HDFC Bank Limited vs Mr. P. Vijayakumar on 29 December 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 defendant for recovery of a aggregate sum of Rs.61,09,981.48p with interest at the rate of 10.99% per annum with monthly rests from the date of filing of the OA till the date of realization in full along with costs of this application.

2. The subject matter of the case is the “Personal Loan” availed by the defendant from the applicant bank.

3. It is the case of the applicant that the defendant approached the applicant bank for grant of Personal Loan vide Loan Application dated 07.02.2018 and the applicant considering the said request sanctioned a loan of Rs.70,41,000/- to the defendant under Loan Account No.92629794. It is also the case of the applicant that the defendant in order to secure the said loan executed Loan Agreement dated 23.02.2018 and post dated cheque acknowledgement Letter. It is stated that the said loan was repayable in 60 equated monthly installments of Rs.1,53,054/- each commencing from 07.04.2018 and ends on 07.03.2023.

4. It is the case of the applicant that the defendant having availed the credit facilities defaulted in repayments and failed to regularize the loan account despite repeated demands and also failed to comply with the terms and conditions of sanction and therefore the applicant sent a legal notice dated 08.07.2019 calling upon the defendant to clear the outstanding dues. It is stated that the said notice was received at the first address on 10.07.2019, returned with endorsement “Left” at office address.

5. It is the case of the applicant that after availing the loan, the defendant was 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. The defendant filed written statement contending therein that the applicant had failed to furnish details of the date on which account became overdue and when it was classified as NPA. It is also stated that the applicant has charged interest contrary to the guidelines of the RBI. It is stated that the defendant had repaid a sum of Rs.21,42,756/-, however, due to unavoidable circumstances defaulted in repayment. It is also stated that if a period of 2 years is given this defendant would clear the outstanding dues. This submitting prayed for dismissing the OA with costs.

7. The applicant bank filed its proof affidavit along with 9 documents, which are marked as Exhibits A-1 to A-9, the details of which are as under: - S. No. Date Description of Documents Exhibit Nos.

1. 16.04.2022 Board Resolution A-1

2. 07.02.2018 Loan Application Form A-2

3. 23.02.2018 Loan Agreement A-3

4. 23.02.2018 Post Dated Cheque Acknowledgement A-4

5. 23.02.2018 Declaration submitted by the defendants A-5

6. 08.07.2019 Legal Notice A-6

7. 10.07.2019 Proof of service of the legal notice A-7

8. 02.05.2019 Returned cover of the legal notice A-8

9. 08.07.2019 Statement of Accounts. A-9

8. The defendant did not choose to file their Counter Proof Affidavit despite availing sufficient opportunities and therefore the chance of filing Counter Proof Affidavit by the defendant was closed on 08.09.2023.

9. Heard the Ld. Counsel for the applicant. There was no representation on behalf of the defendants continuously and hence the Tribunal proceeded to pass order based on the averments in the reply statement. Perused the records.

10. Having heard the Ld. Counsels for the applicant and after perusing the records, the Tribunal framed the following points for consideration: -

1. Whether the applicant bank has established its claim against the defendants? If so, for what amount?

2. Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate?

Point No.1

Whether the applicant bank has established its claim against the defendants? If so, for what amount?

11. The applicant bank in its endeavor to establish its claim against the defendant examined its official as AW1 and got marked exhibits Ex.A-1 to A-9. Ld. Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides Exhibits A-1 to A-9 strenuously contended that the claim of the applicant stands established, as such, the applicant is entitled for a recovery certificate.

12. Ld. Counsel for Applicant Bank would further submit that even as per the Reply Statement filed, the defendant has not denied availing of credit facility, execution of documents and creation of mortgage and as such the said admission is sufficient enough to allow the claim of the applicant. Ld. Counsel would also submit that the amount claimed by the applicant is proper and the applicant has charged interest only at contractual rates and the applicant bank has also produced the statement of accounts duly certified under Bankers’ Book Evidence Act to substantiate the amount claimed by the applicant. Ld. Counsel would also contend that the defendant though filed their reply statement they did not choose to file the Counter Proof Affidavit and as such the claim of the applicant stands unrebutted and is sufficient enough to allow the claim of the applicant.

13. Here it is to be stated that as per the scheme of adjudication of a claim/counter under the RDB Act, parties shall file their respective affidavits/counter affidavits in support of their claim or counter claim as the case may be and the Tribunal shall on the basis of the affidavits filed, adjudicate and decide the claim/counter claim. Therefore, in the absence of Counter Proof Affidavit, the claim of the applicant stands unrebutted. Further, the applicant bank has filed the statement of accounts accompanied by certificates under Bankers’ Book Evidence Act and therefore the claim of the applicants remains unrebutted.

14. Therefore, in the light of the discussion as aforesaid, it is clear that the proof affidavit and the documents filed along with by the applicant remain unchallenged by the defendants. Further, the Tribunal on a careful perusal of the unrebutted Proof Affidavit of AW-1 besides Exhibits A-1 to A-9 is fully satisfied that the applicant has established its claim. This point is answered accordingly.

Point No.2

Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate?

15. In terms of Sec. 19 (20) of the RDB Act, the Tribunal has been empowered to pass an order regarding payment of interest from the date on or before which payment of the amount is found due, up to the date of realisation or only payment, as it think fit to meet the ends of justice. Further, Hon’ble Supreme Court, in the judgement (reported in II 2009 BC pg. 696) in the matter of State Bank of India – vs – Sarath Textiles, held that “Sec. 19 (20) of the RDDB & FI Act confers discretion on the Tribunal to award interest on the applicant being as it thinks fit to meet the ends of justice.”. Further, Hon’ble Supreme Court of India in the matter of Central Bank of India – vs – N. Raveendra (reported in 2002 [1] SCC pg. 367) held that “Sec. 34 of CPC confers discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit de-horse notwithstanding the contract between the parties.” Sec. 19 (20) of the RDDB & FI Act is akin to Sec. 34 CPC.

16. While it is the case of the applicant that the applicant bank is entitled for contractual rate of interest till discharge of the entire outstanding dues, however, the defendant would contend that in so far as pendente lite and future interest is concerned, the contractual rate of interest may not be applied. It is to be stated that the claim of the applicant bank includes the rate of interest and other charges payable as per the contract. The Tribunal already held that the applicant bank is entitled for the amount claimed in the OA. As already stated, the Tribunal has awarded contractual rate of interest as claimed by the applicant bank till the date of filing the OA and in view of the fact that the instant loan is a personal loan, the Tribunal is of the view that the defendant is entitled for a reduced rate of interest. Therefore, under these circumstances, the Tribunal is inclined to grant pendente lite and future interest @ 10% p.a. simple on the OA claim amount from the date of filing till the date of realization. Point No.2 is answered accordingly.

17. In view of the afore mentioned discussions, the OA is disposed off in the following manner: - (a) TA No.40 of 2023 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.61,09,981.48p with further interest @10% per annum (simple) from the defendant from the date of filing of OA till realization in full, after deducting all the amounts received by them during the pendency of OA, and also by selling the assets of the defendant.

(c) It is made clear that the defendant is 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 the order.

(e) The Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of this final order.

21. 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 December, 2023) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI