STATE BANK OF TRAVANCORE vs SARATH CHANDRAN on 20 March 2017

FINAL ORDER

This Original Application has been filed on 11.12.2015 under Section 19(1) of the Recovery of Debts due to Banks and Financial

Institutions Act, 1993 for recovery of a sum of Rs.8,14,77,351.48 due under cash credit A/c No.67219509831 with future interest on the sum of Rs.8,11,47,827.48 @13.45% per annum with monthly rests from the defendants jointly and severally and by sale of ‘A’ to ‘K' schedule properties and the sum of Rs.1,31,63,741/- due under cash credit A/c No.67219509886 with future interest on the sum of Rs.1,31,06,476/- @13.20% per annum with monthly rests from the defendants jointly and severally and by sale of ‘A’ to ‘K' schedule properties. BRIEF FACTS OF THE CASE

1. At the requests of the defendants, the applicant bank granted to the 1st defendant as sole Proprietor of the firm M/s.Sreebhadra Cashew Company a working capital limit [cash credit (hyp.) limit] of Rs.8 crores with a sub-limit by way of export packing credit limit of Rs.5 crores with full interchangeability. The 1st defendant was also permitted to have a sub-limit of Rs.1 crore with Kadampanad Branch of the applicant bank within the said limit. To secure repayment of the amounts due under the aforesaid credit facilities, the 1st defendant executed agreement of loan for overall working capital limit, agreement of hypothecation of goods and assets and the letter regarding the grant of individual limits within the overall working capital limit dated 06.04.2013 in favour of the applicant bank. By the said agreements, properties described in ‘A’ schedule to the OA were hypothecated in favour of the applicant bank. In consideration of the working capital limit of Rs.8 crores granted to the 1st defendant, defendants 2 and 3 executed an agreement on 06.04.2003.

2. It is stated that by way of collateral security for repayment of the amounts due under the above working capital limit of Rs.8 crores, the 1st defendant created equitable mortgage over his properties described in ‘B’ to ‘F' schedules to the OA, the 2nd defendant created equitable mortgage over his property described in ‘G’ schedule to the OA and the 3rd defendant created equitable mortgage over his properties described in ‘H’ to ‘K’ schedules to the OA on 05.04.2013 by deposit of respective title deeds with the applicant’s branch at Kollam and also executed memorandums on 06.04.2013 evidencing the intention and deposit of title deeds.

3. The defendants violated the terms and conditions governing the grant of loan and despite requests, they did not repay the dues. Hence the applicant bank caused to issue lawyer notice dated 23.11.2015 which was received by the defendants. Since the amount due to the applicant has not been paid yet, applicant is left with no other alternative than to file this OA for recovery of amounts due to it. As per the accounts maintained by the applicant bank, an amount of Rs.8,14,77,351.48 is due under cash credit A/c No.67219509831 and Rs.1,31,63,741/- is due under cash credit A/c No.67219509886. Although the applicant has applied penal interest in the loan accounts, capitalized portion of the same is excluded.

4. The defendants 1 to 3 were duly served with summons. Though they entered appearance and sought time for filing written statement, except filing vakalat by defendants 1 and 2, no written statement is filed by the defendants and the chance of filing written statement stood closed on 08.11.2016. As the 3rd defendant has not filed vakalat, he was set exparte on 08.11.2016.

5. The evidence on the side of the applicant bank consists of the proof affidavit of its Assistant General Manager (AW1) and Exts.A1 to A37.

6. 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?

7. The case of the applicant bank regarding recovery of the sum of Rs.8,14,77,351.48 claimed as due under Exts.A30 and A31 statements relating to the cash credit A/c No.67219509831 as on 10.12.2015 together with interest pendente lite and post decree interest on the sum of Rs.8,11,47,827.48 from the defendants jointly and severally and by sale of ‘A’ to ‘K' schedule properties and the sum of Rs.1,31,63,741/- claimed as due under Exts.A34 and A35 statements relating to the cash credit A/c No.67219509886 with interest pendente lite and post decree interest on the sum of Rs.1,31,06,476/- from the defendants jointly and severally and by sale of ‘A’ to ‘K' schedule properties is proved by the proof affidavit of its Assistant General Manager, AW1 and Exts.A1 to A37. Having regard to the amounts 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 interest pendente-lite and post-decree interest @13.45% per annum with monthly rests in cash credit A/c No.67219509831 and @13.20% per annum with monthly rests in cash credit A/c No.67219509886, as prayed for.

