Allowed

Karnataka Bank Limited v. M/s Sri Dharani Polymers

DRT9 Sept 2026OA/593/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the Applicant Bank's recovery application. It rejected the defense that CGTMSE guarantee coverage or threshold limits barred the application, holding the debt remained intact and borrowers were liable.

What did the court decide?

Recovery of Rs. 71,87,353.60 plus future interest and costs, with the OA hypothecated assets and defendants' properties secured for realization.

Karnataka Bank Limited versus M/s Sri Dharani… — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL.II AT^HYDERABAD

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DATED THIS THE O9TH DAY OF SEPTEMBER,²⁰²⁶

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PRESENT: SH. RAMESHWAR KOTHE, B.COM, L.LB.^{(HONS.), M.A.} PRESIDING OFFICER

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Original Application No: 593 OF 2024

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Karnataka Bank Ltd., D.No.7-3-686 & 687, R.P. Road Secunderabad-500003 Rep. by its Senior Branch Manager

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.....Applicant

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Versus

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M/s Sri Dharani Polymers Partnership Firm rep. by its Partners

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Mr. Sathya Reddy K & Smt. Y Kavitha Rani

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Office at: Flat No. 501, "Bharani Classic"^Apartment Plot N.4, 5, 6, 7, Sy. No.10

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Hakeemabad Colony, Khurd Village Hayathnagar Mandal, Hyderabad- 500064

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lvlr. Sathya Reddy K

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S/o Thimma Reddy Karre

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Flat No-506, "Bharani Classic" Apartment Plot N.4, 5, 6, 7, Sy. No.10 Hakeemabad Colony, Khurd Village Hayathnagar Mandal, Hyderabad- 500064.

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Smt. Y Kavitha Rani Wo^{Yarikalreddy SrinivasReddy} Flat No-501, "Bharani Classic" Apartment Plot N.4, 5, 6, 7, Sy. No.10

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Hakeemabad Colony, Khurd Village Hayathnagar Mandal, Hyderabad- 500064.

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.....Defendants

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: I4r. K. Srinivasulu Counsel for the Applicant Counsel for Defendant^Nos.1 to 3:^{Dr. S. V. Rama Krishna} fr,xt'

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:: ORDER::

The Applicant Bank filed the present OA for the recovery of a sum of Rs. 71,87,353.60 ps as on 37.t0,2024 from the Defendants 1to 3 joinfly and severally with future interest @20.20yo p.a. with monthly rests from the date of application till the date of realization along with costs, and in default sale of OA schedule hypothecated assets.

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The averments of the Applicant Bank, as stated in the OA, in brief, are that Defendant No.1 a partnership firm represented by Respondent Nos. 2 & 3 availed over draft facility in year 2015 against hypothecation of assets. Defendants committed defaults, resulting in classification of the loan account as NPA on 29.O5.2023. The Applicant thereafter issued a Legal Notice dated 11.08.2023. Despite issuance of notice defendants failed to regularise the account, compelling the applicant bank to file the present OA seeking recovery of the outstanding dues.

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Defendant Nos.1 to 3 filed a Written Statement. The Defendants contend that Defendant No.1, through its partners, Defendant Nos.2 and 3, availed an overdraft facility of Rs. 55,00,000/- from the Applicant Bank on 29.t7.2021, but dispute the maintainability of the present O.A. They assert that the facility was covered under the CGTMSE scheme, under which 75olo of the defaulted amount was guaranteed, and contend that after accounting for the guaranteed amount, the balance claimed against them is below the statutory threshold of Rs. 20,00,000/- prescribed for maintaining an application under the RDDB Act. They further allege that the Bank, contrary to the collateral-free nature of the scheme, obtained personal guarantees from the partners and failed to invoke the CGTMSE guarantee before proceeding against them. The Defendants also dispute the correctness and evidentiary validity of the statements of account, alleging-that the same are

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not duly authenticated or^{certifledand containarbitraryand excessive} interest and other charges.^{on these grounds,Defendants seek dismissalof} the O.A. with costs.

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In order to^{prove its case, ApplicantBank examined by Mr'} Muralidhar Rao N R, Senior^{BranchManageras AW-1 and marked 14} documents through^{them as ExhibitsA-1 to A-14.}

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J 5. In order to substantiate^{the defence of Defendants,the} defendant-Smt.^{Y Kavitha Ranl, examined herselfas DW-1 and marked} no documents.

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Heard learned counsel^{for the applicant and learned counsel for the} defendant. Perused the^{material placed on record.}

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Learned Counsel for^{the applicantbank during the course of} arguments^{places relianceupon Exs.A-1 to Exs A-14 marked through} applicant evidence^{(AW-1) as proof of claim of the bank and submittedthat} the applicant bank is^{entitled for recovery of the outstanding amount} together with future^{interest and costs.}

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Per contra, Learned^{Counsel for ihe Defendants in the oral arguments} would reiterate the^{content of its written statementand would submit that} Defendant No.1 availed^{an overdraftfacilityof Rs 55,00,000/- from the} Applicant Bank on^{29.11.2021,but dlsputethe maintainabilityof the O'A'} on the^ground that^{the facility was covered underthe CGTMSE scheme'} under which^{75o/o of the defaultedamount was guaranteed, Ieaving the} alleged liability^{below the statutorythresholdof Rs 20,00,000/- under the} RDDB Act. It is further^{contended that the Bank obtainedpersonal} guarantees contrary to the collateral-free^{nature of the scheme and failed} to invoke the^{CGTMSEguarantee' The Defendants} /Qlso^disputethe

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correctness and evidentiary value of the statements of account, a lleg in g want of proper certification and levy of excessive interest and charges. Accordingly, the Defendants seek dismissal of the O.A. with costs.

