Allowed

Kotak Mahindra Bank Limited v. M/S National Glass House

DRT24 Jun 2025OA/337/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's plea for recovery of outstanding dues of Rs. 7.28 crores plus interest. It held penal interest must be excluded before calculating statutory interest at 9% per annum and ordered the issuance of a recovery certificate.

What did the court decide?

Recovery of Rs. 7.28 crores plus 9% interest on the adjusted principal, and issuance of a Recovery Certificate.

Kotak Mahindra Bank Limited versus M/S National Glass House — Company and Corporate | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH

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PRESIDING OFFICER

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Dated this the 24^th day of June, 2025

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ORIGINAL APPLICATION No.337/2023

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Between

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Kotak Mahindra Bank Ltd., Ground Floor, Salpa Complex, Door No.20, M.G. Road, West Fort, Thrissur – 680 004. …Applicant

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And

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M/s.National Glass House, Represented by its Proprietor Sheeja Harshad, No.652A, Main Road, Mala P.O., Thrissur - 680 732.

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Sheeja Harshad, W/o.Harshad P.A., Pulickal, Cheruvaloor, Kallur, Vadakummuri, Cheruvaloor, Mukundapuram, Thrissur- 680 308.

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Harshad P.A., S/o.Ahammedkutty, Pulickal, Cheruvaloor, Kallur, Vadakummuri, Cheruvaloor, Mukundapuram, Thrissur- 680 308. …Defendants

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This Original Application having been heard on 21.05.2025

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in the presence of Advocates M/s.Nagaraj Narayanan, Saijo

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OA 337/2023

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Hassan, Benoj C.Augustin, M.Noohu Kunju Sahib, Hassan U.M. and Devi R.Sens for the applicant bank and the defendants being exparte and stood over to this day for consideration, the Tribunal delivered the following:

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F I N A L O R D E R

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This Original Application has been filed under S.19(1) of the Recovery of Debts and Bankruptcy Act, 1993 for recovery of an aggregate sum of Rs.7,28,62,391.11 due under various loan accounts together with future interest and costs from the defendants jointly and severally and by sale of ‘A’ to ‘G’ schedule properties.

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Facts of the case:

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The applicant is a public limited company incorporated under the Companies Act, 1956 and is engaged in banking business in India through its various branches including one at Thrissur.

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The 1^st defendant is a proprietary concern of the 2^nd defendant and 3^rd defendant is the husband of the 2^nd defendant. The defendants approached the applicant bank for various credit facilities for trading in glass. Considering their request, the applicant sanctioned CC OD limit of Rs.485 lakhs and WCTL of

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OA 337/2023

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Rs.97 lakhs to the 1^st defendant, Agri. OD limits of Rs.40 lakhs and Rs.50 lakhs to the 2^nd defendant and 3^rd defendant respectively and Agri. term loans of Rs.45 lakhs each to the 2^nd and 3^rd defendants. The defendants availed the facilities after executing security documents. As security for the loans, the defendants hypothecated the movable properties described in ‘A’ schedule and towards collateral security for the facilities, equitable mortgage was created over ‘B’ to ‘G’ schedule properties by defendants 2 and 3 by depositing respective title deeds with the applicant. Due to default in repayment of the loans, recall notice was issued to the defendants on 27.10.2022 calling upon them to repay the outstanding dues but they did not clear the liability. Hence the applicant bank was constrained to file the OA claiming the following reliefs:

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(i) To recover an aggregate sum of Rs.7,28,62,391.11 together with pendente lite and post decree interest thereon from the defendants jointly and severally and by sale of ‘A’ to ‘G’ schedule properties;

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(ii) To recover the costs, charges and expenses from the defendants;

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OA 337/2023

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(iii) To issue Recovery Certificate to the Recovery Officer with a direction to recover the amount and pay it to the applicant bank.

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The defendants entered appearance through their Advocate and undertook to file written statement but they did not file the same despite time granted. As the defendants remained absent from the proceeding, they were declared exparte on 20.11.2024.

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Proof Affidavit :

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To establish the claim on behalf of the applicant bank, one Mr.Sreedhara S., Chief Manager of the applicant has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A45. The proof affidavit filed by AW1 and the documents produced in this case are not challenged by the defendants. The availing of the loans and the creation of hypothecation/mortgage charge over the schedule properties are well established from the documents placed by the applicant bank. An aggregate sum of Rs.7,28,62,391.11 is outstanding in the loan accounts as on 10.12.2022, which is clearly established from the account statements marked as Exts.A38 to A43.

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OA 337/2023

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Further, it could be seen from Ext.A44 statement that the applicant has charged a sum of Rs.2,60,022/-, Rs.30,886.04, Rs.29,256.27 and Rs.26,022/- by way of penal interest in the CC OD account, two Agri. term loan accounts and WCTL account respectively. It is well settled that penal interest cannot be capitalized and no interest can be charged on penal interest and hence the applicant bank is not entitled to get any pendente lite and post-decree interest on the aforesaid penal interest of Rs.2,60,022/-, Rs.30,886.04, Rs.29,256.27 and Rs.26,022/charged in the loan accounts.

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Considering the amounts advanced, interest and penal interest applied, repayments effected and default committed, I am of the view that the applicant bank is entitled to get pendente lite and post decree interest @9% per annum on the sum of Rs.7,25,16,204.80 (i.e., after excluding the total penal interest of Rs.3,46,186.31 from the OA claim amount of Rs.7,28,62,391.11), which is reasonable in the facts and circumstances of the case.

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The applicant bank, therefore, is entitled to get a final order on the following lines:

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OA 337/2023

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In the result, the applicant bank is given a final order allowing it to recover:

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(i) the sum of Rs.7,28,62,391.11 (Rupees seven crores twenty eight lakhs sixty two thousand three hundred and ninety one and Paise eleven only) from the defendants jointly and severally and by sale of ‘A’ to ‘G’ schedule properties;

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(ii) Pendente lite and post-decree interest @9% per annum on the sum of Rs.7,25,16,204.80 (Rupees seven crores twenty five lakhs sixteen thousand two hundred and four and Paise eighty only) from 23.05.2023 till realisation from the defendants jointly and severally and by sale of ‘A’ to ‘G’ schedule properties; and

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(iii) also costs and expenses borne by it for realisation of the loans from the defendants.

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‘A’ to ‘G’ schedules to the OA shall be appended to

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this final order.

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

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OA 337/2023

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Recovery Certificate shall be drawn up and issued to

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the Recovery Officer in terms of the final order.

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Communicate copy of this order to both parties as provided in R.16 r/w R.2(c) of the Debts Recovery Tribunal (Procedure) Rules, 1993.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 24^th day of June, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

OA 337/2023

A P P E N D I X

Witness for Applicant: AW1: Mr.Sreedhara S., Chief Manager of the applicant bank.

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Witness for Defendant(s): Nil

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Applicant’s Exhibits

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Ext.No Date Particulars of documents

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A1	17.04.2018	Sanction Letter for Cash Credit/Overdraft limit of Rs.457.00 lakhs issued by the applicant bank and duly accepted by the 1^stdefendant.
A2	23.05.2018	Demand Promissory Note for Rs.4,75,00,000/- executed by the 1^stdefendant in favour of the applicant bank.
A3	23.05.2018	Letter of continuing security executed by the 1^st defendant.
A4	23.05.2018	Deed of hypothecation executed by the 1^st defendant in favour of the applicant bank.
A5	23.05.2018	Master facility agreement executed by the 1^st defendant in favour of the applicant bank.
A6	23.05.2018	Guarantee deed executed by the 2^ndand 3^rd defendant in favour of the applicant bank.
A7	27.05.2019	Sanction Letter for enhanced Cash Credit/Overdraft limit of Rs.485.00 lakhs issued by the applicant bank and duly accepted by the 1^stdefendant.
A8	03.06.2019	Letter of continuing security executed by the 1^st defendant.
A9	03.06.2019	Supplemental deed of hypothecation executed by the 1^stdefendant in favour of the applicant bank.
A10	03.06.2019	Supplemental agreement of Master facility agreement executed by the 1^stdefendant in favour of the applicant bank.
A11	03.06.2019	Letter of appropriation and set-off executed by the 1^stdefendant in favour of the applicant bank.

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OA 337/2023

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A12	03.06.2019	Confirmation cum supplemental guarantee executed by the 2^ndand 3^rddefendant in favour of the applicant bank.
A13	31.05.2020	Sanction Letter issued by the applicant bank and duly accepted by the 3^rddefendant.
A14	03.06.2019	Supplemental agreement of Master facility agreement executed by the 2^nddefendant in favour of the applicant bank.
A15	27.05.2019	Sanction Letter for Agri. OD limit of Rs.50.00 lakhs issued by the applicant bank and duly accepted by the 3^rddefendant.
A16	03.06.2019	Demand Promissory Note for Rs.50,00,000/- executed by the 3^rddefendant in favour of the applicant bank.
A17	03.06.2019	Supplemental agreement of Master facility agreement executed by the 3^rddefendant in favour of the applicant bank.
A18	27.05.2019	Sanction Letter for Agri Term loan of Rs.45.00 lakhs issued by the applicant bank and duly accepted by the 2^nddefendant.
A19	03.06.2019	Supplemental deed of hypothecation executed by the 2^nddefendant in favour of the applicant bank.
A20	03.06.2019	Confirmation cum supplemental guarantee executed by the 1^stand 3^rddefendant in favour of the applicant bank.
A21	03.06.2019	Supplemental deed of hypothecation executed by the 3^rddefendant in favour of the applicant bank.
A22	03.06.2019	Confirmation cum supplemental guarantee executed by the 1^stand 2^nddefendant in favour of the applicant bank.
A23	22.06.2020	Sanction Letter for Working Capital Term loan of Rs.97.00 lakhs issued by the applicant bank and duly accepted by the 2^nddefendant.
A24	22.06.2020	Term loan agreement executed by the 2^nd defendant in favour of the applicant bank.
A25	13.01.2015	Sale Deed No.88/2015 of Mala SRO.
A26	05.06.2015	Sale Deed No.1509/2025 of Annamanada SRO.
A27	10.11.2006	Sale Deed No.2892/2006 of Mala SRO.

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OA 337/2023

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A28(a)	13.03.2012	Release Deed No.777/2012 of Annamanada SRO.
A28(b)	06.08.2012	Release Deed No.2603/2012 of Annamanada SRO.
A28 (c)	01.08.2014	Release Deed No.2465/2014 of Annamanada SRO.
A29	08.06.2006	Sale Deed No.1381/2016 of Mala SRO.
A30	27.02.2009	Sale Deed No.458/2009 of Annamanada SRO.
A31	27.02.2009	Sale Deed No.459/2009 of Annamanada SRO.
A32	08.08.2018	Memorandum of deposit of title deeds executed by the 2^ndand 3^rddefendants.
A33	01.06.2019	Memorandum of entry by constructive delivery executed by the 2^ndand 3^rddefendants.
A34	22.06.2020	Memorandum of entry by constructive delivery executed by the 2^ndand 3^rddefendants.
A35	27.10.2022	Loan recall notice issued to the defendants in respect of account Nos.6812589368 and WCTL- 9017CL0100000004.
A36	27.10.2022	Loan recall notice issued to the defendants in respect of account Nos.6712846783 and 9017TL0100000006.
A37	27.10.2022	Loan recall notice issued to the defendants in respect of account Nos.6712846837 and 9017TL0100000007.
A38	15.05.2023	Statement of account of CC OD account No.6812589368 with Certificate of Banker’s Book of Evidence Act.
A39	15.05.2023	Statement of account of Agri OD account No.6712846783 with Certificate of Banker’s Book of Evidence Act.
A40	15.05.2023	Statement of account of Agri OD account No.6712846837 with Certificate of Banker’s Book of Evidence Act.
A41	15.05.2023	Statement of account of ATL account No.9017TL0100000006 with Certificate of Banker’s Book of Evidence Act.
A42	15.05.2023	Statement of account of ATL account No.9017TL0100000007 with Certificate of Banker’s Book of Evidence Act.

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OA 337/2023

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A43	15.05.2023	Statement of account of WCTL- 9017CL0100000004 with Certificate of Banker’s Book of Evidence Act.
A44	..	Statement of certificate issued by the applicant bank showing the unapplied interest, penal interest and capitalization effect in the Exhibit A38 to A43 accounts.
A45	..	Statement of certificate showing the rate of interestin the Exhibit A38 to A43 accounts.

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Defendants’ Exhibits – Nil

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PRESIDING OFFICER

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PRESIDING OFFICER

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated the 24^th June, 2025

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OA NO.337/2023

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Between

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Kotak Mahindra Bank Ltd., Ground Floor, Salpa Complex, Door No.20, M.G. Road, West Fort, Thrissur. …Applicant

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And

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M/s.National Glass House, Represented by its Proprietor Sheeja Harshad, No.652A, Main Road, Mala P.O., Thrissur - 680 732 & 2 others. ...Defendants

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F I N A L O R D E R

Kotak Mahindra Bank Limited v. M/S National Glass House

Case brief

What is this about?

What did the court decide?

Kotak Mahindra Bank Limited v. M/S National Glass House

Case brief

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