Allowed

Bank of Baroda v. Kaviyam Tyres

DRT7 May 2026OA/406/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an Original Application by Bank of Baroda to recover Rs.20,08,630.72 with interest from borrowers of cash credit facility. The court upheld the claim based on submitted documents and reduced penal interest rate while directing sale of hypothecated properties if necessary.

What did the court decide?

Defendants directed to pay Rs.20,08,630.72 with interest at 12.25% p.a. within one month; liberty to sell mortgaged/immovable properties upon default.

Bank of Baroda versus Kaviyam Tyres — Banking and Recovery | DRT (2026)

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OA No. 406/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 07^TH DAY OF MAY, 2026 PRESENT: SEEMA SINHA,

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

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OA No.406/2024

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Between

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Bank of Baroda, West Masi Street Branch, T S P Towers, First Floor, 326 – West Masi Street, Madurai – 625 001. Rep. By its Senior Manager.

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---Applicant Bank

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And

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M/s Kaviyam Tyres, Prop. Mr. R. Radhakrishnan, S/o Mr. Ramasamy, 60, Fathima Nagar, Bye Pass Road, Madurai – 625 016.

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Also at:

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M/s Kaviyam Tyres, Prop. Mr. R. Radhakrishnan, S/o Mr. Ramasamy, 144/14, Chokalinga Nagar 7^th Street, Arasaradi, Madurai – 625 016.

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Page 1 of 11

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OA No. 406/2024

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Mrs. R. Renganayaki, W/o R. Radhakrishnan, Deepak Hospital Upstairs, Muthu Nagar 2^nd Street, Ponmeni Road, Madurai – 625 016. ---Defendants

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Counsel for the Applicant Bank : M/s V. Kasirajan, A. Meenakshi Sundaram, R. Ajay Janarthan.

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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 07.08.2024 to recover from the Defendants a sum of Rs.20,08,630.72p together with interest at the rate of 14.25% p.a. (including Penal Interest) with monthly rests 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 defendant No.1 and 2 are Husband and wife. The defendant No.1 is the Borrower and the defendant No.2 is the Guarantor.

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CASH CREDIT FACILITY - RS.12,00,000/-

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The defendant No.1 is doing trading of Tyres business in the name and style of M/s. Kaviyam Tyres as its proprietor. On 25.06.2015, the defendant No.1 has approached the applicant bank for Cash Credit facility to develop his business and the defendant No.1 has agreed to hypothecate his under mentioned Schedule. The applicant sanctioned the Cash Credit facility a sum of Rs. 12,00,000/- (Rupees Twelve Lakhs Only) and the defendant No.1 has agreed to adjust and repay the facility enjoyed by the defendant No.1 under Cash Credit facility within a period of one year subject

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OA No. 406/2024

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to renewal with accrued interest at the rate of 2.05% per annum over the vijaya banks base rate of interest as may be fixed by the applicant bank from time to time subject to a minimum of 12.05% per annum on daily balances with monthly rest or at such rest and such interest being added to the balance outstanding on the last working day of every month and the said interest if unpaid will become part of the amount advanced (i.e. the principal amount as mentioned above) and bears interest at the same rate. The cash credit facility was sanctioned for a period of one year subject to renewal. Further, the defendant No.1 agreed to pay higher and revised rate of interest on going base rate of the applicant along with other commission, insurance premium, expenses, charges etc,. Further, the applicant is entitled to recall any time the entire loan or balance thereof as the case may be, in case of default of payment within a period of one year or violation of terms and conditions of sanction. The defendant No.1 has agreed to pay 2% additional interest in case of default.

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The defendant No.1 with an intention to create security for Cash credit facility for a sum of Rs.12,00,000/- availed by defendant No.1, from the applicant bank, on 05.08.2015 has deposited with the applicant bank at Madurai, the original title deeds of his property i.e., Plot Nos.32 and 33 comprised in S.No.325/1A, Kallanai Village, Vadipatti Taluk, Madurai District. The said factum was confirmed by Memorandum Relating to Deposit of Title Deeds dated 05.08.2015 executed by the defendant No.1 infavour of applicant bank was duly registered as Doc. No.2829 of 2015. Hence, a valid equitable mortgage was created over the property i.e., Plot Nos.32 and 33 comprised in S.No.325/1A, Kallanai Village, Vadipatti Taluk, Madurai District, infavour of the mortgagee in respect of the entire outstanding amount due from the above said cash credit facility availed and to be availed by defendant No.1.

