Dismissed

K Haris v. Idbi Bank

DRT17 Oct 2023SA/127/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal rejected Applicant's Securitization Application challenging Section 13(2) demand notices and Section 14 proceedings. The Tribunal upheld the validity of notices and court orders, rejecting claims regarding RBI guideline violations and lack of property details in affidavits.

What did the court decide?

Application for setting aside demand notices, challenging asset classification, and quashing Section 14 order dismissed. No costs.

K Haris versus Idbi Bank — Execution and Attachment | DRT (2023)

¶1

Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 17^th DAY OF OCTOBER, 2023

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

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S.A No. 127 of 2023

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Between

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K. Haris, S/o. Moidu, Kuningarath, Harinagar, Madiyoor, Kalpetta, Wayanad – 673 121.

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--- Applicant

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And

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IDBI Bank Limited, Kalpetta Branch, Kalpetta Business Centre, Ground Floor, Kalpetta Bypass Junction, Vythiri, Wayanad-673 121 Rep. by its Manager.

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The Regional Manager, IDBI Bank Limited, Regional Office, City Plaza, 2^nd Floor, YMCA Cross Road, Kozhikode -673 001.

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Authorised Officer, IDBI Bank Limited, Panampilly Nagar Ernakulam -682 036. --- Defendants

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SA No.127 of 2023

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This Securitization Application coming on 05.09.2023 for final hearing before me in the presence of Mr. P. Srihari, Advocate for the Applicant and Mr. Sanhosh Kumar K., Advocate for the defendants and upon hearing arguments of learned Counsels for both the parties and upon perusing the material on records, this Tribunal delivered the following:

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O R D E R

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This Securitisation Application was filed on 13.03.2023 seeking to declare that all measures under the provisions of SARFAESI Act and Rules including Annexure-A1 and A2 Demand notices, AnnexureA7 notice issued by the Advocate Commissioner, Annexure-A8 Section 14 Application, Annexure-A9 affidavit and Annexure-A10 Section 14 Order in CMP No.1089/2023 on the file of CJM Court, Kalpetta, Wayanad are invalid and illegal and set aside Annexure-A1 and A2 Demand notices, Annexure-A7 notice issued by the Advocate Commissioner, Annexure-A8 Section 14 application and AnnexureA10 Section 14 Order in CMP No.1089/2023 on the file CJM Court, Kalpetta, Wayanad and declare that the classification of accounts as Non-Performing Asset is illegal as because such classification of the loan accounts is in violation of guidelines issued by the RBI and the orders passed by the Hon’ble Apex Court and order restoration of the possession of all the properties described in Annexure-A1 and A2 Demand notices to the applicant and order costs and compensation to the applicant.

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

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The Applicant stood as guarantor to the Kisan Credit Card loans availed by his wife Najila V.K. on 02.02.2015 and his father Ummer V.K. on 23.02.2015 as per loan account Nos.1490651100000310 and 1490651100000462 respectively, and applicant had deposited title deeds relating to 5.50 cents of landed property comprised in Panamaram village, Mananthavady Taluk, Wayanad District and 3.50 cents (1.42 Ares) of landed property comprised in Kalpetta Village, Vythiri Taluk, Wayanad District.

¶19

The applicant also stood as guarantor to the Kisan Credit Card loan dated 14.03.2016 bearing loan account No.1490651100000833 availed by Mr.Noufal Vellamkulam and applicant had deposited title deeds relating to 10.12 Ares of landed property comprised in Panamaram village, Mananthavady Taluk, Wayanad District.

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Page 2 of 11

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SA No.127 of 2023

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Applicant himself had availed Kisan Credit Card loans dated 27.11.2014 and 20.11.2014 respectively bearing loan account Nos.1490651100000116 and 1490651100000107 and had deposited title deeds relating to 4.96 Ares of landed property comprised in Kalpetta Village, Vythiri Taluk, Wayanad District.

¶23

The above agricultural loans were availed during 2014-2016 for agricultural purposes. During severe floods occurred on 16.08.2018, 08.08.2019, 07.08.2020 and 18.10.2021, the agricultural operations of the applicant and other borrowers was adversely affected, which resulted in acute dearth of funds to repay the loan amounts.

¶24

The 3^rd defendant issued separate Section 13(2) demand notice dated 25.03.2022 with respect to aforesaid loan account No1490651100000310 and 1490651100000462. True copies of Section 13(2) demand notice dated 25.03.2022 issued by 3^rd defendant with respect to loan account Nos.1490651100000310 and 1490651100000462 are produced here as Annexure-A1 and A2 respectively. In Annexure-A1 demand notice with respect to loan account No.1490651100000310, the date of NPA is stated as 26.01.2022. The details of amount demanded and the details of immovable properties are not stated and the details stated are incorrect. The details of progressive total of claim with the rate of interest and the amounts repaid are not stated in Annexure-A1 demand notice, which is violation of Section 13(3).

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In Annexure-A2 Demand notice with respect to loan account No.1490651100000462, the date of NPA is stated as 26.01.2022. The details of amount demanded and the details of immovable properties are not stated and the details stated are incorrect. The details of progressive total of claim with the rate of interest and the amounts repaid are not stated in Annexure-A2 demand notice, which is violation of Section 13(3).

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True copy of Section 13(2) demand notices dated 28.10.2021 issued by 3^rd defendant with respect to loan account No.1490651100000833 is produced here as Annexure-A3. True copy of Section 13(2) demand notices dated 25.02.2022 issued by 3^rd defendant with respect to loan account No.1490651100000107 is produced here as Annexure-A4.

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The Clause 4.2.7 of RBI guidelines with respect to asset classification reads – “4.2.7 Asset Classification to be borrower wise and not facility wise. However the aforesaid asset classifications are

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Page 3 of 11

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SA No.127 of 2023

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evidently on account wise. Accordingly, all the aforesaid asset classifications on account wise are per se illegal.

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The amounts demanded in Annexure-A1 and A2 demand notices are not correct, which is evident from the statement of accounts in OA No.565/2022 pending on the file of this Hon'ble Tribunal produced by the 1^st defendant herein. True copy of relevant pages of statement of accounts relating to loan account No.1490651100000310, produced in OA No.565/2022 pending on the file of this Hon'ble Tribunal is produced here as Annexure-A5. True copy of relevant pages of statement of accounts relating to loan account No.1490651100000462, produced in OA No.565/2022 pending on the file of this Hon'ble Tribunal is produced here as Annexure-A6.

¶32

The applicant received a notice dated 13.03.2023 issued by the Advocate Commissioner in CMP No.1089/2023 on the file of CJM Court, Kalpetta, Wayanad notifying that the property scheduled (5.50 cents comprised in Panamaram village, Manantahavady Taluk, Wayanad District and 3.50 cents (1.42 Ares) of landed property comprised in Kalpetta Village, Vythiri Taluk, Wayanad district) in the said CMP No.1089/2023, 10 days’ time is given to vacate and hand over the same. True copy of notice dated 13.03.2023 issued by the Advocate Commissioner in CMP No.1089/2023 on the file of CJM Court, Kalpetta, Wayanad is produced here as Annexure-A7. True copy of Section 14 application in CMP No.1089/2023 on the file of CJM Court, Kalpetta, Wayanad is produced here as Annexure-A8. True copy of affidavit in CMP No.1089/2023 on the file of CJM Court, Kalpetta, Wayanad is produced here as Annexure-A9. True copy of Section 14 Order in CMP No.1089/2023 on the file of CJM Court, Kalpetta, Wayanad is produced here as Annexure-A10.

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The description of the properties with their details like boundaries, building number with their built-up area, etc. are not declared in Annexure-A9 affidavit which is clear violation of Clause (iii) of Proviso to Section 14(1).

¶34

The aforesaid loan No.1490651100000462 dated 23.02.2015 is not secured with any of the aforesaid properties, which is discernible from Annexure-A2 Demand notice itself.

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Annexure-A10 Section 14 order is per se illegal on the ground that it was passed without verifying the veracity of the declarations made in Annexure-A9 affidavit, especially the compliance of declaration in adherence to Clause (iii) of Proviso to Section 14(1).

