Allowed

Karnataka Bank Limited v. Kalagouda Kadagouda Patil

DRT24 Jun 2026OA/346/2024

Case brief

AI extract

What is this about?

The Tribunal allowed the applicant bank's recovery application filed under Section 19 of RDB Act. Rejecting unsupported allegations of fraud by respondents, the court directed issuance of a Recovery Certificate for outstanding dues with interest at 8% p.a.

What did the court decide?

Issuance of Recovery Certificate for Rs. 65,63,004.84 with future interest at 8% simple per annum, recoverable from joint and several liability of respondents holding secure assets.

Karnataka Bank Limited versus Kalagouda Kadagouda… — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II, BENGALURU

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Dated this 24^th Day of June, 2026

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Present: Sri. T. RAJESH Presiding Officer

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OA.No.346/2024

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BETWEEN:

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The Karnataka Bank Ltd., Athani CTS No. 2382 & 2383, Deshpande Complex, Opposite Govt Hospital, Main Road, Athani -591304, Belagavi Dist., Karnataka, Rep. by its Branch Manager,

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…APPLICANT

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AND:

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Kalagounda Kadagouda Patil, S/o. Kadagouda Patil,

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Gundewadi Post, Athani Taluk

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Belgaum District -591304.

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Sri. Dundappa Kadagouda Patil, S/o. Kadagouda Patil, Gundewadi Post, Athani Taluk, Belgaum District -591304.

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Shivananda B Golabhavi,

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S/o. Basappa Golbhavi, Gundewadi Post, Athani Taluk,

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Belgaum District -591304.

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Abasaheb Balasaheb Chavan, S/o. Balesh Chavan, Gundewadi Post, Athani Taluk, Belgaum District -591304.

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M/s. Athani Sugars Limited,

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OA 346/2024

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Office address at; Vishnuanna Nagar, Post Navalihal, Taluka Athani, Dist. Belgaum, Karnataka -591234, Rep. by its Chairman and Managing Director, Shrimant Patil Srinivas.

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...DEFENDANTS

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Counsel on record/appeared for:

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Applicant : Divya Purandar Defendant Nos. 1 and 2 : Mahaling B Kiwad Defendant Nos. 3 to 5 : Ex parte

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FINAL ORDER

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The present Original Application in short “OA” has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 seeking issuance of Recovery Certificate for Rs. 65,63,004.84 (Rupees sixty-five lakh sixtythree thousand four and paisa eighty-four only) with further interest thereon and cost from the Defendants.

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It is the case of the Applicant that Defendant No. 5, being a sugar factory, requested the installation of a Drip and Lift Irrigation System for the benefit of farmers under the irrigation schemes of Shri Shrimat Patil Yata Neeravari Sangh, Gundewadi (A) and Gundewadi (B). Defendant No. 5 also resolved to provide a corporate guarantee in respect of the credit facilities extended to the concerned farmers. Accordingly, Defendant No. 5 availed credit facilities from the Applicant Bank, namely: (i) financing for Lift Irrigation and Crop Loans, and (ii) financing for Crop Loans secured by mortgage, for sugarcane farmers for Lift Irrigation System (LIS), Crop Loans and Drip Irrigation Loans, including those availed by Defendant Nos.

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OA 346/2024

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1 and 2. In this regard, Defendant No. 5 executed a Corporate Guarantee Deed for a sum of Rs. 5,34,60,000/- (Rupees Five Crore Thirty-Four Lakh Sixty Thousand Only) in favour of the Applicant Bank. Defendant Nos. 1 and 2, being the principal borrowers, and Defendant No. 5, being the corporate guarantor, availed a term loan under the Krishik Sinchana Yojana to the tune of Rs. 38,78,000/- (Rupees Thirty-Eight Lakh SeventyEight Thousand Only). Defendant Nos. 1 and 2 also availed another credit facility by way of a Crop Loan under the Kisan Credit Card (KCC) Scheme to the tune of Rs. 10,00,000/- (Rupees Ten Lakh Only). For the said Crop Loan facility, Defendant Nos. 3 and 4 executed deeds of guarantee in favour of the Applicant.

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It is also the case of the Applicant that, in consideration of the aforesaid loan facilities, the Defendants executed the necessary loan documents in respect of the Term Loan, and created Mortgage and hypothecation over the schedule properties in favour of the Applicant Bank as security for due repayment of the said loan facilities.

