INDIAN OVERSEAS BANK vs MUMTAS RAHIM on 27 September 2016

1. The present Original Application is filed by the applicant under section 19 of the RDB&FI Act against the defendant seeking the order to issue Recovery Certificate in favour of the applicant bank with a direction to the defendant to pay a sum of Rs.14,46,988/- with further interest thereon @14.40% per annum with half yearly rests from the date of application till the date of realisation and by sale of movable and immovable properties described in the schedule to the OA.

TA 393/2016 (OA 462/2015)2

2. The brief facts of the case of the applicant bank is that the defendant approached the applicant in August, 2012 seeking for an agricultural term loan for the purchase of land for agricultural purpose. At the request of the respondent the applicant bank sanctioned a term loan of Rs. 10 lakhs on 11.08.2012 under the Bhoomi Lakshmi Scheme of the applicant bank.

3. The defendant availed the credit facility accepting to the terms and conditions of sanction by acknowledging to the terms of sanction and had executed demand promissory note dated 16.08.2012 promising to pay a sum of Rs.10 lakhs with interest thereon at the rate of the Base rate of the bank plus 2.50% p.a with a minimum of 13% p.a.

4. The respondent has executed all security documents on 16.08.2015 towards the sanction of the credit facility and as collateral security, he has mortgaged by deposit of title deeds in respect of an extent of 9.26 ares comprised of 3.92 Ares in Re-Sy. No. 359/3 and 5.34 Ares in Re sy. No. 359/2-2 of Palamel village, Mavelikerara Taluk, Alappuzha district and has deposited the original sale deed No.1910/12, Nooranad S.R.O with an intention to create mortgage.

5. The defendant vide letter dated 16.08.2012 had consented that the DPN and other relevant documents are executed for security for the repayment of all sum remaining unpaid and further authorised the applicant bank to pay Mr. Sunish Philip a sum of Rs.10,95,000/- as sale consideration for the sale of 8.26 Ares of land which was purchased by the defendant. The defendant TA 393/2016 (OA 462/2015)3

had agreed to repay the loan amount in 20 equal half yearly instalment of Rs.85,450/- commencing from 30.09.2014, failing which the applicant was authorised to recall the entire loan amount.

6. The defendant vide letter dated 16.08.2012 has authorised the applicant bank to recover the loan amount under the Kerala Revenue Recovery Act and also consented to payment of collection charges in case the loan amount is recovered under the said ACT and further the defendant has hypothecated standing crops and future crops on the property which was being purchased from the said credit facility.

7. The defendant did not adhere to the terms and conditions of the sanction, he failed to repay the loan as agreed upon, consequently the loan account became NPA on 30.06.2015. The applicant bank issued advocate notice on 28.01.2015 demanding payment of the entire loan amount outstanding and on failure to comply with the demand, the applicant would be proceeding further in recovering the loan amount, the legal notice is received by the defendant and the same is evidenced by the Acknowledgement card.

8. The defendant has executed revival letter dated 19.06.2015 acknowledging the liability under the term loan facility and acknowledging the security documents executed along with the charge created including the mortgage and hypothecation to remain in force. In spite of repeated demand the defendant failed to repay the outstanding amount due in the loan account, hence the TA 393/2016 (OA 462/2015)4

applicant bank has filed the present OA for recovery of amount due in the term loan facility availed by the defendant.

9. After filing of the main application, summons came to be issued to the defendant by RPAD along with paper book. Summons issued to the defendant came to be returned as "unclaimed". It is therefore construed that summons came to be duly served to defendant. The defendant had entered appearance through a lawyer and the counsel undertook to file vakalath and written statement, neither vakalath nor written statement has been filed despite sufficient time granted. Subsequently, he remained absent and was not represented and thus the defendant was declared *ex parte* on 21.06.2016.

