Allowed

Karnataka Bank Limited v. sri krishna shelters Pvt. Ltd.

DRT24 Jun 2026OA/1203/2022

Case brief

AI extract

What is this about?

DRT allowed the applicant bank's application for a Recovery Certificate under Section 19 RDB Act for Rs.50.56 lakhs arising from an encashed bank guarantee. The court reduced the interest rate to 12% p.a. and permitted recovery from mortgaged properties.

What did the court decide?

Recovery Certificate allowed for Rs.50,56,360.45 with interest at 12% p.a. from filing date, recoverable from mortgaged properties or jointly and severally from defendants' other assets.

Karnataka Bank Limited versus sri krishna shelters Pvt. Ltd. — Company and Corporate | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 24^th Day of June, 2026

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Present: Sri. T. RAJESH Presiding Officer

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OA. No.1203/2022

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BETWEEN:

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Karnataka Bank Ltd., Banashankari III Stage Branch At No.650, II Main, II Phase, VII Block, Banashankari III Stage, Hosakerehalli Cross, Bengaluru-560085 Rep. by its Senior Branch Manager … APPLICANT

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AND:

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M/s. Sri. Krishna Shelters Pvt. Ltd., Having its place of business and Administrative Office at No.59, “ Sri Krishna Sudha” West Anjaneya Temple Street, Off: Basavanagudi Main Road, Gandhibazar, Bengaluru-560004 Rep.by its Managing Director Mr. Raghavendra K A

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Sri. Raghavendra K A Aged 58 years S/o. Mr. Ashwathnarayana Rao K

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Smt. Srilakshmi T S Aged 57 years W/o. Mr. Raghavendra K A

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Nos. 2 & 3 above, residing at Flat Nos. 7 & 8, III Floor, “Krishna Nidhi” Site No.4, Old No.445, 7th Main, 33^rd Cross, 4^th Block, Jayanagar, Bengaluru-560011 ...DEFENDANTS

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2 OA/1203/2022

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Counsel on record/appeared for:

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Applicant : Sri. Y P Gokul Defendants Nos.1,2,3 : M/s. P R N Associates

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:FINAL ORDER:

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This application is filed under S.19 of Recovery of Debts and Bankruptcy Act 1993, with a prayer to issuance of Recovery Certificate for Rs.50,56,360.45 (Rupees Fifty Lakhs Fifty Six Thousand Three Hundred Sixty and Forty Five Paisa only) claiming to be due from the borrower, the 1^st defendant who availed the following facilities: demand loan, term loan, overdraft, bank guarantee and inland letter of credit, wherein the defendants 2 and 3 stood as guarantors.

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It is also the case of the applicant that, the loans were secured by hypothecation over the stocks in trade due debts created, apart from the creation of mortgage over the schedule properties. In respect of the above credit facilities, the applicant though has filed OA 1784/2018 seeking recovery of amount due in credit facilities, the Bank Guarantee is invoked later forcing the bank to file this OA seeking recovery of the amount due in the Bank Guarantee. The claim as raised in this OA is only in respect of Bank Guarantee.

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It is the case of the applicant that, 1^st defendant a limited company availed a bank guarantee for Rs.5.00 crore which got sanctioned on 13.05.2014 against the execution of loan guarantees, acceptance of cred sanction order, apart from the execution of the Demand Promissory Note

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OA/1203/2022

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for the said amount, Guarantee letter, declaration from the 1^st and 2^nd defendants. It is further contended by the applicant that, the bank guarantee was obtained in favour of Hindustan Aeronautical Limited in short (HAL) and same had been renewed from time to time up to 30.10.2019. it is also contended that, the beneficiary of the bank guarantee namely HAL had by the communication dated 6.08.2019 sought to invoked the bank guarantee as the said claim made within the validity of the bank guarantee, the bank had obliged for request for invocation of bank guarantee whereby the defendants became liable to refund the amount due in respect of the same. It is also contended that, though two other bank guarantees are issued by the bank, the same is yet to be invoked and claim in respect of the same is not included in this OA.

