Allowed

City Union Bank Limited v. Ms Thiru Murugan Modern Rice Mill

DRT11 Apr 2025OA/9/2022

Case brief

AI extract

What is this about?

The Division Bench allowed the original application filed by City Union Bank Limited against five defendants, including a partnership firm and individuals, for recovery of total dues of Rs. 2,07,24,980/- under Sections 19(1) of RDB Act and 13(2) of SARFAESI Act, despite ex-parte placement of respondents. The bank succeeded in recovering a portion of the claim through asset sales during pendency; t

What did the court decide?

Allowed OA for recovery of Rs. 2,07,24,980/- jointly and severally, with interest and penal interest; directed credit for SARFAESI proceeds; liberty to sell remaining schedule property if not paid by

City Union Bank Limited versus Ms Thiru Murugan… — Contract and Commercial Disputes | DRT (2025)

¶1

O.A. No. 09 of 2022

¶2

11.04.2025

¶3

¶4

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

¶5

Dated this the 11^th day of April, 2025

¶6

Present: SMT. S.V. GOWRAMMA Presiding Officer

¶7

ORIGINAL APPLICATION No. 09 of 2022

¶8

CITY UNION BANK LTD., No.104, Illalur Road, Kanagapattu, Thiruporur – 603 110 Chengalpattu District

¶9

Represented by its Branch Manager

¶10

….Applicant Bank

¶11

- Vs -

¶12

M/s. THIRU MURUGAN MODERN RICE MILL A Partnership Firm Carrying on business at Village No.152, S/No.14/1A & 14/1B Kunnappttu Village Thirukazhukundram Taluk Kancheepuram District – 603 105

¶13

(Presently Chengalpattu District)

¶14

Mr.G.PALANIVEL S/o, Mr. Govindaraj

¶15

No.29, Old No.22, Pazhandiamman Koil Street, Kalavakkam Village, Thiruporur Taluk Kancheepuram District – 603 110

¶16

(Presently Chengalpattu District)

¶17

Mrs.P.DEVAKI, W/o Mrs. G.Palanivel No.29, Old No.22, Pazhandiamman Koil Street Kalavakkam Village, Thiruporur Taluk Kancheepuram District – 603 110 (Presently Chengalpattu District)

¶18

Mr.P.SIVAKUMAR S/o Mr. G.Palanivel

¶19

No.29, Old No.22, Pazhandiamman Koil Street

¶20

O.A. No. 09 of 2022

¶21

¶22

11.04.2025

¶23

Kalavakkam Village, Thiruporur Taluk Kancheepuram District – 603 110 (Presently Chengalpattu District)

¶24

Mr.P.SATHISHKUMAR S/o Mr. G.Palanivel No.29, Old No.22, Pazhandiamman Koil Street Kalavakkam Village, Thiruporur Taluk Kancheepuram District – 603 110 (Presently Chengalpattu District) … Defendants

¶25

Counsels on record / appeared:

¶26

Counsel for Applicant : M/s S. Anuradha Balaji

¶27

Defendants were set ex-parte on 29.07.2022

¶28

: - FINAL ORDER - :

¶29

This Original Application is filed on 03.09.2021 by the Applicant Bank under Section 19 (1) of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the Defendants jointly and severally for recovery of a total sum of Rs.2,07,24,980/- (Rupees Two Crores Seven Lakhs Twenty

¶30

Four Thousand Nine Hundred and Eighty only) as follows:

¶31

(i) A sum of Rs.1,60,99,725.41p due in respect of AGRI SEC OD

¶32

(Account No.512120020003741) together with interest at the rate of 12% p.a. at monthly rests together with penal interest @ 2% p.a. from the date of filing, till the date of realisation in full;

¶33

(ii) A sum of Rs. 46,25,255/- due in respect of WORKING

¶34

CAPITAL-TERM LOAN (Account 501712070000989) together

¶35

O.A. No. 09 of 2022

¶36

¶37

11.04.2025

¶38

with interest at the rate of 13% p.a. at monthly rests together with penal interest @ 2% p.a. from the date of filing, till the date of realisation in full; for sale of schedule mentioned hypotheca and immovable property along with costs of this application;

¶39

Brief Facts of the case:

¶40

The Applicant submits that the application is filed within the period of limitation as prescribed under Section 24 of the Recovery of Debts and Bankruptcy Act, 1993, and the subject recovery claim falls within the jurisdiction of this Hon’ble Tribunal.

