BANK OF BARODA vs Unnikrishnan Kunnummal on 7 October 2017

1. Unnikrishnan Kunnummal,

Niramaruthur P.O, Tirur,

Malappuram, Kerala – 676109.

2. Rajesh M,

S/o Krishnankutty,

Mullathara House,

Niramaruthur P.O,

Tirur, Malappuram,

Kerala – 676109. …Defendants

This Transferred Application having been heard on 24.08.2017 in the presence of Advocates M/s K.J Chackochan, P.R Milton and Mohandas V.S for the applicant bank, and the defendants being exparte, and stood over to this day for consideration, the Tribunal delivered the following:- F I N A L O R D E R This is an Application filed by the applicant bank under S.19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 – for short ‘the Act’ - for recovery of the sum of ₹26,33,977.97 due under term loan account No.08470600011381 with interest thereon @9.65% per annum with monthly rests plus penal interest @2% per annum from the defendants jointly and severally and by sale of ‘A’ schedule immovable property.

2. The Transferred Application was originally filed on 18.05.2016 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 (Original Application) ‘OA 39/2016’. 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 39/2016 stood consigned to this Tribunal and the proceedings continued before this Tribunal in the newly registered number as (Transferred Application) TA 52/2017.

3. The summons sent to the 1st defendant in OA 39/2016 by registered post on 25.06.2016 was returned un-served with the postal endorsement ‘left India’, whereas similar summons sent to the 2nd defendant was not returned. However, fresh summons taken out to the defendants in TA 52/2017 by registered post on 07.03.2017 were returned un-served with the postal endorsement ‘left India’. Hence in terms of the provisions laid down under O.5 R.20(1-A) of the Code of Civil Procedure, 1908, substituted service of summons were taken out to the defendants in their last known correct address by way of publication in the Mathrubhumi daily dated 13.05.2017. But the defendants never appeared nor were they represented and thus they were declared exparte on 04.07.2017.

4. The Chief Manager of the applicant bank, as AW1 filed proof affidavit and got marked Exts.A1 to A14 in support of its case.

5. Although the defendants did not contest the TA and remained exparte, I have examined the question of maintainability and jurisdiction and I found that the TA is well maintainable and this Tribunal has jurisdiction to entertain the TA.

6. According to the applicant bank, the 1st defendant on 30.05.2013 availed a term loan (housing loan) of ₹25 lakhs for purchase of ‘A’ schedule immovable property on due execution of necessary security documents in its favour. The loan was to be repaid in 177 equated monthly instalments of ₹27,445/- each commencing from 30.09.2013. The repayment of the amounts due under the aforesaid loan was guaranteed personally by the 2nd defendant and secured by the equitable mortgage created by the 1st defendant over ‘A’ schedule immovable property.

7. The proof affidavit of AW1 along with Ext.A13 account relating to the term loan (housing loan) shows that the sum of ₹26,33,977.97 claimed as due under such account in the OA is inclusive of the sum of ₹3,358/- debited by way of penal interest under such account during the period from 01.01.2015 to 30.04.2016. It is well settled that penal interest cannot be capitalised and no interest can be charged on penal interest. If any authority is required we find the same in the decision of the Hon’ble Supreme Court in Central Bank of India v. Ravindra [reported in AIR 2001 SC 3095 : (2002) 1 SCC 367 : 2002 (1) KLT 743(SC)]. Therefore, the applicant bank is not entitled to claim interest on the aforesaid penal interest of ₹3,358/-.

8. In the above circumstances, the case of the applicant bank regarding recovery of the sum of ₹26,33,977.97 claimed as due under Ext.A13 certified copy of the statement of account relating to term loan No.08470600011381 as on 18.05.2016, the date of the TA with interest pendentelite and post final order interest on the sum of ₹26,30,619.97 from the defendants jointly and severally and by sale of ‘A’ schedule immovable property is proved by the uncontroverted averments in the proof affidavit of AW1 along with Exts.A1 to A14.

