Canara Bank vs M/s. Morvi Exports on 15 September 2026

JUDGEMENT

1. The Applicant Bank filed the Application under section 19 (1) of the RDDBFI Act 1993 against the Defendant on 05.12.2016 for recovery of a sum of Rs.9,81,33,253/- together with interest at the rate of 17% p.a. with monthly rests in respect of various facilities from the date of filing of Application till the date of realization with cost of the application.

2. The brief averments of the application filed by the Applicant Bank are as follows:-

The 1st defendant is a partnership firm doing textile business and dealing with the applicant bank from 2005. The 1st defendant rep. by its partners the defendants 2 & 3 as a Principal Borrowers and the 4th defendant is a partnership firm represented by its partners the defendants 2 & 3. The 1st defendant applied for PCL credit facility for the purpose of their business development. The applicant bank originally sanctioned 16 crores to the 1st defendant under PCL and various Credit Facility and the same was periodically enhanced. The last limit for a sum of Rs.16 Crores sanctioned to the 1st defendant. The applicant bank submits that the details of the sanctioned credit facility to the 1st Defendant as follows:

For the sanction and availment of the above said credit facilities the 1st defendant executed the necessary loan documents in favour of the applicant bank. The defendants 2 to 4 offered their guarantee for the credit facilities availed by the 1st defendant firm and they executed joint and several guarantee dated 11.09.2008 in favour of the Applicant Bank.

The details of the interest, repayment and present Outstanding as follows:

S. No. Nature of Loan / Facilities Rate of Interest Repayment Schedule Outstanding Loan Amount (as on 28.11.2016)

Various Facilities 17% On demand Rs.9,81,33,253/- Total Rs.9,81,33,253/-

The defendants created a mortgage by deposit of title deeds dated 31.03.2005 and registered with SRO, West Karur as Doc. Nos 5104, 5105, 5106/2005 dated 29.07.2005 and the subsequent confirmation of mortgage was created by the defendants on 11.09.2008 with regard to the credit facilities availed by the defendants 1,2 & 4. Type of Loan / Facilities Date of Loan Loan Amount Date of Execution of Documents Various facilities 11/09/2008 Rs.16,00,00,000 11/09/2008

The Defendants though have availed the entire sanctioned limit amounts under the said facilities and they had not chosen to repay the drawn amounts, as agreed, despite the repeated demands and reminders made by the Applicant Bank, the Defendants had not paid the amount.

Hence, the Applicant Bank initiate SARFAESI action against the defendants and the demand notice U/s.13 (2) of SARFAESI Act dt.15.10.2010 issued to the defendants and the same was acknowledged by the defendants. The Applicant Bank in continuation to the SARFAESI action the applicant bank caused Possession Notice on 27.08.2011 to the Defendants. The Applicant Bank issued a Sale Notice U/s. 8(5) & 8(6) of SARFAESI Act 2002 on 20.03.2015 and the same was challenged by the 3rd defendant before this Tribunal in S.A.No.182/2015 which is pending for its adjudication.

THE DETAILS OF MORTGAGE:

Particulars Details Principal Borrower 1st Defendant Guarantor Defendants 2 to 4 Mortgage Property Belonged to Defendants Date of Mortgage 31.03.2005 Date of Confirmation of Mortgage 29.07.2005

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 of a sum of Rs.9,81,33,253/- together with interest at the rate of 17% p.a. with monthly rests in respect of various facilities from the date of filing of Application till the date of realization with cost.

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

List of Documents

S. No.

Date Description of document Exhibits

08.09.2008 Letter of Sanction Ex.No.A-01

11.09.2008 Comprehensive Pre and Post Shipment Agreement Ex.No.A-02

11.09.2008 Guarantee Agreement (3 Nos.) Ex.No.A-03

30.08.2011 Acknowledgment of Debt and Security Ex.No.A-04

14.10.2015 Acknowledgment of Debt and Security Ex.No.A-05

24.01.2000 Sale Deed registered as Doc. No. 195/2000 Ex.No.A-06

20.12.2004 Partition Deed registered as Doc. No.

Ex.No.A-07

29.07.2005 MOD registered as Doc. No. 5104/2005 Ex.No.A-08

29.07.2005 MOD registered as Doc. No. 5105/2005 Ex.No.A-09

29.07.2005 MOD registered as Doc. No. 5106/2005 Ex.No.A-10

11.09.2008 Confirmation of Creation of Second/Subsequent Mortgage Agreement (2 Nos.) Ex.No.A-11

15.10.2010 Demand Notice Ex.No.A-12

27.08.2011 Possession Notice with Acknowledgment Card and Paper Publication (English & Tamil) Ex.No.A-13

20.03.2015 Sale Notice Ex.No.A-14

27.06.2015 E-Auction Sale Notice Ex.No.A-15

12.10.2015 Letter given by the 2nd Defendant Ex.No.A-16

— Statement of Accounts maintained by Applicant Bank in the regular course of business Ex.No.A-17

08.04.2013 Attested copy of the Order passed in W.P. No. 35198 of 2012 Ex.No.A-18

18.07.2014 Attested copy of the Order passed in Review Application No. 79 of 2014 in W.P. No. 35198 of 2012 Ex.No.A-19

01.10.2014 Attested copy of the Order passed in S.A. No. 96 of 2012 filed by M/s. Power Creating Zone (P) Limited Ex.No.A-20

26.11.2014 Covering letter and Photocopy of Demand Draft issued to M/s. Power Creating Zone (P) Limited by the syndicate bank Ex.No.A-21

29.07.2015 Attested copy of the Order passed in I.A. No. 1292 of 2015 in S.A. No. 182 of 2015 by the Debt Recovery Tribunal, Madurai Ex.No.A-22

- Plaint filed in O.S.No.91/2016 by N.V.Jaikavitha Ex.No.A-23

21.06.2017 Attested copy of the Order passed in W.P. (MD) No. 20842 of 2015 Ex.No.A-24

04.10.2019 Attested copy of the Order passed in I.A. No.

Ex.No.A-25

01.11.2019 Attested copy of the Order passed in C.R.P. (MD) No. 1897 of 2019 Ex.No.A-26

07.03.2020 Audit Report relating to outstanding dues Ex.No.A-27

23.03.2020 Attested copy of the Order passed in C.C. No. 6 of 2019 by the District Consumer Disputes Redressal Forum, Karur Ex.No.A-28

20.08.2020 Attested copy of the Order passed in C.M.P. No. 61 of 2020 in F.A. No. 26 of 2020 by the State Consumer Disputes Redressal Commission Ex.No.A-29

01.07.2011 Master Circular – Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances (Relevant Portions) Ex.No.A-30

18.06.2012 Letter addressed to the Senior Branch Manager, Karur Branch by the Regional Office regarding OTS Proposal and One Time Settlement Format Ex.No.A-31

20.06.2012 Communication relating to OTS dues of M/s. Morvi Exports Ex.No.A-32

21.02.2023 Clarification submitted by the General Manager to the Inspector of Police, EOW, Karur Ex.No.A-33

22.08.2022 Reply submitted to the Inspector of Police, EOW, Karur in response to the summons Ex.No.A-34

— Email communication sent to the CRIF for clarification regarding wrong reporting of details of account of M/s. Morvi Exports Ex.No.A-35

05.09.2022 CRIF Report Ex.No.A-36

29.01.2024 Final Order passed in F.A. No. 26 of 2020 by the State Consumer Disputes Redressal Commission, Madurai Ex.No.A-37

01.10.2024 CRIF Report Ex.No.A-38

- Chapter IV-E of Syndicate Bank's Manual of Instructions – IV, 2014 on NPA Management Ex.No.A-39

21.03.2023 Order passed by the Madurai Bench of the Madras High Court in Crl.O.P. (MD) No.

Ex.No.A-40

16.07.2025 Order passed by the Madurai Bench of the Madras High Court in Crl.O.P. (MD) No.

Ex.No.A-41

— Email sent by Oracle confirming the Account Number Ex.No.A-42

— Statement of Accounts Ex.No.A-43

SCHEDULE OF PROPERTIES. ('A' Schedule Mortgaged Property)

Stock of Raw Material in the form of Yarn and Fabric Work in progress, Finished Goods, Consumables etc.,

('B' Schedule Mortgaged Property)

PART-1-

Karur Registrar, West Karur Sub Registrar, Karur Taluk, Andankovil East Village, A.N.S.1927 Ac.0.31, A.N.S.1928 Ac.0.30, A.N.S.1929 Ac.1.32 totaling Ac.1.93 acres of lands lying within the following boundaries:

North : Properties in SF No. 1930, 1931, 1932, 1933 & 1951 South : 30ft broad east-west road East : Property of Sellathurai West : Property of N.Manickam

Within this Ac.0.12 ¼ , 54 ½ Sq.ft of land and in this RCC, multistoried building, door, door frames, windows, alamaras and all other super structures standing therein and right of way in the above said 30.ft broad east-west road and mamool right of way and all other easementary rights attached thereto. Though as per parent deed the measurement is 5395 ½ sq.ft /the actual present total measurement is 5310 ½ sq.ft only.

PART-II-Item No.1

Karur RD, West Karur Sub Registrar, KarurTaluk, Andankovil East Village, A.P.S.1933, Ac.0.85 in this Ac.0.36, after deducting the land acquired by the government for NH7 road and all appurtenances bounded within the following boundaries:

North : Singalapuram Vaikkal South : Property of Nagamanickam East : New Bye-Pass Road West : Property owned by Morvi Exports.

