Allowed

Union Bank of India v. Sri. S. Rajendra Kumar Prop of Green Agrotech

DRT30 Jun 2026OA/122/2024

Case brief

AI extract

What is this about?

Debt Recovery Tribunal allowed the bank's application for recovery of dues after rejecting defense arguments regarding RBI guidelines, NPA classification, and interest charges, finding the bank's evidence sufficient to prove the loan default.

What did the court decide?

Recovery Certificate issued for Rs. 65,22,938/- with 8% p.a. simple future interest; Defendant No. 1 personally liable for main amount; Defendants jointly and severally liable for interest; proceeding

Union Bank of India versus Sri. S. Rajendra Kumar… — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II,

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BENGALURU

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Dated this 30^th Day of June, 2026

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Present: Sri. T. RAJESH

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Presiding Officer

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OA.No.122/2024

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BETWEEN:

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Union Bank of India, Shivamogga Branch, P B 22, M G Building B H Road, Shivamogga -577201, Rep. by its Chief Manager,

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…APPLICANT

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AND:

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Sri. S. Rajendra Kumar, S/o. Shivalingaradhya, Proprietor of Green Agrotech No. 36, Sharada House, MIG 34, 2^nd Phase, KHB Colony, Vinobhanagara, Shivamogga -577201.

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Sri. K. L. Jagadeeshwara, S/o. K G Lokeshwarappa, Kanchenahalli, Shivamogga -577201.

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...DEFENDANTS

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Counsel on record/appeared for:

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Applicant : M. S. Vinayaka Defendants : M A Rajendra

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FINAL ORDER

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The present Original Application in short “OA” has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 seeking issuance of Recovery Certificate for Rs. 65,22,938/- (Rupees sixty-five lakh twenty-

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OA 122/2024

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two thousand nine hundred and thirty-eight only) with further interest thereon and cost from the Defendants.

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It is the case of the Applicant that Defendant No. 1, being the proprietor of M/s. Green Agrotech, availed a CHFLS loan of Rs. 50,00,000/(Rupees Fifty Lakh Only). Defendant No. 1 also availed a DSL loan of Rs. 15,00,000/- (Rupees Fifteen Lakh Only), for which Defendant No. 2 executed a guarantee agreement.

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It is also the case of the Applicant that, in consideration of the aforesaid loan facilities, the respective Defendants executed the necessary loan documents, and created Mortgage and hypothecation over the schedule properties in favour of the Applicant Bank.

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It is the case of the Applicant that the Defendants, despite availing the credit facility, agreeing with the Terms and Conditions for the loans, failed in complying with the same, resulting in defaults and consequentially turning the loan accounts as Non-Performing Asset (NPA).

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In the above circumstances, the Applicant approached this Tribunal by filing this OA seeking issuance of Recovery Certificate for the amount due in the account.

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Summons were issued to the Defendants. The Defendants entered appearance through their counsel, filed their Written Statement, and led evidence.

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In the Written Statement, the Defendants contend that they are

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OA 122/2024

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engaged in agricultural business under the name and style of M/s. Green Agrotech and that they relied upon RBI circulars under “R.F. 2.0”, which mandate restructuring of loan accounts classified as stressed up to the financial year ending 2020. It is further contended that, in view of the said guidelines, the classification of the account as NPA as on 01.01.2022 is not sustainable, and consequently, initiation of proceedings under the SARFAESI Act or filing of the present Application under Section 19 of the RDB Act is not maintainable. The Defendants have also produced representations seeking restructuring of the loan, marked as Exhibits D-1 to D-4.

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The Defendants further contend that the Applicant has charged interest in excess of the contractual rate without any revival or acknowledgment of debt executed by them agreeing to such rate, and the same is contrary to RBI guidelines. It is also contended that there is discrepancy between the account statements produced by the Applicant and those obtained by the Defendants, and that after merger, an additional sum of Rs. 39,41,692/- was disbursed without their knowledge and was adjusted towards interest and other charges, rendering the final balance irregular and contrary to banking norms. It is further contended that during the COVID-19 period, the Defendants suffered substantial losses in their floricultural business due to labour shortage, transportation issues, and difficulty in procuring raw materials, manure, and other inputs.

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The Applicant adduced evidence through AW-1, who filed a proof

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OA 122/2024

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affidavit reiterating the averments made in the Original Application and produced Exhibits A-1 to A-23 in support of the claim. On the other hand, the Defendants adduced evidence through DW-1, who filed a proof affidavit and produced Exhibits D-1 to D-4.

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Heard both sides and considered the contentions raised in the OA

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in the light of the documentary evidence and proof affidavits.

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The following issues arise for consideration in this matter:

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i) Whether the Applicant succeeded in proving the OA claim as against the Defendants?

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ii) If so, to what extent?

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Both these issues are gone into and decided together.

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The contentions raised in the written statement cannot be

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accepted. The RBI circulars relied upon by the Defendants are merely regulatory guidelines and do not create any enforceable right in favour of the borrowers to seek restructuring as a matter of course. The classification of an account as NPA is based on the objective criteria prescribed under banking norms, and the Defendants have failed to demonstrate any illegality or arbitrariness in such classification. The representations made by the Defendants seeking restructuring do not dilute or suspend the contractual obligations or the Applicant’s statutory

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right to initiate recovery proceedings for the admitted dues.

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OA 122/2024

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The above contentions regarding the interest rate and others are

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not substantiated by any credible evidence. The account statements and loan records produced by the Applicant reflect the interest application strictly in accordance with the agreed terms of the loan and prevailing banking norms. The alleged discrepancies in statements have not been proved by any independent material and cannot override the duly maintained books of account of the Applicant Bank. The plea regarding disbursement after merger is unsupported by documentary proof and remains a mere assertion. Further, financial hardship due to COVID-19, though unfortunate, does not discharge the contractual liability of the Defendants to repay the loan in accordance with the agreed terms.

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The evidence tendered by the Applicant remains uncontroverted

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and undisputed. The evidence put forth by the Applicant is found admissible and sufficient to prove the averments made in the OA, and the default committed by the Defendants in repaying the loan amount due. The liability of the Defendants and the loan amount due are also proved by the above documents.

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Hence in view of the above findings this Tribunal comes to the conclusion that the OA is liable to be allowed.

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Taking into consideration of the fact that the loans are availed for

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OA 122/2024

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business purposes and also the fact that OA claim is arrived at by calculating interest at the agreed rate, pendente lite and future interest is awarded at 8.00% (simple). The prayer for interest with compounded monthly rests and for penal interest for the future period is hereby declined.

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In the result, OA.No. 122/2024, is allowed,

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i) The Applicant is allowed to recover an aggregate sum of Rs. 65,22,938/- (Rupees sixty-five lakh twenty-two thousand nine hundred and thirty-eight only) consisting of:

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a) Defendant No.1 is personally liable to pay a some of Rs.

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64,01,838/- (Rupees sixty-four lakh one thousand eight hundred and thirty-eight only) with pendente lite and future interest of 8.00% p.a. (simple) and,

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b) Defendants are jointly and severally liable to pay a sum of Rs. 1,12,100/- (Rupees one lakh twelve thousand and hundred only) with pendente lite and future interest of 8.00% p.a. (simple),

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from the date of filing of the OA till the realization from the respective Defendants after giving credit to all the amounts recovered and received during the pendency of the OA if any, and allow the same to be recovered by proceeding against the schedule properties. Properties schedule to the

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OA 122/2024

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OA be the schedule to the Recovery Certificate.

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ii) If the sale proceeds are found insufficient to clear the loan amount due from the respective Defendants jointly and severally, the Applicant Bank shall be at liberty to proceed against Defendant No. 1 personally and his other assets for recovery of the balance amount due. Defendant No. 2 and his other assets shall be liable only in respect of the DSL loan facility.

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iii) The applicant bank is allowed cost of the proceedings for which

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Applicant to file cost memo within seven 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 and transferred to Recovery for execution.

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v) Interim application pending, if any, stands disposed of in terms of this final order.

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Communicate a copy of the order to the parties concerned in terms

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of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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(Dictated to PY directly on the Computer, after its transcription, corrected and pronounced by me in the open Court on this the 30^th day of June, 2026).

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Sd/(T. RAJESH) PRESIDING OFFICER

OA 122/2024

ANNEXURES

WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Prashantha Kumara D, Manager, of Applicant Bank.

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Exhibits on the part of the Applicant:

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Exhibit Nos.	Date	Particulars of Documents
A1	30.12.2014	Loan application
A2	01.01.2015	Loan sanction letter
A3	01.01.2015	Agreement for Term Loan
A4	01.01.2015	Common Deed of Hypothecation
A5	01.01.2015	Letter of undertaking/ Declaration
A6	30.12.2014	Deed of Simple Mortgage
A7	01.07.2015	Loan application
A8	04.07.2015	Loan sanction letter
A9	06.07.2015	Agreement for Term Loan
A10	06.07.2015	Common Deed of Hypothecation
A11	06.07.2015	Letter of undertaking/ Declaration
A12	06.07.2015	Demand promissory note
A13	06.07.2015	Take Delivery letter to DPN
A14	06.07.2015	Guarantee Agreement
A15	06.07.2015	Letter of continuity
A16	31.12.2017	Acknowledgement of Debt
A17	05.05.2018	Demand promissory note
A18	05.05.2018	Take Delivery letter to DPN
A19	10.08.2023	Legal notice
A20	--	Return postal cover of 1^stDefendant
A21	--	Postal acknowledgement of 2^nd Defendant
A22	--	Certified statement of account
A23	--	Certified statement of account

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Witness Examined for the Defendants:

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DW-1: Rajendra Kumar, Defendant No.1

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OA 122/2024

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List of Documents Exhibited for the Defendants:

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Exhibit	Date	Particulars of Documents
Nos.
D1	29.04.2020	Restructuringletter
D2	12.11.2020	Restructuring letter
D3	04.02.2021	Restructuring letter
D4	10.02.2021	Restructuring letter

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Sd/-

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(T. RAJESH)

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PRESIDING OFFICER

Union Bank of India v. Sri. S. Rajendra Kumar Prop of Green Agrotech

Case brief

What is this about?

What did the court decide?

Union Bank of India v. Sri. S. Rajendra Kumar Prop of Green Agrotech

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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