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The applicant is also having a case that, the mortgage executed in lieu of the credit facilities is also liable to be proceeded against as the liability incurred by invocation of the bank guarantee is also covered by the mortgage. Hence according to the applicant, the 1^st to 8^th schedule properties to the OA are common security for the bank guarantee facility, apart from the charge over the hypothecation, hypothecated movables. In view of the above, the applicant is claiming the amount due of Rs.50,56,360/- together with the interest @19.75 % and also praying that allowed the same to be recovered by proceedings against the mortgage properties.

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OA/1203/2022

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The defendants entered appearance and filed the written statement contending as follows:

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The applicant has failed to give an appropriation details regarding the claim as put forth in the OA. The so claimed extension of bank guarantee up to 30.09.2019 is also denied by the defendant stating that the account of the defendants were already classified as NPA in 2015. In respect of execution of documents, it is contended that, the signature of the defendants obtained in blank papers and they are not aware as to the contents therein. On the basis of the above, the defendants seeks disbursal of the OA.

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The applicant let in evidence through AW-1 who had filed the proof affidavit in consonance with the pleadings of the OA and got marked Ex.A1 to A31. The defendants have also filed their proof affidavit through 2^nd defendant who was examine as DW-1 and the contention of the written statement have reiterated in the proof affidavit.

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Heard the submissions of the applicant counsel and perused the available records.

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The following issues arise for consideration.

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i) Whether the applicant had succeeded in proving the liability of the defendants as put forth in the OA and their entitlement to the same recovered?

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ii) What Orders to be passed?

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5 OA/1203/2022

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Both the issues are gone into and decided together.

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The case of the applicant as to the application made by the defendant for execution of bank guarantee and credit sanctioned by the applicant is proved by Ex.A1 and A2. The case of the applicant as to the execution of demand promissory note by the defendant and take delivery note is also proved by Ex.A3 and A4. The document Ex.A5 to A10 evidences the intent of the defendants to avail the bank guarantee for the beneficiary HAL and the bank guarantee obtained by the defendant as produced as Ex.A11, extension of bank guarantee has also produced in evidence as Ex.A12 to A20.

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The applicant contends that, the properties already mortgaged with them for the credit facilities are extended to the bank guarantees also, this Tribunal had gone into the memorandum of deposit of title deeds and extension of the mortgage executed by the defendants which evidences that the defendant had with an intension to extend the mortgage which is already created in lieu of the security for the bank guarantee had executed the documents empowering the bank to secure the amount covered by the bank guarantee against the properties.

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Even though the defendant had filed their written statement and let in evidence reiterating the contentions of the written statement, there is no specific denial as to the availment of the bank guarantee facility and encashment of the bank guarantee by the beneficiary namely HAL. The defense put forth by the defendant that, they were made to sign on blank

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OA/1203/2022

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document and they were not aware as to the contents thereon cannot be accepted in view of the fact, that a person who subscribe the signature is supposed to know the contention of the same and cannot turn back and say that he was totally unaware as to the contents of the documents wherein his signature is not disputed.

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There is no serious challenge as to the statement of account and the documents produced by the applicant are all admissible in evidence and are sufficient to prove the case of the applicant as to the sanctioning, disbursement and invocation of bank guarantee. The statement of account is also evidences the amount as claimed in the OA is outstanding in the account which the applicant is entitled to get realize from the defendants and also by proceeding against the mortgaged properties. The claim of the applicant is well within the limitation.

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Taking note of the fact that, the facilities are covered by this OA is bank guarantee; this Tribunal is generally not inclined to interfere with the rate of interest as claimed. However, taking note of the fact that, the rate of interest as claimed is on the higher side and the relief sought with monthly rests, this Tribunal is of the view that, the pendalite and future interest can be reduced in the ends of justice. Hence, this Tribunal is of the view that, a fixed rate of interest @ 12.00 % p.a. including the pendalite till recovery is justifiable.

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7 OA/1203/2022

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In the result, OA.No.1203/2022 stands allowed.

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i) The applicant is allowed to recovery an amount of Rs.50,56,360.45 (Rupees Fifty Lakhs Fifty Six Thousand Three Hundred Sixty and Forty Five Paisa only)^{with further interest of 12.00%} p.a.(simple) from the date of filing OA till the realization from defendants, after giving credit to all the amount recovered and received during the pendency of the OA and allowed the same to be recovered by proceeding against the schedule property. The schedule to the OA be the schedule to the Recovery Certificate.

