Allowed

Canara Bank v. S Ashokkumar

DRT13 Nov 2025OA/208/2023

Case brief

AI extract

What is this about?

The Tribunal examined an application filed by Canara Bank for recovery of an outstanding education loan. Finding the bank's claim proved through documents and noting the defendants' default, the Tribunal allowed the application. The order directed recovery of the principal amount with revised interest calculation, rejecting capitalization of penal interest.

What did the court decide?

The respondents are directed to jointly/severally pay Rs. 23,75,663.39 with interest at 11.45% p.a. with half yearly rests within one month. Recovery Certificate is to be prepared and issued.

Canara Bank versus S Ashokkumar — Contract and Commercial Disputes | DRT (2025)

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OA No. 208/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 13^TH DAY OF NOVEMBER, 2025 PRESENT: SEEMA SINHA,

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[PR. DISTRICT & SESSIONS JUDGE – Retd] PRESIDING OFFICER

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OA No.208/2023

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Between

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Canara Bank, Grand Central Branch, 11813, Pandiyan House, West Perumal Maistry Street, Madurai 625 001. Rep. By its Senior Manager.

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---Applicant Bank

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And

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Mr. S. Ashokkumar, S/o R. Selvaraj, No.21, New Police Quarters, Thirupparankundram Road, Opp. To Crime branch, Madurai - 625 001.

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Mr. R. Selvaraj, S/o Raj, No.21, New Police Quarters, Thirupparankundram Road, Opp. To Crime branch, Madurai - 625 001.

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Mrs. S. Sumathy, W/o R. Selvaraj, No.21, New Police Quarters, Thirupparankundram Road, Opp. To Crime branch, Madurai - 625 001. ---Defendants

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Page 1 of 5

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OA No. 208/2023

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Counsel for the Applicant Bank : M/s M. Muthukumaran, S. Vanitha

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This Original Application was heard and fixed for passing final order before me in the presence of the above said Advocate for Applicant Bank and the Defendants having been set ex-parte and upon hearing the arguments of Counsel for Applicant Bank and upon perusing the material available on the records and having stood over for consideration till this day, this Tribunal delivered the following:

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JUDGEMENT

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1 . This Application has been filed under Sec.19 (1) of the "The Recovery of Debts due to Banks and Financial Institutions Act, 1993" now amended as The Recovery of Debts and Bankruptcy Act, 1993 by the Applicant Bank on 03.02.2023 to recover from the Defendants a sum of Rs.23,75,663.39p together with interest at the rate of 11.45% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Education Loan from the date of filing of Application till the date of realization with cost of the application.

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2 . The brief averments of the application filed by the Applicant Bank are as follows:-

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The Defendants availed Educational loan for 1^st defendant's studies in RL Institute of National Science, for the 4 Years B.E., (Marine) Course and the same was sanctioned Rs. 7,00,000/- by the applicant bank to the Defendants. The 2^nd defendant / father of 1^st defendant and the 3^rd defendant / mother of 1^st defendant were stood as joint borrower for the loan. The defendants Education loan account number is 1013651000173.

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The Defendants executed necessary loan documents in favour of the Applicant Bank and to abide by the terms of the Bank that may be stipulated by the Applicant Bank in the matter of repaying the amounts availed under the said accounts and the interest accrued there under. Further defendants agreed to pay interest at the rate of 11.45%p.a. plus penal interest at the rate of 2%p.a. in case of default. The repayment schedule shall start one year after completion of the course or after six months of getting employment/job whichever is earlier. Principal amount borrowed + accumulated interest + future interest is to be paid in equated monthly installment in 60 months.

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After availing the loan, defendants were not regular in the matter of repayment. The defendants made several promises, but they failed to keep up their promises.

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Page 2 of 5

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OA No. 208/2023

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Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their liability. Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.23,75,663.39p together with interest at the rate of 11.45% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Education Loan from the date of filing of Application till the date of realization with cost.

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The Applicant Bank has submitted the following documents in support its claim in the OA, which are as follows:

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S. No.	Date	Description of document	Exhibits
1.	18.10.2010	Loan Application	Ex.No.A-01
2.	18.10.2010	Education Loan Agreement	Ex.No.A-02
3.	18.10.2010	Guarantee coveringletter	Ex.No.A-03
4.	18.10.2010	Guarantee Agreement	Ex.No.A-04
5.	29.07.2017	Acknowledgement of Debt and Security	Ex.No.A-05
6.	18.02.2020	Acknowledgement of Debt and Security	Ex.No.A-06
7.	----	Branch Merger Letter	Ex.No.A-07
8.	09.11.2022	Account Statement	Ex.No.A-08

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3 . On the other hand, Notices were issued to Defendants and since from the beginning of the case, there was no representation on behalf of the Defendants. Hence, Defendants were set ex-parte.

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4. Now the main point for consideration before me is as to whether the Applicant has been able to prove his case on his own leg?

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Having gone through the affidavit of the applicant and the documents filed by them and also considering the submission of the counsel for the Applicant, I find that the Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. V. Sakthivel, who is the Senior Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Education Loan from the Applicant Bank, but they failed to pay the outstanding loan amount, hence he has filed the case. The applicant bank has also filed the documents given by the defendants at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-08 in support of its claim in the OA.

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Page 3 of 5

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OA No. 208/2023

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The Loan Application has been marked as Ex.No.A-01, Education Loan Agreement has been marked as Ex.No.A-02, Guarantee covering letter has been marked as Ex.No.A-03, Guarantee Agreement has been marked as Ex.No.A-04, Acknowledgement of Debt and Security has been marked as Ex.No.A-05, Another Acknowledgement of Debt and Security has been marked as Ex.No.A-06, Branch Merger Letter has been marked as Ex.No.A07, Account Statement has been marked as Ex.No.A-08. So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

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As the Defendants remained ex-parte, the claim of the Applicant Bank is neither disproved nor dislodged and goes on record as proved. Accordingly a cumulative analysis of both the Proof Affidavit and documents marked by the Applicant Bank would prove the claim of the Applicant Bank in the OA.

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So far the claim of interest is concerned, it is a well settled Law that the Tribunal has got powers to award pendente lite interest in view of the Judgment of the Hon’ble Supreme Court in N.M. Veerapa Vs Canara Bank (reported in AIR 98(1), 1101 & in Central bank of India Vs Ravindra and OS (AIR, 2001(1), 3095).

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So far the penal interest is concerned Hon'ble supreme court stated in the said judgement as followed " Though interest can be capitalised on the anology that the interest falling due on the accrued date and remaining unpaid, partakes the character of amount advanced on that date, yet penal interest, which is charged by way of penalty for non payment, cannot be capitalized. Further interest, i.e interest on interest, whether simple, compound or penal, cannot be claimed on the amount of penal interest. Penal interest cannot be capitalized. It will be opposed to public policy ".

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Therefore, this Original Application is allowed. The Applicant Bank is entitled for a final order on the following lines:-

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The Applicant Bank is entitled to recover from the Defendants, a sum of Rs.23,75,663.39p together with interest at the rate of 11.45% p.a. with half yearly rests in respect of Education Loan from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

Page 4 of 5

OA No. 208/2023

ORDERED

(a) That the Defendants are directed to pay jointly/severally a sum of Rs.23,75,663.39p together with interest at the rate of 11.45% p.a. with half yearly rests in respect of Education Loan from the date of filing of Application till the date of realization with cost within one month from the date of receipt of this order.

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(b) Recovery Certificate be prepared, as per the directions given above, and issue accordingly. A copy of the order is to be communicated to the parties concerned, immediately.

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(c) It is further ordered that the Applicant Bank shall file cost memo within a period of one month from the date of receipt of this order, so as to prepare the recovery certificate with cost for the Education loan and the Recovery Officer is also directed to proceed with the matter in accordance with law. In case, cost memo is not filed before said period of one month, Recovery Certificate will be prepared with available records.

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Dictated to T.P, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 13^th November, 2025.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 25.11.2025

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Canara Bank v. S Ashokkumar

Case brief

What is this about?

What did the court decide?

Canara Bank v. S Ashokkumar

Case brief

What is this about?

What did the court decide?

What the court decided

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