The Debts Recovery Tribunal allowed State Bank of India's application for recovery of a defaulted loan sum adjusted by auction proceeds, directing respondents to pay the balance along with interest and costs via a recovery certificate.
Respondents directed to jointly and severally pay ₹91,40,202 with interest and costs; Recovery Certificate to be issued.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
OA No. 504/2022
Fair Order
IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 16TH DAY OF SEPTEMBER, 2025 PRESENT: SEEMA SINHA,
[PR. DISTRICT & SESSIONS JUDGE – Retd] PRESIDING OFFICER
OA No.504/2022
Between
State Bank of India, Stressed Assets Recovery Branch, 1st Floor, No.8, Dr. Ambedkar Road, Madurai – 625 020. Rep. By its Chief Manager. ---Applicant Bank
And
Trichy – 620 013.
Counsel for the Applicant Bank : M/s Pethu Rajesh
Page 1 of 15
OA No. 504/2022
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:
JUDGEMENT
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 19.05.22 to recover from the Defendants a total sum of Rs.1,42,53,202.60p i.e. (i) Rs.67,78,211.60p together with interest at the rate of 8.15% p.a. with penal interest at the rate of 2%p.a in respect of Cash Credit Facility (ii) Rs.50,12,930/- together with interest at the rate of 8.15% p.a. with penal interest at the rate of 2%p.a in respect of Working Capital Term Loan Facility (iii) Rs.22,29,344/- together with interest at the rate of 9.25% p.a. with penal interest at the rate of 2%p.a in respect of Guaranteed Emergency Credit Line Facility and (iv) Rs.2,32,717/- together with interest at the rate of 7.25% p.a. with penal interest at the rate of 2%p.a in respect of Covid 19 Emergency Credit Line 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.
2 . The brief averments of the application filed by the Applicant Bank are as follows:-
The 1st Defendant herein is the Proprietor concern represented by its Proprietor the 2nd Defendant herein. The 1st Defendant is in the business line of boiler erecting and repairing works. The 2nd and 3rd Defendant stand as Guarantor to the transaction made by the 1st Defendant with State Bank of India, SME Branch, Thuvakudi. The 2nd and 3rd Defendant also personally stands as a Guarantor for the transaction made by and on behalf of the 1st Defendant and liable for the default if any committed by the 1st Defendant and all the Defendants are Jointly and Severally liable for the transaction made by and on behalf of the Defendant with State Bank of India SME Branch, Thuvakudi. The Property No.1 mentioned in Schedule -B belongs to 2nd Defendant by virtue of the Registered Sale Deed Executed in his favour by his vendor on 21.11.2008, registered as a document in Doc.No.11699 of 2008 on the file of the Sub-Registrar, Thiruverambur. Property No.2 mentioned in Schedule -B belongs to 2nd Defendant by virtue of the Sale Deed Executed by S.Periyasamy on 21.11.2014, registered as a document in Doc.No.6198 of 2014 on the file of the Sub-Registrar, Thiruverambur. Property No.3 mentioned in Schedule B personally belongs to the 3rd
Page 2 of 15
OA No. 504/2022
Defendant by virtue of the Registered Sale Deed dated 24.02.1966 executed by Umapathy through his power of attorney P.Ganesan in her favour and registered as a document in Doc No.315 of 1966 on the file of the SubRegistrar, Tiruporur.
The 2nd Defendant executed a Registered Memorandum of Deposit of Title Deeds in favour of the State Bank of India, SME Branch, Thuvakudi on 06.02.2018, in respect of the Property No.3 mentioned in B-Schedule which was registered as document in Doc.No.1298 of 2018 on the file of the SubRegistrar, Tirupporur. The 2nd Defendant executed a Registered Memorandum Suppliment Relating to Deposit of Title Deeds in favour of the State Bank of India, SME Branch, Thuvakudi on 25.01.2018, in respect of the Property No.1 & 2 mentioned in B-Schedule which was registered as document in Doc.No.383 of 2018 on the file of the Sub-Registrar, Tiruverembur. The 3rd Defendant executed a Registered Memorandum of Deposit of Title Deeds in favour of the State Bank of India, SME Branch, Thuvakudi on 14.05.2014, in respect of the Property No.1 mentioned in B- Schedule which was registered as document in Doc.No.2488 of 2014 on the file of the Sub-Registrar, Tiruverembur. Through the execution of the said Registered Memorandum of Deposit of Title Deed the 2nd and 3rd Defendant confirm the deposit of the title deed in favour of the Stae Bank of India in respect of Property No.1 to 3 in Schedule-B.
