Allowed

M/S. Uco Bank v. Church Pg College

DRT18 Sept 2025OA/169/2022

Case brief

AI extract

What is this about?

The DRT allowed the banks original application for recovery of debts. Rejecting claims of blank signatures and lack of evidence, the court held respondents liable for the principal amount plus future simple interest at 12.35% per annum and ordered proceeding against secured properties.

What did the court decide?

Direct recovery of Rs. 1,51,28,410.19 plus future simple interest at 12.35% p.a.; enforcement against schedule assets and person/properties of respondents; costs.

M/S. Uco Bank versus Church Pg College — Execution and Attachment | 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. PRESIDING OFFICER

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ORIGINAL APPLICATION NO. T69 OF 2022

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N4/s. UCO Bank lvl.G. Road Branch 62, MG Road Secunderabad Hyderabad-3 Rep by its Senior Manager. .......Applicant.

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Versus

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Church PG College Represented by its Secretary, G-2, SBI Colony Baqh Amberpet Hyderabad-500 013.

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Church Educational Society, G-2, SBI Colony Bagh Amberpet. Hyderabad, Telangana - 13.

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

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Mrs. N. Yashoda Wo^Ivl r.^{Late N.} Seethaiah, 2-2-647 /77 /G2 Bagh Amberpet, Hyderabad.

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Mr. N. Ramesh Babu S/o. Late N. Seethaiah, General Secretary fu*

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Tarakarama Educational Society, c-2, SBI Colony Bagh Amberpet, Hydera bad - 500013.

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N4 rs. N. Sulochana wo.^tYr. N. Raja Babu, G-2, SBI Colony Bagh Amberpet, Hyderabad - 500013.

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lYrs. N. Manjusha W/o. Mr. N. Ramesh Babu, G-2, SBI Colony Bagh Amberpet, Hyderabad - 500013.

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B. Ms. Mounica D/o. N. Raja Babu, G-2l SBI Colony Bagh Amberpet, Hyderabad - 500013.

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Mr. N. Anudeep G-2, SBI Colony Bagh Amberpet, Hyderabad - 500013.

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Ka rshak Vidya Parishad, G-2, SBI Colony Bagh Amberpet,

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Hyderabad - 500013.

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Ta ra karama Educational Society Rep by its Chairman G-2, SBI Colony Bagh Amberpet, Hyderabad - 500013.

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

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Aurora Educational Society, Street No.12 Chikkad^pally, Hydera bad - 500020.

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

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..... Defendants.

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Counsel for the Applicant : Mr. N.V. Subba Raju. Cou nsel for Defenda nts : M/s. V.V. Ramana.

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:: O-LLLR ::

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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.1,40,07,466.57Ps towards^{Cash Credit account and} Rs.11,20,943.62Ps towards^{FITL account fromdefendantswith} future interest @12.350/o and^{\2.45o/o per annumrespectively} with monthly rests from^{23.1L.2027till the date of realisation} and sale of OA schedule assets.

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The averments of applicant^{bank as per the OA, brlefly, are that} 1't defendant society established^{2nd defendantinstitute.} Defendants 7 and 2,^{represented by its Secretary, availeda} cash credit facility of^{Rs.1,25,00,000/- on 15.11.2008. Therate} of interest of the^{loan facility was75o/o p.a. with monthlyrests} subject to revlslon basing on^{changein primelending rate.} Defendant No.2 executed the^{loan agreement and the} hypothecation agreement in^{respect of OA Schedule-Agoods.} Defendants 3 to 7,¹⁰ and^{12 stood as guarantors to the loan} availed by 2nd^{defendantand executed respectiveguarantee} deeds dated 1s.11.2008.^Derendanr ^..ryry;^.

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agreement and the hypothecation agreement in respect of OA Schedule-A goods. Thereafter the credit facilities were renewed on 25.09.2018. Defendants 3 to 7 and 10 to 13 extended the mortgage over OA B-schedule properties on 16.11.2018 securing the loan availed by defendant No.2. Defendants also availed FITL facility during Covid pandemic period on 06.09.2020. Defendants defaulted in repayment resulting in classification of loan account as NpA and issuance of demand notice u/s 13(2) of the SARFAESI Act dated 27.06.202L. Applicant and legal notice dated 01.11.2021 demanding for payment of entire outstanding dues. 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 defendants have not executed the loan documents relating to availment of loans, renewals, 9uarantees, mortgages. FITL. Defendants were made to sign blank papers/documents/vouchers/agreements/letters without their free will which were subsequenuy filled in by the applicant bank for the purpose of the OA. Mere signatures of the defendants do not constitute a 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 27.06.2027 is liable to be set aside. Applicant failed to take into consideration the payments made by defendants correcuy while filing the present OA. Applicant added premature interest in the OA claim amount. Applicant ignored the losses and damages suffered by the 1st defendant and filed the present OA on vague, baseless and concocted

