Allowed

M/S. Uco Bank v. Tarakarama Educational Society

DRT12 Sept 2025OA/162/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the Debts Recovery Application filed by UCO Bank for recovery of dues totaling Rs. 1.45 crore against educational society and its associates. The suit was based on cash credit and FITL accounts. The court rejected defendants' contentions regarding invalid execution and improper interest rates, noting lack of evidence for paid amounts and denial of liability.

What did the court decide?

Defendants liable to pay total of Rs. 1,45,25,974.57 with interest at 11.95% p.a. to applicant bank along with costs; OA claim secured by hypothecation/mortgage.

M/S. Uco Bank versus Tarakarama Educational Society — Banking and Recovery | DRT (2025)

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PRESENT: SH. RATYESHWAR KOTHE, B.Com, L.LB. (Hon< r v a

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PRESIDING OFFICER

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OR]GINAL APPLICATION NO. 162 OF 2022

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M/s. UCO Bank M.G. Road Branch 62, MG Road Secunderabad Hyderabad-3 Rep by its Senior Manager,

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.......Applicant.

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Versus

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TarakaramaEducationalsociety, Rep re_sented by its Chairman, 9-?,^{Spr Cotony,BaghAmberpet,} Hyderabad^_ SOOOtj.

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Aurora Research and Technological Institute, Formerly Known as Ramappa Engineering College, Represented by its Secretary, 9-2.,^{SBI Cotony,Baghembeipet,} Hyderabad - 500013.

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l. N. Raja Babu, S/o. Mr.Late N. Seethaiah, Chairman, Tarakarama Educational Society, G-2, SBI Colony Bagh Amberpet. Hyderabad - 500013.

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I.:.N.^yashoda, Wo Mr.Late N.Seethaiah, 2-2-647 /77 /cZ, Bagh Amberpet, Hyderabad.

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I. N. Ramesh Babu, S/o Late N. Seethaiah, General Secretary, Tarakarama Educational Society, G-2, SBI Colony, Bagh Amberpet, Hyderabad - 500013.

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Mrs. N. Sulochana, Wo Mr. N. Raja Babu, G-2, SBI Colony, Bagh Amberpet, Hyderabad - 500013. ,,'20, ?Y*o"

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	14rs.N.Manjusha,Wo^{Mr. N. RameshBabu,} G-2,SBIColonY,^{BaghAmberpet,} Hyderabad-^500013.
8.	Ms.Mounica,^{D/o N.RaiaBabu,} G-2,SBI Colony,^{BaghAmberpet,} Hyderabad-^500013.
9.	Mr.N.Anudeep, G-2,SBI Colony,^{BaghAmberpet,} Hyderabad-^500013.
10.	Karshak VidYa^Parishad, G-2,SBI^{Colony,BaghAmberpet,} Hyderabad-^500013.
11.	Church Educational^Soclety, G/2,SBICotonY,^{BaghAmberpet,} Hyderabad,^Telangana-^13.
12.	Kamareddy^{Educational Soclety,} G-2,SBI Colony,^{BaghAmberPet,} Hyderabad-500013.
LJ.	AuroraEducational^Soclety, StreetNo.12,ChikkadPallY, Hyderabad-500020.
14.	Ravi Rishi Educational^Society, G-2,SBI Colony,^{BaghAmberPet,} Hyderabad-500013. .....Defendants.
	CounselfortheApplicant :Mr. N.V. SubbaRaju.
	CounselforDefendants :M/s. V.V.Ramana.
	::SLD-EB::
1.	TheApplicantBankfiledthe^presentOAu/s¹⁹of^TheRecovery
	ofDebts&BankruptcyAct,1993forrecoveryof asumof
	Rs.1,34.45,643.92PstowardsCashCreditaccountand
	Rs.10,80,330.65PstowardsFITLaccqlntfrom.defendantswlth //W"nth //,/'\t<br>'

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oa.762/2022

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future interest @ 11.95olo and 12.85% p.a. respectively with monthly rests from 23.77.2027 till the date of realisation and sale oF OA schedule properties.

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The averments of applicant bank as per the OA, briefly, are that defendant No.1 established an Engineering College in the name and style of Ramappa Engineering College. During the year 2008, 2^d defendant availed a cash credit facility of Rs.1.25 crores vide sanction letter dated 17.09.2008. Defendants 1 and 2 represented by its Secretary executed all the required loan documents. The rate of interest of the loan facility was 16010 p.a. with monthly rests subject to revision as and when prime lending rate changes. The OA A-schedule goods were hypothecated against the loan. During the year 2014, the name of Ramappa Engineering College was changed to Aurora,s Research and Technological Institute i.e. the 2nd defendant herein. The credit limits were renewed/enhanced from time to time and the last such extensions weTe on 05.03.2015 and 25.09.2018. Defendants 3 to 7 and 14 executed agreements of guarantee dated 05.03.2015 towards the liability of defendants 1 and 2 up to a limit of Rs.1.25 crores and interest thereon from time to time. Defendants 3 to 7 and 10 to 13 created mortgage by way of extension of mortgage of OA schedule-B properties on 16.11.2018 for the loan availed by defendants 1 and 2. Defendants also availed FITL facility during Covid period vide sanction letter dated 06.09.2020. Defendants failed to repay the loan amounts as per agreed terms. As a result, the loan account classified as NPA as per RBI norms, followed by demand notice u/s 13(2) of the SARFAESI Act dated 27.06.2027 and thereafter leqal notice dated 01.11.2021

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,Np*'q

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demanding^{for payment of entireoutstandingdues' However'} defendants^{failedto clear the dues Hence' the present OA'}

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Defendant^{No.1 filed written statement on 2l 'lz'2022and} defendants^{2 to 14 adoptedthe samevide memo of theeven} date. In the^{written statement, defendants denied availmentof} loan, execution of^{loan documents, guaranteeand mortgage} deeds, avallment of^{FITL facility during Covid, renewals/} enhancement of^{limits. They have signed various blank papers/} documents/vouchers/ agreements/letters^{without their free will,} which were subsequently filled by the^applicant bank^{for the} purpose of the OA. It ls contended that mere signatures of the defendants do not constitute a valid execution.^Hence defendants do not admit sald documents. They contend that^the accounts were classified as NPA without following the^provisions of RBI norms. The demand notice dated 21.06.2027 is liable to be set aside. Appllcant falled to take into consideration the payments made by defendants while filing the present OA. Applicant added premature interest in the OA claim amount. Applicant ignored the losses and damages incurred by the 1't defendant and filed the present OA on vague, baseless and concocted grounds. Applicant's claim is barred by limitation. Applicant is not entitled to the OA claim along with future interest @11.95olo /L2.85o/o per annum i.e., the present rate of interest. With these contentions/ defendants prayed to discharge them from the OA claim with costs.

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During the pendency of OA, learned counsel appearing for the applicant reported that Defendant No.3 expired and defendants 6, 8 and 9 are the LRs of defendant No.3. They are already party to the OA and personally liable to the applicant bank with Altg.',.'^,{" (l/ ''Y-

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respect to the credit facilities. Applicant filed a Memo to this effect on 03.0t.2024.

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The Applicant Bank examined K.R. R. Rajyalakshmi, Chief

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Manager as AW-1 and marked 16 documents through her as

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Ex. A.1 to Ex. A.16.

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The defendants right of adducing evidence was forfeited vide

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docket order dated tt.04.2025,

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Heard learned counsel appearing for the applicant and learned counsel appearing for the defendants. perused the written ar9uments filed by the defendants and the material placed on record.

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Learned counsel appearing for the applicant bank would submit that the defendants have failed to discharge the liability despite notice. He contended that the OA claim is amply proved through the evidence affidavit of AW_1 coupled with recitals in Exs.A.1 to 4.16 and accordingly prayed to allowing the OA against the defendants l, 2, 4 to 14 and against OA schedule properties.

