Canara Bank vs M s Nanjil Udhayam Chekku Oil on 30 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 an aggregate sum of Rs.26,44,632.15p comprising of a sum of Rs.6,91,600.06p being the amount due under OCC facility; a sum of Rs.18,97,157.68p being the amount due under Term Loan facility and a sum of Rs.55,874.41p being the amount due under COVID Loan facility all together with interest at the rate of 14.25% per annum with monthly rests from the date of the application till the date of realisation along with costs of the application.

2. The subject matter of the case is the various credit facilities availed by the defendants from the Applicant Bank.

3. It is the case of the applicant that the 1st defendant is a Proprietorship firm represented by 2nd defendant as its Proprietrix engaged in the business of manufacturing and selling Chekkku Oil and other allied products availed various credit facilities from the applicant bank for development of its business. It is stated that the applicant had sanctioned a OCC facility of Rs.5,00,000/- and Term Loan facility of Rs.15,13,000/- to the 1st defendant vide sanction dated 31.8.2018. It is also stated that the Term Loan was to be repaid in 84 monthly installments of Rs.18,012/- per months for first 83 months and Rs.18,004/- towards the last installment commencing from March 2019 to February, 2026. It is further stated that having accepted the terms and conditions of sanction the 1st defendant represented by 2nd defendant executed various loan and security documents on 31.08.2018.

4. It is also the case of the applicant that the facility is also covered under the guarantee cover for loans given to small industries issued by the Credit Guarantee Fund Trust for small and medium industries promoted by Government of India and SIDBI. The premium under the said scheme was paid by the defendants.

5. It is the further case of the applicant that the defendants were highly irregular in repayment and during March 2020 the applicant sanctioned adhoc facility of Rs.49,794/- to the 1st defendant.

6. It is also the case of the applicant that the defendants 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 30.09.2020. It is further stated that the applicant thereafter issued a legal notice dated 12.04.2021 calling upon the defendant to clear the outstanding dues, but the defendants did not come forward to clear the dues. Hence the present OA is filed for recovery of its dues.

7. Summons was taken out to the defendants returned and hence were served with notice by way of substituted service causing paper publication. As the defendants were absent continuously and as there was no representation for the defendants on 04.01.2023, 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 09.01.2024, however, Ex. A-12 was marked subject to proof and relevancy being a photocopy. The Ld. Counsel for Applicant Bank made his submissions on 02.03.2026 and thereafter the matter stood till this date for passing final orders.

8. 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.

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

10. 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.

11. 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.

12. In view of the fact that the loan facility availed by the defendant is a loan for development of business 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.

13. 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, TA is disposed off in the following manner: - (a) TA No.502 of 2022 stands allowed.

(b) Applicant is permitted to realize a sum of Rs.26,44,632.15p with further interest @10% 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 other assets of the defendants.

(c) It is made clear that the 2nd defendant is 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.

14. 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.

Sd/

(Dictated to PS, who typed in the system directly, corrected, signed and pronounced by me in Open Court, on this 30th day of March, 2026) EXHIBITS MARKED BY APPLICANT BANK S. No. Date Description of Documents Exhibit Nos.

1. 03.08.2018 Loan application by the defendants A-1

2. 31.08.2018 Sanction letter of the applicant A-2

3. 31.08.2018 Demand Promissory Note by defendants for Rs.5 lakhs A-3

S. No. Date Description of Documents Exhibit Nos.

4. 31.08.2018 Cash Credit Agreement by defendants A-4

5. 31.08.2018 Letter of Proprietorship A-5

6. 31.08.2018 Letter of undertaking A-6

7. 31.08.2018 Agreement relating to advance against book debts. A-7

8. 31.08.2018 Comprehensive letter of undertaking by defendants. A-8

9. 31.08.2018 Deed of hypothecation of machinery A-9

10. 05.09.2018 Letter confirming execution of loan documents A-10

11. 08.01.2021 Letter of acknowledgement of liability by the defendants A-11

12. 12.04.2021 Legal notice by the applicant A-12

13. 03.11.2021 Statement of accounts along with certificates under Bankers’ Book Evidence Act. A-13

Sd/

DESCRIPTION OF PROPERTY

NIL

Sd/-