Allowed

Canara Bank v. G Pandiarajan

DRT17 Dec 2025OA/136/2022

Case brief

AI extract

What is this about?

The tribunal allowed an original application by Canara Bank to recover a term loan of Rs. 24,77,525 from defaulters. It held the bank proved its case and awarded simple interest at 6% p.a. instead of penal interest for the period from filing to realization.

What did the court decide?

Defendants to pay Rs. 24,77,525/- with simple interest at 6% p.a. from filing date; liberty to sell mortgaged properties on default.

Canara Bank versus G Pandiarajan — Banking and Recovery | DRT (2025)

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OA No. 136/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 17^th DAY OF DECEMBER, 2025 PRESENT: SEEMA SINHA, [PR. DISTRICT & SESSIONS JUDGE – Retd] PRESIDING OFFICER

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OA No.136/2022

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Between

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Canara Bank, Athipatti Branch, Rama Nilayam, Nadar Street, Athipatti, Madurai District – 625 527. Rep. By its Branch Manager.

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---Applicant Bank

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And

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G. Pandiarajan,

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S/o Gurusamy Nadar, North Street Athipatti Village, Peraiyur Taluk,

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Madurai District - 6250705.

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G. Sundhararajan, S/o Gurusamy Nadar, North Street Athipatti Village, Peraiyur Taluk, Madurai District – 625 705.

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S. Mariappan,

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S/o Sankara Thevar, Saluppapatti Village, Peraiyur Taluk, Madurai District – 625 705 ---Defendants

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Counsel for the Applicant Bank : M/s P. Madhan Alexandar, P. Priyadharshini, S. Dhanapandian

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Page 1 of 9

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OA No. 136/2022

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This Original Application was heard and fixed for passing final order before me in the presence of the above said Advocate for Applicant Bank and the Defendants having been set ex-parte and upon hearing the arguments of Counsel for Applicant Bank and upon perusing the material available on the records and having stood over for consideration till this day, this Tribunal delivered the following:

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JUDGEMENT

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1 . This Application has been filed under Sec.19 (1) of the "The Recovery of Debts due to Banks and Financial Institutions Act, 1993" now amended as The Recovery of Debts and Bankruptcy Act, 1993 by the Applicant Bank on 16.11.2021 to recover from the Defendants a sum of Rs.24,77,525/together with interest at the rate of 14.20% p.a. with half yearly rests in respect of Term Loan plus 2% penal interest from the date of filing of Application till the date of realization with cost and by sale of mortgaged/hypothecated properties, more fully described in Schedules of the application.

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2 . The brief averments of the application filed by the Applicant Bank are as follows:-

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The defendants approached the Applicant Bank for availing Term Loan to purchase Tractor & Trailer for his agriculture purpose. The Applicant Bank has also sanctioned the said Term Loan for sum of Rs.4,85,000/-.

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In consideration of the said Term Loan, the 1^st defendant executed a Memorandum of Agreement for Agricultural Loans dt. 10.03.06 for a sum of Rs.4,85,000/- in favour of the Applicant Bank by hypothecating the said Tractor, Trailer & its accessories & implements which are fully described in the 'A' Schedule hereunder and by agreeing to repay the loan amount in 17 half yearly installments of Rs.27,000/- and last 18^th installment of Rs.26,000/- each with interest & cost in favour of the applicant Bank. Further the 3^rd defendant who stood as co-obligant has executed covenant dt.10.06.03 in favour of the applicant bank by agreeing & undertaking various terms & conditions which are annexed with the above said memorandum of agreement for agricultural loans. Further the Defendants promised to repay the loan amount with compound interest at the rate of 10.75% Per annum with half yearly rest or at such other rates as may be revised by the bank from time to time with penal interest at the rate of 2% per annum in case of default.

