CANARA BANK vs Mr. C. Shankar on 30 August 2022

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 for recovery of a sum of Rs.1,46,75,731.25p with further interest at the rate of 10.25% per annum with monthly rests from the date of filing of the OA till the date of realization in full along with costs of this application and for sale of schedule mentioned properties.

2. The subject matter of the case is the “Home Loan facility” availed by the defendants from the applicant.

3. It is the case of the applicant that the defendants approached the applicant by their Loan Application dated 14.7.2015 for grant of home loan for purchase of residential building under the “Housing Finance Scheme” and the applicant considering the said request by its sanction dated 31.7.2015 sanctioned a home loan of Rs.1,42,00,000/- to the defendants. It is also the case of the applicant that the defendants on 3.8.2015 executed Home Loan Agreement thereby undertaking to repay the said sum in 252 equated monthly installments with interest at the rate of 11.10% p.a. floating compounded with monthly rests.

4. It is also the case of the applicant that the defendants deposited the title deeds of the schedule property with the applicant with an intention to create equitable mortgage over the same in favour of the applicant on 7.8.2015 and confirmed the same by executing Memorandum of Deposit of Title deeds dated 8.8.2015 registered as Doc. No.5219/2015, SRO, Tambaram.

5. It is the case of the applicant that the defendants having availed the credit facility defaulted in repayments and failed to regularize the loan account despite repeated demands and also failed to comply with the terms and conditions of sanction and therefore the loan account was classified the case a NPA on 6.5.2018. It is stated that as the defendants did not come forward to clear the outstanding dues, the applicant invoked the provisions of the SARFAESI Act and issued the demand notice on 25.5.2018 under Section 13(2) of the SARFAESI Act and despite the said notice the defendants did not come forward to clear the outstanding dues.

6. It is the case of the applicant that after availing the loan, the defendants were irregular in remitting the loan amount. The efforts of the applicant bank to make the defendants settle the loan did not yield any result, and hence the applicant approached this Tribunal seeking issuance of a Recovery Certificate allowing recovery of the amount due in the account.

7. Summons were taken out to the defendants and the same were served on the defendants. The defendants were initially represented by Ld. Counsel. As the defendants did not choose to file the written statement, the chance for filing written statement was closed on 16.07.2017. Applicant Bank filed Proof Affidavit along with 10 documents, which were marked as Ex. A-1 to A-10, on 1.7.2022. As there was no representation on behalf of the defendants continuously and on 1.7.2022 the defendants were set ex-parte on that day. The Ld. Counsel for Applicant Bank made his submissions on 5.8.2022 and thereafter the matter stood till this date for passing final orders.

8. The following issues arise for consideration in the matter: - (a) Whether the applicant had succeeded in proving the liability of the defendants?

(b) What order as to cost of the proceedings need be passed?

These issues are considered together.

9. Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

10. The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-10 along with the proof affidavit. Exhibit A-1 is the Loan Application dated 14.7.2015 submitted by the defendants to the applicant bank. Exhibit A-2 is the Sanction Memorandum dated 31.7.2015 issued by the applicant sanctioning Home Loan of Rs.1,42,00,000/- to the defendants. Exhibit A-3 is the Housing Loan Agreement dated 3.8.2015 executed by the defendants. Exhibit A-4 is the Memorandum relating to deposit of title deeds dated 7.8.2015 executed by the defendants. Exhibit A-5 is the Letter evidencing deposit of title deeds dated 8.8.2015 executed by the defendants. Exhibit A-6 is the Sale deed dated 4.8.2015 in favour of the defendants registered as Doc. No.5142/2015, SRO, Tambaram. Exhibit A-7 is the Construction Agreement dated 7.7.2015 between the defendants and others. Exhibit A-8 is the Legal Scrutiny Report dated 14.7.2015 by the panel Advocate of the applicant. Exhibit A-9 is the notice dated 25.5.2018 issued by the applicant under Section 13(2) of the SARFAESI Act. Exhibit A-10 is the statement of accounts in respect of the loan account along with certificates under Bankers’ Book Evidence Act.

11. Exhibit A-1 evidences that the defendants by loan application dated 14.7.2015 requested the applicant for sanctioning housing loan for purchase of schedule mentioned property. Exhibit A-2 evidences that the applicant considering the request of the applicant and by sanction memorandum dated 31.7.2015 sanctioned housing loan of Rs.1,42,00,000/- to the defendants. Exhibit A-3 evidences that the defendants on 3.8.2015 executed housing loan agreement, Exhibit A-4 to A-8 evidences that the schedule mentioned property belong to the defendants and they deposited the title deeds of the same with the applicant bank on 7.8.2015 with an intention to create equitable mortgage over the same in favour of the applicant and confirmed the same by executing letter dated 8.8.2015 and also executed Memorandum of Deposit of Title deeds dated 4.8.2015 registered as Doc. No.5142/2015, SRO, Tambaram. Exhibit A-9 evidences that the defendants defaulted in repayment and hence the loan account was classified as NPA and the applicant invoked the provisions of the SARFAESI Act and issued the demand notice dated 25.5.2018 under Section 13(2) of the SARFAESI Act calling upon the defendants to clear the outstanding dues. It also evidences that despite the said notice the defendants did not come forward to clear the outstanding dues in the loan account. Exhibit A-10, the statement of accounts in respect of the loan account produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendant. It is clear from the statement of accounts that penal interest is not capitalized.

12. The proof affidavit of the applicant bank remained unchallenged and unrebutted. Therefore, on careful consideration of proof affidavit along with Exhibits filed on behalf of the applicant bank, besides the material placed before the Tribunal, the Tribunal is satisfied that the applicant bank has successfully proved the OA claim against the defendants. Point is answered accordingly.

13. In view of the fact that the instant loan is a Home Loan availed by the defendants, this Tribunal is of the view that the pendent lite interest can be awarded at reduced rates.

14. In view of the afore mentioned discussions, the only conclusion this Tribunal can draw is that the applicant had clearly proved the disbursement of the loan, which the applicant is entitled to realize. Hence, OA is disposed off in the following manner: - (a) OA No.344 of 2019 stands allowed.

(b) Applicant is permitted to realize a sum of Rs.1,46,75,731.25p with further interest at the rate of 9% per annum (simple) from the date of filing of the OA till date of realization from the defendants jointly and severally, after deducting all the amounts received 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 are personally liable for all such amounts due under the Loan Account.

(d) Applicant is permitted to realize cost of the proceedings and shall file cost memo within 7 days from the date of the order.

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

14. 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 30th day of August, 2022) Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI