Allowed

State Bank of India v. Muhammed Sameer

DRT28 Aug 2026OA/390/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an original application filed by State Bank of India to recover outstanding dues from three defendants across multiple loan accounts. The tribunal directed repayment of principal and future interest, disallowed interest on penal interest per Supreme Court precedent, and authorized the sale of mortgaged properties to satisfy the debt.

What the court decided

AI extract

State Bank of India versus Muhammed Sameer — Specific Performance | DRT (2026)

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Fair order

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IN THE DEBTS RECOVERY TRIBUNAL-1 AT ERNAKULAM

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DATED THIS 28^th DAY OF AUGUST, 2026

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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OA No.390/2022

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Between

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State Bank of India, Asset Recovery Management Branch, 1^st Floor, R. S. Building, M.G. Road, Ernakulam, Cochin – 682 011 Rep. by its Chief Manager

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---Applicant Bank

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And

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Muhammed Sameer M, S/o Athan, Sole Proprietor, M/s. MA Traders, Residing at Jamaliya Manzil, Jayanthi Road, Nallalam P.O, Kozhikode – 673 027.

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Athan M, S/o Kunjimoideen Kutty, Mundoli, Jamaliya Manzil, Jayanthi Road, Nallalam P.O, Kozhikode – 673 027.

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OA 390/2022

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Shareeque, Sole proprietor, M/s. M.A Store Olavanna, No.8/357F1, Vandana Stop, Olavana P.O, Kozhikode – 673 019.

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---Defendants

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This Original application coming on 06.07.2026 for final hearing before me in the presence of Ms. Bini Das, Advocate representing Mr. Tom K. Thomas, Counsel for the Applicant Bank and the defendants having been set exparte and upon hearing the argument of representing counsel for the applicant bank and upon perusing the materials on record and having stood over for consideration till this day, this Tribunal delivered the following:

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O R D E R

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This original application was filed on 13.05.2022 by the applicant bank under Section 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 to pass orders that an amount of Rs.46,93,872/- is due from the 1^st defendant in the Cash Credit account No.67342618090 with future interest @11.05% per annum with monthly rests on Rs.46,94,162/- from 29.04.2022 till date of payment; that an amount of Rs.16,04,608/- is due from the defendants 1 & 2 in the Housing Loan account No.67348315894 with future interest @8.40% per annum with monthly rests from 29.04.2022 till date of payment; that an amount of Rs.29,507/- is due from the defendants 1 & 2 in the Suraksha Loan account No.67348315930 with future interest @8.40% per annum with monthly rests from 29.04.2022 till date of payment; that an amount of Rs.19,73,491/- is due from the 3^rd defendant in the Cash Credit account No.37239631737 with future interest @12.25% per annum with monthly rests on Rs.19,73,831/- from 29.04.2022 till date of payment; and that an amount of Rs.2,21,492/- is due from the 1^st defendant in the Term Loan (Covid-19 accrued interest) account No.39608354941 with future interest @12.45% per annum with monthly rests from 29.04.2022 till date of payment and by sale of OA schedule hypothecated and mortgaged properties and with costs.

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The rights of the original applicant bank namely State Bank of Travancore were vested with the State Bank of India w.e.f. 01.04.2017 as per the notification of Government of India dated 22.02.2017.

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

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Page 2 of 9

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OA 390/2022

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The 1^st defendant is the sole proprietor of M/s. M. A. Traders and the 1^st defendant approached the erstwhile State Bank of Travancore (hereinafter referred to as former bank) for financial assistance and accordingly the former bank sanctioned a Cash Credit facility of Rs.30,00,000/- on 07.11.2015 upon execution of necessary security documents. As primary security, the 1^st defendant hypothecated the book debts and securities, fixed assets, goods and assets and all movable properties more specifically described in schedule ‘A’ to the OA. As collateral security, the 1^st defendant created equitable mortgage over his property more specifically described in schedule ‘B’ to the OA and executed memorandum of deposit of title deed dated 08.11.2015.

