THE CHIEF MANAGER vs M/S DHANALAKSHMI ENTERPRISES on 8 September 2026

: - FINAL ORDER- :

1. This original application is filed on 01.10.2019 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, 3 to 5, jointly and severally for recovery of a total sum of Rs.22,93,117.79p (Rupees Twenty Two Lakhs Ninety Three Thousand One Hundred and Seventeen and Seventy Nine paisa only) as follows: i. A sum of Rs.16,21,468.97p due in respect of Cash Credit Account (A/c No.37680500000009) repayable together with further interest @7.35% p.a. along with penal interest @2% with monthly rests from the date of Application till the date of realization in full; ii. A sum of Rs.1,41,180.79p due in respect of Term Loan (A/c No.37680600000620) repayable together with further interest @7.60% p.a. along with penal interest @2% with monthly rests from the date of Application till the date of realization in full; iii. A sum of Rs.5,30,468.03p due in respect of Term Loan (A/c No.37680600000829) repayable together with further interest @7.55% p.a. along with penal interest @2% with monthly rests from the date of Application till the date of realization in full; and for costs of this OA.

2. Originally, this Application was filed before DRT-II, Chennai, assigned OA No. 102 of 2022, and thereafter in pursuance to the notification from Ministry of Finance, DFS dated 04.10.2022, OA No. 102 of 2022 stood transferred to this Tribunal and renumbered as TA No. 258 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 firm of which the 2nd defendant was the proprietor was engaged in the business of trading and distribution of food products and applied for a Cash Credit of Rs.3.00 lakhs and Demand Loan of Rs.2.00 lakhs for Working Capital under the Govt of India’s MUDRA Scheme, vide application dated 22.07.2015.

5. It is submitted by the applicant bank that considering the said request, the applicant bank had sanctioned the amount of Rs.3 lakhs as Cash Credit and Rs.2 lakhs as Demand Loan as requested by the defendants vide Sanction Letter dated 22.07.2015 the terms and conditions of which were accepted by the defendants.

6. The applicant bank submits that the 2nd defendant representing the 1st defendant executed the following documents dated 22.07.2015 in favour of applicant bank: i. Demand promissory note of Rs.3 lakhs with an interest rate of 10.90% ii. Letter of sole proprietorship iii. Letter of continuity security iv. Composite hypothecation agreement

7. It is the further case of the applicant bank that as requested by the defendants vide application dated 08.08.2016, the applicant bank had considered the enhancement of the CC facility to Rs.6 lakhs and review of Term Loan of Rs. 2 lakhs vide Sanction Letter dated 23.08.2016 and the defendants had accepted the terms and conditions and executed the following documents dated 23.08.2016 in favour of the applicant: i. Demand promissory note of Rs.3 lakhs with an interest rate of 10.90% ii. Letter of sole proprietorship iii. Letter of continuity security iv. General undertaking v. Instrument of hypothecation of goods vi. Composite hypothecation agreement

8. The 2nd defendant had executed Letter of Acknowledgement of Debt dated 29.08.2018 confirming the balance in the Cash Credit account and the validity of documents executed in the account, which binds the other defendants who are his legal heirs.

9. The defendants have further requested for enhancement of their Cash Credit Account vide application dated 05.03.2020 and the same was sanctioned by the applicant vide Sanction Letter dated 21.04.2020, the terms of which were accepted by 2nd defendant on behalf of the 1st defendant. The defendants executed the following documents dated 21.04.2020 for the enhanced CC limit of Rs.16 lakhs. i. Demand Promissory Note for Rs.16 lakhs with interest rate of 8.75% ii. Letter of continuity security iii. Supplemental Composite instrument of hypothecation iv. Letter of sole proprietorship v. General undertaking vi. Declaration cum undertaking cum authority vii. Letter of authority to disclose names incase of default

10. The applicant submits that the defendant firm represented by 2nd defendant had applied for Term Loan of Rs.3 lakhs under MUDRA scheme vide application dated 29.08.2018 which was sanctioned as requested by the applicant bank and the defendants have executed the following documents acknowledging the terms of sanction and agreeing to repay the loan in 36 installments of Rs.8345/- with interest as applicable and also agreeing to pay additional interest of 2% in case of any default.

i. Demand promissory note of Rs.3 lakhs

ii. Letter of sole proprietorship

iii. Letter of installment with acceleration clause

iv. Composite hypothecation agreement for Rs.3 lakhs

v. Declarations cum undertaking cum authority

11. The 1st defendant represented by 2nd defendant applied for Term Loan of Rs.6 lakhs under PMMY scheme and submitted an application dated 31.08.2019, which was accordingly considered and sanctioned by the applicant bank vide Sanction Letter dated 31.08.2019, the terms and conditions of which were acknowledged by the defendants.

12. The applicant bank submits that the 1st defendant had executed following documents dated 31.08.2019 agreeing to repay the loan in 36 installments of Rs.16606/- with interest at the rate of 9.55% which would be reset from time to time:

i. Demand promissory note of Rs.6 lakhs

ii. Letter of installment with acceleration clause

iii. Declaration cum undertaking cum authority

iv. Composite hypothecation agreement

v. Power of attorney in respect of book debt facility

vi. Undertaking in respect of guarantee fee payable to CGTMSE and related undertakings vii. Undertaking not to use funds for speculative purposes viii. General undertaking ix. Letter of sole proprietorship

13. It is submitted by the applicant bank that despite the regular sanction of facilities and increase in the Cash Credit limits, the defendants could not carry on the business as proposed by the bank. The repayment of the term/demand loans was also not made as per the terms of the agreement and hence the account was classified as Non-Performing Asset (NPA) from 31.03.2021. The applicant submits that the documents executed by the 2nd defendant are valid and enforceable as it is within three from the execution of documents. The defendant have also executed Letter of Acknowledgement of Debt dated 31.08.2019 in respect of Account no. 06/820 for Rs.3.00 lakhs extending the validity of the security documents.

14. It is understood that the 2nd defendant, who was the Proprietor of the 1st defendant firm has expired and hence the business was shut down and there were not stocks to cover the loan availed from the applicant. Hence the applicant bank is left with no other option but to invoke the terms of the loan/CC agreements to approach this Tribunal for recovery of amounts due from 3rd to 5th defendants who are the legal heirs of the 2nd defendant, whose names have been declared by the 2nd defendant in the documents executed by him and who are bound by the documents executed by the said defendant.

15. The applicant had repeatedly contacted the defendants for repayment of the credit facility and to regularize the account but they have failed to repay interest and principal as agreed. Hence, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues from the defendants.

16. After the filing of the OA, summons was sent to the Defendants 1 to 5 through Registered Post with Acknowledgment Due, which was returned with the postal endorsement as ‘left’ in respect of D-1 and D-5, summons to D-3 and D-4 were duly served, while summons to D-2 returned as ‘Deceased’. No representation from Defendants. Applicant Bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 03.10.2022 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 and 3 to 5 were placed ex-parte on 03.10.2022. Heard the submissions of Applicant Bank and perused the records.

17. To prove the case of the Applicant Bank, Sh. C. Baskaran, 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-53.

18. A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-53 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.

19. The defendants were set ex-parte on 03.10.2022, 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.

20. 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 :

21. The OA is allowed with costs,

(a) The applicant bank is allowed to recover from the defendants 1, 3 to 5, jointly and severally, a total sum of Rs.22,93,117.79p (Rupees Twenty Two Lakhs Ninety Three Thousand One Hundred and Seventeen and Seventy Nine paisa only) as follows:

(i) A sum of Rs.16,21,468.97p due in respect of Cash Credit Account (A/c No.37680500000009) repayable together with further interest @7.35% p.a. along with penal interest @2% with monthly rests from the date of Application till the date of realization in full;

(ii) A sum of Rs.1,41,180.79p due in respect of Term Loan (A/c No.37680600000620) repayable together with further interest @7.60% p.a. along with penal interest @2% with monthly rests from the date of Application till the date of realization in full;

(iii) A sum of Rs.5,30,468.03p due in respect of Term Loan (A/c No.37680600000829) repayable together with further interest @7.55% p.a. along with penal interest @2% with monthly rests from the date of Application till the date of realization in full along with costs of this OA.

