Allowed

Canara Bank v. Mallella Stone International

DRT31 Dec 2025OA/1151/2023

Case brief

AI extract

What is this about?

The Tribunal allowed an original application for issuance of a recovery certificate against defendants for defaulted business credit facilities, noting the defendant was absent.

What did the court decide?

Recovery Certificate drawn allowing recovery of aggregate sum of Rs. 6,20,80,374.90 with further interest @12.00% p.a.(simple) from filing date till realization against defendants jointly, severally a

Canara Bank versus Mallella Stone International — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 31^st Day of December, 2025

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Present: Sri. T. RAJESH Presiding Officer OA.No.1151/2023

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BETWEEN:

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Canara Bank MCB town hall Branch No. 51, Stock Exchange Building Towers, JC Road Cross, Bengaluru – 560 027 …APPLICANT

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AND:

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M/s. Mallella Stone International Rep. by proprietor & others Regd. Officer: No. 15/1, opposite to VLCC, South End Road, Basavangudi, Bangalore – 560 004

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Factory: Sy. No. 418/7,8,9 and 420/1,2,3,4,5,6,7,8,9,16 Arikela village H/o. Bheemaganipalli of Aramadake Village, Punganur Mandal, Chitter District

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Mr. M Pawan Kumar S/o. M Nagi Reddy Prop. Mallella stone international No. 307/7, 23^rd cross, 6^th block, Jaynagar Bengaluru – 5600 82 ...DEFENDANTS

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Counsel on record/appeared for:

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Applicant : P Chithra Nirmala Defendants : Ex parte

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2 OA-1151/2023

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FINAL ORDER

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The present Original Application in short (OA) has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 seeking issuance of Recovery Certificate against the defendants for Rs. 6,20,80,374.90/- (Rupees Six Crore Twenty Lakhs Eighty Thousand Three Hundred And Seventy Four And Ninety Only) with further interest thereon from the date of filing the Application till realization.

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It is the case of the applicant that, the defendants are availed the following credit facilities:

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Term loan of Rs. 75,75,000/- (Rupees Seventy Five Lakhs Seventy Five Thousand Only) for purchase of 1 no. of komatsu PC 350LC-7 hydraulic excavator for their business.

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OCC/ODBD of Rs. 2,50,00,000/- (Rupees Two Crore Fifty Lakhs Only) for the purchase of plant and missionaries.

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Working capital of Rs. 2,50,00,000/- (Rupees Two Crore Fifty Lakhs Only) on 23.12.2019.

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Funded interest term loan of Rs. 16,04,000/- (Rupees Sixteen Lakhs Four Thousand Only) on 23.12.2019.

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It is also the case of the applicant that, in view of the above availed loans, the defendants executed the necessary loan document along with hypothecation agreement.

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It is further contended that, despite availing the credit facilities, agreeing to service the loan amount promptly and regularly, the

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3 OA-1151/2023

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defendants failed in complying the same, resulting in default in repayment and consequentially turning the loan accounts as NPA.

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In the above circumstances, the applicant approached this Tribunal by filing this OA seeking issuance of Recovery Certificate for the amount due in the account.

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Despite, service of summons on the defendants, they failed to appear, resulting the defendants being set ex parte on 08.07.2024.

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The applicant had let in evidence through AW-3, who filed Proof Affidavit reiterating the contentions taken in the OA and also produced Exhibits A-3 to A-68 and got the same marked in evidence.

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Heard the Ld. Counsel for the Applicant and considered the contentions as taken in the OA in the light of documentary evidence and proof affidavit.

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The following issues arise for consideration in this matter:

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i) Whether the applicant had succeeded in proving the OA

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claim as against the defendants?

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ii) What order are to be passed?

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Both these issues are gone into and decided together.

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The case put forth by the applicant in the Application remains

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unrebutted as defendants remained ex parte. The evidence tendered by the applicant remains uncontroverted and undisputed. The evidences put forth by the applicant were found admissible and are

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4 OA-1151/2023

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sufficient to prove availment of credit facility as stated in the OA,

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creation of the security interest and the defaults committed in the

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accounts. The liability of the defendants and the claim of the amount

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due are also proved by the above documents. The claim of the

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applicant is well within the limitation.

