INDIAN OVERSEAS BANK vs MOHANAN C on 12 November 2018

FINAL ORDER

This Original Application is filed on 05.10.2015 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.6,58,063/-(Rupees Six Lakhs Fifty Eight Thousand and Sixty Three only) with interest @ 11.38% per annum with monthly rests for Rs.6,58,063/-; a sum of Rs.14,12,904/-(Rupees fourteen lakhs twelve thousand nine hundred and four only) with interest @12.09% with monthly rests for Rs.14,12,904/-; a sum of Rs.19,17,853/-(Rupees Nineteen Lakhs Seventeen thousand eight hundred and fifty three only) with interest at the rate of 11.85% per annum with monthly rests for Rs.19,17,853/- and a sum of Rs.22,65,729/- (Rupees Twenty Two Lakhs Sixty Five thousand Seven hundred and Twenty Nine only) from 28.09.2015 till the date of recovery. BRIEF FACTS OF THE CASE:

1. The applicant is a body corporate constituted under the Banking Companies Act 1970, carrying on business of banking and having its registered office at Chennai and having branches all over India including one at Vattiyoorkavu, Trivandrum. The applicant bank is represented by its Senior Manager and Principal Officer who is duly authorized by a Power of Attorney to represent the applicant bank and who is able to and competent to depose on behalf of the applicant bank.

2. It is submitted that the defendants executed various loans as security towards loan on 28.02.2011, 10.10.2011, 28.03.2012 and 29.10.2012 respectively. Defendants also executed Revival letter on 17.02.2014, 30.09.2014 and 20.03.2015. The applicant therefore declares that this OA is within the period of limitation prescribed under the Limitation Act, 1963.

3. The 1st defendant is a businessman engaged in transport business approached the applicant bank on 21.02.2011 for a financial assistance for the purchase of brand new Tipper lorry in connection with augment of his business and the applicant bank sanctioned a loan of Rs.9,00,000/- for the said purpose vide Credit Sanction advice dated 28.02.2011 to the 1st defendant. The 2nd defendant stood as surety for the due repayment of the said loan. The 1st defendant purchased a brand new Swaraj Mazda Tipper Lorry bearing registration No.KL-21-C- 9124 agreing to repay the vehicle loan with interest in 57 equated monthly installments of Rs. 22,000/- each from 10.05.2011 and executed a Demand promissory note for Rs.9,00,000/-, and a letter requesting the applicant bank to permit repayment of the loan in equated monthly installments in favour of the applicant bank on 28.02.2011.It is submitted that the defendants have agreed to repay the vehicle loan with interest in 57 equated monthly installments of Rs. 22,000/- each from 10.05.2011. Further the vehicle was hypothecated favoring the applicant bank and 1st defendant executed Deed of hypothecation and Deed of guaranteed by the 2nd defendant guaranting due repayment of the loan.

4. During October 2011, the 1st defendant approached the applicant bank for a credit facility for purchasing another Tipper lorry and the bank sanctioned and amount of Rs.18.5 Lakhs and the same was communicated to the defendant through a Credit Sanction advice dated 10.10.2011. Making use of the loan, 1st defendant purchased a brand new Swaraj Mazda Tipper Lorries bearing registration Nos.KL-21-D-7081 & KL-21- D-7069 and the same was hypothecated with the applicant bank. The 1st defendant availed the loan by executing Demand promissory note for Rs.18,50,000/-, Deed of hypothecation, a letter requesting the applicant bank to permit repayment of the loan in equated monthly installments and a letter of undertaking in favour of the applicant bank on 28.02.2011. It is submitted that the 1st defendant has agreed to repay the loan in 60 equated monthly installments of Rs.42,800/- each from 10.01.2012.

5. During March the 1st defendant again approached the applicant bank for a credit facility for purchasing Tipper lorry which was sanctioned by the bank for an amount of Rs.19,00,000/- and the same was communicated through a Credit Sanction advice dated 28.03.2012. Making use of the loan, 1st defendant purchased a brand new Swaraj Mazda Tipper Lorries bearing registration No.KL-21-E-5301 & KL-21-E-5304 and the same was hypothecated with the applicant bank. The said loan was availed by the 1st defendant by executing Demand promissory note for Rs.19,00,000/-, Deed of hypothecation, a letter requesting the applicant bank to permit repayment of the loan in equated monthly installments and a letter of undertaking in favour of the applicant bank on 28.03.2012. It is further submitted that the defendant had agreed to repay the loan in 60 equated monthly installments of Rs.42,800/- each from 28.06.2012.

