Allowed

Indian Overseas Bank v. Sri Alumalai Ayyan Traders and Another

DRT20 Jun 2025OA/75/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed the bank’s application for recovery of loan dues and interest of Rs.49 lakhs from the proprietorship firm after finding the defendants in default and lacking any defense due to ex-parte proceedings.

What did the court decide?

Recovery of Rs.49,65,789.41 including interest and costs; liberty to recover by sale of hypothecated properties if payment fails.

Indian Overseas Bank versus Sri Alumalai Ayyan Traders and… — Specific Performance | DRT (2025)

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O.A. No. 75 of 2022

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20.06.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 20^th day of June, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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ORIGINAL APPLICATION No. 75 of 2022

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Indian Overseas Bank, Valasaravakkam Branch, Represented by its Manager, No.1, East Kamakodi Nagar, Off. Arcot Road, Valasaravakkam, Chennai – 600 087.

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….Applicant

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-Vs-

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M/s. Sri Alumalai Ayyan Traders, Represented by its Proprietor,

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M. K. Prasanth Kumar,

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A-3, Sunrise Apartments, A-Block. Golden George Nagar,

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Nerkundram, Chennai – 600 107.

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Mr. K. Prasanthkumar, S/o. Mr. Kalathranpillai,

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A-A3, Sunrise Apartments,

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Justice Rathnavel Pandian Street,

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Nerkundram, Chennai – 600 107.

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And also at:-

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No. 57, Jallikuli Street, Rangasamuthuram,

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Sathyamangalam – 638 402. …. Defendants

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Counsels on record / appeared:

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Counsel for Applicant : M/s. P. Annal

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Defendants 1 & 2 were set ex-parte on 03.06.2022

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O.A. No. 75 of 2022

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20.06.2025

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: - FINAL ORDER - :

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This Original Application is filed on 14.09.2021 by the applicant bank under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants 1 & 2 for recovery of a total sum of Rs.49,65,789.41p (Rupees Forty Nine Lakhs Sixty Five Thousand Seven Hundred and Eighty Nine & Forty One Paise only) due in respect of Cash Credit Facility (Account No.173833000000061) repayable together with further interest @ 10.50% p.a., with monthly rests from the date of Application till the date of realization in full, for sale of scheduled mentioned hypothecated property and for costs of this Original Application.

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Brief Facts of the case:

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The Applicant submits that the application is filed within the period of limitation as prescribed under Section 24 of the Recovery of Debts and Bankruptcy Act, 1993, and the subject recovery claim falls within the jurisdiction of this Tribunal.

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It is the case of the Applicant Bank that the 1^st defendant is a Proprietorship Concern, represented by its Proprietor Mr. K. Prasanth Kumar, the 2^nd defendant herein, having his Office at A3, Sunrise Apartments, A Block, Golden George Nagar, Nerkundrum, Chennai- 600 107.

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O.A. No. 75 of 2022

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20.06.2025

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It is submitted that the Defendants herein approached and requested the Applicant for a Credit Facility and upon considering the same, the Applicant Bank sanctioned to the 1^st defendant herein a CASH CREDIT (H) of Rs.40,00,000/- (Rupees Forty Lakhs Only) against Stocks and Book Debts, not more than 90 days, vide its Credit Sanction Advice dated 01.08.2019, the terms and conditions of which are accepted and acknowledged by the Defendants herein.

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The Applicant submits that in evidence of availing the aforesaid Cash Credit Facility, the 1^st defendant executed the following Loan Documents: (a) Revised Demand Promissory Note (Linked to MCLR) dated 01.08.2019 for Rs.40,00,000/- (Rupees Forty Lakhs Only) together with floating Interest thereon at the rate of 10.50% per annum from the date with monthly rests or such rates as may be re-set and rests as may be revised by the Bank on its own or as per the instructions of the Reserve Bank of India from time to time;

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(b) Letter of Continuity and confirmation of DPN dated 01.08.2019 for Rs.40,00,000/-;

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(c) Letter of Hypothecation (In case of open advances only) dated 01.08.2019 for Rs.40,00,000/-, thereby hypothecated all present and future Raw Materials, Work-in-Progress and Finished Goods stored in the premises of the 1^st defendant

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O.A. No. 75 of 2022

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herein;

(d) Letter of Hypothecation (For securing Machineries/Vehicles/ Goods/Book Debts) dated 01.08.2019 for Rs.40,00,000/-, thereby hypothecated all present and future Raw Materials, Work-in-Progress and Finished Goods stored in the premises of the 1^st defendant herein and

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(e) Hypothecation of Book Debts dated 01.08.2019 for Rs.40,00,000/-, thereby hypothecated the Book Debts of the 1^st defendant, as security for the due repayment to the Applicant at any time on demand at Chennai.

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The Applicant submits that the Defendants had agreed to pay the interest for the above said Loan availed by him at the rate of 10.50% per annum compounded on monthly rests basis. The said interest rate is linked to the MCLR (Marginal Cost of funds based Lending Rate) of the Bank and the same is subject to revision by Bank usual practice and RBI Norms from time to time.

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The Applicant humbly submits that the said Credit Facility availed by the 1^st defendant is secured by the Hypothecation of all present and future Raw Materials, Work-in-Progress and Finished Goods stored and the Machineries fixed or lying loose in the aforesaid premises of the 1^st defendant herein and also the Book Debts of the 1^st defendant.

