Allowed

State Bank of India v. a M I Naveen Ilamparithi

DRT20 Feb 2026OA/585/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed the applicant bank's original application for recovery of outstanding cash credit and term loans against borrowers who defaulted. The court rejected capitalization of penal interest while permitting accrued interest. The order granted decree for recovery of principal, interest, and costs.

What did the court decide?

Directed defendants to pay Rs.27,90,041.76 with interest, or repay by sale of mortgaged properties if balance due remains.

State Bank of India versus a M I Naveen Ilamparithi — Contract and Commercial Disputes | DRT (2026)

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OA No. 585/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 20^TH DAY OF FEBRUARY, 2026 PRESENT: SEEMA SINHA,

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

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OA No.585/2022

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Between

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State Bank of India, SME Branch, No.100 & 101, 1^st floor, Municipal Colony, Nehruji Nagar, Dindigul – 624 001. Rep. By its Branch Manager. ---Applicant Bank

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And

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A.M.I. Naveen Ilamparithi,

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S/o K.M. Ilamparithi, Prop. M/s Sai Lakshmi, 6-4-16 A1, Subramanikoil Street, Mayana Road, Batlagundu – 624 202.

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Mrs. I. Lakshmi, W/o K.M.Ilamparithi, 6-4-16 A1, Subramanikoil Street, Mayana Road, Batlagundu – 624 202. ---Defendants

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Counsel for the Applicant Bank : M/s R. Anandharaj & V. Balamurugan

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This Original Application was heard and fixed for passing final order before me in the presence of the above said Advocate for Applicant Bank and the Defendants having been set ex-parte and upon hearing the arguments of Counsel for Applicant Bank and upon perusing the material available on the

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Page 1 of 7

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OA No. 585/2022

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records and having stood over for consideration till this day, this Tribunal delivered the following:

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JUDGEMENT

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1 . This Application has been filed under Sec.19 (1) of the "The Recovery of Debts due to Banks and Financial Institutions Act, 1993" now amended as The Recovery of Debts and Bankruptcy Act, 1993 by the Applicant Bank on 23.06.2022 to recover from the Defendants a total sum of Rs.27,90,041.76p i.e., (i) Rs.24,03,275.76p together with interest at the rate of 10.65% p.a. plus penal interest at the rate of 2%p.a. with monthly rests in respect of Cash Credit Loan and (ii) Rs.3,86,766/- together with interest at the rate of 7.80% p.a. plus penal interest at the rate of 2%p.a. with monthly rests 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 applicant bank submits that the 1^st defendants as the sole proprietor of M/s Sai Lakshmi doing SME segment business. The 1^st defendant applied credit facilities to the applicant bank for the purpose of developing his business. The applicant bank sanctioned cash credit to the limit of Rs.24,00,000/- and Term loan of Rs.4,19,000/-. The 2nd defendant offered her personal and continuing guarantee for the credit facilities availed by the 1^st defendant. In support of the above said sanction and availment the defendants executed the necessary loan documents in favour of the Applicant Bank and to abide by the terms of the Bank that may be stipulated by the Applicant Bank in the matter of repaying the amounts availed under the said accounts and the interest accrued there under. The defendants agreed to pay interest for CC limit at the rate of 10.65%p.a and 7.80%p.a for Term loan with monthly rests along with penal interest at the rate of 2%p.a.

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The 2^nd defendant created an equitable mortgage infavour of the applicant bank over her property by Memorandum of deposit of title deeds dated 31.10.2019 and the same was registered with SRO Batlagundu as Doc.No.3469/2019. The said mortgage has been extended by virtue of Memorandum confirming the extension of the existing equitable mortgage for entire liability on 04.09.2020 and the same was registered with SRO Batlagundu as Doc. No.2291/2020. Hence, the Applicant filed this original application well within the period of prescribed period of limitation.

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Page 2 of 7

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OA No. 585/2022

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After availing the loan, defendants were not regular in the matter of repayment. The defendants made several promises, but they failed to keep up their promises. Despite repeated demands and reminders, made by the Applicant Bank, the Defendants have failed and neglected to repay and adjust their liability.

