Allowed

Indian Bank v. Saravana Stores Gold Palace

DRT15 Oct 2025OA/256/2022

Case brief

AI extract

What is this about?

The DRT allowed an application for recovery of loan dues after admitting the debt via written statement. The court held legal representatives liable up to the value of inherited estate and permitted the bank to realize the balance from remaining secured assets.

What the court decided

AI extract

Indian Bank versus Saravana Stores Gold Palace — Succession and Inheritance | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL –I AT CHENNAI

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Dated this 15^th Day of October, 2025

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PRESENT: SHRI A.S.JAYACHANDRA

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Presiding Officer

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O.A. No.256 of 2022

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Indian Bank ,

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T. Nagar Branch, Now at Stressed Assets Management Branch, No.55, Ethiraj Salai,

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Egmore, Chennai – 600 008

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Represented by its Chief Manager, Mr.L.V.S. Subbaratnam . . . . Applicant [By M/s.T.Sundarrajan, Ms.Bhargavi Sundarrajan, Ld. Advocates.]

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-Versus-

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1. M/s. Saravana Stores Gold Palace,

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Represented by its Partners,

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No. 28, Ranganathan Street,

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T. Nagar, Chennai – 600 017

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[By Shri. N.V.Prakash, Ld.Advocate]

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2. Mr. Y. Pallakku Durai (Since deceased by LRs)

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Managing Partner, M/s Saravana Stores Gold Palace,

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S/o S. Yogarathinam,

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Old No. 24, New No. 14, Ramanathan Street,

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T. Nagar, Chennai – 600 017.

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2a . P. Shanmugha Priya

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D/o Late Y. Pallakku Durai,

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Old No. 24, New No.14, Ramanathan Street,

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T. Nagar, Chennai -600 017.

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[By Shri.Afzal, Ld. Advocate]

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2b. Y. Lakshmi,

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Mother of Late Y. Pallakku Durai

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Old No. 24, New No.14, Ramanathan Street,

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T. Nagar, Chennai -600 017.

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[Exparte]

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3. Mrs. P. Sujatha,

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Partner of M/s. Saravana Stores Gold Palace W/o Mr. Y. Pallakku Durai

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Old No. 24, New No.14, Ramanathan Street,

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T. Nagar, Chennai – 600 017

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[By Shri. N.V.Prakash, Ld.Advocate]

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4. Mr. Y.P. Shiravan,

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Partner of M/s. Saravana Stores Gold Palace, Son of Mr. Y. Pallakku Durai, Old No. 24, New No.14, Ramanathan Street,

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T. Nagar, Chennai – 600 017

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[By Shri. N.V.Prakash, Ld.Advocate] . . . Defendants

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2A and 2B brought on record as per Order dated 07.02.2023 passed in IA No. 1384/2022.

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2A, 2B, 3 and 4 Defendants L.R’s of deceased 2^nd Defendant.

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: - O R D E R - :

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The applicant Bank had filed the OA u/s 19 of the RDB Act, for recovery of Rs. 309,37,02,599.67 paise along with interest and costs. The OA is based on two loan accounts one being term loan and the other open cash credit loan.

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The gist of the case of the Applicant is that the defendant no 1 a firm, to which the other defendants are the partners have approached the Bank for a term loan to purchase certain properties mentioned in schedule C of the OA. The Applicant sanctioned Rs.150 crores on 20.07.2017, which was availed by executing the promissory note, confirmation by the firm through the partners along with disposal of proceeds letter. Further they executed the medium

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term loan agreement dated 20.07.2017. The defendant 2 to 4 also executed the consent letter and the personal guarantee deed of the same date. The first defendant had also deposited the title deeds pertaining to the properties mentioned in schedule A, B and C which is duly registered. It is also submitted by the Applicant that open cash credit facility to the extent of 90 crores for the business purpose of the defendant was sanctioned on 27.09.2017, which was availed. The defendant had executed the promissory note, loan agreement, hypothecation agreement all dated 27.09.2017 along with consent letters of the partners. The defendants 2 to 4 have executed the personal guarantee deed. The mortgage deed is registered concerning schedule D property for the OCC facility which is offered as security.

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The bank alleges that the defendants defaulted in payment of installments and legal notices were sent dated 17.08.2019 and 24.09.2019 but to no avail. It is further pleaded that the loan accounts were classified as NPA on 06.10.2019 and further a demand notice under section 13 (2) of the SARFAESI Act was served which was also not complied. The Applicant took possession of the secured assets under the notice dated 27.01.2020.

