Allowed

Canara Bank v. Laya Engineerings

DRT13 May 2026OA/80/2022

Case brief

AI extract

What is this about?

This tribunal adjudicated an original application by Canara Bank for recovery of dues from three respondents. The bank secured loan facilities via Term Loan and Working Capital limits, later classified as NPAs following default. Despite the second respondent's claims of fraud, coercion, and forgery supported by a pending FIR and an allegation of signing blank documents, the tribunal held these def

What did the court decide?

The original application is allowed. The respondents are directed to pay the outstanding principal sum of Rs.4,22,66,461.78 along with interest and costs.

Canara Bank versus Laya Engineerings — Contract and Commercial Disputes | DRT (2026)

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O.A. No. 80 of 2022

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13.05.2026

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 13^th day of May, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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ORIGINAL APPLICATION No.80 of 2022

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Canara Bank,

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Kellys Corner Branch, No.207 purasawalkam high road, Chennai-600 007

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Represented by its Chief Manager ….Applicant

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-Vs-

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M/s Laya Engineerings,

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Rep by its Partners First Floor No.442,

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Sidco Industrial Estate, 3^rd Main Road, Ambattur Sidco,

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Chennai-600 058

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Mrs. R. T. Asha Latha,

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W/o Mr.Williams Kisku,

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No.25/55 Azeez Mulk 2^nd street,

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Greams Road, Thousand Lights, Chennai- 600 006

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Mr.M.Nagarajan, S/o Murugesan,

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No.4/39, Bajanai Koil Street, Korattur, Chennai- 600 080 …..Defendants

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Counsels on record / appeared:

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Counsel for Applicant : M/s. S.Kesavan Counsel for 2^nd Defendant : Sh. M. Senthil Murugan Defendants 1 & 3 were set ex-parte on 06.09.2022

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: - FINAL ORDER- :

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This Original Application is filed on 01.02.2022 by the applicant bank under Section 19 of Recovery of Debts and Bankruptcy Act, 1993

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O.A. No. 80 of 2022

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(formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants 1 to 3, jointly and severally for recovery of a total sum of Rs.4,22,66,461.78p (Rupees Four Crores Twenty Two Lakhs Sixty Six Thousand Four Hundred and Sixty One Seventy Eight paisa only)

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(i) A sum of Rs.3,80,88,063.54p due in respect of Term Loan (A/c No.0907766000006) repayable together with further interest @ 10.70% p.a. with monthly rests from the date of Application till the date of realization in full;

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(ii) A sum of Rs.41,78,398.24p due in respect of OICC/ODBD under Working Capital Limit (A/c No.0907261010476) repayable together with further interest @ 10.70% p.a. with monthly rests from the date of Application till the date of realization in full;

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for sale of mortgaged property morefully detailed in schedule to the OA and for costs of this OA.

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Brief Facts of the case:

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The Applicant submits that the application is filed within the period of limitation as prescribed under Section 24 of the Recovery of Debts and Bankruptcy Act, 1993, and the subject recovery claim falls within the jurisdiction of this Tribunal.

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Facts of the case:

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3.1 It is the case of the applicant bank that the 2^nd and 3^rd defendants

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have established their partnership business on the Deed of Partnership dated 05.12.2018 under the name and style of M/s Laya Engineerings for manufacturing of auto components and job works for renowned companies. Moreover, in order to establish their manufacturing activities under the MSME scheme, they have entered into rental agreement with landlord Mr. G.B. Baskaran on 10.12.2018 and thereby the land owner has let out the premises in order to carrying out their manufacturing activities. Thus the 1^st defendant has been dealing with the applicant since December 2018 and required financial assistance to develop their manufacturing activities in connection with the auto components and thereby they formally submitted the loan application to the applicant bank on 02.01.2019 together with the enclosures such as Deed of Partnership and Rental Agreement.

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3.2 The applicant submits that in furtherance of these developments the 2^nd defendant represented through its partners the 2^nd and 3^rd defendants herein has approached the applicant bank by submitting necessary proposals on 18.01.2019 to grant fresh Term Loan of Rs.295 lakhs to purchase machineries to establish the said unit. Moreover the 1^st defendants also required OCC/ODBD limit of Rs.30 lakhs under working capital scheme for drawing against raw materials and book debts. Thus, the defendants have specifically agreed to stand as personal guarantors and offered to create immovable securities. Therefore, based on the developments as well as prime and immovable securities offered by the defendant, the applicant bank agreed to grant the aforesaid limits vide a

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Sanction Memorandum dated 22.09.2019 with certain terms and conditions. As such the 2^nd defendant has specifically agreed for the terms and conditions referred in the same.

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3.3 It is submitted by the applicant bank that in view of the Sanction Memorandum issued by the applicant bank to and in favour of the defendants herein, they have submitted necessary request for Overdraft facilities for a sum of Rs.30 lakhs on 13.03.2019 together with Partnership Letter dated 13.03.2019. At the time of availment of the Term Loan and OCC/ODBD under Working Capital limit, the following documents have been executed by the defendants on 13.03.2019:

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i. Term Loan Agreement

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ii. Common Hypothecation Agreement

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iii. Pronote for Rs.30 lakhs

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iv. Guarantee Covering Letter together with Guarantee Agreement by the 2^nd defendant

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v. Guarantee Covering letter together with Guarantee Agreement by the 3^rd defendant

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3.4 It is further submitted by the applicant bank that the defendants also specifically agreed to repay the said Term Loan for Rs.295 lakhs with interest at 12.15% per annum in instalments commencing from September 2019 at Rs.3.05 lakhs spread over to 97 months. Thus, the interest has to be paid as and when debited in the loan account. Moreover, the defendants have also given repayment holiday period of 6 months i.e. upto August, 2019. The rate of interest charged herein may

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change from time to time as per the guidelines issued by the RBI and head office circulars. The defendants also specifically undertook monthly in case of default or non-regularization of the said loan account.

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3.5 The applicant further submits that the 1^st defendant has specifically agreed to regularize the OCC/ODBD under working capital limit with interest at 11.25% per annum compounded monthly over and above the said rate of interest. Moreover, the rate of interest charged herein may change from time to time as per the guidelines issued by the RBI and head office circulars. The defendants also specifically undertook to pay the additional interest at the rate of 2% per annum compounded monthly in case of default or non-regularization of the said loan account. The hypothecation of book debts and stock statement has been treated as prime security towards the said limit.

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3.6 The applicant further submits that the 1^st defendant also specifically submitted letter and thereby confirmed that they have not availed the similar facility anywhere else except with the applicant bank. As the loan amount was disbursed on subsequent day a link letter has been obtained on 14.03.2019 from the defendants to confirm the execution of the loan documents on 13.03.2019. Whereas the 1^st defendant by his letter dated 07.08.2019 confirmed the instalments of machineries at the industrial shed for purchasing raw materials for manufacturing auto components.

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3.7 It is submitted that the 2^nd defendant, who is the absolute and lawful owner of the house and ground bearing old no.55, New door No.20 situated in Azeez mulk, 2^nd street, Thousand lights, Chennai-6, measuring

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about 2251sq.feet comprised in R.S.No.44/38, Nungambakkam village which is morefully described in the schedule A to the OA has deposited his title deeds with an intention to create valid and equitable mortgage to and in favour of applicant bank and the same was confirmed under letter evidencing deposit of title deeds dated 13.03.2019. Moreover the 2^nd defendant has confirmed the execution of the equitable mortgage under memorandum relating to deposit of title deeds dated 13.03.2019 and the same was registered as document No.304/2019 in SRO, Thousand Lights. Thus the A-schedule mentioned property has been secured by the applicant bank while at the time of granting term loan and OCC/ODBD under working capital limit. In the meantime, the 1^st defendant has registered with the Registrar of firms under Sec. 58(1) of the Indian partnership act, 1932. As such the Registrar of firms by his letter dated 15.03.2019 confirmed the acknowledgement of the registration of firms

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under the name and style of M/s Laya Engineerings at the afore mentioned address.

