Allowed

Punjab National Bank v. R Sumathy

DRT19 Feb 2026OA/388/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's application for recovery of Rs. 24,20,796 comprising principal dues and interest, denying capitalization of penal interest while granting 6% simple interest per annum on agricultural loans under the RDBI Act.

What did the court decide?

Defendants directed to pay Rs. 24,20,796 plus simple interest at 6% p.a. from filing date until realization; recovery via sale of mortgaged properties.

Punjab National Bank versus R Sumathy — Banking and Recovery | DRT (2026)

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OA No. 388/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 19^TH DAY OF FEBRUARY, 2026 PRESENT: SEEMA SINHA,

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[PR. DISTRICT & SESSIONS JUDGE – Retd]

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PRESIDING OFFICER

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OA No.388/2022

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Between

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Punjab National Bank, Circle SASTRA Trichy, Circle Office, Kailasapuram, Trichy – 620 014. Rep. By its Chief Manager. ---Applicant Bank

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And

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Mrs. R. Sumathy,

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W/o Rajendran,

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No.1/159 A, Gandhiji Nagar, Reddimangudi, Manachanallur Taluk, Trichy – 621 106.

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Mr. L. Maheswaran,

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No.1/159 A, Gandhiji Nagar, Reddimangudi, Manachanallur Taluk, Trichy – 621 106.

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Mr. K. Rajendran,

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No.7/A-1, North Agraharam, Kiliyanallur Po, Manachanallur Taluk,

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Trichy – 621 213. ---Defendants

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Counsel for the Applicant Bank : M/s S. Balasubramanian, T.M.Subramanian, M. Sundaraj

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Page 1 of 7

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OA No. 388/2022

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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:

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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 21.03.2022 to recover from the Defendants a total sum of Rs.24,20,796/i.e., (i) Rs.14,67,102/- together with interest at the rate of 8.85% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Agri Loan and (ii) Rs.9,53,694/- together with interest at the rate of 11.15% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash 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 defendants had availed Agri loan for a sum of Rs.8,62,500/- and Cash Credit Loan for a sum of Rs.4,87,500/- totaling Rs.13,50,000/executed necessary loaning documents in favour of the applicant. In addition to that the defendants had deposited the original title of their immovable property with the applicant bank as security for the due repayment of loan availed by them. Further, the 1^st defendant had executed memorandum of deposit of title deeds on 09.06.2016 in Document No.1986/2016, SRO, Manachanallur, Trichy. The following is the detail of housing loan availed by the defendants.

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Nature of loan	Loan amount	Rate of interest	Outstanding amount as on 31.01.2022
Agri Loan	Rs.8,62,500/-	8.85%p.a + 2%P.I	Rs.14,67,102/-
Cash Credit	Rs.4,87,500/-	11.15%p.a+2%P.I	Rs.9,53,694/-
	Total		Rs.24,20,796/-

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Page 2 of 7

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OA No. 388/2022

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The defendants had executed Balance of security confirmation letter on 04.06.2019 and on 09.09.2021 thereby acknowledged their duality.

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The defendants failed to pay the loan amount as agreed at the time availing the loan and their loan account has become non performing asset (NPA). Though they have availed the entire sanctioned loan and they have not chosen to repay the loan amounts, as agreed, despite the repeated demands and reminders by the Applicant Bank. The Applicant Bank already initiated SARFAESI proceedings against the defendants which is pending for its execution.

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In spite of repeated reminders, the defendant failed to repay the loan amount. Hence the applicant has issued demand notice dated on 04.06.2018 and possession notice dated 09.08.2018 to the defendants to call upon to pay the outstanding amount. The SARFAESI Notices were duly served to the defendants.

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Hence, the Applicant Bank has filed the OA for recovery of a total sum of Rs.24,20,796/- i.e., (i) Rs.14,67,102/- together with interest at the rate of 8.85% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Agri Loan and (ii) Rs.9,53,694/- together with interest at the rate of 11.15% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash 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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No.	Date	Description	Exhibit No.
1.	----	Loan Application	Ex.No.A-01
2.	----	Loan Sanction Letter	Ex.No.A-02
3.	18.05.2016	Hypothecation Agreement	Ex.No.A-03
4.	18.05.2016	Agreement of Guarantee	Ex.No.A-04
5.	18.05.2016	Agreement ofGuarantee	Ex.No.A-05
6.	09.06.2016	Modin DocNo.1986/2016	Ex.No.A-06
7.	04.06.2019	Balance and SecurityConfirmation Letter	Ex.No.A-07
8.	09.06.2019	Balance and SecurityConfirmation Letter	Ex.No.A-08
9.	----	Statement of account	Ex.No.A-09

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"SCHEDULE OF PROPERTY"

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Page 3 of 7

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OA No. 388/2022

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MORTGAGED PROPERTY

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Tiruchirapalli District, previously Lalgudi Taluk, Now Mannachanallur Taluk, KILIYANALLUR SOUTH Village, Ayan Nanja Re-S.F.No.102/15, of an extent of 39 cents presently S.F.No.90/15B of an extent of 0.07.9 Hec (19.5 cents) as per measurements on ground 789.85 Sq.mt. (8502 Sq.ft.) in this a terraced house bearing Door No.7A/1-N.A.

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Boundaries :-

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On the	North, East	: West pathway
On the	South	: Natarajan Nanja Land
On the	East	: Natarajan Thope
On the	West	: Kaleeswari Property

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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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He has stated in his affidavit that the defendants has availed Overdraft 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 given by the defendants at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-07 in support of its claim in the OA.

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The Loan Application has been marked as Ex.No.A-01, Loan Sanction Letter has been marked as Ex.No.A-02, Hypothecation Agreement has been marked as Ex.No.A-03, Agreement of Guarantee has been marked as Ex.No.A-04, Agreement of Guarantee has been marked as Ex.No.A-05, Mod in Doc No.1986/2016 has been marked as Ex.No.A-06, 1^st Balance and Security Confirmation Letter has been marked as Ex.No.A-07, 2^nd Balance and Security Confirmation Letter has been marked as Ex.No.A-08, Statement of account has been marked as Ex.No.A-09. So the averments of

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Page 4 of 7

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OA No. 388/2022

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the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

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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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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 . Since this is an Agricultural Loan 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 total sum of Rs.24,20,796/- i.e., (i) Rs.14,67,102/- together with simple interest at the rate of 6% p.a. in respect of Agri Loan and (ii) Rs.9,53,694/- together with simple interest at the rate of 6% p.a. in respect of Cash Credit Loan from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

Page 5 of 7

OA No. 388/2022

ORDERED

(a) That the Defendants are directed to pay jointly/severally a total sum of Rs.24,20,796/- i.e., (i) Rs.14,67,102/- together with simple interest at the rate of 6% p.a. in respect of Agri Loan and (ii) Rs.9,53,694/- together with simple interest at the rate of 6% p.a. in respect of Cash Credit 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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(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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Page 6 of 7

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OA No. 388/2022

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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 Agri loan and Cash Credit 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 19^th February, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 02.03.2026

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Page 7 of 7

Punjab National Bank v. R Sumathy

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. R Sumathy

Case brief

What is this about?

What did the court decide?

What the court decided

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