Allowed

Canara Bank v. a Francis

DRT7 Jan 2026OA/325/2022

Case brief

AI extract

What is this about?

Debts Recovery Tribunal allowed an original application filed by Canara Bank against Mr. A. Francis for recovery of an outstanding open cash credit loan, recognizing the bank's documents as proved due to the defaulters ex-parte absence. The order directed repayment of the principal and adjusted interest with direction to sell pledged properties if unpaid.

What did the court decide?

Defendant directed to pay Rs.71,39,264.57 plus interest at 9.15% p.a.; liberty to sell mortgaged properties for realization.

Canara Bank versus a Francis — Contract and Commercial Disputes | DRT (2026)

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OA No. 325/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 07^TH DAY OF JANUARY, 2026 PRESENT: SEEMA SINHA,

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

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OA No.325/2022

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Between

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Canara Bank, Ramalinga Nagar Branch, No.1, Ramalinga Nagar South Extn, Vayalur Rd, Tennur, Tiruchirapalli – 620 017. Rep. By its Branch Manager. ---Applicant Bank

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And

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Mr. A. Francis, S/o Arputham, Prop. Jefraan Bricks, No.210/1, Chennai Bye Pass Rd, Southern Side, Irungalur, Manachanallur TK, Tiruchirapalli – 621 105. ---Defendant

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Counsel for the Applicant Bank : M/s C. Deepak, M. Vengatesh

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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

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OA No. 325/2022

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as The Recovery of Debts and Bankruptcy Act, 1993 by the Applicant Bank on 28.02.2022 to recover from the Defendant a sum of Rs.71,39,264.57p together with interest at the rate of 9.15% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Open cash Credit 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 approached the Applicant Bank to avail a Open Cash Credit loan and the applicant also sanctioned the said loan to the tune of Rs.70,00,000/- as an OCC on 23.3.2017 with the Rate of Interest fixed at 10.35% of tenability till 22.3.2018 of Sanction Reference No. M/S JEFRAAN BRICKS 2017. In consideration of loan facilities, the defendant had executed the Request for Overdraft Facilities, Cash Credit Agreement and the Letter of Proprietorship on 23.3.2017. The defendant also executed a Guarantee Covering Letter along with Guarantee Agreement on 23.3.2017 and Pro-Note on 23.3.2017 and the Acknowledgement of Debt and Security was executed by defendant on 8.8.2019.

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After receiving the loan amount, the Defendant was not regular in repaying the loan and consequently defaulted in repayment as promised to the Applicant. The Applicant was insisting for repayment of loan and Defendant giving one reason or other to evade from repaying and the loan had become NPA on 30.12.2021. The defendant did not adhere to the terms of repayment despite demands. In spite of several demands made by the Applicant, the defendant failed and neglected to settle the amount. The defendant visited the Branch and executed Acknowledgement of Debt and Security dated 8/8/2019 in favor of the Plaintiff and thereby acknowledged the liability due and payable to the Applicant.

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Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.71,39,264.57p together with interest at the rate of 9.15% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Open Cash Credit 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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OA No. 325/2022

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S. No.	Date	Description of document	Exhibits
1.	23.03.2017	Sanction	Ex.No.A-01
2.	23.03.2017	Request for Over draft Facilities	Ex.No.A-02
3.	23.03.2017	Cash Credit Agreement	Ex.No.A-03
4.	23.03.2017	Letter of Proprietorship	Ex.No.A-04
5.	23.03.2017	Guarantee Covering Letter along with GuaranteeAgreement of Francis	Ex.No.A-05
6.	23.03.2017	Pro-Note	Ex.No.A-06
7.	08.08.2019	Acknowledgment of Debt and Security	Ex.No.A-07
8.		Statement of Accounts Maintained by the applicant bank in regular course and conduct of business	Ex.No.A-08

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SCHEDULE OF PROPERTIES

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"A" SCHEDULE - HYPOTHECATION

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Hypothecation of Stocks, work in progress, finished goods and Receivables

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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 Ms. Devapriya, who is the Branch Manager of the Applicant Bank.

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She has stated in her affidavit that the defendant has availed Open Cash Credit from the Applicant Bank, but he failed to pay the outstanding loan amount, hence she has filed the case. The applicant bank has also filed the documents given by the defendant at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-08 in support of its claim in the OA.

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The Sanction has been marked as Ex.No.A-01, Request for Over draft Facilities has been marked as Ex.No.A-02, Cash Credit Agreement has been marked as Ex.No.A-03, Letter of Proprietorship has been marked as Ex.No.A-04, Guarantee Covering Letter along with Guarantee Agreement of

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Page 3 of 6

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OA No. 325/2022

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Francis has been marked as Ex.No.A-05, Pro-Note has been marked as Ex.No.A-06, Acknowledgment of Debt and Security has been marked as Ex.No.A-07, Statement of Accounts Maintained by the applicant bank in regular course and conduct of business has been marked as Ex.No.A-08. 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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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.71,39,264.57p together with interest at the rate of 9.15% p.a. with half yearly rests in respect of Open cash Credit from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

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OA No. 325/2022

ORDERED

(a) That the Defendant is directed to pay personally a sum of Rs.71,39,264.57p together with interest at the rate of 9.15% p.a. with half yearly rests in respect of Open cash Credit 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 Defendant, 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 defendant is personally 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 defendant.

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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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OA No. 325/2022

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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 Open Cash Credit 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 07^th January, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 13.01.26

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Canara Bank v. a Francis

Case brief

What is this about?

What did the court decide?

Canara Bank v. a Francis

Case brief

What is this about?

What did the court decide?

What the court decided

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