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O.A. No. 75 of 2022

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20.06.2025

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It is submitted by the Applicant Bank that subseqeutn to availing of loan, defendants were not regular in repayment of instalments and thus committed default. Since the 1^st defendant failed to regularize the Loan account, it was declared as a Non Performing Asset (NPA) on 29.02.2020 in accordance with RBI guidelines.

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The Applicant issued a Notice dated 18.03.2020 to the defendants herein, calling upon him to regularize his over dues and informing him that the Bank may proceed against him legally, if it did not hear from him on or before 30.04.2020, however Defendants did not turn up to settle the Loan Dues to the Applicant herein. Hence the present Original Application (OA) has been filed for recovery of amounts due from defendants.

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After the filing of the OA, summons were sent to the defendants 1 & 2 through Registered Post with Acknowledgment Due, which were duly served. When OA was taken up on 03.06.2022 even after giving sufficient time, there was no appearance or representation from the defendants.

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Hence, defendants 1 & 2 were placed ex-parte on 03.06.2022.

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Heard the submissions of Applicant Bank and perused the

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records.

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During the pendency of OA, applicant bank had filed IA No.1174/22 praying to appoint an Advocate Commissioner to inspect and compare

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O.A. No. 75 of 2022

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documents/records pertaining to the Loan account of defendants, pending on the file of Central Bureau of Investigation, Anti Corruption Branch, 3rd Floor, Shastri Bhawan, 26, Haddows Road, Chennai – 600 006, which was allowed vide order dated 11.10.2022 and Ms. V. Uma Maheswari was appointed as Advocate Commissioner. After execution of the commands of the warrant, Advocate Commissioner filed her report before this Tribunal on 11.11.2022.

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To prove the case of the Applicant Bank, Sh. Sujoy Bisai, Senior Manager of the Applicant Bank, has filed his Affidavit by way of evidence and same was considered as evidence of AW-1 and list of documents came to be marked as Ex. A-1 to A-8 . Advocate Commissioner report dated 11.11.2022 is taken on record and marked as Ex C-1 . As the defendants remained ex-parte, the OA claim remains unchallenged. There is no contra evidence available on record to repudiate the claim of the Applicant Bank.

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With regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled for a final order on the following terms:

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: O R D E R :

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The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants

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O.A. No. 75 of 2022

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for recovery of a total sum of Rs.49,65,789.41p (Rupees Forty Nine Lakhs Sixty Five Thousand Seven Hundred and Eighty Nine & Forty One Paise only) due in respect of Cash Credit Facility (Account No.173833000000061) repayable together with further interest @ 10.50% p.a., with monthly rests from the date of Application till the date of realization in full along with costs of this application.

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(b) In the event of failure of the Defendants to pay the aforesaid amount, the bank is at liberty to recover the amount by sale of the schedule mentioned hypothecated properties morefully detailed in the OA schedule.

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(d) The applicant bank shall file the latest memo of calculation of OA amount together with interest, costs etc., to be paid by the Defendants duly considering the amounts, if any, paid by the Defendant and/or amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to prepare Recovery Certificate for the amount to be paid by Defendants to the applicant bank.

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

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O.A. No. 75 of 2022

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(f) Recovery Certificate shall be drawn up and issued to the

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Recovery Officer in terms of the final order.

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A copy of this order be communicated to the parties concerned.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Steno (Ponmalar), transcribed by her, corrected, signed and pronounced by me on this the 20^th day of June, 2025)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Sh. Sujoy Bisai, Senior Manager of the Applicant Bank

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Exhibits on the part of the Applicant:

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Sl. No.	Date	Description of Documents	Exhibits No.
1.	01.08.2019	Credit Sanction Advice for Rs.40,00,000/-	A-1
2.	01.08.2019	Revised Demand Promissory Note for Rs. 40,00,000/-	A-2
3.	01.08.2019	Letter of Continuity and Confirmation of DPN for Rs. 40,00,000/-	A-3
4.	01.08.2019	Letter of Hypothecation (In case of open advance only) for Rs. 40,00,000/-	A-4
5.	01.08.2019	Letter of Hypothecation (For securing Machineries/Vehicles/Goods/Book-Debts)	A-5
6.	01.08.2019	Hypothecation of Book Debts for Rs.40,00,000/-	A-6
7.	18.03.2020	Applicant Bank issued a notice to the defendants	A-7
8.	23.08.2021	Statement of Accounts for A/c. No. 173833000000061	A-8

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O.A. No. 75 of 2022

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Report of the Advocate Commissioner dated 11.11.2022 - Ex C-1

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Witness Examined for the Defendants: -Nil-

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List of Documents Exhibited for the Defendants: -Nil –

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SCHEDULE

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(Properties Hypothecated)

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All present and future raw materials, work in progress and finished goods in the premises of 1^st defendant at No. A-3, Sunrise Apartments, A-Block, Golden George Nagar, Nerkundram, Chennai – 600 107 and the Book Debts of the 1^st defendant.

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Sd/- (S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

Indian Overseas Bank v. Sri Alumalai Ayyan Traders and Another

Case brief

What is this about?

What did the court decide?

Indian Overseas Bank v. Sri Alumalai Ayyan Traders and Another

Case brief

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What did the court decide?

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