Dismissed

Uvaice P H v. Axis Bank

DRT7 Dec 2022SA/377/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed the bank in a Securitization Application challenging a possession notice issued by an Advocate Commissioner. The Tribunal held the notice was not a measure under Section 13(4) of the SARFAESI Act since the applicant had not challenged the original possession order within the statutory period of 45 days.

What did the court decide?

Securitisation Application dismissed; no direction for regularization of credit facility or rescheduling granted.

Uvaice P H versus Axis Bank — Banking and Recovery | DRT (2022)

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 7th DAY OF DECEMBER, 2022

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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S.A No. 377 of 2022

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Between

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Uvaice P.H, S/o. Hassan, Poonakudiyil House, Pallarimangalam P.O., Pidavoor Kara, Varapetty Village, Kothamangalam Taluk, Ernakulam District-686671.

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---Applicant

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And

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Axis Bank Limited, Represented by its Manager, Kothamangalam Branch, Ernakulam District -686691.

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Authorised Officer, Axis Bank Retail Asset Centre, 5^th Floor, Chickago Plaza, Rajaji Road, Ernakulam District, Pin – 682305.

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---Defendants

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This Securitisation Application coming on 26.10.2022 for final hearing before me in the presence of Mr. T.A. Khader Kunju, Advocate for Applicant and Ms. Aparna Nair, Advocate for Defendants, and upon hearing the arguments of Counsels for the parties and having stood over for consideration till this day, this Tribunal delivered the following:

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SA No.377 of 2022

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O R D E R

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This Securitisation Application was filed on 16.07.2022 seeking to set aside Annx.A11 Notice and all other measures taken by the defendant Bank under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 against the applicant and restrain the defendant Bank from proceeding to take physical possession of the secured asset and directing the defendants to permit the applicant to regularize/ reschedule the credit facility after paying the overdue amounts in a phased manner within a time as may be fixed by this Tribunal.

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2. The averments of the applicant in the SA in brief are as follows:

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The applicant availed an Agricultural Loan of Rs.25,00,000/- as overdraft facility under the Kisan Power-KCC Scheme from the 1^st respondent on 8.10.2014 for the purpose of meeting the working capital requirement for cultivating cardamom in 25.6 Acres of leasehold land together with the applicant’s 1.10 acres of land, which are situated at Chinnakanal village in Udumbanchola Taluk and the mother of the applicant Smt. Khadeeja Hassan stood as guarantor and the credit facility was secured by creating mortgage over the residential property having an extent of 5.26 Ares together with residential building situated in Sy. No.467/7-2-12 located in Varappetty village, Kothamangaam Taluk in Ernakulam District.

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The applicant planted cardamom in the leasehold land, but unfortunately most of the planted trees were damaged due to the natural calamity and some other problems. But the 1^st respondent issued a demand notice dated 10.12.2015 demanding an overdue loan amount of Rs.2,79,797/- from the applicant. The applicant submitted a reply to the said demand notice requesting the 1^st respondent to calculate interest properly and avoid overdue charges. But there was no response from the 1^st respondent and the bank filed O.A. No.344/2017 before this Tribunal for recovering the entire loan amount. This Tribunal passed an ex parte final order dated 4.6.2018 in the above OA.

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The Bank filed M.C. No.808/2018 before the Additional Chief Judicial Magistrate Court, Ernakulam seeking for assistance of the court for taking physical possession of the residential property of the applicant. In the said M.C.No.808/2018 an exorbitant and unreasonable amount of Rs.43,09,335.80 is shown as the total outstanding amount. Thereafter the applicant received a notice from

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Page 2 of 8

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SA No.377 of 2022

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the Advocate Commissioner appointed by the ACJM Court intimating him that his immovable property was to be taken possession off. Hence the applicant filed W.P.(C) No. 6935/2020 before the Hon'ble High Court of Kerala seeking for stay of all the further coercive proceedings till the disposal of the application filed in OA. No.344/2017. While so, the Covid-19 pandemic situation came and hence the applicant could not properly follow up the application filed to set aside the ex parte final order in O.A. No.344/2018 and hence this Tribunal as per order dated 7.4.2021 dismissed the said application. In that situation the Hon'ble High Court dismissed W.P.(C) No.6935/2020.

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Now the Advocate Commissioner has affixed a notice dated 17.1.2022 on the residential building of the applicant intimating to take physical possession of the residential property within 7 days of receipt of the notice. The manner in which the agricultural loan of the applicant was declared as NPA is unjust, illegal and unsustainable in law. The act of the defendants is in violation of the Reserve Bank of India’s Master Circular containing prudential norms on Asset Classification and the Bank ought to have given sufficient opportunity to the applicant to repay his loan amount and to get his loan account regularized as per the norms of the RBI and without doing so, the coercive proceedings initiated by the bank under the SARFAESI Act, is illegal. The bank has not issued any possession notice under Section 13(4) of the SARFAESI Act, before filing M.C. No.808/2018 before the ACJM Court for taking physical possession of the residential property of the applicant. The defendants are not entitled to claim the amount as shown in the demand notices. The interest calculated by the defendants is incorrect and highly exorbitant. The outstanding amounts claimed by the defendants is highly excessive. Hence this S.A. has been filed.

