Dismissed

Ummer K C v. State Bank of India

DRT13 Dec 2022SA/477/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's Securitisation Application challenging possession proceedings under the SARFAESI Act. It held the applicant was not an aggrieved person as the mortgaged property belonged to his son, and the application was barred by limitation.

What did the court decide?

The Securitisation Application was dismissed, and the applicant was not entitled to any relief sought.

Ummer K C versus State Bank of India — 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 13^th 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.477 of 2022

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Between

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Ummer K.C., Thazhathil House, Ozhukur P.O., Morayur, Malappuram District-673642.

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---Applicant

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And

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The Authorized Officer, State Bank of India, ARM Branch, R.S Building, M.G. Road, Ernakulam-682011.

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---Defendant

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This Securitisation Application coming on 07.11.2022 for final hearing before me in the presence of Mr. Sasi N., Advocate for Applicant and Mr.Vivek George, Advocate for defendant and upon hearing the arguments of both sides’ Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

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O R D E R

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This Securitisation Application was filed on 04.10.2022 seeking to hold that the possession of secured assets of the applicant by the defendant Bank is illegal and to set aside all the steps taken by the defendant under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, ‘SARFAESI Act, 2002’) and order payment of compensation to the applicant for the loss sustained by the illegal act of the defendant.

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SA No.477 of 2022

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

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The applicant being the Managing Partner of M/s New Amana Bakery had availed an overdraft facility and another loan from the respondent bank and as per the Demand notice dated 14.01.2022 an amount of Rs.25,55,354/- and Rs.2,57,306/- respectively is due. Accordingly, a total sum of Rs.28,12,660/- is now due to the respondent. The above loans were taken by mortgaging his properties having a total extent of 25 cents in Re. Sy. No.144/4 Block No.57 in Morarur village, Kondotty Taluk in Malappuram District.

¶18

In spite of the fact that the credit facilities are operating within the permitted limits, the Bank purported to initiate proceedings under the SARFAESI Act. At the time of lockdown for the 2^nd wave of Covid19 pandemic the defendant issued demand notice on 14.01.2022. Immediately after the receipt of the notice applicant approached defendant and stated the circumstances that lead to the default in making payment. Since Annx.A1 Demand notice was totally confusing and not specific, the applicant sent a reply notice dt.21.02.2021 to the Bank through his lawyer. Although some defects were noted in Annx.A2 notice, the applicant ultimately had requested to renew the loans by paying the outstanding amount in instalments. However, the applicant has got a reply to Annx.A2 refusing the request of the applicant.

¶19

Without issuing demand notice, the defendant approached the Chief Judicial Magistrate Court, Manjeri filed CMP No.2299/2022 for taking possession of the properties. As per the order of the Chief Judicial Magistrate Court, Manjeri, Advocate Commissioner issued notice dated 30.09.2022 stating that property will be taken on 30.09.2022.

¶20

The applicant filed W.P (C) No. 10179/2022 before the Hon'ble High Court of Kerala challenging the demand notice and directed the applicant to pay off the amounts in 16 monthly instalments. The MC and affidavit were filed without complying with the amended provision of the Act. This is also illegal. Hence this Securitisation Application.

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The 1^st defendant came on record and filed Written Statement inter-alia contending as follows :

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The S.A. is barred by limitation. The cause of action if any has to be reckoned from the date of notice of the Advocate Commissioner i.e., 17.08.2022 The attempt of the applicant to sustain the cause of auction on the basis of Annx.A4 notice of the Advocate Commissioner is misconceived.

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Page 2 of 9

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SA No.477 of 2022

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The above S.A has been filed by the applicant challenging interalia issuance of Annx.A4 notice to take physical possession of the property which belongs to Sri. Majid Ummer, who is the son of the applicant. He has not challenged any of the actions/measures taken by the defendant under SARFAESI Act. As such the applicant is not a person aggrieved within the meaning of Section 17 of the SARFAESI Act. At the request of the applicant, the bank granted to M/s New Amana Bakery, a partnership firm wherein the applicant, Majid Ummer S/o.K.C.Ummer, Thazhetheel House, Ozhukur P.O, Morayur, Malappuram District, Pin-673 642 and Sainaba P.P., D/o. Veeran Pulparamban, Anaprachalil House, Vakkaloor, Kavanoor P.O., Malappuram District, Pin-673 639 are partners, a Dropline Overdraft Limit of Rs.50 lakhs, inter-alia, upon the guarantee of one Maimoona, W/o. K.C. Ummer, Thazhatheel House, Ozhukur P.O Morayur, Malappuram District, Pin -673642 and mortgage of the immovable property belonging to the above said Majid Ummer.

