UNION BANK OF INDIA vs M.S.Rajith 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.17,79,966/- with interest @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 property.

2. The subject matter of the case is the Housing Loan 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 approached the applicant bank for sanction of a housing loan for purchase of a flat under construction more fully described in Schedule to the OA. The loan application was dated 24.12.2013

and considering the said request the applicant sanctioned a housing loan of Rs.16,00,000/- vide sanction memorandum dated 26.12.2013 repayable in 236 Equated Monthly Installments of Rs.15,787/- each commencing from July, 2015.

4. It is also the case of the applicant that the defendants executed various loan and security documents in favour of applicant on 27.12.2013 viz., Housing Loan Agreement, Demand Promissory Note for a sum of Rs.16 lakhs, letter of undertaking guaranteeing repayment of the loan availed, letter of undertaking / declaration and agreement on rate of interest.

5. It is the further case of the applicant that the defendants deposited the title deeds of the schedule property with the applicant with an intent to create equitable mortgage and confirmed the same by executing Memorandum of Deposit of Title deeds dated 28.03.2014. It is contended that the defendants also executed simple debit balance confirmation on 18.3.2017 confirming the correctness of total outstanding as on that date.

6. It is the further case of the defendants that, after availing the loan the defendants defaulted in repayment, failed and neglected to clear the outstanding dues and hence the loan account was classified as NPA on 31.03.2019. It is also contended that as the defendants did not come forward to clear the outstanding dues, the applicant issued legal notice dated 17.6.2019 calling upon the defendants to pay a sum of Rs.17,79,966/- as on 31.05.2019.

7. 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.

8. Summons were taken out to the defendants and the same were served at two addresses and returned with endorsement “Left” at Thiruvanmiyur address. As there was no representation on behalf of the defendants on 04.08.2021, they were set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 14 documents, which were marked as Ex. A-1 to A-7 and A-9 to A-14 on 9.12.2021 and Ex. A-8 was marked subject to proof. The Ld. Counsel for Applicant Bank made his submissions on 21.12.2021 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-14 along with the proof affidavit. Exhibit A-1 is the loan

application of the defendants dated 24.12.2013 requesting for sanction of housing loan. Exhibit A-2 is the sanction letter dated 26.12.2013 issued by the applicant sanctioning housing loan of Rs.9 lakhs to the 1st defendant. Exhibit A-3 is the housing loan agreement dated 27.12.2013 executed by the defendants. Exhibit A-4 is the Demand Promissory Note dated 27.12.2013 for a sum of Rs.16 lakhs executed by the defendants. Exhibit A-5 is the letter of undertaking from the borrowers dated 27.12.2013. Exhibit A-6 is the letter of undertaking and consent for take over penalty dated 27.12.2013 executed by the defendants. Exhibit A-7 is the agreement on rate of interest dated 27.12.2013 executed by the defendants. Exhibit A-8 is the Memorandum of Deposit of Title deeds dated 28.03.2014. Exhibit A-9 is the simple debit confirmation dated 18.3.2017 executed by the defendants. Exhibit A-10 is the legal notice dated 22.04.2019 issued by the applicant. Exhibit A-11 is the demand notice dated 29.04.2019 issued by the applicant under Section 13(2) of the SARFAESI Act. Exhibit A-12 is the construction agreement dated 25.09.2013 between M/s Amar Prakaash Developers Private Limited and the defendants. Exhibit A-13 is the Sale deed dated 18.3.2014 registered as Doc. No.4107 of 2014 in favour of the defendants. Exhibit A-14 is the statement of accounts in respect of the loan account.

11. Exhibit A-1 evidences that the defendants approached the applicant by loan application dated 24.12.2013 for sanction of housing loan. Exhibit A-2 evidences that considering the request of the defendants the applicant vide its sanction dated 26.12.2013 sanctioned housing loan of Rs.16 lakhs to the defendants. Exhibit A-3 to A-7 evidences that the defendants had executed various loan and

security documents on 27.12.2013 in favour of the applicant to secure the credit facility sanctioned. Exhibit A-12 and A-13 evidences that the defendants had deposited the title deeds on 28.3.2014 and created equitable mortgage over the same in favour of the applicant. Exhibit A-9 evidences that the defendants had executed debit confirmation letter on 18.03.2017 in favour of the applicant. Exhibit A-10 and A-11 evidences that the defendants committed default in repayment and the applicant has caused a legal notice on 2.4.2019 calling upon the defendants to clear the outstanding dues. It also evidences that as the defendants did not come forward to clear the outstanding dues, the applicant invoked the provisions of SARFAESI Act and issued demand notice under Section 13(2) of the SARFAESI Act demanding a sum of Rs.17,55,542.62p as on 31.03.2019. Exhibit A-14, 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 the loan account. 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 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.870 of 2019 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.17,79,966/- 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 property 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