Allowed

Punjab National Bank v. Ms Srika Auto Solutions

DRT21 May 2025TA/518/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the application filed by Punjab National Bank for recovery of dues amounting to Rs. 45,64,871/- comprising a Term Loan and Cash Credit Facility against the respondents who defaulted and failed to appear in court.

What did the court decide?

Recovery of Rs. 45,64,871/- jointly and severally; liberty to recover through sale of schedule assets and personal assets of the second defendant.

Punjab National Bank versus Ms Srika Auto Solutions — Contract and Commercial Disputes | DRT (2025)

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T.A. No. 518 of 2023

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21.05.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 21^st day of May, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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TRANSFERRED APPLICATION No. 518 of 2023

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(Originally filed before DRT- II, Chennai as OA 542/2020 and thereafter transferred to this Tribunal and renumbered as TA No 518 of 2023)

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Punjab National Bank, Velachery Branch, No.3, 3^rd Main Road, Dhandeeswaram, Velachery, Chennai -600 042, Represented by its Manager. ….Applicant

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-Vs-

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M/s Srikara Auto Solutions,

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Rep. by its Proprietor, No.12, Indira Nagar 1^st Street, Kattupakkam, Chennai -600 056.

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Also at

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No.1/62-15, Ravi Colony, 1^st Street, St. Thomas Mount, Chennai -600 016.

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Mr. J. Boopathy, S/o V. Jayaraman, No.183, Sanyasigundu Main Road, Salem -636 015. …Defendants

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Counsels on record / appeared:

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Counsel for Applicant : Mr. S. Vaidyanathan

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Defendants 1 to 2 were set ex-parte on 07.12.2023.

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: - FINAL ORDER - :

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This original application is filed on 09.11.2020 by the applicant bank

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T.A. No. 518 of 2023

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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 to 2, jointly and severally for recovery of a total amount sum of Rs.45,64,871/- (Rupees Forty Five Lakhs Sixty four

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Thousand Eight Hundred Seventy One Only) as follows:

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(i) A sum of Rs.33,40,648.40p due in respect of Term Loan (Account No.644700JT00001718) repayable together with interest @ 9.40% p.a. with monthly rests plus penal interest @2% p.a. from the date of filing the OA, till the date of realization in full;

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(ii) A sum of Rs.12,44,222.13p due in respect of Cash Credit Facility (Account No.6447008700000497) repayable together with interest @10.00% p.a. with monthly rests plus penal interest @ 2% p.a. from the date of filing the OA, till the date of realization in full; and for costs of this Application.

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Originally, this Application was filed before DRT-II, Chennai, assigned OA No.542 of 2020, and thereafter in pursuance to the notification from Ministry of Finance, DFS dated 04.10.2022, OA No.542 of 2020 stood transferred to this Tribunal and renumbered as TA No.518 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

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T.A. No. 518 of 2023

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21.05.2025

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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 1^st Defendant firm, represented by its proprietor, 2^nd Defendant, who is engaged in the business of operating Hired cab services. The 1^st defendant represented by 2^nd defendant had vide application dated 20.12.2016 requested for sanction of Term Loan of Rs.37.80 lakhs from the Applicant bank, for purchase of 6 Tata Indigo cars for operation as Hired Cabs.

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It is submitted by the applicant bank that based on the application, the Applicant Bank had sanctioned the Term Loan of Rs.35,70,000/- to the Defendants vide Sanction letter dated 23.12.2016, which was acknowledged by the Defendants.

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The 1^st Defendant represented by the 2^nd Defendant had executed Hypothecation Agreement (For Road Transport Operator and other commercial Vehicles) dated 23.03.2017 to secure the Term Loan and various other documents and undertaking as required by the bank agreeing to repay the loan in 58 equated monthly instalments or Rs.81,250.00 with interest at the rate of 11.70% per annum to be revised from time to time as per the terms of the Bank. The Loan was disbursed on 23.12.2016 directly to the Dealer and the vehicles purchased out the loan were hypothecated to the Bank.

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It is further submitted by applicant bank that the 2^nd Defendant had

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further applied for a Cash Credit account against hypothecation of book Debts, for working Capital vide application dated 10.11.2017 for the purpose of tourist Cab business, which was sanctioned by the bank on 20.11.2017. The 2^nd Defendant had accepted the terms of sanction and had executed Hypothecation Agreement of Goods and book debts, Agreement for Loan/Cash Credit and various other undertaking as required by the Bank.

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Applicant bank submitted that as per the terms of Hypothecation Agreement, the Defendants had agreed that the Applicant Bank could repossess the vehicles and other goods and book debts, and sell them in public auction if the Defendants defaulted in repayment of the Loan. Consequent to availing the Credit Facility, the defendants had specifically agreed to route all their business transactions through the Applicant Bank.

