PUNJAB NATIONAL BANK vs M/S. ABP TRADE LINK & ORS on 28 January 2026

FINAL ORDER

1. The Application was filed before the Debts Recovery Tribunal-I, Bengaluru on 17.10.2014 Under Section 19 (1) of the Recovery of Debt And Bankruptcy Act, 1993 and numbered as OA No. 2061/2014, seeking for issuance of a Recovery Certificate for Rs. 1,19,56,194/- (Rupees one crore nineteen lakh fifty-six thousand one hundred and ninety-four only). Subsequently, owing to bifurcation of jurisdiction vide Government of India Gazette Notification dated 30.01.2017, the Application (OA No. 2061/2014) was transferred from Debts Recovery Tribunal -I, Bangalore to this Tribunal and renumbered as TA No. 151/2017.

2. It is the case of the applicant that Defendant No. 1 is a proprietary concern in the name and style of ABP Trade Links where in Defendant

No.3(a) is its proprietor which had availed a cash credit limit of Rs. 70,00,000/- (Rupees Seventy Lakh Only), for which Defendant Nos. 2 and 3 stood as guarantors, and that, further, at the request of Defendant No. 1, the said facility was renewed and enhanced from Rs. 70,00,000/- (Rupees Seventy Lakh Only) to Rs. 80,00,000/- (Rupees Eighty Lakh Only), for which enhancement also the guarantors issued their guarantees; Defendant Nos. 2 and 3 having since expired, their legal heirs, namely Defendant No. 2(a) and Defendant No. 3(a) to (c), have become as parties to the present proceedings, though the said legal heirs are not directly involved in the credit facility except Defendant No. 3(a), who is the proprietor of Defendant No. 1 proprietary concern.

3. It is also the case of the Applicant that, in view of the above loan, the Defendants executed the necessary loan documents in favour of the Applicant Bank to secure the loan and also created the requisite security interest over the scheduled property to secure the loan.

4. It is the case of the Applicant that the Defendants, despite availing the credit facility, after agreeing with the Terms and Conditions for the loan, failed in complying with the same, resulting in defaults and consequentially turning the loan accounts as Non-Performing Asset (NPA).

5. In the above circumstances, the applicant approached this Tribunal by filing this TA seeking issuance of Recovery Certificate for the amount due in the account.

6. Summons were duly served on the Defendants. Defendant No. 1

was placed ex parte on 06.09.2021. Further, on the same day, the proceedings record that Defendant Nos. 2(b), (c), and (d) were placed ex parte; however, no such defendants exist in the present T.A., and the said entry was a typographical error. Instead of Defendant Nos. 2(b), (c), and (d), it ought to read that Defendant Nos. 3(a) to (c) were placed ex parte. Defendant No. 2(a) filed a written statement but failed to adduce defendant evidence within the stipulated time; hence, the defendant evidence of Defendant No. 2(a) was closed on 06.09.2021.

7. In the written statement filed by Defendant No. 2(a), it is contended that Defendant No. 2(a) is neither a necessary party nor a proper party to the present proceedings, that Defendant No. 2 had been a guarantor to the loan availed by Defendant No. 1 and Defendant No. 3(a); However, it is further contended that Defendant No. 2 had not signed any guarantee agreement and that it appears that the Applicant Bank, in collusion with Defendant No. 1, has created the alleged guarantee agreement, which is nothing but a bogus, sham, and nominal document fabricated by the Applicant and Defendant No. 1. It is further contended that the mother of Defendant No. 2(a), namely Gangamma, Defendant No. 2, was about 87 years of age and was suffering from severe health problems, including Alzheimer’s disease, asthma, diabetes, visual impairment, and hearing loss; therefore, the signature at the inception does not appear to be genuine. The said signature does not appear to be that of the late Gangamma, and even if it was signed by Defendant No. 2, it appears that Defendant No. 3(a), with a willful intention to defraud the deceased

Defendant No. 2 and the other children, in collusion with officials, obtained the same with mala fide intent to deprive this Defendant of property rights.

