CANARA BANK vs SMT. SEEMA RAO on 27 March 2026

: - O R D E R - :

1. This Transfer application stood transferred to this Tribunal as the same is originally filed before the DRT-I. This application if filed seeking issuance of a Recovery Certificate for Rs.14,44,077/- (Rupees fourteen lakh forty-four thousand and seventy-seven only) with further interest there on and also with a prayer declaring the sale deed dated 23.11.2009 registered as JPN-1-05418- 2009-10 of SRO JP Nagar in favour of 3rd defendant.

2. It is the case of the applicant that the father of Defendants No. 1 & 2 A. Sheshagiri Rao was an ex-employee of the applicant and while in service, the said person had availed a housing loan for Rs.40,000/- (Rupees forty thousand only) and an additional loan for Rs.3,80,000/- (Rupees three lakh eighty thousand only). It is contented that in lieu of the security for the debt a mortgage was created over the properties. It is also stated that father of the defendants 1 and 2 had been paying the amount regularly till he was suspended from service. It is also stated that after his suspension from the service, he failed to pay back the amount and hence the account was classified as NPA on 27.09.2008.

3. It is also stated that the applicant came to know about the specific performance decree and purchase of the schedule mortgaged property by the 3rd defendant and hence the 3rd defendant is also included in the party array. Hence according to the applicant, they are entitled to proceed against the schedule properties despite the so-called transfer of the same in favour of the 3rd defendant.

4. It is further contented that the applicant had issued notice to all the defendants and despite the same no payment was made and hence this OA.

5. The 3rd defendant alone entered appearance and filed their written statement contending that they cannot be held liable for the amount if any due in respect of the subject matter account. It is also contended that the present application is barred by limitation. it is admitted that the 3rd defendant had purchased the property through a court decree for specific performance and it is also pointed out that the so claimed mortgage in favour of the applicant is not reflected in the encumbrance certificate. Hence on the basis of above, it is contended that the 3rd defendant is in bona-fide purchaser.

6. The other defendants remained absent and set ex parte on 19.02.2021.

7. The applicant had let in evidence through AW1 and got marked Ext A3 to Ext A22. The Defendant no.3 had let in evidence and got marked Ext.D3 to D15.

8. The following issues arise for consideration in the light pleadings and evidence. i) whether the applicant had succeeded in proving their case as to the disbursement of the loan, defaults and their entitlement to proceeded against the defendants? ii) whether the applicant is entitled to get any relief as against the schedule properties? Both these issues are gone into and decided together.

9. The case of the applicant as to the disbursement of the credit facility to the deceased borrower not in dispute even by the contesting defendant. Ext.A3 and A5 loan applications Ext.A4 and A6 sanction letters A7 and A8 loan agreements executed by the deceased borrower evidences the availment of credit facilities by the deceased borrower. Ext.A9 evidences the creation of mortgage by deposit of title deeds and Ext.A10 evidences the extension of mortgage. The above documents remain unchallenged and by virtue of same, it can be safely concluded that the applicant had successfully proved the disbursement of subject matter loan and also their case as to the creation of mortgage on 18.02.1989 which stood extended to the 2nd credit facility.

10. The statement of accounts as produced by the applicant evidences the defaulted repayments. The view is taken especially as the defendants 1 and 2 did not appear and dispute the defaults or the claim made by the applicant.

11. The 3rd defendant who is impleaded being the subsequent purchaser had contended that the statement of accounts as produced by the applicant cannot be accepted for calculating the outstanding amount as the same prima- facie evidences erroneous calculation. The Ld. counsel for the 3rd defendant pointed out that the debit given in the statement as “Penalty base adjustments” and adjustments made in “loan suspense interest” are not explained and since the same forms the part of debt claimed the statement of accounts and the claim made based on the same cannot be accepted. It is true that there is entry of “Penalty base adjustment of Rs.1,92,955.75 on 26.11.2012 and Rs.5,78,226.34 on 26.11.2012 in respect of both the accounts. However, the concept of “Penalty base adjustment” which cannot the adjustment of overdue principal is not alien to the banking practice. After careful examination of the statement of accounts, this Tribunal is satisfied that the adjustment of said amount can only be the adjustment of due amount in accordance with standard banking norms and prudential accounting.

