Union Bank of India vs Mr. C. Chidambaram on 31 August 2023

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.67,95,205.73p comprising of a sum of Rs.10,01,181/- together with further interest at the rate of 12.35% per annum with monthly rests being the amount due under Loan Account No.560941000011809, a sum of Rs.20,83,406/- together with interest at the rate of 10.55% per annum with monthly rests being the amount due under Loan Account No.560381000084402 and a sum of Rs.14,82,186/- together with interest at the rate of 11.40% per annum with monthly rests and from 1st defendant a sum of Rs.22,28,432.73p together with interest at the rate of 10.55% per annum with monthly rests being the amount due under Loan Account No.56514000005491 being the amount due under Loan Account No.560381000162808 plus 2% penal interest from the date of filing of this application till the date of realisation along with costs of the application and for sale of schedule properties.

2. The subject matter of the case are the various credit facilities availed by the defendants from erstwhile Corporation Bank.

3. bank for grant of loan to meet out the land development expenses vide Loan Application dated 23.01.2015 and considering the said request the applicant vide sanction dated 23.01.2015 sanctioned CKLS Loan of Rs.10,00,000/- to the 1st defendant. It is stated that the said loan was repayable in 7 yearly installments of Rs.1,42,856/-. It is also stated that the 1st defendant executed defendant mortgaged his property at Nanjikottai village by executing Memorandum of Deposit of Title deeds dated 23.01.2015 registered as Doc. No.338 of 2015 on the file of SRO, Thanjavur.

4. It is the case of the applicant that the 2nd defendant approached the applicant bank for grant of credit facilities vide Loan Application dated 22.04.2016 for the purpose of raising crops in 32 acres land and considering the said request the applicant vide sanction dated 22.04.2016 sanctioned CCCK Loan of Rs.12,25,000/- to the 2nd defendant, which was repayable on demand. It is also stated that the 2nd defendant executed various loan documents on 22.04.2016 and the 1st defendant executed guarantee agreement dated 22.04.2016 thereby guaranteeing due repayment of the credit facility availed by the 2nd defendant. It is further stated that the 1st defendant executed letter of continuity dated 22.04.2016 thereby extending the mortgage created earlier to secure this facility also.

5. bank for grant of loan to meet out the Working Capital Requirements for Meenakshi Steel at SIPCOT vide Loan Application dated Nil and considering the said request the applicant vide sanction dated 13.06.2016 sanctioned CSLPS Liquid Plus Loan of Rs.22,00,000/- to the 1st defendant and the same was repayable on demand. It is also stated that the 1st defendant executed defendant executed letter of continuity thereby extending the mortgage created earlier to secure this credit facility also.

6. It is the case of the applicant that the 1st defendant approached the applicant bank for grant of loan to raise crops vide Loan Application dated 28.03.2017

and considering the said request the applicant vide sanction dated 28.03.2017 sanctioned CCCK Loan of Rs.10,00,000/- to the 1st defendant and the same was repayable on demand. It is also stated that the 1st defendant executed defendant executed continuity letter thereby extending the mortgage created earlier to secure this facility also. It is stated that the defendant executed acknowledgement of debts on 18.12.2017, 01.06.2019 and 02.03.2020 and the 2nd defendant acknowledged the debt on 21.04.2019.

7. It is also the case of the applicant that the defendants violated the terms and conditions of sanction and committed default in repayments and failed to regularize the loan accounts despite repeated request and hence the loan account was classified as NPA on 31.03.2021. It is stated that despite repeated requests the defendants did not come forward to clear the outstanding dues and hence the applicant issued the legal notice dated 16.08.2021 calling upon the defendants to clear the outstanding dues.

8. It is the case of the applicant that after availing the loan, the defendants were irregular in remitting the loan amount. The efforts of the applicant bank to make the defendants to settle the loan did not yield any result, and hence the applicant approached this Tribunal seeking issuance of a Recovery Certificate allowing recovery of the amount due in the account.

9. Summons taken out to the defendants and they were served. The defendants were initially represented by Ld. Counsel Mr. Bhuvaneswaran and repeatedly adjournments were sought for reporting settlement. However, as there was no representation on behalf of the defendants continuously and no settlement was reported, on 01.02.2023, the defendants were called absent and set ex- parte on that day. Applicant Bank filed Proof Affidavit along with 42 documents, which were marked as Ex. A-1 to A-42 on 17.04.2023. The Ld. Counsel for Applicant Bank made his submissions on 19.05.2023 and thereafter the matter stood till this date for passing final orders.

10. 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.

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

12. The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-42 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.

13. 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.

14. In view of the fact that the loan facility availed by the defendant is an agricultural 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.

15. 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.15 of 2022 stands allowed.

(b) Applicant is permitted to realize an aggregate sum of Rs.45,66,773/- from the defendants jointly and severally together with interest at the rate of 9% per annum (simple), and a sum of Rs.22,28,432.73p from the 1st defendant together with interest at the rate of 9% per annum (simple) from the date of filing of the OA till date of realization after deducting all the amounts received by them during the pendency of OA, and also by selling the schedule mentioned 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 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 7 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.

16. 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. (Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 31st day of August, 2023) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI