BANK OF BARODA vs SMITHY JOHNSON on 20 April 2026

1. Smithy Johnson,

W/o.Johnson,

Prop. M/s.AICT,

Thekkemuriyil House,

Perumbaikadu, Parampuzha,

Kottayam – 686 028.

2. Johnson T.J.,

Thekkemuriyil House,

Perumbaikadu, Parampuzha,

Kottayam – 686 028.

3. George Mathew,

Pulickaprambil Building,

Chengalam S.P.O.,

Kottayam – 686 022.

…Defendants

This Original Application having been heard on 25.03.2026 in the presence of Advocate Ms.Annie M.Abraham 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.25,95,523/- and Rs.1,21,051/- due under term loan account and overdraft account respectively, totaling to Rs.27,16,574/- together with future interest and costs from the defendants jointly and severally and by sale of ‘A’ schedule property. Facts of the case:

2. The applicant is a banking company constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its head office at Baroda and one of its branches at Kottayam.

3. The 1st defendant, who is the sole proprietrix of M/s.AICT, approached the applicant bank for financial assistance for running a Fire and Safety Institute. Considering her request, applicant bank sanctioned a term loan of Rs.20 lakhs on 27.05.2008 which was availed by her after executing necessary security documents. The defendants 2 and 3 stood as guarantors for the loan. Towards collateral security for the term loan, the 3rd defendant created mortgage over ‘A’ schedule property to the OA

and executed memorandum dated 27.05.2008 confirming the deposit of title deeds with the applicant bank. Thereafter, at the request of the 1st defendant, applicant bank sanctioned an overdraft limit of Rs.1 lakh as per sanction letter dated 10.09.2008. The defendants 2 and 3 executed guarantee agreement dated 10.09.2008 guaranteeing due repayment of the outstanding loan amount. The 3rd defendant extended the mortgage already created over the subject matter property to secure the overdraft facility. Due to default in repayment, the accounts were classified as NPA. Despite demand notice under S.13(2) of the SARFAESI Act was issued to the defendants demanding repayment of the outstanding dues, they did to clear the liability. In such premises, the applicant was constrained to file the OA claiming the following reliefs:

(i) To recover an aggregate sum of Rs.27,16,574/- together with pendente lite and post-decree interest thereon from the defendants jointly and severally and by sale of the mortgaged property;

(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 entered appearance and filed written statement claiming that the applicant had recovered the amount by selling the subject matter property and hence the OA may be dismissed. They have not filed any counter proof affidavit nor adduced any documentary evidence to substantiate their claim and remained absent from the proceeding. Hence the defendants were set exparte on 01.10.2015. Proof Affidavit:

5. To establish the claim on behalf of the applicant bank, one Mr.Thomas K.P., Senior Manager of the bank has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A39. The proof affidavit filed by AW1 and the documents produced in this case are not challenged by the defendants. The availing of the loans is well established from the documents placed by the applicant bank. An aggregate sum of Rs.27,16,574/- is outstanding in the loan accounts as on 30.04.2011, which is clearly established from the account statements marked as Ext.A39.

6. It is averred by the applicant bank in paragraph 11 of the proof affidavit that the mortgaged property was sold through e-auction held on 29.09.2011 and recovered only an amount of Rs.7 lakhs and the bank has the right to realise the balance amount together with interest from the defendants and their assets.

7. The account statement marked as Ext.A39 would show that the applicant bank has charged a sum of Rs.4,386/- by way of penal interest in the term loan account. 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 amount charged in the loan account.

8. Considering the amount advanced, interest and penal interest applied, repayments effected and default committed, 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.27,12,188/- (i.e., after excluding the penal interest of Rs.4,386/- from the OA claim amount of Rs.27,16,574/-), which is reasonable in the facts and circumstances of the case.

9. 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) an aggregate sum of Rs.27,16,574/- (Rupees twenty seven lakhs sixteen thousand five hundred and seventy four only) due under the term loan account and overdraft account, less the sum of Rs.7,00,000/- (Rupees seven lakhs only) recovered by the applicant bank by sale of the secured asset on 29.09.2011, from the defendants jointly and severally;

(ii) pendente lite and post-decree interest @10% per annum on the sum of Rs.27,12,188/- (Rupees twenty seven lakhs twelve thousand one hundred and eighty eight only) from 23.05.2011 till realization from the defendants jointly and severally; and

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

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

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

12. 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 20th day of April, 2026)

[SOVAN KUMAR DASH] PRESIDING OFFICER

A P P E N D I X Witness for Applicant: AW1: Sri.Thomas K.P., Senior Manager of the applicant bank. Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 27.05.2008 Copy of sanction letter issued by the applicant bank sanctioning term loan of Rs.20 lakhs to the proprietary concern of the 1st defendant. A2 27.05.2008 Demand promissory note for Rs.20 lakhs executed by the 1st defendant. A3 27.05.2008 Letter of installment with acceleration clause executed by the 1st defendant. A4 27.05.2008 Letter of proprietorship executed by the 1st defendant. A5 27.05.2008 Composite hypothecation agreement executed by the 1st defendant. A6

27.05.2008 Hypothecation agreement executed by the 1st defendant. A7

27.05.2008 Instrument of hypothecation of goods executed by the 1st defendant. A8

27.05.2008 Declaration-cum-undertaking cum authority executed by the defendants. A9

27.05.2008 Agreement of guarantee executed by defendants 2 and 3 in favour of the applicant bank. A10 27.05.2008 Memorandum of deposit of title deeds executed by the 3rd defendant. A11 27.05.2008 Declaration executed by the 3rd defendant. A12 27.05.2008 Letter of undertaking executed by the 3rd defendant. A13 27.05.2008 Annexure showing the attendance of the defendants at the bank while creating the mortgage.

A14 28.05.2008 Letter of confirmation of equitable mortgage executed by the 3rd defendant. A15 10.09.2008 Sanction letter issued by the applicant bank sanctioning overdraft limit of Rs.1 lakh to the proprietary concern of the 1st defendant. A16 10.09.2008 Demand promissory note for Rs.1 lakh executed by the 1st defendant. A17 10.09.2008 Letter of continuing security executed by the 1st defendant. A18 10.09.2008 Letter of sole proprietorship executed by the 1st defendant. A19 10.09.2008 Declaration-cum-undertaking cum authority executed by the defendants. A20 10.09.2008 Agreement of guarantee executed by defendants 2 and 3 in favour of the applicant bank. A21 10.09.2008 Memorandum of deposit of title deeds executed by the 3rd defendant confirming the creation of mortgage and the extension thereof. A22 10.09.2008 Letter of undertaking executed by the 3rd defendant. A23 10.09.2008 Declaration executed by the 3rd defendant in favour of the applicant bank. A24 10.09.2008 Annexure showing the attendance of the defendants at the bank while extending the mortgage for the overdraft facility. A25 18.09.2008 Letter of confirmation of mortgage executed by the 3rd defendant. A26 02.07.2001 Copy of partition deed No.2336/2001. A27 19.06.2001 Copy of power of attorney holder executed by one Kunjamma Abraham. A28 21.05.2008 Copy of possession certificate issued by the Village Officer, Chengalam. A29 … Copy of location sketch prepared by the Village Officer, Chengalam. A30 21.05.2008 Copy of relationship certificate issued by the Village Officer, Chengalam.

A31 20.05.2008 Copy of tax receipt issued by the Village Officer, Chengalam. A32 26.07.2007 Encumbrance certificate issued by SRO, Kottayam. A33 02.02.2010 Encumbrance certificate issued by SRO, Kottayam. A34 28.03.2009 Copy of lawyer notice issued to the defendants by the applicant bank. A35 18.11.2010 Copy of demand notice under S.13(2) of the SARFAESI Act issued to the defendants. A36 26.11.2009 Notice under S.13(2) of the SARFAESI Act issued to the 2nd defendant. A37 27.05.2008 Attestation memo issued by the applicant bank. A38 10.09.2008 Attestation memo issued by the applicant bank. A39 … Certified copy of the statements of account relating to the loans.

Defendants’ Exhibits – Nil

PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 20th April, 2026

TA No.1194/2016 (OA NO.227/2011

Between

Bank of Baroda, Kottayam Branch, Kottayam – 686 019. …Applicant

And

Smithy Johnson, W/o.Johnson, Prop. M/s.AICT, Thekkemuriyil House, Perumbaikadu, Parampuzha, Kottayam – 686 028 & 2 others.

...Defendants