Allowed

Canara Bank v. a Naveena Prop of Arsh Mobiles

DRT21 Jul 2026OA/542/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's application for recovery of over Rs. 1.49 crore outstanding from the defendants. While validating the debt, the tribunal directed the deduction of previously capitalized penal interest prior to calculating subsequent interest, adhering to RBI guidelines.

What did the court decide?

Recovery of Rs. 1,49,96,645.46 less capitalized penal interest, with subsequent interest at prescribed rates, sale of hypothecated/mortgaged properties, and expiry of one month for payment.

Canara Bank versus a Naveena Prop of Arsh Mobiles — Contract and Commercial Disputes | DRT (2026)

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OA No. 542/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 21^st DAY OF JULY, 2026 PRESENT: SEEMA SINHA, [PR. DISTRICT & SESSIONS JUDGE – Retd] PRESIDING OFFICER

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OA No. 542/2023

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Between

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Canara Bank, Periyakulam Branch, 5^th Street, Swarnam Buildings, 18^th Road, Tankarai, Periyakulam – 625 501. Theni District. Rep. by its Chief Manager.

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--- Applicant Bank

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And

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Mrs. A. Naveena, W/o Ashik Raja,

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Prop. ARSH Mobiles, No. 3, Siddha Hospital Complex, Thandupalayam, Theni Main Road, Periyakulam – 625 601.

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Theni District.

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Mrs. A. Naveena, W/o Ashik Raja, Sundarraj Nagar, State Bank Colony, Keelavadagarai, Periyakulam, Theni District.

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Mr. U. Ashikraja, S/o Usman Ali Sait, Sundarraj Nagar, State Bank Colony, Keelavadagarai,

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Periyakulam, Theni District. --- Defendants

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Page 1 of 19

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OA No. 542/2023

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Counsel for the Applicant Bank : Mr. 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 23.05.2023 to recover from the Defendants a sum of Rs. 1,49,96,645.46 ps with subsequent interest as under:-

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(i) Rs. 78,37,255.32ps as on 04.05.2023 towards Cash Credit Loan (A/c No. 1017261010273) with subsequent interest at the rate of 9.25 % p.a. with Monthly Rest plus 2% Penal Interest from 05.05.2023,

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(ii) Rs. 1,16,396.31ps as on 25.04.2023 towards Term Loan (A/c No. 1017768000223) with subsequent interest at the rate of 9.45 % p.a. with Monthly Rest plus 2% Penal Interest from 26.04.2023,

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(iii) Rs. 1,20,335.10ps as on 04.05.2023 towards Micro & Small Enterprises (A/c No. 1017768000231) with subsequent interest at the rate of 9.60 % p.a. with Monthly Rest plus 2% Penal Interest from 05.05.2023,

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(iv) Rs. 1,56,845.31ps as on 10.04.2023 towards Micro & Small Enterprises (A/c No. 1017768000248) with subsequent interest at the rate of 9.90 % p.a. with Monthly Rest plus 2% Penal Interest from 11.04.2023,

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(v) Rs. 4,53,800.31ps as on 30.04.2023 towards Micro & Small Enterprises (A/c No. 1017755000003) with subsequent interest at the rate of 9.25 % p.a. with Monthly Rest plus 2% Penal Interest from 01.05.2023,

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(vi) Rs. 35,29,062.39ps as on 19.04.2023 towards Micro & Small Enterprises (A/c No. 1017768000279) with subsequent interest at the rate of 11.90 % p.a. with Monthly Rest plus 2% Penal Interest from 20.04.2023 and

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(vii) Rs. 27,82,950.72ps as on 03.05.2023 towards Micro & Small Enterprises (A/c No. 170001184984) with subsequent interest at the rate of 9.25 % p.a. with Monthly Rest plus 2% Penal Interest from 04.05.2023,

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Page 2 of 19

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OA No. 542/2023

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from the date of filing of Application till the date of realization with cost and by sale of Hypothecated Goods / Mortgaged 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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(i). The applicant bank submitted that the Defendant has approached the Applicant for availing an loan and the applicant has sanctioned the said loan to the tune of Rs.6,75,000/- as an OCC on 10.11.2017 with the Rate of Interest fixed at 9.85% in Account No. 1017261010273 and the defendant has accepted the sanction by executing the Cash Credit Agreement on 10.11.2017. The defendant has executed the Letter of Proprietorship on 9.11.2017 and 10.11.2017 and the defendant has executed the Request for Overdraft facilities on 10.11.2017 and the Pro-Note was executed by defendant on 10.11.2017.

