STATE BANK OF INDIA vs KARUPPAIAH 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 defendants for recovery of a sum of Rs.6,79,19,704/- together with interest at the rate of 14.60% per annum, from the date of filing of the application till the date of realization in full along with costs of this application and for sale of schedule mentioned properties.

2. The above Original Application is filed before DRT-I Chennai and stood transferred to this Tribunal and renumbered as above.

3. The case of the applicant can be encapsulated as follows: - The defendants are related to each other and they belong to the family of 1st defendant, who is the Head / Kartha of the Hindu Joint Family consisting of Defendants 2 to 8 as its Members.

The 1st defendant, a contractor and the 2nd defendant carrying on business of blue metals under the name and style “M/s RMK Shanthi Blude Metal Industry” as its Sole Proprietrix and 3rd defendant carrying on the business of quary under the name and style M/s Karthick Kumar Quary” as its Sole Proprietor had availed credit facilities from the applicant inter alia on the security of the schedule mentioned properties belonging to the defendants.

The 1st defendant was dealing with the applicant bank since 2002 and was enjoying credit facilities from the applicant bank since 2002. The defendants have mortgaged the schedule properties as a security for the credit facilities sanctioned to the 1st defendant. The mortgage of the properties were also extended by the defendants to secure the limits sanctioned to M/s Karthick Kumar Quary of which the 3rd defendant is the Sole Properties and also the limits sanctioned to M/s RMK Santhi Blue Metal Industry of which the 2nd defendant is the Sole Proprietrix.

The applicant vide Letter of Arrangements dated 9.3.2015 sanctioned / renewed the Working Capital by way of Cash Credit Limit of Rs.4.85 crores to the 1st defendant subject to terms and conditions and the 1st defendant executed

necessary loan documents on 9.3.2015 and defendants 2 to 8 also executed guarantee agreements on the same day.

At the request of the defendants the applicant vide its Letter of Arrangement dated 10.02.2016 sanctioned / renewed the Working Capital Limit of Rs.4.85 crores and Working Capital Demand Loan (SME Care) of Rs.90 lakhs to the 1st defendant and the 1st defendant executed necessary loan documents on 10.02.2016 and the defendants 2 to 8 executed guarantee agreements on the same day. It is stated that the said limit was again renewed vide Letter of Arrangement dated 20.02.2018 by the applicant viz., Working Capital Limit of Rs.4.85 crores and Car Loan subject to terms and conditions. The car loan was closed by the 1st defendant.

The 1st defendant deposited the title deeds of the Schedule „A‟, „B‟ and „C‟ properties with the applicant bank with an intention to create equitable mortgage over the same and confirmed the same by letter dated 9.9.2016. The 2nd defendant deposited the title deeds of the Schedule „D‟ & „F‟ properties with the applicant bank with an intention to create equitable mortgage over the same and confirmed the same by letter dated 9.9.2016. Similarly, the defendants 2 & 7 deposited the title deeds of the Schedule „E‟ properties with the applicant bank with an intention to create equitable mortgage over the same and confirmed the same by letter dated 9.9.2016. The 4th defendant deposited the title deeds of Schedule „G‟ properties with the applicant with an intention to create equitable mortgage over the same and confirmed the same by letter dated 9.9.2016. Defendants 6, 3 and 8 deposited the title deeds of Schedule „H‟ properties with

the applicant bank with an intention to create equitable mortgage over the same and confirmed the same by letter dated 9.9.2016. The 5th defendant deposited the title deeds of Schedule „H‟ properties with the applicant with an intention to create equitable mortgage over the same and confirmed the same by letter dated 9.9.2016. The defendants 1 to 4 deposited the title deeds of Schedule „I‟ properties with the applicant with an intention to create equitable mortgage over the same and confirmed the same by letter dated 9.9.2016.

4. It is further stated that even though the defendants had obliged to repay the amount promptly and regularly, but had failed to do so resulting in default in repayment and hence the account was classified as NPA on 24.01.2019.

5. It is contended by the applicant that the applicant‟s officials had on many occasions approached the defendants requesting them to regularize the account and despite the same, no effort was made by the defendants to get the account regularized or to pay back the amount.

6. It is also the case of the applicant that despite repeated reminders and requests the defendant failed to make the repayment forcing the applicant to file this OA seeking recovery of the amount due in the account with further interest and costs.

7. The defendants remained absent and hence were called absent and set ex-parte on 09.09.2022.

8. The applicant had let in evidence through AW-1, who had sworn to a Proof Affidavit in terms of the pleading in the OA and also produced Exhibits A-1 to A-72 and got the same marked in evidence.

9. Heard the Ld. Counsel for the Applicant and considered the contentions as taken in the OA in the light of documentary evidence and proof affidavit.

10. The following issues arise for consideration in this matter: -

(i) Whether the applicant had succeeded in proving the OA claim as against the defendants?

(ii) What orders are to be passed?

Both these issues are gone into and decided together.

11. The case put forth by the applicant in the Application remains unrebutted as defendants remained ex-parte. The evidence tendered by the applicant remains uncontroverted and undisputed. The evidences put forth by the applicant were found admissible. From the statement of accounts as produced by the applicant, it is evident that the amount as claimed in the OA is outstanding in the account, which the applicant is entitled to get recovered from the defendants and their assets. The claim of the applicant is well within the period of limitation and there is no capitalization of penal interest.

12. In view of the fact that the subject loan is business loan availed by the defendants and the applicant has claimed interest at contractual rates till the time

of filing of the application and the interest rates have also considerably come down, this Tribunal is inclined to reject the prayer of the applicant for award of interest with monthly rests and award the pendent lite and future interest at simple and reduced rates.

13. 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 and the defaults committed by the defendants, which the applicant is entitled to realize. Hence, TA is disposed off in the following manner: - (a) TA No.241 of 2023 stands allowed.

(b) Applicant is permitted to realize an aggregate sum of Rs.6,79,19,704/- together with interest at the rate of 12% simple per annum from the defendants jointly and severally from the date of filing of the application till the date of realization in full along with costs of this application and allowed the same to be recovered by sale of schedule mentioned 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 the defendants are personally liable for all such amounts due under the Loan Accounts.

(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 order.

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

14. 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