The applicability of Section 31(A) allows the Debt Recovery Tribunal to issue a recovery certificate based on a preliminary decree, affirming that limitations and rights under such decrees remain enforceable.

COMMON ORDER

1. These appeals are filed under Section 20 of RDB Act against the order dated 22.07.2015 passed in OA 82/2009 by the Learned Presiding Officer, DRT, Coimbatore.

2. The appellant in RA 70/2015, the Federal Bank of India, filed OA 82/2009 against M/s. Kabs Elastomer Products and other defendants before the Tribunal for issuance of Recovery Certificate for a sum of Rs.21,33,715.55p with interest @ 23% per annum on Rs.7,13,334/- from the date of filing the OA till the date of realisation, sale of mortgaged immovable properties, costs and other reliefs.

3. The case of the bank is that the 1^st defendant before the Debt Recovery Tribunal was engaged in the business of Thread Rubber manufacturing. The 2^nd defendant was the Managing Partner and 3^rd, 4^th, 5^th defendants are partners. Defendants 6 to 9 were mortgagors and co-obligants to the loan. Defendants 2 to 5 are also co-obligants / borrowers. The defendants availed IPS loan of Rs.2.53 Lakhs and Cash Credit Facility of Rs.1 Lakh in 1987. They executed a Demand Promissory Note on 12.05.1988 followed by Security Delivery letter, Agreement of Cash Credit Hypothecation of goods, hypothecation of stock and trade and machinery. Defendants 6 to 9 deposited their title deeds relating to the property mentioned in the schedule with an intention to create mortgage by executing letter evidencing deposit of title deeds. Defendants defaulted in making loan repayments and therefore bank filed OS 463/1996 for realizing the loan due. Preliminary Decree was passed on 29.10.2001 by the Principal Subordinate Judge Court, Coimbatore for a sum of Rs.7,13,334/- with interest @ 23% per annum with quarterly rests. Defendants did not pay the entire loan amount but they remitted a sum of Rs.13 Lakhs on various dates. As on the date of filing the OA, defendants were liable to pay a sum of Rs.21,33,715.55p. Therefore OA was filed for recovery of this amount with future interest.

4. Defendants contested the claim of the bank. The case of the 8^th defendant which is adopted by defendants 7, 10, 11, 13-16 is that the claim is barred by limitation. 6^th defendant offered his property as collateral security and he was only a guarantor. The bank seized the machineries hypothecated and sold. Therefore, the operation of the 1^st defendant came to stand still. The value of the machineries was Rs.3.41 Lakhs. The Government provided subsidy of Rs.1,85,261.65p through District Industries Centre. That amount was credited to the bank on 26.09.1992. Bank had shown Rs.17,280/- as value of scrap material. As per Sec. 31(A) of RDB Act , only a decree passed by a Civil Court prior to 17.01.2000 can be relied for filing an application before the Debt Recovery Tribunal for issuance of Recovery Certificate. The Preliminary Decree was passed in this case on 29.10.2001. Therefore, the OA filed was not maintainable. Bank should have approached the Civil Courtfor passing a final decree. The final decree application should have been filed within three years from the date of passing Preliminary Decree under Article 137 of Limitation Act . No such application was filed by the bank. Therefore, the claim of the bank is barred by limitation. Application cannot be filed under Sec.31(A) of RDB Act on the basis of the Preliminary Decree passed in a mortgage suit. The Preliminary Decree in a mortgage suit is not an executable decree. After long time, bank filed Original Applicat