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3.8 It is submitted that as per the terms and conditions of the aforesaid loan documents the defendants are expected to comply with the repayment schedule under Term Loan and to regularize the OCC/ODBD under Working Capital limit. In this connection the applicant sent reminder letters to the defendants on 01.11.2019 and 30.12.2019. However contrary to the expectations the 1^st defendant has submitted letter on 10.01.2020 for restructuring under RBI guidelines in order to reschedulement of the instalments and thereby requested to extend the

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holiday period for further 6 months in respect of the Term Loan. In this connection, the defendants have submitted necessary application on 10.01.2020 for restricting under RBI guidelines in order to reschedulement of the instalments. In the meantime in view of the expiry of the said limits, the applicant bank by their letter dated 10.02.2020 requested the defendants to renew the said limits.

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3.9 The applicant further submitted that in furtherance of this development necessary Debt Restructuring Agreement and DebtorCreditor Agreement have been executed on 13.02.2020 between the 1^st defendant and the applicant. Accordingly, the outstanding under Term Loan has to be repaid within 86 months with 6 months holiday period. Subsequent to the execution of the necessary Debtor Creditor Agreement and Debt Restructuring Agreement, the defendants miserably failed to comply with the terms and conditions of the said documents. Therefore, it is necessitated for the applicant bank to send further Demand Letters to the defendants on 07.10.2020 and 08.10.2020.

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3.10 It is submitted by the applicant bank that based on the Debtor Creditor Agreement and Debt Restructuring Agreement dated 13.02.23020, the defendants were given breathing time to develop their manufacturing activities as well as to regularize the loan amount. In any event the defendants did not utilize the opportunity for the reasons best known to them. Whereas when the applicant bank inspected the manufacturing unit established by the 1^st defendant and found out that there were no manufacturing activities in the industrial shed for the

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reasons best known to them. In the meantime, in view of the lock down announced by the respective Governments, there was no improvement in clearing of this entire liability. Thus, the applicant bank’s repeated follow up could not yield any results. In the meantime, the defendants have not serviced the interest and failed to submit the stock statement despite the extension of the holiday period. As such there has been continuous overdue in respect of the said loans. Thus the said two loan accounts from December, 2020 onwards became irregular and failed and neglected to keep up with the terms and conditions of the loan accounts in clearing the dues within a stipulate time. Noticing the conduct of the aforesaid financial assistance, the applicant bank had no other options and thereby was constrained to classify the said two loans account as Non-performing Asset (NPA) as on 31.03.2021 as per the guidelines issue by the RBI relating to the asset classification accounts.

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3.11 The applicant further states that under such circumstances they have no other option except to proceed on the secured properties which is more fully described in the schedule –A to the OA by issuance of the Demand Notice on 08.04.2021 under Sec. 13(2) of the SARFAESI Act and thereby invited their attention and granted 60 days time to clear the entire liability under the said limits. As there was no response from the defendants, the applicant had no other option except to proceed further and issued Possession Notice in respect of the Schedule A mentioned property on 18.12.2021 by following the procedures contemplated under the said Act. Thus, the steps taken by the applicant bank to recover the

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liabilities in the said two loan accounts from the defendants ended in vain. Hence, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues from the defendants.

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3.12 The applicant further states that the defendants are not entitled for any specific relief under Debts Relief act. Moreover, the interest levied on the transactions is in accordance with the terms and conditions of the loan documents executed by the defendants. As such the rate of interest charged herein may change from time to time as per the guidelines issued by the RBI and head office circulars. The defendants also specifically undertook to pay the additional interest at the rate of 2% per annum compounded monthly in case of default or non-regularization of the said loan account.

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After the filing of the OA, summons were sent to the Defendants 1 to 3 through Registered Post with Acknowledgment Due, which was served in respect of D-1, D-2 and D-3. D-2 entered appearance through counsel and filed vakalath. Written statement was filed by D-2 on 25.08.2022. When OA was taken up on 06.09.2022 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 & 3 were placed ex-parte on 06.09.2022.

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5. Brief Averments of Written Statement filed by 2^nd defendant:

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5.1 The second defendant submits that the above O.A has been filed to

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create an impression as if there existed a legally binding loan transaction between the applicant bank and her. Before traversing to the various

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averments the allegations made in the above O.A it would be just and equitable that the defendant throws light on certain facts which have been conveniently distorted and suppressed by the bank who are otherwise trying to protect their employee (i.e.) their erstwhile bank manager, Mr.Sebastian who has, in connivance and collusion, conspired with the third defendant herein Mrs.Lavanya, Mr. Raju and Mr. Balakrishnan to play a fraud upon this defendant taking advantage of the fact that this defendant is living as a single lady and usurp and snatch the property situated at Door No. 25/55, Azzez Mulk 2^nd street, Greams road, Thousand lights, Chennai- 600 006 which is owned by this defendant.