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Learned counsel appearing for the defendants would contend that the applicant has fited the present OA by applying exorbitant rate of interest and without providing any statement of account to enable them to reconcile with their accounts to know the accurate dues. Learned counsel would submit that the applicant bank has not taken into account the deposits made by the defendants. Defendants cleared FITL account besides depositing Rs.86,03,S76l- into the loan account and the applicant bank has to give du(' *'o"dq;aTe' AP,ricant

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o A.762/2022

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bank is required to charge simple interest as the defendant is an educational institution and not a cc rearned counser prayed ror arowins # ,#l rl;rl"rff.l prace of r7.g50/o or 72.850/o ou. unnum craimed in the oA. In support of his arguments, learned counser praced reriance on the following judgements :^_

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(, o":)2,: fish.f,9urr^{tf Keratain ilt.p.} (() No.7e8B

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'/r ?' ! "^{u t o.oa. i o z i,,',i",'} r..11,oy,on vs. s tqte in wP(C) No 7e88 qrzifio a"iii")

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(i, f.i:iru,:DR4T. Ma,tr.ts in Karur t/ysya Bonk Lkt. vs. und Anr ctecided on t5.03.2002 (Eq.

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(ii, !:;1,:^{?*llK.ttkatain smr. D sancthya Bho.skar} rt I t'n::(^2 i (,J 2t)) j tet.ittetl^'\trinivttta tn ,r.or.ro!i.,d,^{Prasadin Appeot}

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The point that arises for consideration is:_

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Ayntiynr Benk is enlitted for the f:':i;:': t t t,m u4u.inst tfu D''fendantr t' 2 qnd I b t'1 qndr-oRoin.\l rhr' ()A schedule uss?ts qs. praycd.[or?

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Defendants raised various irregularities a nd lapses on the part of the appricant ourr. l"^,^,::.'^:''lt'"t. contendins so, they raired neither ," J::."'il":::,::TJ: of their contentions ":.-';1""::1'rrentary evidence in support examine AW 1 'o filed by the m::::,:"#,:1",1i^{;"1^".,::,} affidavit o, o-, 'no"t^{such t'ttu"tu""ents} rema n,n.r,u unsui:1J::.=.il.'];;Ul;,'T.*lT::

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oA.t62l2022

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t2. Learned counsel for the defendants, during his arguments, prayed for consideration of future interest @60lo per annum in the light of the judgements cited supra for the reason of the loan having been availed for running the educational institute of defendant No.1.

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In the case of Karur Vysya Bank (supra), the relief sought for was with regard to the rate of interest. In the cited case, the borrower had already paid a sum of Rs,15,42,945/_ and agreed to pay the entire barance amount with 60lo simpre interest from the date of praint tiil 29.11.1999, the court fee and Advocate fee before the learned presiding Officer passed the order on 29.11,1999. The total interest amount, adding the Court fee and Advocate fee works out to Rs.5,23,4gg/_ and the balance suit claim works out to Rs.2g,574l- totalling to Rs.5,52,062/. The defendants paid the entire balance amount of Rs.5,52,062/ by way of a cheque. Considering these aspects, learned Presiding Officer ordered on 30.11.1999 to pay 60lo simple interest from the date of plaint till 29.11.1999 basing on the judgement of the Apex Court reported in N. M. Veerapoav. Canora Bank - II (1998) SLT 361. Needress to eraborate or emphasise the exclusivity of the cited case and why the said principle in the cited case cannot be applied to the case on hand.

