Allowed

Karur Vysya Bank v. Radhakrishna Timbers

DRT6 Jul 2026OA/65/2023

Case brief

AI extract

What is this about?

This tribunal allowed an Original Application filed by Karur Vysya Bank to recover dues from borrowers for abandoned cash credit and term loans. The court confirmed the validity of loan documents and recognized the bank's right to interest, modifying the rate for cash credit due to lack of proof for compound interest. It also addressed the procedural aspect of capitalizing penal interest.

What did the court decide?

Direct recovery of Rs.2,64,11,146/- with adjusted interest rates (11.85% and 8.20% p.a.) and preparation of a Recovery Certificate.

Karur Vysya Bank versus Radhakrishna Timbers — Contract and Commercial Disputes | DRT (2026)

¶1

OA No. 65/2023

¶2

Fair Order

¶3

IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 06^th DAY OF JULY, 2026 PRESENT: SEEMA SINHA,

¶4

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

¶5

OA No.65/2023

¶6

Between

¶7

The Karur Vysya Bank Limited, Asset Recovery Branch, Madurai Rep. by its Senior Manager. ---Applicant Bank

¶8

And

¶9

M/s. Radhakrishna Timbers Partnership firm represented by its partners Door No.236/1B, Tanjore Road, Kattur, Thiruchirapalli – 620 019.

¶10

Thiru. Bagavandass A. Patel S/o. Thiru. Abji Patel, Door No.62, Priyanka Nagar, 3rd Street, Kattur, Trichy – 620 019.

¶11

Also at

¶12

Plot No.29, Ganesh Nagar, 8th Cross, Kattur, Trichy – 620 019.

¶13

Tmt. Anushya B. Patel, W/o. Thiru. Bagavandass A. Patel, Door No.62, Priyanka Nagar, 3rd Street, Kattur, Trichy – 620 019.

¶14

Thiru. Mohan A. Patel, S/o. Thiru. Abji Patel, Door No.55, Priyanka Nagar, 2nd Street, Kattur, Trichy – 620 019.

¶15

Page 1 of 15

¶16

OA No. 65/2023

¶17

Tmt. Sarala M. Patel, W/o. Thiru. Mohan A. Patel, Door No.55, Priyanka Nagar, 2nd Street, Kattur, Trichy – 620 019.

¶18

Thiru. Chandrakanth B. Patel, S/o. Thiru. Bagavandass A. Patel, Door No.62, Priyanka Nagar, 3rd Street, Kattur, Trichy – 620 019.

¶19

Thiru. Deepak Patel, S/o. Thiru. Bagavandass A. Patel, Door No.55, Priyanka Nagar, 2nd Street, Kattur, Trichy 620 019. .....Defendants

¶20

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

¶21

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:

¶22

JUDGEMENT

¶23

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 14.11.2022 to recover from the Defendants a sum of Rs.2,64,11,146/- i.e., i) Rs.2,29,08,466/- together with interest with monthly rests plus penal interest at the rate of 3 % p.a. in respect of Open Cash Credit Facility and ii) Rs.35,02,680/- together with interest at the rate of 12.60 % 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.

¶24

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

¶25

Page 2 of 15

¶26

OA No. 65/2023

¶27

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

¶28

S. No.	Nature of Facility	Amount
1	Open Cash Credit	Rs. 30,00,000/-
2	Foreign Letter of Credit	Rs. 70,00,000/-
3	Credit Equivalent Limit	Rs. 8,75,000/-
Total		Rs. 1,08,75,000/-

¶29

The Applicant Bank 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.04.03.11 and the same was duly accepted by the defendants by counter signing the same on 04.03.11. In consideration of the above said Cash Credit Facility, the 1^st defendant executed a Demand Promissory Note on 04.03.11 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 13.25% Per annum with monthly rest or at such other rate as may be revised by the applicant bank from time to time. The 1^st defendant has executed Letter of Continuity dt.04.03.11 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. The 1^st defendant has also executed Hypothecation Agreement dt.04.03.11 for a sum of Rs.30,00,000/- in favour of the Applicant Bank by hypothecating the goods & current assets as mentioned in the 'A' Schedule and by promising to repay the said facility with compound interest at the rate of 13.25% per annum with monthly rests or at such other rates or rest as may be revised by the applicant bank from time to time.