(b) 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.

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

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

22. 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 08th day of September, 2026) ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Sh. C. Baskaran, Chief Manager of the Applicant Bank. Exhibits on the part of the Applicant:

Sl. No. Date Description of Documents Exhibit No.

1. 22.07.2015 Application for cash credit with KYC details A-1

2. 22.07.2015 Sanction letter with terms and conditions A-2

3. 22.07.2015 Attestation memo A-3

4. 22.07.2015 Demand promissory note for Rs.3 lakhs A-4

5. 22.07.2015 Letter of sole proprietorship A-5

6. 22.07.2015 Letter of continuing security A-6

7. 22.07.2015 Composite hypothecation agreement A-7

8. 08.08.2016 Application for increase in CC limit A-8

9. 23.08.2016 Sanction letter for increase in CC limit to Rs. 6lakhs A-9

10. 23.08.2016 Attestation memo A-10

11. 23.08.2016 D.P note for Rs.6 lakhs A-11

12. 23.08.2016 Letter of sole proprietorship A-12

23.08.2016 Letter of continuing security A-13

14. 23.08.2016 Letter of undertaking A-14

15. 23.08.2016 Instrument of hypothecation of goods A-15

16. 23.08.2016 Composite hypothecation agreement A-16

17. 23.08.2016 Letter of acknowledgement of debt in CC account A-17

18. 05.03.2020 Application for increase in CC limit A-18

19. 21.04.2020 Sanction letter for increase in CC limit to Rs. 16lakhs A-19

20. 21.04.2020 Attestation memo A-20

21. 21.04.2020 D.P note for Rs.16 lakhs A-21

22. 21.04.2020 Letter of continuing security A-22

23. 21.04.2020 Supplemental composite instrument of hypothecation of goods, book debts etc A-23

24. 21.04.2020 Letter of sole proprietorship A-24

25. 21.04.2020 General undertaking A-25

26. 21.04.2020 Declaration cum undertaking cum authority A-26

27. 21.04.2020 Letter of authority to disclose names A-27

28. 28.08.2018 Request letter for loan for Rs.3 lakhs A-28

29. 29.08.2018 Application form for Term loan A-29

30. 29.08.2018 Attestation memo A-30

31. 29.08.2018 Demand promissory note for Rs.3 lakhs A-31

32. 29.08.2018 Letter of sole proprietorship A-32

33. 29.08.2018 Letter of installment with acceleration clause A-33

34. 29.08.2018 Composite hypothecation agreement A-34

35. 29.08.2018 Declaration cum undertakings cum authority A-35

36. 31.08.2019 Application for term loan of Rs.6 lakhs A-36

37. 31.08.2019 Sanction letter no.BOB/ADYAR/ADY/09 acknowledged by the defendants A-37

38. 31.08.2019 Attestation memo A-38

39. 31.08.2019 Demand promissory note of Rs.6 lakhs A-39

40. 31.08.2019 Letter of installment with acceleration clause A-40

41. 31.08.2019 Declarations cum undertakings cum authority A-41

42. 31.08.2019 Composite hypothecation agreement A-42

43. 31.08.2019 Power of attorney in respect of book debts facility A-43

44. 31.08.2019 Undertaking A-44

45. 31.08.2019 Undertaking not to use for speculation A-45

46. 31.08.2019 Undertaking to allow debit of guarantee fee etc A-46

47. 31.08.2019 General undertaking A-47

48. 31.08.2019 Letter of sole proprietorship A-48

49. 31.08.2019 Letter of acknowledgement of debt in A/c

A-49

50. - Death certificate A-50

51. - Statement of account of CC account 05/09 from 13.01.2018 to 31.03.2021 and calculation of interest upto 31.08.2021 A-51

52. - Statement of account of Term loan account 06/620 from 29.08.2018 to 31.03.2021 and calculation of interest upto 31.08.2021 A-52

53. - Statement of account of CC account 06/829 from 31.08.2019 to 31.03.2021 and calculation of interest upto 31.08.2021 A-53

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

:-SCHEDULE-: -NIL-

Sd/- (S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI