Allowed

State Bank of India v. M s Promace Engineering LLP

DRT16 Jul 2026OA/145/2023

Case brief

AI extract

What is this about?

The DRT allowed the bank's original application for recovery of a total sum of ₹72,53,998/- plus interest from the debtor and guarantors who failed to appear and contest the ex-parte proceedings following their default in loan repayment.

What did the court decide?

Recovery of ₹72,53,998/- plus applicable interest from respondents jointly and severally; liberty to recover balance through sale of hypothecated and personal assets; issuance of Recovery Certificate.

State Bank of India versus M s Promace Engineering… — Contract and Commercial Disputes | DRT (2026)

¶1

O.A. No.145 of 2023

¶2

16.07.2026

¶3

¶4

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

¶5

Dated this the 16^th day of July, 2026

¶6

Present: SMT. S.V. GOWRAMMA Presiding Officer

¶7

ORIGINAL APPLICATION No.145 of 2023

¶8

M/s State Bank of India,

¶9

Rep by its Branch Manager, SME branch,

¶10

No.5, Jawaharlal Nehru road, Ekkaduthangal, Chennai-600 032

¶11

….Applicant

¶12

-Vs-

¶13

M/s Promace Engineering LLP, Represented by its Partners,

¶14

Mr. Selva Chidambara Nathan,

¶15

And Mrs. Gomathi Chidambara Nathan, S-2, Second floor, New No.13,

¶16

Railway station road,

¶17

Alandur, Chennai- 600 016

¶18

Mr. Selva Chidambara Nathan

¶19

S/o Sri Muthiah Chidambaranathan S-2, Second floor, New No.13, Railway station road, Alandur, Chennai- 600 016

¶20

Mrs. Gomathi Chidambara Nathan, S-2, Second floor, New No.13, Railway station road, Alandur, Chennai- 600 016 …..Defendants

¶21

Counsels on record / appeared:

¶22

Counsel for Applicant: M/s. S. Parthasarathy

¶23

Defendants 1 to 3 were set ex-parte on 08.03.2024

¶24

: - FINAL ORDER- :

¶25

This Original Application is filed on 10.10.2022 by the applicant bank

¶26

under Section 19 of Recovery of Debts and Bankruptcy Act, 1993

¶27

Uploaded on 16.07.2026 at 15:00 hours

¶28

O.A. No.145 of 2023

¶29

¶30

16.07.2026

¶31

(formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants 1 to 3, jointly and severally for recovery of a total sum of Rs.72,53,998/- (Rupees Seventy Two Lakhs Fifty Three Thousand Nine Hundred and Ninety Eight only) as follows:

¶32

(a) A sum of Rs.29,99,998/- due in respect of Cash Credit facility (A/c No.38100834838) repayable together with further interest @8.15% p.a. with monthly rests along with defaulted interest at the rate of 2% p.a. from the date of Application till the date of realization in full;

¶33

(b) A sum of Rs.37,916/- due in respect of Covid-19 Emergency Credit Line Facility (A/c No.39283270431) repayable together with further interest @7.40% p.a. with monthly rests along with defaulted interest at the rate of 2%p.a. from the date of Application till the date of realization in full;

¶34

(c) A sum of Rs.9,75,091/- due in respect of Guaranteed Emergency Credit Line (A/c No. 39366170762) together with further interest @7.40% p.a. along with defaulted interest at the rate of 2%p.a., with monthly rests from the date of Application till the date of realization in full;

¶35

(d) A sum of Rs.30,90,000/ due in respect of Working Capital Term Loan (A/c No. 40108602417) repayable together with further interest @8.15% p.a. with monthly rests along with defaulted interest at the rate of 2%p.a. from the date of Application

¶36

Uploaded on 16.07.2026 at 15:00 hours

¶37

O.A. No.145 of 2023

¶38

¶39

16.07.2026

¶40

till the date of realization in full;

¶41

(e) A sum of Rs.1,50,993/- due in respect of Funded Interest Restructuring Loan (A/c No.40108602417) repayable together with further interest @8.15% p.a. with monthly rests along with defaulted interest at the rate of 2% p.a. from the date of Application till the date of realization in full;

¶42

for sale of hypothecated assets morefully detailed in the schedule to the OA and for costs of this OA.

¶43

Brief Facts of the case:

¶44

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.

¶45

It is the case of the applicant bank that the 1^st defendant represented by its Partners, 2^nd and 3^rd defendants, runs the business in the name and style of M/s Promace Engineering LLP. The defendants have approached the applicant seeking financial assistance facilities to the tune of Rs.51.00 lakhs.

¶46

The applicant bank submits that considering the said request, the applicant bank had sanctioned Cash Credit facility of Rs.51 lakhs on 01.12.2018. The deed of guarantee executed by the 2^nd and 3^rd defendant is a continuing guarantee by and under which the defendants agreed that the guarantee shall remain in full force and effect till such time the

¶47

Uploaded on 16.07.2026 at 15:00 hours

¶48

O.A. No.145 of 2023

¶49

16.07.2026

¶50

¶51

borrower repays/pays in full the facility availed by the borrower together with interest and all other charges. It is submitted that the above facilities were renewed/modified/reduced by the bank time to time at the request of the defendants and lastly vide letter of renewal dated 29.03.2021was issued.

¶52

The 1^st defendant represented by its partners, 2^nd and 3^rd defendants approached the applicant for sanction of credit facility to the tune of Rs.51.00 lakhs and the same was initially sanctioned on 01.12.2018 by the applicant. Further the defendants have approached the applicant by way of application dated 10.02.2020 for sanction of credit facilities and the applicant vide Letter of Arrangement dated 12.02.2020, sanctioned a sum of Rs.51.00 lakhs towards the Cash Credit facility to meet the Working Capital requirement with the terms of repayment at the rate of interest at 12.05% p.a. and a sum of Rs.10 lakhs towards Standby Line of Credit to the defendants with terms of repayment at the rate of interest at 12.55% p.a. compounded with monthly rests which was covered under CGTMSE. The primary security is hypothecation of raw materials and stocks book debts towards overdraft facility.

¶53

The applicant bank submits that the defendants have executed the following documents in favour of applicant bank in respect of Cash Credit facility of Rs.51 lakhs sanctioned on 12.02.2020 in loan A/c No. 38100834838:

¶54

a) The 1^st defendant represented by its partners, 2^nd and 3^rd defendants have executed supplemental agreement of loan cum

¶55

Uploaded on 16.07.2026 at 15:00 hours

¶56

O.A. No.145 of 2023

¶57

16.07.2026

¶58

¶59

hypothecation dated 12.02.2020 in favour of applicant.

¶60

b) The 2^nd and 3^rd defendants have executed guarantee agreement dated 12.02.2020 for Rs.61 lakhs guaranteeing the repayment of credit facilities sanctioned to the 1^st defendant

¶61

It is submitted by the applicant bank that the defendants are liable to pay jointly and severally a sum of Rs.29,99,998.78/- which is rounded off to Rs.29,99,998/- as on 18.08.2022 in Loan Account No.38100834838 towards Cash Credit account to the Applicant together with interest at the rate of 12.05% per annum and defaulted interest at the rate of 2% per annum with compounded monthly rests.

¶62

It is the further case of the applicant bank that the 1^st defendant represented by its partners, 2^nd and 3^rd defendants have further approached the applicant on 17.04.2020 for sanction of Common Covid 19 Emergency Line of Credit by way of Term Loan of Rs.2.50 lakhs.

¶63

It is submitted that considering the said request, the Applicant had sanctioned a sum of Rs.2.50 lakhs on 22.04.2020 with repayment terms in 24 Equated Monthly Installment. A moratorium period of 6 months from the date of first disbursement was provided thereafter repayment to be made in 18 equal installment of Rs.13,889/- each. Interest to be serviced as and when applied including moratorium. The other facilities such as Cash Credit for Rs.51.00 lakhs and Standby Line of Credit for Rs.10.00 lakhs were renewed vide the Sanction Letter dated 22.04.2020. The following documents were executed by the Defendants in favour of the Applicant:

¶64

Uploaded on 16.07.2026 at 15:00 hours

¶65

O.A. No.145 of 2023

¶66

16.07.2026

¶67

¶68

a) The 1st Defendants represented by its Partners, the 2^nd and 3^rd Defendants have executed Supplemental Agreement of Loan Cum Hypothecation, Dated 22.04.2020 in favour of Applicant.

¶69

b) The 2nd and 3rd Defendants have executed Guarantee Agreement, Dated 22.04.2020 guaranteeing the repayment of credit facilities sanctioned to the 1^st Defendant.

¶70

It is submitted that the Defendants are liable to pay jointly and severally a sum of Rs.37,916/- as on 28.05.2022 in Loan Account No.39283270431 towards Cash Credit account to the Applicant together with interest at the rate of 7.40% per annum and defaulted interest at the rate of 2% per annum with compounded monthly rests.

¶71

The applicant bank further submits that the 1^st defendant represented by its partners 2^nd and 3^rd defendants have further approached the applicant for sanction of Guaranteed Emergency line of Credit by way of Term Loan of Rs.12.00 lakhs vide Offer Letter dated 28.05.2020 to meet Temporary Working Capital gap or liquidity crunch. The applicant has sanctioned a sum of Rs.12 lakhs on 30.05.2020 with repayment terms of 24 Equated Monthly Installment at the rate of interest at 9.25% p.a. which was covered under CGTMSE.

¶72

The applicant bank submits that the primary security is hypothecation of raw materials and stock books debts towards overdraft facility. The facility is subject to review for every 12 months where it may be cancelled/reduced depending upon the product and utilization of advance or as per the Bank’s scheme and the period of repayment would

¶73

Uploaded on 16.07.2026 at 15:00 hours

¶74

O.A. No.145 of 2023

¶75

16.07.2026

¶76

¶77

be 48 equal monthly instalments. A moratorium of 12 months from the date of first disbursement is provided thereafter repayment to be made in 36 equal monthly instalments of Rs.33,334/- and the interest should be serviced as and when applied including during moratorium. The other facilities such as cash credit for Rs.51 lakhs standby line of credit for Rs.10 lakhs and common Covid 19 emergency credit line were renewed in the sanction letter dated 30.05.2020. The following documents were executed by the defendants in favour of the applicant.

¶78

a) The 1st Defendant represented by its Partners, the 2nd and 3rd Defendants have executed Supplemental Agreement of Loan Cum Hypothecation, Dated 30.05.2020 in favour of Applicant.

¶79

b) The 2nd and 3rd Defendants have executed Guarantee Agreement dated 30.05.2020 guaranteeing the repayment of credit facilities sanctioned to the 1st Defendant

¶80

The Defendants are liable to pay jointly and severally a sum of Rs.9,75,091/- as on 28.05.2022 in Loan Account No. 39366170762 towards Guaranteed Emergency Credit Line to the Applicant together with interest at the rate of 9.25% per annum and defaulted interest at the rate of 2% per annum with compounded monthly rests.

¶81

It is the further case of the applicant bank that the defendants have approached the applicant on 10.03.2021 for sanction of Restructured Working Capital Term Loan to tune of Rs.31.00 lakhs by carving out of Cash Credit account on 31.03.2021. The applicant has sanctioned a sum of Rs.31.00 lakhs subject to review of every 12 months when it may be

¶82

Uploaded on 16.07.2026 at 15:00 hours

¶83

O.A. No.145 of 2023

¶84

¶85

16.07.2026

¶86

cancelled/reduced depending upon the conduct and utilization of the advance or as per Bank’s scheme and the tenor of the loan will be 72 months at the rate of interest at 8.15% p.a. in loan A/c No. 40108602417 which was covered under CGTMSE. The primary security is hypothecation of raw materials and stock, book debts towards the overdraft facility.

¶87

The Defendants are liable to pay jointly and severally a sum of Rs.30,90,000/- as on 18.08.2022 in Loan Account No. 40108602417 towards Working Capital Term Loan to the Applicant together with interest at the rate of 8.15% per annum and defaulted interest at the rate of 2% per annum with compounded monthly rests.

¶88

The applicant bank submits that the 1st Defendant represented by its Partners, 2nd and 3rd Defendants have further approached the Applicant for sanction of Restructuring of Funded Interest Term loan. Considering the said request, the applicant had sanctioned a sum of Rs.2.00 lakhs on 29.03.2021 subject to review of every 12 months when it may be cancelled/reduced depending upon the conduct and utilization of the advance or as per the Bank’s scheme and the tenor of repayment is 36 equated monthly instalments at the rate of interest @8.15% p.a. The following documents were executed by the defendants in favour of the applicant against the working capital term loan and the funded interest loan (restricting):

¶89

a) The 1st Defendant represented by its Partners, the 2nd and 3rd Defendants have executed Supplemental Agreement of Loan Cum Hypothecation, Dated 29.03.2021 in favour of Applicant

¶90

Uploaded on 16.07.2026 at 15:00 hours

¶91

O.A. No.145 of 2023

¶92

¶93

16.07.2026

¶94

b) The 2^nd and 3^rd Defendants have executed Guarantee Agreement dated 29.03.2021 guaranteeing the repayment of credit facilities sanctioned to the 1^st Defendant.

¶95

The Defendants are liable to pay jointly and severally a sum of Rs.1,50,993/- as on 28.05.2022 in Loan Account No.40108694680 towards Funded Interest Restructuring Loan to the Applicant together with interest at the rate of 8.15% per annum and defaulted interest at the rate of 2% per annum with compounded monthly rests.

¶96

The other facilities such as Cash Credit for Rs.51.00 lakhs, Common Covid 19 Emergency Credit Line for Rs.2.00 lakhs, Guaranteed Emergency Credit Line for Rs. 12.00 Lakhs and Working Capital Term Loan for Rs.31.00 lakhs were renewed in the Sanction Letter, Dated 29.03.2021 with the revised rates of interest for the respective loan accounts. The Standby Line of Credit for Rs.10.00 lakhs was not utilized by the Borrowers.

¶97

The applicant submits that subsequent to availing of loan, the defendants have defaulted in repayment of various facilities sanctioned to them in various loan account numbers. The defendants have failed to respond to the reminders, personal contacts and repeated demands made by the applicant bank. The defendants are also liable to pay 2% additional interest chargeable for default in making repayment till the date of realization along with the costs due to the applicant bank. The applicant bank has classified the borrower’s loan accounts as Non Performing Asset (NPA) on 01.05.2022. The applicant has sent the Legal Notice to the

¶98

Uploaded on 16.07.2026 at 15:00 hours

¶99

O.A. No.145 of 2023

¶100

¶101

16.07.2026

¶102

defendants on 27.08.2022 to repay the outstanding amount of Rs.72,53,998/- and the same was duly served to the defendants, despite which the defendants did not come forward to repay the dues. Hence, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues from the defendants. The defendants are jointly and severally liable to pay a sum of Rs.72,53,998/- to the applicant bank with applicable rate of interest from the date of filing of this original application.

¶103

After the filing of the OA, summons were sent to the Defendants 1 to 3 through Registered Post with Acknowledgment Due, which were returned with postal endorsement as ‘Left’ in respect of D-1 to D-3. Applicant Bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 08.03.2024 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 to 3 were placed ex-parte on 08.03.2024

¶104

Heard the submissions of Applicant Bank and perused the

¶105

records.

¶106

To prove the case of the Applicant Bank, Mr. S. Mathiyazhagan, Deputy 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-22.

¶107

A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-22 evidence that the borrowal of credit

¶108

Uploaded on 16.07.2026 at 15:00 hours

¶109

O.A. No.145 of 2023

¶110

16.07.2026

¶111

¶112

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.

¶113

The defendants were set ex-parte on 08.03.2024, 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.

¶114

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

¶115

: O R D E R :

¶116

The OA is allowed with costs,

¶117

(a) The applicant bank is allowed to recover from the Defendants 1 to 3 jointly and severally, a total sum of Rs.72,53,998/-

¶118

(Rupees Seventy Two Lakhs Fifty Three Thousand Nine Hundred and Ninety Eight only) as follows:

¶119

Uploaded on 16.07.2026 at 15:00 hours

¶120

O.A. No.145 of 2023

¶121

¶122

16.07.2026

¶123

(i) A sum of Rs.29,99,998/- due in respect of Cash

¶124

Credit facility (A/c No.38100834838) repayable together with further interest @8.15% p.a. with monthly rests along with defaulted interest at the rate of 2% p.a. from the date of Application till the date of realization in full;

¶125

(ii) A sum of Rs.37,916/- due in respect of Covid-19 Emergency Credit Line Facility (A/c No.39283270431) repayable together with further interest @7.40% p.a. with monthly rests along with defaulted interest at the rate of 2%p.a. from the date of Application till the date of realization in full;

¶126

(iii) A sum of Rs.9,75,091/- due in respect of Guaranteed Emergency Credit Line (A/c No. 39366170762) together with further interest @7.40% p.a. along with defaulted interest at the rate of 2%p.a., with monthly rests from the date of Application till the date of realization in full;

¶127

(iv) A sum of Rs.30,90,000/ due in respect of Working Capital Term Loan (A/c No. 40108602417) repayable together with further interest @8.15% p.a. with monthly rests along with defaulted interest at the rate of 2%p.a. from the date of Application till the date of realization in full;

¶128

(v) A sum of Rs.1,50,993/- due in respect of Funded Interest Restructuring Loan (A/c No.40108602417)

¶129

Uploaded on 16.07.2026 at 15:00 hours

¶130

O.A. No.145 of 2023

¶131

¶132

16.07.2026

¶133

repayable together with further interest @8.15% p.a. with monthly rests along with defaulted interest at the rate of 2% p.a. from the date of Application till the date of realization in full along with costs of this OA.

¶134

(b) In the event of failure of the Defendants to pay the aforesaid amount, the bank is at liberty to recover the amount by sale of the hypothecated assets morefully detailed in the OA schedule.

¶135

¶136

(d) If the sale proceeds of the hypothecated assets are not sufficient to satisfy the dues as ordered above, the applicant bank is at liberty to sell the personal assets of the 2^nd & 3^rd Defendants (both movable and immovable) to recover the balance dues as required under law for which the 2^nd & 3^rd Defendants to disclose to the Tribunal particulars of other properties or assets owned by the 2^nd and 3^rd Defendants.

¶137

(e) The applicant bank shall file the latest memo of calculation of

¶138

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.

¶139

(f) The applicant bank shall file memo of costs within ten days

¶140

Uploaded on 16.07.2026 at 15:00 hours

¶141

O.A. No.145 of 2023

¶142

16.07.2026

¶143

¶144

from the date of receipt of this final order.

¶145

(g) Recovery Certificate shall be drawn up and issued to the

¶146

Recovery Officer in terms of the final order.

¶147

A copy of this order be communicated to the parties concerned.

¶148

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

¶149

(Dictated to Roshnee, transcribed by her, corrected, signed and pronounced by me on this the 16^th day of July, 2026)

¶150

ANNEXURES

¶151

WITNESSES EXAMINED FOR THE APPLICANT BANK :

¶152

AW-1: Mr. S. Mathiyazhagan, Deputy Manager of the Applicant Bank

¶153

Exhibits on the part of the Applicant:

¶154

Sl. No.	Date	Description of Documents	Exhibit No.
1.	-	Loan application form for loans to Micro & Small enterprises (MSEs)	A-1
2.	12.02.2020	Letter of arrangement for cash credit and standby line of credit	A-2
3.	12.02.2020	Supplemental agreement of loan-cum hypothecation	A-3
4.	12.02.2020	Guarantee agreement executed by 2^nd and 3^rddefendants	A-4
5.	12.02.2020	Request for Adhoc limit-Covid-19 ECL	A-5
6.		Loan application form for loans to MSE	A-6
7.	22.04.2020	Letter of arrangement for common covid-19	A-7
8.	22.04.2020	Supplemental agreement of loan-cum hypothecation	A-8
9.	22.04.2020	Guarantee agreement executed by 2^nd and 3^rddefendants	A-9
10.	-	Loan application form for loans to MSE	A-10
11.	30.05.2020	Letter of arrangement for GECL	A-11

¶155

Uploaded on 16.07.2026 at 15:00 hours

¶156

O.A. No.145 of 2023

¶157

16.07.2026

¶158

¶159

12.	30.05.2020	Supplemental hypothecation	agreement of loan-cum	A-12
13.	30.05.2020	Guarantee ag and 3^rddefend	reement executed by 2^nd ants	A-13
14.	29.03.2021	Letter of arra FITL (restructu	ngement for WCTL and ring)	A-14
15.	29.03.2021	Supplemental hypothecation	agreement of loan-cum	A-15
16.	29.03.2021	Guarantee ag and 3^rddefend	reement executed by 2^nd ants	A-16
17.	27.08.2022	Legal notice bank	issued by the applicant	A-17
18.	18.08.2022	Statement of 38100834838 Banker’s Book	account for loan A/c No. with certificates under Evidence Act	A-18
19.	28.05.2022	Statement of a 39283270431 Banker’s Book	ccount for loan A/c No. with certificates under Evidence Act	A-19
20	28.05.2022	Statement of a 39366170762 Banker’s Book	ccount for loan A/c No. with certificates under Evidence Act	A-20
21.	18.08.2022	Statement of a 40108602417 Banker’s Book	ccount for loan A/c No. with certificates under Evidence Act	A-21
22.	28.05.2022	Statement of a 40108694680 Banker’s Book	ccount for loan A/c No. with certificates under Evidence Act	A-22

¶160

Witness Examined for the Defendants: -Nil-

¶161

List of Documents Exhibited for the Defendants: -Nil –

¶162

SCHEDULE OF PROPERTY

¶163

Hypothecation of stocks and receivables available at S-2, 2^nd Floor, New No.13, Railway Station Road, Alandur, Chennai- 600016

¶164

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

¶165

Uploaded on 16.07.2026 at 15:00 hours

State Bank of India v. M s Promace Engineering LLP

Case brief

What is this about?

What did the court decide?

State Bank of India v. M s Promace Engineering LLP

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

Similar cases

State Bank of India versus M/S Vastraa

Sulochana versus Indian Bank

Indian Bank versus J.S

Canara Bank versus Chitra

Bank of Baroda versus Ms Shinko Equipments

Equital Small Finance Bank Limited versus Sri Bhavani Amman Engineering Works