Allowed

State Bank of India v. M/S S M Enterprises and Another

DRT12 Jun 2026OA/737/2024

Case brief

AI extract

What is this about?

In an ex-parte hearing, the Tribunal allowed the bank applicant's application for recovery of a loan default. The defendants were declared liable to pay the principal amount along with simple interest at 8% p.a. and costs. A Recovery Certificate was issued, permitting realization through hypothecated assets or personal assets if unpaid.

What did the court decide?

Declaratory order that defendants jointly and severally liable to pay Rs.20,52,761.00 plus simple interest at 8% p.a.; Recovery Certificate issued.

State Bank of India versus M/S S M Enterprises and Another — Banking and Recovery | DRT (2026)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.737/2024

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PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 04.06.2024

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DATE OF DECISION: 12.06.2026

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State Bank of India, a body corporate, constituted under the State Bank of India Act, 1955, and having Central Office at Madam Cama Road, Nariman Point, Mumbai and one of its Local Head Office at Sector 17-A, Chandigarh and one of its Branch at Small and Medium Enterprises Credit City Centre, 3^rd Floor, Administrative & Business Unit, Sheranwala Gate, Patiala 147001 through its Chief Manager Smt. Paramjit Kaur.

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……..Applicant

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Versus

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M/s S M Enterprises, a sole proprietorship concern situated at Shop No. 818, Gurbax Colony, Main Market, Patiala - 147001 through its proprietor Ms. Mehak D/o Sh. Lalit Kumar.

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2^nd Address: House No. 1020, Street No. 10, Guru Nanak Nagar, Patiala, Punjab - 147001.

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3^rd Address: House No. 18, Gurbax Colony, Main Market, Patiala.

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Ms. Mehak D/o Sh. Lalit Kumar, R/o House No. 1020, Street No. 1020, Street No.10, Guru Nanak Nagar, Patiala, Punjab - 147001. 2^nd Address: Shop No. 818, Gurbax Colony, Main Market, Patiala 147001.

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3^rd Address: House No. 18, Gurbax Colony, Main Market, Patiala.

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……..Defendants

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Advocates:

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Argued by Sh. Arpit Chawla, Advocate proxy for Sh. K.D. Sachdeva, Advocate for the applicant

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None for Defendants (Already ex-parte vide order dated 10.06.2026).

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2 OA NO.737/2024 STATE BANK OF INDIA VS M/S S M ENTERPRISES AND ANOTHER

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FINAL ORDER

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Present Original Application was instituted by the applicant bank under Section 19 of the Recovery of Debts and Bankruptcy Act 1993, against the defendants for recovery of Rs.20,52,761.00 (Rupees Twenty Lacs Fifty Two Thousand Seven Hundred and Sixty One Only). The Original Application has been filed through Smt. Paramjit Kaur, Chief Manager of the applicant bank, who is competent to institute the Original Application in terms of Notification published in the Gazette of India dated 26.09.1959, 26.08.1972 & 02.05.1987 issued under Regulation No. 76 and 77 of State Bank of India General Regulations framed in exercise of the powers conferred by Sub Section (3) of Section 50 of State Bank of India Act, 1955, with previous sanction of Central Government.

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The brief facts of the OA are that the defendant no. 1 through its proprietor defendant no. 2 approached the applicant for grant of Cash Credit Limit of Rs.20,00,000.00 vide Application Form for Stand Up India Scheme Loan dated 24.01.2023, which is Annexure A1 to this OA. 3. The applicant sanctioned the Cash Credit Limit of Rs.20,00,000.00 vide Letter of Arrangement dated 09.02.2023, which is Annexure A2 to this OA and terms and conditions were duly accepted by the defendant no. 1 through its proprietor defendant no.2. 4. Defendant no. 1 through its proprietor defendant no. 2 hypothecated its stock of diesel generators and receivables vide Agreement of Loan cum Hypothecation dated 09.02.2023, which is Annexure A3 to this OA.

