Allowed

Union Bank of India v. K. Rani

DRT29 Sept 2025OA/391/2022

Case brief

AI extract

What is this about?

The Tribunal disposed of an Original Application filed by Union Bank of India under Section 19(1) RDB Act. The court held that the bank successfully proved the loan liability and disapproved the claim for penal interest, awarding pendente-lite interest at 8% p.a. instead.

What did the court decide?

OA allowed; Recovery Certificate issued; Respondent liable to pay Rs.42,76,179.64 plus 8% annual simple interest from application date; Costs awarded to applicant.

Union Bank of India versus K. Rani — Contract and Commercial Disputes | DRT (2025)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 29^th day of September, 2025

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PRESENT: SHRI SHARANG DHAR UPADHYAY PRESIDING OFFICER

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OA No.391 of 2022

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Union Bank of India Hosur Branch Rep. by its Branch Manager No.1077-1, Shiva Plaza, Opp. Vijaya Hospital Old Bangalore Main Road Hosur - 635126 …Applicant

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Versus

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K. Rani Proprietor of M/s Sri Srinivasan Moulds No.2, Nanjapuram Main Road Sree Nagar, Bommandapalli Circle Hosur – 635 109

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Also at Plot No.21, Kothur Road Sai Residency, Muneswar Nagar Hosur – 635 109 …Defendant

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Counsels on Record / Appeared

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Counsel for Applicant Bank : Mr. Jaishankar Defendant ex-parte on 20.02.2023

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FINAL ORDER

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This application is filed by the applicant bank under Section 19(1) of

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Recovery of Debts and Bankruptcy Act, 1993 against the defendant seeking issuance of a Recovery Certificate for recovery of an aggregate

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sum of Rs.42,76,179.64p comprising a sum of Rs.32,07,171.38p with further interest at the rate of 9.65% per annum with monthly rests being the amount due under Term Loan-I Account; a sum of Rs.4,66,194.20p with further interest at the rate of 9.95% per annum with monthly rests being the amount due under Term Loan-II Account; a sum of Rs.1,34,453.41p with further interest at the rate of 11.75% per annum with monthly rests being the amount due under Term Loan-III account; a sum of Rs.18,161.40p with further interest at the rate of 11.75% per annum with monthly rests being the amount due under Term Loan-IV account and a sum of Rs.4,50,199.25p with further interest at the rate of 7.5% per annum with monthly rests being the amount due under Term Loan-V account plus 2% penal interest from the date of the application till the date of realisation along with costs of the application and for sale of schedule mentioned properties.

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The subject matter of the case is the various credit facilities availed by the defendant from the Applicant Bank.

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It is the case of the applicant that the defendant approached the applicant bank for grant of credit facility for the purpose of her business and considering the said request the applicant vide its sanction dated 21.11.2017 sanctioned Term Loan facility of Rs.32,50,000/- repayable in 84 installments of Rs.40,123.45p. The defendant executed various loan

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and security documents on 21.11.2017 in favour of the applicant bank and also hypothecated the movables more fully described in Schedule ‘A’ to the OA.

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It is also the case of the applicant that at the request of the defendant by Loan Application dated 07.03.2018 under Pradhan Mantri Mudra Yojana, the applicant sanctioned loan facility of Rs.5 lakhs vide sanction dated 09.03.2018 repayable in 60 installments of Rs.8,333,33p and the defendant executed necessary loan and security documents on 09.03.2018.

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It is the further case of the applicant that pursuant to the loan application for restructuring dated 25.10.2019 and executed Debts Restructuring Agreement dated 30.11.2019 and Debtor Creditor Agreement dated 30.11.2019 in favour of the applicant. Based on the said documents the applicant restructured the facility on 30.12.2019 for Rs.30.45 lakhs and sanctioned FITL Term Loan facility of Rs.2.26 lakhs and FITL Term Loan facility 2 of Rs.0.32 lakhs vide Letter of Memorandum dated 30.12.2019.

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It is the case of the applicant that the pursuant to the loan application of defendant for UGECL facility on 13.8.2020, the applicant sanctioned Term Loan facility of 4 lakhs vide sanction dated 12.10.2020 and the defendant executed the loan and security documents on 19.10.2020.

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The defendant defaulted in repayments and failed to comply with the terms and conditions of sanction. Despite repeated demands and requests the defendant did not come forward to clear the dues and hence the applicant issued a recalled the loan by issuing legal notice dated 4.5.2022. Even after issuance of the legal notice the defendant did not come forward to clear the outstanding dues, hence the present OA is filed for recovery of its dues.

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Summons was taken out to the defendant was returned with endorsement “Refused”, hence it is deemed service. As there was no representation on behalf of the defendant continuously and on 20.02.2023, the defendant was called absent and placed ex-parte on that day. Applicant Bank filed Proof Affidavit along with 32 documents, which were marked as Ex. A-1 to A-32 on 02.02.2024, however, Exhibit A-21 and A-23 were marked subject to proof. The Ld. Counsel for Applicant Bank made his submissions on 25.08.2025 and thereafter the matter stood till this date for passing final orders.

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The following issues arise for consideration in the matter: -

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(a) Whether the applicant had succeeded in proving the liability of the defendant?

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(b) What order as to cost of the proceedings need be passed?

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These issues are considered together.

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Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

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The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-32 along with the proof affidavit. The documents produced in evidence are all found admissible. The proof affidavit of the applicant bank remained unchallenged and rebutted. Therefore, on careful consideration of proof affidavit along with exhibits filed on behalf of the applicant bank, besides the material placed before the Tribunal, the Tribunal is satisfied that the applicant bank has successfully proved the OA claim against the defendant. Further, the statement of accounts in respect of the loan account produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendant. It is clear from the statement of accounts that penal interest is not capitalized.

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In view of the foregoing, it is clearly evident that the application filed by the applicant bank is well within the period of limitation and this Tribunal possesses the territorial and pecuniary jurisdiction to entertain this OA.

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In view of the fact that the loan facility availed by the defendant were Term Loan for business purpose and the applicant has claimed interest at contractual rate till the date of filing of the OA, this Tribunal is of the view that the pendente lite interest can be awarded at reduced rates and prayer for award of penal interest is rejected.

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In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan, which the applicant is entitled to realize. Hence, OA is disposed off in the following manner: -

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(a) OA No.391 of 2022 stands allowed.

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(b) Applicant is permitted to realize a sum of Rs.42,76,179.64p with further interest @8% per annum (simple) from the date of filing of the application till the date of realization in full, from the defendant after deducting all the amounts received / realized by them during the pendency of OA and also by selling the schedule mentioned properties and other assets of the defendant.

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(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the defendant is personally liable for all such amounts due as ordered above.

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(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 15 days from the date of receipt of the copy of the order.

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(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

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Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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Sd/- (SHARANG DHAR UPADHYAY) PRESIDING OFFICER DRT-II, CHENNAI

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(Dictated to PS, who typed in the system directly, corrected, signed and pronounced by me in Open Court, on this 29^th day of September, 2025)

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EXHIBITS MARKED BY APPLICANT BANK

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S. No.	Date	Description of Documents	Exhibit Nos.
1.	21.11.2017	Sanction Advice for Rs.32.50 Lakhs given by the applicant to the defendant	A-1
2.	21.11.2017	General Term Loan Agreement executed by the defendant in favour of the applicant	A-2
3.	21.11.2017	Interest Agreement executed by the defendant in favour of the applicant	A-3
4.	21.11.2017	Term Loan Agreement executed by the defendant in favour of the applicant.	A-4

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S. No.	Date	Description of Documents	Exhibit Nos.
5.	21.11.2017	Supplementary Agreement to hypothecation agreement executed by the defendant in favour of the applicant	A-5
6.	21.11.2017	Demand Promissory note for Rs.32.50 Lakhs executed by defendant in favour of the applicant	A-6
7.	21.11.2017	Letter of continuity given by the defendant to the applicant	A-7
8.	21.11.2017	Letter of undertaking from the borrower given by defendant to the applicant	A-8
9.	21.11.2017	Letter of undertaking for no to alienate Hypothecation goods executed by the defendant in favour of the applicant.	A-9
10.	07.03.2018	Loan Application for Mantri Mudre Yojana given by the defendant to the applicant	A-10
11.	09.03.2018	Sanction Advice given by the applicant to the defendant for Term Loan – II for Rs.5 Lakhs	A-11
12.	09.03.2018	General Term Loan Agreement executed by the defendant in favour of the applicant	A-12
13.	09.03.2018	Interest Agreement executed by the defendant in favour of the applicant.	A-13
14.	09.03.2018	Demand Promissory Note for Rs. 5 Lakhs executed by defendant in favour of the applicant	A-14
15.	09.03.2018	Letter of continuity given by the defendant to the applicant	A-15
16.	09.03.2018	Letter of undertaking from the borrower given by the defendant to the applicant.	A-16
17.	11.03.2019	Balance Confirmation Letter given by the	A-17

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S. No.	Date	Description of Documents	Exhibit Nos.
		defendant to the applicant.
18.	25.10.2019	Loan Application given by the defendant to the applicant for restructuring Term Loan – I, facility.	A-18
19.	30.11.2019	Debt Restructuring Agreement executed by the defendant in favour of the applicant	A-19
20.	30.11.2019	Debtor – Creditor Agreement executed by the defendant in favour of the applicant.	A-20
21.	30.12.2019	Memorandum of Letter given by the applicant for restructuring Term Loan – I, facility of Rs.30.45 Lakhs and sanctioned Term Loan -III Rs.2.26 Lakhs & Term loan IV of Rs.0.32 Lakhs	A-21
22.	13.08.2020	Loan Application given by the defendant to the applicant for UGECL facility.	A -22
23.	12.10.2020	Sanction letter given by the applicant to the defendant for UGECL for Rs. 4 Lakhs	A-23
24.	19.10.2020	Term Loan Agreement executed by the defendant in favour of the applicant.	A-24
25.	19.10.2020	Supplementary Agreement to Hypothecation Agreement executed by the defendant in favour of the applicant	A-25
26.	19.10.2020	Interest Agreement executed by the defendant in favour of the applicant.	A-26
27.	19.10.2020	Demand promissory Note for Rs.4 Lakhs executed by defendant in favour of the applicant	A-27
28.	19.10.2020	Letter of continuity given by the defendant to the applicant	A -28
29.	19.10.2020	Letter of undertaking from the borrower given by	A-29

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S. No.	Date	Description of Documents	Exhibit Nos.
		defendant to the applicant
30.	19.10.2020	Letter of General Lien given by the defendant to the applicant	A-30
31.	04.05.2022	Legal Notice issued by the applicant’s counsel to the defendants	A -31
32.		Statement of Accounts along with Certificate under Bankers’ Book’s Evidence Act, 1891.	A-32

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Sd/- (SHARANG DHAR UPADHYAY) PRESIDING OFFICER DRT-II, CHENNAI

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DESCRIPTION OF PROPERTY

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DETAILS OF HYPOTHECATION

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Hypothecated of movables, raw materials & finished goods of stocks,

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current assets and book debts etc., lying at first defendant company premises or

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wherever its available or found.

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Sd/-

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(SHARANG DHAR UPADHYAY) PRESIDING OFFICER DRT-II, CHENNAI

Union Bank of India v. K. Rani

Case brief

What is this about?

What did the court decide?

Union Bank of India v. K. Rani

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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