Allowed

Canara Bank v. M/S G K Steel Company and Another

DRT27 Jul 2026OA/815/2026

Case brief

AI extract

What is this about?

The Tribunal allowed the banks original application for recovery of dues of Rs.21.38 lakhs and Rs.30,663. The court granted uniform simple interest at 8% p.a. and directed issuance of a recovery certificate against the borrowers and guarantor.

What did the court decide?

Recovery of Rs.21,38,375.79 jointly and severally and Rs.30,663.44 from guarantor with simple interest at 8% p.a. and issuance of Recovery Certificate.

Canara Bank versus M/S G K Steel Company and Another — Banking and Recovery | DRT (2026)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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ORIGINAL APPLICATION NO.815/2026

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PRESIDED OVER BY MRIDULESH KUMAR SINGH

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DATE OF INSTITUTION: 30.05.2025

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DATE OF DECISION: 27.07.2026

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CANARA BANK, a body corporate constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act-V of 1970, having its Head Office at 112, J.C. Road, Bengaluru, Karnataka & amongst other places Court Road Branch, District Ludhiana through its one of the Manager namely Sh. Ravi Goyal vide General Power of Attorney dated 20.03.2018.

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……..Applicant

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Versus

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M/s G. K. Steel Company through its proprietorship concern of Smt. Shivani D/o Sh. Ashok Kumar, W/o Sh. Rahul Mehta having its office at Ground Floor, 1040, G K Steel Company Street no. 1, Kot Mangal Singh, Near Jeet Sweet Shop Ludhiana – 141003.

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Second Address:- #2505/1, Infront of Street no. 3, Quality Kanda Road, Janata Nagar, Ludhiana.

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Third Address:- #4189 Street no. 3, Guru Nanak Gali, Shimla Puri, Millerganj, Ludhiana.

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Smt. Shivani D/o Sh. Ashok Kumar, W/o Sh. Rahul Mehta proprietor of M/S G. K. Steel Company having its office at Ground Floor, 1040, G K Steel Company Street no. 1, Kot Mangal Singh, Near Jeet Sweet Shop Ludhiana - 141003.

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Second Address:- #2505/1, Infront of Street no. 3, Quality Kanda Road, Janata Nagar, Ludhiana. Third Address:- H. No. 9626/1, Street no. 18, Ward no. 71, Kot Mangal Singh, Millerganj, Ludhiana - 141003.

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Fourth Address:- H No. 64/B, G K Vihar, Manakwal Gate, Dhandra Road, Gill Ludhiana – 141116.

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…….. Defendants

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2 OA NO.815/2026 CANARA BANK VS M/S G K STEEL COMPANY AND ANOTHER

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Advocates:

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Argued by Sh. Sandesh Arora, Advocate for the applicant (through VC) None for defendants (Already ex-parte vide order dated 23.07.2026).

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FINAL ORDER

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Present Original Application was instituted by the applicant under Section 19 of the Recovery of Debts & Bankruptcy Act 1993, against the defendants for recovery of Rs.21,69,039.23 (Rupees Twenty One Lacs Sixty Nine Thousand Thirty Nine and Paise Twenty Three Only). The Original Application has been filed through Sh. Ravi Goyal, Manager of the applicant, who is competent to institute the Original Application vide Power of Attorney dated 20.03.2018, which is Annexure A1 to this OA.

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The brief facts of the OA are that the defendant no. 1 through its proprietor defendant no. 2 a pproached the applicant for grant of Cash Credit Limit of Rs.10,00,000.00 vide Application Form for Loans to Micro Small & Medium Enterprises dated 09.03.2021 and Request for Overdraft Facility dated 10.03.2021, which are Annexures A2 & A10 to this OA. Thereafter, the defendant no. 1 through its proprietor defendant no. 2 a pproached the applicant for renewal and enhancement of Cash Credit Limit from Rs.10,00,000.00 to Rs.20,00,000.00 vide Application Form for Loans to Micro Small & Medium Enterprises dated 09.03.2022, Request for Overdraft Facilities and Letter of Renewal, both dated 21.05.2022, which are Annexures A14, A20 & A21 to this OA. Thereafter, the defendant no. 1 through its proprietor defendant no. 2 a pproached the applicant for renewal of Cash Credit Limit of Rs.20,00,000.00 vide Letter of Renewal, dated 19.08.2023, which is Annexure A24 to this OA. Thereafter, the defendant no. 1 through its proprietor defendant no. 2 a pproached the applicant for renewal of Cash Credit Limit of Rs.20,00,000.00 vide Application Form for Loans to Micro Small &

