Allowed

Indian Overseas Bank v. M/S Stejo Bright Steel Industries Rep by Its Proprietor Mr a Stephen Raj

DRT8 Jan 2026TA/766/2023

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an Original Application filed by M/s Indian Overseas Bank against two respondents for recovery of a total debt of Rs. 74,76,474/- comprising Term Loan and Cash Credit dues, with liberty to sell hypothecated assets.

What did the court decide?

Recovery of Rs. 74,76,474/- comprising Term Loan and Cash Credit dues with interest; liberty to sell hypothecated and personal assets.

Indian Overseas Bank versus M/S Stejo Bright Steel… — Contract and Commercial Disputes | DRT (2026)

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T.A. No. 766 of 2023

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08.01.2026

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 08^th day of January, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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TRANSFERRED APPLICATION No. 766 of 2023

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(Originally filed before DRT- II, Chennai as OA 239/2022 and thereafter transferred to this Tribunal and renumbered as TA No 766 of 2023)

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M/s. Indian Overseas Bank, Ashok Nagar Branch, No.9, Dr. Natesan Road, Chennai – 600083. Rep.by its Manager ….Applicant

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-Vs-

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M/s. Stejo Bright Steel Industries

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Rep. by its Proprietor Mr. A. Stephen Raj Shed -2/A (Eastern Half of Shed 2) Plot No. 64, Galaxy Road, Ponniamman Nagar

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Keelayanambakkam, Chennai-600095

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Mr. A. Stephen Raj

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S/o. Anandan No.8 – A Block, 80^th Street

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Ashok Nagar

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Chennai- 600 083 ….Defendants

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Counsels on record / appeared:

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Counsel for Applicant : Sh. K. Radhakrishnamurthy

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Defendants 1 and 2 were set ex-parte on 22.09.2023

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: - FINAL ORDER - :

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This Original Application is filed on 07.11.2023 by the applicant bank

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under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 (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 Rs.

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74,76,474/- (Rupees Seventy Four Lakhs Seventy Six Thousand

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T.A. No. 766 of 2023

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08.01.2026

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Four Hundred and Seventy Four only) as follows:

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(i) A sum of Rs.51,98,423/- due in respect of Term Loan (Account No.046303628000002) repayable together with further interest @ 11.50% p.a., with monthly rests together with penal interest @ 2% p.a., from the date of Application till the date of realization in full;

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(ii) A sum of Rs.22,78,051/- due in respect of Cash Credit Facility (Account No.046333000000025) repayable together with further interest @ 11.30% p.a., with monthly rests together with penal interest @ 2% p.a., from the date of Application till the date of realization in full;

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for sale of schedule mentioned hypothecated movable property and for costs of this OA.

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Originally, this Application was filed before DRT-II, Chennai, assigned OA No.239 of 2022, and thereafter in pursuance to the notification from Ministry of Finance, DFS dated 04.10.2022, OA No.239 of 2022 stood transferred to this Tribunal and renumbered as TA No.766 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 jurisdiction of this Tribunal.

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It is the case of the Applicant Bank that 1^st Defendant is a

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T.A. No. 766 of 2023

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08.01.2026

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Proprietorship concern represented by its Proprietor, 2^nd defendant herein. At the request of the 1^st defendant represented by 2^nd defendant by their Application dated 06.08.2018, the applicant bank had sanctioned a Term loan Limit against Hypothecation of Machineries of Rs.37,50,000/- to the First Defendant on 04.09.2018 under Stand Up India Scheme for purchase of machineries etc. The First Defendant availed the Term loan Limit of Rs.37,50,000/- on 05.09.2018 and executed the following documents on the same day in favour of applicant bank:

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a) Demand Promissory Note dated 05.09.2018 for Rs.37.50 Lakhs promising to repay the amount together with interest thereon at 10.50% per annum compounded monthly rest subject to Reserve Bank of India/Bank rates may be revised from time to time.

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b) Repayment letter

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c) Undertaking Letter Regarding Interest

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d) Letter of Hypothecation

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e) Agreement of Term loan and hypothecation.

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It is submitted by the Applicant Bank that at the request of the 1^st defendant represented by 2^nd defendant, the Applicant sanctioned a Cash Credit Limit against hypothecation of stocks and book dated of Rs.15,00,000/- to the First Defendant on 14.11.2018. The First Defendant availed the Cash Credit Limit of Rs.15,00,000/- on 15.11.2018 and executed the following documents on 15.11.2018:

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a) Demand Promissory Note dated 15.11.2018 for Rs.15 Lakhs promising to repay the amount together with interest thereon at

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T.A. No. 766 of 2023

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08.01.2026

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10.60% per annum compounded monthly rest subject to Reserve bank of India/Bank rates may be revised from time to time.

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b) Letter of Continuing security

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c) Undertaking Letter Regarding Interest

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d) Letter of Hypothecation

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e) Hypothecation of Books debts

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It is submitted by the applicant bank that subsequent to availing of loan, the operation of the account by the defendants was not satisfactory. In spite of several demands made to the defendants, they did not regularise the account. Consequently, the loan account was classified as NonPerforming Asset (NPA) on 30.09.2019 in accordance with RBI guidelines. The Applicant Bank made several Demands to the Defendants to repay the loan outstanding but there was no response and no repayment. Therefore the applicant had sent a Demand Notice dated 03.10.2019 under section 13(2) of the SARFAESI Act to the defendants, but no payment was forthcoming. However, the first defendant had executed a Revival letter dated 04.06.2021 wherein the first defendant represented by 2^nd defendant had acknowledging the liabilities. As defendants did not come forward to repay the dues, the present Original 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 unserved as ‘left’. Applicant Bank had caused paper publication of

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T.A. No. 766 of 2023

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08.01.2026

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the notice and filed proof thereof. When OA was taken up on 22.09.2023 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 and 2 were placed ex-parte on 22.09.2023.

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Heard the submissions of Applicant Bank and perused the

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record s.

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To prove the case of the Applicant Bank, Sh. Shiv Ram Jha, Senior 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-15 . As the Defendants remained ex-parte, the OA claim remains unchallenged. There is no contra evidence available on record to repudiate the claim of the Applicant Bank.

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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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The OA is allowed with costs,

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(a) The applicant bank is allowed to recover from the Defendants, for recovery of a total sum of Rs. 74,76,474/- (Rupees Seventy

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Four Lakhs Seventy Six Thousand Four Hundred and Seventy Four only) as follows:

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(i) A sum of Rs.51,98,423/- due in respect of Term Loan

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T.A. No. 766 of 2023

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08.01.2026

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(Account No.046303628000002) repayable together with further interest @ 11.50% p.a., with monthly rests together with penal interest @ 2% p.a., from the date of Application till the date of realization in full;

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(ii) A sum of Rs.22,78,051/- due in respect of Cash Credit Facility (Account No.046333000000025) repayable together with further interest @ 11.30% p.a., with monthly rests together with penal interest @ 2% p.a., from the date of Application till the date of realization in full along with costs of this application.

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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 schedule mentioned movable properties 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

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T.A. No. 766 of 2023

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08.01.2026

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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 Steno (Arti), transcribed by her, corrected, signed and pronounced by me on this the 08^th day of January, 2026)

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK :

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AW-1: Sh. Shiv Ram Jha, Senior Manager representing the Applicant Bank Exhibits on the part of the Applicant:

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Sl. No.	Description of Documents	Exhibit No.
1.	Application by Defendants dated 06.08.2018	A-1
2.	Sanction letter by Applicant Dated 04.09.2018	A-2
3.	Demand Promissory Note For Rs.37.5 lakhs by Defendants dated 05.09.2018	A-3

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T.A. No. 766 of 2023

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4.	Repayment letter by Defendants dated 05.09.2018	A-4
5.	Undertaking Letter Regarding Interest dated 05.09.2018	A-5
6.	Agreement of Term Loan and Hypothecation dated 05.09.2018	A-6
7.	Sanction letter by Applicant dated 14.11.2018	A-7
8.	Demand Promissory Note for Rs.15 lakhs by Defendants dated 15.11.2018	A-8
9.	Letter of Continuing Security dated 15.11.2018	A-9
10.	Undertaking Letter Regarding Interest dated 15.11.2018	A-10
11.	Letter of Hypothecation dated 15.11.2018	A-11
12.	Hypothecation of Book debts dated 15.11.2018	A-12
13.	13(2) notice by applicant dated 03.10.2019	A-13
14.	Revival Letter by Defendant dated 04.06.2021	A-14
15.	Certified Statement of Account	A-15

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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-:

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All the hypothecated stocks, i.e. goods like Reeling machine 75 mm capacity and other hypothecated item are lying at the First Defendant premises i.e.2/A (western half of shed cross 6A old no. 85 new no.64 Galaxy Road) Ponniamman Nagar Kilayanambakkam, Chennai-600095, or stored or to be stored or transit or wherever found.

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

Indian Overseas Bank v. M/S Stejo Bright Steel Industries Rep by Its Proprietor Mr a Stephen Raj

Case brief

What is this about?

What did the court decide?

Indian Overseas Bank v. M/S Stejo Bright Steel Industries Rep by Its Proprietor Mr a Stephen Raj

Case brief

What is this about?

What did the court decide?

What the court decided

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