ICICI BANK LIMITED vs Mr. K. C. Bala Sundram on 31 December 2021

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 defendant seeking issuance of a Recovery Certificate for aggregate a sum of Rs.22,00,000/- with further interest at the rate of 14.35% per annum (floating rate) from the date of filing of the application till the date of realisation along with costs of the application and for sale of schedule mentioned properties.

2. It is the case of the applicant that the defendants approached the applicant for sanction of home loan for purchase of residential flat more fully described in the schedule to the OA vide application dated 4.5.2004 and considering the said request the applicant sanctioned Home Loan of Rs.14,60,000/- by sanction dated 24.5.2004 and the said loan is repayable in 247 monthly installments of Rs.16,488/- per month commencing from June 2004.

3. It is also the case of the applicant that having availed the loan, the defendants executed various loan and security documents on 22.5.2004 viz., Housing Loan Agreement and declaration in favour of the applicant. It is contended that the defendants deposited the title deeds of the property more fully described in schedule to the OA and created equitable mortgage over the same in favour of the applicant.

4. It is the further case of the applicant that the defendants having availed the loan defaulted in repayment and failed to regularize the loan account despite repeated demands, hence the loan account was classified as NPA on 7.6.2012 and issued legal notice to the defendants on 22.11.2016 to repay the outstanding dues. It is contended that despite the said notice the defendants did not come forward to clear the outstanding dues and hence the OA.

5. The defendants filed reply statement contending therein that the OA is not maintainable and is liable to be dismissed. It is contended by the defendants that the defendants approached the applicant for sanction of home loan and executed necessary loan and security documents in favour of the applicant and also created equitable mortgage over the schedule property in favour of the applicant. It is contended that the loan amount of Rs.14,60,000/- sanctioned by the applicant was repayable in 180 installments of Rs.13,125/- per month and the defendants were making the payments regularly without any default. It is also contended that the defendants without intimating the defendants enhanced the EMI from 13,123/- to Rs.16,488/-, which has caused severe loss and hardship to the defendants. It is contended by the defendants that it is wrong to say that the defendants agreed to pay the floating rate of interest @14.35% per annum with monthly rests. It is further contended that the defendants never agreed to bind their legal heirs or their legal representatives to the terms and conditions of the housing loan.

6. It is also contended by the defendants that the applicant had issued a legal notice on 25.12.2011 prior to the notice dated 22.11.2016 demanding a sum of Rs.15,08,337/-, whereas the defendants had paid a sum of Rs.10,73,288/-

as on 7.1.2012 as per the statement of accounts given by the bank. It is further contended by the defendants that despite the said payments, the applicant invoked the provisions of the SARFAESI Act and against the said action the defendants had filed SA No.6/2012 and also paid a sum of Rs.5 lakhs to prevent the applicant from auctioning the property. It is contended that in view of the said payment, the said notice was withdrawn and the bank had also intended to auction the property against which the defendants filed a Writ Petition in W.P. No.24535/2015 and the Hon’ble High Court granted stay of auction and as the sale was not held the writ petition was subsequently closed.

7. It is further contended by the defendants that the bank has charged exorbitant interest rates and the amount claimed is not proper. It is stated that the defendants had also sent One Time Settlement proposal on 10.8.2016 and 10.11.2016 and the same is pending with the applicant. It is submitted that the amount claimed by the applicant is exorbitant and hence the application is liable to be dismissed with costs.

8. The applicant bank filed its proof affidavit along with 8 documents, which are marked as Exhibits A-1 to A-8 the details of which are as under:-

S. No. Date Description of Documents Exhibit Nos.

1. 04.05.2004 Application Form A-1

2. 21.05.2004 Offer Letter A-2

3. 22.05.2004 Loan Agreement A-3

4. 22.05.2004 Declaration A-4

5. 29.04.2004 Sale Deed Doc. No.1309 of 2004 A-5

6. 23.11.2016 Website Downloaded Encumbrance Certificate A-6

7. 22.11.2016 Legal Notice A-7

8. 17.09.2016 Statement of Accounts along with Certificate under Bankers Book of Evidence Act A-8

9. The defendants filed Counter Proof Affidavit reiterating the contention raised in the reply statement. It is contended by the defendants the applicant has claimed exorbitant amounts and is not certified by an authorised person and hence the application is liable to be dismissed.

10. Heard the Ld. Counsel for the applicant. Despite affording sufficient opportunity the defendants did not come forward advance arguments. Perused the records

11. Having heard the Ld. Counsels for the parties and after perusing the records, the Tribunal framed the following points for consideration: -

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?

12. The applicant bank in its endeavor to establish its claim against the defendant examined its official as AW1 and got marked exhibits Ex.A-1 to A-8. Ld. Counsel for Applicant placing reliance on the proof affidavit of AW-1, besides Exhibits A-1 to A-8 strenuously contended that the claim of the applicant stands established, as such, the applicant is entitled for a recovery certificate.

13. Ld. Counsel for Applicant Bank would further submit that even as per the Reply Statement filed, the defendant has not denied availing of credit facility, execution of loan documents and creation of mortgage over the schedule property in favour of the applicant and as such the said admission is sufficient enough to allow the claim of the applicant. Ld. Counsel would also submit

that the applicant the amount claimed by the applicant is proper and has charged interest only at contractual rates and the applicant bank has produced the statement of accounts duly certified under Bankers’ Book Evidence Act to substantiate the amount claimed by the applicant. Ld. Counsel further contended that defendants though filed the reply statement and CPA, did not choose to file any documents in support of their claim and therefore the claim of the applicant stands unrebutted.

14. As rightly contended by the Ld. Counsel for Applicant, barring filing of reply statement and counter proof affidavit, the defendant did not choose to file any documents substantiating the pleas taken by them. Here it is to be stated that as per the scheme of adjudication of a claim/counter under the RDB Act, parties shall file their respective affidavits/counter affidavits in support of their claim or counter claim as the case may be and the Tribunal shall on the basis of the affidavits filed, adjudicate and decide the claim/counter claim. Therefore, in the absence of any evidence other than testimony by way of CPA is forthcoming, as rightly contended by the Ld. Counsel for Applicant, the defense put forth by the defendant remain unsubstantiated hence cannot be considered, thus the claim of the applicant stands unrebutted. Further, the applicant bank has filed the statement of accounts accompanied by certificates under Bankers’ Book Evidence Act and therefore the claim of the defendants that the applicant the amount claimed by the applicant is not proper and has charged higher interest rates fails and remain unsubstantiated.

15. Therefore, in the light of the discussion as aforesaid, it is clear that the proof affidavit and the documents filed along with by the applicant remain unchallenged by the defendants. Further, the Tribunal on careful perusal of the unrebutted Proof Affidavit of AW-1 besides Exhibits A-1 to A-8 is fully satisfied that the applicant has established its claim. 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?

16. 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. Further, Hon’ble Supreme Court, in the 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.”. Further, 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.

17. While it is the case of the applicant that the applicant bank is entitled for contractual rate of interest till discharge of the entire outstanding dues,

however, the defendant would contend that in so far as pendente lite and future interest is concerned, the contractual rate of interest may not be applied. It is to be stated that the claim of the applicant bank includes the rate of interest and other charges payable as per the contract. The Tribunal already held that the applicant bank is entitled for the amount claimed in the OA. As already stated, the Tribunal has awarded contractual rate of interest as claimed by the applicant bank till the date of filing the OA and in view of the fact that thelending rate had considerably come down, the Tribunal is of the view that the defendants are entitled for a reduced rate of interest. Therefore, under these circumstances, the Tribunal is inclined to grant pendente lite and future interest @ 9% p.a. simple on the OA claim amount from the date of filing till the date of realization. Point No.2 is answered accordingly.

18. In view of the afore mentioned discussions, the OA is disposed off in the following manner: - (a) OA No.20 of 2017 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.22,00,000/-with further interest @9% per annum (simple) from the defendants jointly and severally from the date of filing of OA till realization in full, 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.

(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.

19. 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 Virtual Court, through Video Conference on this the 31st day of December, 2021)

Sd/- (T. RAJESH) PRESIDING OFFICER DRT-II, CHENNAI