Allowed

South Indian Bank v. P Shanmugam

DRT6 Aug 2025OA/28/2023

Case brief

AI extract

What is this about?

In an original application for debt recovery, the Tribunal allowed the bank's claim of Rs.57 lakh against defaulting agriculturists. Noting the defendants were absent, the Tribunal accepted the bank's evidence and capped interest at 6% p.a. per statutory direction for agricultural loans.

What did the court decide?

Defendants to pay Rs.57,28,594.67p with simple interest at 6% p.a. from filing date; bank permitted to sell mortgaged properties if payment defaults.

South Indian Bank versus P Shanmugam — Banking and Recovery | DRT (2025)

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OA No. 28/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 06^TH DAY OF AUGUST, 2025 PRESENT: SEEMA SINHA,

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

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OA No.28/2023

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Between

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The South Indian Bank Limited, Trichy Contonment Branch, No.119, Thendral Complex, St.Paul’s Seminary, Opp Head Post Office, Contonment, Trichy - 620 001. Rep.through its Branch Manager. ---Applicant Bank

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And

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Mr.P. Shanmugam, S/o.Periyasamy, No. 7, 3^rd Cross, Arunachalam Nagar, Crawford, Trichy - 620 009.

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Also at:

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Mr.P. Shanmugam, S/o.Periyasamy, 5/24, West Street, Pallapatti, Alunthur, Srirangam Taluk, Trichy – 620 009

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Mrs. S. Devi Dayana, W/o. P. Shanmugam, No. 7, 3^rd Cross, Arunachalam Nagar, Crawford, Trichy - 620 009.

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Page 1 of 9

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OA No. 28/2023

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Also at: Mrs. S. Devi Dayana, W/o. P. Shanmugam, 5/24, West Street, Pallapatti, Alunthur, Srirangam Taluk, Trichy – 620 009 ---Defendants

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Counsel for the Applicant Bank : M/s A R M Ramesh

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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 23.09.2022 to recover from the Defendants a total sum of Rs.57,28,594.67p i.e., (i) Defendant 1 & 2 jointly to pay a sum of Rs.27,98,787.90p together with interest at the rate of 10.25% p.a. with penal interest at the rate of 2%p.a. in respect of Kisan Credit Card loan and (ii) Defendant 1 & 2 jointly/Severally to pay a sum of Rs.29,29,806.77p together with interest at the rate of 10.25% p.a. with penal interest at the rate of 2%p.a. in respect of Agricultural Term Loan 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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Both defendants approached the Applicant Bank and sought KCC loan to a limit of Rs.8,00,000/- to meet the cultivation expenses of mixed vegetables, Banana and paddy and Agricultural Term Loan in a sum of Rs.22,00,000/- for the purpose of land development, reclamation, soil conservation and vermi composing totaling a sum of Rs.40,00,000/-. After due consideration, the Applicant Bank accepted the request of the defendants and sanctioned the Loan after executing necessary documents on 11.01.17 in favour of the Applicant Bank and the same was duly

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Page 2 of 9

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OA No. 28/2023

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accepted by defendants 1 & 2 by counter signing the same in token of their acceptance of the terms and conditions therein. D-1 executed Demand promissory note on 17.01.2017 and D-1 & D-2 have executed credit facility agreements dated 11.01.17 agreeing to abide by the terms of sanction and also to abide by various conditions stipulated therein with regard to said facility. The defendants also executed Agreement for Hypothecation by which movables described in Schedule “A” hereunder stood hypothecated in favour of applicant and executed acknowledgement of receipt.

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The defendants deposited their Title deeds with the applicant bank on 11.01.2017 with an intention to create equitable mortgage in favour of the applicant bank for securing the repayment of the said facilities. The 1^st defendant executed registered Memorandum of deposit of Title deeds and registered as Doc.No.77/2017 on 11.01.17 and executed letter confirming of title deeds dt.12.01.17.

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Renewal of Credit facilities

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On the request of the defendants 1 & 2 the applicant bank renewed the KCC loan limit of Rs.18,00,000/- & Agri Term loan of Rs.22,00,000/and issued sanction intimation letter dt.30.09.2019. Defendants 1 & 2 countersigned the same in token of their acceptance. They have executed acknowledgement of debt and security on 30.09.2019. Further, Defendants agreed to repay the loan together with interest at the rate of 10.25% p.a for KCC & 10.25%p.a for Agri Term Loan. Further, defendants also agreed to pay interest as and when it is changed from time to time by 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.

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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 total sum of Rs.57,28,594.67p i.e., (i) Defendant 1 & 2 jointly to pay a sum of Rs.27,98,787.90p together with interest at the rate of 10.25% p.a. with penal interest at the rate of 2%p.a. in respect of Kisan Credit Card loan and (ii) Defendant 1 & 2 jointly/Severally to pay a sum of Rs.29,29,806.77p together with interest at the rate of 10.25% p.a. with penal interest at the rate of 2%p.a. in respect of Agricultural Term 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 of its claim in the OA, which are as follows:

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Page 3 of 9

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OA No. 28/2023

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S. No.	Date	Description of document	Exhibits
1.	11.01.2017	Sanction Intimation Letter	Ex.No.A-01
2.	11.01.2017	Demand PromissoryNote	Ex.No.A-02
3.	11.01.2017	Demand PromissoryNote	Ex.No.A-03
4.	11.01.2017	Credit facilityAgreement	Ex.No.A-04
5.	11.01.2017	Credit facilityAgreement	Ex.No.A-05
6.	11.01.2017	Agreement of Hypothecation	Ex.No.A-06
7.	11.01.2017	Acknowledgement of receipt of copy of documents	Ex.No.A-07
8.	11.01.2017	Memorandum of deposit of Title deed No.77/2017	Ex.No.A-08
9.	11.01.2017	Acknowledgement of receipt of Title deeds	Ex.No.A-09
10.	12.01.2017	Letter of confirmation of deposit of Title deeds	Ex.No.A-10
11.	11.01.2017	Declaration form of Mortgagor	Ex.No.A-11
		RENEWAL
12.	30.09.2019	Renewal of credit facility	Ex.No.A-12
13.	30.09.2019	Letter of renewal for continuance of KCC facility	Ex.No.A-13
14.	30.09.2019	Acknowledgement of Debt and security	Ex.No.A-14
15.	17.08.2016	Original Sale deed No.3477/2016	Ex.No.A-15
16.	17.08.2016	Original Sale deed No.3478/2016	Ex.No.A-16
17.	17.08.2016	Original Sale deed No.3479/2016	Ex.No.A-17
18.	06.07.2016	Original Sale deed No.2772/2016	Ex.No.A-18
19.	12.01.2012	Xerox copyof Patta Pass Book	Ex.No.A-19
20.	13.06.2016	Original Manaivari Thoraya Patta	Ex.No.A-20
21.	22.01.2016	Xerox copyof Death certificate of Karuppan	Ex.No.A-21
22.	-----	KCC Account No.0388656000000059	Ex.No.A-22
23.	-----	Ari Term Loan Account No. 03886520000000445	Ex.No.A-23

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SCHEDULE OF PROPERTY

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“A” Schedule

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Hypothecation of standing crops as described in Schedule “B” hereunder

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“B” Schedule

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Item No.1

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All the piece and parcel of land measuring 86^1/2 cents situated in Survey No.347/11 of Alunthur Village, Srirangam Taluk, Trichy District within the following boundaries:

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Page 4 of 9

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OA No. 28/2023

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East : Property of Subban Vagayarah West : Property of Devasagayam North : Property of Shanmugam South : Property of Periyasamy

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Situated within the Registration District of Trichy, K. Sathanur Sub Registry and Srirangam Taluk, Trichy District.

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Item No.2

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All the piece and parcel of land measuring 21 cents situated in Survey No.323/8F of Alunthur Village, Srirangam Taluk, Trichy District within the following boundaries:

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East : Property of Periyasamy West : Property of Karuppan North : Property of Periyasamy South : Property of Periyasamy

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Situated within the Registration District of Trichy, K. Sathanur Sub Registry and Srirangam Taluk, Trichy District.

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Item No.3

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All the piece and parcel of land measuring 74 cents situated in Survey No.323/8N of Alunthur Village, Srirangam Taluk, Trichy District within the following boundaries:

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East : Property of Arokiyasamy West : Property of Periyasamy North : Property of Devidayana South : Property of Masi

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Situated within the Registration District of Trichy, K. Sathanur Sub Registry and Srirangam Taluk, Trichy District.

