KARNATAKA GRAMIN BANK vs G.SRINIVAS & ORS on 29 September 2025

FINAL ORDER

1. The present Original Application in short (OA) has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 due for seeking issuance of Recovery Certificate against the defendants for Rs.45,77,270/- (Rupees Forty Five Lakh Senventy Seven Thousand Two Hundred and Seventy only), due in an pledge loan/warehouse loan of Rs.32,00,000/- alleged to have been availed by the defendants from erstwhile Pragati Gramin Bank, which later got amalgamated with the applicant bank.

2. It is the case of the applicant bank that, the above-mentioned credit facility for Rs.32,00,000/- was availed by the defendants by pledging 3000 Paddy bags. It is also contended that the apart from the execution of the loan documents, pledged over the paddy of 3000 bags is created.

3. It is the case of the applicant bank that, despite availing the facility, agreeing to fulfill their commitment to repay the same without default, the defendants failed to repay the same forcing the applicant to sell off the stock of paddy and credit the sale proceeds to the loan account. In view of the above scenario the applicant seeks for issuance of the Recovery Certificate for the amount outstanding in the loan account to allow the same to be recovered by proceeding against the defendant and also against the schedule.

4. The defendants appeared and filed written statement contending defendants availed the financial facility from applicant bank on 04.02.2009 against the pledge of 3000 old Paddy Bags of old Sona Masuri. The loan was repayable in 12 months. The paddy bags were to be deposited and stored in the godown of K. Naveen Kumar at Madagiri Camp. The defendants were contemplating to dispose of the Paddy bags on a competitive price. Due to Government policies prohibiting export of Non-basumathi rice, Defendants opted not to sell the paddy at that point of time as it would result in loss. This caused the delay in excess of twelve months for the Defendants to sell the paddy. In the meantime, applicant started demanding repayment of loan with interest and penal interest thereon and threatened to auction the paddy by displaying and publishing the names of Defendants in the list of defaulters in the local newspapers. Bank obtained signatures on blank formats purporting to be No-Objection Certificate letters from Defendants to dispose of the paddy on its own. Further, the applicant threatened the Defendants that in the event of publication of names of Defendants and the paddy sold in public auction, it would not fetch expected price and the cost of publication and auction charges to be borne by Defendants. Bank further assured that they would sell the paddy as per law in the presence of Defendants and would fetch better price to Defendants.

5. The Defendants were shocked when they received the summons from the Tribunal about the filing of the above application by Bank seeking recovery. On enquiry, it was revealed that the bank has illegally sold 3000 paddy bags belonging to Defendants in an alleged private auction for a paltry-sum and adjusted the same against the illegal claim and filed the Application for recovery of the alleged sum of Rs.45,77,270/-. There is no whisper in the Application regarding the illegal sale of paddy bags for a throw-away price causing loss to Defendants and the Defendants were not informed about it. The Bank is called upon to furnish the details of alleged private sale carried out by it.

6. There is no basis for the Claim made by Applicant bank. Bank took signatures of the Defendants on blank documents and had filled later as evident from the copies of documents enclosed to the application. The ledger extract produced by bank does not give the particulars of the amounts paid, payable and recovered by Applicant bank.

7. The applicant had let in their evidence by filing their Proof Affidavit reiterating the contention of the TA and producing the loan documents which got marked as Exhibits A3 to A16. The defendants also filed their defense evidence by filing their respective proof of affidavit in terms of the contention taken in the written statement.

8. Defendant No.2 filed Evidence Affidavit, the same was considered as DW-1 and marked as Ex.D1. The DW-1 reiterated the contentions raised in the Written Statement.

9. Heard the applicant, despite granting sufficient adjournments there is no representation for the defendants continuously and hence the defendants’ side taken as heard.

10. 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.

11. The availing of loan facility, execution of loan documents and the pledge of paddy bags are not in dispute. It is alleged by Defendants that the Applicant bank obtained signatures of

Defendants on the blank formats purporting to be No-Objection Certificate Letters from Defendants to dispose of the Paddy on its own. If it is really so, nothing prevented the Defendants from raising objections to sign the blank documents or else to fill-up the blanks before appending their signature. Therefore, the allegation is liable to be rejected.