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Page 4 of 11

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SA No.127 of 2023

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The Demand notice dated 15.11.2022 stated to be issued under Section 13(2) declared in Annexure-A9 affidavit was not delivered to the applicant or any of the parties to the subject loan accounts. Hence, such a declaration is false and hence the learned CJM ought not to have assed Annexure-A10 Section 14 Order.

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Annexure-A7 notice issued by the Advocate Commissioner is dated 13.03.2023 giving 10 days’ time to make the petition schedule property vacant and to hand out the same is illegal on the ground that it is issued in pursuance to the illegal measure.

¶40

The defendants are threatening to physically disposes the applicant and family members from the residential property pursuant to the aforesaid illegal measures and hence it is apposite for the applicant to approach this Hon'ble Tribunal under Section 17 of SARFAESI Act.

¶41

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

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Smt. Najila V.K. and Mr. Ummer V.K. had availed financial facilities amounting to Rs.25,00,000/- each from the defendant bank under Kissan Credit Card scheme (KCC in short) for which the applicant stood as the guarantor. Towards the collateral security, the applicant had created equitable mortgage in favour of the defendant bank over (1) 2.22 Ares in Panamaram village and (2) 1.42 Ares in Kalpatta Village, along with all improvements therein. However, since the borrowers failed and neglected to repay the loan amount with interest as agreed, the defendant bank initiated recovery proceedings under the SARFAESI Act, 2002. The defendant bank issued AnnexureA1 and A2 notices to the borrowers as well as against the guarantors under Section 13(2) of the SARFAESI Act, dated 25.3.2022 demanding them to repay the loan amount. Since some errors occurred in the said demand notice dated 25.3.2022, which was noticed subsequently, a fresh notice dated 15.11.2022 u/s 13(2) of the SARFAESI Act, was issued to the borrowers as well as the guarantors which was acknowledged by the borrowers as well as the applicant herein. The true copy of the said demand notice dated 15.11.2022 issued to the borrowers as well as to the applicant being the guarantor are produced as Annexure-B1 and B2 respectively. The true copies of postal acknowledgement cards signed by the borrowers and the applicant herein are produced as Annexure-B3 and B4 respectively. The applicant as well as the borrowers, however, failed to repay the amount as specified in the demand notice. The defendant bank was

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Page 5 of 11

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SA No.127 of 2023

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therefore, constrained to proceed further including proceedings u/s 14(1) before the Chief Judicial Magistrate Court, Kalpetta.

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The reasons put forwarded by the applicant for the nonpayment of the loans as per agreed terms and conditions are denied. The applicant as well as the borrowers are financially well and good.

¶47

Annexure-B1 and B2 demand notices were issued subsequent to Annexure-A1 and A2 notices and the said subsequent notices were already acknowledged by the borrowers as well as the guarantor/ applicant herein. The said factum of receipt of demand notice dated 15.11.2022 was conveniently suppressed by the applicant for the reasons best known to them only.

¶48

The borrowers, guarantors as well as the secured assets are different in each loan transactions. The averments made by the applicant regarding asset/account classification are made without any basis. It is the settled position that if the borrowers/guarantors failed to cause any objections to the demand notice issued u/s 13(2) of the SARFAESI Act, issued by the secured creditor, the notice is presumed as admitted and aggrieved parties are debarred from raising any further objections.

¶49

The defendant bank initiated further proceedings and approached the CJM Court, Kalpetta for physical possession of the secured asset. Annexure-A9 affidavit is also in accordance with law. The order passed by the CJM Court is in accordance with law. The properties against which the Advocate Commissioner issued notice are the secured assets and all further averments are untrue. The details of the secured assets are clearly mentioned in the notices as well as Section 14 application. It is prayed that this Hon'ble Tribunal may be pleased to dismiss the above S.A. with exemplary cost.

