Allowed

Karnataka Bank Limited v. Babanna

DRT30 Jun 2026OA/959/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the applicant bank's Original Application for a Recovery Certificate. The court found the loan and guarantee proven but reduced future interest to 6% p.a. due to agricultural purpose, permitting joint, several, and personal recovery from all defendants.

What did the court decide?

Recovery Certificate allowed for Rs.28,25,446.22 plus future interest at 6% p.a. (simple) to be recovered jointly, severally, and personally from all defendants against scheduled property and other as

Karnataka Bank Limited versus Babanna — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II, KARNATAKA AT BENGALURU

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Dated this 30^th Day of June, 2026

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Present: Sri. T. RAJESH

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Presiding Officer

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OA. No.959/2023

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BETWEEN:

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The Karnataka Bank Ltd., Branch at Athani, CTS No.2382 & 2383, Despande Complex, Oppostie Govt. Hospital Main Road, Athani – 591304

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Belagavi Dist. Karnataka Rep.by its Branch Manager

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… APPLICANT

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AND:

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Sri. Babanna Alagoud Patil S/o. Alagoud B Patil

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Aged about 43 years

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Sri. Shankar Alagoud Patil S/o. Alagoud B Patil

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Aged about 31 years

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Sri. Paragond Alagoud Patil S/o. Alagoud B Patil

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Aged about 39 years

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Sri. Sidagouda Alagoud Patil S/o. Alagoud B Patil Aged about 44 years

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All are residing at Gundewadi Tq., Athani, Belgaum District-591304

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OA. No.959/2023

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M/s. Athani Sugars Limited Office Address at: Vishnuanna Nagar, Post Navalihal, Taluka Athani, Dist. Belgaum Karnataka-591234 Rep. by its Chairman & Managing Director ...DEFENDANTS

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Counsel on record/appeared for:

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Applicant : Sri. Nithin Chandra M Defendants No.1 to 4 : Exparte Defendant No.5 : Shobha Bhavikatti

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:FINAL ORDER:

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The present Original Application in short (OA) has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 for seeking issuance of Recovery Certificate against the defendants for Rs.28,25,446.22/- (Rupees Twenty Eight Lakh Twenty Five Thousand Four Hundred Forty Six and Twenty Two Paisa only) claim to be due in a loan facility availed by the defendant No.1 to 4 installation of drip and lift irrigation system for the land.

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It is also stated that, the 5^th defendant a Company also be resolved to provide corporate guarantee for the repayment of loan sanctioned by the applicant. Hence, according to the applicant, the loan was sanctioned and amounts were disbursed at the request and recommendation by the 5^th defendant also. Hence, according to the applicant a Term loan of Rs.28,07,000/- sanctioned and disbursed, which was repayable an span of 9 years with initial

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OA. No.959/2023

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holiday of 1 year. The defendants had further agreed that, the movables to be purchased using the funds has to be hypothecated to the applicant bank by way of security and mortgage over the agricultural land also created. Though the defendants have executed acknowledgment of liability the repayments were defaulted resulting the account being classified. Hence, according to the applicant a sum of Rs.28,25,446.22 is due as on 30.07.2022 which sought to be recovered by filing this OA.

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Summons was taken out and only 5^th defendant entered appearance, other defendants remained exparte. The 5^th defendant filed their written statement denying as taken in the OA. It is contended that, the applicant has illegally charged the compound interest and the statement of account furnished by the applicant cannot be acted upon. The 5^th defendant also grievance as to the terms and condition of the guarantee deed as evidence by the loan document executed by the defendant Nos.1 to 4. In respect of so claimed Corporate Guarantee, the said defendant denying the acceptance of the said guarantee deed.

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The applicant had let in evidence as AW-1 and got marked as Ex..A1 to A18. Though sufficient opportunities given to the 5^th defendant, no defense evidence was forthcoming.

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OA. No.959/2023

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Heard the Ld. Counsel for the Applicant as well as the defendants and perused the records.

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The following issues arise for consideration in this matter:

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i) Whether the applicant had succeeded in proving the OA claim as against the defendants?

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ii) What order are to be passed?

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Both these issues are gone into and decided together.

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The case of the applicant as to the sanctioning of the loan

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is proved by the credit sanction order, term loan agreement and declaration of borrower along with the consent letter marked as Ex.A3 to A6 evidences that, the case of the applicant as to the sanctioning of the loan in question. The agreement of the hypothecation Ex.A8 evidences that, the defendants had agreed to create hypothecation over the movables to purchase in the funds.

