Allowed

Canara Bank v. M/S. Sumuka Cnc Tech

DRT29 May 2026OA/53/2023

Case brief

AI extract

What is this about?

The DRT-II, Chennai allowed a Recovery Certificate application filed by a bank against borrowers for an outstanding sum of Rs. 85,62,788. The Tribunal found the bank proved the loan liability and admitted the proof affidavit, noting the amount was due from the joint and several defendants.

What did the court decide?

Allowed OA and permitted recovery of Rs. 85,62,788 with interest via Recovery Certificate issued to Recovery Officer.

Canara Bank versus M/S. Sumuka Cnc Tech — Contract and Commercial Disputes | DRT (2026)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 29^th day of May, 2026

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PRESENT: SHRI SHARANG DHAR UPADHYAY PRESIDING OFFICER

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OA No.53 of 2023

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Canara Bank Hosur II Branch Erstwhile Syndicate Bank Rep. by its Senior Manager Eswari Complex, Tank Street Hosur – 635 109 …Applicant

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Versus

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M/s Sumuka CNC TEch Represented by its Proprietor Mr. M. Gunasekar

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No.425/1, Alur Village Shoolagiri Union, Hosur – 635 109

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M. Gunasekar No.3/82A, Bharath Nagar Arasanatti SIPCOT PO Hosur – 635 109 …Defendants

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Counsels on Record / Appeared

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Counsel for Applicant Bank : M/s AGD Balakumar Defendants ex-parte on 04.08.2023

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FINAL ORDER

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This application is filed by the applicant bank under Section 19(1) of

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Recovery of Debts and Bankruptcy Act, 1993 against the defendants’

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seeking issuance of a Recovery Certificate for recovery of an aggregate sum of Rs.85,62,788/- comprising a sum of Rs.70,58,292/- together with

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interest at the rate of 10.75% per annum with monthly rests being the amount due under Term Loan account and a sum of Rs.15,04,496/together with interest at the rate of 9.25% per annum with monthly rests being the amount due under GECL Loan plus 2% per annum penal interest from the date of the application till the date of realisation along with costs of the application and for schedule mentioned properties.

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The subject matter of the case is various credit facilities availed by the defendants from the Applicant Bank.

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It is the case of the applicant that the 1^st defendant represented by its Proprietor, M. Gunasekar, the 2^nd defendant approached the erstwhile Syndicate Bank, Hosur Branch for availing the financial assistance and considering the said request the applicant sanctioned a Term Loan of Rs.75,00,000/- on 20.05.2018 and a GECL Loan of Rs.13,00,000/- on 12.08.2020. It is stated that the 1^st defendant executed Composite Hypothecation Agreement dated 21.5.2018 and Agreement cum Deed of Hypothecation dated 12.08.2020 alongwith other loan documents in favour of the applicant bank.

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It is also the case of the applicant that the 1^st defendant had availed the aforesaid Term Loan and GECL facility by projecting lucrative business operation but on ground reality, the credit facility was not routed to actual business and diverted the same for ulterior purpose which the applicant

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bank came to understand subsequent to money trailing noted by the investigating authorities.

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It is also the case of the applicant that the defendants failed to comply with the terms and conditions of sanction and were highly irregular in repayment and failed to regularize the loan account despite repeated demands and hence the loan account was classified as NPA on 30.07.2021. It is further stated that as the defendants did not come forward to clear the outstanding dues, the applicant issued demand notice on 06.11.2021 requesting the defendants to clear the outstanding dues but in vain. Hence the present application is filed for recovery of its dues.

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Summons was taken out to the 1^st defendant was returned with endorsement “insufficient” and the summons to 2^nd defendant was served. Since 1^st defendant is represented by its Proprietor 2^nd defendant, it is treated as deemed service. As there was no representation for the defendants continuously and on 04.08.2023, they were set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 11 documents, which were marked as Ex. A-1 to A-11 on 09.02.2024. The Ld. Counsel for Applicant Bank made his submissions on 27.04.2026 and thereafter the matter stood till this date for passing final orders.

