FEDERAL BANK vs AJAYAKUMAR MN on 26 May 2018

FINAL ORDER

This Original Application is filed on 20.02.2015 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.24,99,231.76/- due under the FHS account with interest @ 14.50% per annum with monthly rests on Rs.24,67,786.38/- from the date the application till realization in full from the defendants jointly and severally and by sale of A schedule property to the OA. BRIEF FACTS OF THE CASE

1. The Applicant is a Banking Company within the meaning of Banking Regulation Act, constituted under the Companies Act, 1956, having its registered office at Alwaye and a branch amongst other places, at Puzhakkal in Thrissur District. The Senior Manager and Principal Officer of the applicant bank is competent to verify and file this application and represent the applicant in this application.

2. The applicant declares that the application is presented within the limitation prescribed under Section 24 of the RDBFI Act 1993 as the defendants have executed balance confirmation letter for the loan account on 06.03.2013. Hence, the application is within the period of limitation.

3. It is the case of the applicant that in April 2010, defendants 1 & 2 who are husband and wife approached the applicant bank for Federal Housing Loan facility of Rs.15,50,000/- for construction of a house. Accordingly, applicant bank sanctioned Rs.15,50,000/- vide sanction letter dated 08.04.2010. The 1st defendant is the principal borrower and the 2nd defendant is the co- obligant to the said loan transaction.

4. The defendants 1 and 2 executed all loan documents accepting to the terms and conditions of the agreement stipulated therein. The loan was secured by collateral security of immoveable property described under ‘A’ schedule to the OA for the aforesaid FHS loan facility 1st defendant 08.04.2010. Further the 1st defendant has deposited the title deed with respect of his property covered under Sale Deed No.1692/2010 dated 16.04.2010 of SRO, Vadakkanchery with the applicant and executed a letter dated 24.04.2010 confirming the deposit of title deed.

5. As a security for the repayment of loan defendants executed a demand promissory note for Rs.15,50,000/- dated 08.04.2010 along with a security delivery letter agreeing to repay the said amount together with interest thereon. In addition, the defendants had also executed a Federal Housing Scheme Agreement dated 08.04.2010 in favour of the applicant agreeing to repay the loan amount within a period of 234 months in equal monthly installments of Rs.15,272/- each with interest @9.50%, as fixed by the bank from time to time, with monthly rests subject to revision by the RBI and in case of any default of any of the terms of the agreement the defendants agreed to pay additional interest @ 2%.

6. It is the contention of the applicant that the defendants did not operate the account as per terms and conditions of sanction and repayment towards the loan account was defaulted. Though applicant requested the defendants to regularize the loan account but, they failed to do so. As all the efforts of the applicant did not yield any result, the applicant issued Section 13(2) demand notice under SARFAESI Act 2002, demanding to discharge of the liability in full within 60 days from the date of notice. Though the defendants have received the notice on 29.08.2011, they failed to settle the liability. On 06.03.2013 defendants executed a balance confirmation confirming the balance outstanding in the loan account as on 05.03.2013.

7. As per the statement of account maintained by the applicant bank an amount of Rs.24,99,231.76/- together with future interest is due from the defendants under the FHS account.

Defendants are jointly and severally liable to pay the said amount. Hence, the applicant is constrained to file this original application for recovery of the said amount.

8. After filing of the OA, the applicant bank has taken out the summons as directed by the Tribunal and has filed the proof of service on 24.03.2015. The summons issued to the defendants is duly served and service of summons was completed as per the regulations. The defendants have filed Vakalath on 08.05.2015, but they failed to file written statement in time and hence the chance of filing written statement was closed on 16.11.2017.

9. During the pendency of OA applicant bank has filed memo on 04.06.2015 stating that recovery proceedings under SARFAESI Act was initiated against the ‘A’ schedule property to the OA and the same was sold through auction. The sale proceeds of Rs.7,99,000/- was credited in the account on 21.05.2015.

10. The evidence on the side of the applicant bank consists of the proof affidavit of its Senior Manager and Principal Officer, AW1 and Exhibits A1 to A8 is marked on the side of applicant and closed their side of evidence.

11. 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?

My findings on the above points are as follows:- Point No.(i):

In the affirmative

Point No.(ii):

As per final order.

Reasons:-

12. The evidence of the applicant bank by way of proof affidavit of Senior Manager and Principal Officer AW1 reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A8 which clearly establishes the case of the applicant bank to allow the present OA. Added to this, the non filing of written statement by the defendants in spite of filing Vakalath appears to be intentional without any bonafide reasons and it appears that they did not contest the matter as they admitted the entire case of the applicant as sought for in the OA. In view of the above, the present OA is to be allowed with costs as sought by the applicant bank.

13. 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

(a) The OA is allowed with costs.

(b) The applicant bank is allowed to recover the sum of Rs.24,99,231.76 (Rupees Twenty four lakhs ninety nine thousand two hundred and thirty one and paise seventy six only) with future interest on the sum of Rs.24,61,148.76

(Rupees Twenty four lakhs sixty one thousand one hundred and forty eight and paise seventy six only) [Rs.24,99,231.76 – Rs.38,083 (penal interest)] @12.5% per annum with monthly rests from 20.02.2015 till the date realization and also its costs, less the sum of Rs.7,99,000/- (Rupees Seven lakhs ninety nine thousand only) recovered by the applicant bank by sale of ‘A’ schedule property and was credit in the account on 21.05.2015, from the defendants jointly and severally.

(c) In the event of non-realization of the OA claim amount, the bank is at liberty to proceed against the properties of the defendants, as required under law; (d) The applicant bank shall file memo of costs within ten days from the date of this final order; (e) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

14. 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 26th day of May, 2018]

(S.V.GOWRAMMA) Presiding Officer

A P P E N D I X Witness for Applicant: AW1: Sankaran A.M, Senior Manager and Principal Officer of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1 08.04.2010 Demand Promissory Note executed by the defendants. A2 08.04.2010 Security delivery letter executed by the defendants. A3 08.04.2010 Federal Housing loan agreement executed by the defendants. A4 06.03.2013 Balance confirmation letter executed by the defendants A5

29.08.2011 Demand notice issued by the applicant bank to the defendants. A6

Certified copy of the statement of account of the housing loan duly certified under the Bankers’ Book Evidence Act. A7

Certified copy of the statement showing varying rates of interest applied in Housing loan account. A8

Certified copy of the statement showing penal interest and capitalization of penal interest charged in the Housing loan account.

Defendants Exhibits – Nil

(PRESIDING OFFICER)

IN DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM

Dated this the 26th day of May, 2018

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

Between The Federal Bank Ltd., Registered Office: Aluva, Branch: Puzhakkal. …Applicant And Ajayakumar M.N & another …Defendants

FINAL ORDER