Allowed

Karur Vysya Bank v. B Rajkumar

DRT15 Dec 2025OA/695/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's application for recovery of outstanding term loans and interest from four defendants. The court upheld the principal claims and interest rates while noting settled law that penal interest cannot be capitalised.

What did the court decide?

Directing respondents to pay total sum of Rs.76,50,324/- with interest at specified rates with half yearly rests; liberty to sell mortgaged properties.

Karur Vysya Bank versus B Rajkumar — Banking and Recovery | DRT (2025)

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OA No. 695/2022

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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.695/2022

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Between

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The Karur Vysya Bank Ltd., Asset Recovery Branch, D.No.4/30-2, West Street, Jeeyapuram, Trichy – 639 101. Rep. By its Branch Manager.

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---Applicant Bank

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And

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Mr. B. Rajkumar,

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S/o Balakrishnan, No.9, Maduvalarnthanparai North, Savarimedu, Nungavaram Post, Kulithalai Taluk, Trichy District-639 110.

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Mrs. R. Rajathi, W/o B. Rajkumar, No.9, Maduvalarnthanparai North, Savarimedu, Nungavaram Post, Kulithalai Taluk, Trichy District-639 110.

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Page 1 of 12

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OA No. 695/2022

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Mr. S. Kanagaraj, No.409, Agraharam, Edaiyathi Mangalam, Lalgudi Taluk, Trichy District - 621 218.

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Mr. M. Ramesh, S/o Maruthai, No.57C, Maduvalarnthanparai North, Savarimedu, Nungavaram Post, Kulithalai Taluk, Trichy District - 639 110. ---Defendants

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Counsel for the Applicant Bank : M/s P. Madhan Alexandar

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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 07.09.2022 to recover from the Defendants a total sum of Rs.76,50,324/i.e., (i) Defendants 1 to 3 to pay a sum of Rs.41,41,381/- together with interest at the rate of 9% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Term Loan-I, (ii) Defendants 1 & 2 to pay a sum of Rs.8,10,653/- together with interest at the rate of 12.75% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Term Loan-II and (iii) Defendants 1, 2 & 4 to pay a sum of Rs.26,98,290/together with interest at the rate of 9.25% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Term Loan-I 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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Page 2 of 12

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OA No. 695/2022

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The defendants had approached the applicant bank's TrichyJeeyapuram Branch, Trichy District to avail Term Loans for Construction purpose. The applicant bank's Trichy-Jeeyapuram Branch had also sanctioned the said Term loan-I for a sum of Rs.21,00,000/- and Term Loan-II for a sum of Rs.5,00,000/- and Term Loan-III for a sum of Rs.12,00,000/-. The Applicant Bank further submitted that the loan accounts were transferred from Trichy-Jeeyapuram Branch to Asset Recovery Branch, Madurai for purpose of Administration & Management & Recovery and thereby the loan accounts are now with the Applicants Bank's Asset Recovery Branch, Madurai.

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TERM LOAN-I

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In consideration of the said Term Loan-I the letter of sanction along with terms & conditions were communicated to the defendants 1 to 3 by the applicant bank through its sanction letter dt.10.04.13 and the same was duly accepted by the defendants 1 to 3 by counter signing the same on 10.04.13. Vide Acc No-1134 753000000253

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In consideration of the said Term Loan-I the 1^st defendant had executed a Demand Promissory Note on 10.04.13 for a sum of Rs.21,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with interest at the rate of 11.00% Per annum with monthly rest or at such other rates & rests as may be revised by the Applicant Bank from time to time.

¶28

The 1^st defendant had executed a Term Loan Agreement dt.10.04.13 for a sum of Rs.21,00,000/- in favour of the Applicant Bank containing various terms & conditions and by agreeing to repay the loan amount in 300 monthly installments of Rs.20,583/- in favour of the applicant Bank. Further the Defendants promised to repay the loan amount with compound interest at the rate of 11.00% Per annum with monthly rest or at such other rates as may be revised by the bank from time to time with penal interest at the rate of 3% per annum in case of default.

¶29

For the said Term Loan-I the 2nd & 3rd defendants had executed an Agreement of Guarantee on 10.04.13 favour of the Applicant Bank by promising to repay the loan with interest at the rate of 11.00% per annum with monthly rests or at such other rates or rest as may be revised by the applicant bank from time to time.