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It is the case of the Applicant that the Defendants, despite having availed the credit facility and agreed to the terms and conditions thereof, failed to comply with the same, resulting in defaults and the loan account being classified as a Non-Performing Asset (NPA).

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In the above circumstances, the Applicant approached this Tribunal by filing this OA seeking issuance of Recovery Certificate for the amount

OA 346/2024

due in the account.

Summons were duly issued to all the Defendants. Defendant Nos. 1 and 2 entered appearance through their counsel and filed their Written Statement. They also filed their Proof Affidavit by way of evidence. However, Defendant Nos. 3 to 5 failed to appear before this Hon'ble Tribunal despite service of summons. Accordingly, Defendant Nos. 3 to 5 were placed ex parte on 05.03.2026.

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In the Written Statement and the Proof Affidavit, Defendant Nos. 1 and 2 have reiterated substantially the same contentions. Defendant No. 1 contends that he was informed that the loan was repayable in yearly instalments carrying interest at the rate of 10.50% per annum and that, subsequently, the Applicant, in collusion with the Chairman and Secretary of Shri Shrimant Patil Yata Neeravari Sangh Scheme-B, fraudulently enhanced the loan amount from Rs. 2,14,000/- to Rs. 2,44,000/- and fixed the repayment period at five years with five annual instalments carrying interest at the rate of 10.50% per annum. It is further alleged that the Applicant and the office-bearers of the said Scheme acted with a mala fide intention to derive personal gain, thereby causing loss and hardship to the members of the Scheme. Defendant No. 1 further contends that the loan amount sanctioned for the Minor Lift Irrigation Project was disbursed directly to Defendant No. 5 and that the said project has not been completed till date, resulting in substantial losses to the farmers. However, except for the aforesaid allegations, Defendant Nos. 1 and 2 have not

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OA 346/2024

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raised any substantial or specific dispute regarding the sanction and availment of the loan facilities, execution of the loan and security documents, receipt of the loan amount, or their liability to repay the outstanding dues under the said credit facilities.

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The Applicant adduced evidence through AW-1, who filed a Proof Affidavit reiterating the averments made in the Original Application and produced documents marked as Exhibits A-1 to A-37 in support of its claim. On the other hand, the Defendants adduced evidence through DW-1 by filing a Proof Affidavit; however, no documentary evidence was produced in support of the contentions raised in the Written Statement and the Proof Affidavit.

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Heard both sides, and considered the contentions raised in the OA in the light of the documentary evidence and proof affidavits.

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The following issues arise for consideration in this matter:

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i) Whether the Applicant succeeded in proving the OA claim as against the Defendants?

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ii) If so, to what extent?

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Both these issues are gone into and decided together.

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The contentions raised by Defendant Nos. 1 and 2 remain mere assertions in their Written Statement and Proof Affidavit and are not

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supported by any independent documentary evidence. Apart from alleging

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OA 346/2024

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collusion, fraud and mala fide conduct on the part of the Applicant and the office-bearers of the irrigation scheme, the Defendants have failed to place any material on record to substantiate such allegations. It is well settled that allegations of fraud and mala fides require strict proof, which is absent in the present case. Further, if Defendant Nos. 1 and 2 are aggrieved by any alleged mala fide acts or misconduct on the part of the Applicant or the office-bearers of the irrigation scheme, it is open to them to seek appropriate relief before the competent forum in accordance with law. However, such allegations do not absolve them of their liability to repay the loan amount admittedly availed by them. The Defendants have not specifically disputed the execution of the loan and security documents or the disbursement of the loan facilities. Therefore, in the absence of any

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credible evidence rebutting the Applicant's claim, the defence raised by Defendant Nos. 1 and 2 is liable to be rejected.

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The evidence tendered by the Applicant remains uncontroverted and undisputed. The evidence put forth by the Applicant is found admissible and sufficient to prove the averments made in the OA, and the default committed by the Defendants in repaying the loan amount due. The liability of the Defendants and the loan amount due are also proved by the above documents.

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OA 346/2024

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Hence in view of the above findings this Tribunal comes to the conclusion that the OA is liable to be allowed.

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Taking into consideration of the fact that the loans availed are term loan and KCC for business purposes and also the fact that OA claim is arrived at by calculating interest at the agreed rate, pendente lite and future interest is awarded at 8.00% (simple). The prayer for interest with compounded monthly rests and for penal interest for the future period is hereby declined.

