Allowed

Bank of Baroda v. Kalang Logistics

DRT26 May 2026OA/30/2024

Case brief

AI extract

What is this about?

The Tribunal allowed an original application filed by Bank of Baroda against M/s Kalang Logistics for recovery of an overdraft facility. The court fixed interest at 11.25% p.a., disallowing penalties on penal interest to align with Supreme Court precedents.

What did the court decide?

Recovery of Rs.26,28,090.84 plus interest at 11.25% p.a. with half yearly rests from the date of application till realization with cost.

Bank of Baroda versus Kalang Logistics — Contract and Commercial Disputes | DRT (2026)

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OA No. 30/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 26^TH DAY OF MAY, 2026 PRESENT: SEEMA SINHA,

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

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OA No.30/2024

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Between

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Bank of Baroda, Tuticorin Branch, No.159-A, Victoria Street, Tuticorin – 628 001. Rep. By its Chief Manager.

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---Applicant Bank

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And

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M/s Kalang Logistics, Prop. Mrs. S. Soundariya, W/o Mr. Karuppasamy Raju, 1B/203, Silverpuram, Meelavittan Road, Tuticorin – 628 002. ---Defendant

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Counsel for the Applicant Bank : M/s V. Kasirajan, A. Meenakshi Sundaram, R. Ajay Janarthan.

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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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Page 1 of 6

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OA No. 30/2024

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on 18.12.2023 to recover from the Defendant a sum of Rs.26,28,090.84p together with interest at the rate of 13.25% p.a. (including penal interest 2%) with monthly rests in respect of Overdraft facility from the date of filing of Application till the date of realization with cost 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 is a sole Proprietrix of M/s. KALANG LOGISTICS and she has approached the applicant bank for over draft facility to develop her business. The applicant sanctioned the overdraft facility a sum of Rs.25,00,000/- (Rupees Twenty Five Lakhs) (under credit guarantee scheme for micro and small enterprises) and the defendant has agreed to adjust and repay the facility enjoyed by the defendant under Over draft facility within a period of 12 months subject to renewal with accrued interest at the rate of 9.75% p.a (at present), which is sum of, RBI Repo rate 4.00% (at present), markup of 2.50% (at present), strategic premium of 0.25% (at present), credit spread of 3.00% (at present) and risk premium of 0.00% (at present) compounded at monthly rest or at such rest and such interest being added to the balance outstanding on the last working day of every month and the said interest if unpaid will become part of the amount advanced (i.e. the principal amount as mentioned above) and bears interest at the same rate. The facility was sanctioned for a period of 12 months subject to renewal. Further, the defendant agreed to pay higher and revised rate of interest on going base rate of the applicant along with other commission, insurance premium, expenses, charges etc,. Further, the applicant is entitled to recall any time the entire loan or balance thereof as the case may be, in case of default of payment within a period of 12 months or violation of terms and conditions of sanction. The defendant has agreed to pay 2% additional interest in case of default. As security, evidence and cover, for the said loan a sum of Rs.25,00,000/-, the defendant has executed the following documents at Tuticorin on 10.03.2022 infavour of the applicant viz.,

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A) Demand Promissory Note

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B) Letter Of Sole Proprietorship

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C) Letter Of Continuing Security

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D) Composite Hyрoтhecation Agreement

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E) Power Of Attorney In Respect Of Bookdebts F) Declarations Cum Undertaking Cum Authority G) Letter Of Undertaking H) Draft Undertaking

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After availing the loan, defendant was not regular in the matter of repayment. The defendant made several promises, but she failed to keep up

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Page 2 of 6

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OA No. 30/2024

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her promises. Despite repeated demands and reminders, made by the Applicant Bank, the Defendant have failed and neglected to repay and adjust her liability.

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Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.26,28,090.84p together with interest at the rate of 13.25% p.a. (including penal interest 2%) with monthly rests in respect of Overdraft facility 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	Exhibit No.
1	10.03.2022	Original Demand Promissory Note executed by defendant in favour of applicant bank	Ex.No.A-01
		Original Letter of Sole Proprietorship
2	10.03.2022	executed by defendant in favour of applicant bank	Ex.No.A-02
3	10.03.2022	Original Letter of Continuing Security executed by defendant in favour of applicant bank	Ex.No.A-03
		Original Composite Hypothecation
4	10.03.2022	Agreement executed by defendant in favour of applicant bank	Ex.No.A-04
		Original Power of Attorney in respect of Book
5	10.03.2022	Debts executed by defendant in favour of applicant bank	Ex.No.A-05
		Original Declarations-cum-Undertaking-
6	10.03.2022	cum-Authority executed by defendant in favour of applicant bank	Ex.No.A-06
7	10.03.2022	Original Letter of Undertaking executed by defendant in favour of applicant bank	Ex.No.A-07
8	10.03.2022	Draft Undertaking executed by defendant in favour of applicant bank	Ex.No.A-08
9	-	Extract Copy of Statement of Accounts	Ex.No.A-09
10	-	Extract Copy of Unapplied Interest	Ex.No.A-10

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OA No. 30/2024

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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 Applicant, I find that the Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. G. Jagannath Yadav, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendant has availed Overdraft Facility from the Applicant Bank, but she 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-10 in support of its claim in the OA.

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The Original Demand Promissory Note executed by defendant in favour of applicant bank has been marked as Ex.No.A-01, Original Letter of Sole Proprietorship executed by defendant in favour of applicant bank has been marked as Ex.No.A-02, Original Letter of Continuing Security executed by defendant in favour of applicant bank has been marked as Ex.No.A-03, Original Composite Hypothecation Agreement executed by defendant in favour of applicant bank has been marked as Ex.No.A-04, Original Power of Attorney in respect of Book Debts executed by defendant in favour of applicant bank has been marked as Ex.No.A-05, Original Declarations-cumUndertaking-cum-Authority executed by defendant in favour of applicant bank has been marked as Ex.No.A-06, Original Letter of Undertaking executed by defendant in favour of applicant bank has been marked as Ex.No.A-07, Draft Undertaking executed by defendant in favour of applicant bank has been marked as Ex.No.A-08, Extract Copy of Statement of Accounts has been marked as Ex.No.A-09, and Extract Copy of Unapplied Interest has been marked as Ex.No.A-10. 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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OA No. 30/2024

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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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Therefore, this Original Application is allowed . The Applicant

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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.26,28,090.84p together with interest at the rate of 11.25% p.a. with half yearly rests in respect of Overdraft facility 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.26,28,090.84p together with interest at the rate of 11.25% p.a. with half yearly rests in respect of Overdraft facility 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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OA No. 30/2024

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(b) 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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(c) 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 Overdraft Facility 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 26^th May, 2026.

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Sd/-

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(SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 06.06.26

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Bank of Baroda v. Kalang Logistics

Case brief

What is this about?

What did the court decide?

Bank of Baroda v. Kalang Logistics

Case brief

What is this about?

What did the court decide?

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