Allowed

Karur Vysya Bank v. Gayathri

DRT27 May 2026OA/34/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the Applicant Bank's application for recovery of outstanding overdraft and term loan amounts along with interest from the borrowers who failed to repay despite defaults and death of a co-borrower, issuing a direction for sale of mortgaged properties if necessary.

What did the court decide?

Directing defendants to jointly and severally pay Rs. 1,10,32,055/- with interest and costs within one month, with liberty to sell mortgaged/hypothecated properties if payment is defaulted.

Karur Vysya Bank versus Gayathri — Contract and Commercial Disputes | DRT (2026)

¶1

OA No. 34/2024

¶2

Fair Order

¶3

IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 27^TH DAY OF MAY, 2026 PRESENT: SEEMA SINHA,

¶4

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

¶5

OA No.34/2024

¶6

Between

¶7

The Karur Vysya Bank Limited, Asset Recovery Branch, RS.No.170/9, Mattuthavani-Melur Road, Near Mattutavani Bus Stand, Madurai, Rep. by its Senior Manager.

¶8

---Applicant Bank

¶9

And

¶10

Mrs. L. Gayathri, Proprietrix of M/s. Gayathri Coco Products,

¶11

2-1752, Omsakthi Nagar, Tiruvadanai, Ramanathapuram District – 623 501.

¶12

Mr. G. Packiyaraj, S/o. Mr. Govindaraj, West Street, Perungulam, Ramanathapuram District – 623 536. ---Defendants

¶13

Counsel for the Applicant Bank : M/s. P. Madhan Alexandar, M.Priyadharshini, M. Madhumathi.

¶14

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 Defendants 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:

Page 1 of 11

OA No. 34/2024

JUDGEMENT

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 29.12.2023 to recover from the Defendants a total sum of Rs. 1,10,32,055/-, i.e., (i) Rs. 77,98,993/- together with interest at the rate of 17.35% p.a. plus 3% penal interest with monthly rest in respect of Overdraft facility and (ii) Rs. 32,33,062/-, together with interest at the rate of 11.90% p.a. plus 3% penal interest with monthly rests in respect of 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.

¶19

2 . The brief averments of the application filed by the Applicant Bank are as follows:-

¶20

The defendants approached the Applicant Bank for availing Overdraft facility & Term Loan for their business. The Applicant Bank has also sanctioned the said Overdraft Facility to the limit of Rs.15,00,000/- and Term loan for sum of Rs 11,00,0000/-.

¶21

OVERDRAFT FACILITY

¶22

In consideration of the said facility, the letter of sanction along with terms & conditions were communicated to the 1^st defendant by the applicant bank through its sanction letter dt.13.09.12 and the same was duly accepted by the defendants by counter signing the same on 13.09.12. She has executed a Demand Promissory Note on 13.09.12 for a sum of Rs.15,00,000/- (Vide Acc. No.1185 2800 0000 0542) in favour of the Applicant Bank by promising to repay the loan amount on demand with compound interest at the rate of 15% Per annum with monthly rest.

¶23

The 1^st defendant has executed Overdraft facility Agreement dated 13.09.12 for a sum of Rs.15,00,000/- in favour of the Applicant Bank by hypothecating stocks & goods as mentioned in the 'A' Schedule hereunder and by promising to repay the loan with compound interest at the rate of 15% per annum with monthly rests. The 2^nd defendant has agreed to stand as continuing guarantor for the repayment of the said loan with interest & costs thereon and executed an Agreement of guarantee dated. 13.09.12 in favour of the Applicant Bank.

¶24

Page 2 of 11

¶25

OA No. 34/2024

¶26

The 1^st defendant has executed Letter of Continuity dt.13.09.12 in favour of the Applicant Bank containing several undertakings & acceptance with regard to security of pro-note, operation of accounts, charging of interest, liabilities of the defendants etc., and tendering the said pro-note as continuing security for the said facility. Both the defendants by admitting & acknowledging their liabilities made payment on 24.09.14 & 05.07.17 in favour of the applicant bank.

¶27

TERM LOAN

¶28

In consideration of the said loan, the letter of sanction along with terms & conditions were communicated to the 2^nd defendant by the applicant bank through its sanction letter dt.11.01.13 and was duly accepted by the defendants by counter signing it on the same date. The 2^nd defendant has executed a Demand Promissory Note on 11.01.13 for a sum of Rs.11,00,000/- (vide Acc No.1185 7170 0001 2835) in favour of the Applicant Bank by promising to repay the loan amount on demand with interest at the rate of 11.50% Per annum with monthly rest.