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Documents executed : Legal Notice dated 02.05.2024, along with postal receipts, which is Annexure A4 to this OA; Statement of account along with certificate, which is Annexure A5 to this OA. 5. The loan account became irregular and was classified as NPA and after adjusting debit and credit entries in loan account, there was a debit of Rs.20,52,761.00, which is recoverable and the defendants were served recall notices but they did not repay the outstanding

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3 OA NO.737/2024 STATE BANK OF INDIA VS M/S S M ENTERPRISES AND ANOTHER

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amount, therefore, the applicant requested to accept the application and to issue Recovery Certificate accordingly.

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The defendants were served summons to appear before this Tribunal, but no one appeared on behalf of the defendants and they were proceeded ex-parte vide order dated 10.06.2026.

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In support of the OA, affidavit of Smt. Paramjit Kaur , Chief Manager, State bank of India has been filed.

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Heard ex-parte arguments and perused record. 9. It was argued by learned proxy counsel for applicant that in view of the documentary evidence brought on record which had gone unrebutted, the applicant had proved its case.

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From the perusal of all the Annexures A1 to A5 to this OA, it is proved that the defendant no. 1 through its proprietor defendant no. 2 approached applicant for availing of the loan facility, which was granted to them and for that they had executed all the relevant documents in favour of the bank. The defendants failed to pay back the loan as per terms and conditions of the agreement between the parties. Subsequently, loan account was classified as NPA. From the documentary evidence brought on record, it is proved that applicant is entitled to recover a sum of Rs.20,52,761.00 (Rupees Twenty Lacs Fifty Two Thousand Seven Hundred and Sixty One Only), along with interest from the defendants, jointly and severally, from the date of filing of the present Original Application till realization of the amount. 10. In so far as pendente lite and future rate of interest is concerned, the applicant in relief clause has claimed interest @12.40%p.a. with penal interest @2%p.a. with monthly rests from 12.05.2024 till the realization.

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The Tribunal is of the considered opinion that sometimes in appropriate cases the prerogative of mercy is the brightest jewel in the crown of the Judge. Keeping in view the facts and circumstances of the instant case including nature of the hypothecated assets, undertaking of the defendants, quantum of loan and prevalent market rates of interest which have gone drastically downhill in yester years, while

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OA NO.737/2024

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STATE BANK OF INDIA VS M/S S M ENTERPRISES AND ANOTHER

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exercising the discretion vested in this Tribunal, this Tribunal deems it just and appropriate to grant simple interest @08.00%p.a. in the loan account from the date of filing of the OA till realization of the amount ordered vide this final order. It is ordered accordingly.

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In the result, the application is allowed declaring that the defendants are liable to pay to the applicant a total sum of Rs.20,52,761.00 (Rupees Twenty Lacs Fifty Two Thousand Seven Hundred and Sixty One Only), along with interest, jointly and severally, with costs, current and future simple interest @8.00%p.a. in the loan account from the date of filing of OA till the date of realization of the amount. Accordingly, the applicant shall be entitled to recover aforesaid amount from the sale of hypothecated stocks and receivables of the defendant no. 1 in execution proceedings if not sold earlier under the provisions of the SARFAESI Act, 2002. If the dues of the applicant still remain unsatisfied, it shall be entitled to recover the same by attachment and sale of personal assets of the defendants. The applicant is at liberty to enforce the claim through due process of law. 12. Any other application pending stands disposed of. 13. Issue Recovery Certificate accordingly. 14. Parties to appear before Learned Recovery Officer of this Tribunal on 29.06.2026. 15. Copy of this order be given dasti to the applicant and be sent to defendants through registered/speed post and this order be also uploaded on the official website of this Tribunal and record be consigned. Pronounced by me in the open Tribunal . Dated: 12.06.2026 (MRIDULESH KUMAR SINGH) Presiding Officer, DRT-III, Chandigarh

State Bank of India v. M/S S M Enterprises and Another

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State Bank of India v. M/S S M Enterprises and Another

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