8. The Defendant content that even assuming, without admitting, that there were any debts of Defendant No.2 and Defendant No.3, the other defendants are not liable for such debts. Further, since the properties in question belong to the father of the defendants, neither Defendant No.2 nor Defendant No.3 had any right or authority to create security over the same in favour of any bank. Even if any guarantee was executed, the same is not binding on the other defendants, as it was executed without their knowledge or consent.

9. The Applicant examined AW-1, who filed a proof affidavit reiterating the averments made in the TA and produced Exhibits A-1 to A-42, which were marked in evidence.

10. The Applicant’s evidence remain un-rebutted and hence proved. The records placed before this Tribunal by the Applicant prima facie indicate that Defendant No. 2 and Defendant No. 3 stood as guarantors for the loan availed by Defendant No. 1 and Defendant No. 3(a). The contention that Defendant No. 2 did not execute the guarantee agreement and that the same was fabricated by the Applicant Bank in collusion with Defendant No. 1 is unsupported by any material on record. On the contrary, the guarantee agreement forms part of the loan documents produced by the Applicant Bank in the ordinary course of business, and mere bald allegations of fabrication, without cogent evidence, cannot be accepted. Regarding the contention, that Defendant No. 2 was aged about 87 years and suffering from ailments including Alzheimer’s disease and other health issues, no medical records or independent evidence have been produced to establish that she was legally incapable of understanding or executing the guarantee at the relevant time. Mere old age or illness, in the absence of proof of legal incapacity, does not invalidate an otherwise validly executed document.

11. Since Defendant Nos. 2 and 3 are deceased, their legal heirs are properly impleaded as parties representing the estates of the deceased guarantors. Therefore, Defendant No. 2(a) is a necessary and proper party to the proceedings.

12. The contention based on Section 6 of the Hindu Succession Act, 1956, as amended in 2005, is misconceived and cannot be accepted. The present proceedings are not based on the doctrine of pious obligation but arise out of a contractual liability under a personal guarantee executed by Defendant Nos. 2 and 3 in their individual capacity. Liability under a contract of guarantee is governed by the provisions of the Indian Contract Act, 1872, and is independent of succession to ancestral or family property. Therefore, the plea that the other defendants are not liable under Section 6 of the Hindu Succession Act is irrelevant to the facts of the present case.

13. The further contention that Defendant Nos. 2 and 3 had no authority to execute a guarantee on the ground that the properties in question belong to their father is also untenable, as execution of a personal guarantee does not require ownership of the secured property. It is also proved that there existing valid mortgage in respect of the Schedule property. The guarantee is not shown to have created any charge over the father’s property, nor is there any material to establish that it was executed without authority or in violation of law. Accordingly, the contention that the guarantee is void ab initio or non est in the eye of law is rejected.

14. The documents produced by the Applicant are found to be admissible and are sufficient to prove the TA claim. Hence the Applicant is to be found entitled for the TA claim as the only issue as to the proof of TA claim is answered in favour of the applicant. The TA claim is made within limitation and there is no capitalization of penal interest.

15. Since the TA claim has been arrived at by calculating interest at the agreed rate, pendente lite and future interest are awarded at 10.00% per annum (simple). The prayer for interest with monthly rests and for penal interest for the future period is hereby declined.