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(ii) The applicant submitted that the defendant has enhancement the loan and the same was sanctioned by applicant to the tune of Rs. 20,00,000/- as an OCC with the Rate of Interest fixed 10.45% in Account No. 1017261010273 and the defendant has accepted the sanction by executing the Letter of Proprietorship on 30.1.2018. The Supplemental Agreement for Rs. 6,75,000/-to Rs. 20,00,000/- was executed by defendant on 30.1.2018 and the 3^rd defendant has executed the Guarantee covering Letter along with Guarantee Agreement on 30.1.2018 and the defendant has executed the Link Letter to be Obtained When enhancement is considered. The defendant has renewed the loan with enhancement like Micro & Small enterprises on 31.8.2018 and the same was sanctioned by applicant to the tune of Rs. 30,00,000/- with the Rate of Interest fixed at 10.75% in Account No. 1017261010273. The defendant has executed the Link Letter to be Obtained When enhancement is considered on 31.8.2018 and the Letter of Renewal was executed by defendant on 31.8.2018 and the defendant has executed the Pro-Note on 31.8.2018 and the Supplemental Agreement for Rs. 20,00,000/- to Rs. 30,00,000/- was executed by defendant on 31.8.2018.

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(iii). The applicant submitted that the defendant has renewed the loan with enhancement like Micro Small & Medium enterprises on 23.12.2019 and the same was sanctioned by applicant to the tune of Rs. 40,00,000/- with the Rate of Interest fixed at 10.75% in Account No. 1017261010273 and the defendant has accepted the sanction by executing the Link Letter to be Obtained When Enhancement is considered on 23.12.2019. The Letter of Renewal was executed by defendant on

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OA No. 542/2023

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23.12.2019 and the defendant has executed the Pro-Note on 23.12.2019 and the Supplemental Agreement for Rs. 30,00,000/- to Rs. 40,00,000/was executed by defendant on 23.12.2019. The defendant has renewed cum Enhancement the loan and the same was sanctioned by applicant to the tune of Rs. 60,00,000/- ( enhanced from Rs. 40,00,000/-) as an OCC on 11.6.2020 with the Rate of Interest 9.80% of tenability till 22.12.2020 in Account No. 1017261010273 in Sanction Ref: PKM: MSME: 2020.

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(iv) The applicant further submitted that in consideration of loan facilities that the defendant has executed the Common Hypothecation Agreement on 11.6.2020. The defendant has renewed cum Enhancement the loan like Micro Small & Medium Enterprises and the same was sanctioned by applicant to the tune of Rs. 75,00,000/- (enhanced from Rs. 60,00,000/-) as an OCC on 19.10.2020 with the Rate of Interest 9.15% in Account No. 1017261010273 and the defendant has accepted the sanction by executing the Supplemental Common Hypothecation Agreement on 19.10.2020. The defendant has executed the Letter of Proprietorship and the Link Letter to be Obtained when enhancement is considered was executed by defendant on 19.10.2020 and the Supplemental Agreement for Rs. 60,00,000/- to Rs. 75,00,000/- was executed by defendant on 19.10.2020 and the defendant has executed the Pro-Note on 19.10.2020 and the 3rd defendant has executed the Guarantee Agreement on 19.10.2020. The applicant further submitted that the defendant has renewed the loan and the same was sanctioned by applicant to the tune of Rs. 75,00,000/- with the Rate of Interest fixed at 9.15% of tenability renewed upto 20.3.2022 in Account No. 1017261010273 and in Sanction Ref: PKM: MSME: 2021.

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(v) The applicant further submitted that in consideration of loan facilities that the 3^rd defendant has executed the Letter from the Guarantor Whenever limits are to be renewed on 20.3.2021 and the Letter of Renewal was executed by defendant on 20.3.2021.

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(vi) The applicant further submitted that the defendant has applied another loan and the same was sanctioned by applicant to the tune of Rs. 5,00,000/- as an Term Loan on 25.7.2018 with the Rate of Interest fixed at 10.45% and the entire loan of Rs. 5,00,000 is to be repaid in 60 monthly consecutive installment of Rs. 10,735/ of interest and other charges. The the defendant has executed the Letter of Proprietorship on 25.7.2018 and the Deed of Hypothecation Re:Machinery was executed by defendant on 25.7.2018 and the defendant has executed the Letter of Undertaking on executed the 25.7.2018 the and has defendant Acknowledgement of Debt and Security on 23.7.2021.

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(vii) The applicant further submitted that the defendant has applied another loan like Micro & Small Enterprises on 9.4.2018 and the same was

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Page 4 of 19

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OA No. 542/2023

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sanctioned by applicant to the tune of Rs. 4,00,000/- as an Term Loan on 4.9.2018 with the Rate of Interest fixed at 10.55% and the entire loan of Rs. 5,00,000 is to be repaid in 60 monthly consecutive installment of Rs. 8,608/ of interest and other charges. The defendant has executed the Letter of Proprietorship on 4.9.2018 and the Agreement Cum Deed of Hypothecation was executed by defendant on 4.9.2018 and the defendant has executed the Acknowledgement of Debt and Security on 10.8.2021.

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(viii) The applicant further submitted that the defendant has applied another loan like Micro & Small enterprises on 10.5.2019 and the same was sanctioned by applicant to the tune of Rs. 5,00,000/- as an MSME on 18.7.2019 with the Rate of Interest fixed at 11.25% of tenability till 10.5.2024 in Sanction Ref: 1017MS2019000131. The Agreement Cum Deed of Hypothecation was executed by defendant 10.5.2019 and the 3rd defendant has executed the Guarantee covering Letter along with Guarantee Agreement on 10.5.2019.

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(ix) The applicant further submitted that the defendant has applied another loan like Micro & Small Enterprises on 30.5.2020 and the same was sanctioned by applicant to the tune of Rs. 10,00,000/- as an GECL with the Rate of Interest fixed at 7.50% of repayable in 36 equal monthly installments after a moratorium of 12 months from the date of first disbursement of Interest. The defendant has executed the Offer Letter for Guarantee Emergency Credit Line on 30.5.2020 and the Undertaking Letter from Borrower was executed by defendant on 30.6.2020 and the Agreement Cum Deed of Hypothecation was executed by defendant on 30.5.2020 and the defendant has executed the Pro-Note on 30.5.2020.

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(x) The applicant further submitted that the defendant has applied another loan like Micro Small and Medium Enterprises on 19.6.2020 and the same was sanctioned by applicant to the tune of Rs. 39,50,000/- as an MSME on 19.6.2020 with the Rate of Interest fixed till 18.12.2030 in Sanction Ref :- 1017MS2020000087. The applicant further submitted that in consideration of loan facilities that the Term Loan Agreement was executed by defendant on 19.6.2020 and the 3rd defendant has executed the Guarantee covering Letter along with Guarantee Agreement on 19.6.2020.

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(xi) The applicant further submitted that the defendant has applied another loan like Micro & Small Enterprises on 25.10.2021 and the same was sanctioned by applicant to the tune of Rs. 27,00,000/- as an GECL on 25.10.2021 with the Rate of Interest fixed at 7.50% of repayable in 36 equal monthly installments after a moratorium of 24 months from the date of first disbursement of Interest. The Agreement Cum Deed of Hypothecation was

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OA No. 542/2023

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executed by defendant on 25.10.2021 and the defendant has executed the Pro-Note on 25.10.2021.

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(xii) The applicant further submitted that in consideration of loan facilities that the defendant has executed the Memorandum of Deposit of Title Deeds Doc No. 258/2018 on 9.2.2018 and Doc No. 57/2019 on 20.12.2019 and Doc No. 2799/2019 on 20.12.2019.

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(xiii) The Applicant further states that after receiving the loan amount, the Defendants was 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 19.4.2023. The Applicant submits that the defendant did not adhere to the terms of repayment despite demands. In spite of several demands made by the Applicant, the defendant failed and neglected to settle the amount. The defendant visited the Branch and executed Acknowledgement of Debt and Security dated 10.08.2021 in favour of the Plaintiff and thereby acknowledged the liability due and payable to the Applicant.

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(xiv) The Applicant submitted that the defendant is liable to pay a sum of Rs.78,37,255.32ps as on 04.05.2023 in Account No. 1017261010273 and Rs.1,16,396.31ps as on 25.4.2023 in Account No.1017768000223 and Rs.1,20,335.20ps as on 04.05.2023 in Account No. 101776800231 and Rs.1,56,845.31ps as on 10.04.2023 Account No. 1017768000248 and Rs.4,53,800.31ps as on 30.4.2023 in Account No.1017755000003 and Rs.35,29,062.39ps as on 19.4.2023 in Account No. 1017768000279 and Rs.27,82,950.7ps as on 03.05.2023 in Account No. 170001184984 as per account maintained by the Applicant Bank in the regular course of business as per the Bankers Book Evidence Act. The total amount due and payable by the defendant to the Applicant Bank on the date of filing of the Suit is Rs.1,49,96,645.46ps. The defendant is liable to pay the above said amount with interest at 11.25% p.a in Account No. 1017261010273 and at 11.45% p.a in Account No. 1017768000223 and at 11.60% p.a in Account No. 1017768000231 and at 11.90% p.a in Account No. 1017768000248 and at 11.25% p.a in Account No. 1017755000003 and at 13.90% p.a in Account No. 1017768000279 and at 11.25% p.a in Account No. 170001184984 (including penal interest at 2% p.a) with compounded monthly rests from the date of Suit till the date of realization.

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(xv) At present the interest rate charged is at 9.25% per annum in Account No. 1017261010273 and at 9.45% per annum in Account No. 1017768000223 and at 9.60% per annum in Account No. 1017768000231 and at 9.90% per annum in Account No. 1017768000248 and at 9.25% per

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Page 6 of 19

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OA No. 542/2023

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annum in Account No. 1017755000003 and at 11.90% per annum in Account No. 1017768000279 and at 9.25% per annum in Account No. 170001184984 with compounded monthly rests. The defendant, as per Contract, is liable to pay 2% penal interest. Thus, as per present rate of interest provided by the Reserve Bank of India, the applicant is seeking subsequent interest at 11.25 % p.a. in account No. 1017261010273 and at 11.45% p.a. in account No. 1017768000223 and at 11.60% per annum in Account No. 1017768000231 and at 11.90% per annum in Account No. 1017768000248 and at 11.25% per annum in Account No. 1017755000003 and at 13.90% per annum in Account No. 1017768000279 and at 11.25% per annum in Account No. 170001184984 with compounded monthly rests. The Applicant Bank is producing computerized Statement of Account maintained by them in the regular course of business as per the Bankers Book Evidence Act.

