Allowed

State Bank of India v. Kannika Parameshwari

DRT15 Dec 2025OA/448/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an original application filed by State Bank of India to recover Rs. 21,20,459.56 with interest from the defendant for default in repaying cash credit, term loans, and emergency credit facilities, directing personal payment and supplementary sale of assets.

What did the court decide?

Directed defendant to pay Rs. 21,20,459.56 with interest within one month; allowed sale of mortgaged/hypothecated properties if payment defaults.

State Bank of India versus Kannika Parameshwari — Banking and Recovery | DRT (2025)

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OA No. 448/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 15^TH DAY OF DECEMBER, 2025 PRESENT: SEEMA SINHA,

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

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OA No.448/2023

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Between

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State Bank of India, SMEC Branch, Cantonment, Trichy District. Rep. By its Chief Manager.

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---Applicant Bank

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And

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Mrs. M. Kannika Parameshwari, D/o Mohan, Prop. M/s Yazh Enterprises, D.No.19, Ground Floor, Cauvery College Road, Annamalai Nagar, Trichy – 620 018.

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Also at:

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Mrs. M. Kannika Parameshwari, D/o Mohan, Prop. M/s Yazh Enterprises, D.No.64H, Kallar Street, Illupur Road, Kallukuzhi, Trichy – 620 020.

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---Defendants

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Counsel for the Applicant Bank : M/s R. Pandivel & S. Iniyan Karthik

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Page 1 of 9

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OA No. 448/2023

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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 on 24.04.2023 to recover from the Defendant a sum of Rs.21,20,459.56p i.e., (i) Rs.16,10,254.84p together with interest at the rate of 12.40% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash Credit facility (ii) Rs.1,04,561.72p together with interest at the rate of 9.75% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. in respect of CCEG Loan (iii) Rs.2,69,880/- together with interest at the rate of 9.25% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. in respect of Guaranteed Emergency Credit Line Loan (iv) Rs.1,35,763/- together with interest at the rate of 12.40% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. in respect of Funded Interest 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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The defendant approached the applicant bank for availing Cash Credit Facility, CCEGL, Guaranteed Emergency Credit Loans (GECL) and Funded Interest Term Loans. The applicant bank has also sanctioned the said Cash Credit Facility initially to the limit of Rs.15,00,000/- and CCEGL for a sum of Rs.1,50,000/- and Guaranteed Emergency Credit Line (GECL) for a sum of Rs.2,99,000/- and Funded Interest Term Loan (FITL) for a sum of Rs.1,55,000,/-. The defendant having accepted the terms & conditions of the said Cash Credit Facility sanctioned, signed a letter of arrangement on 23.12.19 and agreed to repay the loan amounts with interest as enumerated in the letter of arrangement with monthly rest and at such rates & rests as fixed by the applicant bank then & there.

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In consideration of the said Cash Credit Facility, the defendant executed an Agreement of Loan cum Hypothecation on 23.12.19 containing several terms & conditions for Cash Credit Facility of Rs.15,00,000/- in favour of the applicant bank by hypothecating goods & book debts which are

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Page 2 of 9

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OA No. 448/2023

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fully described in the 'A' Schedule herein and agreeing to repay the loan amount with interest as enumerated in the agreement with monthly rest and at such rates & rests as fixed by the applicant bank then & there.

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At the request of the defendant, the applicant bank has renewed the limit of Cash Credit Facility for a sum of Rs.15,00,000/- and CCEC Loan for a sum of Rs. 1,50,000/-. The defendant having accepted the terms & conditions of the said Cash Credit Facility & CCEC Loan sanctioned; signed a letter of arrangement on 15.05.20 and agreed to repay the loan amounts with interest as enumerated in the letter of arrangement with monthly rest and at such rates & rests as fixed by the applicant bank then & there.

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In consideration of the said renewed Cash Credit Facility & CCEC Loan, the defendant has executed a Demand Promissory Note on 15.05.20 for a sum of Rs. 16,50,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with interest at the rate of 7.25% per annum with monthly rest or at such other rates & rests as may be revised by the Applicant Bank from time to time and also the defendant executed an Agreement of Loan cum Hypothecation on 15.05.20 containing several terms & conditions in favour of the applicant bank by hypothecating goods & book debts which are fully described in the Schedule herein.

