SARASWAT COOPERATIVE BANK LIMITED vs M/S.SRI BHAGYALAKSHMI ENTERPRISES & ORS on 19 September 2025

: - O R D E R - :

1. The Application is filed before the Debts Recovery Tribunal-I, Bengaluru on 02.05.2014 Under Section 19 (1) of the Recovery of Debt And Bankruptcy Act, 1993 and numbered as OA No. 1531/2014, seeking for issuance of a Recovery Certificate for Rs. 54,95,351 (Rupees Fifty four

Lakhs Ninety Five Thousand Three Hundred and fifty one only). due in the Overdraft cum Cash credit facility of Rs.1,20,00,000- availed by the 1st defendant proprietary concern wherein, the predecessor of interest of defendants 2a to 2d was the proprietor. Subsequently, owing to bifurcation of jurisdiction vide Government of India Gazette Notification dated 30.01.2017, the Application (OA No. 1531/2014) was transferred from Debts Recovery Tribunal-I, Bangalore to this Tribunal and renumbered as TA No. 2165/2017.

2. It is contended that the borrower had executed loan documents agreeing to abiding to the conditions therein and also had created equitable mortgage by deposit of title deeds over the schedule mentioned properties. It is also stated that the 3rd defendant who is the wife of the deceased proprietor had also created equitable mortgage in respect of her properties. The applicant also contends that the 3rd and 4th defendant stood as guarantors for the facility availed by the deceased borrower.

3. It is further contended that after availing the facility, the deceased borrower failed in compliance of the terms of the agreement and had become chronic defaulters. It is also the case of the applicant that despite issuance of a legal notice dated 07.10.2011, no repayment was done forcing the applicant to approach the statutory authority as contemplated under section 84 of the Multi State Co-operative Societies Act, 2002. During the pendency of the said proceedings, the borrower expired resulting the legal representatives were brought on record and passing an award on 09.01.2014. It is also stated that in the meanwhile the bank had initiated proceedings under the SARFAESI Act against the properties belonged to the deceased borrower, third defendant and one Mallesh and Kesavu Murthy, as the last named two persons had also extended collateral security. Hence this TA is praying for issuance of a Recovery Certificate in terms of the award passed in section 96 application under the Co-operative Societies Act (supra).

4. The OA is filed against the defendants 2a to 2d who are minors and represented by the natural guardian, the 3rd defendant. Thereafter an application was filed as IA 1143 of 2017 seeking appointment of a court guardian pursuant to which Sri T S Krishnamurthy was appointed as the court guardian. Since the fee as directed to the court guardian is not paid, the court guardian was discharged vide the proceedings dated 19.07.2019. The 4th defendant had filed the written statement contending that the deceased borrower requested the 4th defendant to accompany him for a casual visit to applicant bank and had also solicited signature of the defendant in certain documents stating that the same were only letter of reference. It is also the 4th defendant that he never intended to stood as a guarantor and the letter of guarantee is not valid in the eye of law. The further contention taken by the 4th defendant is that the defendant is not a nominal member of the applicant bank to come within the ambit of arbitration. Hence according to the 4th defendant, the arbitrator failed to take note of the above facts and did not give an opportunity to cross examine the Manager of the applicant.

5. The 3rd defendant remained exparte, so as the defendants 2a to 2d. The applicant let in evidence through AW1 and got marked Exts.A3 to A5. The 4th defendant had an affidavit as document No.11023/25 contending that the decree of the arbitrator is under challenge before the Hon’ble High Court of Karnataka. It is also stated that the counsel engaged by 4th defendant remained the absent all through. No other defense evidence was let in from the side of the defendants.

6. Heard the counsel for applicant and 4th defendant. The following issues arise for consideration. i) Whether the applicant had succeeded in proving the OA claim as against all the defendants?

ii) What orders are to be passed. Both these issues are gone into and decided together.

7. The applicant had filed this application on the basis of an award passed by the competent authority under the act governing the multi state co- operative societies Act and seeks to issue a Recovery Certificate in lieu of the same. None of the parties have any dispute as to the competence of the authority who passed the award. The contesting defendant, the 4th defendant put forth the contention that an appeal is already filed before the Hon’ble High court against the award of the competent authority and the same is pending. However, it is to be noted that the Hon’ble High Court had not stayed the operation of the award so as to restrain the applicant from proceeding further. The order passed in the TA is also subject to the final outcome of the orders passed in the appeal by the Hon’ble High court.

8. Since the operation of the order passed by the competent authority is not stayed by the Appellate Court there is no restrain order against execution of the award of the competent authority. the applicant had succeeded in proving their case as set up in the TA. However, taking note of the fact that the TA is filed against minors, for whom a court guardian is appointed directing the applicant bank to pay the remuneration to the Court guardian and the failure of the bank in payment of honorarium resulted in discharging the Court guardian, this Tribunal is of the view that no relief could be granted against defendants 2a to 2d, as they were minors against whom the proceedings are initiated and the Court guardian is Discharged due to the failure of the applicant bank in paying the amount directed to be paid to the Court guardian. No intimation as to the status of the minor defendants; whether they attained majority or not is forth coming from the side of the applicant bank either in pleadings or in evidence.

9. The applicant by way of their pleadings and documents had successfully proved their claim as set up in the TA. The pleadings of the 4th defendant in the written statement makes it clear that there is no dispute as to the execution of loan documents. Even otherwise this Tribunal is not expected to go behind the award passed by the Competent Authority and decide as to the correctness of the orders.

10. In view of the discussion as held above, the following orders are passed:

i) TA 2165 of 2017 stands allowed.

ii) Applicant is permitted to recover an amount of for Rs. 54,95,351/- (Rupees Fifty Four Lakhs Ninety Five Thousands Three Hundred and Fifty One only) with further interest @17% with monthly rests from 01.01.2012, till realization and allow the same to be recovered by proceeding against Item No.(ii) of the Scheduled property. Schedule to the TA to be the Schedule to the Recovery Certificate.

iii) The TA claim against 2a to 2d stands rejected and claim against property of their predecessor; Item No.(i) is also declined as they are minors and not duly represented by a guardian.

iv) The schedule II property to be proceeded against and sold and if the sale proceeds are not sufficient, the defendants 3 and 4 and their other assets are liable to be proceeded against.

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

11. 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. (Dictated to PS, transcribed by him corrected and pronounced by me in the open Court on this the 19th day of September,

Sd./- (T. RAJESH) PRESIDING OFFICER

Applicant Witness:

AW1 –Shri Laxmikanth Shenoy, Senior Manager, Applicant Bank.

Exhibits on the part of the Applicant:

Ext A1

- Evidence Affidavit. Ext A2

- List of documents. Ext A3

- Board of Resolution dt.07.07.2017. Ext A4

- Copy of Common Judgement passed in A.S.78/2013 and

A.S.12/2014 by the Hon’ble City Civil Court, Bengaluru. Ext A5

- Statement of Account.

Witness Examined for the 4th Defendant:

DW1 –Shri Venkatachalam, 4th Defendant.

List of Documents Exhibited for the Defendants :

NIL

Sd./- (T. RAJESH)

PRESIDING OFFICER