10. Thereafter Sri. Geroge Thomas, Senior Manager of the applicant bank has filed his affidavit by way of evidence and got marked 11 documents as Exhibits A1 to Ex.A11. Since defendant remained absent and set ex parte, there is no evidence on behalf of the defendant.

11. Perused records of the case and heard the arguments of the applicant's counsel appearing for the bank.

12. Following points arise for consideration:

[i] Whether the applicant bank proves that the present Defendant is liable to pay the loan in question as contended by the applicant bank in the present OA?

[ii] What order?

TA 393/2016 (OA 462/2015)5

13. My finding on the above points are as follows:

Point No.1: In the affirmative

Point No.2: As per final order.

Reason:

14. The Senior Manager came to be examined as AW-1, his affidavit by way of evidence reiterates the facts pleaded in the OA and his affidavit is also corroborated by the documents marked as Ex.A-1 to Ex.A-11 which clearly establish the case of the applicant bank to allow the present OA. Further the absence of the defendant to appear before the tribunal is to be intentional without any bona fide reasons and it appears he remained absent as he admitted the entire case pleaded by the applicant bank as sought for in the present OA. Hence the claim of the applicant bank remained unchallenged. Having regard to the amount advanced, the interest and the penal interest applied, the default committed as also the loan granted being an agricultural loan, it has debited a sum of Rs.6,296/- by way of penal interest in the agricultural term loan account. It is well settled that penal interest cannot be capitalised and no interest can be charged on penal interest. Hence the applicant bank, is not entitled to get any interest on the aforesaid penal interest of Rs.6,296/-. I am of the view that the applicant bank is entitled to get interest pendente-lite and post-decree interest @9% per annum with half yearly rests in view of the fact that the loan account relate agricultural term loan.

TA 393/2016 (OA 462/2015)6**ORDER**

15. Present OA stands allowed with costs. The defendant is directed to pay to the applicant bank a sum of Rs.14,46,988/- (Rupees fourteen lakhs forty six thousand nine hundred and eighty eight only) with further interest on the sum of Rs.14,40,692/- (Rupees fourteen lakhs forty thousand six hundred and ninety two only) @14.40% per annum with half yearly rests from 22.09.2015 to 27.09.2015 and thereafter @9% per annum with half yearly rests from 28.09.2015 till realisation.

16. In the event of failure of the defendant to pay the OA amount, the applicant bank is at liberty to sell the hypothecated/mortgaged moveable's and immoveable properties as described in schedule properties as sought in the OA and the applicant bank is at liberty to proceed further according to law. Schedule properties as shown in the schedules of the OA shall become part and parcel of the final order of OA

17. Inspite of sale of the properties mentioned in the schedule of the OA, the claim amount is not realized, the applicant bank is at liberty to proceed against the person and other properties of the defendant as required under law.

18. Office is directed to issue Recovery Certificate as sought by the applicant bank in the OA and do the needful as required under law.

19. The applicant shall file latest Memo of calculation of OA amount together with interest, costs, etc., to be paid by the TA 393/2016 (OA 462/2015)7

defendant duly taking into the account the amount/s if any paid by the defendant and/or amount realised by sale of assets, etc., during the intervening period after filing the OA, to enable the office to prepare Recovery Certificate for the amount to be paid by the defendant to the applicant bank.

Registry is directed to communicate copy of the order to the parties concerned by Registered Post with AD.

*(Dictated to PS, transcribed by her, corrected by me, typed fair and then pronounced by me in the open court on this the 27^th day of September, 2016)*

TA 393/2016 (OA 462/2015)8**APPENDIX**Witness for Applicant:

AW1: George Thomas, Senior Manager of the applicant bank.

Witness for Defendant(s): Nil**Applicant's Exhibits**

<table border="1"> <thead> <tr> <th><u>Ext.No.</u></th> <th><u>Date</u></th> <th><u>Particulars of documents</u></th> </tr> </thead> <tbody> <tr> <td>A1</td> <td>11.08.2012</td> <td>Credit sanction advice issued by the bank.</td> </tr> <tr> <td>A2</td> <td>16.08.2012</td> <td>Demand promissory note executed by the defendant in favor of the applicant bank.</td> </tr> <tr> <td>A3</td> <td>16.08.2012</td> <td>Letter issued to the defendant by the applicant bank.</td> </tr> <tr> <td>A4</td> <td>16.08.2012</td> <td>Letter of undertaking executed by the defendant in favour of the bank.</td> </tr> <tr> <td>A5</td> <td>16.08.2012</td> <td>Letter executed by the defendant authorizing the applicant to recover the loan amount under the Kerala Revenue Recovery Act.</td> </tr> <tr> <td>A6</td> <td>16.08.2012</td> <td>Letter of hypothecation executed by defendant.</td> </tr> <tr> <td>A7</td> <td>17.08.2012</td> <td>Sale deed No.1910/2012 of Nooranad SRO.</td> </tr> <tr> <td>A8</td> <td>09.04.2013</td> <td>Letter executed by the defendant confirming the deposit of title deed with the applicant bank.</td> </tr> <tr> <td>A9</td> <td>28.01.2015</td> <td>Lawyer notice issued to the defendant demanding the entire amount outstanding under the loan account.</td> </tr> <tr> <td>A9(a)</td> <td>31.01.2015</td> <td>Postal acknowledgment signed by the defendant evidencing the receipt of Ext.A9 notice.</td> </tr> <tr> <td>A10</td> <td>19.06.2015</td> <td>Revival letter executed by the defendant acknowledging the liability under the agricultural term loan account.</td> </tr> <tr> <td>A11</td> <td>...</td> <td>certified copy of the statement of account relating to the agricultural term loan.</td> </tr> </tbody> </table>

Defendant's Exhibits - Nil

9

'A' SCHEDULE

Standing crops, future crops in 9.26 Ares comprised of 3.92 Ares in Re Sy. No. 359/3 and 5.34 Ares in Re.Sy.No.359/2-2 of Palamel Village, Mavelikara Taluk. Alappuzha District.

'B' SCHEDULE

<table> <tr><td>District</td><td>:</td><td>Alappuzha</td></tr> <tr><td>Sub District</td><td>:</td><td>Nooranad</td></tr> <tr><td>Taluk</td><td>:</td><td>Mavelikara</td></tr> <tr><td>Village</td><td>:</td><td>Palamel</td></tr> <tr><td>Old Sy.No.</td><td>:</td><td>359/1,1/7,1/5</td></tr> <tr><td>Block No.</td><td>:</td><td>20</td></tr> <tr><td>Resurvey No.</td><td>:</td><td>359/3, 359/2-2</td></tr> <tr><td>Extent</td><td>:</td><td>9.26 Ares</td></tr> </table>

Description of Property:

A part and parcel of land having a total extent of 9.26 Ares comprised of 3.92 Ares in Re Sy. No. 359/3 and 5.34 Ares in Re.Sy.No. 359/2-2 of Palamel Village Alappuzha district, Mavelikara Taluk, obtained by the defendant under Sale Deed No. 1910/2012, Sub Registrar Office, Nooranad, together with all rights of the defendant therein and more specifically described in the schedule thereunder.

Boundaries:

<table> <tr><td>East</td><td>:</td><td>Property of Kadamankulathil Melethil</td></tr> <tr><td>North</td><td>:</td><td>Property of Mr.George</td></tr> <tr><td>West</td><td>:</td><td>Pathway</td></tr> <tr><td>South</td><td>:</td><td>Properties of Thachanamkottu Melethil</td></tr> </table>


**IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM**

**Dated this the 27^th day of September, 2016**

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

**T.A No.393/2016 (O.A No.462/2015)**

**Between**

Indian Overseas Bank Pandalam Branch. ....Applicant

**And**

Mumtas Rahim ....Defendant

**FINAL ORDER ON MAIN APPLICATION**