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At the request of the defendant, the applicant bank has renewed the limit of Cash Credit Facility for a sum of Rs.15,00,000/- and CCEC Loan for a sum of Rs.1,50,000/- and sanctioned Guaranteed Emergency Credit Line (GECL) for a sum of Rs.2,99,200/-. The defendant having accepted the terms & conditions of the said Cash Credit Facility & CCEC Loan & Guaranteed Emergency Credit Line sanctioned; signed a letter of arrangement on 29.05.20 and agreed to repay the loan amounts with interest as enumerated in the letter of arrangement with monthly rest and at such rates & rests as fixed by the applicant bank then & there.

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The defendant executed an Agreement of Loan cum Hypothecation on 29.05.20 containing several terms & conditions in favour of the applicant bank by hypothecating goods & book debts which are fully described in the Schedule herein. At the request of the defendant, due to Covid 19 Pandemic, the unpaid interest of Rs.1,55,900/- in the said Cash Credit Facility from March 2020 to August 2020 was restructured and funded as Funded Interest Term Loan. The defendant having accepted the terms & conditions of the said Funded Interest Term Loan sanctioned; signed a letter of arrangement on 04.02.21 and agreed to repay the loan amounts with interest as enumerated in the letter of arrangement with monthly rest and at such rates & rests as fixed by the applicant bank then & there.

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Page 3 of 9

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OA No. 448/2023

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At the request of the defendant, the applicant bank has again renewed the limit of Cash Credit Facility for a sum of Rs.15,00,000/- and CCEC Loan for a sum of Rs.1,50,000/- and Guaranteed Emergency Credit Line (GECL) for a sum of Rs.2,99,200/- and Funded Interest Term Loan for a sum of Rs.1,55,900/-

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In consideration of the said Cash Credit Facility & CCEG Loan & Guaranteed Emergency Credit Line & Funded Interest Term Loan, the defendant executed a Supplemental Agreement of Loan cum Hypothecation on 30.06.21 containing several terms & conditions in favour of the applicant bank by hypothecating goods & book debts which are fully described in the Schedule herein. By admitting & acknowledging her liabilities, the defendant has executed revival letter dt.19.08.22 in favour of the applicant bank.

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After availing the loans the defendant has not repaid the loans as agreed and promised by her and thus she has committed default in repaying the loan amount with interest & costs. Hence the applicant bank issued lawyer notice dt.27.01.23 to the defendant.

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Despite repeated demands and reminders, made by the Applicant Bank, the Defendant have failed and neglected to repay and adjust her liability. Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.21,20,459.56p i.e., (i) Rs.16,10,254.84p together with interest at the rate of 12.40% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash Credit facility (ii) Rs.1,04,561.72p together with interest at the rate of 9.75% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. in respect of CCEG Loan (iii) Rs.2,69,880/- together with interest at the rate of 9.25% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. in respect of Guaranteed Emergency Credit Line Loan (iv) Rs.1,35,763/together with interest at the rate of 12.40% p.a. compounded with monthly rests plus penal interest at the rate of 2%p.a. in respect of Funded Interest 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 its claim in the OA, which are as follows:

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S. No.	Date	Description of document	Exhibits
1.	23.12.19	Letter of Arrangement executed by the defendant in favour of the applicant bank	Ex.No.A-01
2.	23.12.19	Agreement of Loan cum Hypothecation	Ex.No.A-02

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Page 4 of 9

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OA No. 448/2023

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		executed by the defendant in favour of the applicant bank
3.	15.05.20	Letter of Arrangement executed by the defendant in favour of the applicant bank	Ex.No.A-03
4.	15.05.20	Demand Promissory Note executed by the defendant in favour of the applicant bank	Ex.No.A-04
5.	15.05.20	Agreement of Loan cum Hypothecation executed by the defendant in favour of the applicant bank	Ex.No.A-05
6.	29.05.20	Letter of Arrangement executed by the defendant in favour of the applicant bank	Ex.No.A-06
7.	29.05.20	Agreement of Loan cum Hypothecation executed by the defendant in favour of the applicant bank	Ex.No.A-07
8.	04.02.21	Letter of Arrangement executed by the defendant in favour of the applicant bank	Ex.No.A-08
9.	30.06.21	Letter of Arrangement executed by the defendant in favour of the applicant bank	Ex.No.A-09
10.	30.06.21	Supplemental Agreement of Loan cum Hypothecation executed by the defendant in favour of the applicant bank	Ex.No.A-10
11.	19.08.22	Revival Letter executed by the defendant in favour of the applicant bank	Ex.No.A-11
12.	27.01.23	Lawyer Notice issued by the applicant bank to the defendant	Ex.No.A-12
13.	---	Statement of accounts maintained by the applicant bank in the course and conduct of the business towards CashCreditFacility	Ex.No.A-13
14.	---	Statement of accounts maintained by the applicant bank in the course and conduct of the business towards CCEGL	Ex.No.A-14
15.	---	Statement of accounts maintained by the applicant bank in the course and conduct of the business towards GECL	Ex.No.A-15
16.	---	Statement of accounts maintained by the applicant bank in the course and conduct of the business towards FITL	Ex.No.A-16

