CITY UNION BANK LIMITED vs Ms G and S ASSOCIATES on 2 July 2025

1. M/s.G & S Associates, 76, Nehru Nagar, Kuriachira, Thrissur – 680 006.

2. Samson K.F.,

S/o.Felix Joseph, Kurisingal House, Ancheri, P.O.Kuriachira, Thrissur – 680 006.

3. Sheetal, W/o.Late Georgee Joseph, Pattathanam House, Nehru Nagar, P.O.Kuriachira, Thrissur – 680 006.

4. Hency, W/o.Samson K.F., Kurisingal House, Ancheri, P.O.Kuriachira, Thrissur – 680 006.

5. Franklin, S/o.Felix Joseph, Kurisingal House, Ancheri, P.O.Kuriachira, Thrissur – 680 006.

6. Anabel (minor), D/o.Late George Joseph, Represented by mother and Guardian Smt.Sheetal, Residing at Pattathanam House, Nehru Nagar, P.O.Kuriachira, Thrissur – 680 006.

7. Rayan (minor),

S/o.Late George Joseph, Represented by mother and Guardian Smt.Sheetal, Residing at Pattathanam House, Nehru Nagar, P.O.Kuriachira,

Thrissur – 680 006.

…Defendants

This Original Application having been heard on 24.06.2025 in the presence of Advocates M/s.Thomas T.Varghese, Achu Shubha Abraham and Thahseem A. for the applicant bank, defendants 1 to 5 being exparte and defendants 6 and 7 being absent 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 an aggregate sum of Rs.1,69,20,345.78 together with future interest and costs from the defendants jointly and severally and by sale of the schedule property. Facts of the case:

2. The applicant is a scheduled commercial bank having its registered office in Tamil Nadu and a branch among other places at Thrissur.

3. The 1st defendant is a partnership firm represented by its partners viz., 2nd defendant and George Joseph, who died on 18.08.2014 and the 3rd defendant and defendants 6 and 7 are his legal heirs. At the request of the 1st defendant firm and its partners, the applicant bank sanctioned various credit facilities from 2004 to 2006 on the security of immovable properties. After availing the subject matter loans, the defendants failed to repay the instalments and operation of the accounts became highly irregular. Hence the applicant issued a lawyer notice to the defendants demanding repayment of the outstanding dues but they did not settle 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.1,69,20,345.78 together with pendente lite and post-decree interest thereon from the defendants jointly and severally and by sale of the schedule 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. All the defendants were duly served with summons. Defendants 1 and 2 entered appearance and sought adjournment for filing written statement but they did not file the same despite time granted and remained absent from the proceeding. Defendants 3 to 5 neither appeared nor were they represented. Hence defendants 1 to 5 were declared exparte on 08.07.2016.

5. The court guardian of minor defendants 6 and 7 filed written statement contending that by the death of George Joseph, his personal liability got exhausted and hence the minor defendants are unnecessary parties to the OA. There is no legally enforceable debt against these defendants. The applicant bank has released some properties without discharging the entire liability and hence the present proceeding is hit by S.62 of the Contract Act. To support such contention, they are relying on the judgment of the Hon'ble Apex Court reported in AIR 2003 SC 623

in the case of Satish Chandra Jain vs. National Small Industries Corporation. Hence the OA is not maintainable against these defendants. Proof Affidavit:

6. In order to establish the claim on behalf of the applicant bank, one Mr.Rojo C.J., Manager of the applicant has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A46. The proof affidavit filed by AW1 and the documents produced in this case are not challenged by the defendants. The availing of loans and creation of mortgage over the schedule property are well established from the documents placed by the applicant bank. An aggregate sum of Rs.1,69,20,345.78 is outstanding in the loan accounts as on 10.11.2014, which is clearly established from the accounts statements marked as Exts.A44 to A46.

7. Admittedly, the 3rd defendant and defendants 6 and 7 are the legal heirs of deceased borrower George Joseph. Defendants 6 and 7 are impleaded in the OA being the legal heirs of the borrower. In such circumstance, they are liable to discharge the liability of the deceased borrower to the extent of the value of assets inherited by them from their father late George Joseph. The contentions raised by the learned counsel for the defendants are not sustainable and the judgment of the Hon'ble Apex Court relied on by them is also not applicable in the facts and circumstances of the present case.

8. Further, it could be seen from the account statements that the applicant bank has charged a sum of Rs.4,80,858.32 and Rs.40,244.73 by way of penal interest in the CCOD account and BG/bill purchase 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.4,80,858.32 and Rs.40,244.73 charged in the loan accounts.

9. 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 in the manner stated below, which is reasonable in the facts and circumstances of the case.

10. 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 the amount as given below:

CCOD account Rs.1,48,87,399.14 (Rupees one crore forty eight lakhs eighty seven thousand three hundred and ninety nine and Paise fourteen only) together with pendente lite and post-decree interest @12% per annum on the sum of Rs.1,44,06,540.82 (Rupees one crore forty four lakhs six thousand five hundred and forty and Paise eighty two only) from 14.01.2015 till realisation from defendants 1 to 5 jointly and severally and by sale of the schedule property; OSL account Rs.2,09,768.86 (Rupees two lakhs nine thousand seven hundred and sixty eight and Paise eighty six only) together with pendente lite and post-decree interest thereon @12% per annum from 14.01.2015 till realisation from defendants 1 to 4 jointly and severally and by sale of the schedule property; Bank guarantee/bill purchase account Rs.18,23,177.78 (Rupees eighteen lakhs twenty three thousand one hundred seventy seven and Paise seventy eighty only) together with pendente lite and post-decree interest @12% per annum on the sum of Rs.17,82,933.05 (Rupees seventeen lakhs eighty two thousand nine hundred and thirty three and Paise five only) from 14.01.2015 till realisation from defendants 1 to 5 jointly and severally and by sale of the schedule property; and also costs and expenses borne by it for realization of the loans from defendants 1 to 5. In case of non-recovery of the amount due in any of the aforementioned loan accounts, the same shall be recovered from the assets inherited by the 3rd defendant as well as defendants 6 and 7 from the deceased borrower George Joseph.

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

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 2nd day of July, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

A P P E N D I X Witness for Applicant: AW1: Shri.Rojo C.J., Manager of the applicant bank.

Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 12.06.2007 Joint and several Demand Promissory Note for Rs.75,00,000/- executed by the defendant nos.1 and 2 along with late George Joseph in favour of the applicant bank. A2 12.06.2007 Letter of continuity issued by the defendant nos.1 and 2 along with late George Joseph to the applicant bank. A3 12.06.2007 Overdraft rules executed by the defendant nos.1 and 2 along with late George Joseph infavour of the applicant bank. A4 12.06.2007 Agreement of loan cum hypothecation executed by the defendant no.1 through the defendant no.2 and late George Joseph in favour of the applicant bank. A5 12.06.2007 Guarantee for cash credits executed by the late George Joseph. A6 12.06.2007 Guarantee for cash credits executed by the 2nd defendant. A7 12.06.2007 Guarantee for cash credits executed by the 3rd defendant. A8 12.06.2007 Guarantee for cash credits executed by the 4th defendant. A9 27.08.2008 Guarantee for cash credits executed by the 5th defendant. A10 29.09.2006 Joint and several Demand Promissory Note for Rs.12,00,000/- executed by the defendant nos.2 to 4 along with late George Joseph in favour of the applicant bank.