¶29

The 2^nd defendant executed a Hypothecation of Motor Vehicle Agreement dt.11.01.13 for a sum of Rs.11,00,000/- in favour of the Applicant Bank containing various terms & conditions by hypothecating the vehicle which are fully described in the 'A' Schedule hereunder along with Certificate of Registration and by agreeing to repay the loan amount 60 monthly installments of Rs.24,192/- with interest & cost in favour of the applicant Bank. Further the 2^nd Defendant promised to repay the loan amount with compound interest at the rate of 11.50% per annum with monthly rest or at such other rates as may be revised by the applicant bank from time to time with penal interest at the rate of 3% per annum in case of default.

¶30

The 1^st defendant has agreed to stand as continuing guarantor for the repayment of the said loan with interest & costs thereon and executed an Agreement of guarantee dt.11.01.13 in favour of the Applicant Bank. Both the defendants by admitting & acknowledging their liabilities made payment on 24.09.14 and executed revival letter dt.27.06.17 in favour of the applicant bank.

¶31

COMMON TO BOTH LOAN & FACILITY

¶32

Both the defendants by admitting & acknowledging their liabilities the 2^nd defendant executed letters to acknowledge the debt dt.26.11.18, 24.12.20 & 08.12.23 in favour of the applicant bank. In consideration of the above said loan & facility, the 2^nd defendant has offered his property which

¶33

Page 3 of 11

¶34

OA No. 34/2024

¶35

is fully mentioned in the "B" Schedule hereunder as Security and thereby 2nd defendant has deposited his Title Deeds on 13.09.12 with the Applicant Bank pertaining to his property, with an intention to create an Equitable Mortgage over the said property. The 2^nd defendant has executed a confirmation of deposit of title deeds dt. 13.09.12 pertaining to the said property in favour of the Applicant Bank. Thus the applicant bank is a mortgagee entitled to proceed against the mortgaged property for recovery of loan.

¶36

After availing the loan, defendants were not regular in the matter of repayment. The defendants made several promises, but they failed to keep up their promises. As per the books of account maintained by the Applicant Bank, the defendants have to pay a sum of Rs.77,98,993/- as on 27.12.23 with subsequent interest at the rate of 17.35% p.a with monthly rests plus 3% penal interest from 28.12.23 till the date of realization and costs thereon towards Overdraft Facility. Further the defendants have to pay a sum of Rs.32,33,062/- as on 27.12.23 with subsequent interest at the rate of 11.90% p.a with monthly rests plus 3% penal interest from 28.12.23 till the date of realization and costs thereon towards Term Loan.

¶37

Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their liability. Hence, the Applicant Bank has filed the OA for recovery of a total sum of Rs. 1,10,32,055/-, i.e., (i) Rs. 77,98,993/- together with interest at the rate of 17.35% p.a. plus 3% penal interest with monthly rest in respect of Overdraft facility and (ii) Rs. 32,33,062/-, together with interest at the rate of 11.90% p.a. plus 3% penal interest with monthly rests in respect of Term Loan from the date of filing of Application till the date of realization with cost.

¶38

The Applicant Bank has submitted the following documents in support its claim in the OA, which are as follows:

¶39

LIST OF DOCUMENTS LOAN DOCUMENTS – ANNEXURE – I

¶40

Overdraft Facility

¶41

S. No.	Date	Description of document	Exhibits
1.	13.09.12	Sanction letter along with terms & conditions countersigned by defendants in favour of Applicant bank	Ex.No.A-01
2.	13.09.12	Demand Promissory Note executed by 1^st defendantin favourof Applicant bank	Ex.No.A-02
3.	13.09.12	Agreement for Secured Overdraft executed by 1^st defendantin favourof Applicant bank	Ex.No.A-03

¶42

Page 4 of 11

¶43

OA No. 34/2024

¶44

4.	13.09.12	Agreement of Guarantee executed Defendantin favourof ApplicantBan	by k	2^nd	Ex.No.A-04
5.	13.09.12	Letter of Continuity executed defendantin favourof Applicant bank	by	1^st	Ex.No.A-05
6.		Statement of Accounts maintained Applicant Bank in regular cour conduct of the business.	by se	the and	Ex.No.A-06

¶45

Term Loan

¶46

S. No.	Date	Description of document	Exhibits
7.	11.01.13	Sanction letter along with terms & conditions countersigned by defendants in favour of the applicant bank	Ex.No.A-07
8.	11.01.13	Demand Promissory Note executed by 2^nd defendant in favour of applicant bank	Ex.No.A-08
9.	11.01.13	Hypothecation of Motor Vehicle Agreement executed by 2^nddefendant in favour of ApplicantBank	Ex.No.A-09
10.	-	Vehicle Registration Certificate downloaded fromGovernmentWebsite	Ex.No.A-10
11.	11.01.13	Agreement of Guarantee executed by 2^nd Defendant in favour of Applicant Bank	Ex.No.A-11
12.	27.06.17	Revival Letter executed by 2^nddefendant in favour of Applicant bank	Ex.No.A-12
13.	-	Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business.	Ex.No.A-13

