Allowed

Canara Bank v. K Vanavel Murugan

DRT20 Feb 2026OA/401/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application filed by Canara Bank to recover an outstanding arrears of Rs. 20,39,155.34 with interest. The court relied on bank documents and an affidavit, noting the defendant was set ex-parte, and directed recovery with adjusted interest compounding.

What did the court decide?

The Defendant directed to pay Rs. 20,39,155.34 with interest at 16.30% p.a. with half yearly rests from filing date till realization.

Canara Bank versus K Vanavel Murugan — Banking and Recovery | DRT (2026)

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OA No. 401/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 20^TH DAY OF FEBRUARY, 2026 PRESENT: SEEMA SINHA,

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

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OA No.401/2022

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Between

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Canara Bank, Tiruchendur Branch, 44-45, North car Street, Tiruchendur – 628 215, Thoothukudi District. Rep. By its Branch Manager. ---Applicant Bank

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And

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Mr. K. Vanavel Murugan, S/o Karuppasamy, 1A/2B, Ramasamypuram, Tiruchendur, Thoothukudi District. ---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 25.04.2022 to recover from the Defendant a sum of Rs.20,39,155.34p

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Page 1 of 5

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OA No. 401/2022

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together with interest at the rate of 16.30% p.a. with compounded monthly rests plus penal interest at the rate of 2%p.a. in respect of PMEGP from the date of filing of Application till the date of realization with cost 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 approached the Applicant Bank to grant loan to purchase machineries for his business purpose under Prime Minister Employment Generation Programme (PMEGP) and the same was sanctioned by the Applicant Bank on 20.02.2015. The total loan amount sanctioned is Rs.9,50,000/- with the interest at the rate of 11.95% p.a (Compounded Monthly) which has to be repaid within 84 Monthly Installments. The Defendant have to pay a sum of Rs.11,310-/- as monthly installment which commences from March 2015. The Defendant has to pay 2% p.a penal interest in case if there is default in payment of the principal as well as interest as agreed. A Composite Loan Agreement was executed by the Defendant in favour of the Applicant Bank on 20.02.2015. The Defendant had also executed a Deed of Hypothecation in favour of the Applicant Bank and thereby hypothecated the machinery stands with him in favour of the Applicant Bank on 20.02.2015. The Defendant also executed an two undertaking letter dated 20.02.2015 in favour of the Applicant Bank, by accepting the terms and conditions imposed by the Applicant Bank, by undertaking that he will not he will not utilize the amount borrowed for any other purpose apart from the purpose for which the same is borrowed, that he will not dispose off the assets purchased by him and his liability for criminal action if he violate the terms and conditions and cheated the bank.

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After availing the said Loan the Defendant is not regular in repaying the principal as well as the interest as agreed. The Defendant executed an Acknowledgment of Debts and Security dated 26.12.2017 and 24.12.2020 and thereby acknowledged the debts and Security as on the said date that he have with the Applicant Bank. The account become irregular for NonPayment of principle as well as interest in said Loan Accounts and the same become Non Performing Asset (NPA) on 30.12.2021.

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REVIVAL LETTERS AND BALANCE CONFIRMATION:

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The applicant executed Acknowledgment of Debt and Security on 26.12.2017 and 24.12.2020 towards both the above said loan account.

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Page 2 of 5

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OA No. 401/2022

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Despite repeated demands and reminders, made by the Applicant Bank, the Defendant have failed and neglected to repay and adjust his liability. Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.20,39,155.34p together with interest at the rate of 16.30% p.a. with compounded monthly rests plus penal interest at the rate of 2%p.a. in respect of PMEGP 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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S.No.	Date	Particulars	Exhibits
1	20.02.2015	Sanction Memorandum	Ex.No.A-01
2	20.02.2015	Composite Loan Agreement Executed by the Defendant in favour of the Applicant Bank	Ex.No.A-02
3	20.02.2015	Agreement Cum Deed of Hypothecation executed by the Defendant in favour of the Applicant Bank	Ex.No.A-03
4	20.02.2015	Letter of Undertaking executed by the Defendantin favouroftheApplicantBank	Ex.No.A-04
5	20.02.2015	Undertaking Letter executed by the Defendantin favouroftheApplicantBank	Ex.No.A-05
6	26.12.2017	Acknowledgment of Debt and Security executed by the Defendant in favour of the ApplicantBank	Ex.No.A-06
7	24.12.2020	Acknowledgment of Debt and Security executed by the Defendant in favour of the Applicant Bank	Ex.No.A-07
8	-----------	Statement of Account as on 29.03.2022 in Loan Account No.1121727024041	Ex.No.A-08

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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. M. Dineshwaran, who is the Senior Manager of the Applicant Bank.

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Page 3 of 5

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OA No. 401/2022

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He has stated in his affidavit that the defendant has availed PMEGP 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-08 in support of its claim in the OA.

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The Sanction Memorandum has been marked as Ex.No.A-01, Composite Loan Agreement Executed by the Defendant in favour of the Applicant Bank has been marked as Ex.No.A-02, Agreement Cum Deed of Hypothecation executed by the Defendant in favour of the Applicant Bank has been marked as Ex.No.A-03, Letter of Undertaking executed by the Defendant in favour of the Applicant Bank has been marked as Ex.No.A-04, Undertaking Letter executed by the Defendant in favour of the Applicant Bank has been marked as Ex.No.A-05, Acknowledgment of Debt and Security executed by the Defendant in favour of the Applicant Bank has been marked as Ex.No.A-06, Acknowledgment of Debt and Security executed by the Defendant in favour of the Applicant Bank has been marked as Ex.No.A-07, Statement of Account as on 29.03.2022 in Loan Account No.1121727024041 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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Page 4 of 5

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OA No. 401/2022

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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 Defendant a sum of Rs.20,39,155.34p together with interest at the rate of 16.30% p.a. with half yearly rests in respect of PMEGP 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 Defendant is directed to pay personally a sum of Rs.20,39,155.34p together with interest at the rate of 16.30% p.a. with half yearly rests in respect of PMEGP 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) 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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(c) 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 PMEGP 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 20^th February, 2026.

Sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Uploaded on 04.03.2026

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Page 5 of 5

Canara Bank v. K Vanavel Murugan

Case brief

What is this about?

What did the court decide?

Canara Bank v. K Vanavel Murugan

Case brief

What is this about?

What did the court decide?

What the court decided

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