Allowed

Bank of Baroda v. M s Kavan Bag India Pvt. Ltd.

DRT6 Aug 2026OA/12/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the applicant bank's original application for recovery of dues from a corporate borrower and its guarantors. The defendants were set ex-parte for failing to appear. The court held the evidence on record proved the claim.

What did the court decide?

Recovery of Rs.39,15,783.60 p plus interest @9.60% p.a. and penal interest, along with costs, from defendants jointly and severally.

Bank of Baroda versus M s Kavan Bag India Pvt. Ltd. — Contract and Commercial Disputes | DRT (2026)

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O.A. No.12 of 2023

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06.08.2026

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 06^th day of August, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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ORIGINAL APPLICATION No.12 of 2023

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Bank of Baroda, Velappanchavadi Branch, Munusamy Naicker Avenue, No.126, Poonamallee High Road, Chennai- 600 077

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Represented by its Senior Manager ….Applicant

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-Vs-

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M/s Kavan Bag India Pvt. Ltd, No.9/11, 1^st Block, Edayanchavadi village, Manali New Town, Chennai- 600 103 Represented by its Directors

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Mrs. J. Dackshayani D/o Janarthanan, No.51/105, Govindappa Naicken Street, Chennai- 600 001

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Mr. S. Kannan, S/o Subbaiah, 105/51, Govindappa Naicken Street, Chennai- 600 001

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Mrs.K. Chithirai Valli, W/o Kannan, 105/51, Govindappa Naicken Street, Chennai- 600 001 …..Defendants

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Counsels on record / appeared:

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Counsel for Applicant: Sh. S. Vaidyanathan

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Defendants 1 to 4 were set ex-parte on 28.06.2023

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O.A. No.12 of 2023

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06.08.2026

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: - FINAL ORDER- :

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This Original Application is filed on 02.02.2023 by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants 1 and 2, jointly and severally for recovery of a total sum of Rs.39,15,783.60p (Rupees Thirty Nine Lakhs Fifteen Thousand Seven Hundred Eighty Three and Sixty Paise only) due in respect of Cash Credit Loan (A/c No. 40540500000662) repayable together with further interest @9.60% p.a. with monthly rests along with penal interest 2% p.a. simple from the date of Application till the date of realization in full and for costs of this OA.

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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 firm represented by the 2^nd defendant had applied to the bank for Cash Credit facility of Rs.35 lakhs for the business of manufacture and the sale of bags vide application dated 05.10.2019.

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It is submitted by the applicant bank that based on the loan application of the defendants, the applicant bank had sanctioned a sum of Rs.35 lakhs as Cash Credit to the defendant for the purpose of Working

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Capital and purchase of raw material vide Sanction Letter dated 17.03.2020, the terms and conditions of which were acknowledged by the defendants.

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The 1^st defendant represented by the other defendants executed the following documents dated 08.04.2020 in favour of the applicant bank in acknowledgement of having the credit facility and agreeing to hypothecate all the stocks and book debts of the company in favour of the applicant and also to route all their transactions through their account with the bank:

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i. D.P. Note for Rs.35 lakhs

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ii. Declarations cum undertakings cum authority

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iii. Composite hypothecation agreement- LDOC17B

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iv. Letter of continuing security

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The cash credit account was to be repaid on demand with interest @7.35% per annum plus 2% penal interest in case of default.

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It is submitted that as per the terms and conditions of sanction, the defendants were to route all their transactions through their account with the bank and maintain sufficient stocks of goods to cover the limits sanctioned to them by the bank.

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The 2^nd , 3^rd and 4^th defendants have offered personal guarantee for the credit facility of Rs.35 lakhs availed by the 1^st defendant company and had executed Guarantee Agreement, the terms of which they had accepted co extensive liability with that to the borrower, and also agreed

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O.A. No.12 of 2023

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for any confirmation of debt by the borrower to be binding on them.

