Allowed

Karur Vysya Bank v. Dhanalaksmi Wood Industries

DRT13 Apr 2026OA/62/2023

Case brief

AI extract

What is this about?

In OA No. 62/2023, the Debts Recovery Tribunal allowed the Karur Vysya Bank's application for recovery of a total sum of Rs. 2,72,86,310/- from multiple respondents. The bank successfully proved its claim for outstanding Open Cash Credit and Term Loan amounts along with interest, while respondents remained in ex-parte.

What did the court decide?

Defendants directed to jointly/severally pay Rs. 2,72,86,310/- with interest; recovery certificate to be issued; bank directed to submit cost memo.

Karur Vysya Bank versus Dhanalaksmi Wood Industries — Company and Corporate | DRT (2026)

¶1

OA No. 62/2023

¶2

Fair Order

¶3

IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 13^TH DAY OF APRIL, 2026 PRESENT: SEEMA SINHA,

¶4

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

¶5

OA No.62/2023

¶6

Between

¶7

The Karur Vysya Bank Limited, Asset Recovery Branch, D.No.170/9, Uthankudi Village, Mattuthavani – Melur Road, Near Mattuthavani Bus Stand, Madurai – 625 107. Rep. By its Branch Manager.

¶8

---Applicant Bank

¶9

And

¶10

M/s Dhanalakshmi Wood Industries,

¶11

D.No.478/1A, Dindigul Road,

¶12

Navalur Kuttapattu (Post),

¶13

Near Agricultural College,

¶14

Trichy – 620 009.

¶15

Mr. Aswin Kumar B. Patel, S/o Bhimji S. Patel, D.No.478/1A, Dindigul Road, Navalur Kuttapattu (Post), Near Agricultural College, Trichy – 620 009.

¶16

Mr. Vinod B. Patel,

¶17

S/o Bhimji S. Patel, D.No.478/1A, Dindigul Road, Navalur Kuttapattu (Post), Near Agricultural College, Trichy – 620 009.

¶18

Page 1 of 16

¶19

OA No. 62/2023

¶20

Mrs. Bhavana S. Patel,

¶21

W/o Aswin Kumar B. Patel, D.No.478/1A, Dindigul Road, Navalur Kuttapattu (Post), Near Agricultural College, Trichy – 620 009. ---Defendants

¶22

Counsel for the Applicant Bank : M/s P. Madhan Alexandar, P. Priyadharshini, S. Dhanapandian.

¶23

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:

¶24

JUDGEMENT

¶25

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 07.11.2022 to recover from the Defendants a total sum of Rs.2,72,86,310/- i.e.,

¶26

(i) The defendants to pay a sum of Rs.91,93,319/- together with interest at the rate of 15.60% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Open Cash Credit facility

¶27

(ii) Defendants 1 to 3 to pay a sum of Rs.1,80,92,991/- together with interest at the rate of 13.70% p.a. with monthly rests plus penal interest at the rate of 3%p.a. 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.

¶28

2 . The brief averments of the application filed by the Applicant Bank are as follows:-

¶29

The defendants have approached the applicant bank for availing loan Facilities for business purpose. The applicant bank has also sanctioned the said loan facilities to the defendants as follows

¶30

S.	No	Nature of Facility	Amount
1		Foreign Letter of Credit	Rs. 90,00,000/-
2		Open Cash Credit	Rs. 30,00,000/-

¶31

Page 2 of 16

¶32

OA No. 62/2023

¶33

S.	No	Nature of Facility	Amount
3		Credit Equivalent Limit	Rs. 11,25,000/-
		Total	Rs. 1,31,25,000/-

¶34

In consideration of the said facilities the letter of sanction along with terms & conditions were communicated to the defendants by the applicant bank through its sanction letter dt.28.03.11 and the same was duly accepted by the defendants by counter signing the same on 05.04.11. The 1^st defendant had executed a Demand Promissory Note on 05.04.11 for a sum of Rs.30,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with compound interest at the rate of 13.50% Per annum with monthly rest or at such other rate as may be revised by the applicant bank from time to time and the 1^st defendant has executed Letter of Continuity dt.05.04.11 for a sum of Rs.30,00,000/- in favour of the Applicant Bank containing several undertakings & acceptance with regard to security of pro-note, operation of accounts, charging of interest, liabilities of the defendants etc., and tendering the said pro-note as continuing security for the said facility.

