INDIAN OVERSEAS BANK vs M/s FOTO FAKTORY STUDIO on 16 July 2018

FINAL ORDER

The applicant bank has filed Original Application [OA] on 06.01.2016 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.11,64,813/- (Rupees Eleven lakhs sixty four thousand eight hundred and thirteen only) with interest @ 11.45% per annum with monthly rests from the date of this application till the date of realization and from the assets of the defendants.

BRIEF FACTS OF THE CASE

1. The applicant is body corporate constituted under Banking Companies (Acquisition and Transfer of Undertaking) Act 1970 carrying on business of banking and having its registered office at Chennai and having branch all over India including one at Pattom, Thiruvananthapuram. The applicant is represented by Sri.N.Kannan Chief Manager who is duly authorized by a power of attorney to represent the applicant bank and competent to depose on behalf of the bank.

2. The defendants had availed loan and executing various security documents on 08.10.2010 and the first payment of the monthly installments was paid by the defendants on 30.04.2011. Further defendants had executed Annexure A5 letter admitting and acknowledging the liability towards the applicant bank on 27.03.2014. Hence, the application is within the period of limitation prescribed under Section 24 of the RDDBFI Act 1993.

3. It is the case of the applicant that the 1st defendant is the proprietary firm of the 2nd defendant under the name and style ‘Foto Faktory Studio. During October 2010, defendants approached the applicant for availing a financial assistance for their business. As per request and after satisfied the eligibility of the defendants, applicant sanctioned a term loan of Rs.8,50,000/-vide credit sanction advice dated 28.09.2010.

4. As a security towards the credit facility, defendants have executed demand promissory note for Rs.8,50,000/- in favour of the applicant, promising to repay the said amount with interest thereon, Further the defendants had executed A term loan agreement dated 08.10.2010, agreeing to abide the terms and conditions of sanction, letter of hypothecation dated 08.10.2010 and a letter dated 08.10.2010 requesting the applicant to permit repayment of the term loan with interest in 60 equated monthly installments of Rs.18,165/- commencing from February 2011.

5. It is the contention of the applicant that defendants were irregular in making the payment of monthly installments and as such committed default of payment of several monthly instalments. Hence, applicant classified the loan account as NPA on 31.03.2013. Thereafter defendants vide issued dated 27.03.2014 admitted their liability with the applicant and promised to clear the liability with the applicant within a period 36 months. Though the defendants had promised to clear the liability within a period of 36 month, they again committed a default. Hence, the applicant continued with the recovery proceedings and issued lawyer notice dated 24.07.2015. Despite receipt of lawyer’s notice ,defendants did not settle the loan amount. As per the statement of account maintained with the applicant bank, an amount of Rs.11,64,813/- due as on 26.12.2015 under the term loan account. Hence, the applicant was constrained to file this original application for recovery of the said amount.

6. After filing the OA, the applicant bank has taken out the summons on the defendants as directed by the Tribunal and has filed the proof of service on 02.03.2016. The summons issued to the defendants was duly served on them and service of summons was completed as per the regulations. Inspite of service of summons, the defendants neither appeared nor represented and they chose to remain absent and hence they were declared ex-parte on 13.10.2017.

7. The evidence on the side of the applicant bank consists of the proof affidavit of its Chief Manager, AW1 and Exhibits A1 to A9 were marked on the side of applicant and close their side of evidence.

8. 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:-

9. The evidence of the applicant bank by way of proof affidavit of its Chief Manager AW1, reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A9 which clearly establishes the case of the applicant bank to allow the present OA. Added to this, the absence of defendants inspite of service of summons appears to be intentional without any bonafide reasons and it appears that they remained absent as they admitted the entire case of the applicant as sought for in the present OA. In view of the above, the present OA is to be allowed with costs as sought by the applicant bank.

10. Having regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, the tribunal is of the view that the applicant bank is entitled to get a final order on the following lines:-

O R D E R

(a) The OA is allowed with costs.

(b) The defendants are liable pay the applicant a sum of Rs.11,64,813/- (Rupees Eleven lakhs sixty four thousand eight hundred and thirteen only) due under the term loan account with further interest on the sum of Rs.11,31,509/- (Rupees Eleven lakhs thirty one thousand five hundred and nine only) (Rs.11,64,813 - penal interest portion of Rs.33,304/-) @11.45% per annum with monthly rests from 05.01.2016 till realization and also its costs.

(c) In the event of non-realization of the OA claim amount, the applicant is at liberty to proceed against the person and other 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.

11. 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 16th day of July, 2018]

(S.V.GOWRAMMA) Presiding Officer

A P P E N D I X Witness for Applicant: AW1: N.Kannan, Chief Manager of the applicant bank.

Witness for Defendants: Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1 28.09.2010 Credit Sanction advice issued by the applicant to the defendants. A2 08.10.2010 Demand promissory note for Rs.8,50,000/- executed by the defendants in favour of the applicant. A3 08.10.2010 Term loan agreement executed by the defendants in favour of the applicant bank. A4 08.10.2010 Letter of hypothecation executed by the defendants in favour of the applicant bank. A5 08.10.2010 Letter requesting the applicant bank to permit repayment of the loan in equated monthly installments executed by the defendants. A6 27.03.2014 Letter issued by the defendants to the applicant bank. A7 24.07.2015 Office copy of the lawyer’s notice issued by the applicant to the defendants along with postal receipts and acknowledgment card. A8

Certified copy of the statement of account pertaining the term loan account of the defendants. A9

Statement of interest charged on the term loan account during the distinctive periods.

Defendants Exhibits – Nil

[PRESIDING OFFICER]

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

Dated this the 16th day of July, 2018

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

Between Indian Overseas Bank, Pattom Branch.

…Applicant And M/s.Foto Faktory Studio, represented by its Proprietor, Sri.Unnikrishnan Nair & another …Defendants

FINAL ORDER