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As security, evidence and cover, for the said cash credit facility a sum of Rs.12,00,000/-, the defendant No. I has executed the following documents at West Masi street, Madurai Town on 07.08.2015 infavour of the applicant bank

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a. AGREEMENT FOR DEMAND CASH CREDIT AGAINST HYPOTHECATION OF STOCKS AND BOOK DEBTS Hypothecating the under mentioned Schedule property and created a paramount charge over the same and also agreeing to the terms and conditions inter alia to adjust the limit within a period of one year subject to renewal along with minimum accrued interest at the rate of 2.05% per annum over the vijaya banks base rate of interest as may be fixed by the applicant bank from time to time subject to a minimum of 12.05% per annum on daily balances with monthly rest. Further in case of default, he has agreed to pay additional interest at the rate of 2% per

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OA No. 406/2024

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annum. For other terms and conditions, the said agreement may be referred to.

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b. PERMISSION LETTER FOR ACCESS TO THE GODOWN

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Defendant No.2 in consideration of applicant granting aforesaid cash credit facility to the defendant No.1 after knowing all the terms and conditions of the said cash credit facility a sum of Rs. 12,00,000/-, agreed to stand as guarantor for all the amounts due from the defendant No.1 to the applicant and to that effect, the defendant No.2 has executed Letter of Guarantee dated 07.08.2015 infavour of the applicant bank.

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ENHANCEMENT OF CASH CREDIT FROM Rs.12,00,000/to Rs.20,00,000/-:

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On 16.02.2017, the defendant No.1, approached the applicant bank for enhancement of Cash credit facility from Rs. 12,00,000/- to 20,00,000/-, to develop his business and the Applicant bank granted the same for a sum of from Rs.12,00,000/- to 20,00,000/-. The defendants executed necessary instruments in favour of the Applicant Bank as security for the said enhancement of Cash credit facility. The Applicant bank issued sanction letter dated 18.02.2017 for the enhancement of Cash credit facility, with terms and conditions and the same was accepted by the defendants. In anent to that, the 1ª defendant has executed the following documents dated 18.02.2017 at West Masi Street, Madurai Town infavour of the applicant bank viz,

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a. SUPPLEMENTARY AGREEMENT hypothecating the under mentioned Schedule and created a paramount charge over the same and also agreeing to the terms and conditions inter alia to adjust the limit within a period of one year subject to renewal along with accrued interest at the rate of 2.85% per annum over the vijaya banks base rate of interest as may be fixed by the applicant bank from time to time subject to a minimum of 11.50% per annum on daily balances with monthly rest. Further in case of default, he has agreed to pay additional interest at the rate of 2% per annum. For other terms and conditions, the said agreement may be referred to.

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b. PERMISSION LETTER FOR ACCESS TO THE GODOWN

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The defendant No.2 in consideration of applicant granting the above said enhancement of Cash credit facility from Rs. 12,00,000/- to 20,00,000/- to the defendant No.1, after knowing all the terms and conditions of the said enhancement of Cash credit facility from Rs.12,00,000/- to 20,00,000/- agreed to stand as guarantor for all the

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OA No. 406/2024

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amounts due from the defendant No.1 to the applicant and to that effect, the defendant No.2 has executed a letter of guarantee on 18.02.2017 infavour of the applicant bank. The defendant No.1 has admitted and acknowledged his liabilities and executed Acknowledgement of Liability on 18.02.2017 infavour of applicant bank

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The defendant No.1, with an intention to create security, for the enhancement of cash credit facility, availed by him, from the applicant bank, on 08.03.2017, have agreed to hold the title deeds already deposited as security for the enhancement of cash credit facility and deposited the title deeds of his property i.e., Plot Nos.32 and 33 comprised in S.No.325/1A, Kallanai Village, Vadipatti Taluk, Madurai District, with the applicant bank at Madurai Town and on 08.03.2017, the defendant No.1 executed Supplemental Memorandum of deposit of title deeds infavour of applicant bank was duly registered as Doc. No.420 of 2017. Hence, a valid equitable mortgage was created over the property i.e., Plot Nos.32 and 33 comprised in S.No.325/1A, Kallanai Village, Vadipatti Taluk, Madurai District, infavour of the mortgagee in respect of the entire outstanding amount due from the above said enhancement of cash credit facility.

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The defendant No.1 has availed the above said credit facility from the applicant bank. But he has paid only meager amount as reflected in the statement of accounts. His Account No. 74930500000019 (e-Vijaya bank300706211000020). He has admitted and acknowledged his liabilities and executed Acknowledgement of Liability on 30.01.2020 infavour of applicant bank.