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The defendants 1 & 2 approached the former bank for housing loan and the former bank sanctioned a housing loan of Rs.13,00,000/- and a funding for home loan insurance cover of Rs.43,000/- on 02.01.2016 upon execution of necessary security documents. As per the agreement, the defendants 1 & 2 agreed to repay the loan in equated monthly installments of Rs.12,951/-. The equitable mortgage already created by the 1^st defendant was extended to cover the housing loan and suraksha loan availed by defendants 1 & 2 and the 1^st defendant executed a memorandum of extension of equitable mortgage dated 03.01.2016.

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The former bank upon request of the 3^rd defendant, sanctioned a Cash Credit facility of Rs.15,00,000/- on 12.10.2017 upon execution of necessary security documents. The 3^rd defendant hypothecated stock of grocery items and receivables as primary security more specifically described in schedule ‘C’ to the OA. The 1^st defendant stood as guarantor and executed guarantee agreement dated 12.10.2017. The 1^st defendant also extended the equitable mortgage already created in respect of the schedule property to cover the credit facility availed by the 3^rd defendant and executed letter of confirmation for extension of mortgage by deposit of title deed dated 13.10.2017.

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Further in view of the Covid-19 pandemic the interest accrued in the account of the 3^rd defendant was treated as a separate Fixed Interest Term Loan account as per the guidelines of the RBI and as requested by the 3^rd defendant.

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The defendants availed the credit facilities but defaulted in repayment of the amounts in compliance with the terms and conditions of the agreements. In spite of repeated requests and demands to repay the dues, the defendants failed to repay the dues. Hence, the applicant bank issued a lawyer notice dated 12.04.2022 to the defendants demanding payment of the amounts due to the bank. Since the amounts due to the applicant has

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Page 3 of 9

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OA 390/2022

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not been paid yet, the applicant is left with no other alternative than to file this application for recovery of the amounts due to it.

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The defendants were duly served with summons. However, neither the defendants were represented in the proceedings nor did they file the written statement. Subsequently, the Defendants were set exparte on 31.01.2024.

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Ms. Veena Aravind, Chief Manager of the applicant bank, as AW1 filed proof affidavit and got the documents marked as Exhs.A1 to A27 in support of its case.

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A perusal of the material records available and averments of the OA and proof affidavit along with Exhs.A1 to A27 filed by Ms. Veena Aravind, Chief Manager of the applicant bank, shows that the defendants after having availed the credit facilities committed default in repayment of the outstanding dues.

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The applicant has failed to produce the English translated version of document No.3 as per Rule 3(2) of the Debts Recovery Tribunal (Procedure) Rules, 1993. This Tribunal is not in a position to read the contents of the document and understand the same. However, it appears that this document pertains to the OA ‘B’ schedule property.

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The applicant bank has charged Rs.69,942/- and Rs.94,669/- as penal interests on the Cash Credit facilities account Nos.67342618090 and 37239631737 availed by the defendants 1 & 3 in terms of the agreements. It is well settled that penal interest cannot be capitalised and no interest can be charged on penal interest. The applicant bank, therefore, is not entitled to get any further interest on the aforesaid amount of penal interest, as laid down by the Hon'ble Supreme Court of India in Central Bank of India v. Ravindra [reported in AIR 2001 SC 3095] .

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In the above circumstances, the case of the applicant bank regarding recovery of the sum of Rs.46,93,872/- claimed as due under Exh.A16 certified copy of statement of account relating to the Cash Credit account No.67342618090 with future interest on the sum of Rs.46,23,930/- from the 1^st defendant; recovery of the sum of Rs.16,04,608/- claimed as due under Exh.A19 certified copy of statement of account relating to Housing Loan account No.67348315894 with future interest from defendants 1 & 2; recovery of the sum of Rs.29,507/- claimed as due under Exh.A21 certified copy of statement of account relating to Suraksha Loan account No.67348315930 with future interest from defendants 1 & 2; recovery of the sum of Rs.19,73,491/- claimed as due under Exh.A23 certified copy of statement of account relating to Cash Credit account No.37239631737 with

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Page 4 of 9

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OA 390/2022

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future interest on the sum of Rs.18,78,822/- from the 3^rd defendant; and recovery of the sum of Rs.2,21,492/- claimed as due under Exh.A26 certified copy of statement of account relating to Term Loan (Covid-19 accrued interest) account No.39608354941 with future interest from the 1^st defendant, is proved by the uncontroverted averments in the proof affidavit of AW1 along with Exhs.A1 to A27.

