STATE BANK OF INDIA vs SRI BASAVESHWARA EDUCATION SOCIETY (R) & ORS (TUMKUR) on 22 August 2025

:FINAL ORDER:

1. The Original Application (OA 1569/2016) was filed before the Debts Recovery Tribunal-I, Bengaluru on 11.07.2016 under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act 1993 to recover a sum of Rs.1,65,49,220/- (Rupees One Crore Sixty Five Lakh Forty Nine Thousand Two Hundred and Twenty only) with further interest thereon and costs from the Defendant Nos.1 to 3 jointly and severally.

2. Subsequently, in view of the Government of India Gazette Notification dated 30.01.2017, the Application (OA) was transferred to this Tribunal and renumbered as TA 1075/2017.

3. It is the case of the applicant that, the defendant No.1 is a registered education society represented by its secretary the 3rd defendant have availed term loan of Rs.262.00 lakhs on 04.09.2008 agreeing to repay the same in 20 quarterly instalments of Rs.13,00,000/- each and the last instalment of Rs.15.00 lakhs. The repayment was scheduled by calculating interest at the rate of 13.75% with monthly rests. It is also contended that the 2nd and 3rd defendants had also offered personal guarantee, in view of 3 TA/1075/2017

the amount borrowed for the security for the repayment of the amount, have mortgage the immovable described in B schedule to Item No.I and II. The applicant also contends that, the defendants have also Revival letter dated 29.08.2011 and 18.02.2014 acknowledging the debt for the purpose of limitation and also confirmed that the documents executed shall remain in full force. It is further contended that the despite availing facilities agreeing to repay the same, the defendants committed defaults in repayment, resulting the account classified as NPA on 28.12.2013 and the applicant had initiated measures under provisions of the SARFAESI Act. In the above premises, the applicant filed this TA seeking recovery of the amount claiming to be due from the defendants and also sought for issuance of recovery certificate permitting the recovery of the amount due in the account.

4. The written statement was filed by the defendants, it is contended that, in respect of the above account a Writ Petition was filed before the Hon’ble High Court of Karnataka and in pursuant to the Interim direction of the Hon’ble High Court of Karnataka an amount of Rs.50,00,000/- was remitted. It is also stated before filing of the writ petition an amount of Rs.25,30,000/-, Rs.2,25,000/-, Rs.1,00,000/-, Rs.2,05,000/- and Rs.7,000/- were also remitted. It is also stated in the written statement that after the disposal of the writ petition, the defendants approached the applicant bank and informed that out of settled OTS amount of Rs.89,67,933/- an amount of Rs.25,30,000/- and Rs.50,00,000/- already remitted. Hence, according to the defendants by 4 TA/1075/2017

virtue of the above payments and subsequent payment of Rs.3,00,000/- each on 27.03.2018, 128.03.2018 and Rs.3,00,933/- on 31.03.2018, the entire loan amount is settled. The defendants further contend that, after the disposal of the writ petition another letter of OTS was issued directing the defendant to pay Rs.21,47,912/- and according to the defendant the said claim is untenable in view of the so claimed full payment of Rs.89,67,933/-. It is also admitted in the written statement that the applicant has sent a letter dated 30.04.2018, stating that if the payment were not made before 30.04.2018, the OTS will be cancelled and bank will proceed further. Hence, according to the defendant no amount is payable to the applicant bank.

5. The applicant let in evidence through AW-1, who filed Proof Affidavit reiterating the contentions taken in the TA and also produced Exhibits A-3 to A30 and got the same marked in evidence on 06.02.2025. No defense evidence was adduced by the defendants.

6. Heard the both counsels and perused the available records.

7. The following issues arise for consideration in the TA, in the light of pleadings and also the rebuttal as made by the defendant in the written statement: i) Whether the applicant had succeeded in proving the TA claim as against the defendants? ii) What order are to be passed?

Both these issues are gone into and decided together.

