Allowed

Indian Bank v. M/S. Sisthi Leathers

DRT25 May 2026OA/197/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application for a Recovery Certificate. The Tribunal held that the bank proved loan disbursement and dues were due, permitting realization of principal and interest from the defendants jointly and severally.

What did the court decide?

Allowed the OA and permitted realization of aggregate sum of Rs.5,75,62,890/- with interest via Recovery Certificate drawn up for the Recovery Officer.

Indian Bank versus M/S. Sisthi Leathers — Banking and Recovery | DRT (2026)

¶1

BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

¶2

Dated this 25^th day of May, 2026

¶3

PRESENT: SHRI SHARANG DHAR UPADHYAY PRESIDING OFFICER

¶4

OA No.197 of 2023

¶5

Indian Bank

¶6

Stressed Asset Management Branch Rep. by its Chief Manager No.55, Ethiraj Salai, II Floor Wellington Estate, Egmore Chennai – 600 008

¶7

…Applicant

¶8

Versus

¶9

M/s Sisthi Leathers

¶10

No.17, Wuthucattan Street

¶11

Periamet, Chennai – 600 003

¶12

M. Rahila Begum W/o Mohamed Sheik 97/5, Extension Area, Mettupatti Begampurm Pallipatti Dindugul – 524 001

¶13

M. Mohamed Sheik S/o Mohamed Hanifa 97/5, Extension Area, Mettupatti Begampur, Pallipatti Dindigul – 624 002 …Defendants

¶14

Counsels on Record / Appeared

¶15

Counsel for Applicant Bank : M/s C. Ramaiah & D. Dinakar Defendants ex-parte on 25.09.2023

¶16

FINAL ORDER

¶17

This application is filed by the applicant bank under Section 19(1) of

¶18

Recovery of Debts and Bankruptcy Act, 1993 against the defendants’

¶19

¶20

seeking issuance of a Recovery Certificate for recovery of an aggregate sum of Rs.5,75,62,890.22p comprising a sum of Rs.5,39,89,143.79p together with interest at the rate of 15.40% per annum with monthly rests being the amount due under Cash Credit Loan; a sum of Rs.15,16,644.23p together with interest at the rate of 10.90% per annum with monthly rests being the amount due under WC- Term Loan and a sum of Rs.20,.57,102.19p together with interest at the rate of 10.90% per annum with monthly rests being the amount due under FITL Loan Account from the date of the application till the date of realisation along with costs of the application.

¶21

The subject matter of the case is various credit facilities availed by the defendants from the Applicant Bank.

¶22

It is the case of the applicant that the 2^nd defendant is the Proporietrix of 1^st defendant company, the third defendant is the husband of 2^nd defendant and guarantor for the loans availed by 1^st and 2^nd defendant. The 1^st defendant engaged in leather business approached the applicant on 15.3.2018 for grant of credit facility for development of its business. The applicant considering the same sanctioned Cash Credit Facility of Rs.35 lakhs against the prime security of hypothecation movable assets, stocks and book debts. The 1^st defendant represented by 2^nd defendant and the

¶23

¶24

3^rd defendant executed various loan and security documents on 16.03.2018.

¶25

The 2^nd defendant deposited the title deeds of her property more fully described in the schedule to the OA with an intention to create equitable mortgage over the same in favour of the applicant and confirmed the same by executing Memorandum of Deposit of Title deeds dated 20.03.2018.

¶26

At the request of the defendants the applicant bank restructured the existing limit and sanctioned Cash Credit Limit of Rs.3,50,00,000/-, WCTerm Loan of Rs.10.08 lakhs and FI-Term Loan of $14.80 lakhs. The defendants executed necessary loan and security documents after the restructuring and enhanced credit facilities on 30.12.2019.

¶27

It is also the case of the applicant that the borrowers were highly irregular in repayment and failed to regularize the loan account despite repeated demands and hence the loan account was classified as NPA on 31.12.2019. It is further stated that as the defendants did not come forward to clear the outstanding dues, the applicant issued demand notice on 12.08.2021 requesting the defendants to clear the outstanding dues but in vain. Hence the present application is filed for recovery of its dues.

¶28

Summons was taken out to the 1^st defendant was returned with endorsement “Left” and the summons to 2^nd and 3^rd defendant were

¶29

¶30

served. Since 1^st defendant is represented by its Proprietrix 2^nd defendant, it is treated as deemed service. As there was no representation for the defendants continuously and on 25.09.2023, they were set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 24 documents, which were marked as Ex. A-1 to A-24 on 07.03.2024. The Ld. Counsel for Applicant Bank made his submissions on 15.04.2026 and thereafter the matter stood till this date for passing final orders.

¶31

The following issues arise for consideration in the matter: -

¶32

(a) Whether the applicant had succeeded in proving the liability of the defendants?

¶33

(b) What order as to cost of the proceedings need be passed?

¶34

These issues are considered together.

¶35

Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

¶36

The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-24 along with the proof affidavit. The documents produced in evidence are all found admissible. The proof affidavit of the applicant bank remained unchallenged and unrebutted. Therefore, on careful consideration of proof affidavit along with exhibits filed on behalf of the

¶37

¶38

applicant bank, besides the material placed before the Tribunal, the Tribunal is satisfied that the applicant bank has successfully proved the OA claim against the defendants. Further, the statement of accounts in respect of the loan account produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendants. It is clear from the statement of accounts that penal interest is not capitalized.

¶39

In view of the foregoing, it is clearly evident that the application filed by the applicant bank is well within the period of limitation and this Tribunal possesses the territorial and pecuniary jurisdiction to entertain this OA.

¶40

In view of the fact that the loan facility availed by the defendants is a Cash Credit facility and loan for its business and the applicant has claimed interest at contractual rate till the date of filing of the OA, this Tribunal is of the view that the pendente lite interest can be awarded at reduced rates.

¶41

In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan, which the applicant is entitled to realize. Hence, OA is disposed off in the following manner: -

¶42

(a) OA No.197 of 2023 stands allowed.

¶43

¶44

(b) Applicant is permitted to realize an aggregate sum of Rs.5,75,62,890/- in the following manner from the defendants jointly and severally from the date of filing of the OA till the date of its realization in full after deducting all the amounts received / realized by them during the pendency of OA and by sale of schedule mentioned property and other assets of the defendants.

¶45

(a) A sum of Rs.5,39,89,143.79p together with interest at the rate of 12% per annum (simple) being the amount due under Cash Credit Loan;

¶46

(b) A sum of Rs.15,16,644.23p together with interest at the rate of 10% per annum (simple) being the amount due under WC- Term Loan and

¶47

(c) A sum of Rs.20,57,102.19p together with interest at the rate of 10% per annum (simple) being the amount due under FITL Loan Account

¶48

(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the defendants 2 and 3 are personally liable for all such amounts due as ordered above.

¶49

¶50

(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 15 days from the date of receipt of the copy of the order.

¶51

(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

¶52

Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

¶53

SD/-

¶54

(SHARANG DHAR UPADHYAY ) PRESIDING OFFICER DRT-II, CHENNAI

¶55

(Dictated to PS, who typed in the system directly, corrected, signed and pronounced by me in Open Court, on this 25^th day of May, 2026)

¶56

EXHIBITS MARKED BY APPLICANT BANK

¶57

S. No.	Date	Description of Documents	Exhibit Nos.
1.		Loan Application	A-1
2.	15.03.2018	Sanction letter	A-2
3.	16.03.2018	Demand Promissory Note for Rs.3,50,00,000/- executed by defendants	A-3
4.	16.03.2018	Letter of continuity	A-4
5.	16.03.2018	Agreement of Open Cash Credits (Stocks and Book Debts)	A-5