9. Having regard to the housing loan availed by the 1st defendant for purchase of a house, and the repayments made, and the interest and the penal interest charged, and the prevailing rate of interest for advances of and above ₹25 lakhs under the priority housing sector in the applicant bank, this Tribunal in exercise of its

discretionary power in granting interest as provided under the provisions of S.19(20) of the Act holds that the applicant bank is entitled to get interest pendente-lite and post final order interest @9% per annum.

10. The applicant bank, therefore, is entitled to get a final order on the following lines:- (a) In the result, the applicant bank is given a final order allowing it to recover the sum of ₹26,33,977.97 (Rupees twenty six lakhs thirty three thousand nine hundred seventy seven and paise ninety seven only) with interest on the sum of ₹26,30,619.97 (Rupees twenty six lakhs thirty thousand six hundred nineteen and paise ninety seven only) @9% per annum from 18.05.2016 till realisation and also its costs from the defendants jointly and severally and by sale of ‘A’ schedule immovable property.

(b) ‘A’ schedule to the TA shall be appended to this final order.

(c) The applicant bank shall file memo of costs within ten days from the date of this final order.

(d) A certificate of recovery shall be drawn up on the basis of this final order and be issued along with a copy of this final order to the Recovery Officer for recovery of the amount of debt specified under paragraph 10(a) above and for distribution of the proceeds from the sale of ‘A’ schedule immovable property in the order of priority as provided under sub-section (20AB) of S.19 of the Act.

11. Communicate a copy each of this final order and the recovery certificate to be issued as specified under paragraph 10(d) above to both parties as provided under sub- section (21)(i) of S.19 of the Act r/w R.16 of the Debts Recovery Tribunal (Procedure) Rules, 1993 as amended from time to time. [Dictated to my PA directly on the computer, corrected and pronounced by me in the open Tribunal on this the 07th day of October 2017]

[ N. SOMASUNDAAR ]

Appendix TA 52/2017

A P P E N D I X Witness for Applicant: AW1: K.J Santhosh, Chief Manager of the applicant bank.

Witness for Defendant(s): Nil Applicant’s Exhibits Ext.No. Date Particulars of documents A1 01.05.2013 Home loan application (No.TIRUR0000033) submitted by the 1st defendant to the applicant bank A2 30.05.2013 Letter of sanction issued by the applicant bank to the 1st defendant advising him sanction of home loan of ₹25 lakhs, which was countersigned by the defendants in token of having accepted the terms and conditions therein A3 30.05.2013 Loan agreement executed by the 1st defendant in favour of the applicant bank A4 30.05.2013 Letter of instalment with acceleration clause executed by the 1st defendant in favour of the applicant bank A5 30.05.2013 Letter of undertaking to create equitable mortgage in bank’s favour executed by the 1st defendant in favour of the applicant bank A6

30.05.2013 General form of guarantee executed by the 2nd defendant in favour of the applicant bank A7

25.08.2014 Declaration in the matter of mortgage by deposit of title deeds in respect of immovable executed by the 1st defendant in favour of the applicant bank A8

25.08.2014 Memorandum of entry prepared by the applicant bank in respect of ‘A’ schedule immovable property A9

26.08.2014 Letter of confirmation of mortgage executed by the 1st defendant in favour of the applicant bank A10

30.05.2013 Jenmom sale deed No.2349 of the SRO, Tirur A11

21.11.2014 Copy of notice issued under S.13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 by the authorised officer of the applicant bank to the defendants A12

04.04.2016 Copy of lawyer notice issued by the applicant bank to the defendants calling upon them to discharge the debt due to it within ten days from the date of receipt of such notice A13

Certified copy of the statement of account relating to term loan (home loan) No.08470600011381 A14

Statement showing the varying rate of interest applied under Ext.A13 account during different periods Defendant’s Exhibits – Nil

(PRESIDING OFFICER)

IN THE DEBTS RECOVERY TRIBUNAL - 1, ERNAKULAM

PRESENT: SRI N. SOMASUNDAAR BA BL

Dated the 07th October 2017

TA NO. 52 OF 2017

Between

Bank of Baroda, having its corporate office at Mumbai and branch among other places at Nazeem Commercial Complex, Tirur, Malappuram, Kerala – 676101. …Applicant

