CITY UNION BANK LIMITED vs Bharath Hardware and Colour World on 27 October 2026

: - FINAL ORDER- :

1. This Original Application is filed on 08.07.2020 by the applicant bank under Section 19 of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993), read with Rule 4 of DRT (Procedure) Rules, 1993, against the

Defendants 1 to 3, jointly and severally for recovery of a total sum of Rs.21,43,979/- (Rupees Twenty One Lakhs Forty Three Thousand Nine Hundred and Seventy Nine only) as follows: i. A sum of Rs.8,75,420/- due in respect of OSL Term EMI (A/c No.501812080028969) repayable together with further interest @14.25% p.a. along with penal interest @2% p.a. with monthly rests from the date of Application till the date of realization in full; ii. A sum of Rs.12,68,559/- due in respect of OSL Term EMI (A/c No.501812080044553) repayable together with further interest @14.25% p.a. along with penal interest @2% p.a. with monthly rests from the date of Application till the date of realization in full and for costs of this OA. Brief Facts of the case:

2. The Applicant submits that the application is filed within the period of limitation as prescribed under Section 24 of the Recovery of Debts and Bankruptcy Act, 1993, and the subject recovery claim falls within the jurisdiction of this Tribunal.

3. It is the case of the applicant bank that at the request of the defendants, the applicant bank sanctioned loan for business purpose in the nature of OSL Term EMI of a sum of Rs.10,00,000/- in the name of the 1st defendant on 19.06.2017. The applicant submits that above said loan was sanctioned against the security of the mortgage of the immovable property owned by the 2nd defendant described in the OA schedule. The applicant bank submits that the 1st defendant represented by the 2nd defendant as its Proprietor and the 3rd defendant as the co- obligant has availed the said loan by executing all necessary documents including Demand Promissory Note.

4. It is submitted by the applicant bank that apart from the Term Loan, the applicant bank also sanctioned another facility in the nature of secured OD of a sum of Rs.35,00,000/- in 2015. The applicant bank submits that the said facility was sanctioned against the mortgage of the property owned by 2nd and 3rd defendants at Athikkadai Village, Kudavasal Taluk, Thiruvarur. The 2nd and 3rd defendants by letter dated 10.10.2018 have agreed to continue the equitable mortgage created by way of depositing the original title deeds on 26.05.2015 for the modified facility. The applicant bank submits that in consideration of granting the credit facility, the defendants had executed loan documents for the said credit facilities sanctioned and availed.

5. The applicant bank submits that the defendants have availed the following credit facilities of business loan of OSL term EMI as per sanction dated 19.06.2017 and 19.09.2018. The defendants promised to repay the amounts availed together with interest at the rate of 14.25% p.a. in respect to both facilities or at such rates may be revised by the bank from time to time. The defendants agreed that the demand promissory note executed by the borrowers in bank favour and the agreement are to operate as a continuing security for the balance with interest thereon that may be payable to the bank. The defendants agreed that the securities held under the loans or liability of the borrowers to the bank. The defendants also in by various letters and undertaking promised to indemnify the applicant against the loss. Further the defendants also agreed to have the right to recall the entire loan amount together with interest and other charges or any part thereof withdraw the concessions if any such as reduced rate of interest in case the loan amount has been used for any purpose other than for which it has been sanctioned.

6. It is submitted by the applicant bank that the 1st defendant jointly availed the OSL Term loan facility for a sum of Rs.10,00,000/- on 19.06.2017. In consideration and to secure the same the 1st defendant rep by the 2nd defendant as its proprietor as the borrower and the 3rd defendant as the co-obligant had executed the following loan documents in favour of the bank: i. Demand Promissory Note dated 21.06.2017 executed by the defendants for a sum of Rs.10,00,000/-; ii. Application cum Undertaking for loan in Form 73 dated 21.06.2017 executed by defendants; iii. Consent letter for EMI loans vide form No.44 dated 21.06.2017 executed by defendants herein.

7. The applicant states that to secure the outstanding in the said credit facility availed by the 1st defendant from the applicant bank, the 2nd defendant had mortgage the immovable property owned by him, being all that piece and parcel of vacant plot bearing No.29 in KNR Nagar measuring an extent of 1830 sq.ft morefully described in the schedule hereunder. The mortgage was created by the 2nd defendant by deposit of original title deeds with the applicant bank on 19.06.2017 with an intention to create equitable mortgage over the same to secure the loan and the same was confirmed by Memorandum of Deposit dated 20.06.2017 registered as Doc.No.600/2017, SRO, Koothanallur,

8. It is submitted by the applicant bank that the 1st defendant jointly availed the OSL Term EMI facility for a sum of Rs.35,00,000/- on 19.09.2018. In consideration and to secure the same the 1st defendant rep by the 2nd defendant as its proprietor as the borrower and the 3rd defendant as the co-obligant had executed the following loan documents in favour of the bank: i. Demand promissory note dated 10.12.2018 executed by the defendants for a sum of Rs.35,00,000/-; ii. Application cum undertaking for loan in form 73 dated 10.10.2018 executed by defendants; iii. Consent letter for EMI loans vide form No.44 dated 10.10.2018 executed by defendants herein; iv. Undertaking letter for EMI vide Form No.174 dated 10.10.2018 executed by 2nd and 3rd defendants;

9. The applicant bank submits that to secure the outstanding in the said credit facility availed by the 1st defendant from the applicant bank, the 2nd and 3rd defendants had mortgaged the immovable property owned by them, being all that piece and parcel of vacant plot in East Street measuring an extent of 1835sq.ft comprised in survey no.60/3B1 of Athikadai Village, Kudavasal Taluk, Nagapattinam District. The equitable mortgage was created by the 2nd and 3rd defendants by deposit of original title deeds with the applicant bank on 26.05.2015 with an intention to create equitable mortgage over the same to secure the loan and the same was confirmed by Memorandum of Deposit dated 27.05.2015 registered as Doc.No.615/2015, SRO, Koothanallur.

10. It is submitted that subsequent to availing of loan, defendants were not regular in repayment of loan. The applicant bank had been reminding and requesting the defendants to pay the dues in the loan account which did not bring any response and there was default in servicing the interest, payment of agreed response and there was default in servicing the interest, payment of agreed instalments and adhering to the terms and conditions of the sanction. The dues under the said loan account remain unpaid and consequently the applicant bank had classified the same as Non Performing Asset (NPA) on 08.06.2017 as per the guidelines of Reserve Bank of India.

11. The applicant bank on various occasions had demanded repayment of the dues of which remained futile. As the dues remain unpaid the applicant bank issued a demand notice under Section 13(2) of the SARFAESI Act to the defendants for both the loan accounts on 09.07.2019 calling upon the defendants to repay the dues. The defendants failed to repay their dues. The property being all the piece and parcel of vacant plot in east street measuring an extent of 1835sq.ft comprised in survey no.60/3B1 of Athikadai Village, Kudavasal Taluk, Nagapattinam District sold for a sum of Rs.27,00,000/- and this auction sale amount was given credit to the loan account OSL term EMI 501812080044553 on 16.05.2020. Even after that the default of the borrower was continuing. Hence, the present Original Application (OA) has been filed by the applicant bank for recovery of its balance dues from the defendants.

12. After the filing of the OA, summons were sent to the Defendants 1 to 3 through Registered Post with Acknowledgment Due, which was returned with postal endorsement ‘Left without instructions’ in respect of D-1 to D-

3. Applicant Bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 29.10.2021 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 to 3 were placed ex-parte on 29.10.2021. Heard the submissions of Applicant Bank and perused the records.

13. To prove the case of the Applicant Bank, Mr. Vijay Chakravarthi, Branch Manager of the Applicant Bank, filed Affidavit by way of evidence and same was considered as evidence of AW-1 and list of documents came to be marked as Ex A-1 to A-15.

14. A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-15 evidence that the borrowal of credit facilities and execution of loan and security documents are true, in terms

of averments made in Original Application as well as Proof Affidavit filed by applicant bank establishing its claim. Applicant bank filed Statement of Accounts duly certified under Bankers’ Book Evidence Act, evidencing the amount claimed against defendants.

15. The defendants were set ex-parte on 29.10.2021, but till this day they did not take any action to set aside the ex-parte order and did not choose to contest the claim. Further, a careful scrutiny of records makes it clear that present application is filed well within limitation and this Tribunal possesses necessary and proper jurisdiction to entertain and adjudicate the claim. No oral or documentary evidence on the side of defendants are produced or filed to dispute the claim of applicant bank. Hence, it can be concluded that applicant bank has proved its claim against defendants.