The 1st Defendant availed Cash Credit Facility to the tune of Rs. 1,20,00,000-/- and Bank Guarantee to the tune of Rs.20,00,000-/- in total to the tune of Rs.1,40,00,000-/- from State Bank of India, SME Branch, Thuvakudi which was sanctioned on 30.09..2015. A Letter of Arrangement was executed by all the Defendants on 03.10.2015 in favour of the State Bank of India, Tuvakudi Branch, Trichy and the said facility is available for 12 months from the date of sanction and subject to other terms and conditions. The rate of interest for the facility availed is13.30% excluding penal interest and other charges. An agreement of Loan cum Hypothecation was executed by the 1st Defendant on 03.10.2015 and A guarantee agreement was executed by the 2nd and 3rd Defendants personally on 03.10.2015 for the facility availed by the 1st Defendant in favour of the State Bank of India, Thuvakudi Branch. The 2nd and 3rd Defendant executed a Letter of Confirmation for creation of Mortgage by Deposit of Title Deeds in respect of Property No.1 and 3 in Schedule -B mentioned property and an End use Certificate dated 03.10.2015 in favour of the State Bank of India, SME Branch, Thuvakudi on 03.10.2015. The Account Number for the said Cash Credit Facility availed by the 1st Defendant is 33834389141.
The 1st Defendant extended the Cash Credit Facility to the tune of Rs.1,20,00,000-/- and Bank Guarantee to the tune of Rs.20,00,000-/- in total to the tune of Rs.1,40,00,000-/- from State Bank of India, SME
Page 3 of 15
OA No. 504/2022
Branch, Thuvakudi which was sanctioned on 14.03.2018. A Letter of Arrangement was executed by all the Defendants on 19.04.2018 in favour of the State Bank of India, Tuvakudi Branch, Trichy and the said facility is available for 12 months from the date of sanction and subject to other terms and conditions. The rate of interest for the facility availed is 11.90% excluding penal interest and other charges. A Supplemental agreement of Loan cum Hypothecation was executed by the 1 Defendant along with a guarantee agreement executed by the 2nd and 3rd Defendants personally and an Omnibus Counter Guarantee on 19.04.2018 in favour of the State Bank of India, Thuvakudi Branch. The 1" Defendant executed an End Use Certificate on 19.04.2018 and Balance Confirmation letter for confirmation of balance as on 31.03.2018.
The 1st Defendant extended the Cash Credit Facility to the tune of Rs.1,20,00,000-/- and Bank Guarantee to the tune of Rs.20,00,000-/sanctioned on 14.03.2018 and availed SME Care facility to the tune of Rs. 10,00,000-/- sanctioned on 23.04.2018 from State Bank of India, SME Branch, Thuvakudi and in total the 1st Defendant availed facilities to the tune of Rs.1,50,00,000-/- from the said bank. A Letter of Arrangement was executed by all the Defendants on 23.04.2018 in favour of the State Bank of India, Tuvakudi Branch, Trichy and the said facility is available for 12 months from the date of sanction and subject to other terms and conditions. The rate of interest for the facilities availed is 11.90% excluding penal interest and other charges. A Supplemental agreement of Loan cum Hypothecation was executed by the 1st Defendant along with a guarantee agreement executed by the 2nd and 3rd Defendants personally and an Omnibus Counter Guarantee on 23.04.2018 in favour of the State Bank of India, Thuvakudi Branch. The 1st Defendant executed an End Use Certificate on 23.04.2018. The 2nd and 3rd Defendant executed a Letter of Confirmation for creation of Mortgage by Deposit of Title Deeds in respect of Property No.1 and 3 in Schedule B mentioned property dated 24.04.2018 in favour of the State Bank of India, SME Branch, Thuvakudi.