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The bank alleges that the dues as on 10.08.2021 regarding these two accounts stood at Rs.190,29,45,534.74 paise and Rs.119,07,57,064.93 respectively totaling to Rs.309,37,02,599.67 paise. Thus pleading that the Bank is entitled for recovery of the above sum along with interest against all the defendants jointly and severally. The Applicant further prays for personal decree against the defendants and to sell the properties described in schedule A to D for realization of the amounts.

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The upon notices issued defendants 1, 3 and 4 appeared through the counsel and it was reported that the second defendant expired. The defendant no. 2 is survived by the LRs which include the defendants 3 and 4 apart from

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LRs D2 (a) and D2 (b). However, these defendants 1, 3 and 4 have filed their written statements. The Bank has taken steps to bring the LRs of Defendant No. 2 on record. One of the LRs. is contesting the other LR remained exparte.

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In the written statement filed by the defendants 1, 3 and 4 which is carefully perused, the following inexorable, unambiguous and clear admissions are noted.

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(a) In para 3 the defendants having approached the bank for loan to purchase three properties is admitted along with having availed the loan to the extent of Rs. 90 crores and further admitted the creation of the security by way of equitable mortgage concerning schedule D property

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(b) In the same para the execution of personal guarantee of defendants 2 to 4 and the deed of hypothecation is admitted.

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(c) Though the defendants claim to have repaid Rs. 57 crores, it is admitted that the loan could not be serviced as per the schedule agreed.

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(d) Further admission is found with regard declaration of NPA on 07.07.2019.

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(e) In para 5 of the WS, the defendants have admitted seeking to work out one time settlement which was not arrived at.

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(f) The taking over of the symbolic possession of the properties and the physical possession is admitted.

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(g) It is also found that the second defendant expired on 11.07.2021 who was managing the affairs of the firm.

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(h) The WS at para 8 reveals that the Applicant bank had filed a complaint before the CBI against the defendants and the properties having been attached.

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(i) The defendants only pray in the WS that OA be kept pending till the writ petition filed by the Applicant bank in WP 25278/2022 is disposed of. It is also prayed that OA may be dismissed.

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The ld counsel Shri Sunderrajan appearing for the Applicant bank submits that the admissions found in the written statement of defendants are clear and unambiguous. He also submits that these admissions are without

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any riders and submits that the OA may be disposed since the defendants do not dispute the amount due as pleaded while admitting the loan transaction, execution of loan documents.

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The ld counsel Shri Afzal Hussain, Advocate appearing for contesting D2 (a) who has not filed WS submits that during the pendency of the OA a sum of Rs. 218.45 crores are recovered. He submits that the liability on his client cannot be fastened since his client has not succeeded to the estate of her late father he relied on the ruling of Hon’ble Supreme Court in Vinayak Purshottam Dube (Deceased) through LRs. Vs. Jayashree Padamkar Bhat and Ors. MANU/SC/0156/2024 . On the other hand the ld counsel for the bank submits that part satisfaction Memo was filed on 28.04.2025 disclosing the recoveries made and further points out that the prayer a mended would clearly show that the liability be fixed to the extent of the estate inherited by the LRs of D2 (a) and (b) only and the liability of 3 and 4 is joint and several along with defendant no 1.

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There cannot be any denying of the Law laid down by the Hon’ble Supreme Court which held “legal representative are liable for the debt of their predecessor but their liability is limited to the extent of the estate of the deceased inherited by them. Therefore the representative of the promissory are bound to perform the promissor’s contract to the extent of the assets of the deceased falling in their hands. But they are not personally liable under the contracts of the deceased and are also not liable for personal contracts of the deceased”. The ld. counsel for the Applicant bank while submitting that the contention that a sum of Rs. 218 crores recovered is not supported by any documentary evidence. It is true that no documentary evidence is produced to this effect by the contesting LRs of D2. At the same time, the bank has disclosed the recoveries made and as regards the contention of the ld counsel for the LRs of the deceased defendant No. 2, there is already a

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prayer by the Bank that liability is sought against the LRs are limited to the extent of their inheritance to the estate of the deceased.

