Allowed

m/S. Uco Bank v. Aurora Business School

DRT18 Sept 2025OA/163/2022

Case brief

AI extract

What is this about?

The confirmatory order adjudged upon the application filed by UCO Bank for recovery of dues. The Tribunal rejected the contention to reduce interest to simple 6% due to lack of evidence regarding payments and nature of institution. The application was allowed in favor of the bank and recovery certificate was issued.

What did the court decide?

Defendants jointly and severally liable to pay Rs. 1,28,41,853.45 with interest @ 13.35% p.a. simple and costs; bank entitled to proceed against mortgaged property.

m/S. Uco Bank versus Aurora Business School — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERY^{TRIBUNAL-II AT HYDEMBAD} DATED THIS THE EIGHTEENTH^DAY OF^{SEPTEMBER, 2025}

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PRESENT: SH. RAMESHWAR KOTHE,^{B.COM, L.LB. (HONS.), M.A.}

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PRESIDING OFFICER

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ORIGINAL APPLICATION NO, 163 OF²⁰²²

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

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.......Applicant.

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Versus

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Aurora Business School Represented by its Secretary G-2 SBI Colony, Bagh Amberpet Hydera bad- 500013.

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Au rora Educational Society, Street No.12, Chikkad^pally, Hyderabad - 500020.

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

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I4rs. N. Yashoda Wo^{Mr. Late N. Seethaiah,} 2-2-647 /77 /G2 Bagh Amberpet, Hydera bad.

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Mr. N. Ramesh Babu S/o Late N. Seetha iah, Genera I Secretary Tarakarama Ed ucationa I J\r.-< - ,,q (/"-Ottt"^u

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oa.163/2022

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	society, G-2l sBIcotony BaghAmberpet, Hyderabad-500013.
6.	Mrs. N.Sulochana W/oMr. N.RajaBabu, G-2,SBIColony BaghAmberpet, Hyderabad-500013.
7.	Mrs.N.Manjusha W/oMr. N.Ramesh Babu, G-2,SBI Colony BaghAmberpet, Hyderabad-500013.
	Ms.l,4ounica
	D/oN.RajaBabu G-2,SBI Colony BaghAmberpet, Hyderabad-500013.
9.	Mr.N.Anudeep, G-2,SBI Colony BaghAmberpet, Hyderabad-500013.
10.	KarshakVidyaParishad, G-2,SBI Colony BaghAmberpet, Hyderabad-500013.
11.	TarakaramaEducational Society, RepresentedbyitsChairman, G-2,SBI Colony,BaghAmberpet, Hyderabad-500013.
t2.	Kamareddy Educational Society, G-2,SBIColony,BaghAmberpet, Hyderabad-500013.
13.	Church Educational Society, G/2,SBI Colony,BaghAmberpet, Hyderabad, Telangana-13.-,NOrlc''

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oa.t6312022

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Ravi Rishl Educational Society, G-2, SBI Colony, Bagh Amberpet, Hyderabad - 500013.

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..... Defenda nts.

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: Mr. N.V. Subba Mr. N.V. Subba N.V. Subba Raju.

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Counsel for the Applicant : Mr. N.V. Subba Mr. N.V. Subba N.V. Subba Counsel for Defendants : M/s. V.V. Ramana.

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:: CLLLEB ::

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The Applicant Bank filed the^present OA u/s^{19 of The Recovery} of Debts & Bankruptcy Act, 1993^{for recovery of a sum of} Rs.1,18,91,060.18Ps towards Cash Credit account^and Rs.g,50,793.27Ps towards FITL account from^{defendants with} further interest @ 13.35olo and 13.45olo^{per annum respectively} with monthly rests from 23.17.2027 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} 1't defendant institution established by^{2nd defendantsociety,} represented by its Secretary availed a loan facility^of Rs.1,00,00,000/- on 04.09.2008.^{Defendant No.1 executed the} required loan documents/hypothecation agreement. The^rate of interest of the loan facillty^{was 760/o p.a.} with^monthlyrests subject to revision. Defendants 3 to 7 and 10 to 14^being guarantors executed agreements of guarantee dated 04.09.2008. The credit facilities^{were renewed} on^05.03.2015. Defendant No.1 hypothecated OA A-Schedule^{movableasset.} Defendants 3 to 7 and 10 to 13 confirmed/extended mortgage against OA B-schedule immovable^properties on^16.11.2018. Defendants availed FITL during Covid.19^period on 06.09.2020. Defendants defaulted in repayment leading to classification of loan account as NPA, followed by demand notice u/s 13(2) of Arn,. .c

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oa.r6312022

SARFAESI Act dated 2t.06.2021 and legal notice dated 01.11.20211. However, defendants failed to clear the dues. Hence, the present OA.

