CORPORATION BANK vs SRI M A SATHYA PRASAD & OTHE on 17 July 2026

FINAL ORDER

1. The Application was filed before the Debts Recovery Tribunal-I, Bengaluru on 28.06.2016 Under Section 19 (1) of the Recovery of Debt And Bankruptcy Act, 1993 and numbered as OA No. 1398/2016, seeking for issuance of a Recovery Certificate for Rs. 7,50,95,345/- (Rupees seven crore fifty lakh ninety-five thousand three hundred and forty-five only). Subsequently, owing to bifurcation of jurisdiction vide Government of India Gazette Notification dated 30.01.2017, the Application (OA No. 1398/2016) was transferred from Debts Recovery Tribunal -I, Bangalore to this Tribunal and renumbered as TA No. 2229/2017.

2. It is the case of the Applicant (erstwhile Corporation Bank, which was subsequently amalgamated with the Applicant) that Defendant No. 1 is engaged in the business of distribution of computer peripherals, laptops, networking products, and other related items under the name and style of M/s. Vanpac Systems. At the request of Defendant No. 1, the Applicant had sanctioned and, from time to time, enhanced the Cash Credit facility (CC/01/090009), which was lastly enhanced to a sum of Rs. 700 lakhs to meet the working capital requirements of the firm. Defendant Nos. 2 and 3 executed deeds of guarantee and stood as guarantors for the said facility.

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 loans and also created the requisite security interest over the scheduled properties 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. The Defendants entered appearance and filed their Written Statement. However, they failed to adduce any oral or documentary evidence within the time stipulated. Consequently, the evidence of the Defendants was closed on 13.09.2022.

7. In the Written Statement filed by the Defendants, it is contended that the Applicant's averment regarding the business of Defendant No. 1 is incorrect, as the said business has been closed down owing to continuous losses and outstanding liabilities towards creditors. The Defendants have further contended that Defendant No. 1 has not availed the loan alleged by the Applicant under Loan Account No. CC/01/090009. According to the Defendants, the documents produced by the Applicant in relation to Loan

Account No. CC/01/090009 pertain to M/s. Vanpac Systems and not to Defendant No. 1. It is further contended that the Deed of Guarantee produced by the Applicant along with the OA does not relate to the alleged loan availed by Defendant No. 1. The Defendants have also contended that the mortgage created is in respect of M/s. Vanpac Systems and not Defendant No. 1. It is further contended that the Deed of Guarantee dated 08.05.2014 produced by the Applicant is only for a sum of Rupees Seven Lakhs only, and therefore, the TA filed against the guarantors for recovery of the entire outstanding liability is illegal, not maintainable, and liable to be dismissed. The Defendants have further contended that the loan account became a Non-Performing Asset (NPA) due to adverse business conditions, continuous financial losses, and other unforeseen circumstances beyond the control of the borrower. It is their specific case that, despite making sincere efforts and undertaking various damage-control measures to revive the business and regularize the loan account, such efforts did not yield the desired results owing to factors beyond their control. On the said grounds, the Defendants have disputed the Applicant's claim and sought dismissal of the TA.

8. The Applicant examined AW-1, who filed his proof affidavit reiterating the averments made in the T.A. and produced documents marked as Exhibits A-3 to A-22.

9. The contentions raised by the Defendants have been duly considered. However, the same are not supported by any oral or documentary evidence. Though the Defendants filed their Written

Statement, they failed to adduce any evidence in support of their pleadings, and consequently, their evidence was closed. On a perusal of the loan documents, sanction letters, security documents, mortgage documents, Deed of Guarantee, and other records produced by the Applicant, it is evident that M/s. Vanpac Systems is the proprietary concern/business of Defendant No. 1 and that the credit facilities were sanctioned to Defendant No. 1, who was carrying on business under the said name and style. Therefore, the contention of the Defendants that the loan documents pertain to M/s. Vanpac Systems and not to Defendant No. 1 is devoid of merit and cannot be accepted.