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Hence in view of the findings arrived herein above, the Tribunal find both these issues in favour of applicant and hence, this Tribunal is of the view that OA is to be allowed.

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Taking into consideration the facts that the credit facilities are

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availed for Business purpose and also that the OA claim is arrived at by calculating interest at the agreed rate, this Tribunal of the view

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that OA can be allowed with a reduced interest of 12.00%(simple).

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In the result, OA.No.1151/2023 stands allowed,

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i) The applicant is allowed to recover an aggregate sum of

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Rs. 6,20,80,374.90/- (Rupees Six Crore Twenty Lakhs Eighty

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Thousand Three Hundred and Seventy Four and Ninety Only)with further interest @12.00% p.a.(simple) from the date of filing OA till

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the realization, from the defendants jointly, severally and personally,

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after giving credit to all the amount recovered and received during

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the pendency of the OA and allowed the same to be recovered by

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proceeding against the schedule properties. Properties schedule to

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5 OA-1151/2023

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the OA be the schedule to the recovery certificate.

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ii) If the sale proceeds are not found sufficient to cover the

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amount due and payable to the applicant bank, the defendants jointly, severally and personally and their assets are liable for balance

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amounts due under the loan accounts.

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iii) The applicant bank is allowed cost of the proceedings

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which applicant to file cost memo within 7 days from the date of receipt of the order

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iv) The Recovery Certificate to be drawn in terms of this order

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and transferred to Recovery for execution.

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v) Interim application pending, if any, stands disposed of in

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terms of this final order.

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Communicate a copy of the order to the parties concerned in

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terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT

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(Procedure) Rules, 1993.

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[Dictated to the Stenographer (HS), transcribed by her, corrected and signed and pronounced by me in the Open Court, this the 31^st Day of December, 2025].

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Sd/-

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(T. RAJESH) PRESIDING OFFICER

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6 OA-1151/2023

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Ranjan Kumar, S/o. Sri. Kumar Yogendra Narayana Singh, Chief Manager, of Applicant Bank.

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Exhibits on the part of the Applicant:

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Exhibit	Date	Particulars of Documents
Nos.
A3	15.10.2015	Partnership deed executed between Mr. Pawan Kumar and Smt. Latha Preethi
A4	28.10.2016	Application form for loans to micro and small enterprises
A5	03.11.2016	Provisional sanction memorandum for Rs. 77.00 lacs
A6	03.11.2016	Sanction letter for a term loan of Rs. 75,75,000/-
A7	04.11.2016	Applicant bank’s letter to the machine vendor
A8	04.11.2016	Common hypothecation agreement for Rs. 75,75,000/-
A9	04.11.2016	Guarantee covering letter executed by Mr. Pawan Kumar
A10	04.11.2016	Personal guarantee agreement executed by Mr. Pawan Kumar
A11	04.11.2016	Guarantee covering letter executed by Smt. Latha preeti
A12	04.11.2016	Personal guarantee agreement executed by Smt. Latha Preeti
A13	04.11.2016	Letter of undertaking/consent for coverage of loan under CGTMSE scheme
A14	04.11.2016	Certificate of loan papers obtained
A15	30.11.2016	Application form for loans to micro and small enterprises seeking Rs. 22.00 lacs
A16	06.12.2016	Sanction letter for a term loan of Rs. 22.00 lacs
A17	06.12.2016	Deed of hypothecation

