Allowed

State Bank of India v. M/S Vastraa

DRT15 Jul 2026TA/1270/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal allowed an application by State Bank of India for recovery of over Rs.32 lakhs as an outstanding Cash Credit and Term Loan account was defaulted by M/s Vastraa and Ms. Jessy Shibu following ex-parte proceedings due to their absence.

What did the court decide?

Recovery of total sum of Rs.32,45,007.20p including interest, with liberty to sell hypothecated assets later if proceeds are insufficient and issue of Recovery Certificate.

State Bank of India versus M/S Vastraa — Contract and Commercial Disputes | DRT (2026)

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T.A. No. 1270 of 2023

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15.07.2026

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 15^th day of July, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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TRANSFERRED APPLICATION No.1270 of 2023

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(Originally filed before DRT- II, Chennai as OA No.144 of 2020 and thereafter transferred to this Tribunal and renumbered as TA No.1270 of 2023)

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State Bank of India, SME Centre, Teynampet, Situated at No.556, Jeevan Anand Building, Ground floor, Anna salai, Teynampet, Chennai- 600 018 Rep by its Manager, SARC Wing …Applicant

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-Vs-

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M/s Vastraa, Rep by its Proprietress, Ms. Jessy Shibu, No. 2/17, flat No.1B, Ground floor, Shyam Niwas Apartments, 2^nd Crescent park road, Gandhi Nagar, Adyar, Chennai- 600 020

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Ms. Jessy Shibu, W/o I. Shibu George, No.4/262, C5, Block 2, OMR Kandanchavadi, Perungudi, Chennai- 600 096 ….Defendants

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Counsels on record / appeared:

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Counsel for Applicant : M/s. Nattarajan Gopinath

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Defendants 1 and 2 were set ex-parte on 29.08.2023

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: - FINAL ORDER- :

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This Original Application is filed on 06.02.2020 by the applicant bank

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under Section 19 of Recovery of Debts and Bankruptcy Act, 1993

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T.A. No. 1270 of 2023

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(formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants 1 and 2, for recovery of a total sum of

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Rs.32,45,007.20p (Rupees Thirty Two Lakhs Forty Five Thousand and Seven and Twenty Paise Only) as follows:

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(i) A sum of Rs.15,69,669.22p due in respect of Cash credit Facility (A/c No.67161244888) repayable together with further interest @13.65% 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.16,75,337.98p due in respect of Term Loan (A/c No.38362536130) repayable together with further interest @13.65% p.a. with monthly rests from the date of Application till the date of realization in full;

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for sale of hypothecated assets morefully detailed in the Schedule to the OA and for costs of this OA.

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Originally, this Application was filed before DRT-II, Chennai, assigned OA No.144 of 2020, and thereafter in pursuance to the notification from Ministry of Finance, DFS dated 04.10.2022, OA No.144 of 2020 stood transferred to this Tribunal and renumbered as TA No.1270 of 2023.

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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

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T.A. No. 1270 of 2023

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jurisdiction of this Tribunal.

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It is the case of the applicant bank that the defendants herein are enjoying Cash Credit Limit facility with the applicant bank since 2011 onwards. The above facility was renewed time to time according to terms and conditions set out in the respective Sanction Letters. The defendants herein, in order to improve and expand their business activities, approached the applicant’s PNSB branch, R.A. Puram, Chennai- 600 028 on 24.03.2018 requesting for Cash Credit Hypothecation Limit facility for purpose of Working Capital Requirement.

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It is submitted that the applicant bank, after thorough scrutiny of the application of the defendants herein, sanctioned the Cash Credit Hypothecation Limit facility Rs.30,00,000/on 04.04.2018. The defendants herein on 28.03.2019 approached the applicant bank for renewal of the above limit facility. The applicant bank after strict analysis

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of the defendant’s request sanctioned a sum of Rs.15 lakhs as well as Term Loan facility for sum of Rs.15 lakhs, thus totalling to Rs.30,00,000/-.

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The applicant bank further submits that the defendants herein had agreed to pay interest @11.65% p.a. in respect of CCH limit facility at the bank’s ruling rate prevailing from time to time with monthly rests and also agreed to repay the Cash Credit facility on demand and the above facility is for 12 months and any be reviewed, renewed, enhanced or cancelled subject to performance of the defendant’s unit. With regard to the Term Loan is concerned, the defendant agreed to pay interest @11.65% p.a. at

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the bank’s ruling rate prevailing from time to time with monthly rests and also agreed to repay the amount borrowed in Equated Monthly Installments of Rs.34,631/- towards the repayment of principal and interest. The repayment of the advances are secured inter alia by hypothecation of assets, receivables, machineries and other related items which was purchased out of loan amount in favour of the applicant bank.

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The applicant bank submits that the defendant’s account was migrated to SME centre, Teynampet, Situated at No.556, Jeevan Anand Building, Ground floor, Anna salai, Teynampet, Chennai- 600 018 for best maintenance and recovery.

