THE SOUTH INDIAN BANK LTD vs M/s Sri Chithan Pharmacy on 30 August 2022

FINAL ORDER

1. This application is filed by the applicant bank under Section 31A of Recovery of Debts and Bankruptcy Act, 1993 for recovery of a sum of Rs.20,59,204.20p with further interest at 22.25% p.a. on Rs.3,23,868.88p from 16.6.2019 till the date of realization in full and for sale of schedule mentioned properties along with costs of this application.

2. It is the case of the applicant that the 1st defendant approached the applicant for grant of credit facilities for the purpose of developing his Pharmacy business and considering the said request the applicant sanctioned a CCOL credit facility of Rs.1,00,000/- to the 1st defendant and the 1st defendant executed necessary loan documents on 28.3.1991. It is also the case of the applicant that the 2nd defendant executed guarantee agreement and also deposited the title deeds of his property more fully described in the schedule to the OA with an intention to create equitable mortgage over the same and confirmed the same by executing Memorandum of Deposit of Title deeds dated 30.3.1991. It is the further case of the applicant that after availing the credit facility the defendants defaulted in repayment and failed to regularize the loan account despite repeated demands and hence the applicant issued a recall notice dated 22.7.1993. It is contended that the 1st defendant acknowledged the debt by executing acknowledgement of debt dated 20.3.1994.

3. It is also the case of the applicant as the defendants did not come forward to clear the outstanding dues the applicant filed a suit before Sub Court, Chengalpattu on 17.3.1997 and numbered as OS No.101 of 1997. It is stated that since the defendants remained ex-parte an ex-parte preliminary decree was passed by the Sub Court, Chengalpattu on 7.3.2000 directing the defendants to pay a sum of Rs.6,69,516.30p with further interest at 22.25% from 7.3.2000 to till realization of decreetal amount.

4. It is the further case of the applicant that the applied filed application in IA No.262/2003 in OS No.101/1997 before the Sub Court, Chengalpattu for getting final decree and a final decree was passed on 30.08.2005 and the said final decree was made ready on 26.02.2009. It is stated that as per preliminary decre the suit was decreed for Rs.6,69,516.30 (consisting of Rs.3,23,868.88p being the suit amount and Rs.3,17,326.32p towards interest calculated from the date of plaint till 6.3.2000 together with cost of Rs.28,321/-) and thus the defendants are liable to pay a sum of Rs.6,69,516.30p together with interest at the rate of 22.25% per annum on principal amount of Rs.3,23,868.88p as per decree from 7.3.2000 to 16.6.2019 i.e., Rs.20,59,204.20p along with costs.

5. The summons issued to the defendants returned with endorsement “No such person” and hence the defendants were served with notice by substituted service by causing paper publication. As there was no representation on before of the defendants on 4.5.2022, they were called absent and set ex-parte on that day. The applicant bank filed proof affidavit along with 7 documents, which were marked as Exhibits A-1 to A-7, however Exhibits A-1, A-5 and A-6 are marked subject to proof and relevancy. The matter thus stood till today for passing final orders.

6. The points that arise for consideration by this Tribunal are:

1. Whether the applicant bank has established its claim against the defendants? If so, for what amount?

2. Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate?

Point No.1

Whether the applicant bank has established its claim against the defendants? If so, for what amount?

7. According to the Ld. Counsel for the applicant the claim of the applicant stands established by the evidence of AW-1 besides Exhibits A-1 to A-7. Ld. Counsel would contend that the Preliminary Decree in O.S. No.101 of 1997 dated 7.3.2000 by Sub Court, Chengalpattu, marked as Ex. A-2, and final decree in IA No.262/2003 in OS No.101/1997 dated 30.8.2004, marked as Ex. A-3 since not challenged had become final and the same is binding on the defendants and the defendants are therefore bound to discharge their liability. Thus contending, Ld. Counsel submitted that the claim has been established and the claim of the applicant be allowed in terms of the order passed in the Preliminary decree dated 7.3.2000 and the final decree in IA No.262/2003 in OS No.101/1997 dated 30.8.2005.

8. The defendants remained ex-parte and did not choose to contest the claim of the applicant bank.

9. It is to be stated that when a competent civil court after due adjudication of the claim of the applicant bank for recovery of the amount from the defendants, vide O.S. No.101/1997 has ordered the Preliminary decree on 7.3.2000, wherein a sum of Rs.6,69,516.30p together with interest at the rate of 22.25% per annum on Rs.3,23,868.88p from 7.3.2000 to till realization of decreetal amount and a final decree was also passed by the Sub Court, Chengalpattu in IA No.262/2003 in OS No.101/1997 on 30.8.2005. Admittedly, the defendants has not challenged the preliminary decree, As the amount exceeded Rs.10 lakhs, the applicant bank approached this Tribunal for issuance of a Recovery Certificate for realization of the amount due under the decree.

10. The Hon’ble High Court of Bombay, inre, Bank of India Vs. Shree Satya Corporation and Others, 2001 (1) BomCR 547, has categorically observed that Section 31A of the RDB Act would cover all suits where the decree has not yet been executed. So much so, when the preliminary decree passed by a competent civil court directing payment of amount by defendants remained unchallenged and thus, attained finality besides as the evidence put forth by the applicant herein, since remained unrebutted, the Tribunal is fully entitled and justified in placing reliance on the preliminary decree..

Therefore, in the light of the discussion as aforesaid and on careful perusal of the unrebutted Proof Affidavit of AW-1 besides Exhibits A-1 to A-7 and other documents enclosed to this application, the Tribunal is fully satisfied that the applicant has established its claim against the defendants and is entitled for a Recovery Certificate in terms of the Preliminary Decree passed by Sub Court, Chengalpattu in OS No.101/1997 dated 7.3.2000 and final decree in IA No.262/2003 in OS No.101/1997 dated 30.08.2005. This point is answered accordingly.

Point No.2

Whether the applicant bank is entitled for pendent lite and future interest, if so, at what rate?

In terms of Sec. 19 (20) of the RDB Act, the Tribunal has been empowered to pass an order regarding payment of interest from the date on or before which payment of the amount is found due, up to the date of realisation or only payment, as it think fit to meet the ends of justice.

Hon’ble Supreme Court, in its recent judgement ( reported in II 2009 BC pg. 696) in the matter of State Bank of India – vs – Sarath Textiles, held that “Sec. 19 (20) of the RDDB & FI Act confers discretion on the Tribunal to award interest on the applicant being as it thinks fit to meet the ends of justice.”

Hon’ble Supreme Court of India in the matter of Central Bank of India – vs – N. Raveendra (reported in 2002 [1] SCC pg. 367) held that “Sec. 34 of CPC confers discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit de-horse notwithstanding the contract between the parties.” Sec. 19 (20) of the RDDB & FI Act is akin to Sec. 34 CPC.

However, in the case on hand since the interest including the pendente lite and future has been adjudicated by a competent civil court, the Tribunal is of the opinion that the same rate of interest can be awarded in this application also.

16. In view of the afore mentioned discussions, the OA is disposed off in the following manner: - (a) OA No.84 of 2020 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.20,59,204.20p with further interest @22.25% per annum on the principal amount of Rs.3,23,868.88p from the defendants jointly and severally from 16.6.2019 till realization in full, after deducting all the amounts received by them during the pendency of OA, and also by selling the 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.

(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.

17. 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