Allowed

Bank of Baroda v. M/s. Madurai Idly Shop

DRT2 Jul 2026OA/493/2022

Case brief

AI extract

What is this about?

DT No. 493/2022 allowed Bank of Baroda's application to recover Rs. 23.48 lakhs outstanding from respondents including proprietors, guarantors, and guarantors for movables and immovable properties secured. Court allowed principal and interest at 10.50% with half-yearly rests, directing payment within one month.

What did the court decide?

Directed respondents to pay jointly/severally sum of Rs. 23,48,965.90 with interest at 10.50% p.a. with half yearly rests within one month. Liberty to sell properties in case of default.

Bank of Baroda versus M/s. Madurai Idly Shop — Contract and Commercial Disputes | DRT (2026)

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OA No. 493/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 02^nd DAY OF JULY, 2026 PRESENT: SEEMA SINHA, [PR. DISTRICT & SESSIONS JUDGE – Retd] PRESIDING OFFICER

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OA No.493/2022

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Between

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Bank of Baroda, Theni Branch, 371, Periakulam Road, Theni District – 625 531 Rep. by its Branch Manager. ---Applicant Bank

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And

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M/s. Madurai Idly Shop, Proprietor Mrs. V.Parvathipriya, Near Meenakshi Sunderaswarar Temple, Ring Road Corner, Theni District - 625 531.

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Mrs.V.Parvathipriya W/o. Mr.M.Venkatesan, Ward No.11, Door No.11-2-12, New No.54, Vellaiyappa Pillai Street, Veerapandi, Veerapandi Village, Theni Taluk, Theni District - 625 534.

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Mr.M.Venkatesan, S/o. Mr.R.Marisamy, Ward No.11, Door No.11-2-12, New No.54, Vellaiyappa Pillai Street, Veerapandi, Veerapandi Village, Theni Taluk, Theni District - 625 534.

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OA No. 493/2022

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Mr.M.Srinivasan, S/o. Mr.R.Marisamy, 15, Sesuki Illam, Ramanasri Garden, Madurai South, Subramaniapuram, Madurai - 625 011. ---- Defendants

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Counsel for the Applicant Bank : M/s V Kasirajan and A Meenakshi Sundaram

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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 09.05.2022 to recover from the Defendants a sum of Rs.23,48,965.90p together with interest at the rate of 10.50 % 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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On application of the defendant No.1, the applicant sanctioned term loan a sum of Rs.30,00,000/- (under credit guarantee scheme for micro and small enterprises) to purchase of machineries and reimbursement of cost of Machinery, against the security of schedule property, and on condition of execution of necessary documents in favour of the applicant. The defendant No.1 has agreed to repay the principal amount a sum of Rs.30,00,000/- with accrued interest at the rate of 1.40% above one year MCLR plus strategic premium (i.e.8.70% +0.25%+ 1.40%=10.35%) per annum compounded at monthly rest or at such rest and such interest being added to the balance outstanding dues on the last working day of every calendar month and the said interest if unpaid will become part of the amount advanced (i.e. the

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OA No. 493/2022

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principal amount as mentioned above) and bears interest at the same rate. 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, The loan amount is repayable in 84 equal monthly consecutive instalments. 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 of any installment or violation of the terms and conditions of sanction. The defendants have agreed to pay 2% additional interest in case of default. As security, evidence and cover, for the said loan a sum of Rs.30,00,000/- the defendant No.1 has executed the following documents at Theni on 14.05.2019 in favour of the applicant bank viz., demand promissory Note, Letter of Installment with acceleration clause and composite hypothecation agreement.

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The defendant Nos.2 to 4 in consideration of applicant granting term loan facility to a limit of Rs.30,00,000/- to the defendant No.1, after knowing all the terms and conditions of the said term loan facility, agreed to stand as guarantor for all the amounts due from the defendant No.1 to the applicant and to that effect, the defendant Nos.2 to 4 have jointly executed a general form of guarantee on 14.05.2019 in favour of the applicant bank.

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The defendant Nos.3 and 4 with an intention to create security for the entire outstanding amount due for the aforesaid term loan availed and to be availed from the applicant bank. They have deposited with the applicant bank at Theni, the original title deeds of their properties situate at Theni district and Memorandum of deposit of title deeds dated 14.05.2019 jointly executed by the defendant Nos.3 and 4 were duly registered as doc no.3578/2019. Hence a valid equitable mortgage were created over the above said properties in favour of the mortgagee in respect of the entire outstanding amount due from the defendant No.1.

