FEDERAL BANK vs C. MANOJ KUMAR on 21 July 2025

1. C.Manoj Kumar

S/o.Chandrasekharan Pillai R., ‘Puthiya Veedu’, Vadacode, Kura P.O., Kollam District – 691 557.

2. Lakshmi S., W/o.Manoj Kumar, ‘Puthiya Veedu’, Vadacode, Kura P.O., Kollam District – 691 557.

3. Chandrasekharan Pillai R.,

S/o.Late Ramakurup, ‘Puthiya Veedu’, Vadacode, Kura P.O., Kollam District – 691 557.

4. Ramani Amma S.,

W/o.Chandrasekharan Pillai R., ‘Puthiya Veedu’, Vadacode, Kura P.O., Kollam District – 691 557.

...Defendants

This Original Application having been heard on 27.06.2025 in the presence of Advocates M/s.Varughese Cherian and Jayakala S.S. for the applicant bank and Advocate Sri.Reynold Fernandez N. 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.62,88,746/- due under federal housing loan account together with future interest @17.25% per annum with monthly rests from the defendants jointly and severally and by sale of ‘A’ schedule property. Facts of the case:

2. The applicant is a banking company constituted under the Companies Act, 1956 having its registered office at Aluva and a branch among other places at Ilambal in Kollam District.

3. The 1st defendant is the borrower and defendants 2 to 4 are co-obligants to the loan availed by the 1st defendant. At the request of the defendants, the applicant bank sanctioned a federal housing loan of Rs.50 lakhs on 20.06.2007 for construction of a residential building and they availed the loan after executing the security documents. Towards collateral security for the housing loan, the 1st defendant created equitable mortgage over ‘A’ schedule property by deposit of title deeds with the applicant bank on 20.06.2007 and executed letter dated 21.06.2007 confirming the creation of mortgage. Due to default in repayment of the loan, applicant bank issued a lawyer notice to the defendants on 19.01.2012 calling upon them to repay the outstanding dues. Since the defendants failed to settle the account, the applicant bank was constrained to file the OA claiming the following reliefs:

(i) To recover a sum of Rs.62,88,746/- together with pendente lite and post-decree interest thereon from the defendants jointly and severally and by sale of ‘A’ 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. The defendants were directed to file written statement and counter proof affidavit along with documents, if any, within a week from 21.03.2016 as last chance. But they presented a written statement belatedly without any petition to accept the same and hence the written statement was not taken on record.

5. During the hearing, learned counsel for the defendants submitted that the applicant had offered the housing loan of Rs.50 lakhs with the interest rate of 9.75% per annum but they charged interest at 17.25% per annum with monthly rests and penal interest at 2% per annum which they never agreed to pay. Further, it is claimed that after availing the loan, the defendants had remitted a sum of Rs.69,72,866/- into the loan account. Since the interest charged is in violation of the RBI guidelines, the OA may be dismissed with costs considering the repayments made by the defendants. Per contra, the learned counsel for the applicant submitted that the defendants undertook to repay the loan amount with interest @12% per annum with monthly rests, subject to revision by the bank/RBI from time to time and there is no violation of any of the directives of RBI and the defendants are obligated to repay the amount claimed in the OA. Proof Affidavit:

6. In order to establish the claim on behalf of the applicant bank, one Mr.Mahadevan H., Chief Manager and one Mr.Saji Koshy, Senior Manager of the applicant have filed proof affidavit and additional proof affidavit respectively and produced the loan documents marked as Exhibits A1 to A10. The proof affidavit and additional proof affidavit filed by AW1 and the documents produced in this case are not challenged by the defendants.

7. The availing of the housing loan and creation of mortgage over ‘A’ schedule property are established from the documents placed by the applicant bank. On perusal of Ext.A3 federal housing scheme agreement would show that the defendants had agreed to pay interest @12% per annum with monthly rests and such rate is seen enhanced by the applicant from time to time. Further, it could be seen that after availing the facility, the defendants had made substantial repayments towards the loan account. As per the account statement marked as Ext.A8, a sum of Rs.62,88,746/- is outstanding in the loan account as on 14.03.2012.

8. Further, it could be seen from Ext.A10 statement that the applicant bank has charged a sum of Rs.18,951/- by way of penal interest in the housing 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.18,951/- charged in the loan account.

9. In the additional proof affidavit filed by the applicant bank, it is averred that subsequent to filing of this case the defendants have made the following remittances into the loan account:- Rs.9,00,000/- : 29.03.2012 Rs.2,50,000/- : 08.05.2012 Rs.5,00,000/- : 09.06.2012 Rs.4,50,000/- : 10.07.2015 Rs.7,50,000/- : 11.07.2012 Rs.4,50,000/- : 18.08.2015 Rs.15,00,000/- : 14.03.2016 Total : Rs.48,00,000/-

10. Considering the amount advanced, interest and penal interest applied, substantial recovery effected and the prevailing rate for housing loans, I am of the view that the applicant bank is entitled to get pendente lite and post decree interest @7% per annum on the sum of Rs.62,69,795/- (i.e., after excluding the penal interest of Rs.18,951/- from the OA claim amount of Rs.62,88,746/-), which is reasonable in the facts and circumstances of this case.

11. 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.62,88,746/- (Rupees sixty two lakhs eighty eight thousand seven hundred and forty six only) due under the federal housing loan account, less the payments made by the defendants as stated in paragraph No.9 of the final order, from the defendants jointly and severally and by sale of ‘A’ schedule property;

(ii) pendente lite and post-decree interest @7% per annum on the sum of Rs.62,69,795/- (Rupees sixty two lakhs sixty nine thousand seven hundred and ninety five only) from 15.03.2012 till realisation, less the payments made by the defendants as stated in paragraph No.9 of the final order, 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 loan from the defendants.

12. ‘A’ schedule to the OA shall be appended to this final order.

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

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

15. 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 21st day of July, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

A P P E N D I X Witness for Applicant: AW1: Sri.Mahadevan H., Chief Manager of the applicant bank. AW2: Sri.Saji Koshy, Senior Manager of the applicant.

Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 20.06.2007 Demand Promissory Note for Rs.50 lakhs executed by the defendants in favour of the applicant bank. A2 20.06.2007 Security delivery letter executed by the defendants in favour of the applicant bank. A3 20.06.2007 Federal housing scheme agreement executed by the defendants in favour of the applicant bank. A4 17.01.2007 Settlement deed No.104/2007 of Pattazhi SRO. A5 21.06.2007 Letter executed by the 1st defendant confirming the deposit of title deed with the applicant bank. A6

19.03.2009 Balance confirmation letter executed by the defendants confirming the balance outstanding under the FHS account. A7

19.01.2012 Copy of lawyer notice issued to the defendants calling upon them to repay the amount due. A8

... Certified copy of the statement of account relating to the FHS loan. A9

... Statement showing the rate of interest applied in the FHS account from time to time. A10 ... Statement showing the penal interest charged in the FHS account and capitalisation value thereof.

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 21st July, 2025

TA No.200/2016 (OA No.123/2012)

Between

The Federal Bank Ltd., Ilambal Branch, Punalur (Via), Kollam District. …Applicant

And

C.Manoj Kumar S/o.Chandrasekharan Pillai R., ‘Puthiya Veedu’, Vadacode, Kura P.O., Kollam District – 691 557 & 3 others.

...Defendants

F I N A L O R D E R