Case Name: Canara Bank vs. M/s. Giriraj Tours & Travels Pvt. Ltd. & Ors.
Date of Judgment: January 22, 2026
Introduction
This judgment marks an important move toward making companies and their directors answer for their financial responsibilities. The main goal is to protect public funds. When banks like Canara Bank give out loans, they rely on money from depositors. If borrowers default, as happened here with several vehicle loans, it can weaken the bank’s financial health. This decision shows that the legal system can help recover these funds, so business failures do not end up affecting the public.
The judgment also explains what “joint and several liability” means. Both the company and the directors who guaranteed the loan are equally responsible for paying it back. If selling the vehicles does not pay off the debt, the bank can go after the directors’ personal assets. This takes away some ways people have avoided paying creditors in the past. In the end, the decision encourages financial discipline and makes sure borrowers are held responsible for unpaid loans.
Background of the Case
The applicant, i.e., Canara Bank, filed an application on 14th March, 2016, seeking recovery of Rs. 28,77,737/- (Twenty Eight Lakhs Seventy Seven Thousand Seven Hundred and Thirty Seven Only). The dispute arose from multiple loans taken by the respondents between 2013 and 2014 for the purchase of vehicles for their business. The bank provided three separate loans, namely, RS.17 lakhs for 5 Indica cars, RS.10.36 lakhs for 2 Maruti Swift VDI cars and RS.11.48 lakhs for a Toyota Innova car. As a guarantee, the bank took hypothecation of the purchased vehicles and these were supported by the personal guarantees from the company’s directors. However, the respondents failed to repay on time which led to the classification of their accounts as NPAs on 16th March, 2015. Despite repeated legal notices, the respondent failed to clear the outstanding dues, hence, the present dispute.
Issued Raised by the Court
- Whether the respondents are liable to pay the outstanding debt of Rs. 28,77,737/- (Twenty Eight Lakhs Seventy Seven Thousand Seven Hundred and Thirty Seven Only) to the applicant bank?
- Whether the applicant bank is entitled to interest on the principal amount from the date of filing until the actual realization of the debt?
Analysis of the Case
The Tribunal focused its legal analysis on the clear evidence provided by Canara Bank. An important point was that the first three defendants, which included the company and its main directors, did not challenge the claims. The Court also carefully checked that the loan amounts for the vehicles, such as Indica, Swift, and Innova models, were paid into the borrower’s accounts.
The Tribunal also closely examined the records related to the debt. It confirmed that the defendants had willingly signed important legal documents. These included the Hypothecation Agreements, which allowed the bank to claim the vehicles as collateral, and the Personal Guarantee Agreements, which made the directors personally responsible for the company’s debt.
There was a special issue with the fourth defendant, Shri D.N. Kapoor. After confirming his death, the Court ended the legal action against him. However, the Court made it clear that his death did not cancel the debt. The company and the remaining directors were still jointly and individually responsible. This means the bank could ask any one of them to pay the full amount owed. The Tribunal found that there was a clear breach of contract. Because the money involved was public funds, the bank had both the right and the responsibility to recover the principal and agreed interest to protect public money.
Conclusion
The final judgment, delivered on January 22, 2026, marks a complete legal win for Canara Bank and ends a ten-year effort to recover unpaid debts. The Presiding Officer ordered the company and its surviving directors to pay the full outstanding amount of Rs. 28,77,737/- (Twenty Eight Lakhs Seventy Seven Thousand Seven Hundred and Thirty Seven Only). This payment is to be made “jointly and severally,” which means the bank can collect the entire sum from any one of the directors, not just a share from each. This keeps the responsibility for repayment with the borrowers.
To make up for the long wait for justice, the court has also set a high interest rate of 13.75% per year. This interest applies from when the case was filed in 2016 until the money is paid. It makes sure the bank is compensated for the time the money was tied up, reflecting the profit the funds could have earned if used for other loans during those years.
The most important part of the conclusion is the Recovery Path set by the court. The order gives the bank a two-step safety net:
- Liquidation of Collateral: If the defendants do not pay within 30 days, the bank can immediately take and sell the vehicles used as collateral (the Indicas, Swifts, and Innova).
- Personal Liability: Often, directors try to avoid responsibility by using the company’s name. Here, the court made it clear that if selling the vehicles does not cover the full debt, the bank can claim the directors’ personal assets, such as bank accounts, jewellery, or homes.
By issuing a Recovery Certificate and telling the parties to appear before the Recovery Officer on March 23, 2026, the court turned a legal win into a real, enforceable outcome. This judgment is not just a win for Canara Bank; it reinforces financial discipline. It shows the business community that borrowing public money comes with personal responsibility, helping protect the national economy from corporate defaults.
The Applicant Bank was presented by Associate Mr. Ketan Joshi, Associate Partner, Shantanu Garg, Senior Associate and Mr. Namanveer Singh Sodhi, Senior Associate.