Allowed

Canara Bank v. M s J S Traders and two others

DRT27 Nov 2025TA/1035/2023

Case brief

AI extract

What is this about?

The DRT allowed the bank's debt recovery application unchallenged. The court directed the realization of the outstanding dues of Rs. 7.30 crores from the borrowers and guarantors, credited partial payments from asset sales, and authorized sale of remaining hypothecated and personal assets to recover the balance.

What did the court decide?

Recovery of Rs. 7,30,33,367 p.a. at 12.65% interest with monthly rests; direction to credit partial sales proceeds; authority to sell remaining hypothecated and personal assets.

Canara Bank versus M s J S Traders and two others — Specific Performance | DRT (2025)

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T.A. No. 1035 of 2023

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27.11.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 27^th day of November, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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TRANSFERRED APPLICATION No. 1035 of 2023

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(Originally filed before DRT- II, Chennai as OA 507/2008 and thereafter transferred to this Tribunal and renumbered as TA No 1035 of 2023)

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M/s. Canara Bank,

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Rep. by its Assistant General Manager, Mr. A. Nambikkai Antony Jeyapaul, Teynampet Branch, No. 524, Anna Salai, Teynampet, Chennai – 600 018.

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….Applicant

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-Vs-

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Mrs. J. S. Traders,

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Rep. by its Proprietor,

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Mr. M. Jayam,

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No. 3/2, 4^th street, Singara Garden,

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Suzhal Metthai Back Side, Old Washermenpet,

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Chennai – 600 021.

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Mr. M. Jayam,

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S/o. Mr. S. Mahalingam,

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No. 3/2, 4^th Street, Singara Garden, Suzhal Metthai Back Side, Old Washermenpet, Chennai – 600 021.

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Also at:

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Mr. M. Jayam, S/o. Mr. S. Mahalingam, No. 6, Greens Road, Nearby Periyar Statue, Karaikudi Taluk, Sivagangai District, Pincode – 636 606.

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Mr. M. Mahalingam, S/o. Mr. S. Mahalingam,

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No. 3/2, 4^th Street,

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T.A. No. 1035 of 2023

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27.11.2025

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Singara Garden, Suzhal Metthai Back Side, Old Washermenpet, Chennai – 600 021.

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Also at:

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Mr. M. Mahalingam, S/o. Mr. S. Mahalingam, No. 6, Greens Road, Nearby Periyar Statue, Karaikudi Taluk, Sivagangai District, Pincode – 636 606. …. Defendants

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Counsels on record / appeared:

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Counsel for Applicant : M/s. S. Parthasarathy

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Defendants 1 to 3 were set ex-parte on 09.01.2019

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: - FINAL ORDER - :

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This Original Application is filed on 27.08.2018 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 jointly and severally for recovery of a total sum of Rs. 7,30,33,367/- (Rupees Seven Crores Thirty Lakhs Thirty Three Thousand Three Hundred Sixty Seven only) due in respect of Open Cash Credit Loan (Account No.0416261002690) together with further interest @ 12.65% p.a., with monthly rests from the date of Application till the date of realization in full, for sale of schedule mentioned immovable property and for costs of this Original Application.

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Originally, this Application was filed before DRT-II, Chennai, assigned OA No. 507 of 2018, and thereafter in pursuance to the

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T.A. No. 1035 of 2023

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27.11.2025

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notification from Ministry of Finance, DFS dated 04.10.2022, OA No.507 of 2018 stood transferred to this Tribunal and renumbered as TA No. 1035 of 2023.

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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 has approached the Applicant Bank for sanction of Open Cash Credit (Take over from SBI) for the purpose of working capital requirements, to the tune of Rs.450 Lakhs and the same was sanctioned on 17.11.2014 in Loan Account No. 0416261002690 with the floating rate of interest at 12.95% per annum with monthly rests. The 2^nd and 3^rd Defendants have executed the Guarantee Deed thereby guaranteeing the repayment of the loan amount availed by the 1^st Defendant in favour of the Applicant.

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It is submitted by the applicant bank that in order to secure the loan, the Defendants have executed the following documents in favour of the Applicant Bank:-

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a) Demand Promissory Note executed by the Defendants in favour of the Applicant Bank for Rs.450.00 Lakhs, dated 12.12.2014.

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b) Request for Overdraft Facilities duly signed by the 1^st Defendant

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27.11.2025

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in favour of the Bank, dated 12.12.2014.

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c) Guarantee Agreement executed by the 2^nd Defendant for Rs.450.00 Lakhs in favour of the Bank, dated 12.12.2014.

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d) Guarantee Agreement executed by the 3^rd Defendant for Rs.450.00 Lakhs in favour of the Bank, dated 12.12.2014.

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e) Common Hypothecation Agreement executed by the 1^st Defendant in favour of the Bank for Rs.450.00 Lakhs, dated 12.12.2014.

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The Applicant submits that the 1^st Defendant had approached the Applicant Bank for renewal and enhancement of Open Cash Credit Facility for a sum of Rs.550.00 Lakhs on 24.03.2016 in Loan Account No.0416261002690 for the purpose of working capital requirements with the rate of interest at 12.65% per annum with monthly rests. In order to secure the enhanced facility, the Defendants have executed the following documents in favour of the Applicant Bank:

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a) Sanction Letter for Renewal and Enhancement duly signed by the 1^st Defendant in favour of the Bank for Rs.550.00 Lakhs (Open Cash Credit Facility), dated 24.03.2016.

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b) Letter of Renewal duly signed by the 1^st Defendant in favour of the Bank for Rs.450.00 Lakhs, dated 28.03.2016.

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c) Demand Promissory Note executed by the 1^st Defendant in favour of the Bank for Rs.550.00 Lakhs, dated 28.03.2016.

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d) Supplemental Agreement executed by the 1^st Defendant in favour of the Bank, dated 28.03.2016.

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e) Agreement for Re-advances against Book Debt as Prime Security duly executed by the Borrower in favour of the Bank, dated 28.03.2016

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f) Link Letter in respect of Enhancement executed by the 1^st Defendant in favour of the Bank, dated 28.03.2016

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g) Supplemental Common Hypothecation Agreement executed by the 1^st Defendant in favour of the Bank, dated 28.03.2016

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h) Guarantee Agreement executed by the 2^nd Defendant for Rs.550.00 Lakhs in favour of the Bank, dated 28.03.2016

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i) Guarantee Agreement executed by the 3^rd Defendant for Rs.550.00 Lakhs in favour of the Bank, dated 28.03.2016

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j) Draft of LEDTD used where additional limit is granted on the very security (inclusive of third party property already given to the Bank) duly executed by the 2^nd and 3^rd Defendants, dated 28.03.2016 in favour of the Bank.

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k) Draft of LEDTD used where additional limit is granted on the very security (inclusive of third party property already given to the Bank) duly executed by the 3^rd Defendant, dated 28.03.2016 in favour of the Bank.

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l) Acknowledgement of Debt and Security duly signed by the 1^st Defendant in favour of the Bank, dated 28.03.2016.

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m) Link Letter obtained when disbursement is done on a

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subsequent day duly signed by the 1^st Defendant in favour of the Bank, dated 30.03.2016.

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It is further submitted by the Applicant Bank that the 1^st defendant had approached the applicant bank for Adhoc limit of Rs.110 Lakhs to capitalize the seasonal business by way of Requisition Letter, dated 17.03.2017. The Applicant Bank accepted the Borrower’s request and sanctioned the Adhoc limit of Rs.75.00 Lakhs on 27.03.2017. The following documents were executed by the Borrowers for Adhoc Limits of Rs.75.00 Lakhs:-

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a) Demand Promissory Note executed by the 1^st Defendant in favour of the Bank for Rs.75.00 Lakhs, dated 05.05.2017

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b) Guarantee covering Letter along with Guarantee Agreement executed by the 2^nd Defendant in favour of the Bank for Rs.75.00 Lakhs, dated 05.05.2017.

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c) Guarantee covering Letter along with Guarantee Agreement executed by the 3^rd Defendant in favour of the Bank for Rs.75.00 Lakhs, dated 05.05.2017.

