PUNJAB NATIONAL BANK vs M/S. LEVIN ENTERPRISES & ANR on 30 June 2026

:FINAL ORDER:

1. The present Original Application in short (OA) has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 for seeking issuance of Recovery Certificate against the defendants for Rs.1,14,35,176/- (Rupees One Crore Fourteen Lakh Thirty-Five Thousand One Hundred and Seventy-Six only) claim to be due in the following facilities: i. Cash credit facility of Rs.40,00,000/- ii. Term loan facility of Rs.40,00,000/- iii. Housing loan of Rs.20,00,000/-

2. It is the case of the applicant is as follows: The 2nd defendant being Proprietor of 1st defendant concern which is engaged in purchase of defective branded machines from the companies, servicing the defective machines to new and re-sell them to the same companies, approached the applicant for credit facilities and got sanctioned the cash credit facility and term loan facility, the said facilities were secured by personal guarantee of 2nd defendant as well as hypothecation of goods and book debts.

3. It is also further contended that, the housing loan of Rs.20,00,000/- was also availed by 2nd defendant in pursuant to which agreement for housing loan and Combo Transfer Vouchers are also executed. It is also stated that, despite availing the facilities, agreeing to honor the terms and conditions, the defendants committed consecutive defaults, resulting the account being classified as NPA. In respect of Cash Credit and Term loan on 12.10.2013 and in respect of housing loan on 11.10.2013. It is also contended that, a mortgage in respect of the schedule 2 property, towards the security of the housing loan of Rs.20,00,000/-

4. The defendants entered appearance and filed their written statement contends as follows: it is admitted that the defendant had availed loan facility from State Bank of Patiala which fell in default due to business failure and housing loan and other facilities and other facilities. However, the defendant further contends that, due to the failure of the repayment of the loan in default. It is also contended that, as the loan failed, one Srikanth Mahabaleshwara Hegde along with his wife offering to get a credit facility from the applicant bank and pursuant to which the said Srikanth Mahabaleshwara Hegde cleared the loan of State Bank of Patiala and took back the original documents from the bank and handed over to Branch Manager of the applicant bank. Hence, according to the defendant, the loan documents got executed due to the fraud played by Srikanth Mahabaleshwara Hege and his Wife and the Bank Manager and the three loans got sanctioned on behalf of the said person. The defendants contend that, the above person obtained the signature of the defendants on printed forms and handed over the same to the bank and got release the amount. It is admitted that, the SARFAESI measures against the mortgaged property.

5. In the above scenario, the defendants have approached the Central Bureau Investigations by lodging a complaint and an FIR came to be lodged against the above-mentioned persons. Even though, a SA.No.310/2014 came to be filed impugning the SARFAESI measures, the same came to be dismissed, hence, according to the defendant, since the involvement of Bank Manager is evident as the CBI had commenced enquiry in the matter. The bank cannot recover the amount. It is also admitted that Writ Petition WP.No.1673/15 came to be filed, wherein the Interim Order is filed which stood extended up to 20.03.2015. the defendant further submits that, the applicant had informed the defendant above, possibility of OTS even during the pendency of the case before the Hon’ble High Court as well as the Securitization Application before this Tribunal. Along with the written statement the defendants have produced the documents evidencing the SARFAESI measures and also as to the complaint lodged before the CBI.

6. The applicant had let in as AW-1, who has sworn his proof affidavit dated 12.05.2026 and got marked as Ex.A1 to A17. The defendants though filed their written statement, no defense evidence was adduced by them, though sufficient opportunity was granted.

7. Heard the Ld. Counsel for the Applicant as well as the defendants and perused the records.

8. The following issues arise for consideration in this matter: i) Whether the applicant had succeeded in proving the OA claim as against the defendants? ii) What order are to be passed?

Both these issues are gone into and decided together.

9. The case of the applicant as to the execution of the loan documents pertaining to cash credit, term loan as well as housing loan is not in dispute. Even otherwise, the documents produced by the applicant including the sanction letter Ex.A1 and hypothecation agreement Ex.A2 and A3 evidences the disbursement of the facilities as contended by the applicant. Sanctioning of the housing loan is evidenced by Ex.A6 Sanction Ticket and also Ex.A7 the Agreement of Housing loan. Ex.A9 evidence that the Letter of Confirmation, Ex. A10 evidences the creation of mortgage. Though the defendant is not disputing the disbursement of the amount and execution of the loan documents, the defendants set up a defense that, the same is done by Srikanth

