CANARA BANK vs MS SOFA AVENUES on 23 July 2026

: - FINAL ORDER- :

1. This Original Application is filed on 05.08.2022 by the applicant bank under Section 19(1) 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.1,29,21,524/- (Rupees One Crore Twenty Nine Lakhs Twenty One Thousand Five Hundred and Twenty Four only) as follows:

(i) A sum of Rs. 82,40,594/- due in respect of OCC Account (A/c No.0937768000067) repayable together with further interest @16.50% p.a. with monthly rests from the date of Application till the date of realization in full;

(ii) A sum of Rs.20,64,333/- due in respect of Term loan (A/c No.0937755000021) repayable together with further interest @11% p.a. with monthly rests from the date of Application till the date of realization in full;

(iii) A sum of Rs.21,79,792/- due in respect of GECL (A/c No.0937755000021) repayable together with further interest @10.40% p.a. with monthly rests from the date of Application till the date of realization in full;

(iv) A sum of Rs.4,36,805/- due in respect of CFTIL (A/c No.09377710000002) repayable together with further interest @11.95% p.a. with monthly rests from the date of Application till the date of realization in full; for sale of immovable property morefully desilted in the OA schedule and for costs of this OA Brief Facts of the case:

2. 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.

3. It is the case of the applicant bank that the 1st defendant is engaged in Trading of Electrical Items expressly Touch Model Wi-Fi based products and Electronic Module Switches, represented by its Proprietrix, 2nd defendant herein.

4. It is submitted by the applicant bank that at the request of the 1st defendant by its application dated 01.08.2018, the applicant sanctioned OCC facility of Rs.50 lakhs for development of their electronic business vide Sanction Letter dated 03.08.2018. The 1st defendant has availed the above loan on 04.08.2018 for a sum of Rs.50 lakhs for which the 2nd defendant had executed the following documents on 04.08.2018 in favour of applicant bank as its Proprietrix:

a) Request for overdraft facility

b) Demand promissory note dated 04.08.2018 for Rs.50lakhs promising to repay the amount together with interest thereon at 11.20% p.a. above/below the ongoing base rate (Base rate at present being 8.50%) or at such other rates as revised by the bank from time to time compounded monthly/quarterly/half yearly for value received

c) Cash credit agreement

d) Agreement Re: Advances against book debts as prime security

e) Letter of proprietorship

5. The applicant submits that at the request of the 1st defendant, the applicant had sanctioned Term Loan facility of Rs.22.63 lakhs to the 1st defendant on 02.08.2018. The 1st defendant had availed the above loan on 02.08.2018, for which the 2nd defendant had executed the following documents on 02.08.2018 in favour of applicant bank:

a) Demand promissory note dated 02.08.2018 for Rs.22.63 lakhs promising to repay the amount together with interest thereon at 13.20% p.a. above/below the ongoing base rate (Base rate at present being 8.50%) or at such other rates as revised by the bank from time to time compounded monthly/quarterly/half yearly for value received

b) Agreement cum-deed of hypothecation

c) Letter of undertaking Re: loans/advances

d) Particulars of vehicles/machinery/equipment

6. It is further submitted by the applicant bank that at the request of the 1st defendant by its application dated 03.01.2020, the applicant had sanctioned Renewal of OCC with enhancement from Rs.50 lakhs to Rs.75 lakhs to the 1st defendant on 03.01.2020. The 1st defendant has availed the above loan on 03.01.2020 for which the 2nd defendant had executed the following documents on 03.01.2020 in favour of applicant bank:

a) Letter of renewal

b) Link letter

c) Link letter d) Demand promissory note dated 03.01.2020 for Rs.25lakhs promising to repay the amount together with interest thereon at 11.20% p.a. above/below the ongoing base rate or at such other rates as revised by the bank from time to time compounded monthly/quarterly/half yearly for value received

e) Supplemental agreement

7. The applicant submits that at the request of the 1st defendant by its application dated 10.06.2020, the applicant had sanctioned a Guaranteed Emergency Credit line (GECL) under Covid-19 scheme for a sum of Rs.19.40 lakhs by its Sanction Letter dated 16.06.2020. The 1st defendant has availed the above loan and executed the following documents on 16.06.2020 in favour of applicant bank:

a) Offer letter

b) Undertaking letter from borrowers

c) Demand promissory note dated 16.06.2020 for Rs.19.40 lakhs promising to repay the amount together with interest thereon at 7.50% p.a. above/below the ongoing base rate (Base rate at present being 6.90%) or at such other rates as revised by the bank from time to time compounded monthly/quarterly/half yearly for value received

d) Agreement cum-deed of hypothecation

e) Letter of undertaking Re: loans/advances

8. It is submitted that in accordance with COVID-19 regulatory package announced by RBI interest accrued on CC/OD for the period

March to August 2020 was debited in the accounts. The accrued interest has been converted into Funded Interest Term Loan (FITL) carrying the same interest applicable to this facility and should be repaid at 6 monthly instalments. The applicant submits that the 1st defendant has sanctioned the FITL Facility of Rs.3,69,450/- on 03.09.2020 under the above scheme to the 1st defendant and the same was availed by the 1st defendant on 03.09.2020.