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(xvi) Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their liability. Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs. 1,49,96,645.46 ps with subsequent interest as under:-

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(i) Rs. 78,37,255.32ps as on 04.05.2023 towards Cash Credit Loan (A/c No. 1017261010273) with subsequent interest at the rate of 9.25 % p.a. with Monthly Rest plus 2% Penal Interest from 05.05.2023,

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(ii) Rs. 1,16,396.31ps as on 25.04.2023 towards Term Loan (A/c No. 1017768000223) with subsequent interest at the rate of 9.45 % p.a. with Monthly Rest plus 2% Penal Interest from 26.04.2023,

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(iii) Rs. 1,20,335.10ps as on 04.05.2023 towards Micro & Small Enterprises (A/c No. 1017768000231) with subsequent interest at the rate of 9.60 % p.a. with Monthly Rest plus 2% Penal Interest from 05.05.2023,

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(iv) Rs. 1,56,845.31ps as on 10.04.2023 towards Micro & Small Enterprises (A/c No. 1017768000248) with subsequent interest at the rate of 9.90 % p.a. with Monthly Rest plus 2% Penal Interest from 11.04.2023,

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(v) Rs. 4,53,800.31ps as on 30.04.2023 towards Micro & Small Enterprises (A/c No. 1017755000003) with subsequent interest at the rate of 9.25 % p.a. with Monthly Rest plus 2% Penal Interest from 01.05.2023,

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(vi) Rs. 35,29,062.39ps as on 19.04.2023 towards Micro & Small Enterprises (A/c No. 1017768000279) with subsequent interest at the rate of 11.90 % p.a. with Monthly Rest plus 2% Penal Interest from 20.04.2023 and

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(vii) Rs. 27,82,950.72ps as on 03.05.2023 towards Micro & Small Enterprises (A/c No. 170001184984) with subsequent interest at

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the rate of 9.25 % p.a. with Monthly Rest plus 2% Penal Interest from 04.05.2023,

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from the date of filing of this 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	---	Sanction	Ex. No. A-01
2	10.11.2017	Cash Credit Agreement	Ex. No. A-02
3	09.11.2017	Letter of Proprietorship	Ex. No. A-03
4	10.11.2017	Letter of Proprietorship	Ex. No. A-04
5	10.11.2017	Request for Over draft Facilities	Ex. No. A-05
6	10.11.2017	Pro-Note	Ex. No. A-06
7	30.01.2018	Letter of Proprietorship	Ex. No. A-07
8	30.01.2018	Pro-Note	Ex. No. A-08
9	30.01.2018	Supplemental Agreement	Ex. No. A-09
10	30.01.2018	Guarantee Covering Letter along with Guarantee Agreement of Ashik Raja	Ex. No. A-10
11		Link Letter to be Obtained When Enhancement is Considered	Ex. No. A-11
12	31.08.2018	Application form for Loans to Micro, Small & Medium Enterprises	Ex. No. A-12
13	31.08.2018	Sanction	Ex. No. A-13
14	31.08.2018	Link Letter to be Obtained When Enhancement is Considered	Ex. No. A-14
15	31.08.2018	Letter of Renewal	Ex. No. A-15
16	31.08.2018	Pro-Note	Ex. No. A-16
17	31.08.2018	Supplemental Agreement	Ex. No. A-17
18	23.12.2019	Application form for Loans to Micro Small & Medium Enterprises	Ex. No. A-18
19	23.12.2019	Link Letter to be Obtained When Enhancement is Considered	Ex. No. A-19
20	23.12.2019	Letter of Renewal	Ex. No. A-20
21	23.12.2019	Pro-Note	Ex. No. A-21
22	23.12.2019	Supplemental Agreement	Ex. No. A-22
23	11.06.2020	Sanction Communication	Ex. No. A-23
24	11.06.2020	Common Hypothecation Agreement	Ex. No. A-24
25		Application form for Loans to Micro Small & Medium Enterprises	Ex. No. A-25
26	19.10.2020	Supplemental Common Hypothecation Agreement	Ex. No. A-26
27		Letter of Proprietorship	Ex. No. A-27

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			OA No	. 542/2023
28	19.10.2020	Link Letter to be Obtained When Enhancement is Considered Ex.	No.	A-28
29	19.10.2020	Supplemental Agreement Ex.	No.	A-29
30	19.10.2020	Pro-Note Ex.	No.	A-30
31	19.10.2020	Guarantee Agreement Ex.	No.	A-31
32	20.03.2021	Sanction Communication Ex.	No.	A-32
33	20.03.2021	Letter from the Guarantor Whenever Ex.	No.	A-33
		Limits are to be Renewed of Ashik Raja
34	20.03.2021	Letter of Renewal Ex.	No.	A-34

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ACCOUNT NO. 1017768000223

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35	25.07.2018	Sanction Memorandum	Ex. No. A-35
36	25.07.2018	Letter of Proprietorship	Ex. No. A-36
37	25.07.2018	Deed of Hypothecation Re: Machinery	Ex. No. A-37
38	25.07.2018	Letter of Undertaking	Ex. No. A-38
39	23.07.2021	Acknowledgement of Debt and Security	Ex. No. A-39

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ACCOUNT NO. 1017768000231

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40	09.04.2018	Application Form for Loans to Micro & Small Enterprises	Ex. No. A-40
41	04.09.2018	Sanction Memorandum	Ex. No. A-41
42	04.09.2018	Letter of Proprietorship	Ex. No. A-42
43	04.09.2018	Agreement Cum Deed of Hypothecation	Ex. No. A-43
44	10.08.2021	Acknowledgement of Debt and Security	Ex. No. A-44

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ACCOUNT NO. 1017768000248

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45	28.06.2022	Application form for Loans to Micro & Small Enterprises	Ex. No. A-45
46	18.07.2019	Sanction Letter	Ex. No. A-46
47	10.05.2019	Agreement Cum Deed of Hypothecation	Ex. No. A-47
48	10.05.2019	Guarantee Covering Letter along with Guarantee Agreement of Ashik Raja	Ex. No. A-48

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ACCOUNT NO. 1017755000003

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49	30.05.2020	Application form for Loans to Micro & Small Enterprises Ex.	No. A-49
50	30.05.2020	Sanction Memorandum Ex.	No. A-50
510	30.05.2020	Offer Letter for Guaranteed Emergency Credit Line Ex.	No. A-51
52	30.05.2020	Appendix-I Ex.	No. A-52
53	30.05.2020	UndertakingLetter from Borrower Ex.	No. A-53
54	30.05.2020	Agreement Cum Deed of Hypothecation Ex.	No. A-54
55	30.05.2020	Pro-Note Ex.	No. A-55

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ACCOUNT NO. 1017768000279

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56	19.06.2020	Application form for Loans to Micro Small & Medium Enterprises	Ex. No. A-56
57	19.06.2020	Sanction Letter	Ex. No. A-57
58	19.06.2020	Term Loan Agreement	Ex. No. A-58
59		Guarantee Covering Letter along with	Ex. No. A-59
		Guarantee Agreement of Ashik Raja ACCOUNT NO. 17001184984
60	25.10.2021	Application form for Loans to Micro & Small Enterprises	Ex. No. A-60
61	25.10.2021	Sanction Memorandum	Ex. No. A-61
62	25.10.2021	Agreement Cum Deed of Hypothecation	Ex. No. A-62
63	25.10.2021	Pro-Note Mortgaged Documents	Ex. No. A-63
64	27.11.2017	Registered Sale Deed executed by Chellapandi in favour of Naveena in Doc No. 2484/2017	Ex. No. A-64
65	09.01.2018	Registered Settlement Deed executed by Sabira Begum in favour of Ashik Raja in Doc No. 114/2018	Ex. No. A-65
66	28.06.2018	Registered Sale Deed Executed by Rajakannu in favour of Ashik Raja in Doc No. 1195/2018	Ex. No. A-66
67	03.10.2019	Registered Sale Deed Executed by Karthikeyan in favour of Naveena in Doc No. 2122/2019	Ex. No. A-67
68	09.02.2018	Registered Memorandum of Deposit of Title Deeds executed by Ashik Raja in favour of Canara Bank in Doc No. 258/2018	Ex. No. A-68
69	20.12.2019	Registered Supplemental Memorandum of Deposit of Title Deeds executed by Ashik Raja in favour of Canara Bank in Doc No. 57/2019	Ex. No. A-69
70	20.12.2019	Registered Memorandum of Deposit of Title Deeds executed by Naveena in favour of Canara Bank in Doc No. 2799/2019	Ex. No. A-70
71	----	Statement of accounts maintained by applicant bank in regular course and conduct of business	Ex. No. A-71

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SCHEDULE OF PROPERTIES

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'A' Schedule-Hypothecated Goods

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Mobiles Furnutures Electronic Goods

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"B" SCHEDULE - MORTGAGED PROPERTIES

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Periyakulam Rd, Periyakulam No.1 Joint Sub Dist., in Periyakulam Taluk, A. Kamatchipuram Village, Punja house site, Survey No.107/3 0.04.0 Ares, Cent 10 House vacant Site Boundaries:

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East By : Odai West By : Alagarnaickenpatti Main Raod North By : Elivasl Land South By : Parthipan's Land

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Within this boundaries measuring 10 Cent-4360 Sq ft-405.05 Sq.meter. House Site, at present factory building property tax, Assessment No 2928, Electric Service Connection No.05.521.005.563, with ists deposits etc.

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Periyakulam Rd., Periyakulam No.1 Joint Sub Dist., in Periyakulam Taluk, A.kamatchipuram Village Survey No.110/3 Acre 1 Cent 42, Periyakulam Joint 2 Sub Registration office Silvarpatti Village Nallkaruppanpatti Punja Survey No.49/1 on the northern side Acre 1 Cent 37 and other land comprised and prepared layout divided into house plots Plot No.296 and 313 house vacant site. The Boundaries are:

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North By : Plot No.295 and 314 vacant site West By : Layout Road South By : Plot No.297 and 312 vacant site East By : Layout Road

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With in this Boundaries Norther side 80 ft. Southern side 80ft, North South on the both side 30 feet, totally measuring 2400 sq.ft 222.96 sq. meter House vacant site and common rights in the Road mentioned in the layout.