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Hence, the Applicant Bank has filed the OA for recovery of a total sum of Rs.27,90,041.76p i.e., (i) Rs.24,03,275.76p together with interest at the rate of 10.65% p.a. plus penal interest at the rate of 2%p.a. with monthly rests in respect of Cash Credit Loan and (ii) Rs.3,86,766/- together with interest at the rate of 7.80% p.a. plus penal interest at the rate of 2%p.a. with monthly rests 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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Sl.	DATE	DESCRIPTION	Exhibits
1	30.10.2019	Letter of Arrangement executed by the defendants in favour of the applicant bank CC Loan	Ex.No.A-01
2	30.10.2019	Agreement of loan cum hypothecation executed by the 1st Defendant in favour of applicant bank forCCLoan	Ex.No.A-02
3	10.10.2019	Guarantee Agreement executed by the 2nd Defendant in favour of applicant bank for CC Loan	Ex.No.A-03
4	09.06.2020	Letter of Arrangement executed by the defendants in favour of the applicant bank for TL loan	Ex.No.A-04
5	09.06.2020	Supplemental Agreement of loan cum hypothecation executed by the 1st Defendant in favour of applicant bank for TL Loan	Ex.No.A-05
6	09.06.2020	Guarantee Agreement executed by the 2nd Defendant in favour of applicant bank for TL loan	Ex.No.A-06
7	31.10.2019	Memorandum relating to deposit of title deeds executed by the 2nd defendant in favour of the applicant bank in Doc.No.3469/2019	Ex.No.A-07
		Memorandum confirming the extension of the existing equitable mortgage executed by the 2nd defendant in favour of the	Ex.No.A-08
8.	04.09.2020	applicant Doc. No.2291/2020 bank in
9.	-----	Statement of Accounts	Ex.No.A-09

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Page 3 of 7

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OA No. 585/2022

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SCHEDULE OF PROPERTY

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a) Survey No.Old Natham Survey No.419/2 part & 419/40 part, new natham S.No.419/39 and 419/40A

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b) Door/House No.6.14.16A/1

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c) Extent/are including plomth/built up area in case house property:Applicant site: 1323 sq.ft

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Location like name of the place, Village, City, Registration District, Sub Registration district and boundaries:-

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In Dindigul District, Dindigul Registration District, Vathalagundu Sub Registration District, Nilakottai Taluk, Vathalagundu Village, Measuring East West 31½ feet on both sides and North South: 21 feet both sides in all measuring 661½ sq.ft bounded on

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North	: Land belongs to Ayyavu Nadar
South	: 2^nditem of the property
West	: Land belongs to A.Chinnakalai Nadar
East	: Pathway

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In Dindigul District, Dindigul Registration District, Vathalagundu Sub Registration District, Nilakottai Taluk, Vathalagundu Village, Measuring East West 31 ½ feet on both sides and North South: 21 feet both sides in all measuring 661½ sq.ft bounded on

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North	: Road
South	: Land belongs to Chinnakalai
West	: 1^stitem of the property
East	: Site belongs to Vellaiappa Nadar

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Online Old S.F.No.419/2A1

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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

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Page 4 of 7

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OA No. 585/2022

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Applicant, I find that the Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. Abhinav Bothra, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants has availed Cash Credit and 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 given by the defendants at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-09 in support of its claim in the OA.

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The Letter of Arrangement executed by the defendants in favour of the applicant bank CC Loan has been marked as Ex.No.A-01, Agreement of loan cum hypothecation executed by the 1st Defendant in favour of applicant bank for CC Loan has been marked as Ex.No.A-02, Guarantee Agreement executed by the 2nd Defendant in favour of applicant bank for CC Loan has been marked as Ex.No.A-03, Letter of Arrangement executed by the defendants in favour of the applicant bank for TL loan has been marked as Ex.No.A-04, Supplemental Agreement of loan cum hypothecation executed by the 1st Defendant in favour of applicant bank for TL Loan has been marked as Ex.No.A-05, Guarantee Agreement executed by the 2nd Defendant in favour of applicant bank for TL loan has been marked as Ex.No.A-06, Memorandum relating to deposit of title deeds executed by the 2nd defendant in favour of the applicant bank in Doc.No.3469/2019 has been marked as Ex.No.A-07, Memorandum confirming the extension of the existing equitable mortgage executed by the 2nd defendant in favour of the applicant bank in Doc. No.2291/2020 has been marked as Ex.No.A-08, Statement of Accounts has been marked as Ex.No.A-09. 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

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Page 5 of 7

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OA No. 585/2022

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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 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.27,90,041.76p i.e., (i) Rs.24,03,275.76p together with interest at the rate of 10.65% p.a. with half yearly rests in respect of Cash Credit Loan and (ii) Rs.3,86,766/- together with interest at the rate of 7.80% 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/a total sum of Rs.27,90,041.76p i.e., (i) Rs.24,03,275.76p together with interest at the rate of 10.65% p.a. with half yearly rests in respect of Cash Credit Loan and (ii) Rs.3,86,766/- together with interest at the rate of 7.80% 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

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Page 6 of 7

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OA No. 585/2022

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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 Cash Credit and 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 T.P, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 20^th February, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 04.03.2026

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State Bank of India v. a M I Naveen Ilamparithi

Case brief

What is this about?

What did the court decide?

State Bank of India v. a M I Naveen Ilamparithi

Case brief

What is this about?

What did the court decide?

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