UCO BANK vs DIGITAL GRAPHIX on 18 February 2026

JUDGEMENT

1. The Applicant Bank filed the Application u/s 19 (1) of the RDDBFI Act 1993 against the Defendant on 24.04.2015 for recovery of a total sum of Rs.46,37,856/- i.e.,

(i) D-2, D-3 & D-4 to pay Rs.29,94,390/- together with interest at the rate of 10.20% p.a. with monthly rests in respect of Housing Loan

(ii) D-2, D-3 & D-6 to pay Rs.5,80,358/- together with interest at the rate of 10.45% p.a. with monthly rests in respect of Car Loan

(iii) D-1, D-2, D-3 & D-5 to pay Rs.10,63,108/- together with interest at the rate of 14% p.a. with monthly rests in respect of Cash Credit Account from the date of Application till the date of realization with cost and by sale of mortgaged/hypothecated properties, more fully described in Schedules of the application.

2. The Counsel for the Defendant made appearance and filed Vakalat for D-2 and adopted D-1 & D-3 further filed Reply statement on behalf of D-2.

Subsequently, the Applicant Bank has filed PA/OD. The D-5 counsel prays time for filing reply statement and CPA. After that, the defendant has not filed Reply statement and CPA in spite of sufficient opportunity given to him. Hence he was debarred from filing Reply and CPA. Arguments of Applicant and Defendant have been heard in detail and since pleading are complete, the matter was reserved for orders.

3. The Applicant submits that consequent upon an application made to applicant by defendants 2 and 3 for Housing Loan and on the guarantee of 4th defendant, the applicant granted on 23-6-2006 a Housing Loan of Rs.15,00,000/- under UCO Shelter Scheme. As security for the due repayment of the said Housing Loan of Rs. 15,00,000/- and the balance from time to time together with all interest, costs, charges and expenses, defendants 2 and 3 executed the following security documents in favour of applicant on 23-6-2006:

a) Demand Promissory Note for Rs.15,00,000/- carrying interest at the rate of 2.25% p.a. above the deposit rate /UCO Bank Prime Lending Rate which is at that time 11.5% p.a subject to min. rate of interest of 9.25% p.a. or at such other rate of interest as may be prescribed by the Bank from time to time with monthly rests for value received.

b) Loan Agreement

c) Letter of Waiver

The 4th defendant executed Letter of Continuing Guarantee for the said sum of Rs. 15,00,000/- in favour of applicant.

The Housing Loan was repayable in 240 consecutive monthly installments of Rs.13,740/-. As security for the due repayment of the Housing Loan of Rs.15,00,000/- granted to defendants 2 and 3, the 3rd defendant deposited the title deeds relating to her property of an extent of 0.05 acre of land together with 135 sq.mt. building thereon situated in RS No.1104/4B, New RS No.37/1 of Udagamandalam Town with intention to create equitable mortgage for all advances made or to be made with applicant Bank on 23-6-2006. Oral Ascent was recorded from 3rd defendant оп 26-6-2006.

Further, the 2nd defendant applied for Car Loan and on the guarantee of defendants 3 and 6, the applicant sanctioned Car Loan of Rs.2,52,000/-to the 2nd defendant on 31-12-2007. As security for the due repayment of the said Car Loan of Rs.2,52,000/-, the 2nd defendant executed and delivered to the applicant on 31-12-2007 the following security documents:

a) Demand Promissory Note for Rs.2,52,000/- carrying interest at the rate of 0.25% p.a. above the deposit rate / Reserve Bank of India rate subject to min. rate of interest of 13.25% p.a. or at such other rate of interest as may be prescribed by the Bank from time to time with monthly rests for value received.

b) Agreement relating to Term Loan

c) Letter of Waiver

In consideration of the applicant granted to 2nd defendant, the said Car Loan, the 3rd and 6th defendants executed Letter of Continuing Guarantee for the said sum of Rs.2,52,000/- in favour of the applicant on 31-12-2007.

The said Car Loan was repayable in 60 monthly installments of Rs.5,800/- per month commencing from February 2008 but without prejudice to applicant's right to demand repayment of the entire outstanding balance in case of default in repayment of installments and interest and on the happening of any of the events mentioned in the Agreement.

The 2nd defendant has been carrying on business in the name and style of M/s. Digital Graphix, as its sole proprietor. Consequent upon an application made to applicant by 1st defendant for Cash Credit Limit and on the guarantee of 5th defendant, the applicant granted on 3-7-2008 Cash Credit Limit of Rs.9,75,000/-.

As security for the due repayment of the said Cash Credit Limit of Rs.9,75,000/- and the balance from time to time together with all interest, costs, charges and expenses, the 2nd defendant as sole proprietor of 1st defendant executed the following security documents:

a) Demand Promissory Note for Rs.9,75,000/- carrying interest at the rate of 14% p.a. with monthly rests or at such other rate of interest as may be prescribed by the Bank from time to time.

b) Letter of Continuing Security

c) Letter of Waiver

d) Hypothecation of Goods to secure demand cash credit and hypothecated stocks of computer accessories in favour of applicant Bank. Hypothecated goods are described in schedule III.

In consideration of the applicant granted to defendants 1 and 2, the said Cash Credit Facility, the 5th defendant executed Letter of Continuing Guarantee for the said sum of Rs.9,75,000/- in favour of the applicant on 3- 7-2008.

As further security for the due repayment of the Cash Credit Limit of Rs.9,75,000/- granted to defendants 1 and 2, the equitable mortgage already created on 23-6-2006 by 3rd defendant for the Housing Loan was extended. Oral Ascent was recorded.

