PUNJAB NATIONAL BANK vs BIJU FRANCIS on 4 January 2019

**FINAL ORDER**

The applicant bank has filed Original Application [OA] on 09.03.2016 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.39,19,860.29 (Rupees Thirty nine lakhs nineteen thousand eight hundred sixty and paise twenty nine only) with future interest @9.6% p.a plus 2% penal interest from the defendant due under the Housing Loan Account No.435700KC00004293 and Rs.7,40,085.50 (Rupees Seven lakhs forty thousand eighty five and paise fifty only) with future interest @ 10.6% p.a plus 2% penal interest from the defendant due under the Vehicle Loan Account No.435700KG00001939 and by sale of OA 'A' & 'B' schedule properties.

**BRIEF FACTS OF THE CASE**

1. 1. The applicant is a bank constituted under Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 having its registered office at No.7, Bhikaiji Cama Place, New Delhi and Branch among other places at Kuruppam Road, Thirissur. The Senior Manager, Kuruppam Road Branch, Thirissur is entitled to sign and verify this application and represent the bank in this proceeding.

2. The defendant was sanctioned with a housing loan facility with a limit of Rs.27,00,000/- on 22.12.2012, vehicle loan facility with a limit of Rs.7,33,000/- on 31.12.2012, last remittance to the housing loan account was made on 30.06.2014, last remittance to the vehicle loan account was on 17.05.2015 and on 27.09.2014 defendant executed balance and security confirmation letter in favour of the applicant bank. The OA is filed on 09.03.2016 within the period limitation prescribed under Section 24 of the RDBFI Act 1993.

3. It is the case of the applicant that defendant had approached the applicant for Housing loan of Rs.27lakhs. After satisfying the credentials of the defendant, applicant sanctioned housing loan amounting to Rs.27lakhs on 22.12.2012. The defendant accepted the sanction and executed agreement for housing loan dated 22.12.2012 agreeing to repay the housing loan in 228 equated monthly installments of Rs.21,804/- each commencing from 31.12.2013, giving a moratorium of 12 months for commencing the repayment. As a collateral security to the said loan, defendant had mortgaged an extent of 3.82 ares in Re.Sy.No.152/8 and another extent of 0.61 ares in Re.Sy.No.152/8 of Chenthrippinni Village, Kondungallur Taluk, covered by Sale Deed No.2623/2012 of Thriprayar Sub Registry, described under schedule 'A' to the OA in favour of the applicant on 01.01.2013 and executed letter deposit of title deeds dated 02.01.2013 in favour of the applicant bank.

4. It is the further case of the applicant that at the request of the defendant, the applicant had sanctioned a Car Loan Facility of Rs.7,33,000/- for purchasing Nissan Sunny XLDSL car. As a security for said loan, defendant had executed an agreement of hypothecation for car loan dated 31.12.2012 in favour of the applicant agreeing the repay the said loan in 84 equated monthly installments of Rs.12,744/- each commencing from 31.01.2013 and also agreed to hypothecate the vehicle to be purchased by the defendant. Accordingly, defendant had hypothecated the vehicle ie., Nissan Sunny XL DSL car bearing Engine No.K9KE424E024592 and Chasis No.MDHB DAN17CA501653 registered as KL.8-BA-160 more fully described under 'B' schedule to the OA and had issued a letter dated 03.01.2013 in favour of the applicant giving the particulars of the vehicle hypothecated in term of the agreement for hypothecation.

5. It is submitted by the applicant that after availing loan facilities; defendant failed to adhere the terms and conditions of sanction and committed default in repayment of loans. Hence, the applicant issued a lawyer notice dated 24.05.2014 to the defendant demanding him to repay the liabilities within 7 days from the date of receipt of notice. As defendant has not clear the liabilities, applicant had issued notice dated 22.09.2014 requesting the defendant to clear the balance amount in the loan accounts. Thereafter, defendant had approached the applicant and promised that the liabilities will be cleared before 30.09.2014 and also acknowledged the liabilities due to the applicant by executing a balance and security confirmation letter dated 27.09.2014 in favour of the applicant. But the defendant did not clear the liabilities as promised by him and hence applicant had classified the account as NPA

on 30.09.2014. Again the applicant issued notice on 09.10.2014 to the defendant requesting him to regularize the loan account to avoid legal action.

6. Despite of repeated demand/request, the defendant did not clear the liability, hence the applicant initiated proceedings under the SARAFESI ACT by issuing Section 13(2) notice dated 30.11.2014. As defendant failed to clear the liabilities within the period stipulated under the Section 13(2) notice, applicant took possession of the immovable properties on 26.02.2015. Due to want of bidders, e-auction sale of immovable properties could not be conducted. As regard to the sale of vehicle is concerned, since the applicant could not trace out the vehicle, its sale could not be conducted so far and applicant through letter dated 23.07.2015 has sought assistance of the police for search of vehicle hypothecated with the applicant.

7. It is further submitted that as on 29.02.2016, an amount of Rs.39,19,860.29 and an amount of Rs.7,40,085.50 is due to the applicant from the defendant under the Housing Loan Account No.435700KC00004293 and Vehicle Loan Account No.435700KG00001939. Hence the present OA.

8. After filing of the OA, the applicant bank has taken out summon as directed by the Tribunal and has filed the proof of service on 28.03.2016. The summons issued to the defendant was duly served on him and service of summons was completed as per the regulations. Thereafter on 12.07.2016 defendant appeared and file a memo stating that he is appearing as a party in person for the case. On 26.08.2016 defendant filed a statement contending that the he has availed housing loan from the applicant bank and as a security for the same he had mortgaged his property.

9. It is further stated one Sujeendra Kumara Guru a person who runs construction company, building homes for others arranged all documents for the loan, collected Rs.50,000/- to pay tax and with the help of the Manager got sanctioned the loan. It is contended that Sujeendra Kumara Guru received the entire sanctioned loan amount by using his signed cheques and withdrawals forms. It is further stated that the defendant had paid good amount to bank and in meantime, the car which was brought by using the bank loan was taken by Sujeendra Kumar Guru convincing the defendant that he had some Srilankan delegates and he want take them Bangalore, believing his words the defendant had given all original documents relating to the car. But he did not bring the car back and convinced the defendant that the car met with an accident in Bangalore and agreed to pay the subsequent month loan amounts.

10. It is submitted by the defendant that he filed a case against the Sujeendra Kumara Guru and former Manager of the applicant bank Sethumadavan.K and also filed copy of FIR along with the statement and the said former Manager Sethumadavan was suspended from the applicant bank in relation with the defendant case. Furthermore, the Sujeendra Kumara Guru was sentenced to jail for 17 days and now the case is going against him to recover the entire amount he withdrew from the bank using defendant's account. It is further submitted that he is ready a willing to settled the account by selling the care and his property which had pledged with the bank. On these contentions, defendant prayed for 12 month time to settle the account.

11. The evidence on the side of the applicant bank consists of the proof affidavit of its Senior Manager (AW1) and Exhibits.A1 to A18 is marked on the side of applicant and closed their side of evidence. Defendant has not filed CPA.

12. Heard arguments of the applicant bank and perused the records of the case. The following points arise for my consideration:

**(i) *Whether the applicant is entitled for the reliefs prayed for in the OA?***

**(ii) *What order?***

Findings:

**Point No.1: In affirmative**

**Point No.2: As per order**

**Reasons:-**

13. It is an admitted case of the defendant that he had availed credit facilities from the applicant bank and creation of mortgage over 'A' and 'B' schedule properties.

14. The sole contention raised by the defendant is that one Sujeendra Kumara Guru who runs a construction company had arranged the entire document for loan and he with the help of the Manager sanctioned the loan. Further the said Sujeendra Kumara Guru had received the entire sanctioned amount by using defendant's signed cheques. It is pertinent to mention here that no prudent man will sign and issue blank cheque papers to anyone. The defendant having admitted the credit facilities availed by him has purchased the vehicle, mortgage of property as security as collateral security towards the facilities. Further concededly the defendant has parted the car and the original document when the vehicle was hypothecated favoring the bank with an intention of defraud the bank. Hence, the said contention of defendant devoid of any merit and does not require any consideration.

15. Yet another contention is registering of FIR against the former Manager of the applicant bank Mr.Sethumadavan and his suspension. Further the fact regarding Mr.Sujeendra Kumara Guru, the building constructor was sentenced to jail for 17 days and the case is going against him is nothing to do with the present case. Though the defendant has taken such contentions, there is no an iota of documents adduced to substantiate his case.