¶35

Further, the 1^st defendant has executed Hypothecation Agreement for Cash Credit facility, dt.05.04.11 for a sum of Rs.30,00,000/- in favour of the Applicant Bank by hypothecating the goods mentioned in the 'A' Schedule hereunder and by promising to repay the said facility with interest at the rate of 13.50% per annum with monthly rests or at such other rates or rest as may be revised by the applicant bank from time to time.

¶36

In consideration of the Foreign Letter of Credit for a sum of Rs.90,00,000/- the 1^st defendant has executed Hypothecation Agreement for Foreign Letter of Credit dt.05.04.11 in favour of the Applicant Bank containing several undertakings, conditions & acceptance with regard to the limit availed by the defendants and a Credit Facility Agreement for a sum of Rs.1,31,25,000/(90,00,000+30,00,000+11,25,000) in favour of the Applicant Bank by promising to repay the loan amount on demand with interest as enumerated in the said agreement or at such other rates & rests as may be revised by the Applicant Bank from time to time.

¶37

The defendants 2 to 4 agreed to stand as continuing guarantor for the repayment of the said facilities for a sum of Rs.1,31,25,000/- (90,00,000 + 30,00,000+ 11,25,000) with interest & costs thereon and executed deed of continuing guarantee dt.05.04.11 in favour of the Applicant Bank.

¶38

Page 3 of 16

¶39

OA No. 62/2023

¶40

ENHANCEMENT OF THE FACILITIES

¶41

At the request of the 1^st defendant, the applicant bank has enhanced the said facilities to the defendants as follows

¶42

S. No	Nature of Facility	From	To
1	Foreign Letter of Credit	Rs. 90,00,000/-	Rs. 1,30,00,000/- (Enhanced)
2	Open Cash Credit	Rs. 30,00,000/-	Rs. 40,00,000/- (Enhanced)
3	Credit Equivalent Limit	Rs. 11,25,000/-	Rs. 16,25,000/- (Enhanced)
	Total	—	Rs. 1,86,25,000/-

¶43

In consideration of the said facilities the letter of sanction along with terms & conditions were communicated to the defendants by the applicant bank through its sanction letter dt.30.08.12 and the same was duly accepted by the defendants by counter signing the same on 30.08.12. The 1^st defendant executed a Demand Promissory Note on 30.08.12 for a sum of Rs.40,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with compound interest at the rate of 15.25% Per annum with monthly rest or at such other rate as may be revised by the applicant bank from time to time and also executed Letter of Continuity dt.30.08.12 for a sum of Rs.40,00,000/- in favour of the Applicant Bank containing several undertakings & acceptance with regard to security of pronote, operation of accounts, charging of interest, liabilities of the defendants etc., and tendering the said pro-note as continuing security for the said facility.

¶44

Further, the 1^st defendant has executed Hypothecation Agreement for Cash Credit facility, dt.30.08.12 for a sum of Rs.40,00,000/- in favour of the Applicant Bank by hypothecating the goods mentioned in the 'A' Schedule hereunder and by promising to repay the said facility with interest at the rate of 14.50% per annum with monthly rests or at such other rates or rest as may be revised by the applicant bank from time to time and executed Hypothecation Agreement for Foreign Letter of Credit dt.30.08.12 in favour of the Applicant Bank containing several undertakings, conditions & acceptance with regard to the limit availed by the defendants, and also executed a Credit Facility Agreement & Link Documents on 30.08.12 for a sum of Rs. 1,86,25,000/- (1,30,00,000+40,00,000+ 16,25,000) in favour of the Applicant Bank by promising to repay the loan amount on demand with interest as enumerated in the said agreement or at such other rates & rests as may be revised by the Applicant Bank from time to time.

¶45

The defendants 2 to 4 agreed to stand as continuing guarantor for the repayment of the said facilities for a sum of Rs.1,86,25,000/- (1,30,00,000 +

¶46

Page 4 of 16

¶47

OA No. 62/2023

¶48

40,00,000+ 16,25,000) with interest & costs thereon and executed deed of continuing guarantee dt.30.08.12 in favour of the Applicant Bank.

¶49

ENHANCEMENT OF THE FACILITIES

¶50

At the request of the 1^st defendant, the applicant bank has enhanced the said facilities to the defendants as follows

¶51

S. No	Nature of Facility	From	To
1	Foreign Letter of Credit	Rs. 1,30,00,000/-	Rs. 2,00,00,000/- (Enhanced)
2	Open Cash Credit	Rs. 40,00,000/-	Rs. 75,00,000/-(Enhanced)
3	Credit Equivalent Limit	Rs. 16,25,000/-	Rs. 25,00,000/- (Enhanced)
	Total	—	Rs. 3,00,00,000/-

¶52

¶53

In consideration of the above said Cash Credit Facility, the 1^st defendant executed a Demand Promissory Note on 20.12.13 for a sum of Rs.75,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with compound interest at the rate of 14.25% Per annum with monthly rest or at such other rate as may be revised by the applicant bank from time to time, and executed Hypothecation Agreement for Cash Credit facility, dt.20.12.13 for a sum of Rs. 75,00,000/- in favour of the Applicant Bank by hypothecating the goods mentioned in the 'A' Schedule hereunder and by promising to repay the said facility with interest at the rate of 14.25% per annum with monthly rests or at such other rates or rest as may be revised by the applicant bank from time to time and also executed Hypothecation Agreement for Foreign Letter of Credit dt.20.12.13 in favour of the Applicant Bank containing several undertakings, conditions & acceptance with regard to the limit availed by the defendants.

¶54

Further, 1^st defendant has executed a Credit Facility Agreement & Link Documents on 20.12.13 for a sum of Rs.3,00,00,000/- (2,00,00,000 + 75,00,000+ 25,00,000) in favour of the Applicant Bank by promising to repay the loan amount on demand with interest as enumerated in the said agreement or at such other rates & rests as may be revised by the Applicant Bank from time to time.

¶55

Page 5 of 16

¶56

OA No. 62/2023

¶57

The defendants 2 to 4 agreed to stand as continuing guarantor for the repayment of the said facilities for a sum of Rs.3,00,00,000/- (2,00,00,000 + 75,00,000+ 25,00,000) with interest & costs thereon and executed deed of continuing guarantee dt.20.12.13 in favour of the Applicant Bank.

¶58

ENHANCEMENT CUM RENEWAL OF THE FACILITIES

¶59

At the request of the 1^st defendant, the applicant bank has enhanced & renewed the said facilities to the defendants as follows

¶60

S. No	Nature of Facility	From	To
1	Foreign Letter of Credit	Rs. 2,00,00,000/-	^{Rs. 2,50,00,000/-} (Enhanced)
2	Open Cash Credit	Rs. 75,00,000/-	Rs. 75,00,000/- (Renewal)
3	Credit Equivalent Limit	Rs. 25,00,000/-	Rs. 31,25,000/- (Enhanced)
	Total	—	Rs. 3,56,25,000/-

¶61

¶62

The 1^st defendant executed a Demand Promissory Note on 10.07.15 for a sum of Rs.75,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with compound interest at the rate of 14.00% Per annum with monthly rest or at such other rate as may be revised by the applicant bank from time to time and has executed Hypothecation Agreement for Cash Credit facility, dt.10.07.15 for a sum of Rs.75,00,000/- in favour of the Applicant Bank by hypothecating the goods mentioned in the 'A' Schedule hereunder and by promising to repay the said facility with interest at the rate of 14.00% per annum with monthly rests or at such other rates or rest as may be revised by the applicant bank from time to time also executed Hypothecation Agreement for Foreign Letter of Credit dt. 10.07.15 in favour of the Applicant Bank containing several undertakings, conditions & acceptance with regard to the limit availed by the defendants.

¶63

Further, the 1^st defendant has executed a Credit Facility Agreement & Link Document on 10.07.15 for a sum of Rs.3,56,25,000/- (2,50,00,000+ 75,00,000+ 31,25,000) in favour of the Applicant Bank by promising to repay the loan amount on demand with interest as enumerated in the said

¶64

Page 6 of 16

¶65

OA No. 62/2023

¶66

agreement or at such other rates & rests as may be revised by the Applicant Bank from time to time.

¶67

Tthe defendants 2 to 4 agreed to stand as continuing guarantor for the repayment of the said facilities for a sum of Rs.3,56,25,000/- (2,50,00,000 + 75,00,000+ 31,25,000) with interest & costs thereon and executed deed of continuing guarantee dt.10.07.15 in favour of the Applicant Bank.

¶68

RENEWAL OF FACILITIES

¶69

At the request of the 1^st defendant, the applicant bank has renewed the said facilities to the defendants as follows

¶70

S. No	Nature of Facility	From	To
1	Foreign Letter of Credit	Rs. 2,50,00,000/-	Rs. 2,50,00,000/- (Renewal)
2	Open Cash Credit	Rs. 75,00,000/-	Rs. 75,00,000/- (Renewal)
3	Credit Equivalent Limit	Rs. 31,25,000/-	Rs. 31,25,000/- (Renewal)
	Total	—	Rs. 3,56,25,000/-

¶71

¶72

RENEWAL OF FACILITIES

¶73

At the request of the 1^st defendant, the applicant bank has enhanced the said facilities to the defendants as follows

¶74

S. No	Nature of Facility	From	To
1	Foreign Letter of Credit	Rs. 2,50,00,000/-	^{Rs. 2,00,00,000/-} (Reduction)
2	Open Cash Credit	Rs. 75,00,000/-	Rs. 75,00,000/- (Renewal)
3	Credit Equivalent Limit	Rs. 31,25,000/-	Rs. 25,00,000/- (Reduced)
	Total	—	Rs. 3,00,00,000/-

Page 7 of 16

OA No. 62/2023

The defendants defaulted in maintaining sufficient balance in their loan account for realization of Letter of Credit & Credit Equivalent Limit. Further the default of the defendants in maintaining the sufficient balance for realization of the said Letter of Credit & Credit Equivalent Limit, the Cash Credit Facility account will be automatically debited and the said Letter of Credit & Credit Equivalent Limit will be realized.

¶79

TERM LOAN

¶80

At the request of the 1^st defendant, the applicant bank has sanctioned the said Term Loan for a sum of Rs.2,00,00,000/-. In consideration of Term Loan, the letter of sanction along with terms & conditions were communicated to the defendants by the applicant bank through its sanction letter dt.06.05.19 and the same was duly accepted by the defendants by counter signing the same on 06.05.19.

¶81

In consideration of the Term Loan the 1^st defendant has executed a Demand Promissory Note on 06.05.19 for a sum of Rs.2,00,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with interest at the rate of 12.00% Per annum with monthly rest or at such other rates & rests as may be revised by the Applicant Bank from time to time and executed a Term Loan Agreement & two Supplemental agreement dt.06.05.19 for a sum of Rs.2,00,00,000/- in favour of the Applicant Bank containing various terms & conditions and by agreeing to repay the loan amount in 60 monthly installments of Rs.4,44,889/- in favour of the applicant Bank. Further the Defendants promised to repay the loan amount with compound interest at the rate of 12.00% Per annum with monthly rest or at such other rates as may be revised by the bank from time to time with penal interest at the rate of 3% per annum in case of default.

¶82

In consideration of the said Term Loan, the defendants 2 & 3 agreed to stand as continuing guarantor for the repayment of the said Term Loan with interest & costs thereon and executed deed of continuing guarantee dt.06.05.19 in favour of the Applicant Bank.

¶83

On the default of the defendants in repayment of the above said loan & facilities, the applicant bank sold the mortgage property under Sarfaesi Proceedings and issued sale certificate dt.25.01.21 and appropriated the sale amount in the concern loan account. Further the applicant bank demanded the defendant various times for the balance outstanding amounts.

¶84

The defendants have not repaid the loans as agreed and promised by them. Thus the defendants have committed default in repaying the loan

¶85

Page 8 of 16

¶86

OA No. 62/2023

¶87

amount with interest & costs. Despite repeated demands made by the Applicant Bank the defendants did not take any sincere steps to discharge the loan.

¶88

Hence the applicant bank is constrained to file this original application for recovery of the loan amount for a total sum of Rs.2,72,86,310/- i.e.,

¶89

(i) all defendants to pay a sum of Rs.91,93,319/- together with interest at the rate of 15.60% p.a. with monthly rests plus penal interest at the rate of 3%p.a. in respect of Open Cash Credit facility

¶90

¶91

The Applicant Bank has submitted the following documents in support its claim in the OA, which are as follows:

¶92

Loan Documents – Annexure-I

¶93

S. No.	Date	Description of document	Exhibits
1	28.03.2011	Sanction letter along with terms & conditions countersigned by the 1st defendant in favour of the Applicant Bank	Ex.No.A-01
2	05.04.2011	Demand promissory note executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-02
3	05.04.2011	Letter of Continuity executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-03
4	05.04.2011	Hypothecation Agreement for Cash Credit Facility executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-04
		Hypothecation Agreement for Foreign Letter
5	05.04.2011	of Credit executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-05
6	05.04.2011	Credit Facility Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-06
		Agreement of Continuing Guarantee executed
7	05.04.2011	by Defendants 2 to 4 in favour of the Applicant Bank	Ex.No.A-07
		Sanction letter along with terms & conditions
8	30.08.2012	countersigned by the 1st defendant in favour of the Applicant Bank	Ex.No.A-08
9	30.08.2012	Demand promissory note executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-09

¶94

Page 9 of 16

¶95

OA No. 62/2023

¶96

10	30.08.2012	Letter of Continuity executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-10
		Hypothecation Agreement for Cash Credit
11	30.08.2012	Facility executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-11
		Hypothecation Agreement for Foreign Letter
12	30.08.2012	of Credit executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-12
13	30.08.2012	Credit Facility Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-13
14	17.08.2012	Link Document executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-14
		Agreement of Continuing Guarantee executed
15	30.08.2012	by Defendants 2 to 4 in favour of the Applicant Bank	Ex.No.A-15
		Sanction letter along with terms & conditions
16	20.12.2013	countersigned by the 1st defendant in favour of the Applicant Bank	Ex.No.A-16
17	20.12.2013	Demand promissory note executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-17
		Hypothecation Agreement for Cash Credit
18	20.12.2013	Facility executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-18
		Hypothecation Agreement for Foreign Letter
19	20.12.2013	of Credit executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-19
20	20.12.2013	Credit Facility Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-20
21	20.12.2013	Link Document executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-21
		Agreement of Continuing Guarantee executed
22	20.12.2013	by Defendants 2 to 4 in favour of the Applicant Bank	Ex.No.A-22
		Sanction letter along with terms & conditions
23	10.07.2015	countersigned by the 1st defendant in favour of the Applicant Bank	Ex.No.A-23
24	10.07.2015	Demand promissory note executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-24
		Hypothecation Agreement for Cash Credit
25	10.07.2015	Facility executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-25
26	10.07.2015	Hypothecation Agreement for Foreign Letter of Credit executed bythe 1st defendant in	Ex.No.A-26

¶97

Page 10 of 16

¶98

OA No. 62/2023

¶99

		favour of the Applicant Bank
27	10.07.2015	Credit Facility Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-27
28	10.07.2015	Link Document executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-28
29	10.07.2015	Agreement of Continuing Guarantee executed by Defendants 2 to 4 in favour of the Applicant Bank	Ex.No.A-29
30	24.04.2017	Sanction-cum-Renewal letter along with terms & conditions countersigned by the 1st defendant	Ex.No.A-30
		Sanction-cum-Renewal letter along with
31	03.01.2019	terms & conditions countersigned by the 1st defendant in favour of the Applicant Bank	Ex.No.A-31
		Statement of Accounts maintained by the
32	—	Applicant Bank in the regular course of business	Ex.No.A-32

¶100

Term Loan

¶101

		Sanction letter along with terms & conditions
33	06.05.2019	countersigned by the 1st defendant in favour of the Applicant Bank	Ex.No.A-33
34	06.05.2019	Demand promissory note executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-34
35	06.05.2019	Term Loan Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-35
36	06.05.2019	Supplemental Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-36
37	06.05.2019	Supplemental Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex.No.A-37
38	06.05.2019	Agreement of Continuing Guarantee executed by Defendants 2 & 3 in favour of the Applicant Bank	Ex.No.A-38
		Statement of Accounts maintained by the
39	—	Applicant Bank in the regular course of business	Ex.No.A-39
40	25.01.21	Sale Certificate	Ex.No.A-40

¶102

SCHEDULE OF PROPERTIES

¶103

'A' SCHEDULE - HYPOTHECATED GOODS

Page 11 of 16

OA No. 62/2023

Item No.1

All stocks & goods of Timbers related goods, raw materials, goods-inprocess, all finished & manufactured goods, all stored & kept at 478/1A, Dindigul Road, Navalur Kuttapattu (Post), Near Agricultural College, Trichy - 620 009

¶108

Item No.2

¶109

All the Hypothecated Book Debts, Outstandings, Money Receivables, Claims and Bills due owing to the 1^st defendant.

¶110

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.

¶111

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?

¶112

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. S. Dhandapani, who is the Chief Manager of the Applicant Bank.

¶113

He has stated in his affidavit that the defendants has availed Open 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-40 in support of its claim in the OA.

¶114

The Sanction letter along with terms and conditions countersigned by the 1st defendant in favour of the Applicant Bank has been marked as Ex.No.A-01, Demand Promissory Note executed by the 1st defendant in favour of the Applicant Bank has been marked as Ex.No.A-02, Letter of Continuity executed by the 1st defendant in favour of the Applicant Bank has been marked as Ex.No.A-03, Hypothecation Agreement for Cash Credit Facility executed by the 1st defendant has been marked as Ex.No.A-04, Hypothecation Agreement for Foreign Letter of Credit executed by the 1st defendant has been marked as Ex.No.A-05, Credit Facility Agreement executed by the 1st defendant has been marked as Ex.No.A-06, Agreement of Continuing Guarantee executed by Defendants 2 to 4 has been marked as Ex.No.A-07, Sanction letter along with terms and conditions countersigned

¶115

Page 12 of 16

¶116

OA No. 62/2023

¶117

by the 1st defendant has been marked as Ex.No.A-08, Demand Promissory Note executed by the 1st defendant has been marked as Ex.No.A-09, and Letter of Continuity executed by the 1st defendant has been marked as Ex.No.A-10.

¶118

The Hypothecation Agreement for Cash Credit Facility executed by the 1st defendant has been marked as Ex.No.A-11, Hypothecation Agreement for Foreign Letter of Credit executed by the 1st defendant has been marked as Ex.No.A-12, Credit Facility Agreement executed by the 1st defendant has been marked as Ex.No.A-13, Link Document executed by the 1st defendant has been marked as Ex.No.A-14, Agreement of Continuing Guarantee executed by Defendants 2 to 4 has been marked as Ex.No.A-15, Sanction letter along with terms and conditions countersigned by the 1st defendant has been marked as Ex.No.A-16, Demand Promissory Note executed by the 1st defendant has been marked as Ex.No.A-17, Hypothecation Agreement for Cash Credit Facility executed by the 1st defendant has been marked as Ex.No.A-18, Hypothecation Agreement for Foreign Letter of Credit executed by the 1st defendant has been marked as Ex.No.A-19, and Credit Facility Agreement executed by the 1st defendant has been marked as Ex.No.A-20.