¶30

For Foreign Letter of Credit for a sum of Rs.70,00,000/- & Credit Equivalent Limit for a sum of Rs.8,75,000/-, the 1^st defendant has executed Forward Contract Agreement dt.04.03.11 in favour of the Applicant Bank containing several undertakings, conditions & acceptance with regard to the limit availed by the defendants. The 1st defendant has executed a Credit Facility Agreement on 04.03.11 for a sum of Rs.1,08,75,000/- (Rs.30,00,000 + Rs.70,00,000 +Rs.8,75,000) 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. For the said credit facilities, the defendants 2 to 6 agreed to stand as continuing guarantor for the repayment of the said facilities for a sum of Rs.1,08,75,000/- (Rs.30,00,000 + Rs.70,00,000 + Rs.8,75,000)

¶31

Page 3 of 15

¶32

OA No. 65/2023

¶33

with interest & costs thereon and executed deed of continuing guarantee dt.04.03.11 in favour of the Applicant Bank.

¶34

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

¶35

S. No.	Nature of Facility	From	To
1	Open Cash Credit	Rs. 30,00,000/-	Rs. 50,00,000/-(Enhanced)
2	Foreign Letter of Credit	Rs. 70,00,000/-	Rs. 1,30,00,000/-(Enhanced)
3	Credit Equivalent Limit	Rs. 8,75,000/-	Rs. 16,25,000/-(Enhanced)
	Total		Rs. 1,96,25,000/-

¶36

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.11.09.13 and the same was duly accepted by the defendants by counter signing the same on 11.09.13.

¶37

The Applicant Bank submits that in consideration of the above said Cash Credit Facility, the 1^st defendant executed 11.09.13 for a sum of Rs.50,00,000/- in favour of the Applicant Bank by promising Demand Promissory Note on 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. The 1^st defendant has executed Letter of Continuity dt.11.09.13 for a sum of Rs.50,00,000/- 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. The 1^st defendant has executed Hypothecation Agreement, dt.11.09.13 for a sum of Rs.50,00,000/- in favour of the Applicant Bank by hypothecating the goods & current assets as mentioned in the 'A' schedule. For Foreign Letter of Credit for a sum of Rs.1,30,00,000/- & Credit Equivalent Limit for a sum of Rs.16,25,000/- the 1^st defendant has executed Forward Contract Agreement dt.11.09.13 in favour of the Applicant Bank containing several undertakings, conditions & acceptance with regard to the limit availed by the defendants. The 1^st defendant has executed a credit facility agreement & link documents on 11.09.13 for a sum of Rs.1,96,25,000/- in favour of the applicant bank.

¶38

For the said credit facilities , the defendants 2 to 6 agreed to stand as continuing guarantor for the repayment of the said facilities for a sum of Rs.1,96,25,000/- with interest & cost thereon and executed deed of continuing guarantee dt.11.09.13 in favour of the applicant bank.

¶39

Page 4 of 15

¶40

OA No. 65/2023

¶41

The 1^st defendant has renewed the said credit facilities , and the letter of sanction dt 26.04.15 along with terms and condition were communicated to the defendants by the applicant bank. The 1^st defendant has executed demand promissory note, letter of continuity, Hypothecation agreement , forward contract agreement and credit facility agreement on 26.04.2015. The defendants 2, 6 & 7 agreed to stand as continuing guarantor for the repayment of the said facilities for a sum of Rs.1,96,25,000/- with interest & cost thereon and executed deed of continuing guarantee dt.26.04.15 in favour of the applicant bank.

¶42

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

¶43

S. No.	Nature of Facility	From	To
1	Open Cash Credit	Rs. 50,00,000/-	Rs. 1,25,00,000/-(Enhanced)
2	Foreign Letter of Credit	Rs. 1,30,00,000/-	Rs. 80,00,000/-(Reduced)
3	Credit Equivalent Limit	Rs. 16,25,000/-	Rs. 10,00,000/-(Reduced)
	Total		Rs. 2,15,00,000/-

¶44

The Applicant Bank submits that in consideration of the above said Cash Credit Facility, the 1 defendant executed a Demand Promissory Note on 31.08.16 for a sum of Rs.1,25,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with compound interest at the rate of 12.65% Per annum with monthly rest or at such other rate as may be revised by the applicant bank from time to time. The 1^st defendant has executed demand promissory note, letter of continuity, Hypothecation agreement, forward contract agreement, supplemental agreement and link document on 31.08.16. The defendants 2 ,6 & 7 agreed to stand as continuing guarantor for the repayment of the said facilities for a sum of Rs.2,15,00,000/- with interest & cost thereon and executed deed of continuing guarantee dt.31.08.16 in favour of the applicant bank.

