Allowed

State Bank of India v. M/S Steel House Private Limited

DRT5 Dec 2025OA/140/2022

Case brief

AI extract

What is this about?

The Tribunal adjudicated an application by State Bank of India to recover dues. The court calculated the principal recovery by excluding penal interest, to which no further interest accrues, and directed the recovery of the principal sum along with future interest on the net principal amount.

What did the court decide?

Recovery of principal amounts free of capitalized penal interest, together with future interest on the adjusted principal sums, and issuance of a Recovery Certificate.

State Bank of India versus M/S Steel House Private… — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH

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PRESIDING OFFICER

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Dated this the 5^th day of December, 2025

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ORIGINAL APPLICATION No.140/2022

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Between

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State Bank of India, SME Branch, State Bank Bhavan, Kovilakathumpadam P.O., Thiruvambady, Thrissur – 680 022. …Applicant

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And

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M/s.Steel House Private Limited, Registered Office at: Building No.VI/412A, Chembukkavu, Thrissur - 680 020, represented by its Managing Director, Tenny Jose.

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Tenny Jose Chirammal, S/o.C.C.Jose, Chirammal House, White Mansion Museum Cross Lane, Chembukkavu P.O., Thrissur – 680 020.

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Elsa Tenny, W/o.Tenny Jose, Chirammal House, White Mansion Museum Cross Lane, Chembukkavu P.O., Thrissur – 680 020.

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OA 140/2022

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Kiran C.Tenny, S/o.Tenny Jose, Chirammal House, White Mansion Museum Cross Lane, Chembukkavu P.O., Thrissur – 680 020.

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Arun C.Tenny, S/o.Tenny Jose, Chirammal House, White Mansion Museum Cross Lane, Chembukkavu P.O., Thrissur – 680 020.

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M/s.Tenny Jose Limited, Registered Office at: Building No.VI/412A, Chembukkavu, Thrissur – 680 020, Represented by its Managing Director, Arun C. Tenny. …Defendants

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This Original Application having been heard on 17.11.2025

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in the presence of Advocate Sri.Tom K. Thomas for the applicant bank and stood over to this day for consideration, the Tribunal delivered the following:

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F I N A L O R D E R

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This Original Application has been filed under S.19(1) of the Recovery of Debts and Bankruptcy Act, 1993 for recovery of an aggregate sum of Rs.3,83,65,594/- due under the loan accounts together with future interest and costs from the

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OA 140/2022

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defendants jointly and severally and by sale of the schedule

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property.

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Facts of the case:

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The applicant is a body corporate constituted under the State Bank of India Act, 1955 having its corporate centre at

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Mumbai and its SME branch at Thrissur.

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At the request of the 1^st defendant company,

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applicant bank sanctioned the following credit facilities:

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Date of sanction	Type of loan	Amount	Availed by	Guarantors	Collateral security
21.01.2019	Cash credit limit	Rs.350 lakhs	1^st	Defendants 2 to 6	Hypothecation of schedule property
	Term loan	Rs.32 lakhs	defendant		& term deposit receipt for Rs.194 lakhs
29022020	Enhanced cash credit limit	Rs.500 lakhs	1^st defendant	Defendants 2 to 6	Hypothecation of schedule property & term deposit of R194 lkh &
..	Letter of credit	Rs.150 lakhs			s. as Rs.77.50 lakhs.
08.05.2020	CECL facility	Rs.50 lakhs	1^st defendant	Defendants 2 to 6	Hypothecation of schedule property & term deposit of Rs.194 lakhs & Rs.77.50 lakhs.
01.09.2020	FITL	Rs.20,07,518 [interest ac 01.03.2020 a	/- crued under nd 31.08.2020	the credit ]	facilities between
30.11.2020	GECL	Rs.72 lakhs	1^st defendant	Defendants 2 to 6	Hypothecation of schedule property & term deposit of Rs.194 lakhs & Rs.77.50 lakhs.

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OA 140/2022

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The 1^st defendant availed the facilities but defaulted in repayment. Consequently, the accounts became NPA. Despite lawyer notice being issued to the defendants demanding repayment of the outstanding dues, they failed to settle the liability. In such premises, the bank was constrained to file the OA claiming the following reliefs:

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(i) To recover an aggregate sum of Rs.3,83,65,594/together with pendente lite and post-decree interest thereon from the defendants jointly and severally and by sale of the schedule property.