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Periyakulam Rd., Periyakulam No.I Joint Sub Dist., in Periyakulam Taluk, A kamatchipuram Village House Site Survey No. 106/3B divided into the house plots, Plots No. 153, 154, 165, 166 comprised as a single block vacant house site.

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The Boundaries are:

North By : Road West By : Plot No. 152, 167 in house vacant site South By : Road East By : Plot No. 155, 164 in house vacant site

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With in this Boundaries measuring East West 60 ft. North South 80 ft, totally measuring 4800 sq.ft 445.93 sq. meter House vacant site and common rights in the all pathway rights in the survey numbers.

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Periyakulam Rd, Periyakulam No I Joint Sub Dist., in Periyakulam Taluk A kamatchipuram Village Ayan Survey converted into at present House Site Survey No.110/1A 0.07.0 Ares 0.17. Cent and others places jointed prepared layout divided into house plots, Plots No.186 and Plot No.187 The Boundaries are:

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North By : Main Road West By : Main Road South By : Plot No. 185 and 188 East By : Layout Road

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With in this Boundaries East West 80 ft. North South 30 ft, totally measuring 2400 sq.ft 222.96 sq. meter House vacant site and common rights in the Common Road. That the house plot lies within Survey No.110/1A, at present there is no building.

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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.

¶109

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?

¶110

5. 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. P. Rajeshkumar , who is the Chief Manager of the Applicant Bank.

¶111

Page 12 of 19

¶112

OA No. 542/2023

¶113

He has stated in his affidavit that the defendants have availed Open Cash Credit Loan, Term Loan and Micro & Small Enterprises 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 Nos. A-01 to A-71 in support of its claim in the OA.

¶114

The Sanction Letter dated 10.11.2017 has been marked as Ex. No. A- 01. The Cash Credit Agreement dated 10.11.2017 has been marked as Ex. No. A-02. The Letter of Proprietorship dated 09.11.2017 has been marked as Ex. No. A-03. The Letter of Proprietorship dated 10.11.2017 has been marked as Ex. No. A-04. The Request for Overdraft Facilities dated 10.11.2017 has been marked as Ex. No. A-05. The Promissory Note dated 10.11.2017 has been marked as Ex. No. A-06. The Letter of Proprietorship dated 30.01.2018 has been marked as Ex. No. A-07. The Promissory Note dated 30.01.2018 has been marked as Ex. No. A-08. The Supplemental Agreement dated 30.01.2018 has been marked as Ex. No. A-09. The Guarantee Covering Letter along with the Guarantee Agreement of Ashik Raja dated 30.01.2018 has been marked as Ex. No. A-10. The Link Letter to be Obtained When Enhancement is Considered has been marked as Ex. No. A-11. The Application Form for Loans to Micro, Small & Medium Enterprises dated 31.08.2018 has been marked as Ex. No. A-12. The Sanction Letter dated 31.08.2018 has been marked as Ex. No. A-13. The Link Letter to be Obtained When Enhancement is Considered dated 31.08.2018 has been marked as Ex. No. A-14. The Letter of Renewal dated 31.08.2018 has been marked as Ex. No. A-15. The Promissory Note dated 31.08.2018 has been marked as Ex. No. A-16. The Supplemental Agreement dated 31.08.2018 has been marked as Ex. No. A-17. The Application Form for Loans to Micro, Small & Medium Enterprises dated 23.12.2019 has been marked as Ex. No. A-18. The Link Letter to be Obtained When Enhancement is Considered dated 23.12.2019 has been marked as Ex. No. A-19. The Letter of Renewal dated 23.12.2019 has been marked as Ex. No. A-20. The Promissory Note dated 23.12.2019 has been marked as Ex. No. A-21. The Supplemental Agreement dated 23.12.2019 has been marked as Ex. No. A-22. The Sanction Communication dated 11.06.2020 has been marked as Ex. No. A- 23. The Common Hypothecation Agreement dated 11.06.2020 has been marked as Ex. No. A-24. The Application Form for Loans to Micro, Small & Medium Enterprises has been marked as Ex. No. A-25. The Supplemental Common Hypothecation Agreement dated 19.10.2020 has been marked as Ex. No. A-26. The Letter of Proprietorship has been marked as Ex. No. A-27. The Link Letter to be Obtained When Enhancement is Considered dated 19.10.2020 has been marked as Ex. No. A-28. The Supplemental Agreement

¶115

Page 13 of 19

¶116

OA No. 542/2023

¶117

dated 19.10.2020 has been marked as Ex. No. A-29. The Promissory Note dated 19.10.2020 has been marked as Ex. No. A-30. The Guarantee Agreement dated 19.10.2020 has been marked as Ex. No. A-31. The Sanction Communication dated 20.03.2021 has been marked as Ex. No. A- 32. The Letter from the Guarantor Whenever Limits are to be Renewed of Ashik Raja dated 20.03.2021 has been marked as Ex. No. A-33. The Letter of Renewal dated 20.03.2021 has been marked as Ex. No. A-34.

