Allowed

Canara Bank v. Ratheesh Kumar

DRT13 Jan 2026OA/472/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application under Sec.19(1) of the RDB Act by Canara Bank against three defendants. The Tribunal approved the bank's claim for outstanding term loans, interest, and penal charges based on documented sanctions and acknowledgements of debt.

What did the court decide?

Defendants directed to pay Rs.34,42,894.83p including interest; liberty granted to sell movables/immovables for satisfaction of debt.

Canara Bank versus Ratheesh Kumar — Contract and Commercial Disputes | DRT (2026)

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OA No. 472/2022

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fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 13^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.472/2022

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Between

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Canara bank, Thuckalay Branch, P.B.No.21/37-L 1^st Floor, Vasantham Main Road, Thuckkalay – 629 175, Kanyakumari District. Rep. By its Branch Manager.

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---Applicant Bank

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And

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Mr. Ratheesh Kumar,

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S/o. Sivalingam, 1-79 Valladambu vilai,

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Puliyanvilai, Manakkarai Post, Thuckkalay.

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Mr. A. Subash,

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S/o. Ayyanar, 8/42, Poolan vode, Amman Koil Road, PeyanKuzhi (PO), Thuckkalay.

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Mr. M. Joseph, S/o. Manivel, 7/118A Pullivillai, Mekkamandapam, Kalkulam.

---Defendants

Page 1 of 9

OA No. 472/2022

Counsel for the Applicant Bank : M/s C. Deepak

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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 13.01.2022 to recover from the Defendants a total sum of Rs.34,42,894.83p i.e.,

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(i) Rs.3,66,095.93p together with interest at the rate of 9.45% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan

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(ii) Rs.7,08,190.94p together with interest at the rate of 9.45% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan

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(iii) Rs.9,06,956.50p together with interest at the rate of 10.15% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan and

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(iv) Rs.14,61,651.46p together with interest at the rate of 8.90% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term 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 1^st Defendant has applied for micro and small enterprises and various other facilities before the applicant on 29.9.2015 and after scrutiny of documents the applicant has sanctioned the said term loan to the tune of Rs.3,60,000/- as a Term Loan and Rate of Interest was fixed at 10.45%p.a. under Sanction Reference No.0923-292-1516 dated 30.9.2015 and the repayment was fixed at 6000/- per month in 60 months and in pursuant to the sanction, the defendant had executed the Agreement Cum Deed of Hypothecation dated 30.9.2015

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Page 2 of 9

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OA No. 472/2022

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The Defendant had applied another Term loan in Micro & Small enterprises dated 10.12.2015 and the applicant sanctioned the Loan to the tune of Rs.5,50,000/- to purchase Datsun Go Plus Car with Rate of Interest fixed at 10.15%p.a. under Sanction reference No.CR923-675-1516 on 17.12.2015. The applicant further submits that the repayment was fixed at Rs.9200/- in 84 Easy monthly installments and in pursuant to the loan availed, the defendant had hypothecated Re: Vechicles dated 17.12.2015.

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Again the defendant had applied another Term Loan dated 22.2.2016 and the said loan was sanctioned by applicant to the tune of Rs.6,00,000/for the Purpose of Digital Control Room with Rate of Interest fixed at 10.90% on 24.2.2016 and the repayment was fixed at 72 equated monthly installments of Rs.11,400/ and the defendant has executed the Agreement Cum Deed of Hypothecation dated 24.2.2016.

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After that the defendant had applied another loan like Micro & Small Enterprises dated 30.5.2016 and the said Loan was sanctioned to the tune of Rs.10,00,000/- as an Term Loan MSME with Rate of Interest fixed at 10.90% on 2.6.2016 and the repayment was fixed at 72 equated monthly installments of Rs.19,000/- and in pursuant to the loan availed, the defendant had executed the Agreement Cum Deed of Hypothecation dated 2.6.2016 and the 2^nd and 3^rd defendant had executed the Guarantee covering Letter along with Guarantee Agreement and the 1^st defendant had executed the Acknowledgement of Debt and Security dated 12.2.2018, 3.9.2018, 5.8.2020 and 18.8.2021.

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After receiving the loan amount, the Defendants were not regular in repaying the loan and consequently defaulted in repayment as promised to the Applicant. The Applicant was insisting for repayment of loan amount and Defendants have been giving one reason or other to evade from repaying and the loan has become NPA on 30.4.2021

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The defendant did not adhere to the terms of repayment. The defendant visited the Branch and executed Acknowledgement of Debt and Security on various dates and last of which was acknowledged on 18.8.2021 and in favor of the Plaintiff and thereby acknowledged the liability due and payable to the Applicant. 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.34,42,894.83p i.e.,

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Page 3 of 9

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OA No. 472/2022

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(i) Rs.3,66,095.93p together with interest at the rate of 9.45% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan

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(ii) Rs.7,08,190.94p together with interest at the rate of 9.45% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan

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(iii) Rs.9,06,956.50p together with interest at the rate of 10.15% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan and (iv) Rs.14,61,651.46p together with interest at the rate of 8.90% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term 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	29.09.2015	Application form for Loans To Micro & Small Enterprises	Ex.No.A-01
2	30.09.2015	Sanction Memorandum	Ex.No.A-02
3	30.09.2015	Agreement Cum Deed of Hypothecation	Ex.No.A-03
4	10.12.2015	Application form for Loans To Micro & Small Enterprises	Ex.No.A-04
5	17.12.2015	Sanction Memorandum Cum Communication	Ex.No.A-05
6	17.12.2015	Deed of Hypothecation Re-Vehicles	Ex.No.A-06
7	22.02.2016	Application	Ex.No.A-07
8	24.02.2016	Sanction Memorandum	Ex.No.A-08
9	24.02.2016	Agreement Cum Deed of Hypothecation	Ex.No.A-09
10	30.05.2016	Application form for Loans To Micro & Small Enterprises	Ex.No.A-10
11	02.06.2016	Sanction Memorandum	Ex.No.A-11
12	02.06.2016	Agreement Cum Deed of Hypothecation	Ex.No.A-12
13	02.06.2016	Guarantee Covering Letter along with Guarantee Agreement(A.Subash)	Ex.No.A-13
14	02.06.2016	Guarantee Covering Letter along with Guarantee Agreement(M.Joseph)	Ex.No.A-14
15	12.02.2018	Acknowledgement of Debt and Security	Ex.No.A-15
16	03.09.2018	Acknowledgement of Debt and Security	Ex.No.A-16
17	05.08.2020	Acknowledgement of Debt and Security	Ex.No.A-17
18	18.08.2021	Acknowledgement of Debt and Security	Ex.No.A-18
19	07.10.2021	Statement of Accounts Maintained by the applicant bank in regular course and	Ex.No.A-19

Page 4 of 9

OA No. 472/2022

conduct of business

SCHEDULE OF PROPERTIES

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"A" SCHEDULE - HYPOTHECATION

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Item No.1

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16 GB DDR III RAM and Canon 3570 A3 Printer

Item No.2

Datsun GO Car

Item No.3

Battery, HP Printer, Interl Core 15 Processor

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Item No.4

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CCTV Camera system and other items

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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. Anish Babu, who is the Senior Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed four Term Loans 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-19 in support of its claim in the OA.

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The Application form for Loans To Micro & Small Enterprises has been marked as Ex.No.A-01, Sanction Memorandum has been marked as

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Page 5 of 9

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OA No. 472/2022

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Ex.No.A-02, Agreement Cum Deed of Hypothecation has been marked as Ex.No.A-03, Application form for Loans To Micro & Small Enterprises has been marked as Ex.No.A-04, Sanction Memorandum Cum Communication has been marked as Ex.No.A-05, Deed of Hypothecation Re-Vehicles has been marked as Ex.No.A-06, Application has been marked as Ex.No.A-07, Sanction Memorandum has been marked as Ex.No.A-08, Agreement Cum Deed of Hypothecation has been marked as Ex.No.A-09, Application form for Loans To Micro & Small Enterprises has been marked as Ex.No.A-10.

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The Sanction Memorandum has been marked as Ex.No.A-11, Agreement Cum Deed of Hypothecation has been marked as Ex.No.A-12, Guarantee Covering Letter along with Guarantee Agreement (A.Subash) has been marked as Ex.No.A-13, Guarantee Covering Letter along with Guarantee Agreement (M.Joseph) has been marked as Ex.No.A-14, First Acknowledgement of Debt and Security has been marked as Ex.No.A-15, 2^nd Acknowledgement of Debt and Security has been marked as Ex.No.A-16, 3^rd Acknowledgement of Debt and Security has been marked as Ex.No.A-17, 4^th Acknowledgement of Debt and Security has been marked as Ex.No.A-18, Statement of Accounts Maintained by the applicant bank in regular course and conduct of business has been marked as Ex.No.A-19. 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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Page 6 of 9

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OA No. 472/2022

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Therefore, this Original Application is allowed . The Applicant

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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.34,42,894.83p i.e.,

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(i) Rs.3,66,095.93p together with interest at the rate of 9.45% p.a.

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with half yearly rests in respect of Term Loan

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(ii) Rs.7,08,190.94p together with interest at the rate of 9.45% p.a.

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with half yearly rests in respect of Term Loan

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(iii) Rs.9,06,956.50p together with interest at the rate of 10.15% p.a.

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with half yearly rests in respect of Term Loan and

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(iv) Rs.14,61,651.46p together with interest at the rate of 8.90% p.a.

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with half yearly rests in respect of Term 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 a total sum of Rs.34,42,894.83p i.e.,

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(i) Rs.3,66,095.93p together with interest at the rate of 9.45% p.a.

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with half yearly rests in respect of Term Loan

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(ii) Rs.7,08,190.94p together with interest at the rate of 9.45% p.a.

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with half yearly rests in respect of Term Loan

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(iii) Rs.9,06,956.50p together with interest at the rate of 10.15% p.a. with half yearly rests in respect of Term Loan and

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(iv) Rs.14,61,651.46p together with interest at the rate of 8.90% p.a. with half yearly rests in respect of Term Loan from the date of filing of

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Page 7 of 9

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OA No. 472/2022

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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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(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 four Term loans and the Recovery Officer is also directed to proceed with the matter in accordance

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Page 8 of 9

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OA No. 472/2022

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with law. In case, cost memo is not filed before said period of one month,

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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 January, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 17.01.26

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Page 9 of 9

Canara Bank v. Ratheesh Kumar

Case brief

What is this about?

What did the court decide?

Canara Bank v. Ratheesh Kumar

Case brief

What is this about?

What did the court decide?

What the court decided

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