STATE BANK OF INDIA vs M/S J S PHARMA DISTRIBUTORS on 29 January 2026

: - FINAL ORDER - :

1. This Original Application is filed on 28.11.2019 by the applicant bank under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants 1 and 2, jointly and severally for recovery of a total sum of Rs.20,53,327/- (Rupees Twenty Lakhs Fifty Three Thousand Three Hundred and Twenty Seven only) in respect of Cash Credit facility (Account No.67395403648) repayable together with further interest @ 11.40% p.a. with monthly rests and penal interest @ 2% p.a. from the date of application till the date of realisation in full and for costs of this OA.

2. Originally, this Application was filed before DRT-II, Chennai, assigned OA No.280 of 2021, and thereafter in pursuance to the notification from Ministry of Finance, DFS dated 04.10.2022, OA No.466 of 2020 stood transferred to this Tribunal and renumbered as TA No.1049 of 2023. Brief Facts of the case:

3. The Applicant submits that the application is filed within the period of limitation as prescribed under Section 24 of the Recovery of Debts and Bankruptcy Act, 1993, and the subject recovery claim falls within the jurisdiction of this Tribunal.

4. It is the case of the Applicant Bank that the 1st Defendant is a Proprietary concern represented by its Proprietrix, 2nd defendant herein. During the month of January, 2017, the defendants had approached the State Bank of Travancore, Besant Nagar (which was later merged with the applicant bank) for sanction of credit facilities for their business and submitted loan application dated 15.01.2017 under MSME scheme.

5. It is submitted that considering the said request of the Defendants, the Applicant Bank had sanctioned Cash Credit facility to the tune of Rs.15,00,000/- and Bank Guarantee facility to the tune of Rs.25,00,000/- in all aggregating to Rs.40,00,000/- vide sanction letter dated 10.03.2017. The loans are repayable with interest at the rate of 1.25% p.a. over MCLR with minimum rate of 11.05% p.a. with monthly rests that may change from time to time as per RBI guidelines and also that of the bank’s Rules. The defendants had also agreed to pay penal interest @ 2% p.a. in case of failure to comply with the sanction terms and conditions.

6. The applicant bank submits that on 13.03.2017, the defendants came to applicant bank’s Branch at Besant Nagar, Chennai and accepted the said facility and also executed the following documents for Rs.15,00,000/-:

(i) Hypothecation cum Working Capital Agreement with joint and several liability

7. Since there was no outstanding balance in the Bank Guarantee, the same is not included in the OA claim.

8. It is submitted by applicant bank that subsequent to availing of loan, the operations in Cash Credit account were sporadic and 1st defendant’s entire business transactions were not routed through the account. Thereby the defendants had deviated from the sanction terms and conditions. Inspite of repeated telephonic talks and some personal visits of applicant bank’s officers, the defendants ignored to set right the account. There was no operation in the account after 28.03.2019.

Therefore, the loan account was classified as Non-Performing Asset (NPA) on 10.11.2017 in accordance with RBI guidelines. The applicant bank had issued Legal Notice to the defendants on 04.11.2019 and the same was received by the defendants, despite which the defendants had neither replied to the legal notice nor regularized the same. Hence, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues from the defendants.

9. After the filing of the OA, summons were sent to the Defendants 1 and 2 through Registered Post with Acknowledgment Due, which was returned with the remarks “Left”. Applicant Bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 06.06.2022 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 and 2 were placed ex-parte on 06.06.2022. Heard the submissions of Applicant Bank and perused the records.

10. To prove the case of the Applicant Bank, Sh. Punit Kumar, Chief Manager of the Applicant Bank, has filed his Affidavit by way of evidence and same was considered as evidence of AW-1 and list of documents came to be marked as Ex A-1 to A-6. As the Defendants remained ex-parte, the OA claim remains unchallenged. There is no contra evidence available on record to repudiate the claim of the Applicant Bank.

11. A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-6 evidence that the borrowal of credit facilities and execution of loan and security documents are true, in terms of averments made in Original Application as well as Proof Affidavit filed by applicant bank establishing its claim. Applicant bank filed Statement of Accounts duly certified under Bankers’ Book Evidence Act, evidencing the amount claimed against defendants.

12. The defendants were set ex-parte on 06.06.2022, but till this day they did not take any action to set aside the ex-parte order and did not choose to contest the claim. Further, a careful scrutiny of records makes it clear that present application is filed well within limitation and this Tribunal possesses necessary and proper jurisdiction to entertain and adjudicate the claim. No oral or documentary evidence on the side of defendants are produced or filed to dispute the claim of applicant bank. Hence, it can be concluded that applicant bank has proved its claim against defendants.

13. With regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled for a final order on the following terms:

: O R D E R :

14. The OA is allowed with costs,

(a) The applicant bank is allowed to recover from the Defendants jointly and severally, for recovery of a total sum Rs.20,53,327/- (Rupees Twenty Lakhs Fifty Three Thousand Three Hundred and Twenty Seven only) in respect of Cash Credit facility (Account No.67395403648) repayable together with further interest @ 11.40% p.a. with monthly rests and penal interest @ 2% p.a. from the date of application till the date of realisation in full along with costs of this application.

(b) In the event of failure of the Defendants to pay the aforesaid amount, the bank is at liberty to recover the amount by sale of the schedule mentioned hypothecated property morefully detailed in the OA schedule.

(c) Schedule mentioned hypotheca shall be appended to this final order.

(d) The applicant bank shall file the latest memo of calculation of OA amount together with interest, costs etc., to be paid by the Defendants duly considering the amounts, if any, paid by the Defendant and/or amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to prepare Recovery Certificate for the amount to be paid by Defendants to the applicant bank.

(e) The applicant bank shall file memo of costs within ten days from the date of receipt of this final order.

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

15. A copy of this order be communicated to the parties concerned.

Sd/- (S.V. GOWRAMMA)

PRESIDING OFFICER, DRT-III, CHENNAI (Dictated to PS, transcribed by her, corrected, signed and pronounced by me on this the 29th day of January, 2026) ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Sh. Punit Kumar, Chief Manager of the Applicant Bank Exhibits on the part of the Applicant: Sl. No. Description of Documents Exhibit No.

1. Loan application submitted by the defendants dated 18.01.2017 A-1

2. Interview cum appraisal memo and Loan sanction letter by the applicant bank dated 10.03.2017 A-2

3. Hypothecation cum Working Capital Agreement with joint and several liability by defendants for Rs.15,00,000/- dated 13.03.2017 A-3

4. Legal Notice dated 04.11.2019 A-4

5. Acknowledgment Cards A-5

6. Statement of CC account No.67395403648 with unapplied interest calculation and certificates under BBE Act A-6

Witness Examined for the Defendants: -Nil- List of Documents Exhibited for the Defendants: -Nil –

:-SCHEDULE OF PROPERTY-: NIL

Sd/- (S.V. GOWRAMMA)

PRESIDING OFFICER, DRT-III, CHENNAI