Within this Ac.0.15 of land and in this RCC multistoried building, door, door frames, windows, alamaras and all other super structures standing therein and mamool right of way and all other easementary rights attached thereto. New Sub-Division No.1933/3.

Item No.2

Karur RD, West Karur Sulb Registrar, Karur Talak, Andankovil East Village, ANS. 1930 Ac.0.15. ANS. 1931 Ac.0.23. A.N.5.1932 Ac.0.24 totaling Ac 0.62 of lands and in this RCC multistoried building, door, door frames, windows, alamaras and all other super structures standing therein and Mamool right of way and all other easementary rights attached thereto.

Item No.3

Karur RD, West KarurSubRD, KarurTaluk, Andankovil East Village, A.N.S.1951 Ac.0.56 of lands lying within the following 4 boundaries:

North : East-West Singalapuram Vaikkal South : Property of PoovandiMooppan & Kavudu Lands East : Property of 2nd item West : Singalapuram Vaikkal RCC multistoried building, door, door frames, windows, alamaras and all other super structures standing therein and mamool right of way and all other easementary rights attached thereto.

Item No.4. Karur RD, West Karur SubRegistrar, KarurTaluk, Andankovil East Village, A.P.S.1944 Ac.0.21, A.P.S.1952 Ac.1.24, A.P.S.1954 Ac.0.86 totaling Ac.2.31 acres of lands lying within the following boundaries:

North : Property of Ram Tex & Vangapalayam Palanisamy Gounter South : Property of PunithavathiKannan East : Property of Ram Tex & Kumudam &Palanisamy Dying works West : North-South Kavur RCC multistoried building, door, door frames, windows, alamaras and all other super structures standing therein and right of way in east west road, which proceeds from Madurai Salem bye pass road and mamool right of way and all other easementary rights attached thereto.

3. On the other hand, Notices were issued to Defendants and since from the beginning of the case, there was no representation on behalf of the Defendants D-1,D-2 & D-4. Hence, they were set ex-parte. Further the defendant D-3 appeared and has filed the Written statement along with

Counter Proof Affidavit and the documents have been duly marked as Ex. No. B-01 to Ex. No. B-65 and taken on record.

4. The brief averments of the written statement filed by the Defendant No.3 are as follows:-

4.1. That the various averments have been made in the Original Application other than whose which are specifically admitted hereunder are absolutely false, without any merit and hence denied.

4.2. The above Original Application is filed by applicant bank without any jurisdiction and is barred by limitation. The address of the 3rd Defendant is erroneously mentioned as NH7, Salem-Madurai Bye-Pass Road, Karur, in the cause title whereas the above address is that of immovable properties conveyed to this Defendant by the 2nd Defendant upon execution of settlement Deed No. 4373/2010 on 03.05.2010 which however was taken under possession by the Applicant Bank as early as on 27.08.2011 under SARFASI Act from this Defendant and the said immovable property is in the custody of the Applicant Bank. The conduct of the Applicant Bank in furnishing wrong information even with respect to the address of the Defendants coming under the direct knowledge of the Applicant Bank is misleading and clearly exposes the character and conduct of the persons who have vested interest acting on behalf of the Applicant Bank. 4.3 It is further submitted that previously the 3rd defendant and her two daughters who were partners of 1st defendant firms exited from the firm likewise 3rd defendant exited from 4th defendant firm. The above act exiting from the firms was done on 01.04.2009 through execution of release deeds which got registered with the registrar of firm. Consequently, the 2nd Defendant alone remained and thus Defendants 1 and 4 changed its character through adoption of law and became proprietary concern of the 2nd Defendant. The Applicant Bank is very well aware of all such developments much prior to the filing of the present O.A. in spite of the above fact the 1st Defendant and 4th Defendants are mentioned as firms represented by its partners. The Applicant Bank in the present proceedings have erroneously mentioned the 1st and 4th Defendants as a partnership firm instead of proprietary concerns, the position being so it is clear that the Applicant Bank do not have any right to proceed under law against a non-entity and for the said reason the present OA is bad in Law for mis- joinder of parties and liable to be dismissed, consequently the present proceedings cannot be maintained against this Defendant. It is also submitted that; the following two firms were availed loans from the applicant Bank to develop their Home textiles business. *Ram Textiles (started in the year 1982) - Defendant - D4

*Morvi export (started in the Year 1995) - Defendant - D1 The said two firms were originally partnership firms with the family members of one Ramasamy as its partners. The 2nd Defendant is the son of the said Ramasamy (late). Subsequently after the demise of Ramasamy, this defendant and 2nd defendant reconstituted 4th defendant partnership firm as per deed of partnership dated 1.10.2004. The 1st defendant was constituted by the 2nd defendant and his father Ramasamy. This defendant and the 2nd defendant D-2 along with their children entered in to and re-constituted the Firm M/s. Morvi Export on 01.10.2004. It is further submitted that the above two firms had account with the applicant bank more than 20 years. During 2005 for developing the business the said two firms availed credit facilities viz., packing credit Limit with the Applicant Bank. There are 6 immovable properties were given as collateral securities and the 2nd defendant and this defendant had created equitable Mortgage over the said properties in the favour of the Applicant bank during the year 2005.

It is also submitted that totally 6 items of properties were mortgaged in the year 2005 with the Applicant Bank for the financial facilities provided for the firms. Previously (Now) few of the properties were under mortgaged with the Applicant Bank got released as mentioned in the schedule A below. Item Property No Name of the property Extent Acres Status I

Ramtextiles (SF No: 1931,1932,1927,1928,1929) 0.59 Items no 1 to 3 properties presently owned by D3 virtue of Settlement deed no:4373/2010. Mortgage with the bank.

Not released I

Morvi Export (SF No: 1952,1954,1944) 2.31 I

S.R.Manickavasagam (SF no:1930/1951 1933/3) 0.86 II

Gandhipuram building (5600 Square feet) S.F.No. 183/204/1 block no:4 ward no:3, Karur

Released

Sold by D3 being owner of the property by virtue of settlement deed no:4372/2010. Sold with the consent of bank on 29.03.12 III

Aravakurichi 9.4 Acres (9.41 Acres)-Poongambadi 9.41 Released sold by D3 being owner of the property by virtue of settlement deed. Sold

Item Property No Name of the property Extent Acres Status with the consent of bank on 16.10.10 IV

Aravakurichi 39 Acres (39 Acres) 39.0 Released and sold by D2

4.4. It is further submitted that even prior to the above mentioned sale the properties mentioned 1 to 5 to the above schedule had got conveyed to the 3rd Defendant by virtue of Settlement Deed No. 4373/2010, 4372/2010, 1545/10 of SRO, Karur West on 03/05/2010. Out of the above properties property Nos. 4 & 5 were sold by this defendant with the consent of the Bank and amounts deposited to loans upon sale of the aforesaid properties which got released. Likewise, Property No. 6 retained by 2nd Defendant was also sold with the consent of the bank and amounts deposited. The available stock was also caused to be sold with the consent of the Bank and amounts got deposited. The loan of 4th defendant got closed. In course of time all together an amount of Rs.30.29 Crores had got deposited in the account of both 1st defendant and 4th defendant between the period 2009 to 2013 for clearing the alleged debt. Whereas in the account of 1st defendant an amount of Rs.13.93 got remitted. The payments made as above would demonstrably establish that the applicant bank have substantially gained and booked heavy profit in the transaction had with 1st and 4th defendant. The details of the payment above mentioned is shown in the table below. Total amount deposited to Applicant Bank through Ramtextiles-D4 and Morvi export- D1 current account from the date of company closed) Oct 2009 to Feb 2013. At the time of closure due with bank Rs 23.95 crores.

Particulars Amount 1 Amount deposited to the bank for D1 and D4 from the date of closure of the account (Oct 2009 to 2011) 16,36,57,062.93 2 After NPA amount deposited in to D1 Morvi export PCL loan (2011 to 2012) 9,93,28,885.58 3 3rd party deposited amount Rs.4.00 crores to D1 (Nov 2012 to Feb 2013) 4,00,00,000.00

TOTAL AMOUNT PAID 30,29,85,948.61

Totally Rs.30.29 crores was Paid to applicant. Now due with bank Rs.49 lakhs only.

4.5. It is further submitted that significantly a letter was communicated on 23.10.2009, and 15.12.2009 to the Applicant Bank by 2nd defendant informing that the operation of the concerns is stopped due to family dispute and acknowledged due with bank Rs.23.95 crores. This Defendant is the wife of the 2nd Defendant and stated to live separated from the 2nd Defendant along with their two children from December 2008 onwards due to serious difference of opinion between them. Thereafter upon mediation D2 and this defendant reconciled and started to live

together from Dec 2009. After these developments the parties decided to some how close the liability with the bank and accordingly the properties as mentioned above where sold with the consent of the bank and amounts were deposited to the bank.

4.6. It is also submitted that unfortunately again disputes cropped up between D2 and this defendant and the relation between got strained from April 2012. Consequently, D2 and this defendant started to live separately. This defendant is presently residing at her ancestral house at Erode. Later on innumerable occasions it was informed to the Applicant Bank that this Defendant had left the firm on 01.04.2009 and the 1st and 4th Defendants are proprietary concerns of the 2nd Defendant. However strangely, the Applicant Bank is even now treating the above defendants as partnership firms.