¶41

It is the case of the applicant bank that the 1^st defendant is a partnership firm engaged in business of modern rice Mill, the 2^nd defendant is the Managing Partner of the 1^st defendant, the 3^rd to 5^th defendants are the Partners of the 1^st defendant firm which availed Secured OD and Working Capital Term Loan from the Applicant Bank. The 2^nd defendant mortgaged the property owned by him being Rice Mill Building with Machinery situated at Thirukalukundram Sub-Registration District, Thiruppur Taluk, Kunnapattu Village, situated in Punja Survey No.14/1B to an extent of 1 Acre and 10 Cents and in Survey No.14/1A2, Old Survey No.14/1A to en extent of 0.13 Cents and the 3^rd defendant had mortgaged her property being Residential Building situated within the Sub-Registration District of Thiruporur, Thiruporur Taluk, Kalavakkam,

¶42

O.A. No. 09 of 2022

¶43

11.04.2025

¶44

¶45

Pazhandi Amman Koil Street, Survey No.24/11, Old Survey No.24/8 part for an extent of 322 sq.mtr. or 3465 sq.ft, and the 1^st defendant represented by the 2^nd defendant as its Managing Partner and the 3^rd to 5^th defendants as its Partners have also hypothecated all the Stock and Machinery present at Thiru Murugan Modern Rice Mill, Village No.152, Survey No.14/1A and 14/1B, Kunnapattu Village, Thirukazhukundram Taluk, Kancheepuram District to secure the outstanding in both the loan accounts and the said properties are morefully described in the schedule hereunder.

¶46

It is submitted by the Applicant Bank that the 1^st defendant represented by 2^nd defendant as its Managing Partner, the defendants 3 to 5 as its Partner had sought for a AGRI SEC OD of Rs.1,25,00,000/-.

¶47

It is further submitted that considering the said request, the Applicant Bank sanctioned the AGRI SEC OD of Rs.1,25,00,000/- to the defendants on 31.01.2015. The said loan was sanctioned by the applicant to the defendant against the primary security of the Immovable Property owned by the 3^rd Defendant and commercial property owned by the 2^nd Defendant and collateral security of the machinery and equipments owned by the 1^st defendant.

¶48

The applicant bank submitted that the defendants 1 to 5 herein availed the AGRI SEC OD of Rs.1,25,00,000/- (Rupees One Crore and Twenty Five lakhs only) from the Applicant Bank on 31.01.2015. The

¶49

O.A. No. 09 of 2022

¶50

11.04.2025

¶51

¶52

said loan was periodically reviewed and renewed in the year 2016, 2017 and last such renewal was in the year 2019 when the 1^st defendant firm was reconstituted. In consideration thereof and to secure the same, the reconstituted 1^st defendant firm represented by 2^nd defendant as its Managing Partner and the 3^rd to 5^th defendants as its Partner had executed the following fresh loan documents in favour of the Applicant Bank on 20.03.2019:

¶53

i. Demand Promissory Note executed by the defendants 1 to 5 for a sum of Rs.1,25,00,000/- agreeing jointly and severally to repay the same together with interest at the minimum of 13.00% p.a. with monthly rests.

¶54

ii. Overdraft Rules for Running Account facility executed by the defendants 1 to 5

¶55

iii. Application-cum-Undertaking for Loan executed by the defendants 1 to 5

¶56

iv. Consent Letter of the Borrowers and Guarantors in Form 41 executed by the defendants 1 to 5

¶57

v. Agreement of Loan Cum Hypothecation vide Form No. 259 executed by the defendants 1 to 5.

¶58

vi. Letter of Continuity executed by defendants 1 to 5.

¶59

O.A. No. 09 of 2022

¶60

11.04.2025

¶61

¶62

vii. Guarantee Agreement executed by the 2^nd defendant.

¶63

viii. Guarantee Agreement executed by the 3^rd defendant.

¶64

It is submitted that at request of the 1^st defendant represented by 2^nd defendant as its Managing Partner and the 3^rd to 5^th defendants as its Partner, applicant bank had sanctioned Working Capital Term Loan of a sum of Rs.40,00,000/- (Rupees Forty Lakhs only) on 16.03.2019. The said loan was sanctioned by the applicant to the defendants against the primary security of the machinery owned by the 1^st defendant and collateral security of the Immovable Property owned by the 3^rd Defendant and commercial property owned by the 2^nd Defendant. The defendants agreed to repay the said Working Capital Term Loan together with interest at the rate 12.00% per annum.