16. In view of the above i. TA 151 OF 2017 stands allowed ii. The Applicant is allowed to recover an aggregate sum of Rs. 1,19,56,194/- (Rupees one crore nineteen lakh fifty-six thousand one hundred and ninety four only) with pendente lite and future interest of 10.00% p.a. (simple) from the date of filing of the TA till the realization, from the Defendants jointly and severally after giving credit to all the amounts recovered and received during the pendency of the TA if any, and allow the same to be recovered by proceeding against the schedule properties. Properties schedule to the TA be the schedule to the Recovery Certificate. iii. If the sale proceeds are not sufficient to clear the loan amount due from the Defendants, the Applicant Bank is at liberty to proceed against the other assets of Defendant Nos. 1 and 3(a) for recovery of the balance amount due. iv. Defendant Nos. 2(a), 3(b), and 3(c) are liable only to the extent of the estate inherited by them from the deceased guarantors and not in their personal capacity. v. Interim application pending, if any, stands disposed of in terms of this final order.

vi. A Recovery Certificate is to be drawn and issued to the recovery Officer to enable recovery of the as per the above terms. vii. Applicant is allowed to realize cost of the proceeding for which cost memo is to be filed in 7 days’ time from the date of receipt of the copy of the order.

17. 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 PY directly on the Computer, after its transcription, corrected and pronounced by me in the open Court on this the 28th day of January, 2026)

Sd/- (T. RAJESH)

PRESIDING OFFICER

ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Sri. Raviranjan, Chief Manager and P. A. Holder, of Applicant Bank. Exhibits on the part of the Applicant:

Exhibit Nos. Date Particulars of Documents A1 -- Computerized Statement of Account along with handwritten statement account A2 04.08.2010 Loan Application A3 27.09.2010 Sanction order A4 27.09.2010 Agreement of cash credit limit A5 27.09.2010 Letter of Undertaking A6 27.09.2010 Master undertaking from borrower for cash credit A7 27.09.2010 Acceptance of terms and conditions A8 27.09.2010 Agreement of guarantee A9 27.09.2010 Agreement of Hypothecation A10 27.09.2010 Equitable mortgage by way of aforesaid title records A11 21.03.2012 Sanction order A12 26.06.2012 Letter A13 21.03.2012 Sanction & acceptance of terms and conditions of enhance limit A14 26.06.2012 Letter of undertaking A15 26.06.2012 Agreement of hypothecation A16 26.06.2012 Supplementary agreement A17 -- Agreement of guarantee A18 13.08.2012 Notice A19 29.08.2012 2nd Registered legal notice A20 27.12.2012 Demand Notice A21 05.03.2013 Notice u/s 13(20 of SARFAESI and reply filed by the borrower dated 23.09.2012. A22 09.03.2013 Possession notice A23 -- Registered sale Deed A24 20.04.1990 Mutation Register Extract

A25 05.04.1990 Mutation Register Extract A26 05.04.1990 Mutation Register Extract A27 22.10.1990 Death certificate A28 17.12.1954 Sale deed executed by Smt. Shiddamma and B. S. Sriram Shetty in favour of Smt. Gangamma A29 17.03.1969 Registered sale Deed executed by Smt. Shiddamma and Sriram Shetty A30 19.02.1997 Confirmation Letter A31 -- Jamabandi Register extract A32 -- Jamabandi Register extract A33 30.07.2010 Certificate of Karnataka Bank Ltd. A34 30.07.2010 05.08.2010 Counter foil of Challan towards tax for the years 2009-2010 and 2010-

A35 17.02.1997 Certificate of Encumbrances from 31.03.1997 to 31.12.2007 A36 02.08.2010 Certificate of Encumbrances from 31.03.1997 to 31.12.2007 A37 29.07.2010 Certificate of Encumbrances from 01.04.2008 to 27.04.2010. A38 03.08.2010 Certificate of Encumbrances from 01.04.2010 to 01.08.2010 A39 30.11.2010 Certificate of Encumbrances from 01.06.2010 to 29.11.2010 A40 11.10.2012 Death Certificate of B. K. Gangamma A41 26.06.2012 Letter of continuity of Equitable Mortgage A42 26.06.2012 Letter of authority sent by 2nd and 3rd Respondent Witness Examined for the Defendants:

-Nil- List of Documents Exhibited for the Defendants:

-Nil-

Sd/-

(T. RAJESH)

PRESIDING OFFICER