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Subsequently the said Maimoona was released from the obligations under the above said credit facility and a reduced Dropline Overdraft Limit of Rs.30 lakhs was granted to M/s New Amana Bakery upon the continuing security by way of mortgage of the immovable property belonging to the above said Majid Ummer. Thereafter a GECL (Term Loan) of Rs.2,30,000/- was also granted to M/s New Amana Bakery upon the guarantee of the said Maimoona and mortgage of the immovable property belonging to the above said Majid Ummer.

¶27

Consequent to the default committed by the borrowers in complying with the terms and conditions governing the grant of the credit facilities, the loan accounts were classified as Non Performing Asset(s) and Annx.A1 notice of demand dated 14.01.2022 under Section 13(2) of the SARFAESI Act, was issued to the borrowers. It is submitted that Annx.A1 is an incomplete document. Hence the defendant is producing copy of the demand notice dated 14.01.2022 as Annx.B1. The borrowers received the notice. To the said notice, Annx.A2 objection was sent raising untenable contentions and requesting to renew the loans by paying the outstanding amounts. The bank replied to Annx.A2 vide Annx.A3 and rejected the request made in Annx.A2.

¶28

Since the dues remained unpaid, the bank took possession (symbolic) of the secured asset vide Possession Notice dated 30.04.2022. Possession notice was affixed on the secured asset. The possession notice was also served on the borrowers. The possession notice was also published in Kozhikode edition of ‘The Hindu’ (English) and Malappuram edition of the Mathrubhumi (Malayalam) daily newspapers on 01.05.2022. The bank also proceeded under Section 14 of the SARFAESI Act, to take physical possession of the secured asset. Pursuant to it the Advocate Commissioner issued a

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Page 3 of 9

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SA No.477 of 2022

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notice dated 17.08.2022 and thereafter issued Annx.A4 notice dated 30.09.2022 intimating the date of taking possession.

¶32

The averment in para 1 of the S.A that the loans were taken by mortgaging the properties of the applicant having a total extent of 25 cents in Re. Sy. No.144/4 in Block No.57 in Morarur village, Kondotty Taluk, Malappuram district is not true. As stated above the loans were availed by mortgage of 25 cents in Re. Sy. No.144/4 in Block No.57 in Morayur village, Kondotty Taluk, Malappuram district which belongs to the son of the applicant, Sri.Majid Ummer.

¶33

The averment in para 4 of the S.A. that the defendant bank approached the Chief Judicial Magistrate Court, Manjeri and filed CMP No.2299/2022 for taking possession of the property without issuing demand notice is absolutely false. The applicant had filed W.P (C) No. 10179/2022 before the Hon'ble High Court of Kerala challenging the demand notice and the Hon'ble High Court of Kerala vide its order dated 24.03.2022 directed the applicant to pay off the outstanding amounts in 16 monthly instalments, the first instalment to be paid on or before 24.04.2022. The applicant however did not pay even a single monthly instalment. Applicant is chronic defaulter and he has no intention to repay the dues. The proceedings of the bank under SARFAESI Act, do not suffer from any illegality. Hence it is humbly prayed that this Tribunal may be pleased to dismiss the S.A with costs.

¶34

The point arising for consideration is, as to whether the applicant is entitled to get the relief sought for in this S.A.

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POINT: Admittedly, M/s. New Amana Baker, which is a partnership firm consisting of the applicant, Majeed Ummer, son of the applicant and one Sainaba as partners, availed a Dropline Overdraft facility of Rs.50,00,000/- and one Maimoona stood as guarantor for the aforesaid credit facility. The said Maimoona was discharged from the obligations under the aforesaid credit facility and reduced Dropline Overdraft limit of Rs.30,00,000/- was granted to the partnership firm and subsequently a GECL of Rs.2,30,000/- was also granted to the partnership firm.

¶36

The averment of the applicant that the aforesaid loans were taken by mortgaging the properties of the applicant having a total extent of 25 cents in Re. Sy. No.144/4, Block No.57 in Morayur village, Kondotty Taluk in Malappuram District has been stoutly denied by the defendant. It is the counter averment of the defendant in his written statement that the above said credit facilities were granted upon the guarantee of Maimoona and the mortgage over the immovable property belonging to Majeed Ummer, who is the son of the applicant has been created. The above averment has not been either

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Page 4 of 9

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SA No.477 of 2022

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refuted or denied by the side of the applicant. Therefore, it is established that the immovable property mortgaged with the defendant for the availment of credit facilities by the applicant belongs to Majeed Ummer and not to the applicant. Majeed Ummer, against whose property, the SARFAESI proceedings were initiated has not challenged the measures taken by the defendant by filing SA before this Tribunal. Therefore, this Tribunal is persuaded to accept the contention of the defendant in the written statement and that the applicant, who has filed this SA is not an aggrieved person within the meaning of Section 17(1) of the SARFAESI Act, 2002.

