Allowed

State Bank of India v. Sivanarayanan

DRT24 Jun 2026OA/319/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the Bank's application for recovery of Rs.53.11 lakh plus interest. The Tribunal found the evidence of loan sanctions and defaults proved ex-parte and held the Defendant liable for personal payment and potential sale of mortgaged properties.

What did the court decide?

Direction to Defendant to personally pay Rs.53,11,524 plus interest, cost, and authorization to sell mortgaged properties to satisfy the debt if personal payment defaults.

State Bank of India versus Sivanarayanan — Contract and Commercial Disputes | DRT (2026)

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OA No. 319/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 24^th DAY OF JUNE, 2026 PRESENT: SEEMA SINHA,

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

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OA No.319/2023

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Between

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State Bank of India, Stressed Assets Recovery Branch, 1^st Floor, No.8 , Dr Ambedkar Road, Madurai- 625 020 Rep. by its Chief Manager.

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---Applicant Bank

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And

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Mr. R Sivanarayanan,

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S/o. Rajendran, 198/2, Near Palam Palli, Bye Pass Road, Unjampatty, Theni – 625 531

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Also at

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Door No. 338/1A, Pandi Kovil Street, Valli Nagar, Theni- 625 531 ---- Defendant

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Counsel for the Applicant Bank :M/s P Pethu Rajesh Counsel for the Defendant : Set Ex parte

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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

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OA No. 319/2023

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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 on 04.05.2023 to recover from the Defendant a sum of Rs.53,11,524 i.e., i) Rs.8,38,350/- together with interest at the rate of 10.9% p.a. plus penal interest at the rate of 5.25% p.a. in respect of Cash Credit loan, ii) Rs.32,60,602 together with interest at the rate of 12.40% p.a. plus penal interest at the rate of 5% p.a. in respect of Term Loan, iii) Rs.8,96,612/together with interest at the rate of 9.5 % p.a. plus penal interest at the rate of 0% p.a. in respect of GECL(Guaranteed Emergency Credit Line Facility), iv) Rs.2,08,505/- together with interest at the rate of 12.40 % p.a. plus penal interest at the rate of 5 % p.a. in respect of Working capital Term Loan and v) Rs.1,07,455/- together with interest at the rate of 12.40 % p.a. plus penal interest at the rate of 5 % p.a. in respect of Fund Interested Term Loan from the date of filing of Application till the date of realization with cost and by sale of mortgaged/hypothecated properties, more fully described in Schedules 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 engaged in manufacturing of PET Bottles. For the purchase of the Pet Blowing Machine Automatic the Defendant approached the Applicant Bank with an application dated 03.08.2019 for the accord sanction of Cash Credit Facility and Term Loan under under Credit Guranteed Scheme for Micro and Smal Enterprises (CGTMSE) Cover. The application submitted by the Defendant was accepted and the following Credit Facility was sanctioned to 24.09.2019 by the Applicant Bank to the Defendant on execution of the Letter of Arrangement dated 24.09.2019 by the Defendant in favour of the Applicant Bank and the details of the tenure and the rate of interest also mentioned below:

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OA No. 319/2023

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Sl. No.	Credit Facility Availed	Limit	Rate of Interest & Tenure of Repayment
1	Cash Credit under CGTMSE Cover	Rs.8,00,000/-	Reviewed every 12 months. It may be cancelled/reduced depending upon the conduct and utilization of the advance as per scheme. Rate of interest at the time of availment: 11.15% p.a.
2	Term Loan under CGTMSE Cover	Rs.38,19,000/-	To be repaid in 64 equated monthly installments of Rs. 59,672/-, commencing from 02.02.2020. First installment: Rs. 59,664/-, last installment due on 02.10.2027. Rate of interest at the time of availment: 11.15% p.a.
Tot	al	Rs.46,19,000/-

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The defendant along with the letter of arrangement dated 24.09.2019, the defendant also executed the agreement cum hypothecation of stocks on 24.09.2019. And also executed end use certificate on 24.09.2019.

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On 29.05.2020 the defendant approached the applicant abnk with an application to accord sanction of guaranteed emergency credit line(GECL) under credit Guaranteed scheme for Micro and small Enterprises (CGTMSE) cover. The application was accepted the defendant was sanctioned with a limit of Rs.9,05,600/- on 31.05.2020. The defendant executed agreement of loancum- Hypothecation and guarantee agreement.

