INDIAN OVERSEAS BANK vs Babu V on 6 February 2026

1. V.Babu,

S/o.Velayudhan,

Proprietor, M/s.Mahadeva Spinning Mills,

Chenavila, Anapad, Kollode P.O., Malayinkeezhu, Thiruvananthapuram – 695 571.

2. Udaya Kumari,

W/o.V.Babu, Chenavila, Anapad, Kollode P.O., Malayinkeezhu, Thiruvananthapuram – 695 571. …Defendants

This Original Application having been heard on 19.01.2026 in the presence of Advocate Ms.Arya Satheesh for the applicant bank and stood over to this day for consideration, the Tribunal delivered the following:

F I N A L O R D E R

This Original Application has been filed under S.19(1) of the Recovery of Debts and Bankruptcy Act, 1993 for recovery of a sum of Rs.30,44,636/- and Rs.94,77,137/- due under cash credit account and term loan account respectively together with future interest thereon @13.65% per annum with monthly rests from the defendants jointly and severally and by sale of ‘A’ and ‘B’ schedule properties to the OA. Facts of the case:

2. The applicant is a nationalized bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its central office at Chennai and one of its branches at Aralumoodu.

3. The defendants approached the applicant bank in October, 2010 seeking financial assistance towards working capital requirement of the 1st defendant’s proprietary concern M/s.Mahadeva Spinning Mills. Considering the request, the applicant bank sanctioned a cash credit limit of Rs.25 lakhs and term loan of Rs.70 lakhs to the 1st defendant. The 2nd defendant stood as guarantor for the loans. As security for the loan, the 1st defendant hypothecated the building, machinery etc. described in

‘A’ schedule and equitable mortgage was created over ‘B’ schedule properties by defendants 1 and 2 towards collateral security for the loans and executed letters dated 16.11.2010 confirming the deposit of title deeds with the applicant bank. The defendants availed the loans but defaulted in repayment which resulted in classification of the accounts as NPA on 31.12.2012. The recovery proceeding was initiated under the provision of SARFAESI Act and symbolic possession of the secured assets was taken on 23.02.2015. As there was no positive response from the side of the defendants to liquidate the liability, the applicant was constrained to file the OA claiming the following reliefs:

(i) To recover an aggregate sum of Rs.1,25,21,773/- together with pendente lite and post-decree interest thereon from the defendants jointly and severally and by sale of ‘A’ and ‘B’ schedule properties to the OA;

(ii) To recover the costs, charges and expenses from the defendants;

(iii) To issue Recovery Certificate to the Recovery Officer with a direction to recover the amount and pay it to the applicant bank.

4. The defendants filed written statement stating that they availed loans from the applicant bank and created mortgage over the schedule properties. It is averred that rate of interest charged in the loan accounts is very high. They paid an amount of Rs.7 lakhs in the account which has not been credited in the loan account. The applicant bank has no right to proceed against the mortgaged properties and prayed to dismiss the OA with costs. Proof Affidavit:

5. In order to establish the claim on behalf of the applicant bank, one Mr.Sajju V.P., Branch Manager has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A22. The availing of the loans and creation of hypothecation and mortgage charge over the schedule properties are well established from the documents placed by the applicant bank.

6. The defendants filed counter proof affidavit narrating the same facts as stated in their written statement and claimed that the repayment of the loans was prompt and regular until 2012 which is evident from the payment of Rs.28 lakhs. The defendants have approached the Hon'ble High Court of Kerala challenging the securitisation measures and thereafter they paid an amount of Rs.7 lakhs in the account and such payment is not reflected in the account statement produced by the applicant bank. Their contentions may be taken into consideration for deciding the case on merits.

7. The defendants remained absent from the proceeding from 02.09.2025 and none appeared to address argument in this case. They have also failed to substantiate their claim advanced in this case. Heard arguments advanced by the learned counsel for the applicant bank.

8. The sole question arises for consideration is whether the applicant is entitled to get the relief as claimed in the OA?

