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Banks (Finance)

Delhi District Court Orders State Bank of India to Recover Rs. 7,04,402/- from Defaulting Debtor

Strategic Insights

— 1 min read

The Delhi District Court has issued an order for State Bank of India to recover Rs. 7,04,402/- from Ajmal Khan, proprietor of M/s. Alfaiz Garments, who defaulted on a loan sanctioned under the Pradhan Mantri Mudra Yojana. The loan was granted for a sum of Rs. 5,00,000/- on November 24, 2020, with an interest rate of 3.25% above the External Benchmark Rate (EBR).

Key Takeaways:

  • The plaintiff, State Bank of India, claimed Rs. 7,04,402/- as principal amount, pendente lite, and future simple interest @ 12.40% per annum from the date of institution of the suit till its realization.
  • The court decreed the suit in favour of the plaintiff and against the defendant, awarding the principal sum of Rs. 5,19,686.25 p.
  • The court also awarded interest of Rs. 1,28,938/- from January 2, 2022, to September 8, 2023, and penalty of Rs. 55,778/- as per the terms of the sanction.
  • The court observed that the defendant had defaulted on the loan payments despite being served with summons and legal notices.
  • The court felt that an interest rate of 6% per annum could meet the ends of justice in this commercial dispute.

Statistics:

  • Loan amount granted: Rs. 5,00,000/-
  • Interest rate: 3.25% above EBR
  • Last effective interest rate: 9.90% per annum
  • Amount due and outstanding as on January 1, 2022: Rs. 5,19,686.25 p.
  • Interest accrued from January 2, 2022, to September 8, 2023: Rs. 1,28,938/-
  • Penalty as per the terms of the sanction: Rs. 55,778/-
  • Total amount to be recovered: Rs. 7,04,402/-

Sources:

  • Delhi District Court Order dated May 5, 2025, in the matter of State Bank of India vs. Ajmal Khan Prop. M/S Alfaiz Garments, CS(COMM)-672/2023
  • Loan Application dated October 17, 2020
  • Letter of Arrangement dated November 24, 2020
  • Agreement of Loan cum Hypothecation dated November 24, 2020
  • Undertaking / Affidavit and Consent Letter dated November 24, 2020
  • Statement of account in respect of Cash Credit (Hypo) facility
  • Office copy of letter dated January 3, 2022
  • Notice dated March 27, 2023
  • Non-Starter Report dated July 26, 2023

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