State Bank of India vs Mrs. M. Kiruthika on 29 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 a sum of Rs.34,67,111/- with further interest at the rate of 12.65% per annum with monthly rests from 03.07.2019

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 Term Loan availed by the defendants from the applicant bank.

3. It is the case of the applicant that the 1stdefendant approached the applicant vide loan application dated 25.03.2016 requesting for grant of credit facility for the purpose of its business and considering the said request the applicant sanctioned a Term Loan limit of Rs.24,00,000/- to the 1st defendant on 25.03.2015. It is stated that the 1st defendant executed necessary loan and security documents on 25.03.2015 and the 2nd defendant executed guarantee agreement on the same day.

4. It is also the case of the applicant that the 1st defendant hypothecated the entire stocks of raw materials, book debts and receivables, machineries purchase from and out of the bank finance and the 2nd defendant collaterally secured the same by mortgage by deposit of title deeds of the Schedule „B‟ property belonging to 2nd defendant on 25.03.2015 and confirmed the same by executing Memorandum of Deposit of Title deeds dated 05.05.2015 registered as Doc. No.1154 of 2015, SRO, Pudukottai.

5. It is also the case of the applicant that the defendants committed default in repayments and failed to regularize the loan accounts despite repeated request and hence the loan account was classified as NPA on 29.04.2016 in accordance with the guidelines of the Reserve Bank of India. It is stated that as the defendants did not come forward to clear the dues and hence the applicant invoked the provisions of SARFAESI Act and issued the demand notice under Section 13(2) of the Act on 02.05.2016 calling upon the defendants to clear the outstanding dues followed by Possession Notice dated 05.10.2016. It is stated that the demand notice dated 9.8.2018 was issued in supersession of earlier notices and the applicant took symbolic possession of the property on 20.10.2018. It is also stated that the applicant issued a sale notice dated 4.12.2018 fixing the sale on 05.01.2019 but the sale did not take place, hence another sale notice dated 11.06.2019 scheduling the sale on 15.07.2019 was also issued.

6. 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.

7. Summons were taken out to the defendants and the same returned with endorsement “unclaimed” and hence the service was held sufficient. 2nd defendant was represented by Ld. Counsel. However, as the 2nd defendant failed to file any reply statement and there was no representation on behalf of defendants on 31.12.2019, the defendants were called absent and set ex- parte on that day. Applicant Bank filed Proof Affidavit along with 13 documents, which were marked as Ex. A-1 to A-13 on 01.06.2023, however, Exhibits A-6 to A-8 were marked subject to proof and relevancy. The Ld. Counsel for Applicant Bank made his submissions on 29.09.2023 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-13 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 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.

13. During the pendency of the OA, the applicant filed a part satisfaction memo in Dy. No.702 dated 14.02.2023 stating therein that the applicant bank had brought the Schedule „B‟ property to sale under SARFAESI Act on 29.03.2020 and has realized a sum of Rs.22,46,650/- and credited the same to the loan account after defraying all expenses on 27.03.2020.

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.642 of 2022 stands allowed.

(b) Applicant is permitted to realize a sum of Rs.34,67,111/- together with interest at the rate of 12% per annum (simple) from the defendants jointly and severally, 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 „A‟ property and other assets of the defendant. It is made clear that the sum of Rs.22,46,640/- realized by the applicant by sale of Schedule „B‟ property be given credit to the loan account on its respective date.

(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.

(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 29th day of September, 2023) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI