KOTAK MAHINDRA BANK LIMITED vs MOHD. IRSHAD on 9 May 2022

**JUDGMENT**

1. Applicant Bank has filed initially this Original Application namely OA No. 463 of 2015 before the Debt Recovery Tribunal, Lucknow on 29.05.2015 under section 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time), against the Defendants for recovery of its debt **Rs. 15,46,299.07 (Rs. fifteen lac forty six thousand two hundred ninety nine and paise seven only)** alongwith pendentite-lite and future interest @12.2% per annum from 29.05.2015 till the date of realization. Subsequently, the case record of the present has been transferred to this Tribunal in view of Notification of Govt. of India, Ministry of Finance dated 15.02.2017 thus the case has been re-numbered as TA 150 of 2018.

1. 2. The application has been duly registered and numbered as above.

2. 3. The brief facts of the case of the applicant bank as stated in the application are as under- The applicant, **M/s. Kotak Mahindra Bank Limited**, having its Registered Office at 36-38A, Nariman Bhavan, Mumbai-400021 and Interalia having its Branch/Regional Office at 17/38 The Mall, Meghdoot Building Kanpur The brief history of the case as gathered from the Original Application are that the defendant nos. 1 & 2, approached the applicant bank for grant of financial assistance. The applicant bank considered the request of the defendants and disbursed the loan of Rs. 22,50,000/- vide its sanction letter dated 13.03.2013. The said credit facility was repayable in 44 equated monthly instalments of Rs. 57,963/- + interest commencing from April, 2013.

In order to secure the said credit facility, the defendant No. 1 and 2 as principal borrowers executed and signed several security documents in favour of the Applicant Bank. The defendant no. 3 in capacity of guarantor executed and signed various security documents on 13.03.2013 in favour of the Applicant Bank.

The defendants availed the credit facility but could not adhere with the terms and conditions of the said advance and failed to deposit the monthly instalment regularly and punctually as agreed. The defendants also failed to comply with the terms and conditions mentioned in guarantee agreement and as such a huge amount have become due against the defendants. As a result the account became very sticky in operation and became non performing assets. However, the defendants signed and executed various loan documents and confirmed the debt.

1. 4. The applicant bank requested the defendants for adjusting the bank's dues but the defendants neither approached the bank nor paid the dues. Despite execution of balance confirmation letter, the defendants failed to comply with the terms of the said notice.

1. 5 Since, the defendants have failed and neglected in spite of several reminders to make payment of the dues recoverable to bank, hence this application has been filed by the bank.

1. 6. U/s 19 (4) of the Act & Rule 11 of the DRT [Procedure] Rules, 1993, copies of application & paper book were sent by this Tribunal to the defendants by registered/speed post on 28.07.2015 requiring the defendants to show-cause within 30 days of the service of summons/notices as to why relief prayed for, should not be granted. Thereafter the notice was published in the daily news paper, namely "Aaj, Prayagraj edition" dated 25.10.2021.

7. Despite the registered summons/notices and paper publication of notices in the daily news paper, the defendants have not appeared before this Tribunal to contest the case. The sufficient time has been given to the defendants to defend their case, but they failed to appear and to file WS, hence, the Tribunal has passed an order to proceed exparte against the defendant on 21.03.2022.

9. To prove its case, the applicant Bank has referred attested copies of various documents with its Original Application on 29.05.2015 before this Tribunal and the applicant bank has also filed Affidavit in Evidence of Shri Raghwendra Singh, Authorised Representative. The details of documents are as follows :- <table border="1"> <thead> <tr> <th>Sl.No</th> <th>Description of Documents(Attested copies)</th> <th>Date of Execution</th> <th>Amount [In lacs]</th> <th>Signature of executants</th> <th>Ex./ Ann. No.</th> </tr> </thead> <tbody> <tr> <td>1.</td> <td>Power Attorney</td> <td></td> <td></td> <td>Bank</td> <td>A-1</td> </tr> <tr> <td>2.</td> <td>Loan-cum-guarantee agreement</td> <td>13.03.2013</td> <td>22.50</td> <td>Def.No.1, 2 &amp; 3</td> <td>A-2</td> </tr> <tr> <td>3.</td> <td>Demand Promissory Note</td> <td>13.03.2013</td> <td>22.50</td> <td>Def. No. 1 and 2</td> <td>A-3</td> </tr> <tr> <td>4.</td> <td>Power of attorney</td> <td>13.03.2015</td> <td>22.50</td> <td>Def.No.1 &amp;2</td> <td>A-4</td> </tr> <tr> <td>5.</td> <td>Statement of accounts</td> <td></td> <td></td> <td>Bank</td> <td>A-5</td> </tr> </tbody> </table>