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d) Supplemental Common Hypothecation Agreement executed by the 1^st Defendant for Rs.625.00 Lakhs, dated 05.05.2017 in favour of the Bank.

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In order to further secure the advance, the Defendants have mortgaged their immovable properties morefully detailed in Schedule to the OA as Item Nos. 1 to 9 in favour of applicant bank.

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(i) Item No.1 of the property held in the names of Mr. M. Mahalingam and Mr. M. Jayam, the 2^nd and 3^rd Defendants herein purchased by way of Sale Deed, dated 15.12.2006 and registered as Document No.2341 of 2006, on the file of office of SRO, Karaikudi Joint I.

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(ii) Item No.2 of the property held in the names of Mr. M. Mahalingam and Mr. M. Jayam, the 2^nd and 3^rd Defendants herein purchased by way of Sale Deed, dated 27.12.2006 and registered as Document No.2342 of 2006, on the file of office of SRO, Karaikudi Joint I.

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The above said two properties mortgaged by way of Memorandum of Deposit of Title Deeds, dated 22.06.2015 and registered as Document No.1226 of 2015 on the file of office of SRO, Karaikudi Joint I.

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(iii) Item No.3 of the properties lies within R.S. Mangalam Panchayat Union and Manakudi Panchayat Board. The above said properties purchased by the 3^rd Defendant by way of Sale Deed, Dated 15.07.2008 and Registered as Document No.992 of 2008 on the file of office of Sub Registrar Office, Thondi.

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(iv) Item No.4 of the property lie within R.S. Mangalam Panchayat Union and Manakudi Panchayat Board. The above said properties purchased by the 3^rd Defendant by way of Sale Deed, Dated

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10.09.2008 and Registered as Document No.1474 of 2008 on the file of office of Sub Registrar Office, Thondi.

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(v) Item No.5 of the property lie within R.S. Mangalam Panchayat Union and Manakudi Panchayat Board. The above said properties purchased by the 3^rd Defendant by way of Sale Deed, Dated 10.09.2008 and Registered as Document No.1300 of 2008 on the file of office of Sub Registrar Office, Thondi.

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(vi) Item No.6 of the property lie within R.S. Mangalam Panchayat Union and Manakudi Panchayat Board. The above said properties purchased by the 3^rd Defendant by way of Sale Deed, Dated 10.09.2008 and Registered as Document No.1302 of 2008 on the file of office of Sub Registrar Office, Thondi.

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(vii) Item No.7 of the property lie within R.S. Mangalam Panchayat Union and Manakudi Panchayat Board. The above said properties

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purchased by the 3^rd Defendant by way of Sale Deed, Dated 10.09.2008 and Registered as Document No.1303 of 2008 on the file of office of Sub Registrar Office, Thondi.

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(viii) Item No.8 of the property lie within R.S. Mangalam Panchayat Union and Manakudi Panchayat Board. The above said properties purchased by the 3^rd Defendant by way of Sale Deed, Dated 10.09.2008 and Registered as Document No.1301 of 2008 on the file of office of Sub Registrar Office, Thondi.

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(ix) Item No.9 of the property lies within R.S. Mangalam Panchayat Union and Manakudi Panchayat Board. The above said

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properties purchased by the 3^rd Defendant by way of Sale Deed, Dated 11.09.2008 and Registered as Document No.1475 of 2008 on the file of office of Sub Registrar Office, Thondi.

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The Applicant submits that the subsequent to availing of loan, defendants have defaulted in repayment of the facilities as per agreed terms. The Defendants have failed to respond to the reminders, personal contacts and repeated demands made by the Applicant Bank. The Defendants are also liable to pay 2% additional interest chargeable for default in making repayment till the date of realization along with the costs due to the Applicant Bank. The Applicant Bank has classified the Borrower’s account as Non-Performing Asset (NPA) on 06.04.2018 in accordance with RBI guidelines. Further, the Applicant has caused Legal Notice to the Defendants on 23.08.2018 calling upon them to repay the outstanding of Rs.7,30,33,367/- to the Applicant Bank. As defendants did not come forward to repay the dues, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues from the defendants.