The 1st Defendant extended the Cash Credit Facility to the tune of Rs.1,20,00,000-/- and Bank Guarantee to the tune of Rs.20,00,000-/sanctioned on 14.03.2018 and availed SME Care facility to the tune of Rs. 10,00,000-/- sanctioned on 12.11.2019 from State Bank of India, SME Branch, Thuvakudi and in total the 1st Defendant availed facilities to the tune of Rs.1,50,00,000-/- from the said bank. A Letter of Arrangement was executed by all the Defendants on 12.11.2019 in favour of the State Bank of India, Tuvakudi Branch, Trichy and the said facility is available for 12 months from the date of sanction and subject to other terms and conditions. The rate of interest for the facilities availed is 11.90% excluding penal interest and other charges. A Supplemental agreement of Loan -cumHypothecation was executed by the 1st Defendant along with a guarantee
Page 4 of 15
OA No. 504/2022
agreement executed by the 2nd and 3rd Defendants personally and an Omnibus Counter Guarantee on 12.11.2019 in favour of the State Bank of India, Thuvakudi Branch. The 1st Defendant executed an End Use Certificate on 12.11.2019. The 2nd and 3rd Defendant executed a Letter of Confirmation for creation of Mortgage by Deposit of Title Deeds in respect of Property No.1 and 3 in Schedule B mentioned property dated 13.11.2019 in favour of the State Bank of India, SME Branch, Thuvakudi. The 1 and 2nd Defendant also executed a Balance Confirmation letter on 31.03.2019.
The 1" Defendant extended the Cash Credit Facility by reducing the limit to the tune of Rs.50,00,000-/-, enhanced the Bank Guarantee to the tune of Rs.30,00,000-/- and availed Working Capital Term Loan to the tune of Rs.50,00,000-/- and Covid 19 Emergency Credit Line to the tune of Rs.5,00,000-/- sanctioned on 31.03.2020 from State Bank of India, SME Branch, Thuvakudi and in total the 1st Defendant availed facilities to the tune of Rs.1,35,00,000-/- from the said bank. The Loan Account Number for the Working Capital Term Loan is 39342866052 and the Account Number for Covid 19 Emergency Credit Line is 39342749893. A Letter of Arrangement was executed by all the Defendants on 22.05.2020 in favour of the State Bank of India, Tuvakudi Branch, Trichy and the said facility is available for 12 months from the date of sanction and subject to other terms and conditions. The rate of interest for the Cash Credit Facility is 8.55%, Working Capital Term Loan is 7.55 and for the Covid 19 Emergency Credit Line is 7.25% excluding penal interest and other charges. A Supplemental agreement of Loan cum Hypothecation was executed by the 1" Defendant along with a guarantee agreement executed by the 2nd and 3rd Defendants on 22.05.2020 in favour of the State Bank of India, Thuvakudi Branch. The 2nd and 3rd Defendant executed a Letter of Confirmation for creation of Mortgage by Deposit of Title Deeds in respect of Property No.1 and 3 in Schedule -B mentioned property in favour of the State Bank of India, SME Branch, Thuvakudi on 23.05.2020. The 1st and 2nd Defendant also executed a Balance Confirmation letter on 23.05.2020.
