Allowed

Central Bank of India v. M/S. Prabhu Communication

DRT29 Jul 2025OA/201/2023

Case brief

AI extract

What is this about?

The Tribunal allowed an admission in the original application and granted a recovery certificate. Interest up to the filing date was kept at the contractual rate, while future interest was reduced to 9% p.a. simple interest based on equitable principles and the Supreme Court judgment in Central Bank of India Vs. Ravindra.

What did the court decide?

Recovery certificate issued for Rs. 21,69,526/- with interest at 9% p.a. simple from the date of the order till realization; contractual rate applied up to the date of filing.

Central Bank of India versus M/S. Prabhu Communication — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this the 29^th day of July, 2025

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PRESENT: SHRI SHARANG DHAR UPADHYAY Presiding Officer

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OA No.201 of 2023 &

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IA No.930 of 2025

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IA No.930 of 2025

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M/s Prabhu Communication

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Rep. by its Proprietor

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Mr. R. Herson Prabhu

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Padma Auto Service & Co., Ambica Petrol Bunk No.4/3, Old Bye Pass Road

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Vellore – 632 004

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Mr. R. Herson Prabhu Son of Late S. Ruban & Late Mrs. R. Fathima Door No.4/131, SF 498/4 SLRT & C Road Sathiyapuram, Sevoor Post Vellore – 632 106 …Petitioners / Defendants 1 & 2

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Versus

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The Authorised Officer Central Bank of India CMC Hospital Branch, Arcot Road Thottapalayam, Opp. CMC Vellore – 632 004 Rep. by its Authorised Officer

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…Respondent / Applicant Bank

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OA No.201 of 2023

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Central Bank of India CMC Hospital Branch, Arcot Road Thottapalayam, Opp. CMC Hospital Vellore – 632 004 Rep. by its Authorized Officer Mr. S. Ravichandran, Son of S. Selvapandian

…Applicant

Versus

M/s Prabhu Communication Represented by its Proprietor Mr. R. Herson Prabhu, Son of Late S. Ruban & Late Mrs. R. Fathima Padma Auto Service & Co., Ambica Petrol Bunk No.4/3, Old Bye-Pass Road Vellore – 632 004 2. Mr. R. Herson Prabhu Son of Late S. Ruban & Late Mrs. R. Fathima Door No.4/131, SF 498/4 SLRT & C Road Sathiyapuram, Sevoor Post Vellore – 632 106 3. Mrs. R. Ruby Priscila Daughter of Late S. Ruban & Late Mrs. R. Fathima Door No.4/131, SF 498/4 SLRT & C Road Sathiyapuram, Sevoor Post Vellore – 632 106 4. R. Abitan Prabhu Son of Late S. Ruban & Late Mrs. R. Fathima Door No.4/131, SF 498/4 SLRT & C Road Sathiyapuram, Sevoor Post Vellore – 632 106 …Defendants

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Counsels on Record / Appeared

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Counsel for Applicant : M/s K. Nazir Ahmed Counsel for Defendants 1 & 2 : M/s K.J. Parthasarathy Defendants 3 and 4 placed ex-parte on 12.12.2023.

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FINAL ORDER

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IA No.930 of 2025

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This application is filed praying to permit the Petitioners / Defendants to

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submit to the decree / allow this application and consequently allow the OA claim with reasonable simple interest to be fixed by this Tribunal.

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Heard the Ld. Counsels appearing on behalf of both the parties.

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During the course of the arguments, both parties had conceded to the OA claim and were differing only on the levy of subsequent interest from the date of OA till the date of realization and submitted that appropriate order may be passed. Ld. Counsels also filed the citations relied upon by them in support of their contentions.

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Hence, this IA is allowed and the OA is taken up for passing orders.

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OA No.201 of 2023

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The OA is filed for recovery of an aggregate sum of Rs.21,69,526/- from the defendants 1 to 4, jointly and severally comprising of a sum of Rs.16,13,247/- together with interest at the rate of 12.1% per annum being the amount due under OD Loan Account No.3260432931 and Rs.5,56,279/together with interest at the rate of 9.60% per annum being the amount due under Term Loan Account No.4006785709 and for sale of schedule mentioned property.