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By admitting & acknowledging the liabilities the defendants has made payment on 02.01.18 and executed Letters of Acknowledgement of Debt & Security on 18.09.20 in favour of the Applicant Bank

Page 3 of 12

OA No. 695/2022

TERM LOAN-II

In consideration of the Term Loan-II the letter of sanction along with terms & conditions were communicated to the defendants 1 & 2 by the applicant bank through its sanction letter dt.28.10.13 and the same was duly accepted by the defendants 1 & 2 by counter signing the same on 28.10.13. Vide Acc NO-1134 7820 0000 01684 77

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In consideration of the said Term Loan-II the 1^st defendant had executed a Demand Promissory Note on 28.10.13 for a sum of Rs.5,00,000/in favour of the Applicant Bank by promising to repay the loan amount on demand with interest at the rate of 14.50% Per annum with monthly rest or at such other rates & rests as may be revised by the Applicant Bank from time to time.

¶36

The 1^st defendant had executed a personal loan agreement dt.28.10.13 for a sum of Rs.5,00,000/- in favour of the Applicant Bank containing various terms & conditions and by agreeing to repay the loan amount in 60 monthly installments of Rs.11,894.97/- in favour of the applicant Bank. Further the Defendants promised to repay the loan amount with compound interest at the rate of 14.50% Per annum with monthly rest or at such other rates as may be revised by the bank from time to time with penal interest at the rate of 3% per annum in case of default.

¶37

The 2nd defendant had executed an Agreement of Guarantee on 28.10.13 in favour of the Applicant Bank by promising to repay the loan with interest at the rate of 14.50% per annum with monthly rests or at such other rates or rest as may be revised by the applicant bank from time to time.

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By admitting & acknowledging the liabilities the defendants made payment on 30.06.16 and executed Letters of Acknowledgement of Debt & Security on 19.06.19 & 24.11.21 in favour of the Applicant Bank.

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TERM LOAN - III

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In consideration of the said Term Loan-III the letter of sanction along with terms & conditions were communicated to the defendants 1, 2 & 4 by the applicant bank through its sanction letter dt.13.03.14 and the same was duly accepted by the defendants 1, 2 & 4 by counter signing the same on 13.03.14. Vida. Acc NO-1134 7550 0000 0366.

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Page 4 of 12

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OA No. 695/2022

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In consideration of the said Term Loan-III the defendants 1 & 2 have executed a Demand Promissory Note on 13.03.14 for a sum of Rs.12,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with interest at the rate of 11.00% Per annum with monthly rest or at such other rates & rests as may be revised by the Applicant Bank from time to time.

¶44

The defendants 1 & 2 have executed a Term Loan Agreement dt. 13.03.14 for a sum of Rs.12,00,000/- in favour of the Applicant Bank containing various terms & conditions and by agreeing to repay the loan amount in 300 monthly installments of Rs.11,761.36 in favour of the applicant Bank. Further the Defendants promised to repay the loan amount with compound interest at the rate of 11.00% Per annum with monthly rest or at such other rates as may be revised by the bank from time to time with penal interest at the rate of 3% per annum in case of default.

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The 4th defendant had executed an Agreement of Guarantee on 13.03.14 in favour of the Applicant Bank by promising to repay the loan with interest at the rate of 11.00% per annum with monthly rests or at such other rates or rest as may be revised by the applicant bank from time to time.

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By admitting & acknowledging the liabilities the defendants has executed Letters of Acknowledgement of Debt & Security on 15.02.17 & 06.01.20 in favour of the Applicant Bank.

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COMMON TO ALL LOAN

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In consideration of the above said Term loans, the 1^st & 2^nd defendants have offered their property which are fully mentioned in the "B" Schedule hereunder as Security and thereby they have deposited/redeposited their Title Deeds on 08.04.13 & 21.10.13 with the Applicant Bank pertaining to their property, with an intention to create an Equitable Mortgage over the said property. The defendants had executed Registered Memorandum of Deposit of title deeds dt.08.04.13 & 21.10.13 pertaining to the said property in favour of the Applicant Bank.

¶49

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.

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Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their

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Page 5 of 12

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OA No. 695/2022

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liability. Hence, the Applicant Bank has filed the OA for recovery of a total sum of Rs.76,50,324/- i.e., (i) Defendants 1 to 3 to pay a sum of Rs.41,41,381/- together with interest at the rate of 9% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Term Loan-I, (ii) Defendants 1 & 2 to pay a sum of Rs.8,10,653/- together with interest at the rate of 12.75% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Term Loan-II and (iii) Defendants 1, 2 & 4 to pay a sum of Rs.26,98,290/- together with interest at the rate of 9.25% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Term Loan-I from the date of filing of Application till the date of realization with cost.

