CENTRAL BANK OF INDIA vs A K Nazeer on 27 August 2025

1. A.K.Nazeer,

Plavila Puthen Veedu,

Edava P.O.,

Thiruvananthapuram.

2. Sulfi Nazeer,

W/o.A.K.Nazeer,

Plavila Puthen Veedu,

Edava P.O.,

Thiruvananthapuram.

3. K.K.Shibulal,

TC 1/1613,

Varuvilakattu Veedu,

Medical College P.O.,

Thiruvananthapuram – 695 011.

…Defendants

This Original Application having been heard on 08.08.2025 in the presence of Advocates M/s.Aneesh K.M. and Santhosh Kumar K. for the applicant bank and Advocates M/s.C.I.Abraham, George K.Varghese, Jose Kuriakose and Bindu Abraham for the

3rd defendant and defendants 1 and 2 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.21,61,692/- due under housing loan account together with future interest thereon @10% per annum with monthly rests and penal interest @2% per annum from the defendants jointly and severally and by sale of ‘A’ 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 head office at Mumbai and a branch among other places at Kumarapuram, Thiruvananthapuram.

3. The 1st defendant submitted an application for a housing loan of Rs.15.95 lakhs for purchasing the property described in ‘A’ schedule. Considering his request, applicant bank sanctioned the loan and the 1st defendant availed the facility on 12.06.2007 after executing necessary security documents. The defendants 2 and 3 stood as guarantors for the loan. 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 12.06.2007. After availing the facility, the defendants did not adhere to the repayment schedule and the account became NPA. Hence the applicant bank issued notices to the defendants calling upon them to liquidate the liability but they did not settle the dues. In such premises, the applicant bank was constrained to file the OA claiming the following reliefs:

(i) To recover a sum of Rs.21,61,692/- 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. All the defendants were duly served with summons. But defendants 1 and 2 neither appeared nor were they represented and hence they were declared exparte on 06.09.2011.

5. The 3rd defendant filed written statement denying the averments in the OA. It is contended inter alia that he has no acquaintance or relation with defendants 1 and 2. During May, 2009 applicant bank sanctioned a cent mortgage loan to him and for sanctioning the same, applicant bank obtained several blank documents. The letter of guarantee and consent letter dated 09.05.2009 produced in the OA are the blank documents executed by the defendant for the purpose of obtaining a loan under the scheme of cent mortgage. According to the applicant bank, the 1st defendant executed the loan agreement and the 2nd defendant executed a letter of guarantee with the consent letter on 12.06.2007 but the letter of guarantee with consent letter alleged to be executed by this defendant on 09.05.2009 i.e., after 23 months from 12.06.2007, which is unbelievable. This defendant filed a complaint before the Banking Ombudsman, Thiruvananthapuram. Since the said complaint was premature, the same was returned. Thereafter, he filed a complaint before the Sub Inspector of Police, Medical College Police Station,

Thiruvananthapuram which is pending without any further action. This defendant had never executed a letter of guarantee for the housing loan availed by the 1st defendant and hence the claim against this defendant may be dismissed. Proof Affidavit:

6. In order to establish the claim on behalf of the applicant bank, one Mr.M.Sreekumar and Mr.M.V.Ramachandran, Branch Managers of the applicant has filed proof affidavit and additional proof affidavit respectively and produced the loan documents marked as Exhibits A1 to A25.

7. The 3rd defendant filed counter proof affidavit reiterating the averments made in the written statement and produced some documents which are marked as Exts.B1 to B4.

8. On careful evaluation of the submissions of both sides and the available materials, it appears that the 1st defendant availed a housing loan of Rs.15.95 lakhs from the applicant bank as per Ext.A1 sanction letter and equitable mortgage was created over ‘A’ schedule property towards collateral security for the loan. Further, it could be seen that the 2nd defendant executed Ext.A6 letter of guarantee and Ext.A7 consent letter dated 12.06.2007 and the 3rd defendant executed Ext.A8 letter of guarantee with

Ext.A9 consent letter dated 09.05.2009 in favour of the applicant bank to secure the housing loan availed by the 1st defendant.

