Allowed

Canara Bank v. J Vinoth Kumar Peinba Raj

DRT7 Apr 2026OA/758/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's original application for recovery of a loan principal of Rs. 50,46,141 along with specified interest rates. The tribunal directed the defendant to pay the sum within one month or allow the bank to sell mortgaged properties.

What did the court decide?

Recovery of Rs. 50,46,141 with applicable interest rates and penalty; sale of mortgaged properties if personal payment defaults.

Canara Bank versus J Vinoth Kumar Peinba Raj — Contract and Commercial Disputes | DRT (2026)

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OA No. 758/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 07^TH DAY OF APRIL, 2026 PRESENT: SEEMA SINHA,

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

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OA No.758/2022

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Between

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Canara Bank, College Road Branch, P.B.No.3, 38 College Road, Nagercoil – 629 001, Kanyakumari District. Rep. By its Branch Manager.

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---Applicant Bank

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And

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Mr. J. Vinoth Kumar Peinba Raj, S/o Jeya Kumar, Prop. M/s Kumar Agencies, D.No.182-B, North Sargunaveethi, Near Derik Junction, Nagercoil – 629 001, Kanyakumari District.

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Also at:

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Mr. J. Vinoth Kumar Peinba Raj, S/o Jeya Kumar, Masuthana Perumal Street, Park Road, Irrulappapuram, Vettooranimadam, Vadasery Village, Nagercoil, Kanyakumari District -629 001. ---Defendant

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Page 1 of 10

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OA No. 758/2022

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Counsel for the Applicant Bank : M/s P. Madhan Alexandar

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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 Defendant 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:

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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 14.10.2022 to recover from the Defendant a total sum of Rs.50,46,141/i.e., (i) Rs.32,22,053/- together with interest at the rate of 10.75% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash Credit facility

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(ii) Rs.6,90,861/- together with interest at the rate of 8.75% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan

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(iii) Rs.3,08,356/- together with interest at the rate of 8.90% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of GECL-I and

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(iv) Rs.8,24,871/- together with interest at the rate of 8.90% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of GECL-II 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 defendant approached applicant bank for availing Cash Credit Facility to the limit of Rs.30,00,000/- and Term Loan for a sum of Rs.9,75,000/- and Guarantee Emergency Credit Loan (GECL-1) for a sum of Rs.3,63,000/- and Guarantee Emergency Credit Loan (GECL-II) for a sum of Rs.7,80,000/- and the applicant bank has also sanctioned the said loan & facility.

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The defendant has availed the said Cash Credit Facility & Term Loan from erstwhile Syndicate Bank which is now amalgamated with Canara Bank as stated supra and obtained & Guarantee Emergency Credit Loan from Canara bank which is after amalgamation with erstwhile Syndicate Bank.

Page 2 of 10

OA No. 758/2022

CASH CREDIT FACILITY

In consideration of the above said Cash Credit Facility, the defendant executed a Composite Hypothecation Agreement on 01.11.18 for a sum of Rs. 10,00,000/- in favour of the applicant bank by hypothecating the Goods, Stocks & Book Debts which are fully described in the 'A' Schedule hereunder. Further the defendant promised to repay the loan amount with compound interest at the rate of 9.80% Per annum with monthly rest or at such other rates as may be revised by the applicant bank from time to time with penal interest at the rate of 2% per annum in case of default.

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ENHANCEMENT OF CASH CREDIT FACILITY

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At the request of the defendant the applicant bank has enhanced the limit of Cash Credit Facility for further sum of Rs.20,00,000/- and thereby the limit was enhanced from Rs.10,00,000/- to Rs.30,00,000/-.

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In consideration of the above said enhanced Cash Credit Facility, the defendant executed a Demand Promissory Note on 31.10.20 for a sum of Rs.20,00,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with Compound interest at the rate of 9.80% Per annum with monthly rest or at such other rate as may be revised by the applicant bank from time to time. The defendant had also executed a Supplemental Agreement & Link Letter on 31.10.20 in favour of the Applicant Bank by hypothecating the goods & book debts mentioned in the 'A' Schedule hereunder, as security for repayment of the Loan by promising to repay the loan amount with compound interest at the rate of 9.80% Per Annum with monthly rest or at such other rates as may be revised by the Applicant Bank from time to time.

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The defendant has availed the above said Overdraft Facility as shown in the Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business.

