AXIS BANK vs Fathimath Shamshad on 17 December 2025

O R D E R

1. This transferred application has been filed on 06.10.2016 under Section 19 of the RDDBFI Act (now amended as the Recovery of Debts and Bankruptcy Act, 1993) by the Applicant Bank to recover from the defendants, jointly and severally, a sum of Rs.36,48,008.87 due under the Agricultural Production Credit Facility alongwith unapplied interest and other contractual charges @ 10.95% per annum and penal interest @6% per annum and by sale of OA Schedule properties and with costs.

2. The TA was originally filed on 06.10.2016 before the Debts Recovery Tribunal - 2, Ernakulam which was then having jurisdiction over the State of Kerala except the districts of Ernakulam and Idukki with effect from 09.05.2016 as per notification published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) dated 04.05.2016 vide S.O 1641(E) dated 02.05.2016, and was registered as ‘OA 269/2016’. In view of the amendment in area of jurisdiction in the aforesaid principal notification made by the Central Government vide notification published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) dated 25.01.2017 vide S.O 253(E) dated 25.01.2017, OA 269/2016 stood transmitted to this Tribunal and the proceedings continued before this Tribunal in the newly registered number as TA 3/2017.

3. The brief averments of the application filed by the Applicant Bank are as follows:- The 1st defendant – prime borrower and defendants 2 to 4 as co- borrowers approached the applicant bank for availing certain credit facility for meeting the working capital requirements and post- harvest/consumption/farm repair maintenance expenses and the applicant bank sanctioned Agricultural Production Credit Facility under the CCAGR Scheme to the tune of Rs.30,00,000/- on 04.09.2014 upon execution of necessary security documents. As primary security, the defendants hypothecated all standing and future crops more specifically described in Schedule ‘A’ to the OA and executed hypothecation agreement dated 04.09.2014. Towards collateral security, the defendants 1, 3 & 4 created equitable mortgage over their property more particularly described in Schedule ‘B’ to the OA and executed record of mortgage by deposit of title deeds dated 04.09.2014. The defendants failed and neglected to operate the account in accordance with the agreed terms and conditions and thus the loan was classified as NPA on 05.03.2016. Thereafter, the applicant bank issued a recall notice dated 28.04.2016 to the defendants demanding to clear the outstanding loan amount. Since the amount due to the applicant has not been paid by the defendants, the applicant bank filed this OA for recovery of the amounts due to it.

4. Defendants 1 & 2 entered appearance through their counsel and filed their written statement. The brief averments of the written statement filed by the defendants are as follows:-

The signatory to the TA is not competent to institute the TA. No amount as said or part thereof is due to the applicant bank. The statement of account produced alongwith the TA is not a true statement of accounts. The substantial amounts paid in the loan account is not reflected in the respective statement. These defendants are poor and illiterate agriculturist and the bank took advantage of their poverty and illiteracy and coerced them to sign the documents. The applicant bank is not legally entitled to recover the alleged arrears by selling the hypothecated assets or property scheduled in the TA and the bank is not entitled to any reliefs as prayed for in the TA. Hence, the OA maybe dismissed against the defendants.

5. In spite of granting sufficient time, Vakalath and written statement for the Defendants 3 & 4 not filed. Subsequently, the defendants 3 & 4 were set exparte on 07.09.2018.

6. The Applicant Bank, in order to prove its claim, has filed Proof Affidavit of one Mr. Rahul Mathew, who is the Legal Manager of the Applicant Bank and marked the documents as Exhs.A1 to A11, in support of its claim in the OA.

7. Learned Counsel for the applicant bank contended that the defendants availed the credit facility and that since the defendants committed default in repayment of the outstanding loan amounts, the applicant bank issued recall notice dated 28.04.2016 to the defendants and that since the defendants failed to settle the amount, this TA has been filed.

8. The Legal Manager by name Mr. Rahul Mathew, of the applicant bank has averred in his proof affidavit with regard to availment of Agricultural Production Credit facility by the defendants upon execution of the documents viz. Demand Promissory Note dated 04.09.2014 Exh.A2, Demand Promissory Note Delivery Letter cum Waiver letter dated 04.09.2014 Exh.A3, Loan cum Hypothecation Agreement dated 04.09.2014 Exh.A4, entry record of mortgage by deposit of title deeds dated 04.09.2014 Exhs.A5, A5(a) & A5(b), Undertaking dated 04.09.2014 Exh.A6, Sanction Letter dated 04.09.2014 Exh.A7 and declaration (negative lien) dated 04.09.2014 Exh.A8.

9. The defendants 1 & 2 in their written statement have contended that the applicant bank coerced them to sign the documents. The applicant bank has produced Exhs.A1 to A8 which are documents pertaining to the loan availed by the defendants. A perusal of the same would show that the defendants executed these agreements. Hence, the defendants having signed above said documents are not entitled to raise the unfounded plea that the signatures were obtained coercively by the applicant bank.

10. Except contending in a vague fashion that no amount is due to the applicant bank and that the statement of account is incorrect and that the substantial amounts paid in the loan account is not reflected, the defendants have not specifically disputed the correctness of any of the entries under the statement of account.

11. The applicant bank has charged Rs.14,471.49 as penal interest on the Agricultural Production Credit facility account availed by defendants in terms of the agreements. 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].

12. In the above circumstances, the case of the applicant bank regarding recovery of the sum of Rs.36,48,008.87 claimed as due under Exh.A10 certified copy of the statement of account relating to Agricultural Production

Credit facility with interest pendentelite and post final order interest on the sum of Rs.36,33,537.38 from the defendants, jointly and severally, and by sale of the TA schedule properties is proved by the uncontroverted averments in the proof affidavit of AW1 along with Exts.A1 to A11.

13. Even though the applicant bank has not sought for any future interest on the TA claim amount, the loan granted to the defendants being agricultural loan and by virtue of Section 19(20) of the Recovery of Debts and Bankruptcy Act, 1993, this Tribunal is of the view that the applicant bank is entitled to get interest pendente lite and post final order interest @10.95% per annum from the date of filing of the TA.

14. In the result, the Original Application is allowed and the defendants 1 to 4 are directed to pay to the applicant bank, jointly and severally, as per the following lines:- “A sum of Rs.36,48,008.87 (Rupees Thirty Six Lakhs Forty Eight Thousand Eight and Paise Eighty Seven only) due under the Agricultural Production Credit facility account with further interest thereon on the sum of Rs.36,33,537.38 (Rupees Thirty Six Lakhs Thirty Three Thousand Five Hundred Thirty Seven and Paise Thirty Eight only) @ 10.95% per annum from 06.10.2016 till the date of realisation.”

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

16. 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 17th December, 2025. (Su. WILLYAHM)

‘A’ - SCHEDULE Hypothecation of standing and future crops and their produce in 19.08 Acres comprising in 16.40 Acres of owned and 2.6 Acres of leased lands located at Panathadi Village and Kalanadu Village of Vellarikundu Taluk, Kasargode District was offered by the defendants as primary security for the loan. ‘B’ - SCHEDULE Property No.1 (Covered by Registered Sale Deed No.1139/2011 Hosdurg SRO, owned by 1st defendant)

District

- Kasargode

Sub District

- Hosdurg

Taluk

- Hosdurg

Village

- Balla

Re-Sy. No.

- 60/4 pt

Total Extent

- 4.05 Ares Description Property having a total extent of 4.05 Ares of land comprised in Sy. No.60/4 pt in Bella village, Hosdurg Taluk, Kasargode District with all improvements thereto. Boundaries East

: Property sold to Abdul Khader South

: Property belonging to Naseema

West

: Municipality Road

North

: Property belonging to Shajahan and other

Property No.2 (Covered by Registered Sale Deed No.1138/2011 of Hosdurg SRO, owned by 3rd defendant)

District

- Kasargode

Sub District

- Hosdurg

Taluk

- Hosdurg

Village

- Balla

Re-Sy. No.

- 60/4 pt

Total Extent

- 6.27 Ares Description Property having a total extent of 6.27 Ares of land comprised in Sy. No.60/4 of Bella village, Hosdurg Taluk, Kasargode District with all improvements thereto. Boundaries East

: Property belonging to Beefathima South

: Property belonging to Naseema

West

: Property sold to Abdul Khader Beeran

North

: Plot of Shajahan and others Property No.3 (Covered by Registered Sale Deed No.1137/2011 of Hosdurg SRO, owned by 4th defendant)

District

- Kasargode

Sub District

- Hosdurg

Taluk

- Hosdurg

Village

- Balla

Re-Sy. No.

- 60/4 pt

Total Extent

- 4.86 Ares

Description Property having a total extent of 4.86 Ares of land comprised in Sy. No.60/4 pt, in Bella village, Hosdurg Taluk, Kasargode District with all improvements thereto. Boundaries East

: Property sold to Abdul Khader North

: Property belonging to Naseema

West

: Property sold to Fathimath Shamshad

South

: Property belonging to Abdul Khader Beeran and others (Su. WILLYAHM)

LIST OF DOCUMENTS FILED BY THE APPLICANT BANK

Sl. No. Date Description of document Exhibits

15.07.2014 Application form for credit facility. Ex.A-1

04.09.2014 Joint & several Demand promissory note executed by defendants in favour of the applicant bank Ex.A-2

04.09.2014 Demand promissory note Delivery letter- cum-waiver letter executed by defendants in favour of the applicant bank Ex.A-3

04.09.2014 Loan cum hypothecation agreement executed by defendants in favour of the applicant bank Ex.A-4

04.09.2014 Record of mortgage by deposit of title deeds executed by defendants 1, 3 & 4 in favour of the applicant bank Ex.A-5

04.09.2014 Record of mortgage by deposit of title deeds executed by defendants 1, 3 & 4 in favour of the applicant bank Ex.A-5(a)

04.09.2014 Record of mortgage by deposit of title deeds executed by defendants 1, 3 & 4 in favour of the applicant bank Ex.A-5(b)

04.09.2014 Undertaking executed by defendants in favour of the applicant bank Ex.A-6

04.09.2014 Undertaking regarding the repayment responsibility executed by defendants in favour of the applicant bank Ex.A-7

04.09.2014 Sanction letter issued by the applicant bank Ex.A-8

28.04.2016 Recall notice issued to the defendants Ex.A-9

---- Statement of account pertaining to the loan account Ex.A-10

05.01.2012 Special power of attorney executed by the Applicant Bank in favour of Mr. Paul Ben, the Senior Manager. Ex.A-11

(Su. WILLYAHM)