¶118

The Sanction Memorandum dated 25.07.2018 has been marked as Ex. No. A-35. The Letter of Proprietorship dated 25.07.2018 has been marked as Ex. No. A-36. The Deed of Hypothecation Re: Machinery dated 25.07.2018 has been marked as Ex. No. A-37. The Letter of Undertaking dated 25.07.2018 has been marked as Ex. No. A-38. The Acknowledgement of Debt and Security dated 23.07.2021 has been marked as Ex. No. A-39.

¶119

The Application Form for Loans to Micro & Small Enterprises dated 09.04.2018 has been marked as Ex. No. A-40. The Sanction Memorandum dated 04.09.2018 has been marked as Ex. No. A-41. The Letter of Proprietorship dated 04.09.2018 has been marked as Ex. No. A-42. The Agreement-cum-Deed of Hypothecation dated 04.09.2018 has been marked as Ex. No. A-43. The Acknowledgement of Debt and Security dated 10.08.2021 has been marked as Ex. No. A-44.

¶120

The Application Form for Loans to Micro & Small Enterprises dated 28.06.2022 has been marked as Ex. No. A-45. The Sanction Letter dated 18.07.2019 has been marked as Ex. No. A-46. The Agreement-cum-Deed of Hypothecation dated 10.05.2019 has been marked as Ex. No. A-47. The Guarantee Covering Letter along with the Guarantee Agreement of Ashik Raja dated 10.05.2019 has been marked as Ex. No. A-48.

¶121

The Application Form for Loans to Micro & Small Enterprises dated 30.05.2020 has been marked as Ex. No. A-49. The Sanction Memorandum dated 30.05.2020 has been marked as Ex. No. A-50. The Offer Letter for Guaranteed Emergency Credit Line dated 30.05.2020 has been marked as Ex. No. A-51. Appendix-I dated 30.05.2020 has been marked as Ex. No. A- 52. The Undertaking Letter from the Borrower dated 30.05.2020 has been marked as Ex. No. A-53. The Agreement-cum-Deed of Hypothecation dated 30.05.2020 has been marked as Ex. No. A-54. The Promissory Note dated 30.05.2020 has been marked as Ex. No. A-55.

¶122

The Application Form for Loans to Micro, Small & Medium Enterprises dated 19.06.2020 has been marked as Ex. No. A-56. The Sanction Letter dated 19.06.2020 has been marked as Ex. No. A-57. The Term Loan Agreement dated 19.06.2020 has been marked as Ex. No. A-58. The

¶123

Page 14 of 19

¶124

OA No. 542/2023

¶125

Guarantee Covering Letter along with the Guarantee Agreement of Ashik Raja has been marked as Ex. No. A-59.

¶126

The Application Form for Loans to Micro & Small Enterprises dated 25.10.2021 has been marked as Ex. No. A-60. The Sanction Memorandum dated 25.10.2021 has been marked as Ex. No. A-61. The Agreement-cumDeed of Hypothecation dated 25.10.2021 has been marked as Ex. No. A-62. The Promissory Note dated 25.10.2021 has been marked as Ex. No. A-63.

¶127

The Registered Sale Deed dated 27.11.2017 executed by Chellapandi in favour of Naveena in Document No. 2484/2017 has been marked as Ex. No. A-64. The Registered Settlement Deed dated 09.01.2018 executed by Sabira Begum in favour of Ashik Raja in Document No. 114/2018 has been marked as Ex. No. A-65. The Registered Sale Deed dated 28.06.2018 executed by Rajakannu in favour of Ashik Raja in Document No. 1195/2018 has been marked as Ex. No. A-66. The Registered Sale Deed dated 03.10.2019 executed by Karthikeyan in favour of Naveena in Document No. 2122/2019 has been marked as Ex. No. A-67. The Registered Memorandum of Deposit of Title Deeds dated 09.02.2018 executed by Ashik Raja in favour of Canara Bank in Document No. 258/2018 has been marked as Ex. No. A-68. The Registered Supplemental Memorandum of Deposit of Title Deeds dated 20.12.2019 executed by Ashik Raja in favour of Canara Bank in Document No. 57/2019 has been marked as Ex. No. A-69. The Registered Memorandum of Deposit of Title Deeds dated 20.12.2019 executed by Naveena in favour of Canara Bank in Document No. 2799/2019 has been marked as Ex. No. A-70. The Statement of Accounts maintained by the applicant bank in the regular course and conduct of its business has been marked as Ex. No. A-71.

¶128

So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

¶129

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.

¶130

In this OA, from Perusal of Statement of Accounts (Ex. No. A-71), I find that Applicant Bank has capitalized the penal interest in the loan account of the defendants, which is against the policy of RBI guidelines.

¶131

“ The Reserve Bank of India strictly prohibits the capitalization of Penal charges. Under current RBI regulations, any penalty for non-compliance with loan terms must be treated as a distinct “Penal Charge” rather than added to

¶132

Page 15 of 19

¶133

OA No. 542/2023

¶134

the Principal outstanding amount. This ensures that banks and NBFCs cannot compute further interest on the penalty amount themselves.”