¶47

Common to both loan & facility

¶48

S. No.	Date	Descrip	tion of document		Exhibits
14.	26.11.18	Acknowledgment defendantin favou	Letter executed by rof Applicant bank	2^nd	Ex.No.A-14
15.	24.12.20	Acknowledgment defendantin favou	Letter executed by rof Applicant bank	2^nd	Ex.No.A-15
16.	08.12.23	Acknowledgment defendantin favou	Letter executed by rof Applicant bank	2^nd	Ex.No.A-16
17.	13.09.12	Letter of Confirma executed by 2^nd Applicant Bank	tion of deposit of title de defendant in favour	eds of	Ex.No.A-17

¶49

Page 5 of 11

¶50

OA No. 34/2024

¶51

LIST OF DOCUMENTS – ANNEXURE – II

¶52

Title Deeds Deposited by the 2^nd Defendant with regard to ‘B’ Schedule Mortgage Property

¶53

S. No.	Date	Description of document	Exhibits
1.	22.06.06	Registered sale deed executed by Muniyandi & others in favour of Dhinakaravelan & another(Doc.No.2507/06)	Ex.No.A-18
2.	01.06.09	Registered sale deed executed by Dhinakaravelan & another in favour of Aul Rowther & others.(Doc.No.3013/09)	Ex.No.A-19
3.	01.10.09	Registered sale deed executed by Aul Rowther & others in favour of Ganesapandian(Doc.No.5535/09)	Ex.No.A-20
4.	17.11.11	Registered sale deed executed by Ganesa Pandian in favour of Rajendran (Doc. No.7862/11)	Ex.No.A-21
5.	24.11.11	Registered sale deed executed by Rajendran in favourof Bagyaraj (Doc.No.8124/11)	Ex.No.A-22
6.	26.12.11	Patta transfer order issued by Tahsildar, Ramanathapuram standing in the name of Packyaraj	Ex.No.A-23
7.	27.12.11	Computerized Patta issued by Zonal Deputy Tahsildar, Ramanathapuram Taluk standing in the name of Bagyaraj	Ex.No.A-24
8.	04.09.09	FMB Sketch issued byVAO,Nagatchi Village	Ex.No.A-25
9.	-	Property Tax Receipt for the years 2011-12standingin the name of Packyaraj	Ex.No.A-26

¶54

SCHEDULE OF PROPERTY

¶55

'A' SCHEDULE - HYPOTHECATED GOODS

¶56

Item No.1

¶57

All stocks of raw materials, goods-in-process, such as coconut oriented & machineries other items all finished & manufactured goods, all stored & kept at 2-1752, Omsakthi Nagar, Thiruvadanai, Ramanathapuram No.3/136, West Street, Perungulam, Ramanathapuram District-623 534 623501 and also at NO.3/136, West Street, Perungulam, Ramanathapuram District – 623 534.

Page 6 of 11

OA No. 34/2024

Item No.2

All the Hypothecated Book Debts, Outstandings, Money Receivables, Claims and Bills due owing to the 1^st defendant.

¶62

Item No.3

¶63

Brand New Renault Duster bearing registration number TN-65-R0093 parked at 2-1752, Omsakthi Nagar, Thiruvadanai, Ramanathapuram 623501 and also at No.3/136, West Street, Perungulam, Ramanathapuram District - 623 534

¶64

'B' SCHEDULE - MORTGAGED PROPERTY

¶65

(Property belonging to 2nd Defendant Vide Annexure-II for the title deeds)

¶66

Ramanathapuram District, Ramanathapuram Registration District, Velipattinam Sub-Registry, Ramanathapuram Taluk, Nagatchi Group, Kellanagachi Village, a land measuring 60 Cents comprised in RS.No.46/3A1 within the following boundaries

¶67

On the North	: Property belonging to Seetha Lakshmi
On the East	: North South Cart Path
On the South	: Property belonging to Selva Kumar & another
On the West	: North - South Path to Nagatchiamman Temple

¶68

3 . On the other hand, Notices were issued to Defendants and since from the beginning of the case, there was no representation on behalf of the Defendants. Hence, Defendants are set ex-parte.

¶69

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?

¶70

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. S. Dhandapani, who is the Chief Manager of the Applicant Bank.

¶71

He has stated in his affidavit that the defendants have availed Overdraft facility & 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-26 in support of its claim in the OA.