¶54

The Applicant Bank has submitted the following documents in support its claim in the OA, which are as follows:

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List of Documents – Annexure – I

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Loan Documents

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S. No.	Date	Description of document	Exhibits
1.	10.04.13	Sanction letter along with terms & conditions countersigned by the Defendants 1 to 3 in favour of the applicant bank	Ex.No.A-01
2.	10.04.13	Demand Promissory Note executed by the 1^st defendant in favour of the applicant bank	Ex.No.A-02
3.	10.04.13	Term Loan Agreement executed by ist defendant in favour of the Applicant Bank	Ex.No.A-03
4.	10.04.13	Agreement of Guarantee executed by the 2^nd & 3^rddefendant in favour of the Applicant Bank	Ex.No.A-04
5.	18.09.20	Revival letter executed by 1st defendant in favourofthe applicant bank	Ex.No.A-05
6.	---	Statement of Accounts maintained by the Applicant Bank in regular course and conduct ofthe business.	Ex.No.A-06

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Term Loan-II

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S. No.	Date	Description of document	Exhibits
7.	28.10.13	Sanction letter along with terms & conditions countersigned by the defendants 1 & 2 in favour of the applicant bank	Ex.No.A-07
8.	28.10.13	Demand Promissory Note executed by the 1^st defendant in favour of the applicant bank	Ex.No.A-08

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Page 6 of 12

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OA No. 695/2022

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9.	28.10.13	Personal Loan Agreement executed by 1^st defendant in favour of the Applicant Bank	Ex.No.A-09
10.	28.10.13	Agreement of Guarantee executed by the 2^nd defendantin favouroftheApplicantBank	Ex.No.A-10
11.	19.06.19	Revival letter executed by 1^stdefendant in favour of the applicant bank	Ex.No.A-11
12.	24.11.21	Letter issued by the 1ª defendant in favour of the applicant bank	Ex.No.A-12
13.	---	Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business	Ex.No.A-13

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Term Loan-III

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S. No.	Date	Description of document	Exhibits
14.	13.03.14	Sanction letter along with terms & conditions countersigned by the defendants 1,2 & 4 in favour of the applicant bank	Ex.No.A-14
15.	13.03.14	Demand Promissory Note executed by the defendants 1 & 2 in favour of the applicant bank	Ex.No.A-15
16.	13.03.14	Term 1.oan Agreement executed by defendants 1 & 2 in favour of the Applicant Bank	Ex.No.A-16
17.	13.03.14	Agreement of Guarantee executed by 4th defendant in favour of the Applicant Bank	Ex.No.A-17
18.	15.02.17	Revival letter executed by 1 & 2nd defendant in favour of the applicant bank	Ex.No.A-18
19.	06.01.20	Revival letter executed by 1st & 2nd defendant in favour of the applicant bank	Ex.No.A-19
20.	----	Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business	Ex.No.A-20

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Common To All Term Loans

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21.	08.04.13	Registered Memorandum of deposit of title deeds executed by the 18 defendant in favour of the applicant bank	Ex.No.A-21
22.	21.10.13	Registered Agreement relating to deposit of title deeds executed bythe defendants 1 & 2	Ex.No.A-22

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Page 7 of 12

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OA No. 695/2022

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in favour of the applicant bank

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List of Documents – Annexure – II

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Title deeds deposited by the 1^st defendant with regard to Item No.1 of the “B” Schedule Mortgage Properties

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S. No.	Date	Description of document	Exhibits
1.	17.06.82	Registered sale deed executed by Subramanian in favour of Balakrishnan (Doc.No.1232/82)	Ex.No.A-23
2.	19.12.12	Registered release deed executed by Balakrishnan & another in favour of Raj Kumar(Doc.No.1287/12)	Ex.No.A-24
3.	05.02.13	Computerized Patta issued by Head Quarters DeputyTahsildar, Kulithalai	Ex.No.A-25
4.	22.02.13	Approved building plan issued by Nungawaram Town Panchayat	Ex.No.A-26
5.	17.02.10	Property tax receipt for years 2009-10 issued byNungavaram Town Pachayat	Ex.No.A-27

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SCHEDULE OF MORTGAGED PROPERTY

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(Property belonging to 1^st Defendant Vide Annexure-II for the title deeds)

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Karur District, Karur Registration District, Nangavaram Sub Registry, Kulithalai Taluk, Nangavaram South- 2^nd Bit Village, North Maaduviludan Parai, a house site measuring 4360 Sq.ft & building Constructed thereon bearing Door No.9 along with other Appurtenance thereon comprised in S.No.767-2/48 within the following boundaries

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On the North : Temple Land On the East : North-South Road On the South : Property belongs to Ramar On the West : Property belongs to Subramanian

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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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Page 8 of 12

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OA No. 695/2022

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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. S. Dhandapani, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Term Loan-I, Term Loan-II and Term Loan-III 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-27 in support of its claim in the OA.