The 1st Defendant extended the Cash Credit Facility to the tune of Rs.50,00,000-/-, Working Capital Term Loan to the tune of Rs.50,00,000-/-, Covid 19 Emergency Credit Line to the tune of Rs.5,00,000-/, Bank Guarantee to the tune of Rs.30,00,000-/- and availed Guaranteed Emergency Credit Line to the tune of Rs.23,00,000-/-sanctioned on 31.03.2020 from State Bank of India, SME Branch, Thuvakudi and in total the 1st Defendant availed facilities to the tune of Rs.1,58,00,000/- from the said bank. The Loan Account Number for the Guaranteed Emergency Credit Line is 39449706109. A Letter of Arrangement was executed by all the Defendants on 08.06.2020 in favour of the State Bank of India, Tuvakudi Branch, Trichy and the said facility is available for 12 months from the date of sanction and subject to other terms and conditions. The rate of interest
Page 5 of 15
OA No. 504/2022
for the Cash Credit Facility is 8.55% which may be variable from time to time, Working Capital Term Loan is 8.55% which may be variable from time to time, for the Covid 19 Emergency Credit Line is 7.25% for one year which can be resent after one year and for Guaranteed Emergency Credit Line is 9.25% during the entire tenor excluding penal interest and other charges. A Supplemental agreement of Loan. cum Hypothecation was executed by the 1st Defendant along with a guarantee agreement executed by the 2nd and 3rd Defendants on 08.06.2020 in favour of the State Bank of India, Thuvakudi Branch. The 2nd and 3rd Defendant executed a Letter of Confirmation for creation of Mortgage by Deposit of Title Deeds in respect of Property No.1 and 3 in Schedule -B mentioned property in favour of the State Bank of India, SME Branch, Thuvakudi on 09.06.2020. The 1st Defendant also executed an End Use Certificate on 08.06.2020 in favour of the said bank. The 1st Defendant also executed a Balance Confirmation Letter dated 12.06.2020 in favour of the State Bank of India, SME Branch, Thuvakudi, Trichy.
It is submitted that the Defendants remain chronic defaulter in repaying the facility availed with accrued interest from the State Bank of India, SME Branch, Thuvakudi Branch despite several reminders. Since, the Defendants failed to clear the outstanding despite receipt of the said notice, the accounts maintained by the 1st Defendant becomes Non Performing Asset on 28.10.2021 and the State Bank of India, SME Branch, Tuvakudi, Trichy left with no other option issued a Demand Notice under Section 13(2) of the SARFAESI Act on 02.02.2022 claiming a sum of Rs.1,59,43,316.50p as on 02.02.2022 towards Cash Credit facility, Working Capital Term Loan, Covid 19 Emergency Credit Line, Guaranteed Emergency Credit Line and Bank Guarantee. Despite receipt of the said Demand Notice, the Defendants not chosen to send any representation as contemplated under the SARFAESI Act and the bank with no other option issued the subsequent Possession Notice under Section 13(4) of the SARFAESI Act on 29.01.2022. After issuance of the Possession Notice the accounts stated above was migrated to the Applicant Bank for the purpose of recovery and thus the Applicant Bank preferred the present application.
The Defendants are not prompt in repayment from the date of availing the said Credit facilities. As on 05.04.2021 the Defendants have to pay a sum of Rs.1,42,53,202.60-/-(Rupees One Crore Forty Two Lakhs Fifty Three Thousand Two Hundred Two Sixty Paise) with future interest with agreed penal interest towards the following facility availed:
Since, the Defendants had defaulted in repayments, the assets mortgaged with the Applicant bank consequently declared as NonPerforming Asset by the bank on 28.10.2021. As per the RBI guidelines, the Applicant Bank is charging the interest at the applicable rates as agreed by
Page 6 of 15
OA No. 504/2022
the Defendants by executing necessary documents for the facility availed by the Defendants in favour of the bank. The Defendants had deposited the original title deeds of the schedule of property with the intent to create Equitable Mortgage over the property towards the advances availed by them.