4.7. It is further contended the statement under paragraph 5 (i) of the OA regarding the constitution of the Applicant Bank and the representing capacity of its Branch Manager at Karur are to be put to strict proof. The statement made in Paragraph No.5

(ii) that the 1st & 4th Defendants are partnership firms is absolutely false and hence denied. It is reiterated that the above Defendants continued as a partnership firm only upto 01.04.2009, on the above date the above firms got dissolved by virtue of registered dissolution deeds and have become proprietary concerns through operation of law. It is further stated that the 1st Defendant as a partnership firm in which this Defendant was also a partner had applied to the Applicant Bank in the year 2005 for packing credit loans (PCL) for facilitating exports of its products. The above facility got enhanced in the year 2008. This Defendant apart from being a partner of the firm during the period had also stood as a guarantor for the PCLs taken for the above mentioned business purposes. The statement of the applicant bank in the OA that various other credit facilities apart from PCLs were provided to the 1st Defendant is absolutely false and hence denied. The Sanctioned letter dated 08.09.2008 produced by the Applicant Bank itself would establish that the loan sanctioned was strictly confined to and as against PCL/orders. Even though 16 crores was sanctioned as an outer limit but never enhanced, the PCL was supposed to be individually sanctioned and disbursed on case to case basis strictly upon submission of export order copies followed by separate contract being executed between the Applicant Bank and the 1st Defendant (as clearly referred in the statement given by the Applicant Bank) and each PCL was to be treated as separate loan Account.

4.8. The Applicant Bank has produced a statement of current Account which is merely a bare statement of all the transactions they claim which have transpired with the 1st Defendant and the said statement of Account do not reflect the details of any loan accounts. The above statement of Accounts is merely reflecting the transactions the 1st Defendant had in their regular course of business. Therefore, the above current account statement cannot be relied upon to raise any claims. The attempt of the Applicant Bank seems to plainly fool and mislead this Hon’ble Tribunal and this Defendant. The Applicant Bank in the contrary ought to have produced the account statement of all the PCLs, especially since the loan arrangement between the parties was with respect to PCLs only. However, this Defendant is producing the alleged statement of account of 28 PCLs as provided by the applicant bank which remained outstanding when the account became NPA. The above documents would evidently show that only 4 PCLs are remaining as outstanding with an alleged amount of Rs.49,38,274 as due. The details of all the 28 PCL loans allegedly due is produced here under in the Table.

4.9. The statement made in paragraph No.5 (iii) of OA is false and unacceptable. The facts explained above would clearly answer the fallacy of the above statement. In the present proceedings in the form of O.A. it is the bounden duty of the Applicant Bank at the first instance to prove their case. When the said position being so, the Applicant Bank has vaguely mentioned that a loan amount was sanctioned on 11.09.2008 through various facilities and it is also stated that certain documents were executed on the said date. The Applicant Bank in the contrary was supposed to mention in a crystal clear manner about a) each and every credit facility provided to the 1st Defendant supported with the copy of individual contracts b) the nature and characteristics of a PCL, c) the statement of accounts of each and every such PCLs,

d) the date on which each and such packing credit loans were actually released, e) the details with date about which all of such PCLs were paid/cleared together with the details of outstanding PCLs taken by the 1st Defendant during the course of operation, f) the rate of interest periodically charged by the Applicant Bank for the amounts advanced, g) details regarding other heads of claims based on which alleged interest or penal interest is claimed upon the outstanding loan laying as NPA culminating into the claim based on which the present O.A. is filed etc. The applicant Bank has miserable failed to provide any such relevant mandatory details to prove their case.

4.10. Further this Defendant is seriously disputing the current claims and for the said reason the aforementioned details is to be furnished in the present O.A. by the Applicant Bank. At any rate this O.A. in its present form is not maintainable in law and is liable to be rejected by this Hon’ble Tribunal absolving the liability of this defendant as a guarantor.

4.11. Further the statement made in paragraph No.5 (iv) of the OA with respect to various documents executed by the Defendants for the credit facility availed by the

1st Defendant are to be put to strict proof. The statement made in paragraph No.5 (v) is vague and per se to be rejected. There is no statement of account to substantiate the claim of Rs.9.81 Crores as on 28.11.2016 which is allegedly outstanding and there is absolutely no details regarding the alleged ‘various facilities’. The rate of interest even as per the alleged Loan agreement produced by the bank themselves is minus 3% from PLR under normal condition and Plus 3% from PLR when the account becomes overdue. Therefore, the rate of interest mentioned as 17% is absolutely wrong, misleading and false. Interestingly under the head repayment scheduled it is innocuously mentioned as ‘on demand’, which under any circumstances is to be properly explained with proof.

4.12. The statement made in Paragraph No. 5(vi) of OA is absolutely false and hence denied. The statement that the Defendants had availed the entire sanction limit and had not chosen to repay the drawn amount is absolutely false and denied. As per the audited statement of calculation done by this Defendant out of 48 PCL loans availed for Rs.16.38 crores from 12.03.2009 to 15.10.2009, 20 number of PCLs were cleared by effecting payments to the tune of Rs.5.93 crores. Out of 48 PCL Loan 20 PCL loans were cleared prior to declaration of the account as NPA. Subsequently 28 PCL loans become NPA. Applicant bank issued Demand notice to 1st defendant under SARFAESI Act 13(2) No. 3642/ROCH/RECY/2010 dated 15-10-2010 with due amount of Rs.11,08,19,798/- as on 30.09.2010. After NPA out of 28 PCLs allegedly due 24 PCLs were cleared by payment of Rs.13.93 Crores which also happened on account of sale of mortgaged movable and immovable assets. The applicant have exorbitantly collected amounts even while adjusted in the above 24 loans after NPA. At any rate what remains allegedly due is the amount payable on account of 4 PCLs which remains outstanding as per the accounts of the bank. The statement of account given by the applicant bank evidencing closure of 24 PCLs after declaration of account as NPA and showing outstanding Rs.49,38,279/- against only 4 PCLs is produced along with this written statement. Further the Applicant Bank had deposit of sum of Rs.70,00,000/- stands credit in the name of D4 who is guarantor for the above liability for the 1st defendant. So, if the deposit amount of Rs.70,00,000/- is adjusted towards the above said due amount of Rs.49,38,294 payable by the 1st defendant, thereafter there is no due payable by the 1st defendant with regard to PCL loans of M/s. Morvi Export, so the Applicant Bank is liable to return all the title/security documents to this defendant being present title holder and release the properties from the mortgage.

4.13. The applicant bank have not conclusively explained the manner in which their claim in Rs.9,81,33,253 is based. The statement of account produced by applicant bank is that of current account statement which reflects an amount of Rs.34,47,822

as payable as on December 2016, the basis on which such a calculation made is not at all explained. The Document in page number 294 of the paper book mentions about 'unrealized interest head kept separately while adjusting the principal amount upto 2013'. The above description is misleading as evident from document itself, the statement thus mentioned reflects accounts from April 2013 and apparently do not contain any information about the alleged unrealized interest upto 2013. Further the manner in which or from which source the aforesaid amount of Rs.1,10,43,744 have emanated is not explained, no statement of account regarding the alleged debt and calculation of the aforesaid amount is put forth. The certificate issued under section 2(3) and 8 of the banker's books evidence act do not match with the entries above mentioned since the above calculation as it appears do not reflect in the system. The above account statement seems to be fabricated and false document manually prepared. The claim made based on the above head as reflected in 294 and 294 of the paper book are without any bases and liable to rejected.

4.14. It is further stated that the certificate under banker’s evidence act is certified by the senior branch manager of the applicant bank. It is mentioned in the certificate that 'the penal interest not charged and same not capitalized in the account' whereas page no 296 is the claim statement of penal interest forming part of the alleged statement of account. It is mentioned as '2% Penalty for un-paid PCL upto March 2013' where as the statement reflects PCLs from April 2013.In the instant case all of a sudden without any explanation about the prior calculation or without any accounts an amount of Rs.56,96,111/- is reflected as amount due as on April, 2013 is penal interest. Further the Applicant Bank proceeds to calculate interest on the said amount after capitalization of the amounts in clear violation of law. The conduct of the Bank loudly explains the illegal act perpetrated by them even against their own certification with a deliberate intention to fool and mislead this Hon'ble Tribunal. Appropriate Criminal action is to be initiated against the concerned officials of the Applicant Bank in proceeding to openly given false certification with an intention to mislead and effectively cheat this Hon'ble Tribunal. As such the applicant bank is not legally justified in claiming such amount and the aforesaid claim is liable to be rejected.

4.15. It is also submitted that the applicant bank in page no 298 mentions about PCL sanctioned as per DRT without any explanation what so ever. It seems that the applicant bank intends about the order passed S.A. No. 91/12 of DRT-2, Chennai. The above SA was filed by a 3rd party claiming right based on alleged agreement for sale executed by them with the 2nd defendant and who at the time was not the title holder of the properties covered by the aforesaid sale agreement. Initially by virtue of order passed DRT 2 chennai the above 3rd party applicant was directed to pay all together an amount of RS 4.00 crores to be credited to the loan account of the 1st Defendant. Accordingly, the amount was deposited and credited into the loan account. Thereafter the Hon'ble tribunal upon finally hearing the matter dismissed the claim of the 3rd party applicant in the above matter and preciously have given the following direction to the applicant Bank regarding return of the above deposited amount "Therefore, the applicant has to get back the deposited amount of Rs.4 Crores only from R2", the 2nd respondent R2 in the above proceedings is the Applicant bank and as such the Applicant bank is alone liable for the aforesaid 4 Crores. The Applicant Bank in the absence of any specific order or direction is not supposed to claim the above amount from this Defendant. The basis and manner in which 'PCL sanctioned as per DRT' was opened as mentioned under page 298 of the paper book is to be clearly explained by the applicant bank especially since there is no such orders to sanction a PCL passed by this Hon'ble Tribunal. Further there is no explanation regarding PCL Number, sanction order, export order etc. forming the basis of the alleged PCL.