9. The sole contention raised by the 3rd defendant is that he never executed Exts.A8 and A9 which are fraudulent documents created by the bank in collusion with defendants 1 and

2. To support his contention, the 3rd defendant produced Ext.B1 letter dated 03.06.2010 of the Banking Ombudsman rejecting his complaint due to non-submission of written representation to the bank, Ext.B2 letter dated 14.06.2010 issued by the applicant bank, Ext.B3 complaint dated 23.07.2010 submitted by him before the Sub Inspector of Police, Medical College Police Station, Thiruvananthapuram and Ext.B4 receipt issued by the Medical College Police Station. However, none of the aforementioned documents would prove his case of non-execution of the guarantee agreement.

10. In response to the complaint filed by the 3rd defendant before the Banking Ombudsman, the applicant bank issued Ext.B2 reply to him on 14.06.2010 which reads as follows: “Shri.Shibulal is banking with us since 15/11/2002 by opening an SB a/c. In the course of his association with us he has introduced customers to our Bank. In the instant case Shibulal has introduced the account of Mr.A.K.Nazeer who has been sanctioned a Housing Loan for Rs.17.85 Lakhs which has since become a Non Performing Asset. …………………………………………………..

You have enough knowhow in executing the Loan documents as you have experience by availing Loan from us in the account of Super Hollow Bricks as well as Cent mortgage Loan in your name. It is surprising that you are in a wrong contention that the Branch misuses the guarantee documents executed by you. Over the period of time, the account of Mr.A K Nazeer was showing a sign of becoming non performing asset, we narrated the case to you and in turn assured regularization of the loan account and offered guarantee of the loan by executing the guarantee documents on a later date convenient to you i.e. on 09/05/2009. The guarantee document signed by you on dt.09/05/2009 is the document executed at the bank premises and in the normal course of business and also fully aware of the case in detail.”

11. The 3rd defendant has no case that he issued any reply to the aforesaid letter issued by the bank. The plea advanced is this case is purely afterthought. Fraudulent creation of documents by the applicant bank is not established by him nor any material is placed by him to corroborate his contention regarding non-execution of Ext.A8 letter of guarantee dated 09.05.2009 and Ext.A9 consent letter. In absence of proof of any material evidence, claim of the 3rd defendant cannot be accepted. The availing of the credit facility and creation of mortgage over ‘A’ schedule property is well established from the documents placed by the applicant bank. A sum of Rs.21,61,692/- is outstanding in the housing loan account as on 05.06.2010, which is clearly established from the account statement marked as Ext.A23.

12. Further, it could be seen from paragraph 12 of the proof affidavit filed by AW1 that the applicant bank has charged a sum of Rs.5,444/- 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.5,444/- charged in the loan account.

13. The records would show that during the pendency of the OA, ‘A’ schedule property was sold by the applicant bank under the provisions of SARFAESI Act and recovered an amount of Rs.11,01,000/- on 01.08.2012. Thereafter, the documents marked as Exts.A10 to A19 were returned to the applicant bank on 07.11.2012 as per order dated 30.10.2012 in IA No.2478/2012. As per the affidavit filed along with IA No.2478/2012 and the memo filed by the applicant bank on 26.08.2025, the following amounts were received by them from the defendants subsequent to filing of this case: 01.08.2012 Rs.11,01,000/- (sale proceeds of ‘A’ schedule property) 01.08.2012 Rs.6,36,133/- 17.03.2018 Rs.6,000/-

14. Pending the OA, the Tribunal passed an order of conditional attachment on 01.10.2015 vide IA No.2420/2015 over the properties scheduled thereto belonging to the 2nd defendant. As the 2nd defendant failed to furnish security for the required sum or to show cause why such security should not be furnished within the stipulated time, the attachment sought for as against the petition schedule properties was ordered to be effected vide order dated 13.11.2015. Hence the applicant bank is entitled to realise the amount found due as above by sale of the attached properties also.

15. Considering the amount advanced, interest and penal interest applied and the facility granted being a housing loan and also substantial recovery effected by sale of the secured asset, I am of the view that the applicant bank is entitled to get pendente lite and post decree interest @9% per annum on the sum of Rs.21,56,248/- (i.e., after excluding the penal interest of Rs.5,444/- from the OA claim amount of Rs.21,61,692/-), which is reasonable in the facts and circumstances of the case.

