Allowed

Indian Overseas Bank v. Alco Inspections Rep by Prop a Kathiravan and Another

DRT21 May 2025OA/118/2022

Case brief

AI extract

What is this about?

In an ex-parte Debt Recovery Application filed by Indan Overseas Bank against a proprietorship concern and its proprietor, the Tribunal allowed the application for recovery of outstanding dues and interest on a Cash Credit facility due to default by the defendants.

What did the court decide?

Bank allowed to recover Rs. 38,72,058.15 plus interest at 10.15% p.a. with monthly rests; liberty to sell hypothecated and personal assets for recovery.

Indian Overseas Bank versus Alco Inspections Rep by Prop a Kathiravan… — Arbitration | DRT (2025)

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O.A. No. 118 of 2022

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21.05.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 21^st day of May, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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ORIGINAL APPLICATION No. 118 of 2022

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INIDAN OVERSEAS BANK, ADAMBAKKAM BRANCH Represented by its Assistant Manager, No.19, Karuneegar Street, Adambakkam, Chennai -600 088.

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….Applicant

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-Vs-

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M/s. ALCO INSPECTIONS Represented by its Proprietor Mr. A. Karthiravan, No.71, 1^st Floor, Appar Street, Thiruvalleeshwarar Nagar, Thirumangalam, Anna Nagar, Chennai -600 040.

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AND ALSO AT No.71, Agasthiyar Street, TMP Nagar, Padi, Chennai -600 050. AND ALSO AT No.93/A, Bajanai Koil Street, Periya Colony, Chennai -600 058.

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Mr. A. KATHIRAVAN, S/o. Arunachalam, No.71, 1^st Floor, Appar Street, Thiruvalleeshwarar Nagar, Thirumangalam, Anna Nagar, Chennai -600 040.

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AND ALSO AT No.71, Agasthiyar Street, TMP Nagar, Padi, Chennai -600 050. AND ALSO AT No.93/A, BajanaiKoil Street, Periya Colony, Chennai -600 058 …..Defendants

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O.A. No. 118 of 2022

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21.05.2025

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Counsels on record / appeared:

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Counsel for Applicant : M/s. P. Annal

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Defendants were set ex-parte on 05.08.2022

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: - FINAL ORDER - :

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This original application is filed on 04.02.2022 by the Applicant Bank under Section 19 (1) of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the Defendants jointly and severally for recovery of a total sum of Rs.38,72,058.15p (Rupees Thirty Eight Lakhs Seventy Two Thousand and Fifty Eight and Fifteen Paise Only) due in respect of Cash Credit facility (Account No.165333000000007) together with further interest @ 10.15% p.a. with monthly rests from the date of filing the OA, till date of realization in full, for sale of Hypothecated Properties more fully detailed in Schedule to the OA and for costs of this application.

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Brief Facts of the case:

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The Applicant submits that the application is filed within the period of limitation as prescribed under Section 24 of the Recovery of Debts and Bankruptcy Act, 1993, and the subject recovery claim falls within the jurisdiction of this Hon’ble Tribunal.

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It is the case of the applicant bank that 1^st Defendant is a Proprietorship concern, represented by its Proprietor Mr. A. Kathiravan,

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O.A. No. 118 of 2022

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21.05.2025

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the 2^nd Defendant herein, having his Office at No.71, 1^st Floor, Appar Street, Thiruvalleeshwarar Nagar, Thirumangalam, Anna Nagar, Chennai -600 040 and also at No.93/A, Bajanai Koil Street, Periya Colony, Chennai -600 058. The Defendants herein approached and requested the Applicant for a Credit Facility.

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It is submitted by applicant bank that upon considering the same, the Applicant Bank sanctioned to the 1^st Defendant herein a Cash Credit facility of Rs.20,00,000/- vide its Credit Sanction Advice dated 24.05.2017, the terms and conditions of which are accepted and acknowledged by the Defendants.

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The Applicant submits that in evidence of availing the aforesaid Cash Credit Facility, the 1^st Defendant executed the following Loan Documents:-

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a. Revised Demand Promissory Note (Linked to MCLR) dated 24.05.2017 for Rs.20,00,000/- (Rupees Twenty Lakhs Only) together with floating Interest thereon at one year Marginal Cost of funds based Lending Rate (MCLR) of the Bank being 9.80% per annum from the date with monthly rests or such rates as may be re-set and rests as may be revised by the Bank on its own or as per the instructions of the Reserve Bank of India from time to time;

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b. Letter of Continuity and confirmation of DPN dated 24.05.2017 for Rs.20,00,000/- and.