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The brief facts of the case may be stated as follows: -

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(a) The 1^st defendant is a Proprietorship firm represented by 2^nd defendant as its Proprietor. The 2nd defendant availed certain facilities to the extent of Rs.10,00,000/- in the year 2013 from the applicant and to that effect Mrs. R. Fathima, mother of defendants 2 to 4 herein created equitable mortgage over the schedule mentioned property by way of deposit of title deeds vide Memorandum of Deposit of Title

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deeds dated 22.05.2013 registered as Doc. No.4713 of 2013 on the file of SRO, Katpadi. The said Mrs. Fathima died on 21.03.2015 leaving behind defendants 2 to 4 as her legal heirs, who inherited the properties and became joint owners of the same.

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(b) Subsequently, the 1^st defendant company represented by its Proprietor, the 2^nd defendant further availed Rs.5,00,000/- as enhanced facility from the applicant bank and upon such enhancement, the total facility availed was Rs.15,00,000/- under Loan Account No.3260432931 and accordingly executed the loan documents on 7.8.2015. The defendants 3 and 4 executed guarantee agreement on 7.8.2015. The defendants 2 to 4 created equitable mortgage over the schedule mentioned property by way of deposit of title deeds by executing Memorandum of Deposit of Title deeds dated 11.8.2015 registered as Doc. No.6927 of 2015 on the file of SRO, Katpadi.

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(c) The 2^nd defendant in his personal capacity availed a Term Loan of Rs.5,00,000/- on 09.01.2018 and executed necessary loan and security documents. The defendants 3 and 4 executed guarantee agreement thereby guaranteeing due repayment of the said facility on 9.1.2018. Defendants 2 to 4 extended the mortgage to secure the said facility by executing Supplemental Memorandum of Deposit of Title deeds dated 11.5.2018 registered as Doc. No.3209 of 2018, SRO, Katpadi.

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(d) The 1^st defendant represented by 2^nd defendant acknowledged

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the outstanding amount payable to the applicant as on 31.3.2021 by executing Letter of Acknowledgement of Debt dated 31.3.2021 in Term Loan Account No.4006785709.

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(e) The defendants defaulted in repayments in the above two facilities and failed to clear the outstanding dues despite repeated demands and request. The applicant bank therefore classified the loan accounts as NPA on 29.5.2019. The applicant bank invoked the provisions of SARFAESI Act and issued the demand notice under Section 13(2) of the Act on 01.06.2019. Despite the said notice the defendants failed to make the repayments. Hence the present OA is filed for recovery of a sum of Rs.21,69,526/- being amount due under both the loan accounts viz., Rs.16,13,247/- under OD Loan Account and Rs.5,56,279/- under the Term Loan Account.

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The defendants 1 and 2 though entered appearance through their Counsel did not choose to file their written statement and hence the chance for filing written statement was closed on 05.03.2024. The defendants 3 and 4 were placed ex-parte on 12.12.2023.

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The applicant bank filed its proof affidavit along with original documents vide Dy No.8009 of 2024 dated 22.10.2024, however, the applicant bank is yet examine its witness for marking the documents.

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While so, the defendants 1 to 4 filed IA No.930 of 2025 for permitting them to submit to the decree for the OA claim amount of Rs.21,69,526/- and prayed for ordering reasonable pendente lite interest. After hearing both the parties, the said IA was allowed today i.e., 29.07.2025.

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The Ld. Counsel appearing on behalf of the applicant bank vehemently opposed to the grant of reduced interest and prayed for awarding the pendente lite interest at the contractual rate and relied upon the judgment of Hon’ble High Court of Delhi in “Canara Bank Vs. Marshall Cycle & Others” reported in 72 (1998) DLT 295 in support of his contentions.

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Whereas, on the other hand, the Ld. Counsel for the defendants submitted that the discretion vests with this Tribunal for award of pendente lite interest and prayed for award of pendente lite interest at reduced rates. The Ld. Counsel relied upon the judgments of Hon’ble Supreme Court in Central Bank of India Vs. Ravindra and Otheres reported in (2002) 1 SCC 367 and Punjab and Sind Bank Vs. Allied Beverage Company Private Limited and

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Others reported in (2010) 10 SCC 640 in support of his contentions.

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In the present Original Application filed under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, the defendants have chosen not to contest the claim and have voluntarily submitted to the decree, thereby avoiding protracted litigation and enabling an early adjudication. This cooperative stance is a material factor warranting consideration while determining the rate of pendente lite and future interest. While the applicant

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has claimed interest at the contractual rate as per the loan agreement, the Tribunal is vested with discretion under Section 19(20) of the RDB Act to determine the appropriate rate of interest from the date of filing till realization, having due regard to principles of equity, justice, and reasonableness. The Hon’ble Supreme Court in Central Bank of India v. Ravindra & Ors. (2002) 1 SCC 367 has clearly held that the courts and tribunals are not bound to apply the contractual rate for pendente lite or post-decree interest, and may exercise discretion to award a reasonable rate based on the facts of the case..

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Considering the above legal position and the cooperative conduct of the defendants, this Tribunal finds it appropriate to award pendente lite and future interest at a reduced rate of 9% per annum simple interest , while allowing interest up to the date of filing at the contractual rate as per the loan agreement. All other IAs, if any, pending stand closed.

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In the result, the application is allowed granting recovery certificate as follows:-

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(a) Applicant is entitled for a Recovery Certificate as against defendants 1 to 4, for a total sum of Rs.21,69,526/- together with further interest at the rate of 9% per annum (simple) on the amount as determined above and remained unpaid from the date of this OA till the date of its realization along with costs.

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(b) It is further ordered that any amount remitted by defendants or realized by the applicant bank during the pendency of this OA shall be

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given due credit to the loan account of the defendants on the respective dates.

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(c) It is ordered that in case of default by defendants to pay the amount adjudged, applicant bank is entitled to sell all or that part of the schedule mentioned property as is sufficient to answer the claim of Recovery Certificate and appropriate the sale proceeds towards amount due.

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(d) If the sale proceeds are not found sufficient, after defraying expenses of such sale for the payment of all such amounts, the defendants 2 to 4 are personally liable for the deficiency of adjudged amount with interest and costs until realization.

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The applicant bank is directed to file costs memo within two week of the receipt of this order.

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Issue recovery certificate in favour of the applicant bank in terms of the final order.

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Communicate a copy of the order to the parties concerned in terms of Rule 16 read with Rule 2(c) of DRT (Procedure) Rules, 1993.

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Sd/(SHARANG DHAR UPADHYAY) PRESIDING OFFICER DRT-II, CHENNAI

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(Dictated to PS, who typed in the system directly, corrected, signed and pronounced by me in Open Court, on this 29^th day of July, 2025)

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EXHIBITS MARKED BY APPLICANT BANK

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Though the Proof Affidavit was filed along with original documents, the

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applicant bank has not examined AW-1 for marking the documents.

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Sd/(SHARANG DHAR UPADHYAY) PRESIDING OFFICER DRT-II, CHENNAI

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DESCRIPTION OF PROPERTY

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All that piece and parcel of the RCC building constructed on the site

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measuring to an extent of 10 cents (i.e.,) 4360 Sq. ft. bearing Door No.4/131

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and comprised in Survey No.498/4 of Sevoor Village in Katpadi Taluk, Vellore District and within the limits of Sevoor Panchayat and situated within the Registration District of Vellore and Registration Sub-district of Katpadi and the

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entire land with the following boundaries:

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On the North by : Land of Chicken Farm On the South by : Battai On the East by : House of Ranjithammal and On the West by : North South Road

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Sd/-

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(SHARANG DHAR UPADHYAY) PRESIDING OFFICER

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DRT-II, CHENNAI

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