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In the result, OA.No. 346/2024, is allowed,

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i) The Applicant is allowed to recover an aggregate sum of Rs. 65,63,004.84 (Rupees sixty-five lakh sixty-three thousand four and paisa eighty-four only) consisting of:

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a) Defendant Nos. 1, 2 and 5 jointly, severally and personally liable for a sum of Rs. 48,83,921.84 (Rupees forty-eight lakh eightythree thousand nine hundred twenty-one and paisa eighty-four only) with pendente lite and future interest of 8.00% p.a. (simple) and,

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b) Defendant Nos. 1 to 4 jointly, severally and personally liable for

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a sum of Rs. 16,79,083/- (Rupees sixteen lakh seventy-nine thousand

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OA 346/2024

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and eighty-three only) with pendente lite and future interest of 8.00%

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p.a. (simple)

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from the date of filing of the OA till the realization from the respective Defendants after giving credit to all the amounts recovered and received during the pendency of the OA if any, and allowed the same to be recovered by proceeding against the schedule properties. The schedule of properties to the OA shall form part of the Recovery Certificate.

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ii) If the sale proceeds of the secured assets are found insufficient to satisfy the decretal amount, the Applicant Bank shall be at liberty to proceed against the other assets of Defendant Nos. 1, 2 and 5, who are jointly and severally liable in respect of the first credit facility (Term Loan), and against the other assets of Defendant Nos. 1 to 4, who are jointly and severally liable in respect of the second credit facility (Crop Loan/KCC Loan), for recovery of the balance amount remaining due and payable.

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iii) The applicant bank is allowed cost of the proceedings for which Applicant to file cost memo within seven days from the date of receipt of the order.

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iv) The Recovery Certificate to be drawn in terms of this order and transferred to Recovery for execution.

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v) Interim application pending, if any, stands disposed of in terms

OA 346/2024

of this final order.

16. Communicate a copy of the order to the parties concerned in terms

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of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure)

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Rules, 1993.

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(Dictated to PY directly on the Computer, after its transcription, corrected and pronounced by me in the open Court on this the 24^th day of June, 2026).

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Sd/-

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(T. RAJESH)

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PRESIDING OFFICER ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Manohara, Branch head, of Applicant Bank.

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Exhibits on the part of the Applicant:

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Exhibit Nos.	Date	Particulars of Documents
A1	30.06.2014	Resolutionpassed on behalf of D5
A2	22.07.2023	Guarantee Deed
A3	30.07.2015	Loan application
A4	14.09.2015	Sanction communication
A5	23.09.2015	Term loan agreement
A6	23.09.2015	Declaration letter
A7	23.09.2015	Consent letter
A8 & A9	23.09.2015	Undertaking letter to Hypothecation and Hypothecation agreement
A10	16.09.2015	Mortgage deed
A11	23.05.2017	Acknowledgement debt
A12	03.01.2020	Acknowledgement debt
A13	30.11.2022	Acknowledgement debt
A14	23.05.2017	Acknowledgement debt
A15	23.05.2018	Acknowledgement debt
A16	01.11.2019	Acknowledgement debt

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OA 346/2024

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A17	25.10.2015	Loan application
A18	06.11.2015	Sanction communication
A19	06.11.2015	Composite agreement
A20 & A21	06.11.2025	Letter of authority and declaration
A22	06.11.2015	Consent letter
A23	06.11.2015	Consent letter
A24 & A25	06.11.2015	Letter of undertaking with respect fixing same limit for crop loan	to
A26 to A30	28.10.2016, 25.10.2017, 03.07.2020, 30.11.2022, 17.01.2019	Acknowledgement debts
A31	17.06.2021	Legal notices
A32 & A33 (a to d)	--	Postal receipts and proof acknowledgement	of
A34 to A35 (a)	10.06.2022	Legal notice
A36 & A37	--	Certified account statements

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Witness Examined for the Defendants:

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DW-1, Defendant No.1

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List of Documents Exhibited for the Defendants: -Nil-

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Sd/-
(T. RAJESH)
PRESIDING OFFICER

Karnataka Bank Limited v. Kalagouda Kadagouda Patil

Case brief

What is this about?

What did the court decide?

Karnataka Bank Limited v. Kalagouda Kadagouda Patil

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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