UNITED BANK OF INDIA vs H.N. ALLAMA PRABHU & ANR on 24 July 2026

FINAL ORDER

1. The Application was filed before the Debts Recovery Tribunal-I, Bengaluru on 20.06.2014 Under Section 19 (1) of the Recovery of Debt And Bankruptcy Act, 1993 and numbered as OA No. 720/2014, seeking for issuance of a Recovery Certificate for Rs. 1,56,87,669.94 (Rupees one crore fifty-six lakh eighty-seven thousand six hundred sixty-nine and paisa ninety-four only). Subsequently, owing to bifurcation of jurisdiction vide Government of India Gazette Notification dated 30.01.2017, the Application (OA No. 720/2014) was transferred from Debts Recovery Tribunal -I, Bangalore to this Tribunal and renumbered as TA No. 1998/2017.

2. It is the case of the Applicant that Defendant No. 1 is the sole proprietor of M/s. Prabhu Digitals, a proprietary concern engaged in the business of producing high-quality digital print photographs in various formats. Defendant No. 2 is the wife of Defendant No. 1 and is the owner and person in possession of the schedule property. Defendant No. 1, in his capacity as the sole proprietor of M/s. Prabhu Digitals, initially availed an overall credit facility of Rs. 70,00,000/- (Rupees Seventy Lakhs Only) from the Applicant Bank for the purpose of meeting the project cost estimated at Rs. 104.90 lakhs.

3. Subsequently, in the year 2004, Defendant No. 1 availed an enhanced overall credit facility of Rs. 1,31,75,000/- (Rupees One Crore Thirty-One Lakhs Seventy-Five Thousand Only), comprising Term Loan-I of Rs. 75.75 lakhs and Term Loan-II of Rs. 56.00 lakhs, for the purpose of purchasing one Kodak Digital Printer with all accessories and one Noritsu QSS-3201 Digital Photo Printer.

4. It is also the case of the Applicant that, in view of the above loan, the Defendants executed the necessary loan documents including Demand promissory note, agreement of term loan cum hypothecation, letter of guarantee, memorandum of deposit of title deed and letter of lien in favour of the Applicant Bank to secure the loans and also created the mortgage over the scheduled property to secure the loan.

5. 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).

6. 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.

7. Summons were duly served on the Defendants. The Defendants entered appearance and filed their written statement along with some documents; however, they failed to adduce any oral or documentary evidence within the time granted by this Hon'ble Tribunal. Thereafter, the Defendants filed I.A. No. 742/2026 seeking permission to cross-examine the Applicant's witness. When the said application was taken up for hearing, the petitioner in the IA remained absent. Accordingly, I.A. No. 742/2026 came to be dismissed for non-prosecution on 22.07.2026.

8. Further, I.A. No. 3893/2025 filed by the proposed Defendant seeking to implead himself as a party to the proceedings was also dismissed by this Hon'ble Tribunal by order dated 23.02.2026.

9. In the written statement filed by the Defendants, it is contended that the Applicant has filed the present application by suppressing material facts and has incorrectly claimed the outstanding debt amount without producing supporting documents. It is further contended that the Applicant, under the threat of initiating legal proceedings, coerced the Defendants into creating a mortgage over the immovable property described in the Schedule to the application. The Defendants have also contended that they had been carrying on their business and had been regularly paying the loan instalments up to the year 2007, and that they had deposited amounts in excess of the dues in their respective loan accounts.

10. The Defendants have further contended that, upon verifying the statement of account pertaining to Term Loan-II, they found that the outstanding balance as on 12.11.2007 was Rs. 23,79,435/-. According to the Defendants, when they rechecked the same loan account after three days, they were shocked to find that the outstanding amount had suddenly increased to Rs. 52,46,627/-, reflecting a total outstanding of Rs. 76,26,062/-. The Defendants have alleged that the said discrepancy was caused by an erroneous entry made by the Applicant due to a software malfunction. It is further contended that, although the Applicant assured the Defendants that the discrepancy would be reconciled and rectified, no steps were taken to correct the alleged error.

11. The Defendants have further contended that Defendant No. 1, by letter dated 18.11.2009, sought the Applicant's permission to sell the long- term leasehold rights in the mortgaged property situated at Barton Centre, M.G. Road, Bengaluru. The Applicant granted permission subject to the condition that, out of the sale consideration, Rs. 20,00,000/- be appropriated towards the loan account of M/s. Prabhu Photo Studio and Rs. 21,00,000/- be credited to the other group loan accounts of M/s. Prabhu Digitals, aggregating Rs. 41,00,000/-, upon receipt of which the Applicant agreed to release the original title deeds. The Defendants thereafter found a purchaser and, after obtaining the Applicant's approval, executed a Deed of Lease-cum-Assignment of Interest and Transfer of Leasehold Rights dated 19.04.2010 in favour of a third party. In terms of the said condition, Rs. 41,00,000/- was directly credited to the Defendants' loan accounts, following which the Applicant released the original title deeds relating to the said property.