9. The applicant submits that subsequent to availing of aforesaid credit facilities, the operation of the accounts by the defendants was irregular and inspite of several requests the defendants have not regularized the account. However the 1st defendant executed Acknowledgment of Debt dated 03.01.2020, wherein it had admitted its liabilities. As defendants did not come forward to repay the dues, the applicant bank classified the loan accounts as Non-Performing Asset (NPA) on 19.05.2021. The applicant also made demands to the defendants but there is no response. Finally the applicant also sent Demand Notice dated 19.10.2021 under Section 13(2) of SARFAESI Act but defendants did not come forward to repay the dues. The applicant also sent Legal Notice dated 09.07.2022 to the defendants but there was no response and repayment. Hence, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues from the defendants.

10. The applicant submits that statement of account of the amount due and payable by the defendants duly certified under the Bankers Book Evidence Act, 1891 is filed along with this application.

11. After the filing of the OA, summons was sent to the Defendants 1 and 2 through Registered Post with Acknowledgment Due, which was returned with postal endorsement as ‘Unclaimed’ in respect of D-1, while summons to D-2 returned as ‘left’. Applicant Bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 20.03.2025 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 and 2 were placed ex-parte on 20.03.2025 Heard the submissions of Applicant Bank and perused the records.

12. To prove the case of the Applicant Bank, Mrs. N. Suguna, Chief Manager of the Applicant Bank, has filed her 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-29.

13. A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-29 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.

14. The defendants were set ex-parte on 20.03.2025, 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.

15. 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 :

16. The OA is allowed with costs,

(a) The applicant bank is allowed to recover from the Defendants 1 and 2 jointly and severally, a total sum of Rs.1,29,21,524/- (Rupees One Crore Twenty Nine Lakhs Twenty One Thousand Five Hundred and Twenty Four only) as follows:

(i) A sum of Rs. 82,40,594/- due in respect of OCC Account (A/c No.0937768000067) repayable together with further interest @16.50% p.a. with monthly rests from the date of Application till the date of realization in full;

(ii) A sum of Rs.20,64,333/- due in respect of Term loan (A/c No.0937755000021) repayable together with further interest @11% p.a. with monthly rests from the date of

Application till the date of realization in full;

(iii) A sum of Rs.21,79,792/- due in respect of GECL (A/c No.0937755000021) repayable together with further interest @10.40% p.a. with monthly rests from the date of Application till the date of realization in full;

(iv) A sum of Rs.4,36,805/- due in respect of CFTIL (A/c No.09377710000002) repayable together with further interest @11.95% p.a. with monthly rests from the date of Application till the date of realization in full along with costs of this OA

(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 properties morefully detailed in the OA schedule.

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

(d) If the sale proceeds of the hypothecated assets are not sufficient to satisfy the dues as ordered above, the applicant bank is at liberty to sell the personal assets of the 2nd Defendant (both movable and immovable) to recover the balance dues as required under law for which the 2nd Defendant to disclose to the Tribunal particulars of other properties or assets owned by the 2nd Defendant.

(e) 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.

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

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

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

Sd/- (S.V. GOWRAMMA)

PRESIDING OFFICER, DRT-III, CHENNAI

(Dictated to Roshnee, transcribed by her, corrected, signed and pronounced by me on this the 23rd day of July, 2026) ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Mr. Sreenivasa, Chief Manager of the Applicant Bank. Exhibits on the part of the Applicant:

Sl. No. Date Description of Documents Exhibit No.

1. 01.08.2018 Application by 1st defendant A-1

2. 03.08.2018 Sanction letter by applicant A-2

3. 04.08.2018 Request for O.D. facilities A-3

4. 04.08.2018 Demand promissory note for Rs.50 lakhs by 1st defendant A-4

5. 04.08.2018 Cash credit agreement by 1st defendant A-5

6. 04.08.2018 Agreement Re: Advances Against book debts A-6

7. 16.07.2018 Letter of Proprietorship A-7

8. 02.08.2018 DPN for Rs.22.63 lakhs by 1st defendant A-8

9. 02.08.2018 Agreement cum deed of hypothecation A-9

10. 02.08.2018 Letter of undertaking Re: Loans A-10

11. 08.08.2018 Particulars of vehicles/machineries A-11

12. 03.01.2020 Application A-12

13. 03.01.2020 Sanction letter A-13

14. 03.01.2020 Letter of renewal A-14

15. 03.01.2020 Link letter A-15

16. 03.01.2020 Link letter A-16

17. 03.01.2020 DPN for Rs.25 lakhs A-17

18. 03.01.2020 Supplemental agreement A-18

19. 10.06.2020 Application for GECL A-19

16.06.2020 Sanction letter of GECL A-20

21. 16.06.2020 Offer letter A-21

22. 16.06.2020 Undertaking letter to be obtained from borrower A-22

23. 16.06.2020 DPN for Rs.19.40 lakhs A-23

24. 16.06.2020 Agreement cum deed of hypothecation A-24

25. 16.06.2020 Letter of undertaking Re: Loans A-25

26. 03.01.2020 AOD by 2nd & 3rd defendants A-26

27. 19.10.2021 13(2) SARFAEASI notice by applicant A-27

28. 09.07.2022 Legal notice issued by applicant bank A-28

29. Certified statement of accounts A-29

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

:-SCHEDULE OF HYPOTHECATED PROPERTY-:

1. All the hypothecated electronic items such as module switches and electrical items touch model and Wi-Fi based model products lying at the

1st defendant premises i.e. No.18, VGP layout, 4th cross street, Injambakkam, Kancheepuram, Chennai- 600 115 or stored or to be stored or in transit or wherever found.

2. All Book debts and receivables.

Sd/- (S.V. GOWRAMMA)

PRESIDING OFFICER, DRT-III, CHENNAI