¶65

The Applicant Bank submitted that the 1^st defendant represented by the 2^nd defendant as its Managing Partner and the 3^rd to 5^th defendants as its Partner availed Working Capital Term Loan of a sum of Rs.40,00,000/from the Applicant Bank on 21.03.2019. In consideration thereof and to secure the same, the 1^st to 5^th defendants had executed following loan documents in favour of the Applicant Bank on 21.03.2019:

¶66

a) Demand Promissory Note dated 21.03.2019 executed by defendants 1 to 5 for a sum of Rs.40,00,000/- agreeing jointly

¶67

O.A. No. 09 of 2022

¶68

11.04.2025

¶69

¶70

and severally to repay the same together with interest at the minimum rate of 12.00% p.a. with monthly rests.

¶71

b) Application-cum-Undertaking for Loan executed by the defendants 1 to 4

¶72

c) Consent Letter of the Borrowers and Guarantors in Form 41 executed by the defendants 1 to 4

¶73

d) Consent Letter for EMI Loans in Form 44 executed by the defendants 1 to 4

¶74

e) Guarantee Agreement dated 21.03.2019 executed by the 2^nd defendant.

¶75

f) Guarantee Agreement dated 21.03.2019 executed by the 3^rd defendant.

¶76

It is submitted by the Applicant Bank that to secure the outstanding in the said loan accounts, the 2^nd defendant mortgaged his immovable property being Rice Mill Building with Machinery situated at Thirukazhukundram Sub-Registration District, Thiruporur Taluk, Kunnapattu Village, morefully detailed in the OA schedule by deposit of original title deeds and confirmed the same by Memorandum of Deposit of title deeds dated 18.02.2015 registered as Doc.No.951/2015, S.R.O. Thiruporur and extended the said mortgage to cover the loan outstanding

¶77

O.A. No. 09 of 2022

¶78

¶79

11.04.2025

¶80

dues of the 1^st defendant for the enhanced OD limit and Working Capital Term Loan facility by Memorandum of Extension of mortgage by way of deposit of title deeds dated 19.03.2019 registered as Doc.No.1075/2019, S.R.O. Thiruporur, the 3^rd defendant mortgaged her immovable property being Residential Building situated within the Sub-Registration District of Thiruporur, Thiruporur Taluk, Kalavakkam, Pazhandi Amman Koil Street, morefully detailed in the OA schedule by deposit of original title deeds and confirmed the same by Memorandum of Deposit of title deeds dated 18.02.2015 registered as Doc.No.2338/2015, S.R.O. Thiruporur and extended the said mortgage to cover the loan outstanding dues of the 1^st defendant for the enhanced OD limit and working capital term loan facility by Memorandum of Extension of mortgage by way of deposit of title deeds dated 19.03.2019 registered as Doc.No.3598/2019, S.R.O. Thiruporur, and the 1^st defendant represented by 2^nd defendant as its Managing Partner and the 3^rd to 5^th defendants as its Partners hypothecated all the Stock and Machinery present at Thiru Murugan Modern Rice Mill, Village No.152, Survey No.14/1A and 14/1B, Kunnapattu Village, Thirukazhukundram Taluk, Kancheepuram District (presently Chengalpattu District) standing in the name of the 1^st Defendant.

¶81

It is submitted by the Applicant Bank that the defendants had utilized the loan disbursed and made huge profit in their business, however failed to repay the dues. There is continuous default in payment

¶82

O.A. No. 09 of 2022

¶83

¶84

11.04.2025

¶85

of the interest and the installments due to the Applicant Bank, leading to mounting of arrears of installments and interest dues. As the dues in the said loan accounts remained unpaid, Applicant Bank had classified the loan accounts as ‘Non-Performing Assets’ as on 30.12.2020, as per the RBI guidelines. The Applicant Bank has also proceeded against the defendants and demand notice under Section 13(2) of the SARFAESI Act was also issued to the defendants on 29.04.2021. The said notice was received by the defendants. However, no payment was made within the mandatory period. Hence, this Original Application (OA) has been filed to recover the dues from the defendants.

¶86

After the filing of the OA, summons were sent to the Defendants 1 to 5 through Registered Post with Acknowledgment Due, which was returned unserved with postal endorsement as ‘Addressee Left’ in respect of D-1, while summons to D-2 to D-5 are duly served. Applicant bank had caused paper publication of the notice in respect of D-1 and filed proof thereof. When OA was taken up on 29.07.2022 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, defendants 1 to 5 were placed ex-parte on 29.07.2022.

¶87

Heard the submissions of Applicant Bank and perused the records.

¶88

O.A. No. 09 of 2022

¶89

¶90

11.04.2025

¶91

To prove the case of the Applicant Bank, Mr. R. Deeban, Branch Manager, Illalur Branch representing the Applicant Bank, has filed his Affidavit by way of evidence and same was considered as evidence of AW-

¶92

1 and list of documents came to be marked as Ex A-1 to A-30 . As the Defendants remained ex-parte, the OA claim remains unchallenged. There is no contra evidence available on record to repudiate the claim of the Applicant Bank.