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TERM LOAN

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In consideration of the above said Term loan, the defendant executed a Composite Hypothecation Agreement on 25.07.19 in favour of the Applicant Bank containing various terms & conditions by hypothecating goods mentioned in the 'A' Schedule hereunder, as security for repayment of the Loan and by agreeing to repay the loan amount in 60 equated monthly installments of Rs.20,966/- each with interest & cost in favour of the Applicant Bank. Further the Defendant promised to repay the loan amount

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Page 3 of 10

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OA No. 758/2022

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with compound interest as per the conditions enumerated in the agreement with monthly rest or at such other rates as may be revised by the bank from time to time (vicle Ace Neo-6182 991 0001861)

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The defendant by admitting & acknowledging his liability executed Acknowledgement of debt & security dt.19.11.21 in favour of the applicant bank. The defendant has availed the above said Overdraft Facility as shown in the Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business

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GUARANTEE EMERGENCY CREDIT LOAN-I

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In consideration of the above said Loan, the defendant executed a Demand Promissory Note on 22.07.20 for a sum of Rs.3,63,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with compound interest at the rate of 7.50% per annum with monthly rest or at such other rate as may be revised by the applicant bank from time to time. The defendant had also executed a Deed of Hypothecation dt.22.07.20 for a sum of Rs.3,63,000/- in favour of the Applicant Bank containing various terms & conditions by hypothecating the goods which are fully described in the 'A' Schedule hereunder and by agreeing to repay the loan amount in 36 monthly installments of Rs. 10,083/- with interest & cost in favour of the applicant Bank. Further the Defendant promised to repay the loan amount with compound interest at the rate of 7.50% per annum with monthly rest or at such other rates as may be revised by the applicant bank from time to time with penal interest at the rate of 2% per annum in case of default.

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The defendant has availed the above said Overdraft Facility as shown in the Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business.

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GUARANTEE EMERGENCY CREDIT LOAN-II

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In consideration of the above said Loan, the defendant executed a Demand Promissory Note on 03.11.21 for a sum of Rs.7,80,000/- in favour of the Applicant Bank by promising to repay the loan amount on demand with compound interest at the rate of 7.50% per annum with monthly rest or at such other rate as may be revised by the applicant bank from time to time. The defendant executed a Deed of Hypothecation dt.03.11.21 for a sum of Rs.7,80,000/- in favour of the Applicant Bank containing various terms & conditions by hypothecating the goods which are fully described in the 'A' Schedule hereunder and by agreeing to repay the loan amount in 36 monthly installments of Rs.21,666/- with interest & cost in favour of the

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Page 4 of 10

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OA No. 758/2022

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applicant Bank. Further the Defendant promised to repay the loan amount with compound interest at the rate of 7.50% per annum with monthly rest or at such other rates as may be revised by the applicant bank from time to time with penal interest at the rate of 2% per annum in case of default. The defendant has availed the above said Overdraft Facility as shown in the Statement of Accounts maintained by the Applicant Bank in regular course and conduct of the business

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After availing all the loans the defendant have not repaid the said loans & facilities as agreed & promised by them. Thus he has committed default in repaying the loan amount. Despite the said notice & repeated demands made by the Applicant Bank the defendant did not take any sincere steps to discharge the loan.

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Hence, the Applicant Bank has filed the OA for recovery of a total sum of Rs.50,46,141/- i.e., (i) Rs.32,22,053/- together with interest at the rate of 10.75% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Cash Credit facility

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(ii) Rs.6,90,861/- together with interest at the rate of 8.75% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of Term Loan

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(iii) Rs.3,08,356/- together with interest at the rate of 8.90% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of GECL-I (iv) Rs.8,24,871/- together with interest at the rate of 8.90% p.a. with monthly rests plus penal interest at the rate of 2%p.a. in respect of GECL-II 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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Cash Credit Facility

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S. No.	Date	Description of document	Exhibits
1	30.10.2018	Composite Hypothecation Agreement executed by the defendant in favour of the applicant bank	Ex.No.A-01
2	31.10.2020	Demand Promissory Note executed by the defendant in favour of the applicant bank	Ex.No.A-02
3	31.10.2020	Supplemental Agreement executed by the defendant in favour of the applicant bank	Ex.No.A-03
4	31.10.2020	Link Letter executed by the defendant in favour of the applicant bank	Ex.No.A-04
5	—	Statement of Accounts maintained bythe	Ex.No.A-05

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Page 5 of 10

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OA No. 758/2022

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applicant bank in the regular course and conduct of business

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Term Loan

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6	24.07.2019	Composite Hypothecation Agreement executed by the defendant in favour of the applicant bank	Ex.No.A-06
		Letter of Acknowledgement of Debt and	Ex.No.A-07
7	19.11.2021	Security executed by the defendant in favour of the applicant bank
8	—	Statement of Accounts maintained by the applicant bank in the regular course and conduct of business	Ex.No.A-08

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Guarantee Emergency Credit Loan-I

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9	22.07.2020	Demand Promissory Note executed by the defendant in favour of the applicant bank	Ex.No.A-09
		Agreement-cum-Deed of Hypothecation	Ex.No.A-10
10	22.07.2021	executed by the defendant in favour of the applicant bank
		Statement of Accounts maintained by the	Ex.No.A-11
11	—	applicant bank in the regular course and conduct of business