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7 OA-1151/2023

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A18	10.12.2016	Hypothecation leaf letter
A19	06.12.2016	Supplemental common hypothecation agreement
A20	06.12.2016	Particulars of personal guarantor Mr. Pawan Kumar
A21	06.12.2016	Particulars of personal guarantor Smt. Latha Preeti
A22	06.12.2016	Guarantee covering letter executed by Mr. Pawan Kumar
A23	06.12.2016	Guarantee agreement executed by Mr. Pawan Kumar
A24	06.12.2016	Guarantee covering letter executed by Smt. Latha Preeti
A25	06.12.2016	Guarantee agreement executed by Smt. Latha Preeti
A26	06.12.2016	Mandate letter executed by the defendants for deduction of claim amounts from current account no. 040214000022
A27	06.12.2016	Letter of undertaking for coverage of loan under CGTMSE scheme
A28	06.12.2016	Certificate of loan papers obtained for Rs. 22.00 lacs
A29	06.12.2016	Letter evidencing execution of loan documents
A30	30.05.2017	Letter of proprietorship
A31	30.03.2017	Sanction memorandum
A32	13.04.2017	Sanction letter
A33	30.05.2017	Request for overdraft facilities for Rs. 1,50,00,000/-
A34	30.05.2017	Promissory note for a sum of Rs. 1,50,00,000/-
A35	30.05.2017	Supplemental common hypothecation agreement
A36	30.05.2017	Agreement re: advances against book debts as primary security
A37	30.05.2017	Sub-ordination agreement
A38	30.05.2017	Guarantee covering letter
A39	30.05.2017	Guarantee agreement executed by the defendant guarantors
A40	30.05.2017	Certificate of loan papers obtained

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8 OA-1151/2023

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A41	30.05.2017	Letter evidencing execution of documents
A42	25.10.2017	Application for loans to micro and small enterprises along with particulars of personal guarantors Mr. Pawan Kumar and Smt. Latha Preeti
A43	20.11.2017	Sanction memorandum for Rs. 500 lakhs
A44	22.11.2017	Promissory note for a sum of Rs. 3,50,00,000/- repayable with interest at 11.10% P.a
A45	22.11.2017	Supplemental common hypothecation agreement
A46	22.11.2017	Guarantee covering letter
A47	22.11.2017	Guarantee agreement executed by Smt. Latha Preeti and Mr. Pawan Kumar Reddy
A48	22.11.2017	Letter of evidencing execution of documents
A49	26.05.2020	Request for deferment of interest payment
A50	26.12.2019	Sanction memorandum no. 237/2019-20 ref: BLC SMES CR 9256 RMS 2019-20
A51	24.12.2019	Debt restructuring agreement
A52	24.12.2019	Debtor creditor agreement
A53	24.12.2019	Letter of undertaking executed by the guarantor for restructuring of loan facilities
A54	24.12.2019	Letter from 3^rddefendant Mrs. Latha Preeti
A55	08.04.2019	Letter of revival for term loan limit of Rs. 75.75 lakhs
A56	24.12.2019	Letter of renewal for OCC/ODBD limit of Rs. 5.00 lakhs
A57	24.12.2019	Letter of revival for OCC/ODBD of Rs. 2.50 crore and WCTL of Rs. 2.50 crore
A58	30.11.2021	Letter of revival for OCC of Rs. 2.50 crore, WCTL of Rs. 2.50 crore, FITL dated Rs. 16.04 lakhs and term loan of Rs. 75.75 lakhs
A59	24.12.2019	Letter of evidencing execution of documents
A60	24.12.2019	Certificate of loan papers obtained for Rs. 5.00 crore

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9 OA-1151/2023

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A61	19.05.2017	Memorandum of deposit of title deeds
A62	25.02.2022	Demand notice issued u/s. 13(2) of the SARFAESI act
A63	23.05.2022	Possession notice issued u/s. 13(4) of the SARFAESI act
A64	-------	Statement of account a/c. 0404766000002
A65	-------	Statement of account a/c. 0404261009121
A66	-------	Statement of account a/c. 0404746000005
A67	-------	Statement of account a/c. 0404747000004
A68	-------	Certificate under the banker’s book of evidence act

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Witness Examined for the Defendants: List of Documents Exhibited for the Defendants:

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-Nil -

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-Nil -

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Sd/-

Canara Bank v. Mallella Stone International

Case brief

What is this about?

What did the court decide?

Canara Bank v. Mallella Stone International

Case brief

What is this about?

What did the court decide?

What the court decided

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