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The Defendant approached the Applicant Bank on 30.07.2021 with an application to accord Restructuring of existing Credit Facilities of Cash Credit Facility, Term Loan and Guaranteed Emergency Credit Line (GECL) under COVID Resolution framework to tide over the deficiencies covered under Credit Guaranteed Scheme for Micro and Small Enterprises (CGTMSE) Cover. The application submitted by the Defendant was accepted and the following Credit Facility was sanctioned to the Defendant on 30.07.2021 by executing Arrangement dated 30.07.2021 by the Defendant in favor of the Applicant Bank and the details of the tenure and the rate of interest also mentioned below .

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Sl. No.	Credit Facility Availed	Limit	Rate of Interest & Tenure of Repayment
1			To be reviewed every 12
	Cash Credit under CGTMSE Cover	Rs.8,00,000/-	months. It may be cancelled/reduced depending upon conduct and utilization

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OA No. 319/2023

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			of the advance as per scheme. Rate of interest at the time of availment: EBLR 6.65% + 2.00% = 8.65%p.a.
2	Term Loan under CGTMSE Cover	Rs.29,21,000/-	To be repaid in 52 equated monthly installments (excluding 24 months moratorium) of Rs. 63,424/- plus interest as and when applied. First installment commences on 01.07.2023 and last installment falls on 02.10.2027. Rate of interest at the time of availment: EBLR 6.65% + 3.50% = 10.15%p.a.
3	Guaranteed Emergency Credit Line (GECL) under CGTMSE cover	Rs.8,88,501/-	Repayable over 60 months (including 24 months (12 months original terms 12 after restructuring) moratorium) Interest to be paid during moratorium. repayable in 35 monthly installments for Rs.25,386-/-plus interest as and when applied starting from 01.07.2022. The rate of interest at the time of availemtn is (EBLR 6.65% plus 0.75%) i.e 7.40%p.a.
			Repayable in 72 month including 12 months
4	Working Capital Term Loan – (WCTL) under CGTMSE Cover	Rs.1,80,000/-	moratorium. Monthly installments of Rs.3,000 plus interest as and when applied starting from 01.08.2022. The rate of interest at the time of availemtn is (EBLR 6.65% plus 3.50%)i.e 10.15%p.a.
	Fund Interested Term		Repayable in 48 months (including 24 months moratorium). Monthly
5	Loan (FITL) under CGTMSE Cover	Rs.1,70,400/-	installment of Rs.7,100 plus interest as and when applied starting from 01.07.2023. The rate of interest at the time of availemtn is (EBLR 6.65% plus 2.00%)i.e 8.65%p.a.

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The defendant has committed default in repaying the loan amount with interest & costs. Despite repeated demands made by the Applicant Bank the defendants did not take any sincere steps to discharge the loan. Since the defendant defaulted in repayments, the accounts have been declared as Non performing Asset by the applicant on 24.11.2022. With no other option applicant bank initiated SARFAESI action on 29.11.2022.

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OA No. 319/2023

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Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.53,11,524 i.e., i) Rs.8,38,350/- together with interest at the rate of 10.9% p.a. plus penal interest at the rate of 5.25% p.a. in respect of Cash Credit loan, ii) Rs.32,60,602 together with interest at the rate of 12.40% p.a. plus penal interest at the rate of 5% p.a. in respect of Term Loan, iii) Rs.8,96,612/together with interest at the rate of 9.5 % p.a. plus penal interest at the rate of 0% p.a. in respect of GECL(Guaranteed Emergency Credit Line Facility), iv) Rs.2,08,505/- together with interest at the rate of 12.40 % p.a. plus penal interest at the rate of 5 % p.a. in respect of Working capital Term Loan and v) Rs.1,07,455/- together with interest at the rate of 12.40 % p.a. plus penal interest at the rate of 5 % p.a. in respect of Fund Interested Term Loan 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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List of Documents Filed

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Sl. No.	Date	Particulars	Exhibit No.
1	24.09.2019	Letter of Arrangement executed by the Defendant in favour of the Applicant for availing the Cash Credit Facilityand Term Loan.	Ex. No. A-01
2	24.09.2019	Agreement of Loan-cum-Hypothecation executed bythe Defendant in favour of the Applicant Bank.	Ex. No. A-02
3	24.09.2019	End Use Certificate signed by the Borrower.	Ex. No. A-03
4	31.05.2020	Letter of Arrangement executed by the Defendant in favour of the Applicant Bank for availing the Cash Credit Facility, Term Loan and Working Capital Term Loan(GECL).	Ex. No. A-04
5	31.05.2020	Supplemental Agreement of Loan-cum- Hypothecation executed by the Defendant in favour of the Applicant Bank.	Ex. No. A-05
6	31.05.2020	Guarantee Agreement.	Ex. No. A-06
7	30.07.2021	Arrangement Letter.	Ex. No. A-07
8	30.07.2021	Modification to the Arrangement Letter executed by the Defendant in favour of the Applicant Bank.	Ex. No. A-08
9	30.07.2021	Supplemental Agreement of Loan-cum- Hypothecation executed by the Defendant in favour of the Applicant Bank.	Ex. No. A-09
10	—	Invoice for the purchase of the schedule mentioned properties.	Ex. No. A-10
11	30.11.2022	Demand Notice issued under Section 13(2) of the SARFAESI Act.	Ex. No. A-11