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Guarantee Emergency Credit Loan-II

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12	03.11.2021	Demand Promissory Note executed by the defendant in favour of the applicant bank	Ex.No.A-12
		Agreement-cum-Deed of Hypothecation	Ex.No.A-13
13	03.11.2024	executed by the defendant in favour of the applicant bank
		Statement of Accounts maintained by the	Ex.No.A-14
14	—	applicant bank in the regular course and conduct of business

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SCHEDULE OF PROPERTIES

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'A' SCHEDULE - HYPOTHECATED GOODS

Page 6 of 10

OA No. 758/2022

Item No.1

All stocks of goods, raw materials, etc., and all items of furniture etc., all stored & kept at business premises office at Door No.3, Louis Ammal Street, Nagercoil, Kanyakumari District 629 001 and residing at 67, Masuthana Perumal Street, Park Road, Irulappapuram, Nagarcoil, Vettooranimadam, Vadasery Village, Nagercoil, Kanyakumari District - 629 003

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Item No.2

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

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3 . On the other hand, Notices were issued to Defendant and since from the beginning of the case, there was no representation on behalf of the Defendant. Hence, Defendant was set ex-parte.

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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. Mohamed Fazallulah Bai, who is the Chief Manager of the Applicant Bank.

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He has stated in his affidavit that the defendant has availed cash Credit Facility, Term Loan, Guarantee Emergency Credit Loan –I and Guarantee Emergency Credit Loan –II from the Applicant Bank, but he failed to pay the outstanding loan amount, hence he has filed the case. The applicant bank has also filed the documents given by the defendant at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A-14 in support of its claim in the OA.

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The Composite Hypothecation Agreement executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-01, Demand Promissory Note executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-02, Supplemental Agreement executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-03, Link Letter executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-04, Statement of Accounts maintained by the applicant bank in the regular course and conduct of business has been marked as Ex.No.A-05, Composite Hypothecation Agreement executed by

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Page 7 of 10

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OA No. 758/2022

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the defendant in favour of the applicant bank has been marked as Ex.No.A06, Letter of Acknowledgement of Debt and Security executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-07, Statement of Accounts maintained by the applicant bank in the regular course and conduct of business has been marked as Ex.No.A-08, Demand Promissory Note executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-09, Agreement-cum-Deed of Hypothecation executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-10.

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The Statement of Accounts maintained by the applicant bank in the regular course and conduct of business has been marked as Ex.No.A-11, Demand Promissory Note executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-12, Agreement-cum-Deed of Hypothecation executed by the defendant in favour of the applicant bank has been marked as Ex.No.A-13, and Statement of Accounts maintained by the applicant bank in the regular course and conduct of the business has been marked as Ex.No.A-14. 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 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.

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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

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Bank is entitled for a final order on the following lines:-

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Page 8 of 10

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OA No. 758/2022

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The Applicant Bank is entitled to recover from the Defendant, a total sum of Rs.50,46,141/- i.e.,

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(i) Rs.32,22,053/- together with interest at the rate of 10.75% p.a.

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with half yearly rests in respect of Cash Credit facility

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(ii) Rs.6,90,861/- together with interest at the rate of 8.75% p.a. with

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half yearly rests in respect of Term Loan

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(iii) Rs.3,08,356/- together with interest at the rate of 8.90% p.a. with half yearly rests in respect of GECL-I

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(iv) Rs.8,24,871/- together with interest at the rate of 8.90% p.a. with half yearly rests in respect of GECL-II 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 Defendant is directed to pay personally a total sum of Rs.50,46,141/- i.e.,

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(i) Rs.32,22,053/- together with interest at the rate of 10.75% p.a.

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with half yearly rests in respect of Cash Credit facility

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(ii) Rs.6,90,861/- together with interest at the rate of 8.75% p.a. with half yearly rests in respect of Term Loan

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(iii) Rs.3,08,356/- together with interest at the rate of 8.90% p.a. with half yearly rests in respect of GECL-I

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(b) In case of default of payment by the above mentioned Defendant, 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.

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Page 9 of 10

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OA No. 758/2022

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(c) If the sale proceeds are not sufficient, after defraying the expenses of such sale, for the payment of all such amounts, the defendant is personally liable to pay the amount of such deficiency with interest mentioned above until realization.

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

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(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.

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(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 Cash Credit Facility, Term Loan, Guarantee Emergency Credit Loan –I and Guarantee Emergency Credit Loan –II 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 T.P, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 07^th April, 2026.

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Sd/-

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(SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 18.04.26

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Page 10 of 10

Canara Bank v. J Vinoth Kumar Peinba Raj

Case brief

What is this about?

What did the court decide?

Canara Bank v. J Vinoth Kumar Peinba Raj

Case brief

What is this about?

What did the court decide?

What the court decided

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