KARUR VYSYA BANK vs MEHTAB CHAND & ORS (BHADRAVATHI) on 22 May 2026

: - O R D E R - :

1. This TA is originally filed before the Debt Recovery Tribunal-I, Bangalore which later transferred to this Tribunal and got numbered as above. The application is filed u/s 19 of the Recovery of Debts due to Banks Financial Institution Act 1993(as it was taken) seeking issuance of a Recovery Certificate for Rs.11,91,155.93 (Rupees eleven lakh ninety one thousand one hundred fifty five and paisa ninety three only) from 1st defendant, Rs.42,71,288.58 (Rupees forty two lakh seventy one thousand two hundred and eighty eight and paisa fifty eight only) from 1st and 2nd defendants and allied the total due amount of Rs.54,62,444.51 (Rupees fifty four lakh sixty two thousand four hundred forty four and paisa fifty one only) and also allowing the same to be recovered by proceedings against the schedule properties and hypothecated A schedule properties.

2. It is also the case of the applicant that the 1st defendant, acting as the proprietor of M/s. Mehtab Rice & Phova Mills, again availed credit facilities. It is contended that the 1st defendant is engaged in the business of purchasing paddy, storing the same in various warehouses for processing and sale, and that, upon such storage, warehouse receipts are issued by the Karnataka State Warehousing Corporation, being the owner and custodian of the warehouse.

3. The applicant contends that the 1st defendant, representing himself as the proprietor of M/s. Mehtab Rice & Phova Mills, approached the applicant and obtained sanction of a loan for a sum of Rs. 14,42,000/- (Rupees fourteen lakh forty-two thousand only), secured against the vehicle XUV FWD W8, for which the 2nd defendant extended a personal guarantee.

4. It is the case of the applicant that, against the pledge of warehouse receipts pertaining to the godown of the 3rd defendant, a credit facility of Rs. 11,50,000/- was sanctioned against the pledge of paddy stored in the warehouse of the 3rd defendant, for which the 2nd defendant had extended a personal guarantee. It is also stated that the 1st defendant executed the necessary loan documents in respect of the amount disbursed and agreed to repay the same in 84 monthly instalments.

5. The applicant further contends that additional facilities of a similar nature for sums of Rs. 28,98,000/- (Rupees Twenty-Eight Lakh Ninety-Eight Thousand Only) and Rs. 29,50,000/- (Rupees Twenty-Nine Lakh Fifty Thousand Only) were also availed and sanctioned on 28.02.2014 and 05.03.2014 respectively, against the security of warehouse receipts issued by the 3rd defendant, for which the defendants also executed loan agreements agreeing to the terms and conditions thereof.

6. Another credit facility of Rs. 17,00,000/- (Rupees Seventeen Lakh Only) was also disbursed upon execution of the loan documents and creation of security by way of mortgage over the immovable properties described in Schedule ‘B’ and Schedule ‘D’ properties. It is also contended that, though similar facilities availed by other family members had also fallen into default, separate applications have been filed in respect of the same.

7. It is also the case of the applicant that, despite availing the aforesaid facilities and being liable to make repayment, the 1st defendant, in collusion with the officials of the 3rd defendant, defrauded the bank by misappropriating and removing the pledged stock. It is further contended that the defendants thereby caused wrongful loss to the applicant bank. In the above circumstances, the present application has been filed seeking recovery of the amounts due from the defendants.

8. The 1st defendant has filed a written statement contending that the amount claimed does not constitute a legally recoverable debt under the provisions of the Act. The defendant admits the availment of credit facilities; however, contends that the loan documents are not enforceable in law. The statement of accounts produced by the applicant is also disputed by the defendant. Apart from the above, the defendant disputes the classification of the account as Non-Performing Asset (NPA) and the service of the demand notice.

9. The 3rd Defendant did not file any written statement in the above proceedings. Further, the Applicant has neither sought nor claimed any relief against Defendant No. 3. Therefore, no cause of action survives against Defendant No. 3 in the present proceedings.

