Allowed

State Bank of India v. Messrs Vallabh Fashions and Another

DRT30 Jan 2026OA/1246/2023

Case brief

AI extract

What is this about?

DR-Tribunal allowed an OA by State Bank of India for recovery of Rs.29 lakhs against M/S Vallabh Fashions. The court upheld the debt but substituted the claimed interest rate of 12.75%/9% with a uniform rate of 8% p.a. pending realization.

What did the court decide?

Recovery of Rs.29,77,591 along with costs and simple interest at 8% p.a. from the date of OA; Recovery Certificate issued; Execution proceedings permitted.

State Bank of India versus Messrs Vallabh Fashions… — Contract and Commercial Disputes | DRT (2026)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.1246/2023

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PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 03.10.2023

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DATE OF DECISION: 30.01.2026

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State Bank of India, a body corporate constituted under the State Bank of India Act, 1955 having its Corporate Centre at Madame Cama Road, Nariman Point, Mumbai and one of its Local Head Office at Sector 17A, Chandigarh having branches all over India and one of its Specialized Branch SME City Credit Centre (SMECCC), Administrative Office Building, Second Floor, Civil Lines, Fountain Chowk, Ludhiana through its Chief Manager and Principal Officer Sh. Abinash Kumar Roy.

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……..Applicant

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Versus

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M/S Vallabh Fashions, Lot No. 202-C, Gobind Puri, Azad Nagar, Karabara, 2 Bahadurke Road, Ludhiana, a proprietorship firm through its proprietor Sh. Salil Jain son of Sh. Sudhir Kant Jain 2^nd Address: C/O Roshan Lal, IInd Floor, Plot No.1, Complex above SJDM, Tanush International, Near Mann Resort, Baloke Road, Sant Vihar, Haibowal Kalan, Ludhiana.

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Sh. Salil Jain son of Sh. Sudhir Kant Jain, resident of House No. B-I / 1284, Street No.2, Rajinder Nagar, Ludhiana. 2nd Address: C/O Balbir Singh, House No. 8901/16, Villa Apartment, Baloke Road, Haibowal Kalan, Ludhiana.

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….……Defendants

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Advocates:

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Sh. V.K. Sharma, Advocate for Applicant

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Defendants already ex-parte vide order dated 07.09.2024.

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FINAL ORDER

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Present Original Application was instituted by the applicant under Section 19 of the Recovery of Debts & Bankruptcy Act, 1993, against the defendants for recovery of Rs.29,77,591.00 (Rupees Twenty Nine Lacs Seventy Seven Thousand Five Hundred Ninety One Only). The Original Application has been filed through Sh. Abinash Kumar Roy, Chief Manager and Principal Officer, of the applicant, who

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OA/1246/2023 STATE BANK OF INDIA VS. MESSRS VALLABH FASHIONS AND ANOTHER

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is competent to institute the Original Application in terms of Gazette Notification dated 26.09.1959, 26.08.1972 and 27.03.1987 issued by the Executive Committee of the Central Board in exercise of powers conferred on it under Regulation No.76 and 77 of State Bank of India General Regulations, made by the RBI in exercise of powers conferred by Section 50 of the State Bank of India Act. 1955.

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The brief facts are that the defendant no. 1 through its proprietor defendant no. 2 approached the applicant for grant of Cash Credit Limit of Rs.10.00 Lacs vide loan application 21.02.2013, which is Annexure A1 to this OA and thereafter, approached the applicant for enhancement of the limit to Rs.12.00 Lacs and thereafter for grant of Working Capital Term Loan under GECL. Thereafter, the defendant no. 1 through its proprietor defendant no. 2 approached the applicant for conversion of accrued interest in CC Limit into Funded Interest Term Loan (FITL) vide request letter, which is Annexure A9 to this OA. Thereafter, the defendant no. 1 through its proprietor defendant no. 2 again approached the applicant for enhancement of the Limit to Rs.24.50 Lacs vide request letter dated 25.01.2021, which is Annexure A11 to this OA. Thereafter, the defendant no. 1 through its proprietor defendant no. 2 again approached the applicant for grant of Loan under GECL extension vide request letter dated 03.02.2022, which is Annexure A14 to this OA.

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The applicant sanctioned Cash Credit Limit of Rs.8.00 Lacs vide letter of arrangement dated 29.03.2013, which is Annexure A2 to this OA and terms and conditions were duly accepted by the defendants. Thereafter, the applicant enhanced the limit to Rs.12.00 Lacs vide letter of arrangement dated 30.11.2018, which is Annexure A5 to this OA. Thereafter, the applicant renewed the limit along with sanction of Fresh Working Capital Term Loan (WCTL) of Rs.2.21 Lacs under GECL vide letter of arrangement dated 04.06.2020, which is Annexure A7 to this OA. Thereafter, the applicant converted the accrued interest in CC Limit to into Funded Interest Term Loan (FITL) of Rs. 67,782.00 vide letter of arrangement dated 06.11.2020, which is Annexure A10

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OA/1246/2023 STATE BANK OF INDIA VS. MESSRS VALLABH FASHIONS AND ANOTHER

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to this OA. Thereafter, the applicant enhanced the limit to Rs.24.00 Lacs vide letter of arrangement dated 1602.2021, which is Annexure A12 to this OA. Thereafter, the applicant sanctioned another Term Loan of Rs.2.39 Lacs under GECL extension vide letter of arrangement dated 14.02.2022, which is Annexure A15 to this OA.

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The defendant no.1 through its proprietor defendant no. 2 hypothecated stock of raw material, semi-finished goods and finished goods of hosiery and readymade garments and related goods and other current assets and book debts etc. vide agreement of loan cum hypothecation dated 29.03.2013, which is Annexure A3 to this OA; Supplemental agreement of loan cum hypothecation dated 30.11.2018 & 04.06.2020, which are Annexures A6 & A8 to this OA; agreement of loan cum hypothecation dated 16.02.2021, which is Annexure A13 to this OA; Supplemental agreement of loan cum hypothecation dated 14.0.2022, which is Annexure A16 to this OA.

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Documents executed: DP Note & DP Note delivery cum continuity dated 29.03.2013, which is Annexure A4 to this OA; Demand notice dated 18.09.2023, which is Annexure A17 to this OA; Statement of accounts and closure statements with certificate, which are Annexures A18 to A20 to this OA.

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The loan accounts became irregular and were classified as NPA and after adjusting debit and credit entries in the loan accounts there was a debit of Rs.29,77,591.00, which is recoverable and the defendants were served recall notices but they did not repay the outstanding amount, therefore, the applicant requested to accept the application and to issue Recovery Certificate accordingly.

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The defendants were served notices to appear before this Tribunal but no one appeared on behalf of defendants and they were proceeded ex parte vide order dated 07.09.2024. 7. In support of the OA, affidavit of Sh. Abinash Kumar Roy, Chief Manager and Principal Officer, State Bank of India, has been filed. 8. Heard ex-parte arguments and perused record.

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OA/1246/2023 STATE BANK OF INDIA VS. MESSRS VALLABH FASHIONS AND ANOTHER

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It was argued by learned counsel that in view of the documentary evidence brought on record which had gone unrebutted, the applicant had proved its case. From the perusal of all the Annexures A1 to A20 to this OA, it is proved that the defendants approached applicant for availing of the loan facilities which were granted to them and for that they had executed all the relevant documents in favour of the bank. The defendants failed to pay back the loans as per terms and conditions of the agreement between the parties. Subsequently, accounts of the defendants were classified as NPA. From the documentary evidence brought on record, it is proved that applicant bank is entitled to recover a sum of Rs.29,77,591.00 (Rupees Twenty Nine Lacs Seventy Seven Thousand Five Hundred Ninety One Only) along with interest from the defendants, jointly and severally, from the date of filing of the present Original Application till realization of the accounts.

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In so far as pendente lite and future rate of interest is concerned, the applicant in relief clause has claimed interest @12.75%p.a. with 2% penal interest and monthly rests in CC Limit & interest @9.00%p.a. with 2% penal interest and monthly rests in GECL accounts from 26.09.2023 till the realization.

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The Tribunal is of the considered opinion that sometimes in appropriate cases the prerogative of mercy is the brightest jewel in the crown of the Judge. Keeping in view the facts and circumstances of the instant case including nature of the hypothecated assets, undertaking of the defendants, quantum of loans and prevalent market rates of interest which have gone drastically downhill in yester years, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @8.00%p.a. in all the loan accounts from the date of filing of the OA till realization of the amount ordered vide this final order. It is ordered accordingly.

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In the result, the application is allowed declaring that the defendants are liable to pay to the applicant a total sum of Rs.29,77,591.00 (Rupees Twenty Nine Lacs Seventy Seven Thousand

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OA/1246/2023 STATE BANK OF INDIA VS. MESSRS VALLABH FASHIONS AND ANOTHER

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Five Hundred Ninety One Only) jointly and severally, with costs, current and future simple interest @8.00%p.a. in all the loan accounts from the date of filing of OA till the date of realization of the amount. Accordingly, the applicant shall be entitled to recover aforesaid amount from the sale of hypothecated assets of defendants in execution proceedings if not sold earlier under the provisions of the SARFAESI Act, 2002. If the dues of the applicant still remain unsatisfied, it shall be entitled to recover the same by attachment and sale of personal assets of the defendants. The applicant is at liberty to enforce the claim through due process of law.

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12. Any other application pending stands disposed of .

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Issue Recovery Certificate accordingly.

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Parties to appear before Learned Recovery Officer of this Tribunal on 12.02.2026.

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Copy of this order be given dasti to the applicant and be sent to defendants through registered/speed post and this order be also uploaded on the official website of this Tribunal and record be consigned.

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Pronounced by me in the open Tribunal . Dated: 30.01.2026.

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(MRIDULESH KUMAR SINGH)

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Presiding Officer, DRT-III, Chandigarh

State Bank of India v. Messrs Vallabh Fashions and Another

Case brief

What is this about?

What did the court decide?

State Bank of India v. Messrs Vallabh Fashions and Another

Case brief

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