12. The loan suspense interest is also the adjustment from temporary ledger noticing accrued interest which is also acceptable banking practice. Hence in view of the same, this Tribunal is convinced that the admissibility of the amount claimed on the basis of the statement of account evidencing the exact credit and debit is acceptable in evidence. It is also to be born in mind that only the 3rd defendant who had nothing to do with the debt alone is contesting the matter.

13. Hence in view of the findings as entered above, this Tribunal is convinced that the applicant is entitled to recover the amount as claimed in the OA. However, taking notice of the fact that the facility availed is a housing loan the interest is allotted at a reduced rate 8%(simple) and prayer for penal interest is declined.

14. In respect as to the relief of declaration as to the sale deed is concerned it is trait law that granting a declaration of said nature is beyond the competence of this tribunal. However, in view of the fact that said assignment is subsequent to the mortgage, the same can only be subservient to the mortgage. It is well settled that the purchaser of the property could not get any better title than that of its previous owner. Therefore, this Tribunal is of the view that the applicant’s entitlement to proceed against the schedule property is to be upholded.

15. In the result i) TA.502 of 2017 stands allowed. ii) The applicant is entitled to realize altogether an amount of Rs.14,44,077/- (Rupees fourteen lakh forty-four thousand and seventy-seven only) with further interest @ 8.00% (Simple) from the date of filing the application till realization and allowed to realize the same by proceedings against schedule property.

iii) If the sale proceed are not sufficient to wipe of the liability the assets inherited by defendants 1 and 2 from deceased borrower are liable to be proceeded against.

iv) The applicant is entailed for cost of this litigation for which cost memo to be filed in 7 days from the date receipt of this order. v) A Recovery Certificate is to be drawn and issued to the recovery Officer to enable recovery of the as per the above terms.

vi) Interim application pending, if any, stands disposed of in terms of this final order.

16. 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 27th day of March, 2026)

Sd/- (T. RAJESH)

PRESIDING OFFICER ANNEXURES

WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Smt. Vineela Niranjan, Assistant Manager, of Applicant Bank. Exhibits on the part of the Applicant:

Exhibit Nos. Date Particulars of Documents A1 -- Evidence affidavit A2 -- List of documents A3 -- Application for additional Housing loan A4 06.02.1989 Sanction letter A5 10.07.1999 Loan application for housing loan A6 23.07.1999 Loan sanction letter A7 17.02.1989 Agreement executed by A. Sheshagiri Rao A8 01.08.1999 Supplemental Housing Loan agreement A9 18.02.989 Letter evidencing deposit of title deed A10 01.08.1999 Letter extending creation of further mortgage A11 21.07.2004 Acknowledgement of Debit and security A12 23.11.2009 Sale Deed A13 13.12.2011 Original EC from 01.06.1989 to 31.03.2004 A14 14.12.2011 Original EX from 01.04.2004 to 13.12.2011 A15 19.12.2012 legal notice A16 -- Return Postal Covers

A17 31.02.2012 Notice A18 -- Certified copy of statement of account A19 -- Certified copy of statement of account A20 -- Certified copy of list of documents A21 11.06.1987 Sale Deed A22 -- Original E. C

Witness Examined for the Defendants:

DW-1: S. N. Shabharish, Defendant No.3

List of Documents Exhibited for the Defendants:

Exhibit Nos. Date Particulars of Documents D1 -- Evidence affidavit D2 -- List of documents D3 17.02.1989 Agreement D4 01.08.1999 & 18.02.1989 Supplemental Agreement & Letter of LEDT D5 01.08.1999 & 21.07.2004 C.C, Acknowledgment D6 23.11.2009 & 01.04.2009 C.C, Sale D7 -- Copy OA. 384/2004 D8 -- RA before DRAT 79/2009 D9 -- DRC 408/2017 D10 -- DRC. 408/2017 D11 -- O R No. 3/2019 & objection D12 -- A O R No. 3/2019 D13 -- M. A. 38/2023 before Chennai

D14 19.12.2012 Notice by the bank & replay D15 -- Bank statements

Sd/-

(T. RAJESH)

PRESIDING OFFICER