CANARA BANK vs Ms AK Motors on 29 October 2026

: - FINAL ORDER- :

1. This Original Application is filed on 11.04.2022 by the applicant bank under Section 19(1) of Recovery of Debts and Bankruptcy Act, 1993 (formerly Recovery of Debts Due to Banks and Financial Institutions Act, 1993) against the Defendants 1 and 2, for recovery of a total sum of

Rs.30,76,567.29p (Rupees Thirty Lakhs Seventy Six Thousand Five Hundred and Sixty Seven and Twenty Nine Paise only) due in respect of i) Overdraft facility (A/c No.2666261000180), ii) Term loan-I (A/c No.2666768000120), iii) Term Loan-II (A/c No.2666753000003), iv) Term loan-III (A/c No. 2666710000006),

v) Term loan-IV (A/c No.2666746000005) repayable together with further interest @ 12% p.a. with monthly rests along with penal interest @ 1.25% p.a. from the date of Application till the date of realization in full, for sale of hypothecated assets morefully detailed in the schedule to the OA and for costs of this OA.

2. Originally, this Application was filed before DRT-II, Chennai, assigned OA No.219 of 2022, and thereafter in pursuance to the notification from Ministry of Finance, DFS dated 04.10.2022, OA No.219 of 2022 stood transferred to this Tribunal and renumbered as TA No.195 of 2023. Brief Facts of the case:

3. 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.

4. It is the case of the applicant bank that the 2nd Defendant is the Proprietor of 1st defendant M/s A.K. Motors. The defendants have approached the applicant and submitted loan application dated

27.03.2018 seeking Overdraft facilities with an upper limit of Rs.5,00,000/- and Term Loan for a sum of Rs.25,00,000/- for the purpose of raising Working Capital for purchasing machineries and expansion of their working unit.

5. It is submitted that considering the said request, the applicant bank had sanctioned Overdraft facilities to an extent of Rs.5,00,000/- on 28.03.2018 and on the same day the defendants have in turn executed a Promissory Note and Cash Credit Agreement dated 28.03.2018 thereby hypothecating stock receivables in favour of the applicant interest calculated at 10.30% p.a. It was agreed that the interest rate chargeable shall be floating depending upon the MCLR of the bank. Pursuant thereto the defendants were holding an overdraft account with the applicant in A/c No.2666261000180.

6. It is the further case of the applicant bank that upon the request of the defendants, the applicant bank had also sanctioned Term Loan to an extent of Rs.25,00,000/- on 28.03.2018 and on the same day the defendant had executed Deed of Hypothecation thereby hypothecating i) Two wheeler servicing stages-3 units, ii) spares, iii) water washing units and iv) Machineries/furniture etc like PC’s, CCTV units morefully described in the schedule to the OA in favour of the applicant and agreed to repay the credits advanced along with applicable interest calculated at 10.30% p.a. It was agreed that the interest rate chargeable shall be floating depending upon the MCLR of the bank. The applicant had released the loan amount in favour of the defendant in A/c No.2666768000120 on

28.03.2018.

7. The applicant submits that the defendants had approached the applicant and submitted another loan application dated 08.05.2020 seeking Term Loan for a sum of Rs.50,000/-. Considering the said request, the applicant bank had also sanctioned the Term Loan to an extent of Rs.50,000/- and on 08.05.2020 the defendants have executed Take Delivery Letter and Demand Promissory Note in favour of the applicant, thereby agreeing to repay the credits advanced along with applicable interest calculated at 7.30% p.a. and the same has been acknowledged by the Promissory Note dated 08.05.2020. It was agreed that the interest rate chargeable shall be floating depending upon the MCLR of the bank. The applicant had released the loan amount in favour of the defendant in A/c No.2666753000003 on 08.05.2020.

8. It is further submitted by the applicant bank that the defendants have approached the applicant bank through Online portal for the Covid- 19 Assistance Loan (CFITL) on 03.09.2020 for a sum of Rs.31,488/-. Considering the said request, the applicant bank had sanctioned the Term Loan to an extent of Rs.31,488/- to the defendants on 03.09.2020 as Covid Funded Interest Term Loan (CFITL) assistance, which shall be repayable along with interest applicable to the above mentioned OD account on or before 31.03.2021. Pursuant thereto the applicant had released the loan amount in favour of the defendants in A/c No.2666710000006 on 03.09.2020.

9. The defendants further approached the applicant bank and

submitted another application dated 31.03.2021 requesting for restructuring under the RBI guidelines and sought for Term Loan for a sum of Rs.25,000/-. Considering the said request, the applicant bank had sanctioned Term Loan to an extent of Rs.25,000/- and on the same day the defendants have executed Debtor-Creditor Agreement and Debt Restructuring Agreement in favour of the applicant and agreeing to repay the credit advances with new restructure basis along with applicable interest. It was agreed that the interest rate chargeable shall be floating depending upon the MCLR of the bank. Pursuant thereto, the applicant had released the loan amount in favour of the defendant in A/c No.2666746000005 on 31.03.2021.