¶50

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

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Point: It is admitted by the applicant with regard to the availment of credit facilities by Mrs. Najila V.K. and Mr.Ummer V.K., the wife and father of the applicant respectively from the 1^st defendant Bank and that the applicant stood as guarantor to the aforesaid credit facilities by creating equitable mortgage by deposit of title deeds over his immovable property measuring 5.50 cents comprised in Panamaram Village, Mananthavady Taluk, Wayanad District and 3.50 cents comprised in Panamaram Village, Mananthavady Taluk, Wayanad District in favour of the 1^st defendant Bank. It is also admitted by the applicant that he also stood as guarantor to the credit

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Page 6 of 11

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SA No.127 of 2023

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facilities availed by Mr. Noufal Vellamkulam by creation of security interest over his property measuring 10.12 Ares comprised in Panamaram Village, Mananthavady Taluk, Wayanad District. It is also not in dispute that the applicant himself has availed credit facilities on 27.11.2014 and 20.11.2014 from the 1^st defendant Bank by deposit of title deed relating to 4.96 Ares o land comprised in Kalpetta Village, Vythiri Taluk, Wayanad district. Default in repayment of the outstanding loan due is also admitted by the applicant. Hence the loan account came to be classified as Non-Performing Asset. According to the applicant, Annexure-A1 to A4 demand notices were issued to the borrowers and guarantors including the applicant.

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It is revealed from the perusal of the averment of the written statement filed by the defendants as well as the documents, Annexures-B1 to B4 produced along with the written statement that since there was some error in the demand notice dated 25.3.2022, fresh demand notice dated 15.11.2022, Annexure-B1 was served to the applicant as well as to his wife Najila and also Annexure-B2 demand notice was issued to the applicant and his father separately. The aforesaid issuance of the demand notices, Annexures-B1 and B2 was omitted to be stated in the SA for the best reasons known to the applicant. A perusal of the demand notices shows that the particulars of financial assistance granted and the details of documents submitted for creation of security interest, description of properties with boundaries and the survey numbers of the properties, commission of default, total outstanding amount etc are clearly stated. Therefore the contention of the applicant that the details of the immovable properties and details of the amounts are not stated in the demand notices is liable to be rejected. Further the provisions of Section 13(2) does not contemplate the mentioning of progressive total of the claim with rate of interest and the amounts repaid in the demand notices. It is established that the applicant stood as guarantor to different borrowers namely, his wife and his father. Therefore the contention of the applicant that the asset clarification should be borrower-wise and not facility-wise as per Clause 4.2.7 of RBI guidelines does not hold good. Receipt of demand notice is accepted by the applicant. Further the defendants have produced copies of postal acknowledgment cards as Annexure-B3 and B4 for receipt of Annexure-B1 and B2 demand notices.

¶56

Since the applicant failed to respond to the terms of the demand notice, the 3^rd defendant filed Annexure-A8 petition and Annexure-A9 affidavit under Section 14 of the SARFAESI Act, 2002 before the Chief Judicial Magistrate Court, Kalpetta, Order, Annexure-A10 came to be passed in CMP No.1089/2023 by the learned Chief Judicial Magistrate, Kalpetta for taking physical possession of the secured

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Page 7 of 11

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SA No.127 of 2023

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asset. The Advocate Commissioner issued Annexure-A7 notice dated 13.03.2023 to the applicant and his wife and father calling upon them to hand over the vacant possession of the secured asset within 10 days.

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It is submitted by the counsel for the applicant that the description of the properties with the details, such as boundaries, building number with built-up area etc are not declared in AnnexureA9 affidavit and that as per Annexure-A2 demand notice the lone pertaining to the loan No.1490651100000462 is not secured with any of the properties and that Annexure-A10 order is per se illegal since it was passed without verifying the veracity of declaration made in Annexure-A9 affidavit especially with regard to the compliance of declaration in adherence to Clause (iii) of proviso to Section 14(1) of the SARFAESI Act, 2002. Annexure-A7 Advocate Commission notice is illegal since it was issued in pursuant to the illegal measures.

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The Counsel appearing for the defendants submitted that all the details required under Section 14(1) of the SARFAESI Act, 2002 have been stated in Annexure-A9 affidavit and that property which physical possession is sought for is secured asset and that the details of the secured asset are clearly mentioned in Annexure-A9 affidavit.