¶135

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).

¶136

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 ".

¶137

Therefore, this Original Application is allowed. The Applicant Bank is entitled for a final order on the following lines:-

¶138

The Applicant Bank is entitled to recover from the Defendants, a sum

¶139

of Rs. 1,49,96,645.46 ps (i.e)

¶140

(i) Cash Credit outstanding amount of Rs. 78,37,255.32 ps towards the Loan A/c No. 1017261010273 with subsequent interest at the rate of 9.25 % p.a. with half yearly rest,

¶141

(ii) Rs. 1,16,396.31 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 1,16,396.31 ps till before filing of the Original Application ) towards the Loan No. 1017768000223 with subsequent interest at the rate of 9.45 % p.a. with half yearly rest,

¶142

(iii) Rs. 1,20,335.10 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 1,20,335.10 ps till before filing of the Original Application ) towards the loan No. 1017768000231 with subsequent interest at the rate of 9.60 % p.a. with half yearly rest,

¶143

(iv) Rs. 1,56,845.31 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 1,56,845.31 ps till before filing of the Original Application ) towards the loan No. 1017768000248 with subsequent interest at the rate of 9.90 % p.a. with half yearly rest,

¶144

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¶145

OA No. 542/2023

¶146

(v) Rs. 4,53,800.31 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 4,53,800.31 ps till before filing of the Original Application ) towards the loan A/c No. 1017755000003 with subsequent interest at the rate of 9.25 % p.a. with half yearly rest,

¶147

(vi) Rs. 35,29,062.39 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 35,29,062.39 ps till before filing of the Original Application ) towards the loan A/c No. 1017768000279 with subsequent interest at the rate of 11.90 % p.a. with half yearly rest and

¶148

(vii) Rs. 27,82,950.72 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 27,82,950.72 ps till before filing of the Original Application ) towards the loan A/c No. 170001184984 with subsequent interest at the rate of 9.25 % p.a. with half yearly rest,

¶149

from the date of filing of this Application till the date of realization with cost. Accordingly, it is hereby

¶150

ORDERED

¶151

(a) That the Defendants are directed personally/jointly/severally to pay a sum of Rs. 1,49,96,645.46 ps (i.e)

¶152

(i) Cash Credit outstanding amount of Rs. 78,37,255.32 ps towards the Loan A/c No. 1017261010273 with subsequent interest at the rate of 9.25 % p.a. with half yearly rest,

¶153

(ii) Rs. 1,16,396.31 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 1,16,396.31 ps till before filing of the Original Application ) towards the Loan A/c No. 1017768000223 with subsequent interest at the rate of 9.45 % p.a. with half yearly rest,

¶154

(iii) Rs. 1,20,335.10 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 1,20,335.10 ps till before filing of the Original Application ) towards the loan A/c No. 1017768000231 with subsequent interest at the rate of 9.60 % p.a. with half yearly rest,

¶155

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¶156

OA No. 542/2023

¶157

(iv) Rs. 1,56,845.31 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 1,56,845.31 ps till before filing of the Original Application ) towards the loan A/c No. 1017768000248 with subsequent interest at the rate of 9.90 % p.a. with half yearly rest,

¶158

(v) Rs. 4,53,800.31 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 4,53,800.31 ps till before filing of the Original Application ) towards the loan A/c No. 1017755000003 with subsequent interest at the rate of 9.25 % p.a. with half yearly rest,

¶159

(vi) Rs. 35,29,062.39 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 35,29,062.39 ps till before filing of the Original Application ) towards the loan A/c No. 1017768000279 with subsequent interest at the rate of 11.90 % p.a. with half yearly rest and

¶160

(vii) Rs. 27,82,950.72 ps ( after deduction of the capitalized Penal Interest from the outstanding amount of Rs. 27,82,950.72 ps till before filing of the Original Application ) towards the loan A/c No. 170001184984 with subsequent interest at the rate of 9.25 % p.a. with half yearly rest,

¶161

from the date of filing of this Application till the date of realization with cost within one month from the date of receipt of this order.

¶162

(b) In case of default of payment by the above mentioned Defendants, the Applicant Bank is at liberty to sell the movable and 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.

¶163

(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 personally/jointly/severally liable to pay the amount of such deficiency with interest mentioned above until realization.

¶164

(d) Any amount remitted during the course of this proceedings shall be given due credit, to the loan account of the defendants.

¶165

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¶166

OA No. 542/2023

¶167

(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.

¶168

(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 Loan, Term Loan and Micro & Small Enterprises Loans 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.

¶169

Dictated to SKP (Typist), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 21^st July, 2026.

¶170

Sd/- (SEEMA SINHA) PRESIDING OFFICER

¶171

Uploaded on 27.07.2026

¶172

Page 19 of 19

Canara Bank v. a Naveena Prop of Arsh Mobiles

Case brief

What is this about?

What did the court decide?

Canara Bank v. a Naveena Prop of Arsh Mobiles

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

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