Allowed

Union Bank of India v. M/s. Sita Logistics

DRT19 Jun 2026OA/926/2023

Case brief

AI extract

What is this about?

The Tribunal allowed the Original Application by Union Bank of India for recovery of dues. It held that the defendants are jointly and severally liable as the bank proved execution of documents and no evidence of forgery was produced. Retired partners remain liable on guarantees unless expressly released.

What did the court decide?

Defendants jointly and severally liable to pay Rs. 90,88,499.12 plus interest; Recovery Certificate issued.

Union Bank of India versus M/s. Sita Logistics — Contract and Commercial Disputes | DRT (2026)

¶1

IN THE DEBTS RECOVERY^{TRIBUNAL-II AT HYDERABAD} DATED THIS THE 19TH DAY OF JUNE,²⁰²⁶

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

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Original Application No: 926^{OF 2023}

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Union Bank of India

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Gunrock Enclave bra nch #220, Gunrock Enclave, Sikh^Road, Bowenpally, Secunderabad - 500⁰⁰⁹ Rep by its Authorised Officer

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..'..Applicant

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Versus

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lY/s. Sita Logistics

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B2l1 Agricultural Market^Yard, Bowenpally, Secunderabad - 500 011 Represented by its Partners G. Jagadish^Kumar,

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G. Sita Devl, D Latha Madhavi.

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Sri G. Jagadish Kumar, S/o Late G.P. Reddaiah Aged about 55^years, Occ: Business R/o Plot No. 46, Sai Sagar^Enclave, Bear lYanasarovar Heights,^RTCColony, Tirumalaigiri, Secunderabad

¶12

Gobburu Sita Devi,

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W/o G. Pedda Reddaiah,

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Aged about 55^years, Occ:^Business R/o Flat No. G3, Nagvilla,^{Plot No. 84,} Road No. 11, Film Nagar, Jubilee^Hills, Hyderabad - 500 033

¶15

Degala Latha Madhavi, W/o G. Jagadish Kumar Aged about 51 Years, Occ:^Business R/o Plot No. 46, Sai Sagar^Enclave, Bear Manasarovar Heiqhts,^RTCColony, H62r tu2neqarA/ar HClnnfq' J< I I⁽ nlnnV Tirumalaigiri, SecunoeraDao

¶16

Gobburu Sai Krishna^Kishore,

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S/o Pedda Reddaiah,

¶18

Aged about 52 Years, Occ:^Business R/o Flat No.G3, Nagvilla,^{Plot No. 84, RoadNo.}

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OA No.926/2023

.. Defendants

11, Film Nagar, Jubilee Hills, Hyderabad - 500033

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Counsel for the Applicant : Mr. Akkapaka Srinivas Counsel for Defendants : Mr. P.S.N. Ravindra

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:: ORDER:i

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The Applicant Bank r,,"O *" *."rn OA for the recovery of a sum of Rs. 90,88,499.12 ps from the defendant jointly and severally with future interest @ 10.50o/o (8.50% + 2% penal) p.a. with monthly rests from 23.03.2022 fll the date of realisation along with costs, and in default, sale of OA schedule property.

¶27

The averments of the applicant bank, as stated in the OA, in brief, are that the Defendant No.1 is a partnership firm engaged in running a petrol bunk, which originally availed a Secured Overdraft (SOD) facility of Rs.85.00 lakhs from the applicant bank (erstwhile Corporation Bank) Gunrock Enclave Branch, Secunderabad, on 26.03.2014 for working capital purposes. The facility was sanctioned against the personal guarantees of Defendants No.2, 3 and 5, and against mortgage of immovable property furnished by Defendant No.3 by way of deposit of title deeds. Defendant No.4, wife of Defendant No.2, was later inducted as a partner in the firm in 2018. The Defendants executed various loan documents, including Demand Promissory Note, continuing guarantees and other security documents. Due to default in repayment, the account was classified as a NPA on 06.04.2023. The Bank"thereupon issued a demand notice under the SARFAESI Act on 15.04.2023. Despite repeated demands, personal contacts, and service of registered notices, the Defendants have failed to repay the outstanding amount. Hence this OA for recovery of dues.