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The defendants failed to repay the loan amount as agreed to. Hence the defendant No.1's Loan Account was classified as Non Performing Assets on 31.01.2020. On 15.02.2020, the Applicant bank issued notice under Sec 13(2) of the SARFAESI Act, demanding the Defendants to repay the loan amount with interest. Further the opportunity given by applicant Bank was not utilized by the defendants and hence, the applicant bank without alternative issued possession notice dated 28.09.2020 in the above said mortgaged properties. The symbolic possession of the above said mortgaged properties were taken by the applicant bank under SARFAESI Act. But even after, they have not taken efforts to clear the liabilities. The defendants have not cleared the liabilities. Hence, the applicant bank has taken steps under SARFAESI ACT for sale of the secured assets and issued sale notice dated 28.10.2020 in the said mortgaged properties were sold in the public auction to the highest

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OA No. 493/2022

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bidder Mr.K.Maheswaran, for a sum of Rs.12,89,000/-. The amount realized from the auction i.e., is Rs.12,89,000/- was credited in the account of M/s. "Madurai Idli Shop” and sale certificate was issued by applicant bank to the highest bidder Mr.K Maheswaran. On 31.07.2021, possession was handed over to auction purchaser Mr K Maheswaran and on 09.07.2021, sale certificate was registered as document no.6395/2021.

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Despite the reminders of the applicant, the defendants dragged on to repay the remaining liabilities. Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.23,48,965.90p together with interest at the rate of 10.50 % 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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		List of Documents
Sl. No.	Date	Particulars	Exhibit No.
1	14.05.2019	Original Sanction letter for a sum of Rs.30,00,000/- issued by the applicant bank and duly accepted by the defendants	Ex. No. A-01
2	14.05.2019	Original Letter of Sole Proprietorship	Ex. No. A-02
3	14.05.2019	Original Demand Promissory Note executed by the defendant No.1 in favour of the applicant bank	Ex. No. A-03
4	14.05.2019	Original Letter of Installment with acceleration clause executed by the defendant No.1 in favour of the applicant bank	Ex. No. A-04
5	14.05.2019	Original Composite Hypothecation Agreement executed by the defendant No.1 in favour of the applicant bank	Ex. No. A-05
6	14.05.2019	Original General Form of Guarantee executed by the defendant No.2 in favour of the applicant bank	Ex. No. A-06
7	14.05.2019	Original General Form of Guarantee executed by the defendant No.3 in favour of the applicant bank	Ex. No. A-07
8	14.05.2019	Original General Form of Guarantee executed by the defendant No.4 in favour of the applicant bank	Ex. No. A-08
9	14.05.2019	Original Declaration-cum-Undertaking-cum- Authority jointly executed by the defendants in favour of the applicant bank	Ex. No. A-09
10	14.05.2019	Online SRO copy of Agreement Relating to deposit of Title deeds jointly executed by defendant Nos.3 and 4 in favour of applicant bank (Doc.No.3578/2019)	Ex. No. A-10

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OA No. 493/2022

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11	15.02.2020	Xerox copy of 13(2) Demand notice issued by applicant bank to the defendants	Ex. No. A-11
12	18.02.2020	Xerox copy of Acknowledgement card received from defendant No.4	Ex. No. A-12
13	17.02.2020	Xerox copy of Postal cover returned as "Left" from the defendant nos.1 to 3	Ex. No. A-13
14	28.09.2020	Xerox copy of 13(4) Possession Notice issued by the Applicant Bank	Ex. No. A-14
15	29.09.2020	Xerox copy of Postal cover returned as "Left" from defendants	Ex. No. A-15
16	30.09.2020	Xerox copy of Paper Publication of Possession Notice in "Dinamani"	Ex. No. A-16
17	30.09.2020	Xerox copy of Paper Publication of Possession Notice in "The New Indian Express"	Ex. No. A-17
18	28.10.2020	Xerox copy of Sale notice issued by applicant bank	Ex. No. A-18
19	21.04.2021	Xerox copy of Cr.M.P. No. 848/2021 order passed byHon'ble Chief Judicial Magistrate,Theni	Ex. No. A-19
20	09.07.2021	Xerox copy of Sale certificate executed by applicant bank in favour of Mr. R. Maheswaran (Auction Purchaser) (Doc No.6395/2021)	Ex. No. A-20
21	-------	Extract copy of statement of accounts	Ex. No. A-21
22	-------	Extract copy of Memorandum of Interest	Ex. No. A-22

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SCHEDULE OF PROPERTY (Movables)

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I. The Whole of the Borrower's stocks, both present and future and including but without prejudice to the generality of the foregoing words, all stocks of raw materials, works-in-process, semi-finished goods and finished goods such as Hypothecation of Vessel, Cooking, Equipments, Furniture Stock, book debt and other items in the restaurant whatsoever and wheresoever's situate and/or in transit whether now belonging to or that may at any time during the continuance of this security belong to the Borrower or that may be held by any party anywhere to the order and disposition of the Borrower.

