SREEKUMAR Vs. CANARA BANK

JUDGEMENT

(1.) The present writ petition has been filed impugning the order dtd. 9/5/2025 passed by the Debts Recovery Appellate Tribunal, Chennai (DRAT) in Regular Appeal No.110/2017 and the order dtd. 27/1/2016 passed by the Debts Recovery Tribunal, Bengaluru (DRT) in the Original Application No.1458/2013.

(2.) The petitioners were the partners of M/s. Srishti Components, a partnership firm registered under the provisions of the Indian Partnership Act, 1932. Initially, the respondent No.2-partnership firm was constituted with the petitioners and the respondent No.3-Smt. Preetha Menon as its partners. The firm was constituted with the object of setting up a small scale industrial unit for manufacturing of Metal Press Components used in mechanical, electrical and automobile industries. The partnership firm applied for a loan of Rs.35,00,000.00 from the respondent No.1-Canara Bank for the purchase of machinery and an additional amount of Rs.15,00,000.00 as working capital for the firm. The Bank, vide Sanction Letter dtd. 23/6/2008, sanctioned a term loan for Rs.35,00,000.00 for the purchase of machinery and an overdraft facility upto a limit of Rs.5,00,000.00 was given in favour of the firm.

(3.) The term loan of Rs.35,00,000.00 was repayable with an interest @14.75% per annum in 55 equated monthly instalments of Rs.92,792.50 each commencing from 30/4/2009. The last instalment was to be paid on or before 31/12/2013. The overdraft facility was initially valid upto 30/6/2009 as per the Sanction Letter dtd. 23/6/2008. The petitioner No.1 and the respondent No.2-firm stood as guarantors and by a Composite Hypothecation Agreement dtd. 4/7/2008, the newly purchased machinery as well as the raw materials, stock in process, finished goods, stores and spares of the firm were pledged as security for the loan advanced to the partnership firm by the Canara Bank. The petitioner No.1 and the respondent No.3 also executed Guarantee Agreements dtd. 4/7/2008 in favour of the Bank.