ENCORE ASSET RECONSTRUCTION COMPANY vs SRI. H E GRISHAPPA & OTHER on 31 December 2025

FINAL ORDER

1. The Application was filed before the Debts Recovery Tribunal-I, Bengaluru on 23.08.2015 Under Section 19 (1) of the Recovery of Debt And Bankruptcy Act, 1993 and numbered as OA No. 2005/2016, seeking

for issuance of a Recovery Certificate for Rs. 3,56,89,953/- (Rupees three crore fifty-six lakh eighty-nine thousand nine hundred and fifty-three only). Subsequently, owing to bifurcation of jurisdiction vide Government of India Gazette Notification dated 30.01.2017, the Application (OA No. 2005/2016) was transferred from Debts Recovery Tribunal -I, Bangalore to this Tribunal and renumbered as TA No. 136/2017.

2. It is the case of the applicant (erstwhile Allahabad Bank, which was later amalgamated with the Applicant) that Defendant No. 1, carrying on the business of manufacture and sale of aluminum ingots under the name and style of C. G. Aluminum Alloy, as borrower, and Defendant No. 2, as guarantor, availed a Cash Credit loan limit of Rs. 1.70 crores and a Term Loan of Rs. 70.00 lakhs, aggregating to Rs. 2.40 crores. Further, Defendant No. 1 requested the applicant to restructure the loan accounts by transferring the overdue amounts in the Cash Credit loan account and the overdue instalments in the Term Loan account to separate accounts. Accordingly, the applicant transferred the overdue amount to the extent of Rs. 29,85,016/- (Rupees twenty-nine lakh eighty-five thousand and sixteen only) from the Cash Credit loan account maintained in the name of C. G. Aluminum Alloy to a separate account known as the Working Capital Term Loan (WCTL). Similarly, the overdue instalments amounting to Rs. 6,31,120/- (Rupees six lakh thirty-one thousand one hundred and twenty only) in the Term Loan account maintained in the name of C. G. Aluminum Alloy were transferred to a separate account known as the Funded Interest Term Loan (FITL) account.

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 loan and also created the requisite security interest over the scheduled property 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 through their counsel and filed their written statement. On 12.02.2025, the TA was dismissed for non-prosecution and default. Thereafter, the Applicant filed MA No. 8/2025 seeking restoration of the dismissed TA, which was allowed, and accordingly, the TA was restored on 23.04.2025.

7. The Applicant examined AW-1, who filed a proof affidavit reiterating the averments made in the TA and produced Exhibits A-1 to A-18, which were marked in evidence.

8. In their written statement, the Defendants themselves admitted the availment of the credit facilities. However, the Defendants contended that although they had signed the documents at the time of sanction and

disbursement, the rate of interest fixed by the applicant is contrary to the RBI guidelines. They further contended that the applicant bank cannot levy penal interest or demand repayment during the moratorium period. The Defendants also contended that the applicant had not submitted the statement of account duly certified by the competent authority as required under the Bankers’ Books Evidence Act. Furthermore, the Defendants alleged that the applicant bank ignored the concept of lender’s liability and is arbitrarily claiming the said sum while again charging interest and claiming further interest and other charges, which, according to the Defendants, is arbitrary, unfair, illegal, and against the principles of natural justice.

9. The contentions raised by the Defendants are untenable, misconceived, and devoid of merit. While the Defendants have unequivocally admitted the availment of the credit facilities and execution of the loan documents, they cannot selectively dispute the terms thereof, including the agreed rate of interest, which was fixed strictly in accordance with the applicable RBI guidelines and the contractual stipulations voluntarily accepted by them. The levy of interest and penal charges has been effected as per the terms of the loan agreement and applicable banking norms, and there is no violation of any moratorium guidelines, as the recall and demand were made only after the Defendants committed persistent defaults. The applicant bank has duly produced the statement of account, certified in accordance with the provisions of the Bankers’ Books Evidence Act, which carries

statutory evidentiary value which marked as Ext. A14 to A18. The Defendant’s plea of lender’s liability is vague, unsupported by any material particulars, and is raised only to evade their lawful repayment obligations. The claim made by the applicant bank is neither arbitrary nor illegal but is based on contractual rights and statutory compliance. Accordingly, the Defendant’s objections are liable to be rejected.

10. Hence, the Applicant’s evidence remain un-rebutted and hence proved. The documents produced by the Applicant are found to be admissible and are sufficient to prove the TA claim. Hence the Applicant is to be found entitled for the TA claim as the only issue as to the proof of TA claim is answered in favour of the applicant. The TA claim is made within limitation and there is no capitalization of penal interest.

11. Further, on 10.09.2024, the applicant filed a memo DC No. 11940/2024, by way of an affidavit, a report on the sale of the mortgaged immovable properties described in Schedule A-I and Schedule A-II of the OA. As stated therein, the immovable property described in Schedule A- I was sold for a sale consideration of Rs. 2,27,00,000/- (Rupees Two Crore Twenty-Seven Lakh Only), and the immovable property described in Schedule A-II was sold for a sale consideration of Rs. 1,13,00,000/- (Rupees One Crore Thirteen Lakh Only). Thus, a total sum of Rs. 3,40,00,000/- (Rupees Three Crore Forty Lakh Only) was realized, out of which a sum of Rs. 2,48,20,000/- (Rupees Two Crore Forty-Eight Lakh Twenty Thousand Only) was credited to the loan accounts of Defendant

No. 1. The balance amount of Rs. 91,80,000/- (Rupees Ninety-One Lakh Eighty Thousand Only) was credited to the other loan accounts of Defendant Nos. 1 and 2.

12. 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.

13. In view of the above i. TA 136 OF 2017 stands allowed ii. The Applicant is permitted to recover a sum of Rs. 3,56,89,953.15 (Rupees Three Crore Fifty-Six Lakh Eighty-Nine Thousand Nine Hundred Fifty-Three and Paise Fifteen Only), together with future and pendente lite interest at the rate of 10.00% (simple) per annum from the date of filing of the TA till realization, from the Defendants jointly, severally, and personally, after giving due credit to all amounts recovered or received during the pendency of the TA, including a sum of Rs. 3,40,00,000/- (Rupees Three Crore Forty Lakh Only) realized by way of sale of the Schedule A-I and Schedule A-II properties, out of which a sum of Rs. 2,48,20,000/- (Rupees Two Crore Forty-Eight Lakh Twenty Thousand Only) was credited to the loan accounts of Defendant No. 1. The said amount is permitted to be recovered by initiating proceedings

against the Schedule A-III property to the TA. The Schedule A- III property to the TA be the schedule to the Recovery Certificate. iii. If the sale proceeds are not found sufficient to clear the loan amount due from Defendants jointly, severally and personally, then the Applicant bank is at liberty to proceeded against their other assets for the recovery of the balance due. 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.

14. 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 31st day of December, 2025)

Sd/- (T. RAJESH)

PRESIDING OFFICER

ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Sri. K. V. Shashishekar, Chief Manager, of Applicant Bank.

Exhibits on the part of the Applicant:

Exhibit Nos. Date Particulars of Documents A1 28.01.2010 Letter of sanction A2 30.01.2010 Agreement of hypothecation A3 01.02.2010 Agreement of Term loan A4 01.02.2010 Deed of guarantee A5 19.05.2009 Memorandum of deposit of Title deeds A6 10.06.2010 Supplemental Memorandum A7 03.02.2010 Memorandum of deposit of Title deeds A8 30.01.2013 Supplemental memorandum of deposit of title deed A9 27.01.2014 Letter of confirmation A10 30.09.2013 Letter of request for restructure A11 30.09.2013 Letter of sanction A12 30.09.2013 Demand promissory note A13 30.09.2013 Demand promissory note A14 17.07.2015 Statement of account A15 17.07.2015 Statement of account A16 08.08.2016 Statement of account A17 08.08.2016 Statement of account A18 17.07.2015 Certificate

Witness Examined for the Defendants:

-Nil- List of Documents Exhibited for the Defendants:

-Nil-

Sd/-

(T. RAJESH) PRESIDING OFFICER