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3 OA NO.815/2026 CANARA BANK VS M/S G K STEEL COMPANY AND ANOTHER

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Medium Enterprises and Letter of Renewal, both dated 23.08.2024, which are Annexures A25 & A29 to this OA.

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Thereafter, the defendant no. 1 through its proprietor defendant no. 2 a pproached the applicant for renewal of Cash Credit Limit of Rs.20,00,000.00 vide Application Form for Loans to Micro Small & Medium Enterprises and Letter of Renewal, both dated 25.08.2025, which are Annexures A33 & A36 to this OA.

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The applicant sanctioned the Cash Credit Limit of Rs.10,00,000.00 vide Sanction Letter dated 10.03.2021, which is Annexure A3 to this OA and the terms and conditions were duly accepted by the defendant no. 1 through its proprietor defendant no. 2. Defendant no. 2 stood as guarantor. Thereafter, th e applicant renewed and enhanced the Cash Credit Limit from Rs.10,00,000.00 to Rs.20,00,000.00 vide Sanction Letter dated 21.05.2022, which is Annexure A16 to this OA and the terms and conditions were duly accepted by the defendant no. 1 through its proprietor defendant no. 2. Defendant no. 2 stood as guarantor. Thereafter, th e applicant renewed the Cash Credit Limit of Rs.20,00,000.00 vide Sanction Letter dated 19.08.2023, which is Annexure A23 to this OA and the terms and conditions were duly accepted by the defendant no. 1 through its proprietor defendant no. 2. Defendant no. 2 stood as guarantor. Thereafter, th e applicant renewed the Cash Credit Limit of Rs.20,00,000.00 vide Sanction Letter dated 23.08.2024, which is Annexure A26 to this OA and the terms and conditions were duly accepted by the defendant no. 1 through its proprietor defendant no. 2. Defendant no. 2 stood as guarantor. Thereafter, th e applicant renewed the Cash Credit Limit of Rs.20,00,000.00 vide Sanction Letter dated 25.08.2025, which is Annexure A34 to this OA and the terms and conditions were duly accepted by the defendant no. 1 through its proprietor defendant no. 2. Defendant no. 2 stood as guarantor. Thereafter, th e applicant sanctioned the Credit Card bearing No. 4687780828637008 vide Loan Account No. 125009209957 and

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4 OA NO.815/2026 CANARA BANK VS M/S G K STEEL COMPANY AND ANOTHER

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outstanding balance was Rs.30,663.44 to the defendant no. 2 as mentioned in Para 5(o) in OA.

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Defendant no. 1 through its proprietor defendant no. 2 hypothecated its stock and book debts vide Stock Statement dated 31.03.2025, which is Annexure A32 to this OA. Documents executed: Particulars of Guarantor, Pronote, Cash Credit Agreement, Letter of Undertaking not to avail OCC Facility elsewhere, Letter of Proprietorship, Letter of Undertaking regarding Loans/Advances, all dated 10.03.2021, which are Annexures A4 to A9 to this OA; Udyam Registration Certificate dated 20.01.2021, which is Annexure A11 to this OA; Copy of PAN Card and Aadhar Card, which are Annexure A12(Colly) to this OA; GST Registration Certificate dated 31.05.2022, which is Annexure A13 to this OA; Particulars of Guarantor, dated 09.03.2022, which is Annexure A15 to this OA; Pronote, Supplemental Agreement, Link Letter in Respect of Enhancement of Credit Facilities, Annexure Regarding concept / clarification/illustrative examples, all dated 21.05.2022, which are Annexures A17 to A19 & A22 to this OA; Particulars of Guarantor, dated 23.08.2024, 25.08.2025, which are Annexures A27 & A35 to this OA; Statement of Assets and Liabilities dated 22.08.2024, which is Annexure A28 to this OA; Letter of Proprietorship, Acknowledgement of Debt and Security, both dated 23.08.2024, which are Annexures A30 & A31 to this OA; Legal Notices dated 19.03.2026, 25.03.2026, along with postal receipts, which are Annexure A37(Colly) to this OA; Statement of Accounts along with and certificate, which are Annexures A38 to A40 to this OA.