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(ii) To recover the costs, charges and expenses from the defendants.

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(iii) To issue Recovery Certificate to the Recovery Officer with directions to recover the amount and pay it to the applicant bank.

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The defendants were duly served with summons. But they neither appeared nor were they represented and hence the defendants were declared exparte on 06.12.2024.

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Proof Affidavit :

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To establish the claim on behalf of the applicant bank, one Mr.A.Anantha Raja, Assistant General Manager, has filed proof affidavit and produced the loan documents marked as

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OA 140/2022

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Exhibits A1 to A72. The proof affidavit filed by AW1 and the documents produced in this case are not challenged by the defendants. The availing of the credit facilities is well established from the documents placed by the applicant bank. An aggregate sum of Rs.3,83,65,594/- is outstanding in the loan accounts as on 04.02.2022, which is clearly established from the account statements marked as Exts.A65 to A72.

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It could be seen from paragraph 15 of the proof affidavit filed by AW1 that the applicant has charged a sum of Rs.7,99,289/- by way of penal interest in the cash credit account. From the statements produced along with memo dated 05.12.2025, it could be seen that an amount of Rs.31,546.61 and Rs.74,199.47 has been charged by way of penal interest in CCECL account and GECL account respectively. It is well settled that penal interest cannot be capitalized and no interest can be charged on penal interest and hence the applicant bank is not entitled to get any pendente lite and post-decree interest on the aforesaid penal interest charged in the loan accounts. According to the applicant bank, penal interest is not charged in the term loan account.

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Considering the amount advanced, interest and penal interest applied, repayments effected and default committed, I

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OA 140/2022

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am of the view that applicant bank is entitled to get pendente lite and post-decree interest in the manner stated below, which is reasonable in the facts and circumstances of the case.

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The applicant bank, therefore, is entitled to get a final order on the following lines:

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In the result, applicant bank is given a final order allowing it

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to recover the amounts as follows:

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Cash credit account	Rs.2,58,52,932/- (Rupees two crores fifty eight lakhs fifty two thousand nine hundred and thirty two only) together with future interest @8% per annum on the sum of Rs.2,50,53,643/- (Rupees two crores fifty lakhs fifty three thousand six hundred and forty three only) from 14.02.2022 till realization from the defendants jointly and severally and by sale of the schedule property;
Term loan account	Rs.17,18,290/- (Rupees seventeen lakhs eighteen thousand two hundred and ninety only) together with future interest thereon @9% per annum from 14.02.2022 till realization from the defendants jointly and severally and by sale of the schedule property;
CCECL account	Rs.32,23,495/- (Rupees thirty two lakhs twenty three thousand four hundred and ninety five only) together with future interest @7% per annum on the sum of Rs.31,91,948.39 (Rupees thirty one lakhs ninety one thousand nine hundred and forty eight and Paise thirty nine only) from 14.02.2022 till realization from the

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OA 140/2022

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	defendants jointly and severally and by sale of the schedule property;
GECL	Rs.75,70,877/- (Rupees seventy five lakhs seventy
account	thousand eight hundred and seventy seven only)
	together with future interest @7% per annum on the
	sum of Rs.74,96,677.53 (Rupees seventy four lakhs
	ninety six thousand six hundred and seventy seven and
	Paise fifty three only) from 14.02.2022 till realization
	from the defendants jointly and severally and by sale of the schedule property; and

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costs and expenses borne by it for realization of the loans from the defendants.

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The schedule to the OA shall be appended to this final

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order.

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The applicant bank shall file memo of costs within ten

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days from the date of this final order.

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

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Communicate copy of this order to both parties as provided in R.16 r/w R.2(c) of the Debts Recovery Tribunal

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(Procedure) Rules, 1993.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 5^th day of December, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

OA 140/2022

A P P E N D I X

Witness for Applicant: AW1: Sri.A.Anantha Raja, Assistant General Manager of the applicant bank.

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Witness for Defendant(s): Nil

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Applicant’s Exhibits

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Ext.No	Date	Particulars of documents
A1	21.01.2019	Letter of arrangement for cash credit facility term loan issued by the applicant bank and signed by the defendants.	and duly
A2	21.01.2019	Agreement of loan cum hypothecation execu by the 1^stdefendant in favour of the applic bank.	ted ant
A3	21.01.2019	Guarantee agreement executed by defendants 2 to 5.	the
A4	29.02.2020	Letter issued by the 2^nddefendant confirming execution of guarantee agreement.	the
A5	29.02.2020	Letter issued by the 3^rddefendant confirming execution of guarantee agreement.	the
A6	29.02.2020	Letter issued by the 4^thdefendant confirming execution of guarantee agreement.	the
A7	29.02.2020	Letter issued by the 5^thdefendant confirming execution of guarantee agreement.	the
A8	21.01.2019	Guarantee agreement executed by the defendant.	6^th
A9	30.01.2019	Security delivery letter executed by the defendant.	1^st
A10	21.01.2019	General indemnity agreement executed by the defendant in favour of the applicant bank.	1^st
A11	..	Declaration cum undertaking executed by the defendant.	2^nd
A12	29.02.2020	Declaration cum undertaking executed by the defendant.	2^nd
A13	29.02.2020	General indemnity agreement executed by the defendant in favour of the applicant bank.	1^st

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OA 140/2022

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A14	29.02.2020	Security delivery letter executed by the defendant.	1^st
A15	04.03.2020	Security delivery letter executed by the defendant.	2^nd
A16	08.05.2020	Letter of arrangement for common C Emergency Credit Line facility issued by applicant bank and duly signed by defendants.	ovid the the
A17	12.05.2020	Supplemental agreement of loan hypothecation executed by the 1^stdefendan favour of the applicant bank.	cum t in
A18	12.05.2020	Guarantee agreement executed by defendants 2 to 5.	the
A19	12.05.2020	Guarantee agreement executed by the defendant.	6^th
A20	12.05.2020	Declaration executed by the 1^stdefendant.
A21	25.05.2020	Declaration cum undertaking executed by the defendant.	2^nd
A22	12.05.2020	Demand promissory note for Rs.50,00,0 executed by the 1^stdefendant in favour of applicant bank.	00/- the
A23	12.05.2020	D.P. Note delivery letter executed by the defendant.	1^st
A24	12.05.2020	Balance confirmation letter issued by the defendant confirming the balance as 31.03.2020.	1^st on
A25	12.05.2020	Revival letter executed by the defendants.
A26	11.05.2020	Declaration cum undertaking executed by the defendant.	1^st
A27	15.05.2020	Affidavit cum declaration executed by the defendant.	2^nd
A28	12.05.2020	Letter issued by the 1^stdefendant confirming execution of the guarantee agreement defendants 2 to 6.	the by
A29	12.05.2020	Letter issued by the 2^nddefendant confirming execution of guarantee agreement.	the
A30	12.05.2020	Letter issued by the 3^rddefendant confirming execution of guarantee agreement.	the

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OA 140/2022

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A31	12.05.2020	Letter issued by the 4^thdefendant confirming execution of guarantee agreement.	the
A32	12.05.2020	Letter issued by the 5^thdefendant confirming execution of guarantee agreement.	the
A33	12.05.2020	Letter issued by the 6^thdefendant confirming execution of guarantee agreement.	the
A34	12.05.2020	End use certificate issued by the 1^stdefendant	.
A35	19.01.2019	Declaration cum undertaking executed by the defendant.	1^st
A36	12.05.2020	Security delivery letter executed by the defendant.	1^st
A37	12.05.2020	Security delivery letter executed by the defendant.	2^nd
A38	12.05.2020	Balance confirmation letter issued by defendants in respect of cash credit account term loan account.	the and
A39	12.05.2020	Balance confirmation letter issued by the defendant in respect of term loan account.	1^st
A40	06.11.2020	Letter issued by the 1^stdefendant for deferm of interest in view of Covid-19 regula package.	ent tory
A41	01.09.2020	Letter of arrangement issued by the applic bank and duly signed by the defendants.	ant
A42	30.11.2020	Letter of arrangement issued by the appli bank and duly signed by the defendants.	cant
A43	09.12.2020	Supplemental agreement of loan hypothecation executed by the 1^stdefendan favour of the applicant bank.	cum t in
A44	09.12.2020	Guarantee agreement executed by defendants 2 to 5.	the
A45	09.12.2020	Guarantee agreement executed by the defendant.	6^th
A46	09.12.2020	Letter issued by the 2nd defendant confirm the execution of guarantee agreement.	ing
A47	09.12.2020	Letter issued by the 3rd defendant confirming execution of guarantee agreement.	the

