Allowed

South Indian Bank v. Aruna Agencies

DRT15 Sept 2025OA/26/2022

Case brief

AI extract

What is this about?

In an Original Application under the RDB Act, the bank sought recovery of loan amounts including interest and penal interest from defaulting borrowers. The tribunal allowed the application, directing respondents to pay the principal sum with adjusted interest rates within one month, permitting subsequent sale of mortgaged properties to recover deficiencies.

What did the court decide?

Directing respondents to pay Rs.2,26,92,727.32p with interest within one month; allowing sale of mortgaged properties for deficiency; directing preparation of Recovery Certificate.

South Indian Bank versus Aruna Agencies — Contract and Commercial Disputes | DRT (2025)

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OA No. 26/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 15^TH DAY OF SEPTEMBER, 2025 PRESENT: SEEMA SINHA,

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

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OA No.26/2022

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Between

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The South Indian Bank Ltd., D.No.40-41, Pereira Street, Tuticorin – 628 001. Rep. By its Chief Manager.

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---Applicant Bank

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And

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M/s Aruna Agencies,

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Rep.by its Partners,

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D.No.1A/3A, First floor, Toovipuram 3^rd street, VVD Main Road,

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Tuticorin – 628 003.

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Mr. R. Subramanian,

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S/o Ramachandran,

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No.6, Anna Nagar, 6^th Street, Tuticorin – 628 003.

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A.K.Mohamed Baruk, S/o A. Kottupuli, D.No.8/162, BalathandayuthaNagar, Arockiapuram Post,

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Tuticorin – 628 002.

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Mr. S. Ramachandran, S/o Subramanian, D.No.6, Anna Nagar, 6^th Street,

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Tuticorin – 628 003. ---Defendants

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Page 1 of 13

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OA No. 26/2022

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Counsel for the Applicant Bank : M/s R. Pandivel

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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 27.08.2021 to recover from the Defendants a sum of Rs.2,26,92,727.32p i.e. (i) Rs.50,00,000/- together with interest at the rate of 13% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. on Rs.50,00,000/- in respect of Packing credit facility (ii) Rs.1,49,76,783/together with interest at the rate of 13% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. on Rs.1,48,84,871/- in respect of facility of Foreign Bill purchase (iii) Rs.27,15,944.32p together with interest at the rate of 17.40% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. on Rs.26,52,041.26p in respect of Temporary overdraft facility from the date of filing of Application till the date of realization with cost and by sale of mortgaged/hypothecated properties, more fully described in Schedules 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 approached the Applicant Bank for availing Packing Credit Facility & Facility of Foreign Bill purchase. After due consideration, the Applicant Bank accepted the request of the defendants and sanctioned the Packaging credit facility to the limit of Rs.50,00,000/- and Facility of Foreign Bill purchase initially to the limit of Rs.50,00,000/- which was subsequently enhanced to the limit of Rs.1,00,00,000/- and the interest portion of Packing credit facility was operated through Current Account and accumulated interest portion was sanctioned as Temporary Overdraft. The terms of sanction along with terms & conditions were communicated to the defendants by the applicant bank through its sanction intimation letter dt.24.01.17 and the same was duly accepted by the defendants by counter signing the same on 24.01.17. Packing credit facility & Facility of Foreign Bill purchase, the defendants 1 to 3 had executed a Demand Promissory Note on 24.01.17 for a sum of Rs.1,00,00,000/- in favour of the Applicant

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Page 2 of 13

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OA No. 26/2022

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bank by promising to repay the loan amount on demand with interest at the rate of 9.80%p.a compounded with monthly rests or at such other rates as prescribed by the applicant bank from time to time.

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And also the defendants had executed Common Agreement of Hypothecation & Credit facility Agreements & Instrument of Pledge and Trust Loan Agreement dt.24.01.17 by hypothecating the goods & boo debts mentioned in the “A” Schedule hereunder in favour of the Applicant bank. The 4^th agreed to stand as Continuing guarantor for the repayment of the said loan with interest & costs thereon and executed an Agreement of continuing Guarantee on 24.01.17 in favour of the Applicant bank. At the request of the defendants 1 to 3 the applicant bank has enhanced the limit of Facility of Foreign Bill Purchase from Rs.50.00.000/- to Rs.1,00,00,000/and the terms of sanction along with terms & conditions were communicated to the defendants by the applicant bank through its sanction intimation letter dt.29.08.18 and the same was duly accepted by the defendants by counter signing the same on 29.08.18.

