Allowed

Canara Bank v. S and S Electronics

DRT29 Aug 2025OA/1572/2023

Case brief

AI extract

What is this about?

The Tribunal allowed an Original Application filed by Canara Bank seeking a Recovery Certificate against five defendants for a default of over Rs. 9.95 crore. The defendants appeared ex parte. The Tribunal approved the claim but reduced the interest rate to 9% simple interest, ordering recovery jointly, severally, and personally.

What did the court decide?

Recovery Certificate issued for Rs. 9,95,35,492 including principal and 9% simple interest, to be recovered jointly, severally, and personally from defendants.

Canara Bank versus S and S Electronics — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 29^th Day of August, 2025

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Present: Sri. T. RAJESH Presiding Officer

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OA.No.1572/2023

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BETWEEN:

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Canara Bank, VV Puram Branch, @ No 550, Diagnol Road, Sajjan Rao Circle, Bangalore- 560004, Represented by: Its Assistant General Manager, Sri. Raju N Kori.

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…APPLICANT

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AND:

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M/s. S & S Electronics, Represented by its Partners, D2 & 3, #19, Ground Floor, 4^th Main, Chamarajpet, Bangalore- 560018.

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Also at:

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No. 952/A, Sundar Mahal, 14^th Cross, Hoskerahalli Main Road, Girinagar II Phase, Bangalore.

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Smt. Sumangala Ramesh Aithal, W/o Sri. Ramesh Aithal, R/at: No. 85, Yukthi 11^th Main, 3^rd Phrase, Avalahalli 3^rd Stage, Girinagara, Bangalore- 560055.

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Smt. Sarasawathi Shantha Rama Holla, W/o Mr. Shanthram Holla, R/a: #202, 100 Ft Ring Road, Ashwini Apartment, Kadirenahalli,

OA 1572/2023

Bangalore- 560070.

Sri. Ramesh Aithal, S/o Sri. K. Venkata Raman Aithal, R/at: No. 85, Yukthi 11^th Main, 3^rd Phrase, Avalahalli 3^rd Stage, Girinagara, Bangalore- 560055.

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Sri. Shantharam Holla, S/o Sri Achyutha Holla, R/a: #202, 100 Ft Ring Road, Ashwini Apartment, Kadirenahalli, Bangalore- 560070.

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...DEFENDANTS

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Counsel on record/appeared for:

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Applicant : C Vinay Swamy Defendants : Exparte

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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. 9,95,35,492/- (Rupees Nine Crore Ninety Five lakh Thirty Five Thousand Four Hundred and Ninety Two 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 defendant No.1 availed the following loans from the applicant:-

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Working Capital Limit of Rs. 8,75,00,000/- (Rupees Eight Crore Seventy Five Lakh Only)- defendants No.2 to 5 stood as

OA 1572/2023

guarantors.

GECL Loan of Rs. 1,70,00,000/- (Rupees One Crore Seventy Lakh Only)- defendants No. 2 to 5 stood as guarantors.

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Working Capital Term loan of Rs. 1,00,00,000/- (Rupees One Crore Only)- defendants No. 2 & 3 stood as guarantors.

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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 documents along with supplemental hypothecation agreement, undertaking letter, Charge and hypothecation of book debts agreement, guarantee agreement and guarantee covering letter and guarantee 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 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 exparte on 04.10.2024.

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The applicant had let in evidence through AW-1, who filed Proof Affidavit reiterating the contentions taken in the OA and also produced

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OA 1572/2023

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Exhibits A-3 to A-48 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 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 unrebutted as defendants remained exparte. The evidence tendered by the applicant remains uncontroverted and undisputed. The evidences put forth by the applicant were found admissible and are sufficient to prove availment of credit facilities as stated in the OA, creation of the hypothecation and the defaults committed in the accounts. The liability of the defendants and the claim of the amount due are also proved by the above documents. The claim of the applicant is well within the limitation.

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Hence in view of the findings arrived herein above, the Tribunal

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find both these issues in favour of applicant and hence, this Tribunal

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OA 1572/2023

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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 in view of the OA can be allowed with a reduced interest of 9.00% (simple).