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After the filing of the OA, summons were sent to the defendants 1 to 3 through Registered Post with Acknowledgment Due, which returned unserved with postal endorsement as ‘unclaimed’. Applicant Bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 10.12.2018 even after giving sufficient time, there was no appearance or representation from the defendants. Hence,

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Defendants1 to 3 were placed ex-parte on 10.12.2018.

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Heard the submissions of Applicant Bank and perused the records.

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To prove the case of the Applicant Bank, Sh. A. Aravindan, 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

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came to be marked as Ex. A-1 to A-39 . 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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During the pendency of OA, Applicant Bank had reported part satisfaction of OA claim in a sum of Rs.1,87,00,000/- by way of sale of Item No.1 and 2 of the OA schedule mentioned property under SARFAESI Act on 17.11.2021 and a sum of Rs. 89.40 lakhs by way of sale of Item Nos. 3, 3(a), 3(b), 3(c), 3(d), 3(e) 3(f), 3(g), 3(h), 3(i), Item Nos. 4 to 9 of the schedule mentioned property in the OA under SARFAESI Act on 05.12.2022. Accordingly, part satisfaction of sum of Rs.1,87,00,000/was recorded vide order dated 23.03.2022 and part satisfaction of sum of Rs. 89,40,000/- was duly recorded vide order dated 24.01.2024. The documents at Sr. No.27, 28 and 29 viz., Sale Deed No.2341/2006, 2342/2006 and MOD No.1226/2015 in respect of Item Nos. 1 and 2 were returned to applicant bank on 30.03.2022 and documents marked as Ex A-30 to A-37 in respect of Item Nos.3, 3(a) to 3(i), 4 to 9 were returned

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to applicant bank on 09.05.2024 under proper acknowledgement.

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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 jointly and severally, for recovery of a total sum of Rs. 7,30,33,367/- (Rupees Seven Crores Thirty Lakhs Thirty Three Thousand Three Hundred Sixty Seven only) due in respect of Open Cash Credit Loan (Account No.0416261002690) together with further interest @ 12.65% 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) A sum of Rs.1,87,00,000/- and Rs. 89,40,000/- realized by way of sale of immovable properties morefully detailed in Item Nos.1, 2, 3, 3 (a) to 3(i), 4 to 9 of the OA schedule is directed to be given credit to the borrower’s loan account as on the date of realization.

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(c) 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 hypotheca morefully detailed in the OA

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schedule.

(d) If the sale proceeds of the hypothecated assets and immovable properties are not sufficient to satisfy the dues as ordered above, the applicant bank is at liberty to sell the personal assets of the 2^nd and 3^rd Defendants (both movable and immovable) to recover the balance dues as required under law for which the 2^nd and 3^rd Defendants to disclose to the Tribunal particulars of other properties or assets owned by the 2^nd and 3^rd Defendants.

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

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(g) Recovery Certificate shall be drawn up and issued to the 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 27^th day of November, 2025)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Sh. A. Aravindan, Senior Manager representing the Applicant Bank

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Exhibits on the part of the Applicant:

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Sl. No.	Date	Description of Documents	Exhibit No.
1.	17.11.2014	Sanction Memorandum for Rs.450.00 Lakhs (Open Cash Credit Facility)	A-1
2.	12.12.2014	Demand Promissory Note for Rs.450.00 Lakhs	A-2
3.	12.12.2014	Request for Overdraft Facility duly signed by the 1^stDefendant	A-3
4.	12.12.2014	Guarantee Agreement duly signed by the 2^ndDefendant for Rs.450.00 Lakhs.	A-4
5.	12.12.2014	Guarantee Agreement duly signed by the 3^rdDefendant for Rs.450.00 Lakhs.	A-5
6.	12.12.2014	Common Hypothecation Agreement duly signed by the 1^stDefendant for Rs.450.00 Lakhs	A-6
7.	24.03.2016	Sanction Memorandum for Rs.550.00 Lakhs (Renewal of limits with enhancement)	A-7
8.	30.03.2016	Link Letter obtained with disbursement is done on a subsequent day	A-8
9.	28.03.2016	Letter of Renewal duly signed by the 1^st Defendant for Rs.450.00 Lakhs	A-9