9. Opportunity of hearing has been fully given to both the parties, but despite several opportunities given to defendants, the defendants have not appeared to contest the case, hence, the exparte arguments of learned counsel for applicant bank were heard. Perused the case record and considered.

10. Ld. Counsel of applicant bank submitted that the defendants have taken the loan and utilized the same and also executed the various loan documents to secure the loan. Further submitted that the claim of the bank has been proved by documentary and oral evidence. Ld. Counsel for the applicant bank further submitted that the defendant has not deposited any amount, after filing of the OA.

11. It is further submitted by Ld. Counsel of applicant bank that there is no any stay granted by any Higher Court, in respect of the proceedings of the present OA and requested to issue recovery certificate, as claimed for, in OA.

12. It has been established that defendants are living in the state of Uttar Pradesh. Cause of action also arose in the State of Uttar Pradesh. The said claim on the date of filing of application exceeded Rs.10 lacs. The applicant bank is functioning within jurisdiction of this Tribunal. Therefore, this Tribunal has territorial as well as pecuniary jurisdiction to adjudicate upon the present application.

13. On the issue of Limitation, to prove it, the Applicant Bank has submitted that the Applicant Bank has declared the account as NPA on 31.03.2015, whereas the present application has been filed on 29.05.2015, Even, it is counted for the purpose of Limitation, then it is established that the applicant bank has filed the case within the limitation period from the date of declaring the account as NPA. As such, it is established that present application has been filed well within the period of limitation.

14. In the affidavit of Shri Raghwendra Singh, Authorised Representative of the applicant bank has stated that he is well acquainted with the facts of the case and has on verification of record, sworn in the affidavit in support of contents of application and the documents as evidence and established on oath the pleadings and documents of the applicant bank as stated above.

15. The documents as stated above reveal that the defendants have applied for the loan and the bank had sanctioned the loan and to secure the loan and for repayment of loan amount with interests etc., the defendants have executed various loan documents and Mortgaged the landed property, which strengthen the case of the applicant bank.

16. The applicant bank has also furnished statement of accounts as above, which is not only admissible but shall be taken as correct statement of accounts, more so since the entries in the statement of accounts has not been challenged.

17. Since, the defendants were proceeded exparte, contentions raised and documents produced by plaintiff remained unrebutted and the tribunal may act upon the affidavit of the applicant as per law. Defendant has neither denied the utilization of funds advanced by applicant bank nor have pointed out any specific error and discrepancy in the Statement of Accounts, which is kept in due course of business, evidence on affidavit, which has supported the claim of the applicant bank, established to have fully correct and believable. Provisions contained in Section 4 of the Banker's Books Evidence Act, 1891 apply to certified copies of entries in banker's book furnished along with the application filed under section 19[1] of the Act. Hence, the entries in the Statement of Account are also proved.

18. On consideration of the arguments and on perusal of the application, documents and affidavit, it is proved that the applicant bank has granted the loan facility, documents were executed by the defendants and facility was availed by the defendant as stated in the application.

19. Now, whether interest has been charged as per agreement and as per R.B.I. Guidelines?

20. The applicant bank has sought for recovery of following sum with costs till realization:

(i) **Rs. 15,46,299.07 (Rs. fifteen lac forty six thousand two hundred ninety nine and paise seven only)** along with pendentelite and future interest @12.2% per annum from 29.05.2015 till date of recovery/payment of entire dues. (Against defendant nos. 1 to 3).

**Total amounting to Rs. 15,46,299.07**

21. Learned Advocate appearing for the applicant bank submits that the applicant bank has charged interest in terms of the agreements and that interest has been charged at such rates, and capitalized at such periodical rests as are permitted by and do not run counter to the directives of Reserve Bank of India.

22. On consideration of the arguments and on perusal of the pleadings, documents and affidavit, it is proved that the applicant has charged interest against defendants in terms of documents and as per directives of R B I, but keeping the facts and circumstances of the case in mind, the defendants deserve some leniency in the rate of interest.

23. None of the defendants appeared before the Tribunal to contest the claim made by the applicant, therefore, it necessarily goes to establish that the claim made by the applicant bank is genuine and true. It is manifest that the defendants have not disputed the claim. Therefore, the claim referred to the Tribunal is recoverable till full and final realization of the claim.

24. In Indian Bank Vs. Blue Jagers Estates Limited and others [2010] 8 SCC 129, the Hon'ble Supreme Court of India has observed as under-

*"The Court cannot lose sight of the fact that the bank is a trustee of public fund. It cannot compromise the public interest for benefiting private individuals. Those who take loan and avail financial facilities from the bank are duty bound to repay the amount strictly in accordance with the terms of the contract. Any lapse in such matters has to be viewed seriously and the bank is not only entitled but duty bound to recover the amount by adopting all legally permissible methods. Parliament enacted the act because it was found that legal mechanism available till then was wholly insufficient for recovery of the outstanding dues of the banks and Financial Institutions."*

25. In my view, the case of the bank is well proved by evidence of the applicant bank. The applicant bank is entitled to receive its debt **Rs. 15,46,299.07 (Rs. fifteen lac forty six thousand two hundred ninety nine and paise seven only)** from the defendants jointly and severally alongwith pendentelite and future interest @10% simple from 20.05.2015 till realization. So the final order may be passed accordingly, to meet the ends of justice.

ORDER

In the result, the application of the applicant bank is allowed exparte and debt is determined with costs against the defendants and it is, hereby, ordered that the applicant bank is entitled to receive its debts from the defendants amounting to **Rs. 15,46,299.07 (Rs. fifteen lac forty six thousand two hundred ninety nine and paise seven only)** from the defendants jointly and severally alongwith pendentelite and future interest @10% simple from 29.05.2015 till realization of the entire sum due and recoverable with costs.

In case of failure to repay the aforementioned adjudicated amount within 30 days, same shall be recovered from the sale of the hypothecated vehicles in execution proceedings. The amount, if any, already recovered by sale of vehicles or otherwise shall be adjusted towards the debt and only the balance amount shall be recoverable. If the dues of Applicant Bank still remain unsatisfied, the same shall be recovered by attachment and sale of the personal movable and immovable assets of the Defendant nos. 1 to 3. The cost of litigation be also borne by the Defendant nos. 1 to 3.

It is made clear that the defendant nos 3 would also liable to pay the dues of the bank together with defendant nos. 1 and 2 alongwith interest thereon.

The Defendants are hereby restrained by means of injunction from depleting, transferring, encumbering, alienating, selling or otherwise dealing with vehicle or their other immovable/movable property/estates without first paying the above claim of Applicant Bank/Certificate Holder.

In case, any of the Defendants expire, the legal representatives shall be liable to pay in proportion to the inheritance.

Let a certificate of recovery be drawn up forthwith and put up for signatures in terms of provisions contained in Section 19(22) of the Act to be issued, on the basis of the order of the Tribunal to the Recovery Officer. The Recovery Officer shall realize the amount as per the certificate in the manner and mode prescribed under the Act from the defendant.

Parties are directed to appear before the Recovery Officer, DRT, Allahabad on 13.07.2022. The order be communicated accordingly.

Judgment signed, sealed, dated and pronounced in the open court on this 9^th Day of May, 2022.

Dictated & Corrected by me

[R. M. Kushawaha]

Presiding Officer

Debts Recovery Tribunal, Allahabad

[R. M. Kushawaha]

Presiding Officer

Debts Recovery Tribunal, Allahabad

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