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Item No.4

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All the piece and parcel of land measuring 1420Sq.ft situated in Survey No.441/7 of Alunthur Village, Srirangam Taluk, Trichy District within the following boundaries:

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East : Property of Andi West : Property of Muniyan North : Property of Road South : Nallamalli Amman Kovil Property

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Page 5 of 9

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OA No. 28/2023

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Situated within the Registration District of Trichy, K. Sathanur Sub Registry and Srirangam Taluk, Trichy District.

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Item No.5

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All the piece and parcel of land measuring 49^1/2 cents situated in Survey No.323/9A of Alunthur Village, Srirangam Taluk, Trichy District within the following boundaries:

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East : Property of Kodangi Vagayarah West : Property of Murugan Vagayarah & Kodangi Vagayarah North : Property of Karuppayee South : Property of Kodangi Vagayarah

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Situated within the Registration District of Trichy, K. Sathanur Sub Registry and Srirangam Taluk, Trichy District.

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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. Darshan, who is the Branch Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed KCC and Agricultural Term 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-23 in support of its claim in the OA.

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The Sanction Intimation Letter has been marked as Ex.No.A-01, Demand Promissory Note has been marked as Ex.No.A-02, 2^nd Demand Promissory Note has been marked as Ex.No.A-03, Credit facility Agreement has been marked as Ex.No.A-04, Credit facility Agreement has been marked as Ex.No.A-05, Agreement of Hypothecation has been marked as Ex.No.A06, Acknowledgement of receipt of copy of documents has been marked as Ex.No.A-07, Memorandum of deposit of Title deed No.77/2017 has been marked as Ex.No.A-08, Acknowledgement of receipt of Title deeds has been

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Page 6 of 9

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OA No. 28/2023

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marked as Ex.No.A-09, Letter of confirmation of deposit of Title deeds has been marked as Ex.No.A-10, Declaration form of Mortgagor has been marked as Ex.No.A-11, Renewal of credit facility has been marked as Ex.No.A-12.

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Letter of renewal for continuance of KCC facility has been marked as Ex.No.A-13, Acknowledgement of Debt and security has been marked as Ex.No.A-14, Original Sale deed No.3477/2016 has been marked as Ex.No.A15, Original Sale deed No.3478/2016 has been marked as Ex.No.A-16, Original Sale deed No.3479/2016 has been marked as Ex.No.A-17, Original Sale deed No.2772/2016 has been marked as Ex.No.A-18, Xerox copy of Patta Pass Book has been marked as Ex.No.A-19, Original Manaivari Thoraya Patta has been marked as Ex.No.A-20, Xerox copy of Death certificate of Karuppan has been marked as Ex.No.A-21, KCC Account No.0388656000000059 has been marked as Ex.No.A-22, Agri Term Loan Account No. 03886520000000445 has been marked as Ex.No.A-23. 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. Since this is an Agricultural loan the Applicant Bank is entitled for a final order on the following lines:-

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Page 7 of 9

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OA No. 28/2023

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The Applicant Bank is entitled to recover from the Defendants, a total sum of Rs.57,28,594.67p i.e., (i) Defendant 1 & 2 jointly to pay a sum of Rs.27,98,787.90p together with simple interest at the rate of 6% p.a. in respect of Kisan Credit Card loan and (ii) Defendant 1 & 2 jointly/Severally to pay a sum of Rs.29,29,806.77p together with simple interest at the rate of 6% p.a. in respect of Agricultural Term Loan 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 total sum of Rs.57,28,594.67p i.e., (i) Defendant 1 & 2 jointly to pay a sum of Rs.27,98,787.90p together with simple interest at the rate of 6% p.a. in respect of Kisan Credit Card loan and (ii) Defendant 1 & 2 jointly/Severally to pay a sum of Rs.29,29,806.77p together with simple interest at the rate of 6% p.a. in respect of Agricultural Term 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) 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.

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Page 8 of 9

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OA No. 28/2023

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(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.

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(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 Kisan Credit Card and Agricultural Term 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 06^th August, 2025.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 16.09.2025

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Page 9 of 9

South Indian Bank v. P Shanmugam

Case brief

What is this about?

What did the court decide?

South Indian Bank v. P Shanmugam

Case brief

What is this about?

What did the court decide?

What the court decided

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