Allowed

Canara Bank v. M/s Mulchand Fasteners

DRT22 May 2026OA/382/2022

Case brief

AI extract

What is this about?

The DRT upheld the bank's claim for recovery of outstanding dues amounting to Rs. 38 lakhs from a corporate borrower and its proprietor. The Tribunal exercised discretion to award a uniform simple interest rate of 8% p.a. across all accounts and directed the issuance of a recovery certificate.

What did the court decide?

Recovery of Rs. 38,11,866.18 jointly and severally with costs and simple interest @8.00% p.a. from the date of filing of OA.

Canara Bank versus M/s Mulchand Fasteners — Banking and Recovery | DRT (2026)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.382/2022

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PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 06.12.2021

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DATE OF DECISION: 22.05.2026

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Canara Bank, a Body Corporate AND Nationalized Bank under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act of 1970 with its Head Office at J C Road, Bangalore, Karnataka and amongst other a Branch Office at Bharat Nagar Chowk, Ludhiana, Punjab through General Attorney Holder and Officer, Smt. Kunalika Gupta, W/o Sh. Sunil Kumar

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… …..Applicant

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Versus

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M/S Mulchand Fasteners, a sole Proprietorship concern situated at Plot no. 30-2185/A/151/30, Focal Point, Phase VII, Gobindgarh Road, Ludhiana, Punjab- 141010 through its sole Proprietor, Sh. Sanjay Rana

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Sh. Sanjay Rana, S/o Sh. Mulchand Rana, R/o House no. 478, Street no. 2, Ward no. 12, 33 Futta Road, Guru Nanak Nagar, Focal Point, Ludhiana, Punjab

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…Defendants

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Advocates:

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Argued by Sh. Sumit Batra, Advocate for applicant

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None for defendants (already ex-parte vide order dated 20.05.2026)

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FINAL ORDER

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Present Original Application was instituted by the applicant under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, against the defendants for recovery of Rs. 38,11,866.18 (Rupees Thirty Eight Lacs Eleven Thousand Eight Hundred Sixty Six and Paise Eighteen Only). The Original Application has been filed through Smt. Kunalika Gupta, General Attorney o f the applicant, who is competent

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2 OA/382/2022 CANARA BANK VS. M/S MULCHAND FASTENERS AND ANOTHER

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to institute the Original Application vide Power of Attorney dated 18.10.2016, which is Annexure A1 to this OA.

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The brief facts of the OA are that defendant no. 1 through its Proprietor defendant no. 2 approached the applicant for grant of OD Facilities of Rs. 10.00 Lacs and Term Loan- 1 of Rs. 15.00 Lacs vide Request for OD Facilities dated 10.03.2014, which is Annexure A5 to this OA. Thereafter, defendant no. 1 through its Proprietor defendant no. 2 approached the applicant for grant of Term Loan- 2 of Rs. 15.00 Lacs. Thereafter, defendant no. 1 through its Proprietor defendant no. 2 approached the applicant for renewal of OD Facilities of Rs. 10.00 Lacs vide Loan Application Form dated 07.08.2018, which is Annexure A17 to this OA. Thereafter, defendant no. 1 through its Proprietor defendant no. 2 approached the applicant for restructuring of Term Loan and grant of WCTL of Rs. 3.20 Lacs vide Application for restructuring dated 30.09.2019, which is Annexure A20 to this OA. Thereafter, defendant no. 1 through its Proprietor defendant no. 2 again approached the applicant for grant of FITL of Rs. 62,491.00.

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The applicant sanctioned OD Facilities of Rs. 10.00 Lacs and Term Loan- 1 of Rs. 15.00 Lacs vide Renewal Sanction Letter dated 06.06.2016, which is Annexure A13 to this OA and the terms and conditions were duly accepted by the defendants. Thereafter, the applicant sanctioned Term Loan- 2 of Rs. 15.00 Lacs vide Sanction Letter dated 24.07.2015, which is Annexure A9 to this OA. Thereafter, the applicant sanctioned renewal of OD Facilities of Rs. 10.00 Lacs vide Renewal Sanction Letter dated 07.08.2018, which is Annexure A18 to this OA. Thereafter, the applicant sanctioned restructuring of Term Loans and grant of WCTL of Rs. 3.20 Lacs. Thereafter, the applicant sanctioned grant of FITL of Rs. 62,491.00. 4. Defendant no. 1 through its Proprietor defendant no. 2 hypothecated their plant and machinery vide Deeds of Hypothecation dated 10.03.2014 and 24.07.2015, which are Annexure A7 and A12 to this OA.

