Allowed

State Bank of India v. D Kannan

DRT19 Jan 2026OA/446/2022

Case brief

AI extract

What is this about?

Debt Recovery Tribunal allowed an original application filed by a bank for recovery of agricultural loans under RDBI Act. The court confirmed the bank's claim based on documentary evidence presented in the ex-parte proceedings and adjusted the interest rates to 6% simple interest per annum.

What did the court decide?

Directed respondents to pay Rs.24,58,577.55p along with simple interest at 6% p.a. from the date of filing till realization and authorized sale of mortgaged/hypothecated properties.

State Bank of India versus D Kannan — Contract and Commercial Disputes | DRT (2026)

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OA No. 446/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 19^TH DAY OF JANUARY, 2026 PRESENT: SEEMA SINHA,

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

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OA No.446/2022

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Between

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State Bank of India, Stressed Assets Recovery Branch, 1^st Floor, No.8, Dr. Ambedkar Road, Madurai - 625 020. Rep. By its Chief Manager.

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---Applicant Bank

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And

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Mr. D. Kannan,

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S/o Dharmaraj,

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D. No.4/80, Melamangavanam, Pathalapettai Post,

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Tiruverumbur Taluk, Trichy – 620 013.

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Mr. D. Pandian, S/o Dharmaraj,

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D. No.4/80, Melamangavanam, Pathalapettai Post, Tiruverumbur Taluk, Trichy – 620 013. ---Defendants

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Counsel for the Applicant Bank : M/s R. Pandivel

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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

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OA No. 446/2022

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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 16.04.2022 to recover from the Defendants a total sum of Rs.24,58,577.55p i.e., (i) Rs.3,32,748.52p together with interest at the rate of 10.25% p.a. with compounded half yearly rests plus penal interest at the rate of 2%p.a. in respect of Kissan Credit Card Facility (ii) Rs.21,25,829.03p together with interest at the rate of 10.60% p.a. with compounded half yearly rests plus penal interest at the rate of 2%p.a. in respect of Overdraft 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 Overdraft Facility & Kissan Credit Card Facility. The applicant bank had also sanctioned the said Kissan Credit Card Facility to the limit of Rs.3,00,000/and Overdraft Facility to the limit of Rs.20,00,000/-.

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Kissan Credit Card Facility

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The defendants having accepted the terms & conditions of the said Kissan Credit Card Facility sanctioned; signed a letter of arrangement on 27.12.16 and agreed to repay the loan amounts with interest at the rate of 7% p.a with half yearly rest and at such rates & rests as fixed by the applicant bank then & there.

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In consideration of the said Kissan Credit Card Facility, the 1^st defendant on 27.12.16 executed Hypothecation Agreement containing several terms & conditions for sum of Rs.3,00,000/- in favour of the applicant bank by hypothecating goods & book debts which are fully described in the 'A' Schedule herein in favour of the Applicant Bank agreeing to repay the loan amount with interest at the rate of 7% p.a with monthly rest and at such rates & rests as fixed by the applicant bank then & there.

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OA No. 446/2022

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In consideration of the said Kissan Credit Card Facility, the 1^st defendant by admitting & acknowledging his liability executed Revival Letter dt.05.12.19 in favour of the applicant bank.

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Overdraft Facility

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The defendants having accepted the terms & conditions of the said Overdraft Facility sanctioned; signed a letter of arrangement on 31.01.17 and agreed to repay the loan amounts with interest as enumerated in the letter of arrangement with half yearly rest and at such rates & rests as fixed by the applicant bank then & there.

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In consideration of the said Overdraft Facility, the 1^st defendant on 31.01.17 executed Hypothecation Agreement containing several terms & conditions for sum of Rs.20,00,000/-in favour of the applicant bank by hypothecating goods & book debts which are fully described in the 'A' Schedule herein in favour of the Applicant Bank agreeing to repay the loan amount with interest at the rate of 12% p.a with half yearly rest and at such rates & rests as fixed by the applicant bank then & there. The 2^nd defendant agreed to stand as Continuing Guarantor for the repayment of the said loan with interest & costs thereon and executed deed of continuing guarantee dt.31.01.17 in favour of the Applicant Bank.

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In consideration of the said Overdraft Facility, the 1^st defendant by admitting & acknowledging his liability executed Revival Letter dt.07.01.20 in favour of the applicant bank.

