INDIAN OVERSEAS BANK vs M/S C S AGRO FOODS on 5 October 2026

: - FINAL ORDER- :

1. This Original Application is filed on 09.03.2020 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 Defendant, for recovery of a total sum of Rs.59,23,746/- (Rupees Fifty Nine Lakhs Twenty Three Seven Hundred and Forty Six only) as follows: i. A sum of Rs.30,12,679/- due in respect of Cash Credit facility (A/c No.02890200002655) repayable together with further interest @13.25% p.a. with monthly rests from the date of Application till the date of realization in full; ii. A sum of Rs.7,98,685/- due in respect of Term Loan (A/c No.028903261400001) repayable together with further interest @13.20% p.a. with monthly rests from the date of Application till the date of realization in full; iii. A sum of Rs.10,62,966/- due in respect of Term Loan (A/c No.028903261400004) repayable together with further interest @13.20% p.a. with monthly rests from the date of Application till the date of realization in full; iv. A sum of Rs.10,49,416/- due in respect of Term Loan (A/c No.028903603000006) repayable together with further interest @13.20% p.a. 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.213 of 2020, and thereafter in pursuance to the notification from Ministry of Finance, DFS dated 04.10.2022, OA No. 213 of 2020 stood transferred to this Tribunal and renumbered as TA No.452 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 defendant is a Proprietary concern rep by its Sole Proprietor Mrs.K.Divya. The defendant approached the applicant bank and requested to provide financial assistance for the purpose of purchasing machinery. Considering the request of the defendant, the applicant on 04.01.2014 sanctioned Term Loan of Rs.7.00 lakhs in favour of defendant for the purpose of purchasing machinery for her business.

5. The applicant submits that the defendant having accept the aforesaid credit sanction and the terms and conditions enumerated therein, executed the following loan documents in favour of the applicant on 04.01.2014:

a) Demand Promissory Note for the sum of Rs.7.00 lakhs executed by the defendant.

b) Letter of repayment executed by the defendant agreeing to repay the loan amount of Rs.7.00 lakhs by 60 monthly instalments i.e. 50 monthly instalments Rs.11,700/- and 60th monthly installment @ Rs.9,700/- commencing from 31.03.2014.

c) Term loan agreement of Rs.7.00 lakhs executed by the defendant

d) Deed of hypothecation (for securing machineries/vehicles/ goods/book-debts) for Rs.7.00 lakhs executed by the defendant

6. It is the further case of the applicant bank that the defendant subsequently requested the applicant to provide financial assistance under Cash Credit limit for business purpose. Considering the request of the defendant, the applicant sanctioned Cash Credit limit of Rs.3.00 lakhs on 23.01.2014 to the defendant. In consideration thereof the defendant on 23.01.2014 executed following loan documents in favour of the applicant:

a) Demand Promissory Note dated 23.01.2014 for the sum of Rs.3.00 lakhs executed by the defendant.

b) Letter of continuity the demand promissory note for a sum of Rs.3.00 executed by the defendant

c) Deed of hypothecation of stocks executed by the defendant for Rs.3.00 lakhs

d) Deed of hypothecation (for securing machineries/vehicles/ goods/book-debts) for Rs.10.00 lakhs executed by the defendant

7. The applicant submits that the defendant requested the applicant to provide financial assistance for the purpose of purchasing machinery. Considering the request of the defendant, the applicant on 25.03.2014 sanctioned Term Loan of Rs.8.90 lakhs to the defendant for the purpose of purchasing machinery for the business purpose.

8. The applicant submits that the defendant having accept the aforesaid credit sanction on 25.03.2014 executed following loan documents in favour of the applicant:

a) Demand promissory note for the sum of Rs.8.90 lakhs executed by the defendant.

b) Letter of repayment executed by the defendant agreeing to repay the loan amount of Rs. 8.90 lakhs by 60 monthly instalments i.e.

monthly instalments Rs.14,835/- commencing from 30.06.2014.

c) Term loan agreement of Rs. 8.90 lakhs executed by the defendant

d) Deed of hypothecation (for securing machineries/vehicles/ goods/book-debts) for Rs. 18.90 lakhs executed by the defendant

9. The applicant further submits that the defendant enjoyed the aforesaid credit limit of Rs.3.00 lakhs and two Term Loan limits sanctioned by the applicant. Subsequently the defendant requested the applicant to enhance the existing Cash Credit limit for its business necessities. Considering the request of the defendant, the applicant on 16.09.2014 enhanced the existing Cash Credit limit from Rs.3.00 lakhs to Rs.8.00 lakhs. Having accept the credit sanction, the defendants on 18.09.2014 executed following loan documents in favour of the applicant for the enhanced credit limit:

a) Demand Promissory Note for the sum of Rs.5.00 lakhs together with interest at the base rate + 1.75% per annum compounded with monthly rests executed by the defendant.

b) Letter of Continuity for the Demand Promissory Note for Rs.5.00

c) Deed of Hypothecation of stocks for Rs.5.00 lakhs executed by the defendant for Rs.3.00 lakhs

d) Deed of hypothecation (for securing machineries/vehicles/

goods/book-debts) for Rs. 23.90 lakhs executed by the defendant.