16. Further the OA has been filed to adjudicate the liability of the defendant towards the applicant bank. The criminal proceedings pending before any competent authority and proceedings against the Bank official is irrelevant and unnecessary for deciding the OA and the scope of application under S.19(1) of the Act is confined only to the determination of debt due to the bank or financial institution based on the documentary evidence by both the parties.

17. In the instant matter, though the defendant has filed written statement taking untenable contentions without there being any denial of the availing of the loan, purchase of vehicle using the bank amount disbursed and creation of mortgage as security. Hence the contention of alleged misuse of cheque by Sujeendra Kumara Guru and collusion of former Manager of the applicant bank Sethumadavan.K is untenable without any basis or documents. In absence of any documentary evidence, these contentions fail.

18. The defendant in his written statement sought 12 months time to settle the account. However he did not come forward to clear the debt, nor has approached the bank to settle the liability. The attitude of the defendant reveals that he has not intention to clear the huge liability amounting to Rs.46,59,945.79. [ie, Housing loan of Rs.39,19,860.29 + Vehicle loan of Rs.7,40,085.50].

19. On perusal of the evidence of the applicant bank by way of proof affidavit of Senior Manager AW1 reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A18 which clearly establishes the case of the applicant bank to allow the present OA. Even otherwise the whole case of the applicant bank is based on the documentary evidence and the witness has duly proved all the documents exhibited by him. It is quite evident from the documents placed on record by the applicant bank that defendant has availed the financial assistance from the applicant bank and has failed to repay the dues of the applicant bank. Added to this, absence of the defendant after filing statement appears to be intentional without any bonafide reasons and it appears that he did not contest the matter as he admitted the entire case of the applicant as sought for in the OA.

20. In view of the above the present OA is to be allowed with costs as sought by the applicant bank. Having regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, I am of the view that the applicant bank is entitled to get a final order on the following lines:-

**ORDER**

21. The OA is allowed with costs.

(a) The defendant is directed pay the applicant bank a sum of Rs.39,19,860.29 (Rupees Thirty nine lakhs nineteen thousand eight hundred sixty and paise twenty nine only) with future interest on the sum of Rs.38,21,840.23 [Rupees Thirty eight lakhs twenty one thousand eight hundred forty and paise twenty three only] [i.e. Rs.39,19,860.29 – penal interest of Rs.98,020.06] @ 9.6% per annum due under the Housing Loan Account No.435700KC00004293 from 01.03.2016 till the date of realization.

(b) The defendant is directed pay the applicant bank a sum of Rs.7,40,085.50 (Rupees Seven lakhs forty thousand eighty five and paise fifty only) with future interest on the sum of Rs.7,20,725.17 [Rupees Seven lakhs twenty thousand seven hundred twenty five and paise seventeen only] [i.e. Rs.7,40,085.50 – penal interest of Rs.19,360.33] @ 10.6% per annum due under the Vehicle Loan Account No.435700KG00001939 from 01.03.2016 till the date of realization.

(c) In the event of failure of the defendant to pay the OA claim amount, the bank is at liberty to sell the OA 'A' & 'B' schedule properties and the sale proceeds be appropriated towards the OA claim amount as required under law;

- (d) In the event of non-realization of the OA claim amount despite the sale of the mortgaged properties referred above, the bank is at liberty to proceed against the other properties of the defendant both movable and immovable, as required under law.

- (e) Schedule 'A' & 'B' property shown in the OA shall become part and parcel of the final order of the OA and Recovery Certificate of present OA;

- (f) The applicant bank shall file memo of costs within ten days from the date of this final order;

- (g) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

22. The Registry is directed to communicate copy of the order to the parties concerned by speed post or registered post with AD.

*[Dictated to the Steno, transcribed by him, corrected by me and then pronounced in the open court on this the 4^th day of January, 2019]*

11TA.No.282/2016 (O.A.No.245/2016)**APPENDIX****Witness for Applicant:**

AW1: K.Satheesh Kumar, Senior Manager of the applicant bank..

**Witness for Defendant(s):** Nil

**Exhibits on the part of the applicant**

<table><thead><tr><th><b><u>Ext.No.</u></b></th><th><b><u>Particulars of documents</u></b></th></tr></thead><tbody><tr><td>A1</td><td>Sanction letter dated 22.12.2012 of the applicant for grant of housing loan facility.</td></tr><tr><td>A2</td><td>Agreement for housing loan dated 22.12.2012 executed by the defendant in favour of the applicant.</td></tr><tr><td>A3</td><td>Letter evidencing deposit of title deeds dated 02.01.2013 executed by the defendant in favour of the applicant.</td></tr><tr><td>A4</td><td>Sale Deed No.2623/2012 dated 17.12.2012 of Thriprayar SRO executed by Jamaludheen in favour of Biju @ Biju Francis, pertaining to schedule A property.</td></tr><tr><td>A5</td><td>Agreement for hypothecation for car loan dated 31.12.2012 executed by the defendant in favour of the applicant.</td></tr><tr><td>A6</td><td>Letter dated 03.01.2013 issued by the defendant in favour of the applicant giving the particulars of the vehicle hypothecated in term of Annexure A5.</td></tr><tr><td>A7</td><td>Office copy of lawyer notice dated 24.05.2014 issued by the applicant to the defendant along with original postal receipt and postal acknowledgement.</td></tr><tr><td>A8</td><td>Office copy of notice dated 22.09.2014 issued by the applicant to the defendant.</td></tr><tr><td>A9</td><td>Balance and security confirmation letter dated 27.09.2014 executed by the defendant in favour of the applicant acknowledging the liabilities due under the housing loan facility.</td></tr><tr><td>A10</td><td>Balance and security confirmation letter dated 27.09.2014 executed by the defendant in favour of the applicant acknowledging the liabilities due under the car loan account.</td></tr><tr><td>A11</td><td>Office copy of notice dated 30.11.2014 issued under Section 13(2) of the SARFAESI ACT by the applicant to the defendant.</td></tr><tr><td>A12</td><td>Letter dated 23.07.2015 submitted by the applicant to the Assistant Commissioner of Police west police station, Thirssur.</td></tr></tbody></table>

A13 Extract of Housing Loan account No.435700NC00004293 maintained by the defendant with the applicant duly certified under Banker's Book of Evidence Act.

A14 Statement of account showing the calculation of unapplied interest and penal interest charged in the housing loan account.

A15 Extract of Vehicle Loan account No.435700NG00001939 maintained by the defendant with the applicant duly certified under Banker's Book of Evidence Act.

A16 Statement of account showing the calculation of unapplied interest and penal interest charged in the housing loan account.

A17 General power of attorney dated 05.06.2015 issued by the applicant in favour of Bhanu Saranya.

A18 General power of attorney dated 30.12.2013 issued by the applicant in favour of K.Satheesh Kumar.

Defendant's Exhibits - Nil

TA.No.282/2016 (O.A.No.245/2016)13**SCHEDULE 'A'**

State : Kerala District : Thrissur Sub District : Thriprayar Taluk : Kodungallur Desom : Perumbadappu Village : Chenthroppinni Tenure : Jenmom Resurvey Nos. : 152/8 Extent (in ares) : 4.43

**DESCRIPTION OF PROPERTY**

All that pieces and parcels of land admeasuring 3.82 ares in Resurvey No.152/8 p.t and another extent of 0.61 ares in Survey No.152/8 of Chenthroppinni Village, Kodungallur Taluk and all other improvements attached and appurtenant thereto and covered by Sale Deed No.2623/2012 of Thriprayar Sub Registry.

**BOUNDARIES**

North : Property of Chandramathy East : Property of Rajan West : Properties of Vasu and Narayanan South : Pathway and Property of Shahana.

**SCHEDULE 'B'**

Nissan Sunny DCI XL car with Engine No.K9KE424E024592 and Chasis No.MDHBDAN17CA501653 bearing registration No.KL8-BA-160 registered with Registering Authority, Thrissur.

**IN THE DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM**

Dated this the 5^th day of January 2019

**Present: S.V.Gowramma, B.A., LL.B** **Presiding Officer**

TA.No.282/2016 (O.A.No.245/2016)

**Between**

Punjab National Bank, Kuruppam Road, Thirissur. ....Applicant

**And**

Biju Francis. ....Defendant

**FINAL ORDER**

(PRESIDING OFFICER)