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The Corporate Guarantee is executed by the 5^th defendant as produced as A3 evidence that, the 5^th defendant had resolved to extend the Corporate Guarantee the credit facility disbursed to the defendants No.1 to 4. The acknowledgment of debt executed by

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the defendants Ex.A10 to A14 evidence that, the claim of the limitation is well within the limitation. The mortgage claimed to

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OA. No.959/2023

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have been made by the defendant is proved by Ex.A9 simple mortgage deed as well as the document deposited for the above purpose. The document produced by the applicant bank are not in dispute and found admissible. The statement of accounts also proves that, there is no capitalization of penal interest and in the amount as claimed in the OA.

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Taking note of the fact that, the OA clam is arrived at as calculated at agreed rate, that too penal interest and other charges. This Tribunal is of the view that, the pendalite and future interest is to be awarded at reduced interest, especially as the credit facility is availed for purely agriculture purpose. Taking note

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of the above, pendalite and future inters is calculated at 6%p.a. (simple)

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In the result, OA.No.959/2023 stands allowed,

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i) The applicant is allowed to recovery an aggregate sum of Rs.28,25,446.22/- (Rupees Twenty Eight Lakh Twenty Five Thousand Four Hundred Forty Six and Twenty Two Paisa only) with further interest of 6.00% p.a.(simple) from the date of filing OA till the realization from the defendants, after giving credit to all the amounts recovered and received during the pendency of the OA

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OA. No.959/2023

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and allowed the same to be recovered by proceeding against defendants jointly, severally and personally and also by proceeding against the schedule property. The schedule property

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to the OA be the schedule property to the Recovery Certificate.

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ii) If the sale proceeds are not found sufficient to cover

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the amount due and payable to the applicant bank, the defendants jointly, severally and personally and their other assets are liable for all such amounts due under the loan account.

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iii) The applicant bank is allowed cost of the proceeding

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which applicant to file cost memo within 7 days from the date of receipt of the order.

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iv) The Recovery Certificate to be drawn in terms of this order and transferred to Recovery for execution.

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v) Interim Application pending, if any, stands disposed of with this Final Order.

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Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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[Dictated to the Stenographer (PR), transcribed by her, corrected and signed and pronounced by me in the Open Court, this the 30^th Day of June 2026].

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Sd/(T. RAJESH) PRESIDING OFFICER

OA. No.959/2023

ANNEXURES

WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Sri. Manohara, Branch Manager of the applicant bank.

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Exhibits on the part of the Applicant:

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Sl. No.	Description of Documents	Exhibit Number
1	True copy of the Power of Attorney	A1
2	Resolution passed in the executive committee meeting of Board of Directors of defendant No.3 company held on 30.06.2014	A2
3	Guarantee deed dated 22.07.2014 executed collectively executed by defendant No.5 in favour of applicant bank	A3
4	Credit sanction order bearing Ref.No.CMRS/R400/3705/2014-15 dated 09.10.2014	A4
5	Term loan agreement dated 27.10.2014	A5
6	Declaration by borrower dated 27.10.2014	A6
7	Consent letter from the borrower/s dated 27.10.2014	A7
8	Letter dated 27.10.2014 hypothecation of vehicles and machineries/movable	A8
9	Hypothecation agreement dated 27.10.2014	A9
10	Simple mortgage deed dated 15.10.2014	A10
11	Letter or Acknowledgment of debt dated 23.05.2017	A11
12	Letter of acknowledgment of debt dated 12.01.2020 executed by defendant No.1 to 4	A12
13	Letter of acknowledgment of debt dated 23.05.2018	A13
14	Letter of acknowledgment of debt dated 01.11.2019 executed by defendant No.5	A14
15	Legal notice dated 28.06.2021 along with postal receipt	A15 (a to d)
16	legal notice dated 16.05.2022	A16 A16(a)

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OA. No.959/2023

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17	Legal notice dated postal receipts (5 tracking acknowledgments/re	18.07.2022 along with No’s) and online postal acknowledgment/s/postal turned postal covers	A17 A17 (a to g)
18	Certified true extrac account of the 0197001800049101 books of evidence	t of the said statement of term loan A/c.No. certified as per Bankers	A18

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(T. RAJESH) PRESIDING OFFICER

Karnataka Bank Limited v. Babanna

Case brief

What is this about?

What did the court decide?

Karnataka Bank Limited v. Babanna

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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Case details

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