The Defendants are liable to pay the balance due amount with applicable rate of interest together with penal interest at the rate of 2%. As the Defendants had committed default in repayment, the Applicant is entitled to charge penal interest. Therefore the rate of interest charged and capitalization of unpaid interest are calculated as permitted by RBI and do not run counter to RBI directives. On the basis of the documents produced, the Defendants are liable and the applicant bank is entitled to recover the loan, with subsequent interest and cost from the Defendants and from their assets and by sale of the Schedule Mentioned Property. The copies of the Statement of Accounts certified under Bankers Books of Evidence Act are
Hence, the Applicant Bank has filed the OA for recovery of a total sum of Rs.1,42,53,202.60p i.e. (i) Rs.67,78,211.60p together with interest at the rate of 8.15% p.a. with penal interest at the rate of 2%p.a in respect of Cash Credit Facility (ii) Rs.50,12,930/- together with interest at the rate of 8.15% p.a. with penal interest at the rate of 2%p.a in respect of Working Capital Term Loan Facility (iii) Rs.22,29,344/- together with interest at the rate of 9.25% p.a. with penal interest at the rate of 2%p.a in respect of Guaranteed Emergency Credit Line Facility and (iv) Rs.2,32,717/- together with interest at the rate of 7.25% p.a. with penal interest at the rate of 2%p.a in respect of Covid 19 Emergency Credit Line from the date of filing of Application till the date of realization with cost.
During the Pendency of OA the 2nd item of the property mentioned in Schedule – B sold on 05.05.2023 by virtue of the E-Auction Sale notice issued by the Applicant bank on 27.03.2023 under SARFAESI Act to one Mrs. Nirmala Nirmal w/o Nirmal resideing at No.56 Guruvappa Maistry Street, Ayanavaram, Chennai – 600 023 for a sum of Rs.7,80,000/-. Copy of Sale Notice and Sale Certificate dated 27.03.2023 and 10.05.2023 has been enclosed. Subsequently the 1st Item of the Property mentioned in Schedule – B sold on 17.08.2023 by virtue of the E-Auction Sale Notice issued by the Applicant bank on 19.07.2023 under SARFAESI Act to one Mr. Nandhakumar Vadivel S/o Vadivel residing at No.6/15, Thattankulam, Pathalapettai, Trichy – 620 013 for a sum of Rs.43,33,000/-. Copy of Sale Notice and Sale Certificate dated 19.07.2023 and 25.09.2023 has been
Page 7 of 15
OA No. 504/2022
enclosed. Out of the said sale the Applicant Bank received a sum of Rs.51,13,000/-
The Applicant Bank has submitted the following documents in support its claim in the OA, which are as follows:
| S. No. |
Date | Description of document | Exhibits |
|---|---|---|---|
| 1. | 24.02.1966 | Sale Deed executed in favour of 3rddefendant in respect of the 3rdproperty mentioned in Schedule –B |
Ex.No.A-01 |
| 2. | 03.10.2015 | Letter of Arrangement executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-02 |
| 3. | 03.10.2015 | Agreement of loan – Cum – Hypothecation executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-03 |
| 4. | 03.10.2015 | Guarantee Deed executed by the 2ndand 3rd defendants personally in favour of State Bank of India,SME Branch,Thuvakudi |
Ex.No.A-04 |
| 5. | 04.10.2015 | Letter of confirmation of creation of Mortgage by Deposit of Title Deeds executed by the 2nd and 3rd defendants |
Ex.No.A-05 |
| 6. | 06.02.2018 | Memorandum relating to deposit of Title deeds executed by the 3rddefendant in favour of State Bank of India, SME Branch, Thuvakudi in respect of Property-3 in Schedule B |
Ex.No.A-06 |
| 7. | 19.04.2018 | Letter of Arrangement executed by the 1stto 3rddefendants in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-07 |
| 8. | 19.04.2018 | Supplemental Agreement of loan – Cum – Hypothecation executed by the 1stdefendant in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-08 |
| 9. | 19.04.2018 | Guarantee Deed executed by the 2ndand 3rd defendant personally in favour of State Bank of India,SME Branch,Thuvakudi |