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The defendants executed Letter of Renewal for continuance of credit facility on 29.08.18 in favour of the Applicant bank by declaring & confirming that all the documents & securities shall remain in force and continue to remain in force and that it will bind on them and further by promising to repay the loan with interest & cost as enumerated in the agreements. For the Packing Credit Facility & enhanced Facility of Foreign Bill Purchase, the defendants 1 to 3 have executed a Demand Promissory Note on 29.08.18 for a sum of Rs.1,50,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with interest at the rate of 13.95% per annum compounded with monthly rests or at such other rates as prescribed by the applicant bank from time to time. The defendants 1 to 3 executed Agreement of Hypothecation, Credit Facility Agreement on 29.08.18 by hypothecating the goods & book debts mentioned in the 'A' Schedule hereunder in favour of the Applicant Bank by promising to repay the loan with interest as enumerated in the agreement with monthly rests. The 4th defendant agreed to stand as Continuing Guarantor for the repayment of the said loan with interest & costs thereon and executed an Agreement of Continuing Guarantee on 29.08.2018 in favour of the Applicant Bank. The defendants 1 to 3 by admitting & acknowledging their liabilities had executed Letter of Acknowledgment of Debt & Security dt. 29.08.18 in favour of the applicant bank.

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Page 3 of 13

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OA No. 26/2022

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Temporary Overdraft Facility

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At request of the defendants 1 to 3, Current Account was opened in the name of the 1^st defendant on 04.11.16 for its business transaction and the 1" defendant was allowed to operate the said current account. The applicant bank submits that during the course of the business the applicant bank has debited the interest portion of Packing Credit Facility in Current Account of the 1" defendant which led to temporary overdrawing in the Current Account [TOD] of the 1" defendant. The Applicant Bank begs to submit that as per the terms & conditions enumerated & accepted for opening & operating the Current Account, the defendants have to repay the liability to the bank with clear compound interest at the prevailing rate & rests and at such other rate & rests as may be revised by the bank from time to time.

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Common to all Facilities

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The Applicant Bank submits that in order to secure the above said facilities, the 3^rd defendant has offered his property more fully mentioned in the 'B' Schedule hereunder as Security and thereby the 3rd defendant has deposited/re-deposited his Title Deeds pertaining to the said property on 24.01.17 & 29.08.18 with the Applicant Bank with an intention to create an Equitable Mortgage over the said property. Further by confirming the said deposit of title deeds & creation of equitable mortgage the 3rd defendant has executed registered memorandum of deposit of title deeds dt.24.01.17 & 29.08.18 in favour of the Applicant Bank containing details of title deeds & description of property. Thus the Applicant Bank is the mortgagee entitled to proceed against the mortgaged property.

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The defendants after availing the said loans & facilities have not repaid the same as promised by them and they have committed default in repaying the loan amount with interest & costs. Despite repeated demands made by the Applicant Bank the defendants did not take any sincere steps to discharge the loan. Hence the Applicant Bank issued demand notice dt.06.11.19 to the defendants demanding them to discharge the loan. Despite the receipt of the said notice the defendants have not repaid the loan. Hence the applicant is constrained to file this Original Application. The applicant is reserving its right to pursue with the SARFAESI measures which has already been initiated.

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The Applicant Bank submits that on the basis of the documents executed and produced the defendants are jointly & severally liable to repay the loan amount with subsequent interest and costs and that the applicant

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Page 4 of 13

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OA No. 26/2022

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bank is entitled to recover the loan amount with subsequent interest and cost from the defendants and their assets and by bringing the sale of the mortgage property mentioned in the schedule hereunder. The Applicant Bank submits that the present rate of interest chargeable in the Packing Credit Facility is 13% per annum compounded with monthly rests together with charges & cost. In addition to that, the applicant bank is entitled to charge penal interest at the rate of 2% per annum due to default committed by the defendants. The present rate of interest chargeable in the Facility of Foreign Bill Purchase is 13% per annum compounded with monthly rests together with charges & cost. In addition to that, the applicant bank is entitled to charge penal interest at the rate of 2% per annum due to default committed by the defendants. The present rate of interest chargeable in the Temporary Overdraft Facility is 17.40% per annum compounded with monthly rests together with charges & cost. In addition to that, the applicant bank is entitled to charge penal interest at the rate of 2% per annum due to default committed by the defendants.

