Allowed

Punjab National Bank v. Sri Ganapathy Silks

DRT27 May 2026OA/193/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an original application filed by Punjab National Bank for recovery of a loan amount of Rs. 70,16,855.25. The tribunal clarified the treatment of pendente lite interest versus capitalisable penal interest while directing the defendants to repay the principal with calculated interest.

What did the court decide?

Defendants directed to pay Rs. 70,16,855.25 with interest at 7% p.a. with half-yearly rest and a recovery certificate to be issued.

Punjab National Bank versus Sri Ganapathy Silks — Contract and Commercial Disputes | DRT (2026)

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OA No. 193/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 27^TH DAY OF MAY, 2026 PRESENT: SEEMA SINHA,

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[PR. DISTRICT & SESSIONS JUDGE – Retd] PRESIDING OFFICER

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OA No.193/2024

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Between

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Punjab National Bank, Circle SASTRA Trichy, Circle Office, Kailasapuram, Trichy 620 014, Rep. by its Chief Manager. ---Applicant Bank

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And

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M/s. Sri Ganapathy Silks Proprietor Smt. Madhulakshmi, Shop No.18-19, Iyyappan Koil Street, Surat Market, Bargur, Krishnagiri District - 635 104.

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Smt. Madhulakshmi W/o. AE mr.Sampath, No.29D Advocate Ramnath Nagar, Tirupathur - 635 601.

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M/s. Sri Ganapathi Silks & Readymade Proprietor Sh.A.E.Sampath, No.244, Mahalakshmi Market, Bargur, Krishnagiri District - 635 104.

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Sh.A.E. Sampath, Opp. To Sri Vidya Mandhir School, C/o. Vasanthi Mess Near to Pallavan Grama Bank, Uthangarai - 635 207. ---Defendants

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Counsel for the Applicant Bank : M/s T. M. Subramanian, S. Balasubramanian, M. Sundaraj, B. Iswarya.

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Page 1 of 7

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OA No. 193/2024

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This Original Application was heard and fixed for passing final order before me in the presence of the above said Advocate for Applicant Bank and the Defendants having been set ex-parte and upon hearing the arguments of Counsel for Applicant Bank and upon perusing the material available on the records and having stood over for consideration till this day, this Tribunal delivered the following:

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JUDGEMENT

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1 . This Application has been filed under Sec.19 (1) of the "The Recovery of Debts due to Banks and Financial Institutions Act, 1993" now amended as The Recovery of Debts and Bankruptcy Act, 1993 by the Applicant Bank on 07.03.2024 to recover from the Defendants a total sum of Rs. 70,16,855.25ps, i.e., (i) Rs. 46,67,560/- together with interest at the rate of 7% p.a. plus 2% penal interest with monthly rest in respect of Cash Credit (Hypothecation) and (ii) Rs. 23,49,295.25ps, together with interest at the rate of 7% p.a. plus 2% penal interest with monthly rests in respect of Cash Credit from the date of filing of Application till the date of realization with cost and by sale of mortgaged/hypothecated properties, more fully described in Schedules of the application.

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2 . The brief averments of the application filed by the Applicant Bank are as follows:-

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The defendants have availed Cash Credit (Hypothecation) for a sum of Rs.20,00,000/- and availed Cash Credit for a sum of Rs.10,00,000/- and totalling Rs.30,00,000/-. The defendant executed necessary loaning documents in favour of the Applicant. In addition to that, the defendants has also deposited the original title deeds this immovable property with the applicant bank as security for the due repayment of loan availed by him. Further, the 2^nd defendant has executed memorandum of deposit of title deeds on 29.10.2014 in Document No.9436/2014 SRO Tirupathur, and Supplemental memorandum of Deposit of Title Deeds on 02.05.2016 in Document No.4194/2016 SRO Tirupathur. The following is the detail of loan availed by the defendant.

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S.No.	Nature of loan & Account Number	Loan amount	Rate of interest	Outstanding amount as on 31.10.2023
1.	Cash Credit (Hypothecation) 4401008700003708	Rs.20,00,000/-	7%p.a+ 2%P.1	Rs.46,67,560.00/-
2.	Cash Credit 4401008700003805	Rs.10,00,000/-	7%p.a+ 2%P.1	Rs.23,49,295.25/-
	T	otal		Rs.70,16,855.25/-

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Page 2 of 7

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OA No. 193/2024

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After availing the loan, defendants were not regular in the matter of repayment. Thus the loan accounts turned into NPA as follows:

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Sl.No.	Nature of Loan	NPA Date
1.	Cash Credit	29.06.2016
	(Hypothecation)
2.	Cash Credit	30.10.2016

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As per the statement of accounts of the applicant maintained in the name of the defendants, on 31.10.2023 for a sum of Rs.70,16,855.25/- has became due and they are liable to pay the said amounts with further interest till repayment. The defendants made several promises, but they failed to keep up their promises. Hence, the applicant bank issued demand Notice U/s. 13(2) of the SARFAESI Act on 21.11.2016 & 25.07.2018 against the defendants and the same was received by the defendants but the defendants failed and have not come to discharge the loan.

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Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their liability. Hence, the Applicant Bank has filed the OA for recovery of a total sum of Rs. 70,16,855.25ps, i.e., (i) Rs. 46,67,560/- together with interest at the rate of 7% p.a. plus 2% penal interest with monthly rest in respect of Cash Credit (Hypothecation) and (ii) Rs. 23,49,295.25ps, together with interest at the rate of 7% p.a. plus 2% penal interest with monthly rests in respect of Cash Credit from the date of filing of Application till the date of realization with cost.

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The Applicant Bank has submitted the following documents in support its claim in the OA, which are as follows:

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S. No.	Date	Description of document	Exhibits
1.	10.10.2014	Hypothecation of Goods and Book Debts to Secure Cash Credit Facility	Ex.No.A-01
2.	31.12.2015	Hypothecation of Goods and Book Debts to Secure Cash Credit Facility	Ex.No.A-02
3.	31.12.2015	Agreement of Guarantee	Ex.No.A-03
4.	29.10.2014	MOD in Doc No.9436/2014	Ex.No.A-04
5.	02.05.2016	Supplemental MOD in Doc No.4194/2016	Ex.No.A-05
6.	16.07.2010	Sale deed Doc. No.7537/2010	Ex.No.A-06
7.		Statement of account	Ex.No.A-07

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Page 3 of 7

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OA No. 193/2024

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SCHEDULE OF PROPERTY Mortgaged Property

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All that part and parcel of property situated at Vellore District, Tirupattur Sub Registry, Tirupattur Town, T.S.No. 154/4, D.No.29D, Advocate Ramanathan Nagar in this total 1240sq.ft including builted RCC House, belonging to S. Madhulakshmi W/o. A.E. Sampath residing at 29D, Advocate Ramanathan Nagar, Tirupattur Town, Vellore District.

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Bounded on the

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North by : Natarajan's Plot South by : Jayaraman's Plot East by : 9ft broad common pathway belonging to S.Ramesh, Jayaraman West by : Seenan's land

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Within this East West on the

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Northern Side - 40ft, 50ft Southern Side - North South 40ft Eastern Side-31 ft Western Side-31 ft

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Totalling 1240sq.ft equivalent to (115.20 sq.mtrs) including RCC building in 900sq.ft borewell, compressor, portico, service connection n 084-2-101-2247, compound wall, iron gate, mamool pathway rights and also in the pathway right belonging to Ramesh, Jayaraman and Natarajan.

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3 . On the other hand, Notices were issued to Defendants and since from the beginning of the case, there was no representation on behalf of the Defendants. Hence, Defendants are set ex-parte.

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4. Now the main point for consideration before me is as to whether the Applicant has been able to prove his case on his own leg?

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Having gone through the affidavit of the applicant and the documents filed by them and also considering the submission of the counsel for the Applicant, I find that the Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. Manjunath Venkatagiri, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants have availed Cash Credit (Hypothecation) & Cash Credit from the Applicant Bank, but they failed to pay the outstanding loan amount, hence he has filed the case. The applicant bank has also filed the documents signed by the defendants at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-07 in support of its claim in the OA.

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Page 4 of 7

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OA No. 193/2024

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The Hypothecation of Goods and Book Debts to Secure Cash Credit Facility has been marked as Ex.No.A-01, Hypothecation of Goods and Book Debts to Secure Cash Credit Facility has been marked as Ex.No.A-02, Agreement of Guarantee has been marked as Ex.No.A-03, MOD in Doc No.9436/2014 has been marked as Ex.No.A-04, Supplemental MOD in Doc No.4194/2016 has been marked as Ex.No.A-05, Sale deed Doc. No.7537/2010 has been marked as Ex.No.A-06, Statement of account has been marked as Ex.No.A-07. So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

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As the Defendants remained ex-parte, the claim of the Applicant Bank is neither disproved nor dislodged and goes on record as proved. Accordingly a cumulative analysis of both the Proof Affidavit and documents marked by the Applicant Bank would prove the claim of the Applicant Bank in the OA.

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So far the claim of interest is concerned, it is a well settled Law that the Tribunal has got powers to award pendente lite interest in view of the Judgment of the Hon’ble Supreme Court in N.M. Veerapa Vs Canara Bank (reported in AIR 98(1), 1101 & in Central bank of India Vs Ravindra and OS (AIR, 2001(1), 3095).

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So far the penal interest is concerned Hon'ble supreme court stated in the said judgement as followed " Though interest can be capitalised on the anology that the interest falling due on the accrued date and remaining unpaid, partakes the character of amount advanced on that date, yet penal interest, which is charged by way of penalty for non payment, cannot be capitalized. Further interest, i.e interest on interest, whether simple, compound or penal, cannot be claimed on the amount of penal interest. Penal interest cannot be capitalized. It will be opposed to public policy ".

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Therefore, this Original Application is allowed . The Applicant Bank is entitled for a final order on the following lines:-

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The Applicant Bank is entitled to recover from the Defendants, a total sum of Rs. 70,16,855.25ps, i.e., (i) Rs. 46,67,560/- together with interest at the rate of 7% p.a. with half yearly rest in respect of Cash Credit (Hypothecation) and (ii) Rs. 23,49,295.25ps, together with interest at the rate of 7% p.a. with half yearly rests in respect of Cash Credit from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

Page 5 of 7

OA No. 193/2024

ORDERED

(a) That the Defendants are directed to pay jointly/severally a total sum of Rs. 70,16,855.25ps, i.e., (i) Rs. 46,67,560/- together with interest at the rate of 7% p.a. with half yearly rest in respect of Cash Credit (Hypothecation) and (ii) Rs. 23,49,295.25ps, together with interest at the rate of 7% p.a. with half yearly rests in respect of Cash Credit from the date of filing of Application till the date of realization with cost within one month from the date of receipt of this order.

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(b) In case of default of payment by the above mentioned Defendants, the Applicant Bank is at liberty to sell the movable / immovable properties more fully described in Schedule of the original application for appropriation of sale proceeds towards the satisfaction of amount due to the Applicant Bank.

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(c) If the sale proceeds are not sufficient, after defraying the expenses of such sale, for the payment of all such amounts, the defendants are jointly/severally liable to pay the amount of such deficiency with interest mentioned above until realization.

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(d) Any amount remitted during the course of this proceedings shall be given due credit, to the loan account of the defendants.

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Page 6 of 7

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OA No. 193/2024

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(e) Recovery Certificate be prepared, as per the directions given above, and issue accordingly. A copy of the order is to be communicated to the parties concerned, immediately.

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(f) It is further ordered that the Applicant Bank shall file cost memo within a period of one month from the date of receipt of this order, so as to prepare the recovery certificate with cost for the Cash Credit (Hypothecation) & Cash Credit and the Recovery Officer is also directed to proceed with the matter in accordance with law. In case, cost memo is not filed before said period of one month, Recovery Certificate will be prepared with available records.

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Dictated to P. Sharmila, LDC taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 27^th May 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 11.06.2026

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Punjab National Bank v. Sri Ganapathy Silks

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. Sri Ganapathy Silks

Case brief

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