Phoenix ARC Private Limited vs M/S Institute of Nuclear Science and Diagnostics on 18 July 2025

1. M/s.Institute of Nuclear Science and Diagnostics, Represented by Managing Partner, Jayadas Samuel S., Kumarapuram, Medical College P.O., Thiruvananthapuram.

2. Jayadas Samuel S., K.S.T.Bhavan, Parasuvaikal P.O., Thiruvananthapuram – 695 508. Present address: Jayadas Samuel S. Zion Dale, T.C.14/214, Anayara P.O., Thiruvananthapuram – 695 029.

3. Dr.Jayalal, Sreenilayam, Naranganam, Naranganam North P.O., Kozhenchery – 689 642.

4. Dr.Dinachandran, Sreevalsam, House No.60, Kattachal Road, Thirumala P.O., Thiruvananthapuram. Present address: Dr.Dinachandran, Devi Vilasam, T.C. 16/488 CRA 40, Manikanteswaram, Peroorkada, Thiruvananthapuram.

5. Sherly Vijayan,

Mangalodayam, Panchakuzhy, Panachamood P.O., Thiruvananthapuram.

6. Dr.Ramachandran Nair P., T.C. 25/1099, Anugraha, Thampanoor, Thiruvananthapuram.

…Defendants

This Original Application having been heard on 04.07.2025 in the presence of Advocates M/s.K.K.John and Asish K.John for the applicant and the defendants 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 a sum of Rs.1,47,97,585/- and Rs.10,50,470/- due under FSL account and overdraft account respectively, totaling to Rs.1,58,48,055/- together with future interest on the sum of Rs.1,57,70,497/- @14.50% per annum with monthly rests and penal interest @2% per annum from the defendants jointly and severally and by sale of ‘A’ and ‘B’ schedule properties. Facts of the case:

2. The above application is filed by South Indian Bank Ltd., which has later assigned the debt in favour of the present applicant as per assignment agreement dated 17.03.2017.

3. The 1st defendant is a partnership firm, 2nd defendant is its managing partner and defendants 3 to 5 are its partners. The 6th defendant is the co-obligant to the loans availed by the partnership firm. At the request of the defendants, South Indian Bank Ltd. sanctioned a fully secured loan (FSL) of Rs.1 crore on 12.05.2003 which was availed by the defendants after creating hypothecation charge over ‘B’ schedule property, besides executing security documents in favour of the bank. Towards collateral security for the loan, the 6th defendant created equitable mortgage over ‘A’ schedule property and executed letter dated 14.05.2003 confirming the deposit of title deeds in respect of ‘A’ schedule property with the bank on 12.05.2003. Thereafter, the defendants availed an overdraft limit of Rs.10 lakhs on 06.09.2003 which was enhanced to Rs.16 lakhs on 08.01.2004.

The 6th defendant extended the mortgage created over ‘A’ schedule property to secure the overdraft facility also.

4. After availing the loans, the defendants failed and neglected to repay the instalments. Consequently, the accounts turned NPA. Despite lawyer notice and demand notice under S.13(2) of the SARFAESI Act were issued to the defendants demanding repayment of the outstanding dues, they did not liquidate the liability. In such premises, the applicant bank was constrained to file the OA claiming the following reliefs:

(i) To recover an aggregate sum of Rs.1,58,48,055/- together with pendente lite and post-decree interest on the sum of Rs.1,57,70,497/- from the defendants jointly and severally and by sale of ‘A’ and ‘B’ 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.

5. All the defendants were duly served with summons. Defendants 1, 2 and 5 neither appeared nor were they represented and hence they were declared exparte on 26.10.2006.

6. Defendants 3, 4 and 6 jointly filed written statement contending inter alia that defendants 3 and 4 retired from the partnership firm one month after its creation and they did not execute any documents annexed to the OA. At the time of joining the firm, the 2nd defendant got some blank papers signed from the 6th defendant, who upon receiving summons from the Tribunal realized that the same had been used by the 2nd defendant for creation of various documents in favour of the bank. The 6th defendant had never executed any documents with the intention of discharging the liability of the 1st defendant firm nor mortgaged his property to secure the dues of the firm. The applicant has charged interest on monthly rests in the overdraft account and such charging of interest is not permissible as per the documents alleged to be executed by the defendants. Proof Affidavit:

7. In order to establish the claim on behalf of the applicant bank, one Ms.Mercy Thanikkal, Senior Manager of South Indian Bank Ltd. and Mr.Suresh Mangattu Variyam, Senior Vice President of the applicant have filed proof affidavit and additional proof affidavit respectively and produced the loan documents marked as Exhibits A1 to A28.

8. The 4th defendant filed counter proof affidavit denying the execution of loan documents and creation of mortgage by the 6th defendant. It is submitted that ‘B’ schedule movable property owned by the 1st defendant is worth Rs.1.36 crores which is sufficient to satisfy the claim of the applicant. Interest charged on monthly rests is not permissible in view of Exts.A11, A12, A18 and A19 alleged to be executed by the defendants.

9. Heard arguments advanced by the learned counsel for the applicant. None appeared and represented for defendants 3, 4 and 6 to address arguments in this case and they remained absent from the proceeding from 26.09.2016. On perusal of the materials on record would reveal that the 1st defendant partnership firm had availed an FSL limit of Rs.1 crore from South Indian Bank Ltd. vide Ext.A1 sanction letter dated 12.05.2003. The 2nd defendant being the managing partner, defendants 3 to 5 as partners and the 6th defendant as co-obligant as well as mortgagor had countersigned Ext.A1 sanction letter in token of having accepted the terms and conditions thereof. The defendants had also executed Ext.A2 demand promissory note, Ext.A3 declaration, Ext.A4 letter of authority to charge interest as per

RBI directive, Exts.A5 and A6 agreements, Ext.A7 letter evidencing deposit of title deeds, Ext.A8 undertaking to execute registered mortgage etc. The defendants 1 to 6 had also executed Exts.A9 and A10 letters of acknowledgement of debt confirming the balance outstanding under the FSL loan account as on 13.05.2003 and 23.07.2003 respectively.

10. Further, defendants 1 to 6 had executed Exts.A12 to A17 documents to secure the overdraft limit of Rs.10 lakhs. Thereafter, the documents marked as Ext.A19 to A22 were executed in respect of the enhanced overdraft limit of Rs.16 lakhs. Insofar as the contention regarding charging of interest at monthly rests is concerned, the RBI vide Ext.A28 circular dated 09.03.2002 directed the banks to move over to charging of interest at monthly rests on cash credit and overdraft accounts and also all new term loans and other loans of longer/fixed tenor. The defendants have not adduced any documentary evidence to rebut the claim of the applicant. Mere denial of execution of the loan documents does not deserve any consideration of the Tribunal. The availing of the credit facilities by the defendants and creation of mortgage over ‘A’ schedule property by the 6th defendant and hypothecation charge over ‘B’ schedule property are well established from the documents placed by the applicant bank. An aggregate sum of Rs.1,58,48,055/- is outstanding in the loan accounts as on 28.08.2006, which is clearly established from the accounts statements marked as Exts.25 and A26.

11. It is averred in the additional proof affidavit filed by the applicant that as per order dated 29.11.2006 of the Hon'ble High Court of Kerala in W.P.(C) No.31603/2006, the applicant sold the movable assets described in ‘B’ schedule for Rs.22.15 lakhs on 18.07.2007 and the entire amount was realized on 18.07.2007. The sale certificate marked as Ext.A27 was issued to the auction purchaser on 27.07.2007. It is also stated that the bank spent Rs.29,438.45 towards cost of the sale proceeding including publication charges etc. and the net amount to be adjusted in the loan account is Rs.21,85,561.55.

11. Considering the amount advanced, interest and penal interest applied, repayments effected and substantial recovery effected by sale of the secured asset, I am of the view that the applicant is entitled to get pendente lite and post-decree interest @11% per annum on the sum of Rs.1,57,70,497/- (i.e., after excluding the penal interest of Rs.77,558/- from the total OA claim amount of Rs.1,58,48,055/-), which is reasonable in the facts and circumstances of the case.

12. 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) an aggregate sum of Rs.1,58,48,055/- (Rupees one crore fifty eight lakhs forty eight thousand fifty five only), less the sum of Rs.21,85,561.55 (Rupees twenty one lakhs eighty five thousand five hundred and sixty one and Paise fifty five only) recovered by the applicant by sale of ‘B’ schedule property on 18.07.2007, from the defendants jointly and severally and by sale of ‘A’ schedule property;

(ii) pendente lite and post-decree interest @11% per annum on the sum of Rs.1,57,70,497/- (Rupees one crore fifty seven lakhs seventy thousand four hundred and ninety seven only) from 29.08.2006 till realisation, less the sum of Rs.21,85,561.55 (Rupees twenty one lakhs eighty five thousand five hundred and sixty one and Paise fifty five only) recovered by the applicant by sale of ‘B’ schedule property on 18.07.2007, from the defendants jointly and severally and by sale of ‘A’ schedule property; and

(iii) costs and expenses borne by it for realisation of the loans from the defendants.