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The Applicant Bank submits that the liabilities of the 4th defendant as Guarantor are Co-extensive with that of the principal debtors. Hence the defendants are jointly and severally liable to repay the Loan Amount with interest and cost to the Applicant Bank. 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. Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their liability.

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Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.2,26,92,727.32p i.e. (i) Rs.50,00,000/- together with interest at the rate of 13% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. on Rs.50,00,000/- in respect of Packing credit facility (ii) Rs.1,49,76,783/- together with interest at the rate of 13% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. on Rs.1,48,84,871/- in respect of facility of Foreign Bill purchase (iii) Rs.27,15,944.32p together with interest at the rate of 17.40% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. on Rs.26,52,041.26p in respect of Temporary overdraft facility 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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Page 5 of 13

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OA No. 26/2022

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List of Documents

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Annexure – I

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Loan Documents executed by the Defendants

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S. No.	Date	Description of document	Exhibits
1.	24.01.17	Sanction intimation letter counter signed by the defendants in favour of the Applicant bank	Ex.No.A-01
2.	24.01.17	Demand Promissory Note executed by defendants 1 to 3 in favour of the applicant bank	Ex.No.A-02
3.	24.01.17	Agreement of Hypothecation executed by defendants 1 to 3 in favour of the applicant bank	Ex.No.A-03
4.	24.01.17	Credit facility Agreement for packing executed by defendants 1 to 3 in favour of theapplicant bank	Ex.No.A-04
5.	24.01.17	Credit facility Agreement for facility of Foreign purchase of Bill executed by defendants 1 to 3 in favour of the applicant bank	Ex.No.A-05
6.	24.01.17	Instrument of Pledge executed by defendants 1 to 3 in favour of the applicant bank	Ex.No.A-06
7.	24.01.17	Trust loan Agreement executed by defendants 1 to 3 in favour of the applicant bank	Ex.No.A-07
8.	24.01.17	Agreement of Guarantee executed by 4^th defendantin favouroftheApplicant bank	Ex.No.A-08
9.	29.08.18	Sanction intimation letter counter signed by the defendants in favour of the Applicant bank	Ex.No.A-09
10.	29.08.18	Letter of Renewal executed by defendants 1 to 3in favouroftheapplicant bank	Ex.No.A-10
11.	29.08.18	Demand Promissory Note executed by defendants 1 to 3 in favour of the applicant bank	Ex.No.A-11
12.	29.08.18	Agreement of Hypothecation executed by defendants 1 to 3 in favour of the applicant bank	Ex.No.A-12
13.	29.08.18	Credit facility Agreement for facility of Foreign purchase of Bill executed by defendants 1 to 3 in favour of the applicant bank	Ex.No.A-13
14.	29.08.18	Agreement of Guarantee executed by 4^th defendantin favouroftheApplicant bank	Ex.No.A-14

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OA No. 26/2022

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15.	04.11.16	Current Account OpeningForm	Ex.No.A-15
16.	24.01.17	Registered Memorandum of Deposit of Title deeds executed by the 3^rddefendant in favour of the Applicant bank	Ex.No.A-16
17.	29.08.18	Supplemental memorandum of deposit of Title deeds executed by the 3^rddefendant in favour of the Applicant bank	Ex.No.A-17
18.	29.08.18	Letter of Acknowledgement of debt & Security executed by the 3^rddefendant in favour of the Applicant bank	Ex.No.A-18
19.	06.11.19	Demand notice issued by the applicant bank to the defendants	Ex.No.A-19
20.	---	Statement of Accounts maintained by the applicant bank in the regular course & conduct of the business towards Packing CreditFacility	Ex.No.A-20
21.	---	Statement of Accounts maintained by the applicant bank in the regular course & conduct of the business towards Facility of Foreign Bill Purchase	Ex.No.A-21
22.	---	Statement of Accounts maintained by the applicant bank in the regular course & conduct of the business towards Temporary Overdraft facility	Ex.No.A-22

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List of Documents

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Annexure – II

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Title Deeds Deposited by the 3^rd Defendant with regard to the ‘B’ Schedule Mentioned Mortgage Property

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S. No.	Date		Descri	ption of docum	ent	Exhibits
1.	27.12.11	Registered agent Selva (Doc.No.41	Sale raj in 17/11	deed execute favour of Moh )	d by power ammed Baruk	Ex.No.A-23
2.	28.02.11	Registered Peter Je (Doc.No.12	gener baraj 4/11)	al power deed in favour	executed by of Selvaraj	Ex.No.A-24
3.	07.02.11	Registered Sudhakar of Peter Je	Settl Christ baraj (	ement deed opher Sugirth Doc.No.514/11	executed by araj in favour )	Ex.No.A-25
4.	28.02.06	Registered agent Kan Christophe	Sale dhasa r Sugi	deed execute my in favour rtharaj (Doc.No	d by power of Sudhakar .419/06)	Ex.No.A-26
5.	27.02.04	Registered Ramanuja	Settl Naid	ement deed u in favour	executed by of Meena	Ex.No.A-27

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OA No. 26/2022

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		(Doc.No.349/04)
6.	23.09.10	Registered general power deed executed by Sudhakar Christopher Sugirtharaj in favour of Selvaraj (Doc.No.436/10)	Ex.No.A-28
7.	09.02.11	Registered cancellation of general Power deed executed by Sudhakar Christopher Sugirtharaj in favour of Selvaraj (Doc.No.77/11)	Ex.No.A-29
8.	14.10.10	Registered Mortgage deed executed by Sudhakar Christopher Sugirtharaj in favour of Samsudeen(Doc.No.2481/10)	Ex.No.A-30
9.	09.02.11	Registered discharge receipt executed by Samsudeen in favour of Sudhakar ChristopherSugirtharaj (Doc.No.301/11)	Ex.No.A-31
10.	22.09.05	Registered general power deed executed by Meena in favour of Kandasamy (Doc.No.589/05)	Ex.No.A-32
11.	19.08.98	Family Partition arrangement deed entered into between Ramanuja Naidu & Others	Ex.No.A-33
12.	19.08.10	Computerized Patta issued by Head Quarters Deputy Tahsildar, Tuticorin standing in the name of Sudhakar Christopher Sugirtharaj & others	Ex.No.A-34
13.	19.05.11	Computerized Patta issued by Zonal Deputy Tahsildar, Tuticorin standing in the name of PeterJebaraj & others	Ex.No.A-35
14.	20.08.10	Kist receipt for fasli 1420 issued by VAO, Sankaraperi Village standing in the name of SudhakarChristopherSugirtharaj	Ex.No.A-36
15.	24.05.11	Kist receipt for fasli 1420 issued by VAO, Sankaraperi Village standing in the name of Peter Jebaraj	Ex.No.A-37
16.	---	‘A’ Register of Sankarperi Village	Ex.No.A-38
17.	09.03.12	Computerized Patta issued by Zonal Deputy Tahsildar, Tuticorin standing in the name of MohammedBaruk& others	Ex.No.A-39

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Schedule of Properties

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'A' Schedule - Hypothecated Goods

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Item No.1

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All the tangible movable properties such as stock-in-trade and goods etc., of the borrower which now or hereafter from time to time during the security shall be brought in stored or be in or about their premises or godown that place specified in the Agreements or any other godowns as

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Page 8 of 13

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OA No. 26/2022

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approved by the Bank or be in course of transit from one godown to another or from one place to another or wherever else the same may be.

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Item No.2

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All the present and future actionable claims and other movable property that may arise or come into existence in the future, including all book debts, decrees and decreetal debts, outstanding monies, receivable, hire purchase receivable/documents and contractual rights arising there from, other claims, (including counter claims and claims under insurance policies including life insurance policies), bills including government supply bills, contracts, securities, investments, bank deposits and other deposits, beneficial rights to others movable property and other assets of the borrower.

