UNION BANK OF INDIA vs Mrs.S. Selvi 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 defendant for recovery of a sum of Rs.25,15,771.93p with interest @15.10% per annum with monthly rests from the date of the OA till the date of realization in full along with costs of this application and for sale of schedule properties.

2. The subject matter of the case is the Cash Credit Facility availed by the defendant 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 defendant approached the erstwhile Corporation Bank for sanctioning credit facility for the purpose of development of her business vide loan application dated 05.09.2016. It is contended that considering the request of the defendant the erstwhile bank sanctioned Cash Credit Facility of Rs.23,50,000/- vide Credit Sanction Intimation letter dated 15.09.2016.

4. It is also the case of the applicant that the defendant, having availed the credit facility executed Agreement of Loan cum hypothecation for cash credit facility dated 15.09.2016 thereby agreeing to comply with the terms and conditions of sanction and hypothecating the stocks, receivables and other chargeable current assets.

5. It is the further case of the applicant that the defendant after availing the credit facility failed and neglected to comply with the terms and conditions of sanction and also committed default in repayment. It is contended that the applicant therefore classified the loan account of the defendant as NPA on 31.12.2017 and

issued legal notice on 17.05.2018 calling upon the defendant to clear the outstanding dues. Inspite of the said notice the defendant did not come forward to regularize the loan account.

6. It is also the case of the applicant that after availing the loan, the defendant was irregular in remitting the loan amount. The efforts of the applicant bank to make the defendant 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 sole defendant and the defendant was served at one of the addresses. Though initially the defendant was represented by a Ld. Counsel, the Ld. Counsel reported no instructions from the defendant on 26.4.2019 and as there was no representation on behalf of the defendant on subsequent posting date, 20.06.2019, the defendant was set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 11 documents, which were marked as Ex. A-1 to A-11 on 24.11.2021. The Ld. Counsel for Applicant Bank made his submissions on 10.12.2021 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 defendant?

(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-11 along with the proof affidavit. Exhibit A-1 is the Power of Attorney dated 9.9.2009 issued by the erstwhile Corporation Bank to Mr. ula Elanahan authorizing him to institute and defend the claim on behalf of the applicant. Exhibit A-2 is the Loan Application dated 5.9.2016 submitted by the defendant to the applicant. Exhibit A-3 is the Credit sanction intimation of the applicant dated 15.9.2016 issued to the defendant. Exhibit A-4 is the request for overdraft facilities / cash credit limit dated 15.9.2016 executed by the defendant in favour of the applicant. Exhibit A-5 is the Demand Promissory Note dated 15.9.2016 for a sum of Rs.23,50,000/- executed by the defendant in favour of the applicant. Exhibit A-6 is the Take delivery letter dated 15.9.2016 given by the defendant to the applicant. Exhibit A-7 is the common deed of hypothecation of movables / assets / debts dated 15.9.2016 executed by the defendant in favour of the applicant. Exhibit A-8 is the letter of undertaking / declaration dated 15.9.2016 given by the defendant to the applicant. Exhibit A-9 is the legal notice dated 17.5.2018 issued by the applicant’s counsel to the defendant. Exhibit A-10 and A-11 are the statement of accounts in respect of the loan account and the certificates under Bankers’ Book Evidence Act submitted by the applicant.

11. Exhibit A-1 evidences that the Authorised Signatory has been authorized by the erstwhile Corporation Bank i.e., Mr. Ula Elanahan to institute and defend the claim on behalf of the applicant. Exhibit A-2 evidences that the defendant had approached the applicant for sanction of credit facilities by submitting Loan Application dated 5.9.2016. Exhibit A-3 evidences that the applicant vide credit sanction intimation dated 15.9.2016 had sanctioned cash credit limit of Rs.29,50,000/- to the defendant. Exhibit A-4 to A-8 evidences that the defendant had availed the credit facility and has executed various loan and security documents in favour of the applicant to secure the said limit on 15.9.2016 and also hypothecated the movables / assets / debts of the defendant in favour of the applicant. Exhibit A-9 evidences that the defendant defaulted in repayment and hence the applicant bank had issued a legal notice on 17.5.2018 calling upon the defendant to clear the outstanding dues. Exhibit A-10 and A-11, 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 defendant 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 defendant. Point is answered accordingly.

13. In view of the fact that the subject loan is a Cash Credit Facility for development of her business and as the interest rates have come down this Tribunal is inclined to award interest 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.520 of 2018 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.25,15,771.93p with interest @10% p.a., simple from defendant, 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 hypotheca 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 defendant is 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