¶45

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

¶46

S. No.	Nature of Facility	From	To
1	Open Cash Credit	Rs. 1,25,00,000/-	Rs. 1,50,00,000/-(Enhanced)
2	Foreign Letter of Credit	Rs. 80,00,000/-	Rs. 30,00,000/-(Reduced)
3	Credit Equivalent Limit	Rs. 10,00,000/-	Rs. 3,75,000/-(Reduced)
	Total		Rs. 1,83,75,000/-

¶47

Page 5 of 15

¶48

OA No. 65/2023

¶49

The applicant bank submits that 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.15.02.18 and the same was duly accepted by the defendants by counter signing the same on 15.02.18. In consideration of the said facilities, 1^st defendant has executed a letter of declaration 15.05.18 in favour of the applicant bank and the loan documents as executed already will have same effect & link on the subsequent enhancement of cash credit facility for a sum of Rs.1,50,00,000/and reduction of Foreign Letter of credit and credit equivalent limit. The applicant bank at the request of the 1^st defendant has renewed the said facilities as above through its sanction letter dt.26.12.19 and the same was duly accepted by the defendants.

¶50

The Applicant Bank on the request of the 1^st defendant has sanctioned the said Term Loan for a sum of Rs.30,00,000/-. In consideration of said Term Loan, the 1^st defendant has executed a demand promissory note on 08.06.20 for a sum of Rs.30,00,000/- in favour of the applicant bank and also executed credit facility agreement & general credit facility agreement. The defendants 2 & 6 agreed to stand as continuing guarantor for the term loan.

¶51

The Applicant Bank submits that in consideration of the above said facilities, the 2nd defendant has offered his properties which is fully mentioned in the 'B' Schedule hereunder as Security and thereby he has deposited his Title Deeds on 11.09.13, 31.08.16, 15.02.18 & 10.06.20 with the Applicant Bank pertaining to his property, with an intention to create an Equitable Mortgage over the said properties. To evidence the said facts as well as by confirming the same, the 2nd defendant has executed four Registered Memorandum of Deposit of title deeds dt.11.09.13, 31.08.16, 19.03.19 & 12.06.20 pertaining to the said properties in favour of the Applicant Bank. Thus the applicant bank is a mortgagee entitled to proceed against the mortgaged property for recovery of loan.

¶52

The defendants have not repaid the loans as agreed and promised by them. Thus the defendants have committed default in repaying the loan amount with interest & costs. Despite repeated demands made by the Applicant Bank the defendants did not take any sincere steps to discharge the loan.

¶53

Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.2,64,11,146/- i.e., i) Rs.2,29,08,466/- together with interest with monthly rests plus penal interest at the rate of 3 % p.a. in respect of Open Cash Credit Facility and ii) Rs.35,02,680/- together with interest at the rate of 12.60 % p.a. with monthly rests plus penal interest at the rate of 3 % p.a. in respect

¶54

Page 6 of 15

¶55

OA No. 65/2023

¶56

of Term loan from the date of filing of Application till the date of realization with cost.

¶57

During the pendency of the OA, the applicant bank has sold the property for a sum of Rs.84,74,400/- under SARFAESI action to Mrs. Vipul patel and handed over title deeds to the auction purchaser.

¶58

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

¶59

List of Documents

¶60

Sl. No.	Date	Particulars	Exhibit No.
1.	04.03.11	Sanction letter along with terms & conditions counter signed by the 1st defendant in favour of the applicant bank	Ex. No. A-01
2.	04.03.11	Demand promissory note executed by the 1st defendant in favour of the applicant bank	Ex. No. A-02
3.	04.03.11	Letter of Continuity executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-03
4.	04.03.11	Hypothecation Agreement for Cash Credit Facility executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-04
5.	04.03.11	Forward Contracts Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-05
6.	04.03.11	Credit facility agreement executed by the 1st defendant in favour of the applicant bank	Ex. No. A-06
7.	04.03.11	Agreement of continuing guarantee executed by the defendants 2 to 6 in favour of the Applicant Bank	Ex. No. A-07
8.	11.09.13	Sanction letter along with terms & conditions counter signed by the 1st defendant in favour of the applicant bank	Ex. No. A-08
9.	11.09.13	Demand promissory note executed by the 1st defendant in favour of the applicant bank	Ex. No. A-09
10.	11.09.13	Letter of Continuity executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-10
11.	11.09.13	Hypothecation Agreement for Cash Credit Facility executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-11
12.	11.09.13	Forward Contracts Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-12
13.	11.09.13	Credit facility agreement executed by the 1st defendant in favour of the applicant bank	Ex. No. A-13
14.	11.09.13	Link Document executed by the 1st defendant in favour of the applicant bank	Ex. No. A-14

