Punjab National Bank vs M/s. Sri Bharath Logistics on 8 July 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.76,53,444.61p together with interest at the rate of 11.3% 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 property.

2. The subject matter of the case is the Cash Credit facility availed by the defendants from the Applicant Bank.

3. It is the case of the applicant that the 1st defendant represented by its Sole Proprietor, the 2nd defendant approached the applicant bank for grant of credit facility for the purpose of their logistics business and the applicant considering the said request sanctioned Cash Credit Facility of Rs.75 lakhs to the defendants vide sanction dated 22.6.2017. It is also the case of the applicant that the defendants executed hypothecation of goods and book debts on 4.7.2017. It is the further case of the applicant that the 2nd defendant deposited the title deeds of his property more fully described in the schedule to the OA on 5.7.2017 with an intention to create equitable mortgage over the same and confirmed the same by executing Memorandum of Deposit of Title deeds dated 11.7.2017 registered as Doc. No.3046/2017, SRO, Purasawalkam.

4. It is also the case of the applicant that the defendants after availing the loan was not performing business operations to an optimum level as projected at the time of availing credit facility and had also defaulted in repayments.

5. It is the further case of the applicant that the defendants confirmed the outstanding loan amount as on 30.03.2018 by executing balance and security confirmation letter dated 10.5.2018 for the purpose of Section 18 of the Limitation Act.

6. 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 31.12.2018. It is further stated that as the defendants did not come forward to clear the outstanding dues, the applicant issued demand notice under Section 13(2) of the SARFAESI Act on 04.01.2019, for which the defendants gave an undertaking letter on 28.3.2019 promising to upgrade the loan account by paying the overdrawn amount. It is stated that the defendants also executed supplementary agreement on 28.03.2019 thereby empowering the applicant bank to continue with the SARFAESI Action and pursuant to which the applicant issued the possession notice under Section 13(4) of the SARFAESI Act on 04.09.2019 followed by sale notice but the sale failed for want of bidders. As the defendants did not come forward to clear the outstanding dues the present application is filed for recovery of its dues.

7. Summons was taken out to the defendants are served. As there was no representation for the defendants continuously and on 03.08.2023, they were set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 11 documents, which were marked as Ex. A-1 to A-11 on 05.04.2024, however, Exhibits A-3 and A-4 were marked subject to proof and relevancy. The Ld. Counsel for Applicant Bank made his submissions on 14.05.2026 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.

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

9. The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-11 along with the proof affidavit. The documents produced in evidence are all found admissible. The proof affidavit of the applicant bank remained unchallenged and unrebutted. 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.

10. 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.

11. In view of the fact that the loan facility availed by the defendants is a Cash Credit facility for its 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 and prayer for grant of penal interest is rejected.

12. 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.825 of 2023 stands allowed.

(b) Applicant is permitted to realize an aggregate sum of Rs.76,53,444.61p 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 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 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.

13. 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 7th day of July, 2026)

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

1. 22.06.2017 Sanction letter A-1

2. 04.07.2017 Hypothecation of goods and book debts to secure Cash Credit facility A-2

3. 11.07.2017 Memorandum of Deposit of Title deeds registered as Doc. No.3046/2017, SRO, Purasawalkam A-3

4. 20.04.2012 Deed of release registered as Doc. No.1574/2012, SRO, Purasawalkam executed in favour of 2nd defendant A-4

5. 10.05.2018 Balance and security confirmation letter A-5

6. 04.01.2019 Demand notice issued under Section 13(2) of the SARFAESI Act. A-6

7. 28.03.2019 Letter of undertaking given by the 2nd defendant A-7

8. 28.03.2019 Supplementary Agreement executed by the 1st defendant A-8

9. 04.09.2019 Possession Notice issued under Section 13(4) of the SARFAESI Act. A-9

S. No. Date Description of Documents Exhibit Nos.

10. Statement of Accounts A-10

11. Certificate issued under Bankers’ Book Evidence Act. A-11

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DESCRIPTION OF PROPERTY

All that part and parcel of land and building situated at Old Door No.2, New Door No.59, Venkadri Naicken Street, Kosapet, Chennai-12 forming part of Purasawalkam Village, Purasawalkam, Perambur Taluk, comprised in R.S. No.1584/8, Block No.26, land measuring an extent of 1137 Sq. ft. and building approved B.A. No.6386/1965 dated 04.12.1965 issued by the Commissioner, Corporation of Chennai.

Bounded on the

North by

: R.S. No.1584/6, 1584/5, Mr. Samuel’s House South by : R.S. No.1584/9

East by

: Venkatadri Naicken Street, R.S. No.1589

West by

: R.S. No.1584/7

Lying within Registration District of North Chennai and Sub Registrar District of Purasawalkam.

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