Allowed

Punjab National Bank v. R Senthil Kumar

DRT11 Aug 2026OA/384/2024

Case brief

AI extract

What is this about?

The Tribunal allowed the Original Application for recovery of a term loan. It directed repayment of the principal amount after deducting capitalized penal interest, along with interest at 10.85% p.a. pending from the filing date, utilizing the mortgaged property if necessary.

What did the court decide?

Recovery of Rs. 23,86,684.79 ps (after deducting capitalized penal interest) with interest at 10.85% p.a. with half-yearly rests from filing date. Sale of mortgaged properties permissible for deficien

Punjab National Bank versus R Senthil Kumar — Execution and Attachment | DRT (2026)

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OA No. 384/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 11^th DAY OF AUGUST, 2026 PRESENT: SEEMA SINHA,

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

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OA No.384/2024

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Between

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Punjab National Bank Circle SASTRA Trichy, Circle Office, Kailasapuram, Trichy 620 014, Represented by its Chief Manager.

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---Applicant Bank

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And

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R.Senthil Kumar S/o.Rajakumaran

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No.92, Mariamman Koil Street, Peryathukurichi Andimadam, Ariyalur - 608 901.

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B. Ranjani W/o. Balamurugan No.2/127, West Street, Olaiyur, Ariyalur. ---Defendants

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Counsel for the Applicant Bank : M/s K. Ramesh, M. Sundaraj.

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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 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 6

OA No. 384/2024

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 02.08.2024 to recover from the Defendants a sum of 23,86,684.79ps together with interest at the rate of 10.85% p.a. plus 2% P.I 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.

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

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The Applicant Bank submits that the defendants has availed Term Loan for a sum of Rs. 15,00,000/- The defendant executed necessary loaning documents in favour of the Applicant. In addition to that, the defendants has also deposited the original title deeds of immovable property with the applicant bank as security for the due repayment of loan availed by him. Further, the defendant has executed memorandum of deposit of title deeds on 10.10.2017 in Document No. 2383/2017, SRO Andimadam, Ariyalur District. The following is the detail of loan availed by the defendants.

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Sl.	Nature of Loan &	Loan Amount	Rate of	Outstanding
No	Account Number		interest	amount as on 20.06.2024
1.	Term Loan	Rs. 15,00,000/-	10.85%p.a	Rs. 23,86,684.79ps
	170200AP00004410		+2%P.I

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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. The borrower's loan account turned in to NPA on 03.10.2023. As per the accounts of the applicant maintained in the name of the defendants kept in regular course of business and as certified under the Bankers Book of Evidence Act as on 20.06.2024 for a sum of Rs.23,86,684.79/-has became due and they are liable to pay the said amounts with further interest till repayment.

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The defendants had availed the entire sanctioned limits under the said facilities and have failed to repay the loan as per the sanction ticket, as agreed. 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 sum of Rs. 23,86,684.79ps together with interest at the rate of 10.85% p.a. plus 2% P.I with monthly rests in respect of Term Loan from the date of filing of Application till the date of realization with cost.

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Page 2 of 6

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OA No. 384/2024

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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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S. No.	Date	Description of document	Exhibits
1.	27.09.2017	Loan Application	Ex. No. A-01
2.	27.09.2017	Hypothecation Agreement	Ex. No. A-02
3.	27.09.2017	Deed of Guarantee	Ex. No. A-03
4.	10.10.2017	MOD. in Doc. No.2383/2017	Ex. No. A-04
5.	-	Statement of accounts	Ex. No. A-05

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SCHEDULE

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Mortgaged Property

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In Ariyalur Registration District, Andimadam Sub Registration District, In Ariyalur Revenue District, in Andimadam Taluk, in Olaiyur Village, In R.S.No.323/1E Middle Portion of 1 Acre 50 Cent out of 5 acre 16 Cents.

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Boundaries:

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East and West of property belongs to Balamurukan in R.S.No.323/1E

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North of property belongs to Vetrivel

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South of property belongs to Govindasamy

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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 were 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. Manjunath Venkatagiri, who is the Chief Manager of the Applicant Bank.

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Page 3 of 6

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OA No. 384/2024

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He has stated in his affidavit that the defendants has availed 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-05 in support of its claim in the OA.

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I perused the documents filed by the Applicant Bank and I find that the Loan Application has been marked as Ex. No. A-01, the Hypothecation Agreement has been marked as Ex. No. A-02, the Deed of Guarantee has been marked as Ex. No. A-03, the MOD in Doc. No. 2383/2017 has been marked as Ex. No. A-04, and the Statement of Accounts has been marked as Ex. No. A-05. 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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On the other hand 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.

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In this OA, from Perusal of Statement of Accounts (Ex. No. A-05), I find that the Applicant Bank has capitalized the penal interest only in the Term Loan account of the defendant, which is against the policy of RBI guidelines.

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“ The Reserve Bank of India strictly prohibits the capitalization of Penal charges. Under current RBI regulations, any penalty for non-compliance with loan terms must be treated as a distinct “Penal Charge” rather than added to the Principal outstanding amount. This ensures that banks and NBFCs cannot compute further interest on the penalty amount themselves.”

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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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Page 4 of 6

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OA No. 384/2024

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Therefore, this Original Application is allowed . The Applicant Bank is entitled for a final order on the following lines:-

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The Applicant Bank is entitled to recover from the Defendants, a sum of Rs. 23,86,684.79ps ( after deduction of the capitalized penal interest from the outstanding amount of Rs. 23,86,684.79ps till before the filing of the Original Application ) together with interest at the rate of 10.85% 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

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ORDERED

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(a) That the Defendants are directed to pay jointly/severally for a sum of Rs. 23,86,684.79ps ( after deduction of the capitalized penal interest from the outstanding amount of Rs. 23,86,684.79ps till before the filing of the Original Application ) together with interest at the rate of 10.85% 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.

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(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.

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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 defendants are jointly/severally 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 defendants.

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Page 5 of 6

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OA No. 384/2024

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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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(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 P.S, LDC taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 11^th August, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 19.08.2026

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Punjab National Bank v. R Senthil Kumar

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. R Senthil Kumar

Case brief

What is this about?

What did the court decide?

What the court decided

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