¶61

Page 7 of 15

¶62

OA No. 65/2023

¶63

15.	11.09.13	Agreement of continuing guarantee executed by the defendants 2 to 6 in favour of the Applicant Bank	Ex. No. A-15
16.	26.04.15	Sanction letter along with terms & conditions counter signed by the 1st defendant in favour of the applicant bank	Ex. No. A-16
17.	26.04.15	Demand promissory note executed by the 1st defendant in favour of the applicant bank	Ex. No. A-17
18.	26.04.15	Letter of Continuity executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-18
19.	26.04.15	Hypothecation Agreement for Cash Credit Facility executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-19
20.	26.04.15	Forward Contracts Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-20
21.	26.04.15	Credit facility agreement executed by the 1st defendant in favour of the applicant bank	Ex. No. A-21
22.	26.04.15	Agreement of continuing guarantee executed by the defendants 2 ,6 & 7 in favour of the Applicant Bank	Ex. No. A-22
23.	31.08.16	Sanction letter along with terms & conditions counter signed by the 1st defendant in favour of the applicant bank	Ex. No. A-23
24.	31.08.16	Demand promissory note executed by the 1st defendant in favour of the applicant bank	Ex. No. A-24
25.	31.08.16	Letter of Continuity executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-25
26.	31.08.16	Hypothecation Agreement for Cash Credit Facility executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-26
27.	31.08.16	Forward Contracts Agreement executed by the 1st defendant in favour of the Applicant Bank	Ex. No. A-27
28.	31.08.16	Supplemental Agreement executed by the 1st defendant in favour of the applicant bank	Ex. No. A-28
29.	31.08.16	Link Document executed by the 1st defendant in favour of the applicant bank	Ex. No. A-29
30.	31.08.16	Agreement of continuing guarantee executed by the defendants 2 , 6 &7 in favour of the Applicant Bank	Ex. No. A-30
31.	15.02.18	Sanction letter along with terms & conditions counter signed by the 1st defendant in favour of the applicant bank	Ex. No. A-31
32.	15.02.18	Letter of link declaration executed by the 1st defendant in favour of the applicant bank	Ex. No. A-32
		Renewal letter along with terms & conditions
33.	26.12.19	counter signed by the 1st defendant in favour of the applicant bank	Ex. No. A-33
		Statement of Accounts maintained by the
34.	****	Applicant Bank in regular course and conduct of the business towards Term Loan	Ex. No. A-34

¶64

Page 8 of 15

¶65

OA No. 65/2023

¶66

		Sanction letter for Term Loan along with terms &
35.	08.06.20	conditions counter signed by the 1st defendant in favour of the applicant bank	Ex. No. A-35
		Demand promissory note for Term Loan executed
36.	08.06.20	by the 1st defendant in favour of the applicant bank	Ex. No. A-36
37.	08.06.20	Credit facility agreement for Term Loan executed by the 1st defendant in favour of the applicant bank	Ex. No. A-37
38.	08.06.20	General Credit facility agreement for Term Loan executed by the 1st defendant in favour of the applicant bank	Ex. No. A-38
39.	08.06.20	Agreement of continuing guarantee for Term Loan executed by the defendants 2 & 6 in favour of the Applicant Bank	Ex. No. A-39
40.	****	Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business towards Term Loan	Ex. No. A-40
41.	11.09.13	Registered Memorandum of deposit of title deed executed by the 2nd defendant in favour of the applicant bank	Ex. No. A-41
42.	31.08.16	Registered deed of rectification executed by the 2nd defendant in favour of the applicant bank	Ex. No. A-42
		Registered Memorandum of deposit of title deed
43.	31.08.16	executed by the 2nd defendant in favour of the applicant bank	Ex. No. A-43
		Registered Memorandum of deposit of title deed
44.	19.03.19	executed by the 2nd defendant in favour of the applicant bank	Ex. No. A-44
45.	12.06.20	Registered Memorandum of deposit of title deed executed by the 2^nddefendant in favour of the applicant bank	Ex. No. A-45

¶67

SCHEDULE OF PROPERTIES

¶68

'A' SCHEDULE - HYPOTHECATED GOODS

¶69

Item No.1

¶70

All stocks & goods of Timbers related goods, raw materials, goods-in-process, all finished & manufactured goods, all stored & kept at Door No.236/1B, Tanjore Road, Kattur, Thiruchirapalli - 620 019.

Item No.2

Page 9 of 15

OA No. 65/2023

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

¶75

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.

¶76

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?

¶77

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.

¶78

He has stated in his affidavit that the defendants has availed Open cash credit loan 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 signed by the defendants at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-45 in support of its claim in the OA.

¶79

I scrutinized the document filed by the applicant bank and I find that the Sanction Letter along with terms and conditions counter-signed by the 1st Defendant dated 04.03.2011 marked as Ex. A-01 ; the Demand Promissory Note dated 04.03.2011 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-02 ; the Letter of Continuity dated 04.03.2011 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-03 ; the Hypothecation Agreement for Cash Credit Facility dated 04.03.2011 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-04 ; the Forward Contracts Agreement dated 04.03.2011 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-05 ; the Credit Facility Agreement dated 04.03.2011 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-06 ; the Agreement of Continuing Guarantee executed by Defendants 2 to 6 dated 04.03.2011 marked as Ex. A-07 ; the Sanction Letter along with terms and conditions counter-signed by the 1st Defendant dated 11.09.2013 marked as Ex. A-08 ; the Demand Promissory Note dated 11.09.2013 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-09 ; the Letter of Continuity dated 11.09.2013 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-10 ; the Hypothecation Agreement for Cash

¶80

Page 10 of 15

¶81

OA No. 65/2023

¶82

Credit Facility dated 11.09.2013 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-11 ; the Forward Contracts Agreement dated 11.09.2013 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-12 ; the Credit Facility Agreement dated 11.09.2013 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-13 ; the Link Document dated 11.09.2013 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-14 ; the Agreement of Continuing Guarantee executed by Defendants 2 to 6 dated 11.09.2013 marked as Ex. A-15 ; the Sanction Letter along with terms and conditions counter-signed by the 1st Defendant dated 26.04.2015 marked as Ex. A-16 ; the Demand Promissory Note dated 26.04.2015 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-17 ; the Letter of Continuity dated 26.04.2015 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-18 ; the Hypothecation Agreement for Cash Credit Facility dated 26.04.2015 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-19 ; the Forward Contracts Agreement dated 26.04.2015 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-20 ; the Credit Facility Agreement dated 26.04.2015 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-21 ; the Agreement of Continuing Guarantee executed by Defendants 2 ,6 & 7 dated 26.04.2015 marked as Ex. A-22 ; the Sanction Letter along with terms and conditions counter-signed by the 1st Defendant dated 31.08.2016 marked as Ex. A-23 ; the Demand Promissory Note dated 31.08.2016 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-24 ; the Letter of Continuity dated 31.08.2016 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-25 ; the Hypothecation Agreement for Cash Credit Facility dated 31.08.2016 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-26 ; the Forward Contracts Agreement dated 31.08.2016 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-27 ; the Supplemental Agreement dated 31.08.2016 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-28 ; the Link Document dated 31.08.2016 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-29 ; the Agreement of Continuing Guarantee executed by Defendants 2 ,6 & 7 dated 31.08.2016 marked as Ex. A-30 ;

¶83

Further I find that the Sanction Letter along with terms and conditions counter-signed by the 1st Defendant dated 15.02.2018 marked as Ex. A-31 ; the Letter of Link Declaration dated 15.02.2018 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-32 ; the Renewal Letter along with terms and conditions counter-signed by the 1st Defendant dated 26.12.2019 marked as Ex. A-33 ; the Statement of Accounts maintained by the Applicant Bank in the regular course and conduct of business relating to the Cash Credit Facility marked as Ex. A-34 ; the Sanction Letter for Term