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Thus, this Tribunal holds that since the applicant bank has proved its case through its proof affidavit and the documents marked, the Original Application is allowed as per the following lines :

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(i) The 1^st defendant is directed to pay to the applicant bank, a sum of Rs.46,93,872/- (Rupees Forty Six Lakhs Ninety Three Thousand Eight Hundred Seventy Two only) due under the Cash Credit account No.67342618090 with future interest on the sum of Rs.46,23,930/- (Rupees Forty Six Lakhs Twenty Three Thousand Nine Hundred Thirty only) @11.05% per annum from 29.04.2022 till realisation;

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(ii) The defendants 1 & 2 are directed to pay to the applicant bank, jointly and severally, a sum of Rs.16,04,608/- (Rupees Sixteen Lakhs Four Thousand Six Hundred Eight only) due under Housing Loan account No.67348315894 with future interest @8.40% per annum from 29.04.2022 till realisation;

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(iii) The defendants 1 & 2 are directed to pay to the applicant bank, jointly and severally, a sum of Rs.29,507/- (Rupees Twenty Nine Thousand Five Hundred Seven only) due under Suraksha Loan account No.67348315930 with future interest @8.40% per annum from 29.04.2022 till realisation;

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(iv) The defendants 1 & 3 are directed to pay to the applicant bank, jointly and severally, a sum of Rs.19,73,491/- (Rupees Nineteen Lakhs Seventy Three Thousand Four Hundred Ninety One only) due under Cash Credit account No.37239631737 with future interest on the sum of Rs.18,78,822/- (Rupees Eighteen Lakhs Seventy Eight Thousand Eight Hundred Twenty Two only) @12.25% per annum from 29.04.2022 till realisation; and

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(v) The 1^st defendant is directed to pay to the applicant bank, a sum of Rs.2,21,492/- (Rupees Two Lakhs Twenty One Thousand Four Hundred Ninety Two only) due under Term Loan (Covid-19 accrued interest) account No.39608354941 with future interest @12.45% per annum from 29.04.2022 till realisation.

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Page 5 of 9

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OA 390/2022

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On failure to pay the above said debts to the Applicant Bank, the Applicant Bank is directed to bring the hypothecated and immovable properties, more fully described in Schedules ‘A to C’ of the application, for sale to realize its dues and its proportionate costs.

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The Registry is directed to prepare DRC in terms of this final order. The Applicant Bank shall file memo of costs within 10 days from the date of this order. Registry is directed to communicate the copy of this order to both parties as provided in Rule 16 of the Debts Recovery Tribunal (Procedure) Rules, 1993, as amended in 2003.

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Typed by PS, transcribed, corrected and pronounced by me in the open court this the 28^th day of August, 2026.

(Su. WILLYAHM)

PRESIDING OFFICER

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OA 390/2022

SCHEDULE ‘A’

1^st defendant hypothecated the book debts and securities, fixed assets, goods and assets and all movable properties as primary security.

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SCHEDULE ‘B’

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District	: Kozhikode
Sub District	: Meenchantha
Taluk	: Kozhikode
Village	: Cheruvannoor
Block No.	: Nil
Re. Sy. No.	: 64/2
Extent	: 15 cents (6.072 Ares)

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Description

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All that piece and parcel of land having an extent of 6.072 Ares in Re. Sy No. 64/2 of Cheruvanoor Village, Kozhikode Taluk, Kozhikode District, together with all improvements and buildings therein obtained by Muhammed Sameer under Dale Deed No. 2198 of 2015 dated 10.09.2015 of Meenchanda SRO.