And

Unnikrishnan Kunnummal, S/o Kandu, Kunnummal House, Niramaruthur P.O, Tirur, Malappuram, Kerala – 676109 and another. …Defendants

F I N A L O R D E R

IN THE DEBTS RECOVERY TRIBUNAL-1 ERNAKULAM

D.R.C. No. 247 OF 2017 IN TRANSFERRED APPLICATION NO.52 OF 2017

(Originally presented on 18.05.2016 before the Debts Recovery Tribunal-2 Ernakulam and registered as OA 39/2016)

R E C O V E R Y C E R T I F IC A T E (bearing even date of final order dated 07.10.2017)

Between

having its corporate office at Mumbai

and branch among other places at

Nazeem Commercial Complex, Tirur,

Malappuram, Kerala-676101.

.....…Applicant/Certificate holder bank

And

1. Unnikrishnan Kunnummal, S/o Kandu, Kunnummal House, Niramaruthur P.O., Tirur, Malappuram, Kerala-676109.

2. Rajesh M., S/o Krishnankutty, Mullathara House, Niramaruthur P.O., Tirur, Malappuram, Kerala-676109. …………….Defendants/Certificate debtors

Whereas, the above titled Transferred Application under Section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act 1993 (hereinafter referred to as ‘the Act’, for short) having come up before me on 07th day of October, 2017 for final disposal and determination of the debt against the defendants/Certificate debtors.

2. It is hereby ordered and certified under the provisions of sub-section (22) of Section 19 of the Act for recovery of the sum of 26,33,977.97 (Rupees twenty six

lakhs thirty three thousand nine hundred seventy seven and paise ninety seven only) with interest on the sum of 26,30,619.97 (Rupees twenty six lakhs thirty thousand six hundred nineteen and paise ninety seven only) @9% per annum from 18.05.2016 till realisation and also its costs from the defendants/certificate debtors jointly and severally and by sale of ‘A’ schedule immovable property.

Given under my hand and the seal of this Tribunal on this the 17th day of November, 2017.

[ N. SOMASUNDAAR ]

SCHEDULE OF AMOUNT TO BE RECOVERED UNDER THE RECOVERY CERTIFICATE

Sl.No Item of amount to be recovered Amount(in )

(a) Amount determined to be recovered from the defendants/ certificate debtors jointly and severally and by sale of ‘A’ schedule immovable property. 26,33,977.97

(b) Interest @9% per annum from 18.05.2016 to 07.10.2017 (508 days) on 26,30,619.97 3,29,512.18

(c) Cost 80,464.00

Total amount to be recovered as on 07.10.2017 from the defendants/ certificate debtors jointly and severally and by sale of ‘A’ schedule immovable property. 30,43,954.15 (Rupees thirty lakhs fortythree thousand nine hundred fifty four and paise fifteen only)

DEBTS RECOVERY TRIBUNAL, ERNAKULAM

SCHEDULED TO RECOVERY CERTIFICATE

TA 52 OF 2017

Bank of Baroda Vs. Unnikrishnan Kunnummal DETAILS OF COSTS

Costs memo filed on 17.10.2017

Sl.No. Item of costs Claimed (in ) Allowed (in ) Remarks

Court fee 29,000.00 29,000.00

Advocate fee 29,000.00 29,000.00

DTP & Photostat 926.00 303.00 (Xerox charges)

Process fee 450.00 134.00 (receipt produced)

Paper publication 22,027.00 22,027.00

Clerkage 2,000.00

(not allowed) Total 83,403.00 80,464.00 (Rupees eighty thousand four hundred sixty four only)

Debts Recovery Tribunal-1, Ernakulam

TA No.52/2017

Final order dated 07.10.2017 and cost memo filed by the applicant bank are placed below for kind perusal. Accordingly, Recovery certificate has been typed and put up along with schedule of amount to be recovered under the recovery certificate, for kind approval and signature please.

Assistant Registrar

Registrar

Hon’ble Presiding Officer