Allowed

Canara Bank v. Ms Kmt Educational Trust

DRT27 Apr 2026OA/59/2024

Case brief

AI extract

What is this about?

In an exparte hearing, the Tribunal allowed the Original Application filed by the bank for issuance of a Recovery Certificate against a trust and its trustees. The claim for the principal amount was upheld, but interest was reduced to 10% p.a. (simple) from the date of filing till realization.

What did the court decide?

Issue a Recovery Certificate for Rs.2,31,48,925.20 with reduced interest of 10% p.a. (simple) from filing date against defendants jointly, severally, and personally, and over schedule property.

Canara Bank versus Ms Kmt Educational Trust — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 27^th Day of April, 2026

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Present: Sri. T. RAJESH Presiding Officer

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OA. No.59/2024

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BETWEEN:

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Canara Bank Madikeri Main Branch Office at:P.B.54, Kodava Samaj Building, Main road, Madikeri Town, Madikeri Taluk, Kodagu District-571201 Rep. by its Chief Manager Mr. Suresh Babu P … APPLICANT

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AND:

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M/s. KMT Educational Trust A Regd. Trust, Rep. by its Trustees a) Mr. Mohan P.M. b) Mrs. Kavitha P.M.

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Office at: Gummanakolli, Kushalnagar Kushalnagar, Madikeri Taluk, Kodagu Distirct-571234

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Mr. Mohan P M S/o. P.B. Muddappa Aged about 62 years, R/at: No.145, Aishwarya Nilaya, Gummanakolli, Kushalnagar, Madikeri Taluk, Kodagu District-571234 ...DEFENDANTS

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Counsel on record/appeared for:

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Applicant : M/s. M.V. Kini & Co., Defendants : Exparte

OA. No.59/2024

:FINAL ORDER:

The present Original Application in short (OA) has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 for seeking issuance of Recovery Certificate against the defendants for Rs.2,31,48,925.20 (Rupees Two Crore Thirty One Lakh Forty Eight Thousand Nine Hundred Twenty Five and Twenty Paisa only) with further interest thereon from the date of filing the Application till realization from the Defendants.

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It is the case of the applicant that, the defendant No.1 Trust as the borrower represented by defendant No.2 and 3 Trustees as guarantor have availed Micro and Small Enterprises Scheme for Rs.2,02,00,000/- i.e. i) Term loan of Rs.1,90,00,000/- and ii) Overdraft facility of Rs.12,00,000/- on 14.03.2014.

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It is also the case of the applicant that, in view of the above financed credit facilities, the defendants executed necessary loan documents. Apart from the creation of security interest by way of mortgage over the Schedule properties.

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It is further contended that, despite availing the credit facilities, agreeing to service the loan amount promptly and regularly, the defendants failed in complying the same, resulting in default in repayment and consequentially turning the loan accounts

OA. No.59/2024

as NPA.

In the above circumstances, the applicant approached this Tribunal by filing this OA seeking issuance of Recovery Certificate for the amount due in the accounts.

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Despite, service of summons on the defendants, they failed to appear, resulting the defendants being set exparte on 09.04.2026.

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The applicant had let in evidence through AW-1, who filed Proof Affidavit reiterating the contentions taken in the OA and also produced Exhibits A1 to A23 and got the same marked in evidence.

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Heard the Ld. Counsel for the Applicant and considered the contentions as taken in the OA in the light of documentary evidence and proof affidavit.

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The following issues arise for consideration in this matter:

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i) Whether the applicant had succeeded in proving the OA

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claim as against the defendants?

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ii) What order are to be passed?

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Both these issues are gone into and decided together.

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OA. No.59/2024

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The case put forth by the applicant in the Application

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remains unrebutted as defendants remained exparte. The evidence tendered by the applicant remains uncontroverted and

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undisputed. The evidences put forth by the applicant were found admissible and are sufficient to prove availment of credit facilities as stated in the OA, creation of security interest as claimed by the applicant bank and the defaults committed in the account. The liability of the defendants and the claim of the amount due are also

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proved by the above documents. The claim of the applicant is well within the limitation.

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Hence in view of the above findings which cover both the issues raised in this manner, this Tribunal is of the view that OA is liable to be allowed.

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Taking into consideration the facts that the credit facilities

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were availed for business and also that OA claim is arrived at by calculating interest at the agreed rate, this Tribunal in view of the

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OA can be allowed with a reduced interest of 10.00% p.a.(simple).

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OA. No.59/2024

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In the result, OA.No.59/2024 stands allowed,

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i) The applicant is allowed to recovery an aggregate sum

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of Rs.2,31,48,925.20 (Rupees Two Crore Thirty One Lakh Forty

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Eight Thousand Nine Hundred Twenty Five and Twenty Paisa only) with further interest of 10.00% p.a.(simple) from the date of filing OA till the realization from the defendants, after giving credit to all the amounts recovered and received during the pendency of the OA and allowed the same to be recovered by proceeding against

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defendants jointly, severally and personally and also by proceeding against the schedule property. The schedule property

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to the OA be the schedule property to the Recovery Certificate.

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ii) If the sale proceeds are not found sufficient to cover

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the amount due and payable to the applicant bank, the defendants

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jointly, severally and personally and their other assets are liable

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for all such amounts due under the loan accounts.

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iii) The applicant bank is allowed cost of the proceeding

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which applicant to file cost memo within 7 days from the date of receipt of the order.

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iv) The Recovery Certificate to be drawn in terms of this order and transferred to Recovery for execution.

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OA. No.59/2024

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v) Interim Application pending, if any, stands disposed of

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with this Final Order.

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14. Communicate a copy of the order to the parties concerned

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in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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[Dictated to the Stenographer (PR), transcribed by her, corrected and signed and pronounced by me in the Open Court, this the 27^th Day of April 2026].

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Sd/-

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(T. RAJESH) PRESIDING OFFICER

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Sri. Arun P, Officer of the applicant bank.

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Exhibits on the part of the Applicant:

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Sl. No.	Description of Documents	Date	Exhibit Number
1	Sanction letter	14.03.2014	A1
2	Term loan agreement	29.03.2014	A2
3	Guarantee covering letter executed by the defendant No.2	29.03.2014	A3
4	Guarantee covering letter executed by the defendant No.3	29.03.2014	A4
5	Subordination agreement	29.03.2014	A5
6	Common deed of hypothecation agreement	29.03.2014	A6
7	Letter of evidencing deposit of title deeds	29.03.2014	A7
8	Pronote	29.03.2014	A8
9	Letter issued by the defendant	29.03.2014	A9

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OA. No.59/2024

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10	Letter issued by the defendant	29.03.2014	A10
11	Request letter for Overdraft	28.12.2017	A11
12	Sanction letter	28.12.2017	A12
13	Supplemental agreement	28.12.2017	A13
14	Pronote	28.12.2017	A14
15	Application for restructuring the loan	29.05.2021	A15
16	Debt restructuring agreement	29.05.2021	A16
17	Debtor creditor agreement	29.05.2021	A17
18	Revival letter	23.02.2017	A18
19	Revival letter	24.06.2022	A19
20	Revival letter	27.06.2019	A20
21	Demand notice	28.04.2023	A21
22	Statement of account for term loan A/c. No.0517773007241	------	A22
23	Statement of account for overdraft A/c. No.05517746000008 along with Certificate U/s. 2A of the Banker’s Book of Evidence Act, 1981	------	A23

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Sd/(T. RAJESH) PRESIDING OFFICER

Canara Bank v. Ms Kmt Educational Trust

Case brief

What is this about?

What did the court decide?

Canara Bank v. Ms Kmt Educational Trust

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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Case details

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