13. ‘A’ and ‘B’ schedules to the OA shall be appended to this final order.

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

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

16. 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 18th day of July, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

A P P E N D I X Witness for Applicant: AW1: Ms.Mercy Thanikkal, Senior Manager of South Indian Bank Ltd. AW2: Mr.Suresh Mangattu Variyam, Senior Vice President of the applicant.

Witness for Defendant(s):

DW1:

Dr.Dinachandran (4th defendant)

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 12.05.2003 Letter of Sanction No.309 for FSL(O) limit of Rs.1,00,00,000/- issued by the applicant Bank and duly accepted by the defendants. A2 12.05.2003 Joint and several demand promissory note for Rs.1,00,00,000/- executed by the defendants in favour of the applicant bank. A3 12.05.2003 Declaration under Oath Act issued by the defendants to the applicant bank. A4 12.05.2003 Letter of authority to charge interest as per RBI directives issued by the defendants to the applicant bank. A5 12.05.2003 Agreement tendering the demand pronote for Rs.1,00,00,000/- executed by the defendants in favour of the applicant bank. A6 12.05.2003 Agreement of hypothecation of machineries executed by the defendants 1 to 5 in favour of the applicant bank. A7 14.05.2003 Letter confirming the deposit of title deeds executed by the 6th defendant. A8 12.05.2003 Undertaking to execute registered mortgage executed by the 6th defendant to the applicant bank. A9 15.05.2003 Acknowledgement of debt executed by the defendants. A10 24.07.2003 Acknowledgement of debt executed by the defendants.

A11 06.09.2003 Letter of Sanction No.309 for CCOL limit of Rs.10,00,000/- issued by the applicant Bank and duly accepted by the defendants. A12 06.09.2003 Pronote for Rs.10,00,000/- executed by the defendants in favour of the applicant bank. A13 06.09.2003 Declaration under Oath Act issued by the defendants to the applicant bank. A14 06.09.2003 Letter of authority to charge interest as per RBI directives issued by the defendants to the applicant bank. A15 06.09.2003 Agreement tendering the demand pronote for Rs.10,00,000/- executed by the defendants in favour of the applicant bank. A16 06.09.2003 Application for continuance of equitable mortgage for FSL(O) and OD facilities executed by the 6th defendant. A17 06.09.2003 Acknowledgement of debt executed by the defendants in respect of FSL(O) account. A18 08.01.2004 Letter of Sanction No.309 for overdraft facility of Rs.16,00,000/- issued by the applicant Bank and duly accepted by the defendants. A19 08.01.2004 Pronote for Rs.16,00,000/- executed by the defendants in favour of the applicant bank. A20 08.01.2004 Letter of authority to charge interest as per RBI directives issued by the defendants to the applicant bank. A21 08.01.2004 Application for continuance of equitable mortgage for FSL(O) and OD facilities executed by the 6th defendant. A22 08.01.2004 Agreement tendering the demand pronote for Rs.16,00,000/- executed by the defendants in favour of the applicant bank. A23 13.07.2006 Office copy of the lawyer’s notice issued to the defendants. A24 14.02.1991 Partition Deed No.518/1991 of Thiruvananthapuram SRO. A25 19.08.2006 Statement of account in respect of FSL(O) account duly certified as per Bankers Books Evidence Act.

A26 23.08.2006 Statement of account in respect of overdraft account duly certified as per Bankers Books Evidence Act. A27 27.07.2007 Copy of the sale certificate for B schedule property issued by the applicant bank. A28 09.03.2002 Copy of the Circular No. DBOD No. Dir. B. S. 72/13. 03. 00/2001-02 issued by the RBI.

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 18th July, 2025

TA No.1246/2016 (OA NO.235/2006)

Between

Phoenix ARC Private Limited., Registered Office at: Dani Corporate Park, 5th Floor, 158, C S T Road, Kalina, Santacruz (E), Mumbai – 400 098. …Applicant And

M/s.Institute of Nuclear Science- and Diagnostics, Represented by Managing Partner, Jayadas Samuel S., Kumarapuram, Medical College P.O., Thiruvananthapuram & 5 others.

...Defendants

F I N A L O R D E R