Allowed

Canara Bank v. Nalan Kumar

DRT10 Apr 2026OA/202/2022

Case brief

AI extract

What is this about?

This Debt Recovery Tribunal allowed Canara Bank's application for recovery of Rs. 21,19,504.80 plying on an SME loan. The defendant was heard ex-parte. The Tribunal affirmed the claim based on filed documents, allowed interest but capped capitalization on penal interest.

What did the court decide?

Ordered the defendant to pay Rs. 21,19,504.80 plying with interest at 15.95% p.a. with half yearly rests and cost. Authorized sale of hypothecated properties for recovery if payment defaults.

Canara Bank versus Nalan Kumar — Contract and Commercial Disputes | DRT (2026)

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OA No. 202/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 10^TH DAY OF APRIL, 2026 PRESENT: SEEMA SINHA,

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

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OA No.202/2022

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Between

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Canara Bank, UDC Kattur Branch, 3/184, Tanjore Main Road, Tiruchirapalli District. Rep. By its Branch Manager. ---Applicant Bank

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And

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Mr. Nalan Kumar, S/o Jeyam, Prop. JNK Engineers, No.376, Cauvery Nagar, Behind Industrial Estate, Ariyamangalam, Trichy – 620 010. ---Defendant

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Counsel for the Applicant Bank : M/s C. Deepak, V. Vilma Rexy

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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 Defendant 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

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OA No. 202/2022

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on 27.12.2021 to recover from the Defendant a sum of Rs.21,19,504.80p together with interest at the rate of 15.95% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of ML-SME 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 Defendant has approached the applicant bank to apply loan under Small Scale Industries (SSI) and the application form for credit facilities for small scale Industries (SSI) upto 10 Lakhs dated 7.3.2007. After due consideration the said loan was processed and the same was sanctioned in Ref No. MLSME 13374 dated 14.5.2007 in Account No. 2755752013374. The sanctioned amount was Rs.5,03,000/- and the repayment was fixed for 60 months and the rate of interest is fixed at 14.25%. The Defendant had executed the deed of hypothecation dated 14.5.2007 and thereby hypothecated the schedule mentioned properties and executed a letter of undertaking dated 14.5.2007 and the Defendant also executed an Acknowledgment of Debt and security dated 16.10.2009, 10.6.2011, 15.5.2014 and 4.5.2017 subsequently the applicant was not regular in repaying the loan and the loan was classified as NPA.

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After receiving the loan amount, the Defendant was not regular in repaying the loan and consequently defaulted in repayment as promised to the Applicant Bank. The Applicant was insisting for repayment of loan amount and Defendant have been giving one reason or other to evade from repaying. The defendant did not adhere to the terms of repayment despite demands. In spite of several demands made by the Applicant, the defendant failed and neglected to settle the amount.

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Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.21,19,504.80p together with interest at the rate of 15.95% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of ML-SME 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	7.3.2007	Application Form Loans to Micro & Small Enterprises	Ex.No.A-01

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OA No. 202/2022

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2	14.5.2007	Sanction Memorandum	Ex.No.A-02
3	14.5.2007	Letter of Undertaking	Ex.No.A-03
4	14.5.2007	Deed of Hypothecation: Machinery	Ex.No.A-04
5	16.10.2009	Acknowledgment of Debt and Security	Ex.No.A-05
6	10.6.2011	Acknowledgment of Debt and Security	Ex.No.A-06
7	15.5.2014	Acknowledgment of Debt and Security	Ex.No.A-07
8	4.5.2017	Acknowledgment of Debt and Security	Ex.No.A-08
9	—	Statement of Accounts maintained by the applicant bank in regular course and conduct of business	Ex.No.A-09

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SCHEDULE OF PROPERTIES

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"A" SCHEDULE HYPOTHECATION

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Olympic/Accumax Lathe Machine with Accessories.

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Measuring Instruments.

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Electrical Items.

ANNEXURE -I

SCHEDULE-A

Nagamani Heavy Duty

ARC 400 B Machine

Gas Culturing set

Surface machinery Taluk

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Angle Crainders

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3 . On the other hand, Notices were issued to Defendant and since from the beginning of the case, there was no representation on behalf of the Defendant. Hence, Defendant was 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

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OA No. 202/2022

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Applicant, I find that the Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. M. Sathishkumar, who is the Senior Manager of the Applicant Bank.

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He has stated in his affidavit that the defendant has availed ML-SME from the Applicant Bank, but he failed to pay the outstanding loan amount, hence he has filed the case. The applicant bank has also filed the documents signed by the defendant at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-09 in support of its claim in the OA.

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The Application Form Loans to Micro & Small Enterprises has been marked as Ex.No.A-01, Sanction Memorandum has been marked as Ex.No.A-02, Letter of Undertaking has been marked as Ex.No.A-03, Deed of Hypothecation: Machinery has been marked as Ex.No.A-04, Acknowledgment of Debt and Security has been marked as Ex.No.A-05, Acknowledgment of Debt and Security has been marked as Ex.No.A-06, Acknowledgment of Debt and Security has been marked as Ex.No.A-07, Acknowledgment of Debt and Security has been marked as Ex.No.A-08, and Statement of Accounts maintained by the applicant bank in regular course and conduct of business has been marked as Ex.No.A-09. 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 Defendant 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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OA No. 202/2022

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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 Defendant, a sum of Rs.21,19,504.80p together with interest at the rate of 15.95% p.a. with half yearly rests in respect of ML-SME from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

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ORDERED

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(a) That the Defendant is directed to pay personally a sum of Rs.21,19,504.80p together with interest at the rate of 15.95% p.a. with half yearly rests in respect of ML-SME 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 Defendant, 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 defendant is personally liable to pay the amount of such deficiency with interest mentioned above until realization.

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OA No. 202/2022

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(d) Any amount remitted during the course of this proceedings shall

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be given due credit, to the loan account of the defendant.

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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 ML-SME 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 T.P, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 10^th April, 2026.

Sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Uploaded on 22.04.26

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Canara Bank v. Nalan Kumar

Case brief

What is this about?

What did the court decide?

Canara Bank v. Nalan Kumar

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

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Case details

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