AXIS BANK vs P.D JOSEPH on 11 August 2026

1. P.D.Joseph, S/o.Devassia, Sole Proprietor, AVS Jewel Works, AVS Cottage, III/276 A, Poomala P.O., Thrissur – 680 561. Residing at: Perumbanachi House, KSHB Plot No.32, Haritha Nagar, Mulamkunnathukavu P.O., Thrissur – 680 581.

2. Vijay James, S/o.M.A.James, Manjaly House, Jyothi Nivas, 5th Avenue, New Gardens Area, Ayyanthole P.O., Thrissur – 680 003.

3. Kuriakose V.K., S/o.Kurian, Vettikuzhiyil House, Marangattully, Thiruvaniyoor P.O., Kochi – 682 308.

…Defendants

TA 701/2016 (OA 322/2016)

This Original Application having been heard on 30.07.2026 in the presence of Advocate Sri.Nelson Joseph for the applicant bank and Advocate Sri.Alan Sojan representing counsel for Advocate Sri.Sivadas for the defendants 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.2,38,07,946.55 due under cash credit account together with future interest thereon @13.35% per annum with monthly rests and penal interest @2% per annum from the defendants jointly and severally and by sale of ‘A’ to ‘F' schedule properties. Facts of the case:

2. The applicant is a banking company governed by the provisions of the Companies Act, 1956 having its registered office at Ahmedabad and one of its branches at Thrissur. 3.1 The 1st defendant being the sole proprietor of AVS Jewel Works approached the applicant bank for financial assistance for the working capital requirement of his business. Accordingly, applicant bank sanctioned a cash credit limit of Rs.100 lakhs under ‘MSE Power Scheme’ as per sanction letter TA 701/2016 (OA 322/2016)

dated 01.08.2013. As security for the loan, the 1st defendant executed demand promissory note, letter of arrangement and deed of hypothecation, whereby he hypothecated the movables described in ‘A’ schedule with the bank. The 2nd defendant stood as guarantor for the loan. Towards collateral security for the cash credit limit, the 2nd defendant created equitable mortgage over ‘B’ to ‘E’ schedule properties and executed record of mortgage dated 03.08.2013 confirming the creation of mortgage. Thereafter, at the request of the 1st defendant, the cash credit limit was enhanced to Rs.200 lakhs on 18.02.2014. The 1st defendant availed the enhanced facility and executed necessary security documents in favour of the bank. As further security for the enhanced cash credit limit, defendants 2 and 3 executed deed of guarantee dated 20.02.2014 and the 2nd defendant extended the mortgage already created over ‘B’ to ‘E’ schedule properties. The 3rd defendant deposited title deed of his property described in ‘F' schedule with the intention to create mortgage to secure the cash credit limit of Rs.200 lakhs and executed record of mortgage dated 20.02.2014. 3.2 The 1st defendant availed the facility but committed default in repayment which resulted in classification of the account as NPA. Consequently, the applicant issued lawyer notice TA 701/2016 (OA 322/2016)

to the defendants on 22.02.2016 demanding repayment of the outstanding dues but they did not settle the dues even after receipt of the notice. Being unable to recover the dues, applicant bank was constrained to file this case claiming the following reliefs:

(i) To recover the sum of Rs.2,38,07,946.55 together with pendente lite and post decree interest thereon from the defendants jointly and severally and by sale of ‘A’ to ‘F' schedule properties;

(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

4. The 1st defendant filed written statement claiming inter alia that applicant bank sanctioned a cash credit limit of Rs.100 lakhs which was availed by him on 03.08.2013 and the limit was subsequently enhanced to Rs.200 lakhs on 18.02.2014. All the current assets were hypothecated to the applicant as primary security for the loan and defendants 2 and 3 created TA 701/2016 (OA 322/2016)

mortgage over their properties towards collateral security for the loan and they were also guarantors to the credit facility. Calculation of interest and other charges by the applicant is wrong and they have no manner of right to include the expenses for invoking SARFAESI proceedings. The applicant is not entitled for any relief and the OA is liable to be dismissed.

5. Defendants 2 and 3 jointly filed written statement denying the averments in the OA. It is submitted that the 1st defendant was sanctioned the cash credit loan of Rs.100 lakhs on 03.08.2013 which was enhanced to Rs.200 lakhs on 18.02.2014. They admitted the creation of mortgage and execution of guarantee agreements. Due to reasons beyond the control of the 1st defendant, there occurred some default in repayment. Hence the applicant initiated proceeding under the SARFAESI Act and affixed the possession notice on the secured asset. Challenging the securitization proceeding, the 1st defendant filed W.P.(C) No.5157/2016 before the Hon'ble High Court of Kerala and this fact is concealed by the applicant in the OA. The OA, being devoid of any merit, may be dismissed.

TA 701/2016 (OA 322/2016)

Proof Affidavit:

6. To establish the claim on behalf of the applicant, one Mr.V.G.Rajeev, Assistant Vice President of the bank has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A26. The availing of the cash credit limit is well established from the documents placed by the applicant bank.

7. Despite time granted, the defendants have not filed counter proof affidavit.

8. Heard submissions of both sides and perused the materials on record. The sole issue that arises for consideration is whether the applicant is entitled to get the relief as claimed in this case?

9. There is no dispute with regard to the availing of the enhanced cash credit limit of Rs.200 lakhs by the 1st defendant and creation of hypothecation charge over ‘A’ schedule properties and mortgage over ‘B’ to ‘F' schedule properties by defendants 2 and 3. Admittedly, there is default in repayment of the loan. The interest has been charged in the account as per the terms and conditions of sanction and the defendants had agreed to repay the loan amount together with interest @13.75% per annum with monthly rests vide Exts.A1 and A2. In Ext.A5 deed of TA 701/2016 (OA 322/2016)

hypothecation, the 1st defendant had agreed to pay penal interest @2% per annum from the date of default till the date of actual payment. As per clause 33 of Ext.A5, the borrowers shall pay to the bank all costs, charges and expenses in connection with realization of the security and recovery of money. Hence the applicant is entitled to recover the expenses incurred for the securitisation proceeding initiated from the defendants.

10. The evidence adduced by the applicant bank marked as Exts.A1 to A21 and A25 would prove the claim of the bank. As on 31.03.2016, an amount of Rs.2,38,07,946.55 is outstanding under the cash credit limit of Rs.200 lakhs availed by the 1st defendant which is clearly established from the account statements marked as Ext.A25(1) and A25(3). In the above circumstance, the applicant is entitled to recover the said amount from the defendants and the issue is answered in favour of the applicant.

11. Further, it could be seen from Ext.A25(3) statement that the applicant has charged a sum of Rs.3,50,819.12 by way of penal interest in the cash credit 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 TA 701/2016 (OA 322/2016)

entitled to get any pendente lite and post-decree interest on the aforesaid amount charged in the loan account.

12. Along with the OA, applicant bank filed IA No.1082/2016 and IA No.1083/2016 seeking injunction of the properties mortgaged by defendants 2 and 3 on the ground that they are making earnest efforts to alienate the properties. In view of there being a prima facie case and balance of convenience lies in favour of the applicant bank, the Tribunal has granted an ad- interim injunction on 19.04.2016 restraining the defendants 2 and 3 from alienating or encumbering the mortgaged properties until further orders. The said order shall remain in force until recovery of the claim amount by sale of the properties.

13. Considering the amount advanced, interest and penal interest applied 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.2,34,57,127.43 (i.e., after excluding the penal interest of Rs.3,50,819.12 from the OA claim amount of Rs.2,38,07,946.55), which is reasonable in the facts and circumstances of the case.

14. The applicant bank, therefore, is entitled to get a final order on the following lines:

TA 701/2016 (OA 322/2016)

In the result, the applicant bank is given a final order allowing it to recover:

(i) the sum of Rs.2,38,07,946.55 (Rupees two crores thirty eight lakhs seven thousand nine hundred and forty six and Paise fifty five only) due under the cash credit account from the defendants jointly and severally and by sale of ‘A’ to ‘F' schedule properties;

(ii) pendente lite and post-decree interest @12% per annum on the sum of Rs.2,34,57,127.43 (Rupees two crores thirty four lakhs fifty seven thousand one hundred and twenty seven and Paise forty three only) from 06.04.2016 till realization from the defendants jointly and severally and by sale of ‘A’ to ‘F' schedule properties; and

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

15. ‘A’ to ‘F' schedules to the OA shall be appended to this final order.