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10.	28.03.2016	Demand Promissory Note for Rs.550.00 Lakhs duly signed by the 1^stDefendant	A-10
11.	28.03.2016	Supplemental Agreement duly signed by the 1^stDefendant	A-11
12.	28.03.2016	Link Letter in respect of enhancement of credit facilities duly signed by the 1^st Defendant	A-12
13.	28.03.2016	Agreement for Re: Advances against Book Debts as Prime Security duly signed by the 1^stDefendant	A-13
14.	28.03.2016	Link Letter in respect of Enhancement duly signed by the 1^stDefendant	A-14
	28.03.2016	Supplemental Common Hypothecation
15.		Agreement executed by the 1^st Defendant	A-15
16.	28.03.2016	Guarantee Agreement duly signed by the 2^ndDefendant for Rs.550.00 Lakhs.	A-16
17.	28.03.2016	Guarantee Agreement duly signed by the 3^rdDefendant for Rs.550.00 Lakhs.	A-17
18.	28.03.2016	Draft of LEDTD used where additional limit is granted on the very security (inclusive of third party property already given to the Bank) signed by 2^ndand 3^rdDefendants	A-18
19.	28.03.2016	Draft of LEDTD used where additional limit is granted on the very security (inclusive of third party property already given to the Bank) signed by 3^rdDefendants	A-19
20.	28.03.2016	Acknowledgement of Debt and Security duly signed by the 1^stDefendant in favour of the Bank	A-20
21.	17.03.2017	Request for Adhoc Limit of Rs.110.00 Lakhs duly signed by the 1^stDefendant	A-21
22.	27.03.2017	Sanction Note for recommendation of Adhoc limits of Rs.75.00 Lakhs	A-22
23.	05.05.2017	Demand Promissory Note for Rs.75.00 Lakhs duly signed by the 1^stDefendant	A-23
24.	05.05.2017	Guarantee Agreement duly signed by the 2^ndDefendant for Rs.75.00 Lakhs.	A-24
25.	05.05.2017	Guarantee Agreement duly signed by the 3^rdDefendant for Rs.75.00 Lakhs.	A-25
	05.05.2017	Supplemental Common Hypothecation
26.		Agreement executed by the 1^st Defendant for Rs.625.00 Lakhs	A-26

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27.	15.12.2006	Sale Deed in Document No.2341 of 2006	A-27
28.	27.12.2006	Sale Deed in Document No.2342 of 2006	A-28
29.	22.06.2015	Memorandum of Deposit of Title Deeds executed by the 2^ndand 3^rdDefendants in favour of the Bank in Document No.1226 of 2015	A-29
30.	15.07.2008	Sale Deed in Document No.992 of 2008	A-30
31.	10.09.2008	Sale Deed in Document No.1474 of 2008	A-31
32.	10.09.2008	Sale Deed in Document No.1300 of 2008	A-32
33.	10.09.2008	Sale Deed in Document No.1302 of 2008	A-33
34.	10.09.2008	Sale Deed in Document No.1303 of 2008	A-34
35.	10.09.2008	Sale Deed in Document No.1301 of 2008	A-35
36.	11.09.2008	Sale Deed in Document No.1475 of 2008	A-36
37.	13.11.2015	Memorandum of Deposit of Title Deeds executed by 3^rdDefendant in favour of the Bank in Document No.1285 of 2015	A-37
38.	23.08.2018	Legal Notice issued by the Applicant Bank	A-38
39.	08.03.2018	Statement of Account for OCC A/c No. 0416261002690	A-39

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Witness Examined for the Defendants

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: -Nil-

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List of Documents Exhibited for the Defendants : -Nil –

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:- SCHEDULE OF MOVABLE PROPERTIES -:

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Hypothecation of Stocks lying at No.3/2, 4^th Street, Singara Garden, Suzhal Metthai Back Side, Old Washermenpet, Chennai 600 021.

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

Canara Bank v. M s J S Traders and two others

Case brief

What is this about?

What did the court decide?

Canara Bank v. M s J S Traders and two others

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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Case details

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