Canara Bank vs Ibrahim Khaleel

The matter has been heard through video conferencing due to prevalence of pandemic Covid-19. Learned Counsel for applicant has confirmed that audio video of video conferencing was proper and understandable to him.

The present Original Application has been filed by the Applicant Bank under Section 19 of the Recovery of Debts Due to Banks and financial Institutes Act, 1993 against the defendants for recovery of a sum of Rs.11,36,550/- (Rupees Eleven Lakhs Thirty Six Thousand Five Hundred and Fifty only) together with further accrued interest on the above amount at the rate of 12.20 % per annum at monthly rests (inclusive of 2% penal interest) on Rs.11,29,266/- (Rupees Eleven Lakhs Twenty Nine Thousand Two Hundred and Sixty Six only) from 31.01.2017 till realization.

Brief facts of the case of the applicant as stated are that defendant approached the applicant bank for availing of Term Loan facility of Rs.10,00,000/- (Rupees Ten Lakhs Only) for purchase of vehicle. After considering the request of defendants, applicant bank sanctioned loan amount of Rs.10,00,000/- (Rupees Ten Lakhs Only). The defendants have executed documents such as vide letter of undertaking re: Loans/Advances dated 28.02.2014 and Deed of Hypothecation Re: Vehicle Agreement dated 28.02.2014. The loan was sanctioned for purchase of vehicle for the business of tour operating service and as per loan agreement, defendants agreed to repay the loan amount with interest @ 10.75% per annum and additional interest @ 2% in case of violation of any of the terms of the agreement as agreed by them while acceptance of terms and condition of loan agreement entered by them. However, Defendant failed to regularize the account as per terms and condition of loan agreement. Applicant bank recalled the defendant to repay the loan amount, however, in spite of various requests of the applicant bank, the defendant failed to repay the loan amount. Hence, the present Original Application has been filed by the applicant bank.

Upon notice issued by this Tribunal none appeared on behalf of defendant and the case was proceeded against defendants ex parte vide order dated 12.10.2017.

Applicant bank in order to prove its case lead its evidence through it Senior Manager and Constituted Attorney, Mr. Prabhakaran P, who tendered into evidence of applicant bank Proof Affidavit reiterating the averments made in the original application which are not reproduced here for the sake of brevity. In documentary evidence, he has tendered Original letter of undertaking re:Loans/Advances dated 28.02.2014 for Rs.10,00,000/- Exh. A/03, the Deed of Hypothecation Re:Vehicle Agreement dated 28.02.2014 for creation of security over the vehicle Exh. A/04, Legal notice dated 07.12.2015 Exh. A/05, statement of account of Term loan account Exh. A/06, statement showing different rate of interest charged in the Term loan account including unapplied and penal interest Exh. A/07. Thereafter evidence on behalf of applicant bank was closed.

I have heard the learned counsel for the applicant and have also gone through the case file properly. I have also gone through law applicable to facts and circumstances of the present case.

After hearing learned counsel for the applicant bank and after going through the case file, I have come to the considered conclusion that evidence adduced by the applicant bank on the case file stood unchallenged and unrebutted. Defendants have opted not to contest the original application. From the evidence available on record in the shape of documents, it is proved on record that defendant availed Term Loan facility of Rs.10,00,000/- (Rupees Ten Lakhs Only) from the applicant bank and executed letter of undertaking re:Loans/Advances dated 28.02.2014 for Rs.10,00,000/- Exh. A/03, the Deed of Hypothecation Re:Vehicle Agreement dated 28.02.2014 Exh.A/04. However, defendant failed to repay the loan amount. The amount of Rs.11,36,550/- (Rupees Eleven Lakhs Thirty Six Thousand Five Hundred and Fifty Only) as per statement of account as on 31.01.2017. The Certificate of Banker Book of Evidence Act has been annexed with Original Application. The penal interest of an amount of Rs.7,284/- is charged in the loan account. The applicant bank has not applied capitalization of penal interest under this loan account. Therefore, correct amount taken in the original application is Rs.11,36,550/- (Rupees Eleven Lakhs Thirty Six Thousand Five Hundred and Fifty Only) which is taken to be principal amount.

As per amendment in Sub Section 4 of Section 1 of Recovery of Debts and Bankruptcy Code 1993 vide notification S.O. 4312(E) dated 06th of September 2018, the provision of this Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of banks or financial institutions is less than twenty lakh rupees or such other amount, being not less than one lakh rupees, as the Central Government may, by notification, specify. However, Department of Financial Service, Ministry of Finance, Government of India vide circular F.No. 3/4/2018 dated 01st August 2019 clarified that the cases having suit value between Rs 10 Lakh and Rs 20 Lakh, which have been filed before DRTs during the stay period (i.e. from 26.09.2018 to 30.06.2019) may continue in DRTs till conclusion so that no prejudice shall be caused to parties who have filed such suits in good faith. Therefore, this matter having filed on 15.02.2017 even prior to 26.09.2018 is within the pecuniary jurisdiction of this Tribunal. The applicant bank Branch which sanctioned and disbursed the loan is situated at S.M.E Kasaragod, Kasaragod District, Kerala within the territorial jurisdiction of this Tribunal. Therefore, this Tribunal is having pecuniary as well as territorial jurisdiction to entertain and try the present original application.

So far as period of limitation is concerned, the present Original Application is within limitation as original application was filed on 15.02.2017 and defendant has executed loan documents on 28.02.2014. Section 24 of the Recovery of Debts and Bankruptcy Code 1993, provides that the provisions of the Limitation Act, 1963, shall, as far as may be, apply to an application made to a Tribunal.

So far as rate of interest charged by respondent bank is concerned, respondent bank has charged rate of interest as per terms and conditions of loan documents executed by the defendants. However, as per the provision of Section 19(20) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 which is analogous to Section 34 of Civil Procedure of Code 1908, on filing of the suit/claim, the contract between the parties comes to an end and the Court/Tribunal has a discretion to award the same depending upon the circumstances of each case. Same principle has been laid down by the Hon'ble Apex Court in the case of Central Bank of India Vs. Ravindra & Others. Taking stock of all the circumstances and keeping in view that there is a drastic fall in rates of interest globally and domestically, I am of the opinion that interest of justice will be served if the interest at the rate of 10% per annum is awarded. Act has been annexed with Original Application. In the light of the above discussions, the Original Application deserves to be allowed.

O R D E R

1) I hereby allow this O.A. of the Applicant Banks and direct the defendant to pay to the applicant banks within 30 days from today, a sum of Rs. 11,36,550/-(Rupees Eleven Lakhs Thirty Six Thousand Five Hundred and Fifty Only) due under the Term Loan account along with future interest on the sum of Rs.11,29,266/- (Rupees Eleven Lakhs Twenty Nine Thousand Two Hundred and Sixty Six only) @ 10 % per annum from the date of filing of this O.A. till the date of realization of dues with costs and expenses.

2) In case of failure to deposit the said amount, the same shall be recovered from the movable property of the defendant as described in Schedule- 'A' attached to the original application.

3) In case of any shortfall, the same shall be recovered from the personal movable and immovable properties of the defendant.

4) Recovery Certificate is issued forthwith and is sent to Recovery Officer, Debts Recovery Tribunal-I, Ernakulam.

5) Registry of this Tribunal is hereby directed to issue the free copy of the order and sent to the both parties.

6) Any other application pending stands disposed of. File be consigned to records.

Pronounced in Open Court:

Note: This judgment of mine consists of eight pages and each page has been checked and signed by me.