INDIAN BANK vs A U Zakir Hussain on 11 September 2025

1. A.U.Zakir Hussain, S/o.Abdul Rahman, Sole Proprietor, M/s.ARS Industries, Priyadarsini, Peroor, T.K.M.C (P.O.), Kollam.

2. Ashraf, S/o.Abdul Karim, Shamla Manzil, Decent Junction, Mukhathala P.O., Kollam.

…Defendants This Original Application having been heard on 26.08.2025 in the presence of Advocate Sri.Rajesh Rajagopala Pillai 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 a sum of Rs.8,90,587/- due under housing loan account together with future interest thereon @11.50% per annum with monthly rests from the defendants and by sale of ‘A’ schedule property; and the sum of Rs.7,63,516.62 due under OCC account together with future interest thereon @14.50% per annum with monthly rests from the 1st defendant and by sale of ‘B’ schedule property. Facts of the case:

2. At the request of the defendants, applicant bank sanctioned the following credit facilities: Date of sanction Type of loan Amount Availed by Guarantor Date of guarantee Collateral security 29.06.2005 Housing loan Rs.8 lakhs 1st defendant 2nd defendant 29.06.2005 ‘A’ schedule property 16.06.2006 OCC facility Rs.7 lakhs 1st defendant for his proprietary concern M/s.A.R.S Industries … … ‘B’ schedule property

The defendants availed the loans after executing loaning/security documents but committed default in repayment and the accounts became highly irregular. Hence the applicant bank issued a lawyer notice to the defendants on 25.04.2009 demanding repayment of the outstanding dues. Despite the notice, the defendants did not turn up to liquidate the liability. In such premises, the applicant was constrained to file the OA claiming the following reliefs:

(i) To recover an aggregate sum of Rs.16,54,103.62 together with pendente lite and post decree interest thereon from the defendants and by sale of ‘A’ and ‘B’ schedule properties;

(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. The defendants were duly served with summons. But they neither appeared nor were they represented and hence the defendants were set exparte on 09.04.2010. Proof Affidavit:

4. In order to establish the claim on behalf of the applicant bank, one Mr.E.K.Babilal, Branch Manager has filed proof affidavit and produced the loan documents marked as

Exhibits A1 to A30. 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 is well established from the documents placed by the applicant bank. An aggregate sum of Rs.16,54,103.62 is outstanding in the loan accounts as on 10.06.2009, which is clearly established from the account statements marked as Exts.A27 to A30.

5. The applicant bank filed a statement on 11.05.2010 claiming that it has charged a sum of Rs.522/- and Rs.1,193/- by way of penal interest in the housing loan account and OCC account respectively. In paragraph 5.19 of the OA it is averred that capitalized portion of the penal interest in OCC account is Rs.101/-. 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 recover the aforesaid sum of Rs.101/- debited as interest on capitalization of penal interest in the OCC account and cannot claim any pendente lite and post-decree interest on the penal interest of Rs.522/- and Rs.1,193/- charged in the housing loan account and OCC account respectively.

6. Pending the OA, applicant bank filed IA No.1518/2009 seeking attachment of the IA schedule properties, which are mortgaged properties described in ‘A’ and ‘B’ schedules to the OA, belonging to the 1st defendant. The Tribunal passed an ad-interim injunction on 23.07.2009 restraining the 1st defendant from transferring, alienating or encumbering the petition schedule properties and the injunction was made absolute on 12.10.2012.

7. Considering the amount advanced, interest and penal interest applied, repayments effected and default committed, I am of the view that applicant bank is entitled to get a sum of Rs.7,63,415.62 (i.e., after excluding the capitalized portion of the penal interest of Rs.101/- from the OA claim amount of Rs.7,63,516.62) in the OCC account and pendente lite and post decree interest @12% per annum on the sum of Rs.7,62,222.62 (i.e., after excluding the penal interest of Rs.1,193/- from Rs.7,63,415.62) in the OCC account and @9% per annum on the sum of Rs.8,90,065/- (i.e., after excluding the penal interest of Rs.522/- from the OA claim amount of Rs.8,90,587/-) in the housing loan account, which is reasonable in the facts and circumstances of the 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.8,90,587/- (Rupees eight lakhs ninety thousand five hundred and eighty seven only) due under the housing loan account together with pendente lite and post decree interest @9% per annum on the sum of Rs.8,90,065/- (Rupees eight lakhs ninety thousand and sixty five only) from 11.06.2009 till realisation from the defendants and by sale of ‘A’ schedule property;

