Allowed

Union Bank of India v. Mp Paper Traders

DRT18 Jun 2026OA/265/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an original application filed by Union Bank of India for recovery of outstanding dues from M/s MP Paper Traders and its proprietor. The bank claimed recovery amounting to Rs. 21,85,051/- along with interest and costs through ex-parte proceedings.

What did the court decide?

Directed repayment of Rs.18,58,402/- for Cash Credit and Rs.3,26,649/- for Term Loan with interest and costs. Order to issue Recovery Certificate.

Union Bank of India versus Mp Paper Traders — Contract and Commercial Disputes | DRT (2026)

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O.A. No.265 of 2022

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18.06.2026

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 18^th day of June, 2026

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Present: SMT. S.V. GOWRAMMA

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Presiding Officer

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ORIGINAL APPLICATION No.265 of 2022

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Union Bank of India,

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Rep by its Authorized Signatory Thiruvallur Branch,

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Plot No.3573, Thiruvallur Kakkalur Bye Pass Road, Thiruvallur-602 001 ….Applicant

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-Vs-

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M/s MP Paper Traders, Represented by its Proprietor, Mr. A. Gowtham, No.1/380, CSI School street, Theerthagiriyampattu, Thiruvallur, Chennai- 600 052

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Mr. A. Gowtham, S/o Anandan, No.1/380, CSI School street, Theerthagiriyampattu, Thiruvallur, Chennai- 600 052 …..Defendants

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Counsels on record / appeared:

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Counsel for Applicant: M/s. S. Parthasarathy

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Defendants 1 and 2 were set ex-parte on 05.12.2022

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: - FINAL ORDER- :

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This Original Application is filed on 21.04.2022 by the applicant bank

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under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act,

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against the defendants for recovery of a total sum of

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O.A. No.265 of 2022

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18.06.2026

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Rs.21,85,051/- (Rupees Twenty One Lakhs Eighty Five Thousand

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and Fifty One only) as follows:

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(i) Directing the 1^st and 2^nd Defendants to pay a sum of Rs.18,58,402/- due in respect of Cash Credit facility (A/c No. 635406170000159) repayable together with further interest @9.65% p.a. with monthly rests from the date of Application till the date of realization in full;

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(ii) Directing the 1^st and 2^nd Defendants to pay a sum of Rs.3,26,649/- due in respect of Working Capital Term Loan (A/c No.6354069990000321) repayable together with further interest @7.50% p.a. with monthly rests from the date of Application till the date of realization in full

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and for costs of this OA.

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Brief Facts of the case:

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The Applicant submits that the application is filed within the period of limitation as prescribed under Section 24 of the Recovery of Debts and Bankruptcy Act, 1993, and the subject recovery claim falls within the jurisdiction of this Tribunal.

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It is the case of the applicant bank that the 1^st defendant represented by its Proprietrix, the 2^nd defendant had approached the applicant bank for sanction of Cash Credit facility for the purpose of running a paper trading company in the name and style of M/s.MP Paper Traders under Credit Guarantee Fund Trust for Micro Small Enterprises

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O.A. No.265 of 2022

18.06.2026

(CGTMSE).

It is submitted that the applicant bank considered defendants request and sanctioned the Cash Credit under Union Progress on 29.01.2020 for Rs.15.00 lakhs in Loan account No. 635406170000159 with repayment terms at the rate of interest at 9.65% per annum. The 2^nd defendant executed the following loan documents:

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a) Demand Promissory Note dated 29.01.2020 for Rs.15.00 lakhs in favour of the applicant.

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b) Composite Hypothecation Deed dated 29.01.2020 in favour of the applicant

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c) Simple Agreement dated 29.01.2020 agreeing to transfer any sum or sums standing to the credit of any one or more of such accounts in or towards satisfaction of any of the liability to the applicant.

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d) Interest Agreement dated 29.01.2020 in favour of the applicant.

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No collateral security was obtained from the defendants since the sanction was made under CGTMSE scheme.

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It is submitted by the applicant bank that in case the defendants default in payment of any installment of the loan which has fallen due as per the repayment terms or any other amounts as directed by the applicant bank and such default continues for a period of three months compound interest shall be charged on a quarterly basis on the outstanding liability. Further in the event of such default by the defendants in making payment of any amounts which have fallen due as

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O.A. No.265 of 2022

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18.06.2026

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stipulated in the loan agreement, the defendants shall be liable to pay additional interest at 2% per annum over and above the interest rate stipulated herein above on such defaulted amounts from the date of such default till regularizing or clearing the account in full as the case may be.

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The applicant bank submits that the defendants have failed to respond to the reminders, personal contacts and repeated demands made by the applicant bank. The defendants are jointly and severally liable to pay a sum of Rs.18,58,402.25/- which is rounded off to Rs.18,58,402 with the present rate of interest at 9.65% per annum towards Working Capital facility account in loan A/c No. 635406170000159.

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It is the further case of the applicant bank that the defendants have approached the applicant for sanction of Term Loan to meet the liquidity crunch and cash flow mismatch on account of outbreak of COVID-19. Considering the said request, the applicant had sanctioned a sum of Rs.3.00 lakhs to the defendants vide their Sanction Letter dated 03.07.2020, with repayment terms of 48 monthly instalments with the moratorium period of 12 months.

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In order to secure the loan, the defendants have executed the following loan documents in favour of applicant bank:

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a) The 1^st and 2^nd defendants had executed Demand Promissory Note dated 03.07.2020 for Rs.3.00 lakhs in favour of the applicant promising to pay on demand to the applicant together with interest on such sum from this date at interest rate of 7.50% per annum

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O.A. No.265 of 2022

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18.06.2026

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with quarterly rests for value received.

