INDIAN OVERSEAS BANK vs M/s HEERA INDUSTRIES on 30 October 2025

1. M/s.Heera Industries, Mini Industrial Estate, Panayara, Varkala. represented by its proprietrix Heera Devi, Mini Industrial Estate, Panayara, Varkala – 695 145.

2. Heera Devi,

C.P.II – 357, Roshnara, Narikallumukku, Cheruniyoor, Palachira P.O., Varkala – 695 143.

…Defendants

This Original Application having been heard on 28.10.2025 in the presence of Advocate Sri.Leo George for the applicant bank and Advocate K.J.Ratheesh representing counsel for M/s.Renju V. and Aniyan P. for the 2nd defendant and the 1st defendant 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.67,95,816.50 due under cash credit and term loan accounts together with future interest on the sum of Rs.67,18,726.50 from the defendants and by sale of ‘A’ and ‘B’ schedule properties. Facts of the case:

2. The 1st defendant is a proprietary concern of the 2nd defendant. At the request of the defendants, the applicant bank sanctioned the following credit facilities: Date of sanction Type of loan Amount Availed by Collateral security 28.12.2005 Term loan Rs.2 lakhs 1st defendant through the 2nd defendant ‘A’ & ‘B’ schedule properties 28.12.2005 Term loan Rs.3 lakhs 1st defendant through the 2nd defendant ‘A’ & ‘B’ schedule properties 28.12.2005 Cash credit Rs.2 lakhs 1st defendant through the 2nd defendant ‘A’ & ‘B’ schedule properties 29.01.2010 Enhanced cash credit [cash credit limit was enhanced from time to time] Rs.46 lakhs 1st defendant through the 2nd defendant ‘A’ & ‘B’ schedule properties

The 2nd defendant availed the facilities after executing the security documents on behalf of the 1st defendant. Thereafter, they committed default in repayment of the loans. Hence the applicant bank issued a lawyer notice to the defendants on 09.07.2010 calling upon the defendants to repay the outstanding dues under the loan accounts. Despite receipt of the notice, they did not liquidate the liability. In such premises, the applicant bank was constrained to file the OA claiming the following reliefs:

(i) To recover an aggregate sum of Rs.67,95,816.50 together with pendente lite and post decree interest on the sum of Rs.67,18,726.50 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 2nd defendant filed written statement admitting the availing of loans from the applicant bank. It is contended inter alia that the defendants have not executed any revival letter or acknowledgement of debt as claimed by the applicant bank and hence the OA is barred by limitation. The loan facility is covered by CGTMSE scheme and the same was in force at the time of issuance of lawyer notice. The applicant had applied for invocation of guarantee during the month of October, 2010 and the Trust had released a sum of Rs.19,21,488/- towards settlement of claim. Apart from that by sale of the machinery worth more than Rs.35 lakhs which the bank has taken possession under the SARFAESI Act, they can recover the amount due to the bank but they have not taken any further action in this regard. The applicant is not entitled to get the amount claimed in the OA and hence the same may be dismissed. Proof Affidavit:

4. To establish the claim on behalf of the applicant bank, one Mr.George Zachariah, Senior Manager of the applicant has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A39. The availing of the loans and creation of hypothecation/mortgage charge over the schedule properties is well established from the documents placed by the applicant bank. An aggregate sum of Rs.67,95,816.50 is outstanding in the loan accounts as on 25.08.2010, which is clearly established from the account statements marked as Exts.A33, A35 and A37.

5. The 2nd defendant filed counter proof affidavit contending that the loan account is covered by CGTSME Scheme and the applicant has suppressed the receipt of Rs.19,21,488/- from the accounts produced by the applicant. The amount claimed in the OA is not correct. The applicant had taken possession of the industrial unit as well as the machinery under the provisions of SARFAESI Act on 17.12.2010 and if prompt steps were taken against the hypothecated machinery, it could have realized an amount of Rs.35 lakhs by sale of the same. Without any standing instruction from the defendant, the applicant had debited amounts from the loan account to other two accounts which is illegal. In view of the above, the OA is liable to be dismissed with costs.