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OA No. 319/2023

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12	02.12.2022	Acknowledgment Card signed by the Defendant.	Ex. No. A-12
13	30.11.2022	Statement of Account in Account No. 38883956220.	Ex. No. A-13
14	30.11.2022	Statement of Account in Account No. 38884035311.	Ex. No. A-14
15	30.11.2022	Statement of Account in Account No. 40325469986.	Ex. No. A-15
16	30.11.2022	Statement of Account in Account No. 40325466577.	Ex. No. A-16
17	29.11.2022	Statement of Account in Account No. 39363415017.	Ex. No. A-17

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DESCRIPTION OF PROPERTIES (Movable properties) SCHEDULE

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Sl. No.	Particulars	Quantity
1	Auto Drop Semi Automatice-PET Strech Blow 1 Moulding Machine with PET Conveying & Pre-Heating System., pneumatic line make: Blowchenn Machines, Model: BCM-AD-SA, No. of Cavities: 2 Nos, Cap: 800 - 1200 Bottle/hr, Max. Container Volume: 2000 ml, Max Neck Dia:19-30mm, Max Container Dia: 130mm, Max Container Ht:350mm, No. of Lamps: 6 Nos, Power: 12 KW, Air operating Pr: 8Kg/Cm2, Air Volume: 18-22 CFM, Along with Air Cooled water Chiller Unit,Cap:5.OTR, Qty: 1 No.	1
2	PET Strech Blow Moulding Machine with Pet Conveying & Heating System, Pheumatic lines, Make: Blowchenn Machines, Model: BCM 2C-1L, S.No.219-19, No of Cavities: 2 Nos, Capacity:30mm - 1000ml, max Dia: 80mm, Min Dia 46mm, Neck Dia: 18-30mm, Capacity: 500ml bottles 2500 Nos- 3000 Nos/hour, power 16 KW, Alongwith Air Dyer(cap: 100CFM)-2Nos	1
3	Reciprocating type air compressor with drive motor and air receiver, make J.S. Air Compressor, Model JSHD, Year 2019, air receiver capacity 500 litres, Qty 2 Nos. (1 No of Compressor found without motor).	1
4	Auto Drop Semi-Automatic PET Stretch Blow Moulding Machine with PET Conveying and Pre-Heating System, pneumatic line make: Blowchenn Machines, Model: BCM-AD-SA, No. of Cavities: 2 Nos, Cap : 800 - 1200 Bottle/hr, Max. Container Volume: 2000 ml, Max Neck Dia:19-30mm, Max Container Dia : 130mm, Max Container Ht:350mm, No. of Lamps: 6 Nos, Power: 12 KW, Air operatingPr: 8Kg/Cm2,Air Volume: 18-22 CFM	1
5	(i) Pet Bottle Moulds (Dies) including 100 ml 1 No, 300 ml - 1No, 500 ml - 1 No., 200 ml 1 No, 2000 ml - 1 No. (ii) Soda Bottle Die – 200 ml - 1 No, 300ml -1 No., 300 ml - 1 No, 500 ml-1 No.	1 Lot

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OA No. 319/2023

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Sl. No.	Particulars	Quantity
	(iii) Maza Bottle Die - 200ml - 1 No, 500 ml-1 No, 600 ml - 1 No, 1000ml – 1No (iv)Loose/Spare dies: 2000ml – 1 No,1000 ml 1 No.
6	Current assets, stocks, hypothecated goods, book debts, outstanding, money receivables, claims and bills due and owing to the defendants in the name of the defendants.	Available

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The above assets located at 198/2, Near Palam Palli, Bye Pass Road, Unjampatty, Theni.

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3 . On the other hand, Notices were issued to Defendants and since from the beginning of the case, the Defendant have been absent and advocate representing defendant did not filed vakalath since 10.04.2024 in spite of sufficient time given. Hence, Defendants were 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. A Vijayakumar, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Cash Credit loan , Term Loan , GECL, Working capital Term Loan and Fund Interested Term Loan from the Applicant Bank, but they failed to pay the outstanding loan amount, hence he has filed the case. The applicant bank has also filed the documents signed by the defendants at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-17 in support of its claim in the OA.