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'B' Schedule of Mortgage Property

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Property belonging to 3rd defendant Vide Annexure II for Title Deeds

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Tuticorin District, Tuticorin Registration District, Tuticorin Joint No.1 Sub Registration District, Tuticorin Taluk, Sankaraperi Village, Muthammal Colony, Rahmath Nagar 5th Street, lands in S.Nos.82/1, 85/1A, 85/2A, 85/3A, 85/4A, 86, 87/1, 87/3, 88/1, 88/3, 88/4, 88/8, 89/1, 89/3, 89/5, 94/3A, 203, 204 & 205 which are divided into various house plots; out of Plot No.233 measuring 72.64 cents; in which Eastern Portion of Plot No.233 measuring East-West 134 feet on the Northern side & 154 feet on the Southern side and North-South 114 feet on the Western side & 184 feet on the Eastern side totaling 21,456 Sq.ft (1993 Sq.mtr) (49.25 cents) now comprised in S.No.89/3A1 within the following boundaries.

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On the North by	: Land in S.No.201
On the East by	: North-South Road
On the South by	: East-West Road
On the West by	: House site belonging to M.S.A Peter Jebaraj

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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. Bijo Joseph, who is the Chief Manager of the Applicant Bank.

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Page 9 of 13

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OA No. 26/2022

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He has stated in his affidavit that the defendants has availed Packing Credit facility, Facility of Foreign Bill Purchase and Temporary Overdraft Facility 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-39 in support of its claim in the OA.

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The Sanction intimation letter counter signed by the defendants in favour of the Applicant bank has been marked as Ex.No.A-01, Demand Promissory Note executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-02, Agreement of Hypothecation executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-03, Credit facility Agreement for packing executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-04, Credit facility Agreement for facility of Foreign purchase of Bill executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-05, Instrument of Pledge executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-06, Trust loan Agreement executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-07, Agreement of Guarantee executed by 4th defendant in favour of the Applicant bank has been marked as Ex.No.A-08, Sanction intimation letter counter signed by the defendants in favour of the Applicant bank has been marked as Ex.No.A-09, Letter of Renewal executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-10.

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The Demand Promissory Note executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-11, Agreement of Hypothecation executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-12, Credit facility Agreement for facility of Foreign purchase of Bill executed by defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-13, Agreement of Guarantee executed by 4th defendant in favour of the Applicant bank has been marked as Ex.No.A-14, Current Account Opening Form has been marked as Ex.No.A-15, Registered Memorandum of Deposit of Title deeds executed by the 3rd defendant in favour of the Applicant bank has been marked as Ex.No.A-16, Supplemental memorandum of deposit of Title deeds executed by the 3rd defendant in favour of the Applicant bank has been marked as Ex.No.A-17, Letter of Acknowledgement of debt & Security executed by the 3rd defendant in favour of the Applicant bank has been marked as Ex.No.A18, Demand notice issued by the applicant bank to the defendants has been marked as Ex.No.A-19, Statement of Accounts maintained by the applicant

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bank in the regular course & conduct of the business towards Packing Credit Facility has been marked as Ex.No.A-20.

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The Statement of Accounts maintained by the applicant bank in the regular course & conduct of the business towards Facility of Foreign Bill Purchase has been marked as Ex.No.A-21, Statement of Accounts maintained by the applicant bank in the regular course & conduct of the business towards Temporary Overdraft facility has been marked as Ex.No.A22, Registered Sale deed executed by power agent Selvaraj in favour of Mohammed Baruk (Doc.No.4117/11) has been marked as Ex.No.A-23, Registered general power deed executed by Peter Jebaraj in favour of Selvaraj (Doc.No.124/11) has been marked as Ex.No.A-24, Registered Settlement deed executed by Sudhakar Christopher Sugirtharaj in favour of Peter Jebaraj (Doc.No.514/11) has been marked as Ex.No.A-25, Registered Sale deed executed by power agent Kandhasamy in favour of Sudhakar Christopher Sugirtharaj (Doc.No.419/06) has been marked as Ex.No.A-26, Registered Settlement deed executed by Ramanuja Naidu in favour of Meena (Doc.No.349/04) has been marked as Ex.No.A-27, Registered general power deed executed by Sudhakar Christopher Sugirtharaj in favour of Selvaraj (Doc.No.436/10) has been marked as Ex.No.A-28, Registered cancellation of general Power deed executed by Sudhakar Christopher Sugirtharaj in favour of Selvaraj (Doc.No.77/11) has been marked as Ex.No.A-29, Registered Mortgage deed executed by Sudhakar Christopher Sugirtharaj in favour of Samsudeen (Doc.No.2481/10) has been marked as Ex.No.A-30.