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b) The 1^st and 2^nd defendant had executed Interest Agreement dated 03.07.2020 in favour of the applicant.

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The applicant bank submits that in case the defendants default in payment of any instalment of the loan, which has fallen due as per the repayment terms or any other amounts, as directed by the applicant bank and such default continues for a period of three months compound interest shall be charged on a quarterly basis on the outstanding liability. Further in event of such default by the defendants in making payment of any amounts which have fallen due as stipulated in the loan agreement, the defendant shall be liable to pay additional interest at 2% per annum over and above the interest rate stipulated herein above on such defaulted amounts from the date of such default till regularizing or clearing the account in full as the case may be.

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It is submitted by the applicant bank that the defendants have failed to respond to the reminders, personal contacts and repeated demands made by the applicant bank. The defendants are jointly and severally liable to pay a sum of Rs.3,26,649/- with the present rate of interest at 7.5% per annum towards cash credit facility account in loan account no.6354069990000321 as on 28.02.2022

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The applicant sent Legal Notice to the defendants calling upon him to pay the outstanding under the aforesaid credit facilities. Inspite of the above notice the defendants have not taken any steps to pay or regularize the aforesaid personal loan facility. The defendants have closed the

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O.A. No.265 of 2022

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18.06.2026

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business after default in repayment and no stocks are available in the business premises. Therefore, the applicant has no other option except to file this suit for recovery of a sum of Rs.21,85,051/- as on 28.02.2022 with applicable rate of interest. Hence, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues from the defendants.

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After the filing of the OA, summons was sent to the Defendants 1 and 2 through Registered Post with Acknowledgment Due. AOS of notice to defendants was awaited. Applicant Bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 05.12.2022 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 and 2 were placed ex-parte on 05.12.2022.

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Heard the submissions of Applicant Bank and perused the

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records.

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To prove the case of the Applicant Bank, Sh. K. Venkata Ratnam, Authorized Officer of the Applicant Bank, has filed his Affidavit by way of evidence and same was considered as evidence of AW-1 and list of documents came to be marked as Ex A-1 to A-14.

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A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-14 evidence that the borrowal of credit facilities and execution of loan and security documents are true, in terms of averments made in Original Application as well as Proof Affidavit filed

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O.A. No.265 of 2022

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by applicant bank establishing its claim. Applicant bank filed Statement of Accounts duly certified under Bankers’ Book Evidence Act, evidencing the amount claimed against defendants.

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The defendants were set ex-parte on 05.12.2022 but till this day they did not take any action to set aside the ex-parte order and did not choose to contest the claim. Further, a careful scrutiny of records makes it clear that present application is filed well within limitation and this Tribunal possesses necessary and proper jurisdiction to entertain and adjudicate the claim. No oral or documentary evidence on the side of defendants are produced or filed to dispute the claim of applicant bank. Hence, it can be concluded that applicant bank has proved its claim against defendants.

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With regard to the amount advanced, the interest applied the conduct and operations in the account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled for a final order on the following terms:

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: O R D E R :

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18. The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants for recovery of a total sum of Rs.21,85,051/- (Rupees Twenty

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One Lakhs Eighty Five Thousand and Fifty One only) as follows:

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(i) Directing the 1^st and 2^nd Defendants to pay a sum of

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Rs.18,58,402/- due in respect of Cash Credit facility (A/c

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O.A. No.265 of 2022

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18.06.2026

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No. 635406170000159) repayable together with further interest @9.65% p.a. with monthly rests from the date of Application till the date of realization in full;

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(b) The applicant bank shall file the latest memo of calculation of OA amount together with interest, costs etc., to be paid by the Defendants duly considering the amounts, if any, paid by the Defendant and/or amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to prepare Recovery Certificate for the amount to be paid by Defendants to the applicant bank.

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

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O.A. No.265 of 2022

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A copy of this order be communicated to the parties concerned.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Roshnee, transcribed by her, corrected, signed and pronounced by me on this the 18^th day of June, 2026)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Sh. K. Venkata Ratnam, Authorized Officer of the Applicant Bank

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Exhibits on the part of the Applicant:

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Sl. No.	Date	Description of Documents	Exhibit No.
1.	29.01.2020	Application form	A-1
2.	29.01.2020	Sanction advice for Rs.15.00 lakhs	A-2
3.	07.02.2020	Letter of sanction for Rs.15.00 lakhs	A-3
4.	29.01.2020	Demand promissory note for Rs.15.00 lakhs	A-4
5.	-	Letter of continuity in favour of the bank for Rs.15.00 lakhs	A-5
6.	29.01.2020	Composite Hypothecation Deed	A-6
7.	29.01.2020	Simple Agreement	A-7
8.	29.01.2020	Interest Agreement	A-8
9	03.07.2020	Letter of Sanction for Rs.3.00 lakhs	A-9
10	03.07.2020	Demand Promissory Note for Rs.3.00 lakhs	A-10
11.	03.07.2020	Interest Agreement	A-11
12.	16.04.2022	Legal notice	A-12
13.	07.03.2022	Statement of accounts for loan A/c No.635406170000159 along with certificate under Bankers Book evidence act	A-13
14.	07.03.2022	Statement of accounts for loan A/c No.635406990000321 along with certificate under Bankers Book Evidence act	A-14

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O.A. No.265 of 2022

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Witness Examined for the Defendants: -Nil-

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List of Documents Exhibited for the Defendants: -Nil –

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:- SCHEDULE OF PROPERTY -:

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NIL

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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Uploaded on 18.06.2026 at 16:30 hours

Union Bank of India v. Mp Paper Traders

Case brief

What is this about?

What did the court decide?

Union Bank of India v. Mp Paper Traders

Case brief

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What did the court decide?

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