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It is submitted by applicant bank that the Term Loan account and Cash Credit sanctioned was covered under the Credit Guarantee Trust for Micro and small Enterprises (CGTMSE) Scheme of Govt. of India, and the fees for the coverage was to be debited from the accounts periodically.

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The Defendants had executed Balance and Security Confirmation Letter dated 29.09.2018 in the Term Loan and on 17.09.2019 in the CC account, extending the validity of the documents in the Loan Accounts.

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The Applicant submits that over a period of time after availing the Loan, the Defendants failed to conduct the account as per the terms of

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sanction and did not route the proceeds of their business through the Bank. As the Instalments in the loan account were not paid on time, the account became irregular and was classified as Non-performing Asset (NPA) as per RBI norms on 12.10.2018. The Applicant had re-possessed the vehicle as per terms of the Hypothecation agreement after due notice to the Defendants and had sold it in public auction on 04.04.2019 to recover it dues. However, the sale proceeds of the vehicles which had been used extensively, was grossly insufficient to recover the dues of the Applicant.

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The Cash Credit account availed for the same business purpose was not conducted properly and there were no sufficient credits to service the interest in the account or to justify the limits as per banking norms. Hence the account was classified as NPA on 08.01.2019.

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The Applicant Bank submits that various efforts to recover the dues of the Defendants have been met with failure and the defendants have also closed down their business whereby there are no hypothecated assets or recoverable Book Debts, from which the Applicant can recover its dues, but for the personal assets of the Defendants. 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 D1 and D2 through Registered Post with Acknowledgement due, which returned unserved.

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T.A. No. 518 of 2023

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Applicant bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 07.12.2023 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 to 2 were placed ex-parte on 07.12.2023.

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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. M. Velayutham, Chief Manager 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-14 . 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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17. The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants 1 and 2 jointly and severally, a total amount sum of Rs.45,64,871/-

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(Rupees Forty Five Lakhs Sixty four Thousand Eight Hundred

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Seventy One Only) as follows:

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(i) A sum of Rs.33,40,648.40p due in respect of Term Loan (Account No.644700JT00001718) repayable together with interest @ 9.40% p.a. with monthly rests plus penal interest @2% p.a. from the date of filing the OA, till the date of realization in full;

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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 assets.

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(d) The applicant bank is at liberty to sell the personal assets of the

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2^nd Defendant (both movable and immovable) to recover the balance dues as required under law, for which the 2^nd Defendant to disclose to the Tribunal particulars of other properties or assets owned by the 2^nd Defendant.

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(e) The applicant bank shall file the latest memo of calculation of

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OA amount together with interest, costs etc., to be paid by the Defendants duly considering the amounts, if any, paid by the

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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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(f) The applicant bank shall file memo of costs within ten days from

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the date of this final order.

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(g) 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 (Surya), transcribed by him, corrected, signed and pronounced by me on this the 21^st day of May, 2025)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Mr. M. Velayutham, Chief Manager representing the Applicant Bank

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Exhibits on the part of the Applicant:

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Sl.	Description of Documents		Exhibit
No.			No.
1.	Application for Term loan (Original)	dated	A-1
	20.12.2016.

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2.	Sanction letter with terms and conditions acknowledged by D1 (Original) dated 23.12.2016.	A-2
3.	Hypothecation Agreement of Vehicles (Original) dated 23.12.2016.	A-3
4.	Application for Cash Credit (Original) dated 10.11.2017.	A-4
5.	Sanction letter with acceptance of Terms and Conditions (Original) dated 20.11.2017.	A-5
6.	Hypothecation Agreement (Original) dated 20.11.2017.	A-6
7.	Agreement for Loan/Cash Credit (Original) dated 20.11.2017.	A-7
8.	Balance and Security confirmation letter for Term Loan (Original) dated 29.09.2018.	A-8
9.	Balance and Security confirmation letter for Cash credit account (Original).	A-9
10.	Intimation of seizure (copy) dated 15.02.2019.	A-10
11.	Seizure letter 3(copy) dated 28.03.2019.	A-11
12.	Notice to borrower intimating sale of vehicles (Copy) dated 15.04.2019.	A-12
13.	Statement of account of Term Loan till date of NPA and Calculation of interest and charges during NPA period (Certified true copy).	A-13
14.	Statement of account for CC account till NPA and Calculation of interest and charges during NPA period (Certified true copy).	A-14

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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 – NIL

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

Punjab National Bank v. Ms Srika Auto Solutions

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. Ms Srika Auto Solutions

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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Case details

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