10. It is submitted by the applicant bank that the defendant enjoyed the aforesaid credit limit sanctioned by the applicant. Subsequently the defendant requested the applicant to enhance the existing Cash Credit limit for its business necessities. Considering the request of the defendant, the applicant on 30.08.2016 enhanced the existing Cash Credit limit from Rs.10.00 lakhs to Rs.18.00 lakhs. Having accept the credit sanction, the defendants on 30.08.2016 executed following loan documents in favour of the applicant for the enhanced credit limit:

a) Demand Promissory Note for the sum of Rs.10.00 lakhs together with interest at the base rate + 1.75% per annum compounded with monthly rests executed by the defendant.

b) Letter of continuity the demand promissory note for Rs.18.00

c) Deed of hypothecation of stocks for Rs.18.00 lakhs executed by the defendant for Rs.3.00 lakhs

d) Deed of hypothecation (for securing machineries/vehicles/ goods/book-debts) for Rs. 21,58,652/- executed by the defendant

11. The applicant submits that the defendant enjoyed the aforesaid credit limit sanctioned by the applicant. The defendant requested the applicant to provide financial assistance for the purpose of purchasing of machinery. Considering the request of the defendant, the applicant on

30.08.2016 sanctioned the Term Loan of Rs.7.30 lakhs in favour of the defendant for the purpose of purchasing machinery.

12. The applicant submits that having accept the aforesaid credit sanction the defendants on 30.08.2016 executed following loan documents in favour of the applicant for the enhanced credit limit:

a) Demand promissory note for the sum of Rs.7.30 lakhs executed by the defendant.

b) Letter of repayment executed by the defendant agreeing to repay the loan amount of Rs. 7.30 lakhs by 60 monthly instalments i.e.

monthly instalments Rs.15,349/- commencing from 30.09.2016.

c) Term loan agreement of Rs. 7.30 lakhs executed by the defendant

d) Agreement of term loan and hypothecation of Rs.7.30 lakhs executed by the defendant

13. The applicant submits that the defendant revived the loan documents by executing Revival Letters on 30.08.2016 and on 17.07.2019. However, the defendant was highly irregular in operating the Cash Credit limit and was also highly irregular in repaying the loan instalments of aforesaid said three Term Loan limits. Therefore the liabilities of the defendant in his credit accounts were going on increasing without proper remittance. Consequently, the defendants loan account was classified as Non Performing Asset (NPA) on 31.03.2017 as per the RBI guidelines. The applicant on 13.04.2017 issued Demand Notice and called upon the defendant to pay the due amount. Having received the demand notice, the defendant did not come forward to pay any amount.

14. The applicant submits that they are charging interest for the credit facilities sanctioned to the 1st defendant as per contractual rate over and above the base rate fixed by the applicant. The interest rate is subject to variation from time to time. Further the defendant is liable to pay default interest at the rate of 2% per annum over and above the contractual rate since they are wilful defaulter. As such the present rate of interest for the cash credit limit availed by the defendant is 11.25% + 2%=13.25% p.a. compounded with monthly rest and the rate of interest for the term loan limits sanctioned to the defendant is 11.20% + 2% = 13.20% p.a. compounded with monthly rests. Despite repeated requests and demands, as defendant did not come forward to repay the dues, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues from the defendant.

15. After the filing of the OA, summons was sent to the sole Defendant through Registered Post with Acknowledgment Due, which was duly served, despite which there was no representation for the Defendant. When OA was taken up on 06.01.2022 even after giving sufficient time, there was no appearance or representation from the Defendant. Hence, Defendant was placed ex-parte on 06.01.2022. Heard the submissions of Applicant Bank and perused the records.

16. To prove the case of the Applicant Bank, Mr. Rajan, Assistant

General Manager of the Applicant Bank, filed 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-37.

17. A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-37 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 Defendant.

18. The defendant was set ex-parte on 06.01.2022, 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 Defendant are produced or filed to dispute the claim of applicant bank. Hence, it can be concluded that applicant bank has proved its claim against Defendant.

19. 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 :

20. The OA is allowed with costs,

(a) The applicant bank is allowed to recover from the Defendant, total sum of Rs.59,23,746/- (Rupees Fifty Nine Lakhs Twenty Three Seven Hundred and Forty Six only) as follows: i. A sum of Rs.30,12,679/- due in respect of Cash Credit facility (A/c No.02890200002655) repayable together with further interest @13.25% p.a. with monthly rests from the date of Application till the date of realization in full; ii. A sum of Rs.7,98,685/- due in respect of Term Loan (A/c No.028903261400001) repayable together with further interest @13.20% p.a. with monthly rests from the date of Application till the date of realization in full; iii. A sum of Rs.10,62,966/- due in respect of Term Loan (A/c No.028903261400004) repayable together with further interest @13.20% p.a. with monthly rests from the date of Application till the date of realization in full; iv. A sum of Rs.10,49,416/- due in respect of Term Loan (A/c No.028903603000006) repayable together with further interest @13.20% p.a. with monthly rests from the date of Application till the date of realization in full along with costs of this application.