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I scrutinized the document filed by the applicant bank and I find that Letter of Arrangement dated 24.09.2019 executed by the Defendant in favour of the Applicant for availing the Cash Credit Facility and Term Loan, marked as Ex. No. A-01; Agreement of Loan-cum-Hypothecation dated 24.09.2019 executed by the Defendant in favour of the Applicant Bank, marked as Ex. No. A-02; End Use Certificate dated 24.09.2019 signed by the Borrower, marked as Ex. No. A-03; Letter of Arrangement dated 31.05.2020 executed by the Defendant in favour of the Applicant Bank for availing the Cash Credit Facility, Term Loan and Working Capital Term Loan (GECL), marked as Ex. No. A-04; Supplemental Agreement of Loan-cum-Hypothecation dated

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OA No. 319/2023

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31.05.2020 executed by the Defendant in favour of the Applicant Bank, marked as Ex. No. A-05; Guarantee Agreement dated 31.05.2020, marked as Ex. No. A-06; Arrangement Letter dated 30.07.2021, marked as Ex. No. A-07; Modification to the Arrangement Letter dated 30.07.2021 executed by the Defendant in favour of the Applicant Bank, marked as Ex. No. A-08; Supplemental Agreement of Loan-cum-Hypothecation dated 30.07.2021 executed by the Defendant in favour of the Applicant Bank, marked as Ex. No. A-09; Invoice for the purchase of the schedule mentioned properties, marked as Ex. No. A-10; Demand Notice dated 30.11.2022 issued under Section 13(2) of the SARFAESI Act, marked as Ex. No. A-11; Acknowledgment Card dated 02.12.2022 signed by the Defendant, marked as Ex. No. A-12; Statement of Account in Account No. 38883956220 dated 30.11.2022, marked as Ex. No. A-13; Statement of Account in Account No. 38884035311 dated 30.11.2022, marked as Ex. No. A-14; Statement of Account in Account No. 40325469986 dated 30.11.2022, marked as Ex. No. A-15; Statement of Account in Account No. 40325466577 dated 30.11.2022, marked as Ex. No. A-16; and Statement of Account in Account No. 39363415017 dated 29.11.2022, marked as Ex. No. A-17 . 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 Defendants remained absent and also not filed written statement, 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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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 Bank

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is entitled for a final order on the following lines:-

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OA No. 319/2023

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The Applicant Bank is entitled to recover from the Defendant, a sum of Rs.53,11,524 i.e., i) Rs.8,38,350/- together with interest at the rate of 10.9% p.a. in respect of Cash Credit loan, ii) Rs.32,60,602 together with interest at the rate of 12.40% p.a. in respect of Term Loan, iii) Rs.8,96,612/- together with interest at the rate of 9.5 % p.a. in respect of GECL(Guaranteed Emergency Credit Line Facility), iv) Rs.2,08,505/- together with interest at the rate of 12.40 % p.a. in respect of Working capital Term Loan and v) Rs.1,07,455/- together with interest at the rate of 12.40 % p.a. in respect of Fund Interested Term Loan 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 Defendants are directed to pay personally a sum of Rs.53,11,524 i.e., i) Rs.8,38,350/- together with interest at the rate of 10.9% p.a. in respect of Cash Credit loan, ii) Rs.32,60,602 together with interest at the rate of 12.40% p.a. in respect of Term Loan, iii) Rs.8,96,612/- together with interest at the rate of 9.5 % p.a. in respect of GECL(Guaranteed Emergency Credit Line Facility), iv) Rs.2,08,505/- together with interest at the rate of 12.40 % p.a. in respect of Working capital Term Loan and v) Rs.1,07,455/- together with interest at the rate of 12.40 % p.a. in respect of Fund Interested Term Loan 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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(b) In case of default of payment by the above mentioned Defendants, the Applicant Bank is at liberty to sell the movable / immovable properties more fully described in Schedule of the original application for appropriation of sale proceeds towards the satisfaction of amount due to the Applicant Bank.

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(c) If the sale proceeds are not sufficient, after defraying the expenses of such sale, for the payment of all such amounts, the defendants are

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OA No. 319/2023

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jointly/severally liable to pay the amount of such deficiency with interest mentioned above until realization.

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(d) Any amount remitted during the course of this proceedings shall be given due credit, to the loan account of the defendants.

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(e) 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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(f) 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 Cash Credit loan, Term Loan , GECL , Working capital Term Loan and Fund Interested Term Loan 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 P N, taken down, transcribed, typed by him, corrected and pronounced by me in the Open Court in this the 24^th June, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 04.07.26

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State Bank of India v. Sivanarayanan

Case brief

What is this about?

What did the court decide?

State Bank of India v. Sivanarayanan

Case brief

What is this about?

What did the court decide?

What the court decided

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