CANARA BANK vs M/s. Sridhar Traders on 26 September 2025

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.50,79,070.24p with further interest at the rate of 10.90% per annum with yearly 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 credit facility availed by the defendants from the Applicant Bank.

3. It is the case of the applicant that the defendants approached the applicant bank vide their application dated 17.06.2019 and 20.06.2019 for grant of credit facilities for development of their business and the applicant bank considering the said request vide its sanction 17.06.2019 and 21.06.2019 sanctioned credit facilities to the tune of Rs.20,92,000/- and 20,97,000/-. It is also the case of the applicant that the defendants 1 & 2 executed necessary loan and security documents on 17.06.2019 and 20.06.2019 and the 3rd defendant executed guarantee agreement on 17.06.2019 and 20.06.2019 thereby guaranteeing due repayment of the credit facilities availed by the 1st and 2nd defendant.

4. It is also the case of the applicant that despite the condition that the entire loan has to be repaid within a period of 12 months, the defendants failed to comply the same and the account became irregular and amounts were overdue.

5. It is the further case of the applicant that the defendants did not come forward to clear the dues despite repeated demands and requests and hence the applicant issued a legal notice on 20.11.2020. It is stated that even after the issuance of legal notice the defendants did not come forward clear the outstanding dues. Hence this OA is filed by applicant for recovery of its dues.

6. Summons were taken out to the defendants and the same were served and were represented by Ld. Counsel. As the defendants did not file their written statement and further as there was no representation on behalf of the defendants continuously and on 05.10.2023 the defendants were called absent and placed ex-parte on that day. Applicant Bank filed Proof Affidavit along with 16 documents, which were marked as Ex. A-1 to A-16 on 04.04.2024. The Ld. Counsel for Applicant Bank made his submissions on 04.09.2025 and thereafter the matter stood till this date for passing final orders.

7. 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-16 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 defendant. 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 are credit facilities for business purpose 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.

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.468 of 2022 stands allowed.

(b) Applicant is permitted to realize a sum of Rs.50,79,070.24p with further interest at the rate of 9% per annum (simple) 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 defendants 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.

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 26th day of September, 2025)

EXHIBITS MARKED BY APPLICANT BANK

S. No. Date Description of Documents Exhibit Nos.

1. 17.06.2019 Loan application submitted by defendants 1 & 2 A-1

2. 17.06.2019 Loan application submitted by defendants 1 & 2 A-2

3. 17.06.2019 Sanction Memorandum sanctioning a sum of Rs.20,92,000/- A-3

4. 21.06.2019 Sanction Memorandum sanctioning a sum of Rs.20,97,000/- A-4

5. 18.06.2019 Agreement cum deed of hypothecation by defendants. A-5

6. 21.06.2019 Agreement cum deed of hypothecation by defendants. A-6

7. 18.06.2019 Guarantee covering letter by 3rd defendant A-7

8. 21.06.2019 Guarantee covering letter by 3rd defendant A-8

9. 18.06.2019 Guarantee agreement by 3rd defendant A-9

10. 21.06.2019 Guarantee agreement by 3rd defendant A-10

11. 17.06.2019 Lien Letter to Warehouse A-11

12. 17.06.2019 Lien Letter to Warehouse A-12

13. 20.11.2020 Legal notice issued by applicant bank A-13

14. 20.11.2020 Legal notice issued by the applicant bank A-14

15. 17.05.2021 Statement of Accounts along with certificates under Bankers’ Book Evidence Act. A-15

16. 17.05.2021 Statement of Accounts along with certificates under Bankers’ Book Evidence Act. A-16

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DESCRIPTION OF PROPERTY

NIL

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