Allowed

State Bank of India v. Shajahan E

DRT17 Jul 2025OA/693/2023

Case brief

AI extract

What is this about?

DRT allowed the bank's application for recovery of outstanding loans totaling Rs.71.45 lakh plus interest and realization costs from the defendant by sale of schedule property, excluding capitalized penal interest.

What did the court decide?

Recovery of Rs.71.45 lakh principal with interest @12% for cash credit, @10% for term loan, @9% for GECL accounts from 15.12.2023, plus costs and sale of property.

State Bank of India versus Shajahan E — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated this the 17^th day of July, 2025

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ORIGINAL APPLICATION No.693/2023

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Between

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State Bank of India, Stressed Assets Recovery Branch, LMS Compound, Near Museum West Gate, Vikas Bhavan P.O., Thiruvananthapuram - 695 033. …Applicant

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And

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Shajahan E., S/o.Esmail Kunju, General Merchant and Commission agent, Shahida Manzil, Kayyalakkal, Eravipuram P.O., Kollam - 691 011. Residing at Bismilla Manzil, Snehatara Nagar, 203 Kavalpura, Eravipuram P.O., Kollam - 691 011. ...Defendant

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This Original Application having been heard on 16.06.2025 in the presence of Advocate Sri.Tom K.Thomas for the applicant bank and the defendant being absent and stood over to this day for consideration, the Tribunal delivered the following:

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OA 693/2023

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F I N A L O R D E R

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This Original Application has been filed under S.19(1) of the Recovery of Debts and Bankruptcy Act, 1993 for recovery of an aggregate sum of Rs.1,03,86,411.79 together with future interest and costs from the defendant and by sale of the schedule property.

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Facts of the case:

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The applicant is a body corporate constituted under the State Bank of India Act, 1955 having its corporate centre at Mumbai and its stressed assets recovery branch at Thiruvananthapuram.

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The defendant approached the applicant bank seeking financial assistance. Considering his request, applicant bank sanctioned various credit facilities to him and the loans were renewed from time to time. The defendant availed the facilities but committed default in repayment. Consequently, the accounts turned NPA on 30.07.2023. Thereafter, lawyer notice was issued to the defendant on 24.11.2023 calling upon him to discharge the liability but he did not repay the dues despite receipt of the notice. In such premises, the applicant bank was constrained to file the OA claiming the following reliefs:

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OA 693/2023

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(i) To recover an aggregate sum of Rs.1,03,86,411.79 together with pendente lite and post-decree interest thereon from the defendant and by sale of the schedule property;

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(ii) To recover the costs, charges and expenses from the defendant;

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(iii) To issue Recovery Certificate to the Recovery Officer with a direction to recover the amount and pay it to the applicant bank.

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The defendant was duly served with summons. He entered appearance on 11.04.2024 and undertook to file vakalath and written statement shortly. However, he did not file any written statement and remained absent from the proceeding.

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Proof Affidavit :

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To establish the claim on behalf of the applicant bank, one Mrs.Shiny Alexander, Chief Manager of the applicant has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A37. The proof affidavit filed by AW1 and the documents produced in this case are not challenged by the defendant. The availing of the credit facilities and creation of mortgage over the schedule property are well established from the documents placed by the applicant bank. An aggregate sum

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OA 693/2023

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of Rs.1,03,86,411.79 is outstanding in the loan accounts as on 07.12.2023, which is clearly established from the accounts statements marked as Exts.A29, A30 and A32 to A37.

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Further, it could be seen from Ext.A31 statement that the applicant bank has charged a sum of Rs.66,326/- by way of penal interest in the cash credit account. It is well settled that penal interest cannot be capitalized and no interest can be charged on penal interest and hence the applicant bank is not entitled to get any pendente lite and post-decree interest on the aforesaid penal interest of Rs.66,326/- charged in the cash credit account.

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Considering the amount advanced, interest and penal interest applied, repayments effected and default committed, I am of the view that the applicant bank is entitled to get pendente lite and post-decree interest in the manner stated below, which is reasonable in the facts and circumstances of the case.

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The applicant bank, therefore, is entitled to get a final order on the following lines:

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In the result, the applicant bank is given a final order allowing it to recover:

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Cash	credit	Rs.71,45,280.79 (Rupees seventy one lakhs forty
account		five thousand two hundred and eighty and Paise

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OA 693/2023

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	seventy nine on post-decree inte of Rs.70,78,954 eight thousand Paise seventy realisation from schedule proper	ly) together with_pendente lite_and rest @12% per annum on the sum .79 (Rupees seventy lakhs seventy nine hundred and fifty four and nine only) from 15.12.2023 till the defendant and by sale of the ty;
Working capital term loan account	Rs.11,82,929/- thousand nine together with_pe_ thereon @10% realisation from schedule proper	(Rupees eleven lakhs eighty two hundred and twenty nine only) _ndente lite_and post-decree interest per annum from 15.12.2023 till the defendant and by sale of the ty;
GECL A/c No.39532872480	Rs.12,07,949/- thousand nine together with_pe_ thereon @9% realisation from schedule proper	(Rupees twelve lakhs seven hundred and forty nine only) _ndente lite_and post-decree interest per annum from 15.12.2023 till the defendant and by sale of the ty;
GECL A/c No.40634128149	Rs.8,50,253/- ( two hundred a pendente lite @9% per annu from the defen property; and	Rupees eight lakhs fifty thousand nd fifty three only) together with and post-decree interest thereon m from 15.12.2023 till realisation dant and by sale of the schedule
also costs and ex the defendant.	penses borne by	it for realization of the loans from

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OA 693/2023

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The schedule to the OA shall be appended to this final

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order.