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Boundaries

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West : Property of Athan South : Balance property North : Balance property East : Road

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SCHEDULE ‘C’

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3^rd defendant hypothecated stock of grocery items and receivables as primary security.

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(Su. WILLYAHM) PRESIDING OFFICER

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Page 7 of 9

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OA 390/2022

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LIST OF DOCUMENTS FILED BY THE APPLICANT BANK

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Sl. No.	Date	Description of document	Exhibits
1	07.11.2015	Sanction letter duly signed by the 1^st defendant	Ex.A-1
2	07.11.2015	Hypothecation cum working capital agreement executed by 1^stdefendant in favour of the applicant bank	Ex.A-2
3	10.09.2015	Assignment Deed No.2198/2015 of Meenchantha SRO	Ex.A-3
4	08.11.2015	Memorandum of deposit of title deed executed by 1^stdefendant in favour of the applicant bank	Ex.A-4
5	02.01.2016	Housing Term Loan and Funding for Home Loan Insurance Cover executed by defendants 1 & 2 in favour of the applicant bank	Ex.A-5
6	02.01.2016	Memorandum of Loan Agreement for Home Loan executed by defendants 1 & 2 in favouroftheapplicant bank	Ex.A-6
7	03.01.2016	Memorandum of extension of equitable mortgage executed by 1^stdefendant in favourofthe applicant bank	Ex.A-7
8	12.10.2017	Letter of Arrangement executed by defendants 1 & 3 in favour of the applicant bank	Ex.A-8
9	12.10.2017	Agreement of Loan cum Hypothecation executed by 3^rddefendant in favour of the applicant bank	Ex.A-9
10	12.10.2017	Guarantee agreement executed by the 1^st defendant	Ex.A-10
11	13.10.2017	Letter of confirmation for extension of mortgage by deposit of title deed executed by 1^stdefendant in favour of the applicant bank	Ex.A-11
12	13.10.2017	Memorandum of extension of equitable mortgage by deposit of title deed executed by 1^stdefendant in favour of the applicant bank	Ex.A-12
13	15.07.2020	Revival Letter executed by defendants 1 & 3in favourofthe applicant bank	Ex.A-13

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OA 390/2022

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14	12.04.2022	Lawyer notice issued by the applicant bankto the defendants	Ex.A-14
15	----	Postal receipts evidencing issuance of lawyer notice	Ex.A-15
16	----	Statement of account pertaining to Cash Credit accountNo.67342618090	Ex.A-16
17	----	Statement of unapplied accrued interest in respect of Cash Credit account No.67342618090	Ex.A-17
18	----	Statement of penal interest in respect of Cash Credit account No.67342618090	Ex.A-18
19	----	Statement of account pertaining to Housing Loan account No.67348315894	Ex.A-19
20	----	Statement of unapplied accrued interest together with rate of interest in respect of HousingLoanaccountNo.67348315894	Ex.A-20
21	----	Statement of account pertaining to SurakshaLoanaccountNo.67348315930	Ex.A-21
22	----	Statement of unapplied accrued interest together with rate of interest in respect of SurakshaLoanaccountNo.67348315930	Ex.A-22
23	----	Statement of account pertaining to Cash Credit accountNo.37239631737	Ex.A-23
24	----	Statement of unapplied accrued interest together with rate of interest in respect of CashCredit accountNo.37239631737	Ex.A-24
25	----	Statement of penal interest in respect of CashCredit accountNo.37239631737	Ex.A-25
26	----	Statement of account pertaining to Term Loan (Covid-19 accrued interest) account No.39608354941	Ex.A-26
27	----	Statement of unapplied accrued interest together with rate of interest in respect of Term Loan (Covid-19 accrued interest) accountNo.39608354941	Ex.A-27

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(Su. WILLYAHM) PRESIDING OFFICER

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State Bank of India v. Muhammed Sameer

Case brief

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What the court decided

State Bank of India v. Muhammed Sameer

Case brief

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