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OA 140/2022

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A48	09.12.2020	Letter issued by the 4th defendant confirming the execution of guarantee agreement.
A49	09.12.2020	Letter issued by the 5th defendant confirming the execution of guarantee agreement.
A50	09.12.2020	Letter issued by the 1^stdefendant to the applicant bank
A51	09.12.2020	Security delivery letter executed by the defendants 1, 2 and 5.
A52	09.12.2020	Demand promissory note for Rs.72,00,000/- executed by the defendants in favour of the applicant bank.
A53	09.12.2020	D.P. Note delivery letter executed by the defendants.
A54	14.12.2020	Extract of the minutes of the meeting of Board of Directors of the 1^stdefendant.
A55	14.12.2020	Extract of the minutes of the meeting of Board of Directors of the 1^stdefendant.
A56	09.12.2020	Resolution for the Board of Directors of the 1^st defendant.
A57	09.12.2020	Letter issued by the defendants acknowledging receipts of the draft copies of loan documents.
A58	26.10.2021	Office copy of the lawyer notice issued to the defendants.
A59	..	Postal acknowledgement card evidencing the receipt of Ext.A58 notice by the 1^stdefendant.
A60	..	Postal acknowledgement card evidencing the receipt of Ext.A58 notice by the 2^nddefendant.
A61	..	Postal acknowledgement card evidencing the receipt of Ext.A58 notice by the 3^rddefendant.
A62	..	Postal acknowledgement card evidencing the receipt of Ext.A58 notice by the 4^thdefendant.
A63	..	Postal acknowledgement card evidencing the receipt of Ext.A58 notice by the 5^thdefendant.
A64	..	Postal acknowledgement card evidencing the receipt of Ext.A58 notice by the 6^thdefendant.
A65	11.02.2022	Statement of account duly certified with respect to Cash Credit Account No.38207354342.

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OA 140/2022

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A66	11.02.2022	Statement of unapplied but accrue the Exhibit A65 account together interest duly certified.	d interest in with rate of
A67	11.02.2022	Statement of account duly certified to Term Loan Account No.383266028	with respect 13.
A68	11.02.2022	Statement of unapplied but accrue the Exhibit A67 account together interest duly certified.	d interest in with rate of
A69	11.02.2022	Statement of account duly certified to CCECL Account No.39317626442.	with respect
A70	11.02.2022	Statement of unapplied but accrue the Exhibit A69 account together interest duly certified.	d interest in with rate of
A71	11.02.2022	Statement of account duly certified to GECL Account No.39868746088.	with respect
A72	11.02.2022	Statement of unapplied but accrue the Exhibit A71 account together interest duly certified.	d interest in with rate of

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Defendants’ Exhibits – Nil

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PRESIDING OFFICER

OA 140/2022

SCHEDULE

Stocks of raw material, finished goods, receivables and other current assets in the premises of the 1^st defendant.

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PRESIDING OFFICER

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated the 5^th December, 2025

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OA NO.140/2022

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Between

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State Bank of India, SME Branch, State Bank Bhavan, Kovilakathumpadam P.O., Thiruvambady, Thrissur – 680 022. …Applicant

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And

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M/s.Steel House Private Limited, Registered Office at: Building No.VI/412A, Chembukkavu, Thrissur - 680 020, represented by its Managing Director, Tenny Jose & 5 others. ...Defendants

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F I N A L O R D E R

State Bank of India v. M/S Steel House Private Limited

Case brief

What is this about?

What did the court decide?

State Bank of India v. M/S Steel House Private Limited

Case brief

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