(ii) the sum of Rs.7,63,415.62 (Rupees seven lakhs sixty three thousand four hundred and fifteen and Paise sixty two only) due under the OCC account together with pendente lite and post decree interest @12% per annum on the sum of Rs.7,62,222.62 (Rupees seven lakhs sixty two thousand two hundred and twenty two and Paise sixty two only) from 11.06.2009 till realisation from the 1st defendant and by sale of ‘B’ schedule property; and

(iii) costs and expenses borne by it for realization of the loans from the defendants, in proportion to the amount ordered to be recovered from them.

9. ‘A’ and ‘B’ schedules 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 11th day of September, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

A P P E N D I X Witness for Applicant: AW1: Mr.E.K.Babilal, Branch Manager of the applicant bank.

Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 29.06.2005 Sanction ticket issued by the applicant bank sanctioning housing loan of Rs.8 lakhs to the 1st defendant. A2 29.06.2005 Demand promissory note for Rs.8,00,000 executed by the 1st defendant. A3 29.06.2005 Term loan agreement for housing loan executed by the 1st defendant in favour of the applicant bank. A4 09.05.2000 Sale Deed No.750/2000 of Killikollur SRO. A5 16.06.2004 Tax receipt No.1627203 issued by the Village Office, Kottankara. A6

28.06.2005 Tax receipt No.08523 issued by the Village Office, Kottankara. A7

… Location Sketch No.1041/2005 prepared by the Village Officer, Kottankara. A8

03.06.2005 Encumbrance certificate No.971/2005 issued by the Sub Registrar Office, Killikollur. A9

05.07.2005 Letter executed by the 1st defendant confirming the deposit of title deeds with the applicant bank. A10 29.06.2005 Agreement of guarantee executed by the 2nd defendant in favour of the applicant bank. A11 15.05.2008 Acknowledgement of Debt- Cum- Security executed by the defendants. A12 25.04.2009 Copy of lawyer notice issued to the defendants. A13 29.04.2009 Acknowledgement card signed by the 2nd defendant.

A14 … Postal cover containing lawyer notice sent to the 1st defendant returned as unclaimed. A15 16.06.2006 Sanction letter issued by the applicant bank sanctioning OCC limit of Rs.7 lakhs to the 1st defendant. A16 16.06.2006 Demand promissory note for Rs.7,00,000/- executed by the 1st defendant. A17 16.06.2006 Agreement of hypothecation of movables executed by the 1st defendant in favour of the applicant bank. A18 22.04.1992 Settlement Deed No.987/1992 of Killikollur SRO. A19 10.11.2005 Tax receipt issued by the Village Office, Thrikkovilvattom. A20 10.02.2006 Possession certificate No.141/06-1 issued by the Village Office, Thrikkovilvattom. A21 … Location sketch No. 141/06-2 prepared by the Village Officer, Thrikkovilvattom. A22 07.02.2006 Encumbrance certificate No.133/2006 issued by the Sub Registrar Office, Killikollur. A23 10.02.2006 Encumbrance certificate No.157/2006 issued by the Sub Registrar Office, Kannanalloor. A24 20.06.2006 Encumbrance certificate No.638/2006 issued by the Sub Registrar Office, Kannanalloor. A25 19.06.2006 Letter executed by the 1st defendant confirming the deposit of title deeds with the applicant bank. A26 25.04.2009 Copy of lawyer notice issued to the 1st defendant. A27 28.01.2007 Certified copy of the statement of account relating to the housing loan. A28 10.06.2009 Memorandum of unapplied interest with respect to home loan. A29 10.06.2009 Certified copy of the statement of account relating to the OCC facility. A30 10.06.2009 Memorandum of unapplied interest with respect to OCC facility.

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 11th September, 2025

TA No.1266/2016 (OA No.207/2009)

Between

Indian Bank, Keralapuram Branch. Represented by Chief Manager, Circle Office, Ernakulam, Kochi – 682 035. …Applicant

And

A.U.Zakir Hussain, S/o.Abdul Rahman, Sole Proprietor, M/s.ARS Industries, Priyadarsini, Peroor, T.K.M.C (P.O.), Kollam & another. …Defendants

F I N A L O R D E R