10. The applicant had let in evidence through AW1 who filed proof affidavit in conformity with the pleadings of the OA and got marked the following documents as Ext A1 to A17. Ext.A1- Sanction letter dated 22.02.2013. Ext.A2- Hypothecation agreement in respect of vehicle dated 22.02.2013. Ext.A3- Guarantee agreement by defendant no.3 dated 22.02.2013. Ext.A4- B Register extract. Ext.A5- Sanction dated 13.05.2014. Ext.A6- Demand Promissory Note dated 13.05.2014. Ext.A7- Confirmation as to the paddy in respect of receipt no.375398 dated 13.05.2014. Ext.A8- Notice to 3rd defendant dated 13.05.2014.

Ext.A9- Sanction letter dated 16.05.2014. Ext.A10- Demand Promissory Note dated 16.05.2014. Ext.A11- Confirmation as to the storage of 180MT covered by receipt 37399 dated 16.05.2014. Ext.A12- Notice to defendant no.3 date 16.05.2014. Ext.A13- Sanction dated 09.07.2018. Ext.A14- Term loan agreement dated 09.07.2015. Ext.A15- Guarantee by 2nd defendant dated 09.07.2015. Ext.A16- Memorandum of deposit of title deed dated 08.07.2015. Ext.A17- Statement of accounts. Though sufficient opportunity is given no defense evidence was adduced.

11. Heard the counsel for both sides the only issue that the arise for consideration is whether the applicant had proved the OA claim and their entitlement to get it recovered.

12. The applicant had produced the sanction memorandum and loan documents evidencing the disbursement and the under taking as given by the defendants showing them obligation to pay back the amount as per its terms. Even otherwise the defendant who had filed the written statement is having no serious dispute as to the above factors. The documents produced by the applicant are all admissible in evidence. The statement of accounts on produced and marked by the applicant evidences the default occurred in the account and that the amount claimed in the TA is outstanding in the account. It is also clean that there is no capitalization of interest.

13. The defendants 1 and 2, though they have filed their written statement, have failed to adduce evidence in support of their contentions. Though the case was listed for defence evidence, and sufficient opportunities was give, the defendants failed to turn up, resulting in closure of defence evidence. Hence, this Tribunal is of the view that the evidence adduced by the applicant remains uncontroverted, and the documents produced by the applicant are admissible in evidence and stand proved.

14. On consideration of the above discussions, this Tribunal is convinced that the applicant is entitled to succeed in this TA and is entitled to the relief as sought for, including interest at the rate of 12.00% per annum (simple interest) on the amount dues.

15. In the result

i) TA.81 of 2017 stands allowed

ii) Applicant is entitled to recover total amount of Rs.54,62,444.51 (Rupees fifty four lakh sixty two thousand four hundred forty four and paisa fifty one only) out of which an amount of

Rs.11,91,155.93 (Rupees eleven lakh ninety one thousand one hundred fifty five and paisa ninety three only) with further interest @ 12% (simple) from defendant no.1 and his assets and Rs.42,71,288.58 (Rupees forty two lakh seventy one thousand two hundred seventy seven and paisa fifty eight only) from defendants 1 and 2 with further interest at the same rate 12% (simple) from the date of filing of the TA, till realization, after giving credit to all the amounts recovered and received during the pendency of this TA in respective accounts. Properties schedule to the TA be the schedule to the Recovery Certificate. iii) The amount as found due is to be recovered by proceedings against schedule mortgage properties and also against hypothecated goods and also by proceedings personally against defendant no. 1 and 2 and then other assets. iv) The Applicant failed to seek any relief against Defendant No. 3; hence, Defendant No. 3 does not incur any liability towards the claim amounts.

v) 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.

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) 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 22nd day of May, 2026).

Sd/-

(T. RAJESH)

PRESIDING OFFICER

Witnesses Examined for the Applicant Bank: AW-1: Shachi Singh, legal officer, of Applicant Bank. Exhibits on the part of the Applicant:

The exhibits have already been referred to and discussed in the body of the order and hence are not repeated herein. Witness Examined for the Defendants:

-Nil - List of Documents Exhibited for the Defendants: -Nil -

Sd/-

(T. RAJESH)

PRESIDING OFFICER