CANARA BANK vs Mr K Munisamy 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.18,37,493/- comprising a sum of Rs.17,11,157/- together with further interest at the rate of 12.90% per annum with half yearly rests being the amount due under Account No.952856006591 and a sum of Rs.1,26,336/- together with further interest at the rate of 9.80% per annum with half yearly rests being the amount due under Account No.952840016388 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. It is the case of the applicant that the defendants approached the applicant bank for grant of financial assistance for purchase of Tractor viz., Sonalika Model 740 DI 40H Tractor and considering the said request the applicant vide sanction dated 21.06.2006 a sum of Rs.4,47,000/- repayable in eight yearly installments of Rs.49,600/- commencing from July 2007 to 21.09.2011 and the defendants executed necessary loan documents hypothecating the tractor purchased from and out of the funds availed from the applicant

3. It is also the case of the applicant that the defendants deposited the title deeds relating to the property more fully described in Schedule „A‟ on 21.06.2006 with an intention to create equitable mortgage over the same. It is the case of the applicant that the defendants defaulted in repayment despite repeated demand and hence the account was classified as NPA on 09.08.2016, however, the defendants executed letter acknowledging the liability on 25.03.2008, 20.02.2011, 09.07.2013 and 21.04.2015.

4. It is the further case of the applicant that at the request of the defendants the applicant sanctioned Kissan Credit Card Loan of Rs.65,000/- on 21.09.2011 and the defendants executed necessary loan documents. The defendants defaulted in repayment and hence the loan account was classified as NPA on 09.08.2016 and the defendants acknowledged the liability by executing acknowledgement of debt and liability on 30.09.2013 and 21.04.2015.

5. It is stated that the defendants did not come forward to clear the outstanding dues despite repeated demands and hence the applicant issued a lawyer‟s notice on 21.04.2014 calling upon the defendants to clear the outstanding dues and hence the applicant has filed the present application.

6. The defendants filed reply statement stating that the application is not maintainable and is barred by limitation. It is admitted that the Agricultural Tractor Loan of Rs.4.47 lakhs and Agricultural Loan of Rs.65,000/- were sanctioned on 22.06.2006 and 21.09.2011 respectively. It is not correct to say that the defendants had not acknowledged the debts as claimed by the applicant bank and the alleged acknowledgments dated 25.03.2008, 20.02.2011, 09.07.2013 and 21.04.2015 are all created by the applicant bank for the purpose of limitation. It is stated that the applicant had obtained the signatures on blank documents including acknowledgement debt and the same has been now utilized for the purpose of filing the application. It is denied by the defendants that the alleged demand notice dated 21.04.2014 as the defendants have not filed any proof of service of the same. It is further submitted that the present O.A. has been filed on 12.01.2018 i.e. after three years of period of limitation from the date of issuance of the alleged demand legal notice dated 21.04.2014. It is stated that in the said notice the applicant bank alleged to have claimed that the defendants had executed the acknowledgment of debts on 25.02.2011 and 09.07.2013, however at page 41 and 42 of the O.A. booklet will clearly revels that the signature of 2nd defendant does not find place in that document apart from the fact in the alleged acknowledgment the signature of the witness and quantum of amount acknowledged are also blank which vitiates the total O.A. claim. It is also stated that the amounts remitted by the defendants have not been given credited too and the statement of accounts filed is not correct and proper. It is further stated that the defendants are agriculturist and the financial assistance had been provided for agricultural purposes by the applicant bank to purchase Tractor and agricultural purpose and it is stated that the entire loan had been discharged under the various waiver schemes introduced by the Government of India and the applicant bank being a public sector undertaking was bound by the waiver scheme introduced by the Government of India and ought to have discharged the entire loan as per the waiver scheme, on the contrary the applicant bank has not granted the defendants any relief under the waiver scheme, even though the defendants are entitled to the same. It is submitted that despite default on the part of the defendants herein, the applicant bank had on 21.09.2011 sanctioned the Agricultural Kisan Credit loan without exercising due precaution to ensure that atleast the borrower had remitted the interest due on the date of sanction of 2nd loan. It is stated that Applicant bank is not certain towards the schedule of security created in favour of the applicant bank and hence the property cannot be proceeded against in the absence of correct particulars. It is also stated that the classification of the loan account as NPA is contrary to the guidelines and various circular issued by RBI and without taking into account that the loan facility is granted for agricultural purposes. The defendants thus contending prayed for dismissing the OA.