¶58

¶59

S. No.	Date	Description of Documents	Exhibit Nos.
6.	16.03.2018	Agreement of Hypothecation of movables executed by defendants	A-6
7.	16.03.2018	Agreement of guarantee executed by defendants	A-7
8.	16.03.2018	Declaration by Sole Proprietor	A-8
9.	16.03.2018	Letter from security owner to bank for creation of equitable mortgage	A-9
10.	20.03.2018	Memorandum of Deposit of Title deed executed by 2^nddefendant – Doc. No.1312/2018	A-10
11.	26.06.2009	Sale deed – Doc. No.3425/2009	A-11
12.	30.12.2019	Sanction letter	A-12
13.	30.12.2019	DPN for Rs.3,50,00,000/- executed by the defendants	A-13
14.	3012.2019	Agreement for bifurcation of existing Cash Credit facility into Demand Cash credit and Capital Demand Loan	A-14
15.	30.12.2019	Agreement of hypothecation of movables	A-15
16.	30.12.2019	Agreement of Open Cash Credit Limit (Stocks / Book Debts)	A-16
17.	30.12.2019	Agreement of guarantee	A-17
18.	30.12.2019	Medium Term Loan Agreement	A-18
19.	30.12.2019	Funded Interest Term Loan Agreement	A-19
20.	30.12.2019	Declaration of Sole Proprietor	A-20
21.	31.12.2021	Demand Notice issued under Section 13(2) of the SARFAESI Act	A-21

¶60

¶61

S.	Description of Documents	Exhibit
No.		Nos.
22.	Statement of Account – CC Limit	A-22
23.	Statement of Account – WC – Term Loan	A-23
24.	Statement of Account – FI – Term Loan	A-24

¶62

Sd/-

¶63

(SHARANG DHAR UPADHYAY ) PRESIDING OFFICER DRT-II, CHENNAI

¶64

DESCRIPTION OF PROPERTY

¶65

Land comprised in S. Nos. 141/2A, 141/2B & 141/3

¶66

Property were divided in to 5 parts within this 4^th Part – S. Nos.141/2A, 141/2B and 141/3, measuring an extent of 36,727.5 Sq. ft and 5^th Part S. Nos. 141/2A, 141/2B and 141/3 measuring an extent of 37,815 sq. ft. and thus total extent of 74,542.5 sq. ft. out of the total extent of Acres 3.56 Cents.

¶67

Land situated at Dindigul District, Athoor Taluk, Pillaiyar Natham Village and situated within the Registration District Dindigul and Sub Registration of Naganaickanpatti.

¶68

On the North: Property in S. Nos.141/2A as Item No.2

¶69

On the South: Property in S. Nos. 141/4 & 5

¶70

On the East: South North Road with a width of 10 feet, Pallapatti Village boundary line and South North Road.

¶71

On the West: Property in Survey Nos.135 & 142.

¶72

¶73

4^th Part

¶74

East to West on the Northern side: 496 feet Northern side: 496 feet

¶75

East to West on the Southern side : 500 feet North to South on the Eastern side: 72.5 feet North to South on the Western side: 75 feet

¶76

Sd/(SHARANG DHAR UPADHYAY ) PRESIDING OFFICER DRT-II, CHENNAI

¶77

Indian Bank v. M/S. Sisthi Leathers

Case brief

What is this about?

What did the court decide?

Indian Bank v. M/S. Sisthi Leathers

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

Sujatha Kumaravel versus State Bank of India

Poovai Amman Avency and Others versus City Union Bank Limited

Canara Bank versus M/S. Real Deal Electronic India Ltd.

Sun Milk products Represented by its proprietor periyar dasan samraj and two others versus Ujjivan Small Finance Bank Limited

Canara Bank versus M/S. Sumuka Cnc Tech

S Sundar versus Idfc First Bank Ltd.