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The applicant bank submits that the defendants herein have executed the following documents in favour of the applicant bank thereby acknowledging the said loan amount availed from the applicant bank. The defendants undertook to repay the loan amount in time without committing any default. In consideration of applicant bank granting the aforesaid cash credit limit facility as well as term loan limit facility the defendant executed the following documents in favour of the applicant

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bank:

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i. Letter of arrangement dated 27.03.2018

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ii. Agreement of loan cum hypothecation dated 27.03.2018

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iii. Link letter dated 27.03.2018

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iv. Letter of arrangement dated 27.03.2019

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v. Agreement of loan-cum hypothecation dated 27.03.2019

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vi. Link letter dated 27.03.2019

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It is submitted that though the defendant agreed to repay the borrowed amount without any default, however subsequent to availing of loan, the defendants have failed to pay interest and principle due under the loan account. Consequently it has become Non Performing Asset (NPA) on 28.10.2019 in the books of the applicant bank.

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The applicant bank submits that the defendants have undertaken to repay the loan amount together with interest as per the terms and conditions of the sanction and loan agreement dated 27.03.2018 & 27.03.2019. The applicant bank had been repeatedly representation to the defendants to regularize the Cash Credit Hypothecation as well as Term Loan facility, but the defendants did not bother to regularize the loan account or to repay the loan outstanding amount. The defendants have been enjoying the cash credit hypothecation as facility from 2011 and term loan facility from 2019. The defendants have not shown significant transactions to the utmost satisfaction of the applicant bank.

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The applicant bank further submits that since the defendants was not operating the cash credit hypothecation as well as term loan facility account and allowed it to become NPA the applicant bank sent recall notice to the defendants to repay the cash credit hypothecation as well as term loan facility amount together with accumulated interest but not on some pretext or other the defendants postponed the repayment of the borrowed loan amount to the applicant bank. Hence, the present Original

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Application (OA) has been filed by the applicant bank for recovery of its dues from the defendants.

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After the filing of the OA, summons were sent to the Defendants 1 and 2 through Registered Post with Acknowledgment Due, which was returned with postal endorsement ‘No such person’ in respect of D-1, while summons to D-2 returned as ‘Left’. Applicant Bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 29.08.2023 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 and 2 were placed ex-parte on 29.08.2023.

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Heard the submissions of Applicant Bank and perused the records.

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To prove the case of the Applicant Bank, Mr. Jayapaul Murugan, Manager [SARC] 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-12.

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A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-12 evidence that the borrowal of credit facilities and execution of loan and security documents are true, in terms of averments made in Original Application as well as Proof Affidavit filed by applicant bank establishing its claim. Applicant bank filed Statement of Accounts duly certified under Bankers’ Book Evidence Act, evidencing the amount claimed against defendants.

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The defendants were set ex-parte on 29.08.2023, but till this day they did not take any action to set aside the ex-parte order and did not choose to contest the claim. Further, 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 oral or 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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With regard to the amount advanced, the interest applied the conduct and operations in the account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled for a final order on the following terms:

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: O R D E R :

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17. The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants 1 and 2, for recovery of a total sum of Rs.32,45,007.20p (Rupees Thirty Two Lakhs Forty Five Thousand and Seven and Twenty Paise Only) as follows:

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(b) In the event of failure of the Defendants to pay the aforesaid amount, the bank is at liberty to recover the amount by sale of the hypothecated assets morefully detailed in the OA schedule.

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(d) If the sale proceeds of the hypothecated assets are not sufficient to satisfy the dues as ordered above, the applicant bank is at liberty to sell the personal assets of the 2^nd Defendant (both movable and immovable) to recover the balance dues as required under law for which the 2^nd Defendant to disclose to the Tribunal particulars of other properties or assets owned by the 2^nd Defendant.

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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

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from the date of receipt of this final order.

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(g) Recovery Certificate shall be drawn up and issued to the

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

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(Dictated to Roshnee, transcribed by her, corrected, signed and pronounced by me on this the 15^th day of July, 2026)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Mr. Jayapaul Murugan, 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.	24.03.2018	Application form	A-1
2.	04.04.2018	Sanction proposal	A-2
3.	27.03.2018	Letter of arrangement	A-3
4.	27.03.2018	Agreement of loan cum hypothecation	A-4
5.	27.03.2018	Link letter	A-5
6.	28.03.2019	Letter of arrangement	A-6
7.	28.03.2019	Agreement of loan cum hypothecation	A-7
8.	28.03.2019	Link letter	A-8
9.	10.03.2019	Demand notice	A-9
10.	01.12.2019	Legal notice	A-10
11.	18.12.2019	Acknowledgment card	A-11
12.	30.08.2018	Statement of accounts	A-12

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Witness Examined for the Defendants: -Nil-

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List of Documents Exhibited for the Defendants: -Nil –

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:-SCHEDULE- A:

The hypothecation of stocks, receivables, machineries and related items are lying at the defendant’s address having unit at No.2/17. Flat no.1B, Ground floor, Shyam Niwas Apartments, 2^nd Crescent park road, Gandhi Nagar, Adyar, Chennai- 600 020 and having registered office at No.4/262, C5, Block 2, OMR Kandanchavadi, Perungudi, Chennai- 600 096

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above mentioned or in transit or wherever found.

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

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State Bank of India v. M/S Vastraa

Case brief

What is this about?

What did the court decide?

State Bank of India v. M/S Vastraa

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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Statutes considered

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