Allowed

Punjab National Bank v. a Palanivel

DRT11 Aug 2026OA/417/2024

Case brief

AI extract

What is this about?

The Tribunal allowed an original application filed by Punjab National Bank for recovery of an agricultural loan of Rs. 20.98 lakhs. Rejecting the bank's claimed interest rates as penal, it ordered the defendants to pay the principal plus simple interest at 6% p.a.

What did the court decide?

Directed defendants to pay Rs. 20,98,031.20 with simple interest at 6% p.a. and liability for sale proceeds if payment defaults.

Punjab National Bank versus a Palanivel — Banking and Recovery | DRT (2026)

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OA No. 417/2024

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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.417/2024

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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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A. Palanivel, S/o.Adhimoolam No.23, Nayudu Street, Alagapuram, Udayarpalayam Ariyalur - 608 901.

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R. Sivakumar No.1096/1, North Street, Alagapuram, Udayarpalayam Ariyalur - 608 901. ---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. 417/2024

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 27.09.2024 to recover from the Defendants a total sum of Rs.20,98,031.20ps i.e., i) Rs. 12,69,527/-together with interest at the rate of 9.20% p.a. plus 2% Penal Interest with monthly rests in respect of Term Loan ii) Rs. 8,28,504.20ps together with interest at the rate of 10% p.a. plus 2% Penal Interest with monthly rests in respect of Cash Credit 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 had availed the Term Loan for a sum of Rs.7,15,000/- and availed the Cash Credit for a sum of Rs.4,85,000/- in totalling Rs. 12,00,000/-. The defendant executed necessary loaning documents in favour of the Applicant. In addition to that, the defendants has also deposited the original title deeds this 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 18.01.2018 in Document No.113/2018, SRO Andimadam. The following is the detail of loan availed by the defendants.

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S. No.	Nature of Loan & Account Number	Loan Amount	Rate of Interest	Outstanding Amount as on 31.03.2024
1.	Term Loan 170200AO00015361	Rs.7,15,000/-	9.20%p.a. +2% P.I.	Rs. 12,69,527.00/-
2.	Cash Credit 1702008800009162	Rs.4,85,000/-	10% p.a. +2%P.I.	Rs. 8,28,504.20ps
		Total		Rs.20,98,031.20ps

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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. Thus the loan account became NPA on 02.04.2021. As on 31.03.2024 a sum of Rs.20,98,031.20/- has became due and they are liable to pay the said amounts with further interest till repayment.

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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 total sum of Rs.20,98,031.20ps i.e., i) Rs. 12,69,527/-together with interest at the rate of 9.20% p.a. plus 2% Penal Interest with monthly rests in respect

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Page 2 of 6

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OA No. 417/2024

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of Term Loan ii) Rs. 8,28,504.20ps together with interest at the rate of 10% p.a. plus 2% Penal Interest with monthly rests in respect of Cash Credit Loan 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	Description of document	Exhibits
1.	05.02.2018	Sanction Letter	Ex. No. A-01
2.	05.02.2018	Hypothecation Agreement	Ex. No. A-02
3.	05.02.2018	Deed of Guarantee	Ex. No. A-03
4.	10.01.2018	Loan Application	Ex. No. A-04
5.	---	Letter of Sanction	Ex. No. A-05
6.	10.01.2018	Hypothecation Agreement	Ex. No. A-06
7.	10.01.2018	Deed of Guarantee	Ex. No. A-07
8.	18.01.2018	MOD. Doc. No.113/2018	Ex. No. A-08
9.		Statement of account	Ex. No. A-09

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SCHEDULE

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Mortgaged Property

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In Ariyalur Registration District, In Andimadam Sub Registration District, In Ariyalur Revenue District, In Andimadam Taluk, In Alagapuram Village,

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1. R.S.No. 29/3B	0.16.5 Hectare	0.41 acre
2. R.S.No. 29/6A	0.16.5 Hectare	0.41 acre
3. R.S.No. 29/6C	0.05.0 Hectare	0.14 acre
4. R.S.No. 29/9	0.17.5 Hectare	0.43 acre
5. R.S.No. 29/11	0.03.0 Hectare	0.08 acre
6. R.S.No. 40/3A1	0.81.0 Out of 2.31.0 Hectare	2.00 acre

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Item No.6 Boundaries:

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North of Property belongs to borrower father Adhimoolam

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South of Balamurugan and Rajamoorthy

East of Viswanathan

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OA No. 417/2024

West of R.S.No.40/3A2

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7.R.S.No.	40/3A2 0.05.5 Hectare	0.14 acre
8.R.S.No.	40/3B 0.72.0 Hectare	1.78 acre

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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 Term Loan & Cash Credit Loan for agricultural purpose 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-09 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 Sanction Letter has been marked as Ex. No. A-01, Hypothecation Agreement has been marked as Ex. No. A-02, Deed of Guarantee has been marked as Ex. No. A-03, Loan Application has been marked as Ex. No. A-04, Letter of Sanction has been marked as Ex. No. A-05, Hypothecation Agreement has been marked as Ex. No. A-06, Deed of Guarantee has been marked as Ex. No. A-07, MOD. Doc. No. 113/2018 has been marked as Ex. No. A-08, and the Statement of Account has been marked as Ex. No. A-09. 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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Page 4 of 6

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OA No. 417/2024

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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.20,98,031.20ps i.e., i) Rs. 12,69,527/- together with simple interest at the rate of 6% p.a. in respect of Term Loan ii) Rs. 8,28,504.20ps 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

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ORDERED

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(a) That the Defendants are directed to pay jointly/severally for a total sum of Rs.20,98,031.20ps i.e., i) Rs. 12,69,527/- together with simple interest at the rate of 6% p.a. in respect of Term Loan ii) Rs. 8,28,504.20ps 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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Page 5 of 6

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OA No. 417/2024

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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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(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 & 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 P.Sharmila, 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. a Palanivel

Case brief

What is this about?

What did the court decide?

Punjab National Bank v. a Palanivel

Case brief

What is this about?

What did the court decide?

What the court decided

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