M/s. NU-Tech Associates vs Canara Bank & Ors.

Learned Counsel for both sides are present. On 23.6.2026, R2 and R3 are called absent and set ex parte.

This appeal is filed against the ex parte final order passed in OA No.164 of 2009 by the Learned Presiding Officer, DRT-I, Chennai on 11.7.2010.

The 1^st Respondent Bank filed Original Application No.164 of 2009 for recovery of Rs.10,06,082/-, along with further interest at the rate of 14% per annum compounded monthly, jointly, and severally from Defendants 1 to 3, and issue recovery certificate for the same.

The brief facts leading to filing of OA No.164 of 2009 are as follows:

The 1^st Defendant, Mrs. B.R. Savithri is the proprietrix of Apsara Beauty Parlour. The 3^rd Defendant, M/s.NU-Tech Associates, represented by its proprietor Shri B. Nagi Reddy, and power attorney holder of Mrs. Bhooma Kannan, is involved in construction activities. The 1^st Defendant approached the applicant Bank for financial accommodation of Rs.6.00 lakhs towards the purchase of Flat No. C in the Ground Floor on northern side admeasuring 714 sq.ft. together with 439 sq.ft of undivided share of land at Door No. 1, Sankarlal Jain Street, Nehru Nagar, Chormpet, Asthinapuram, Chennai – 600 044 in Survey No. 6/11 in Paimash 230 and 231 measuring to an extent of 2¼ ground, B3B within the Sub-Registration District of Pallavaram and Registration District of South Chennai.

The 1^st Defendant represented that she entered into a sale agreement of 27.5.2002 with Mrs. Bhooma Kannan, represented by her power agent Shri B. Nagi Reddy. 3^rd Defendant, M/s. NU-Tech Associates, formulated a scheme of construction of ownership of flats in a land of an extent of 2¼ ground in the aforesaid land. Mrs. Bhooma Kannan was entitled to the property by virtue of settlement by her mother, Mrs. Jayalakshmi, dated 7.2.2000. Construction work for development was entrusted with the 3^rd Defendant. 1^st Defendant agreed to pay Rs.1,72,290/- towards the price of undivided share of 439 sq.ft. 3^rd Defendant delivered vacant possession of the undivided share to the 1^st Defendant who, in turn, redelivered it to 3^rd Defendant for the purpose of construction. A sale agreement was executed between Mrs. Bhooma Kannan, represented through 3^rd Defendant and 1^st Defendant on 27.6.2002. 1^st Defendant entered into a construction agreement with 3^rd Defendant on 29.6.2002. She agreed to pay Rs.5,52,170/- for construction purposes. A sale deed was executed on 4.7.2002 by Mrs. Bhooma Kannan through her power agent, 3^rd Defendant, in favour of the 1^st Defendant. The 1^st Defendant loan application was processed by the Bank and a sum of Rs.6.00 lakhs was sanctioned on 11.2.2003 by the Bank. Necessary loan documents have been executed by the 1^st Defendant. A sum of Rs.6.00 lakhs was released by a Pay Order bearing No.334982 dated 11.2.2003 favouring 3^rd Defendant and handed over to the 1^st Defendant. 1^st Defendant availed additional housing loan of Rs.50,000/- for renovating the flat on 17.2.2004. 2^nd Defendant stood as a guarantor for the loan availed by the 1^st Defendant. The Encumbrance Certificate showed two entries in the name of Karnataka Bank, George Town branch in respect of the property concerned. Therefore, the Bank applied for certified copy and found that it totally differed from the sale deed lodged by the 1^st Defendant with the bank. When checked with the 3^rd Defendant to ascertain the genuineness, it is informed that many bankers have been making similar enquiries with them and that the 1^st Defendant has defrauded several banks by producing fake documents. In the said background, the original application was filed making the claim against all the Defendants, including the Appellant herein.

