Allowed

Punjab National Bank v. K Arichandran

DRT19 Feb 2026OA/109/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed the applicant bank's original application for recovery of an agricultural loan from an ex-parte defendant. Despite rejecting the claim for penal interest based on settled Supreme Court law, the tribunal directed the defendant to pay the principal along with recalculated simple interest.

What did the court decide?

Direction to defendant to jointly/severally pay Rs.22,83,964.89 comprising principal and simple interest at 6% p.a. within one month; liberty to bank to sell mortgaged properties.

Punjab National Bank versus K Arichandran — Banking and Recovery | DRT (2026)

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OA No. 109/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 19^TH DAY OF FEBRUARY, 2026 PRESENT: SEEMA SINHA,

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[PR. DISTRICT & SESSIONS JUDGE – Retd]

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PRESIDING OFFICER

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OA No.109/2024

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Between

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Punjab National Bank, Circle SASTRA Trichy, Circle Office, Kailasapuram, Trichy – 620 014. Rep. By its Chief Manager. ---Applicant Bank

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And

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Mr. K. Arichandran, S/o Kaliyaperumal, No.2/28, Kaliamman Koil Street, Thethuvasalpatti, Ponnakulam, Pudukkottai. ---Defendant

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Counsel for the Applicant Bank : M/s S. Balasubramanian, T.M.Subramanian, M. Sundaraj, B. Iswarya

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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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JUDGEMENT

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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

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Page 1 of 6

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OA No. 109/2024

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on 06.02.2024 to recover from the Defendant a total sum of Rs.22,83,964.89p i.e., (i) Rs.5,98,960.88p together with interest at the rate of 7% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of KCC Loan and (ii) Rs.16,85,004.01p together with interest at the rate of 7% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan from the date of filing 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 had availed KCC loan for a sum of Rs.2,80,000/- and Term Loan for a sum of Rs.7,50,000/- totaling Rs.10,30,000/- executed necessary loaning documents in favour of the applicant. In addition to that the defendant had deposited the original title of his immovable property with the applicant bank as security for the due repayment of loan availed by him. Further, the defendant had executed memorandum of deposit of title deeds on 27.11.2015 in Document No.3192/2015, SRO, Kantharvakottai. The following is the detail of housing loan availed by the defendants.

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Nature of loan	Loan amount	Rate of interest	Outstanding amount as on 31.01.2022
KCC Loan	Rs.2,80,000/-	7%p.a + 2%P.I	Rs.5,98,960.88p
Term Loan	Rs.7,50,000/-	7%p.a + 2%P.I	Rs.16,85,004.01p
	Total		Rs.22,83,964.89p

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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. Despite repeated demands and reminders, made by the Applicant Bank, the Defendant have failed and neglected to repay and adjust his liability.

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Hence, the Applicant Bank has filed the OA for recovery of a total sum of Rs.22,83,964.89p i.e., (i) Rs.5,98,960.88p together with interest at the rate of 7% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of KCC Loan and (ii) Rs.16,85,004.01p together with interest at the rate of 7% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan from the date of filing of Application till the date of realization with cost.

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The Applicant Bank has submitted the following documents in support its claim in the OA, which are as follows:

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Page 2 of 6

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OA No. 109/2024

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No.	Date	Description	Exhibit No.
1.	21.11.2015	Loan Application	Ex.No.A-01
2.	21.11.2015	Hypothecation Agreement	Ex.No.A-02
3.	02.12.2015	Loan Application	Ex.No.A-03
4.	02.12.2015	Hypothecation Agreement	Ex.No.A-04
5.	27.11.2015	Mod in Doc No.3192/2015	Ex.No.A-05
6.	----	Statement of account	Ex.No.A-06

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"SCHEDULE OF PROPERTY"

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MORTGAGED PROPERTY

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In Pudukottai District, at Gandharvakkottai Taluk and Sub Registration District at Punalkulam Village, in RS No.6/6 an extent of 1 Hec 98 Ares equal to 4 Acres 89 cents Punja Lands in Patta No1364. It lies Within Punalkulam Panchayat Limit.

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Sl.No.	RS		Extent		Classification
	No.	Hec.	Acre	Cent
01	6/6	1.98	4	89	Punjai Lands
Tot	al		4	89

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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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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. Manjunath Venkatagiri, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendant has availed KCC Loan and Term Loan from the Applicant Bank, but he failed to pay 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-06 in support of its claim in the OA.

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Page 3 of 6

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OA No. 109/2024

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The Loan Application has been marked as Ex.No.A-01, Hypothecation Agreement has been marked as Ex.No.A-02, Loan Application has been marked as Ex.No.A-03, Hypothecation Agreement has been marked as Ex.No.A-04, Mod in Doc No.3192/2015 has been marked as Ex.No.A-05, Statement of account has been marked as Ex.No.A-06. 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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Therefore, this Original Application is allowed . Since this is an Agricultural Loan 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 total sum of Rs.22,83,964.89p i.e., (i) Rs.5,98,960.88p together with simple interest at the rate of 6% p.a. in respect of KCC Loan (ii) Rs.16,85,004.01p together with simple interest at the rate of 6% p.a. in respect of Term Loan from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

Page 4 of 6

OA No. 109/2024

ORDERED

(a) That the Defendants are directed to pay jointly/severally a total sum of Rs.22,83,964.89p i.e., (i) Rs.5,98,960.88p together with simple interest at the rate of 6% p.a. in respect of KCC Loan (ii) Rs.16,85,004.01p together with simple interest at the rate of 6% p.a. in respect of Term Loan from the date of filing 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 defendants are jointly/severally 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

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be given due credit, to the loan account of the defendants.

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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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Page 5 of 6

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OA No. 109/2024

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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 KCC loan and 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 19^th February, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 02.03.2026

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Punjab National Bank v. K Arichandran

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. K Arichandran

Case brief

What is this about?

What did the court decide?

What the court decided

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