¶119

The Link Document executed by the 1st defendant has been marked as Ex.No.A-21, Agreement of Continuing Guarantee executed by Defendants 2 to 4 has been marked as Ex.No.A-22, Sanction-cum-Renewal letter countersigned by the 1st defendant has been marked as Ex.No.A-23, Sanction-cum-Renewal letter countersigned by the 1st defendant has been marked as Ex.No.A-24, Statement of Accounts maintained by the Applicant Bank has been marked as Ex.No.A-25, Sanction letter relating to Term Loan has been marked as Ex.No.A-26, Demand Promissory Note executed by the 1st defendant has been marked as Ex.No.A-27, Term Loan Agreement executed by the 1st defendant has been marked as Ex.No.A-28, Supplemental Agreement executed by the 1st defendant has been marked as Ex.No.A-29, and Supplemental Agreement executed by the 1st defendant has been marked as Ex.No.A-30.

¶120

The Agreement of Continuing Guarantee executed by Defendants 2 & 3 has been marked as Ex.No.A-31, Statement of Accounts maintained by the Applicant Bank in the regular course of business has been marked as Ex.No.A-32, Sale Certificate has been marked as Ex.No.A-33, Sanction letter dated 06.05.2019 has been marked as Ex.No.A-34, Demand Promissory Note dated 06.05.2019 has been marked as Ex.No.A-35, Term Loan Agreement dated 06.05.2019 has been marked as Ex.No.A-36, Supplemental Agreement dated 06.05.2019 has been marked as Ex.No.A-37, another Supplemental Agreement dated 06.05.2019 has been marked as Ex.No.A-38, Agreement of Continuing Guarantee executed by Defendants 2 & 3 has been

¶121

Page 13 of 16

¶122

OA No. 62/2023

¶123

marked as Ex.No.A-39, and Statement of Accounts maintained by the Applicant Bank has been marked as Ex.No.A-40. So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

¶124

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.

¶125

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).

¶126

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 ".

¶127

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

¶128

The Applicant Bank is entitled to recover from the Defendants, a total sum of Rs.2,72,86,310/- i.e.,

¶129

(i) all defendants to pay a sum of Rs.91,93,319/- together with interest at the rate of 15.60% p.a. with half yearly rests in respect of Open Cash Credit facility

¶130

(ii) Defendants 1 to 3 to pay a sum of Rs.1,80,92,991/- together with interest at the rate of 13.70% p.a. with half yearly rests plus in respect of Term Loan from the date of filing of Application till the date of realization with cost. Accordingly, it is hereby

ORDERED

Page 14 of 16

OA No. 62/2023

(a) That the Defendants are directed to pay jointly/severally a total sum of Rs.2,72,86,310/- i.e.,

¶135

(i) Defendants to pay a sum of Rs.91,93,319/- together with interest at the rate of 15.60% p.a. with half yearly rests in respect of Open Cash Credit facility

¶136

¶137

(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.

¶138

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

¶139

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

¶140

(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.

¶141

(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 Open 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.

¶142

Page 15 of 16

¶143

OA No. 62/2023

¶144

Dictated to T.P, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 13^th April, 2026.

¶145

Sd/- (SEEMA SINHA) PRESIDING OFFICER

¶146

Uploaded on 24.04.26

¶147

Page 16 of 16

Karur Vysya Bank v. Dhanalaksmi Wood Industries

Case brief

What is this about?

What did the court decide?

Karur Vysya Bank v. Dhanalaksmi Wood Industries

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Balaji v versus Karur Vysya Bank

Canara Bank versus Nalan Kumar

Punjab National Bank versus P Marimuthu

Karur Vysya Bank versus K Venkatesan

Punjab National Bank (United Bank of India) versus M/s Rps Agencies

R Ramkumar versus State Bank of India