Allowed

Punjab National Bank v. Zion Sports

DRT23 Apr 2025TA/515/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the applicant bank's application filed under Section 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 against the defendants for recovery of Rs. 32,59,499/- along with interest and costs, directing recovery from hypothecated assets.

What did the court decide?

The defendants are directed to pay the applicant bank Rs. 32,59,499/- with interest at 8.05% and 8.55% along with costs; the bank may recover the amount by sale of hypothecated assets.

Punjab National Bank versus Zion Sports — Contract and Commercial Disputes | DRT (2025)

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T.A. No. 515 of 2023

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28.04.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 28^th day of April, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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TRANSFERRED APPLICAION No. 515 of 2023

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(Originally filed before DRT- II, Chennai as OA 424/2021 and thereafter transferred to this Tribunal

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and renumbered as TA No.515 of 2023)

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M/s. Punjab National Bank Circle SASTRA Centre, PNB Towers, No.46-49, Royapettah High Road, Royapettah, Chennai-600 014. Rep. by its Chief Manager

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…Applicant

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-Vs.-

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M/s Zion Sports,

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Rep. by its Proprietor, Mr. S. Karthikeyan, No.53, Thirumangai Alwar Street, Sriperumbudur, Kancheepuram Dist. PIN-602 105.

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Mr. S. Karthikeyan S/o K, Selvaraj, 213, Nethaji Street, Gandhi Road, Extn, Near ESI Hospital, Sriperumbudur, Kancheepuram Dist. PIN-602 105. …Defendants

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Counsels on record / appeared:

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Counsel for Applicant : Sh. K. Radhakrishnamurthy Defendants were set ex-parte on 29.08.2022

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: - FINAL ORDER - :

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This Original Application is filed on 16.10.2021 by the Applicant Bank

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under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 (formerly

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T.A. No. 515 of 2023

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28.04.2025

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Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the Defendants for recovery of a total sum of Rs. 32,59,499 /- (Rupees

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Thirty Two Lakhs Fifty Nine Thousand Four Hundred and Ninety Nine

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only) due as on 30/09/2021 as follows:

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(a) Directing the Defendants 1 and 2 to pay to the Applicant bank a sum of Rs. 11,02,653/- together with interest at 8.05% with monthly rests in respect of Cash Credit facility (A/c No. 7922008700000090) from the date of this Application till the date of final payment in full;

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(b) Directing the Defendants 1 and 2 to pay to the Applicant bank a sum of Rs. 21,56,846/- together with interest at 8.55% with monthly rests in respect of Term Loan facility (A/c. No. 792200SG00000020) from the date of this Application till the date of final payment in full;

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for sale of schedule mentioned hypotheca and for costs of this application.

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Originally, this Application was filed before DRT-II, Chennai, assigned OA No.424 of 2021, and thereafter in pursuance to the notification from Ministry of Finance, DFS dated 04.10.2022, OA No.424 of 2021 stood transferred to this Tribunal and renumbered as TA No.515/2023.

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Brief Facts of the case:

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T.A. No. 515 of 2023

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28.04.2025

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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 Hon’ble Tribunal.

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It is the case of the Applicant Bank that the First defendant is the proprietary concern wherein the second defendant is the sole proprietor. The 1^st defendant is carrying on and manufacturing of sports equipment’s. The 2^nd defendant has executed all the documents on behalf of the 1st defendant.

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It is submitted that the 1^st defendant by his application dated 10.10.2016 approached the applicant for sanction of a Cash Credit Facility of Rs.5 lakhs for business purpose.

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Considering the said request, the Applicant sanctioned the same on 15.10.2016 to the 1^st defendant under Pradhan Mantri Mudra Yojana Scheme and the 1^st defendant had executed the following documents on 15.10.2016 to secure the above facility:

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(i) Hypothecation of Goods and Book Debts to secure Cash Credit Facility;

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(ii) Letter of Lien

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(iii) Letter of undertaking

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It is further submitted that the 1^st defendant, represented by 2^nd

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defendant, by letter dated 20.04.2017 had approached the Applicant Bank for enhancement of the CC facility from Rs.5 lakhs to 10 lakhs.

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The Applicant Bank by its sanction letter dated 16.05.2017 had sanctioned the enhanced Cash Credit (Hypothecation of Goods and Book Debts) Facility to the 1^st defendant. The 1^st defendant, represented by 2^nd defendant had availed the same and executed the following documents on 16.05.2017:

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(i) Hypothecation of Goods and Book Debts to secure Cash

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Credit Facility;

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(ii) Letter of lien

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(iii) Letter of undertaking

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It is further submitted that the 1^st defendant, represented by 2^nd defendant, by application dated 04.07.2017 had approached the Applicant Bank for sanction of the Term Loan facility of Rs.23.75 lakhs for business purpose.

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The Applicant by its sanction letter dated 07.08.2017 had sanctioned the Term Loan Facility to the 1^st defendant. The 1^st defendant, represented by 2^nd defendant had availed the same and executed the following documents on 07.08.2017:

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(i) Term Loan agreement

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(ii) Hypothecation of Assets to secure Term Loan Facility

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(iii) Undertaking letter

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(iv) Letter of Authority

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(v) Undertaking letter

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It is submitted by applicant bank that subsequent to availing of loan,

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the operation of the accounts by the defendants was not satisfactory. In spite of several demands by the Applicant, the Defendants did not regularize the account. The Defendants had failed to pay regularly for aforesaid loan facilities resulting which the loan accounts slipped into NPA on 30.11.2019 as per RBI guidelines. The applicant also has sent demand letters to the defendants on 22.06.2019, 03.10.2019 and 17.02.2020. The defendants by their letters dated 02.12.2019 and 29.09.2020 admitted their liabilities and requested time to repay the outstanding dues, however defendants failed to comply with the same.

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The defendants have executed Balance and security confirmation letters on 04.01.2020 and 13.03.2020, wherein they acknowledged their liabilities, but did not come forward to repay the outstanding dues. Hence, this Original Application (OA) has been filed to recover the dues from the defendants.

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After the filing of the OA, summons were sent to the Defendants 1 and 2 through Registered Post with Acknowledgment Due, which was duly served in respect of D-1, while summons to D-2 returned as ‘unclaimed’.

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Applicant bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 29.08.2022 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, defendants were placed ex-parte on 29.08.2022.

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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, Mr. P. Mahendran, Chief Manager, Circle Sastra Centre, Chennai representing 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-25 . 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 :

The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants, a total sum of Rs. 32,59,499 /- (Rupees Thirty Two Lakhs Fifty Nine Thousand Four Hundred and Ninety Nine only) as follows:

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(i) Directing the Defendants 1 and 2 to pay to the Applicant bank a sum of Rs. 11,02,653/- together with interest at 8.05% with monthly rests in respect of Cash Credit facility (A/c No. 7922008700000090) from the date of this Application till the date of final payment in full;

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(ii) Directing the Defendants 1 and 2 to pay to the Applicant bank a sum of Rs. 21,56,846/- together with interest at 8.55% with monthly rests in respect of Term Loan facility (A/c. No. 792200SG00000020) from the date of this Application till the date of final payment in full along with costs.

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

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this final order;

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T.A. No. 515 of 2023

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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 Defendant to the applicant bank.

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

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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 PS, transcribed by her, corrected, signed and pronounced by me on this the 28^th day of April, 2025)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Mr. P. Mahendran, Chief Manager, Circle Sastra Centre, Chennai

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Exhibits on the part of the Applicant:

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Sl. No.	Date	Description of Documents	Exhibit No.
1.	10.10.2016	Application by 1^stDefendant.	A-1
2.	15.10.2016	Hypothecation of Book Debts By 1^st defendant.	A-2
3.	15.10.2016	Letter of Lien by 1^stDefendant.	A-3
4.	15.10.2016	Letter of undertaking by Defendant.	A-4
5.	20.04.2017	Application by 1^stDefendant.	A-5
6.	16.05.2017	Sanction letter by Applicant bank	A-6
7.	16.05.2017	Hypothecation of Book Debts by 1^st defendant	A-7
8.	16.05.2017	Letter of lien by Defendants.	A-8
9.	16.05.2017	Letter of undertaking by Defendant.	A-9
10.	04.07.2017	Application by 1^stDefendant.	A-10
11.	07.08.2017	Sanction letter by Applicant bank	A-11
12.	07.08.2017	Term Loan agreement by Defendant.	A-12
13.	07.08.2017	Hypothecation of assets by Defendants.	A-13
14.	07.08.2017	Undertaking letter by Defendants.	A-14
15.	07.08.2017	Letter of Authority by defendants	A-15
16.	07.08.2017	Undertaking letter by Defendant.	A-16
17.	22.06.2019	Demand Letter by applicant bank	A-17
18.	03.10.2019	Demand Letter by applicant bank	A-18
19.	17.02.2019	Demand Letter by applicant bank	A-19
20.	02.12.2019	Letter by Defendant	A-20
21.	29.09.2020	Letter by Defendant	A-21
22.	04.01.2020	Balance & security confirmation letter by Defendants	A-22
23.	13.03.2020	Balance & security confirmation letter by Defendants	A-23
24.	02.01.2019	Gazzette of India ( Bank Amalgamation)	A-24
25.		Certified statement of accounts	A-25

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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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T.A. No. 515 of 2023 10 28.04.2025

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:- SCHEDULE -:

All the hypothecated raw materials, manufacturing of Bats and Sports items etc. No.53, Thirumangai Alwar Street, Sriperumbudur, Kancheepuram Dist. PIN-602105. Or stored or to be stored or in transit or wherever found.

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

Punjab National Bank v. Zion Sports

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. Zion Sports

Case brief

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