Allowed

Canara Bank v. Mr Asif M S

DRT30 Apr 2026OA/186/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the bank's application for a Recovery Certificate. The court held that the applicant's evidence regarding loan disbursement and outstanding dues was unrebutted. The defendant relied solely on documents produced by the applicant, failing to advance contrary contentions. The recovery of Rs. 26,66,755.20 with 8% simple interest was granted.

What did the court decide?

Allowed recovery of Rs. 26,66,755.20 plus interest at 8% p.a. (simple) from the date of filing until realization, executable against personal assets and schedule movable property.

Canara Bank versus Mr Asif M S — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II, BENGALURU

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Dated this 30^th Day of April, 2026

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Present: Sri. T. RAJESH Presiding Officer OA.No. 186/2022

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BETWEEN:

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Canara Bank, Napoklu Branch, Kodagu District, Rep. by its Manager,

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…APPLICANT

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AND:

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Mr. Asif M. S., S/o. Sharif M K, Proprietor of Marsh Fashion Stores, FMC Road Napoklu Village and Post, Madikeri Taluk, Kodagu District -571214.

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Also at,

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Madikeri Taluk, Kanthur, Kodagu Murnad, Karnataka -571252.

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And Marsh Fashion Store No. 1334 50ft Main Road, Kumaraswamy Layout, 1^st Stage, Karnataka -560078.

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...DEFENDANT

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Counsel on record/appeared for:

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Applicant : Manik B T Defendant : Suhaib Fazeel Madar

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FINAL ORDER

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

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OA 186/2022

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under section 19 of Recovery of Debts and Bankruptcy Act 1993 seeking issuance of Recovery Certificate for Rs. 26,66,755.20 (Rupees twenty-six lakh sixty-six thousand seven hundred fifty-five and paisa twenty only) with further interest thereon and cost from the Defendant.

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It is the case of the Applicant that the Defendant, being the borrower, had availed a sum of Rs. 10,00,000/- (Rupees Ten Lakh Only) for the purpose of setting up a textile shop; and further availed another loan of Rs. 10,00,000/- (Rupees Ten Lakh Only) as working capital, along with a COVID Funded Interest Term Loan (CFIT) of Rs. 66,236/- (Rupees Sixty-Six Thousand Two Hundred and Thirty-Six Only).

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It is also the case of the Applicant that, in consideration of the aforesaid loan facilities, the Defendant executed the necessary loan documents, including Hypothecation Agreement and Promissory Note, in favour of the Applicant Bank to secure the said loans, and also created a charge by way of hypothecation over the schedule property.

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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 NonPerforming 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

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OA 186/2022

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the amount due in the accounts.

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Summons were duly issued to the Defendant in accordance with law. Upon receipt thereof, the Defendant entered appearance by filing a Vakalat and thereafter filed a Written Statement along with an Affidavit of Evidence. On 15.12.2025, it was recorded in the proceedings that the Defendant would rely only upon the documents produced by the Applicant.

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In the reply filed by the Defendant, it was contended that the loan amount was disbursed on four different dates, and the entire amount was not disbursed on 21.08.2018, as falsely stated by the Applicant. In respect of the MSME loan, the Defendant paid Rs. 1,37,914/- between 21.08.2018 and 27.10.2021; however, despite such payments, the Applicant Bank increased the outstanding amount from Rs. 10,00,000/- to Rs. 11,24,182/-, which is illegal, arbitrary, and contrary to banking regulations and the principles of natural justice. It is further contended that the Applicant has levied charges such as CGFMU fees, interest arrears capitalization, reminder notice charges, guarantee fees, legal notice charges, etc., which were never agreed to by the Defendant, and therefore, the said charges are illegal and contrary to law.

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In respect of the Open Cash Credit Account, the Applicant transferred a loan amount of Rs. 9,90,000/- to the Defendant on 21.02.2019, but is falsely claiming that a sum of Rs. 10,00,000/- was

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OA 186/2022

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transferred. The Applicant has also levied additional charges, including CGTMSE fees and other unauthorized charges, which were never agreed to by the Defendant, and despite payments made by the Defendant, the outstanding amount has been arbitrarily increased, which is illegal, contrary to banking regulations, and against the principles of natural justice. Furthermore, in respect of the COVID loan, the Applicant has charged an exorbitant rate of interest and arbitrarily increased the outstanding amount to Rs. 72,774.91 within a period of one year, which is illegal and contrary to law.

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The Applicant examined AW-1, who filed a proof affidavit reiterating the averments made in the OA and produced Exhibits A-1 to A-17, while the Defendant examined DW-1, who filed a proof affidavit, produced certain documents, and submitted that the Defendant is also relying upon the documents produced by the Applicant.

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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 affidavits.

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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

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as against the Defendants?

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OA 186/2022

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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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In reply, contentions of the defendant that the loan was duly disbursed in accordance with the sanction terms and accounting records of the Applicant Bank, and the allegation of multiple or irregular disbursements is incorrect and denied. The statement regarding alleged inflation of the outstanding amount is also denied as the same has been arrived at strictly as per the agreed rate of interest, applicable charges, and contractual terms. All payments made by the Defendant have been duly accounted for and credited to the loan account. The levy of charges such as CGFMU fees, interest arrears capitalization, reminder notice charges, guarantee fees, legal notice charges, and other incidental charges are part of the sanctioned loan terms and applicable banking guidelines, duly agreed to at the time of execution of loan documents. Hence, the contention that such charges are unauthorized or illegal is untenable and devoid of merit.

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In respect of the Open Cash Credit Account, it is submitted that the same was duly sanctioned and operated in accordance with the sanctioned terms and banking records. The contention regarding any discrepancy in disbursement is incorrect and is denied. The statement of account clearly reflects all transactions and the outstanding position has been arrived at strictly based on the duly maintained records. Hence, the allegation is baseless and not sustainable. All applicable

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OA 186/2022

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charges have been levied in accordance with the loan agreement and applicable banking guidelines, and the computation of the outstanding amount is fully in compliance with contractual terms, with no arbitrariness or illegality as alleged.

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Further, in respect of the COVID loan, it is submitted that the rate of interest applied is as per the applicable government/financial institution guidelines and the terms of sanction. The outstanding amount has been duly calculated based on the agreed interest structure and repayment position of the account, and the allegation of exorbitant interest or arbitrary increase is false, baseless, and denied.

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The Applicant’s evidence remains unrebutted and is therefore deemed to be proved. Though the Defendant has adduced evidence by filing a proof affidavit along with certain documents, it is submitted that during the proceedings dated 15.12.2025, the Defendant himself stated that he is relying upon the documents produced by the Applicant. Hence, the evidence of the Defendant does not advance his contentions and remains unsubstantiated. On the other hand, the Applicant Bank has adduced cogent evidence supported by relevant documents establishing the availing of the loan facility by the Defendant, which have been duly exhibited and marked as Exhibits A1 to A17. The documents produced by the Applicant are admissible and sufficient to substantiate the claim made in the Original Application.

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OA 186/2022

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The OA has been filed within the period of limitation, and there is no capitalization of penal interest. The loan documents placed on record by the Applicant are adequate to prove the availment of the loan facilities and the consequent liability of the Defendant.

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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 the fact that the loan is availed by the Defendants for business purpose 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 monthly rests and for penal interest for the future period is hereby declined.

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In the result, OA.No.186/2022, is allowed,

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i) The Applicant is allowed to recover an aggregate sum of

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Rs. 26,66,755.20 (Rupees twenty six lakh sixty six thousand seven

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hundred fifty five and paisa twenty only) along with pendente lite and future interest of 8.00% p.a. (simple), from the date of filing of the

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OA till the realization, from the Defendant 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

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against the defendant personally and his assets including the

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OA 186/2022

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schedule movable property. Properties schedule to the OA be the

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schedule to the Recovery Certificate.

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ii) The Applicant bank is allowed cost of the proceedings for

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which Applicant to file cost memo within seven days from the date of

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receipt of the order.

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iii) 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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iv) 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

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terms 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 April, 2026)

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Sd/-

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(T. RAJESH)

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PRESIDING OFFICER

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Sri. Sivaraj K, Senior Manager, of Applicant Bank.

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Exhibits on the part of the Applicant:

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Exhibit	Date	Particulars of Documents
Nos.
A1	21.08.2018	Loan application

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OA 186/2022

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A2	21.08.2018	Letter of proprietorship
A3	--	GST registration certificate
A4	21.08.2018	Sanction memorandum
A5	21.08.2018	Agreement cum Deed of Hypothecation
A6	21.08.2018	Particulars of Assets Hypothecated
A7	21.02.2018	Loan application
A8	21.02.2019	Sanction memorandum
A9	21.02.2019	Letter of proprietorship
A10	21.02.2019	Cash credit agreement
A11	21.02.2019	Pronote
A12	03.09.2020	Sanction letter of the CFITL
A13	09.12.2020	Letter of revival
A14	30.03.2021	Legal notice
A15	11.11.2021	Statement of Accounts
A16	11.11.2021	Statement of Accounts
A17	11.11.2021	Statement of Accounts

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Witness Examined for the Defendants:

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DW -1: Sri. Asif M. S., Defendant

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List of Documents Exhibited for the Defendants:

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-Nil-

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Sd/(T. RAJESH)

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PRESIDING OFFICER

Canara Bank v. Mr Asif M S

Case brief

What is this about?

What did the court decide?

Canara Bank v. Mr Asif M S

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

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Case details

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