Allowed

The Cosmos Co. Operative bank Ltd. v. Sri Muthumariamma Container Carrier

DRT27 Mar 2026OA/319/2022

Case brief

AI extract

What is this about?

The Chennai Debt Recovery Tribunal allowed an application by Cosmos Co-operative Bank against five respondents to recover a working capital loan of approximately Rs. 31.17 Lakhs. The Tribunal upheld the bank's claim based on executed loan documents, borrower acknowledgments, and bank statements, rejecting defenses regarding CERSAI registration and pandemic restructuring as unsupported by evidence.

What did the court decide?

Recovery of Rs. 31,16,756.62 plus further interest and costs, enabling sale of mortgaged immovable property.

The Cosmos Co. Operative bank Ltd. versus Sri Muthumariamma… — Banking and Recovery | DRT (2026)

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O.A. No. 319 of 2022

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27.03.2026

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 27^th day of March, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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ORIGINAL APPLICATION No. 319 of 2022

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The Cosmos Co-operative bank Ltd. Madipakkam branch, Plot No.2, New No.3, Ground floor, Defence colony, Medavakkam main road, Madipakkam, Chennai-600 091 Represented its Chief Manager ….Applicant

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-Vs-

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Sri Muthumariamma Container Carrier, Represented by its proprietrix Ms.G.Yamuna Rani No.67/115, Desiyanagar 4th street,

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Old Washermanpet,

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Chennai - 600 081

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Mrs.G. Yamuna rani, W/o R. Govindan No.67/115, Desiyanagar 4th street, New washermanpet, Tondaiarpet

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Chennai - 600 081

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R. Govindan (Alias) Gopi S/o Late Joseph No.67/115, Desiyanagar 4th street, New Washermanpet, Tondaiarpet Chennai - 600 081

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Mary Shantha, W/o Late Joseph No.67/115, Desiyanagar 4th street, New Washermanpet, Tondaiarpet

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Chennai - 600 081

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L. Jayakumar, S/o, Lakshmikanthan Old No.5, New no.6, Kadumpadiamman koil Street 2nd Cross Street, Chennai- 600 118 …..Defendants

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O.A. No. 319 of 2022

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27.03.2026

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Counsels on record / appeared:

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Counsel for Applicant : M/s. NVS & Associates

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Counsel for Defendants : Sh. Perumal Ravikumar

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: - FINAL ORDER- :

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This Original Application is filed on 10.01.2020 by the applicant bank under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants 1 to 5, jointly and severally for recovery of a total sum of Rs.31,16,756.62p (Rupees Thirty One Lakhs Sixteen Thousand Seven Hundred and Fifty Six and Sixty Two Paise only) due in respect of Working Capital loan (A/c 1277511846) repayable together with further interest @ 14% p.a., with monthly rests from the date of Application till the date of realization in full, for sale of schedule mentioned immovable property 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 on the basis of application dated 01.08.2016, the 1^st defendant was sanctioned with Cosmos Mortgage working Capital loan on 30.08.2016 vide letter of

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sanction Ref. 127/30/2016-17, for Rs. 25,00,000/- (Rupees Twenty Five Lakhs only). As per the terms of sanction, the prime security is mortgage of the property owned by Mrs. Mary Shantha and Mr. R.Govindan Alias Gopi.

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It is submitted by the Applicant Bank that the rate of interest stipulated at the time of sanction was 13% per annum with monthly rest and the borrower, Co-borrower as well as the Guarantor by signing a copy of the letter of sanction have confirmed having accepted the terms and conditions of the loan.

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In consideration of having availed the loan, the defendants have executed the following loan documents in favour of applicant bank:

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i. Demand Promissory Note dated 31.08.2016 for Rs. 25,00,000/-(Rupees Twenty Five Lakhs only) by 1^st defendant represented by 2^nd defendant viz. Mrs. Yamuna Rani as Proprietrix of the firm. Defendants 3 & 4 namely Mr. R. Govindan and Mrs. Mary Shantha executed the promissory note as Co-borrowers.