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The loan accounts became irregular and were classified as NPA and after adjusting debit and credit entries in the loan accounts there was a debit of Rs.21,69,039.23, which is recoverable and the defendants were served recall notices but they did not repay the outstanding amount, therefore, the applicant requested to accept the application and to issue Recovery Certificate accordingly. 6. The defendants were served summons to appear before this Tribunal but no one appeared on behalf of defendants and they were proceeded ex-parte vide order dated 23.07.2026.

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5 OA NO.815/2026 CANARA BANK VS M/S G K STEEL COMPANY AND ANOTHER

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In support of the OA, affidavit of Sh. Ravi Goyal, Manager, Canara Bank has been filed.

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Heard ex-parte arguments and perused record.

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It was argued by learned counsel for applicant through video conferencing that in view of the documentary evidence brought on record which had gone unrebutted, the applicant had proved its case. From the perusal of all the Annexures A1 to A40 to this OA, it is proved that the defendant no. 1 through its proprietor defendant no. 2 approached applicant for availing of Cash Credit Facility, which was granted to them, defendant no. 2 stood as guarantor and the defendant no. 2 approached applicant for availing of Credit Card Facility, which was granted to her and for that she had executed all the relevant documents in favour of the bank. The defendants failed to pay back the loans as per terms and conditions of the agreement between the parties. Subsequently, loan accounts were classified as NPA. From the documentary evidence brought on record, it is proved that applicant is entitled to recover a sum of Rs.21,38,375.79 (Rupees Twenty One Lacs Thirty Eight Thousand Three Hundred Seventy Five and Paise Seventy Nine Only), along with interest from the defendants, jointly and severally and Rs.30,663.44 (Rupees Thirty Thousand Six Hundred Sixty Three and Paise Forty Four Only), along with interest from the defendant no. 2, from the date of filing of the present Original Application till realization of the amount.

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In so far as pendente lite and future rate of interest is concerned, the applicant in relief clause has claimed interest @10.25%p.a. in Cash Credit Limit and interest @30.00%p.a. in Credit Card Limit, with monthly rests, with penal interest @2%p.a in both the loan accounts from 01.05.2026 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 loans and prevalent market rates of interest which have gone drastically downhill in yester years, while exercising the discretion vested in this Tribunal, this Tribunal deems it

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6 OA NO.815/2026 CANARA BANK VS M/S G K STEEL COMPANY AND ANOTHER

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just and appropriate to grant uniform simple interest @8.00%p.a. in the loan accounts from the date of filing of the OA till realization of the amount ordered vide this final order. It is ordered accordingly. 11. In the result, the application is allowed declaring that the defendants are liable to pay to the applicant sum of Rs.21,38,375.79 (Rupees Twenty One Lacs Thirty Eight Thousand Three Hundred Seventy Five and Paise Seventy Nine Only), jointly and severally and the defendant is liable to pay to the applicant sum of Rs.30,663.44 (Rupees Thirty Thousand Six Hundred Sixty Three and Paise Forty Four Only), with costs, current and future simple interest @8.00%p.a. in both the loan accounts 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 book debts of 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 11.08.2026. 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: 27.07.2026

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(MRIDULESH KUMAR SINGH) Presiding Officer, DRT-III, Chandigarh

Canara Bank v. M/S G K Steel Company and Another

Case brief

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Canara Bank v. M/S G K Steel Company and Another

Case brief

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