Allowed

Hdfc Bank v. M/s.Sri Mahalakshmi Enterprises

DRT23 Dec 2025OA/562/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the Original Application filed by HDFC Bank Limited to recover dues from enterprise proprietor and guarantor. The decree accounted for principal, simple interest at 9%, and excluded penal interest on penal interest.

What did the court decide?

Defendants directed to pay Rs.36,44,796.40p with 9% p.a. interest (half yearly rests) and cost; liberty to sell mortgaged properties if payment defaults.

Hdfc Bank versus M/s.Sri Mahalakshmi Enterprises — Contract and Commercial Disputes | DRT (2025)

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OA No. 562/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 23^RD DAY OF DECEMBER, 2025 PRESENT: SEEMA SINHA,

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

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OA No.562 OF 2023

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Between

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M/s HDFC Bank Limited., Dept. for special Operations, No.96, Anna Salai, B Wing, 7^th floor, Prince Khushal Towers, Chennai – 600 002. Rep. By its Auth. Signatory. ---Applicant Bank

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And

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M/s Sri Mahalakshmi Enterprises, Rep. by its Proprietor, Mrs. S. Mahalakshmi, No.18/143/1, Nethaji Road, Srivilliputhur, Virudhunagar – 626 125.

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Mrs. S. Mahalakshmi,

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W/o Manikandan, No.250/13, Avarampatti, Alagudevankulam Road, Rajapalayam, Virudhunagar – 626 117. ---Defendants

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Counsel for the Applicant Bank : M/s Vastlaw Associates

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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

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Page 1 of 6

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OA No. 562/2023

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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 27.07.2023 to recover from the Defendants a sum of Rs.36,44,796.40p together with interest at the rate of 9% p.a. with monthly rests and additional interest at the rate of 18%p.a. in respect of Cash Credit Facility 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 no. 1 is a Proprietorship concern carrying on business at Srivilliputhur, Virudhunagar District. The defendant no.2 is the Proprietor of the defendant no.1. The defendant no. 2 stood as guarantor in her individual capacity for the credit facility availed by the defendant no. 1 from the applicant bank. The applicant bank through its Madurai Branch had lent a credit facility of Rs.40,00,000/- under CGTMSE Scheme. Facility

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In respect of cash credit facilities and also to secure the amount under the said facilities, the defendant no.1 represented by the defendant no.2 executed Sanction letter, Master Facility Agreement (MFA), Deed of Hypothecation and Power of Attorney on 04.09.2021 in favour of applicant bank. Further, the defendant agreed to repay the loan with interest at the rate of 9%p.a. The defendant no.2 stood as a guarantor in her personal capacity to secure the liabilities undertaken by the defendant no.1 and executed Letter of Continuing Guarantee on 04.09.2021.

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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. Thus the account has become irregular in view of nonpayment of interest. The defendants willfully neglected to pay the dues. Hence the Applicant Bank has called upon the Defendants to regularize the dues. Even thereafter the Defendants have not taken any prospective steps to regularize the dues, resulting in the account being declared as NPA. Even after several reminders the defendants have willfully and malafidely

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Page 2 of 6

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OA No. 562/2023

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neglected to pay the amount outstanding in the books of the applicant bank borrowed by the defendant no.1.

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Therefore the Applicant Bank is before this Hon'ble Tribunal for recovery of the dues. 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.36,44,796.40p together with interest at the rate of 9% p.a. with monthly rests and additional interest at the rate of 18%p.a. in respect of Cash Credit Facility 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.	04.09.2021	Acceptance of Initial Sanction Letter	Ex.No.A-01
2.	04.09.2021	Master Facility Agreement (MFA) executed by the defendant No.1	Ex.No.A-02
3.	04.09.2021	Deed of Hypothecation executed by the defendant No.1	Ex.No.A-03
4.	04.09.2021	Power of Attorney executed by the defendant No.1	Ex.No.A-04
5.	04.09.2021	Letter of ContinuingGuarantee	Ex.No.A-05
6.	---	Statement of Accounts	Ex.No.A-06
7.	---	Certified True copy of the Resolution passed by the board of directions of HDFC Bank Limited	Ex.No.A-07

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SCHEDULE OF PROPERTIES SCHEDULE-A

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STOCK IN TRADE

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All the stock in trade both present and future consisting of raw materials, finished goods, goods in process of manufacturing and any other goods, movable assets of merchandise whatsoever now or at any time hereafter belonging to the security provider or at its disposal and now or at any time and from time to time hereafter stored or to be stored or brought into or upon or in course of transit to the factory or premises of the security provider or at any other place whatsoever and where so ever in possession of the security provider or occupation or at any other premises or place.

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Page 3 of 6

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OA No. 562/2023

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BOOK DEBTS AND RECEIVABLES

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All the book debts amounts outstanding monies receivable claims and bills which are now due and owing or which may at any time hereafter during the continuance of this security become due and owing to the security provide in the course of its business by any person, firm, company or body corporate or by a government department or office or any municipal or local or public or semi government body or authority or anybody corporate or undertaking.

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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. Sivalingam, who is the Authorised Signatory of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Cash Credit Facility 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-07 in support of its claim in the OA.

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The Acceptance of Initial Sanction Letter has been marked as Ex.No.A01, Master Facility Agreement (MFA) executed by the defendant No.1 has been marked as Ex.No.A-02, Deed of Hypothecation executed by the defendant No.1 has been marked as Ex.No.A-03, Power of Attorney executed by the defendant No.1 has been marked as Ex.No.A-04, Letter of Continuing Guarantee has been marked as Ex.No.A-05, Statement of Accounts has been marked as Ex.No.A-06, Certified True copy of the Resolution passed by the board of directions of HDFC Bank Limited has been marked as Ex.No.A-07. 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

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Page 4 of 6

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OA No. 562/2023

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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.36,44,796.40p together with interest at the rate of 9% p.a. with half yearly rests in respect of Cash Credit Facility 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.36,44,796.40p together with interest at the rate of 9% p.a. with half yearly rests in respect of Cash Credit Facility 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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Page 5 of 6

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OA No. 562/2023

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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 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 Cash Credit 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 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 23^rd December, 2025.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 02.01.26

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Hdfc Bank v. M/s.Sri Mahalakshmi Enterprises

Case brief

What is this about?

What did the court decide?

Hdfc Bank v. M/s.Sri Mahalakshmi Enterprises

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

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