9. Admittedly, the defendants availed the subject loans from the applicant bank and created equitable mortgage over the schedule properties. The remittances made by the defendants are seen credited in the loan accounts. From the judgement dated 17.02.2017 passed by the Hon'ble High Court of Kerala in W.P.(C) No.4906/2017, it could be seen that the defendants approached the applicant bank and put forward a proposal for one-time settlement for Rs.1.10 crores and they agreed to remit Rs.7 lakhs on 17.02.2017, Rs.26 lakhs within two weeks and the balance amount by 31.03.2017. According to the applicant bank, pursuant to the aforesaid judgement, the defendants have remitted only a sum of Rs.7 lakhs in the cash credit account on 18.02.2017 which was duly reflected in the account and they failed to make payment of the remaining amount in terms of the OTS.

10. The documents marked as Exts.A2 to A10 would establish the loans availed by the 1st defendant and the guarantee given by the 2nd defendant. The title deeds pertaining to ‘B’ schedule properties marked as Exts.A11, A12, A12(a) and A13 were deposited with the applicant bank to secure such transactions. As on 09.09.2015, an aggregate sum of Rs.1,25,21,773/- is outstanding in the loan accounts which is established by the applicant bank by producing account statements marked as Exts.A20 and A21. In such backdrop, the applicant bank is entitled to recover the amount claimed in this case after excluding the amounts recovered by the bank subsequent to filing of this case.

11. Pending the OA, the applicant bank filed IA No.2505/2024 praying to return the title deeds marked as Ext.A11 to A13 in respect of the mortgaged properties described as item Nos.1 to 3 in ‘B’ schedule to the OA. In the affidavit filed along with the petition, it is averred that the mortgaged properties were sold as per the provisions of the SARFAESI Act on 04.06.2024 and one Sreejith V.R. was the highest bidder who remitted the entire bid amount of Rs.1,01,01,000/- for item No.1 property and Rs.10,10,000/- for item No.2 property and sale certificate was issued to him on 24.06.2024; and the aforesaid amounts were credited to the loan account on 10.06.2024. Since it is affirmed by the applicant bank that there was no challenge to the sale proceeding, Exts.A11 to A13 title deeds were ordered to be returned to the applicant bank which were received by them on 19.07.2024.

12. It is pertinent to mention here that though the applicant bank has claimed in IA No.2505/2024 that item Nos.1 to 3 properties in ‘B’ schedule were sold under the SARFAESI Act, nothing is stated about the sale price of item No.3 property. If the said property is not sold, applicant bank is entitled to recover the outstanding loan amount by sale of such property also.

13. In paragraph 18 of the proof affidavit filed by the applicant bank, it is averred that the applicant has charged a sum of Rs.1,46,833/- and Rs.12,794/- by way of penal interest in the cash credit account and term loan account respectively. It is well settled that penal interest cannot be capitalized and no interest can be charged on penal interest and hence the applicant bank is not entitled to get any pendente lite and post-decree interest on the aforesaid penal interest of Rs.1,46,833/- and Rs.12,794/- charged in the loan accounts.

14. According to the applicant bank, subsequent to filing of the OA, the following amounts were recovered by them:

Date Cash credit A/c Term loan A/c 18.02.2017 Rs.7,00,000/- … 10.06.2024 Rs.10,10,000/- Rs.1,01,01,000/-

15. Considering the amount advanced, interest and penal interest applied and substantial recovery effected by sale of the secured assets, I am of the view that the applicant bank is entitled to get pendente lite and post decree interest @10% per annum on the sum of Rs.28,97,803/- (i.e., after excluding the penal interest of Rs.1,46,833/- from the OA claim amount of Rs.30,44,636/-) in the cash credit account and @10% per annum on the sum of Rs.94,64,343/- (i.e., after excluding the penal interest of Rs.12,794/- from the OA claim amount of Rs.94,77,137/-) in the term loan account, which is reasonable in the facts and circumstances of the case.

16. The applicant bank, therefore, is entitled to get a final order on the following lines: In the result, the applicant bank is given a final order allowing it to recover:

(i) the sum of Rs.30,44,636/- (Rupees thirty lakhs forty four thousand six hundred and thirty six only) due under the cash credit account together with pendente lite and post-decree interest on the sum of

Rs.28,97,803/- (Rupees twenty eight lakhs ninety seven thousand eight hundred and three only) @10% per annum from 28.09.2015 till realization, less the amount recovered by the applicant bank as stated in paragraph No.14 of the final order, from the defendants jointly and severally and by sale of ‘A’ schedule properties, if available and sale of item no.3 of ‘B’ schedule properties, if not sold, during pendency of the OA;

(ii) the sum of Rs.94,77,137/- (Rupees ninety four lakhs seventy seven thousand one hundred and thirty seven only) due under the term loan account together with pendente lite and post-decree interest on the sum of Rs.94,64,343/- (Rupees ninety four lakhs sixty four thousand three hundred and forty three only) @10% per annum from 28.09.2015 till realization, less the amount recovered by the applicant bank as stated in paragraph No.14 of the final order, from the defendants jointly and severally and by sale of ‘A’ schedule properties, if available and sale of item no.3 of ‘B’ schedule properties, if not sold, during pendency of the OA; and

(iii) costs and expenses borne by it for realization of the loans from the defendants.

17. ‘A’ schedule and item No.3 in ‘B’ schedule to the OA shall be appended to this final order.

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

19. Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

20. Communicate copy of this order to both parties as provided in R.16 r/w R.2(c) of the Debts Recovery Tribunal (Procedure) Rules, 1993. (Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 6th day of February, 2026)

[SOVAN KUMAR DASH] PRESIDING OFFICER

A P P E N D I X Witness for Applicant: AW1: Sri.Sajju V.P., Branch Manager of the applicant bank.

Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 … Credit sanction advice issued by the applicant bank. A2 16.11.2010 Demand promissory note for Rs.25 lakhs executed by the 1st defendant. A3 16.11.2010 Letter of hypothecation executed by the 1st defendant in favour of the applicant bank. A4 16.11.2010 Letter of hypothecation of machinery executed by the 1st defendant. A5 16.11.2010 Demand promissory note for Rs.70 lakhs executed by the 1st defendant. A6 16.11.2010 Term loan agreement executed by the 1st defendant. A7 30.06.2011 Letter of request executed by the defendants. A8 16.11.2010 Letter of hypothecation executed by the 1st defendant. A9 16.11.2010 Letter of undertaking executed by the 1st defendant. A10 16.11.2010 Letter of guarantee executed by the 2nd defendant in favour of the applicant bank. A11 18.09.2010 Sale deed No.4414/2010 of Malayinkeezhu SRO. A12 18.02.2010 Sale deed No.783/2010 of Malayinkeezhu SRO. A12(a) 18.02.2010 Sale deed No.1817/2010 of Malayinkeezhu SRO. A13 18.02.2010 Sale deed No.784/2010 of Malayinkeezhu SRO. [Exts.A11 to A13 were returned to the applicant bank on 19.07.2024 as per order dated 12.07.2024 in IA No.2505/2024]

A14 16.11.2010 Letter executed by the 1st defendant confirming the deposit of Ext.A11 title deed with the applicant bank. A15 16.11.2010 Letter executed by the 1st defendant confirming the deposit of Ext.A12 title deed with the applicant bank. A16 16.11.2010 Letter executed by the 2nd defendant confirming the deposit of Ext.A13 title deed with the applicant bank. A17 30.06.2011 Letter executed by the 1st defendant in favour of the applicant bank. A18 28.09.2013 Revival letter executed by the 1st defendant acknowledging the liability under the loan accounts. A19 08.10.2014 Copy of demand notice under S.13(2) of the SARFAESI Act issued to the defendants. A19(a) 29.10.2014 Acknowledgement cards signed by the defendants. A20 … Certified copy of the statement of account relating to the cash credit facility. A21 … Certified copy of the statement of account relating to the term loan. A22 … Certified copy of the statement of accounts showing the remittances made in cash credit and term loan accounts.

Defendants’ Exhibits – Nil

PRESIDING OFFICER

‘A’ SCHEDULE

(a) Building and machinery situated in the premises of the 1st defendant at Anapad, Kollode P.O.

(b) Stock of cotton and yarn in the premises of the 1st defendant at Anapa, Kollode P.O.

‘B’ SCHEDULE

PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 6th February, 2026

TA No.991/2016 (OA NO.455/2015)

Between

Indian Overseas Bank, Aralumoodu Branch, MNC 1/28A, Sulaika Complex, Vazhimukku Junction, Balaramapuram, Aralumoodu P.O., Thiruvananthapuram. …Applicant

And

V.Babu, S/o.Velayudhan, Proprietor, M/s.Mahadeva Spinning Mills,

Chenavila, Anapad, Kollode P.O., Malayinkeezhu, Thiruvananthapuram – 695 571 & another.

…Defendants

F I N A L O R D E R