10. Further, the Defendants have contended that the Deed of Guarantee is dated 08.05.2014. However, upon perusal of the Deed of Guarantee produced by the Applicant, the document appears to bear the date 30.04.2014. The said discrepancy in the date, by itself, does not affect the validity of the guarantee, particularly when the Deed of Guarantee, read along with the sanction letters, loan documents, and other contemporaneous records, clearly establishes that Defendant Nos. 2 and 3 had furnished guarantee in respect of the credit facilities extended to Defendant No. 1. It is also noticed that the guaranteed amount is mentioned as "Rs. 7,00,00,000/-" (Rupees Seven Crores only) in figures, whereas the amount is mentioned in words as "Rupees Seven Lakhs only." The said discrepancy appears to be a clerical/typographical error. Considering the Deed of Guarantee as a whole along with the surrounding loan records evidencing the sanction of credit facilities of Rs. 7.00 crores, the intention of the parties is clear that the guarantee was furnished towards the said credit facilities. Therefore, the discrepancies in the date and description of the guaranteed amount, by themselves, do not absolve Defendant Nos. 2 and 3 from their liability as guarantors.

11. The plea of the Defendants regarding the classification of the account as a Non-Performing Asset (NPA) and the circumstances leading to the same also remains unsubstantiated in the absence of any supporting evidence. Accordingly, the contentions raised by the Defendants are rejected, and the Applicant has successfully established the loan transaction, execution of the loan and security documents, liability of the Defendants, and the amount due and payable under the TA.

12. The evidence adduced by the Applicant remains un-rebutted and unchallenged and, therefore, stands proved. The documents produced by the Applicant are found to be admissible in evidence and are sufficient to establish the claim made in the TA against the Defendants. Accordingly, the Applicant is entitled to the TA claim, as the sole issue regarding proof of the TA claim is answered in favour of the Applicant. It is also observed that the TA has been filed within the period of limitation and that there is no capitalization of penal interest in the claim amount.

13. The Applicant, in its evidence, has stated that the immovable properties mortgaged in favour of the Applicant were sold under the provisions of the SARFAESI Act, and the sale proceeds amounting to Rs. 5,32,36,000/- were realized and adjusted towards the loan account. The said recovery comprises the sale of Schedule ‘A’ property on 29.06.2018

for a sum of Rs. 2,10,00000/-, Schedule ‘B’ property on 15.12.2017 for a sum of Rs. 2,17,26,000/-, and Schedule ‘C’ property on 03.03.2017 for a sum of Rs. 1,05,10,000/-. The said adjustment of sale proceeds has been duly taken into consideration while determining the outstanding liability of the Defendants.

14. 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.

15. In view of the above i. TA 2229 OF 2017 stands allowed

ii. The Applicant is allowed to recover an aggregate sum of Rs. 7,50,95,345/- (Rupees seven crore fifty lakh ninety-five thousand three hundred and forty-five only) from the Defendants jointly, severally and personally 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 after giving credit to all the amounts recovered and received during the pendency of the TA including a sum of Rs. 5,32,36,000/- received by sale of the schedule properties, and permitting recovery of the balance due amount by proceeding against the Defendants and their other assets.

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

iv. A Recovery Certificate is to be drawn and issued to the recovery Officer to enable recovery of the as per the above terms. v. 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.

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 17th day of July, 2026).

Sd/- (T. RAJESH)

PRESIDING OFFICER

ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Sri. Chauhan, Chief Manager, of Corporation Bank. Exhibits on the part of the Applicant:

Exhibit Nos. Date Particulars of Documents A1 -- Proof affidavit A2 -- List of documents A3 -- Application A4 -- Credit sanction Intimation A5 08.05.2014 Demand promissory note A6 08.05.2014 Take Delivery Letter A7 08.05.2014 Letter of undertaking A8 09.05.2014 General power of attorney A9 08.05.2014 Guarantee agreement A10 10.04.2000 Memorandum of Deposit of title deed

A11 10.12.2011 Memorandum of Deposit of title deed A12 23.09.1998 Sale Deed A13 29.04.1999 Sale Deed A14 30.04.1999 Sale Deed A15 16.09.2004 Sale Deed A16 18.06.2007 Sale Deed A17 08.05.2014 Letter of continuity A18 08.05.2014 Supplemental common deed of Hypothecation of movables/ Assets/ Debts A19 29.08.2015 Demand promissory note A20 29.08.2015 Take Delivery letter to DPN A21 & A22 28.04.2016 and 30.05.2016 Notices A23 -- Certified statement of account

Witness Examined for the Defendants:

-Nil- List of Documents Exhibited for the Defendants:

-Nil-

Sd/-

(T. RAJESH)

PRESIDING OFFICER