SOUTH INDIAN BANK vs V.K SIVADAS on 22 September 2018

FINAL ORDER

[ This Original Application is filed on 05.12.2008 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.3,43,930/- in the FSL(O) account with interest on Rs.3,22,856/- @ 19.5% per annum and Rs. 20,03,563/- in the CCOL OD account with interest on Rs.18,02,559/- @ 19% per annum with monthly rests from 05.12.2008 till realization and by sale of OA schedule property.

BRIEF FACTS OF THE CASE:

The applicant is a banking company registered under the companies act of 1956 having its registered office at Trichur and branches at various places including one at Mullasserry, Trichur District and is entitled to sue and be sued in its name and the Senior Manager of the Mullasserry Branch Sri. FrancyJos.E, aged 47 years, S/o E.P.Jose who is the principal officer thereof, is competent to verify the application and represent the bank and to file this application.

The applicant declares that the application is within the limitation period prescribed under Sec.24 of the Recovery of Debts due to Banks and Financial Institutions Act 1993, as the loan availed and the documents were executed and the equitable mortgage was created originally on 02.02.2000 renewed on 28.10.2000, 29.05.2003 and debts were acknowledged and liability admitted on 07.12.2005 and on 12.11.2008 when lawyer notice was issued to the defendants.

It is the case of the applicant that the 1st defendant availed an FSL(O) loan of Rs. 5 lakhs for his business of Cable T.V net work and the 2nd defendant is the wife of the 1st defendant is the co-obligant to the loan. The applicant bank sanctioned the loan of Rs. 5 lakhs vide sanction order dated 01.02.2000 and the defendants signed the sanction letter agreeing to the terms and conditions of the sanction. The defendants executed Demand Promissory note on 02.02.2000 agreeing to pay Rs. 5 lakhs on demand along with interest with quarterly rests.

The defendants executed an agreement on 02.02.2000 agreeing to the bank fixing the rate of interest at revised rates notwithstanding the rates mentioned in the documents and also agreed for charging penal interest at the rate of 2% per annum if the repayment is defaulted. Further the defendants executed a hypothecation agreement hypothecating the machineries and other movable towards security of the loan.

The title deeds of the property of the 2nd defendant having an extent of 31 cents in Sy. No. 33/2 and 33/3 bearing document No. 441/99 of Mullasserry SROwere also mortgaged towards security of the FSL(O) loan and deposit of title deed is confirmed vide letter of confirmation dated 02.02.2000 ifavoring the applicant bank.

At the request of the defendants, an OD facility was sanctioned by the bank for limit of Rs.5 lakhs and allowed continuance of the FSL(O) facility with a reduced limit of Rs.2.5 lakhs vide sanction letter dated 28.10.2000. The defendants accepting the terms and conditions of the loan and signed the sanction letter and further executed a pro-note dated 28.10.2000 promising to repay the amount with interest @18%p.a with quarterly rests and the pronote was tendered as cover for the loan along with the letter dated 28.10.2000.

The defendants acknowledged the debt availed in FSL(O) account and accepted the liability as Rs.2,50,000/- as on 28.10.2000 and executed an application for continuance of the security by the deposit of title deeds made on 02.02.2000.

As security for the two loans totaling to Rs.7.5 lakhs the defendants hypothecated the goods, movables and machineries and executed an hypothecation agreement dated 28.10.2000.The defendants executed acknowledgement of debt in both the loan accounts and confirmed the balance in the CCOL account as Rs. 7,12,020/- and in the FSL(O) account as Rs. 1,20,462/- as on 28.05.2003.

On 29.05.2003 the limit of Rs.7.50 lakhs was renewed by sanction intimation letter dated 29.05.2003 and the defendants have signed the sanction letter accepting the terms and conditions of the sanction. Further the defendants on 29.05.2003 also executed a demand promissory note for Rs. 5 lakhs agreeing to repay the amount with interest @ 16% p.a at monthly rests. The defendants also executed a letter of continuity dated 29.05.2003 agreeing that the pro-note shall operate as continuing security for the ultimate balance with interest and other charges on the said loan accounts.

The defendants executed acknowledgement of debt in case of FSL(O) and CCOL facilities and have confirmed the balance in the CCOL facility as Rs. 11,27,470/- and in the FSL(O) account as Rs. 1,91,942/- as on 06.12.2005.

