Allowed

City Union Bank Limited v. M/S. Srinidhi Trading Company

DRT21 Jan 2026OA/771/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's original application for recovery of a loan owed by various defendants and their guarantors, holding them jointly and severally liable for the outstanding balance after deducting part-payments.

What did the court decide?

Defendants 1 to 8 directed to jointly and severally pay balance claim of Rs. 4,96,42,972.07 ps less Rs. 3,10,00,000/- plus interest.

City Union Bank Limited versus M/S. Srinidhi Trading Company — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL-II^{AT HYDERABAD}

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DATED THIS THE 21ST DAY OF^JANUARY,2026

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PRESENT: SH. RAMESHWAR^{KOTHE,B.COM, L.LB. (HONS.), M.A.}

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PRESIDING OFFICER

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Original Application No: 771 OF 2023

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City Union Bank Ltd., Tirupathi Branch, Chittoor District Rep by its Branch Manager

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...Applicant

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Versus

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M/s Srinidhi Trading ComPanY

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Rep. by Partner

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Sri R. Muthukumaran

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Son of M. Ranganathan, aged^major No. 1-34, Srinivasapuram, Near HP Petro Bunk, Tirupati-s17503.

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Sri R. Muthukumaran

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S/o M. Ranganathan,^Age :^Major Door No. 10, Flat No. 9, 2nd^Floor Touchwood Apartments, Mahalingapuram, Chennai-600034

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Sri J. Sakthivel S/o Late M. Jayaraman, Age : Major No.119, Kamarajar Street, NGGO^Nagar,

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Tirukolur, Vilu^pu ra m-60 5 757.

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Sri D.G. Nishanth S/o D. Gajendra Babu,^Age :^Major, No. 19-9-2915, LakshmiPuram, Tiruchanur Road, Tirupati-517501

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Sri R. Ashokan S/o M. Ranganathan Age Major, P-2. Turn Bulls Road 2nd cross Street, Nandanam, Chennai-600035

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Sri R. Sangram Chowdary S/o K. Rathanaram Chowdary Age: Major, Door No.8-5-402 Panta Street, Tirupati-517501.

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Page 2 of6

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oANo.777/2023.

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Sri l. Murugan S/o Late^M. Jayaraman Age: Major, No.119, Kamarajar Street, NGGO Nagar, Tirukolur, Vilupura m-605757.

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B. lvlrs. S. Lakshmi w/o J. Sakthivel Age: Major, No.119, Kamarajar Street, NGGO Nagar, Tirukolur, Vilupuram-605757.

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... Defendants

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Cou nsel for the Applicant : 14 rs. Ch. Laxmi Chaya Cou nsel for Defendant 1to : Mr.Shaik leelani Basha Counsel for Defendant 4 to 8 : Ex- Parte

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:: ORDER::

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The Applicant Bank filed the^present OA for the recovery of a^sum of Rs.4,96,42,97 2.07^ps from the defendants^jointly and^{severallyi.e.,} enhanced OLCC amounting to Rs.350 lakhs, ECLS limit of^{Rs.77.50lakhs} and OSL special loan of Rs.70 lakhs with interest @^{12.25olo p€rsnnum} compounded monthly from date of application till the date of^realisation and sale of OA schedule assets.

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The averments of the appllcant bank, as stated ln the OA, in^brief, are that Defendant No. 1 is a^partnership firm, and^{Defendants No. 2 to 4} are^partners of the said firm.^{Defendants No. 2} to^{4 approached thebank} for a business loan of Rs.1,60,00,000/-, and^{DefendantsNo. 2 to 8 stood} as^guarantors for the said^{loan. The said business loanwas subsequently} enhanced to Rs.250 lakhs in 2017 and^{Rs.350 lakhs} in^{2018, and further} loans of Rs. 77.50 lakhs^(ECLS) and Rs.70 lakhs^{(OSL)were sanctioned in} the^years 2020 and 2021 respectively.^The defendants^agreed to^{repay the} loan within the stipulated^period and to^pay an^{additional2olointerest on} the overdue amount in case of default or delay ln^repayment. The^loan facilities are primarily secured by way of hypothecation of oA^schedule-A movable assets and by way of mortgage created/extended^{by defendants2} to 8 over their respective OA^{B-schedule immovah!4properties. After} //XV."t\ (v'$'"

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Page 3 of6

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OA No.771l2023

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availing the aforesaid loan facilities defendants^{committedvarious} irregularities in repayment hence accounts became NPA on 31.08.2022 followed by issuance of demand notice dated 16.11.2022 under^the SARFAESI Act, 2002 besides filing this OA.

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Defendants 1 to 3 have filed their written statement.^The submissions, briefly, are that defendants¹ to 4^are the^{borrowers and co-} applicants and defendants 5 to 8 are^{guarantors/they agreed to terms and} conditions of the sanction. It is stated that the^loans were^{secured by} hypothecation of stock and collateral securities as^per the^schedulesThe business operations^got disrupted as one of the^{partners ransackedand} sold the stock and^premises. Defendants 2 and 3^{sought separationof loan} accounts and^partial release of securities/^{expressing theirreadiness to pay} to the extent covered by their respective^{properties. Applicant bank agreed} to release only 4 out of 6^properties. Defendants 2^and 3^{approached the} Hon'ble Madras High Court by filing WP No.30044 of 2022 waY of a writ petition and obtained order dated 74.07.2023. Consequent thereto, defendants 2 and 3^paid Rs.310 lakhs on 10.08.2023 and^{got released their} properties. At the time of approaching Hon'ble lvladras High Court the outstanding was Rs.4.38 crores and even after^payment of^Rs.310lakhs, the applicant is claiming Rs.4.96 crores. Hence the averments at^{parasO to} Q^{of application need to be reconsidered and claim can be made only for} balance dues against 4th defendant and his^properties and OA be dismissed against defendants 1 to 3.

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The defendants 4 to 8 were set ex parte on 79.07.2024 as called absent and no representation despite service of notice.

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The Applicant Bank examined Aravamudhan Venugopalan,^Branch Manager ad AW-l and marked 56 documents tDrqugh him as Ex. A.1 to Ex. A.s6. //)Y.o** ()/

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Page 4 of6

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OANo.777/2b23

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In order to substantiate their^defence,the D1 to 3 examined R. Muth ukumaran-2nd defendant as^{Dw-1and marked} no documents.

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Heard learned counsel for^{the applicant bank and learned counsel for} the defendants 1 to 3.^{Perused the writtenarguments filed for defendants1} to 3 and the material brought^{on record.}

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According to learned counsel for^{defendants1 to 3, out of total} outstanding amount of^{Rs.438lakhs, bankconsidered waiver of Rs.28} lakhs, Rs.31O lakhs^paid by^{defendants 2 and 3, and Rs.1crore is kept} aside towards share of loan of^{4th defendantfor which securitiesare lying} with the bank. The^payment of^Rs.310lakhs by^{defendants2 and 3} constitute more than 75olo of the total loan.^{Learned counselsought for} dismissal of OA claim against^{defendants1 to 3'}

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Per contra, learned counsel for the applicant^{bank contendedthat the} applicant bank released the^{properties mentionedin ltem Nos.1 to 6 of OA} schedule-B upon^part-payment of^{Rs.310 lakhs by defendants2 and 3, as} per orders of Hon'ble Madras High Court in WP No.30044 of^{2022. Learned} counsel denied the contention^{of the defendants1 to 3 that they should be} discharged of the balance liability.^{The claim of the applicantis amply} proved through the evidence affidavit of AW-1 and^Exs.A.1 to^A.56marked through him. Hence OA^claim of^{Rs.4,96,42,972.O7psless} Rs.3,1o,oo,ooo/- together with future^interest @12.250lo^{thereonfrom the} date of application till the^{date of realization. Accordingly learnedcounsel} prayed to allow the OA.

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The^point that arises for^{consideration is:-}

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Whether the Applicant Bank is entitled^for the^balanceOA ctaim against the Defendants and^{remaininqOAschedule} properties?

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Page 5 of 6

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OANo.77712023

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Availment of loan facilities, default^{in repayment and creation of} hypothecation/mortgage are the admitted^{facts. The primarycontentlonof} the contesting defendants¹ to^{3 is} that^{applicant bank segregated the loan} liability of Rs.1 crore^payable by^{4th defendant (Nishant) and upon payment} of Rs.31O lakhs and^{releaseof concernedproperties, defendants1 to 3} stand discharged oF the liability.^{Applicantbank denies ofsuch} commitment. The contesting^{defendantsexamined2nd defendantand relied} on certain documents, but^none of^{the documentshas been markedas} exhibits. However, a^perusal of^{letter daled 2a.07.2023 issued by the} applicant bank whereby it^required the^{1st defendantto payRs.310lakhs} on or before 10.08.2023 and assuring^{releaseof the properties mentioned} therein, would display a caution^{note indicatingthat "Preasenote that this} approval is only for release of^{property mortgagedto the Bank." Fhe} defendants failed to^prove the^{applicantbank expressly admittingor} committing to discharge these defendants^{from the balanceliabilityupon} receipt of Rs.31O lakhs. Hence the^{contention of the defendanton} discharge from entire liability is^{baseless and deservesno acceptance.} Defendants 4 to 8 remained ex^{parte to the OA proceedings,as observed} supra. Contesting defendants^{have not contradictedthe evidence of AW-1} and exhibits marked through^{him. It is a matter of record that AW-1 stated} that defendants^paid Rs.31O lakhs^{whereuponItem Nos.1 to 6 of OA} schedule-B^properties have^{been releasedand applicant bankis havingOA} schedule-A movable^{property and} Item^{No'7 of OA schedule-Bimmovable} property.

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In view of the above observations, the^{evidence affidavitof AW-1} coupled with recitals of^Ex.A.1 to^{4.56remainedunchallengedand un-} rebutted for the balance OA claim.^Hence, I^{hold that the Defendants 1 to 8} are^jointly and severally llable to^pay to^{the ApplicantBank the c!^aim made} in the oA minus Rs.3,1o,O0,ooo/- with^{futureinterestunO} .ort6l&r"5

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Page 6 of 6

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oANo.777l2t23

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In the result, the^present Original Application No.77l/2023 is allowed as under: -

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i) the Defendants 1 to B are^jointly and severally liable to pay to the Applicant Bank a sum of Rs.4,96,42,972.07 ps with interest @ 9.25olo^per annum simple from the date of application till 10.08.2023 minus Rs.3,10,00,000/- paid by defendants 1 and 2 on 10.08.2023 towards^part- payment plus interest @ 9.25o/o per annum simple from 11.08.2023 till the date of realization;

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ii) the OA claim is secured by way of hypothecation of OA Schedule-A property and mortgage of Item No.7 of OA Schedule-B immovable property and the applicant bank is entitled to proceed against the same to realise its balance debt as at (i) above;

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iii) the applicant bank is also entitled to proceed against the person and properties of the defendants 1 to B for realization of its balance d ues;

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iv) the applicant bank is entitled for the costs.

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The Applicant Bank is directed to file Cost Memo within 2 weeks from the date of receipt of this Order.

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Issue Recovery Certificate according ly.

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Communicate a copy of this order to the parties concerned and upload in the official website.

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(Typed to my dictation by the PS, corrected, signed and pronounced by me in the open court on this the 21't day of January, 2026).

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ESHWAR KOTHE) PRESIDING OFFICER

City Union Bank Limited v. M/S. Srinidhi Trading Company

Case brief

What is this about?

What did the court decide?

City Union Bank Limited v. M/S. Srinidhi Trading Company

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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