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

TA 701/2016 (OA 322/2016)

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

18. 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 11th day of August, 2026)

[SOVAN KUMAR DASH] PRESIDING OFFICER

TA 701/2016 (OA 322/2016)

A P P E N D I X Witness for Applicant: AW1: Sri.V.G.Rajeev, Assistant Vice President of the applicant bank. Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 01.08.2013 Loan sanction letter for cash credit limit of Rs.1,00,00,000/- issued by the applicant bank and duly acknowledged by the defendants 1 and

2. A2 03.08.2013 Demand Promissory Note for Rs.1,00,00,000/- executed by the 1st defendant as proprietor of AVS Jewel Works in favour of the applicant bank. A3 03.08.2013 D.P.Note delivery cum waiver letter executed by the 1st defendant. A4 03.08.2013 Letter of arrangement for cash credit advances executed by the 1st defendant. A5 03.08.2013 Deed hypothecation of current assets executed by the 1st defendant as proprietor of AVS Jewel Works in favour of the applicant bank. A6 03.08.2013 Deed of guarantee executed by the 2nd defendant. A7 22.10.2012 Sale Deed No.4876/2012 of Wadakkancherry SRO. A8 22.10.2012 Sale Deed No.4873/2012 of Wadakkancherry SRO. A9 22.10.2012 Sale Deed No.4874/2012 of Wadakkancherry SRO. A10 22.10.2012 Sale Deed No.4875/2012 of Wadakkancherry SRO. A11

executed by the 2nd defendant. A12 18.02.2014 Loan sanction letter for enhanced cash credit limit issued by the applicant bank and duly acknowledged by the defendants.

TA 701/2016 (OA 322/2016)

A13 20.02.2014 Demand Promissory Note for Rs.2,00,00,000/- executed by the 1st defendant. A14 20.02.2014 D.P.Note delivery cum waiver letter executed by the 1st defendant. A15 20.02.2014 Letter of arrangement for cash credit advances executed by the 1st defendant as proprietor of AVS Jewel Works A16 20.02.2014 Deed hypothecation of current assets executed by the 1st defendant as proprietor of AVS Jewel Works in favour of the applicant bank. A17 20.02.2014 Deed of guarantee executed by the 2nd defendant. A18 20.02.2014 Deed of guarantee executed by the 3rd defendant. A19 09.11.1990 Settlement Deed No.4084/1990 of Puthenkurish SRO A20

executed by the 3rd defendant. A21 20.02.2014 Record of mortgage of deposit of title deeds executed by the 3rd defendant A22 22.02.2016 Office copy of the lawyer notice issued to the defendants. A23 24.02.2016 Copy of the postal receipts showing the issuance of Exhibit A22 notice to the defendants. A24 05.03.2016 Copy of the reply given by the 1st defendant to the Exhibit A22 notice. A25(a) 04.04.2016 Certified copies of relative ledger extracts of accounts entered in the Books of Accounts of the Bank. A25(b) .. Statement of base rate and interest applied in the Exhibit A25(a) account. A25(c) .. Statement of unapplied interest and penal interest in the Exhibit A25(a) account. A25(d) .. Statement of expenses incurred for taking insurance of building/taking possession of mortgaged property under SARFAESI Act in the Exhibit A25(a) account.

TA 701/2016 (OA 322/2016)

A26 02.01.2015 Power of attorney executed by the applicant bank in favour of Mr. Rajeev V.G.

Defendants’ Exhibits – Nil

PRESIDING OFFICER

TA 701/2016 (OA 322/2016)

TA 701/2016 (OA 322/2016)

TA 701/2016 (OA 322/2016)

TA 701/2016 (OA 322/2016)

TA 701/2016 (OA 322/2016)

PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 11th August, 2026

TA No.701/2016 (OA No.322/2016)

Between

Axis Bank Ltd., City Centre, 2nd Floor, Round West, Thrissur, Kerala – 680 001. …Applicant

And

P.D.Joseph, S/o.Devassia, Sole Proprietor, AVS Jewel Works, AVS Cottage, III/276 A, Poomala P.O., Thrissur – 680 561. Residing at: Perumbanachi House, KSHB Plot No.32, Haritha Nagar, Mulamkunnathukavu P.O., Thrissur – 680 581 & 2 others. …Defendants

F I N A L O R D E R