6. Heard submissions and perused the materials on record. There is no dispute regarding the availing of loans and creation of mortgage over ‘A’ schedule property and hypothecation charge over ‘B’ schedule properties. As collateral security for the loans, the 2nd defendant created mortgage over ‘A’ schedule immovable property by deposit of title deeds with the applicant on 28.12.2005 and executed letter dated 29.12.2005 confirming the creation of mortgage. Further, the 2nd defendant executed loan documents marked as Ext.A25 to A27 on

29.01.2010 to secure the enhanced cash credit limit of Rs.46 lakhs availed by her. The OA was filed on 25.08.2010 which is well within the period of limitation prescribed under the Recovery of Debts and Bankruptcy Act. Mere denial of execution of Ext.A28 revival letter and Ext.A29 balance confirmation letter are not acceptable. The 2nd defendant has not produced any material to substantiate any of the contentions raised either in the written statement or in the counter proof affidavit filed in this case. In the course of hearing, learned counsel for the applicant bank submitted that the secured assets were not sold by the bank so far.

7. The contention regarding CGTSME claim is concerned, the applicant bank has averred in the counter statement dated 05.06.2018 that they have received a part payment of Rs.19,21,488/- towards part settlement of the claim but the bank is not under obligation to give credit to the said amount towards the amount claimed in the OA. According to the applicant, the bank is under obligation to recover the entire amount as claimed in the OA and remit the same to the Credit Guarantee Trust. It is contended by the 2nd defendant that as the applicant bank failed to intimate the CGTMSE about the limit extended to the defendants, the Trust had released lesser amount than this defendant is eligible and hence she is not entitled to pay the amount claimed in the OA.

8. CGTMSE scheme is a guarantee provided to the lenders to protect their interest in the event of default by borrowers. Merely because the credit facilities availed by the defendants is covered under the CGTMSE scheme, they cannot claim that they have no liability to repay the dues. The defendants are liable to pay the outstanding loan amount even if the guaranteed amount is received by the applicant bank and the receipt of such amount will not absolve the defendants from their liability.

9. Considering the amounts 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 in the manner stated below, 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:

Cash credit account Rs.49,82,585.50 (Rupees forty nine lakhs eighty two thousand five hundred eighty five and Paise fifty only) together with pendente lite and post-decree interest on the sum of Rs.49,26,288.50 (Rupees forty nine lakhs twenty six thousand two hundred eighty eight and Paise fifty only) @10% per annum from 26.08.2010 till realisation from the defendants and by sale of ‘A’ and ‘B’ schedule properties; Term loan of Rs.20 lakhs Rs.15,28,352/- (Rupees fifteen lakhs twenty eight thousand three hundred and fifty two only) together with pendente lite and post-decree interest on the sum of Rs.15,11,351/- (Rupees fifteen lakhs eleven thousand three hundred and fifty one only) @10% per annum from 26.08.2010 till realisation from the defendants and by sale of ‘A’ and ‘B’ schedule properties; Term loan of Rs.3 lakhs Rs.2,84,879/- (Rupees two lakhs eighty four thousand eight hundred and seventy nine only) together with pendente lite and post-decree interest on the sum of Rs.2,81,087/- (Rupees two lakhs eighty one thousand and eighty seven only) @10% per annum from 26.08.2010 till realisation from the defendants and by sale of ‘A’ and ‘B’ schedule properties; and also costs and expenses borne by it for realisation of the loans from the defendants.

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 30th day of October, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

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

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 28.12.2005 Sanction letter issued by the applicant bank sanctioning credit facilities to the defendants. A2 29.12.2005 Demand Promissory Note for Rs.20 lakhs executed by the 2nd defendant in favour of the applicant bank. A3 29.12.2005 Term loan agreement executed by the 2nd defendant in favour of the applicant bank. A4 29.12.2005 Letter of hypothecation executed by the 2nd defendant in favour of the applicant bank. A5 29.12.2005 Letter of undertaking executed by the 2nd defendant in favour of the applicant bank. A6

29.12.2005 Letter of undertaking executed by the 2nd defendant granting liberty to the applicant bank to demand the outstanding in the loan accounts in the event of non-compliance of the conditions of the loans. A7

09.03.2006 Demand Promissory Note for Rs.3 lakhs executed by the 2nd defendant in favour of the applicant bank. A8

09.03.2006 Letter of undertaking executed by the 2nd defendant in favour of the applicant bank. A9

07.10.2006 Demand Promissory Note for Rs.2 lakhs executed by the 2nd defendant in favour of the applicant bank. A10 07.10.2006 Letter of hypothecation executed by the 2nd defendant in favour of the applicant bank. A11 07.10.2006 Letter of undertaking executed by the 2nd defendant in favour of the applicant bank.

A12 28.11.2005 Proceedings of the General Manager, District Industries Centre, Thiruvananthapuram. A13 29.12.2005 Letter executed by the 2nd defendant evidencing the deposit of title deed with the applicant bank. A14 20.09.2007 Sanction letter issued to the defendants by the applicant bank. A15 05.10.2007 Demand Promissory Note for Rs.15 lakhs executed by the 2nd defendant in favour of the applicant bank. A16 05.10.2007 Supplemental deed of hypothecation executed by the 2nd defendant in favour of the applicant bank. A17 05.10.2007 Letter of hypothecation of machinery executed by the 2nd defendant in favour of the applicant bank. A18 05.10.2007 Letter of hypothecation of stock executed by the 2nd defendant in favour of the applicant bank. A19 19.03.2009 Sanction letter issued to the defendants by the applicant bank. A20 19.03.2009 Demand Promissory Note for Rs.11 lakhs executed by the 2nd defendant in favour of the applicant bank. A21 19.03.2009 Supplemental deed of hypothecation executed by the 2nd defendant in favour of the applicant bank. A22 19.03.2009 Letter of hypothecation of machinery executed by the 2nd defendant in favour of the applicant bank. A23 19.03.2009 Letter of hypothecation of stock executed by the 2nd defendant in favour of the applicant bank. A24 29.01.2010 Sanction letter issued to the defendants by the applicant bank. A25 29.01.2010 Demand Promissory Note for Rs.46 lakhs executed by the 2nd defendant in favour of the applicant bank. A26 29.01.2010 Letter of hypothecation of machinery executed by the 2nd defendant in favour of the applicant bank. A27 29.01.2010 Letter of hypothecation of stock executed by the 2nd defendant in favour of the applicant bank. A28 17.12.2008 Revival letter executed by the 2nd defendant in favour of the applicant bank.

A29 30.09.2008 Balance confirmation letter executed by the 2nd defendant in favour of the applicant bank. A30 09.07.2010 Copy of lawyer notice issued to the defendants by the applicant bank calling upon them to pay the amount due under the cash credit account. A31 09.07.2010 Copy of lawyer notice issued to the defendants by the applicant bank calling upon them to pay the amount due under the term loan account of Rs.20 lakhs. A32 09.07.2010 Copy of lawyer notice issued to the defendants by the applicant bank calling upon them to pay the amount due under the term loan account of Rs.3 lakhs. A33 … Certified copy of the statement of account relating to the cash credit limit. A34 … Statement showing the rate of interest applied in Ext.A33 account from time to time. A35 … Certified copy of the statement of account relating to the term loan of Rs.20 lakhs. A36 … Statement showing the rate of interest applied in Ext.A35 account from time to time. A37 … Certified copy of the statement of account relating to the term loan of Rs.3 lakhs. A38 … Statement showing the rate of interest applied in Ext.A37 account from time to time. A39 17.05.1996 Photocopy of the Power of Attorney executed by the applicant bank in favour of AW1.

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 October, 2025

TA No.1314/2016 (OA No.360/2010)

Between

Indian Overseas Bank, Varkala Branch, Anil Bhavan, Maithanam, Varkala – 695 141. …Applicant

And

M/s.Heera Industries, Mini Industrial Estate, Panayara, Varkala. represented by its proprietrix Heera Devi, Mini Industrial Estate, Panayara, Varkala – 695 145 & another.

...Defendants

F I N A L O R D E R