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The Registered discharge receipt executed by Samsudeen in favour of Sudhakar Christopher Sugirtharaj (Doc.No.301/11) has been marked as Ex.No.A-31, Registered general power deed executed by Meena in favour of Kandasamy (Doc.No.589/05) has been marked as Ex.No.A-32, Family Partition arrangement deed entered into between Ramanuja Naidu & Others has been marked as Ex.No.A-33, Computerized Patta issued by Head Quarters Deputy Tahsildar, Tuticorin standing in the name of Sudhakar Christopher Sugirtharaj & others has been marked as Ex.No.A-34, Computerized Patta issued by Zonal Deputy Tahsildar, Tuticorin standing in the name of Peter Jebaraj & others has been marked as Ex.No.A-35, Kist receipt for fasli 1420 issued by VAO, Sankaraperi Village standing in the name of Sudhakar Christopher Sugirtharaj has been marked as Ex.No.A-36, Kist receipt for fasli 1420 issued by VAO, Sankaraperi Village standing in the name of Peter Jebaraj has been marked as Ex.No.A-37, ‘A’ Register of Sankarperi Village has been marked as Ex.No.A-38, Computerized Patta issued by Zonal Deputy Tahsildar, Tuticorin standing in the name of Mohammed Baruk & others has been marked as Ex.No.A-39. 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.

¶93

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).

¶94

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 ".

¶95

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

¶96

The Applicant Bank is entitled to recover from the Defendants, a sum of Rs.2,26,92,727.32p i.e. (i) Rs.50,00,000/- together with interest at the rate of 13% p.a. with half yearly rests in respect of Packing credit facility (ii) Rs.1,49,76,783/- together with interest at the rate of 13% p.a. with half yearly rests in respect of facility of Foreign Bill purchase (iii) Rs.27,15,944.32p together with interest at the rate of 17.40% p.a. with half yearly rests in respect of Temporary overdraft facility from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

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ORDERED

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(a) That the Defendants are directed to pay jointly/severally a sum of Rs.2,26,92,727.32p i.e. (i) Rs.50,00,000/- together with interest at the rate of 13% p.a. with half yearly rests in respect of Packing credit facility (ii) Rs.1,49,76,783/- together with interest at the rate of 13% p.a. with half yearly rests in respect of facility of Foreign Bill purchase (iii) Rs.27,15,944.32p together with interest at the rate of 17.40% p.a. with half yearly rests in respect of Temporary overdraft facility 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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¶101

(b) In case of default of payment by the above mentioned Defendants, the Applicant Bank is at liberty to sell the movable / immovable properties more fully described in Schedule of the original application for appropriation of sale proceeds towards the satisfaction of amount due to the Applicant Bank.

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(c) If the sale proceeds are not sufficient, after defraying the expenses of such sale, for the payment of all such amounts, the defendants are jointly/severally liable to pay the amount of such deficiency with interest mentioned above until realization.

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(d) Any amount remitted during the course of this proceedings shall be given due credit, to the loan account of the defendants.

¶104

(e) 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.

¶105

(f) 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 Packing Credit facility, Facility of Foreign Bill Purchase and Temporary Overdraft Facility 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.

¶106

Dictated to T.P, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 15^th September, 2025.

¶107

Sd/- (SEEMA SINHA) PRESIDING OFFICER

¶108

Uploaded on 24.09.2025

¶109

Page 13 of 13

South Indian Bank v. Aruna Agencies

Case brief

What is this about?

What did the court decide?

South Indian Bank v. Aruna Agencies

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

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