SOUTH INDIAN BANK vs M.Kalaiselvi 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 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the defendants for recovery of a sum of Rs.21,89,397.62p with interest @10% per annum with monthly rests plus 2%

penal interest from 15.07.2019 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 housing loan facility availed by the defendants from the applicant bank. The facts of the case as stated in the OA, in brief, are as follows.

3. It is the case of the applicant that the defendants 1 and 2 approached the applicant for sanction of housing loan for construction of residential building and considering the said request, the applicant by its sanction letter dated 26.10.2013 sanctioned a housing loan of Rs.15 lakhs and the said sanction is countersigned by the defendants accepting the terms and conditions of sanction.

4. It is also the case of the applicant that the defendants 1 and 2 having availed the housing loan executed Housing Loan Agreement on 26.10.2013 and the 3rd defendant executed agreement of guarantee thereby guaranteeing due repayment of the credit facility availed by the defendants 1 and 2. It is contended that the1st defendant mortgaged her property more fully described in the schedule to the OA to secure the credit facility availed by the defendants 1 and 2 by depositing the title deeds on 28.10.2013 and confirmed the same by executing Memorandum of Deposit of Title Deeds dated 28.10.2013 registered as Doc. No.13782 of 2013 with SRO, Thiruvallur.

5. It is also the case of the applicant that after availing the credit facility, the defendants defaulted in repayment and failed to clear the outstanding dues despite repeated demands / requests and did not come forward to clear the

outstanding dues and hence the loan account was classified as NPA on 30.06.2016. It is contended that the defendants acknowledged the debt by executing acknowledgement of debt cum security on 15.7.2016 and the defendants have been making part remittances till 22.3.2017 and thereafter there was no remittance in the loan account. It is also contended that as the defendant did not come forward to clear the outstanding dues, the applicant invoked the provisions of SARFAESI Act and issued the demand notice on 16.9.2016 demanding a sum of Rs.15,01,185/- under Section 13(2) of the SARFAESI Act.

6. It is also 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 to 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 summons to the defendants 2 and 3 were served and the summons to the 1st defendant returned with endorsement “Left” and hence substituted service was affected by way of paper publication. As there was no representation on behalf of the defendants on 21.10.2021, they were set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 9 documents, which were marked as Ex. A-1 to A-9 on 2.12.2021. The Ld. Counsel for Applicant Bank made his submissions on 13.12.2021 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-9 along with the proof affidavit. Exhibit A-1 is the sanction letter of the applicant dated 26.10.2013 sanctioning housing loan of Rs.15 lakhs. Exhibit A-2 is the housing loan agreement dated 26.10.2013 executed by defendants 1 and 2. Exhibit A-3 is the agreement of guarantee dated 26.10.2013 executed by the 3rd defendant. Exhibit A-4 is acknowledgement of debt and security dated 15.07.2016 executed by the defendants. Exhibit A-5 is the notice sent to the defendants by the applicant dated 4.7.2016. Exhibit A-6 is Memorandum of Deposit of Title deeds dated 28.10.2013 executed by 1st defendant to and in favour of the applicant registered as Doc. No.13782/2013, SRO, Thiruvallur. Exhibit A-7 is the agreement of construction dated 14.10.2013 entered into between Ms. Sri Keerthi Promoters and Mrs. M. Kalaiselvi. Exhibit A-8 is the sale deed dated 23.9.2013 in favour of Mrs. M. Kalaiselvi registered as

Doc. No.12371/2013, SRO, Thiruvallur. Exhibit A-9 is the state of account in respect of the loan account.

11. Exhibit A-1 evidences that the defendants 1 and 2 approached the applicant bank for construction of a building for residential purpose and considering the said request the applicant had sanctioned housing loan of Rs.15 lakhs to the defendants 1 and 2. Exhibit A-2 evidences that the defendants 1 and 2 executed Housing Loan Agreement in favour of the applicant on 26.10.2013. Exhibit A-3 evidences that the 3rd defendant executed agreement of guarantee on 26.10.2013 thereby guaranteeing due repayment of the loan availed by defendants 1 and 2. Exhibit A-4 evidences that the defendants had acknowledged the debt and security on 15.7.2016. Exhibit A-5 evidences that the defendants defaulted in repayment and hence the applicant sent a notice on 4.7.2016 calling upon the defendants to clear the outstanding dues. Exhibit A-6 to A-8 evidences that the schedule property belonged to the 1st defendant and the 1st defendant deposited the title deeds with the applicant bank with an intention to create equitable mortgage over the same in favour of the applicant and confirmed the same by executing Memorandum of Deposit of Title deeds dated 28.10.2013 registered as Doc. No.13782/2013, SRO, Thiruvallur. Exhibit A-9, the statement of accounts produced and certified under the Banker’s Book Evidence Act, clearly indicates that the amount claimed by the applicant is due from the defendants under both the loan accounts. It is also 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 subject loan is a housing loan and the interest rates have come down the Tribunal is inclined to reject the interest with monthly and award simple interest and also reject the penal interest claimed

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.700 of 2019 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.21,89,397.62p with interest @10% p.a., simple from defendants jointly and severally, from the date of the OA till the date of its realization 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 Accounts.

(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.

15. 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