A11 29.09.2006 Undertaking letter issued by the defendant nos.2 to 4 along with late George Joseph to the applicant bank. A12 09.03.2010 Promissory Note for Rs.8,00,000/- executed by the defendant nos.1 to 4 along with late George Joseph in favour of the applicant bank. A13 13.05.2009 Counter guarantee for Rs.10,00,000/- executed by the defendant nos.1 and 2 along with late George Joseph in favour of the applicant bank. A14 13.05.2009 Guarantee for cash credits executed by the late George Joseph. A15 13.05.2009 Guarantee for cash credits executed by the 2nd defendant. A16 13.05.2009 Guarantee for cash credits executed by the 3rd defendant. A17 13.05.2009 Guarantee for cash credits executed by the 4th defendant. A18 13.05.2009 Guarantee for cash credits executed by the 5th defendant. A19 30.09.2008 Sale Deed No.6376/2008 of Thrissur SRO. A20 06.10.2008 Memorandum of deposit of title deeds executed by the 2nd defendant in favour of the applicant bank A21 12.07.2010 Office copy of the lawyers notice issued to the defendant nos.2 to5 and late George Joseph. A22 13.07.2010 Office copy of the lawyers notice issued to the defendant nos.1 to5 and late George Joseph. A23 .. Postal cover showing the return of Exhibit A21 notice issued to the late George Joseph. A24 17.07.2010 Acknowledgement card signed by the 2nd defendant regarding the delivery of Exhibit A21 notice. A25 .. Postal cover showing the return of Exhibit A21 notice issued to the 3rd defendant. A26 .. Postal cover showing the return of Exhibit A21 notice issued to the 4th defendant.

A27 15.07.2010 Acknowledgement card signed by the 5th defendant regarding the delivery of Exhibit A21

notice. A28 .. Postal cover showing the return of Exhibit A22 notice issued to the 1st defendant. A29 .. Postal cover showing the return of Exhibit A22 notice issued to the late George Joseph. A30 .. Postal cover showing the return of Exhibit A22 notice issued to the 2nd defendant. A31 .. Postal cover showing the return of Exhibit A22 notice issued to the 3rd defendant. A32 .. Postal cover showing the return of Exhibit A22 notice issued to the 4th defendant. A33 .. Postal cover showing the return of Exhibit A22 notice issued to the 5th defendant. A34 07.04.2010 Revival letter issued by the defendant in respect of loan account No.54709. A35 07.04.2010 Balance confirmation letter executed by the defendants confirming the amount outstanding under the CCOD account. A36 20.03.2013 Revival letter executed by defendants 1 to 5 along with late George Joseph. A37 20.03.2013 Revival letter executed by defendants 1 to 5 along with late George Joseph confirming the amount outstanding under the OLCC account. A38 07.09.2009 Balance confirmation letter executed by defendants 2 to 4 and George Joseph. A39 07.09.2009 Revival letter executed by defendants 2 to 4 and George Joseph acknowledging the liability under loan account No.207375. A40 22.02.2012 Revival letter executed by defendants 2 to 4 along with late George Joseph acknowledging the liability under loan account No.207375. A41 22.02.2012 Revival letter executed by defendants 2 to 4 along with late George Joseph acknowledging the liability under OSL account.

A42 05.02.2013 Revival letter executed by defendants 1 to 5. A43 05.02.2013 Revival letter executed by defendants 1 to 5 acknowledging the liability under bill purchase account. A44 ... Statement of account of the CCOD account with Certificate of Banker’s Book of Evidence Act. A45 ... Statement of account of the OSL account with Certificate of Banker’s Book of Evidence Act. A46 ... Statement of account of the invoked bank guarantee with Certificate of Banker’s Book of Evidence Act.

Defendants’ Exhibits – Nil

PRESIDING OFFICER

PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 2nd July, 2025

TA No.111/2016 (OA NO.81/2015)

Between

The City Union Bank Limited, Thrissur Branch, Ground Floor, A.R.Tower, Near Thiruvambadi Temple, Shornur Road, Thrissur – 680 022. …Applicant

And

M/s.G & S Associates, 76, Nehru Nagar, Kuriachira, Thrissur – 680 006 & 6 others.

...Defendants

F I N A L O R D E R