8. The applicant bank, therefore, is entitled to get a final order on the following lines:-

ORDER

The applicant bank is given a final order allowing it to recover,

(i) the sum of Rs.8,14,77,351.48 (Rupees eight crores fourteen lakhs seventy seven thousand three hundred fifty one and Paise forty eight only) under the cash credit A/c No.67219509831 with further interest on the sum of Rs.8,11,47,827.48 (Rupees eight crores eleven lakhs forty seven thousand eight hundred twenty seven and Paise forty eight only) @13.45% per annum with monthly rests from 11.12.2015 till realization from the defendants jointly and severally and by sale of ‘A’ to ‘K' schedule properties;

(ii) the sum of Rs.1,31,63,741/- (Rupees one crore thirty one lakhs sixty three thousand seven hundred and forty one only) under the cash credit A/c No.67219509886 with further interest on the sum of Rs.1,31,06,476/- (Rupees one crore thirty one lakhs six thousand four hundred and seventy six only) @13.20% per annum with monthly rests from 11.12.2015 till realization from the defendants jointly and severally and by sale of ‘A’ to ‘K' schedule properties; and

(iii) also its costs from the defendants jointly and severally and by sale of ‘A’ to ‘K' schedule properties.

9. ‘A’ to ‘K' 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 20th day of March, 2017]

(S.V.GOWRAMMA)

Presiding Officer

A P P E N D I X Witness for Applicant: AW1: Mohanakrishnan, Assistant General Manager of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents

A1 05.04.2013 Sanction letter issued by the applicant bank sanctioning credit facilities to the 1st defendant which was countersigned by the defendants in token of having accepted the terms and conditions thereof. A2 06.04.2013 Agreement of loan for overall working capital limit executed by the 1st defendant in favour of the applicant bank. A3 06.04.2013 Agreement of hypothecation of goods and assets executed by the 1st defendant in favour of the applicant bank. A4 06.04.2013 Letter executed by the 1st defendant in favour of the applicant bank. A5 06.04.2013 Deed of guarantee executed by defendants 2 and 3 in favour of the applicant bank. A6

03.08.2010 Sale deed No.2003/2010 of Pathanamthitta SRO. A7

06.04.2013 Memorandum of deposit of title deed executed by the 1st defendant in favour of the applicant bank. A8

22.12.2011 Sale deed No.4569/2011 of Adoor SRO. A9

06.04.2013 Memorandum of deposit of title deed executed by the 1st defendant in favour of the applicant bank. A10 10.02.2006 Sale deed No.502/2006 of Adoor SRO. A11 06.04.2013 Memorandum of deposit of title deed executed by the 1st defendant in favour of the applicant bank. A12 18.05.2006 Sale deed No.1775/2006 of Adoor SRO. A13 06.04.2013 Memorandum of deposit of title deed executed by the 1st defendant in favour of the applicant bank. A14 26.11.2012 Sale deed No.3498/2012 of Konni SRO. A15 26.11.2012 Sale deed No.3497/2012 of Konni SRO. A16 06.04.2013 Memorandum of deposit of title deed executed by the 1st defendant in favour of the

applicant bank. A17 03.01.2011 Sale deed No.30/2010 of Adoor SRO. A18 06.04.2013 Memorandum of deposit of title deed executed by the 2nd defendant in favour of the applicant bank. A19 30.06.1992 Sale deed No.2060/1992 of Adoor SRO. A20 28.05.2008 Sale deed No.1825/2008 of Adoor SRO. A21 20.04.2004 Sale deed No.1300/2004 of Adoor SRO. A22 21.11.1991 Sale deed No.3167/1991 of Adoor SRO. A23 20.11.1991 Sale deed No.3165/1991 of Adoor SRO. A24 04.08.1992 Sale deed No.2386/1992 of Adoor SRO. A25 06.04.2013 Memorandum of deposit of title deed executed by the 3rd defendant in favour of the applicant bank. A26 23.11.2015 Copy of lawyer notice issued to the defendants by the applicant bank calling upon them to pay the amount due. A27 26.11.2015 Acknowledgment card signed by the 1st defendant evidencing the receipt of Ext.A26 lawyer notice. A28 26.11.2015 Acknowledgment card signed by the 2nd defendant evidencing the receipt of Ext.A26 lawyer notice. A29 … Acknowledgment card signed by the 3rd defendant evidencing the receipt of Ext.A26 lawyer notice. A30 … Certified copy of statement of account relating to the cash credit A/c No.67219509831. A31 … Statement showing the accrued unapplied interest under cash credit A/c No.67219509831. A32 … Statement showing the rate of interest applied in cash credit A/c No.67219509831 from time to time. A33 … Statement showing the penal interest applied in cash credit A/c No.67219509831 and capitalized portion thereof. A34 … Certified copy of statement of account relating to the cash credit A/c No.67219509886. A35 … Statement showing the accrued unapplied interest under cash credit A/c No.67219509886. A36 … Statement showing the rate of interest applied in cash credit A/c No.67219509886

from time to time. A37 … Statement showing the penal interest applied in cash credit A/c No.67219509886 and capitalized portion thereof.

Defendants’ Exhibits – Nil

(PRESIDING OFFICER)

IN THE DEBTS RECOVERY TRIBUNAL- 2, KERALA AT ERNAKULAM

Dated this the 20th day of March, 2017

Present: S.V.Gowramma, B.A., LL.B Presiding Officer T.A No.555/2016 (O.A No.150/2016) Between State Bank of India …Applicant And Rinju.K.Johns & another

…Defendants

FINAL ORDER