Allowed

Union Bank of India v. Amazing auto consultant

DRT25 Mar 2025OA/121/2022

Case brief

AI extract

What is this about?

The DRT allowed the Debts Recovery Tribunal III original application filed by Union Bank of India for recovery of dues from defendants defaulting on term loan and cash credit facilities, granting liberty to sell mortgaged property for satisfaction of dues.

What did the court decide?

The applicant bank is allowed to recover Rs. 22,37,730/- along with interest and costs, with liberty to sell mortgaged and personal assets to recover dues.

Union Bank of India versus Amazing auto consultant — Company and Corporate | DRT (2025)

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O.A. No. 121 of 2022

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25.03.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 25^th of March, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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ORIGINAL APPLICATION No. 121 of 2022

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Union Bank of India, No. C.S. 33/6, Pavendar Salai, NH-1, Maraimalai Nagar, Chennai – 603 209. Rep. by its Asst.Manager & Constituted Attorney ….Applicant

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-Vs-

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M/s Amazing auto consultant

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(Prop: Mr N Thangarajan) #2 Opposite Ford, Near Railway Station, Peramanur Village, Maraimalai Nagar, Chengalpattu Taluk, Kancheepuram – 603 209.

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Mr. Thangarajan S/o Nagaraj, No. 20 Union Salai, Peramanur Village Maramalai Nagar, Chengalpattu Taluk, Kancheepuram – 603 209. …..Defendants

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Counsels on record / appeared:

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Counsel for Applicant : Mr. K. Radhakrishnamurthy

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Defendants were set ex-parte on 14.07.2022

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: - FINAL ORDER - :

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This Original Application is filed on 16.03.2022 by the Applicant

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Bank under Section 19 of Recovery of Debts and Bankruptcy Act, 1993

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(formerly Recovery of Debts Due to Banks and Financial Institutions Act,

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O.A. No. 121 of 2022

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25.03.2025

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against the Defendants 1 and 2 for recovery of a total sum of Rs.22,37,730/- (Rupees Twenty Two Lakhs Thirty Seven Thousand Seven Hundred and Thirty Only) as follows:

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(i) A sum of Rs.14,35,124/- due in respect of Term Loan

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account (Loan A/c No.702806400000001) together with interest thereon @ 12.35% p.a. with monthly rests from the date of filing the OA till date of realization in full,

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(ii) A sum of Rs.8,02,606/- due in respect of Cash Credit facility

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Loan A/c No.702805010000104) together with interest thereon @ 10.55% p.a. with monthly rests from the date of filing the OA, till date of realization in full,

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for sale of schedule mentioned immovable property 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 the First Defendant is the Proprietorship concern wherein the Second Defendant is the Proprietor

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O.A. No. 121 of 2022

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25.03.2025

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and also the Mortgagor. The second defendant had executed all the loan documents on behalf of the First Defendant.

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It is submitted by the Applicant Bank that at the request of the Defendants by their application dated 27.08.2019 for their business development the applicant bank has sanctioned a Term Loan of Rs.15.00 Lakhs and Cash Credit loan (hypothecation of stocks in trade) facility of Rs.8.00 lakhs to the Defendants on 29.11.2019 for their business purpose under Union Bank of India MSME SUVIDHA Scheme.

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The second defendant has executed the following documents on 29.11.2019 to secure the above Term loan facility.

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(i) Demand Promissory Note for Rs.15.00 lakhs promising to repay the amount together with interest on such sum at the rate of External Benchmark Lending Rate (EBLR) comprising of RBI Repo rate + Spread which is presently 8% per annum plus Premium of 350 basis points or such other rate as may be prescribed by the Bank from time to time upon interest rate reset, with monthly rests, for value received.

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(ii) Interest agreement

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(iii) Term Loan Agreement

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(iv) Hypothecation agreement of goods and debts

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(v) Letter of undertaking from borrowers

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25.03.2025

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It is further submitted by the Applicant Bank that for availing the cash credit facility of Rs.8 Lakhs. The second Defendant has executed the following documents on 29.11.2019 to secure the above cash credit loan facility for working capital.

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(i) Demand Promissory Note for Rs. 8.00 lakhs promising to repay the amount together with interest on such sum at the rate of External Benchmark Lending Rate (EBLR) comprising of RBI Repo rate + Spread which is presently 8% per annum plus Premium of 300 basis points or such other rate as may be prescribed by the Bank from time to time upon interest rate reset, with monthly rests, for value received.

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(ii) Letter of Continuity

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(iii) Interest agreement

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(iv) Letter of Lien

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(v) Hypothecation agreement of goods and debts

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(vi) Letter of undertaking from borrowers

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It is submitted by the Applicant Bank that as security for the advances made to the first Defendant, the second Defendant has deposited on 29.11.2019 with the Applicant’s branch Chennai – the Title Deeds relating to his property more fully described in Schedule hereunder with intent to create an Equitable Mortgage as security for the advances made to the Frist Defendant. The deposit of Title Deeds was confirmed by

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2^nd defendant. The above mortgage properties have been also registered before the Sub Registrar, Chengalpattu Joint II, on 29/11/2019 vide registered Doc.No.14185 / 2019 by way of Memorandum of Deposit of Title Deeds.

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The applicant further submit that at the request of the first defendant by his application dated 22.03.2021, the applicant bank vide its sanction letter dated 31.05.2021 has cancelled the earlier cash credit facility of Rs.8 lakhs and renewed the same (fresh cash credit facility of Rs.8 lakhs). The second defendant has availed the same and executed the following documents on 31.05.2021 to secure the above cash credit loan facility.