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O.A. No. 118 of 2022

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21.05.2025

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c. Letter of Hypothecation (In case of open advances only) dated 24.05.2017 for Rs.20,00,000/-, thereby hypothecated Inspection Equipment’s, Accessories, Weld Flow Specimens and Calibration Blocks held at No.71, Agasthiyar Street, TMP Nagar, Padi, Chennai -600 050.

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It is further submitted that at the request of the 1^st Defendant, the aforesaid Cash Credit facility of Rs.20,00,000/- was renewed by the Applicant Bank, vide its Credit Sanction Advice dated 15.09.2018, the terms and conditions of which are accepted and acknowledged by the Defendants.

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The Applicant submitted that in evidence of availing the aforesaid Cash Credit Facility, the 1^st Defendant executed the following Loan Documents:-

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a. Revised Demand Promissory Note (Linked to MCLR) dated 15.09.2018 for Rs.20,00,000/- (Rupees Twenty Lakhs Only) together with floating Interest thereon at one year Marginal Cost of funds based Lending Rate (MCLR) of the Bank being 10.15% per annum from the date with monthly rests or such rates as may be re-set and rests as may be revised by the Bank on its own or as per the instructions of the Reserve Bank of India from time to time;

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b. Letter of Continuity and confirmation of DPN dated 15.09.2018 for Rs.20,00,000/- and.

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c. Letter of Hypothecation (In case of open advances only)

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O.A. No. 118 of 2022

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21.05.2025

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dated 15.09.2018 for Rs.20,00,000/- thereby hypothecated Inspection Equipment’s, Accessories, Weld Flow Specimens and Calibration Blocks held at No.71, Agasthiyar Street, TMP Nagar, Padi Chennai-600 050.

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It is submitted that at the request of the Defendants vide his Letter dated 08.07.2019, the aforesaid Cash Credit was enhanced with an Adhoc Limit of Rs.5,00,000/- (Rupees Five Lakhs Only) and the same was availed by the Defendants on 08.07.2019.

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It is further submitted by the that on the oral requests of the Defendants herein, Ad-hoc Limits, totaling to Rs.6,76,079/- (Rupees Six Lakhs Seventy Six Thousand and Seventy Nine Only) in addition to the above said Cash Credit were sanctioned by the Applicant Bank to the 1^st Defendant herein on ad-hoc basis, which were availed by the 1^st Defendant.

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Applicant bank submitted that the 1^st Defendant has also executed a Revival Letter dated 13.02.2020 for the above said Cash Credit Facility availed by him from the Applicant. The 1^st Defendant had agreed to pay the interest for the above said Cash Credit Facility availed by him at the rate of 10.15% per annum compounded on monthly rests basis. The said interest rate is linked to the MCLR (Marginal Cost of funds based Lending Rate) of the Bank and the same is subject to revision by Bank usual practice and RBI Norms from time to time.

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The Applicant submitted that the said Credit Facility availed by the

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O.A. No. 118 of 2022

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21.05.2025

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1^st Defendant is secured by hypothecation of Inspection Equipments, Accessories, Weld Flow Specimens and Calibration blocks held at No.71, Agasthiyar Street, TMP Nagar, Padi, Chennai -600 050.

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It is submitted by applicant bank that subsequent to availing of loan, the 1^st Defendant failed to regularize her Loan account and hence it was declared as a Non Performing Asset (NPA) on 30.11.2019. The Applicant bank had issued a Legal Notice dated 03.11.2021 by RPAD, calling upon the Defendants herein to repay the dues along with interest at contract rate, which were all returned. Hence, this Original Application (OA) has been filed to recover the dues from the Defendants.

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After the filing of the OA, summons were sent to the Defendants 1 and 2 through Registered Post with Acknowledgment Due, which was returned unserved with postal endorsement as ‘Left’ and ‘No such person’ respectively. Applicant bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 05.08.2022 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, defendants 1 to 2 were placed ex-parte on 05.08.2022.

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Heard the submissions of Applicant Bank and perused the records.

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To prove the case of the Applicant Bank, Mrs. Chitra S Mudaliar, Assistant Manager representing the Applicant Bank, has filed her Affidavit by way of evidence and same was considered as evidence of AW-1 and

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O.A. No. 118 of 2022

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21.05.2025

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list of documents came to be marked as Ex A-1 to A-18 . As the Defendants remained ex-parte, the OA claim remains unchallenged. There is no contra evidence available on record to repudiate the claim of the Applicant Bank.

