PUNJAB NATIONAL BANK vs NCK Engineering and Contracting Services Pvt Ltd on 6 April 2026

O R D E R

1. This Miscellaneous Application has been filed by the applicant bank seeking to issue a Recovery Certificate for the entire amount claimed by the applicant in the OA, less the sum of Rs.6,00,000/- remitted on 24.02.2021, in the interest of justice.

2. The counsel for the petitioner bank has filed the present petition stating inter alia that the above Original Application has been filed on 13.11.2019 under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 (in short ‘the Act’) for recovery of the sum of Rs.55,37,306/- with future interest @13.25% per annum plus 2% penal interest with monthly rests from 11.11.2019 till realisation being the amount due under Cash Credit Account No.4272008700002121 and by sale of OA schedule property and with cost.

3. When the OA was taken up for hearing on 03.05.2021, the applicant bank filed a joint compromise petition IA No.698/2021 settling the matter for Rs.30,00,000/- (Rupees Thirty Lakhs only); and prayed for recording the compromise and disposing of the OA in terms of the compromise, and pass final order accordingly. In view of the compromise, the OA was disposed of on 03.05.2021 as per the compromise terms in IA No.698/2021.

4. As per the terms of the joint compromise, the defendants agreed to pay a sum of Rs.30,00,000/- to the applicant in two installments i.e. Rs.6 Lakhs had to be remitted on 24.02.2021 and the balance of Rs.24 Lakhs had to be deposited on or before 20.05.2021 and that in the event of failure to pay the amount as aforesaid, the defendants shall forfeit the benefits of compromise and they shall have no objection for issuance of Recovery Certificate for the entire amount claimed in the OA with interest and costs, less payments effected subsequent to the compromise, on filing of necessary application before the Tribunal intimating the instance of such default.

5. According to the petitioner bank, the defendants have remitted only a sum of Rs.6,00,000/- on 24.02.2021 as per the joint compromise and, therefore, they are entitled for a Recovery Certificate in terms of the default clause set out in the terms of the compromise. Therefore, this Tribunal holds that the applicant bank is entitled for a Recovery Certificate in terms of the default clause set out therein.

6. The applicant bank has charged Rs.3,06,226/- as penal interest on the cash credit account availed by the 1st defendant in terms of the agreement. It is well settled that penal interest cannot be capitalised and no interest can be charged on penal interest. The applicant bank, therefore, is not entitled to get any further interest on the aforesaid amount of penal interest, as laid down by the Hon'ble Supreme Court of India in Central Bank of India v. Ravindra [reported in AIR 2001 SC 3095].

7. In the light of the above, MA No.55/2026 stands allowed. The Registry is hereby directed to issue Recovery Certificate in terms of the joint compromise petition. In the result, the Original Application is allowed as per the following lines : “The defendants are directed to pay to the applicant bank, jointly and severally, a sum of Rs.55,37,306/- (Rupees Fifty Five Lakhs Thirty Seven Thousand Three Hundred Six only) due under the Cash Credit Account No.4272008700002121 with future interest on the sum of Rs.52,31,080/- (Rupees Fifty Two Lakhs Thirty One Hundred Eighty only) @13.25% per annum from 11.11.2019 till realisation less the sum of Rs.6,00,000/- (Rupees Six Lakhs only) credited on 24.02.2021.”

8. On failure to pay the above said debts to the Applicant Bank, the Applicant Bank is directed to bring the OA schedule property, for sale to realize its dues and its proportionate costs.

9. The Registry is directed to prepare DRC in terms of this final order. The Applicant Bank shall file memo of costs within 10 days from the date of this order. Registry is directed to communicate the copy of this order to both parties as provided in Rule 16 of the Debts Recovery Tribunal (Procedure) Rules, 1993, as amended in 2003.

Typed by PS, transcribed, corrected and pronounced by me in the open court this the 06th day of April, 2026.

(Su. WILLYAHM)

SCHEDULE OF PROPERTIES SCHEDULE – ‘A’

State

: Kerala District

: Malappuram

Sub District : Edakkara

Taluk

: Nilambur

Village

: Edakkara

Tenure

: Jenmom

Re. Sy. No. : 1186/2A

Extent (in cents) : 85 Cents

DESCRIPTION OF PROPERTY

All that pieces and parcels of land admeasuring 85 cents in Re. Sy. No.1186/2A of Edakkara Village, Nilambur Taluk, covered by Sale Deed No.4393/2004 of Edakkara SRO.

BOUNDARIES

East : River North : Property of Kunhipathu, Firoz & others and pathway West : Property of Sara South : Property of Salam Haji

(Su. WILLYAHM)