12. In this context, the Tribunal places reliance on judgment of the Hon’ble High Court of Andhra Pradesh in the case titled Corporation Bank V/s Sushil Enterprises (2004) 1 ISJ Banking 160, wherein it is held that: “Nobody is expected to sign the documents without reading or when it is blank and if he does so he does at his own risk and the very fact that the plaintiff bank has disbursed the loan amount and Defendant had availed it also shows that the documents were valid and duly executed”

13. It is the case of the Defendants that applicant bank has illegally sold the pledged paddy bags for a throw away price and the details have not been furnished by bank. Document No.7 filed with the OA i.e., Letter of Access dated 04.02.2009 has been executed by Defendant No.2 Sri K. Naveen Kumar in favour of the Bank with the details of godown where the pledged goods are stored. It is surprising to note the allegation of Defendants that they are not aware of the sale of goods and the bank has illegally sold the pledged paddy bags.

14. It is alleged by Defendants that there is no basis for the claim made by the Applicant bank. To establish their claim, applicant bank has filed the proof/documentary evidence through the Evidence Affidavit of AW-1 and by marking of documents-Exhibits A3 to A16. Exhibit No.16 is the certified statement of account pertaining to the loan account of Defendants containing the details of loan transactions and showing a balance outstanding due of Rs.45,77,270/-. The Defendants have not pointed out any discrepancy in the Statement of Account filed by the applicant bank. Further, the Defendants have not produced any proof or documentary evidence to dispute the claim made by applicant bank.

15. There is no contra-evidence available on record to repudiate the claim of the applicant bank regarding the availing of loan by Defendants, execution of loan and security documents and the default committed in repaying the loan dues. Therefore, in the absence of any material proof or evidence to repudiate the claim of the applicant bank, the claim made by the applicant bank stands proved. However, in view of the fact that, the facilities are availed against the pledge of paddy apart from other security and the TA relates to 2012, this Tribunal is of the view that, the pendentalite and future interest has to be awarded at the rate of 6.00% p.a. (simple).

16. Hence in view of the above finding which cover both the issues raised in this manner, this Tribunal is of the view that OA is liable to be allowed.

17. In the result, TA.No.1634/2017 stands allowed,

i) The applicant is allowed to recovery an aggregate sum of Rs.45,77,270/- (Rupees Forty Five Lakh Senventy Seven Thousand Two Hundred and Seventy only) with further interest of 6.00% p.a.(simple) from the date of filing OA till the realization from defendants, after giving credit to all the amount recovered and received during the pendency of the OA and allowed the same to be recovered by proceeding against schedule. The schedule to the OA be the schedule 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 other assets are liable for all such amounts due under the loan accounts.

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.

18. 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 29th Day of September 2025].

Sd/- (T. RAJESH) PRESIDING OFFICER

DRT-II, BENGALURU

ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Sri. G. R. Deshpande, Branch Manager of the applicant bank.

Exhibits on the part of the Applicant: Annexure Particulars A1 Applicant Evidence A2 List of Documents A3 Application for Pledge loan/Warehouse loan dated 04.02.2009 submitted by the defendants. A4 Sanction memorandum dated 04.02.2009 A5 Produce loan agreement dated 04.02.2009 executed by the defendants A6 Pronote dated 04.02.2009 for Rs.32,00,000/- & Take Delivery Letter to DPN dated 04.02.2009 A7 Godown/Building on Lease Agreement dated 04.02.2009 executed by the defendants and lease agreement dated 24.02.2010 A8 Specimen Signature Card dated 04.02.2009 submitted by the defendants A9 Letter of Access dated 04.02.2009 executed by the defendants. A10 Godown/Building on lease agreement dated 24.02.2010 executed by the defendants A11 Proforma of the Letter to be obtained dated 04.02.2009 A12 Letter of Revival dated 25.10.2011 sent by the applicant bank A13 Recall letter/notice dated 20.06.2010 along with postal receipt sent by the applicant bank. A14 Recall letter dated 03.07.2010 sent by the applicant bank A15 Certified statement of account pertaining to the loan account of the defendants A16 Statement showing the total outstanding in the loan account of the defendants

Sd/- (T. RAJESH) PRESIDING OFFICER