Ex.No.A-09 |
| 10. | 19.04.2018 | Omnibus Counter Guarantee executed by the 1stdefendant in favour of State Bank of India,SME Branch,Thuvakudi |
Ex.No.A-10 |
| 11. | 31.03.2018 | Balance confirmation executed by the 1st defendant in favour of State Bank of India, SME Branch,Thuvakudi |
Ex.No.A-11 |
| 12. | 23.04.2018 | Letter of Arrangement executed by the 1st defendant in favour of State Bank of India, |
Ex.No.A-12 |
Page 8 of 15
OA No. 504/2022
| SME Branch, Thuvakudi | |||
|---|---|---|---|
| 13. | 23.04.2018 | Supplemental Agreement of loan – Cum – Hypothecation executed by the 1stdefendant in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-13 |
| 14. | 23.04.2018 | Guarantee Deed executed by the 2ndand 3rd defendant personally in favour of State Bank of India,SME Branch,Thuvakudi |
Ex.No.A-14 |
| 15. | 12.11.2019 | Letter of Arrangement executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-15 |
| 16. | 12.11.2019 | Supplemental Agreement of loan – Cum – Hypothecation executed by the 1stdefendant in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-16 |
| 17. | 12.11.2019 | Guarantee Deed executed by the 2ndand 3rd defendant in favour of State Bank of India, SME Branch,Thuvakudi |
Ex.No.A-17 |
| 18. | 12.11.2019 | Omnibus Counter Guarantee executed by the 1st defendant |
Ex.No.A-18 |
| 19. | 13.11.2019 | Letter of confirmation for Extension of Mortgage by Deposit of Title Deeds covering Enhanced limits executed by the 2ndand 3rd defendant in respect of Property No.1 to 3 in Schedule - B |
Ex.No.A-19 |
| 20. | 22.05.2020 | Letter of Arrangement executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-20 |
| 21. | 21.05.2020 | Supplemental Agreement of loan – Cum – Hypothecation executed by the 1stdefendant in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-21 |
| 22. | 22.05.2020 | Guarantee Deed executed by the 2ndand 3rd defendant in favour of State Bank of India, SME Branch,Thuvakudi |
Ex.No.A-22 |
| 23. | 23.05.2020 | Letter of confirmation for Extension of Mortgage by Deposit of Title Deeds covering Enhanced limits executed by the 2ndand 3rd defendant in respect of Property No.1 to 3 in Schedule - B |
Ex.No.A-23 |
| 24. | 08.06.2020 | Letter of Arrangement executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi |
Ex.No.A-24 |
| 25. | 08.06.2020 | Supplemental Agreement of loan – Cum – Hypothecation executed bythe 1stdefendant |
Ex.No.A-25 |
Page 9 of 15
OA No. 504/2022
| in favour of State Bank of India, SME Branch, Thuvakudi |
|||
|---|---|---|---|
| 26. | 08.06.2020 | Guarantee Deed executed by the 2ndand 3rd defendant in favour of State Bank of India, SME Branch,Thuvakudi |
Ex.No.A-26 |
| 27. | 09.06.2020 | Letter of confirmation for Extension of Mortgage by Deposit of Title Deeds covering Enhanced limits executed by the 2ndand 3rd defendant in respect of Property No.1 to 3 in Schedule - B |
Ex.No.A-27 |
| 28. | 12.06.2020 | Balance confirmation as on 31.03.2020 | Ex.No.A-28 |
| 29. | 27.03.2023 | Sale Notice issued for the 2nd property | Ex.No.A-29 |
| 30. | 10.05.2023 | Sale certificate for the 2nd property | Ex.No.A-30 |
| 31. | 19.07.2023 | Sale Notice issued for the 1st property | Ex.No.A-31 |
| 32. | 25.09.2023 | Sale certificate for the 1st property | Ex.No.A-32 |
| 33. | 06.04.2022 | Statement of Account for Account No.33834389141 as on 05.04.2022 |
Ex.No.A-33 |
| 34. | 06.04.2022 | Statement of Account for Account No.39342866052as on 05.04.2022 |
Ex.No.A-34 |
| 35. | 06.04.2022 | Statement of Account for Account No.39342749893 as on 05.04.2022 for Covid 19 EmergencyCredit Line |
Ex.No.A-35 |
| 36. | 06.04.2022 | Statement of Account for Account No.39449706109 as on 05.04.2011 for GuaranteedEmergency CreditLine |
Ex.No.A-36 |
DESCRIPTION OF PROPERTIES
SCHEDULE - "A"
Current Assets, Stocks, Hypothecated Goods, Book debts, outstanding, moneys receivables, claims and bills due and owing to the Defendants in the name of the Defendants.