16. 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.21,61,692/- (Rupees twenty one lakhs sixty one thousand six hundred and ninety two only)

due under the housing loan account, less the payments received by the applicant bank as stated in paragraph No.13 of this final order, from the defendants jointly and severally and by sale of the properties attached under IA No.2420/2015;

(ii) Pendente lite and post-decree interest @9% per annum on the sum of Rs.21,56,248/- (Rupees twenty one lakhs fifty six thousand two hundred and forty eight only) from 09.06.2010 till realization, less the payments received by the applicant bank as stated in paragraph No.13 of this final order, from the defendants jointly and severally and by sale of the properties attached under IA No.2420/2015; and

(iii) costs and expenses borne by it for realization of the loan from the defendants.

17. ‘A’ schedule to the OA and schedule to IA No.2420/2015 shall be appended to this final order.

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

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

20. 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 27th day of August, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

A P P E N D I X Witness for Applicant: AW1: Shri.M.Sreekumar, Branch Manager of the applicant bank. AW2: Shri.M.V.Ramachandran, Branch Manager of the applicant bank.

Witness for Defendant(s):

DW1:

Shri.K.K.Shibulal, 3rd defendant.

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 … Sanction letter issued by the applicant bank sanctioning housing loan of Rs.15.95 lakhs to the 1st defendant. A2 12.06.2007 Loan agreement executed by the 1st defendant. A3 12.06.2007 Consent letter executed by the 1st defendant. A4 12.06.2007 Letter of authority regarding disbursement of loan executed by the 1st defendant. A5 12.06.2007 Letter executed by the 1st defendant in favour of the applicant bank. A6

12.06.2007 Letter of guarantee executed by the 2nd defendant. A7

12.06.2007 Consent letter executed by the 2nd defendant. A8

09.05.2009 Letter of guarantee executed by the 3rd defendant. A9

09.05.2009 Consent letter executed by the 3rd defendant. [Exts.A10 to A19 documents were returned to the applicant bank vide order dated 30.10.2012 in IA No.2478/2012]

A10 12.06.2007 Sale deed No.2004/2007 of Karakulam SRO. A11 17.12.2004 Sale deed No.3574/2004 of Karakulam SRO. A12 15.07.2003 Sale deed No.230/2003 of Karakulam SRO. A13 15.07.1991 Sale deed No.1179/1991 of Nedumangad SRO. A14 06.06.2007 Tax receipt No.944478 issued by Vattappara Village Office. A15 15.01.2005 Possession certificate issued by Vattappara Village Office. A16 15.01.2005 Location certificate prepared by Vattappara Village Office.

A17 21.05.2004 Encumbrance certificate issued by Karakulam SRO. A18 25.05.2004 Encumbrance certificate issued by Karakulam SRO. A19 05.01.2005 Encumbrance certificate issued by Karakulam SRO. A20 23.01.2008 Copy of lawyer notice issued to defendants 1 and

2. A21 20.05.2010 Copy of lawyer notice issued to the defendants recalling the liability. A22 31.05.2010 Reply to Ext.A21 lawyer notice given by the 3rd defendant. A23 03.05.2010 Certified copy of the statement of account relating to the housing loan. A24 14.06.2010 Copy of reply given by the applicant to the complaint submitted by the 3rd defendant. A25 03.06.2010 Copy of reply given to the 3rd defendant by the Banking Ombudsman.

3rd defendant’s Exhibits

Ext.No Date Particulars of documents

B1 03.06.2010 Letter received by the 3rd defendant from the Office of Banking Ombudsman. B2 14.06.2010 Letter received by the 3rd defendant from the applicant bank. B3 23.07.2010 Copy of complaint filed with Medical College Police Station, Thiruvananthapuram by the 3rd defendant. B4 25.07.2010 Receipt issued to the 3rd defendant by the Sub Inspector of Police, Medical College Police Station, Thiruvananthapuram.

PRESIDING OFFICER

ATTACHMENT SCHEDULE PROPERTIES

PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 27th August, 2025

TA No.1337/2016 (OA NO.245/2010)

Between

Central Bank of India, Kumarapuram Branch, Thiruvananthapuram. ...Applicant

And

A.K.Nazeer, Plavila Puthen Veedu, Edava P.O., Thiruvananthapuram & 2 others.

...Defendants

F I N A L O R D E R