INDIAN OVERSEAS BANK vs M/S SHADOWS FILM ACADEMY on 7 May 2026

1. M/s.Shadows Film Academy,

10/7, Aramam,

Indira Junction,

Alappuzha – 688 006,

Represented by its proprietress

Noorjahan.

2. Noorjahan,

Nabeel Cottage,

Beach Ward,

Near Rubber Factory,

Alappuzha – 688 012.

3. Shajimon M.S.,

S/o.M.A.Shukkoor,

Shahin Firth,

Nadumbrakad P.O.,

CMC 6, Cherthala,

Alappuzha District – 688 524.

…Defendants This Original Application having been heard on 19.03.2026 in the presence of Advocate Smt.Keerthi K.Narayan 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.11,74,089/- due under term loan account together with future interest thereon @14% per annum from the defendants and their assets. Facts of the case:

2. The 1st defendant is a proprietary concern owned by the 2nd defendant. At the request of the 1st defendant, applicant bank sanctioned a term loan of Rs.10 lakhs on 07.07.2012 for working capital requirement of the proprietary concern. The 1st defendant through the 2nd defendant availed the facility after executing necessary security documents. The 3rd defendant stood as guarantor for the loan. Due to default in repayment of the loan, the account was classified as NPA on 25.06.2014. Thereafter, the applicant issued a lawyer notice to the defendants on 17.10.2014 calling upon them to repay the outstanding dues but they did not settle the liability even after receipt of the notice.

In such premises, the applicant was constrained to file the OA claiming the following reliefs:

(i) To recover the sum of Rs.11,74,089/- together with pendente lite and post-decree interest thereon from the defendants and their assets;

(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. Written statement

3. The defendants 2 and 3 filed written statement admitting the availing of the term loan of Rs.10 lakhs from the applicant bank but they denied the execution of loan documents. It is contended inter alia that the 3rd defendant never stood as surety for the loan availed by the 1st defendant and they disputed the classification of the loan account as NPA. The amounts paid by the defendants were not properly accounted by the applicant. Hence the OA may be dismissed. Proof Affidavit:

4. In order to establish the claim on behalf of the applicant bank, one Mr.N.Krishnakumar, Chief Manager has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A7. The availing of loan is well established from the documents placed by the applicant bank.

5. Defendants 2 and 3 have not filed counter proof affidavit nor adduced any documentary evidence to substantiate their claim despite a last opportunity was given till 08.08.2019. Thereafter, they presented a counter proof affidavit along with a petition on 19.09.2022 but the petition was rejected on 11.01.2023 for not rectifying the defects noted by the Registry. Accordingly, the counter proof affidavit was not taken on record.

6. Heard arguments advanced by the learned counsel for the applicant and perused the records of the case. None appeared and represented for the defendants.

7. The sole issue arises for consideration is whether the applicant is entitled to get the relief as claimed in this case?

8. Admittedly, the 1st defendant through the 2nd defendant availed the subject loan of Rs.10 lakhs from the applicant bank. The records would reveal that while availing the loan, the defendants had countersigned Ext.A1 sanction letter dated 07.07.2012 in token of having accepted the terms and conditions thereof. Thereafter on 09.07.2012, the 1st defendant through its proprietor had executed Ext.A1 demand promissory note, Ext.A3 letter of undertaking and Ext.A4 agreement of term loan and hypothecation in favour of the applicant bank. The 3rd defendant executed guarantee agreement marked as Ext.A5 guaranteeing due repayment of the loan amount of Rs.10 lakhs together with interest and charges due in the said account. Due to irregular repayment, the account turned NPA. In absence of proof, the defendants cannot claim and contend that payments made by them were not adjusted in the loan account. The account statement produced by the applicant bank would prove the claim made by them in this case. The contentions raised by the defendants are unsustainable. The issue is answered in favour of the applicant bank.

9. It is averred by the applicant bank in paragraph 8 of the proof affidavit that it has charged a sum of Rs.23,046/- 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.

10. 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 @12% per annum on the sum of Rs.11,51,043/- (i.e., after excluding the penal interest of Rs.23,046/- from the OA claim amount of Rs.11,74,089/-), which is reasonable in the facts and circumstances of the case.

11. 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.11,74,089/- (Rupees eleven lakhs seventy four thousand and eighty nine only) due under the term loan account from the defendants and their assets;

(ii) pendente lite and post-decree interest @12% per annum on the sum of Rs.11,51,043/- (Rupees eleven lakhs fifty one thousand and forty three only) from 25.06.2015 till realization from the defendants and their assets; and

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

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

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

14. 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 7th day of May, 2026)

[SOVAN KUMAR DASH]

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

Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 07.07.2012 Credit sanction advice issued by the applicant bank sanctioning Rs.10 lakhs to the 1st defendant. A2 09.07.2012 Demand promissory note for Rs.10 lakhs executed by the 1st defendant. A3 09.07.2012 Letter of undertaking executed by the defendants. A4 09.07.2012 Agreement of term loan and hypothecation executed by the 1st defendant. A5 09.07.2012 Guarantee agreement executed by the 3rd defendant. A6 … Certified copy of the statement of account relating to the term loan. A7 … Statement showing the rate of interest applied in the term loan account from time to time.

Defendants’ Exhibits – Nil

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 7th May, 2026

TA No.238/2016 (OA NO.300/2015)

Between

Indian Overseas Bank, Alappuzha Branch, V.S.V. Buildings, C.C.N.B. Road, Alappuzha – 688 001. …Applicant

And

M/s.Shadows Film Academy, 10/7, Aramam, Indira Junction, Alappuzha – 688 006, Represented by its proprietress Noorjahan & 2 others.

…Defendants

F I N A L O R D E R