7. The applicant bank filed its proof affidavit along with 15 documents, which are marked as Exhibits A-1 to A-15, the details of which are as under: -

Sl. No. Date Description of Documents Exhibits

1. 22.06.2006 Letter evidencing deposit of title deeds registered as Doc. No.3534/2006, SRO, Tirupattur A 1

2. 18.07.2006 Memorandum of Agreement for agricultural loans A 2

3. 25.03.2008 Acknowledgement of debt and security A 3

4. 20.02.2011 Acknowledgement of debt and security A 4

5. 09.07.2013 Acknowledgement of debt and security A 5

6. 21.04.2015 Acknowledgement of debt and security A 6

7. 21.09.2011 Agreement of hypothecation for agricultural loans A 7

8. 30.09.2013 Acknowledgement of debt and security A 8

9. 21.04.2015 Acknowledgement of debt and security A 9

10. 21.04.2014 Lawyer‟s notice issued by applicant bank A 10

11. 11.12.2017 Statement of Accounts A 11

12. 04.04.1997 Sale deed – Doc. No.1331/1997, SRO, Tirupattur A 12

13. 19.06.1997 Sale deed – Doc. No.2246/1997, SRO, Tirupattur A 13

14. 09.02.2004 Sale deed – Doc. No.529/2009, SRO, Tirupattur A 14

15. 18.07.2006 Loan Application A-15

8. The defendants filed Counter Proof Affidavit reiterating the contentions made in the reply statement.

9. Ld. Counsel for applicant bank advanced his arguments. However, Ld. Counsel for defendants did not choose to put forth their arguments despite availing sufficient opportunities and hence was taken up as heard on 17.08.2023.

10. Heard the Ld. Counsel for the Applicant Bank. Perused the records.

11. 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?

12. The applicant bank in its endeavor to establish its claim against the defendants examined its official as AW1 and got marked Exhibits Ex.A-1 to A-

15. The Ld. Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides on Ex. A-1 to A-15, strenuously contended that the claim of the applicant stands established against the defendants, as such, the applicant is entitled for a recovery certificate as prayed for.

13. Ld. Counsel for the applicant would contend that the contention of the defendants that they did not sign the acknowledgement of debt and security and the applicant has used the blank documents which they got signed at the time of availing the loan facility for the purpose of creating this documents and based on which they have claimed limitation is concerned, the same is an afterthought and the defendants having accepted that they have signed the documents cannot now turn around and contend that they have not executed the same. Ld. Counsel would also contend that the contention of the defendants that the amounts remitted by them have not been given credit to is concerned, the same is also not tenable for the reason that the applicant has

not given details of the payments. Ld. Counsel would further contend that the contentions of the defendants are false and not supported by any evidence.

14. In so far as the contention of the defendants that the OA is barred by limitation and that the applicant has utilized the blank documents which they had got signed at the time of sanction for the purpose of filing this OA and to bring the claim within the period of limitation is concerned it is to be stated that the defendants have not disputed their signatures in the document. Further, the contention of the defendants that the applicant has got signed blank documents and they have utilized the same now for the purpose of filing this OA is concerned it is to be stated that this contention is being raised by every defaulting borrower. Further, the Hon‟ble DRAT, Mumbai in the matter of Sangli Bank Ltd. Vs. Prabha K.Maheshwari and others reported in MANU/DM/0025/2005 held in paragraph 8 that; “8. The grant of loan as alleged by the Bank and defendant Nos.6 to 10 having signed a guarantee agreement is an admitted position. Their contention is that on 30th July, 1992, defendant Nos. 1 to 5 had sent blank letter of lien, demand note for grant of Rs.30 lacs to the Bank, which indeed, appears to be correct. However, it has to be pointed out that settled legal position is that the person who signs blank standard documents takes responsibility for the same and the plea of non est factum is not available to him”

In view of the above judgment also the above contention of the defendants falls to the ground.

15. In so far as the contentions of the defendants that the various remittances made by the defendants have not been given credit to is concerned, it is to be stated that the defendants have failed to produce the details, proof of payments made by the defendants for verification and hence the said contention also fails for want of documentary evidence. Further, the applicant has filed the statement of accounts duly supported with certificates under Bankers‟ Book Evidence Act proving the claim of the applicant.

16. In so far as the contention of the defendants that the applicant has extended the various schemes of the Government of India and the State Government to the defendants and if the same had been done then the defendants account would have been closed is concerned, it is to be stated that no document as to the existence or availability of any such scheme is forthcoming from the defendants evidence even to suggest that they were entitled for any such scheme.

17. As regards the other contention of the defendants that the loan account has been wrongly classified as NPA is concerned it is to be stated that a careful examination of the statement of accounts clearly proves that the applicant has rightly classified the account as NPA.

18. 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 defendant. Further, the Tribunal on careful perusal of the unrebutted Proof Affidavit of AW-1 besides Exhibits A-1 to A-15 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?

19. 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.

20. 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 subject loan is an agricultural loan and the lending rate had considerably come down, the Tribunal is of the view that the defendants are entitled for a reduced rate of interest. Therefore, under these circumstances, the Tribunal is inclined to grant pendente lite and future interest @ 8% p.a. simple on the OA claim amount from the date of filing till the date of realization. Point No.2 is answered accordingly.

21. In view of the afore mentioned discussions, the OA is disposed off in the following manner: - (a) TA No.258 of 2023 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.18,37,493/- with further interest @8% per annum (simple) from the date of filing of the application till the date of realization in full, from the defendants jointly and severally after deducting all the amounts received / recovered 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 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 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.

22. 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