Allowed

South Indian Bank v. St Marys Associates

DRT4 Aug 2026OA/687/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed the applicant bank's original application for recovery of a term loan. The defendants failed to file a written statement, and the bank's documentary evidence was deemed sufficient. The court barred capitalization of penal interest but awarded pendente lite interest.

What did the court decide?

The defendants were directed to jointly/severally pay the principal sum of Rs.21,09,992.34 with interest at 10.10% p.a. with half-yearly rests, along with costs.

South Indian Bank versus St Marys Associates — Contract and Commercial Disputes | DRT (2026)

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OA No. 687/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 04^th DAY OF AUGUST, 2026 PRESENT: SEEMA SINHA, [PR. DISTRICT & SESSIONS JUDGE – Retd] PRESIDING OFFICER

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OA No.687/2022

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Between

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The South Indian Bank Ltd., Thuckalay Branch, Door No.32, Ward No.13, Sevalayam Main Road, Thuckalay, Kanyakumari District- 629 175 Rep. by its Branch Manager. ---Applicant Bank

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And

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M/s. St.Mary’s Associates, Represented by its partners, Door No.17-279A, Sebastian Towers, Kumarapuram Post, Kothanalloor Village, Kanyakumari District- 629 189

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Mr.K.M.C.Stephenson, S/o.Mr.M.Sebastian, Door No.10/56-A, Annai Mary Paradise, Kumarapuram Post, Kothanalloor Village,Kalkulam Taluk, Kanyakumari District- 629 189

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Mrs.J.Thangam Isabel Rani, W/o. Mr.K.M.C.Stephenson, Door No.10/56-A, Annai Mary Paradise, Kumarapuram Post,

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Page 1 of 6

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OA No. 687/2022

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Kothanalloor Village,Kalkulam Taluk, Kanyakumari District- 629 189 ---- Defendants

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Counsel for the Applicant Bank : M/s R.Pandivel Counsel for the Defendants D-2 & D-3: M/s A.Pushpanathan, R.Iyappan & P.Karthick

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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 Counsel for the Defendants D-2 & D-3 made appearance and filed Vakalat. There was no representation for defendant D-1 from the beginning and hence he was set Ex-Parte. After that, the defendants D-2 & D-3 have not filed written statement in spite of sufficient opportunity given to them. Hence they were debarred from filing written statement. 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 30.07.2022 to recover from the Defendants a sum of Rs.21,09,992.34p with future interest at the rate of 15.10 % p.a. compounded with monthly rests plus penal interest at the rate of 2% 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.

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

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The 1^st defendant is a partnership firm and defendants 2 & 3 are its partners and they approached the applicant bank for availing Term Loan for their business. The applicant bank has also sanctioned the said Term Loan for a sum of Rs.17,80,000/-. The terms of sanction along with terms & conditions were communicated to the defendants by the applicant bank through its sanction letter dated 02.02.18 and the same was duly accepted by the defendants by countersigning the same on 02.02.18. The true copy of the said Sanction Intimation Letter dated 02.02.2018 containing the terms and conditions of the sanction duly acknowledged by the defendants.

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Page 2 of 6

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OA No. 687/2022

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The Applicant Bank submits that in consideration of the said Term Loan, the defendants executed Credit Facility Agreement and Agreement containing Terms & Conditions on 02.02.18 in favour of the Applicant Bank by promising to repay the loan amount in 48 monthly installments of Rs.49,650/- with interest at the rate of 15.10% per annum with monthly rests. The defendants have availed the above said Term Loan, as shown in the Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business, and thereby received consideration. The defendants, by admitting and acknowledging their liabilities, made payments from 23.03.18 to 11.12.19.

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The defendants after availing the said loan have not repaid the same as promised by them and they have committed default in repaying the loan amount with interest & costs. Despite the repeated demands made by the Applicant Bank, the defendants did not take any sincere steps to discharge the loan. Consequently, due to the default in making the repayments, the loan facility was classified as Non-Performing Asset on 31.08.2019.

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Hence, the Applicant Bank has filed the OA for recovery of a sum of Rs.21,09,992.34p with future interest at the rate of 15.10 % p.a. compounded with monthly rests plus penal interest at the rate of 2% p.a. in respect of Term Loan 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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List of Documents

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Sl. No.	Date	Particulars	Exhibit No.
1.	02.02.18	Sanction intimation letter along with terms & conditions countersigned by the defendants in favour of the applicant bank	Ex. No. A-01
2.	02.02.18	Credit Facility Agreement executed by the defendants in favour of the applicant bank	Ex. No. A-02
3.	02.02.18	Agreement of General Terms and Conditions executed by the defendants in favour of the applicant bank	Ex. No. A-03
4.	19.08.21	Registered Notice issued by the applicant bank to the defendants	Ex. No. A-04
5.	14.09.21	Recall Notice issued by the applicant bank to the defendants	Ex. No. A-05
6.	----	Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business.	Ex. No. A-06

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Page 3 of 6

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OA No. 687/2022

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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 Defendant D-1. Hence, he was set ex-parte. The Counsel for the Defendants D-2 & D-3 made appearance and filed Vakalat. After that, the defendants D- 2 & D-3 have not filed written statement in spite of sufficient opportunity given to them. Hence they were debarred from filing written statement

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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. Askans M, who is the Branch Manager of the Applicant Bank.

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He has stated in his affidavit that the defendants have availed 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-06 in support of its claim in the OA.

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I scrutinized the document filed by the applicant bank and I find that the Sanction Intimation Letter dated 02.02.2018 was marked as Ex. A-01; the Credit Facility Agreement executed by the defendants in favour of the applicant bank dated 02.02.2018 was marked as Ex. A-02; the Agreement of General Terms and Conditions executed by the defendants in favour of the applicant bank dated 02.02.2018 was marked as Ex. A-03; the Registered Notice issued by the applicant bank to the defendants dated 19.08.2021 was marked as Ex. A-04; the Recall Notice issued to the defendants dated 14.09.2021 was marked as Ex. A-05; and the Statement of Accounts maintained by the Applicant Bank in the regular course and conduct of its business was marked as Ex. A-06. So the averments of the applicant as well as the statement of the pleading have been corroborated by the above mentioned documents.

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As the Defendant D-1 remained ex-parte and the defendants D-2 & D- 3, did not file written statement, 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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Page 4 of 6

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OA No. 687/2022

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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 Defendants, a sum of Rs.21,09,992.34p with interest at the rate of 10.10 % p.a. with half yearly rests in respect of Term Loan 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 Defendants are directed to pay jointly/severally a sum of Rs.21,09,992.34p with interest at the rate of 10.10 % p.a. with half yearly rests in respect of Term Loan 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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(b) Any amount remitted during the course of this proceedings shall be given due credit, to the loan account of the defendants.

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(c) 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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Page 5 of 6

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OA No. 687/2022

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(d) 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 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.

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Dictated to P N, taken down, transcribed, typed by him, corrected and pronounced by me in the Open Court in this the 04^th August, 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 12.08.2026

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Page 6 of 6

South Indian Bank v. St Marys Associates

Case brief

What is this about?

What did the court decide?

South Indian Bank v. St Marys Associates

Case brief

What is this about?

What did the court decide?

What the court decided

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