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The Sanction letter along with terms & conditions countersigned by the Defendants 1 to 3 in favour of the applicant bank has been marked as Ex.No.A-01, Demand Promissory Note executed by the 1st defendant in favour of the applicant bank has been marked as Ex.No.A-02, Term Loan Agreement executed by 1^st defendant in favour of the Applicant Bank has been marked as Ex.No.A-03, Agreement of Guarantee executed by the 2nd & 3rd defendant in favour of the Applicant Bank has been marked as Ex.No.A-04, Revival letter executed by 1^st defendant in favour of the applicant bank has been marked as Ex.No.A-05, Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business has been marked as Ex.No.A-06, Sanction letter along with terms & conditions countersigned by the defendants 1 & 2 in favour of the applicant bank has been marked as Ex.No.A-07, Demand Promissory Note executed by the 1st defendant in favour of the applicant bank has been marked as Ex.No.A-08, Personal Loan Agreement executed by 1st defendant in favour of the Applicant Bank has been marked as Ex.No.A-09, Agreement of Guarantee executed by the 2nd defendant in favour of the Applicant Bank has been marked as Ex.No.A-10.

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The Revival letter executed by 1st defendant in favour of the applicant bank has been marked as Ex.No.A-11, Letter issued by the 1^st defendant in favour of the applicant bank has been marked as Ex.No.A-12, Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business has been marked as Ex.No.A-13, Sanction letter along with terms & conditions countersigned by the defendants 1,2 & 4 in favour of the applicant bank has been marked as Ex.No.A-14, Demand Promissory Note executed by the defendants 1 & 2 in favour of the applicant bank has been marked as Ex.No.A-15, Term 1.oan Agreement executed by defendants 1 & 2 in favour of the Applicant Bank has been marked as Ex.No.A-16, Agreement of Guarantee executed by 4th defendant in favour of the Applicant Bank has

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Page 9 of 12

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OA No. 695/2022

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been marked as Ex.No.A-17, Revival letter executed by 1 & 2nd defendant in favour of the applicant bank has been marked as Ex.No.A-18, Revival letter executed by 1st & 2nd defendant in favour of the applicant bank has been marked as Ex.No.A-19, Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business has been marked as Ex.No.A-20.

¶88

The Registered Memorandum of deposit of title deeds executed by the 18 defendant in favour of the applicant bank has been marked as Ex.No.A21, Registered Agreement relating to deposit of title deeds executed by the defendants 1 & 2 in favour of the applicant bank has been marked as Ex.No.A-22, Registered sale deed executed by Subramanian in favour of Balakrishnan (Doc.No.1232/82) has been marked as Ex.No.A-23, Registered release deed executed by Balakrishnan & another in favour of Raj Kumar (Doc.No.1287/12) has been marked as Ex.No.A-24, Computerized Patta issued by Head Quarters Deputy Tahsildar, Kulithalai has been marked as Ex.No.A-25, Approved building plan issued by Nungawaram Town Panchayat has been marked as Ex.No.A-26, Property tax receipt for years 2009-10 issued by Nungavaram Town Panchayat has been marked as Ex.No.A-27. So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

¶89

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.

¶90

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).

¶91

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 ".

¶92

Therefore, this Original Application is allowed . The Applicant Bank is entitled for a final order on the following lines:-

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Page 10 of 12

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OA No. 695/2022

¶95

The Applicant Bank is entitled to recover from the Defendants, a total sum of Rs.76,50,324/- i.e., (i) Defendants 1 to 3 to pay a sum of Rs.41,41,381/- together with interest at the rate of 9% p.a. with half yearly rests in respect of Term Loan-I, (ii) Defendants 1 & 2 to pay a sum of Rs.8,10,653/- together with interest at the rate of 12.75% p.a. with half yearly rests in respect of Term Loan-II and (iii) Defendants 1, 2 & 4 to pay a sum of Rs.26,98,290/- together with interest at the rate of 9.25% p.a. with half yearly rests in respect of Term Loan-III 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.76,50,324/- i.e., (i) Defendants 1 to 3 to pay a sum of Rs.41,41,381/- together with interest at the rate of 9% p.a. with half yearly rests in respect of Term Loan-I, (ii) Defendants 1 & 2 to pay a sum of Rs.8,10,653/- together with interest at the rate of 12.75% p.a. with half yearly rests in respect of Term Loan-II and (iii) Defendants 1, 2 & 4 to pay a sum of Rs.26,98,290/- together with interest at the rate of 9.25% p.a. with half yearly rests in respect of Term Loan-III 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.

¶98

(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 11 of 12

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OA No. 695/2022

¶102

(d) Any amount remitted during the course of this proceedings shall be given due credit, to the loan account of the defendants.

¶103

(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.

¶104

(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 Term Loan-I, Term Loan-II and Term Loan-III 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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Page 12 of 12

Karur Vysya Bank v. B Rajkumar

Case brief

What is this about?

What did the court decide?

Karur Vysya Bank v. B Rajkumar

Case brief

What is this about?

What did the court decide?

What the court decided

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Cases cited

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