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Common to all Loans & Facility

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In consideration of the above said loan & facility, the defendants on 27.12.16 deposited their title deeds morefully described in Annexure II herein relating to the immovable property described in the 'B' Schedule herein, with an intention to create an equitable mortgage by deposit of title deeds over the said property with the applicant bank and executed registered memorandum of deposit of title deeds dt.04.04.17 by confirming the deposit of title deeds in favour of the applicant bank. Hence the applicant bank is a mortgagee entitled to proceed against the mortgaged property mentioned in the 'B' Schedule.

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The defendants have not repaid the loans as agreed and promised by them and thus they have committed default in repaying the loan amount with interest & costs. Despite the repeated demands, the defendants did not take any sincere steps to discharge the loans. Hence the applicant bank is constrained to file this application before this Hon'ble Tribunal.

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OA No. 446/2022

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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. 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 total sum of Rs.24,58,577.55p i.e., (i) Rs.3,32,748.52p together with interest at the rate of 10.25% p.a. with compounded half yearly rests plus penal interest at the rate of 2%p.a. in respect of Kisan Credit Card Facility (ii) Rs.21,25,829.03p together with interest at the rate of 10.60% p.a. with compounded half yearly rests plus penal interest at the rate of 2%p.a. in respect of Overdraft 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

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Annexure – I

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Loan Documents executed by the Defendants

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Kissan Credit Card Facility

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S. No.	Date	Description of document	Exhibits
1	27.12.16	Letter of Arrangement executed by 1^st defendant in favour of the applicant bank	Ex.No.A-01
2	27.12.16	Hypothecation Agreement executed by the 1^st defendant in favour of the applicant bank	Ex.No.A-02
3	05.12.19	Revival letter executed by the 1^stdefendant in favour of the applicant bank	Ex.No.A-03
4	----	Statement of accounts maintained by the applicant bank in the course and conduct of the business	Ex.No.A-04

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Overdraft Facility

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S. No.	Date	Description of document	Exhibits
1	31.01.17	Letter of Arrangement executed by 1st	Ex.No.A-05
		defendant in favour of the applicant bank
2	31.01.17	Hypothecation Agreement executed bythe 1^st	Ex.No.A-06

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OA No. 446/2022

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		defendant in favour of the applicant bank
3	31.01.17	Guarantee Agreement executed by the 2nd defendant in favour of the applicant bank	Ex.No.A-07
4	07.01.20	Revival letter executed by the 1^stdefendant in favour of the applicant bank	Ex.No.A-08
5	---	Statement of accounts maintained by the applicant bank in the course and conduct of the business	Ex.No.A-09

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Common to All Loans & Facility

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S. No.	Date	Description of document	Exhibits
1	04.04.17	Registered Memorandum of Deposit of Title deeds executed by the defendants in favour of the applicant bank	Ex.No.A-10

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List of Documents Annexure – II Title deeds deposited by the defendants

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S. No.	Date	Description of document	Exhibits
1	12.12.56	Registered sale deed executed by Rethinam Udayar in favour of Govindasamy Udayar (Doc.No.5783/1956)	Ex.No.A-11
2	25.11.61	Registered sale deed executed by Pitchaih Udayar in favour of Govindasamy Udayar (Doc.No.6705/1961)	Ex.No.A-12
3	31.08.67	Registered sale deed executed by Mariyayee Ammal & another in favour of Govindasamy Udayar(Doc.No.4345/1967)	Ex.No.A-13
4	28.09.01	Registered partition deed entered into between Govindasamy Udaiyar & others (Doc.No.4658/01)	Ex.No.A-14
5	24.06.11	Registered settlement deed executed by Dharmaraj in favour of Pandian (Doc.No.5678/11)	Ex.No.A-15
6	24.06.11	Registered settlement deed executed by Dharmaraj in favour of Kannan (Doc.No.5679/11)	Ex.No.A-16
7	10.12.15	Patta issued by Special Thasildar, Zonal Deputy Thasildar, Tiruverumbur standing in thename of Kannan&another	Ex.No.A-17
8	28.03.14 &	House tax receipt for the years 2012-13 & 2014-15 &2015-16 issued byPathalapettai	Ex.No.A-18

