Allowed

Union Bank of India v. Servo Transformer Company

DRT30 Jun 2026OA/2550/2025

Case brief

AI extract

What is this about?

The Tribunal allowed a recovery certificate application filed by a bank against a proprietorship firm for a loan default. The defendant appeared ex parte. The Court reduced the interest rate to 12% simple interest for recovery.

What did the court decide?

Recovery Certificate issued for Rs. 41,53,000 with interest at 12% p.a. simple from filing date till realization.

Union Bank of India versus Servo Transformer Company — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 30^th Day of June, 2026

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Present: Sri. T. RAJESH Presiding Officer

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OA.No.2550/2025

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BETWEEN:

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Union Bank of India Rajarajeshwari Nagar Branch, No. 457/C, Ideal Homes Township, Rajarajeshwari Nagar, Bangalore -560 098. Represented by its Senior Manager.

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…APPLICANT

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AND:

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M/s. Servo Transformer Company Represented by its Proprietrix, Smt. Leela Devi, W/o Sri. Ganapatlal, Aged about 40 years, Bo. 11, Kochohalli Industrial Area, Dasanapura, Gangondanahalli Main Road, Bangalore -560 091. Also at: No. 24, 5^th Cross, Vidyhamanaya Nagar, Andrahalli Main Road, Bangalore- 560091.

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...DEFENDANTS

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Counsel on record/appeared for:

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Applicant : Mr. Rohit R. Achar Defendants : Exparte

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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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2 2550/2025

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of Recovery Certificate against the defendants for Rs. 41,53,000/- (Rupees Forty One Lakh Fifty Three Thousand Only) with further interest thereon from the date of filing the Application till realization.

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It is the case of the applicant that the defendant is the Proprietorship concern represented by its Proprietrix availed the Cash credit facility of Rs. 45,00,000/- from the applicant bank on 12.01.2024.

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It is also the case of the applicant that, in view of the above availed loans, the defendant executed necessary loan documents along with Demand Promissory Note, Hypothecation Agreement, Letter of Undertaking.

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It is further contended that, despite availing the credit facility, agreeing to service the loan account promptly and regularly, the defendant failed in complying the same, resulting in default in repayment and consequentially turning the loan accounts as 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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Despite, taking out summons the defendant failed to appear, resulting the defendants being set exparte on 20.01.2026.

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The applicant had let in evidence through AW-1, who filed Proof Affidavit reiterating the contentions taken in the OA and also produced Exhibits A-1 to A-8 and got the same marked in evidence.

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3 2550/2025

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Heard the Ld. Counsel for the Applicant and considered the contentions as taken in the OA in the light of documentary evidence and proof affidavit.

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The following issues arise for consideration in this matter:

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i) Whether the applicant had succeeded in proving the OA claim as against the defendant?

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ii) What order are to be passed?

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Both these issues are gone into and decided together.

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The case put forth by the applicant in the Application remains unrebutted as defendant remained exparte. The evidence tendered by the applicant remains uncontroverted and undisputed. The evidences put forth by the applicant were found admissible and are sufficient to prove availment of credit facility as stated in the OA, creation of Hypothecation as claimed by the applicant bank and the defaults committed in the accounts. The liability of the defendant and the claim of the amount due are also proved by the above documents. The claim of the applicant is well within the limitation.

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Hence in view of the findings arrived herein above, the Tribunal find both these issues in favour of applicant and hence, this Tribunal is of the view that OA is to be allowed.

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4 2550/2025

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Taking into consideration the facts that the credit facility are

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availed for Business purpose and also that the OA claim is arrived at by calculating interest at the agreed rate, this Tribunal in view of the OA can be allowed with a reduced interest of 12.00% (simple).

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In the result, OA.No.2550/2025, stands allowed,

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i) The applicant is allowed to recovery an aggregate sum of Rs.

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41,53,000/- (Rupees Forty One Lakh Fifty Three Thousand Only) with further interest @12.00 % p.a.(simple) from the date of filing OA till the realization, from the defendant personally after giving credit to all the

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amount recovered and received during the pendency of the OA and allowed the same to be recovered by proceedings against the defendant and their assets including the schedule hypothecation. Schedule to the

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OA be the schedule to the recovery certificate.

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ii) The applicant bank is allowed cost of the proceedings which

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applicant to file cost memo within 7 days from the date of receipt of the order.

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

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5 2550/2025

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of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure)

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Rules, 1993.

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[Dictated to the Stenographer (DV), transcribed by her, corrected and signed and pronounced by me in the

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Open Court, this the 30^th Day of June, 2026].

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Sd/- (T. RAJESH)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Mr. Amit Soni, Senior Manager of the applicant Bank

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Exhibits on the part of the Applicant:

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Annexure	Date	List of Documents
A1	22.12.2023	Loan Application
A2	12.01.2024	Sanction Letter
A3	12.01.2024	Demand Promissory Note
A4	12.01.2024	Hypothecation Agreement
A5	12.01.2024	Letter of Undertaking
A6	12.01.2024	Letter of Continuity
A7	02.07.2025	Legal Notice
A8	--	Account Extract

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Witness Examined for the Defendant: -Nil - List of Documents Exhibited for the Defendant: -Nil –

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Sd/- (T. RAJESH)

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6 2550/2025

Union Bank of India v. Servo Transformer Company

Case brief

What is this about?

What did the court decide?

Union Bank of India v. Servo Transformer Company

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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