¶28

Defendants Nos. 1 to 5 filed written statement. They deny having executed any loan or guarantee documents and allege that the Applicant Bank obtained their signatures on b_p,nk printed formats and ,/,,.y \WV:-I\ 777';".o'\*' L-,'

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¶30

OA No.92612023

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subsequently filled in by the Bank itself.^{Defendants dispute the} genuineness and contents of the Demand Promissory^{Note, Continuing} Guarantees, Letter of Undertaking, and all^{other security documents.} The Defendants further contend that the^{account statementsfiled by} the Bank are incomplete and fabricated, that^{interest has not been} charged in accordance with RBI norms, the^{classification of the account} as NPA is improper. They assert that they^{have been regularly servicing} the loan without any irregularities^{and they never received any demand} notice or SARFAESI notice. The Defendants^{alsoplead that the Bank's} claim is barred by limitation and^place the^{Bank to strict proof on every} material averment, including the Bank's^{jurisdictionoverthe} hypothecation and the legality and^effect of^{the merger/amalgamation.} Consequently, the OA is liable to^{be dismissed.}

¶32

In order to^prove its case,^{Applicant Bank examinedby Mr' P'} Satish Kumar, Chief^Manager as^{AW-1 and marked 18 documents} through them as Exhibits A-1 to^A-18.

¶33

The 5th defendant Gobburu Sai^{Krishna Kishoreexamined himself} as DW-1, the 2nd defendant^{Sri G. Jagadish Kumar examinedas DW-1} for himself as well as for 1't defendant^{M/s. Sita Logistics.No} documents marked.

¶34

Heard the learned counsel^{appearing for the applicantwhereas} the learned counsel for the^{defendantsreported no oral arguments'} Perused the written arguments^{filed by the learned counsel for the} Applicant Bank as well as^{learned counsel for the Defendants and also} perused the material brought on record.

¶35

Learned "counsel for the applicant^{bank contended that the} applicant bank being^{successor-in-interest of erstwhilecorporationBank} by virtue of amalgamation^{have rights, titles and interests in the} ,.X) 17/9.-,,^u$ 1-'l -fq''

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4ol7

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OANo.926/2023

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financial assets and securities of defendants. While reiterating the version as in the application on availment of credit facility^(SOD) of Rs.B5 lakhs, executing loan documents, personal guarantees, security documents, letters of acknowledgement of debt, subsequent default in repayment, NPA classification, issuance of demand notice under the SARFAESI Act, 2002 etc., learned counsel relied on Exs.A-1 to Exs.A-18 marked through applicant's evidence (AW-1) as proof of claim of the bank and submitted that the applicant bank is entitled for recovery of the outstanding amount together with future interest and costs and invoking the mortgage deed. Accordingly he prayed to allow the OA together with pendent lite and future interest @10.50o/o p.a. with monthly rests and costs, consequently issue recovery certificate for Rs.90,88,499.12 ps and order sale of schedule mortgage properties.

¶39

B. Learned counsel for the defendants, vide written arguments, would repeat the contents of the written statement and contended that eJascifisatisn.qf,.NPA..y.vEs-.impr,qpei,,.Lg,,Qengnfl aoIicf,,pee0 sgryeg^g0 them, statement of account being fabricated, and claim is based on excessive interest and that claim is barred by limitation. He specifically contended that defendants 3 and 5 retired from the partnership in the year 2018. Dissolution of firm with a request to release guarantee and mortgage. As per Sec.45 of the Partnership Act, the erstwhile partners of a dissolved partnership firm cannot be held liable once notice of dissolution has been given as per judgment reported in AIR 1963 Mad 302. When the 2nd defendant proprietor of 1't defendant had taken over all the liabilities of the 1't defendant firm and executed new documents replacing the old documents, defendants 3 and 5 stand discharged by operation of Secs.124 and 133 of the Indian Contract Act. 5th defendant filed SA and the Tribunal granted stay of all SARFAESI proceedings. The applicant has no right to file the OA and hence liable to be dismissed with exemptary costs. 77ffi.n-

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¶41

OANo.926/2023

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The point that arises for consideration is:Whether the Applicant Bank is entitled for the OA claim against the Defendants and O.A. mortgaged^property?

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The case of the Applicant Bank is that Defendant No.1^partnership firm availed a Secured Overdraft facility of Rs.85.00 lakhs^on 26.03.20L4 for working capital requirement of its business.^{To proveits} case, the Applicant examined AW-1 and marked^Exs.A-1 to^A-18.The documents include the sanction letter, demand^{promissorynote, letters} of undertaking,^guarantee agreements, mortgage-related^documents, acknowledgments of debt and statement of account.^{The statementof} account statement evidences operation of the credit^{facility, debits,} credits and the outstanding balance. The defendants^{have merely} alleged that the statement of account is fabricated^{and interesthas} been charged improperly. However, no^{independentmaterialhas been} produced to demonstrate any specific discrepancy. The defendants have also denied execution of the documents and^{contended that their} signatures were obtained on blank^printed forms.^{However, exceptthe} oral testimonies, no documentary evidence^{has been produced to} substantiate such allegation. It is well settled^{that a mere plea that} signatures were obtained on blank^papers is^{insufficientunless} supported by cogent evidence. The Defendants^{have admittedlynot} initiated any criminal or civil^proceedings alleging^{fraud, forgeryor} misuse of signed documents. No expert^{evidencehas been adduced to} dispute the signatures appearing on the^{documents. Hence,the} contention of the defendants that the^{documentsare fabricated cannot} be accepted.

¶44

Though the defendants contend that the claim is barred^bY limitation, the applicant bank proved that OA is within limitation by relying upon acknowledgments of debt and-revival documents^executed by the defendants /woo

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¶46

OA No.92612023

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The principal defence of Defendants Nos.3 and 5 is that they retired from the partnership in the year 2018 and therefore cannot be made liable for the debt. It is further contended that Defendant No.2 assumed all liabilities of the firm and executed fresh documents. However, this contention cannot be accepted as the liability sought to be enforced arises out of the loan facility originally sanctioned when Defendants Nos.3 and 5 were admittedly partners and guarantors. A guarantor is not discharged merely because of retirement from partnership unless the creditor expressly agrees to such discharge or there is a legally enforceable novation. No document evidencing release of guarantees by the Applicant Bank has been produced. Likewise, there is no evidence showing that the Bank agreed to substitute Defendant No.2 in place of Defendants Nos.3 and 5 or to relinquish its rights under the guarantee deeds. In the absence of a formal release by the Bank, the liability of guarantors continues. Accordingly, Defendants Nos.3 and 5 remain liable under the guarantees executed by them.

¶48

In view of the above discussion, it is concluded that the claim of the Applicant Bank is amply proved by the evidence affidavit of AW-1 coupled with recitals in Exhibits A-1 to A-18 and accordingly I hold that the Defendant Nos.1 to 5 are jointly and severally liable to pay to the applicant bank the claim made in the OA with future interest and costs.

¶49

In the result, the present Original Application No.92612023 is allowed as under: -

¶50

(i) The Defendant Nos. 1 to 5 are liable to pay to the Applicant Bank a sum of Rs. 90,88,499.12 ps with future interest rate of 8.50o/o simple from the date of application till the date of realization;

f+n^Id

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OA No.92612023

(ii) The OA claim is secured by way of mortgage^of property as described in the schedule annexed to the OA and applicant bank is entitled to^proceed against the same for realization^{of dues;}

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(iii) the applicant is also entitled to^proceed against^the person and properties of the Defendant Nos. 1 to⁵ for realization of dues; and

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(iv) the applicant bank is entitled for the costs.

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The Applicant Bank is directed to file^{CostMemowithin 2 weeks} from the date of receipt of this Order.

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Issue Recovery Certificate accordingly.

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Communicate a copy of this order^{to the partiesconcernedand} upload on the official website.

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(Dictated to the steno, corrected, signed and^{pronounced by me in the open} court on this the^19th day^{of June, 2026).}

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r*Ai#Hwl$x"ol-rrl PRESIDING OFFICER

Union Bank of India v. M/s. Sita Logistics

Case brief

What is this about?

What did the court decide?

Union Bank of India v. M/s. Sita Logistics

Case brief

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