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With regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled for a final order on the following terms:

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: O R D E R :

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The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants jointly and severally, a sum of Rs.38,72,058.15p (Rupees Thirty Eight Lakhs Seventy Two Thousand and Fifty Eight and Fifteen Paise Only) due in respect of Cash Credit facility (Account No.165333000000007)

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together with further interest @ 10.15% p.a. with monthly rests from the date of filing the OA, till date of realization in full, along with costs.

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(b) In the event of failure of the Defendants to pay the aforesaid amount, the bank is at liberty to recover the amount by sale of the schedule mentioned hypothecated assets.

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(d) If the sale proceeds of the hypothecated assets are not

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sufficient to satisfy the dues as ordered above, the applicant bank is at liberty to sell the personal assets of the 2^nd Defendant (both movable and immovable) to recover the balance dues as required under law for which the 2^nd Defendant to disclose to the Tribunal particulars of other properties or assets owned by the 2^nd Defendant.

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(e) The applicant bank shall file the latest memo of calculation of OA amount together with interest, costs etc., to be paid by the Defendants duly considering the amounts, if any, paid by the Defendant and/or amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to prepare Recovery Certificate for the amount to be paid by Defendant to the applicant bank.

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(f) The applicant bank shall file memo of costs within ten days from the date of this final order.

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(g) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

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O.A. No. 118 of 2022

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21.05.2025

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A copy of this order be communicated to the parties concerned.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Steno (Surya), transcribed by him, corrected, signed and pronounced by me on this the 21^st day of May, 2025)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Mrs. Chitra S Mudaliar, Assistant Manager representing the Applicant Bank.

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Exhibits on the part of the Applicant:

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Sl. No.	Description of Documents	Exhibit No.
1.	Credit Sanction Advice for Rs.20,00,000/- Original dated 24.05.2017.	A-1
2.	Revised Demand Promissory Note for Rs.20,00,000/-Original dated 24.05.2017.	A-2
3.	Letter of Continuity and confirmation of DPN for Rs.20,00,000/-Original dated 24.05.2017.	A-3
4.	Letter of Hypothecation (In Case of open advances only) for Rs.20,00,000/- Original dated 24.05.2017.	A-4
5.	Credit Sanction Advice renewed as for Public for Rs.20,00,000/-Original dated 15.09.2018.	A-5
6.	Revised Demand Promissory Note for Rs.20,00,000/-Original dated 15.09.2018.	A-6
7.	Letter of Continuity and confirmation of DPN for Rs.20,00,000/-Original dated 15.09.2018.	A-7
8.	Letter of Hypothecation (In case of open advances only) for Rs.20,00,000/- Original dated 15.09.2018.	A-8
9.	Letter from the Defendant for Request for Ad hoc Limit or Rs.5,00,000/- Original dated 08.07.2019.	A-9
10.	Revival Letter executed by the Defendant Original dated 13.02.2020.	A-10

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O.A. No. 118 of 2022

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11.	LAWYER NOTICE Office Copy dated 03.11.2021.	A-11
12.	Returned cover of the 1^stAddress of the 1^st Defendant Original dated 08.11.2021.	A-12
13.	Returned cover of the 2^ndAddress of the 1^st Defendant Original dated 09.11.2021.	A-13
14.	Returned cover of the 3rd Address of the 1^st Defendant Original dated 08.11.2021.	A-14
15.	Returned cover of the 1^stAddress of the 2^nd Defendant Original dated 08.11.2021.	A-15
16.	Returned cover of the 2^ndAddress of the 2^nd Defendant Original dated 09.11.2021.	A-16
17.	Returned cover of the 3^rdAddress of the 2^nd Defendant Original dated 08.11.2021.	A-17
18.	Statement of Accounts for A/c No.165333000000007 and its Certificated (Original Statement of Accounts along with its Certificates have already been furnished along with the Original Application) Attested True Copy dated 25.11.2021.	A-18

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Witness Examined for the Defendants: -Nil-

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List of Documents Exhibited for the Defendants: -Nil –

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:- SCHEDULE -:

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(PROPERTIES HYPOTHECATED)

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Inspection Equipments, Accessories, Weld flow Specimens and Calibration Blocks held at No.71, Agasthiyar Street, TMP Nagar, Padi Chennai 600 050.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

Indian Overseas Bank v. Alco Inspections Rep by Prop a Kathiravan and Another

Case brief

What is this about?

What did the court decide?

Indian Overseas Bank v. Alco Inspections Rep by Prop a Kathiravan and Another

Case brief

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