Case Law Details
Karur Vysya Bank Vs Electronics Marvel (DRT Karnataka)
The case concerns an Original Application (OA) filed before the Debts Recovery Tribunal (DRT), Karnataka under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993. The applicant bank sought issuance of a Recovery Certificate against the defendant for a sum of ₹99,81,419.26 along with further interest from the date of filing the application until realization.
According to the applicant, the defendant had availed an overdraft loan facility of ₹1 crore, which was later renewed to ₹95 lakh. In connection with the loan facility, the defendant executed the required loan documents including a letter of undertaking, a demand promissory note, and a hypothecation agreement. These documents were executed to secure the loan and record the borrower’s obligations.
The applicant contended that despite availing the credit facilities and agreeing to service the loan account regularly, the defendant failed to comply with the repayment obligations. As a result of this default, the loan account was classified as a Non-Performing Asset (NPA). Due to the continued default and outstanding dues, the applicant approached the Tribunal by filing the Original Application seeking recovery of the balance amount due in the account.
Summons were issued to the defendant. However, the defendant failed to appear before the Tribunal despite service of summons. Consequently, the defendant was set ex parte on 13 November 2024.
The applicant bank presented its evidence through AW-1, who filed a proof affidavit reiterating the claims made in the Original Application. Along with the affidavit, the applicant produced documentary evidence marked as Exhibits A-1 to A-17. These documents were admitted into evidence during the proceedings.
The Tribunal heard the submissions made by the counsel for the applicant and examined the contentions raised in the application in light of the documentary evidence and the proof affidavit filed by AW-1.
Two issues were framed for consideration by the Tribunal:
1. Whether the applicant had succeeded in proving the claim made in the Original Application against the defendant.
2. What order should be passed in the matter.
Both issues were considered together by the Tribunal.
The Tribunal observed that the case presented by the applicant remained unrebutted because the defendant did not appear and was proceeded against ex parte. As a result, the evidence submitted by the applicant remained uncontroverted and undisputed. The Tribunal found that the documents produced by the applicant were admissible and sufficient to establish that the defendant had availed the credit facilities as stated in the application. The documents also established the creation of hypothecation and the defaults committed in the loan account.
Based on the documentary evidence and the affidavit filed by AW-1, the Tribunal concluded that the liability of the defendant and the amount claimed by the applicant were proved. The Tribunal further observed that the claim made by the applicant was within the period of limitation.
Accordingly, the Tribunal decided both issues in favour of the applicant and held that the Original Application deserved to be allowed.
While allowing the application, the Tribunal took into consideration that the credit facilities had been availed for business purposes. The Tribunal also noted that the amount claimed in the application had been calculated by applying the agreed rate of interest. However, the Tribunal decided to allow the claim with a reduced rate of interest of 12% per annum (simple).
In its final order dated 2 February 2026, the Tribunal allowed OA No.1471/2023. The applicant bank was permitted to recover a sum of ₹99,81,419.26 along with further interest at the rate of 12% per annum (simple) from the date of filing the Original Application until realization. The recovery was to be made from the defendant personally after giving credit for any amounts recovered or received during the pendency of the application.
The Tribunal also permitted the recovery to be effected by proceeding against the defendant personally as well as against the defendant’s assets, including the schedule assets specified in the application. The schedule attached to the Original Application was directed to form part of the recovery certificate.
Further, the Tribunal granted the applicant bank the costs of the proceedings and directed the applicant to file a cost memo within seven days from the date of receipt of the order.
The Tribunal directed that a Recovery Certificate be drawn in accordance with the order and transferred to the Recovery Officer for execution. Any pending interim applications were disposed of in terms of the final order.
Finally, the Tribunal directed that a copy of the order be communicated to the concerned parties in accordance with Section 19(21)(i) of the Recovery of Debts and Bankruptcy Act read with Rule 16 of the DRT (Procedure) Rules, 1993.
FULL TEXT OF THE ORDER OF DRT KARNATAKA
The present Original Application in short (OA) has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 seeking issuance of Recovery Certificate against the defendant for Rs. 99,81,419.26 (Rupees Ninety Nine Lakh Eighty One Thousand Four Hundred Nineteen and Paise Twenty Six Only) with further interest thereon from the date of filing the Application till realization.
2. It is the case of the applicant that the defendant availed overdraft loan facility of Rs. 1,00,00,000/- (Rupees One Crore Only) which was later renewed to Rs. 95 lakhs.
3. It is also the case of the applicant that, in view of the above availed loans, the defendant executed necessary loan documents along with letter of undertaking, demand promissory note and hypothecation agreement.
4. It is further contended that, despite availing the credit facilities, agreeing to service the loan account promptly and regularly, the defendant failed in complying the same, resulting in default in repayment and consequentially turning the loan accounts as NPA.
5. In the above circumstances, the applicant approached this Tribunal by filing this OA seeking issuance of Recovery Certificate for the balance amount due in the account.
6. Despite, summons on the defendant, they failed to appear resulting the defendant being set exparte on 13.11.2024.
7. The applicant had let in evidence through AW-1, who filed Proof Affidavit reiterating the contentions taken in the OA and also produced Exhibits A-1 to A-17 and got the same marked in evidence.
8. Heard the Ld. Counsel for the Applicant and considered the contentions as taken in the OA in the light of documentary evidence and proof affidavit.
9. The following issues arise for consideration in this matter:
i) Whether the applicant had succeeded in proving the OA claim as against the defendant?
ii) What order are to be passed?
Both these issues are gone into and decided together.
10. The case put forth by the applicant in the Application remains unrebutted as defendant remained exparte. The evidence tendered by the applicant remains uncontroverted and undisputed. The evidences put forth by the applicant were found admissible and are sufficient to prove availment of credit facilities as stated in the OA, creation of Hypothecation and the defaults committed in the accounts. The liability of the defendant and the claim of the amount due are also proved by the above documents. The claim of the applicant is well within the limitation.
11. Hence in view of the findings arrived herein above, the Tribunal find both these issues in favour of applicant and hence, this Tribunal is of the view that OA is to be allowed.
12. Taking into consideration the facts that the credit facilities are availed for Business purpose and also that the OA claim is arrived at by calculating interest at the agreed rate, this Tribunal in view of the OA can be allowed with a reduced interest of 12.000/0 (simple).
13. In the result, OA.No.1471/2023, stands allowed,
i) The applicant is allowed to recovery an aggregate sum of Rs. 99,81,419.26 (Rupees Ninety Nine Lakh Eighty One Thousand Four Hundred Nineteen and Paise Twenty Six Only) with further interest ©12.00 % p.a.(simple) from the date of filing OA till the realization, from the defendant personally, after giving credit to all the amount recovered and received during the pendency of the OA and allowed the same to be recovered by proceeding against the defendant personally and also proceeding against its assets including the schedule assets. Schedule to the OA be the schedule to the recovery certificate.
ii) The applicant bank is allowed cost of the proceedings which applicant to file cost memo within 7 days from the date of receipt of the order.
iii) The Recovery Certificate to be drawn in terms of this order and transferred to Recovery for execution.
iv) Interim application pending, if any, stands disposed of in terms of this final order.
14. Communicate a copy of the order to the parties concerned in terms of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure) Rules, 1993.
{Dictated to the Stenographer (AJ), transcribed by her, corrected and signed and pronounced by me in the Open Court., this the 02’d Day of February, 2026].
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