¶40

The applicant has not specifically averred in the SA as to whether he was prompt in repaying the outstanding loan due to the defendant. However, it is revealed from the perusal of the averments of the defendant in the written statement that since the borrowers committed default in complying with the terms and conditions governing grant of credit facilities, loan accounts were classified as NPA. The demand notice dated 14.1.2022, Annx.A1, was served to the applicant and other guarantors. The applicant has omitted to enclose the copy of the last page of the demand notice containing the description of ‘C’ schedule Part-I movable property and Part-II immovable property as evidenced from the perusal of the averment in para 7 of the written statement. However, defendant has filed the copy of the demand notice, Annx.B1, containing all the pages of the original demand notice sent to the applicant.

¶41

The applicant and other guarantors were called upon to pay the outstanding loan due to the tune of Rs.28,12,660/- as on 14.1.2022 within 60 days from the date of receipt of the notice. The reply notice dated 21.2.2021 (year has been wrongly mentioned as 2021, instead of 2022) was sent on behalf of the applicant as well as other guarantors through their Advocate to the defendant stating that the details of the loans, dates of sanction of loans, rate of interest, date of classification as NPA have not been mentioned in the demand notice. The defendant sent reply dated 7.3.2022, Annx.A3, to the applicant and other guarantors denying the averments of the applicant and other guarantors in their reply. It has been mentioned in the reply notice about the details of loan availed, loan documents acknowledging the debt including sanction letter, rate of interest and the creation of security interest. It is also seen from the perusal of the reply notice, that the applicant and other borrowers were also informed about the date of NPA through the letter dated 23.12.2021. In the reply notice, Annx.A3, the date of receipt of the reply of the applicant, Annx.A2 has been mentioned as 25.2.2022. Annx.A3 reply notice was sent on 7.3.2022. Therefore, it is evident that the reply, Annx.A3 was sent by the defendant within the period of 15 days as contemplated under Section 13 (3A) of the SARFAESI Act, 2002. Hence the argument advanced by the counsel for the applicant that

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Page 5 of 9

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SA No.477 of 2022

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the objection to the demand notice was not considered in time does not hold good.

¶45

Since the applicant and other guarantors have failed to comply with the directions of the demand notice, possession notice dated 30.4.2022, Annx.B2 was issued. The defendant has produced true copies of photographs evidencing the affixture of possession notice in the conspicuous part of the secured asset as Annx.B3(a) and B3(b). The defendant has also produced true copies of postal acknowledgement cards as Annx.B4 to B8 to show that the possession notice was served to the applicant and other guarantors. Annx.B9 and B10 are the true copies of extract of Kozhikode edition of the Hindu Daily dated 01.05.2022 and the extract of Malappuram edition of Mathrubhumi daily dated 01.05.2022 to show that the possession notice was published in two newspapers having wide circulation in the area, where the applicant and other guarantors resided.

¶46

The argument of the counsel for the defendant that since there was no publication for Hindu daily as Malappuram edition, possession notice was published in the Hindu daily having the edition of Calicut. Hence the argument advanced by the counsel for the defendant that the publication of the possession notice in Hindu daily having the edition of Calicut is illegal, does not hold good.

¶47

On application filed by the defendant under Section 14 of the SARFAESI Act, 2002 before the Chief Judicial Magistrate Court, Manjeri, order was passed in CMP No.2299/2022 appointing Advocate Commissioner for taking physical possession of the secured asset. The applicant has filed copy of Advocate Commissioner notice dated 30.9.2022 as Aannx.A4 contending that the Advocate Commissioner informed the applicant and other guarantors that he would take possession of the property on 30.09.2022. The above averment of the applicant has been denied by the defendant in his written statement contending that the Advocate Commissioner issued notice dated 17.8.2022 informing them that he would take physical possession of the secured asset on 30.9.2022. Thereafter he issued Annx.A4 notice dated 30.9.2022. The counsel for the defendant submitted that the SA ought to have been filed within 45 days from the date of receipt of the first Advocate Commissioner notice dated 17.8.2022 and that the SA was filed on 25.10.2022 and that therefore, the filing of SA is barred by limitation. The averment of the defendant in paragraph 9 of the written statement with regard to the issuance of the notice dated 17.8.2022 by the Advocate Commissioner for taking physical possession of the secured asset has not been refuted or denied by the side of the applicant. In any event, a perusal of the Advocate Commissioner notice, Annx.A4, would show that the Advocate Commissioner has already issued notice to the applicant and other guarantors with regard to taking physical possession of the property

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Page 6 of 9

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SA No.477 of 2022

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on 13.09.2022. Therefore, the applicant ought to have filed this SA within the period of 45 days from the date of issuance of the first Advocate Commissioner notice dated 17.8.2022, but he has filed this SA on 25.10.2022 beyond the limitation period. Therefore, it is evident that the filing of the SA is barred by limitation.

¶51

In any event, Advocate Commissioner issued notice for taking physical possession of the secured asset pursuant to the order passed by the Chief Judicial Magistrate Court, Manjeri in CMP No.2299/22 and the Advocate Commissioner being a Court Officer has to act as per the above direction of the Chief Judicial Magistrate Court. Even though the notice issued by the Advocate Commissioner can be construed as a measure either under Section 13(4) or Section 14 of the SARFAESI Act, 2002, the applicant has not challenged the order of the learned Chief Judicial Magistrate Court, Manjeri. Without challenging the order of the Chief Judicial Magistrate Court, Manjeri, challenging the subsequent measure is unsustainable. The relief sought for by the applicant in paragraph 6 of the SA is as follows:

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“This Hon’ble Tribunal may be pleased to hold that the possession of secured assets of the applicant by the defendant bank is illegal and to set aside all the steps taken by the defendant under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and order for payment of compensation to the applicant for the loss sustained by the illegal act of the defendant.”

¶53

The applicant has not challenged the issuance of the possession notice dated 30.4.2022, Annx.B2, by filing the SA within the period of 45 days from the date of issuance of the possession notice. The applicant has also not pointed out as to whether the issuance of the possession notice is not in conformity with the provisions of Section 13(2) of the SARFAESI Act, 2002. However, the defendant has filed copies of documents as Annx.B2 to B10 as referred to supra, to show that the possession notice has been issued in conformity with the mandatory requirements of the provisions of Section 13(4) of the SARFAESI Act, 2002. Therefore, this Tribunal holds that the applicant is not entitled to get the reliefs sought for in the SA, since he has miserably failed to prove his case.

¶54

The applicant filed WP (C) No. 10179/2022 before the Hon'ble High Court of Kerala challenging the demand notice. Order dated 24.3.2022 was passed by the Hon'ble High Court of Kerala directing the applicant to pay off outstanding amounts in 16 monthly instalments and that the first instalment has to be paid on or before 24.4.2022. Admittedly, the applicant did not pay even a single monthly instalment. The attitude of the applicant would show that he had no intention to comply with the above direction of the Hon'ble

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Page 7 of 9

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SA No.477 of 2022

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High Court of Kerala in letter and spirit. In Prestige Lights Ltd. V. State Bank of India {2007(2) D.R.T.C. 401 (SC)} the Hon’ble Supreme Court observed that an order passed by a competent Court- interim or final has to be obeyed without any reservation. If such order is disobeyed or not complied with, the Court may refuse the party violating such order to hear her/ him on merits.

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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. In the result SA No.477/2022 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 13^th December, 2022 .

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 8 of 9

SA No.477 of 2022

List of documents filed by the Applicant along with the application

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S.No.	Date	Particulars
1.	14.01.2022	True copy ofthe demandnotice underSec.13(2)
2.	21.02.2021	True copy ofthereplynotice
3.	07.03.2022	True copy ofthereplynotice
4.	30.09.2022	True copy of the notice issued by Advocate Commissioner.

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

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S.No.	Date	Particulars
1.	14.01.2022	True copy of 13(2) demandnotice.
2.	30.04.2022	True copy ofpossession notice.
3.	---	True copy of photograph evidencing affixture of Annx.B2 possession notice.
4.	---	True copy of the photograph evidencing affixture of Annx.B2 possession notice.
5.	---	True copy of postal A/D card evidencing receipt of Annx.B2 possession notice byM/sNew Amanabakery
6.	---	True copy of postal A/D card evidencing receipt of Annx.B2 possession notice by Ummer K.C.
7.	---	True copy of postal A/D card evidencing receipt of Annx.B2 possession notice byMajid Ummer.
8.	---	True copy of postal A/D card evidencing receipt of Annx.B2 possession notice by Sainaba.
9.	---	True copy of postal A/D card evidencing receipt of Annx.B2 possession notice byMaimoona.
10.	01.05.2022	True copy of the extract of the Kozhikode edition of ‘The Hindu’ daily evidencing publication of Annx.B2 possession notice.
11.	01.05.2022	True copy of the extract of the Kozhikode edition of ‘Mathrubhumi’ daily evidencing publication of Annx.B2 possession notice.

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/

Page 9 of 9

Ummer K C v. State Bank of India

Case brief

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Ummer K C v. State Bank of India

Case brief

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