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Defendant No.1 filed written statement and defendants 2 to 14 adopted the same. The averments of the written statement, in brief, are that while admitting sanction of loan of Rs.1,00,00,000/- on 04.09.2008, defendants deny avaitment and renewal of loans. Defendants further deny execution of loan documents/guarantee and mortgage agreements by defendants 3 to 7 and 10 to 14 as the case may be, renewals/ enhanced limits/FlTL in 2OOB, 2015, 2018 and 2OZO. Defendants were made to sign various blank papers/ documents/vouchers/agreements/letters without their free will which were subsequently filled in by the applicant bank for the purpose of the OA. Mere signatures of the defendants do not constitute valid execution and subsisting right against the defendants. Hence, the documents are not admitted by the defendants. The accounts were classified as NpA without following the provisions of RBI norms. Therefore, the demand notice dated 27.06.2O2t is liable to be set aside. They deny of issuance of legal notice dated 01.11.2021. Applicant failed to take into consideration the payments made by defendants correctly while filing the present OA. Applicant added premature interest in the OA claim amount. The statement of account is not in terms of the provisions of the Bankers Book of Evidence Act, 1891 and the certification was not given by the competent persons. Applicant ignored the losses and damages sufFered by the 1st defendant and filed the present OA on vague, baseless and concocted grounds. The OA claim is barred by limitation. ffi**

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oA.L63/2022

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Applicant bank is not entitled to the OA claim or for sale of^OA schedule asset.

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During the^pendency of OA, Iearned counsel appearing for^the applicant filed a Memo reporting the^demise of^{DefendantNo.3} and defendants 6, 8 and 9 LRs of defendant^{No.3 being already} parties to the OA proceedings, are liable personally for payment of credit facilities and also to the extent of^property of defendant No.3.

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The Applicant Bank examined K.R.R. Rajyalakshmi,^Chief Manager as AW-1 and marked 15 documents through her as Ex. A. 1 to Ex. A.15.

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Heard learned counsel appearing for the appllcant and learned counsel appearing for the defendants. Perused the^written arguments 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^{liabilitydespite} 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 A.15 and accordingly^prayed to allowing the^OA against the defendants l, 2, 4 lo 14 and against^{OA schedule} properties.

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Learned counsel appearing for the defendants would^contend that the applicant has filed the^present OA by applying abnormal rate of interest and without^providing any statement of account to enable them to reconcile with their accounts^to know the accurate ou.r. ,uurn*ffiln$utd submit that the

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oA.76312022

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applicant bank has not taken into account the deposits made by the defendants. Defendants cleared FITL loan of Rs.12,6g,000/_ and deposited Rs.93,50,936/_ into the loan account. The applicant bank has to deduct these amounts form the loan account. Applicant bank is required to charge simple rate of interest taking into account the fact of defendant being an educational institution. Therefore, learned counsel prayed for allowing 60lo interest per annum. In support of his arguments, learned counsel placed reliance on the following judgements:_

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(, H9y'ble High Courr of Kerata in Wt.p. (C) No.79BB of 2020 dated 10.0g.202 between Swaroop vs. State of Kerala & Ors. in Il/p(C) No.798g of 2020 decided on 10.08.2023:

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(ii) Hon'ble DMT, Madras in Karur Vysya Bank Ltd. vs. V.T.C. Builders and Anr. decided on-15.03.2002 (Eq. r (2003) BC 4j;

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(ii, Hon'ble DRAT, Kolkata in Smt. D. Sandhva Bhaskar Sridevi and D. Srinivasa prasad Reddy in Appeal No. I I 6 of 2023 decided on I 5.05.2024.

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The point that arises for consideration is:_

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Wether the Applicant Bank is entitled .for the OA claim against the Defendants l, 2 and 4 to 14 and against the OA schedule assets as prayed for?

