PUNJAB NATIONAL BANK vs LATHA T on 8 September 2025

1. Latha T., W/o.Sreenath (Late), VARA 596, Arappura Lane, Anantha Nagar, Vattiyoorkavu P.O., Thiruvananthapuram – 695 013.

2. Rajamma K., W/o.John, Door No.1054-1, Ward No.14, Palayam, Thiruvananthapuram.

3. Viswajith Sreenath (minor), S/o.Sreenath, Represented by his mother and Natural Guardian Latha T., VARA 596, Arappura Lane, Anantha Nagar, Vattiyoorkavu P.O., Thiruvananthapuram – 695 013. …Defendants

This Original Application having been heard on 21.08.2025 in the presence of Advocates M/s.M.Mohammed Navas and T.P.Sajan for the applicant bank and Advocate Smt.Saraswathy, Court Guardian 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.13(10) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’) for recovery of a sum of Rs.18,14,832/- due under term loan account together with future interest thereon @10.75% per annum with monthly rests from the defendants jointly and severally and their assets. Facts of the case:

2. During October, 2009, husband of the 1st defendant late Sreenath approached the applicant bank for a housing loan for completion of the construction of a house. Considering his request, erstwhile United Bank of India sanctioned a term loan of Rs.20 lakhs under united housing loan scheme. To secure the loan, late Sreenath created mortgage over his property having an extent of 1.62 Ares in Vattiyoorkavu Village by depositing title deed No.283/2009 of Sasthamangalam SRO. He availed the facility after executing security documents in favour of the bank and the 2nd defendant stood as guarantor for the loan. Thereafter the said Sreenath committed default in repayment of the installments and the account turned NPA. Consequently, the bank initiated recovery proceeding under the SARFAESI Act and sold the mortgaged property for Rs.8.30 lakhs on 15.10.2012 and the said amount was appropriated in the loan account. Thereafter on 18.10.2012, defendants 1 and 2 renewed the loan documents. As they failed to discharge the liability, the bank was constrained to file the OA claiming the following reliefs:

(i) To recover the sum of Rs.18,14,832/- together with pendente lite and post-decree interest thereon from the defendants jointly and severally and their assets;

(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.

3. All the defendants were duly served with summons. The 1st defendant entered appearance on 04.03.2016 but she did not file any written statement and hence the chance of filing written statement stood closed. The 2nd defendant neither appeared nor was she represented and hence defendants 1 and 2 were declared exparte on 24.05.2022.

4. The court guardian of minor 3rd defendant filed written statement contending inter alia that document Nos.A12 to A15 are fabricated documents and the father of this defendant has not executed any of the documents so as to make this defendant liable on the same. This defendant is not aware of document Nos.A1 to A5. No property has been inherited by this defendant from his father late Sreenath and hence no claim can be made in this regard. The execution of documents by the mother of this defendant, though not admitted, cannot cast personal liability upon this defendant and hence the claim against him is not sustainable and the same is liable to be rejected. Proof Affidavit:

5. In order to establish the claim on behalf of the applicant bank, one Mr.Alexander Thomas and Mr.Adarsh Mohan, Senior Managers of the applicant have filed proof affidavit and additional proof affidavit and produced the loan documents marked as Exhibits A1 to A18. The proof affidavit and additional proof affidavit filed by AW1 and AW2 and the documents produced in this case are not challenged by the defendants. The availing of loan is well established from the documents placed by the applicant bank. An amount of Rs.18,14,832/- is outstanding in the loan account as on 20.12.2012, which is clearly established from the account statements marked as Exts.A15 and A16.

6. Despite time granted, the court guardian has not filed counter proof affidavit for the 3rd defendant nor produced any material to substantiate his case.

7. On careful evaluation of the submissions and the available materials, it could be seen that pursuant to the loan application marked Ext.A1 submitted by late Sreenath, erstwhile United Bank of India granted a term loan of Rs.20 lakhs under united housing loan scheme for construction of a house and he availed the same after executing necessary security documents in favour of the bank. Towards collateral security for the loan, equitable mortgage was created over 4 cents of land along with a building therein owned by late Sreenath. The 2nd defendant stood as guarantor for the loan. Meanwhile, the borrower Sreenath died, leaving behind his legal heirs Smt.Latha T. (wife) and Vishwajith Sreenath (son), who are defendants 1 and 3 respectively in this case. Due to default in repayment, recovery proceedings were initiated under the provisions of SARFAESI Act and issued Ext.A7 demand notice dated 03.01.2012 under S.13(2) of the SARFAESI Act to defendants 1 and 3 being the legal heirs of late Sreenath as well as the 2nd defendant/guarantor demanding repayment of Rs.24,14,641/- due as on 31.12.2011. As the defendants did not respond to the demand notice, possession of the secured asset was taken on 06.06.2012 vide Ext.A8. Thereafter the secured asset was sold for Rs.8.30 lakhs and sale certificate was issued to the successful bidder on 21.11.2012 vide Ext.A13 and the said amount was appropriated towards the loan account on 27.11.2012.

