Allowed

Canara Bank v. M/s. Diya Traders

DRT31 Jul 2026OA/1624/2023

Case brief

AI extract

What is this about?

In an original application under Section 19 of the RDB Act, the court allowed the bank's claim for a recovery certificate for Rs. 58,00,358/- against trade proprietors who failed to adduce evidence to rebut the bank's documented loan sanctions and defaults. Interest at 10% p.a. was awarded.

What did the court decide?

Recovery Certificate issued for Rs. 58,00,358/- with 10% p.a. simple interest; Applicant allowed costs.

Canara Bank versus M/s. Diya Traders — Company and Corporate | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II, BENGALURU

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Dated this 31^st Day of July, 2026

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Present: Sri. T. RAJESH Presiding Officer OA.No.1624/2023

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BETWEEN:

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Canara Bank, Basrur Branch, Bank Street, Kundapura Taluk, Udupi District, Basrur -576211, Karnataka Rep. by its Branch Manager,

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…APPLICANT

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AND:

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M/s. Diya Traders, Ground Floor, No. 636/V, 5^th Ward, Purasabha Building, Kundapura -576201, Rep. by its Proprietrix Smt. Manjula Nair,

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Smt. Manjula Nair, D/o. Sri. Bhaskaran Nambiar, Proprietrix of M/s. Diya Traders, No. 4/1, Parimala Nilaya, Kodi Road, Hangalur, Kundapura -576217.

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...DEFENDANTS

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Counsel on record/appeared for:

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Applicant : Raghavendra G. K. Defendants : Law Minds

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FINAL ORDER

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The present Original Application in short “OA” has been filed under

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section 19 of Recovery of Debts and Bankruptcy Act 1993 seeking issuance

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of Recovery Certificate for Rs. 58,00,358/- (Rupees fifty-eight lakh three hundred fifty-eight only) with further interest thereon and cost from the

OA 1624/2023

Defendants.

It is the case of the Applicant that Defendant No. 1 is a partnership firm represented by Defendant No. 2, who is its partner and authorized representative. The Defendants approached the Applicant for financial assistance and availed an Overdraft facility of Rs. 50,00,000/- (Rupees Fifty Lakh Only) to meet their working capital requirements. Subsequently, on 06.05.2021, Defendant No. 2 also availed a Credit Card facility with a sanctioned limit of Rs. 50,000/- (Rupees Fifty Thousand Only) by executing the requisite application form and Letter of Revival in favour of the Applicant Bank, agreeing to abide by the terms and conditions governing the said facilities.

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It is also the case of the Applicant that, in consideration of the aforesaid loan facility, the Defendants executed the necessary loan documents including pro-note, Hypothecation agreement, Letter of Revival and created hypothecation over the schedule property in favour of the Applicant Bank as security for the said loan facility.

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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 accounts.

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OA 1624/2023

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Summons were duly issued to all the Defendants. Defendants entered appearance through their counsel by filing Vakalat and also filed their Written Statement. However, despite being afforded sufficient opportunities, they failed to adduce any evidence in support of their contentions. Consequently, the evidence of Defendants were closed on 22.07.2026.

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The Defendants, in their Written Statement, have not raised any substantial or bona fide defence with respect to the availing of the loan facilities or the execution of the loan documents. The Written Statement consists of vague, evasive, and unsupported denials and fails to specifically traverse the material averments made by the Applicant. The Defendants have merely called upon the Applicant to strictly prove the availing of the loan facility, the enhancement of the overdraft limit, and the execution of the Supplemental Agreement and the Demand Promissory Note, while contending that the Applicant's claim against Defendant No. 1 is not maintainable on the ground that Defendant No. 1 did not utilize the loan proceeds and that the entire overdraft facility is false and therefore the OA is liable to be dismissed.

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The Applicant led evidence through AW-1, who filed his Proof Affidavit reiterating the averments made in the Original Application and produced documents marked as Exhibits A-1 to A-8.

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Heard for both side and considered the contentions as taken in the OA in the light of documentary evidence and the proof affidavit.

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OA 1624/2023

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The following issues arise for consideration in the light of pleading and evidence:

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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 by the Defendants are wholly untenable and are belied by the duly executed loan documents, sanction records, statements of account, and other contemporaneous records produced by the Applicant Bank, which clearly establish the sanction, availing, operation, and continuation of the Overdraft facility and Credit Card facility by the Defendants. The Defendants have failed to place on record any documentary evidence or other material to substantiate their allegations or to rebut the Applicant’s case. A plain reading of the Written Statement demonstrates that the Defendants have not specifically denied the material averments relating to the sanction of the credit facilities, execution of the Demand Promissory Note, Hypothecation Agreement, Letter of Revival, Supplemental Agreement, and other relevant loan documents.

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Instead, the Defendants have raised vague, bald, and unsupported assertions, including the contention that Defendant No. 1 did not utilize the loan proceeds and that the overdraft facility was false, without producing any evidence in support thereof. Such unsubstantiated allegations do not constitute a valid defence in law to dispute the contractual liability arising

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OA 1624/2023

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out of the duly executed loan documents and the admitted banking transactions. Further, despite being granted sufficient opportunities, the Defendants failed to adduce any evidence to establish their defence or rebut the Applicant’s claim. Therefore, the Written Statement does not disclose any bona fide or triable issue warranting adjudication, and the defence raised therein is merely an afterthought, devoid of merit, and raised only with an intention to delay the proceedings and evade the Defendants’ lawful liability towards the Applicant Bank.

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The documents marked and relied upon by the Applicant establish the sanction and availing of the Overdraft facility and Credit Card facility by the Defendants, the execution of the Demand Promissory Note, Hypothecation Agreement, Letter of Revival, and other relevant loan documents, as well as the liability arising therefrom. The said documents, along with the statements of account and other records maintained by the Applicant Bank, clearly substantiate the Applicant’s claim regarding the outstanding dues payable by the Defendants. Though the Defendants entered appearance and filed their Written Statement, they failed to produce any oral or documentary evidence to substantiate their allegations or to rebut the evidence placed on record by the Applicant. Therefore, the contentions raised by the Defendants remain mere assertions without any evidentiary support and are insufficient to displace the Applicant’s claim. Accordingly, this Tribunal finds no merit in the defence raised by the Defendants.

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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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OA 1624/2023

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The OA has been filed within the prescribed period of limitation and

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the claim of the Applicant is found to be legally tenable. Taking into consideration the fact that the loan was availed for the business of the Defendants and that the OA claim has been arrived at by calculating interest at the agreed rate, pendente lite and future interest are awarded at the rate of 10.00% per annum (simple). The prayer for interest with monthly rests and for penal interest for the future period is hereby declined.

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In the result, OA.No. 1624/2023, is allowed,

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i) The Applicant is allowed to recover an aggregate sum of Rs. 58,00,358/- (Rupees fifty-eight lakh three hundred and fifty-eight only) along with pendente lite and future interest of 10.00% p.a. (simple), from the date of filing of the OA till the realization, from the Defendants jointly, severally and personally after giving credit to all the amounts recovered and received during the pendency of the OA if any, and allowed the same to be recovered by proceeding against the defendants personally and their assets including the schedule movable property. Properties schedule to the OA be the schedule to the Recovery Certificate.

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ii) The Applicant bank is allowed cost of the proceedings for which Applicant to file cost memo within seven days from the date of receipt of the order.

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iii) The Recovery Certificate to be drawn in terms of this order and transferred to Recovery for execution.

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iv) Interim application pending, if any, stands disposed of in terms

OA 1624/2023

of this final order.

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)

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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 31^st day of July, 2026).

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Sd/-

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(T. RAJESH)

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PRESIDING OFFICER ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Sri. Amit Kumar Meena, Senior 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	06.04.2021	Letter of Proprietorship
A2	06.04.2021	Request for overdraft facilities
A3	06.04.2021	Common Hypothecation Agreement
A4	06.04.2021	Pro-note
A5	09.05.202	Letter of Revival
A6	01.06.2023	Legal Notice
A7	--	Certified statement of account
A8	--	Certified statement of account

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Witness Examined for the Defendants: List of Documents Exhibited for the Defendants:

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-Nil -

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-Nil -

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Sd/(T. RAJESH) PRESIDING OFFICER

Canara Bank v. M/s. Diya Traders

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/s. Diya Traders

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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