Allowed

Karur Vysya Bank v. Chinnaiyan

DRT19 Sept 2025OA/425/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's application to recover a housing loan of approximately Rs. 21.58 lakhs. Relying on a Proof Affidavit and documentary evidence where respondents appeared ex-parte, the Tribunal ruled for the bank and directed recovery.

What did the court decide?

Direct order to pay Rs.21,58,856 plus interest at 10.75% p.a. with half-yearly rests and liberty to sell mortgaged properties for realization.

Karur Vysya Bank versus Chinnaiyan — Contract and Commercial Disputes | DRT (2025)

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OA No. 425/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 19^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.425/2023

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Between

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The Karur Vysya Bank Limited.,

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Asset Recovery Branch, RS.No.170/9, Mattuthavani – Melur Road, Near Mattuthavani Bus Stand, Madurai – 625 107. Rep. By its Senior Manager. ---Applicant Bank

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And

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Mr. C. Chinnaiyan,

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S/o Lakshmanan,

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No.19/5, Paingal West, Peravurani, Pattukkotai Tk, Thanjavur – 614 623.

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Mr. M. Raja,

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S/o Muthuvel,

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No.84, South Kaliyamman Kovil Street, Pattukkotai,

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Thanjavur – 614 601.

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Mr. C. Krishnaveni,

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W/o C. Chinnayan, No.19/5, Paingal West, Peravurani, Pattukkotai Tk, Thanjavur – 614 623.

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Mrs. P. Priya Dharshini, W/o C. Prakash, Aranthangi Post & Taluk, Pudukottai – 614 616. ---Defendants

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Page 1 of 8

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OA No. 425/2023

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Counsel for the Applicant Bank : M/s P. Madhan Alexandar

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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 26.05.2023 to recover from the Defendants a sum of Rs.21,58,856/together with interest at the rate of 10.75% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Housing 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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The defendants 1 & 2 and Late.Prakash approached the Applicant Bank for availing Housing Loan for construction of house. The Applicant Bank has also sanctioned the said Term loan for a sum of Rs.15,00,000/vide Account No. 1698 790 00000 0071-41. In consideration of the said loan, the letter of sanction along with terms & conditions were communicated to the Late. Thiru. Prakash along with defendants 1 & 2 by the applicant bank through its sanction letter dt.23.09.15 and the same was duly accepted by them. Further 1^st defendant executed all loan documents as power agent on behalf of Late. Thiru. Prakash. The 1^st defendant for himself & as power agent of Late. Thiru. Prakash had executed a Demand Promissory Note on 23.09.15 for a sum of Rs.15,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with interest at the rate of 10.75% Per annum with monthly rest or at such other rates & rests as may be revised by the Applicant Bank from time to time.

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The 1^st defendant for himself & as power agent of Late. Thiru. Prakash had executed a Term Loan Agreement dt.23.09.15 for a sum of Rs.15,00,000/- in favour of the Applicant Bank containing various terms & conditions and by agreeing to repay the loan amount in 120 monthly installments of Rs.20,450.80 in favour of the applicant Bank. Further the 1^st defendant for himself & as power agent of Late. Thiru. Prakash promised to

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Page 2 of 8

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OA No. 425/2023

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repay the loan amount with compound interest at the rate of 10.75% Per annum with monthly rest or at such other rates as may be revised by the applicant bank from time to time with penal interest at the rate of 3% per annum in case of default. The 2^nd defendant agreed to stand as guarantor for the repayment of the said loan with interest & costs thereon and executed agreement of guarantee dt.23.09.15 in favour of the Applicant Bank from time to time.

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The 1^st defendant as power agent of Late. Thiru. Prakash has offered his power principal Late. Prakash's property which is fully mentioned in the "B" Schedule hereunder as Security and thereby deposited his Title Deeds on 31.08.15 with the Applicant Bank pertaining to property, with an intention to create an Equitable Mortgage over the said property. To evidence the said fact as well as by confirming the same, the 1^st defendant had executed a Registered Memorandum of Deposit of title deeds dt.31.08.15 pertaining to the said property in favour of the Applicant Bank.

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The above said Late. Prakash died leaving behind the defendants 3 & 4 herein as his legal heirs who inherited the estate of Late. Prakash including loan liabilities as per law of succession. Further the defendants 3 & 4 being the Legal heirs of Late. Prakash have been benefited by the loan availed by him. The loan documents executed & mortgage created by the said Late. Prakash will bind the defendants 3 & 4 and so they are liable to repay the loan dues. The defendants have not repaid the loans as agreed and promised by them. Thus the defendants 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 is constrained to file this original application for recovery of the loan amount.

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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 sum of Rs.21,58,856/- together with interest at the rate of 10.75% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Housing 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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Page 3 of 8

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OA No. 425/2023

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List of Documents – Annexure-I

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Loan Documents

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Term Loan

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S. No.	Date	Description of document	Exhibits
1.	23.09.15	Sanction letter along with terms & conditions counter signed defendants for favour of Applicant Bank	Ex.No.A-01
2.	23.09.15	Demand Promissory Note executed by Late. Prakash in favour of Applicant bank	Ex.No.A-02
3.	23.09.15	Term Loan Agreement executed by Late. Prakash in favour of Applicant bank	Ex.No.A-03
4.	23.09.15	Agreement of Guarantee executed by 2^nd defendant in favour of Applicant bank	Ex.No.A-04
5.	31.08.15	Registered Memorandum of deposit of Title deeds executed by Late. Prakash in favour of Applicant bank(Doc.No.1053/15)	Ex.No.A-05
6.	---	Statement of Accounts maintained by the Applicant bank in regular course and conduct of the business	Ex.No.A-06

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List of Documents – Annexure-II

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Title Deeds Deposited by 1^st defendant with regard to the ‘B’ Schedule Mortgage Property

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S. No.	Date	Description of document	Exhibits
1.	27.12.12	Registered gift settlement deed executed by Chinnayan in favour of Prakash (Doc.No.1458/12)	Ex.No.A-07
2.	23.10.14	Patta Transfer order issued by Tahsildar, Peravurani Taluk	Ex.No.A-08
3.	01.12.21	Certificate issued byVAO, Paingal Village	Ex.No.A-09
4.	01.12.14	Extract of Adangal for fasli 1424 issued by VAO,PaingalGroup	Ex.No.A-10
5.	01.12.14	FMB Sketch issued byVAO, Paingal Group	Ex.No.A-11
6.	26.12.14	Building plan along with proceedings issued by peravurani Panchayat standing in the name of Late.Prakash	Ex.No.A-12
7.	22.09.14	Registered General Power of attorney issued by Prakash in favour of Chinnayan (Doc.171/14)	Ex.No.A-13

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Page 4 of 8

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OA No. 425/2023

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SCHEDULE PROPERTY

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SCHEDULE OF MORTGAGED PROPERTY

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(Property belonging to 1" Defendant Vide Annexure-I for the title deeds)

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Tanjavur District, Pattukottai Registration District, Keeramangalam Sub Registry, Peravurani Taluk, Paingal Village, a house site measuring 8,720 Sq.ft or 20 Cents comprised in RS.No.124/12B corresponding to new RS.No.124/12B2 & building constructed thereon within the following boundaries

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On the North : Property belonging to Kulandhaivelu & others On the East : Property belonging to Sreenivasan & others On the South : Keeramangalam - Peravurani Main Road On the West : Property belonging to Arunkumar & Ponnusamy

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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. S. Dhandapani, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Housing 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-13 in support of its claim in the OA.

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The Sanction letter along with terms & conditions counter signed defendants for favour of Applicant Bank has been marked as Ex.No.A-01, Demand Promissory Note executed by Late. Prakash in favour of Applicant bank has been marked as Ex.No.A-02, Term Loan Agreement executed by Late. Prakash in favour of Applicant bank has been marked as Ex.No.A-03, Agreement of Guarantee executed by 2nd defendant in favour of Applicant bank has been marked as Ex.No.A-04, Registered Memorandum of deposit

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Page 5 of 8

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OA No. 425/2023

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of Title deeds executed by Late. Prakash in favour of Applicant bank (Doc.No.1053/15) has been marked as Ex.No.A-05, Statement of Accounts maintained by the Applicant bank in regular course and conduct of the business has been marked as Ex.No.A-06, Registered gift settlement deed executed by Chinnayan in favour of Prakash (Doc.No.1458/12) has been marked as Ex.No.A-07, Patta Transfer order issued by Tahsildar, Peravurani Taluk has been marked as Ex.No.A-08, Certificate issued by VAO, Paingal Village has been marked as Ex.No.A-09, Extract of Adangal for fasli 1424 issued by VAO, Paingal Group has been marked as Ex.No.A-10.

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The FMB Sketch issued by VAO, Paingal Group has been marked as Ex.No.A-11, Building plan along with proceedings issued by peravurani Panchayat standing in the name of Late.Prakash has been marked as Ex.No.A-12, Registered General Power of attorney issued by Prakash in favour of Chinnayan (Doc.171/14) has been marked as Ex.No.A-13. 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. 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 Defendants, a sum of Rs.21,58,856/- together with interest at the rate of 10.75% p.a. with half

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Page 6 of 8

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OA No. 425/2023

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yearly rests in respect of Housing 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 sum of Rs.21,58,856/- together with interest at the rate of 10.75% p.a. with half yearly rests in respect of Housing 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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(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 Term loan and the Kisan Credit Card 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

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Page 7 of 8

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OA No. 425/2023

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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 19^th September, 2025.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 30.09.2025

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Karur Vysya Bank v. Chinnaiyan

Case brief

What is this about?

What did the court decide?

Karur Vysya Bank v. Chinnaiyan

Case brief

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