4.16. It is also submitted that the statement shown in pg 299 of the paper book is beyond any kind of understanding and it is for the applicant bank to explain the manner in which such claims are made. In this statement claims are on various heads i.e. PCL unrealized interest from April 2013 Rs.2.04 crores not explained, Overdue interest charged not explained, PCL sanctioned as per court order not-explained, the loan sanction letter itself says that the interest of subvention as per the scheme stands with drawn from 01.10.2008., if the position being so there is absolutely no justification to claim any such amount on the above head. Likewise, an amount of Rs.34,56,196/ is claimed under the head drawn balance in current account. It is beyond any prudent persons understanding to conceive the logic of debiting current account with balance due when it is established position that the current account only reflects the regular transactions and there is no provision to provide advance from the current account.

4.17. It is futher submitted that the statements made in paragraph 5(vi) that the entire amount covered by the sanction limit was availed by the Defendant is absolutely false. The further statement that the amount thus availed was not repaid is also absolutely false. The statements made in paragraph no 5 (vii) are without any merit and improperly fashioned. Initiation of proceeding under SARFAESI act is always the descrition of the Bank. This defendant has continuously disputed the amounts claimed by the applicant bank since made erroneously. The manner in which the applicant bank proceeded to initiate proceeding under SARFAESI act against the properties owned by this defendant was seriously disputed and challenged by filing S.A.No.182/15, from which Writ petition No.20842/15 was filed challenging an order passed by the DRT-Madurai in refusing to appoint advocate commissioner in demarcating the immovable property. It is made clear that the amounts claims by the applicant bank was never admitted at any point of time and was always put under dispute. The secured property against which the Bank is proceeding is at present owned by this Defendant, this Defendant is not in good terms with her husband 2nd Defendant and she along with children are living separated from the 2nd Defendant. The 2nd Defendant in collusion with the Applicant Bank and a third party company who was the Applicant in S.A. No. 96/2012 was attempting to grab away the mortgaged property behind the back of this Defendant. The communications/admissions from the side of the 2nd Defendant are with malicious intention to grab away the property in collusion with Applicant Bank and third parties and therefore are not binding up on this Defendant.

4.18. The applicant bank has committed fraud and misrepresentation in the transaction with the defendants. The total remittance made to 24 PCL loan accounts out of 28 PCL loan accounts which remained outstanding as on the date of declaration of the accounts as NPA on 07.04.2010 is an amount of Rs.13.93 crores. However, the counter affidavit filed in S.A. No. 96/12 before DRT-2 Chennai on 13.03.2013 in paragraph 11 it is stated that only an amount of 11.05 Crores is remitted between the period 20-06-2012 to 25-02-13 whereas between said period an amount of Rs.12.08 crores were actually deposited. The above facts evidence from the details account statement of PCL provided by the applicant bank. Therefore, there is a difference of Rs.1,03,28,885 concealed by applicant bank which needs to be explained. It is evident from records that the Applicant Bank have illegally opened current account 63611630000032 on 28.09.2012 and routed the amounts through bogus accounts on 28.09.2012, 03.10.2012 and 27.11.2012 without any mandate. If the amount credited was correctly shown as 12.08 crores as on 25.02.2013 the alleged outstanding due would have been Rs.49 lakhs instated of Rs.1.45 crores as claimed by the applicant bank in the above DRT proceedings. Significantly it is admitted fact that there is deposit of Rs.70 lakhs in the name of D4 and this amount ought to have been adjusted to wipeout entire liability and release the property of this defendant. The applicant bank has misrepresented and committed fraud on the Hon'ble High Court and this Hon'ble Tribunal in Writ Petition No.35198/12 and S.A.No.96/12.

4.19. In the above context it is respectfully stated that certain observations touching upon the scheduled properties were made in a previous proceedings by the Hon'ble High Court i.e. W.P. 35198 of 2012 being influenced by the misrepresentations and fraud committed by the Applicant Bank, 2nd Defendant and a third party company. The Judgment as mentioned above got to be passed primarily without considering or appreciating the fact that this Defendant was the absolute title holder and also upon believing the false statement made by the Applicant Bank regarding the alleged substantial payment made by a third party company relying upon the above mentioned agreement for sale in which this Defendant was not a signatory while the above agreement itself in clear terms admits that this Defendant is the title holder. The Applicant bank had also misrepresented about the balance outstanding at the said point of time. In short the Defendants and others had committed fraud upon the Hon'ble High Court by giving false statements as mentioned above and consequently the above writ petition was dismissed recording the availability of an alternate remedy

to the Plaintiff to the challenge the auction sale notice. This Hon'ble Tribunal thereafter considered the claim made by the third party in S.A. No. 96/2012 based upon the alleged agreement of sale and was pleased to reject the said claim. As such the claim raised by the 3rd party do not subsist as on date and even the contextual relevance of the above Judgment do not remain.

4.20. This defendant an account of illegal proceedings initiated by applicant bank in proceeding with the sale of the immovable properties owned by her and currently under mortgage had filed SA 182/15 challenging the sale. The real intention of the bank was not that of recovering the legally enforceable debt due to them but in the contradictory, they had intention to grab the immovable property of this defendant. And was accordingly attempting to proceed against whole of the assets in an illegal manner.

4.21. This defendant had obtained the copy of current account statement for the period from between 01-04-2011 to 08-02-2015 supplied by the bank. The above account statement was given to the auditor and in the month of October 2015, this defendant came to know through Auditor that a fresh loan PACKING CREDIT Loan No: 017PCLB143300001 has been sanctioned to the tune of Rs.4,00,00,000/- by the applicant bank to 1st defendant on 26.11.2014. It is pertinent to note that already the account of the 1st defendant D1 has been declared as NPA on 15-10-2010. That being so, it was impossible for the applicant bank to sanction any loan what so ever to 1st defendant. Now the applicant bank claims that the above PCL loan was created as per the direction of this Tribunal in SA96/2012, however there is no such direction or order passed by the tribunal. At any rate the mortgaged properties now under the ownership of this defendant can't be consider as a security for the above loan mentioned since this defendant can't be considering as guarantor for the above alleged new loan.

4.22. The alleged sanction of contract on 26.11.2014 contract no: 017PCLB143300001 the fresh PCL loan of Rs.4,00,00,000/- to the 1st defendant by the applicant bank is illegal and unlawful and it will not bind this defendant or her properties (i.e.) petition mentioned properties. The applicant bank in opening a fresh PCL loan in the above manner and claiming that the said account has been opened as directed the by this tribunal has committed fraud upon the court. This defendant had also preferred a suit as O.S. 91/2016 before sub-ordinate court Karur against the fraud committed by the applicant bank and others.

4.23. It is further submitted that this is the case in which the loan account was declared as NPA as early as on 07.04.2010. The bank did not take any step until 15.10.2010 and only on the above date that notice under 13(2) of the SARFAESI Act was issued. There after only on 27.08.12 possession under 13(4) of the SARFAESI Act was taken. In the meanwhile, after declaration of NPA against an alleged outstanding of Rs.11.08 crores an amount of 13.93 crores was already deposited by 25.02.2013 which included 4 Crores remitted by 3rd party as per the order in S.A. No. 96/12 which got adjusted in closing 24 PCLs out of 28 PCLs. As on 25.02.2013 the amount outstanding on 4 PCL loans which remained payable is Rs.49,38,279 and the aforesaid amount is the only amount legally liable to be payable to the Applicant Bank.

4.24. It is admitted position that the 4th Defendant is a guarantor. It is also admitted in the written statement filed in O.S.No. 91/2016 karur that an amount of Rs. 70 Lakhs with interest from the date of deposit is laying in the Account of the 4th Defendant. When the alleged interest charged by the Applicant Bank is 17%, what prevented them to adjust the aforesaid 70 Lakhs with interest laying in the Account of 4th Defendant immediately after initiation of the proceedings under SARFASI. The above position would make the Applicant Bank not liable to claim any interest of 70 Lakhs as that has been claimed from the first opportunity they obtained to recover the said amount to be adjusted to the loan Account. The above position is so when the 4th Defendant and 1st Defendant were functioning as proprietary concerns of the 2nd Defendant from 01.04.2009 and is legally to be treated as one and the same. It is therefore clear that the applicant bank is not justified in any manner what so ever to claim the amount as has been claimed. Besides adjustment of the above amount would wipe out the whole of the debt lying as outstanding as mentioned above.

4.25. It is also submitted that the various instances as narrated above clearly would depict several instances of serious malpractice in accounts and fraud committed by the applicant bank. This defendant is filing an audited report of the statement of the account which got prepared with the available documents in hand to give a primary picture that the accounts have been seriously manipulated. However only on an elaborate through inspection of the accounts available with the Applicant Bank through an independent audit that full picture of malpractice committed by Applicant Bank could be brought out. A separate affidavit and petition is filed along with this written statement seeking appointment of an independent auditor to conduct a thorough audit of the account statement maintained by Applicant Bank in relation with the transactions with the defendants.

4.26. This defendant further submits that the applicant bank have taken a physical possession of the immovable assets now owned by this defendant on 27.08.2011 and are in possession and control of the item No.1 property in Document No.12 possession notice in the paper books. In fact item No.2 property in the above possession notice got sold by this defendant in concurrence with the Applicant Bank and sale proceeds were deposited into the loan account. The item No.1 property above mentioned do have an RCC framed Structure with total built up area 189838.07 sq. feet, computers, other utensils etc. The Applicant Bank is debiting an amount to the tune of Rs.78,000/- per month towards up keeping of the promises. The above amount charged per month is itself unconscionable, exorbitant and against all prudent norms. The competitive quotations obtained from two agencies for up keeping the subject premises is produced along with the written statement.

4.27. It is also submitted that Most importantly the building in the present form has got extensively damaged and in dilapidated condition. Huge amount would be required to be spent to make the structure in the condition as it was at the time when the bank took possession of the promises. Further the computers, other utensils etc. available in the premises is known to become either damaged or theft. The conduct of the bank in not up keeping the building in a good condition is violation of Rule 8

(3) of the security interest enforcement rules 2002 under SARFAESI Act. The bank has mischievously acted in spite of the fact that they are bound to be responsible to up keep the building as mandated under law. The act of the bank is more aggravated considering fact that substantial amount is being illegally utilized for up keeping the building. The above aspects are to be demonstrated and brought on the record before this Hon'ble tribunal, to assess the extent of damages and to estimate the amount required to be spent to retrieve the building to its position when the bank had taken possession of the same. To achieve the above object a separate petition is filed to appoint an expert Engineer to access the extent of the damage caused to the building compared to the position the building remained at the time when the physical possession was taken by the Applicant Bank. The above position also would disentitle the Applicant Bank to claim any amounts they claim to have spent towards up keeping of the building.

4.28. Further submitted that as per the provisions of SARFAESI the Applicant Bank always had an option to utilize the buildings, other utensils etc. for generating income and make it possible to realize the alleged amounts due, no such attempts were made in this direction and in the contrary the whole thing without any kind of up keeping got damaged. At least the minimum income the Applicant Bank would have certainly generated out of the property under their possession for such long period of time is required to be assessed and adjusted/recovered.

4.29. The statement made regarding details of the mortgage under paragraph 6 is to be strict proof. The further statement regarding the amount due as on 28.11.2016 is incorrect, absolutely false and hence denied. The claim that the alleged statement of account is duly certified in proper manner under banker’s book evidence act is absolutely false. The reliefs sought are also liable to be rejected.

4.30. This defendant submits that the alleged sanction of PCL (017PCLB143300001) contract on 26.11.2014 after NPA, being fully aware that the fraudulently created PCL could not be covered by the earlier security and demand notice: 3642/ROCH/RECY/2010 dated 15-10-2010, the applicant Bank nonetheless has gone on to claim the outstanding due as Rs.9,81,33,253 crores as on 28.11.2016 for

the demand notice 3642/ROCH/RECY/2010 dated 15-10-2010. To substantiate its claim, Applicant Bank has enclosed a print out in the OA claiming it to be the computer generated account statement printout (OA typed set at page No:294-300). Applicant has certified that it was stored in the bank database server and has claimed it as authentic account statement under section 2(3) and 2(8) of the banker's book evidence act 1891 as amended by Act No.21 of 2006.

4.31. It is submitted that a closer look upon the alleged statement, it can be seen that the above account statement printouts (OA typeset at page No:294-300) are not taken from the Bank server. It is fabricated and manually entered into a computer (without loan number), then printed out and submitted to this Tribunal. It reveals the applicant Bank’s malafide intention to mislead this Tribunal and to somehow obtain the recovery certificate. Applicant bank has submitted only the current account statement from the bank server and has not submited the real loan account of Morvi export NPA as per 3642/ROCH/RECY/2010 dated 15-10-2010. The applicant bank have clearly shown their fraudulent intentions by these blatant misrepresentations to this Hon’ble Tribunal in their latest attempt to grab the property and to make unlawful gains at her cost.

4.32. This defendant further submits that the outstanding due with applicant bank become Rs.49,38,274/- as on 25.02.2013 which is less than 20 % of the total due amount of Rs.14,42,67,160/- claimed. Thus the applicant bank ought not have invoked the SARFAESI ACT by above demand notice 3642/ROCH/RECY/2010 dt 15.10.2010. In this context under Section 31(j) of the SARFAESI Act, any amount due, which is less than 20% of the principal amount and interest thereon, as the case herein, is not recoverable under the provisions of the SARFAESI Act. Interestingly the Applicant Bank had a deposit of Rs.70,00,000/- with interest in the credit of D4 who is the guarantor. So, if the aforesaid deposit amount was adjusted towards the above said due amount of Rs.49,38,294 payable by the 1st defendant no due would have remained payable by the 1st defendant with regard to PCL loans of M/s. Morvi Export and this defendant’s properties (i.e.) the suit properties which were offered as security would have got discharged. This defendant is therefore not liable to pay any amount to the applicant bank and at any rate the present O.A. is not maintainable in law and is liable to be rejected by this Hon'ble Tribunal. Hence, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the above O.A 1277 OF 2016 of the Applicant with heavy costs and thus render justice. The defendant no.3 has submitted the following documents in support its claim in the OA, which are as follows:

List of Documents

S. No. Date Description of Document Exhibit

19.04.2006 Second/Subsequent Equitable Mortgage of D4 Properties Ex.No.B-01

19.04.2006 Second/Subsequent Equitable Mortgage of D1 Properties Ex.No.B-02

19.04.2006 Second/Subsequent Equitable Mortgage of D2 Properties Ex.No.B-03

22.02.2007 Second/Subsequent Equitable Mortgage of D4 Properties Ex.No.B-04

22.02.2007 Second/Subsequent Equitable Mortgage of D1 Properties Ex.No.B-05

23.03.2007 Letter of Loan Sanction for ₹6.00 Crores to D4 – Ram Textiles Ex.No.B-06

11.09.2008 Letter of Loan Sanction for ₹6.00 Crores to D4 – Ram Textiles Ex.No.B-07

01.04.2009 Partnership Release Deed – D1; D3 relieved from D1 Ex.No.B-08

01.04.2009 Partnership Release Deed – D4; D3 relieved from D4 Ex.No.B-09

23.10.2009 Form-A of D4, M/s. Ram Textiles Export, issued by Registrar of Firms Ex.No.B-10

23.10.2009 Form-A of D1, M/s. Morvi Export, issued by Registrar of Firms Ex.No.B-11

02.04.2009 3rd Defendant's Letter to Bank informing her retirement from both firms D1 & D4 Ex.No.B-12

17.07.2022 Bank's Computer Screenshot of Customer Portal showing Morvi Export as Proprietorship Ex.No.B-13

13.02.2013 Applicant Bank filed Counter Affidavit in W.P. No.35198/2012 Ex.No.B-14

23.10.2009 Letter to Bank by D2 informing that the concern was closed Ex.No.B-15

15.12.2009 Letter to Bank by D2 informing that debt due to Applicant Bank was ₹23.95 Crores Ex.No.B-16

03.05.2010 Registered Settlement Deed in favour of 3rd Defendant, Doc. No.4372/2010, SRO Karur, with English Translation Ex.No.B-17

03.05.2010 Registered Settlement Deed in favour of 3rd Defendant, Doc. No.4373/2010, SRO Karur (3 items of properties), with English Translation Ex.No.B-18

03.05.2010 Registered Settlement Deed in favour of 3rd Defendant, Doc. No.1545/2010, SRO Aravakurichi, with English Translation Ex.No.B-19

18.11.2010 Applicant Bank Loan Discharge Receipt, SRO Aravakurichi, Doc. No.3902/2010, with English Translation Ex.No.B-20

29.03.2012 Applicant Bank Loan Discharge Receipt, SRO Karur, Doc. No.2594/2012, with English Translation Ex.No.B-21

07.08.2012 Legal Notice to Applicant Bank by D3 cautioning Bank not to hand over title deeds to anyone other than her Ex.No.B-22

01.10.2014 Order Copy in S.A. No.96/2012, DRT-II, Chennai Ex.No.B-23

15.10.2010 Demand Notice under Section 13(2) of SARFAESI Act to D1 – Morvi Export; outstanding due ₹11.08 Crores Ex.No.B-24

15.10.2010 Demand Notice under Section 13(2) of SARFAESI Act to D4 – Ram Textiles; outstanding due ₹2.09 Crores Ex.No.B-25

16.01.2013 Bank GM Letter to 3rd Defendant stating outstanding dues of D1 as ₹4.84 Crores as on 31.12.2012 Ex.No.B-26

11.08.2023 Bank GM Reply Letter to Police stating D1 repaid ₹14.54 Crores Ex.No.B-27

04.01.2012 Bank's Statutory Auditor Report FY 2011–12; D1 Book Balance ₹10.80 Crores as on 31.12.2011 Ex.No.B-28

S. No. Date Description of Document Exhibit

05.10.2012 Bank's Statutory Audit Report for FY 2012–13 (Quarter Q1 and Q2) Ex.No.B-29

10.04.2013 Audit Reports for FY 2012 to 2019 Ex.No.B-30

19.11.2022 Applicant Bank Letter to Police furnishing computerized Bank Account Statement of D1 – 28 PCL loan accounts Ex.No.B-31

07.04.2023 Auditor Report Letter to Police regarding audited accounts of Morvi Export Ex.No.B-32

Details of D1 and D4 Term Deposit Accounts and deposited amount of ₹1.04 Crores Ex.No.B-33

30.01.2015 Applicant Bank Letter to 3rd Defendant informing that ₹70 Lakhs Fixed Deposit is held in D4 Ex.No.B-34

04.12.2019 Proof Affidavit filed by Applicant Bank before District Consumer Disputes Redressal Forum in C.C. No.6/2019 Ex.No.B-35

07.03.2019 Applicant Bank Final Audit Report – reflected 4 PCL loan due as NIL balance Ex.No.B-36

22.06.2022 Bank Letter to Police – 4 PCL Loan Account Statements Ex.No.B-37

11.10.2012 Sale Notice Ex.No.B-38

05.12.2017 Decree Copy of HMOP in Subordinate Court, Erode Ex.No.B-39

06.12.2012 Legal Notice by 3rd Defendant to GM of Applicant Bank Ex.No.B-40

01.07.2013 RBI Guidelines – Foreign Export Credit (Packing Credit Loan) Ex.No.B-41

03.12.2016 Computerized Loan Account Statement for New Loan of ₹4.00 Crores to 1st Defendant (A/c No.017PCLB1433000001) Ex.No.B-42

13.09.2023 Chargesheet filed by EOW Police Inspector before CJM Court, Karur (C.C. No.255/2024) Ex.No.B-43

03.06.2024 List of Documents produced by Inspector of Police, EOW, Karur in Chargesheet (C.C. No.255/2024) Ex.No.B-44

07.04.2010 to 31.03.2013 Date-wise repayment details of 28 PCL loan account from NPA stage till demand notice and 15.10.2010 to 31.03.2013 Ex.No.B-45

07.04.2022 Computerized Statement of Account – Current A/c No.63611630000032 (M/s Morvi Export) Ex.No.B-46

01.03.2025 Bank Reply Letter to Police (Annexure-5) Ex.No.B-47

13.04.2017 Bank Statutory Audited Report FY 2016–17 (NPA date: 15.12.2014) Ex.No.B-48

07.03.2018 Bank Regional Manager RTI Reply Letter to 3rd Defendant Ex.No.B-49

30.06.2018 Bank GM Published List of Suit Filed and Non-Suit Filed Accounts of ₹1 Crore and above Ex.No.B-50

12.04.2018 Bank Branch LFAR Audit Report 2014–15; Auditor Certified Branch Computerized CBS – No Manual Books Ex.No.B-51

05.05.2021 RBI Reply Letter to 3rd Defendant Ex.No.B-52

27.05.2021 M/s Morvi Export Credit Report – CRIF High Mark Credit Company; Details of D1 Loans Ex.No.B-53

26.04.2022 Order of Hon’ble High Court of Madras (Madurai Bench) dismissing Quash Petition in Crl.O.P.(MD) No.7776/2022 Ex.No.B-54

17.11.2022 Order of Hon’ble Supreme Court of India in SLP No.6348/2022 Ex.No.B-55

14.07.2022 Bank GM Reply Letter to Police Ex.No.B-56

S. No. Date Description of Document Exhibit

06.10.2022 Letter by CRIF Credit Company to Police confirming 5 PCL Loan disbursed on 13.09.2019 Ex.No.B-57

16.03.2020 to 23.03.2020 Bank Final Audit Report dated 16.03.2020 Ex.No.B-58

25.12.2021 Bank Valuation Report of Properties obtained by Bank for ₹13.42 Crores Ex.No.B-59

12.03.2015 Valuation Report obtained by Bank for ₹20.00 Crores Ex.No.B-60

04.11.2022 Valuation Report of Properties obtained by Defendant for ₹56.00 Crores Ex.No.B-61

11.08.2022 Sale Notice issued by Applicant Bank showing outstanding dues of ₹19.18 Crores Ex.No.B-62

30.12.2016 Times of India Newspaper Report regarding Syndicate Bank official alleged fraud of ₹28,000 Crores in Rajasthan Ex.No.B-63

2015–2016 Annual Report of Syndicate Bank officials regarding large value fraud of ₹1,000 Crores Ex.No.B-64

14.10.2015 Bank Debt Acknowledgement signed by 2nd Defendant as Proprietor of D1 Ex.No.B-65

5. Further the defendant No3. Has filed written arguments in which she has specifically submitted:

 The defendant D3 claims that the registered gift deeds dated 03.05.2010 made her the absolute owner of the five properties, subject to the existing mortgage.  She claims that D1’s loan was fully discharged through payments of about ₹15.58 crore, with Bank audit records allegedly showing a nil balance by 31.12.2012.  She further alleges that the Bank diverted about ₹7.29 crore, including ₹2.45 crore through an allegedly unauthorized account and ₹4.84 crore to other accounts. She further alleges that ₹18.80 crore was remitted to D1’s accounts, sufficient to clear the liability. Despite the alleged repayment, D3 says the Bank continued treating the loan as outstanding and failed to release her mortgaged properties.  Further alleges that fictitious loans were subsequently created by Bank officials in 2014, 2019 and 2020, involving amounts exceeding ₹20 crore. And also she relies on the EOW investigation, charge sheet and subsequent High Court proceedings as supporting her allegations against Bank officials.  Overall D3 alleges diversion/misappropriation of funds, continuation of a discharged loan liability, wrongful retention/attempted sale of her properties, and subsequent creation of fictitious loans, despite the alleged absence of a genuine outstanding debt.

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

(i) Whether this case is maintainable:

(ii) Whether this case has valid cause of action:

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

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

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

Having heard the parties and 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 D-3, I find that the Applicant Bank, in order to prove its claim, has filed Proof Affidavit executed by one Mr. Chunchu Satyahari , who is the Chief Manager of the Applicant Bank.

He has stated in his affidavit that the defendants has availed various PCL loans 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 signed by the defendants at the time of sanctioning the loan amount, which have been marked as exhibits No. A-01 to A-17 in support of its claim in the OA. Further I find that the Applicant Bank, in order to prove its claim, has filed additional Proof Affidavit executed by one Mr. A Geethakrishna, who is the Chief Manager of the Applicant Bank on 03.10.2025 and which have been marked as exhibits No.A-18 to A-43

I also find that the defendant D-3, in order to prove her claim, has filed Counter Proof Affidavit executed by her and exhibits have been marked as Ex. No. B-01 to Ex. No. B-65

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 sum of Rs.9,81,33,253/- together with interest at the rate of 17 % p.a. with compounded monthly rests in respect of various Loans from the date of filing of Application till the date of realization with cost.

After perusal of records I find that in order to prove the case of the applicant he has filed the documents which are the Letter of Sanction dated 08.09.2008 was marked as Exhibit No.A-1. The Comprehensive Pre and Post Shipment Agreement dated 11.09.2008 was marked as Exhibit No.A-2. The three Guarantee Agreements dated 11.09.2008 were marked as Exhibit No.A-

3. The Acknowledgment of Debt and Security dated 30.08.2011 was marked as Exhibit No.A-4,and the Acknowledgment of Debt and Security dated 14.10.2015 was marked as Exhibit No.A-5. The Applicant Bank has filed the present Original Application seeking recovery of dues arising out of credit facilities sanctioned to the Defendants, together with interest and costs. In this case all the defendants have been set exparte except D-3, who has resisted the claim primarily on the various grounds which are given below:

*It is submitted by D-3 that she ceased to be a partner and has no continuing liability, loan accounts stood closed during 2012–13, that subsequent accounting entries are fabricated, and that the Bank has relied upon allegedly inconsistent statements of account and post-litigation documents. After perusal of records I find that the execution of loan documents, guarantee agreements, and creation of security interest under Ex.No.A1 to Ex.No.A11 stands duly proved and is not disputed. The borrower–bank relationship and subsisting contractual liability arising therefrom are clearly established. The acknowledgments of debt and security executed by defendant D-2 in 2011 and 2015 (Ex.No.A4 and Ex.No.A5) constitute valid acknowledgments within the meaning of the Limitation Act and extend the enforceability of the debt, thereby negating the plea of full discharge during 2012–2013. a.Regarding the alleged retirement of the 3rd defendant from the 1st defendant partnership firm, I perused all the documents filed by the applicant bank and defendant and I find that the retirement deed does not absolve her from the liabilities incurred towards the applicant bank. The liability of a partner in respect of debts and obligations incurred during the period of partnership continues even after retirement unless the creditor expressly agrees to discharge such partner from liability. The alleged retirement arrangement, if any, between the partners is only an internal arrangement and cannot affect or prejudice the rights of the applicant bank, which was not a party to such arrangement and never consented to the discharge of the 3rd defendant. And also there is no agreement of novation, release, or substitution of liability executed by the applicant bank relieving the 3rd defendant from her obligations under the loan transaction. The loan facilities were sanctioned and availed during the subsistence of the 3rd defendant's partnership, and she continues to be jointly and severally liable along with the other defendants for repayment of the outstanding dues. Any retirement deed or settlement between the defendants is not binding upon the applicant bank in the absence of its acceptance and consent. Further, if the 3rd defendant claims that she has been discharged from liability, the burden lies upon her to establish by documentary evidence that the applicant bank had expressly released her from the obligations. In the absence of such proof, the applicant bank is entitled to proceed against the 3rd defendant for recovery of its lawful dues. Apart from comprehensive pre and post shipment agreement, I find that the defendant D-3 had executed Guarantee agreement dated 11.09.2008 marked as Ex.No.A-03 which has a clause "The guarantor authorizes the borrower to execute acknowledgement of debt/liability on behalf of the guarantor and acknowledgement of debt/liability, either in writing or by part payment under the signature made by the borrower shall constitute a valid acknowledgement of debt/liability on behalf of the guarantor also." Based on the guarantee agreement, the defendant as one of the borrower cum guarantor expressly authorized the Co-borrower to execute acknowledgements of debt on her behalf. The acknowledgements dated 30.08.2011 and 14.10.2015 were executed by the defendant D-2 in exercise of that contractual authority. Therefore, those acknowledgements constitute valid acknowledgements by the guarantor herself and extend the period of limitation against her under Section 18 of the Limitation Act, 1963. The retired partner's retirement from the partnership may not by itself terminate that authority if it arises from an independent contract of guarantee. A guarantee is a separate contract from the partnership relationship. Unless the guarantee provides that the authority ends on retirement or the guarantee has otherwise been discharged or revoked, the authorization may continue. Hence this contention is not sustainable in the eye of law. b.The property in question had already been validly mortgaged in applicant bank’s favour much prior to the execution of the settlement deed by the 2nd Defendant in favour of the 3rd Defendant. Once a valid mortgage is created, the mortgagor cannot, by a subsequent transfer, settlement, gift or any other mode of alienation, defeat, diminish or adversely affect the rights of the secured creditor. Consequently, the settlement deed executed subsequent to the creation of the mortgage is subject to the Applicant Bank's prior security interest and is not binding on the Applicant Bank to the extent that it seeks to prejudice or impair the Bank's rights over the secured asset. The 3rd

Defendant, being the transferee under the settlement deed, acquires no better title than that held by the 2nd Defendant and takes the property subject to the existing mortgage in favour of the Applicant Bank. Further, both the transferor and the transferee are borrowers in the same loan account and were fully aware of the mortgage created in favour of the Applicant Bank. Therefore, the 3rd Defendant cannot claim to be a bona fide transferee without notice. The subsequent settlement deed cannot override the Applicant Bank's prior mortgage or prevent the Applicant Bank from enforcing its security interest under the provisions of the SARFAESI Act, 2002 and the applicable principles of the Transfer of Property Act, 1882. Accordingly, the settlement deed does not affect the Applicant Bank's right to proceed against the secured asset for recovery of its lawful dues. c.The 3rd Defendant has contended in her argument that the Applicant Bank had diverted a sum of ₹7.29 crores from the funds available in the account of the 1st Defendant through unauthorised accounts, as referred to in Ex.B-46, and had routed the amounts to unknown accounts. It is further contended that, despite sufficient remittances having been made towards discharge of the loan liability, the Applicant Bank had continued to project an outstanding liability by creating unauthorised accounts and fictitious liabilities.This contention has been considered in the light of the documents placed on record. On examination of Ex.B-46, it appears that, in the course of processing an One Time Settlement (OTS) proposal, a separate account was maintained for accounting and adjustment of the settlement transaction and the same is seen from the Ex.B-46 in P.No.1231 where product name of the account appears “OTS-DRT CASES”. The opening of such a separate account, by itself, cannot be treated as sufficient evidence of the creation of an unauthorised or fictitious account or of diversion of funds. The relevant question is whether the transactions reflected in such accounts were, in fact, unauthorised or represented diversion of the borrowers’ funds.

In the present proceedings, no specific documentary material has been brought on record identifying the particular transactions by which the alleged funds were diverted to unknown or unauthorised accounts, or establishing that the amounts were appropriated for the purpose unconnected with the loan transaction. Mere existence of separate accounts or accounting entries, without corresponding evidence regarding the actual movement and ultimate utilisation of the funds, would not by itself be sufficient to establish diversion or misappropriation.

d.The 3rd Defendant has also relied upon Ex.B-43, namely, the charge sheet filed by the Economic Offences Wing Police in C.C. No.255 of 2024 before

the learned Chief Judicial Magistrate, Karur. The said charge sheet refers to allegations against certain Bank officials and other persons in relation to, inter alia, creation of fictitious loan accounts, diversion of funds, fabrication or manipulation of banking records and dealings concerning the mortgaged property.

The existence and pendency of the said criminal proceedings are not in dispute. However, the allegations contained in the charge sheet are presently the subject matter of adjudication before the competent criminal court. The mere filing of a charge sheet, though it indicates that the investigating agency has found sufficient material to place the accused persons on trial, cannot by itself be treated as a final adjudication of the allegations or as conclusive proof of the commission of the alleged offences.

This Tribunal is therefore not called upon, in the present proceedings, to determine the criminal culpability of the persons arraigned in the said criminal case. Such determination falls within the jurisdiction of the competent criminal court before which C.C. No.255 of 2024 is pending. Any finding in the present proceedings must necessarily be based upon the pleadings, documents and evidence produced before this Tribunal and without prejudging the issues pending before the criminal court.

The next issue is whether the materials produced in the present proceedings establish that the loan transaction itself was fictitious, fabricated or otherwise vitiated by fraud. In this regard, the Applicant Bank has relied upon Ex.A-42, namely, the communication dated 20.08.2022 from Oracle, the software service provider, explaining that the Flexcube software upgradation resulted in changes to account numbers. It is further stated that subsequent changes in the account numbers occurred following the amalgamation of Syndicate Bank with Canara Bank.

The Applicant Bank has also produced Ex.A-43, comprising statements relating to 4 PCL accounts, the account created for refund purposes and the consolidated statement of accounts, together with particulars of the four outstanding PCL accounts. These documents have been relied upon to explain the changes in account numbers and to demonstrate continuity of the underlying loan accounts. The change or renumbering of an account consequent upon software migration, system upgradation or the amalgamation of two banking entities cannot, in isolation, be regarded as proof of creation of a fictitious loan account. What is material is whether the underlying transactions, balances and liabilities can be traced and reconciled from the relevant banking records. On the materials presently available, Ex.A- 42 and Ex.A-43 provide an explanation for the changes in account numbers and the continuity of the PCL accounts.

It is also relevant that the execution of the underlying loan documents, guarantee documents, mortgage documents and acknowledgements of liability relied upon by the Applicant Bank has not, in these proceedings, been shown to be fabricated or otherwise invalid by sufficient evidence.

At the same time, the pendency of criminal proceedings against certain Bank officials is a matter which cannot be ignored. However, the pendency of such proceedings, in the absence of a final adjudication, does not by itself establish that the underlying loan documents are fabricated or that the entire loan transaction is vitiated by fraud. The criminal court seized of C.C. No.255 of 2024 will determine the allegations against the accused persons in accordance with law. This Tribunal, for the purposes of the present proceedings, is required to determine the claim on the basis of the evidence available before it.

It is well recognised that civil and criminal proceedings may operate in their respective fields, and the pendency of criminal proceedings does not, by itself, preclude adjudication of a civil or debt claim. The nature and standard of proof applicable in the respective proceedings are also distinct. The present proceedings are therefore required to be decided on the basis of the evidence adduced before this Tribunal and the applicable standard governing such adjudication.

Having regard to the materials presently on record, the allegation that the Applicant Bank created fictitious loan accounts or diverted amount to unknown accounts has not been established by sufficient and cogent evidence in these proceedings. The account-number changes are reasonably explained by the software upgradation and subsequent amalgamation, while the separate account maintained in connection with the OTS process cannot, by itself, establish diversion or creation of a fictitious liability.

Accordingly, while the allegations raised in the pending criminal proceedings remain subject to adjudication by the competent criminal court, this Tribunal finds that the mere pendency of those proceedings and the contents of the charge sheet, in the absence of independent and convincing evidence establishing fraud or diversion in the present proceedings, are insufficient to displace the Applicant Bank's claim founded upon the underlying loan, security and banking documents.

e.The Applicant Bank submits that, in compliance with the order of the Hon’ble DRT II, Chennai, it refunded ₹4.00 crores to M/s. Power Creating Zone Private Limited by issuing four demand drafts dated 26.11.2014, which are marked as Ex.No.A-21. Since its software did not permit reversal of an amount that had already been credited and adjusted towards the loan account, it was necessary to create a new account to give effect to the refund transaction. According to the Bank, the amount had originally been received from the proposed third-party purchaser pursuant to the interim order of the Tribunal and had been credited to the loan account of the 1st Defendant. Upon refund of the said amount, the Bank debited the loan account of the 1st Defendant, thereby treating ₹4.00 crores as again becoming due from the 1st Defendant. In view of the above facts, I find that the creation of a separate PCL account was only an accounting mechanism adopted due to software limitations in reversing an already adjusted transaction. There is no material evidence to establish that the said transaction amounted to diversion or misappropriation of funds. Hence, the allegations of illegal diversion of funds and creation of fictitious liabilities raised by the 3rd Defendant are not proved, and the explanation offered by the Applicant Bank regarding the account entries and transactions is found to be acceptable. f.The other contention by the defendant in her argument that the Applicant Bank's own audit reports (Ex.No. B-28 to Ex.No.B-30) recorded a "NIL" balance as on 31.12.2012, confirming that the PCL loan stood fully discharged and defendant claimed that the bank fraudulently fabricated documents and statements claiming amounts under various heads to claim Rs.9.81 Crores. On perusal of the loan account statements maintained by the Applicant Bank clearly shows that the loan account continuously reflected an outstanding liability and was never shown as fully discharged. The mere reference to a "NIL" book balance in certain internal audit reports cannot be construed as proof of full repayment or closure of the loan account. Internal audit reports are prepared for accounting and verification purposes and do not determine or extinguish the contractual liability of the borrower. The operative loan account statements, which constitute the primary record of the borrower's liability, consistently disclosed outstanding dues payable by Defendants. The allegation that the Bank recovered amounts in excess of the dues or intentionally withheld the secured assets despite full repayment is not supported by the documents provided. In these circumstances, it is for the Defendants, who rely upon the "NIL" entry, to establish by cogent evidence how and on what basis such entry came to be recorded and how it resulted in the discharge of the loan liability, particularly when the loan account statements continued to reflect outstanding dues. The disputes raised by the Defendant in the written statement regarding the legality, validity or propriety of the measures taken by the Applicant Bank under the SARFAESI Act do not fall within the scope of the present O.A. and cannot be adjudicated in these proceedings. Any challenge to the measures taken under the SARFAESI Act is required to be agitated in the appropriate proceedings contemplated under the said Act."

