CANARA BANK vs M/s SURABHI FOOD RESEARCH & DEVELOPMENT UNIT on 30 July 2025

1. M/s.Surabhi Food Research & Development Unit, V/187, Pazhayannur, Talappilly Taluk, Thrissur District – 680 587, Represented by defendants 2 to 5.

2. Suneer V.V., S/o.Vavakutty, Valiyakath House, Kalleppadam, Pazhayannur, Thrissur District – 680 587.

3. Deepak K.R., S/o.Ramachandran, Kallingaithodiyil House, Thekkethara, Pazhayannur, Thrissur District – 680 587.

4. Sheeja, W/o.Suneer, Valiyakath House, Kalleppadam, Pazhayannur, Thrissur District – 680 587.

5. Densha, W/o.Deepak, Kallingalthodiyil House, Thekkethara, Pazhayannur, Thrissur District – 680 587.

...Defendants

This Original Application having been heard on 24.06.2025 in the presence of Advocate Smt.V.K.Hema 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 an aggregate sum of Rs.16,89,815.85 together with future interest and costs from the defendants personally and by sale of the schedule property. 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 registered office at Bangalore and a branch among other places at Athani, Thrissur District.

3. At the request of the defendants, applicant bank sanctioned a term loan of Rs.20 lakhs and open cash credit limit of Rs.7 lakhs on 04.09.2013 for the business of food processing unit. Out of the term loan of Rs.20 lakhs, applicant bank disbursed an amount of Rs.10,55,200/- only to the defendants based on Sthe agreement executed by them. The defendants availed the facilities on the security of hypothecation of stock of machineries and creating mortgage over 4.96 Ares of land along with factory building as described in the schedule and executed letter dated 04.09.2013 confirming the deposit of title deeds with the applicant bank. Defendants 2 to 5 executed guarantee agreements dated 04.09.2013 guaranteeing due repayment of the amount outstanding under the loan accounts. As the defendants failed to repay the dues, the applicant was constrained to file the OA claiming the following reliefs:

(i) To recover an aggregate sum of Rs.16,89,815.85 together with pendente lite and post-decree interest thereon from the defendants personally 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. The defendants were duly served with summons. But they neither appeared nor were they represented and hence the defendants were declared exparte on 06.12.2018. Proof Affidavit:

5. To establish the claim on behalf of the applicant bank, one Mr.Unnikrishnan P.K., Senior Manager of the applicant has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A27. The proof affidavit filed by AW1 and the documents produced in this case are not challenged by the defendants. The availing of the credit facilities and creation of mortgage over the schedule property are well established from the documents placed by the applicant bank. An aggregate sum of Rs.16,89,815.85 is outstanding in the loan accounts, which is clearly established from the account statements marked as Exts.A23 and A24.

6. Ext.A23 statement would show that the applicant bank has charged a sum of Rs.7,519/- 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 charged in the term 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 @12% per annum on the sum of Rs.11,29,560/- (i.e., after excluding the penal interest of Rs.7,519/- from the OA claim amount of Rs.11,37,079/-) in the term loan account and @12% per annum on the sum of Rs.5,52,736.85 in the open cash credit account (no penal interest is seen charged in the open cash credit account), which is reasonable in the facts and circumstances of the present 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.11,37,079/- (Rupees eleven lakhs thirty seven thousand seventy nine only) due under the term loan account together with pendente lite and post-decree interest @12% per annum on the sum of Rs.11,29,560/- (Rupees eleven lakhs twenty-nine thousand five hundred and sixty only) from 07.12.2015 till realisation from the defendants personally and by sale of the schedule property;

(ii) the sum of Rs.5,52,736.85 (Rupees five lakhs fifty two thousand seven hundred and thirty six and Paise eighty five only) due under the open cash credit account together with pendente lite and post-decree interest thereon @12% per annum from 07.12.2015 till realisation from the defendants personally and by sale of the schedule property; and

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

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

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

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

12. 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 30th day of July, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

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

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 14.06.2013 Application form for loans to Micro and Small Enterprises submitted by the defendants to the applicant bank. A2 14.08.2013 Account opening form executed by the defendants in favour of the applicant bank. A3 14.08.2013 Partnership letter executed by the defendants 2 to 5. A4 02.09.2013 Sanctioned letter No.74/2013 issued by the applicant bank to the defendants. A5 04.09.2013 Request for overdraft facilities of Rs.7,00,000/- submitted by the defendants to the applicant bank. A6 04.09.2013 Pronote for Rs.7,00,000/- executed by the defendants in favour of the applicant bank. A7 04.09.2013 Letter of undertaking executed by the defendants in favour of the applicant bank. A8 04.09.2013 Cash credit agreement executed by the defendants in favour of the applicant bank. A9 04.09.2013 Deed of hypothecation of machinery executed by the defendants in favour of the applicant bank. A10 04.09.2013 Collateral security agreement executed by the defendants in favour of the applicant bank. A11 05.09.2013 Link letter executed by the defendants in favour of the applicant bank. A12 04.09.2013 Guarantee agreement executed by the 2nd defendant. A13 04.09.2013 Guarantee covering letter executed by the 2nd defendant.

A14 04.09.2013 Guarantee agreement executed by the 3rd defendant. A15 04.09.2013 Guarantee covering letter executed by the 3rd defendant. A16 04.09.2013 Guarantee agreement executed by the 4th defendant. A17 04.09.2013 Guarantee covering letter executed by the 4th defendant. A18 04.09.2013 Guarantee agreement executed by the 5th defendant. A19 04.09.2013 Guarantee covering letter executed by the 5th defendant. A20 04.09.2013 Letter evidencing the deposit of title deed executed by the defendants 2 to 5. A21 28.01.2013 Sale Deed No.208/2013 of Pazhayannur SRO. A22 06.03.2006 Sale Deed No.585/2006 of Pazhayannur SRO. A23 11.08.2016 Original ledger extract of the MSME – MFG loan account bearing No.253766000054 from 04.09.2013 to 30.11.2015 duly certified. A24 08.11.2016 Original ledger extract of the open cash credit facility account bearing No.2553261000370 from 04.09.2013 to 30.11.2015 duly certified. A25 04.12.2015 Statement of rate of interest in respect of Exhibit A23 account form 04.09.2013 to 30.11.2015 A26 04.12.2015 Statement of rate of interest in respect of Exhibit A24 account form 05.09.2013 to 30.11.2015 A27 09.09.2006 General power of attorney executed by the applicant bank in favour of Smt. Usha Kumari C.K. 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 30th July, 2025

TA No.1620/2016 (OA No.120/2016)

Between

Canara Bank, SME Branch, Athani, Thrissur – 680 581. …Applicant

And

M/s.Surabhi Food Research & Development Unit, V/187, Pazhayannur, Talappilly Taluk, Thrissur District – 680 587, Represented by defendants 2 to 5 & 4 others.

...Defendants

F I N A L O R D E R