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Schedule of Property

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Hypothecated Goods & Book Debts

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Item No.1

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All Stocks, Raw Materials, Stock in Process, Finished goods, Distributor of Food & Beverages etc., stored & kept at Door No.19, Ground Floor, Cauvery College Road, Annamalai Nagar, Trichy-620 018, Trichy

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Page 5 of 9

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OA No. 448/2023

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District and also at Door No.64H, Kallar Street, Illupur Road, Kallukuzhi, Trichy, Trichy District-620 020.

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Item No.2

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All Book Debts, Outstandings, Money Receivables, Claims and Bills due and owing to the defendants

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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. Abinav Bothra, 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 Facility, CCEGL, Guaranteed Emergency Credit line loan (GECL), Funded Interest Term Loan (FITL) 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 defendant at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-16 in support of its claim in the OA.

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The Letter of Arrangement executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-01, Agreement of Loan cum Hypothecation executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-02, Letter of Arrangement executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-03, Demand Promissory Note executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-04, Agreement of Loan cum Hypothecation executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-05, Letter of Arrangement executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-06, Agreement of Loan cum Hypothecation executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-07, Letter of Arrangement executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-08, Letter of Arrangement executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-09,

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Page 6 of 9

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OA No. 448/2023

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Supplemental Agreement of Loan cum Hypothecation executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-10.

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The Revival Letter executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-11, Lawyer Notice issued by the applicant bank to the defendant has been marked as Ex.No.A-12, Statement of accounts maintained by the applicant bank in the course and conduct of the business towards Cash Credit Facility has been marked as Ex.No.A-13, Statement of accounts maintained by the applicant bank in the course and conduct of the business towards CCEGL has been marked as Ex.No.A-14, Statement of accounts maintained by the applicant bank in the course and conduct of the business towards GECL has been marked as Ex.No.A-15, Statement of accounts maintained by the applicant bank in the course and conduct of the business towards FITL has been marked as Ex.No.A-16. 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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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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Page 7 of 9

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OA No. 448/2023

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The Applicant Bank is entitled to recover from the Defendant, a sum of Rs.21,20,459.56p i.e., (i) Rs.16,10,254.84p together with interest at the rate of 12.40% p.a. half yearly rests in respect of Cash Credit facility (ii) Rs.1,04,561.72p together with interest at the rate of 9.75% p.a. half yearly rests in respect of CCEG Loan (iii) Rs.2,69,880/- together with interest at the rate of 9.25% p.a. half yearly rests in respect of Guaranteed Emergency Credit Line Loan (iv) Rs.1,35,763/- together with interest at the rate of 12.40% p.a. half yearly rests in respect of Funded Interest 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 Defendant is directed to pay personally a sum of Rs.21,20,459.56p i.e., (i) Rs.16,10,254.84p together with interest at the rate of 12.40% p.a. with half yearly rests in respect of Cash Credit facility (ii) Rs.1,04,561.72p together with interest at the rate of 9.75% p.a. with half yearly rests in respect of CCEG Loan (iii) Rs.2,69,880/- together with interest at the rate of 9.25% p.a. with half yearly rests in respect of Guaranteed Emergency Credit Line Loan (iv) Rs.1,35,763/- together with interest at the rate of 12.40% p.a. with half yearly rests in respect of Funded Interest 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 Defendant, 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 defendant is personally liable to pay the amount of such deficiency with interest mentioned above until realization.

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Page 8 of 9

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OA No. 448/2023

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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 defendant.

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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 Cash Credit Facility, CCEGL, Guaranteed Emergency Credit line loan (GECL), Funded Interest Term Loan (FITL) 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 15^th December, 2025.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 19.12.25

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State Bank of India v. Kannika Parameshwari

Case brief

What is this about?

What did the court decide?

State Bank of India v. Kannika Parameshwari

Case brief

What is this about?

What did the court decide?

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