CENTRAL BANK OF INDIA vs A Habeeb on 12 June 2025

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated this the 12th day of June, 2025

TA No.1115/2016 (OA No.305/2012) Between

Central Bank of India, Peroorkada Branch, Trivandrum.

…Applicant

And

A.Habeeb, Vinod Bhavan, L-63, LIC Lane, Lakshmi Nagar, Pattom P.O., Trivandrum District. Also at: Ratna Villa, TC 2/3201, Pattom P.O., Trivandrum – 695 004.

…Defendant

This Original Application having been heard on 21.05.2025 in the presence of Advocate Sri.Praveen K.Joy for the applicant bank and the defendant 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 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.53,81,681/- due under term loan account together with future interest thereon from the defendant and by sale of the schedule properties. Facts of the case:

2. The applicant is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969 having its head office at Mumbai and one of its branches at Peroorkada, Thiruvananthapuram.

3. The defendant approached the applicant bank for a loan for purchase of two Leyland tourist bus. Considering his request, applicant bank sanctioned a term loan of Rs.40 lakhs on 12.07.2010. The defendant availed the loan after executing security documents and the vehicles purchased by him were hypothecated to the bank. Due to default in repayment, the loan account was classified as NPA on 01.03.2012. Thereafter, the applicant initiated securitization proceeding under S.14 of the SARFAESI Act for taking possession of two vehicles bearing registration Nos.KL-01-BA 8713 and KL-01-BA 8703. The Advocate Commissioner appointed by the CJM, Thiruvananthapuram in MC No.436/2012 could take possession of only one vehicle bearing registration No.KL-01-BA 8713 as the defendant has removed the other vehicle from the premises. All efforts made by the applicant bank to get the loan account regularized has turned futile. In such premises, the applicant bank was constrained to file the OA claiming the following reliefs:

(i) To recover the sum of Rs.53,81,681/- due under term loan account together with pendente lite and post decree interest thereon from the defendant and by sale of the schedule properties;

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

(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 defendant was duly served with summons. But he neither appeared nor was he represented and hence the defendant was declared exparte on 13.02.2019. Proof Affidavit:

5. In order to establish the claim on behalf of the applicant bank, one Mr.Santhosh Kumar, Chief Manager of the bank has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A17. The proof affidavit filed by AW1 and the documents produced in this case are not challenged by the defendants. The availing of the loan and creation of hypothecation charge over the schedule property are well established from the documents placed by the applicant bank. A sum of Rs.53,81,681/- is outstanding in the loan account as on 10.07.2012, which is clearly established from the account statement marked as Ext.A15.

6. Along with the OA, the applicant bank filed IA No.1977/2012 seeking attachment of two items of immovable properties described in ‘A’ schedule to the OA. The Tribunal had granted conditional attachment in respect of the said properties as per order dated 17.07.2012 in IA No.1977/2012, besides directing the applicant bank to issue show cause notice to the defendant. Since no material is placed on record by the applicant showing issuance of show cause notice to the defendant and service of the same on him, the conditional attachment granted on 17.07.2012 was vacated as per order dated 12.04.2023. Therefore, the applicant bank is not entitled to get any relief as against the properties described in ‘A’ schedule to the OA.

7. Further, it could be seen from Ext.A16 statement that the applicant bank has charged a sum of Rs.4,675/- 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 penal interest of Rs.4,675/- 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 @12% per annum on the sum of Rs.53,77,006/- (i.e., after excluding the penal interest of Rs.4,675/- from the OA claim amount of Rs.53,81,681/-), 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) the sum of Rs.53,81,681/- (Rupees fifty three lakhs eighty one thousand six hundred and eighty one only) due under the term loan account from the defendant and by sale of the schedule property;

(ii) Pendente lite and post decree interest @10% per annum on the sum of Rs.53,77,006/- (Rupees fifty three lakhs seventy seven thousand and six only) from 13.07.2012 till realisation from the defendant and by sale of the schedule property; and

(iii) also costs and expenses borne by it for realisation of the loan from the defendant.

The schedule to the OA shall be appended to this final order.

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

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

13. 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 12th day of June, 2025)

[SOVAN KUMAR DASH]

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

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 12.07.2010 Term loan agreement executed by the defendant in favour of the applicant bank. A2 12.07.2010 Interest variation letter issued by the defendant to the applicant bank. A3 12.07.2010 Letter of declaration issued by the defendant to the applicant bank. A4 12.07.2010 Letter issued by the defendant to the applicant bank. A5 12.07.2010 Letter of authority regarding disbursement of loan issued by the defendant to the applicant bank. A6 12.07.2010 Consent letter executed by the defendant in favour of the applicant bank. A7 12.07.2010 Sanction letter issued by the applicant bank and duly accepted by the defendant. A8 07.02.2011 Letter issued by the defendant to the applicant bank. A9 01.10.2011 Copy of the letter issued by the applicant bank to the defendant. A10 02.01.2012 Copy of the letter issued by the applicant bank to the defendant. A11 21.02.2012 Reply notice issued by the defendant tot eh applicant bank in respect Exhibit A9 and A10 notices. A12 20.06.2016 Copy of the warrant authorizing the advocate commissioner to take possession of the property issued by the Hon’ble CJM Court, Thiruvananthapuram.

A13 12.06.2012 Encumbrance certificate No.4606/12 issued by the by the Punalur SRO from 01.01.2001 to 01.01.2011 A14 13.06.2012 Encumbrance certificate No.4981/12 issued by the by the Punalur SRO from 01.01.1992 to 01.01.1999. A15 11.07.2012 Statement of account as certified under Bankers Book Evidence Act/ I.T. Act. A16

Statement showing the interest accrued from the date of NPA till date of the application in respect of Exhibit A15 account. A17 .. Statement showing rate interest from the beginning with period in respect of Exhibit A15 account

Defendant’s Exhibits – Nil

RESIDING OFFICER

SCHEDULE

Ashok Leyland vehicles bearing registration Nos.KL-01- BA 8713 and KL-01 BA 8703. PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 12th June, 2025

TA No.1115/2016 (OA NO.305/2012)

Between

Central Bank of India, Peroorkada Branch, Trivandrum.

…Applicant

And

A.Habeeb, Vinod Bhavan, L-63, LIC Lane, Lakshmi Nagar, Pattom P.O., Trivandrum District. Also at: Ratna Villa, TC 2/3201, Pattom P.O., Trivandrum – 695 004. …Defendant

F I N A L O R D E R