Canara Bank vs M s Laika Company on 16 March 2026

FINAL ORDER

1. This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 against the defendants’ seeking issuance of a Recovery Certificate for recovery of a sum of Rs.1,63,35,860.47p together with interest at the rate of 13.85% p.a. with monthly rests plus 2% penal interest from the date of the application till the date of realisation along with costs of the application and for sale of schedule mentioned properties.

2. The subject matter of the case is the Secured Overdraft Synd MSE loan availed by the defendants from the Applicant Bank.

3. It is the case of the applicant that the 1st defendant is a Partnership firm, represented by its Partners, the defendants 2 and 3 submitted an application on 10.09.2016 requesting for grant of SOD facility and considering the said request the erstwhile Syndicate Bank sanctioned a loan of Rs.1,25,00,000/- on 03.11.2016. It is also the case of the applicant that the defendants executed necessary loan and security documents on 3.11.2016. It is the further case of the applicant that the 3rd defendant deposited the title deeds of the properties more fully described in the schedule to the OA on 26.10.2016 with an intention to create equitable mortgage over the same to secure the credit facility availed by the 1st defendant and confirmed the same by executing Memorandum of Deposit of Title deeds on 28.10.2016 registered as Doc. No.15952/2016 SRO, Kundrathur.

4. It is also the case of the applicant that the borrowers were highly irregular in repayment and failed to regularize the loan account despite repeated demands and hence the loan account was classified as NPA on 30.09.2018. It is further stated that as the defendants did not come forward to clear the outstanding dues, the applicant issued legal notice on 13.08.2019 requesting the defendants to clear the outstanding dues but in vain. Hence the present application is filed for recovery of its dues.

5. Summons was taken out to the defendants and the summons to the 3rd defendant is duly served and the defendants 1 and 2 were served with notice by way of substituted service. As the defendants were continuously absent and as there was no representation for the defendants on 15.06.2022, they were set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 13 documents, which were marked as Ex. A-1 to A-13 on 06.02.2024. The Ld. Counsel for Applicant Bank made his submissions on 20.02.2026 and thereafter the matter stood till this date for passing final orders.

6. The following issues arise for consideration in the matter: -

(a) Whether the applicant had succeeded in proving the liability of the defendants?

(b) What order as to cost of the proceedings need be passed?

These issues are considered together.

7. Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

8. The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-13 along with the proof affidavit. The documents produced in evidence are all found admissible. The proof affidavit of the applicant bank remained unchallenged and rebutted. Therefore, on careful consideration of proof affidavit along with exhibits filed on behalf of the applicant bank, besides the material placed before the Tribunal, the Tribunal is satisfied that the applicant bank has successfully proved the OA claim against the defendants. Further, the statement of accounts in respect of the loan account produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendants. It is clear from the statement of accounts that penal interest is not capitalized.

9. In view of the foregoing, it is clearly evident that the application filed by the applicant bank is well within the period of limitation and this Tribunal possesses the territorial and pecuniary jurisdiction to entertain this OA.

10. In view of the fact that the loan facility availed by the defendant is a SOD facility and the applicant has claimed interest at contractual rate till the date of filing of the OA, this Tribunal is of the view that the pendente lite interest can be awarded at reduced rates and prayer for grant of penal interest is rejected.

11. In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan, which the applicant is entitled to realize. Hence, OA is disposed off in the following manner: - (a) TA No.78 of 2023 stands allowed.

(b) Applicant is permitted to realize a sum of Rs.1,63,35,860.47p with further interest @9% per annum (simple) from the date of filing of the application till the date of realization in full, from the defendants jointly and severally after deducting all the amounts received / realized by them during the pendency of OA and also by selling the schedule property and other assets of the defendants.

(c) If the sale proceeds are not found sufficient to cover the amount due and payable to the Applicant Bank, the defendants 2 and 3 are personally liable for all such amounts due as ordered above.

(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 15 days from the date of receipt of the copy of the order.

(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

12. Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.

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(Dictated to PS, who typed in the system directly, corrected, signed and pronounced by me in Open Court, on this 16th day of March, 2026)

EXHIBITS MARKED BY APPLICANT BANK S. No. Date Description of Documents Exhibit Nos.

1. 10.09.2016 Application for sanction of SOD facility by defendants. A-1

2. 03.11.2016 Sanction letter by the applicant A-2

3. 03.11.2016 Charge and Hypothecation of book debts agreement signed by 1st defendant represented A-3

S. No. Date Description of Documents Exhibit Nos. by defendants 2 and 3.

4. 03.11.2016 Composite Hypothecation Agreement signed by 1st defendant represented by defendants 2 and

3. A-4

5. 03.11.2016 Guarantee Agreement signed by 2nd defendant. A-5

6. 03.11.2016 Guarantee Agreement signed by 3rd defendant. A-6

7. 03.11.2016 Demand Promissory Note executed by 1st defendant represented by defendants 2 and 3 A-7

8. 26.10.2016 Letter depositing title deeds by 3rd defendant A-8

9. 28.10.2016 Memorandum of Deposit of Title deeds executed by 3rd defendant. A-9

10. 05.11.2016 Confirmation of deposit of title deeds executed by 3rd defendant. A-10

11. 07.09.2016 Release deed executed by K. Mariammal and three others in favour of D. Murugan. A-11

12. 13.08.2019 Legal notices sent by the applicant. A-12

13. Statement of Accounts along with certificates under Bankers’ Book Evidence Act. A-13

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DESCRIPTION OF PROPERTY

Item No.1

All that piece and parcel of the property extent of 2354 Sq. ft. land with houses, E.B. & etc., Kundrathur Village, Sriperumbudur now Pallavaram Taluk, Kancheepuram District, Grama Natham Survey No.1151/1 Part (Patta No.355, as per Patta New Survey No.1427/3) Perumal Koil Street and Bounded on the:

North by

: Land belongs to Korathi Thambu

South by

: Land belongs to Etti and others

East by

: Land belongs to Manickam

West by

: Perumal Koil Street

Measuring:

Northern side : 107 feet

Southern side : 107 feet

Eastern side : 22 feet

Western side : 22 feet

And situated within the Registration District of South Chennai and Sub Registration District of Kundrathur Item No.2

All that piece and parcel of the property extent of 2363 Sq. ft. land with houses, E.B. & etc., Kundrathur Village, Sriperumbudur now Pallavaram Taluk, Kancheepuram District, Grama Natham Survey No.1151/1 Part (Patta No.355, as per Patta New Survey No.1427/3) Perumal Koil Street and

Bounded on the:

North by

: Land belongs to Marimuthu and Narachandu South by : Land belongs to Duraisamy

East by

: Nanjai Land

West by

: Perumal Koil Street

Measuring:

Northern side : 105 feet

Southern side : 105 feet

Eastern side : 22 ½ feet

Western side : 22 ½ feet

And situated within the Registration District of South Chennai and Sub Registration District of Kundrathur

Sd/-