Allowed

Canara Bank v. Cosmozone Clothing Private Limited

DRT29 May 2026OA/722/2022

Case brief

AI extract

What is this about?

In an exparte recovery application under the RDB Act, the Tribunal issued a recovery certificate against the defendant company and its directors for a business loan default, allowing recovery with reduced interest.

What did the court decide?

Recovery certificate issued for Rs. 5.31 Crore plus 11% p.a. interest from filing date; recovery against the defendants jointly, severally, personally, and schedule property.

Canara Bank versus Cosmozone Clothing Private Limited — Company and Corporate | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 29^th Day of May, 2026

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Present: Sri. T. RAJESH

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Presiding Officer

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OA. No.722/2022

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BETWEEN:

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Canara Bank Having its branch at South End Road Branch, 96, South End Road, Bengaluru-560004 … APPLICANT

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AND:

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Cosmozone Clothing Private Limited Rep. by its Directors Raghavendra N and Sylashree K R Company Registered Address No.8/1, Gandhi Layou, Agrahara, Dasarahalli, Magadi Road, Bangalore-560079

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Raghavendra N S/o. Nanjunda K #227M, 15th C Cross, 2nd Phase, Near Chaithanya Techno School, Mahalakshmipuram, Bangalore North Bangalore, Karnataka-560086

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Shylashree K R W/o. Raghavendra N #227M, 15^th C Cross, 2^nd Phase, Near Chaithanya Techno School, Mahalakshmipuram, Bangalore, North Bangalore, Karnataka 560086

...DEFENDANTS

OA. No.722/2022

Counsel on record/appeared for:

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Applicant : Sri. B Rajashree Defendants : Exparte

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:FINAL ORDER:

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The present Original Application in short (OA) has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 for seeking issuance of Recovery Certificate against the defendants for Rs.5,31,02,667/- (Rupees Five Crore Thirty One Lakh Two Thousand Six Hundred and Sixty Seven only) with further interest thereon from the date of filing the Application till realization from the Defendants.

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It is the case of the applicant that, the defendants availed credit facility of Rs.3,75,00,000/- for setting up on business.

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It is also the case of the applicant that, in view of the above financed credit facility, the defendants executed necessary loan documents. Apart from the creation of security interest by way of hypothecation over the Schedule.

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It is further contended that, despite availing the credit facility, agreeing to service the loan amount promptly and regularly, the defendants failed in complying the same, resulting in default in repayment and consequentially turning the loan account as NPA.

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OA. No.722/2022

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In the above circumstances, the applicant approached this Tribunal by filing this OA seeking issuance of Recovery Certificate for the amount due in the account.

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Despite, service of summons on the defendants, they failed to appear, resulting the defendants being set exparte on 27.11.2025.

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The applicant had let in evidence through AW-1, who filed Proof Affidavit reiterating the contentions taken in the OA and also produced Exhibits A1 to A8 and got the same marked in evidence.

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Heard the Ld. Counsel for the Applicant and considered the contentions as taken in the OA in the light of documentary evidence and proof affidavit.

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The following issues arise for consideration in this matter:

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i) Whether the applicant had succeeded in proving the OA claim as against the defendants?

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ii) What order are to be passed?

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Both these issues are gone into and decided together.

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The case put forth by the applicant in the Application

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remains unrebutted as defendants remained exparte. The evidence tendered by the applicant remains uncontroverted and

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OA. No.722/2022

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undisputed. The evidences put forth by the applicant were found admissible and are sufficient to prove availment of credit facility as stated in the OA, creation of security interest as claimed by the applicant bank and the defaults committed in the account. The liability of the defendants and the claim of the amount due are also proved by the above documents. The claim of the applicant is well within the limitation.

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Hence in view of the above findings which cover both the issues raised in this manner, this Tribunal is of the view that OA is liable to be allowed.

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Taking into consideration the facts that the credit facility was availed for business purpose and also that OA claim is arrived at by calculating interest at the agreed rate, this Tribunal in view of the OA can be allowed with a reduced interest of 11.00%

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p.a.(simple).

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In the result, OA.No.722/2022 stands allowed,

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i) The applicant is allowed to recovery an aggregate sum

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of Rs.5,31,02,667/- (Rupees Five Crore Thirty One Lakh Two Thousand Six Hundred and Sixty Seven only) with further interest of 11.00% p.a.(simple) from the date of filing OA till the realization

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OA. No.722/2022

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from the defendants, after giving credit to all the amounts recovered and received during the pendency of the OA and allowed the same to be recovered by proceeding against defendants jointly, severally and personally and also by proceeding against the schedule property. The schedule property to the OA be the schedule property to the Recovery Certificate.

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ii) If the sale proceeds are not found sufficient to cover the amount due and payable to the applicant bank, the defendants jointly, severally and personally and their other assets are liable for all such amounts due under the loan accounts.

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iii) The applicant bank is allowed cost of the proceeding

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which applicant to file cost memo within 7 days from the date of receipt of the order.

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iv) The Recovery Certificate to be drawn in terms of this

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order and transferred to Recovery for execution.

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v) Interim Application pending, if any, stands disposed of with this Final Order.

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OA. No.722/2022

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14. Communicate a copy of the order to the parties concerned

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in terms of Section 19(21 )(i) of the RDB Act, read with Rule 16 of

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DRT (Procedure) Rules, 1993.

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[Dictated to the Stenographer (PR), transcribed by her, corrected and signed and pronounced by me in the Open Court, this the 29^th Day of May 2026].

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Sd/-

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(T. RAJESH) PRESIDING OFFICER

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Mr. Palavnivel Rajan, Chief Manager of the applicant bank.

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Exhibits on the part of the Applicant:

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Sl. No.	Description of Documents	Exhibit Number
1	Sanction letter for OD dated 29.12.2018	A1
2	MODTD by the bank dated 29.12.2018	A2
3	Guarantee agreement dated 31.12.2018	A3
4	Common hypothecation agreement dated 31.12.2018	A4
5	Subordination agreement dated 20.02.2020	A5
6	Legal notice dated 10.01.2022	A6
7	Loan account statement for 1173261001031	A7
8	Certificate by Banker under 2A(b) and 2A(c) of the Bankers Book of Evidence Act	A8

(T. RAJESH)

Sd/-

OA. No.722/2022

PRESIDING OFFICER

Canara Bank v. Cosmozone Clothing Private Limited

Case brief

What is this about?

What did the court decide?

Canara Bank v. Cosmozone Clothing Private Limited

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

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Case details

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