It is submitted that the defendants failed to repay the loan as per the agreed terms and conditions of the loan and hence the bank issued a notice through an Advocate dated 12.11.2008. Inspite of the receipt of the notice of the Advocate, the defendants did not settle the account and hence the applicant bank has constrained to file the OA for recovering the amounts due from the defendants. The loan accounts were classified as NPA and notice under Sec.13(2) of the SARFAESI Act was issued on 02.09.2005. As the defendants failed to settle the account within the statutory period of 60 days, the applicant bank took possession of the secured asset on 17.03.2006.

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 19.01.2009. The summons issued to the defendants is duly served and service of summons was completed as per the regulations. Though defendants have filed reply statement no vakalath is not seen to be filed. Hence, the reply statement cannot be taken into record. Subsequently, there was no appearance for the defendants.

The evidence on the side of the applicant bank consists of the proof affidavit of its Senior Manager, AW1 and Exhibits A1 to A27is marked on the side of applicant and closed their side of evidence.

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:-

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 A27 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 financial assistance from the respondent bank and have failed to repay the dues of the applicant bank.

Added to this, it appears that the defendant did not contest the matter as he 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.

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:-

ORDER

(a) The OA is allowed with costs.

(b) The defendants are jointly and severally directed to pay a sum of Rs.3,43,930/- in the FSL(O) account with interest on Rs.3,22,856/- @ 19.5% per annum and Rs. 20,03,563/- in the CCOL OD account with interest on Rs.18,02,559/- @ 19% per annum with monthly rests from 05.12.2008 till realization and by sale of OA schedule property.

(c) In the event of failure of the defendants to pay the OA claim amount, the bank is at liberty to sell the OA Schedule property of the defendants 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 defendants, as required under law; (e) Schedule 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.

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 22nd day of September, 2018]

(S.V.GOWRAMMA)

A P P E N D I X Witness for Applicant:

AW1: Mr. FrancyJose.E, 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 01.02.2000 Sanction letter in the case FSL(O) A2 02.02.2000 Demand Proceedings-note for Rs.5,00,000/- A3 02.02.2000 Agreement A4 02.02.2000 Agreement of hypothecation A5 - Sale deed No.441/99 of Mullasserry SRO A6 03.02.2000 Letter confirming deposit of title deed A7 28.10.2000 Sanction letter in Form 309 A8 28.10.2000 Demand Pro-note for Rs.5,00,000/- A9 28.10.2000 Letter of tender of Pro-note A10 29.10.2000 Letter of acknowledge of debt FSL(O) A11 28.10.2000 Letter of continuance A12 28.10.2000 Hypothecation agreement concerning good and movable A13 28.10.2000 Hypothecation agreement concerning machineries A14 29.05.2003 Acknowledgement of debt in the CCOL account A15 29.05.2003 Acknowledgement of debt in the FSL(O) account A16 29.05.2003 Sanction intimation letter in Form

A17 29.05.2003 Demand Promissory Note for Rs.5,00,000/- A18 29.05.2003 Letter of continuity A19 29.05.2003 Application for continuance A20 29.05.2003 Hypothecation agreement

Defendant’s Exhibits – Nil

(PRESIDING OFFICER)

A21 07.12.2005 Acknowledgement of debt in the FSL(O) account A22 07.12.2005 Acknowledgement of debt in the CCOL account A23 12.11.2008 Copy of lawyer notice A24 02.09.2005 Copy of notice U/s 13(2) of the SARFAESI Act A25 04.12.2008 Statement of Account of FSL(O) A26 01.12.2008 Statement of Account of CCOL A27 - Statement showing the rate of interest applied to the accounts

SCHEDULE OF PROPERTY

District

:

Trichur Sub District

:

Mullasserry Taluk

:

Chavakkad Firka

:

Nattika Amsom

:

Venkitangu Desom

:

Venkitangu Survey No.

:

33/2 – 33/3 Extent

:

11cents -20cents

DESCRIPTION OF PROPERTY All that part and parcel of land having an extent of 11 cents in Sy.No.33/2 and 20 cents in Sy.No.33/3 lying contiguously to form a total of 31 cents with all improvements and rights thereon covered by Sale Deed No. 441/1999 of Mullasserry S.R.O BOUNDARIES

East : Panchayath road South : Property in the possession of EarachamVeetilHamsa West : DharmadasVakaParambu and property of Sobha

North : Rest of the property

[PRESIDING OFFICER]

IN THE DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM Dated this the 22nd day of September, 2018 Present: S.V.Gowramma, B.A., LL.B Presiding Officer T.A.No.475 / 2016(OA.No.349 / 2008)

Between

The South Indian Bank Ltd.,

Mullasserry Branch,

Trichur District.

…Applicant And

V.K. Sivadas,

Trichur District.

& another

…Defendants

FINAL ORDER