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In the result, OA.No.1572/2023, stands allowed,

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

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Rs. 9,95,35,492/- (Rupees Nine Crore Ninety Five lakh Thirty Five Thousand Four Hundred and Ninety Two Only) with further interest @9.00 % p.a.(simple) which consists of:-

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a) Rs. 7,90,91,533/- (Rupees Seven Crore Ninety Lakh Ninety One Thousand Five Hundred and Thirty Three Only) from the date of filing OA till the realization, from the defendants Nos. 1 to 5 jointly, severally & personally, after giving credit to all the amount recovered and received during the pendency of the OA and allowed the same to

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be recovered by proceedings against the defendants Nos. 1 to 5 jointly, severally & personally and also proceeding against their assets including hypothecated assets.

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b) Rs. 97,31,516/- (Rupees Ninety Seven Lakh Thirty One Thousand

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Five Hundred and Sixteen Only) from the date of filing OA till the

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realization, from the defendants Nos. 1 to 5 jointly, severally &

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OA 1572/2023

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personally, after giving credit to all the amount recovered and received during the pendency of the OA and allowed the same to be

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recovered by proceedings against the defendants Nos. 1 to 5 jointly, severally & personally and also proceeding against their assets including hypothecated assets.

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c) Rs. 1,07,12,443/- (Rupees One Crore Seven Lakh Twelve Thousand Four Hundred and Forty Three Only) from the date of filing OA till the realization, from the defendants Nos. 1 to 3 jointly, severally & personally, after giving credit to all the amount recovered and received during the pendency of the OA and allowed the same to be recovered by proceedings against the defendants Nos. 1 to 3 jointly, severally & personally and also proceeding against their assets including hypothecated assets.

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Schedule of movable proprieties in the OA be the schedule to the recovery certificate.

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ii) The applicant bank is allowed cost of the proceedings which applicant to file cost memo within 7 days from the date of receipt of the order.

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iii) The Recovery Certificate to be drawn in terms of this order and transferred to Recovery for execution.

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

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OA 1572/2023

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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 (AJ), transcribed by her, corrected and signed and pronounced by me in the Open Court, this the 29^th Day of August, 2025].

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Sd/- (T. RAJESH)

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PRESIDING OFFICER

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Arun A Lakra, Senior Manager, of Applicant Bank.

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Exhibits on the part of the Applicant:

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Exhibit Nos.	Date	Particulars of Documents
A1	--	Applicant’s Evidence
A2	--	List of Documents
		Working capital limit of Rs. 8,75,00,000/- sanctioned on 24.01.2020 in A/c No 04401400000500
A3	25.02.2016	Partnership deed
A4	25.02.2016	Registration certificate
A5	24.01.2020	Supplemental Hypothecation agreement
A6	24.01.2020	Undertaking letter
A7	24.01.2020	Renewal letter
A8	24.01.2020	Charge and hypothecation of book debts agreement
A9	--	Power of attorney in favour of applicant
A10	24.01.2020	Guarantee agreement
A11	24.01.2020	Guarantee agreement
A12	24.01.2020	Guarantee agreement
A13	24.01.2020	Guarantee agreement

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OA 1572/2023

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A14	08.07.2021	Sanction memorandum
A15 to A18	26.07.2021	Letter from guarantor whenever limits are to be renewed
A19	26.07.2021	Letter of revival
		GECL Loan of Rs. 1,70,00,000/- sanctioned on 30.06.2020 in A/c No. 04409160000276
A20	02.06.2020	Application form
A21	30.06.2020	Sanction memorandum
A22	30.06.2020	Undertaking
A23	30.06.2020	Pronote by defendants on
A24	30.06.2020	Common hypothecation agreement
A25 to A 32	30.06.2020	Guarantee covering letter and guarantee agreement
A33	25.01.2023	Letter of revival
		Working capital term loan of Rs. 1,00,00,000/- sanctioned on 25.11.2021 in A/c No 170002417806
A34	01.11.2021	Application form
A35	26.11.2021	Sanction memorandum
A36	26.11.2021	Pronote
A37	26.11.2021	Cash credit agreement
A38	26.11.2021	Supplemental hypothecation agreement dated
A39	26.11.2021	Letter of undertaking
A40 & A41	26.11.2021	Guarantee covering letter and guarantee agreement
A42 & A43	26.11.2021	Guarantee covering letter and guarantee agreement
A44	17.04.2023	Recall notice
A45	25.04.2023	Postal acknowledgement
A46 to A48	--	Statement of accounts

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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/- (T. RAJESH) PRESIDING OFFICER

Canara Bank v. S and S Electronics

Case brief

What is this about?

What did the court decide?

Canara Bank v. S and S Electronics

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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