Allowed

Punjab National Bank v. S Govindasamy

DRT18 Sept 2025OA/401/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an original application filed by Punjab national Bank for recovery of a cash credit loan. The tribunal held that the bank proved its claim via affidavit and documentary evidence, and awarded the principal amount plus simple interest at 6% p.a., directing the specific exclusion of capitalization of penal interest.

What did the court decide?

Director respondent to pay principal sum of Rs.31,29,579.69 plus simple interest at 6% p.a. from filing date and cost within one month.

Punjab National Bank versus S Govindasamy — Banking and Recovery | DRT (2025)

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OA No. 401/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 18^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.401/2023

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Between

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Punjab national Bank, Circle SASTRA Trichy, Circle Office, Kailasapuram, Trichy – 620 014. Rep. By its Chief Manager.

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---Applicant Bank

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And

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Mr. S. Govindasamy, S/o Sami Ayya Udayar, Thettuvasalpatty, Ponakulam, Thanjavur – 613 303. ---Defendant

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Counsel for the Applicant Bank : M/s S. Balasubramanian, T.M. Subramanian, M Sundaraj, B. Iswarya

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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 Defendant 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

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OA No. 401/2023

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on 10.05.2023 to recover from the Defendant a sum of Rs.31,29,579.69p together with interest at the rate of 13.75% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash Credit Loan from the date of filing of Application till the date of realization with cost 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 defendant approached the Applicant Bank for availing Cash Credit Hypothecation Loan for the purpose of Crop production for a sum of Rs.10,00,000/-. After due consideration, the Applicant Bank accepted the request of the defendant and sanctioned the Cash Credit Hypothecation Loan of Rs. 10,00,000/- after executing necessary documents in favour of the Applicant Bank. The defendant executed necessary loan documents in favour of the applicant bank. Further, Defendant agreed to repay the loan together with interest at the rate of 13.75% p.a. plus penal interest at the rate of 2%p.a. together with costs and charges and also agreed to pay interest as and when it is changed from time to time by the Applicant Bank. The defendant had executed Balance and security confirmation letter on various dates in favour of the Applicant bank. After availing the loan, the defendant was not regular in the matter of repayment. The defendant made several promises, but he failed to keep up his promises.

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Despite repeated demands and reminders, made by the Applicant Bank, the Defendant have failed and neglected to repay and adjust his liability. Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.31,29,579.69p together with interest at the rate of 13.75% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash Credit 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 its claim in the OA, which are as follows:

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S. No.	Date	Description of document	Exhibits
1.	07.09.2011	Loan Application	Ex.No.A-01
2.	07.09.2011	Sanction Letter	Ex.No.A-02
3.	07.09.2011	Hypothecation Agreement	Ex.No.A-03
4.	06.09.2014	Balance and securityConfirmation Letter	Ex.No.A-04
5.	05.09.2017	Balance and securityConfirmation Letter	Ex.No.A-05
6.	05.09.2020	Balance and securityConfirmation Letter	Ex.No.A-06
7.	---	Statement of Accounts	Ex.No.A-07

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OA No. 401/2023

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3 . On the other hand, Notices were issued to Defendant and since from the beginning of the case, there was no representation on behalf of the Defendant. Hence, Defendant was 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. N. Sivagurunathan, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendant has availed Cash Credit Loan for crop production from the Applicant Bank, but he failed to pay the outstanding loan amount, hence he has filed the case. The applicant bank has also filed the documents given by the defendant at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-07 in support of its claim in the OA.

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The Loan Application has been marked as Ex.No.A-01,Sanction Letter has been marked as Ex.No.A-02, Hypothecation Agreement has been marked as Ex.No.A-03, Balance and security Confirmation letter has been marked as Ex.No.A-04, Balance and security Confirmation letter has been marked as Ex.No.A-05, Balance and security Confirmation letter has been marked as Ex.No.A-06, Statement of Accounts has been marked as Ex.No.A07. 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 Defendant 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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OA No. 401/2023

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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 cash credit the Applicant Bank is entitled for a final order on the following lines:-

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The Applicant Bank is entitled to recover from the Defendant, a sum of Rs.31,29,579.69p together with simple interest at the rate of 6% p.a. in respect of Cash Credit 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 Defendant is directed to pay personally a sum of Rs.31,29,579.69p together with simple interest at the rate of 6% p.a. in respect of Cash Credit 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) 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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(c) 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 Cash Credit loan for crop production 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

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OA No. 401/2023

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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 18^th September, 2025.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 19.11.2025

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Punjab National Bank v. S Govindasamy

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. S Govindasamy

Case brief

What is this about?

What did the court decide?

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