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The applicant submits that subsequent to availing of loan, the defendants have not carried on the business as per terms of sanction and have not maintained sufficient stocks to cover the dues of the applicant bank and also have diverted funds for other purposes. The defendants have since closed down their business and hence there is no stock available from which the bank can recover its dues.

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The defendants have also clandestinely sold the stocks and machinery, purchased out of the loan sanctioned by the applicant, which was under Hypothecation to the bank. The applicant has repeated contacted the defendants for regularization of the account and had sent letters dated 15.12.2020, 10.03.2021 and 17.04.2021 to regularize the account but no response was received from the defendants. The applicant bank had to therefore classify the account as Non-Performing Asset (NPA) as per RBI norms on 31.03.2021. Hence, 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 4 through Registered Post with Acknowledgment Due, which were duly served in respect of D-1 to D-4. No representation for the Defendants. When OA was taken up on 28.06.2023 even after giving sufficient time,

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there was no appearance or representation from the defendants. Hence, Defendants 1 to 4 were placed ex-parte on 28.06.2023

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O.A. No.12 of 2023

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Heard the submissions of Applicant Bank and perused the

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records.

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To prove the case of the Applicant Bank, Sh. M.V. Ramakrishna, Chief 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 came to be marked as Ex A-1 to A-15.

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A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-15 evidence that the borrowal of credit facilities and execution of loan and security documents are true, in terms of averments made in Original Application as well as Proof Affidavit filed by applicant bank establishing its claim. Applicant bank filed Statement of Accounts duly certified under Bankers’ Book Evidence Act, evidencing the amount claimed against defendants.

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The defendants were set ex-parte on 28.06.2023, but till this day they did not take any action to set aside the ex-parte order and did not choose to contest the claim. Further, a careful scrutiny of records makes it clear that present application is filed well within limitation and this Tribunal possesses necessary and proper jurisdiction to entertain and adjudicate the claim. No oral or documentary evidence on the side of defendants are produced or filed to dispute the claim of applicant bank. Hence, it can be concluded that applicant bank has proved its claim against defendants.

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With regard to the amount advanced, the interest applied the conduct

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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

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1 to 4 jointly and severally, a total sum of Rs.39,15,783.60p (Rupees Thirty Nine Lakhs Fifteen Thousand Seven Hundred Eighty Three and Sixty Paise only) due in respect of Cash Credit Loan (A/c No. 40540500000662) repayable together with further interest @9.60% p.a. with monthly rests along with penal interest 2% p.a. simple from the date of Application till the date of realization in full along with costs of this application.

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(b) 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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(d) 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 Roshnee, transcribed by her, corrected, signed and pronounced by me on this the 06^th day of August, 2026)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Sh. M.V. Ramakrishna, Chief Manager of 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.	05.10.2019	Application for credit facilities	A-1
2.	17.03.2020	Attestation memo	A-2
3.	08.04.2020	Demandpromissorynote for Rs.35 lakhs	A-3
4.	08.04.2020	Letter of Continuingsecurity	A-4
5.	08.04.2020	Composite hypothecation agreement	A-5
6.	08.04.2020	Declarations cum undertaking cum authority	A-6
7.	08.04.2020	Guarantee agreement byD-2	A-7
8.	08.04.2020	Guarantee agreement byD-3	A-8
9	08.04.2020	Guarantee agreement byD-4	A-9
10	15.12.2020	Reminder letter to defendants with receipt	A-10
11.	10.03.2021	Reminder letter to defendants with receipt	A-11
12.	17.04.2021	Reminder letter to defendants with receipt	A-12
13.	-	Certificate of incorporation of 1^stdefendant	A-13
14.	-	Master data of directors of 1^stdefendant	A-14
15.	-	Statement of cash A/c from 08.04.2020 to 31.03.2021 with calculation of interest and charges in the account duringNPAperiod	A-15

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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 OF PROPERTY

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NIL

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

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Uploaded on 06.08.2026 at 14:00 hours

Bank of Baroda v. M s Kavan Bag India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Bank of Baroda v. M s Kavan Bag India Pvt. Ltd.

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

Coram

Case details

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