Allowed

Tamilnad Mercantile Bank Limited v. v Ramya Prop. Sakthi Saravana Traders

DRT1 Aug 2025OA/510/2024

Case brief

AI extract

What is this about?

The Tribunal allowed an application filed by a bank to recover loan principal amounts in excess of sixty-four lakhs rupees along with interest from three respondents who appeared ex-parte. The court directed joint and several liability and authorized sale of mortgaged/hypothectated properties.

What did the court decide?

Defendants directed to pay jointly/severally Rs. 64,24,179.39p with interest; liberty to sell mortgaged/hypothecated properties; recovery certificate to be prepared.

Tamilnad Mercantile Bank Limited versus v Ramya Prop. Sakthi… — Banking and Recovery | DRT (2025)

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OA No. 510/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 01^ST DAY OF AUGUST, 2025 PRESENT: SEEMA SINHA,

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

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OA No.510/2024

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Between

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Tamilnad Mercantile Bank Ltd., Pavithramputhur Branch, S.No.2/128, Rajaveethi, Pavithram, Namakkal District- 637 021. Rep. By its Branch Manager.

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---Applicant Bank

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And

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Mrs. V. Ramya, W/o M. Manikandan, Prop.M/s Sakthi Saravana Traders, D.No.217/2, Pillathurai, Thathiengarpet, Musiri,

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Trichi District – 621 214

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M. Manikandan,

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S/o Muthusamy, No.27D, Vadugar Street, Thathiengarpet, Musiri, Trichi District – 621 214

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R. Muthusamy,

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S/o Raju Naidu, Prop. M/s Sri RajaganapathiHardwares & Timbers, D.No.84, Vadugur Street, Pillaturai,Thathiengarpet,

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Musiri, Trichy District – 621 214 ---Defendants

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Page 1 of 10

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OA No. 510/2024

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Counsel for the Applicant Bank : M/s T. Thevan

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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 29.11.2024 to recover from the Defendants a total sum of Rs.64,24,179.39p i.e., (i) Defendants 1 to 3 to pay a sum of Rs.53,19,180.53p together with interest at the rate of 14.60%p.a. with monthly rests plus penal interest at the rate of 2%p.a in respect of Cash credit Loan and (ii) Defendants 1 to 3 to pay a sum of Rs.11,04,998.86p together with interest at the rate of 12.30%p.a. with monthly rests plus penal interest at the rate of 2%p.a in respect of 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 1^st defendant a proprietorship concern running business in the name and style of M/s Sri Sakthi Saravana Traders. The defendants have been availing various credit facilities from the applicant bank for long, on the strength of execution of loan and security documents. The loan accounts have been subject to renewal/enhancement from time to time. The loans availed in the name of the defendant’s sister concern in the name and style of M/s Rajaganapathi Hardwares & Timbers & M/s Sri Sakthi Saravana Timbers from the applicant bank and most of the mortgage properties happen to be common for securing liabilities under both heads of loan accounts. However this suit is confined to the loan account of M/s Sakthi Saravana Traders. On the other hand the bank files separate Original application for M/s Rajaganapathi Hardwares & Timbers & M/s Sri Sakthi Saravana Timbers before this Hon’ble Tribunal.

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Page 2 of 10

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OA No. 510/2024

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Term Loan for a sum of Rs.30,00,000/-

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The 1^st defendant approached the applicant bank and sought to sanction Term Loan for a sum of Rs.30,00,000/- for the purpose of his business working capital. After considering the request of the defendant the applicant bank sanctioned the Term Loan for a sum of Rs.30,00,000/- on 09.03.21. The 1^st defendant had executed necessary security loan documents in favour of the applicant bank on 10.03.21 and also hypothecated his stocks in trader of Petrolium products, Lubricants & Receivables with the bank as a primary security of the loan amounts in relation to “B” Schedule Properties towards. The 2^nd & 3^rd defendant stood as Guarantor for discharge of the loan account and they have executed guarantee agreement in favour of the applicant bank on 10.03.21. The 1^st defendant executed revival letter dated 29.01.24 in favour of the applicant bank and admitting and acknowledging his liabilities.