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8. The applicant had let evidence in support of the TA claim and had reiterated the averment in the TA claim in the evidence and had also let in the documents to prove the availment of the credit facility. The agreement of loan cum hypothecation, guarantee agreement and registered MODT along with memorandum for recording creation of mortgage is sufficient to prove the averment in the TA as to the availment of the credit facility and extension of security including mortgage over the schedule properties. The letter of arrangement dated 15.04.2011 and revival letters dated 29.08.2011 and 18.02.2014 are not in dispute. The demand made by the applicant for entire amount is evidenced by demand notice issued by under provisions of SARFAESI Act.,

9. The defendants though filed the written statement had put up the contention that they have remitted the entire amount as per the OTS and also that further claim of the applicant bank is not sustainable. Along with the written statement a communication of the OTS arrangement have produced. The scheme of the OTS is available only if the borrower stick on to the terms of repayment as enumerated in the OTS letter wherein it is mentioned that the outstanding on 31.03.2016 is Rs.1,25,84,916/- and OTS will be processed on payment 5% with further rider the 25% of the OTS amount will have to be deposited as upfront money within 30 days and the balance to be paid within 6 months. It is also stated that, no interest will be charged after the rate of the crystallization, if the entire OTS amount is paid within 3 months from the date of sanction. The defendants does not have the case that, they have strictly complied with the above terms of 6 TA/1075/2017

the OTS. Even though the defendants have filed Writ Petition before the Hon’ble High Court of Karnataka, the Hon’ble High Court of Karnataka have disposed of the Writ Petition granting permission to the defendants to approach the bank and pay off the entire amount not later by 31.03.2018. Even after Hon’ble High Court of Karnataka disposed the Writ Petition, the defendants failed to make the payment and the said fact is brought out in the evidence by the applicant in their evidence filed in support of the TA claim. No contra evidence is available to hold that, the defendants have strictly followed the repayment schedule as enumerated in the OTS as they entitled to claim the entire liability is closed.

10. In view of the above discussions and findings entered therein, this Tribunal is of the view that, the defense set out by the defendants is not sufficient to controvert the evidence put forth by the applicant in support of the TA claim. The documents produced and marked by the applicant is sufficient to prove the disbursement of the facility, creation of security interest. The statement of account duly certified and marked by the applicant is sufficient to prove that, the amount outstanding as claimed in the TA is outstanding in the TA, which the applicant is entitled to get recover from the defendants.

11. Taking into consideration that the matter is pending for 15 years and also that the applicant bank has arrived, calculated interest at the aggrieved rate and arrived at the TA claim by calculating interest at the rate prevailing at that period, this Tribunal is of the view that, the 7 TA/1075/2017

pendelite and future interest can be awarded at a reduced rate of 12.00% (simple)

12. In the result the TA.No.1075/2017 stands allowed, i) The applicant is allowed to recovery an aggregate sum of Rs.1,65,49,220/- (Rupees One Crore Sixty Five Lakh Forty Nine Thousand Two Hundred and Twenty only) with further interest of 12.00% p.a.(simple) from the date of filing TA till the realization from defendants, after giving credit to all the amount recovered and received during the pendency of the TA and allowed the same to be recovered by proceeding against schedule ‘A and B’ property. The schedule ‘A and B’ property to the TA be the schedule ‘A and B’ 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, defendant No.2 and 3 personally and other their 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.

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13. 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 22nd Day of August 2025].

Sd/- (T. RAJESH) PRESIDING OFFICER

ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Sri. Mahesh Kumar C, Chief Manager of the applicant bank.

Exhibits on the part of the Applicant: Annexure Particulars A1 Affidavit Evidence A2 List of documents A3 Letter of sanction dated 04.09.2008 (SME-1) A4 Agreement of loan cum hypothecation (SME-2) dated 04.09.2008 A5 Guarantee Agreement dated 04.09.2008 (SME3) executed by defendant No.2 and 3 A6 Registered memorandum of deposit dated 10.03.2008 executed by defendant No.2 A7 Memorandum for recording creation of mortgage by the deposit of title deeds (SME-5) A8 Letter of confirmation of deposit of title deeds dated 21.10.2008 executed by defendant No.2 and 3 representing defendant No.1 A9 Letter of arrangement dated 29.08.2011 A10 Revival letter dated 29.08.2011 A11 Revival letter dated 18.02.2014 (SME-11) A12 Demand notice issued u/s. 132) of SARFAESI Act dated 18.01.2014

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A13 Certified statement of account along with certificate

Sd/- (T. RAJESH) PRESIDING OFFICER