Defendants 2, 3 and 4 acknowledged the debt due under Housing Loan by executing separate Balance Confirmation Letters on 7-7-2009 and on 8-6-2012. Further part payments were also made towards the Housing Loan by signing the pay-in-slips. Defendants 2 and 3 acknowledged the debt due under Car Loan by executing separate Balance Confirmation Letter on 21-12-2010 and on 26-8-2013, defendants 2 and 6 acknowledged the debt due under Car Loan by executing Balance Confirmation Letter. Further part payments were also made towards the Car Loan by signing the pay-in-slips.

The 2nd defendant as sole proprietor of 1st defendant and 5th defendant acknowledged the debt due under Cash Credit Account by executing separate Balance Confirmation Letters on 4-6-2011 and on 28-3- 2014. Further part payments were also made towards the Cash Credit Account by signing the pay-in-slips.

The Housing loan account of defendants 1 and 2, Car Loan account of 2nd defendant and Cash Credit account of defendants 1 and 2 was irregular and out of order for a long time. Inspite of several demands, defendants 1 and 2 failed and neglected to repay the amounts due under the aforesaid loan accounts and committed default. The Housing loan account was classified as NPA on 30-9-2014 and the Car loan account was classified as

NPA on 31-3-2014 and the Cash Credit account was classified as NPA on 30- 9-2014 Notice under Section 13(2) of SRFAESI was issued on 24-10-2014 to defendants 1 to 5. Subsequently applicant Bank has taken possession of the properties and possession notice was issued on 22-1-2015. The 2nd defendant filed appeal viz SA No.304/2015 questioning the proceedings under SARFAESI and the same is pending before this Honourable Tribunal.

As the aforesaid Cash Credit Facility was availed by defendant 1 and 2 for business purposes, the transaction is of commercial nature, subsequent interest from the date of the application may be granted to the applicant at 14%p.a with monthly rests for Cash Credit Limit, and at 10.20% p.a with monthly rests for Housing Loans and 10.45% p.a. with monthly rests for the Car Loan.

Despite repeated demands made by the Applicant Bank the defendants did not take any sincere steps to discharge the loan. Hence, the Applicant Bank has filed the OA for recovery a total sum of Rs.46,37,856/- i.e.,

(i) D-2, D-3 & D-4 to pay Rs.29,94,390/- together with interest at the rate of 10.20% p.a. with monthly rests in respect of Housing Loan

(ii) D-2, D-3 & D-6 to pay Rs.5,80,358/- together with interest at the rate of 10.45% p.a. with monthly rests in respect of Car Loan

(iii) D-1, D-2, D-3 & D-5 to pay Rs.10,63,108/- together with interest at the rate of 14% p.a. with monthly rests in respect of Cash Credit Account from the date of Application till the date of realization with cost.

The Applicant Bank has submitted the following documents in support of its claim in the OA, which are as follows:

List of Documents

S. No. Date Description of document Exhibits

23.06.2006 Demand Promissory Note forRs. 15,00,000/-- Original Ex.No.A-01

23.06.2006 Loan Agreement -Original Ex.No.A-02

23.06.2006 Letter of Waiver-Original Ex.No.A-03

23.06.2006 Letter of Continuing Guarantee-Original Ex.No.A-04

26.06.2006 Oral Ascent-Original Ex.No.A-05

31.12.2007 Demand Promissory Note for Rs.2,52,000/- - Original Ex.No.A-06

31.12.2007 Agreement relating to Term Loan-Original Ex.No.A-07

31.12.2007 Letter of Waiver-Original Ex.No.A-08

31.12.2007 Letter of Continuing Guarantee-Original Ex.No.A-09

03.07.2008 Demand Promissory Note for Rs.9,75,000/-- Original Ex.No.A-10

03.07.2008 Letter of Continuing Security-Original Ex.No.A-11

03.07.2008 Letter of Waiver-Original Ex.No.A-12

03.07.2008 Hypothecation of Goods-Original Ex.No.A-13

03.07.2008 Letter of Continuing Guarantee-Original Ex.No.A-14

08.07.2008 Oral Ascent-Original Ex.No.A-15

07.07.2009 Balance Confirmation Letter executed by 2nd Defendant- Original Ex.No.A-16

07.07.2009 Balance Confirmation Letter executed by 3rd Defendant-Original Ex.No.A-17

07.07.2009 Balance Confirmation Letter executed by 4th Defendant-Original Ex.No.A-18

08.06.2012 Balance Confirmation Letter executed by 2nd Defendant-Original Ex.No.A-19

08.06.2012 Balance Confirmation Letter executed by 3rd Defendant-Original Ex.No.A-20

08.06.2012 Balance Confirmation Letter executed by 4th Defendant-Original Ex.No.A-21

21.12.2010 Balance Confirmation Letter executed by 2nd Defendant- Original Ex.No.A-22

21.12.2010 Balance Confirmation Letter executed by 3rd Defendant-Original Ex.No.A-23

26.08.2013 Balance Confirmation Letter executed by 2nd Defendant- Original Ex.No.A-24

26.08.2013 Balance Confirmation Letter executed by 3rd Defendant-Original Ex.No.A-25

04.06.2011 Balance Confirmation Letter executed by 2nd Defendant as Sole Proprietor of 1st Defendant-Original Ex.No.A-26

04.06.2011 Balance Confirmation Letter executed by 5th Defendant -Original Ex.No.A-27

28.03.2014 Balance Confirmation Letter executed by 2nd Defendant-Original Ex.No.A-28

28.03.2014 Balance Confirmation Letter executed by 5th Defendant -Original Ex.No.A-29

24.10.2014 Demand Notice-Original Ex.No.A-30

22.01.2015 Possession Notice- Original Ex.No.A-31

---- Account relating to Housing Loan Account- Certified Copy Ex.No.A-32

---- Account relating to Car Loan Account- Ex.No.A-33

Certified Copy

---- Account relating to Cash Credit Account- Certified Copy Ex.No.A-34

28.06.1971 Award Passed by R.V.K.G. Ranga Rao, Arbitrator. - Xerox copy Ex.No.A-35

09.04.2005 General Power of Attorney executed by Anand Gajapathi Raju in favour of S.R.Jayaraman. Attested by Notary Public on 09.04.2005 xerox Copy Ex.No.A-36

15.11.2005 Deed of Sale executed by Anand Gajapathi Raju by Power Agent S.R.Jayaraman in favour of S.Femina Registered as Doc No.1146 of 2005-Original Ex.No.A-37

12.07.1982 Proceedings of Tahsildar, Udagamandalam- Xerox copy Ex.No.A-38

24.12.1991 Proceedings of Tahsildar, Udagamandalam Town East Xerox Copy Ex.No.A-39

04.04.2006 Proceedings of Tahsildar, Udagamandalam to carryout mutation- Xerox Copy Ex.No.A-40

27.08.2001 Chitta Extract granted by Tahsildar, Udagamandalam-Xerox Copy Ex.No.A-41

18.05.2006 Encumbrance Certificate for the period from 01.01.1992 | upto 17.05.2006 Vide No.947/2006 Certified copy Ex.No.A-42

SCHEDULE I

DESCRIPTION OF MORTGAGED PROPERTY

An extent of 0.05 acre of land together with 135 sq.mt building thereon situated in RS No.1104 /4B, New RS No.37/1 of Udagamandalam Town, Joint Sub Registrar I, Udagamandalam, The Nilgiris. The properties owned by Mrs.S.Femina wife of Mr.K.B.Nagenthiran.

East -14 ft common right of way West - RS No.1104/4B of Mrs. Kavitha Valsalayar South - remaining portion of land in RS No.1104/4B North - 14 ft common right of way

Within these boundaries situated a residential house of RC construction, the approximate carpet area of the building is 1500 sq.ft.

SCHEDULE II

DESCRIPTION OF HYPOTHECATED CAR

One Hyundai Santro Xing bearing registration No.TN43 7467 and its accessories.

SCHEDULE III

DETAILS OF HYPOTHECATED GOODS

All stocks of computer and accessories available at 1st defendant premises situate at B-4, KCR Arcade Building, Walshom Road, Ootacamund, The Nilgiris or wheresoever situate and/or in transit and/or kept / stored elsewhere.

4. The brief averments of the Reply Statement filed by the 2nd Defendant are as follows:-

1). The OA filed by Applicant is grossly fallacious, frivolous, reckless and not maintainable in law and on facts.

2). This Defendant does not admit various allegations in the OA filed by proposed party except those that are specifically admitted herein by him. The Applicant is put to strict proof of the same. This Defendant is no way liable to pay the debts due to the bank even if any. Admittedly no amount was borrowed by this Respondent and on these grounds alone, the above OA is liable to be dismissed in limini as against the Defendants.

3). The Defendant submits that Originally during July 2008, the Bank sanctioned Housing Term Loan facilities to the tune of Rs. 15,00,000/- and Cash credit facilities to the tune of Rs.9,75,000/- and the Defendant also availed a car loan to the tune of Rs.2,52,000/-. After availing the Loan facilities, this Defendant has made prompt and regular payments towards the loans amount. In view of the business crisis prevailed in India In general and Nilgiris in particular for the last 10 years and due to power, this Defendant is struggling to carry on the business. Though there is huge financial crisis, this Defendant had paid huge amount which was adjusted by the Applicant Bank. The Applicant Bank never intended to recover the amount but to harass this Defendant and disburse the properties to collect huge interest from the Defendant. This Defendant has never acknowledged the debts as claimed by the Applicant Bank. The Applicant bank's reluctance to reschedule the term with reduced EMI burden had made this Defendant with direction less and to incur heavy loss that leads to debt trap and most importantly not informing the actual status until serving the notice and misleading the borrower and the guarantor had only made the Defendant to incur heavy loss in his business.

4). The Applicant bank had issued a notice on 24/10/2014 under section 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security interest Act 2002. There after the Applicant has issued a possession Notice dated 22/2/2015 for which this Applicant has filed an application in S.A.No.34/2015 under section 17 of SARFAESI Act. During the pendency of the Application, the Applicant Bank has issued the impugned sale notice dated 13/03/2015 under the SARFAESI Act. This Hon'ble Tribunal has granted interim stay subject to payment of Rs.9.5 Lakhs to the Applicant bank. As per the Order, this Defendant has complied conditional order and he has remitted a sum of Rs.9.7 Lakhs to the Applicant Bank. As far as car loan is concerned the Hypothecated car was met with an accident and toppled off from the height roughly measuring about 25 Ft. when this Defendant claimed compensation from the concerned insurance company, the company refused to give compensation. So this Defendant filed an application in C.O.P.No.3 of 2010 before the District Consumer Redressal Forum Ootacamund and the same is pending. Since this Defendant incurred heavy loss, he is unable to repay the car loan. The Applicant Bank has not made any claim against this Defendant in time. The Applicant's claim is hopelessly barred by limitation, No relief can be claimed against this Defendant and this Defendant is liable to be discharged from the above application and no liability can be fastened as against this Defendant and the above OA is liable to be dismissed in limini.

5). The Defendant submits that the OA is filed contrary to the facts and it is Intended only to harass the Defendant. The above OA has not been filed within the statutory period and even if any debt due to the bank the same is time barred debt and the Applicant is not entitled to claim from this Defendant. The claim is hopelessly barred by limitation. The OA Is not maintainable since it is filed after expiry of statuary period.

6). The OA has not been verified and filed properly. The Branch manager has not produced any power of Attorney in this regard. On this ground alone, the OA is liable to be dismissed in limini as against the Respondent.

7). The alleged debt did not constitute "debt" as defined in section 3(a) of Recovery of debts due to Banks and financial Institutions Act. The amount claimed in the OA is false. The statement of account produced by the applicant bank does not show the accurate picture since no amount has been disbursed to this Respondent. The application contains false and ambiguous details. The application is liable to be dismissed for misrepresenting the facts before this Hon'ble Tribunal.

8). The contents in para 1 & 2, are the matter of record and are not denied.

9). The allegation in para. 3 and 4 of the Original Application are false and incorrect. This Hon'ble Tribunal has no jurisdiction to entertain much less determine the main application. The application is not instituted within the period of Limitation prescribed under law. There is no acknowledgement by these Defendants. The Applicant has to strictly prove that the application is filed within the stipulated time. The date of disbursement of alleged loan is not even disclosed in the application to plead limitation. The application is filed without any required details.

10). These Defendants submit that the allegations in paras V (1 to 3) of Original Application are false and incorrect. In particular, the branch manager of the applicant bank has filed the main application, on the basis of the improper and invalid document. The alleged date of application for loan facilities is all false and baseless. Further, the alleged loan facilities were not actually disbursed to this Respondent. This Respondent do not admit the loan and transaction and reserves his right to traverse the averments in para 5 in the event of necessity after verification of records and accounts. The alleged acknowledgement of Liability Letters are not admitted and the genuiness has to be proved. As per rules and regulation the letters ought to have sent through post. Admittedly the signatures in the said letter were obtained while advance loan which cannot fasten any liability on this Defendant. The Applicant has obtained signature in blank papers and printed forms while advancing loan by this Defendant, which cannot be relied for any purpose. Further, the applicant bank has made interlineations and interpolations in most such documents that were not authenticated by the Respondent and some of such documents are even undated. The entire

contentions with regard to alleged loan transactions have to be strictly proved. This Respondent do not admit the various amounts mentioned in the application.

11). As regards para V sub clause 4 to 18 the alleged creation of Mortgage is false and baseless. The Loan agreement alleged to have been executed by this Respondent in favour of the applicant Bank and appearing as documents 1 to 29 of the OA paper book is a mockery and fabricated on the face of it. By reasons of the invalid documents of hypothecation as filed by the applicant Bank, no relief can be claimed regarding hypothecated vehicle. The purported documents produced in this regard are undated and imperfect. Besides, the alleged date of creation of Mortgage in respect of Immovable properties are false and baseless. So the alleged Mortgage is non est at law. The alleged details of hypothecation are vague and unsubstantiated. In particular, the alleged date of creation of hypothecation is false and fabricated. The Applicant is not entitled for any amount and the Applicant cannot seek for any personal decree against this Respondent.

12). This Respondent further submits that the allegations in para 19 in the Original Application are false and incorrect. The rate of interest calculated and claimed in the application is not admitted and it is exorbitant and contrary to the agreement. As per the guidelines given by the Hon'ble Supreme Court and Reserve Bank of India, the Applicant bank cannot charge interest on interest and the penal interest charged by the Applicant over the loan avalled by this Defendant is unjustified. The Applicant Bank has to prove each and every entry in the statement of accounts. The liabilities even if any, the Vehicle and goods which has been hypothecated itself sufficient to settle the same. This Respondent reserves his right to file the Additional Reply statement after verification of records and accounts.

13). In reply to Para 20 and 21, in view of the above submissions the present OA is premature and unwarranted. The various reliefs claimed as against this Respondent is unsustainable in law. There is no scope for any personal decree and the claim is barred by limitation. There is no cause of action to file the application and the alleged causes of action are false and Incorrect. The verification clause in the main application not properly couched. The documents filed along with the main application are all false and fabricated and in any case Illegible. More so there is no liability as against this Respondent and there cannot be any cause of action against this Defendant and the applicant bank is not entitled for any relief.

14). There are no merits or bonafides in the OA and it is purely an abuse of process of law.

Hence it is prayed that this Hon'ble Court may be pleased to dismiss the application against this Respondent with compensatory costs and pass other necessary orders, and render justice.

5. 3rd Defendant has filed additional reply statement.

1). The OA filed by Applicant is rossly fallacious, frivolous, reckless and not maintainable in law and on facts.

2). This Defendant does not admit various allegations in the OA filed by proposed party except those that are specifically admitted herein by him. The Applicant is put to strict proof of the same. This Defendant is no way liable to pay the debts due to the bank even if any. Admittedly no guarantee was given to the loan availed by the Respondents 1 & 2 and on these grounds alone, the above OA is liable to be dismissed in limini as against this Defendant.

3). This Defendant submits that originally during July 2008, the Bank sanctioned Housing Term Loan facility to the tune of Rs.15,00,000/- for construction of house in the suit property and the above account has been declared as NPA on 30/09/2014 without followed the Rules and Regulation framed by RBI. While declaring an account as NPA, Reserve Bank of India clearly advised all Banks to reverse the unpaid interest on the account fully and only the balance amount to be shown as NPA balance. The Applicant Bank while declaring NPA on 30/09/2014, this Respondent's Account could have been reversed, only Rs.15,00,000/- would have been balance, the remaining being interest charged on this Defendant's Loan Account which could have been reversed to the debit of their profit account. Instead the Applicant Bank has wrongly shown a balance of Rs.28,07,321/- as housing loan balance without reversing the interest charged on the loan account which leads to a huge amount of overburden to this Respondent. If the Applicant Bank have followed to the RBI Norms and done accounting, for this Defendant's Housing loan, liability of this Respondent would have been reduced to great extent. This Defendant is enclosed here with the housing loan interest calculation sheet at the rate of 9.60% simple interest as per RBI guideline and as per calculation sheet the balance amount payable by this

Defendant towards Housing Loan is only Rs.5,91,070/-. After the housing loan has been declared as NPA, this Defendant has remitted an amount of Rs. 14,60,000/- towards Housing Loan.

4). This Defendant submit that on 03/07/2008 the 1st Defendant a proprietary concern has availed Cash Credit Limit of Rs.9,75,000/- from the Applicant Bank for which this Defendant is in no way connected to the liability since neither this Defendant is a guarantor nor this Defendant has extended her house property as mortgage for the loan. Admittedly nowhere the Applicant Bank claimed that this Defendant stand an Guarantor for the loan sanctioned to the 1st Defendant M/s Digital Graphix, Ongoing through all the papers submitted by the Applicant Bank, this Defendant shocked and surprise to know that Page No.54 of the document called "ORAL ASSENT" which is signed by the Bank official only, this Defendant never signed any paper/Document to stand as Guarantor for the loan or extended her property as Collateral Security for the Loan availed by the 1st Defendant.

5). The Defendants 1 & 2, who advanced a loan of Rs. 9,75,000 Lakhs as on 03/07/2008 had not obtained any guarantee from this Defendant. This Defendant had not signed any document towards the said loan. Though she is not a guarantor and no liability can be fastened as against this Defendant when she is not a guarantor for the said CC loan. Such a claim by the Applicant against this Defendant is baseless and unauthorized. So, this Defendant cannot be held liable for the loan advanced by the Defendants 1 &2.

6). The Applicant besides failing so realise the stock and movables as shown in 'II' & 'III' Schedule is trying fastening liability as against this Defendant's property which is suffice to show that there is a fraud as against this Defendant for the purpose of fastening the liability as against her. This Defendant cannot be made liable to pay Rs.10,63,108/-There is no guarantee agreement for CC Limit to invoke any claim as against this Defendant. As per law, a banker cannot exercise a general lien over the property owned by the wife, for the liability incurred by the Husband, in the absence of any express or implied consent thereto.

7). This Defendant submits that with regard to the car loan sanctioned to the 2nd Defendant, this Defendant has extended her personal guarantee only for the loan and this Defendant has not extended her property as security for the car loan sanctioned to the 2nd Defendant. The Applicant does not have any right to attach her property for the car loan since the same cannot be done as per the "Right to set off Clause". To surprise of this Defendant, the Applicant issued sale Notice dated 15/02/2017 claimed Rs.48,79,651/- which is not at all correlation to the possession notice issued earlier. The most astonishing fact is that the car loan dues mentioned is Rs. 10,86,018/- which is not at all acceptable by my layman, since the car loan availed by the 2nd Defendant was only be 2.52 Lacs. At the time when the housing loan was declared as NPA, M/s Digital Graphix was a well functioning account and the same has been wrongly declared as NPA by the Applicant Bank considering as group exposure which is totally wrong. The Housing loan is a separate Loan account and no way connected with the loan availed by the Defendants 1 & 2.

8). It is pertinent to state that Cash Credit loan itself was availed for 1 Defendant's business for which this Defendant neither deposited her title deeds nor consented for ORAL ASCENT. Having unable to realine the stock and movables as shown in I' & 'III' Schedule, using title deed deposited for her housing Loan fraudulently extended liability as against her property contrary to the agreed terms. It is nothing but cheating There is no privity of contract between this Defendant and the Applicant Bank and there is no valid, enforceable contract and there is no enforceable or valid mortgage of property for the loan availed by the 1 Defendant. There is no mortgage in the eye of law. The alleged ORAL ASCENT is not obtained from this Defendant. The Applicant bank is not entitled to seek any relief as against this Defendant and her properties for the CC Loan and the alleged PAL ASCENT without consent of this Defendant cannot fasten any liability as against her property. The Applicant Bank cannot recover the amount out of her properties as there is a bonafide dispute. It is needless to say that three requisites are essential for creating a mortgage by title deeds. They are:

(i) Debt,

(ii) Deposit of title deeds; and

(iii) An intention that the title meds shall be the security for the debt.

An equitable mortgage may cover at existing as well as a future debt. In order to accept the creation of mortgage by deposit of title deeds, the factum of delivery of the title deeds should be proved, if it is so pleaded. Apart from the above two essential, the intention to create a security thereon should

exist. In the absence of the intention to create a security, the deposit of title deeds alone cannot by itself create an equitable mortgage. It is absolutely nothing at all unless the deposit of title deeds actually effects the transfer of an interest in the immovable property for the purpose of security on the money advanced or to be advanced. Mere possession of deeds without the necessary evidence of the contract under which the possession was obtained or of the manner, in which the possession originated so that a contract may be inferred, will not create an equitable security. In this case, there is no document on record to spell out the intention that title deed was delivered by this Defendant with a view to tender it as a security of the loan advanced to 1 Defendant. The Hon'ble Madras High Court in its case Lakshmi Vilas Bank Ltd. Vs. M/s.Shreechakra Enterprises and others reported in AIR 2003 Madras page No.1, held that in the absence of necessary proof of the deposit of title deeds, mere production of the said letter would not be sufficient to create an equitable mortgage or to hold that the guarantor had equitably mortgaged it by deposit of the title deeds in respect of the immovable property.

9). This Defendant submits that the alleged Oral Assent at page 54 of the OA Book will clearly show that there is no signature of this Defendant. Admittedly no loan application is made for her property and the Applicant Bank has deliberately failed to produce the sanction letter for CC Limit. The Applicant bank is trying to suppress the material facts for unlawful enrichment and coerce this Defendant. Since the Applicant Bank failed to produce any document for Oral Assent, there is no deposit of deeds for CC Limit and there is no valid equitable mortgage regarding her properties. The Bank has to initiate separate proceeding against the person who sought CC loan. No documents have been executed by this Defendant for CC Loan availed by the Defendants 1 & 2. The CC Loan document will clearly show that the loan was availed for the 1 Defendant's business purpose by hypothecating its stocks. There is no acceptance of the terms and conditions stated in the CC Loan Document by this Defendant and the Applicant Bank cannot bind her for any of the terms accepted by the Defendants 1 & 2. The documents said to have been obtained by the Applicant Bank will not any way bind this Defendant and the same are fraudulently cooked up for ulterior purpose. The loan was granted under two transactions and the same constitutes two different causes of action. Under rule 10 of the debt recovery tribunal (procedure) rules, 1903, an apple on must be confined to one cause of action. Only for the purposes fasten liability to this Defendant's property, both the causes of acts have been combined. The loan was granted under two different document and it was also sanctioned in two different years. Therefore, both these transactions cannot be clubbed together. The loan was also Bantal under two sanction letters and the Defendants have executed, separate documents and, therefore, the OA is bad for misjoinder of causes of action

10). It is deliberately false to make that as further security for due repayment of the Cash credit Limit of Rs.9,75,000/- granted to Defendants 1 & 2 the equitable mortgage already created on 23/06/2006 by this Defendant for Housing loan was extended and oral Ascent was recorded. This Defendant never given oral Ascent and did not deposit her title deeds to create an equitable mortgage for CC Loan. The alleged Oral Ascent said to have been recorded by the Bank is not valid and binding on this Defendant. As per law, in the absence of the necessary proof for the deposit of title deeds in respect of 1st schedule for CC Loan, the mere production of Oral Ascent letter which was created by the Applicant Bank would not be sufficient to create an equitable mortgage. The alleged mortgage is unenforcable and nonest in the eye of law. There is no acknowledgement of libility on 07/07/2009, 08/06/2012 & 21/12/2010 by this Defendant. The Acknowledgement of Liability at page Nos.65 to 68 of the OA Book will clearly shows that there is no acknowledgement of liability by this Defendant towards the Cash Credit Account. This Defendant is not jointly or severally liable to pay the amount due to the 1st Defendant and her property cannot be brought for sale as there is no mortgage. The documentation in favour of the Applicant Bank is not valid. The amount claimed is not admitted and each and every entry has to be strictly proved. This Defendant had already issued a Letter dated 30/01/2018 to the Applicant and inspite of acknowledging the same there is no reply from the Applicant Bank.

11). This Defendant submits that the documents filed by the Applicant also would clearly show that there cannot be any valid equitable mortgage on her property an extent of 0.05 Acres of Land together with 135 Sq.mt., building situated in RS.No. 1104/4B, New RS.No.37/1 of Udagamandalam. This Defendant humbly submits that using the title deeds which were deposited for housing loan, the then manager fraudulently extended collateral security to CC Loan in collusion with the official of the applicant Branch. The applicant bank has also not followed required procedures while disbursing the loan to the 1st defendant. The purpose of loan and security can be only for constructing house in her property and there is no power to advance a loan by towing her property as security for developing the 1st Defendant's

12). This Defendant submits that she is not co-obligant and this Defendant is not jointly and severally liable to pay any amount and the alleged Oral Ascent recorded by the Applicant cannot be enforced and the transaction is otainted with illegality for enrichment.

13). There is no cause of action to file application as against this Defendant and no relief can be claimed on the basis of imaginary mortgage. There cannot be any joint or several liabilities. There cannot be any certificate authorising the Applicant Bank to recover any amount form this Defendant and from her property. No order can be passed for sale of the properties offered as security since there is no enforceable security and the alleged equitable mortgage is not valid. The mortgage property shown in schedule cannot be enforced and the documents may be ordered to be returned in favour of this Defendant. So there cannot be any liability as against this Defendant and her property. The pro-note, agreement and several other documents obtained including this Defendant as party is untenable not valid and binding. The entire documentation and procedure adjusted are all incorrect, Improper and unenforceable, contrary to law and principle of natural justice. This Defendant respectfully submits that all documents including her name is unlawful and invalid. This Defendant is not liable to pay any amount. The application is liable to be dismisssed as against this Defendant with compensatory cost.

14). The various reliefs claimed as against this Defendant is unsustainable in law. There is no hope for any personal decree and the claim is barred by limitation. There is no cause of action to file the application and the alleged cause of action are false and incorrect. More so there is no liability as against this Defendant and there cannot be any cause of action against this Defendant and the applicant bank is not entitled for any relief.

15). There are no merits or bonafides in the OA and it is purely an abuse of process of law.

Hence it is prayed that this Hon'ble Court may be pleased to dismiss the application against this Respondent with compensatory costs and pass other necessary orders and render justice.

The 2nd defendant filed CPA in which the same contention of reply statement has repeated again.

6. On the basis of the above pleading the following issues have been framed

(i) Whether this case is maintainable:

(ii) Whether there is any cause of action:

(iii) Whether this case is barred by the limitations:

(iv) Whether the applicant has been able to prove his case:

(v) Whether the applicant is entitled for any relief as claimed for:

Issue No. (iii),(iv),(v) :-

Having heard the parties and after going through the affidavit of the applicant and the documents filed by them and also considering the submission of the counsel for the Applicant and defendant, I find that the Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. N. Babu, who is the Authorized officer of the Applicant Bank.

He has stated in his affidavit that the defendants has availed Housing Loan, Car Loan, Cash Credit loan from the Applicant Bank, but they failed to pay the outstanding loan amount, hence he has filed this case. The applicant bank has also filed the documents given by the defendants at the time of sanctioning the loan amount, which have been marked as exhibits No.A-01 to A- 42 in support of its claim in the OA.

On a careful consideration of facts and evidence on record, it is observed that the Original Application has been filed against the Defendant for recovery of a total sum of Rs.46,37,856/- i.e.,(i) Rs.29,94,390/- together with interest at the rate of 10.20% p.a. with monthly rests in respect of Housing Loan

(ii) Rs.5,80,358/- together with interest at the rate of 10.45% p.a. with monthly rests in respect of Car Loan

(iii) Rs.10,63,108/- together with interest at the rate of 14% p.a. with monthly rests in respect of Cash Credit Account from the date of filing of Application till the date of realization with cost. The Applicant Bank has also filed the Proof Affidavit and the documents have been duly marked as Ex. No. A- 01 to Ex. No.A-42 and taken on record. It is pertinent to mention here that Applicant Bank has submitted that defendant has closed the Car loan and Cash Credit loan. So now point for consideration is only for Housing loan.

On the other hand I also find that while admitting the availment of the subject loans from the Bank, the 2nd defendant contended that (i) the O.A. is

not maintainable in law and on facts as he is no way liable to pay the debts due to the bank (iii) Admittedly no amount was borrowed by them (iii) he has made prompt and regular payments towards the loan account (iv) he has never acknowledged the debts as claimed by the Applicant Bank (v) The claim is hopelessly barred by limitation (vi) The OA has not been verified and filed properly (vii) The Branch manager has not produced any power of Attorney (viii) The statement of account produced by the applicant bank does not show the accurate picture, since no amount has been disbursed to this Respondent (ix) The application contains false and ambiguous details, the alleged date of creation of hypothecation is false and fabricated (x) The rate of interest calculated and claimed in the application is not admitted and it is exorbitant and contrary to the agreement (xi) There is no cause of action .

After perusal of documents, I find that the present application has been instituted under Section 19(1) of the Recovery of Debts and Bankruptcy Act (formerly RDB Act, 1993) for recovery of dues legally owed by the defendants by Senior Branch Manager. All procedural requirements, including limitation, valuation, court fees, and necessary documentation, have been duly complied with. The Defendant has failed to substantiate how the present Application is not maintainable.

The 2nd & 3rd contention of the Defendant that he is in no way liable to pay the debts due to the Applicant Bank and that no amount was borrowed by this defendant. But in 3rd & 4th contention he said that he has made prompt and regular payments towards the loan account but again he is submitting that he has never acknowledged the debts as claimed by the Applicant Bank. All the four statement shows the contradiction of the defendant’s contention. On the other hand from perusal of documents filed by Applicant Bank I find that the loan facilities were duly sanctioned and availed from the Applicant Bank under valid loan documents executed by the Defendants. The Defendants have executed the loan agreements (Ex.No.A- 02, Ex.No.A-07) , promissory notes (Ex.No.A-01 (H.L) guarantee documents (Ex.No.A-04) thereby unequivocally undertaking to repay the dues together with interest and other charges as agreed for Housing Loan.

The O.A. has been filed well within the statutory period of limitation because Possession Notice was issued on 22.01.15 and this O.A has been filed on 24.04.15 which is well within limitation period. The O.A. has been duly verified in compliance with the statutory requirements and procedural rules of this Tribunal. The amount claimed is strictly in accordance with the contractual terms and actual outstanding dues. The hypothecation agreement was duly executed by the Defendant on the date mentioned in the O.A., and the same forms part of the loan documentation. The rate of interest has been applied strictly in terms of the loan agreement executed by the Defendant. The defendant has not proved by filing any document that the Applicant Bank has charged any interest beyond what is contractually agreed, so there exists a valid and subsisting cause of action for filing the present O.A., arising from the Defendant’s default in repayment of the loan amount despite repeated demands and notices From perusal of documents I find that the mortgage was validly and lawfully created by the Defendant in favour of the Applicant Bank as security for the loan facilities availed and described in Schedule of the OA Book (Pg.No.10).

I find that the Applicant Bank, being a statutory financial institution, has acted strictly in accordance with law and in compliance with the terms of the Housing loan agreement. I find that all actions initiated were only after continuous default and after issuance of repeated notices. All amounts paid by the Defendant have been duly credited and adjusted (Statement of Accounts Ex.No.A-32) in the loan account as per banking norms. The certified statement of account (Pg.No.74 of O.A) clearly reflects the disbursement, payments received, interest applied as per agreed rate, and the outstanding balance. Defendant has not proved by adducing any evidence that Applicant Bank has charged excess interest.

Another contention of the defendant that this Hon’ble Tribunal was pleased to grant interim stay subject to payment of a sum of Rs. 9,50,000/- and that the Defendant has remitted a sum of Rs. 9,70,000/- pursuant to the conditional order. But from perusal of statement of account (Ex.No.A-32) I find that he has remitted Rs.9,11,700/-only. The said amount has been duly credited and adjusted in the loan account in accordance with banking norms. I find that, compliance with the interim conditional order does not absolve the Defendant of the remaining outstanding liability. The payment made pursuant to the interim order is only a part-payment and does not discharge the entire contractual obligation of the Defendant under the loan agreement.

Hence, the contention of the defendant is not sustainable.

The evidence brought on record established the claim of the Bank over the Defendant and also its charge over the scheduled properties. It is evident that the defendant borrowed the amounts and executed the loan and security documents in favour of the Applicant Bank. It is seen from the records that the Defendants had not submitted any proof either to dislodge or to disprove the case of the bank.