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5.2 It is submitted by the second defendant that she is a qualified medical doctor and was working with the Govt. of Tamilnadu as a Director of RSI and she retired from the service in the year 2016. This defendant has got nothing to do with Engineering activity, much less the Engineering business said to have been carried out by the first defendant.

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5.3 The second defendant submits that the subject property situated at Door no 25/55, Azzez Mulk 2^nd street, Greams road, Thousand lights, Chennai- 600 006 is the ancestral property, inherited by her form the Grandparents. She is having a son who is living separately with his family. The 2^nd defendant also had separated from her husband and has been living separately as a single women. Knowing that this defendant is a single women living in the subject property, the said Mrs. Lavanya, Mr. Raju, Mr. Balakrishnan and Mr. Sebastian (Branch manager of the

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applicant bank) hatched up a conspiracy to snatch away the property belonging to this defendant by creating a false loan transaction, for which this property was to be used as a security. This defendant is a victim of circumstances and she has not done anything willfully with free consent of knowledge.

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5.4 The second defendant submits that she came to know about Raju and his team through her friend, Ramesh for whom Mr. Raju was allegedly making some financial arrangements by way of advances through his known sources. At which point of time Mr. Raju introduced Mrs. Lavanya, Mr. Nagarajan, Mr. Balakrishna and Mr. Sebastian. The said Mr. Raju and team induced this defendant to start a business for which she was not agreeable, as the second defendant had told she is a doctor by profession and is not interested and prepared to take any risk at the retired age. However, the defendant was made to believe that the business proposal would be good for her son.

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5.5 The second defendant submits that first Defendant Company did not have any background and to her knowledge it was only a paper company and it was informed that Mr. Nagarajan was owning a land in Ambattur where they could establish an industrial unit by taking appropriate funds from the bank. This defendant was totally under the control of the conspiracies. Mr. Sebastian the erstwhile Bank Manager of the applicant bank, had constantly been visiting this defendant in her residence and gave all sorts of promises for advancing the loan. Although this defendant

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was not prepared to mortgage her property, the Bank Manager Mr. Sebastian, gave a picture that it is only a collateral security and the main lending would be based on the machineries and that this defendant needn’t have to worry and with one year turnover they could redeem the property back to the defendant. Believing the words, this defendant ended up in a quandary by signing all documents on dotted lines. This defendant is not aware if what are the documents on what her signatures were obtained. When she was trying to call the bank manager, Mr. Sebastian he was very rude and called the defendant a defaulter and started behaving as if she had complied and created all the fabricated documents. In fact this defendant is shocked to know from the paper book filed by applicant book that the Ambattur property is a leased out property in favour of Nagarajan and it is not owned by him. The defendant submits that she had signed the rental deeds and many blank

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stamp papers under the influence of the third defendant and others saying that these signatures would be used for applying all approvals and licenses etc.

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5.6 This defendant has never borrowed any monies for her personal gain and she has been duped and mislead for entering into a Partnership Deed, for which applicant bank has advanced money. This defendant immediately lodged a Police complaint before Central Crime Branch, Chennai and an FIR was registered as FIR No. 41/2022 dated 18.02.2022 and the investigation on the same are pending. As per the said FIR the following persons are the accused LR system, Raju, Lavanya,

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Balakrishnan, Nagarajan, Sebastine and AGM of Canara Bank. The very reading of the FIR would establish the fact that there is an absolute connivance and conspiracy between Raju and others including that of the bank officials in snatching away this defendant’s property.

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5.7 The second defendant submits that it is not known as to where the money is gone but today the applicant bank is trying to recover the same from and out of the property that is owned by this defendant, they have allowed others to go out scot free despite all these facts being intimated to the bank, the bank doesn’t seem to be taking action against their official morefully Mr.Sebastian, the then Bank manager, no disciplinary action is taken and the bank is only trying to cover up the lacuna to protect their employees and to clean up their books by recovering their payments from and out of the property owned by this defendant. This applicant bank has not made any efforts to even sell the hypothecated machinery which is detailed under the hypothecation agreement dated 13.03.2019.

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5.8 It is contended that this defendant had not created willfully any mortgage and the mortgage alleged to have been created is by way of misrepresentation and fraud played upon this defendant.

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5.9 The second defendant submits that as far as the averments mentioned in Para 3, 4 and 5 is concerned, she denies the allegations in so far as the execution of 1) Term loan agreement, 2) Common hypothecation agreement, 3) Pronote for Rs.30 lakhs, 4) Guarantee

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covering letter together with guarantee agreement by the 3^rd defendant for the advancement of loan. All the alleged documents were not executed by this defendant for advancement of loan in proper state of mind and further these agreements were taken by misrepresentation, undue influence and fraud. The same cannot be assumed and presumed to be valid contract to bind this defendant on the so called Debt which has neither been obtained willfully nor enjoyed or utilized by this defendant.

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5.10 The second defendant submits that with regard to the averments in Para 6 and 7 of the OA, it is submitted that she inherited the subject property from her grandparents and the said mortgage was created by misrepresentation undue influence and fraud and she has become a victim of circumstances and she has not done anything willfully with free consent of knowledge. She was unware of the particulars of the mortgage as she has not enjoyed or benefited personally through it as she had signed only in the dotted lines in each and every document that was given to her.

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5.11 The second defendant submits that with regard to the averments in Para 8, the allegations in so far as the execution of debtor creditor agreement and debt restructuring agreement dated 13.02.2020 are denied. Both the alleged documents were not executed by this defendant in proper statement of mind and further these agreements were taken by misrepresentation undue influence and fraud same cannot be assumed and presumed to a valid contract to bind this defendant on the so called

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debt which has neither been obtained willfully nor enjoyed or utilized by this defendant.

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5.12 The second defendant submits that with regard to the averments in Para 9, she was unaware of Repayment schedule under Term loan as any of it was not handled by her and it was the third defendant in collusion with Mr.Sebastian had submitted application for reschedulement of installments on 10.01.2020. The second defendant submits that with regard to the averments and allegations mentioned in Para 11of this application as she was never involved in the business of the first defendant.

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5.13 The second defendant submits that with regard to the averments in Paragraph 12 of the OA, the applicant bank has not made any efforts to even sell the hypothecated machinery which is detailed under the hypothecation agreement dated 13.03.2019. The Bank’s intent is not to disturb the business or the machineries of Mr.Nagarajan, Raju and others. Their intent is to raise funds out of property and to siphon it among themselves under the guise of invoking the provisions of SARFAESI and Recovery deeds and bankruptcy Act, 1993 they want to recover the dues from and out of the property owned by this defendant.

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5.14 The second defendant submits that all the further process of the above OA and SARFAESI needs to be kept in abeyance till the police officials conduct and completed which would otherwise prove who has committed fraud upon this defendant and the bank. Such fraudsters

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cannot be allowed to walk free. The law should be allowed to take its own course in completing the investigation.

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5.15 This defendant submits that she is very innocent and law abiding person who has held a very high position in the Govt. of Tamilnadu who is a Doctor by profession. She has never intended or attempted to commit any fraud to cheat the bank or the public money. This defendant is equally placed as that of the bank who have been duped by their own employees in connivance with third parties. Thus submitting 2^nd defendant prayed for dismissal of OA.

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Heard the submissions of Applicant Bank and perused the

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records.

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To prove the case of the Applicant Bank, Mr. S. Dinesh Kumar, Manager of the Applicant Bank, has filed his Affidavit by way of evidence and same was considered as evidence of AW-1 and list of documents came to be marked as Ex A-1 to A-45 .

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Despite filing written statement, 2^nd defendant did not choose to file Counter Proof Affidavit. Hence opportunity to file Counter Proof Affidavit by the 2^nd defendant was closed on 13.10.2025.

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The 2^nd defendant, a Qualified Medical Doctor and working with Government of Tamil Nadu as Director for ESI and since retired from 2016, contended that bank is trying to protect their employee, erstwhile Bank Manager, who had in connivance and collusion with third defendant and others to play fraud upon her. It is further contended that she has

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been a victim of circumstances and she has not done anything wilfully with free consent of knowledge. The 2^nd defendant had also contended that the mortgage has not been created wilfully and it has been allegedly created by way of misrepresentation and fraud played upon her.

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When a defendant challenges the creation of a mortgage by citing fraud or misrepresentation, they are invoking a defense where the underlying consent was either completely absent or obtained through intentional deception. For contracts deemed voidable, a defendant cannot merely sit back and ignore the legal consequences of the mortgage. They are legally required to file a formal Counter Claim or approach the civil court to have the fraudulent transaction set aside. Courts require substantial, corroborative evidence (such as witness testimonies, forensic analysis of signatures on blank papers, or disparity in consideration) to overturn a registered mortgage. Vague or unsupported claims are unsustainable. Hence the above contention fails.

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The 2^nd defendant had further admitted that she had signed many blank papers under the influence of third parties, saying that her signatures would be used for applying all approvals and licenses. Further that 2^nd defendant had not borrowed any money for her person gain and that she had been duped and mislead for entering into a Partnership Deed, for which applicant bank had advanced money. A doctor by profession, having worked and retired, the admission of 2^nd defendant that she had signed all blank papers is unacceptable. The Hon’ble Supreme Court has set precedents on liabilities related to signed blank documents

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under laws like the Indian Contract Act.

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The 2^nd defendant while denying execution of the aforesaid documents, did not choose to file any application for cross examination of concerned Branch Manager at that relevant point of time. A "bald denial" without documentary evidence refers to a bare, unsupported, or vague denial of an allegation that lacks any supporting proof or specifics. Various Courts consistently have held that such denials are insufficient in law. Once a signature is admitted, the presumption is that the document was validly executed. The defendant must provide strong evidence — such as witness testimony, discrepancies in the document, or expert handwriting analysis—to prove the document was signed while blank. The Hon’ble Supreme Court of India and many common law jurisdictions have repeatedly held that a signatory is bound by the contents of a document, even if they did not read it, provided fraud, misrepresentation, or coercion is being established. The burden of proof lies with the executant of the documents, and cannot be disputed at a later point of time to suit their defense. In the absence of any such documentary evidence, this contention fails.

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In this context, the judgment of the Hon’ble High Court of Andhra Pradesh in the case of Corporation Bank V/s Sushil Enterprises (2004) 1 ISJ Banking 160 is relevant, wherein it is held that:

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“Nobody is expected to sign the documents without reading or when it is blank and if he does so he does at his own risk and the very fact that the plaintiff bank has disbursed the loan

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amount and Defendant had availed it also shows that the documents were valid and duly executed.”

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The further contention of 2^nd defendant the she had lodged police complaint before the Central Crime Branch, Chennai and an FIR was registered as FIR No.41/2022 dated 18.02.2022 and the investigation is on and pending and that the very reading of FIR would establish the fact that there is absolute connivance and conspiracy between the parties and that of the Bank officials in snatching away 2^nd defendant’s property. A pending FIR does not automatically aid the defendant. An FIR is generally not considered substantive evidence in a trial. The defendant ought to have used the pending FIR to cross-examine the concerned Manager and others, in support of her defense. In the absence of any such document or evidence, the above contention also fails.

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The further contention of the 2^nd defendant in para 8 of the written statement regarding execution of documents by her and that the same are not executed in proper state of mind and that those agreements were taken by misrepresentation, undue influence and fraud. In this regard, a person is considered of unsound mind if, at the time of making the contract, they are incapable of understanding it and forming a rational judgment regarding its effects upon their interests. The 2^nd defendant being a qualified Medical Doctor and was working with the Government of Tamil Nadu as Director of ESI and since retired in 2016, cannot take the defense of execution of documents in improper state of mind. In the absence of contrary evidence to prove coercion or undue influence, the

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above contention also fails.

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With regard to the loan amounts due from the Defendants, Applicant Bank has filed the Statement of Loan Accounts as Ex A-44 and A-45 duly certified under the Bankers Books Evidence Act,1891 containing the details of loan transactions pertaining to the loan account of Defendants. The 2^nd Defendant, except for denying the availment of loan by her, neither pointed out any omission or wrong entry in the certified Statement of Account nor filed any proof or documentary evidence to disprove the entries made the Statement of Accounts. Further, the 2^nd Defendant failed to explain as to how she is not liable to the claim made in the Application. On the other hand, Applicant bank filed the loan and security documents duly executed by Defendants along with the Terms and Conditions stipulated therein and the Statement of Accounts duly certified under the Bankers Books Evidence Act. Therefore, in the absence of any proof or material evidence produced by 2^nd Defendant to substantiate her claim, the allegation fails.

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In this regard, this Tribunal places reliance on the decision reported in 2012(6) SCC 430 A. Vamsathu Madalaya Nandhavana Paripalanai Sangam , wherein it was held as under:

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“27. The pleadings must set-forth sufficient factual details to the extent that it reduces the ability to put forward a false or exaggerated claim or defence. The pleadings must inspire confidence and credibility. If false averments, evasive denials or false denials are introduced, then the Court must carefully look

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into it while deciding a case and insist that those who approach the Court must approach it with clean hands.”

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Thus, in the absence of any such proof or evidence to disprove the claim of applicant bank, the allegations made by the Defendants falls to the ground and deserve rejection.

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The applicant bank through its Witness (AW.1) has corroborated the averments made in the OA by marking of documents Ex.A-1 to A-45. There is no contra-evidence available on record to repudiate the claim of the applicant bank regarding the availing of loan, execution of loan and security documents by Defendants and the default committed by them in repaying the loan.

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A careful scrutiny of records makes it clear that present application is filed well within limitation and this Tribunal possesses necessary and proper jurisdiction to entertain and adjudicate the claim. No documentary evidence on the side of defendants are produced or filed to dispute the claim of applicant bank. Hence, it can be concluded that applicant bank has proved its claim against defendants.

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During the pendency of OA, Applicant Bank had reported part satisfaction of OA claim in a sum of Rs.3,77,25,000/- by way of sale of Schedule immovable property under SARFAESI Act. Accordingly, part satisfaction of sum of Rs.3,77,25,000/- is duly recorded vide proceedings dated 13.10.2025 and documents marked as Ex A-18 to A-25 were returned to applicant bank on 24.10.2025 under proper acknowledgement

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on 24.10.2025.

Considering the submissions of both sides and having regard to the amount advanced, documents executed, the conduct and operations in the loan account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled to a final order on the following terms:-

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: O R D E R :

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The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants 1 to 3, for recovery of a total sum of Rs.4,22,66,461.78p (Rupees Four Crores Twenty Two Lakhs Sixty Six Thousand Four Hundred and Sixty One Seventy Eight paisa only)

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(b) The sum of Rs.3,77,25,000/- realized by way of sale of mortgaged property under SARFAESI Act is directed to be given

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credit to the borrower’s loan account as on the date of realisation.

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amount, the bank is at liberty to recover the amount by sale of the schedule B mentioned hypothecated properties morefully detailed in the OA schedule.

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(d) Schedule B to the OA shall be appended to this final order.

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(e) The applicant bank shall file the latest memo of calculation of OA amount together with interest, costs etc., to be paid by the Defendants duly considering the amounts, if any, paid by the Defendant and/or amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to prepare Recovery Certificate for the amount to be paid by Defendants to the applicant bank.

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(f) The applicant bank shall file memo of costs within ten days from the date of receipt of this final order.

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(g) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

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A copy of this order be communicated to the parties concerned.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to PS, transcribed by her, corrected, signed and pronounced by me on this the 13^th day of May, 2026)

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ANNEXURES

WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Mr. S. Dineshkumar, Manager of the Applicant Bank

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Exhibits on the part of the Applicant:

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Sl. No.	Date	Description of Documents	Exhibit No.
1.	02.01.2019	Loan application by the 1^stdefendant to the applicant	A-1
2.	05.12.2018	Partnership deed executed between the defendants 2 &3	A-2
3.	10.12.2018	Rental agreement executed between Mr. G.B. Krishnan	A-3
4.	22.02.2019	Sanction memorandum issued by the applicant bank	A-4
5.	13.03.2019	Request for overdraft facilities by the 1^st defendant	A-5
6.	13.03.2019	Partnership letter submitted by the 2^nd and 3^rddefendant	A-6
7.	13.03.2019	Term loan agreement submitted by the 1^st defendant	A-7
8.	13.03.2019	Common hypothecation agreement submitted by the 1^stdefendant.	A-8
9.	13.03.2019	Pronote for Rs.30 lakhs	A-9
10.	13.03.2019	Guarantee covering letter together with guarantee agreement by the 2^nd defendant	A-10
11.	13.03.2019	Guarantee covering letter together with guarantee agreement by the 3^rd defendant	A-11
12.	13.03.2019	Letter of undertaking by the 1^stdefendant	A-12
13.	13.03.2019	Link letter when the disbursement of loan is done on the subsequent date by the 1^st defendant.	A-13
14.	15.03.2019	Acknowledgement of registration of firm in the name of M/s Laya Engineering.	A-14
15.	07.08.2019	Link letter when the disbursement of loan is done on the subsequent date by the 1^st defendant	A-15
16.	07.08.2019	Letter by the 1^stdefendant of the applicant.	A-16
17.	05.03.2019	Letter evidencing deposit of title deeds by the 2^nddefendant	A-17
18.	13.03.2019	Memorandum relating to deposit of title deeds vide document No.30/2019 in SRO	A-18

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		thousand lights
19.	19.06.1963	Deed of release executed by Mr. Hans Luther to Mrs. R.E. Kamala James vide document No.1755/1963 in SRO T. Nagar	A-19
20	17.04.1965	Deed of release executed by Abu Pillai and others to Mrs. R.E. Kamala James vide document No.1153/1965 in SRO T. Nagar	A-20
21.	10.08.2005	Extract from the permanent land register and copy of the survey plan in the name of the 2^nddefendant	A-21
22.	18.09.2001	Death certificate of Mr. R. James issued by the Health Department, Chennai corporation	A-22
23.	03.01.2002	Death certificate of Mrs Kamala issued by the Health Department, Chennai corporation	A-23
24.	23.11.2001	Legal heirship certificate in the name of N.E. Kamala and Asha Latha issued by the Tahsildar, Egmore Nungambakkam taluk.	A-24
25.	08.02.2002	Legal heirship certificate in the name of Asha Latha issued by the Tahsildar, Egmore Nungambakkam taluk.	A-25
26.	01.11.2019	Letter by the applicant to the 1^st defendant together with returned cover.	A-26
27.	30.12.2019	Demand letter issued by the applicant to the 1^stdefendant.	A-27
28.	30.12.2019	Demand letter issued by the applicant to the 2^nddefendant.	A-28
29.	30.12.2019	Demand letter issued by the applicant to the 3^rddefendant together with returned cover.	A-29
30.	-	Returned cover of the 1^stdefendant	A-30
31.	10.01.2020	Letter by the 1^stdefendant to the applicant.	A-31
32.	10.01.2020	Application issued by the 1^stdefendant for restructuring under RBI guidelines	A-32
33.	10.02.2020	Intimation letter by the applicant to the 1^stdefendant	A-33
34.	13.02.2020	Debt restricting agreement by the defendant	A-34
35.	13.02.2020	Draft letter of undertaking from the guarantor for restricting of loans.	A-35
36.	13.02.2020	Draft letter of undertaking from the guarantor for restricting of loans	A-36
37.	07.10.2020	Demand letter issued by the applicant to	A-37

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		the 1^stdefendant
38.	08.10.2020	Demand letter issued the 1^stdefendant	by the applicant to	A-38
39.	08.10.2020	Demand letter issued the 1^stdefendant	by the applicant to	A-39
40.	08.10.2020	Demand letter issued the 1^stdefendant	by the applicant to	A-40
41.	08.10.2020	Demand letter under SARFAESI Act issued the 1^stdefendant	Sec.13(2) of the by the applicant to	A-41
42.	08.10.2020	Demand letter under SARFAESI Act issued the defendant 2 &3	Sec.13(2) of the by the applicant to	A-42
43.	18.12.2021	Possession notice in schedule mentioned the applicant to the de	respect of the A- property issued by fendant	A-43
44.	31.01.2022	Statement of account loan account together with enclosur	in respect of term No.0907766000006 es	A-44
45.	31.01.2022	Statement of account loan account together with enclosur	in respect of term No.0907261010476 es	A-45