¶93

During the pendency of OA, applicant bank had reported part satisfaction of OA claim in a sum of Rs.1,48,00,000/- by way of sale of Item No.1 (Schedule immovable property) and Item No.3 (hypothecated machinery) under SARFAESI Act on 12.10.2022. Accordingly, part satisfaction was duly recorded and documents marked as Exhibits A-19, A-20, A-22 and A-24 are returned to applicant bank on 06.12.2022 under proper acknowledgment as per extant guidelines.

¶94

With regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled for a final order on the following terms:

¶95

O.A. No. 09 of 2022

11.04.2025

: O R D E R :

The OA is allowed with costs,

¶100

(a) The applicant bank is allowed to recover from the Defendants jointly and severally, a total sum of Rs.2,07,24,980/- (Rupees Two Crores Seven Lakhs Twenty Four Thousand Nine Hundred and Eighty only) as follows:

¶101

(i) A sum of Rs.1,60,99,725.41p due in respect of AGRI SEC OD (Account No.512120020003741) together with interest at the rate of 12% p.a. at monthly rests together with penal interest @ 2% p.a. from the date of filing, till the date of realisation in full;

¶102

(ii) A sum of Rs. 46,25,255/- due in respect of WORKING CAPITAL-TERM LOAN (Account 501712070000989) together with interest at the rate of 13% p.a. at monthly rests together with penal interest @ 2% p.a. from the date of application till the date of realisation in full along with costs.

¶103

(b) The sum of Rs.1,48,00,000/- realized by way of SARFAESI sale is directed to be given credit to the borrower’s loan account as on the date of realization.

¶104

(c) In the event of failure of the defendants to pay the aforesaid amount, the bank is at liberty to recover the amount by sale of the Item No.2 of schedule mentioned immovable property

¶105

O.A. No. 09 of 2022

¶106

¶107

11.04.2025

¶108

morefully detailed in the OA;

¶109

(d) Item No.2 of Schedule mentioned immovable property in the OA shall be appended to this final order;

¶110

(e) The applicant bank shall file the latest memo of calculation of OA amount together with interest, costs etc., to be paid by the Defendants duly considering the amounts, if any, paid by the Defendant and/or amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to prepare Recovery Certificate for the amount to be paid by Defendant to the applicant bank.

¶111

(f) The applicant bank shall file memo of costs within ten days from the date of this final order.

¶112

(g) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

¶113

A copy of this order be communicated to the parties concerned.

¶114

Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

¶115

(Dictated to PS, transcribed by her, corrected, signed and pronounced by me on this the 11^th day of April, 2025)

¶116

O.A. No. 09 of 2022

11.04.2025

ANNEXURES

WITNESSES EXAMINED FOR THE APPLICANT BANK :

¶121

AW-1: Mr. R. Deeban, Branch Manager, Illalur Branch representing the Applicant Bank

¶122

Exhibits on the part of the Applicant:

¶123

Sl.	Date	Description of Documents	Exhibit
No.			No.
1.	31.01.2015	Sanction Ticket for sum of Rs.1,25,00,000/-	A-1
2.	26.04.2016	Renewed Sanction ticket for sum of Rs.1,25,00,000	A-2
3.	27.12.2017	Renewed Sanction ticket for sum of Rs.1,25,00,000	A-3
4.	20.03.2019	Demand Promissory Note executed by the defendants 1 to 5 for a sum of Rs.1,25,00,000/- agreeing jointly and severally to repay the same together with interest at the minimum of 13.00% p.a. with monthly rests	A-4
5.	20.03.2019	Overdraft Rules for Running Account facilities executed by the defendants 1 to 5	A-5
6.	20.03.2019	Application-cum-Undertaking for Loan executed by the defendants 1 to 5	A-6
7.	20.03.2019	Consent Letter of the Borrowers and Guarantors in Form 41 executed by the defendants 1 to 5	A-7
8.	20.03.2019	Agreement of Loan Cum Hypothecation vide Form No. 259 executed by the defendants 1 to 5	A-8
9.	20.03.2019	Letter of Continuity executed by defendants 1 to 5	A-9
10.	20.03.2019	Guarantee Agreement executed by the 2^nddefendant	A-10
11.	20.03.2019	Guarantee Agreement executed by the 3^rddefendant	A-11
12.	16.03.2019	Sanction Letter for sum of Rs.40,00,000/-	A-12

¶124

O.A. No. 09 of 2022

¶125

11.04.2025

¶126

¶127

13.	21.03.2019	Demand Promissory Note executed by defendants 1 to 5 for a sum of Rs.40,00,000/- agreeing jointly and severally to repay the same together with interest at the minimum rate of 12.00% p.a. with monthly rests	A-13
14.	21.03.2019	Application-cum-Undertaking for Loan executed by the defendants 1 to 4	A-14
15.	21.03.2019	Consent Letter of the Borrowers and Guarantors in Form 41 executed by the defendants 1 to 4	A-15
16.	21.03.2019	Consent Letter for EMI Loans in Form 44 executed by the defendants 1 to 4	A-16
17.	21.03.2019	Guarantee Agreement executed by the 2^nddefendant	A-17
18.	21.03.2019	Guarantee Agreement executed by the 3^rddefendant.	A-18
19.	17.11.2005	Sale deed executed in favour of 2^nddefendant by Veerabathiran and others – Doc.No.4951/2005 S.R.O Thirukalukundram	A-19
20.	19.01.2006	Sale deed in favour of 2^nddefendant executed by Sundarammal and Others Doc.No.231/2005, S.R.O Thirukalukundram	A-20
21.	08.01.2015	Settlement deed executed in favour of the 3^rddefendant by the 2^nddefendant – Doc.No.257/2015, S.R.O. Thiruporur.	A-21
22.	18.02.2015	Memorandum of Deposit of Title Deeds in favour of the Applicant Bank – Doc.No.951/2015, S.R.O. Thiruporur.	A-22
23.	18.02.2015	Memorandum of Deposit of Title Deeds to in favour of the Applicant Bank – Doc.No.2338/2015, S.R.O. Thiruporur.	A-23
24.	19.03.2019	Memorandum of extension of equitable Mortgage to in favour of the Applicant Bank – Doc.No.1075/2019, S.R.O. Thiruporur.	A-24
25.	19.03.2019	Memorandum of extension of equitable Mortgage to in favour of the Applicant	A-25

¶128

O.A. No. 09 of 2022

¶129

11.04.2025

¶130

¶131

		Bank – Doc.No.3598 S.R.O. Thiruporur.	of 2019/2015,
26.	23.04.2021	Demand notice under Sarfaesi Act	Section 13(2) of	A-26
27.	02.06.2021	Valuation Report of owned by the 2^nddefen	the Property dant.	A-27
28.	03.06.2021	Valuation Report of owned by the 3^rddefen	the Property dant.	A-28
29.	01.03.2019	Statement of Loan Ac OD Account No.51 along with Memorandu	count AGRI SEC 2120020003741 m of Interest	A-29
30.	21.05.2019	Statement of Loan WORKING CAPITAL 501712070000989 Memorandum of Intere	Account CUB EMI Account along with st	A-30

¶132

Witness Examined for the Defendants: -Nil-

¶133

List of Documents Exhibited for the Defendants: -Nil –

¶134

-: SCHEDULE :-

¶135

Item No.2: Property owned by P.Devaki – 3^rd Defendant

¶136

Residential Building situated within the Sub-Registration District of Thiruporur, Thiruporur Taluk, Kalavakkam, Pazhandi Amman Koil Street, Survey No.24/11, Old Survey No.24/8 part for an extent of 322 sq.mtr., or 3465 sq.ft. and land being

¶137

BOUNDED ON THE .

¶138

East by	:	S.No.24/14
West by	:	Thanikachalam Chettiyar Plot
North by	:	Amirthammal, Govindharaj House site
South by	:	Cement Road

¶139

O.A. No. 09 of 2022

11.04.2025

MEASURING:

East to West on the Northern side : 8.2 Mtr.

¶144

East to West on the Southern side : 9 Mtr.

¶145

North to South on the Eastern side : 37.4 Mtr. North to South on the Western side : 23.6 Mtr.

¶146

Situate within the Registration District of Chengalpattu and SubRegistration District of Thirukalukundram.

¶147

Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

City Union Bank Limited v. Ms Thiru Murugan Modern Rice Mill

Case brief

What is this about?

What did the court decide?

City Union Bank Limited v. Ms Thiru Murugan Modern Rice Mill

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

State Bank of India versus M/s Colorhome Developers Pvt. Ltd.

Indian Overseas Bank versus M/s. Aks Alloys Pvt. Ltd.

Reliance Asset Reconstruction Company Ltd. versus M s Himaja Alloys Pvt. Ltd.

Mms Iron Corporation and others versus City Union Bank Limited

Bank of India versus Amman Food Products

Bank of India versus Amman Food Products