The Catholic Syrian Bank Ltd., vs M/s Jani Rithi Cattle Feeds on 22 September 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.23,72,481/- comprising a sum of Rs.18,45,983/- together with interest at the rate of 14.5% per annum with monthly rests being the amount due under Term Loan Account, a sum of Rs.5,25,216/- together with interest at the rate of 14.50% per annum being the amount due under Term Loan-II Account and a sum of Rs.1,282/- together with interest at the rate of 14.50% per annum with monthly rests being the amount due under Cash Credit Loan Account from 06.06.2018 till the date of realisation along with costs of the application and for sale of schedule properties.

2. The subject matter of the case is the credit facility availed under Prime Minister’s Employment Generation Programme – PMEGP to the Khadi and Village Industries Commission - KVIC 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 the 2nd defendant as its Proprietor / Mortgagor / Guarantor and the 3rd defendant is a guarantor. It is stated that the 1st defendant by Loan Application dated 30.04.2013 and considering the said request the applicant recommended sanction of credit facility vide Letter dated 20.11.2014 and by sanction letter dated 09.07.2015 the applicant sanctioned Term Loan (PMEGP) of Rs.14.30 lakhs, Term Loan (for building construction) of Rs.5.02

lakhs and Cash Credit facility of Rs.4.18 lakhs towards Working Capital. It is also stated that the defendants executed various documents on 15.07.2015.

4. It is also the case of the applicant that the 2nd defendant deposited the title deeds of the properties more fully described in Schedule to the OA with an intention to create equitable mortgage over the same and executed Memorandum of Deposit of Title deeds dated 15.07.2015 registered as Doc. No.6603/2015, SRO, Tirupattur.

4. 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 03.01.2017.

5. 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 defendant 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.

6. Summons taken out to the defendants were served. As there was no representation on behalf of the defendants on 14.10.2019, the defendants were called absent and set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 28 documents, which were marked as Ex. A-1 to A-28 on 14.07.2021. The Ld. Counsel for Applicant Bank made his submissions on 10.08.2023 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-28 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 defendant. 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 defendant is business 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 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.829 of 2023 stands allowed.

(b) Applicant is permitted to realize an aggregate sum of Rs.23,72,781/- from the defendants jointly and severally together with interest at the rate of 12% per annum (simple), from 06.06.2018 till date of realization after deducting all the amounts received by them during the pendency of OA, and also by selling the schedule properties 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 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 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.

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. (Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 22nd day of September, 2023) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI