ALLAHABAD BANK vs Satheesh K R on 23 September 2017

FINAL ORDER

The applicant bank has filed Original Application [OA] under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.16,32,398.54 with future interest @ 16.75% p.a with monthly rests from 01.06.2012 till realization and application costs from the defendants jointly and severally and by sale of properties owned by defendants.

BRIEF FACTS OF THE CASE

1. The applicant is a Nationalized Bank licensed and governed by the provisions of Banking Regulations Act, 1949. The applicant is having its Registered Office at 2, Netaji Subhas Road, Kolkata -700 001 and branches at various places including one at Power House Road, Thiruvananthapuram. The Senior Manager, Mr.Rajasekharan.R who is one of the Principal Officers of the Bank, is competent to institute these proceedings for recovery of the debts due to the applicant bank.

2. This Application has been filed on 19.07.2012 before the Tribunal. The applicant submits that the application is within the limitation prescribed under section 24 of the RDDBFI Act, 1993 r/w Sec.13[10] of the Securitization and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002, as the defendants availed loan on 09.02.2008, created mortgage on 04.07.2009, property sold under Securitization Act on 01.10.2011, sale confirmed on 19.11.2011. Thus, the application is well within the period of limitation. The claim of the applicant bank in the OA is for recovery of an amount of Rs.16,32,298.54 with future interest from 01.06.2012 which is above Rs.10 lakhs. Hence the Tribunal has the pecuniary jurisdiction to adjudicate the OA.

3. It is the case of the applicant that on 30.01.2008, 1st defendant had applied for loan for working capital of his business. After consideration of the application, the applicant sanctioned loan of Rs.20,00,000/- vide sanctioned letter dated 11.02.2008. The 1st

defendant on 11.02.2008 executed an agreement of overdraft cash credit agreeing to the terms and conditions of sanction.

4. As security for repayment, the 1st defendant executed a demand promissory note for an amount of Rs.20,00,000/- undertaking to repay the amounts on demand along with interest of 2% above the applicant bank’s prime lending rate compounded with monthly rests. The 1st defendant also issued a letter dated 11.02.2008 waving presentment of the promissory note for payment. The 2nd and 3rd defendant stood as guarantors to the loan facility availed by the 1st defendant and executed guarantee agreement dated 11.02.2008 with the applicant guaranteeing the repayment of the amount due by the 1st defendant.

5. The credit facility is further secured by mortgage of property owned by 2nd defendant having an extent of 19 Ares of land in Re.Sy.No.341/7 (Old Sy.No.179/1/1/208), Block No.27 in Elamadu Village, Kottarakara Taluk, Kollam District and deposited the original title deeds and other documents pertaining to the aforesaid property on 09.02.2008 with an intention to create mortgage over the property as security for the loan availed by the 1st defendant. Further 2nd defendant had issued a letter dated 11.02.2008 to the applicant confirming the deposit of title deed on 09.02.2008. After the execution of necessary loan documents, the applicant opened a cash credit account No.CC 20567802998 and the 1st defendant started operating the account.

6. Subsequently, the 1st defendant applied for another loan facility of Rs.4,98,000/- and the same was sanctioned vide letter dated 26.03.2008. The 1st defendant on 26.03.2008 executed loan agreement,

agreed to abide various terms and conditions of sanction and received the amount on 26.03.2008. The 2nd and 3rd defendants stood as guarantors to the loan facility availed by the 1st defendant had executed a guarantee agreement dated 26.03.2008. That apart, the 2nd defendant issued a letter dated 26.03.2008 acknowledging that the mortgage created on 09.02.2008 will also cover the additional cash credit facility. After the execution of necessary loan documents the applicant opened a cash credit account No.CC20567831952 and the 1st defendant started operating the account.

7. It is the contention of the applicant that initially the defendants were properly repaying the amounts, but subsequently they started committing default and finally the accounts of the defendants were classified as NPA. Thereafter the officers of the applicant approached the defendants and demanded to regularize the loans. But the defendants did not comply with the demand made. Hence the applicant proceeded under SARFAESI Act and issued demand notice on 04.07.2009 demanding payment of the entire amount outstanding due under the loan accounts. But the defendant did not close the accounts. Therefore, the applicant proceeded further under the SARFAESI Act by issuing possession notice dated 14.12.2009 and taken possession of the mortgaged property. As the repeated demands did not yield any result, the mortgaged property was auctioned on 13.08.2010 for successful bid of 21,50,000/- and the sale was confirmed and registered in the name of S.Surendran Pillai, S/o.Sankaran Pillai, Thekkethil Veedu, Panayamcherry Muri, Anchal P.O-691 506 who was the successful bidder.