10. The applicant submits that subsequent to availing of loan, the defendants have not maintained the credit limits/repaid the Term Loans, despite bank’s repeated reminders and requests to tender payments. However, the defendants have acknowledged the liability in favour of the applicant in writing on 30.09.2020 and 18.11.2020 by executing an Acknowledgement of Debt, thereby agreeing to repay the loan amount in stipulated manner. The defendants ignored their commitments and have committed a wilful default. The applicant submits that since the defendants has failed to make payments on stipulated dates the account had become sub-standard and the defendants has committed default within the above mentioned loan agreements. Consequently, the loan accounts of the defendants were classified as Non-Performing Asset (NPA) on 02.06.2021.

11. Inspite of many opportunities given, the defendants have failed to regularize the account and are wilfully ignoring to clear the dues with an intention to cheat and defraud the applicant bank. Hence, the present Original Application (OA) has been filed by the applicant bank for recovery of its dues from the defendants.

12. After the filing of the OA, summons were sent to the Defendants 1 and 2 through Registered Post with Acknowledgment Due, which was returned with postal endorsement as ‘Left without instructions’ and ‘No such person’ respectively in respect of D-1 and D-2. Applicant Bank had caused paper publication of the notice and filed proof thereof. When OA was taken up on 03.11.2023 even after giving sufficient time, there was no appearance or representation from the defendants. Hence, Defendants 1 and 2 were placed ex-parte on 03.11.2023. Heard the submissions of Applicant Bank and perused the records.

13. To prove the case of the Applicant Bank, Mr. Prabhu Subramaniam, 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-18.

14. A careful examination of the pleadings in the Proof Affidavit and documents Exhibits A-1 to A-18 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 03.11.2023, 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. 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 :

17. The OA is allowed with costs,

(a) The applicant bank is allowed to recover from the Defendants 1 and 2, a total sum of Rs.30,76,567.29p (Rupees Thirty Lakhs Seventy Six Thousand Five Hundred and Sixty Seven and Twenty Nine Paise only) due in respect of i) Overdraft facility (A/c No.2666261000180), ii) Term loan-I (A/c No.2666768000120), iii) Term Loan-II (A/c

No.2666753000003), iv) Term loan-III (A/c No. 2666710000006), v) Term loan-IV (A/c No.2666746000005) repayable together with further interest @ 12% p.a. with monthly rests along with penal interest @ 1.25% p.a. from the date of Application till the date of realization in full along with costs of this application.

(b) In the event of failure of the Defendants to pay the aforesaid amount, the bank is at liberty to recover the amount by sale of the hypothecated assets morefully detailed in the OA schedule.

(c) OA Schedule property shall be appended to this final order.

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

(e) 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.

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

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

18. 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 29th day of October, 2026) ANNEXURES WITNESSES EXAMINED FOR THE APPLICANT BANK: AW-1: Mr.Prabhu Subramaniam, Manager of the Applicant Bank Exhibits on the part of the Applicant:

Sl. No. Date Description of Documents Exhibit No.

1. 27.03.2018 Loan application A-1

2. 28.03.2018 Cash credit agreement A-2

3. 28.03.2018 Promissory note A-3

4. 28.03.2018 Deed of hypothecation RE: machinery A-4

5. 08.05.2020 Loan application for term loan A-5

6. 08.05.2020 Take delivery letter to DPN A-6

7. 08.05.2020 Promissory note A-7

8. 03.09.2020 Letter issued by the applicant bank A-8

9. 30.09.2020 Acknowledgement of debt and security A-9

10. 18.11.2020 Acknowledgement of debt and security A-10

11. 31.03.2021 Loan application for term loan A-11

12. 31.03.2021 Debtor-creditor agreement A-12

13. 31.03.2021 Debt restructuring agreement A-13

14. 17.03.2022 Statement of account for overdraft facility in A/c No.2666261000180 A-14

15. 17.03.2022 Statement of account for term loan in A/c No.2666768000120 A-15

16. 17.03.2022 Statement of account for term loan in A/c No.2666753000003 A-16

17. 17.03.2022 Statement of account for term loan in A/c No.2666710000006 A-17

18. 17.03.2022 Statement of account for term loan in A/c No.2666746000005 A-18

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

:-SCHEDULE-: All that piece and parcel of two wheeler servicing stages-3 units, ii) spares/parts, iii) water washing units and iv) machineries/furniture etc like PC’s, CCTV units situated at M/s A.K.Motors, No.9/19A, Lakshmipuram 2nd Street, New Avadi Road, Villivakkam, Chennai- 600 049 or elsewhere.

Sd/- (S.V. GOWRAMMA)

PRESIDING OFFICER, DRT-III, CHENNAI