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2024 Supreme(Online)(DRAT) 458
IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI Dated the 11th day of December, 2024 PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN CHAIRPERSON RA 151/2018 (arising out of OA 565/2015 on the file of DRT-II, Chennai)
Between State Bank of India, SME Ekkattuthangal Branch, Rep. by its Chief Manager, No.5, J.N. Road, Guindy, Chennai 600 032.
Presently migrated to SARB, State Bank of India, Red Cross Building, MontiethRoad, Egmore, Chennai 600 008. …..Appellant Bank And
1. M/s Keerthi Shoes (India) Private Limited, Plot No.2A (SP, Thiru Vika Industrial Estate, Guindy, Chennai 600 032. Rep. by Official Liquidator, Madras High Court, No.29, Rajaji Salai, Chennai 1.
2 M/s Keerthi Exports Private Limited, Represented by its Directors, Plot No.2A (SP, ThiruVika Industrial Estate, Guindy, Chennai 600 032.
3. M/s Instyle Footwears (Chennai) Private Limited, Rep. by its Managing Director, Having office at:
No.54/2, Paulwells Road, St. Thomas Mount, Chennai 600 015.
4. Mr. S. Ramesh, S/o Late Mr. P.V. Sambandam, No.4/2, First Street, Abhiramapuram, Chennai 600 018.
5. Mrs. Shanthi Ramesh, W/o Mr. Ramesh, No.4/2, First Street, Abhiramapuram, Chennai 600 018.
6. Mr. S. Ganesh, S/o late Mr. P.V.Sambandam, No.6-AB, 4th Block, Kences Enclave, No.1, Ramakrishna Street, T. Nagar, Chennai 600 017.
7. Mr. S. Naresh, S/o Late Mr. P.V. Sambandam, No.19, Kandan Garden, 3rd Floor, No.37, Ponniyamman Koil Street, Kotturpuram Chennai.
8. Mrs. H. Sakkubai, W/o Late Mr. P.V.Sambandam, No.54/2, Paulwells Road, St.Thomas Mount, Chennai 600 015.
9. M/s Sam Plastics & Film, Represented by its Proprietor, Mr. S. Ganesh, No.6-AB, 4th Block, Kences Enclave, No.1, Ramakrishna Street, T. Nagar, Chennai 600 017.
…..Respondents Counsel for appellant Bank : M/s M.L. Ganesh & Co.
: R1 is represented by Official Liquidator Counsel for R3, R4,R5, R6 & R8 : None Counsel for R2, R7, R9 : M/s P. Jesus Moris Ravi
ORDER
1. This appeal is filed under Section 20 of RDDB & FI Act, 1993 against the order passed in OA 565/2015 by Ld. Presiding Officer, DRT-II, Chennai on 16.10.2017.
2. Ld. Counsel for the appellant bank submitted that appellant bank filed original application under Section 19(1) of RDDB & FI Act, 1993 before DRT-II, Chennai for recovery of a sum of (i) Rs.3,22,48,222.88p towards Cash Credit Facility together with interest at 13.45% p.a. from the defendants 1,4,5 and 9 jointly and severally, (ii) Rs.25,04,631/- towards SME Credit Plus facility together with interest at 14.45% p.a. from the defendants 1,4,5 and 9 jointly and severally, (iii) Rs.1,33,591/- towards Term Loan together with interest at 13.85% p.a. from the defendants 1,4,5 and 9 jointly and severally (iv) Rs.24,45,506/- towards Cash Credit Facility together with interest at 13.20% p.a. from the 2nd defendant, (v) Rs.64,74,816/- towards cash credit facility together with interest at 14.20% p.a. from the defendants 3 to 9 jointly and severally and (vi) Rs.25,45,863/- towards SME Credit Plus facility together with interest @ 15.20% p.a. from the defendants 3 to 9 jointly and severally totaling to Rs.4,63,52,629.88p with monthly rests from the date of OA till the date of realization together with costs and by sale of schedule mentioned properties.
3. Ld. Counsel further submitted that Ld. Presiding Officer passed while passing the order in favour of the bank for recovery of money, reduced the rate of interest to 6% p.a.(simple) from the date of filing of OA till the date of realization of the amount instead of ordering interest at contractual rate. Aggrieved against this particular portion of the order reducing the interest rate from contractual rate of interest to 6% (simple), this appeal is filed.
4. In support of his submission, Ld. Counsel for appellant placed reliance on the judgment of the Hon’ble Supreme Court of India in re, Jayant Verma others Vs.Union of India reported in AIR 2018 SC(1) 1079 wherein Hon’ble Supreme Court laid down the proposition as to the validity of Section 21(A) of Banking Regulation Act, 1949. Ld. Counsel also placed reliance on judgment of Hon’ble High Court of Madras in re.,Central Bank of India Vs.Ravindra and others reported in AIR 2001 SC 1395 wherein the Hon’ble High Court laid down the proposition as to the circumstances under which rate of interest may be reduced and not otherwise.
None of the circumstances elicited in this judgment is available for the Ld. Presiding Officer to reduce the interest. There is no valid reason given in the order for reducing the interest rate from contractual rate of interest to 6% p.a.(simple). The only reason stated is since D1 company was wound up, awarding contractual interest will not meet the ends of justice, therefore, interest rate is reduced to 6% p.a. (simple). This is against the settled proposition of law.
5. It is seen from records that this appeal is pending from the year 2018. There was no representation for respondents on 4.11.2024. However, Ld. Counsel appearing for the appellant bank was heard in full and the matter was adjourned to 6.11.2024 for respondents’ arguments, as last chance. On 6.11.2024 also, there was no representation for respondents and it was posted to 14.11.2024. There was also no representation for respondents, therefore, opportunity for respondents’ argument was closed and order was reserved.
6. The simple issue involved in this appeal is whether reduction of interest from contractual rate to 6% p.a.(simple) from the date of application till date of realization is in tune with the legal propositions or not.
7. Admittedly, loan transaction involved is a commercial transaction wherein interest rate for the loans advanced is stipulated in the loan agreement. There was no dispute with regard to availing of loan by the respondents and the interest rate claimed. Reduction of rate of interest from contractual rate to 6% p.a. (simple) merely for the reason that D1 company was w