¶84

Page 11 of 15

¶85

OA No. 65/2023

¶86

Loan along with terms and conditions counter-signed by the 1st Defendant dated 08.06.2020 marked as Ex. A-35 ; the Demand Promissory Note for Term Loan dated 08.06.2020 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-36 ; the Credit Facility Agreement for Term Loan dated 08.06.2020 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-37 ; the General Credit Facility Agreement for Term Loan dated 08.06.2020 executed by the 1st Defendant in favour of the Applicant Bank marked as Ex. A-38 ; the Agreement of Continuing Guarantee for Term Loan executed by Defendants 2 & 6 dated 08.06.2020 marked as Ex. A-39 ; the Statement of Accounts maintained by the Applicant Bank in the regular course and conduct of business relating to the Term Loan marked as Ex. A-40 ; the Registered Memorandum of Deposit of Title Deeds dated 11.09.2013 executed by the 2nd Defendant in favour of the Applicant Bank marked as Ex. A-41 ; the Registered Deed of Rectification dated 31.08.2016 executed by the 2nd Defendant in favour of the Applicant Bank marked as Ex. A-42 ; the Registered Memorandum of Deposit of Title Deeds dated 31.08.2016 executed by the 2nd Defendant in favour of the Applicant Bank marked as Ex. A-43 ; the Registered Memorandum of Deposit of Title Deeds dated 19.03.2019 executed by the 2nd Defendant in favour of the Applicant Bank marked as Ex. A-44 ; and the Registered Memorandum of Deposit of Title Deeds dated 12.06.2020 executed by the 2nd Defendant in favour of the Applicant Bank marked as Ex. A-45 . So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

¶87

And also I find that during the pendency of the OA, the applicant bank has sold the property for a sum of Rs.84,74,400/- under SARFAESI action and handed over title deeds to the auction purchaser.

¶88

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.

¶89

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).

¶90

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,

¶91

Page 12 of 15

¶92

OA No. 65/2023

¶93

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 ".

¶94

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

¶95

The Applicant Bank is entitled to recover from the Defendants, a sum of Rs.2,64,11,146/- i.e., i) Rs.2,29,08,466/- together with interest at the rate of 11.85 % p.a. with half yearly rests in respect of Open Cash Credit loan and ii) Rs.35,02,680/- together with interest at the rate of 8.20 % p.a. with half yearly rests in respect of Term loan from the date of filing of Application till the date of appropriation of sale proceeds.

¶96

And after deducting Rs.84,74,400/- from the outstanding amount realized on sale appropriation date by selling the schedule mentioned property, the applicant is entitled to recover remaining amount together with interest at the rate of i) 11.85 % p.a. with half yearly rests in respect of Open Cash Credit Facility ii) 8.20 % p.a. with half yearly rests in respect of Term loan from the date of appropriation of sale proceeds till the date of realization with cost. Accordingly, it is hereby

¶97

ORDERED

¶98

(a) That the Defendants are directed to pay jointly/severally a sum of Rs.2,64,11,146/- i.e., i) Rs.2,29,08,466/- together with interest at the rate of 11.85 % p.a. with half yearly rests in respect of Open Cash Credit loan and ii) Rs.35,02,680/- together with interest at the rate of 8.20 % p.a. with half

¶99

Page 13 of 15

¶100

OA No. 65/2023

¶101

yearly rests in respect of Term loan from the date of filing of Application till the date of appropriation of sale proceeds.

¶102

¶103

(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.

¶104

(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.

¶105

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

¶106

Page 14 of 15

¶107

OA No. 65/2023

¶108

(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.

¶109

(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.

¶110

Dictated to P N, taken down, transcribed, typed by him, corrected and pronounced by me in the Open Court in this the 06^th July, 2026.

¶111

Sd/- (SEEMA SINHA) PRESIDING OFFICER

¶112

Uploaded on 21.07.26

¶113

Page 15 of 15

Karur Vysya Bank v. Radhakrishna Timbers

Case brief

What is this about?

What did the court decide?

Karur Vysya Bank v. Radhakrishna Timbers

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Uco Bank versus P Kamalam

Bank of Baroda versus Arumugam

City Union Bank Limited versus Ramasubbu

Canara Bank versus Thoorigai Engineers and Developers

Punjab National Bank versus K Gurusamy

Bank of Baroda versus Nk Traders