Allowed

Canara Bank v. P Krishnamoorthy

DRT25 Apr 2025OA/81/2023

Case brief

AI extract

What is this about?

Dr. Debts Recovery Tribunal allowed an original application filed by Canara Bank to recover a term loan of Rs. 26,24,902.55p plus interest from a defaulting borrower. The court accepted the bank's evidence as the respondent did not appear, awarded interest, and permitted the sale of mortgaged properties to satisfy the debt.

What did the court decide?

The defendant is directed to pay the outstanding sum of Rs. 26,24,902.55p with half-yearly interest. If unpaid, movable/immovable properties described in the application may be sold to realize the deb

Canara Bank versus P Krishnamoorthy — Banking and Recovery | DRT (2025)

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OA No. 81/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 25^TH DAY OF APRIL, 2025 PRESENT: SEEMA SINHA,

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

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OA No.81/2023

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Between

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Canara Bank, Gandhigram Branch, Khadi Bhavan Building, Gandhigram – 624 302. Rep. By its Branch Manager. ---Applicant Bank

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And

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P. Krishnamoorthy, S/o Pandian, Kalikampatti Main Road, Munnilaikottai, Dindigul – 624 303.

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Also at:

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P. Krishnamoorthy, S/o Pandian, No.1/143, Munnilaikottai, Athur Taluk, Dindigul – 624 302. ---Defendant

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Counsel for the Applicant Bank : K. Hariharan

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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 Defendant 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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OA No. 81/2023

JUDGEMENT

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 08.12.2022 to recover from the Defendant a sum of Rs. 26,24,902.55p together with interest at the rate of 11.65% p.a. with monthly rests along with penal interest at the rate of 2%p.a. in respect of Term Loan from the date 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 is doing Fly Ash Bricks Production at Dindigul District, he approached the Applicant Bank to avail Term Loan credit facility to establish the project of construction of GI Sheet shed for his Fly Ash Brick Unit to the tune of Rs.23.73lakh. After due consideration, the Applicant Bank accepted the request of the defendant and sanctioned the Term Loan of Rs. 6,00,000/- after executing necessary documents on 22.10.2007 in favour of the Applicant Bank. The defendant had offered security of properties in favor of the applicant bank. He hypothecated the ‘A’ Schedule property and also created equitable Mortgage over his property as mentioned in ‘B’ Schedule property hereunder by Deposit of title deeds dated 29.01.2022 and executed Memorandum of Deposit of Title deeds and same has been registered with SRO Chinnalapatti as Doc.No.261/2022 in favor of the applicant bank. Further, Defendant agreed to repay the loan together with interest at the rate of 11.65% p.a. with monthly rests together with costs and charges. After availing the loan, defendant was not regular in the matter of repayment. The defendant made several promises, but he failed to keep up his promises.

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Despite repeated demands and reminders, made by the Applicant Bank, the Defendant failed and neglected to repay and adjust his liability. Hence the applicant bank has brought the Schedule B Property situated at Dindigul District for auction sale vide its Auction sale Notice dated 03.05.2023 under the provisions of SARFAESI Act. The auction held on 12.06.2023, the said Schedule B Property was sold for a sum of Rs.16,00,840.00 and sale certificate dated 20.07.2023 and registered as Doc.No.2560 of 2023 dated 21.08.2023 issued by the Applicant bank to the auction purchaser. The said amount received has been given due credit in to the loan account. The defendant did not repay the balance outstanding due amount of the loan account. Hence, the Applicant Bank has filed the OA for

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OA No. 81/2023

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recovery of a sum of Rs. 26,24,902.55p together with interest at the rate of 11.65% p.a. with monthly rests along with penal interest at the rate of 2%p.a. in respect of Term Loan from the date of Application till the date of realization with cost. 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.	13.12.2021	Application form for Term Loan	Ex.No.A-01
2.	01.02.2022	Letter of Undertaking	Ex.No.A-02
3.	01.02.2022	Deed of Hypothecation Re: Machinery executed bythe Defendant	Ex.No.A-03
4.	01.02.2022	Agreement cum Deed of Hypothecation executed by theDefendant	Ex.No.A-04
5.	23.02.2022	Particulars of the Hypothecation Assets submitted by theDefendants	Ex.No.A-05
6.	31.01.2022	Memorandum of Deposit of Title Deeds executed by the defendant as (D.No.261/2022) (Photo Copy)	Ex.No.A-06
7.	18.07.2023	Sale certificate (Photo Copy)	Ex.No.A-07
8.	----	Statement of Account	Ex.No.A-08

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SCHEDULE OF PROPERTIES

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“A” HYPOTHECATED PROPERTIES

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Hypothecation of Plant and Machinery

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Fly Ash Bricks Making Machinery Hydraulic Fully Automatic per stroke 8 Bricks (9”*4”*3) with heavy Duty pressing type with PLC Control Panel Board, Power pack, air cooler system.

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500Kg capacity fly ash pan mixer machine inner 2 rollers, hand type with 15hp motor.

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Bricks shifting pallet Trolley.

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Conveyer 20 feet length with gear box 2hp motor (RM mixing moving conveyer)

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Raw Material Trolley.

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Raw Material.

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3 . On the other hand, Notices were issued to Defendant and since from the beginning of the case, there was no representation on behalf of the Defendant. Hence, Defendant was 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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OA No. 81/2023

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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. RA. Shanthakumar, who is the Branch Manager of the Applicant Bank.

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He has stated in his affidavit that the defendant has availed Term Loan from the Applicant Bank, but he failed to repay the outstanding loan amount, hence he has filed the case. The applicant bank has also filed the documents given by the defendant at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-08 in support of its claim in the OA.

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The Application form for Term Loan has been marked as Ex.No.A-01, Letter of Undertaking has been marked as Ex.No.A-02, Deed of Hypothecation Re: Machinery executed by the Defendant has been marked as Ex.No.A-03, Agreement cum Deed of Hypothecation executed by the Defendant has been marked as Ex.No.A-04, Particulars of the Hypothecation Assets submitted by the Defendants has been marked as Ex.No.A-05, Memorandum of Deposit of Title Deeds executed by the defendant as (D.No.261/2022) (Photo Copy ) has been marked as Ex.No.A-06, Sale certificate (Photo Copy) has been marked as Ex.No.A-07, Statement of Account has been marked as Ex.No.A-08. 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 Defendant 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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OA No. 81/2023

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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 Defendant, a sum of Rs. 26,24,902.55p together with interest at the rate of 11.65% p.a. with half yearly rests in respect of Term Loan from the date 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 Defendant is directed to pay personally a sum of Rs. 26,24,902.55p together with interest at the rate of 11.65% p.a. with half yearly rests in respect of Term Loan from the date 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 Defendant, 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 defendant is personally 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 defendant.

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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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OA No. 81/2023

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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 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 25^th April, 2025.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 14.05.2025

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Canara Bank v. P Krishnamoorthy

Case brief

What is this about?

What did the court decide?

Canara Bank v. P Krishnamoorthy

Case brief

What is this about?

What did the court decide?

What the court decided

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