BANK OF INDIA vs Faizal K Mohammed on 4 July 2025

1. Faizal K.Mohammed (Died, LRs on record), S/o.K.T.Mohammed, D-12, Jawahar Nagar,

Thiruvananthapuram.

Proprietor of M/s.Euro Marine,

Vizhinjam, Thiruvananthapuram.

...Defendant

2. Beena Faizal,

W/o.Faizal K.Mohammed,

D-12, Jawahar Nagar,

Thiruvananthapuram – 695 003.

3. Laila Faizal Mohammed,

D/o.Faizal K.Mohammed,

D-12, Jawahar Nagar,

Thiruvananthapuram – 695 003.

4. Akhil Faizal Mohammed,

S/o.Faizal K.Mohammed,

D-12, Jawahar Nagar,

Thiruvananthapuram – 695 003. …Additional defendants

This Original Application having been heard on 24.06.2025 in the presence of Advocates M/s.P.Balakrishnan and Sasi N. for the applicant bank and the defendants 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.10,33,546/- due under term loan account together with future interest thereon @13.50% per annum with monthly rests from the defendant and his assets. Facts of the case:

2. The applicant is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its head office at Mumbai and a branch among other places at Puthenchanthai,

3. The defendant approached the applicant bank for financial assistance to the tune of Rs.7 lakhs for purchase of marine products. Considering his request, applicant bank sanctioned a term loan of Rs.7 lakhs on 13.10.2009. The defendant availed the loan but committed default in repayment. Hence the applicant issued lawyer notices dated 19.12.2011 and

08.09.2012 calling upon the defendant to repay the outstanding dues. As there was no positive response from the defendant, applicant bank filed the OA claiming the following reliefs:

(i) To recover a sum of Rs.10,33,546/- together with pendente lite and post-decree interest thereon from the defendant and his assets;

(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 summons sent to the defendant was returned with the postal endorsement ‘Add. Deceased’. Hence additional defendants 2 to 4 were impleaded as legal heirs of the deceased borrower vide IA No.1543/2019. The additional defendants were duly served with summons. But they neither appeared nor were they represented and hence they were set exparte on 22.03.2024. Proof Affidavit:

5. In order to establish the claim on behalf of the applicant bank, one Mr.P.Parameswara Iyer, Chief Manager of the applicant has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A11. The proof affidavit filed by AW1 and the documents produced in this case are not challenged by the defendants. The availing of the credit facility is well established from the documents placed by the applicant bank. A sum of Rs.10,33,546/- is outstanding in the loan account as on 15.09.2015, which is established from the account statements marked as Exts.A10 and A11.

6. Further, it could be seen from Ext.A11 statement that the applicant bank has charged a sum of Rs.71,459/- 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.71,459/- charged in the loan account.

7. 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.9,62,087/- (i.e., after excluding the penal interest of Rs.71,459/- from the OA claim amount of Rs.10,33,546/-) in the term loan account, which is reasonable in the facts and circumstances of the case.

8. 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.10,33,546/- (Rupees ten lakhs thirty three thousand five hundred and forty six only) due under the term loan account from the assets, if any, inherited by additional defendants 2 to 4 from the deceased borrower/1st defendant;

(ii) pendente lite and post-decree interest @10% per annum on the sum of Rs.9,62,087/- (Rupees nine lakhs sixty two thousand eighty seven only) from 25.09.2015 till realisation from the assets, if any, inherited by additional defendants 2 to 4 from the deceased borrower/1st defendant; and

(iii) costs and expenses borne by it for realisation of the loan from the assets inherited by additional defendants 2 to 4 from the deceased borrower.

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

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

11. 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 4th day of July, 2025)

[SOVAN KUMAR DASH]

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

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 06.10.2009 Copy of loan application submitted by the defendant. A2 13.10.2009 Demand promissory note for Rs.7 lakhs executed by the defendant. A3 13.10.2009 Copy of instalment letter executed by the defendant. A4 13.10.2009 Hypothecation-cum-loan agreement executed by the defendant. A5 13.10.2009 Consolidated stamped agreement executed by the defendant. A6

19.12.2011 Copy of lawyer notice issued to the defendant. A7

08.09.2012 Copy of lawyer notice issued to the defendant. A8

11.10.2012 Letter submitted to the applicant bank by the defendant requesting time to regularize the loan account. A9

11.10.2012 Acknowledgement of debt executed by the defendant confirming the balance outstanding under the loan account. A10 ... Certified copy of the statement of account relating to the term loan. A11 ... Statement showing the unapplied interest and penal interest under Ext.A10 account.

Defendants’ Exhibits – Nil

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 4th July, 2025

TA No.376/2016 (OA No.563/2015)

Between

Bank of India, Puthenchanthai Branch, Thiruvananthapuram. …Applicant

And

Faizal K.Mohammed, S/o.K.T.Mohammed, D-12, Jawahar Nagar, Thiruvananthapuram. Proprietor of M/s.Euro Marine, Vizhinjam, Thiruvananthapuram. & 3 others.

...Defendant & Additional defendants

F I N A L O R D E R