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The 2^nd defendant offered his properties which are fully mentioned in the "B" Schedule hereunder as security and thereby he deposited his Title

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Page 2 of 9

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OA No. 136/2022

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Deeds on 25.11.03 with the applicant bank's Usilampatti Branch pertaining to said properties, with an intention to create an equitable mortgage over the said properties and by confirming the same then he executed a Letter Evidencing Deposit of Title Deeds on 21.12.03 in favour of the Applicant Bank. The defendants have executed Letters of Acknowledgement of Debt & Security dt. 12.01.09, 10.01.12, 30.09.14, 31.03.17 & 24.03.20 in favour of the Applicant Bank

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After availing the loan, defendants were not regular in the matter of repayment. The defendants made several promises, but they failed to keep up their promises. Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their liability.

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Further the hypothecated Tractor, Trailer and its accessories seized and subsequently sold by public auction and the sale proceeds were duly credited in the loan account of the borrower. After the sale proceeds there was huge outstanding in their loan accounts. But defendants did not come forward to settle their outstandings. Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.24,77,525/- together with interest at the rate of 14.20% p.a. with half yearly rests in respect of Term Loan plus 2% penal interest from the date of filing of Application till the date of realization with cost.

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The Applicant Bank has submitted the following documents in support its claim in the OA, which are as follows:

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LIST OF DOCUMENTS LOAN DOCUMENTS ANNEXURE - I

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S. No.	Date	Description of document	Exhibits
1.	10.03.06	Memorandum of Agreement for Agricultural Loan executed by the Defendants in favour of the Applicant Bank	Ex.No.A-01
2.	21.12.03	Letter evidencing Deposit of Title Deeds executed by the 2^ndDefendant in favour of the Applicant Bank	Ex.No.A-02
3.	12.01.09	Letter of Acknowledgement of Debt and Security executed by the defendants in favour of the Applicant Bank	Ex.No.A-03
4.	10.01.12	Letter of Acknowledgement of Debt and Security executed by the defendants in	Ex.No.A-04

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Page 3 of 9

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OA No. 136/2022

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		favour of the Applicant Bank
5.	30.09.14	Letter of Acknowledgement of Debt and Security executed by the defendants in favour of the Applicant Bank	Ex.No.A-05
6.	31.03.17	Letter of Acknowledgement of Debt and Security executed by the 1^stdefendant in favour of the Applicant Bank	Ex.No.A-06
7.	24.03.20	Letter of Acknowledgement of Debt and Security executed by the 1^stdefendant in favour of the Applicant Bank	Ex.No.A-07
8.	------	Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business	Ex.No.A-08

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LIST OF DOCUMENTS

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TITLE DEEDS – ANNEXURE II

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Title deeds deposited by the 2^nd defendant with regard to ‘B’ Schedule Mortgage Properties

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S.	Date	Description of document	Exhibits
No.
1.	09.04.03	Registered sale deed executed by Dhanuskodi in favour of Sundhararajan (Doc.No.899/03)	Ex.No.A-09
2.	24.04.02	Registered sale deed executed by Shanmuga Nadar in favour of Sundhararajan (Doc.No.780/02)	Ex.No.A-10
3.	25.10.03	Chitta for fasli 1413 issued by VAO, Athipatti Village standing in the name of Sundararajan	Ex.No.A-11
4.	25.10.03	Extract of Adangal for fasli 1413 issued by VAO, Athipatti Village standing in the name of Sundhararajan	Ex.No.A-12
5.	25.10.03	Extract of Adangal for fasli 1414 issued by VAO, Athipatti Village standing in the name of Sundararajan	Ex.No.A-13
6.	25.10.03	Certificate issued by VAO, Athipatti Village	Ex.No.A-14

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Page 4 of 9

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OA No. 136/2022

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A SCHEDULE - HYPOTHECATED GOODS

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All standing crops along with other accessories situated at 'B' schedule mortgage properties.

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B SCHEDULE-MORTGAGE PROPERTIES (Property belonging to Defendant)

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Vide Annexure II for the title deeds

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Item No.1

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Madurai District, Madurai South Registration District, Peraiyur Sub Registry, Peraiyur Taluk, Athipatti Village, a land measuring 23 Cents comprised in RS.No.158/6A within the following boundaries

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On the North : Property belonging to Manicka Nadar On the East : Property belonging to Sundrarajan On the South : Property belonging to Sundrarajan On the West : Property belonging to Samidruai

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Item No.2

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Madurai District, Madurai South Registration District, Peraiyur Sub Registry, Peraiyur Taluk, Athipatti Village, a land measuring 59 Cents comprised in RS.No. 158/8 within the following boundaries

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On the North : Property belonging to Manicka Nadar On the East : Property belonging to Ganapathy On the South : Property belonging to Sundrarajan On the West : Property belonging to Sundrarajan

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Item No.3

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Madurai District, Madurai South Registration District, Peraiyur Sub Registry, Peraiyur Taluk, Athipatti Village, a land measuring 56 Cents comprised in RS.No. 158/5-B

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Item No.4

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Madurai District, Madurai South Registration District, Peraiyur Sub Registry, Peraiyur Taluk, Athipatti Village, a land measuring 25 Cents comprised in RS.No.158/6-B

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OA No. 136/2022

Item No.5

Madurai District, Madurai South Registration District, Peraiyur Sub Registry, Peraiyur Taluk, Athipatti Village, a land measuring 49 Cents comprised in RS.No.158/7

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Item No.6

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Madurai District, Madurai South Registration District, Peraiyur Sub Registry, Peraiyur Taluk, Athipatti Village, a land measuring 68 Cents comprised in RS.No. 158/9

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Item No.7

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Madurai District, Madurai South Registration District, Peraiyur Sub Registry, Peraiyur Taluk, Athipatti Village, a land measuring 17 Cents comprised in RS.No.158/10

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Item No.8

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Madurai District, Madurai South Registration District, Peraiyur Sub Registry, Peraiyur Taluk, Athipatti Village, a land measuring 1 Acre 2 Cents comprised in RS.No. 158/11 along with well & 3.H.P motor Pumpset kamalai vari, Vaikkal bearing S.C.No. 165, with the following boundaries

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3 . On the other hand, Notices were issued to Defendants and since from the beginning of the case, there was no representation on behalf of the Defendants. Hence, Defendants were set ex-parte.

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4. Now the main point for consideration before me is as to whether the Applicant has been able to prove his case on his own leg?

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Having gone through the affidavit of the applicant and the documents filed by them and also considering the submission of the counsel for the Applicant, I find that the Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. L. Siva Balaji, who is the Branch Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Term Loan from the Applicant Bank, but they failed to pay the outstanding loan amount, hence he has filed the case. The applicant bank has also filed the documents given by the defendants at the time of sanctioning the loan

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Page 6 of 9

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OA No. 136/2022

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amount, which have been marked as exhibits No.A-01 to A-14 in support of its claim in the OA.

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Memorandum of Agreement for Agricultural Loan executed by the Defendants in favour of the Applicant Bank has been marked as Ex.No.A-01, Letter evidencing Deposit of Title Deeds executed by the 2^nd Defendant in favour of the Applicant Bank has been marked as Ex.No.A-2, Letter of Acknowledgement of Debt and Security executed by the defendants in favour of the Applicant Bank has been marked as Ex.No.A-3, Letter of Acknowledgement of Debt and Security executed by the defendants in favour of the Applicant Bank has been marked as Ex.No.A-4, Letter of Acknowledgement of Debt and Security executed by the defendants in favour of the Applicant Bank has been marked as Ex.No.A-5, Letter of Acknowledgement of Debt and Security executed by the 1^st defendant in favour of the Applicant Bank has been marked as Ex.No.A-6, Letter of Acknowledgement of Debt and Security executed by the 1^st defendant in favour of the Applicant Bank has been marked as Ex.No.A-7, Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business has been marked as Ex.No.A-8, Registered sale deed executed by Dhanuskodi in favour of Sundhararajan (Doc.No.899/03) has been marked as Ex.No.A-9, Registered sale deed executed by Shanmuga Nadar in favour of Sundhararajan (Doc.No.780/02) has been marked as Ex.No.A-10.

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Chitta for fasli 1413 issued by VAO, Athipatti Village standing in the name of Sundararajan has been marked as Ex.No.A-11, Extract of Adangal for fasli 1413 issued by VAO, Athipatti Village standing in the name of Sundhararajan has been marked as Ex.No.A-12, Extract of Adangal for fasli 1414 issued by VAO, Athipatti Village standing in the name of Sundararajan has been marked as Ex.No.A-13, Certificate issued by VAO, Athipatti Village has been marked as Ex.No.A-14. So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

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As the Defendants remained ex-parte, the claim of the Applicant Bank is neither disproved nor dislodged and goes on record as proved. Accordingly a cumulative analysis of both the Proof Affidavit and documents marked by the Applicant Bank would prove the claim of the Applicant Bank in the OA.

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So far the claim of interest is concerned, it is a well settled Law that the Tribunal has got powers to award pendente lite interest in view of the Judgment of the Hon’ble Supreme Court in N.M. Veerapa Vs Canara Bank (reported in AIR 98(1), 1101 & in Central bank of India Vs Ravindra and OS (AIR, 2001(1), 3095).

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Page 7 of 9

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OA No. 136/2022

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So far the penal interest is concerned Hon'ble supreme court stated in the said judgement as followed " Though interest can be capitalised on the anology that the interest falling due on the accrued date and remaining unpaid, partakes the character of amount advanced on that date, yet penal interest, which is charged by way of penalty for non payment, cannot be capitalized. Further interest, i.e interest on interest, whether simple, compound or penal, cannot be claimed on the amount of penal interest. Penal interest cannot be capitalized. It will be opposed to public policy ".

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Therefore, this Original Application is allowed . Since this is an Agricultural loan the Applicant Bank is entitled for a final order on the following lines:-

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The Applicant Bank is entitled to recover from the Defendants, a sum of Rs.24,77,525/- together with simple interest at the rate of 6% p.a. in respect of Term Loan from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

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ORDERED

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(a) That the Defendants are directed to pay jointly/severally for a sum of Rs.24,77,525/- together with simple interest at the rate of 6% p.a. in respect of Term Loan from the date of filing of Application till the date of realization with cost within one month from the date of receipt of this order.

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(b) In case of default of payment by the above mentioned Defendants, the Applicant Bank is at liberty to sell the movable / immovable properties more fully described in Schedule of the original application for appropriation of sale proceeds towards the satisfaction of amount due to the Applicant Bank.

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(c) If the sale proceeds are not sufficient, after defraying the expenses of such sale, for the payment of all such amounts, the defendants are jointly/severally liable to pay the amount of such deficiency with interest mentioned above until realization.

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(d) Any amount remitted during the course of this proceedings shall be given due credit, to the loan account of the defendants.

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(e) Recovery Certificate be prepared, as per the directions given above, and issue accordingly. A copy of the order is to be communicated to the parties concerned, immediately.

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Page 8 of 9

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OA No. 136/2022

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(f) It is further ordered that the Applicant Bank shall file cost memo within a period of one month from the date of receipt of this order, so as to prepare the recovery certificate with cost for the Term loan and the Recovery Officer is also directed to proceed with the matter in accordance with law. In case, cost memo is not filed before said period of one month, Recovery Certificate will be prepared with available records.

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Dictated to P.S, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 17^th December, 2025.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 26.12.2025

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Canara Bank v. G Pandiarajan

Case brief

What is this about?

What did the court decide?

Canara Bank v. G Pandiarajan

Case brief

What is this about?

What did the court decide?

What the court decided

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