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ii. Likewise on 31.08.2016 the applicant bank has also obtained another promissory note for Rs.25,00,000/(Rupees twenty five lakhs only) where along with defendant No 1 represented by Defendant No 2, Defendant No 3 , Defendant No 4, Defendant No.5 also joined the execution of the Promissory note.

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iii. As per the prevailing practice, the applicant bank on 31.08.2016 obtained the letter of continuing security from Defendants 1 to 3 to confirm that the promissory note executed by the defendants will be available to the applicant bank as security for the ultimate balance.

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iv. As per the prevailing practice of the applicant bank, on 31.08.2016 the Defendants 1 to 3 also executed the letter of Lien and set off on the terms and conditions narrated in the said document.

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v. On 31.08.2016, the defendants namely, Defendant No.2 G.Yamuna Rani representing the Defendant No.1, Defendant No.3 R. Govindan, And Defendant No.4 Mary Shantha executed the loan agreement dated 31.08.2016 containing the terms and conditions on which they have availed the loan.

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vi. Further Mr.R. Govindan and Mr. L. Jayakumar, who are Defendants No 3 & 5 respectively in the O.A executed the deed of guarantee in favour of the applicant bank on 31.08.2016 as per the terms of sanction and the terms of Guarantee narrated in the document.

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vii. As per the requirement of the applicant bank, defendants No. 1,3 & 4 executed the property Mortgage loan agreement on 31.08.2016.

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viii. As per the requirement of the applicant bank, Defendants No.3 & 5 namely, R. Govindan had executed the agreement of Guarantee on 31.08.2016.

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ix. As per the requirement of the applicant bank, Defendant No.4 has executed the declaration for signing in vernacular language.

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x. The applicant bank further submits that as per the terms of sanction, Defendant NO.4 and Defendant No.3 executed the mortgage in respect of their property at Plot No.56, Door No.115/67, 4^th Street, Desiya nagar, New Washermanpet, Chennai 600 081 and the property is more fully described in Schedule A of this O.A.

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The applicant further submits subsequently on 27.03.2018, the 2^nd Defendant in her capacity as the proprietor of the 1^st defendant requested for renewal of the loan.

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The applicant bank further submits that the defendants have signed the copy of the sanction letter no. CSRO/Rev/05/2017-18 dated 28.03.2018 for having accepted the terms of renewal.

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The applicant bank submits that the Defendant No.3 & 4 executed a letter dated 27.03.2018 confirming that they have no objection for extension of the security.

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The applicant bank further submits that the defendants on 27.03.2018 executed a Declaration cum Acknowledgment of Debt

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thereby acknowledging the liability and also about the renewal of the security documents. It is further submitted that the Defendants 3 & 5 also confirmed and acknowledged the liability and confirmed that the Letter of Guarantee dated 31.083.2016 executed buy them will be in force.

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The applicant bank submits that after the availment of the loan and even after the renewal of the loan as sought for by the defendants, the defendants failed to maintain financial discipline and thereby allowed the loan account to slip into Non Performing Asset (NPA) category. On 18.08.2018, the applicant bank issued the 1^st Overdue Intimation Letter with Ref:127/ to the borrower to regularize the overdue amount. The applicant bank further submits that as there was no response, they again issued a letter dated 03.09.2018 by way of Caution Notice with Ref.No:127/545 to all the defendants to regularize the loan account.

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It is submitted by the applicant bank that vide letter dated 29.09.2018, the 2^nd defendant, as Proprietrix of the 1^st defendant, confirmed that she was in the process of selling her property and she will pay the loan amount of Rs.25,00,000/- (Rupees Twenty Five Lakhs only) together with interest by 31.10.2018. However, as there was no response from the defendants, on 17.10.2018, the applicant bank issued the final notice with Ref.No:127/586 calling upon the defendants to repay a sum of Rs.26,10,842.12p, which was the outstanding loan amount as on 29.09.2018, together with further interest at 16% p.a.

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till realization of entire loan. Even for this notice there was no response.

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The applicant bank further submits that the applicant bank through its Authorised Officer issued Notice under Section 13(2) of the SARFAESI Act with Ref. no: SR/Rec/127/5/2018-19 issued on 21.12.2018 to all the defendants, whereby the defendants were informed that if the outstanding are not paid with applicable interest within 60 days from the date of notice, further action will be initiated. Despite notice as defendants did not come forward to repay the dues, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues.

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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, which was served in respect of D-1 to D-5. Defendants entered appearance and filed their written statement.

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Written statement filed by the defendants:

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It is submitted by the defendants that the above OA is not maintainable either in law or on facts. It is submitted by the applicant bank that the 2^nd defendant is the Proprietrix of the 1^st Defendant engaged in container career business and approached the applicant Cooperative Bank Limited for the financial assistance for Working Capital Loan for the development of their business.

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The defendants admit availing of Overdraft Facility for Working Capital for a sum of Rs.25 lakhs. It is the case of the defendants have

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invested several lakhs for the business and that the business of the defendants went on well, during which period the defendants have repaid the loan regularly which is evident from the statement of accounts. The loan is primarily secured by equitable mortgage of the immovable property belonging to 3^rd and 4^th defendant. Subsequently, the 4^th defendant passed away due to her old age. It is contended that the defendants were attempting sincere attempts to repay the loan inspite of all difficulties, however the applicant bank without considering the same had classified the loan account as NPA.

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During Covid Pandemic period, the business of the 1^st defendant was completely shut down and they were not in a position to repay the loan amount at that point of time. The applicant bank did not restructure the loan under Covid 19 Relief Scheme as per various guidelines issued by Reserve Bank of India.

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The defendants contend that the claim of the applicant bank is baseless as the defendant had paid the amount towards the loan amount even after the account was classified as NPA. The applicant bank had inflated the interest rate and debited various costs to the defendant’s account. As per RBI norms, once the loan account was rendered as NPA, no interest, more so any penal interest caused and other charges cannot be charged on the account. The applicant bank has capitalized the penal interest, which is against the guidelines of RBI.

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It is contended by the defendants that the applicant bank has not

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shown any evidence of registering the details of security interest with CERSAI as this has to be registered within thirty days from the date of such payment or satisfaction as per Section 25 of SARFAESI Act, 2002. In the absence of any such registration, the applicant bank shall not be entitled to exercise the rights of enforcement of securities.

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The defendants submitted that the issue of Demand Notice under Section 13(2) of the Act is against the provisions of law as the applicant bank is not entitled to initiate or to exercise the rights of enforcement of securities. It is further alleged that the rate of interest being floating has been followed only whenever the rate was increased and not when decreased. The defendants further submit that the details of the account statement is not produced.

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It is further contended that several requests made to the applicant bank to settle the loan account under OTS due to pathetic situation were not considered by the applicant positively. The defendants further submits that they are willing to settle the account under OTS, within a reasonable time frame and to show the willingness, the defendants had remitted a sum of Rs.1,50,000/- on 21.09.2021. Thus submitting, defendants prayed for dismissal of OA with costs.

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Heard the submissions of both sides and perused the

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record s.

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To prove the case of the Applicant Bank, Sh. K. Balaji Sah Manager

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of the Applicant Bank, has filed his Affidavit by way of evidence and same

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was considered as evidence of AW-1 and list of documents came to be marked as Ex A-1 to A-29 .

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Despite availing sufficient time, the defendants did not choose to file their Counter Proof Affidavit. Hence opportunity to file Counter Proof Affidavit by the defendants was closed on 20.12.2023.

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The defendants while admitting availing of loan, creation of mortgage by 3^rd and 4^th defendants, repayment of loan being reflected in the statement of account, contended that during Covid Pandemic period, the business of the 1^st defendant was completely shut down and they were not in a position to repay the loan amount at that point of time and that the applicant bank did not restructure the loan under Covid 19 Relief Scheme as per various guidelines issued by Reserve Bank of India. However, the defendants did not file any documentary evidence for their request for restructure or any document to prove that they were eligible for restructure under the said guidelines. If at the defendants were otherwise eligible, the applicant bank would have extended the same. In the absence of any documentary evidence, the above contention fails.

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The defendants further contend that the claim of applicant bank is baseless as the defendant had paid the amount towards the loan amount even after the account was classified as NPA and that the interest charged by applicant bank is inflated one and that the penal interest has been capitalized. In this regard, as per the agreed terms, bank is

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entitled to charge interest at 14% p.a. from the date of borrowing till the date of realization date together with penal interest @ 2%. As stated above, the loan agreement/ documents along with the terms and conditions have duly been agreed to between the parties including the component of interest rates and rests.

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The Defendants, agreed to the terms and conditions of loan and confirmed the balance outstanding in the loan accounts. Further, the Defendants have not produced any proof or evidence to show that the issue of rate of interest applicable to the loan facilities had been objected

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to or disputed by them. If at all, the Defendants were aggrieved by any of the terms & conditions of loan sanction, they could have refused to sign such loan documents and objected to it. Having availed the loan facilities, accepting the terms and conditions of the loan and acknowledging the balance outstanding dues in the loan accounts, including the interest calculated thereon from time to time, now the Defendants cannot go back and dispute the rate of interest charged by applicant bank. Therefore, the allegation is an after-thought and deserves rejection.

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As per the agreed terms, the applicant bank is entitled to charge penal interest on the overdue liability, however the records reveal that the applicant bank has not capitalised the penal interest and also have produced certificates to that effect.

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In this regard, this Tribunal places reliance on the decision reported in 2012(6) SCC 430 A. Vamsathu Madalaya Nandhavana

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Paripalanai Sangam , wherein it was held as under:

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“27. The pleadings must set-forth sufficient factual details to the extent that it reduces the ability to put forward a false or exaggerated claim or defence. The pleadings must inspire confidence and credibility. If false averments, evasive denials or false denials are introduced, then the Court must carefully look into it while deciding a case and insist that those who approach the Court must approach it with clean hands.”

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Thus, in the absence of any such proof or evidence to disprove the

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claim of applicant bank, the allegations made by the Defendants falls to the ground and deserve rejection.

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With regard to contention of the defendants that the applicant bank has not shown any evidence of registering the details of security interest with CERSAI as this has to be registered within thirty days from the date of such payment or satisfaction as per Section 25 of SARFAESI Act, 2002, mere non-registration of a charge with CERSAI does not automatically render the charge void, but it hinders the bank’s ability to initiate SARFAESI action. Hence in this pretext the defendants cannot dispute the claim of amount due to applicant bank.

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It is further submitted by the defendants that they were willing to settle the account under OTS, within a reasonable time frame and to show the willingness, they had remitted a sum of Rs.1,50,000/- on

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21.09.2021. The OTS is considered a private contract between the parties, and the DRT cannot dictate its terms or force a bank to accept an OTS proposal.

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During the course of arguments on 30.01.2026, the defendant’s counsel submitted that out of Rs.35 lakhs, he had already remitted a sum of Rs.11 lakhs and intends to settle the liability. The defendants were granted opportunity to approach the bank within a week’s time for any amicable settlement. However, till the date of passing orders, the parties did not report any settlement.

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A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-29 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 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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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 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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Considering the submissions of both sides and having 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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34. The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants 1 to 5 jointly and severally for recovery of a total sum of Rs.31,16,756.62p (Rupees Thirty One Lakhs Sixteen Thousand Seven Hundred and Fifty Six and Sixty Two Paise only) due in respect of Working Capital loan (A/c 1277511846) repayable together with further interest @ 14% p.a., with monthly rests from the date of Application till the date of realization in full along with for costs of this application.

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(b) In the event of failure of the Defendants to pay the aforesaid amount, the bank is at liberty to recover the amount by sale of the schedule A mentioned immovable properties morefully detailed in the OA schedule.

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(d) 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

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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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(e) The applicant bank shall file memo of costs within ten days from the date of receipt of this final order.