Issue No. (iv) : -

The 3rd defendant’s other contention regarding Rs.70 Lakhs depost in the name of 4th defendant is concerned, It is an admitted position that the 4th Defendant is a guarantor. The Defendant has further relied upon the proof affidavit filed by the applicant bank before District consumer Disputes Redressal forum in CC No.6/2019, wherein it is stated that a sum of Rs.70,00,000/-, was lying in the name of the 4th Defendant. The Defendant has contended that the said amount was available with the Applicant Bank based on Ex.No.B-34 and Ex.No.B-35 and could have been considered for adjustment towards the outstanding loan liability.

However, the Applicant Bank, in the pleadings and materials placed before this Tribunal, has not specifically dealt with or explained the said alleged deposit of Rs.70,00,000/-, nor has it shown whether the said amount was available with the Bank, whether any adjustment was made against the loan liability, or, if no adjustment was made, the reasons thereof. No satisfactory explanation has also been placed before this Tribunal with regard to the said amount and its effect, if any, upon the outstanding liability claimed in the OA.

This aspect assumes significance particularly because the Applicant Bank has claimed interest on the outstanding loan liability. If an amount of Rs.70,00,000/- was in fact lying to the credit of the 4th Defendant with the Applicant Bank during the relevant period, the question as to whether and to what extent the same was liable to be taken into account or adjusted against the outstanding liability would have a bearing upon the computation of interest and the ultimate amount recoverable.

In the circumstances, this Tribunal is of the view that the Applicant Bank ought to have specifically addressed the said deposit and placed the relevant account particulars and explanation before the Tribunal. In the

absence of such explanation or reconciliation, the Tribunal is unable to ascertain whether the said amount, together with the interest accrued thereon, had any bearing upon the outstanding liability claimed by the Applicant Bank.

Accordingly, the contention of the Defendant regarding the alleged deposit of Rs.70,00,000/- cannot be brushed aside without examination. At the same time, in the absence of complete documentary material establishing the precise nature, status and availability of the said deposit and the terms governing its adjustment, this Tribunal refrains from recording any conclusive finding that the entire amount was necessarily liable to be appropriated towards the subject loan liability. The Applicant Bank's failure to specifically explain and reconcile the said amount, however, assumes relevance while considering the correctness of the total outstanding amount claimed in the OA.

Further the defendant D-3 contends that the applicant bank has not conclusively explained the manner in which their claim in Rs.9,81,33,253/- is based and the applicant bank has allegedly added the penal interest to the outstanding amount and then calculated further interest on it, which amounts to capitalisation of penal interest, which is contrary to law. On perusal of the proof affidavit submitted by the applicant bank in which statement summarizes Outstanding amount of Rs.49,38,274.89p in respect of 4 PCL loans and various categories of interest and related charges on pending PCL Bills. It states that the unrealized interest on the pending PCL Bills from the date of availment up to 31.03.2013 amounts to Rs.1,10,43,744.35. It further mentions that unrealized interest for the period from 31.03.2013 to 30.11.2016 is bringing the total unrealized interest to Rs.2,04,95,543.99. The statement also records 2% penal interest on the pending PCL Bills from the date of availment up to 31.03.2013 at Rs. 56,96,111.08, while the unrealized penal interest for the period from 31.03.2013 to 30.11.2016 resulting in a total unrealized penal interest of Rs. 61,28,031.48. Additionally, it includes a difference of interest of Rs. 38,90,112.00 relating to PCL bills realized after 120 days, and notes that interest subvention received from the Government of India along with security charges amounts to Rs. 24,30,080. The statement further records that, pursuant to the Court's order in S.A. No. 96/2012, the PCL sanction amount of Rs. 4,00,00,000/- is to be returned. Interest on this amount for the period from November 2014 to November 2016 has been calculated, resulting in a total of Rs. 5,67,95,013.92. In addition, there is a debit balance in the Current Account of Rs. 34,56,196.26. Accordingly, the total outstanding amount claimed as due is Rs. 9,81,33,252.54.

However, upon examination of the material placed before this Tribunal, only two components of the Bank's claim can be said to have been satisfactorily established:

*The four PCL loan accounts aggregating to Rs.49,38,274.89; and *The amount of Rs.4,00,00,000/-, together with the interest claimed thereon.

In respect of the second component, although the Applicant Bank has quantified the amount due, including interest, at Rs.5,67,95,013.92, the documentary material relied upon by the parties does not support the said figure in its entirety. In particular, statement of accounts Ex.No.B-42 at P.No.1139 and Ex.No.A-43 at P.No.425 reflect the amount as Rs.5,41,29,529.47 upto November 2016.

In the absence of a satisfactory reconciliation by the Applicant Bank explaining the basis for the additional amount of Rs.26,65,484.45, the Tribunal is unable to accept the higher figure of Rs.5,67,95,013.92 merely on the basis of the Bank's claim. The amount established on the basis of the documentary evidence is therefore Rs.5,41,29,529.47. From perusal of statement of Accounts Ex.No.A-43, I find that the applicant bank has capitalized the penal interest in this Rs.4 Crore loan account of the defendant, which is against the policy of the Reserve Bank of India guidelines. “The Reserve Bank of India strictly prohibits the capitalization of penal charges. Under current RBI regulations, any penalty for non- compliance with loan terms must be treated as a distinct “Penal Charge” rather than added to the principal outstanding amount. This ensures that banks and NBFCs cannot compute further interest on the penalty amount themselves” The statements relied upon by the Bank in respect of other components are not sufficiently clear and self-explanatory so as to enable the tribunal to arrive at the claimed figures with certainty. The tribunal cannot merely accept an aggregate figure stated in an affidavit when the underlying account statements, period-wise calculations, rate of interest, dates of accrual, contractual basis for the charges, credits, debits, payments and adjustments are not satisfactorily demonstrated.

A claim for interest or other financial charges must be supported by cogent documentary evidence and a calculation which permits the tribunal to ascertain how the amount has been arrived at. An unclear or internally unreconciled statement cannot, by itself, constitute sufficient proof of liability. In particular, evenafter sufficient time given the applicant Bank has not placed before the tribunal sufficiently clear and reconciled material enabling the tribunal to independently verify the various amounts claimed under these heads.The tribunal therefore declines to award these additional amounts. So, I find force in the averment of the defendant and as such I find that applicant has failed to prove that total outstanding amount claimed as due is Rs. 9,81,33,252.54.

Hence the Applicant Bank's claim is therefore allowed only to the following extent:  Rs.49,38,274.89p in respect of 4 PCL Loans and  Rs.5,41,29,529.47p, (To exclude capitalized penal interest/penal charges and any interest calculated upon such penal interest/penal charges on the said amount.) being the amount established in respect of the Rs.4 Crore PCL loan account. 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 partly able to prove this case in his favour. 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. Accordingly the Issue No (i),(ii),(iii) are decided in favour of Applicant Bank and Issue No (iv) is partly decided in favour of Applicant Bank. I find that the Applicant has been partly able to prove his case and is entitled for only relief as ordered. And this O.A. is hereby partly allowed.

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 it is hereby

ORDERED

(a) i) That the Defendants are directed to pay jointly/severally to the applicant bank a sum of Rs.49,38,274.89, together with further interest at the rate of 9 % p.a. with half yearly rests in respect of PCL Loans from the date of filing of Application till the date of realization with cost within one month form the date of receipt of this order. and

ii) That the Defendants are directed to pay jointly/severally to the Applicant Bank the amount outstanding under the Rs.4,00,00,000/- PCL Loan, as established from the statement of account, being Rs.5,41,29,529.47p , the capitalized penal interest component shall be deducted from the outstanding PCL Loan amount of Rs.5,41,29,529.47p and the Applicant Bank shall be entitled to recover only the balance amount due after such deduction , together with further interest at the rate of 9 % p.a. with half- yearly rests in respect of PCL Loan from the date of filing of the Application till the date of realization with costs within one month from the date of receipt of this order. Provided, however, that while preparing the Recovery Certificate and determining the actual amount recoverable from the Defendants, the Applicant Bank shall specifically verify and reconcile the alleged deposit of ₹70,00,000/- standing in the name of the fourth Defendant, together with the interest, if any, accrued thereon, with reference to the relevant account records, Ex.No.B-34, Ex.No.B-35 and other connected documents. If, upon such verification, it is established that the said sum of ₹70,00,000/- or any part thereof, together with the interest accrued thereon, was lying to the credit of the fourth Defendant with the Applicant Bank and that, under the terms and conditions governing the said deposit and the applicable banking arrangements, the Applicant Bank was entitled to appropriate or adjust such amount towards the outstanding liability of defendants under the subject loan account, the Applicant Bank shall give due credit for the amount so established and shall not recover the same amount again from the Defendants. The corresponding interest liability shall also be recalculated to the extent necessary to give effect to such credit/adjustment.

(b) In case of default of payment by the above mentioned Defendants, the Applicant Bank is at liberty to sell the movable / immovable properties more fully described in Schedule of the original application for appropriation of sale proceeds towards the satisfaction of amount due to the Applicant Bank.

(c) If the sale proceeds are not sufficient, after defraying the expenses of such sale, for the payment of all such amounts, the defendants are jointly/severally liable to pay the amount of such deficiency with interest mentioned above until realization.

(d) Any amount remitted during the course of this proceedings shall be given due credit, to the loan account 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 PCL loans 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 P N, taken down, transcribed, typed by him, corrected and pronounced by me in the Open Court in this the 15th September, 2026.

Sd/- (SEEMA SINHA) PRESIDING OFFICER

Uploaded on 23.09.2026