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The applicant bank shall file memo of costs within ten days from the date of this final order.

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Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

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Communicate copy of this order to both parties as provided in R.16 r/w R.2(c) of the Debts Recovery Tribunal

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(Procedure) Rules, 1993.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 17^th day of July, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

OA 693/2023

A P P E N D I X

Witness for Applicant: AW1: Smt.Shiny Alexander, Chief Manager of the applicant bank.

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Witness for Defendant(s): Nil

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Applicant’s Exhibits

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Ext.No	Date	Particulars of documents
A1	24.09.1999	Sale Deed No.4352/1999 of Eravipuram SRO.
A2	19.05.2000	Memorandum of deposit of title deeds executed by the defendant in favour of the erstwhile State Bank of Travancore.
A3	04.10.2011	Sanction letter issued by the erstwhile State Bank of Travancore and duly signed by the defendant.
A4	03.12.2011	Hypothecation cum working capital agreement executed by the defendant in favour of the erstwhile State Bank of Travancore.
A5	04.12.2011	Memorandum of extension of equitable mortgage executed by the defendant in favour of the erstwhile State Bank of Travancore.
A6	18.01.2012	Sanction letter issued by the erstwhile State Bank of Travancore and duly signed by the defendant.
A7	18.01.2012	Supplemental hypothecation cum working capital agreement executed by the defendant in favour of the erstwhile State Bank of Travancore.
A8	19.01.2012	Memorandum of extension of equitable mortgage executed by the defendant in favour of the erstwhile State Bank of Travancore.
A9	30.03.2012	Sanction letter issued by the erstwhile State Bank of Travancore and duly signed by the defendant.
A10	03.04.2012	Supplemental hypothecation cum working capital agreement executed by the defendant in favour of the erstwhile State Bank of Travancore.
A11	04.04.2012	Memorandum of extension of equitable mortgage executed by the defendant in favour of the erstwhile State Bank of Travancore.
A12	27.01.2014	Revival letter executed by the defendant.

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OA 693/2023

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A13 A14	28.12.2016 04.04.2018	Revival letter executed by the defendant. Letter of arrangement issued by the applicant bank and duly signed by the defendant.
A15	30.05.2020	Letter of arrangement issued by the applicant bank and duly signed by the defendant.
A16	30.05.2020	Agreement executed by the defendant in favour of the applicant bank.
A17	30.05.2020	Supplemental agreement of loan cum hypothecation executed by the defendant in favour of the applicant bank.
A18	28.07.2020	Letter of arrangement issued by the applicant bank and duly signed by the defendant.
A19	28.07.2020	Agreement of loan cum hypothecation executed by the defendant in favour of the applicant bank
A20	28.07.2020	Link letter issued by the defendant to the applicant bank.
A21	28.07.2020	Letter of confirmation for extension of mortgage executed by the defendant in favour applicant bank.
A22	05.03.2021	Revival letter executed by the defendant
A23	08.12.2021	Letter of arrangement issued by the applicant bank and duly signed by the defendant.
A24	08.12.2021	Supplemental agreement of loan cum hypothecation executed by the defendant in favour of the applicant bank.
A25	09.12.2021	Letter of confirmation for extension of mortgage executed by the defendant in favour applicant bank.
A26	05.04.2023	Letter of confirmation for extension of mortgage executed by the defendant in favour applicant bank.
A27	24.11.2023	Office copy of the lawyer’s notice issued to the defendant.
A28	..	Postal acknowledgment card evidencing the receipt of Exhibit A27 notice.
A29	07.12.2023	Statement of account with respect to Cash credit A/c No.67166164032 duly certified under Bankers’ Books Evidence Act.

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OA 693/2023 A30	..	9 Certificate showing the unapplied Exhibit A29 account together with interest.	interest the rate	in of
A31	..	Certificate showing the penal interes Exhibit A29 account.	t applied	in
A32	07.12.2023	Statement of account with respect Capital Term Loan A/c No.395328 certified under Bankers’ Books Eviden	to Worki 25576 d ce Act.	ng uly
A33	..	Certificate showing the unapplied Exhibit A32 account together with interest.	interest the rate	in of
A34	07.12.2023	Statement of account with respect to Emergency Credit Line (G No.39532872480 duly certified und Books Evidence Act.	Guarante ECL) er Banke	ed A/c rs’
A35	..	Certificate showing the unapplied Exhibit A34 account together with interest.	interest the rate	in of
A36	07.12.2023	Statement of account with respect to Emergency Credit Line (G No.40634128149 duly certified und Books Evidence Act.	Guarante ECL) er Banke	ed A/c rs’
A37	..	Certificate showing the unapplied Exhibit A36 account together with interest.	interest the rate	in of

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Defendant’s Exhibits – Nil

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PRESIDING OFFICER

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OA 693/2023

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PRESIDING OFFICER

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated the 17^th July, 2025

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OA NO.693/2023

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Between State Bank of India, Stressed Assets Recovery Branch, LMS Compound, Near Museum West Gate, Vikas Bhavan P.O., Thiruvananthapuram. …Applicant

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And

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F I N A L O R D E R

State Bank of India v. Shajahan E

Case brief

What is this about?

What did the court decide?

State Bank of India v. Shajahan E

Case brief

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What did the court decide?

What the court decided

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