12. The Defendants have further contended that, despite their requests, the Applicant issued a notice dated 05.06.2010 under Sections 13(2) and 13(4) of the SARFAESI Act without giving credit to the payment of Rs. 41,00,000/- made by the Defendants. It is further contended that the Applicant arbitrarily initiated proceedings against the Defendants' property, which was never mortgaged as collateral security for the loan facilities. Despite several payments, the Applicant failed to reconcile the accounts and attempted to take possession of the schedule property. The Defendants also registered a criminal case against the Applicant, which was later settled with the intervention of higher officials. Though the Defendants sought a one-time settlement, the Applicant, with an alleged intention to take possession of the schedule property, closed the transactions in the said bank accounts. On the basis of the aforesaid contentions, the Defendants have prayed for dismissal of the present TA.

13. 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-1 to A-13.

14. The Defendants have produced certain documents, including the summary of payments made by them, letters/correspondence exchanged between the parties, the Deed of Lease-cum-Assignment of Interest and Transfer of Leasehold Rights, notices, possession notice, FIR, NCR, endorsement issued by the Applicant Bank, and the RTI application submitted by them to the Applicant. However, though the said documents were produced, the Defendants have failed to mark the same in evidence or prove the contents thereof by adducing any oral or documentary evidence. Therefore, the said unmarked documents cannot be relied upon for establishing the defence taken by the Defendants. Mere production of documents without proof does not amount to evidence, and hence the contentions raised by the Defendants remain unsubstantiated.

15. The Defendants have also failed to substantiate their contentions regarding the alleged discrepancies in the loan accounts, adjustment of the amount of Rs. 41,00,000/-, or the correctness of the outstanding liability claimed by the Applicant. Mere production of documents without proving the same in accordance with law cannot discharge the burden cast upon the Defendants. Hence, the defence raised by the Defendants remains unsupported by admissible evidence and is liable to be considered accordingly.

16. The Mortgage Deed executed by Defendant No. 2 specifically provides that the maximum amount secured under the mortgage shall be limited to Rs. 70,00,000/- (Rupees Seventy Lakhs Only) together with interest thereon and other charges payable in respect of the said loan facility. Therefore, the liability of the mortgaged property is confined to the amount expressly secured under the mortgage deed along with the applicable interest and charges arising out of the said loan transaction. The Applicant has not produced any document to establish that the mortgage created by Defendant No. 2 extends to any further amount or covers any additional liability beyond the amount specifically mentioned in the mortgage deed. In the absence of any such document, the liability of the mortgaged property cannot be extended beyond the extent of security expressly created under the terms of the mortgage deed.

17. The evidence adduced by the Applicant has remained un-rebutted and, therefore, stands proved. The documents produced by the Applicant, including the Term Loan-cum-Hypothecation Agreement, Letter of Guarantees, Memorandum of Deposit of Title Deeds, Memorandum of Agreement for Trade Credit, and Demand Promissory Note, are found to be admissible and sufficient to establish the claim made in the present TA against the Defendants. Accordingly, the Applicant is held entitled to the reliefs sought in the TA. The issue regarding proof of the TA claim is answered in favour of the Applicant. It is also found that the claim is within the period of limitation and that there is no capitalization of penal interest in the amount claimed.

18. Since the TA claim has been arrived at by calculating interest at the agreed rate, pendente lite and future interest are awarded at 12.00% per annum (simple). The prayer for interest with monthly rests and for penal interest for the future period is hereby declined.

19. In view of the above

i. TA 1998 OF 2017 stands allowed

ii. The Applicant is allowed to recover an aggregate sum of Rs. 1,56,87,669.94 (Rupees one crore fifty-six lakh eighty-seven thousand six hundred sixty-nine and paisa ninety-four only) from the Defendants jointly, severally and personally with pendente lite and future interest of 12.00% p.a. (simple), from the date of filing of the TA till the realization, from the respective Defendants 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 property to the extent of Rs. 70,00,000/- and interest accrued thereon. Property schedule to the OA be the schedule to the Recovery Certificate.

iii. In the event of any balance amount remaining due and payable after enforcement of the mortgage security, the Applicant Bank shall be at liberty to proceed against the Defendants personally and against their other assets for recovery of such balance amount, in accordance with law.

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

20. 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 24th day of July, 2026).

Sd/- (T. RAJESH)

PRESIDING OFFICER

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

Exhibit Nos. Date Particulars of Documents A1 10.06.2002 Term loan application A2 -- Sanction letter A3 25.06.2002 Agreement of Term Loan cum Hypothecation A4 25.06.2002 Letter of guarantee A5 25.06.2002 Memorandum of Deposit of Title Deeds

A6 -- Sanction letter A7 11.08.2004 Memorandum of agreement for trade credit A8 11.08.2004 Agreement of hypothecation of movable plant and machinery A9 11.08.2004 Littre of lien A10 11.08.2004 Letter of guarantee A11 11.08.2004 Demand promissory note A12 05.06.2010 Notice A13 -- Statement of account.

Witness Examined for the Defendants:

-Nil- List of Documents Exhibited for the Defendants:

-Nil-

Sd/-

(T. RAJESH)

PRESIDING OFFICER