(b) The applicant bank shall file the latest memo of calculation of

OA amount together with interest, costs etc., to be paid by the Defendant 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 Defendant 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.

21. 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 05th day of October, 2026) ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Mr. Rajan, Assistant General Manager of the Applicant Bank Exhibits on the part of the Applicant:

Sl. No. Date Description of Documents Exhibit No.

1. 04.01.2014 Loan sanction letter from the applicant A-1

2. 04.01.2014 Demand promissory note for Rs.7.00 lakhs executed by the defendant. A-2

3. 04.01.2014 Letter of repayment agreeing for term loan amount of Rs.7.00 lakhs executed by the A-3

defendant

4. 04.01.2014 Term loan agreement of Rs.7.00 lakhs executed by the defendant A-4

5. 04.01.2014 Deed of hypothecation (for securing machineries/vehicles/goods/book-debts) for Rs.7.00 lakhs executed by the defendant A-5

6. 23.01.2014 Demand promissory note for Rs.3.00 lakhs executed by the defendant. A-6

7. 23.01.2014 Letter of continuity to the promissory note for Rs.3.00 executed by the defendant A-7

8. 23.01.2014 Deed of hypothecation of stocks executed by the defendant A-8

9. 23.01.2014 Deed of hypothecation (for securing machineries/vehicles/goods/book-debts) for Rs.10.00 lakhs executed by the defendant A-9

10. 25.03.2014 Demand promissory note for Rs.8.90 lakhs executed by the defendant. A-10

11. 25.03.2014 Letter of repayment of term loan amount of Rs. 8.90 lakhs executed by the defendant A-11

12. 25.03.2014 Letter of repayment of term loan amount of Rs.8.90 lakhs executed by the defendant A-12

25.03.2014 Deed of hypothecation (for securing machineries/vehicles/goods/book-debts) for Rs. 18.90 lakhs executed by the defendant A-13

14. 16.09.2014 Loan sanction letter from the applicant A-14

15. 18.09.2014 Demand promissory note for Rs.5 lakhs executed by the defendant A-15

16. 18.09.2014 Letter of continuity the demand promissory note for Rs.5 lakhs executed by the defendant A-16

17. 18.09.2014 Deed of hypothecation of stocks for Rs.5.00 lakhs executed by the defendant A-17

18. 18.09.2014 Deed of hypothecation (for securing machineries/vehicles/goods/book-debts) for Rs. 23.90 lakhs executed by the defendant. A-18

19. 30.08.2016 Loan sanction letter from the applicant A-19

20. 30.08.2016 Demand promissory note for Rs.10 lakhs

A-20

21. 30.08.2016 Letter of continuity the demand promissory note for Rs.18 lakhs executed by the defendant A-21

22. 30.08.2016 Deed of hypothecation of stocks for Rs.10.00 lakhs executed by the defendant A-22

23. 30.08.2016 Deed of hypothecation (for securing machineries/vehicles/goods/book-debts) for Rs. 24,58,652/- lakhs executed by the defendant. A-23

24. 30.08.2016 Loan sanction letter from the applicant A-24

25. 30.08.2016 Demand promissory note for Rs.7.30 lakhs executed by the defendant A-25

26. 30.08.2016 Letter of repayment of term loan amount of Rs.7.30 lakhs executed by the defendant A-26

27. 30.08.2016 Term loan agreement for Rs.7.30 lakhs

A-27

28. 30.08.2016 Deed of hypothecation of machineries for Rs. 7.30 lakhs executed by the defendant. A-28

29. 30.08.2016 Revival letter executed by the defendant A-29

30. 30.09.2016 Acknowledgement of balance in cash credit account executed by the defendant A-30

31. 13.04.2017 Demand notice issued by the applicant A-31

32. 28.04.2017 Acknowledgement card received from the defendant A-32

33. 17.07.2019 Revival letter executed by the defendant A-33

34. 27.02.2020 Statement of account for the cash credit limit A-34

35. 27.02.2020 Statement of account for the term loan A/c No. 028903261400001 A-35

36. 27.02.2020 Statement of account for the term loan A/c No. 028903261400004 A-36

37. 27.02.2020 Statement of account for the term loan A/c No. 028903603000006 A-37

Witness Examined for the Defendant: -Nil- List of Documents Exhibited for the Defendant: -Nil – :-SCHEDULE-: -NIL-

Sd/- (S.V. GOWRAMMA)

PRESIDING OFFICER, DRT-III, CHENNAI