Allowed

Karnataka Gramin Bank v. Narayana Swamy E and Another

DRT30 Jun 2026OA/2201/2024

Case brief

AI extract

What is this about?

The Tribunal allowed the application for issuance of a Recovery Certificate of Rs. 36,21,994/-. The court found the debt recoverable under the RDB Act, rejected jurisdiction objections regarding penal interest, and set future interest at 6% simple.

What did the court decide?

Recovery Certificate issued for Rs. 36,21,994/- with future interest at 6% simple; execution against schedule properties and personal assets if sale proceeds insufficient.

Karnataka Gramin Bank versus Narayana Swamy E and… — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II,

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BENGALURU

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Dated this 30^th Day of June, 2026

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Present: Sri. T. RAJESH

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Presiding Officer OA.No.2201/2024

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BETWEEN:

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Karnataka Grameena Bank, Having a Branch at Kamadenahalli, Kolar Taluk, Kolar District -563101, Rep. by its Branch Manager,

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…APPLICANT

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AND:

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Sri. E. Narayanaswamy, S/o. Eragappa, R/o. Veerapura Village, Thoradevandahalli Post, Kolar Taluk -563126.

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Sri. Manjunatha, S/o. Late Krishne Gowda, R/o. Veerapura Village, Thoradevandahalli Post, Kolar Taluk -563126.

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...DEFENDANTS

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Counsel on record/appeared for:

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Applicant : M Anitha Adhivakta Defendant No. 1 : Manjunath B Gowda Defendant No.2 : Ex parte

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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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OA 2201/2024

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of Recovery Certificate for Rs. 36,21,994/- (Rupees thirty-six lakh twentyone thousand nine hundred and ninety-four only) with further interest thereon and cost from the Defendants.

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It is the case of the Applicant that Defendant No. 1, as borrower, and late Krishnegowda, as co-obligant, availed an Agri-PKCC loan of Rs. 6,50,000/- (Rupees Six Lakh Fifty Thousand Only) for cultivation of tomatoes and an Agri-Term Loan of Rs. 5,00,000/- (Rupees Five Lakh Only) for agricultural purposes, including drip irrigation. Defendant No. 2 is the legal heir of the deceased co-obligant, late Krishnegowda.

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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, and created Mortgage over the schedule properties in favour of the Applicant Bank.

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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 account.

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Summons were issued to the Defendants. Defendant No. 1 entered appearance through their counsel and filed vakalat and written statement,

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OA 2201/2024

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but after giving sufficient opportunity the said defendant failed to lead their evidence hence defendant evidence was closed on 16.06.2026. Defendant No. 2 failed to appear despite service of summons and was accordingly placed ex parte on 06.10.2025.

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In the Written Statement, Defendant No. 1 contends that the OA is liable to be dismissed as the Applicant's claim does not fall within the definition of "debt" under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. It is further contended that this Tribunal lacks jurisdiction to entertain the Application as the claim includes compounded penal interest. The Defendant also contends that Defendant No. 2, being the legal heir of the deceased co-obligant, has neither executed any loan documents nor agreed to repay the alleged loan with such interest.

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The Applicant adduced evidence through AW-1, who filed a proof affidavit reiterating the averments made in the Original Application. AW-1 also produced and got marked Exhibits A-1 to A-21 in support of the Applicant's case.

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Heard the learned counsel for the Applicant and perused the pleadings, proof affidavit, and documentary evidence on record. Despite being afforded sufficient opportunities, the Defendants failed to adduce any evidence. Defendant No. 1 only filed a Written Statement in support of his defence.

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The following issues arise for consideration in this matter:

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OA 2201/2024

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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 of Defendant No. 1 cannot be accepted. The documents produced by the Applicant establish that the loan facilities were duly sanctioned and availed by Defendant No. 1 and the deceased coobligant, giving rise to a legally recoverable debt within the meaning of the Recovery of Debts and Bankruptcy Act. The Applicant has also specifically pleaded and established that there is no capitalization of penal interest. Accordingly, the objection regarding the jurisdiction of this Tribunal is untenable. As regards Defendant No. 2, being the legal heir of

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the deceased co-obligant, his liability, is confined to the extent of the estate inherited from the deceased and not in his personal capacity.

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The evidence tendered by the Applicant remains uncontroverted and undisputed. The evidence put forth by the Applicant is found admissible and sufficient to prove the averments made in the OA, and the default committed by the Defendants in repaying the loan amount due. The liability of the Defendants and the loan amount due are also proved by the above documents.

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OA 2201/2024

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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 of the fact that the loans are availed for agricultural purposes 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 6.00% (simple). The prayer for interest with compounded monthly rests and for penal interest for the future period is hereby declined.

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In the result, OA.No. 2201/2024, is allowed,

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i) The Applicant is allowed to recover an aggregate sum of Rs. 36,21,994/- (Rupees thirty-six lakh twenty-one thousand nine hundred and ninety-four only) with pendente lite and future interest of 6.00% p.a.

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(simple) from the date of filing of the OA till the realization from the Defendants jointly and severally after giving credit to all the amounts recovered and received during the pendency of the OA if any, and allow the same to be recovered by proceeding against the schedule properties. Properties schedule to the OA be the schedule to the Recovery Certificate.

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ii) If the sale proceeds are found insufficient to clear the loan

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amount due from the Defendants jointly and severally then the Applicant Bank shall be at liberty to proceed against Defendant No. 1 personally and

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OA 2201/2024

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his other assets for recovery of the balance amount due, in accordance

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with law.

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iii) Defendant No.2 is only liable to the extent of the estate inherited

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form the deceased borrower Krishnegowda.

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iv) The applicant bank is allowed cost of the proceedings for which

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

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the order.

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v) The Recovery Certificate to be drawn in terms of this order and

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transferred to Recovery for execution.

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

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of this final order.

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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) 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 June, 2026).

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Sd/(T. RAJESH) PRESIDING OFFICER

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Sri. Modala Harish Kumar, Branch Manager, of Applicant Bank.

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OA 2201/2024

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Exhibits on the part of the Applicant:

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Exhibit Nos.	Date	Particulars of Documents
A1	23.01.2015	Application form cum appraisal report
A2	23.01.2015	Memorandum of Agreement for Agricultural loans
A3	23.01.2015	Simple mortgage deed
A4	02.02.2015	Application form cum appraisal report
A5	24.02.2015	Sanction memorandum
A6	09.03.2015	Memorandum of agreement for agricultural loans
A7	06.03.2015	Simple mortgage Deed
A8	22.06.2017	Revival Letter
A9	22.06.2017	Revival Letter
A10	05.05.2020	Revival Letter
A11	01.03.2023	Revival Letter
A12	21.06.2017	Revival Letter
A13	21.09.2017	Revival Letter
A14	07.03.2020	Revival Letter
A15	01.03.2020	Revival Letter
A16	22.03.2024	Legal Notice
A17	--	Postal receipts
A18	22.03.2024	Legal notice
A19	--	Postal receipt
A20	--	Statement of account
A21	--	Statement of account

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

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Sd/-

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(T. RAJESH)

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PRESIDING OFFICER

Karnataka Gramin Bank v. Narayana Swamy E and Another

Case brief

What is this about?

What did the court decide?

Karnataka Gramin Bank v. Narayana Swamy E and Another

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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