6. Again, on October 2012, the 1st defendant approached the bank for credit facility for purchasing a Backhoe Loader with Kirloskar Enginer (JCB) and accordingly the applicant bank sanctioned a loan of Rs.19,00,000/- to the defendant for the said purpose. The sanction of the loan was communicated by issuance of Credit Sanction advice dated 29.10.2012 to the 1st defendant and the loan was availed by executing Demand promissory note for Rs.19,00,000/-, Deed of hypothecation, a letter requesting the applicant bank to permit repayment of the loan in equated monthly installments and a letter of undertaking in favour of the applicant bank on 29.10.2012. Making use of the funds the 1st defendant purchased a brand new Backhoe loader with Kirloskar Engine(JCB) bearing registration no. KL-21-F-7655 and the same was also hypothecated with the applicant bank. It is also submitted that the defendant had agreed to repay the vehicle loan in 81 equated monthly installments for Rs.34,850/- each from 27.02.2013.

7. After availing the loans, the defendants committed default in repayment of the installments. Inspite of repeated requests and maximum leniency and time given to the defendants to regularize the account, no sincere effort was shown by the defendants to liquidate the dues and the arrears outstanding under the loan account and the account was classified as NPA on 01.07.2014 in accordance with the RBI guidelines.

8. It is further submitted that the defendants had executed revival letters in respect of vehicle loans on 17.02.2014, 30.09.2014 and 20.03.2015 thereby admitting and acknowledging the liability towards the applicant bank. As per the statement of accounts maintained by the bank a sum of Rs.5,58,919/- in A/c no.311100018 as on 28.02.2011, Rs.12,43,543/- in A/c No.311100070 as on 10.10.2011, Rs.16,29,955/- in A/c No.311200030 as on 28.03.2012 and Rs.19,05,809/- in A/c No.311200095 as on 29.10.2012 is outstanding and hence the applicant bank has filed this Original Application.

9. 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 21.12.2015. The summons issued to the defendants are duly served and service of summons is completed as per the regulations. The defendants has neither filed the vakalath nor filed written statement. There was no appearance for the defendants nor defendants were represented by any counsel and hence defendants were placed exparte on 03.07.2017.

10. During the pendency of the OA, the applicant has filed an IA 746/2016 for attachment of properties belonging to the 1st defendant. The Hon’ble Tribunal vide order dated 27.01.2017 has allowed the IA and the IA schedule properties were attached.

11. The evidence on the side of the applicant bank consists of the proof affidavit of its Senior Manager, AW1 and Exhibits A1 to A12 is marked on the side of applicant and closed their side of evidence.

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?

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

In the affirmative

Point No.(ii):

As per final order.

Reasons:-

13. 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 A12 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 defendants have availed the credit facilities from the applicant bank and have failed to repay the dues to the applicant bank. Added to this, the defendants 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.

14. 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 defendants are jointly and severally directed to pay a sum of Rs.6,58,063/- (Rupees Six lakhs Fifty eight thousand sixty three only) together with future interest compounded monthly on a sum of Rs.6,43,548/- (Rs.6,58,063 – Penal interest of Rs.14515) @ 11.38% per annum from 28.09.2015till realization and also its costs from the defendants;

(c) The 1st defendant is directed to pay a sum of Rs.14,12,904/- (Rupees Fourteen Lakhs twelve thousand nine hundred and four only) together with future interest compounded monthly on a sum of Rs.13,89,358/- (Rs.14,12,904 – Penal interest of Rs.23546) @ 12% per annum from 28.09.2015till realization and also its costs from the defendants; (d) The 1st defendant is directed to pay a sum of Rs.19,17,853/- (Rupees Nineteen lakhs seventeen thousand eight hundred and fifty three only) together with future interest compounded monthly on a sum of Rs.18,77,123/- (Rs.19,17,853 – Penal interest of Rs.40,730) @ 12% per annum from

28.09.2015till realization and also its costs from the defendants; (e) The 1st defendant is directed to pay a sum of Rs.22,65,729/- (Rupees Twenty two lakhs sixty five thousand seven hundred and twenty nine only) together with future interest compounded monthly on a sum of Rs.22,14,983/- (Rs.22,65,729 – Penal interest of Rs.50,746) @ 12% per annum from 28.09.2015till realization and also its costs from the defendants; (f) In the event of failure of the defendants to pay the OA claim amount, the bank is at liberty to sell the IA schedule attached properties more fully described in IA 746/2016 of the defendants and the sale proceeds be appropriated towards the OA claim amount as required under law; (g) In the event of non-realization of the OA claim amount despite the sale of the IA schedule properties referred above, the bank is at liberty to proceed against the other properties of the defendants, as required under law; (h) The IA ‘A’ &’B’ Schedule properties scheduled in the IA 746/2016 shall become part and parcel of the final order of the OA and Recovery Certificate of present OA;