Therefore, keeping in view of the facts, particulars, the material documents read with the Proof Affidavit filed and considering the arguments of the Applicant Bank and the defendant, I am of the considered view that the Applicant Bank has been fully able to prove this case in his favor. Accordingly this Issue No (iii),

(iv) & (v) are decided in favour of Applicant Bank.

Issue No.(i) & (ii):-

From perusal of records I find that the cause of action for the present application arose on 23-6-2006 when the applicant sanctioned Housing Loan of Rs.15,00,000/- to defendants 2 and 3, on the same day as security for the due repayment of the Housing Loan with interest, costs and charges, defendants 2 and 3 executed in favour of applicant Demand Promissory Note for the said sum of Rs.15,00,000/- and also executed other security documents and the guarantor 4th defendant has executed Letters of Continuing Guarantee. On the same day, the 3 defendant deposited the title deeds with applicant relating to her property morefully described in schedule I hereunder with intention to create equitable mortgage and oral ascent was recorded on 26-6-2006. On 31-12-2007, applicant sanctioned Car Loan of Rs.2,52,000/- to 2nd defendant and as security for the due repayment of the Car Loan, the 2nd defendant executed Demand Promissory Note for the said sum of Rs.2,52,000/- and also executed other security documents and hypothecated the car in favour of applicant. The guarantors defendants 3 and 6 have executed Joint and Several Letter of Continuing Guarantee. On 3-7-2008, applicant sanctioned Cash Credit Limit of Rs.9,75,000/- to 2nd defendant has been carrying on business as sole proprietor of M/s.Digital Graphix, the 1" defendant and as security for the due repayment of the Cash Credit, the 2nd defendant as sole proprietor of 1" defendant executed Demand Promissory Note for the said sum of Rs.9,75,000/- and also executed other security documents and the guarantor 5th defendant has executed Letter of Continuing Guarantee, the equitable mortgage already created by 3rd defendant was extended on 3-7-2008 for the cash credit limit of Rs.9,75,000/- granted to defendants 1 and 2. Several payments were made by defendants 1, 2 and 3 in the Housing loan account, Car Loan account and Cash Credit account by signing pay-in-slips, subsequently the defendants failed and neglected to pay the amounts due under the loan accounts and committed default, and the accounts were classified as NPA and on 24-10-2014, applicant issued Notice under Section 13(2) of the SRFAESI Act and subsequently Possession Notice dated 22-1-2015 was served on defendants 1 to 5, at Ootacamund where the security documents were executed, where the title deeds were deposited and at Udagamandalam where the mortgaged property is situate and the subject matter of recovery of debts fall within the jurisdiction of this Honourable Tribunal..

In view of the above facts and circumstances and also in view of the above discussion this case is maintainable and has valid cause of action. I find that the Applicant has been fully able to prove his case. Accordingly this Issue No

(i) & (ii) are also decided in favour of Applicant Bank. As such the applicant is entitled for relief as claimed only for Housing Loan as car loan and Cash Credit have already been closed.

So far the rate of interest is concerned, it is a well settled Law that the Tribunal has got powers to award pendente lite interest in view of the Judgment of the “ Hon’ble Supreme Court in N.M. Veerapa Vs Canara Bank (reported in AIR 98(1), 1101 & in Central bank of India Vs Ravindra and OS (AIR, 2001(1), 3095) ” and as per the Applicant Bank Agreement norms.

In view of the above Judgement and also in the light of Loan Document, Revised DPN 14 A with minimum interest Clause this O.A. is allowed and the Applicant Bank is entitled for a final order on the following lines:-

The Applicant Bank is entitled to recover from the Defendants,

(i) a sum of Rs.29,94,390/- together with interest at the rate of 10.20% p.a. with half yearly rests from the date of filing of application till the date of compliance of Interim stay and

(ii) After deduction of Rs.9,11,500/- from the amount arrived at date of compliance of Interim stay together with interest at the rate of 10.20%p.a. with half yearly rests in respect of Housing Loan from the date of compliance of Interim stay till the date of realization with cost. Accordingly, it is hereby

ORDERED

(a) That the Defendants are directed to pay jointly/severally (i) a sum of Rs.29,94,390/- together with interest at the rate of 10.20% p.a. with half yearly rests from the date of filing of application till the date of compliance of Interim stay and

(ii) After deduction of Rs.9,11,500/- from the amount arrived at date of compliance of Interim stay together with interest at the rate of 10.20%p.a. with half yearly rests in respect of Housing Loan from the date of compliance of Interim stay till the date of realization with cost.

(b) In case of the default of payment by the above mentioned amount by the Defendants, the Applicant Bank is at liberty to sell the Movable/immovable Properties described in the Schedule and for appropriation of sale proceeds in and towards the satisfaction of amount due, to the Applicant Bank.

(c) If the sale proceeds were not sufficient after defraying the expenses of such sale for the payment of all such amounts, the Defendants are jointly/severally liable to the respective loans, as stated above to pay the amount of such deficiency to the Applicant Bank with interest mentioned above until realization.

(d) Any amount remitted by the defendants during the course of this proceedings shall be given due credit, to the concern loan accounts of the defendants.

(e) Recovery Certificate be prepared, as per the directions given above, and issue accordingly. A copy of the order is to be communicated to the parties concerned, immediately.

(f) It is further ordered that the Applicant Bank shall file cost memo within a period of one month from the date of receipt of this order, so as to prepare the recovery certificate with cost for the Housing Loan and the Recovery Officer is also directed to proceed with the matter in accordance with law. In case, cost memo is not filed before said period of one month, Recovery Certificate will be prepared with available records.

Dictated to T.P, taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 18th February, 2026.

Sd/- (SEEMA SINHA) PRESIDING OFFICER

Uploaded on 26.02.2026