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The following issues arise for consideration in the matter: -

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(a) Whether the applicant had succeeded in proving the liability of the defendants?

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(b) What order as to cost of the proceedings need be passed?

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These issues are considered together.

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Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

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The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-11 along with the proof affidavit. The documents produced in evidence are all found admissible. The proof affidavit of the applicant bank remained unchallenged and unrebutted. Therefore, on careful consideration of proof affidavit along with exhibits filed on behalf of the applicant bank, besides the material placed before the Tribunal, the Tribunal is satisfied that the applicant bank has successfully proved the OA claim against the defendants. Further, the statement of accounts in respect of the loan account produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendants. It is clear from the statement of accounts that penal interest is not capitalized.

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In view of the foregoing, it is clearly evident that the application filed by the applicant bank is well within the period of limitation and this Tribunal possesses the territorial and pecuniary jurisdiction to entertain this OA.

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In view of the fact that the loan facility availed by the defendants is a Cash Credit facility and loan for its business and the applicant has claimed interest at contractual rate till the date of filing of the OA, this Tribunal is of the view that the pendente lite interest can be awarded at reduced rates.

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In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan, which the applicant is entitled to realize. Hence, OA is disposed off in the following manner: -

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(a) OA No.53 of 2023 stands allowed.

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(b) Applicant is permitted to realize an aggregate sum of Rs.85,62,788/in the following manner from the defendants jointly and severally from the date of filing of the OA till the date of its realization in full after deducting all the amounts received / realized by them during the pendency of OA and by sale of schedule mentioned property and other assets of the defendants.

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(a) A sum of Rs.70,58,292/- together with interest at the rate of 10% per annum (simple) being the amount due under Term Loan;

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(b) A sum of Rs.15,04,496 together with interest at the rate of 9%

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per annum (simple) being the amount due under GECL Loan and

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(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the 2^nd defendant is personally liable for all such amounts due as ordered above.

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(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 15 days from the date of receipt of the copy of the order.

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(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

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Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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Sd/(SHARANG DHAR UPADHYAY ) PRESIDING OFFICER DRT-II, CHENNAI

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(Dictated to PS, who typed in the system directly, corrected, signed and pronounced by me in Open Court, on this 29^th day of May, 2026)

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EXHIBITS MARKED BY APPLICANT BANK

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S. No.	Date	Description of Documents	Exhibit Nos.
1.	02.05.2018	Application for credit facility to Micro and Small Enterprises.	A-1
2.	20.05.2018	Loan sanction letter for Term Loan facility	A-2
3.	21.05.2018	Composite Hypothecation Agreement executed by the defendants	A-3
4.	04.10.2021	Acknowledgement of debt cum security executed by the defendants.	A-4
5.	01.06.2020	Application for Credit facility to Micro and Small Enterprises.	A-5
6.	12.08.2020	Loan sanction letter for GECL loan facility	A-6
7.	12.08.2020	Agreement cum deed of hypothecation executed by the defendants	A-7
8.	12,08.2020	Demand Promissory Note executed by the defendants	A-8
9.	04.10.2021	Acknowledgement of debt cum security executed by the defendants	A-9
10.	06.11.2021	Demand Notice issued by the applicant under Section 13(2) of the SARFAESI Act.	A-10
11.		Statement of Accounts	A-11

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Sd/- (SHARANG DHAR UPADHYAY ) PRESIDING OFFICER DRT-II, CHENNAI

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DESCRIPTION OF PROPERTY

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List of movable property mortgaged with the applicant bank by the defendants

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6 Nos. of Jothi make CNC Lathe Machine Model DX200-3A with Fanuc Controller and all standard accessories and electrical.

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Machine Serial Nos. 60025598-2018, 60025599-2018, 60025648-2018, 60025668-2018, 60026812-2018, 60027570-2018

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Sd/-

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(SHARANG DHAR UPADHYAY ) PRESIDING OFFICER DRT-II, CHENNAI

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Canara Bank v. M/S. Sumuka Cnc Tech

Case brief

What is this about?

What did the court decide?

Canara Bank v. M/S. Sumuka Cnc Tech

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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