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PUNJAB NATIONAL BANK v. UMA SHANKER PANDEY

Debts Recovery Tribunal

Jan 10, 2022

Judgment

Subsequent
References

CaseIQ

Smart Summary (Beta)

Court: Debts Recovery Tribunal, Lucknow — Presiding Officer: A. H. Khan

Factual and Procedural Background

This Original Application (O.A. No. 711 of 2021) was filed by Punjab National Bank under Section 19 of the Recovery of Debts & Bankruptcy Act, 1993 seeking recovery of Rs.42,24,264.96 (comprising Rs.39,85,506.96 in an overdraft/term loan account and Rs.2,38,758 in a car loan account) together with pendent-lite and future interest, costs and other reliefs. The loan facilities were initially sanctioned on 07.04.2015 (an overdraft/term facility), enhanced subsequently (sanction dated 17.02.2018), and a vehicle loan sanctioned on 31.08.2016. Defendant No.1 (Shri Uma Shanker Pandey) is the borrower; Defendant No.2 (Smt. Reena Pandey) is a mortgagor/guarantor. To secure the facilities, loan agreements, hypothecation letters and guarantee agreements were executed; defendant No.2 created an equitable mortgage over an immovable property and deposited title deeds (documents include Exhibits A-1 to A-15). The bank records show the accounts became NPA on 31.03.2021 and a legal notice was sent on 02.08.2021. Summons were served by registered post but the defendants did not contest and the matter proceeded ex parte. The Tribunal heard evidence by way of affidavit (filed by the bank's manager) and documents produced in support of the claim.

Legal Issues Presented

Whether the applicant bank is legally entitled to recover the amount claimed (Rs.42,24,264.96) on the basis of the loan and security documents and the bank's pleadings and evidence.
Whether pendent-lite and future interest should be awarded and at what rate, and whether the Recovery Certificate should be issued directing sale of secured assets on default.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Central Bank of India vs. Ravindra and others, AIR 2001 SC 3095	Cited in support of granting pendent-lite and future interest (court indicated it is supported by this Supreme Court decision).	The Tribunal relied on this authority as support for awarding pendent-lite and future interest to the bank in the present case.

Court's Reasoning and Analysis

The Tribunal's analysis proceeded as follows:

The application was filed under Section 19 of the Recovery of Debts & Bankruptcy Act, 1993 and the defendants did not contest the claim after service of summons, so the proceedings ran ex parte against them.
The bank produced documentary evidence (Exhibits A-1 to A-15) and an affidavit by Shri Mukesh Arora, Manager of the applicant bank. The documents included sanction letters, loan agreements, hypothecation and guarantee agreements, confirmation of debit balance letters (dated 24.07.2019 and 26.07.2021), mortgage/title deed deposit records, NPA classification (31.03.2021), legal notice (02.08.2021) and statements of account.
The Tribunal found that the defendant(s) had availed and utilized the credit facilities, and that the bank maintained its books of account in the ordinary course of banking business. The Tribunal noted that the bank had charged interest from time to time and that entries are relevant under Section 4 of the Bankers' Books Evidence Act, 1891, as referred to in the record.
The Tribunal observed that the bank's claim was within the period of limitation as per the record before it.
On the basis of the uncontroverted documentary evidence and affidavit, the Tribunal concluded that the defendants are jointly and severally liable for the outstanding dues and that the bank had proved execution of loan documents and availment of credit facilities.
Regarding interest, the Tribunal noted the applicant's claimed rates but exercised its discretion under Section 19(2) of the RDDB Act (analogous to Section 34 CPC) to grant pendent-lite and future interest. The Tribunal expressly referred to the Supreme Court decision in Central Bank of India v. Ravindra (AIR 2001 SC 3095) as supportive of granting such interest.

Holding and Implications

Holding: The Original Application No. 711 of 2021 succeeds ex parte against the defendant Nos. 1 and 2. The Tribunal directed that a Recovery Certificate be issued for Rs.42,24,264.96 together with pendent-lite and future interest at the rate of 11.00% per annum with monthly rests in both loan accounts on reducing balance from the date of filing of the O.A. (stated in the order as 30.09.2021) until full realization, and costs.