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The defendants failed to repay the loan amount as agreed to. Hence the defendants’ Loan Account was classified as Non Performing Asset on 31.03.2021. The Applicant bank issued notice under Sec 13(2) of the SARFAESI Act, dated 05.05.2021, demanding the Defendants to repay the loan amount with interest. The defendant No.1 has admitted and acknowledged his liabilities and executed Acknowledgement of Liability on 05.01.2023 infavour of applicant bank.

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The opportunity given by the applicant Bank was not utilized by the defendants and hence, the applicant bank without alternative issued possession notice dated 09.01.2023. The symbolic possession of the property was taken by the applicant Bank under SARFAESI Act and the possession notice was issued by the applicant bank. But even there after, they have not taken efforts to clear the liability.

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The defendant No.1 has not cleared the liabilities. Hence, the applicant bank has taken steps under SARFAESI ACT for sale of the secured

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OA No. 406/2024

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assets and issued sale notice dated 20.06.2023 in the above said mortgaged properties i.e., Plot Nos.32 and 33 comprised in S.No.325/1A, Kallanai Village, Vadipatti Taluk, Madurai District, were sold in the public auction to the highest bidder Mr.S. Nachiappan, for a sum of Rs.14,25,200/-. The amount realized from the auction i.e., is Rs. 14,25,200/- was credited in the account of M/s. "Kaviyam Tyres" on 24.08.2023 (i.e., Cash credit - A/c No. 74930500000019) and sale certificate was issued by applicant bank to the highest bidder Mr.S.Nachiappan, was registered as doc.No.4267/2023.

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The defendants have not cleared the liabilities despite the reminders of the applicant. Hence, the applicant was left with no other option, initiated proceedings before this Hon'ble Tribunal for the recovery of public money lent. Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their liability.

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Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.20,08,630.72p together with interest at the rate of 14.25% p.a. (including Penal Interest) with monthly rests 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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S.	Date	Description of document	Exhibits
No.
		Part-I Cash Credit – Rs.7,00,000/-
1	02.01.2019	Xerox copy of Gazette Notification Original Loan Application executed	Ex.No.A-01
2	25.06.2015	Original Loan Application executed by defendant No.1 in favour of Applicant Bank	Ex.No.A-02
3	09.05.2011	Xerox copy of Original Sale Deed executed by Mr. P.K.N. Arumugam in favour of Mr. R. Radhakrishnan (i.e., D-1) (Doc No.1928/2011)	Ex.No.A-03
4	05.08.2015	Memorandum Relating to Deposit of Title Deeds executed by Mr. R. Radhakrishnan (i.e., D-1) in favour of Applicant Bank (Doc No.2829/2015)	Ex.No.A-04
5	07.08.2015	Original Agreement for Demand Cash Credit Against Hypothecation of Stocks and Book Debts executed by defendant No.1 in favour of Applicant Bank	Ex.No.A-05

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OA No. 406/2024

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		Original Permission Letter for access to the
6	07.08.2015	godown executed by defendant No.1 in favour of Applicant Bank	Ex.No.A-06
7	07.08.2015	Original Letter of Guarantee executed by defendant No.2 in favour of Applicant Bank	Ex.No.A-07
1	02.01.2019	Xerox copy of Gazette Notification Original	Ex.No.A-01
		Loan Application executed
	Enhancem	Part-II ent of Cash Credit facility from Rs.12,00,00 Rs.20,00,000/-	0/- to
8	16.02.2017	Original Loan Application jointly executed by defendants in favour of Applicant Bank	Ex.No.A-08
		Original Sanction Letter issued by the
9	18.02.2017	Applicant Bank duly accepted by the defendants	Ex.No.A-09
		Original Supplementary Agreement executed
10	18.02.2017	by defendant No.1 in favour of Applicant Bank	Ex.No.A-10
		Original Permission Letter for access to the
11	18.02.2017	godown executed by defendant No.1 in favour of Applicant Bank	Ex.No.A-11
12	18.02.2017	Original Letter of Guarantee executed by defendant No.2 in favour of Applicant Bank	Ex.No.A-12
		Original Acknowledgement of Liability
13	18.02.2017	executed by defendant No.1 in favour of	Ex.No.A-13
		Applicant Bank
		Part-III
		Original Xerox Copy & Supplemental Memorandum of Deposit of Title Deeds
14	08.03.2017	executed by Mr. R. Radhakrishnan (i.e., D-1) in favour of Applicant Bank (Doc	Ex.No.A-14
	Enhance	No.420/2017) Part-IV ment of OD from Rs.2,70,000/- to Rs.6,50,0 Second Loan	00/-
		Original Acknowledgement of Liability
15	30.01.2020	executed by defendant No.1 in favour of Applicant Bank	Ex.No.A-15
16	05.05.2021	Xerox copy of Demand Notice U/s. 13(2) issued byApplicant Bank to the defendants	Ex.No.A-16
		Original Acknowledgement of Liability
17	05.01.2023	executed by defendant No.1 in favour of Applicant Bank	Ex.No.A-17

