UNION BANK OF INDIA vs Krithika Kodumudi Nandakumar 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.12,05,764.40p with interest @10.80% 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 1 and 2 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 during July 2011 the defendants 1 and 2 approached applicant for grant of a housing loan for purchase of flat more fully described in schedule to OA and the applicant considering the said request sanctioned housing loan of Rs.11,50,000/- in the name of 1st defendant against the mortgage of the said flat and against co-obligation of the 2nd defendant. It is contended that the said loan is repayable in 240 equated monthly installments of Rs.12,782/- per month with a holiday period of 25 months.

4. It is also the case of the applicant that the 1st defendant on 20.07.2011 executed composite agreement agreeing to the terms and conditions of sanction. It is contended that the 2nd defendant agreed to stand as co-obligant and agreed to

pay the above loan amount with 1st defendant and on 20.07.2011 executed composite agreement along with 1st defendant.

5. It is the further case of the applicant that the 1st defendant on 11.5.2012 had entered into an agreement with the 4th defendant for lease of the above said flat in his favour for 99 years on completion and construction of the flat subject to terms and conditions of the lease deed. It is also contended that the 1st defendant requested the applicant to pay the dues of the 1st defendant to 4th defendant as per terms of the lease deed and take delivery of original registered lease deed from the 4th defendant. It is further contended that on 1.2.2012 a tripartite agreement was entered into between the applicant, the defendants 1 and 2 and 4th defendant, accordingly the applicant paid a sum of Rs.9,47,700/- to the 4th defendant by way of RTGS to 3rd defendant’s account No.407011011724 maintained with Vysya Bank, Perungudi Branch, Chennai.

6. It is the case of the applicant that the 4th defendant executed lease deed dated 10.05.2012 in favour of defendants 1 and 3 represented by their power agent. It is contended that the defendants 1 and 3 offered to create security over the schedule property and in pursuance to the same deposited the title deeds on 28.5.2012 through their power agent with an intent to create equitable mortgage over the same in favour of the applicant and confirmed the same by executing a registered Memorandum of Deposit of Title deeds dated 19.6.2012.

7. It is the further case of the applicant that the 4th defendant received the sum of Rs.9,47,000/- from the applicant through 1st defendant which was intended to be

gratuitous but for construction and sale of the flat to the 1st defendant and since the flat was not constructed the 4th defendant ought to have returned the amount to the applicant but failed to do so.

8. It is also the case of the applicant that after availing the loan the 1st defendant defaulted in repayment and the 2nd defendant also did not care to pay the amount due and hence the loan account was classified as NPA on 3.5.2015. It is contended that as the defendants 1 and 2 did not come forward to clear the outstanding dues the applicant issued a legal notice on 2.2.2018 to all the defendants, which was received the 4th defendant and defendants 1 to 3 evaded the notice.

9. It is also the case of the applicant that after availing the loan, the defendants 1 to 3 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.

10. Summons were taken out to the defendants and the summons to defendants 1 to 3 returned with endorsement “no such person” and hence summons was effected by substituted service by way of paper publication. 4th defendant was served with summons and was initially represented by a Ld. Counsel. As there was no representation on behalf of the defendants on 02.01.2019, they were set ex-parte on that day. Applicant Bank filed Proof Affidavit along with 8 documents, which were marked as Ex. A-1 to A-8 on 9.12.2021. 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.

11. 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.

12. Heard the Ld. Counsel for the applicant, perused the OA averments and the record placed before the Tribunal.

13. The evidence of the applicant is led by AW1 who produced the documents Exhibit A-1 to A-8 along with the proof affidavit. Exhibit A-1 is the loan application of the defendants 1 and 3 requesting for sanction of housing loan. Exhibit A-2 is the sanction letter dated 20.07.2011 issued by the applicant sanctioning housing loan of Rs.11,50,000/- to defendants 1 and 3. Exhibit A-3 is the Composite Agreement executed by defendants 1 and 2 dated 20.07.2011. Exhibit A-4 is the registered Memorandum of Deposit of Title deeds dated 19.06.2012 executed by the defendants registered as Doc. No.2992/2012. Exhibit A-5 is the lease agreement entered into between the defendants dated 10.05.2012. Exhibit A-6 is the legal notice dated 02.02.2018 issued by the applicant bank to the

defendants. Exhibit A-7 is the returned covers and Exhibit A-8 is the statement of accounts in respect of the loan account.

14. Exhibit A-1 evidences that the 1st defendant approached the applicant bank for sanction of housing loan for purchase of a flat and the 3rd defendant as co-owner Exhibit A-2 evidences that considering the request of the 1st defendant the applicant sanctioned a housing loan of Rs.11,50,000/- on 20.07.2011 repayable in 240 equated monthly installments with a holiday period of 25 months. Exhibit A-3 evidences that the applicant extended loan to 1st defendant and 2nd defendant agreed to stand as co-obligant and both of them executed composite agreement on 20.07.2011. Exhibit A-4 evidences that defendants 1 and 3 deposited the title deeds of the property with the applicant bank and executed memorandum of Deposit of Title deeds on 19.6.2012 acknowledging the said deposit. Exhibit A-5 evidences that the defendants on 10.05.2012 entered to a lease agreement in respect of the property. Exhibit A-6 and A-7 evidences that the defendants failed to comply with the terms and conditions of sanction and the provisions of the composite agreement and hence the applicant issued a legal notice on 2.2.2018 to the defendants calling upon them to clear the outstanding dues and the said notices returned unserved. Exhibit A-8, 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.

15. 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.

16. 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 prayer for awarding interest with monthly and award simple interest and also at reduced rates.

17. 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.469 of 2018 stands allowed.

(b) Applicant is permitted to realize an amount of Rs.12,05,764.40p 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 1 to 3 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.

18. 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