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This tribunal had carefully perused the evidence produced on record. The Bank had examined the AW-1 Shri T. Sahadevan and relied on exhibits A 1 to A48. The relevant piece of evidence argued by the ld counsel for the Applicant bank is exhibit A 46. This is the statement of account running to pages 560 to 581. The certificates issued under section 2 (A) (b) of the Bankers Books of Evidence Act 1891 is found at pages 578 to 581. Since the WS does not dispute the liability, there is no impediment to rely on the certificate issued under the Bankers Books of Evidence Act. This Tribunal also notes that the Applicant bank had duly informed the Tribunal about the recoveries made vide the memo dated 28.04.2025 which shows that the following sums are realized by selling schedule A and B properties during February and March 2025. The Memo states as under:-

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“The Applicant states that the above OA has been filed for recovery of a sum of Rs. Rs. 309,37,02,599.67 paise towards the loan facilities availed by the Defendants together with interest as claimed in the OA, for personal decree, for sale of schedule A to D properties, for attachment and sale of Schedule E hypothecated properties and other reliefs.

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The Schedule A and B properties of the OA namely Door No. 130, New Door No. 78, Usman Road, T. Nagar, Chennai – 600 017 and the property at Door No. 132, Usman Road, T. Nagar, Chennai – 600 017, were sold by the Applicant Bank under the SARFAESI Act by way of Sale Notice dated 18.02.2025 in the E-Auction Sale conducted on 07.03.2025 to the highest bidder M/s. Khazana Jewellery Pvt. Ltd. For Rs. 150,11,00,000/- and the sale confirmation letter has been issued by the Bank on 10.03.2025. The auction purchaser has remitted the sale proceeds of Rs.148,60,89,000/- (excluding TDS of Rs. 1,50,11,000/-).

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After making payment of Employee Provident Fund dues of the borrower Firm being Rs.2,49,57,708/-, the net sale proceeds of

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Rs.1,46,11,31,292/- was credited to the loan account on 24.03.2025 as detailed below:-

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S.	Facilit	Loan	Amount
No.	y	Number	Credited
1.	MTL	6548447351	129,28,55,732.00
2.	OCC	6568414195	16,82,75,560.00

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Hence it is prayed that Part Satisfaction may be recorded in the above OA for Rs.146,11,31,292/- (Rupees One Hundred and Forty Six Crores Eleven Lakhs Thirty One Thousand Two Hundred and Ninety Two only).”

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In view of the above and after considering entire gamut of the case, the OA stands disposed by the following:

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: - O R D E R - :

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(i) OA stands allowed with costs. The defendants 1, 3 and 4 are directed to pay a sum of Rs.309,37,02,599.67 jointly and severally along with simple interest at the rate of 18% per annum from 10.08.2021 till the date of realization LESS the recoveries made already.

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(ii) The LRs. of defendant No 2 (a) and (b) are also liable to pay the amount to the extent of their inheriting the estate of deceased defendant No 2.

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(iii) The Applicant bank is permitted to sell schedule D properties and realize the sums, since it is submitted by the ld counsel for the Applicant that schedule properties at A, B and C are already sold. In case, the Sale proceeds do not match the liability there shall be personal decree against D1, D3 and D4 jointly and severally for the balance outstanding.

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(iv) No order is made with regard to hypothecated goods mentioned in schedule E properties as the ld counsel for the Bank made it clear that hypothecated goods are NOT available as mentioned in schedule E.

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(v) Recovery certificate be issued accordingly. All the pending IAs stands disposed of. The Applicant bank is at liberty to seek recovery against other assets of the defendants if found during the course of the recovery proceedings to the balance.

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

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Sd/-

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(A.S.JAYACHANDRA) PRESIDING OFFICER DRT-I, CHENNAI

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(Dictated to Steno who typed in the system, corrected, signed and pronounced in open court on this 15^th Day of October, 2025)

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:- Appendix to the final order

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Number of witness examined on behalf of Bank:- AW -1 Sahadevan.

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Witness examined on behalf of Defendants:- Nil

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List of documents relied by the AW-1. [Originals not on the file]

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A1. 01.10.2015 Reconstitution by Amendment to the Partnership Deed of 1^st Deft Firm (Xerox)

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A2. 15.04.2010 Registration certificate of 1^st Deft Firm (Xerox)

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A3. 22.05.2017 Application for loan submitted by Defts (xerox)

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A4. 20.07.2017 Sanction Ticket of Indian Bank (Xerox)

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A5.	20.07.2017	Joint and Several Demand Promissory Note (xerox)
A6.	20.07.2017	Partnership Letter (xerox)
A7.	20.07.2017	Disposal of Proceeds letter (xerox)
A8.	20.07.2017	Medium Term Loan Agreement (xerox)
A9.	20.07.2017	Term Loan Agreement for Housing Finance (xerox)
A10.	20.07.2017	Letter from the borrower/s for disclosure Of information (xerox)
A11.		Details of Family Members of
		Borrower/Guarantor (xerox)
A12.	20.07.2017	Declaration by the Borrower on details Of relatives, etc. (xerox)
A13.	20.07.2017	Agreement of Guarantee (xerox)
A14.	20.07.2017	Consent Letter from the guarantors/for Disclosure of information (xerox)
A15.	21.07.2017	Memorandum of Agreement Relating to
		Deposit of Title Deeds Doc.No. 1842/17 (xerox)
A16.	27.09.2017	Sanction Ticket (xerox)
A17.	27.09.2017	Demand Promissory Note (xerox)
A18.	27.09.2017	Partnership Letter (xerox)
A19.	27.09.2017	Agreement for open Cash Credit (xerox)
A20.	27.09.2017	Agreement of Hypothecation of Movables (xerox)
A21.	27.09.2017	Declaration by the Borrower on details of
		Relatives, etc. (xerox)
A22.		Details for Family Members of Borrower/Guarantor
A23.	27.09.2017	Letter from the borrower/s for disclosure of Information (xerox)
A24.	27.09.2017	Agreement of Guarantee (xerox)
A25.	27.09.2017	Consent Letter from the guarantor/s for Disclosure of information (xerox)

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A26.	28.09.2017	Memorandum of Deposit of Title Deeds
		Doc.No. 2342/17 (xerox)
A27.	17.08.2019	Legal notice with postal receipts (original)
A28.	24.09.2019	Legal notice with postal receipts (original)
A29.	09.10.2019	Demand Notice with AD cards (original)
A30.	20.12.2019	Acknowledgment of Debt-Cum-Security (xerox)
A31.	27.01.2020	Possession Notice with postal receipts and
		Acknowledgment Cards and paper publication
		(original)
A32	---	Sale Certificate in respect of Schedule C (Xerox)
A33.	21.07.2017	Sale Deed, Doc.No.1837/2017 (xerox)
A34.	21.07.2017	Sale Deed, Doc.No.1839/2017 (xerox)
A35.	25.11.2010	Sale Deed, Doc.No.2519/2010 (xerox)
A36.	12.10.2009	Sale Deed, Doc.No.1915/2009 (xerox)
A37.	28.09.2007	Sale Deed, Doc.No.2171/2007 (xerox)
A38.	13.06.2011	Sale Deed, Doc.No.1209/2011 (xerox)
A39.	10.06.2009	Sale Deed, Doc.No.1069/2009 (xerox)
A40.	20.05.2009	Sale Deed, Doc.No.920/2009 (xerox)
A41.	28.09.2007	Sale Deed,Doc.No.2170/2007 (xerox)
A42.	21.06.2010	Sale Deed,Doc.no.1341/2010 (xerox)
A43.	27.04.2009	Sale Deed, Doc.No.740/2009 (xerox)
A44.	20.08.2007	Sale Deed,Doc.No.1880/2007 (xerox)
A45.	16.05.2008	Sale Deed,Doc.No.1048/2008 (xerox)
A46.		Statement of Accounts with Certificates
A47	26.5.2022	Receipt Memo issued by CBI (Xerox)
A48	8.9.2022	Receipt Memo issued by CBI (Xerox)

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SCHEDULE D

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Belonging to 2^nd Defendant

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All that piece and parcel of the land and buildings bearing New Door No. 29/1 to 29/12, Ranganathan Street, Thyagaraya Nagar, Chennai 600017, comprised in T.S.No. 5562/2 and T.S.No. 5567 in Block No. 128 and Plot No. 37 C and 37 (bit) measuring to an extent of 3 ½ grounds of Thyagaraya Nagar Division, Mambalam Guindy Taluk, Chennai City together with building thereon bounded on

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North by : Ranganathan Street

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South by : Kalyan Store

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East by : Passage of loading staircase

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West by : Vishwanatha Book Shop

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Situated within the Registration District of Chennai and the Sub Registration District of T.Nagar.

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Sd/-