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The point that arises for consideration is:-

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Whether the Applicant Bank is enti ed for the OA claim against the Defendants and OA hypothecated assets?

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Defendants, principal defence is that the facility was covered under the CGTI\4SE scheme and, therefore, after taking into account the guarantee coverage, the amount allegedly recoverable from them falls below the statutory threshord prescribed under the Act. The said contention cannot be accepted. The guarantee extended under the cGTr4sE scheme is an arrangement between the lending institution and the guarantee trust in respect of the credit facility and does not, by itself, discharge or extinguish the underlying riabirity of the borrower. The Defendants have not produced any material to show that the Applicant Bank had waived, released or otherwise extinguished any part of the debt payable by them. Therefore, the mere availability of guarantee coverage under the CGTMSE scheme cannot be treated as a payment or adjustment towards the debt due from the Defendants for the purpose of determining the maintainability of the o.A.

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Simirarry, there is another contention that the Bank obtained personar guarantee/collateral security as against the scheme under CGTMSE. As per OA schedule, the security available to the bank is only hypothecation of stock and book debts and no collateral security is involved. However, apparently Defendants executed necessary loan documents and guarantee letters, availed loan facility without any questioning or objection; and thereafter defaurted in repayment. Defendants have not fired rerevant CGTMSE Rure position or any other document to estabris[that the nature

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of the loan availed by them is^such that obtaining security/guarantee^is prohibited. Hence the contentlon cannot be accepted.

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lZ. The Defendants have also disputed the correctness and^evidentiary value of the statement of account and alleged levy of^{excessive interest} and charges. However, except making such a^{general allegation,the} Defendants have neither^produced any^{contrary statementof account nor} identified any specific entry which, according to them,^{is incorrect and} hence the contention cannot be accepted.

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Apart from the bald statements, the^{Defendants neitherchose to} mark any documents to substantiate their^pleas, nor^{choseto cross-} examlne AW-1 to disprove the veraclty of Exs. A.1 to A.14,^{the material} papers relied on by the Applicant Bank. On the other hand, the evidence affidavit of AW-1, coupled with^{the recitals} in^{Exs. A.1 to A.14,amply prove} the claim of the bank. Accordingly, the^{OA deserves to be allowed,holding} the Defendants 1 to 3 are^jointly and^{severally liable to pay the OA claim} with future interest.

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In the result, the^present Original^{ApplicationNo.593/2024 is allowed} as under: -

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(i) The Defendant Nos. 1 to 3 are^jointly and severally liable to pay to the Applicant Bank a sum of^{Rs. 71,87,353.60} ps with future interest rate @ 15.20olo p.a. simple^from the date of application till the date of^realization;

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(ii) the OA claim is secured by way of hypothecation of^assets as described in Schedules annexed to^{the OA and} applicant bank is entitled to^proceed againstlhe^samefor rearisatron of dues;

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(iii) the applicant is entitled to proceed against the person and properties of the defendants for realization of its dues; and

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(iv) the applicant bank is entitled for the costs;

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The Applicant Bank is directed to flle Cost Memo within 2 weeks from the date of receipt of this Order.

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Issue Recovery Certificate accordingly.

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Communicate a copy of this order to the parties concerned and upload in the official website.

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(oictated to the steno, corrected, signed and pronounced by me in the open court on this the O9n day of September, 2026)

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'qi-!t!

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SHWAR KOTHE) PRESIDING OFFICER

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oA.NO.593/2024.

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0L.07.2026. Counsel for defendant stated matter is under settlement. Counsel for applicant stated there is no settlement. For arguments, call on 22.07.2026 as last chance. / AW(-!.'' P.O. 22.07.2026. Heard the arguments of applicant through Sri K Srinivasulu. Sri Sumit representing SCRK counsel for defendants requested time for arguments and filed a memo stating matter is under settlement, copy given. For defendant arguments, call on 04.08.2026 as last chance and finally. OW 04.08.2026 Heard the arguments of D1 to 3 through Sri SVRK and reply arguments of appricant through sri K srinivasuru. For orders, call on 20.08.2026. 1f'P.O. 20\8\2b lrc;idin3 ctfic.:i on l::ie. Ci:e e:il:{ , and rrjournc,,,...:.1.}.A-.,. 09.09.2026 Order pronounced vide separate sheets. In the result, OA is allowed with costs. Issue Recovery Certificate accordingly.

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1f'*-

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Ow-,a P.O.

Karnataka Bank Limited v. M/s Sri Dharani Polymers

Case brief

What is this about?

What did the court decide?

Karnataka Bank Limited v. M/s Sri Dharani Polymers

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Parties & counsel

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