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L4, In the judgement of Hon'bl e DMT, Kolkata in Appeal No.t16 of 2023 (supra),the issue pressed in the appeal was on the point of rate of interest only. In the cited case, the borrower challenged the rate of interest granted by DRT in the OA. It may not be out of place to mention here that the appeal before DRAT is subject to payment of 50% of the disputed amount before entertaininq the

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appeal itself.^{Whereas,in the caseon hand, the borrower has} not deposited^{anyamountsincethe fllingof the OA'}

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As per Exhibit A.4^{promissorynote dated 05.03 2015, the rate} of interest on the^{loan amountof Rs.1,25,00,000/-agreed to} wdl 140/o^per annum^{wlth monthly rests. whereas,the rate of} interest sought in^{the presentOA is 11.95olofor Cash Credit} account i.e., the^{prevailingrate of interest but not the} contracted rate.^{Therefore, the applicant bank has already} brought down the^{rate of interest to 11.95olofromthe agreed} rate of interest of^{14olo per annum in respect of the amounts} claimed in the^OA.

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10, Before coming to^{any conclusion over the aspectof grantingany} relief in the rate of^{interestln the present case, I deem it} appropriate to take^{into considerationthe followlng aspects:-}

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a) Firstly the defendant-borrower^{isnot a} charitable institution or^{NGO established for} promoting education.

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b) Secondly, as already^{stated supra,il Karw Vvsla} Banh case, the borrower^{already deposited} entire disputed amount^{beforethe date of order} of the learned Presiding^{Officer.Whereasin the} case of Smt. D. Sandhya^{BhaskatSfideti& Anothe4} entertainment of appeal^{before the DRATitself} is subject to deposit of^50o/o of^{the dues} stipulated u/s 21 of the^{RDB Act. However,in} the case on hand defendants have^{not made} known their intention or^{willingnessto deposit} the disputed amount either in^part or^{in full} unlike in the cited cases.

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c) Thirdly, relief in rate of interest cannot be^a uniform norm and the same has to^be considered^judiciously taking into account^the facts and circumstances, flnancial^stakes involved and bonafides or rn. Oouo*"A2rnr,

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oA.762/2022

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In the entire pleadings the deFendants denied each and every averment of the applicant bank including execution of loan documents itself. They totally rejected the OA claims and questioned the competency of person certifying the statements of account. There is no remorse on the part of the defendants for not discharging the liability. On the other hand, they prayed to discharge them from the liability with costs. Further, the pleadings are centred on in pin pointing irregularities in NPA classification, making use of blank/printed documents for filing the OA etc. Except making bald and baseless allegations, defendants did not choose to place on record any essential pa rticu la rslmateria I in support of their contentions. Nor did they choose to confront and cross examine AW.1 to substantiate their contentions. In view of the foregoing observations, I am not inclined to decrease the interest component of the OA claim.

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Though the defendants ln para 6 of the written arguments claimed to have cleared the FITL loan of Rs.14,42,000/- besides paying Rs.86,03.576l- into the loan account, no evidence is placed on record to substantiate the same. Hence this aspect needs no consideration.

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In view of the foregoing observations, facts and circumstances of the case and the Evidence Affidavit of AW.1 coupled with the recitals in Exs. A.1 to A.16 marked on behalf of the Applicant Bank, I hold that Defendants 1, 2 and 4 to 74, jointly and severally and defendants 6,8 and 9 to the extent of estate of deceased defendant No.3, are liable to pay the_OA claim to the Appticant Bank with future interest ano costsp{xdrf

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oAJ,6212022

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In the result, the present Original Application No.16212022 is allowed as under: -

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i) the defendants 7, 2 and 4 to 14 joinUy and severally and defendants 6,8 and 9 to the extent of the estate of defendant No.3 now lying ln their hands, are liable to pay to the applicant bank a total sum of Rs.l,45,25,97 4.57Ps (Rs. 1,34,45,643.92ps + Rs.10,80,330.65Ps) along with interest @ 11.95o/o per annum simple from the date of application till the date of realization;

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ii) the OA claim is secured by way of hypothecation/mortgage of property as described in the schedules to the OA and the applicant bank is entitled to proceed against the same for recovery of its dues;

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