Interest accrues during the moratorium period, and declaring an account as Non Performing Asset without proper repayment leads to legitimate debt claims by the bank.

JUDGMENT :

R. HEMALATHA, J.

The appellants are the defendants in O.S.No.4555 of 2015, on the file of the XV Assistant City Civil Court, Chennai. The respondent, M/s. Kuber Infosolutions Private Limited, represented by its Managing Director Mr.M.Kuber filed the said suit for a declaration that no amount is payable by him to the defendants (appellants herein) in respect of his Working Capital Term Loan Account Number 052554023762 and Cash Credit Hypothecation Account Number 052513000038. He also prayed for a mandatory injunction directing the defendants to return all the original title deeds of plaintiff's property at Door No.594, second lane, T.H. Road, Old Washermenpet, Chennai, and for costs.

2. For the sake of convenience, the parties are referred to as per their ranking in the trial court and at appropriate places, their rank in the present appeal would also be indicated.

3. The case of the plaintiff in a nutshell is as follows :

3.1. The plaintiff company entered into an agreement with the second defendant during the year 2002 for cash credit facility of Rs.10,00,000/-. The title deeds of the land and building at No.594, 2nd lane, T.H. Road, Old Washermenpet, Chennai - 600 021, belonging to the plaintiff were handed over to the second defendant as a security for due repayment of the loan by way of Equitable mortgage. The plaintiff was also making payments regularly without any default. The second defendant therefore enhanced the cash credit facility to Rs.25,00,000/-.

3.2. Subsequently, the business of the plaintiff was affected due to recession and therefore, the plaintiff and the second defendant mutually agreed to convert the cash credit facility into working capital term loan. A memorandum of agreement dated 31.01.2009 (Ex.A2) was executed by the plaintiff and the second defendant. As per the restructuring agreement dated 31.01.2009, the outstanding amount was Rs.28,24,292/- (principal Rs.25,00,000/- and interest Rs.3,24,292/-) which has to be paid in sixty (60) equated monthly installments at Rs.63,522/- per month commencing from 31.07.2010. However, the defendants calculated the interest during the moratorium period and pressurized the plaintiff to pay interest as well as principal. Subsequently, the account was declared as Non performing Asset (NPA) on 30.11.2009 and the defendants sent a demand notice under SARFAESI dated 19.12.2009 (Ex.A3) claiming a sum of Rs.32,01,202/- from the plaintiff. After receiving the demand notice, the plaintiff paid a sum of Rs.50,000/- on 05.12.2009 and also sent a representation dated 24.12.2009 (Ex.A4) requesting the bank to stop the legal action, if any, to be taken against the plaintiff. However, the first defendant issued a possession notice dated 05.03.2010 (Ex.A5) under SARFAESI stating that the symbolic possession of the secured asset was taken. They also informed the plaintiff that the amount due and payable by the plaintiff is Rs.34,33,125/-.

3.3. Therefore, the plaintiff challenged the same in S.A.No.30/2010 before the DRT II, Chennai. The said application was decreed on 02.02.2011. Even during the pendency of the application before DRT, the sale notice was issued by the first defendant on 15.05.2010 (Ex.A6). The DRT II, Chennai, vide its judgment dated 02.02.2011 declared both the demand notice dated 19.12.2009 (Ex.A3) and the possession notice dated 05.03.2010 (Ex.A5) as invalid and set aside them. The DRT II, Chennai, also directed the defendants to adjust the sum of Rs.6,00,000/- that was paid by the plaintiff in compliance of the conditional order dated 16.06.2010, from the outstanding balance amount. As per the direction o