16. During the pendency of OA, Applicant Bank had reported part satisfaction of OA claim in a sum of Rs.6,76,000/- by way of sale of Schedule immovable property under SARFAESI Act. Accordingly, part satisfaction of sum of Rs.6,76,000/- was duly recorded vide proceedings dated 20.04.2022.

17. With regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, this Tribunal comes to the conclusion that the applicant bank is entitled for a final order on the following terms:

: O R D E R :

18. The OA is allowed with costs,

(a) The applicant bank is allowed to recover from the Defendants 1 to 3 jointly and severally, a sum of Rs.21,43,979/- (Rupees Twenty One Lakhs Forty Three Thousand Nine Hundred and Seventy Nine only) as follows: i. A sum of Rs.8,75,420/- due in respect of OSL Term EMI (A/c No.501812080028969) repayable together with further interest @14.25% p.a. with monthly rests along with penal interest @2% p.a. from the date of Application till the date of realization in full; ii. A sum of Rs.12,68,559/- due in respect of OSL Term EMI (A/c No.501812080044553) repayable together with further interest @14.25% p.a. with monthly rests along with penal interest @2% p.a. from the date of Application till the date of realization in full along with costs of this application.

(b) The sum of Rs.6,76,000/- realized by way of sale of schedule immovable property is directed to be given credit to the borrower’s loan account as on date of realization.

(c) If the sale proceeds of the immovable properties are not sufficient to satisfy the dues as ordered above, the applicant bank is at liberty to sell the personal assets of the 2nd and 3rd Defendants (both movable and immovable) to recover the balance dues as required under law for which the 2nd and 3rd Defendants to disclose to the Tribunal particulars of other properties or assets owned by the 2nd and 3rd Defendants.

(d) The applicant bank shall file the latest memo of calculation of OA amount together with interest, costs etc., to be paid by the Defendants duly considering the amounts, if any, paid by the Defendant and/or amount realized by sale of assets etc., during the intervening period after the filing of the OA, enabling the Registry to prepare Recovery Certificate for the amount to be paid by Defendants to the applicant bank.

(e) The applicant bank shall file memo of costs within ten days from the date of receipt of this final order.

(f) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

19. A copy of this order be communicated to the parties concerned.

Sd/- (S.V. GOWRAMMA)

PRESIDING OFFICER, DRT-III, CHENNAI

(Dictated to Roshnee, transcribed by her, corrected, signed and pronounced by me on this the 27th day of October, 2026) ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Mr. Vijay Chakravarthi, Branch Manager of the Applicant Bank

Exhibits on the part of the Applicant:

Sl. No. Date Description of Documents Exhibit No.

1. 19.06.2017 Sanction Ticket issued by the central office of the applicant bank A-1

2. 19.06.2017 Sanction letter issued by the applicant bank A-2

3. 21.06.2017 Demand promissory note executed by defendants A-3

4. 21.06.2017 Application cum undertaking for loan in form 73 executed by defendants A-4

5. 21.06.2017 Consent letter of the EMI loans in form 44 executed by the defendants A-5

6. 28.03.2015 Sanction Ticket issued by the central office of the applicant bank A-6

7. 19.09.2018 Sanction Ticket issued by the central office of the applicant bank A-7

8. 19.09.2018 Sanction Ticket issued by the applicant bank A-8

9. 10.10.2018 Demand promissory note executed by defendants A-9

10. 10.10.2018 Undertaking for loan in form executed by defendants A-10

11. 10.10.2018 Consent letter of the EMI loans in form 44 executed by the defendants A-11

12. 09.07.2019 Demand notice under Section 13(2) of SARFAESI Act issued by the central office of the applicant bank A-12

13. 11.10.2019 Revaluation report of C. Senthil Chartered engineer for the secured asset A-13

14. - Statement of account in respect of OSL Term EMI Loan A/c No.501812080028969 A-14

15. - Statement of account in respect of OSL Term EMI Loan A/c No.501812080044553 A-15

Witness Examined for the Defendants: -Nil- List of Documents Exhibited for the Defendants: -Nil –

:-SCHEDULE-: The mortgaged property has been sold under the SARFAESI Act.

Sd/- (S.V. GOWRAMMA)

PRESIDING OFFICER, DRT-III, CHENNAI