8. After the sale of the property an amount of Rs.15,77,319.87 is due from the defendant as on 01.03.2012. Therefore, the applicant caused issue lawyer notice dated 10.04.2012 to the defendants to close the loan by repaying the balance amount due after auction. The defendant received the notice, but did not reply or repay any amounts. As per the statement of account maintained with the applicant bank, an amount of Rs.16,32,398.54 is due from the defendants as on 31.05.2012. The defendants are jointly and severally liable for the said amount with interest. Hence the applicant has filed the present OA for realization of the said amount.

9. 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 27.08.2012. The summons issued to the defendants was duly served on them and defendants have filed their Vakalath. On 07.09.2012 defendants had entered appearance through their counsel and sought adjournment for filing written statement. As defendants failed to represent their matter and to file written statement in time the chance of filing of written statement were closed and defendants were set exparte on 08.01.2016.

10. The evidence on the side of the applicant bank consists of the proof affidavit of its Senior Manager, AW1 and Exhibits A1 to A15 are 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 its Senior Manager AW1, reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A15 which clearly establishes the case of the applicant bank to allow the present OA. Added to this, the non filing of written statement by defendants in spite of filing Vakalath 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.

13. Heard the Ld. Counsel for the applicant bank and perused the pleadings and submissions, this Tribunal is of the view that the bank has proved its case beyond reasonable doubts, the documents and evidence lead by the bank are not rebutted by the defendants by not placing any evidence and after careful perusal of the pleadings and documents relied upon by the applicant. 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 jointly and severally are directed pay a sum of Rs.16,32,398.54 (Rupees Sixteen lakhs thirty two thousand three hundred ninety eight and paise fifty four only) with future @ 9% per annum with monthly rests from 01.06.2012 till realization and also its costs from the defendants personally;

(c) in the event of non-realization of the OA claim amount, the bank 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 seven 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 PS, transcribed by her, corrected by me and then pronounced in the open court on this the 23rd day of September, 2017]

(S.V.GOWRAMMA) Presiding Officer

A P P E N D I X Witness for Applicant: AW1: N.S.Salomi, Senior Manger of the applicant bank.

Witness for Defendants: Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1 30.01.2008 Loan application singed by the 1st defendant. A2 11.02.2008 Guarantee agreement signed by 2nd and 3rd defendant. A3 11.02.2008 Demand Promissory note singed by 1st defendant A4 11.02.2008 Letter waiving presentment of promissory note signed by the 1st defendant. A5 11.02.2008 Over Draft agreement signed by 1st defendant. A6 11.02.2008 The letter confirming creation of mortgage by the 2nd defendant. A7 26.03.2008 Sanction letter issued by the applicant to the 1st defendant. A8 26.03.2008 Receipt signed by 1st defendant. A9 26.03.2008 Guarantee agreement signed by 2nd and 3rd defendant. A10 26.03.2008 Over Draft agreement signed by 1st defendant. A11 26.03.2008 Letter of extension mortgage executed by the 2nd defendant. A12 04.07.2009 Demand notice under Section 13(2) issued by the applicant defendants. A13 14.02.2009 Possession notice under Section 13(4) issued by the applicant to the defendants A14 19.11.2011 Registered certificate of sale executed by the Authorized officer. A15

Statement of accounts of loan account No.20567831952 TL duly certified under the Banker’s Books Evidence Act,1891 along with Statement showing various rates of interest charged in the account and Statement of penal interest charged. Defendants’ Exhibits – Nil

(PRESIDING OFFICER)

IN THE DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM

Dated this the 23rd day of September, 2017

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

Between Allahabad Bank, Thiruvananthapuram Branch, Rep.by its Senior Manager. …Applicant And Satheesh K.R & others. …Defendants

FINAL ORDER