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OA No. 446/2022

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28.01.16	Panchayat	standing	in	the	name	of
	Dharmaraj	&Pandian

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Schedule of Properties

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'A' Schedule Hypothecated Goods

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All standing crops etc., situated at land belonging to defendants Pathaalapettai Village & Kamarajapuram Village, Trichy District

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'B' Schedule Mortgage Property

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Trichy District, Trichy Registration District, Thiruverumbur Sub Registration District, Thiruverambur Taluk, Pathalapettai Village, Kudi Street, a house site measuring 11 cents and 1881 Sq.ft comprised in Natham S.No.286/1-O corresponding to UDR S.No.286/41 and buildings constructed thereon bearing old Door No.5/15 corresponding to new Door No.8/43 within the following boundaries.

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North of : Plot belonging to Patchamuthu Udayar South of : East-West Street East of : Plot belonging to Karuppur Udayar West of : Plot belonging to Kannusamy Udayar

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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. Abhinav Bothra, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Kissan Credit Card Facility and Overdraft 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 given by the defendants at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-18 in support of its claim in the OA.

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OA No. 446/2022

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The Letter of Arrangement executed by 1st defendant in favour of the applicant bank has been marked as Ex.No.A-01, Hypothecation Agreement executed by the 1st defendant in favour of the applicant bank has been marked as Ex.No.A-02, Revival letter executed by the 1st defendant in favour of the applicant bank has been marked as Ex.No.A-03, Statement of accounts maintained by the applicant bank in the course and conduct of the business has been marked as Ex.No.A-04, Letter of Arrangement executed by 1st defendant in favour of the applicant bank has been marked as Ex.No.A-05, Hypothecation Agreement executed by the 1st defendant in favour of the applicant bank has been marked as Ex.No.A-06, Guarantee Agreement executed by the 2nd defendant in favour of the applicant bank has been marked as Ex.No.A-07, Revival letter executed by the 1st defendant in favour of the applicant bank has been marked as Ex.No.A-08, Statement of accounts maintained by the applicant bank in the course and conduct of the business has been marked as Ex.No.A-09, Registered Memorandum of Deposit of Title deeds executed by the defendants in favour of the applicant bank has been marked as Ex.No.A-10

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Registered sale deed executed by Rethinam Udayar in favour of Govindasamy Udayar (Doc.No.5783/1956) has been marked as Ex.No.A-11, Registered sale deed executed by Pitchaih Udayar in favour of Govindasamy Udayar (Doc.No.6705/1961) has been marked as Ex.No.A-12, Registered sale deed executed by Mariyayee Ammal & another in favour of Govindasamy Udayar (Doc.No.4345/1967) has been marked as Ex.No.A-13, Registered partition deed entered into between Govindasamy Udaiyar & others (Doc.No.4658/01) has been marked as Ex.No.A-14, Registered settlement deed executed by Dharmaraj in favour of Pandian (Doc.No.5678/11) has been marked as Ex.No.A-15, Registered settlement deed executed by Dharmaraj in favour of Kannan (Doc.No.5679/11) has been marked as Ex.No.A-16, Patta issued by Special Thasildar, Zonal Deputy Thasildar, Tiruverumbur standing in the name of Kannan & another has been marked as Ex.No.A-17, House tax receipt for the years 2012-13 & 2014-15 & 2015-16 issued by Pathalapettai Panchayat standing in the name of Dharmaraj & Pandian has been marked as Ex.No.A-18. 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

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(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.24,58,577.55p i.e., (i) Rs.3,32,748.52p together with simple interest at the rate of 6% p.a. in respect of Kissan Credit Card Facility (ii) Rs.21,25,829.03p together with simple interest at the rate of 6% p.a. in respect of Overdraft 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 total sum of Rs.24,58,577.55p i.e., (i) Rs.3,32,748.52p together with simple interest at the rate of 6% p.a. in respect of Kissan Credit Card Facility (ii) Rs.21,25,829.03p together with simple interest at the rate of 6% p.a. in respect of Overdraft 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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OA No. 446/2022

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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 Kissan Credit Card Facility and Overdraft 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 19^th January, 2026.

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Sd/-

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(SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 20.01.2026

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State Bank of India v. D Kannan

Case brief

What is this about?

What did the court decide?

State Bank of India v. D Kannan

Case brief

What is this about?

What did the court decide?

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