(i) The applicant bank shall file memo of costs within ten days from the date of this final order; (j) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

15. 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 her, corrected by me and then pronounced in the open court on this the 12thday of November, 2018]

(S.V.GOWRAMMA)

A P P E N D I X Witness for Applicant: AW1: Mr. S.K.Nair, Senior Manager of the applicant bank.

Witness for Defendant(s): Nil

[Exhibits on the part of the applicant Ext.No Date Particulars of documents A1 28.02.2011 Credit Sanction advice A1a 28.02.2011 Demand promissory note A1b 28.02.2011 Deed of hypothecation A1c 28.02.2011 Deed of guarantee A1d 28.02.2011 Letter to the applicant bank A2 10.10.2011 Credit Sanction advice A2a 10.10.2011 Demand promissory note A2b 10.10.2011 Deed of hypothecation A2c 10.10.2011 Letter to the applicant bank A2d 10.10.2011 Letter of undertaking A3 28.03.2012 Credit Sanction advice A3a 28.03.2012 Demand promissory note A3b 28.03.2012 Deed of hypothecation A3c 28.03.2012 Letter to the applicant bank A3d 28.03.2012 Letter of undertaking A4 29.10.2012 Credit Sanction advice A4a 29.10.2012 Demand promissory note A4b 29.10.2012 Deed of hypothecation A4c 29.10.2012 Letter to the applicant bank A4d 29.10.2012 Letter of undertaking A5 17.02.2014 Revival letter A6 30.09.2014 Revival letter A7 20.03.2015 Revival letter A8 28.02.2011 Statement of accounts from 28.02.2011 to 26.06.2014 A9 10.10.2011 Statement of accounts from 10.10.2011 to 26.06.2014

A10 28.03.2012 Statement of accounts from 28.03.2012 to 26.06.2014 A11 29.10.2012 Statement of accounts from 29.10.2012 to 26.06.2014 A12 - Statement showing Interest charged on the vehicle loan accounts.

Defendant’s Exhibits – Nil

(PRESIDING OFFICER)

IA SCHEDULE PROPERTIES A SCHEDULE PROPERTY District :

Sub District : Vellanad Taluk : Nedumangad Village : Aruvikkara Muri : Kokkothamangalam Panchayat : Aruvikkara Tenure : Pandaravaka Resurvey No. :

Block No. :

Old Sy.No. :

Extent : 4.15 Ares

DESCRIPTION OF PROPERTY All that is part and parcel of property having a total extent of 4.15 Ares in Re.Sy.No.463/17 in Block No.40 corresponding to Old Sy.No.2592/4 of Aruvikkara Village, with a residential building standing therein bearing Panchayat door No.AP XI/68 in Nedumangad Taluk, Thiruvananthapuram District, covered by Sale deed No.611/2009 of Vellanad Sub Registry Office. BOUNDARIES

North : Purayidom

South : Property left for way

East :

West : Remaining property

B SCHEDULE PROPERTY District : Thiruvananthapuram Sub District : Vellanad Taluk : Nedumangad Village : Aruvikkara Muri : Kokkothamangalam Panchayat : Aruvikkara Tenure : Pandaravaka Resurvey No. :

Block No. :

Old Sy.No. : 2581/4-1 Extent : 0.40 Ares

DESCRIPTION OF PROPERTY All that is part and parcel of property having a total extent of 0.40 Ares in Re.Sy.No.463/2 in Block No.40 corresponding to Old Sy.No.2581/4-1 of Aruvikkara Village, in Nedumangad Taluk, Thiruvananthapuram District, covered by Sale deed No.1973/2008 of Vellanad Sub Registry Office. BOUNDARIES

North : Vazhi

South : Vazhi

East : Property of first defendant

West :

[PRESIDING OFFICER]

IN THE DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM Dated this the 12th day of November, 2018 Present: S.V.Gowramma, B.A., LL.B Presiding Officer T.A No. 24/2016 [OA.No.500/2015] Between Indian Overseas Bank, Vattiyoorkavu Branch, …Applicant And Mohanan.C, & another

…Defendants

FINAL ORDER