CENTRAL BANK OF INDIA vs RANJITH BABU on 17 November 2025

1. Ranjith Babu,

Proprietor,

M/s.Adi Ayur Foods and Beverages,

MIG-1-8 D, Mullai Nagar,

Raykotta Road,

Hosur – 635 109.

2. Jayalakshmi N. (Died)

W/o.Ravindranathan,

Karapottayil Rema Mandiram,

Kannambra P.O.,

Palakkad – 678 686.

…Defendants

3. Anila,

D/o.Jayalakshmi,

Remamandiram,

Karapotta, Kannambra P.O.,

Palakkad District – 678 686. …Additional 3rd defendant [Additional 3rd defendant was impleaded as legal heir of deceased 2nd defendant as per order dated 14.06.2018 in IA No.773/2017] This Original Application having been heard on 29.10.2025 in the presence of Advocate Sri.Vinod Jabar for the applicant bank and the 1st defendant and additional 3rd 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 an aggregate sum of Rs.1,60,95,967/- due under cash credit and two term loan accounts together with future interest thereon @10.95% per annum with monthly rests in cash credit account and @11.45% per annum with monthly rests in term loan accounts from the defendants jointly and severally and by sale of the OA schedule property. Facts of the case:

2. The applicant is a body corporate incorporated under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its head office at Mumbai and one of its branches at Thrissur.

3. At the request of the 1st defendant, applicant bank sanctioned the following credit facilities: Date of sanction Type of loan Amount Availed by Guarantor/ mortgagor Collateral security 26.10.2013 Cash credit Rs.80 lakhs 1st defendant … … 26.10.2013 Term loan Rs.18 lakhs 1st defendant … …

27.06.2014 Term loan Rs.65 lakhs [Rs.44 lakhs was availed out of Rs.65 lakhs sanctioned] 1st defendant 2nd defendant OA schedule property

The defendants availed the facilities but defaulted in repayment. Hence the applicant issued a lawyer notice to the defendants on 04.08.2015 calling upon them to repay the outstanding dues. Despite receipt of the notice, the defendants did not settle 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.1,60,95,967/- together with pendente lite and post decree interest thereon from the defendants jointly and severally and by sale of the OA 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.

Written statement

4. The 1st defendant filed written statement denying the averments in the OA and claimed inter alia that he availed cash credit facility of Rs.80 lakhs and term loan of Rs.18 lakhs and executed various documents as required by the applicant without knowing the contents thereof. Thereafter, another term loan of Rs.65 lakhs was sanctioned and only Rs.44 lakhs was given to the defendants but steps are being taken to recover the entire amount. The calculation of interest is excessive and hence the applicant is not entitled to get the amount claimed in the OA.

5. The additional 3rd defendant filed written statement contending that the 2nd defendant, who is the deceased mother of defendants 1 and 3, was a guarantor to the term loan of Rs.65 lakhs (only Rs.44 lakhs was disbursed) and her property was mortgaged to the said loan. No mortgage was created and has not given any guarantee to the other two loans availed by the 1st defendant. Subsequently, the aforesaid term loan was closed under OTS and the title deeds relating to the OA schedule property was released to her. Hence the claim of the applicant against the 2nd defendant and her property is not sustainable and the same is liable to be rejected.

Proof Affidavit:

6. To establish the claim on behalf of the applicant bank, one Ms.Shiny S., Senior Manager has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A20. The availing of loans is well established from the documents placed by the applicant bank. An aggregate sum of Rs.1,60,95,967/- is outstanding in the loan accounts as on 28.09.2015, which is clearly established from the account statements produced by the applicant bank.

7. The defendants 1 and 3 have not filed any counter proof affidavit despite time granted. And none appeared and represented for them to address arguments in this case.

8. Heard arguments advanced by the learned counsel for the applicant and perused the materials available on record. Admittedly, the 1st defendant had availed credit facilities from the applicant bank and the deceased 2nd defendant is the guarantor as well as mortgagor to the term loan of Rs.65 lakhs sanctioned to the 1st defendant, out of which Rs.44 lakhs was disbursed to him. In paragraph 5 of the proof affidavit by the applicant bank, it is averred that the term loan of Rs.65 lakhs was closed by the defendants by making a payment of Rs.33.58 lakhs and the OA

schedule property was released by the bank on 27.03.2018. Evidently, deceased 2nd defendant is neither a guarantor nor a mortgagor to the cash credit limit of Rs.80 lakhs and term loan of Rs.18 lakhs availed by the 1st defendant. In such premises, the amount due under the said facilities is to be recovered from the 1st defendant alone and the additional 3rd defendant being the legal heir of deceased 2nd defendant is not liable to pay any amount due under the above two loan accounts.