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3 OA/382/2022 CANARA BANK VS. M/S MULCHAND FASTENERS AND ANOTHER

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Documents executed: DP Note, Agreement Re: Collateral Security, Cash Credit Agreement, Letter of Undertaking and Letter of Proprietorship, all dated 10.03.2014, which are Annexure A2 to A4, A6 and A8 to this OA; Letter of Proprietorship and Letter of Undertaking, both dated 24.07.2015, which are Annexure A10 and A11 to this OA; Letter of Renewal, Undertaking and Letter of Proprietorship, all dated 16.06.2016, which are Annexure A14 to A16 to this OA; Letter of Renewal dated 07.08.2018, which is Annexure A19 to this OA; Letter of Undertaking, Debtor Creditor Agreement and Debt Restructuring Agreement, all dated 30.09.2019, which are Annexure A21 to A23 to this OA; Notice dated 13.04.2020, which is Annexure A24 to this OA; Notice u/s 13 (2), SARFAESI Act, 2002 dated 29.10.2021, which is Annexure A25 to this OA and Statement of Accounts, which are Annexure A26 to A30 to this OA.

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The loan accounts became irregular and were classified as NPA and after adjusting debit and credit entries in loan accounts there was a debit of Rs. 38,11,866.18 which is recoverable and the defendants were served recall notice but they did not repay the outstanding amount, therefore, the applicant requested to accept the application and to issue Recovery Certificate accordingly. 6. The defendants were served summons to appear before this Tribunal but no one appeared on behalf of defendants and they were proceeded ex-parte on vide order dated 20.05.2026. 7. In support of the OA, affidavit of Smt. Kunalika Gupta, Officer, Canara Bank, h as been filed. 8. Heard ex-parte arguments and perused record. 9. It was argued by learned counsel that in view of the documentary evidence brought on record which had gone unrebutted, the applicant had proved its case.

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From the perusal of all the Annexures A1 to A30 to this OA, it is proved that the defendant no. 1 through it Proprietor defendant no.

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OA/382/2022 CANARA BANK VS. M/S MULCHAND FASTENERS AND ANOTHER

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2 approached applicant for availing of the loan facilities, which were granted to them and for that they had executed all the relevant documents in favour of the bank. The defendants failed to pay back the loans as per terms and conditions of the agreement between the parties. Subsequently, the loan accounts were classified as NPA. From the documentary evidence brought on record, it is proved that applicant is entitled to recover a sum of Rs. 38,11,866.18 (Rupees Thirty Eight Lacs Eleven Thousand Eight Hundred Sixty Six and Paise Eighteen Only) along with interest from the defendants, jointly and severally, from the date of filing of the present Original Application till realization of the amount.

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In so far as pendent elite and future rate of interest is concerned, the applicant in relief clause has claimed interest @12.25%p.a. in OD Limit Account, @11.90% p.a. in Term Loan- 1 Account, @12.40% p.a. in Term Loan- 2 Account, @11.30% p.a. in WCTL Account and @12.25% p.a. in FITL Account, all including penal interest of 2% with monthly rests from 16.10.2021 till the realization.

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The Tribunal is of the considered opinion that sometimes in appropriate cases the prerogative of mercy is the brightest jewel in the crown of the Judge. Keeping in view the facts and circumstances of the instant case including nature of the hypothecated assets, undertaking of the defendants, quantum of loans and prevalent market rates of interest which have gone drastically downhill in yester years, while exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant uniform simple interest @8.00% p.a. in all the loan accounts from the date of filing of the OA till realization of the amount ordered vide this final order. It is ordered accordingly.

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In the result, the application is allowed declaring that the defendants are liable to pay to the applicant a total sum of Rs.38,11,866.18 (Rupees Thirty Eight Lacs Eleven Thousand Eight Hundred Sixty Six and Paise Eighteen Only) jointly and severally, with costs, current and future simple interest @8.00% p.a. in all the loan accounts from the date of filing of OA till the date of realization of the amount. Accordingly, the applicant shall be entitled to recover

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OA/382/2022 CANARA BANK VS. M/S MULCHAND FASTENERS AND ANOTHER

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aforesaid amount from the sale of hypothecated assets of the defendants in execution proceedings if not sold earlier under the provisions of the SARFAESI Act, 2002. If the dues of the applicant still remain unsatisfied, it shall be entitled to recover the same by attachment and sale of personal assets of the defendants. The applicant is at liberty to enforce the claim through due process of law.

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12. Any other application pending stands disposed of. 13. Issue Recovery Certificate accordingly. 14. Parties to appear before Learned Recovery Officer of this Tribunal on 15.06.2026. 15. Copy of this order be given dasti to the applicant and be sent to defendants through registered/speed post and this order be also uploaded on the official website of this Tribunal and record be consigned. Pronounced by me in the open Tribunal . Dated: 22.05.2026

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(MRIDULESH KUMAR SINGH) Presiding Officer, DRT-III, Chandigarh

Canara Bank v. M/s Mulchand Fasteners

Case brief

What is this about?

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Canara Bank v. M/s Mulchand Fasteners

Case brief

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