UCO BANK vs DAVISON on 7 June 2017

FINAL ORDER

This Original Application has been filed under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.19,54,431/- with further interest on the sum of Rs.18,65,721/- @16.50% per annum with monthly rests from the defendants and by sale of ‘A’ and ‘B’ schedule properties.

BRIEF FACTS OF THE CASE

1. At the request of the 1st defendant, the applicant bank sanctioned cash credit limit of Rs.15 lakhs as per sanction letter dated 22.07.2011. The said limit was primarily secured by hypothecation of all stocks of provisions, stationary, bakery, cosmetics etc. and is collaterally secured by equitable mortgage of immovable property having an extent of 09.09 Ares (22.500 cents) comprised in Re-Sy.No.218/15/4 (old Sy.No.167/16/1 & 167/16/2) together with building situated therein in Kalavoor Village, Ambalapuzha Taluk belonging to the 1st defendant. The 1st defendant had on 22.07.2011 executed security documents to secure the loan availed by him and that the 2nd defendant executed personal guarantee on 22.07.2011 in favour of the applicant.

2. The defendants failed to abide by the terms and conditions under which the loan was sanctioned and there was no regular transaction in the account. The cash credit account was classified as NPA as on 30.09.2012. The applicant initiated proceedings under the SARFAESI Act and issued S.13(2) demand notice on 05.11.2012. Challenging the proceedings, the 1st defendant approached the Hon’ble High Court of Kerala, but he failed to comply with the direction of the Hon’ble High Court. As per the account kept by the applicant bank in the ordinary course of business, an amount of Rs.19,54,431/- as on 31.08.2014 is due to the bank from the defendants. It is stated that the applicant bank is entitled to recover the said sum of Rs.19,54,431/- together with interest @14.50% per annum on Rs.18,65,721/- from 01.09.2014 till realization and costs from the defendants and by sale of ‘A’ and ‘B’ schedule properties.

3. The defendants were duly served with summons. Though the defendants had entered appearance through Advocate Mathew James and filed written statement on 23.02.2014 denying the averments made by the applicant bank in the OA, they did not file any vakalat till date. Therefore, the merits of the contentions raised by the defendants cannot be appreciated.

4. The evidence on the side of the applicant bank consists of the proof affidavit of its Senior Manager, AW1 and Exts.A1 to A20.

5. 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 to get the reliefs prayed for in the OA?

(ii) What order?

Findings:

Point No.1: In affirmative Point No.2: As per order

Reasons:

6. The case of the applicant bank regarding recovery of the sum of Rs.19,54,431/- claimed as due under Ext.A18 statement of account relating to the cash credit limit as on 31.08.2014 with further interest on the sum of Rs.18,65,721/- at the contractual rate @14.50% per annum with monthly rests plus penal interest @2% per annum from 01.09.2014 to 22.10.2014 together with pendente lite and post decree interest from the defendants and by sale of ‘A’ and ‘B’ schedule properties, is proved by the proof affidavit of its Senior Manager and the evidence adduced by the applicant bank by way of Exts.A1 to A20.

7. Having regard to the amount advanced, the interest and penal interest applied and the chronic default committed, I am of the view that the applicant bank is entitled to get interest pendente-lite and post-decree interest @14.50% per annum with monthly rests.

ORDER

8. The OA is allowed with costs. The applicant bank is allowed to recover the sum of Rs.19,54,431/- (Rupees nineteen lakhs fifty four thousand four hundred and thirty one only) with further interest on the sum of Rs.18,65,721/- (Rupees eighteen lakhs sixty five thousand seven hundred and twenty one only) @14.50% per annum with monthly rests plus penal interest @2% per annum from 01.09.2014 to 22.10.2014 and thereafter @14.50% per annum with monthly rests from 23.10.2014 till realization and also its costs from the defendants and by sale of ‘A’ and ‘B’ schedule properties.

9. ‘A’ and ‘B’ schedules to the OA shall be appended to this order.

10. The applicant bank shall file memo of costs within ten days from the date of this final order.

11. Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

12. 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 7th day of June, 2017]

(S.V.GOWRAMMA)

A P P E N D I X

Witness for Applicant: AW1: O.M.Alikunju, 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 13.07.2011 Loan application submitted by the 1st defendant to the applicant bank. A2 22.07.2011 Sanction letter issued by the applicant bank sanctioning cash credit limit of Rs.15 lakhs to the 1st defendant. A3 22.07.2011 Demand promissory notice for Rs.15 lakhs executed by the 1st defendant in favour of the applicant bank. A4 22.07.2011 Letter of continuity executed by the 1st defendant in favour of the applicant bank. A5 22.07.2011 Waiver of presentment executed by the 1st defendant in favour of the applicant bank. A6

22.07.2011 Hypothecation of goods to secure demand cash credit executed by the 1st defendant in favour of the applicant bank. A7

22.07.2011 Personal guarantee executed by the 2nd defendant in favour of the applicant bank. A8

… Certified copy of the relevant page of the equitable mortgage register evidencing the creation of mortgage by the 1st defendant. A9

25.07.2011 Letter executed by the 1st defendant confirming the deposit of document No.875/2011 with the applicant bank. A10 21.03.2011 Sale deed No.875/2011 of Mararikulam SRO. A11 01.04.2011 Possession-cum-location certificate No.1939/11(1) issued by the Village Officer, Kalavoor. A12 01.04.2011 Location sketch No.1939/11 in respect of the mortgaged property issued by the Village Officer, Kalavoor. A13 01.04.2011 Possession and non-attachment certificate No.1939/11(2) issued by the Village Officer, Kalavoor. A14 30.03.2011 Encumbrance certificate No.2270/2011 issued by Sub Registry Office, Mararikulam.

A15 20.04.2011 Land tax receipt No.3117434 with respect to the mortgaged property. A16 27.04.2011 Building tax receipt No.5 issued to the 1st defendant by Mararikulam South Grama Panchayath. A17 … Certified copy of the statement of account showing the balance due in the cash credit account as on 28.09.2012. A18 … Certified copy of the statement of account relating to the cash credit limit. A19 08.02.2013 Certified copy of the judgment in W.P.(C) No.3561/2013 of the Hon’ble High Court of Kerala. A20 23.02.2015 Copy of the judgment in W.P.(C) No.5659/2015 of the Hon’ble High Court of Kerala.

Defendants’ Exhibits – Nil

(PRESIDING OFFICER)

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

Dated this the 7th day of June, 2017

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

T.A No.806/2016 (O.A No.535/2014) Between UCO Bank

…Applicant And Davison & another.

…Defendants

FINAL ORDER