Allowed

Canara Bank v. M Sathya

DRT26 Mar 2026OA/360/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the Applicant Bank's Original Application filed under Section 19(1) of the Act to recover a principal sum of Rs. 26,26,222/- along with interest, relying on proven documentary evidence of the debt and default. The court directed recovery via sale of mortgaged properties if necessary.

What did the court decide?

Defendant to pay Rs. 26,26,222/- with 10.20% p.a. interest from filing date until realization, with liberty to sell mortgaged properties for deficiency recovery.

Canara Bank versus M Sathya — Banking and Recovery | DRT (2026)

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OA No. 360/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 26^TH DAY OF MARCH, 2026 PRESENT: SEEMA SINHA,

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

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OA No.360/2024

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Between

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Canara Bank, Asset Recovery Management Branch, Muthaiah Towers, I^st Floor, No.1, Royal Road, Cantonment, Trichy – 620 001. Rep. By its Chief Manager. ---Applicant Bank

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And

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Mrs. N. Sathya, W/o Maruthamutharasan, VN Nagar, No.1, Tollgate, Trichy – 621 216. ---Defendant

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Counsel for the Applicant Bank : M/s P. Pethu Rajesh

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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 as The Recovery of Debts and Bankruptcy Act, 1993 by the Applicant Bank on 08.07.2024 to recover from the Defendant a sum of Rs.26,26,222/-

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Page 1 of 7

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OA No. 360/2024

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together with interest at the rate of 10.20% p.a. plus penal interest at the rate of 2%p.a. in respect of Term Loan Credit facility 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 for the purpose of purchasing Kirloskar Silent Diesel Genset Generator and for the purchase of Electronic Weigh Bridge for her business purpose, approached the Canara Bank, Seva Sangam Branch, Trichy with an application for sanctioning a Term Loan to the tune of Rs.12,00,000-/-. The application submitted by the Defendant is accepted and a sum of Rs. 12,00,000/- was sanctioned by the Canara Bank, Seva Sangam Branch vide Sanction Letter dated 24.02.2014 Following are the Terms and Conditions for the repayment of the above said Credit Facility availed by the Defendant.

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Term Loan Facility (TL)

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Amount Sanctioned RS. 12,00,000-/-

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Rate of Interest-10.70% and the same will be fluctuating as per the prevailing 10.20% rate.

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Repayment Tenure - 60 months

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Amount towards the installment Rs.20,000-/-for 60 monthly installments. Interest to be collected as and when the same becomes due.

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Repayment will commence from March 2014 and ends at February 2019.

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Purpose of the loan is to purchase Kirloskar Silent Diesel Genset Generator and for the purchase of Electronic Weigh Bridge

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Primary Security Hypothecation of Plant and machinery proposed to be purchased out of bank finance.

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Collateral Security - Nil

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Personal Guarantee - Nil

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Page 2 of 7

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OA No. 360/2024

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To avail the above said Credit facility, the Defendant executed an Agreement Cum Deed of Hypothecation dated 25.02.2014 in favour of Canara Bank, Seva Sangam Branch, Trichy and thereby agreed for the Terms and Conditions stated in the same. The Defendant also executed a Deed of Hypothecation dated 25.02.2014 in favour of the said bank and thereby agreed for the Terms and Conditions stated in it and Hypothecated the Machineries purchased out of the credit facility sanctioned. Along with the said documents the Defendant executed a Letter of undertaking dated 25.02.2014 in favour of the said bank. The Loan Account for the said Term Loan Credit Facility is 2895768000020.

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The Defendant Acknowledged the Debt stands in her name as follow:

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SI.No	Date on which the Acknowledgment isgiven	Amount Acknowledged to pay
1	26.07.2016	Rs. 10,72,777.36-/- excluding interest from 25.06.2016
2	02.05.2019	Rs.14,78,203.36 excluding the interest from 21.04.2019
3	18.11.2021	Rs.19.23.257.98-/-excluding interest from 28.10.2021

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The Defendant remain chronic defaulter in repaying the facility availed with accrued interest from the Canara Bank, Seva Sangam Branch, Trichy, despite several reminders and hence, the accounts as specified above maintained by the Defendant becomes Non Performing Asset on 29-02-2020. As on 30.06.2024, the Defendant have to pay a sum of Rs. 26,26,222-/with future interest at the rate of 10.20% per annum along with Penal Interest of 2% per annum till the date of realization of the Loan amount. At present the Loan Account stands in the name of the Defendant migrated from Canara Bank, Seva Sangam Branch to the Applicant Bank for the purpose of Administration and Recovery and hence, the present Original Application is filed by the Applicant Bank.

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Despite repeated demands and reminders, made by the Applicant Bank, the Defendant have failed and neglected to repay and adjust her liability. Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.26,26,222/- together with interest at the rate of 10.20% p.a. plus penal interest at the rate of 2%p.a. in respect of Term Loan Credit facility 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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Page 3 of 7

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OA No. 360/2024

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S. No.	Date	Description of document	Exhibits
1	25.02.2014	Loan Application	Ex.No.A-01
2	25.02.2014	Agreement of Deed of Hypothecation	Ex.No.A-02
3	25.02.2014	Deed of Hypothecation	Ex.No.A-03
4	25.02.2014	Letter of Undertaking	Ex.No.A-04
5	26.07.2016	Acknowledgment of Debt and Security	Ex.No.A-05
6	02.05.2019	Acknowledgment of Debt and Security	Ex.No.A-06
7	18.11.2021	Acknowledgment of Debt and Security	Ex.No.A-07
8	30.06.2024	Statement of Account in Loan Account No.2895768000020	Ex.No.A-08

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SCHEDULE OF HYPOTHECATED MACHINERY

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S. No.	Name of the Machinery
1	Kirloskar Silent Diesel Genset Generator	Purchased out of the Credit Facility availed from the bank
2	and for the purchase of
	Electronic Weigh Bridge

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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 Mr. A. GeethaKrishna, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendant has availed Term Loan from the Applicant Bank, but she failed to pay the outstanding loan amount, hence he 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 Loan Application has been marked as Ex.No.A-01, Agreement of Deed of Hypothecation has been marked as Ex.No.A-02, Deed of

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OA No. 360/2024

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Hypothecation has been marked as Ex.No.A-03, Letter of Undertaking has been marked as Ex.No.A-04, Acknowledgment of Debt and Security has been marked as Ex.No.A-05, 2^nd Acknowledgment of Debt and Security has been marked as Ex.No.A-06, 3^rd Acknowledgment of Debt and Security has been marked as Ex.No.A-07, Statement of Account in Loan Account No.2895768000020 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.26,26,222/- together with interest at the rate of 10.20% p.a. in respect of Term Loan Credit facility from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

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OA No. 360/2024

ORDERED

(a) That the Defendant is directed to pay personally a sum of Rs.26,26,222/- together with interest at the rate of 10.20% p.a. in respect of Term Loan Credit facility 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. 360/2024

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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 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 T.P, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 26^th March, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 04.04.26

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Canara Bank v. M Sathya

Case brief

What is this about?

What did the court decide?

Canara Bank v. M Sathya

Case brief

What is this about?

What did the court decide?

What the court decided

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