¶72

Page 7 of 11

¶73

OA No. 34/2024

¶74

The Sanction letter along with terms & conditions countersigned by defendants in favour of Applicant bank has been marked as Ex.No.A-01, Demand Promissory Note executed by 1^st defendant in favour of Applicant bank has been marked as Ex.No.A-02, Agreement for Secured Overdraft executed by 1^st defendant in favour of Applicant bank has been marked as Ex.No.A-03, Agreement of Guarantee executed by 2^nd Defendant in favour of Applicant Bank has been marked as Ex.No.A-04, Letter of Continuity executed by 1^st defendant in favour of Applicant bank has been marked as Ex.No.A-05, Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business has been marked as Ex.No.A-06, Sanction letter along with terms & conditions countersigned by defendants in favour of the applicant bank has been marked as Ex.No.A-07, Demand Promissory Note executed by 2^nd defendant in favour of applicant bank has been marked as Ex.No.A-08, Hypothecation of Motor Vehicle Agreement executed by 2nd defendant in favour of Applicant Bank has been marked as Ex.No.A-09.

¶75

The Vehicle Registration Certificate downloaded from Government Website has been marked as Ex.No.A-10, Agreement of Guarantee executed by 2nd Defendant in favour of Applicant Bank has been marked as Ex.No.A-11, Revival Letter executed by 2nd defendant in favour of Applicant bank has been marked as Ex.No.A-12, Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business has been marked as Ex.No.A-13, Acknowledgment Letter executed by 2^nd defendant in favour of Applicant bank has been marked as Ex.No.A-14, Acknowledgment Letter executed by 2^nd defendant in favour of Applicant bank has been marked as Ex.No.A-15, Acknowledgment Letter executed by 2^nd defendant in favour of Applicant bank has been marked as Ex.No.A-16.

¶76

The Letter of Confirmation of deposit of title deeds executed by 2nd defendant in favour of Applicant Bank Ex.No.A-17, Registered sale deed executed by Muniyandi & others in favour of Dhinakaravelan & another (Doc.No.2507/06) has been marked as Ex.No.A-18, Registered sale deed executed by Dhinakaravelan & another in favour of Aul Rowther & others. (Doc.No.3013/09) has been marked as Ex.No.A-19, Registered sale deed executed by Aul Rowther & others in favour of Ganesapandian (Doc.No.5535/09) has been marked as Ex.No.A-20, Registered sale deed executed by Ganesa Pandian in favour of Rajendran (Doc. No.7862/11) has been marked as Ex.No.A-21, Registered sale deed executed by Rajendran in favour of Bagyaraj (Doc.No.8124/11) has been marked as Ex.No.A-22, Patta transfer order issued by Tahsildar, Ramanathapuram standing in the name of Packyaraj has been marked as Ex.No.A-23, Computerized Patta issued by Zonal Deputy Tahsildar, Ramanathapuram Taluk standing in the name of

¶77

Page 8 of 11

¶78

OA No. 34/2024

¶79

Bagyaraj has been marked as Ex.No.A-24, FMB Sketch issued by VAO, Nagatchi Village has been marked as Ex.No.A-25, Property Tax Receipt for the years 2011-12 standing in the name of Packyaraj has been marked as Ex.No.A-26. So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

¶80

As the Defendants 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.

¶81

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).

¶82

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 ".

¶83

Therefore, this Original Application is allowed . The Applicant

¶84

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

¶85

The Applicant Bank is entitled to recover from the Defendants, a total sum of Rs. 1,10,32,055/-, i.e., (i) Rs. 77,98,993/- together with interest at the rate of 17.35% p.a. with half yearly rest in respect of Overdraft facility and (ii) Rs. 32,33,062/-, together with interest at the rate of 11.90% p.a. with half yearly rests in respect of Term Loan from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

Page 9 of 11

OA No. 34/2024

ORDERED

(a) That the Defendants are directed to pay jointly/severally a total sum of Rs. 1,10,32,055/-, i.e., (i) Rs. 77,98,993/- together with interest at the rate of 17.35% p.a. with half yearly rest in respect of Overdraft facility and (ii) Rs. 32,33,062/-, together with interest at the rate of 11.90% p.a. with half yearly rests in respect of 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.

¶90

(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.

¶91

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

¶92

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

¶93

Page 10 of 11

¶94

OA No. 34/2024

¶95

(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.

¶96

(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 Overdraft facility & 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.

¶97

Dictated to P. Sharmila, LDC taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 27 May 2026.

¶98

Sd/- (SEEMA SINHA) PRESIDING OFFICER

¶99

Uploaded on 11.06.2026

¶100

Page 11 of 11

Karur Vysya Bank v. Gayathri

Case brief

What is this about?

What did the court decide?

Karur Vysya Bank v. Gayathri

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Bank of Baroda versus Kalang Logistics

State Bank of India versus Appar Ceramics

A S Guru Ambath versus State Bank of India

Punjab National Bank versus M.Manoj Kumar

Punjab National Bank versus Sri Ganapathy Silks

State Bank of India versus M s Sri Sai Traders