Allowed

Canara Bank v. S Velsamy

DRT7 Apr 2026OA/61/2022

Case brief

AI extract

What is this about?

This Debt Recovery Tribunal adjudicated an original application for recovery of a cash credit loan with accrued interest. The defendant was presentex-parte. The Tribunal found the bank's evidence of loan sanction, utilization, and default sufficient, allowing the application for repayment with statutory interest but restricting capitalization of penal interest.

What did the court decide?

Defendant directed to pay Rs.37,56,726.75 with interest at 14% p.a. with half yearly rests within one month; failure to pay allows sale of mortgaged properties.

Canara Bank versus S Velsamy — Money Laundering | DRT (2026)

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OA No. 61/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 07^TH DAY OF APRIL, 2026 PRESENT: SEEMA SINHA,

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

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OA No.61/2022

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Between

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Canara Bank, Sankarankovil Branch, 191-A, Rajapalayam Main Road, Sankarankovil, Tirunelveli District. Rep. By its Senior Manager.

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---Applicant Bank

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And

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Mr. S. Velsamy, S/o Shanmugaiah Thevar, Prop. M/s. Akshiva Associates, No.119/3, Nehru Street, NGO “B” Colony, Sankarankovil – 627 756, Tirunelveli District.

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Also at

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Mr. S. Velsamy, S/o Shanmugaiah Thevar, Door.No.5/1093C, Gomathisankar NGGO Colony, Kalappakulam Village, Sankarankovil Taluk, Tirunelveli District. ---Defendant

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

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Page 1 of 6

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OA No. 61/2022

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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 Defendant 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 04.10.2021 to recover from the Defendant a sum of Rs.37,56,726.75p together with interest at the rate of 14% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash Credit facility 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 defendant is a principal borrower and also proprietor of a company in the name and style of M/s. Akshiva Associates. The defendant availed credit facility for developing his business activities and the same was sanctioned by the applicant bank.

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The details of the credit facility as follows:

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Type of Loan	Date of Loan	Loan Amount	^{Date of Execution} of Documents
CASH CREDIT FACILITY (A/c No. 1115256010234)	17.10.2014	^Rs. 37,00,000/-	^17.10.2014

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In support of the above said sanction the defendant 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 details of the interest, and present outstanding as follows:

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The defendant created an equitable mortgage over his properties by deposit of title deeds on 12.10.2014 and the same was confirmed by way of Memorandum of Deposit of Title Deeds dated 17.10.2014 registered with

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Page 2 of 6

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OA No. 61/2022

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SRO Sankarankovil as Doc.No.2883/2014 in favor of the applicant bank. The defendant executed Acknowledgement of Debt and Security dated 24.04.2017 for the above said credit facility.

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The defendant though had availed the entire sanctioned limit amounts under the said facilities and he had not chosen to repay the drawn amounts, as agreed, despite the repeated demands and reminders made by the Applicant Bank, the Defendants has not paid the amount. 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 sum of Rs.37,56,726.75p together with interest at the rate of 14% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash Credit facility 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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S. No.	Date	Description of document	Exhibits
1	17.10.2014	Letter of Proprietorship executed by the defendant	Ex.No.A-01
2	17.10.2014	Request for overdraft facilities submitted by the defendant with the applicant bank	Ex.No.A-02
3	17.10.2014	Pronote executed by the defendant in favour of the applicant bank	Ex.No.A-03
4	17.10.2014	Cash Credit Agreement executed by the defendant in favour of the applicant bank	Ex.No.A-04
5	17.10.2014	Memorandum of Deposit of Title Deeds (Doc.No.2883/2014) executed by the defendant in favour of the applicant bank	Ex.No.A-05
		Acknowledgement of Debt and Security	Ex.No.A-06
6	24.04.2017	executed by the defendant in favour of the applicant bank
7	18.09.2021	Statement of Accounts for Cash Credit facility (A/c No.1115256010234)	Ex.No.A-07

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SCHEDULE OF PROPERTIES

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Tirunelveli District, Tenkasi Registration District, Uthamalai Sub Registrar Office, Sankarankovil Panchayat Union, Kalappakulam Village Panchayat Limit, Kalappakulam Village, 5^th Ward Old Survey No.438A/1A1A

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Page 3 of 6

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OA No. 61/2022

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and its New Natham Survey No.616 in which to an extent of east west 40 feet north south 85 feet and in total comes to 3400 sq.feet 315.867 sq.m shown as Plot No.203 wherein after due approval RCC House bearing Door No.5/1093C was constructed as per approval No.dated 20/2011 dated 06.09.2011 the same is situated in the following four boundaries:

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East by : Ramasamiyapillai Own Land West by : Ramasamiyapillai Own Land South by : Ramasamiyapillai Own Land North by : 25 feet breadth of Street

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3 . On the other hand, Notices were issued to Defendant and since from the beginning of the case, there was no representation on behalf of the Defendant. Hence, Defendant was 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 Applicant, I find that the Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. Venkatachalapathy, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendant has availed Cash Credit facility from the Applicant Bank, but he failed to pay the outstanding loan amount, hence he has filed the case. The applicant bank has also filed the documents given by the defendant at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-07 in support of its claim in the OA.

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The Letter of Proprietorship executed by the defendant has been marked as Ex.No.A-01, the Request for overdraft facilities submitted by the defendant with the applicant bank has been marked as Ex.No.A-02, the Pronote executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-03, the Cash Credit Agreement executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-04, the Memorandum of Deposit of Title Deeds (Doc.No.2883/2014) executed by the defendant in favour of the applicant bank has been marked as Ex.No.A05, the Acknowledgement of Debt and Security executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-06, and the Statement of Accounts for Cash Credit facility (A/c No.1115256010234) has been marked as Ex.No.A-07. So the averments of the applicant as well as

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Page 4 of 6

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OA No. 61/2022

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the statement of the pleading have been corroborated by the above mentioned documents.

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As the Defendant 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 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 Defendant, a sum of Rs.37,56,726.75p together with interest at the rate of 14% p.a. with half yearly rests in respect of Cash Credit facility 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 Defendant is directed to pay personally a sum of Rs.37,56,726.75p together with interest at the rate of 14% p.a. with half yearly rests in respect of Cash Credit facility 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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Page 5 of 6

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OA No. 61/2022

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(b) In case of default of payment by the above mentioned Defendant, 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 defendant is personally 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 defendant.

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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 Facility 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 07^th April, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 18.04.26

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Page 6 of 6

Canara Bank v. S Velsamy

Case brief

What is this about?

What did the court decide?

Canara Bank v. S Velsamy

Case brief

What is this about?

What did the court decide?

What the court decided

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