9. It is averred by the applicant in paragraph No.9 of the proof affidavit that it has charged a sum of Rs.1,32,729/- and Rs.4,009/- by way of penal interest in Exts.A19 and A20 account statements relating to the cash credit facility of Rs.80 lakhs and term loan of Rs.18 lakhs 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 aforementioned penal interest charged in the loan accounts.

10. 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 @10% per annum on the sum of Rs.88,90,979/- (i.e., after deducting the penal interest of Rs.1,32,729/- from the OA claim amount of Rs.90,23,708/-) in the cash credit account and Rs.19,32,120/- (i.e., after excluding the penal interest of Rs.4,009/- from the OA claim amount of Rs.19,36,129/-) in the term loan account, 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.90,23,708/- (Rupees ninety lakhs twenty three thousand seven hundred and eight only) due under the cash credit account together with pendente lite and post-decree interest @10% per annum on the sum of Rs.88,90,979/- (Rupees eighty eight lakhs ninety thousand nine hundred and seventy nine only) from 30.09.2015 till realization from the 1st defendant;

(ii) the sum of Rs.19,36,129/- (Rupees nineteen lakhs thirty six thousand one hundred and twenty nine only) due under the term loan account together with pendente lite and post-decree interest @10% per annum on the sum of Rs.19,32,120/- (Rupees nineteen lakhs thirty two thousand one hundred and twenty only) from 30.09.2015 till realization from the 1st defendant; and

(iii) costs and expenses borne by it for realization of the loans from the 1st defendant.

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 17th day of November, 2025)

[SOVAN KUMAR DASH] PRESIDING OFFICER

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

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 … Loan application submitted to the applicant bank by the 1st defendant. A2 26.10.2013 Sanction letter issued by the applicant bank sanctioning cash credit limit of Rs.80 lakhs and term loan of Rs.18 lakhs to the 1st defendant. A3 26.10.2013 Demand promissory note for Rs.80 lakhs executed by the 1st defendant. A4 … Letter of continuity executed by the 1st defendant. A5 26.10.2013 Agreement of hypothecation executed by the 1st defendant. A6

… Letter of hypothecation executed by the 1st defendant. A7

26.10.2013 Supplementary agreement executed by the 1st defendant. A8

26.10.2013 Term loan agreement executed by the 1st defendant. A9

26.10.2013 Supplementary agreement for term loan executed by the 1st defendant. A10 … Application for term loan submitted by the 1st defendant. A11 27.06.2014 Sanction letter issued by the applicant bank sanctioning term loan of Rs.65 lakhs to the 1st defendant. A12 27.06.2014 Term loan agreement executed by the 1st defendant. A13 27.06.2014 Supplementary agreement executed by the 1st defendant.

A14 27.06.2014 Letter of hypothecation of book debts executed by the 1st defendant. A15 27.06.2014 Form of guarantee for advances executed by the 2nd defendant. A16 04.08.2015 Copy of lawyer notice issued to defendants 1 and 2 calling upon them to repay the outstanding dues. A17 04.08.2015 Postal receipts (2 Nos.) evidencing the dispatch of lawyer notice to the defendants. A18 06.08.2015 Acknowledgement cards (2 Nos.) evidencing the receipt of lawyer notice by the defendants. A19 … Certified copy of the statement of account relating to the cash credit A20 … Certified copy of the statement of account relating to the term loan.

Defendants’ Exhibits – Nil

PRESIDING OFFICER

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 17th November, 2025

TA No.952/2016 (OA No.484/2015)

Between

Central Bank of India, Thrissur Branch. …Applicant

And

Ranjith Babu, Proprietor, M/s.Adi Ayur Foods and Beverages, MIG-1-8 D, Mullai Nagar, Raykotta Road, Hosur – 635 109 & 2 others. ...Defendants &

additional 3rd defendant

F I N A L O R D E R