FEDERAL BANK vs TOMY P.P on 28 August 2025

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated this the 28th day of August, 2025

TA No.1213/2016 (OA No.285/2010) Between

The Federal Bank Ltd., Registered Office: Aluva, Branch: Chalakudy, South Junction, Chalakudy – 680 307, Thrissur District.

…Applicant And

Tomy P.P., Sole Proprietor of M/s.Boxer Sports Shoes, Mahila Samajam Road, Kuttikad P.O., Chalakkudy, S/o.Paulose, Pengiparamban House, Kuttikad P.O., Chalakkudy, Thrissur District.

…Defendant

This Original Application having been heard on 05.08.2025 in the presence of Advocate Sri.Vinod Jabar for the applicant bank and the defendant 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.15,22,085.11 and Rs.37,31,571.18 due under cash credit account and term loan account respectively together with future interest thereon @18% per annum with monthly rests (inclusive of penal interest @2% per annum) from the defendant and by sale of ‘A’ and ‘B’ schedule properties. 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 amongst other places at Chalakudy in Thrissur District.

3. The defendant is the sole proprietor of M/s.Boxer Sports Shoes. At his request, on 06.08.2007 the applicant bank granted a cash credit limit of Rs.2,78,170/- for augmenting the proprietary concern of the defendant and a term loan of Rs.20,96,830/- for purchasing machinery. The defendant availed the facilities after executing necessary security documents. In addition to that, ‘A’ schedule movable items were hypothecated and equitable mortgage was created over ‘B’ schedule property and executed letter dated 07.08.2007 confirming the deposit of title deeds with the applicant bank with the intent to create mortgage. After availing the facilities, the defendant failed and neglected to regularize the loan accounts and the accounts were classified as NPA on 30.09.2008. On 09.02.2009, the applicant sent a notice to the defendant under the provision of SARFAESI Act demanding repayment of the outstanding dues. As he did not care to repay the dues, applicant bank took possession of the property on 04.06.2009. Since the defendant failed to settle the liability, applicant bank was constrained to file the OA claiming the following reliefs:

(i) To recover an aggregate sum of Rs.52,53,656.29 together with pendente lite and post-decree interest thereon from the defendant and by sale of ‘A’ and ‘B’ schedule properties;

(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 defendant filed written statement denying the claim made in the OA. It is averred that he was made to sign certain printed formats having blank spaces when he approached the applicant bank for availing the credit facilities referred in the OA. It is submitted that at the time of sanctioning the loans, the applicant has offered to charge interest only @12% per annum. The title documents with respect to the schedule property were taken by the bank for legal scrutiny and he has not delivered the same with an intention to create mortgage. No relief can be granted to the applicant bank based on the documents produced in this case and the OA may be dismissed. Proof Affidavit:

5. To establish the claim on behalf of the applicant bank, one Mr.Jose P.A., Chief Manager of the applicant has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A15. The availing of the credit facilities and creation of hypothecation as well as mortgage charge over ‘A’ and ‘B’ schedule properties are well established from the documents placed by the applicant bank.

6. The defendant filed counter proof affidavit reiterating the averments made in the written statement but he has not adduced any documentary evidence to contradict the claim of the applicant bank. The learned counsel for the defendant had submitted in the proceeding dated 12.07.2017 that he is relinquishing the vakalath. Thereafter, none appeared and represented for the defendant in this case.

7. On careful evaluation of the materials, it appears that the defendant availed the subject loans from the applicant bank after executing Ext.A1 to A6 loan documents and agreed to pay the amount together with interest @16% per annum. To secure the credit facilities, sale deed marked as Ext.A7 pertaining to ‘B’ schedule property was deposited with the applicant bank on 06.08.2007 and executed Ext.A8 letter dated 07.08.2007 confirming the deposit of title deed with the bank with the intention to create mortgage. As per the account statements marked as Exts.A10 and A11, an aggregate sum of Rs.52,53,656.29 is outstanding in the loan accounts as on 15.07.2010.