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Defendants raised various irregularities and lapses on the part of the applicant bank. However, despite contending so, they failed neither to produce any documentary evidence in support of their contentions nor did they cross examine AW.1 to disprove the averments basing on the documents filed by the applicant bank' Under such circumstances, the evidence fu"o

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oA.L63l2022

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aFfidavit of AW-1 and the Exhibited documents through her remain unchallenged and unrebutted.

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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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t2. In the case of Karur Vysya Bank gupra), 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.15,42,9451- and agreed to pay the entire balance amount with 60lo simple interest from the date of plaint till 29.11,1999, the Court fee and Advocate fee before the learned Presiding Officer passed the order on 29.L1.t999. The total interest amount, adding the Court fee and Advocate fee works out to Rs.5,23,488/- and the balance suit claim works out to Rs.28,574l- 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 6Yo simple interest from the date of plaint till 29.11.1999 basing on the judgement of the Apex Court reported in N. M. Veerappa v. Canara Bank II 099& SLT 361. Needless to elaborate or emphasise^the exclusivity of the cited case and why the said ratio in the cited case cannot be applied to the case on hand.

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In the^judgement of Hon'ble DRAT, Kolkata in Appeal No.I16 of²⁰²³ (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 theX, It may not be out of ffi.*

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place to mention here that the appeal before DRAT is subject to payment of 50o/o of the disputed amount before entertaining the appeal itself. Whereas, in the case on hand, the borrower has not deposited any amount since the filing of the OA.

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t4. Before coming to any conclusion for granting relief on the rate of interest, I deem it appropriate to take into consideration the following aspects:-

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a) Firstly the defendant-borrower is not a charitable institution or NGO established for promoting education.

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b) Secondly, as already stated supra, in Karur Vysya Bantr case, the borrower already deposited entire disputed amount before the date of order of the learned^presiding Officer. Whereas in the case of Smt. D. Sandhya Bhas*ar Sridevi & Anothe4 entertainment of appeal before the DRAT itself is subject to deposit of 50o/o of the dues stipulated u/s ?t of the RDB Act. However, in the case on hand defendants have not made known their intention or willingness to 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, financial stakes involved and bonafides of the borrower.

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In the entire pleadings the defendants denied each and every averment of the OA including execution of loan documents itself. They totally rejected the OA claim 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 ffi*'

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oa.t63l2022

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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 assertions, defendants did not choose to place on record any essential particulars/material in support of their contentions. Nor did they choose to confront and cross examine AW.1 to substantiate their contentions. The contractual rate of interest as per Ex.A3 promissory note date was 16010. Whereas the rate of interest claimed in the OA is for 13.35olo. Therefore, applicant bank voluntarily decreased the rate of interest to 13.35o/o from the contracted rate of 16010.

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16, Though the defendants in para 6 of the written arguments claimed to have cleared the FITL loan of Rs.12,68,000/- besides Rs.93,50,936/- being deposited 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 observatlons, facts and circumstances of the case and the Evidence Affidavit of AW.1 coupled with the recitals in Exs. A.1 to A.15 marked on behalf of the Applicant Bank, I hold that Defendants l, 2 and 4 to t4,^jointly and severally and defendants 6, I and 9 to the extent of estate of deceased defendant No.3, are liable to^pay the OA claim to the Applicant Bank with future interest and costs.

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in the result, the present Original Application No.163/2022 is allowed as under: -

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i) the defendants l, 2 and 4 to 14^jointly and severally and defendants 6,8 and 9 to the extent of the estate of defendant No.3 now lying in their hands, are liable to^pay to the applicant bank a total sum of fu1**

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oA.76312O2Z

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Rs.1,28,41,853.45Ps (Rs.1,18,91,060.18ps + Rs.9,50,793.27Ps) along with interest @ 13.35o/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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iii) the applicant bank is also entitled to proceed against the person and properties of defendants t, 2 and 4 to 14 for realization of its dues; and

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iv) the applicant bank is entiUed for the costs.

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The Applicant Bank is directed to file Cost Memo within 2 weeks from the date of receipt of this Order.

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Issue Recovery Certificate accordingly.

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Communicate a copy of this order to the parties concerned and upload in Web Site. (Dictated to the steno, signed and pronounced by me in the open court on this the 18th day of September, 2025)

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frw.s (RAffESHWAR KOTHE) PRESIDING OFFICER

m/S. Uco Bank v. Aurora Business School

Case brief

What is this about?

What did the court decide?

m/S. Uco Bank v. Aurora Business School

Case brief

What is this about?

What did the court decide?

What the court decided

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