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(i) Demand Promissory Note for Rs.8.00 Lakhs promising to repay the amount together with interest on such sum at the rate of External Benchmark Lending Rate (EBLR) comprising of RBI Repo rate + Spread which is presently 6.8% per annum plus Premium of 175 basis points or such other rate as may be prescribed by the

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Bank from time to time upon interest rate reset with monthly rests, for value received.

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(ii) Interest agreement

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(iii) Hypothecation agreement of goods and debts

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(iv) Letter of undertaking from borrowers

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It is submitted by Applicant Bank that the defendants failed to maintain financial discipline and the operation of account was out of order

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and gradually the repayment became irregular. In spite of repeated reminders, the Defendants did not regularize the account. The applicant made several demands to the defendants. But the defendants did not comply with the demands. The account became NPA on 29/05/2021. The applicant also sent Demand Notice dated 31/08/2021 and possession notice dated 09/12/2021 to the defendants under Section 13(2) and 13(4) of SARFAESI Act, despite which defendants did not come forward to make any repayment. The applicant bank through its counsel had issued Legal Notice dated 29/11/2021 to the defendants but there was no response. Hence the present Original Application (OA) has been filed for recovery of amount due from the defendants.

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After the filing of the OA, summons were sent to defendants 1 and 2 through Registered Post with Acknowledgment Due, which returned unserved with postal endorsement as ‘left’. Applicant bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 14.07.2022 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, defendants were placed ex-parte on 14.07.2022.

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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. R. Gayathri, Manager representing the Applicant Bank, has filed her Affidavit by way of evidence and same was considered as evidence of AW-1 and list of documents came

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to be marked as Ex A-1 to A-26 . 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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13. The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants 1 and 2, a total sum of Rs.22,37,730/- (Rupees Twenty Two Lakhs Thirty Seven Thousand Seven Hundred and Thirty

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Only) as follows:

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(i) A sum of Rs.14,35,124/- due in respect of Term Loan

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account (Loan A/c No.702806400000001) together with interest thereon @ 12.35% p.a. with monthly rests from the date of filing the OA till date of realization in full,

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(ii) A sum of Rs.8,02,606/- due in respect of Cash Credit

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facility Loan A/c No.702805010000104) together with interest thereon @ 10.55% p.a. with monthly rests from the date of filing the OA, till date of realization in full, along with

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costs of this application.

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(b) In the event of failure of the Defendants to pay the aforesaid amount, the applicant bank is at liberty to sell the schedule mentioned immovable property towards the dues.

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(d) If the sale proceeds of the schedule mentioned mortgaged properties are not 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.

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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 Defendant 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

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O.A. No. 121 of 2022

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Recovery Officer in terms of the final order.

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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 PS, transcribed by her, corrected, signed and pronounced by me on this the 25^th day of March, 2025)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Mrs. R. Gayathri, Manager representing the Applicant Bank.

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Exhibits on the part of the Applicant:

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Sl. No.	Description of Document	s	Exhibit No.
1.	Loan Application by 1^stDefendant 27/	08/2019	A-1
2.	Sanction advice by applicant 31/10/2	019	A-2
3.	DPN for Rs.15.00 Lakhs by 1^st 29/11/2019	Defendant	A-3
4.	Letter of Continuity by 1^stDefendant		A-4
5.	Interest agreement by 1^st 29/11/2019	Defendant	A-5
6.	General Term Loan Agreement by 1^st 29/11/2019	Defendant	A-6
7.	Hypothecation agreement of goods by the 1^stDefendant 29/11/2019	and debts	A-7
8.	Letter of undertaking from borrowers		A-8
9	DPN for Rs.8.00 lakhs by 1^st 29/11/2019	Defendant	A-9
10	Letter of continuity by 1^stDefendant		A-10
11	Interest agreement by 1^st 29/11/2019	Defendant	A-11
12	Letter of Undertaking by 1^st 29/11/2019	Defendant	A-12

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13	Hypothecation agreement of goods by the 1^stDefendant 29/11/2019	and debts	A-13
14	Letter of undertaking from borrowers		A-14
15	MOD by 2^ndDefendant 29/11/2019		A-15
16	Loan Application by 1^stDefendant		A-16
17	Sanction advice by applicant		A-17
18	DPN for Rs.8.00 lakhs by 1^st 31/05/2021	Defendant	A-18
19	Interest agreement by 1^st 31/05/2021	Defendant	A-19
20	Hypothecation agreement of goods by the 1^stDefendant 31/05/2021	and debts	A-20
21	Letter of undertaking from borrowers		A-21
22	Notice u/s 13(2) SARFAESI by 31/08/2021	applicant	A-22
23	Legal Notice by applicant’s counsel 29	/11/2021	A-23
24	Notice u/s 13(4) SARFAESI by 09/12/2021	applicant	A-24
25	Certified Statement of Account		A-25
26	Settlement Deed executed by Velankanni in favour of Mr. Thangaraj	Mrs. V. an	A-26

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Witness Examined for the Defendant: -Nil-

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List of Documents Exhibited for the Defendant: -Nil –

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SCHEDULE OF PROPERTY

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All that piece and parcel of house site with building, measuring an extent of 00100 Square meter or 1076 Square Feet, comprised in Grama

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Natham Old survey No. 43A, Grama Natham New survey No.

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43A/151, situated in PERAMANUR VILLAGE, Chengalpattu Taluk, Kancheepuram District and

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Bounded on the :-

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NORTH BY: House belongs to Thangarajan

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SOUTH BY: House Belongs to Kuppan & Jothi

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EAST BY: 30 Feet wide road

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WEST BY: House Belongs to Thangarajan

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The above property is situated within the Maraimalai Nagar Municipality and wthin the Registration District of Chengalpattu and Registration Sub – District of Chengalpattu joint-II.

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

Union Bank of India v. Amazing auto consultant

Case brief

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Union Bank of India v. Amazing auto consultant

Case brief

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