CANARA BANK vs M/s VRB Tooling on 23 September 2025

FINAL ORDER

1. This application is filed by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, against the defendants’seeking issuance of a Recovery Certificate for recovery of a sum of Rs.69,81,187/- with further interest at the rate of 10.25% per annum 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 Loan availed by the defendants from the Applicant Bank.

3. It is the case of the applicant that the 1st defendants proprietorship concern represented by the 2nd defendant as its Proprietor approached the erstwhile bank for grant of Secured Overdraft loan by submitted Loan application on 11.10.2014 and considering the said request the erstwhile bank sanctioned a SOD Synd MSE Loan of Rs.45,00,000/- vide its sanction dated 15.10.2014. It is stated that the 1st defendant represented by the 2nd defendant executed Composite Hypothecation Agreement on 15.10.2014 and the third defendant executed guarantee agreement on 15.10.2014.

4. It is also the case of the applicant that the 2nd defendant deposited the title deeds of the schedule mentioned properties with the erstwhile bank with an intention to create equitable mortgage over the same and executed Memorandum of Deposit of Title deeds dated 08.03.2011 registered as Doc. No.3004 of 2011 and confirmed creation of mortgage by letter dated 27.01.2014 and 14.10.2014.

5. It is also the case of the applicant bank that the 1st defendant violated the terms and conditions of sanction and also defaulted in repayment and hence the loan account was classified as NPA on 30.09.2017 and as no payment was forthcoming the applicant bank issued a legal notice dated 18.07.2018.

6. Despite the said notice the defendants did not come forward to clear the outstanding dues, hence the present OA is filed for recovery of its dues.

7. Summons was taken out to the defendants and the same were served. As there was no representation on behalf of the defendants continuously and on 14.06.2022 the defendants were called absent and placed ex-parte on that day. Applicant Bank filed Proof Affidavit along with 10 documents, which were marked as Ex. A-1 to A-10 on 07.02.2024. The Ld. Counsel for Applicant Bank made his submissions on 26.08.2025 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-10 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 defendant. 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 defendants is a secured overdraft loan 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 award of overdue interest is rejected.

13. During the pendency of the TA, the applicant bank filed a memo stating therein that the mortgaged property was sold in auction under SARFAESI Act held on 27.01.2022 and the applicant had realized a sum of Rs.16,60,000/- and the same was given credit to the loan account. This Tribunal vide its proceedings dated 07.02.2024 recorded part satisfaction of the TA claim.

14. 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.769 of 2022 stands allowed.

(b) Applicant is permitted to realize a sum of Rs.69,81,187/- with further interest @8% 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) The amount of Rs.16,60,000/- realized by the applicant bank by sale of schedule mentioned property be given due credit to the loan account on its respective date.

(d) It is made clear that 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.

15. 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 23rd day of September, 2025)

EXHIBITS MARKED BY APPLICANT BANK

S. No. Date Description of Documents Exhibit Nos.

1. 11.10.2014 Application for Secured Overdraft by the 1st defendant represented by the 2nd defendant A-1

2. 15.10.2014 Composite Hypothecation Agreement executed by 1st defendant represented by 2nd defendant A-2

3. 15.10.2014 Guarantee Agreement executed by the 3rd defendant. A-3

4. 25.09.2017 Acknowledgement of debt executed by 1st defendant. A-4

5. 08.03.2011 Memorandum of deposit of title deeds executed by 2nd defendant registered as Doc. No.3004 of

A-5

6. 27.01.2014 Confirmation of creation of second / subsequent equitable mortgage registered as Doc. No.946 of 2014. A-6

7. 14.10.2014 Confirmation of creation of second / subsequent equitable mortgage registered as Doc. No.11223 of 2014 A-7

8. 25.11.2010 Registered sale deed executed by K. Manikandan and K. Kumar in favour of V.R. Balasubramanian, S/o Rangaiyan – Doc. No.13140/2010. A-8

9. 18.07.2018 Legal notices sent to the defendants A-9

10. Statement of accounts along with certificates under Bankers’ Book Evidence Act. A-10

Sd/-

DESCRIPTION OF PROPERTY

NIL

Sd/-