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OA No. 406/2024

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18	09.01.2023	Xerox copy of Possession Notice U/s. 13(4) issued byApplicant Bank	Ex.No.A-18
19	20.06.2023	Xerox copy of Sale Notice issued by Applicant Bank	Ex.No.A-19
		Xerox copy of Sale Certificate executed by
20	30.08.2023	Bank of Baroda in favour of Mr. S.	Ex.No.A-20
		Nachiappan registered as Doc No.4267/2023
21	29.12.2023	Xerox copyof Statement of Accounts	Ex.No.A-21

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SCHEDULE

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(Evaluated Price - Rs.27,86,561/-)

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Hypothecation of all current assests such as Tyres, Tubes and Flaps.

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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. Nimal Ghosh, who is the Senior Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Cash Credit facility 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-21 in support of its claim in the OA.

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The Xerox copy of Gazette Notification Original Loan Application executed has been marked as Ex.No.A-01, Original Loan Application executed by defendant No.1 in favour of Applicant Bank has been marked as Ex.No.A-02, Xerox copy of Original Sale Deed executed by Mr. P.K.N. Arumugam in favour of Mr. R. Radhakrishnan (i.e., D-1) (Doc No.1928/2011) has been marked as Ex.No.A-03, Memorandum Relating to Deposit of Title Deeds executed by Mr. R. Radhakrishnan (i.e., D-1) in favour of Applicant Bank (Doc No.2829/2015) has been marked as Ex.No.A-04, Original Agreement for Demand Cash Credit Against Hypothecation of

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OA No. 406/2024

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Stocks and Book Debts executed by defendant No.1 in favour of Applicant Bank has been marked as Ex.No.A-05, Original Permission Letter for access to the godown executed by defendant No.1 in favour of Applicant Bank has been marked as Ex.No.A-06, Original Letter of Guarantee executed by defendant No.2 in favour of Applicant Bank has been marked as Ex.No.A-07, Original Loan Application jointly executed by defendants in favour of Applicant Bank has been marked as Ex.No.A-08, Original Sanction Letter issued by the Applicant Bank duly accepted by the defendants has been marked as Ex.No.A-09, Original Supplementary Agreement executed by defendant No.1 in favour of Applicant Bank has been marked as Ex.No.A-10.

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The Original Permission Letter for access to the godown executed by defendant No.1 in favour of Applicant Bank has been marked as Ex.No.A-11, Original Letter of Guarantee executed by defendant No.2 in favour of Applicant Bank has been marked as Ex.No.A-12, Original Acknowledgement of Liability executed by defendant No.1 in favour of Applicant Bank has been marked as Ex.No.A-13, Original Xerox Copy & Supplemental Memorandum of Deposit of Title Deeds executed by Mr. R. Radhakrishnan (i.e., D-1) in favour of Applicant Bank (Doc No.420/2017) has been marked as Ex.No.A14, Original Acknowledgement of Liability executed by defendant No.1 in favour of Applicant Bank has been marked as Ex.No.A-15, Xerox copy of Demand Notice U/s. 13(2) issued by Applicant Bank to the defendants has been marked as Ex.No.A-16, Original Acknowledgement of Liability executed by defendant No.1 in favour of Applicant Bank has been marked as Ex.No.A17, Xerox copy of Possession Notice U/s. 13(4) issued by Applicant Bank has been marked as Ex.No.A-18, Xerox copy of Sale Notice issued by Applicant Bank has been marked as Ex.No.A-19, Xerox copy of Sale Certificate executed by Bank of Baroda in favour of Mr. S. Nachiappan registered as Doc No.4267/2023 has been marked as Ex.No.A-20, and Xerox copy of Statement of Accounts has been marked as Ex.No.A-21. 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 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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OA No. 406/2024

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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 . 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.20,08,630.72p together with interest at the rate of 12.25% p.a. with half yearly rests in respect of Cash Credit Facility 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 a sum of Rs.20,08,630.72p together with interest at the rate of 12.25% p.a. with half yearly rests in respect of Cash Credit Facility 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

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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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(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 Cash Credit Facility 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 07^th May, 2026.

Sd/- (SEEMA SINHA)

PRESIDING OFFICER

Uploaded on 19.05.26

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Bank of Baroda v. Kaviyam Tyres

Case brief

What is this about?

What did the court decide?

Bank of Baroda v. Kaviyam Tyres

Case brief

What is this about?

What did the court decide?

What the court decided

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