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The defendants came on record and filed Written Statement inter-alia contending as follows :

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All the averments contained in the above S.A except those that are specifically admitted hereunder are denied as incorrect or not maintainable in both terms of law as well as on facts. The applicant is a chronic defaulter, who is wilfully not paying the dues and no mercy can be shown to the applicant. The loan availed by the applicant became NPA on 20.09.2016. The foreclosure amount will be Rs.70,64,301.61 as on 20.09.2022. The applicant had not paid even a single payment from the date of disbursement of loan.

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Page 3 of 8

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SA No.377 of 2022

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The respondents had filed an O.A. No.344/2017 before the Debt Recovery Tribunal for recovery of the amounts due from the applicant. No one appeared before the DRT in the said matter and an exparte order was passed by the DRT on 04.06.2018. Challenging the exparte order dated 04.06.2018, M.A. No.173/2019 and M.A. 174/2019 was filed by the applicant to set aside the same. The said M.A. No.173/2019 and M.A. 174/2019 was also dismissed for want of nonprosecution and stands closed 07.04.2021. The case is now pending before the Recovery Officer as DRC No.248/2018. The application under Sec.14, M.C. No.808/2018 was also filed by the respondent and the same is also pending before the Chief Judicial Magistrate Court from 2018 onwards.

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The Advocate Commissioner and the Bank’s Authorized Officer were not even permitted to enter into the premises, even with the help of the police. The respondent was not able to enter into the property for taking valuation of the properties. On 14.01.2022 the Recovery officer had ordered the assistance of the Police at Pothanicadu for giving necessary assistance to the respondent, vide this order the respondents have done inspection of the schedule property on 06.08.2022. As of now the matter before the Recovery Officer is pending for sale proclamation.

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The applicant had filed two writ petitions before the Hon’ble High Court and both the writ petitions were dismissed by High Court. The WP(C) No.6935/2020 was filed before the Hon'ble High Court of Kerala seeking stay of all proceedings till the disposal of M.A. No.174/2019 and the High Court granted stay on 09.03.2020. On the dismissal of M.A. No.173/2019 and M.A. No.174/2019 due to nonprosecution, the Hon’ble High Court dismissed the said writ petition vide judgment dated 29.10.2021. Subsequently, the applicant filed another writ petition, WP (C) No. 29747/2021 seeking stay against the SARFAESI proceedings initiated by the respondent bank against the applicant. The same was disposed of directing this applicant to file application under Sec.17 of the SARFAESI Act, 2002 to avail his remedies from this Tribunal. Hence, it is most humbly prayed that this Tribunal may be pleased to dismiss the case with cost.

¶32

The availment of credit facilities by the applicant from the 1^st defendant bank by creating equitable mortgage over his immovable property measuring an extent of 5.26 Acres of leasehold land together with the applicant’s 1.10 acres of land, which are situated at Chinnakanal village in Udumbanchola Taluk has been admitted by

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Page 4 of 8

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SA No.377 of 2022

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the applicant in the S.A. The applicant has not specifically averred in the SA as to whether he was regular in repayment of outstanding loan dues. A perusal of the averments of the defendants in para 3 of their written statement would show that since the applicant did not make even a single payment from the date of disbursement of loan, the loan account of the applicant became NPA on 20.9.2016.

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The demand notice dated 10.12.2015, Annx.A2, was issued to the applicant calling upon him to pay the outstanding loan due within seven days from the date of receipt of notice. The applicant sent reply dated 15.12.2015, Annx.A3, to the 1^st defendant requesting him to calculate the interest properly and avoid overdue charges. The applicant has himself admitted in para 4 of the SA since he could not settle the dues the bank filed OA No.344/2017 before this Tribunal for recovery of the entire loan amount. Admittedly, the applicant was set exparte in the OA and OA was allowed as prayed for. The applicant filed petition, MA No.173/2019 to set aside the exparte final order. The above petition was dismissed for want of prosecution.

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On application in M.C. No.808/2018 filed by the defendants under Sectin14 of the SARFAESI Act, 2002, before the Chief Judicial Magistrate Court, Ernakulam, order was passed appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner served notice dated 13.1.2020, Annx.A8, to the applicant informing him that he would take physical possession of the secured asset. The applicant filed WP(C) No.6935/2020 before the Hon'ble High Court of Kerala seeking for stay of all further coercive proceedings till the disposal of the O.A No.344/2017. Admittedly the above Writ Petition was dismissed by way of judgment, Annx.A9. Subsequently, the Advocate Commissioner issued fresh notice dated 17.01.2022, Annx.A11, for taking physical possession which is now under challenge before this Tribunal.

