CANARA BANK vs MS Virgin Aluminium Rolling Mills on 18 December 2025

1. M/s.Virgin Aluminium Rolling Mills,

Shed No.5 and 6,

Mini Industrial Estate,

Chakrapanipuram,

Puthukulangara (P.O.),

Nedumangad,

Thiruvananthapuram District.

2. Virgin Mary Justin,

W/o.Justin,

T.C. 19/460, Mudavanmugal,

Poojapura P.O.,

Thiruvananthapuram,

Thiruvananthapuram District – 695 012. ...Defendants This Original Application having been heard on 19.11.2025 in the presence of Advocate Sri.Ajeesh S.Brite for the applicant bank 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.19,20,864.90 due under MSME loan account together with future interest and costs from the defendants jointly and severally and their assets. 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 Bangalore and one of its branches at Nedumangad in Thiruvananthapuram District.

3. The 1st defendant is a proprietary concern and the 2nd defendant is its proprietrix. Pursuant to the application submitted by the defendants, applicant bank sanctioned an MSME loan of Rs.15 lakhs on 02.04.2013. The defendants hypothecated the stock in trade to secure the loan besides execution of the loan documents in favour of the applicant bank. After availing the facility, the defendants defaulted in repayment and hence a lawyer notice was issued calling upon them to repay the entire outstanding loan amount. Despite receipt of the notice, the defendants did not clear the liability and hence the applicant bank was constrained to file the OA claiming the following reliefs:

(i) To recover a sum of Rs.19,20,864.90 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. Since Written statement

4. The 2nd defendant appeared in person and filed objection admitting the availing of loan from the applicant bank. Due to reasons beyond her control, business unit was closed. Now she is residing in a rented house and is in debt but paid some amount towards the loan account. At the time of availing the loan, applicant bank registered her name in the credit guarantee scheme and the loan was insured and hence necessary direction may be given to the bank to recover the amount from such scheme. Proof Affidavit:

5. In order to establish the claim on behalf of the applicant bank, one Mr.Rakesh R.G., Branch Manager of the applicant has filed proof affidavit and produced the loan documents marked as Exhibits A1 to A8. The availing of the loan is well established from the documents placed by the applicant bank.

6. Despite time granted, the defendants have not filed any counter proof affidavit and hence chance of filing counter proof affidavit stood closed on 24.05.2023. The defendants remained absent from the proceeding and none appeared to address argument and substantiate their claim in this case.

7. From the respective case of the parties, the sole question arises for consideration is whether the applicant bank is entitled to recover the amount claimed in the OA from the defendants?

8. Admittedly, the 2nd defendant availed the subject loan from the applicant bank on 02.04.2013 but due to financial stringency, she could not repay the same in time. While availing the facility, the defendants executed Ext.A3 demand promissory note and Ext.A5 agreement on 02.04.2013 agreeing to repay the loan together with interest @11.75% per annum with quarterly rests. Ext.A8 account statement would show that the defendants remitted some amount towards the loan account but the same was not suffice to regularise the loan which resulted in issuance of Ext.A6 lawyer notice to the defendants on 05.01.2015 calling upon them to repay the entire amount due under the loan account but they failed to repay the dues. In such premises, applicant bank is entitled to recover the outstanding loan amount i.e., Rs.19,20,864.90 due as on 30.09.2015 which is evident from the account statement marked as Ext.A8.

9. Further, it could be seen from paragraph 5.4 of the OA that the applicant bank has charged a sum of Rs.42,277/- by way of penal interest in the subject 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.42,277/- charged in the loan account.

10. 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 pendente lite and post-decree interest @10% per annum on the sum of Rs.18,78,587.90 (i.e., after excluding the penal interest of Rs.42,277/- from the OA claim amount of Rs.19,20,864.90), 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.19,20,864.90 (Rupees nineteen lakhs twenty thousand eight hundred and sixty four and Paise ninety only) from the defendants and their assets;

(ii) pendente lite and post-decree interest @10% per annum on the sum of Rs.18,78,587.90 (Rupees eighteen lakhs seventy eight thousand five hundred and eighty seven and Paise ninety only) from 29.10.2015 till realization from the defendants and their assets; and

(iii) 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 18th day of December, 2025)

[SOVAN KUMAR DASH]

A P P E N D I X Witness for Applicant: AW1: Sri.Rakesh R.G., Branch Manager of the applicant bank. Witness for Defendant(s): Nil

Applicant’s Exhibits

Ext.No Date Particulars of documents

A1 02.04.2013 Loan application submitted to the applicant bank by the defendants. A2 02.04.2013 Sanction memorandum issued by the applicant bank sanctioning MSME loan of Rs.15 lakhs to the defendants. A3 02.04.2013 Demand promissory note for Rs.15 lakhs executed by the defendants. A4 02.04.2013 Request for overdraft facilities executed by the defendants. A5 02.04.2013 Cash credit agreement executed by the defendants. A6

05.01.2015 Copy of lawyer notice issued to the defendants by the applicant bank calling upon them to repay the entire loan amount. A7

06.01.2015 Acknowledgement card signed by the 2nd defendant. A8

… Certified copy of the statement of account relating to the loan.

Defendants’ Exhibits – Nil

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

Dated the 18th December, 2025

TA No.1543/2016 (OA NO.486/2016)

Between

Canara Bank, Nedumangad Branch, PAC Shopping Complex, Near KSRTC Bus Stand, Nedumangad, Thiruvananthapuram. …Applicant

And

M/s.Virgin Aluminium Rolling Mills, Shed Nos.5 and 6, Mini Industrial Estate, Chakrapanipuram, Puthukulangara (P.O.), Nedumangad, Thiruvananthapuram District & another.

...Defendants

F I N A L O R D E R