8. The records would show that after sale of the secured asset, some of the loan documents were renewed by defendants 1 and 2. On 18.10.2012, the 2nd defendant executed Ext.A10 letter of guarantee and the 1st defendant being the legal heir of deceased borrower had executed Ext.A11 demand promissory note for Rs.20 lakhs, Ext.A12 letter of lien and Ext.A14 letter confirming the balance outstanding under the loan account. Admittedly, defendants 1 and 3 are the successors of deceased borrower and the 1st defendant had executed Exts.A11, A12 and A14 documents only in that capacity. A legal heir is liable only to the extent of the property secured by him from the estate of the deceased. Therefore, the applicant bank is entitled to recover the balance amount found due under the loan account from the 2nd defendant and also from the assets, if any, inherited by defendants 1 and 3 from the deceased borrower Sreenath.

9. Further, it could be seen from Ext.A18 statement that the applicant has charged a sum of Rs.2,380/- 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 of Rs.2,380/- charged in the loan account.

10. Considering the amount advanced, interest and penal interest applied, substantial recovery effected by sale of the secured asset and also the loan granted being a housing loan, 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.18,12,452/- (i.e., after excluding the penal interest of Rs.2,380/- from the OA claim amount of Rs.18,14,832/-), which is reasonable in the facts and circumstances of the 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.18,14,832/- (Rupees eighteen lakhs fourteen thousand eight hundred and thirty two only) due under the term loan account from the 2nd defendant and also from the assets inherited by defendants 1 and 3 from the deceased borrower Sreenath;

(ii) pendente lite and post-decree interest on the sum of Rs.18,12,452/- (Rupees eighteen lakhs twelve thousand four hundred and fifty two only) @9% per annum from 26.02.2013 till realization from the 2nd defendant and also from the assets inherited by defendants 1 and 3 from the deceased borrower Sreenath; and

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

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 8th day of September, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

A P P E N D I X Witness for Applicant: AW1: Sri.Alexander Thomas, Senior Manager of the applicant bank. AW2: Sri.Adarsh Mohan, Senior Manager of the applicant bank.

Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 12.10.2009 Application for loan under united housing loan scheme submitted by the deceased Sreenath to the applicant bank. A2 19.10.2009 Sanction letter issued by the applicant bank and signed by the deceased Sreenath. A3 19.10.2009 Agreement under united housing loan scheme executed by the deceased Sreenath in favour of the applicant bank. A4 19.10.2009 Demand promissory note for Rs.20,00,000/- executed by the deceased Sreenath in favour of the applicant bank. A5 19.10.2009 Letter of guarantee executed by the 2nd defendant. A6 19.10.2009 Letter of lien executed by the deceased Sreenath in favour of the applicant bank. A7 03.01.2012 Office copy of the Sec.13(2) notice issued to the defendants. A8 06.06.2012 Office copy of the Sec.13(4) notice issued to the defendants. A9 05.09.2012 Office copy of the Sale notice issued to the defendants. A10 18.10.2012 Letter of guarantee executed by the 2nd defendant. A11 18.10.2012 Demand promissory note for Rs.20,00,000/- executed by the 1st defendant in favour of the applicant bank.

A12 18.10.2012 Letter of lien executed by the 1st defendant in favour of the applicant bank. A13 21.11.2012 Office copy of the sale certificate issued by the applicant bank in favour of Mr. Vishnu Ram G.R. A14 18.10.2012 Revival letter executed by the 1st defendant. A15 12.12.2012 Statement of account from 19.10.2009 to 29.09.2010 with regard to the United housing loan account no.061230001005 and the system administration certificate. A16 20.12.2012 Statement of account from 29.09.2010 to 20.12.2012 with regard to the United housing loan account no.061230001005. A17 20.12.2012 Statement showing the rate of interest in Exhibit A15 account. A18 .. Statement showing the penal interest charged in Exhibit A15 account.

Defendants’ Exhibits – Nil

PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 8th September, 2025

TA No.726/2016 (OA NO.112/2013)

Between

Punjab National Bank (erstwhile United Bank of India), Thiruvananthapuram Branch, Kesava Towers, 1st Floor, Gandhi Amman Koil Road, Thiruvananthapuram. …Applicant And

Latha T., W/o.Sreenath (Late), VARA 596, Arappura Lane, Anantha Nagar, Vattiyoorkavu P.O., Thiruvananthapuram & 2 others.

...Defendants

F I N A L O R D E R