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Cash Credit Loan to a limit of Rs.50,00,000/-

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The 1^st defendant approached the applicant bank and requested to sanction cash credit loan to a limit of Rs.20,00,000/- for the purpose to meet out his business working capital. After considering the request of the defendant the applicant bank sanctioned the Cash Credit Loan to a limit of Rs.20,00,000/- on 21.04.2014. The 1^st defendant had executed necessary security loan documents in favour of the applicant bank. After that the 1^st defendant again approached the applicant bank and requested to enhance the cash credit limit from Rs.20,00,000/- to Rs.30,00,000/-for the development of his business. The applicant bank sanctioned the enhancement of Cash Credit limit to Rs.30,00,000/- on 17.12.2013. The 1^st defendant again approached the applicant bank and requested to enhance the cash credit limit from Rs.30,00,000/- to Rs.50,00,000/-for the development of his business. The applicant bank sanctioned the enhancement of Cash Credit limit to Rs.50,00,000/- on 17.05.2022. The defendant had executed necessary security loan documents in favour of the applicant bank on 17.05.2022 for the enhancement limit and also hypothecated his stocks in trade of Petrolium products, Lubricants & Receivables with the bank as a primary security of the loan amounts in relation to “B” Schedule Properties towards. The 2^nd & 3^rd defendant stood as Guarantor for discharge of the loan account and he had executed Joint and several guarantee agreement deed in favour of the applicant bank on 17.05.2022.

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Page 3 of 10

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OA No. 510/2024

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Details of Mortgage

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The 3^rd defendant who had earlier deposited his Title deeds on 30.01.2015 in relation to “A” Schedule properties towards equitable Mortgage has subsequently extended the coverage of the Equitable mortgage to Successive renewal/reduction/enhancements/restructuring. The 3^rd defendant had executed Memorandum of Deposit of Title deed dated 30.01.2015 vide Doc.No.147/2015 including respective loan amount availed by the 1^st defendant and its sister concern namely M/s Rajaganapathi Hardwares & Timbers & M/s Sri Sakthi Saravana Timbers & M/s Samuthira Traders including the Cash Credit loan amount to a limit of Rs.50,00,000/-. The 3^rd defendant had extended his earlier Mortgage for the additional Term Loan amount in a sum of Rs.30,00,000/- in favour of the Applicant bank and had executed supplementary memorandum of deposit of Title deeds dated 2308.2021 vide Doc.No.1444/2021 in favour of the applicant bank.

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After availing the loan, defendants were not regular in the matter of repayment. The defendants made several promises, but they failed to keep up their promises. Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their liability. Thus the loan account was declared as Non Performing Asset (NPA) on 26.09.2024. Hence, the Applicant Bank has filed the OA for recovery of a total sum of Rs.64,24,179.39p i.e., (i) Defendants 1 to 3 to pay a sum of Rs.53,19,180.53p together with interest at the rate of 14.60%p.a. with monthly rests plus penal interest at the rate of 2%p.a in respect of Cash credit Loan and (ii) Defendants 1 to 3 to pay a sum of Rs.11,04,998.86p together with interest at the rate of 12.30%p.a. with monthly rests plus penal interest at the rate of 2%p.a in respect of 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.	09.03.2021	Sanction Letter	Ex.No.A-01
2.	10.03.2021	Demand PromissoryNote	Ex.No.A-02
3.	10.03.2021	Letter of waivepresentment	Ex.No.A-03
4.	10.03.2021	Letter of undertaking for payment of installment	Ex.No.A-04
5.	10.03.2021	Articles of Agreement	Ex.No.A-05
6.	10.03.2021	Agreement for demand cash credit on the hypothecation of movableproperties	Ex.No.A-06
7.	10.03.2021	Letter of Hypothecation of book debts	Ex.No.A-07