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The counsel appearing for the applicant submitted that the manner in which the agricultural loan of the applicant was declared as NPA is unjust, illegal and unsustainable in law and also against the violation of Reserve Bank of India’s Master Circular containing prudential norms Asset classification and that sufficient opportunity was not given to regularize his loan account and that possession notice under Section 13(4) of the SARFAESI Act, 2002 was not issued to the applicant before filing M.C. No.808/2018 before the Chief Judicial Magistrate Court, Ernakulam.

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Page 5 of 8

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SA No.377 of 2022

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The counsel appearing fort the defendants countered the above contention of the counsel for the applicant and submitted that the loan account was classified as per RBI guidelines and that since the Advocate Commissioner and Bank’s authorized officer were even not permitted to enter into the secured asset, the valuation of the property could not be made pursuant to the order passed by the Recovery Officer and that valuation of the property was done only with the assistance of the police and that the matter is now pending before the Recovery Officer for sale proclamation and that therefore, the S.A is liable to be dismissed.

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The applicant did not challenge the possession notice issued by the 2^nd defendant. Therefore, he is not entitled to take up the plea now that possession notice was not served to him. The applicant has not averred anything in the SA as to what is the procedural irregularity in the order passed by the learned Additional Chief Judicial Magistrate Court Ernakulam in M.C. No.808/2018. The copy of the application filed by the defendants in M.C. No.808/2018 before the Additional Chief Judicial Magistrate Court Ernakulam has been produced as Annx-A7. A perusal of the same would show that all the requirements mandated as per Section 14(1) have been complied with by the defendants. It cannot be disputed that the applicant has not challenged the order passed by the learned Additional Chief Judicial Magistrate Court Ernakulam in MC. No.808/2018. What is challenged in this SA is the Advocate Commissioner notice dated 17.1.2022, Annx.A11. The Advocate commissioner has issued the notice pursuant to the order passed by the Additional Chief Judicial Magistrate Court Ernakulam in MC. No.808/2018. Therefore, this notice cannot be construed as a measure as contemplated under Section 13(4) of the SARFAESI Act, 2002. Therefore, the relief sought for by the applicant restraining the defendants from proceeding to take physical possession of the secured asset cannot be granted.

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Possession notice issued under Section 13(4) of the SARFAESI Act, 2002 was not challenged by the applicant within the stipulated period of 45 days. Therefore, the relief sought for by the applicant in this SA to set aside all other measures under Section 13(4) of the SARFAESI Act, 2002 is unsustainable. No direction can be given by this Tribunal to the defendants to regularize/re-schedule the credit facility after paying the overdue amounts in a phased manner within the time as may be fixed by this Tribunal.

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Page 6 of 8

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SA No.377 of 2022

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In view of the foregoing reasons, this Tribunal holds that the applicant is not entitled to get the reliefs sought for in this SA.

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In the result, SA No.377/2022 stands dismissed. No costs.

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Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 07^th December, 2022.

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/

Page 7 of 8

SA No.377 of 2022

List of documents filed by the Applicant along with the application

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S.No.	Date	Particulars
1.	---	True copy of the welcome letter issued by the 1^st respondent.
2.	10.12.2015	True copy of the demand Notice issued by the 1^st respondent.
3.	15.12.2015	True copy of the reply letter submitted by the applicant before the1^strespondent.
4.	04.06.2018	True copy of the final order in O.A. No.344/2017 passed by theDebtsRecoveryTribunal-1 Ernakulam.
5.	---	True copy of M.A. No.173/2019 in O.A. No.344/2017 by theDebtsRecoveryTribunal-1 Ernakulam.
6.	08.05.2015	True copy of the Licence bearing No.A2-155/15-16 dated 8.5.2015issuedfrom Adimaly Grama panchayat
7.	---	True copy of the M.C. No.808/2018 on the files of the AddlChiefJudicial Magistrate CourtErnakulam.
8.	13.01.2020	True copy of the notice issued by Advocate Commissioner.
9.	29.10.2021	True copy of the judgment in WP (C) No. 6935/2020 on thefiles oftheHon'bleHighCourt of Kerala.
10.	---	True copy of M.A. No.270/2021 in OA No.344/2018 on thefiles oftheDebtsRecoveryTribunal-1,Ernakulam
11.	17.01.2022	Original of the Notice issued by the Advocate Commissioner.
12.	06.07.2022	True copy of the judgment in WP (C) No. 29747/2021 onthefiles of Hon'bleHighCourt of Kerala.

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List of documents filed by the Defendants Bank along with the Written Statement

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S.No.	Date	Particulars
1.	---	True copy of the statement of account pertaining to the loanoftheapplicant.
2.	07.04.2021	Proceedings of the Debts Recovery Tribunal in MA 173/2019inO.A.344/2017.

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/

Page 8 of 8

Uvaice P H v. Axis Bank

Case brief

What is this about?

What did the court decide?

Uvaice P H v. Axis Bank

Case brief

What is this about?

What did the court decide?

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