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grounds. The statement of account is not in terms of the provlsions of the Bankers Books of Evidence Act, 1891 and the same was not certified by competent^person. Applicant's^clalm is barred by limitation. Applicant is not entitled to the OA^claim or for sale of OA schedule asset.

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During the pendency of OA, learned 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^propertyof defendant No.3.

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The Applicant Bank examined K.R.R. Rajyalakshmi, Chief Manager as AW-1 and marked 12 documents through her as Ex. A.1 to Ex. A.12.

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Heard learned counsel appearing for the applicant 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^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 A.12 and accordingly^prayed to allowing the OA against the defendants 7, 2, 4 to¹⁴ and^{againstOA schedule} properties.

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Learned counsel appearing for the defenda nts would contend that the applicant has filed the present A by applying (u"t"

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abnormal 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 loan of Rs.12,30 ,toz/and deposited Rs.1,L2,OO,OOO/- into the toan account. The applicant bank has to deduct these amounts form the loan account. Applicant bank is required to charge simple rate of interest since the defendant being an educational institution. Therefore, learned counsel prayed for allowtng 60/o interest per annum. In support of his arguments, learned counsel placed reliance on the following judgements:-

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(i) Hon'ble High Court of Kerala in W.p. (C) No.79SS of 2020 dated 10.08.202 between Swaroop vs. State of Kerala & Ors. in WP(C) No.7988 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 (200s) BC 43;

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(ii, Hon'ble DRAT, Kolkota in Smt. D. Sandhya Bhaskar Sridevi and D. Srinivasa prasad Reddy in Appeal No.116 of 2023 decided on 15.05.2024.

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9. The point that arises for consideration is:-

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llthether the Applicant Bank is entitled for the OA cloim agoinst the Defendants l, 2 and 4 to 14 and against the OA schedule assets as prayedfor?

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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

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disprove the averments basing on the documents filed by the applicant bank. Under such circumstances, the evidence affidavit of AW-1 and the Exhibited documents through her remain unchallenged and unrebutted.

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Though the defendants in para 6 of the written arguments claimed to have cleared the FITL loan of Rs,12,30,102/- besides Rs.1,12,00,000/- 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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L2, Learned counsel for the defendants, during his arguments, prayed for consideration of future interest @6% 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 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 29.11.1999, 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 60lo simple interest from the date of plaint till 29.11.1999 basing on the judgement of the Apex Court reported in N. M. a v. Canara

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Bank - II (199& 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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t4. In the judgement of Hon'bl e DMT, Kolkata in Appeal No.tt6 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 DMT is subject to payment of 50% 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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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 KarurVysya Bank 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 Bhaskar Sridevi & Another, entertainment of appeal before the DRAT itself 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 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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-Lb. In the entire pleadings the defendants denied each and every averment of the OA lncluding 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. Further, they prayed to discharge them from the liability with costs. 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 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.A1 Demand Promissory Note was 15olo. Whereas the rate of interest claimed in the OA is 12.357o. Therefore, applicant bank voluntarily decreased the rate of interest to 12.350/o from the contracted rate of 15olo.

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t7. 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.12 marked on behalf of the Applicant Bank, I hold that Defendants l, 2 and 4 to L4, joinfly 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 Applicant Bank with future interest and costs.

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In the result, the present Original Appllcation No.169/2022 is allowed as under: -

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i) the defendants 7, 2 and 4 to 14 jointly and severally and defendants 6,8 and 9 to the extent of estate of defen(,".rr..r6ry;XO

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in their hands, are liable to pay to the applicant bank a total sum of Rs.1,51,28,410.19ps (Rs.1,40,07,466.57ps and Rs.11,20,943.62ps) along with interest @12.35olo per annum stmple fr-om 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 properties as described in the schedules to the OA and the applicant bank is entiHed to proceed against rne same tor recovery of its dues;

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