Consequences and directions resulting from the holding:

The defendants are directed to pay the bank's dues within two months from the date of judgment (judgment dated 10.01.2022). If they fail to pay within that period, the applicant bank is entitled to sell the mortgaged property, hypothecated assets and, if necessary, the personal movable and immovable assets of the defendants to recover the outstanding amount.
The applicant bank is entitled to recover the amount by sale of mortgaged/hypothecated assets (including under the SARFAESI Act, 2002, if applicable) and any amounts already realized shall be adjusted towards the debt; only the balance remains recoverable.
The defendants are restrained by injunction from depleting, transferring, encumbering, alienating or otherwise dealing with their properties/estates without first paying the bank's claim.
The Tribunal ordered that a Recovery Certificate be issued immediately under Section 19(2) of the RDDB Act and fixed the matter before the Recovery Officer, DRT, Lucknow on 10.03.2022 for that purpose. The applicant bank was directed to file a memo of costs for preparing the Recovery Certificate under Section 19(2).

Note on precedent and broader implications: the Tribunal relied upon an existing Supreme Court authority to justify awarding pendent-lite and future interest but did not purport to lay down any new law. The decision's practical effect is limited to the rights and obligations of the parties in this matter (recovery of the stated debt, interest, costs, and enforcement remedies described above).

Show all summary ...

IN THE DEBTS RECOVERY TRIBUNAL AT LUCKNOW

Present: A.H. Khan, Presiding Oflicer Case No. Original Application No.711 of 2021 Dated: 10.01.2022 Punjab National Bank, a body Corporate duly constituted under the Banking Companies (Acquisition & Transfer of

Undertakings),Act of 1970 having its Head Office at Plot No.4 Sector 10, Dwarka, New Delhi 110075 amongst others a Circle SASTRA, l't Floor Staff Training Collage 1, Vibhuti khand, Gomti Nagar, Lucknow Uttar Pradesh through ..Applicant Bank

its Manager.

Versus 1. Shri Uma Shanker Pandey son of Mr.

Parshuram Pandey Resident of House No.288122, Arya Nagar Lucknow

u.P.226004 2. Smt. Reena Pandey wife of Shri Uma Shanker Pandey Resident of House No.288/22, Arya Nagar Lucknow u.P.226004

...Defendants

Counsel for the applicant-bank : Shri M. H. Abidi, Advocate

Counsel for the defendants : None JUDGMENT l. This Original Application has been filed by the applicant Bank under Section 19 of the Recovery of Debts & Bankruptcy Act, 1993, against the defendants for the recovery of Rs.42,24,264.96 (Rupees Forty Two Lacs Twenty Four Thousand Two Hundred Sixty four and palsa

Ninety Six Only)(Rs.39,85,506.96l- in Overdrafl/ Term Ioan

o.A. No. 711 ^of²⁰²¹accountxRs. 2,38,7581- in Car loan account) together with pendent-lite and future interest, costs and other reliefs etc. 2. The brief facts of case are that the defendant No.l is a borrower and the defendant No.2 is a mortgagor/Guarantor in this Original application, The defendant Nos.l & 2 approached to the applicant bank for grant Overdraff/Term loan limit Facility of Rs.25.00 Lacs, which was considered and sanctioned by the applicant-bank vide it sanction letter on 07.04.2015 (Exhibit No. A-1 to Exhibit No. A-2) to this Original application. 3. In order to secure the Overdrafl/Term Loan facility of Rs.25.00 Lacs, the defendant Nos.l & 2 signed, executed various necessary security documents like Overdraft loan agreement, letter of hypothecation , Agreement of Guarantee on 07.04.2015 in favour of the applicant-bank, Upon Sanctioned facility was duly Enhanced from Rs. 25.00 Lac to Rs.33.00 Lacs (as Total Rs.35,33,421/-) which was vide sanctioned on 17.02.2018 the defendant Nos.l & 2 duly signed, executed various necessary documents like overdraft loan agreement, letter of hypothecation, Agreement of Guarantee on 27.02.201g and again approached for the Vehicle loan facility of Rs.4.00 Lacs, to purchase the car (Maruti Suzuki Ertiga VDI SHVS) which was Registered through certificate on 12.09.2016 the credit facility was sanctioned vide on sanction Letter on 3 I .08.20 I 6(TotalRs.39,33,42 1 /-) the defendant Nos. I & 2 signed, executed letter of Hypothecation of car 7'

O.A. No. 711 of 2021 Loan, Agreement of Guarantee on 31.08.2016(Exhibit No.A-3 to Exhibit No.A-8) to this Original application. 4. In order further to secure the Repayment of the Bank dues, the defendant No. 2 created the equitable mortgage of her Immovable properties I.e. Double storied House No.288/213. Arya Nasar Lucknow

U.P.-226004 measuring 83.85 Square meter the boundaries which are as Under EAST: 6 feet wide Lane WEST: House No.288/211 owned bv

depositing the original title deed on 07.04.2015 and 28.02.201g to the applicant bank which was duly Registered in the office of Sub Registrar l" Lucknow at Bahi No.l Jild No.ll272 page Nos.l to 56 at Serial No.5587 dated 29.03.2010 (Exhibit No.A-g to Exhibit No.A-10)to this Original application 5. To Repayment of the credit facilities, the applicant Bank had opened rwo Loan accounts in the name of defendant No.l in order to maintain credit and debit facilities of the sanctioned facility. 6. After availing the aforesaid credit Facilities the defendants signed

and executed the Debit balance confirmation Letter on 24.07.2019 and, again on 26.07.2021 to confirm there liabilities in respect of credit facilities(Exhibit No.A-l l) to this original application. 7. After availing the aforesaid credit facilities, the defendants failed

to maintain financial discipline and also failed to comply with the terms and conditions of the loan agreement as required in the matter, the . ^.

O.A. No. 711 of 2021 applicant Bank made all possible efforts through Oral Persuasion and Letters etc, the defendants were reminded many times by the several applications but the defendants keep mum have not come forward to make any efforts regarding payment of dues, the applicant Bank sent notices and informed them by personal meetings also but the defendants were remained irregular and the defendants did not care the deposit the amount to adjust/regularize the accounts despite various assurances given by them, consequently, the said loan accounts of the defendant No.l was classified as NPA since 31.03.2021(Exhibit No.A-12) as per under R.B.I. Guidelines, thereafter the applicant Bank issued and also sent Registered legal notice on 02.08.2021(Exhibit No.A-13) through Registered post to the defendants to pay lien ofall the outstanding dues, requested for Repayments, But, defendants did not paid the heed to the

same, hence, this Original Application has been instituted. 8' As per books of the applicant bank and maintained in the usual and ordinary course of banking business, an outstanding of Rs.42, 24,264.96 (Rupees Forty Two Lacs Twenty Four Thousand Two

Hundred Sixty Four and paisa Ninety Six Only)(Rs. 39,g5,506.96/_ in

Overdraff/ Term loan account)(Rs. 2,38,758/- in Car loan account) upto 31.08.2021 in the loan accounts of defendants were lying due for

payment, for which the defendants jointly, severally liable to repay the

same. The applicant Bank has filed the copy of Statement of Accoury,

(Exhibit No.A-14 to Exhibit No.A-15) to this original application.

O.A. No. 711 of 2021 9. The cause of action for filing the present application arose firstly 07.04.2015, 27.02.2018 and 31.08.2016 when on the request of

defendants Credit facilities were sanctioned by the applicant Bank and the same were availed by the defendants and necessary documents were executed by them finally arose on 02.08.2021when the applicant bank

had sent legal Notice to pay the entire outstanding dues and they failed

to pay the same. 10. The summons were served to the defendants through registered post, but the defendants opted not to contest the case before this Tribunal, hence, the matter proceeded ex-parte against the defendants. 11. From the perusal of the record, it is evident that the defendants were provided with fair opportunities to contest the claim of the bank. As the defendants opted not to contest the case, so only point of consideration before this Tribunal is as to whether bank is legally

entitled to the amount as claimed in Original Application on the basis of

documents and pleadings submitted by it. 12. In support of the case, Shri Mukesh Arora, Manager of the

applicant Bank has filed an affidavit. 13. On a careful scrutiny of the evidences on affidavit and Exhibits marked as Exhibit No.A-l to Exhibit No.A-15, it is proved that