Learned Counsel for Appellant submitted that the order in the original application was passed without hearing the Defendants, especially the Appellant herein. It is an ex parte order. There is absolutely no ground made out to make a claim against the Appellants. Since the Appellant has not contested the claim, the Learned Presiding Officer, DRT-I, Chennai, without considering the case of the Bank on merits, passed an order allowing the original application. He brought to my notice a criminal complaint given by the 1^st Respondent Bank against the 1^st Defendant Mrs. B.R. Savithri, the 2^nd Respondent herein, with regard to the acts of cheating and forgery committed by her, along with her husband. A letter dated 1.4.2009 addressed by the 1^st Respondent Bank to (i) IDBI Bank, (ii) Mrs. B.R. Savithri, and (iii) Mr. Nagi Reddy is brought to my consideration to show that there was no claim against either Mrs. B.R. Savithri or Mr. Nagi Reddy. The claim was made only against IDBI Bank. The charge against IDBI Bank was that it did not verify the constitution and credentials of M/s. NU-Tech Associates before allowing the wrong person to encash it. M/s. NU-Tech Associates represented by Mr. R. Ramesh, has no title and, therefore, allowing the payment through bank draft is liable for action for conversion as contemplated under Section 131 of Negotiable Instruments Act. Thus, he submitted that the order of the Learned Presiding Officer, DRT-I, Chennai has to be set aside and this appeal has to be allowed.

Learned Counsel for 1^st Respondent submitted that there is an agreement between the 1^st Defendant and 3^rd Defendant, Mrs. B.R. Savithri and M/s. NU-Tech Associates, for the purchase of undivided share of land, construction of building, culminating into a registered sale deed. It shows that Appellants and Respondents 2 and 3, the Defendants before the Tribunal, have actively colluded amongst themselves in defrauding the 1^st Respondent Bank. The order was passed ex parte on the Defendants not contesting the original application. The appeal filed, without setting aside the order passed by the Learned Presiding Officer, DRT-I, Chennai ex parte, is not sustainable.

In reply, Learned Counsel for Appellant submitted that Appellant filed CRP NPD Nos. 4319 and 4320 of 2010 against the order passed in the original application. Though the said review petitions were dismissed as not maintainable, the Hon’ble High Court of Judicature at Madras permitted the Appellant to assail the correctness of the order passed in the original application by filing an appeal before this Tribunal by excluding the time spent in the review petitions. Only thereafter, this appeal was filed.

Considered the rival submissions and perused the records.

From the pleadings extracted and from the case of the Parties, especially the 1^st Respondent that the 1^st Respondent made claim against the Appellant only on the ground that there was an agreement between 1^st Defendant and 3^rd Defendant as the power agent of Mrs. Bhooma Kannan, followed by a construction agreement, and a sale deed, and that the loan amount of Rs.6.00 lakhs was disbursed in the form of a Demand Draft drawn in favour of Appellant and delivered to the 1st Defendant / 2^nd Respondent, Mrs. B.R. Savithri. Appellant flatly denies receiving Rs.6 lakhs. It is not established by the 1^st Respondent, that the amount of Rs.6.00 lakhs was paid to the Appellant. In fact, as pointed out by the Learned Counsel for Appellant in the letter dated 1.4.2009 sent by the 1^st Respondent to IDBI Bank and two others, the allegation was that without verifying the credentials of Appellant, the amount was released. The claim was made only against IDBI Bank and not even against Mrs. B.R. Savithri, and Mr. B. Nagi Reddy, Proprietor of NU-Tech Associates. There is absolutely no material produced to show that Appellant has any connection with the loan applied and availed by Mrs. B.R. Savithri. While the claim is made against IDBI Bank in the aforesaid notice, IDBI Bank is not made as a Defendant in the original application. There is no independent contract between the Appellant and 1^st Respondent Bank with regard to the loan repayment. Fastening the liability on the Appellant only on the basis of an agreement for sale of undivided land, construction agreement, and the sale deed executed between Appellant and Mrs. B.R. Savithri, is not correct. From the copies of criminal complaints produced, it is quite obvious that the borrowers, Mrs. B.R. Savithri had cheated not only the 1^st Respondent Bank but also several other banks. It is so pleaded in the original application.

In this view of the matter, and when there is no worthwhile material available to fasten the liability on the Appellant, the order allowing the original application against the Appellants cannot be justified, even if it is an order passed in ex parte. It is a settled proposition of law that there can be no order passed ex parte mechanically without appreciating the pleadings and evidences. As already stated, there is no material to fasten liability on the Appellant and, therefore, the order of Learned Presiding Officer, DRT-I, Chennai, insofar as allowing the original application against the Appellant, has to be necessarily set aside and, accordingly, set aside.

The order allowing the OA No.164 of 2009 stands only against 1^st and 2^nd Defendant and not against the 3^rd Defendant, the Appellant herein.

Accordingly, this appeal, RA 95 of 2026, is allowed.

Parties are directed to bear their own costs.

Pending IAs, if any, stand closed.