8. Further, it could be seen from Exts.A14 and A15 statements that the applicant bank has charged a sum of Rs.52,608/- and Rs.67,565/- by way of penal interest in the cash credit account and term loan 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.52,608/- and Rs.67,565/- charged in the loan accounts.

9. Considering the amount advanced, debiting of exorbitant amount towards interest, penal interest and other charges in the loan accounts, 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.14,69,477.11 (i.e., after excluding the penal interest of Rs.52,608/- from the OA claim amount of Rs.15,22,085.11) in the cash credit account and @10% per annum on the sum of Rs.36,64,006.18 (i.e., after excluding the penal interest of Rs.67,565/- from the OA claim amount of Rs.37,31,571.18) in the term loan account, 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:

(i) the sum of Rs.15,22,085.11 (Rupees fifteen lakhs twenty two thousand and eighty five and Paise eleven only) due under the cash credit account together with pendente lite and post-decree interest @10% per annum on the sum of Rs.14,69,477.11 (Rupees fourteen lakhs sixty nine thousand four hundred and seventy seven and Paise eleven only) from 16.07.2010 till realization from the defendant and by sale of ‘A’ and ‘B’ schedule properties;

(ii) the sum of Rs.37,31,571.18 (Rupees thirty seven lakhs thirty one thousand five hundred and seventy one and Paise eighteen only) due under the term loan account together with pendente lite and post-decree interest @10% per annum on the sum of Rs.36,64,006.18 (Rupees thirty six lakhs sixty four thousand and six and Paise eighteen only) from 16.07.2010 till realization from the defendant and by sale of ‘A’ and ‘B’ schedule properties; and

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

11. ‘A’ and ‘B’ schedules 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 28th day of August, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

A P P E N D I X Witness for Applicant: AW1: Shri.Jose P.A., Chief Manager and Principal Officer of the applicant bank.

Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 06.08.2007 Demand Promissory Note for Rs.2,78,170/- executed by the defendant in favour of the applicant bank. A2 06.08.2007 Security delivery letter executed by the defendant. A3 06.08.2007 Agreement for cash credit limit executed by the defendant in favour of the applicant bank. A4 06.08.2007 Demand Promissory Note for Rs.20,96,830/- executed by the defendant in favour of the applicant bank. A5 06.08.2007 Security delivery letter executed by the defendant. A6 06.08.2007 Agreement for term loan executed by the defendant in favour of the applicant bank. A7 10.11.2006 Sale Deed No.6966/2006 of Chalakkudy SRO. A8 07.08.2007 Letter confirming the deposit of title deed and creation of mortgage executed by the defendant. A9 28.11.2008 Office copy of lawyer notice issued to the defendant. A10 06.07.2010 Statement of account of CC limit duly certified under Bankers Book Evidence Act/IT Act. A11 06.07.2010 Statement of account of Term loan duly certified under Bankers Book Evidence Act/IT Act. A12 .. Statement showing varying rates of interest charged in Exhibit A10 account. A13 .. Statement showing varying rates of interest charged in Exhibit A11 account.

A14 .. Statement showing penal interest and capitalised penal interest charged in Exhibit A10 account. A15 .. Statement showing penal interest and capitalised penal interest charged in Exhibit A11 account.

Defendant’s Exhibits – Nil

PRESIDING OFFICER

PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 28th August, 2025

TA No.1213/2016 (OA No.285/2010)

Between

The Federal Bank Ltd., Registered Office: Aluva, Branch: Chalakudy, South Junction, Chalakudy – 680 307, Thrissur District. …Applicant

And

Tomy P.P., Sole Proprietor of M/s.Boxer Sports Shoes, Mahila Samajam Road, Kuttikad P.O., Chalakkudy, S/o.Paulose, Pengiparamban House, Kuttikad P.O., Chalakkudy, Thrissur District.

...Defendant

F I N A L O R D E R