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Page 4 of 10

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OA No. 510/2024

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8.	10.03.2021	Power of Attorney	Ex.No.A-08
9.	10.03.2021	Joint and several Guarantee Agreement	Ex.No.A-09
10.	10.03.2021	Consent letter	Ex.No.A-10
11.	10.03.2021	Undertaking letter to keep the security in tact	Ex.No.A-11
12.	10.03.2021	Mortgage extension letter	Ex.No.A-12
13.	10.03.2021	Mortgage extension letter	Ex.No.A-13
14.	10.03.2021	Mortgage extension letter	Ex.No.A-14
15.	09.05.2022	Sanction Letter	Ex.No.A-15
16.	17.05.2022	Demandpromissorynote	Ex.No.A-16
17.	17.05.2022	Letter of waivepresentment	Ex.No.A-17
18.	17.05.2022	Agreement for demand cash credit on the hypothecation of movableproperties	Ex.No.A-18
19.	17.05.2022	Letter of Hypothecation of book debts	Ex.No.A-19
20.	17.05.2022	Power of Attorney	Ex.No.A-20
21.	17.05.2022	Joint and several Guarantee Agreement	Ex.No.A-21
22.	17.05.2022	Mortgage extension letter	Ex.No.A-22
23.	17.05.2022	Mortgage extension letter	Ex.No.A-23
24.	17.05.2022	Mortgage extension letter	Ex.No.A-24
25.	30.12.2023	Sanction intimation	Ex.No.A-25
26.	30.12.2023	Consent Letter	Ex.No.A-26
27.	30.12.2023	Guarantee coveringLetter	Ex.No.A-27
28.	30.12.2023	Undertaking letter to keep the security in tact	Ex.No.A-28
29.	30.12.2023	Revival Letter	Ex.No.A-29
30.	30.01.2015	Original Memorandum of Deposit of Title DeedsNo.147/2015	Ex.No.A-30
31.	23.08.2021	Attested copy of Supplemental Memorandum of Deposit of Title deedsNo.1444/2021	Ex.No.A-31
32.	19.03.1985	True copyof sale deed No.382/1985	Ex.No.A-32
33.	15.12.2014	True copyof sale deed No.2116/2014	Ex.No.A-33
34.	----	Cash Credit Loan Account No.080700150950010	Ex.No.A-34
35.	----	Term Loan Account No.080700460100159	Ex.No.A-35
36.	----	Banker Certificate	Ex.No.A-36

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SCHEDULE –A

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Item No.1

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All that part and parcel of vacant land to the extent of 84.45 cents at S.F.No.216/2 & 217/2, Mettupalayam bye pass Road, Pilladurai village, Musiri Taluk, Thathiyangarpettai, Trichy District, property stand in the name Muthusamy.

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Page 5 of 10

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OA No. 510/2024

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Boundaries: Survey No.217/2

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North of : Lands in S.Nos.216 & Item No.2 South of : East West Road East of : Lands of Thangaraju West of : Lands of Thalamali

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Boundaries: Survey No.216/2

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East of : Lands of Krishnamurthi South of : Item No.1 West of : Lands of Thalamalai & Sathyamurthi North : Lands of Subramaniam Chettiar

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Item No.2

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All that part and parcel of vacant land to the extent of 12000 Sq.ft and building with petrol bunk constructed thereat S.No.217/2, Sakthi Saravana Tower, Bye Pass Road, Pilladurai Village, Musiri Taluk, Thathiyangarpettai, Trichy District, property stands in the name Muthusamy.

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Boundaries:

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North of : Muthusamy Property South of : Road East of : Land in S.F.No.217/1 West of : Muthusamy Property

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Note : S.No.217/2 to an extent of 55 cents & 216/2 to an extent of 57 cents, totally 112 cents. (Item No.1: 84.45 cents + Item No.2: 27.54 cents)

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Item No.3

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All that part and parcel of vacant land to the extent of 3955^1/8 Sq.ft, in Old Natham S.No.221/7, New Survey No.221/7B, Pillathurai Village, Thathiyangarpettai, Musiri Taluk, Trichy District.

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Boundaries:

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East of : South – North Road West of : S.No.227 South of : 221/7A North of : Church in S.No.221/84 Balu House in S.No.221/8C, Sanmugam house in S.No.221/bD

Page 6 of 10

OA No. 510/2024

Schedule – B

On hypothecation of Stocks in Trade of wooden log, cutting machinery components, spares & WIP, Semi Finished Goods of Timber & wood Logs & hardwares and Genuine receivables in trade.

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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. A. Chandan Ramkumar, who is the Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Cash Credit Loan and Term 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-36 in support of its claim in the OA.

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The Sanction Letter has been marked as Ex.No.A-01, Demand Promissory Note has been marked as Ex.No.A-02, Letter of waive presentment has been marked as Ex.No.A-03, Letter of undertaking for payment of instalment has been marked as Ex.No.A-04, Articles of Agreement has been marked as Ex.No.A-05, Agreement for demand cash credit on the hypothecation of movable properties has been marked as Ex.No.A-06, Letter of Hypothecation of book debts has been marked as Ex.No.A-07, Power of Attorney has been marked as Ex.No.A-08, Joint and several Guarantee Agreement has been marked as Ex.No.A-09, Consent letter has been marked as Ex.No.A-10, Undertaking letter to keep the security in tact has been marked as Ex.No.A-11, Mortgage extension letter has been marked as Ex.No.A-12.

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The Mortgage extension letter has been marked as Ex.No.A-13, 2^nd Mortgage extension letter has been marked as Ex.No.A-14, Sanction Letter has been marked as Ex.No.A-15, Demand promissory note has been marked as Ex.No.A-16, Letter of waive presentment has been marked as Ex.No.A-17, Agreement for demand cash credit on the hypothecation of movable properties has been marked as Ex.No.A-18, Letter of Hypothecation

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Page 7 of 10

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OA No. 510/2024

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of book debts has been marked as Ex.No.A-19, Power of Attorney has been marked as Ex.No.A-20, Joint and several Guarantee Agreement has been marked as Ex.No.A-21, Mortgage extension letter has been marked as Ex.No.A-22, 2^nd Mortgage extension letter has been marked as Ex.No.A-23, 3^rd Mortgage extension letter has been marked as Ex.No.A-24.

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The Sanction intimation has been marked as Ex.No.A-25, Consent Letter has been marked as Ex.No.A-26, Guarantee covering Letter has been marked as Ex.No.A-27, Undertaking letter to keep the security in tact has been marked as Ex.No.A-28, Revival Letter has been marked as Ex.No.A-29, Original Memorandum of Deposit of Title Deeds No.147/2015 has been marked as Ex.No.A-30, Attested copy of Supplemental Memorandum of Deposit of Title deeds No.1444/2021 has been marked as Ex.No.A-31, True copy of sale deed No.382/1985 has been marked as Ex.No.A-32, True copy of sale deed No.2116/2014 has been marked as Ex.No.A-33, Cash Credit Loan Account No.080700150950010 has been marked as Ex.No.A-34, Term Loan Account No.080700460100159 has been marked as Ex.No.A-35, Banker Certificate 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.

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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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Page 8 of 10

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OA No. 510/2024

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The Applicant Bank is entitled to recover from the Defendants, a total sum of Rs.64,24,179.39p i.e., (i) Defendants 1 to 3 to pay a sum of Rs.53,19,180.53p together with interest at the rate of 14.60%p.a. with half yearly rests in respect of Cash credit Loan and (ii) Defendants 1 to 3 to pay a sum of Rs.11,04,998.86p together with interest at the rate of 12.30%p.a. with half yearly rests in respect of 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 Defendants are directed to pay jointly/severally a total sum of Rs.64,24,179.39p i.e., (i) Defendants 1 to 3 to pay a sum of Rs.53,19,180.53p together with interest at the rate of 14.60%p.a. with half yearly rests in respect of Cash credit Loan and (ii) Defendants 1 to 3 to pay a sum of Rs.11,04,998.86p together with interest at the rate of 12.30%p.a. with half yearly rests in respect of 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 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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Page 9 of 10

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OA No. 510/2024

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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 Loan and Term loan 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 01^st August, 2025.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Order uploaded on 16.09.2025

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Page 10 of 10

Tamilnad Mercantile Bank Limited v. v Ramya Prop. Sakthi Saravana Traders

Case brief

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Tamilnad Mercantile Bank Limited v. v Ramya Prop. Sakthi Saravana Traders

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