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ii) If the sale proceeds are not found sufficient to cover the amount due and payable to the applicant bank, the defendants jointly, severally, personally and other their assets are liable for all such amounts due under the loan accounts.

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iii) The applicant bank is allowed cost of the proceeding which applicant to file cost memo within 7 days from the date of receipt of the order.

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iv) The Recovery Certificate to be drawn in terms of this order

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and transferred to Recovery for execution.

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OA/1203/2022

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15. Communicate a copy of the order to the parties concerned in

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terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT

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(Procedure) Rules, 1993.

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[Dictated to the Stenographer (PR), transcribed by her, corrected and signed and pronounced by me in the Open Court, this the 24^th Day of June 2026].

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(T. RAJESH) PRESIDING OFFICER

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Sri. Niranjan P, Officer of the applicant bank.

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Exhibits on the part of the Applicant:

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Annexure	Particulars
A1	Application For Issue for Bank Guarantee Dated 13.05.2014 From 1^stDefendant to Applicant Bank
A2	Credit sanction order dated 13.05.2014 form applicant to defendant
A3	ON DEMAND PROMISSORY NOTE DATED 13.05.2014
A4	Take Delivery Letter dated 13.05.2014
A5	Guarantee Letter dated 13.05.2014
A6	Declaration dated 13.05.2014 from 1^stdefendant
A7	Declaration dated 13.05.2014 from defendants 2 and 3
A8	Consent dated 13.05.2014 from 1^stdefendant
A9	Consent letter dated 13.05.2014 form defendants 2 and 3 to bank
A10	Resolution dated 28.04.2014 passed by 1^stdefendant
A11	Bank Guarantee bearing No.14097BG000067 dated

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9 OA/1203/2022

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	16.10.2014
A12	Letter of 20.08.2016	extension of from applicant	Ban bank	k Guarantee to beneficiary	dated HAL
	Letter of	extension of	Ban	k Guarantee	dated
A13	27.02.2017 HAL	from the appl	icant	bank to ben	eficiary
A14	Letter of 23.05.2017	extension of	Ban	k Guarantee	dated
A15	Letter of 29.12.2017	extension of from applicant	Ban bank	k Guarantee to beneficiary	dated HAL
A16	Letter of 30.06.2018	extension of from applicant	Ban bank	k Guarantee to beneficiary	dated HAL
A17	Letter of 28.09.2018	extension of from applicant	Ban bank	k Guarantee to beneficiary	dated HAL
A18	Letter of 22.03.2019	extension of from applicant	Ban bank	k Guarantee to beneficiary	dated HAL
A19	Letter of 28.06.2019	extension of from applicant	Ban bank	k Guarantee to beneficiary	dated HAL
	Letter dated	06.08.2019 is	sued	by HAL (Bene	ficiary)
A20	to applican	t bank requ	esting	to encash	Bank
	Guarantee a	mount
A21	Certified sta 1^stdefendan	tement of acco t	unt b	earing No.344	of the
A22	Letter of Au	thority dated 13	.05.2	014
A23	Memorandu 28.01.2010	m of Deposit from 1^stdefend	of ant	Title Deeds	dated
A24	Letter of Au to applicant	thority dated 3 bank regarding	0.07.2 exten	015 form defe sion of mortg	ndants age
A25	Memorandu 07.09.2013	m of Deposit	of	Title Deeds	dated

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OA/1203/2022

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A26	Letter of Authority dated 07.09.2013
A27	Memorandum of Deposit of Title Deeds dated 15.07.2009 from 1^stdefendant
A28	Registered Deed of Mortgage dated 05.11.2007
A29	Registered Memorandum of Deposit of Title Deeds dated 22.02.2013 from defendants to applicant bank
A30	Registered deed of mortgage dated 26.07.2006 from defendants No.2 & 3
	Hypothecation agreement dated 16/17-9-2014
A30A	executed by defendants 1 and 2 in favour of the applicant bank
A31	Demand notice dated 17.08.2019 issued by applicant bank to defendants

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PRESIDING OFFICER

Karnataka Bank Limited v. sri krishna shelters Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Karnataka Bank Limited v. sri krishna shelters Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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Statutes considered

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