Mahabaleshwara Hegde with a conveyance of the bank officials and it is admitted that the both parties that the CBI investigated same fraud, whether the same will exonerate the liability of the applicant is in question is gone into. It is pertinent to note that, the defendant though contends that, no amount has been received by them and amounts were taken away by the 3rd party who made the defendant to sign the loan documents and execute the mortgage, this Tribunal is of the view that, the defendants cannot escape from the liability even the contentions as above stands proved. A person who executed the loan documents and deposit the title documents is suppose to know the consequences thereon and the lack of diligence from the defendants is evident from the fact that, the third party manage the defendant to execute the loan documents and deposit his title documents and get the money sanctioned and appropriate the same. The person who is not diligent enough cannot resort his negligence as defense escape from the liability especially when the disbursement of the loan as well as the execution of loan documents is not in dispute. If at all the defendant is having any grievance against the 3rd party as well as the bank manager, it is for the defendant to initiate necessary measures for recovery of amount if any defrauded by them and same will not stand in way of the applicant bank getting the amount recovered from the defendant especially the disbursement of the loan and execution of the loan documents are not in dispute.

10. The defendants failed to adduce any defense evidence, though some documents were produced along with the written statement, these documents evidence only investigation of CBI which even the applicant is admitted.

11. The answer to the question whether the fraud is committed by the third party even if the convenes of the bank manager will exonerate the liability of the defendant to executed the loan document, the answer can only be negative.

12. Taking view of the above discussion, this Tribunal is convinced that the applicant is entitled to get the recovery certificate allowing them to recover the amount due in the loan account. The statement of account produced by the applicant evidences the amount as claimed in the OA is outstanding in the account and there is no capitalization of penal interest.

13. Taking note of the fact that, this Tribunal is convinced that there is some force in the defendant that they were defrauded by third party, whether the convenes of the Bank Manager or not, this Tribunal is inclined to take a lenient view in respect of the interest awarded at reduced rate of interest @8.00%p.a. (simple).

14. In the result, TA.No.1869/2017 stands allowed,

i) The applicant is allowed to recovery an aggregate sum of Rs.1,14,35,176/- (Rupees One Crore Fourteen Lakh Thirty-Five Thousand One Hundred and Seventy-Six only) with further interest of 8.00% p.a.(simple) from the date of filing OA till the realization from the defendants, after giving credit to all the amounts recovered and received during the pendency of the OA and allowed the same to be recovered by proceeding against defendants jointly, severally and personally and also by proceeding against the schedule property in respect of housing loan if it is available. The schedule property to the OA be the schedule property to the Recovery Certificate.

ii) If the sale proceeds are not found sufficient to cover the amount due and payable to the applicant bank, the defendants jointly, severally and personally and their other assets are liable for all such amounts due under the loan account.

iii) The applicant bank is allowed cost of the proceeding

which applicant to file cost memo within 7 days from the date of receipt of the order.

iv) The Recovery Certificate to be drawn in terms of this order and transferred to Recovery for execution.

v) Interim Application pending, if any, stands disposed of with 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 the Stenographer (PR), transcribed by her, corrected and signed and pronounced by me in the Open Court, this the 30th Day of June 2026].

(T. RAJESH) PRESIDING OFFICER

ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Smt. Praseetha, Senior Manager of the applicant bank.

Exhibits on the part of the Applicant: Sl. No. Description of Documents Exhibit Number

Sanction letter dated 28.01.2013, issued by applicant in favour of M/s. Levin Enterprises A3

Hypothecation of Goods and Book Debts to secure cash credit facility dated 28.01.2013 A4

Hypothecation of assets to secure to Term loan dated 28.01.2013 A5

Letter dated 28.01.2013 executed by defendant as Prop of M/s. Levin Enterprises requesting the applicant for disbursement of loan A6

Combo Transfer Voucher dated 28.01.2013 for Rs.40.00 lakhs A7

Sanction letter dated 28.01.2013 issued by applicant in favour of defendant for housing loan A8

Agreement for housing loan dated 28.01.2013 executed by defendant A9

Combo Transfer Voucher dated 28.01.2013 and dated 31.01.2013 A10

Letter dated 18.06.2013 executed by defendant confirming the Deposit of Title Deeds of creating EM on 17.06.2013 A11

Acknowledgment letter dated 19.06.2013 acknowledging the receipt of Title Deeds written by applicant to defendant duly received by the defendant A12

Statement of account cash credit A13

Statement of account term loan A14

Statement of housing loan account A15

Follow up letter dated 29.07.2013 written by the applicant to defendant A16

Letter dated 18.11.2013 written by defendant assuring the applicant to repay the loans A17

Recall notice dated 10.12.2013 issued by applicant to defendant recalling housing loan A18

Recall notice dated 10.12.2013 issued by applicant to defendant recalling cash credit and term loan of M/s. Levin Enterprises A19

Possession notice dated 13.06.2014 issued by applicant A20

(T. RAJESH) PRESIDING OFFICER