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

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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 PS, transcribed by her, corrected, signed and pronounced by me on this the 27^th day of March, 2026)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Mr.K. Balaji Sah, Chief Manager representing 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.		PAN ID of 2^nddefendant	A-1
2.	30.08.2016	Sanction Letter Ref.No.124/320/2016- 17 issued by the applicant bank to the defendant.	A-2
3.	30.08.2016	Promissory note for Rs.25,00,000/- executed by Defendant Nos 1 to 4	A-3

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4.	31.08.2016	Promissory note for Rs.25,00,000/- executed by Defendant Nos 1 to 5	A-4
5.	31.08.2016	Letter of continuing security from the defendant Nos.1 to 4	A-5
6.	31.08.2016	Letter of Lien and set off executed by the defendant No’s 1 to 4	A-6
7.	31.08.2016	Loan agreement executed by Defendant Nos 1 to 4	A-7
8.	31.08.2016	Agreement of Guarantee executed by defendant No’s 3 and 5	A-8
9	31.08.2016	Property mortgage loan agreement executed by defendant No 1 to 4	A-9
10	31.08.2016	Agreement of Guarantee executed by Defendant Nos. 3 and 5	A-10
11	31.08.2016	Memorandum of Deposit of Title deeds executed by defendant No’s 3 and 4	A-11
12	08.09.2016	Memorandum of deposit of title deeds executed by defendant No’s 3 and 4	A-12
13	21.09.1990	Settlement deed executed by Mr. G.R Jospeh (late) in favour of Mrs.G. J. Mary Santha (late) registered as document No.1512/1990 in SRO. Royapuram along with translated version in English.	A-13
14	04.12.1996	‘Gift settlement deed’ dated 04.12.1996 registered as Document No.2779/1996 in SRO: Royapuram, executed by Mr.G.R.Jospeh (late) in favour of Mrs. G.J. Mary Santha (Late) along with translated version in English.	A-14
15	26.10.2007	‘Deed of confirmation of sale’ was executed by Tamilnadu Slum Clearance Board rep. by its Assistant Secretary (plots) Chennai-600 005, in favour of Mrs.Mary santha (late) registered as Document No. 3531/2007 in SRO: Royapuram along with translated version in English.	A-15
16	16.08.2016	‘Valuation report prepared by ‘M. Sappany Pillai and associates’ of the property mortgaged by defendant no. 3 and defendant no.4	A-16
17 18	28.03.2018 27.03.2018	‘Sanction Letter No. CSRO/Rev/05/2017-18’ accepting the terms of renewal of the loan facilities. Letter from Defendant no.1 to 5 to the	A-17 A-18

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		applicant bank acknowledging their liabilities.
19	27.03.2018	Declaration/ confirmation and balance and acknowledgment of Debt’ executed by Defendant no.1 to 5	A-19
20	27.03.2018	Letter from Defendant no.3 and 4 to the applicant bank acknowledging their liabilities.	A-20
21	18.08.2018	Overdue intimation letter with Ref: 127/ to the borrower.	A-21
22	03.09.2018	Caution notice with Ref: 127/ 545 to all the defendants.	A-22
23	29.09.2018	2^nddefendant as proprietary of the 1^st defendant, acknowledged in writing her liability to the loan availed vide letter to the applicant bank.	A-23
24	17.10.2018	Final notice with Ref: 127/586 issued by the applicant bank to all the defendants.	A-24
25	21.12.2018	Notice under section 13(2) of the securitisation and reconstruction of financial assets and enforcement of security interest act, 2002 with ref No: SR/Rec/127/5/2018-19 issued to all the defendants.	A-25
26	06.08.2022	“Possession notice” under Section 13(2) of the securitisation and reconstruction of financial assets and enforcement of security interest act 2002	A-26
27	11.08.2022	Paper publication of “possession notice” was published in two local newspapers namely. “The New Indian express” in English and “Dinamani” in Tamil	A-27 & A-28
28	-	Statement of account along with Banker’s book Evidence act,1891	A-29

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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-A:

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All that house, ground and premises bearing Plot No.56, Door No. 115/67, 4^th street, Desiyanagar, New Washermanpet, Chennai - 600 081,

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comprised in R.S No. 4138 part, Block NO.79 of Tondiarpet village, FortTondiarpet Taulk, Chennai district, Measuring about 74 Sq.mtr of land with building thereon and

Bounded on the

North by: Plot No.55

South by: Plot No.57

East by: Plot no.85

West by: Street,

Admeasuring