Allowed

Karur Vysya Bank v. K Venkatesan

DRT13 Apr 2026OA/43/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an Original Application filed by a bank to recover an agricultural loan against two defendants. The bank proved the advance of loan, hypothecation of assets, and default through documents. The Tribunal directed recovery of principal plus 6% simple interest, excluding penal interest, and authorized the sale of mortgaged properties if payment by defendants is not

What did the court decide?

Directed defendants to pay principal of Rs.53,63,383/- plus simple interest at 6% p.a. from filing date. Bank granted liberty to sell mortgaged/hypothecated properties for recovery.

Karur Vysya Bank versus K Venkatesan — Banking and Recovery | DRT (2026)

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OA No. 43/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 13^TH DAY OF APRIL, 2026 PRESENT: SEEMA SINHA,

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

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OA No.43/2023

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Between

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The Karur Vysya Bank Limited, Asset Recovery Branch, D.No.170/9, Uthankudi Village, Mattuthavani – Melur Road, Near Mattuthavani Bus Stand, Madurai – 625 107. Rep. By its Branch Manager.

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---Applicant Bank

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And

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Mr. K. Venkatesan, S/o S. Krishnan, No.1/3-3, Ammagudi Agraharam, Andhanallur Post, Jeeyapuram, Trichy – 639 101.

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Mr. S. Krishnan,

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S/o Selvarengan, No.1/3-3, Ammagudi Agraharam, Andhanallur Post, Jeeyapuram, Trichy – 639 101. ---Defendants

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Counsel for the Applicant Bank : M/s P. Madhan Alexandar, P. Priyadharshini, S. Dhanapandian.

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OA No. 43/2023

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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 07.11.2022 to recover from the Defendants a sum of Rs.53,63,383/together with interest at the rate of 15.60% p.a. with monthly rests plus penal interest at the rate of 3%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 approached the Applicant Bank for availing cash credit facility to their agriculture purpose. The Applicant Bank has also sanctioned the said Term Loan for a sum of Rs.27,00,000/-vide AccNo-1134 272 000000 764. In consideration of the said facility the letter of sanction along with terms & conditions were communicated to the 1^st defendant by the applicant bank through its sanction letter dt.25.01.17 and the same was duly accepted by the 1^st defendant by counter signing the same on 25.01.17.

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In consideration of the said facility, the 1^st defendant has executed a Demand Promissory Note on 25.01.17 for a sum of Rs.27,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with interest at the rate of 10.75% Per annum with monthly rest or at such other rates & rests as may be revised by the Applicant Bank from time to time. The 1^st defendant has also executed a Hypothecation Agreement dt.25.01.17 for a sum of Rs.27,00,000/- in favour of the Applicant Bank containing various terms & conditions by hypothecating the standing crops, motor, pumpset, borewell & its accessories & implements which are fully described in the 'A' Schedule hereunder as security for repayment of the Loan and by agreeing to repay the loan amount with compound interest at the rate of 10.75% Per annum with monthly rest or at such other rate as may be revised by the bank from time to time and executed Letter of Continuity dt.04.03.11 for a sum of Rs.27,00,000/- in favour of the Applicant Bank containing several undertakings & acceptance with regard

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OA No. 43/2023

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to security of pro-note, operation of accounts, charging of interest, liabilities of the defendants etc., and tendering the said pro-note as continuing security for the said facility.

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The 2nd defendant has executed an Agreement of Guarantee on 25.01.17 in favour of the Applicant Bank by promising to repay the loan with interest at the rate of 10.75% per annum with monthly rests or at such other rates or rest as may be revised by the applicant bank from time to time. The defendants have availed the above said facility as per the particulars mentioned in the Statement of Accounts maintained by the Applicant Bank in its regular course and conduct of business. By admitting & acknowledging the liabilities the 1^st defendant has executed revival letter on 23.01.20 in favour of the Applicant Bank

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The 1^st defendant has offered his property which is fully mentioned in the "B" Schedule hereunder as Security and thereby he has deposited his Title Deeds on 24.01.17 with the Applicant Bank pertaining to his property, with an intention to create an Equitable Mortgage over the said property. To evidence the said fact as well as by confirming the same, the 1" defendant has executed a Registered Memorandum of Deposit of title deeds dt.25.01.17 pertaining to the said property in favour of the Applicant Bank. Thus the applicant bank is a mortgagee entitled to proceed against the mortgaged property for recovery of loan.

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Particulars of Mortgage

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Name of the Mortgagors : 1st Defendant

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Name of the Mortgagee	: The Karur Vysya Bank Ltd (Applicant Bank)
Date of Mortgage	: 24.01.2017
Mortgage Amount Title Deeds	: As mentioned in the Memorandum of Deposit of
Mortgage Property	: As described in the “B” Schedule

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Amount Now Due as on 31.10.2022: Rs. 53,63,383/-

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Current Rate of Interest : 15.60% p.a. with monthly rests plus 3% penal interest

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After availing the loan the defendants have not repaid the loans as agreed and promised by them. So the applicant bank issued Recall Notice dt.28.10.19 to the defendants. Thus the defendants have committed default in repaying the loan amount with interest & costs. Despite repeated

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OA No. 43/2023

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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.53,63,383/- together with interest at the rate of 15.60% p.a. with monthly rests plus penal interest at the rate of 3%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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LIST OF DOCUMENTS - ANNEXURE –I Loan Documents

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S. No.	Date	Description of document	Exhibits
		Sanction Letter along with terms &
1	25.01.2017	conditions countersigned by the 1st Defendant in favour of the Applicant Bank	Ex.No.A-01
2	25.01.2017	Demand Promissory Note executed by the 1st Defendant in favour of the Applicant Bank	Ex.No.A-02
		Hypothecation Agreement executed by the
3	25.01.2017	1st Defendant in favour of the Applicant Bank	Ex.No.A-03
4	25.01.2017	Letter of Continuity executed by the 1st Defendant in favour of the Applicant Bank	Ex.No.A-04
5	25.01.2017	Agreement of Guarantee executed by the 2nd Defendant in favour of the Applicant Bank	Ex.No.A-05
6	23.01.2020	Revival Letter executed by the 1st Defendant in favour of the Applicant Bank	Ex.No.A-06
7	24.01.2017	Registered Memorandum of Deposit of Title Deeds executed by the 1st Defendant in favour of the Applicant Bank	Ex.No.A-07
8	28.10.2019	Recall Notice issued by the Applicant Bank to the Defendants	Ex.No.A-08
9	—	Statement of Accounts maintained by the Applicant Bank in regular course of business	Ex.No.A-09

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LIST OF DOCUMENTS - ANNEXURE -II

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Title Deeds Deposited by the 1^st Defendant with regard to 'B' Schedule Mortgage Property

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S. Date	Description of document	Exhibits

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OA No. 43/2023

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No.
1	07.06.1978	Registered Partition Deed between Ramakrishnan & others (Doc. No.1187/1978)	Ex.No.A-10
2	25.09.2008	Registered Sale Deed executed by Sridharan in favour of Venkatesan(Doc. No.3212/2008)	Ex.No.A-11
3	—	UDR ‘A’ Register of Andanallur issued by VAO in the name of Sridharan	Ex.No.A-12
4	20.12.2016	Computerized Patta in the name of Venkatesan downloaded from Government website	Ex.No.A-13
5	23.12.2016	Extract of Adangal for Fasli 1425 issued by VAO, Andanallur Village in the name of Venkatesan	Ex.No.A-14
6	—	FMB Sketch issued by VAO, Andanallur Village	Ex.No.A-15

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SCHEDULE PROPERTY 'A' SCHEDULE HYPOTHECATED GOODS

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Item No.1

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All Standing crops, Motor Pumpset, Pipes, Borewell, other machineries developed in the 'B' schedule mortgaged property.

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Item No.2

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All the Hypothecated Book Debts, Outstandings, Money Receivables, Claims and Bills due owing to the 1" defendant.

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'B' SCHEDULE - MORTGAGED PROPERTY

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(Property belonging to 1^st Defendant Vide Annexure-I for the title deeds)

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Trichy District, Trichy Registration District, Trichy Town No.3 Joint Sub Registry, Srirangam Taluk, Andanallur Village, a land measuring 1 Acre 1 Cent comprised in RS.No.294/1 within the following boundaries

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On the North : Channel (Vadivu Kanni) On the East : Property belonging to Dhanakodi Pillai On the South : Property belonging to Loganayagi & Channel On the West : Channel

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OA No. 43/2023

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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. S. Dhandapani, who is the Chief 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-15 in support of its claim in the OA.

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The Sanction Letter along with terms & conditions countersigned by the 1st Defendant in favour of the Applicant Bank has been marked as Ex.No.A-01, Demand Promissory Note executed by the 1st Defendant in favour of the Applicant Bank has been marked as Ex.No.A-02, Hypothecation Agreement executed by the 1st Defendant in favour of the Applicant Bank has been marked as Ex.No.A-03, Letter of Continuity executed by the 1st Defendant in favour of the Applicant Bank has been marked as Ex.No.A-04, Agreement of Guarantee executed by the 2nd Defendant in favour of the Applicant Bank has been marked as Ex.No.A-05, Revival Letter executed by the 1st Defendant in favour of the Applicant Bank has been marked as Ex.No.A-06, Registered Memorandum of Deposit of Title Deeds executed by the 1st Defendant in favour of the Applicant Bank has been marked as Ex.No.A-07, Recall Notice issued by the Applicant Bank to the Defendants has been marked as Ex.No.A-08, Statement of Accounts maintained by the Applicant Bank in the regular course of business has been marked as Ex.No.A-09.

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The Registered Partition Deed entered into between Ramakrishnan & others (Doc. No.1187/1978) has been marked as Ex.No.A-10, Registered Sale Deed executed by Sridharan in favour of Venkatesan (Doc. No.3212/2008) has been marked as Ex.No.A-11, UDR ‘A’ Register of Andanallur issued by VAO standing in the name of Sridharan has been marked as Ex.No.A-12, Computerized Patta downloaded from Government Website standing in the name of Venkatesan has been marked as Ex.No.A-

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OA No. 43/2023

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13, Extract of Adangal for Fasli 1425 issued by VAO, Andanallur Village standing in the name of Venkatesan has been marked as Ex.No.A-14, FMB Sketch issued by VAO, Andanallur Village has been marked as Ex.No.A-15. 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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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 sum of Rs.53,63,383/- together with simple interest at the rate of 6% p.a. 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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OA No. 43/2023

ORDERED

(a) That the Defendants are directed to pay jointly/severally a sum of Rs.53,63,383/- together with simple interest at the rate of 6% p.a. 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 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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OA No. 43/2023

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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 13^th April, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 24.04.26

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Karur Vysya Bank v. K Venkatesan

Case brief

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Karur Vysya Bank v. K Venkatesan

Case brief

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