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II. All the present and future book-debts, outstanding moneys, receivables, claims, bills, contracts, engagements and securities which are now due and owing or which may at anytime hereafter during the continuance of this security become due and owing to the Borrower in the course of its business by any person, firm, company or body corporate or by the Government of India or any state Government or Indian Railways or any Government Department or Office or any Municipal or Local or Public or Semi-Government body or authority whatsoever including those relating to the assets leased out and/or given on hire purchase basis.

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III. All the tangible movable machinery and plant and cranes, boats and craft sand the vehicles of the Borrower together with spares, tools and accessories and other movables, both present and future, and the furniture, fixtures and fittings and

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OA No. 493/2022

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office equipment whether installed or not and whether lying looser in cases which are now lying or stored in or about or shall be brought into or be stored or be in or upon or about the Borrower's premises and go downs or wherever else the same may be or be held by any party to the order or disposition of the Borrower (including those on lease or hire-purchase) relating or pertaining to the Borrower's works at Theni

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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. Ganesh Babu, who is the Branch Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Term Loan 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-22 in support of its claim in the OA.

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I scrutinized the document filed by the applicant bank and I find that the Original Sanction Letter dated 14.05.2019 for a sum of Rs.30,00,000/duly accepted by the defendants was marked as Ex.A-01; the Original Letter of Sole Proprietorship dated 14.05.2019 was marked as Ex.A-02; the Original Demand Promissory Note dated 14.05.2019 executed by Defendant No.1 in favour of the Applicant Bank was marked as Ex.A-03; the Original Letter of Installment with Acceleration Clause dated 14.05.2019 executed by Defendant No.1 was marked as Ex.A-04; the Original Composite Hypothecation Agreement dated 14.05.2019 executed by Defendant No.1 was marked as Ex.A-05; the Original General Form of Guarantee dated 14.05.2019 executed by Defendant No.2 was marked as Ex.A-06; the Original General Form of Guarantee dated 14.05.2019 executed by Defendant No.3 was marked as Ex.A-07; the Original General Form of Guarantee dated 14.05.2019 executed by Defendant No.4 was marked as Ex.A-08; the Original Declaration-cum-Undertaking-cum-Authority dated 14.05.2019 jointly executed by the defendants was marked as Ex.A-09; the Online SRO copy of the Agreement Relating to Deposit of Title Deeds dated 14.05.2019 jointly executed by Defendant Nos.3 and 4 in favour of the Applicant Bank

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OA No. 493/2022

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(Document No.3578/2019) was marked as Ex.A-10; the Xerox copy of the Section 13(2) Demand Notice dated 15.02.2020 was marked as Ex.A-11; the Xerox copy of the Acknowledgement Card dated 18.02.2020 received from Defendant No.4 was marked as Ex.A-12; the Xerox copy of the Postal Cover returned with the endorsement "Left" in respect of Defendant Nos.1 to 3 dated 17.02.2020 was marked as Ex.A-13; the Xerox copy of the Section 13(4) Possession Notice dated 28.09.2020 was marked as Ex.A-14; the Xerox copy of the Postal Cover returned with the endorsement "Left" dated 29.09.2020 was marked as Ex.A-15; the Xerox copy of the Paper Publication of the Possession Notice in Dinamani dated 30.09.2020 was marked as Ex.A-16; the Xerox copy of the Paper Publication of the Possession Notice in The New Indian Express dated 30.09.2020 was marked as Ex.A-17; the Xerox copy of the Sale Notice dated 28.10.2020 was marked as Ex.A-18; the Xerox copy of the order dated 21.04.2021 passed by the Hon'ble Chief Judicial Magistrate, Theni, in Cr.M.P. No.848 of 2021 was marked as Ex.A-19; the Xerox copy of the Sale Certificate dated 09.07.2021 executed by the Applicant Bank in favour of Mr. R. Maheswaran, Auction Purchaser (Document No.6395/2021) was marked as Ex.A-20; the Extract copy of the Statement of Accounts was marked as Ex.A-21; and the Extract copy of the Memorandum of Interest was marked as Ex.A-22.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 . The Applicant Bank

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is entitled for a final order on the following lines:-

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OA No. 493/2022

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The Applicant Bank is entitled to recover from the Defendants, a sum of Rs.23,48,965.90p together with interest at the rate of 10.50 % p.a. 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 sum of Rs.23,48,965.90p together with interest at the rate of 10.50 % p.a. with half yearly rests in respect of Term 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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(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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OA No. 493/2022

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(d) Any amount remitted during the course of this proceedings shall be

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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 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 N, taken down, transcribed, typed by him, corrected and pronounced by me in the Open Court in this the 02^nd July, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 20.07.26

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Bank of Baroda v. M/s. Madurai Idly Shop

Case brief

What is this about?

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Bank of Baroda v. M/s. Madurai Idly Shop

Case brief

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What did the court decide?

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