defendants availed credit facilities from the applicant bank by executing loan and security documents detailed as above in favour of the applicant-Bank. A perusal of the applications, evidence and documents relied upon clearly show that defendants had utilized the above loan ,/-

o.A. No. 711 of 2021 facility granted to them. The applicant- bank had maintained the Books ofaccount in the ordinary course ofbanking business showing disbursal of the loan amount. The Bank had also charged interest from time to time and the entries are relevant ur/s 4 of the Bankers book of Evidence,l89l Act. It is also proved that the applicant-bank's claim is within limitation, therefore, the defendant Nos.l & 2 jointly, severally liable to pay the bank dues. 14. Accordingly, the defendant Nos.l & 2 are directed to pay the balances dues to the applicant bank within a period of 2 months from

the date of Judgment failing which the applicant bank will be entitled to sell the mortgaged property/Hypothecated assets as well as personal

assets/properties of the defendants. 15. The applicant-bank has claimed interest @15.25% per annum with monthly rest in overdraff/Term loan account and @ 11.70%o in Car Loan account with effect from 01.09.2021 till the date of realization and costs. The contest between applicant-bank and the defendants comes to an end after filing the O.A. as per the provisions of section l9(2) of the

Recovery of the Debts and Bankruptcy Act,l993 (as amended from time to time) which is analogous to section 34 to the CPC, the Tribunal/

Court ^hasdirection in awarding pendent-lite and future interest. I am also supported in my view by Hon'ble Supreme Court in a case titled Central Bank of India vs. Ravindra and others reported in AIR

2001 SC page 3095.On the basis of the foregoing discussion, interest of

justice will be served if pendentJite and future interest is grantedT 1t

O.A. No. 711 of 2021 ' @11.00%o per annum with monthly rests in Both loan accounts on reducing balance from the date of filing of the O.A. till the date of realization with costs. 16. In the result, the Original Application succeeds ex parte against the defendant Nos.l & 2 with costs. The bank has proved the loan execution of loan documents and availment of credit facility. The liabilities the defendants are joint and several, the mortgaged property/hypothecated assets as well as the personal properties/assets are liable to be sold. It is, therefore, ordered:- (D The Original Application No. 711 of Z02t of the applicant bank for issuance of Recovery Certificate to the tune of

Rs.42,24,264.96 (Rupees Forty Two Lacs Twenty Four

Thousand Two Hundred Sixty Four and paisa Ninety Six Only) together with pendent-lite and future interest @ll.O0%

per annum in both the loan accounts from the date offiling of the O.A. i.e.30.09.2021 till amount fully liquidated and costs succeeds ex parte against the defendant Nos.l & 2. (iD The defendant Nos.l & 2 are directed to pay the dues within a period of two months from the date of Judgement, failing which the applicant bank will be entitled to recover the same from the secured assets, persgnal movables and immovable // assets of the o*""dy /:

8 o.A. No. 711 of 2021 (iiD The applicant-bank is entitled to recover aforesaid amount by Sale of Mortgaged property/Hypothecated assets (if not sold earlier under the provision of the S.A.RF.A.E.S.I. 4ct,2002).The amount, if any, already recovered by the sale of any hypothecated assets or otherwise shall be adjusted towards the debt and only the balance amount shall be recoverable. If the dues of the applicant-bank still remain unsatisfied, and sale of the personal movable and immovable

assets of the defendants jointly and severally. (iv) The defendants are hereby restrained by means of injunction form depleting, transferring, encumbering, alienating or in any way dealing with their properties/estates without first paying the claim ofthe applicant-bank (v) Let the Recovery Certificate be issued immediately uls 19(22) of the Recovery of Debts and Bankruptcy Act, 1993 by fixing 10.03.2022 before Recovery Officer, DRT, Lucknow. (vi) The applicant bank is directed to file a memo of costs for

preparing Recovery Certificate u/s l9e2) of the Recovery of

Debts and Bankruptcy Act,1993.

Judgment is pronounced in the open Court

/ Dated: 10.01.2022

/ //--T-.-,.\ a{.ru.kn*l P6siding Officer