SCHEDULE - "B"
Property-3
Kancheepuram District, North Chennai Registration District and sub Registration District Thiruporur, Chengalpattu Taluk, Karungulipallam Village, the property comprised all that piece and parcel of land at plot no.58, Sri Kumaran Nagar (II stage) comprised in Old Survey No.17 as per Patta New Survey No.17/18, Patta No.531, at No.117, Plot No.58, within the following four boundaries
| East by | : | Plot No:57 |
|---|---|---|
| West by | : | Plot No.59 |
| North by | : | Plot no 61 |
| South by | : | Proposed Road |
Page 10 of 15
OA No. 504/2022
East West Measurement : North 60 feet south 60 feet North South Measurement : East 50 Feet West 50 Feet
Total extent : 4800 Sq Ft.,
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.
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?
He has stated in his affidavit that the defendants has availed Cash Credit Facility, Working Capital Term Loan Facility, Guaranteed Emergency Credit Line Facility, Covid 19 Emergency Credit Line 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-36 in support of its claim in the OA.
The Sale Deed executed in favour of 3rd defendant in respect of the 3rd property mentioned in Schedule –B has been marked as Ex.No.A-01, Letter of Arrangement executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-02, Agreement of loan – Cum – Hypothecation executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-03, Guarantee Deed executed by the 2nd and 3rd defendants personally in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-04, Letter of confirmation of creation of Mortgage by Deposit of Title Deeds executed by the 2nd and 3rd defendants has been marked as Ex.No.A-05, Memorandum relating to deposit of Title deeds executed by the 3rd defendant in favour of State Bank of India, SME Branch, Thuvakudi in respect of Property-3 in Schedule B has been marked as Ex.No.A-06, Letter of Arrangement executed by the 1st to 3rd defendants in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-07, Supplemental Agreement of loan – Cum – Hypothecation executed by the 1st defendant in favour of State Bank of India, SME Branch, Thuvakudi has
Page 11 of 15
OA No. 504/2022
been marked as Ex.No.A-08, Guarantee Deed executed by the 2nd and 3rd defendant personally in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-09, Omnibus Counter Guarantee executed by the 1st defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-10.
The Balance confirmation executed by the 1st defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A11, Letter of Arrangement executed by the 1st defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-12, Supplemental Agreement of loan – Cum – Hypothecation executed by the 1st defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-13, Guarantee Deed executed by the 2nd and 3rd defendant personally in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-14, Letter of Arrangement executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-15, Supplemental Agreement of loan – Cum – Hypothecation executed by the 1st defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-16, Guarantee Deed executed by the 2nd and 3rd defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-17, Omnibus Counter Guarantee executed by the 1st defendant has been marked as Ex.No.A-18, Letter of confirmation for Extension of Mortgage by Deposit of Title Deeds covering Enhanced limits executed by the 2nd and 3rd defendant in respect of Property No.1 to 3 in Schedule – B has been marked as Ex.No.A-19, Letter of Arrangement executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-20.
The Supplemental Agreement of loan – Cum – Hypothecation executed by the 1st defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-21, Guarantee Deed executed by the 2nd and 3rd defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-22, Letter of confirmation for Extension of Mortgage by Deposit of Title Deeds covering Enhanced limits executed by the 2nd and 3rd defendant in respect of Property No.1 to 3 in Schedule – B has been marked as Ex.No.A-23, Letter of Arrangement executed by the defendants in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-24, Supplemental Agreement of loan – Cum – Hypothecation executed by the 1st defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-25, Guarantee Deed executed by the 2nd and 3rd defendant in favour of State Bank of India, SME Branch, Thuvakudi has been marked as Ex.No.A-26, Letter of confirmation for Extension of Mortgage by Deposit of Title Deeds
Page 12 of 15
OA No. 504/2022
covering Enhanced limits executed by the 2nd and 3rd defendant in respect of Property No.1 to 3 in Schedule – B has been marked as Ex.No.A-27, Balance confirmation as on 31.03.2020 has been marked as Ex.No.A-28, Sale Notice issued for the 2nd property has been marked as Ex.No.A-29, Sale certificate for the 2nd property has been marked as Ex.No.A-30.
The Sale Notice issued for the 1st property has been marked as Ex.No.A-31, Sale certificate for the 1st property has been marked as Ex.No.A-32, Statement of Account for Account No.33834389141 as on 05.04.2022 has been marked as Ex.No.A-33, Statement of Account for Account No.39342866052 as on 05.04.2022 has been marked as Ex.No.A34, Statement of Account for Account No.39342749893 as on 05.04.2022 for Covid 19 Emergency Credit Line has been marked as Ex.No.A-35, Statement of Account for Account No.39449706109 as on 05.04.2011 for Guaranteed Emergency Credit Line has been marked as Ex.No.A-36. So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.
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.
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).
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 ".
Therefore, this Original Application is allowed. The Applicant Bank is entitled for a final order on the following lines:-
Page 13 of 15
OA No. 504/2022
The Applicant Bank is entitled to recover from the Defendants, a total sum of Rs.91,40,202/- i.e. (i) Rs.42,21,711 together with interest at the rate of 8.15% p.a. in respect of Cash Credit Facility (ii) Rs.37,34,680/- together with interest at the rate of 8.15% p.a. in respect of Working Capital Term Loan Facility (iii) Rs.9,51,094/- together with interest at the rate of 9.25% p.a. in respect of Guaranteed Emergency Credit Line Facility and (iv) Rs.2,32,717/- together with interest at the rate of 7.25% p.a. in respect of Covid 19 Emergency Credit Line from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby
ORDERED
(a) That the Defendants are directed to pay jointly/severally a total sum of Rs.91,40,202/- i.e. (i) Rs.42,21,711 together with interest at the rate of 8.15% p.a. in respect of Cash Credit Facility (ii) Rs.37,34,680/- together with interest at the rate of 8.15% p.a. in respect of Working Capital Term Loan Facility (iii) Rs.9,51,094/- together with interest at the rate of 9.25%p.a. in respect of Guaranteed Emergency Credit Line Facility and (iv) Rs.2,32,717/- together with interest at the rate of 7.25% p.a. in respect of Covid 19 Emergency Credit Line 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.
(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.
(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.
Page 14 of 15
OA No. 504/2022
(d) Any amount remitted during the course of this proceedings shall be given due credit, to the loan account of the defendants.
(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.
(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, Working Capital Term Loan Facility, Guaranteed Emergency Credit Line Facility, Covid 19 Emergency Credit Line 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.
Dictated to T.P, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 16th September, 2025.
Sd/- (SEEMA SINHA) PRESIDING OFFICER
Uploaded on 24.09.2025
Page 15 of 15
2 issues framed by the court
Whether the Applicant Bank proved its claim on the basis of the documents filed by it?
Whether penal interest can be capitalized on unpaid interest?
Colour shows how this judgement treated each authority
N.M. Veerapa vs Canara BankReferred¶94
N.M. Veerapa Vs Canara Bank (reported in AIR 98(1), 1101
Central Bank of India vs RavindraReferred¶94
Central bank of India Vs Ravindra and OS (AIR, 2001(1), 3095) · Who else cites this
2 provisions across 2 enactments
State Bank of India
JNN Energy services
P.C.Nirmal
Mrs. Mary Dominic
Seema Sinha
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