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A bare perusal of Annexure-A9 affidavit shows that the particulars such as the aggregate amount of financial assistance granted to the 2^nd and 3^rd respondents therein and creation of security interest by the 1^st respondent therein in favour of the petitioner bank, non-occupation of the scheduled property by any tenants, the details of the secured asset with survey numbers, default in repayment of the outstanding loan due, issuance of demand notice to the respondents, the total outstanding amount as on the date of classification of the loan account as Non-Performing Asset, failure of the respondents to respond to the terms of the demand notice, registration of the asset with CERSAI are clearly stated. Further the description of the property with its boundaries is stated in Annexure-A8 petition. Thus it is evident that all the particulars required under the proviso (i) to (ix) of Section 14(1) of the SARFAESI Act, 2002 has been complied with by the 3^rd respondent. The immovable property can be identified only by its survey numbers and boundaries. Proviso (i) to (ix) of Section 14(1) of the SARFAESI Act, 2002 does not contemplate for specific mention the building number and its extent in the affidavit filed under Section 14(1) of the SARFAESI Act, 2002. Hence the submission of the Counsel for the applicant that non-mentioning of the building number with is built-up area is violation of Clause (iii) to proviso to Section 14(1) of the SARFAESI Act, 2002, does not hold good. A perusal of Annexure-A10 order passed by the Chief Judicial Magistrate Court,

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Page 8 of 11

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SA No.127 of 2023

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Kalpetta, Wayanad in CMP 1089/2023 shows that the learned Chief Judicial Magistrate, after having perused the averments of the affidavit and the documents filed and having satisfied over the same, passed the order for taking physical possession of the secured asset. This Tribunal does not find any infirmity or flaw in the above order. The applicant has miserably failed to prove his case that he is entitled to get the relief sought for in the SA, which deserves to be dismissed.

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In the result, S.A No.127 of 2023 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 17^th October, 2023.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 9 of 11

SA No.127 of 2023

List of documents filed by the Applicant along with the S.A.

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Sl. No.	Date	Particulars
1.	25.03.2022	True copy of Section 13(2) demand notice issued by 3^rddefendant with respect to loan account No.1490651100000310.	Annexure-A1
2.	25.03.2022	True copy of Section 13(2) demand notice issued by 3^rddefendant with respect to loan account No.1490651100000462.	Annexure-A2
3.	28.10.2021	True copy of Section 13(2) demand notice issued by 3^rddefendant with respect to loan account No.1490651100000833.	Annexure-A3
4.	25.02.2022	True copy of Section 13(2) demand notice issued by 3^rddefendant with respect to loan account No.1490651100000107.	Annexure-A4
5.	---	True copy of relevant page of statement of accounts relating to loan account No.1490651100000310 produced in OA No.565/2022 pending on the file of this Hon'bleTribunal.	Annexure-A5
6.	---	True copy of relevant page of statement of accounts relating to loan account No.1490651100000462 produced in OA No.565/2022 pending on the file of this Hon'bleTribunal.	Annexure-A6
7.	13.03.2023	True copy of notice issued by the Advocate Commissioner in CMP No.1089/2023 on the file of CJM Court, Kalpetta,Wayanad.	Annexure-A7
8.	---	True copy of Section 14 application in CMP No.1089/2023 on the file of CJM Court,Kalpetta,Wayanad.	Annexure-A8
9.	---	True copy of affidavit in CMP No.1089/2023 on the file of CJM Court, Kalpetta,Wayanad.	Annexure-A9
10.	---	True copy of Section 14 order in CMP No.1089/2023 on the file of CJM Court Kalpetta,Wayanad.	Annexure-A10

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Page 10 of 11

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SA No.127 of 2023

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

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SL. No.	Date	Particulars
1.	15.11.2022	True copy ofthe demandnotice.	Annexure-B1
2.	15.11.2022	True copy ofthe demandnotice	Annexure-B2
3.	---	True copy of the postal acknowledgment card.	Annexure-B3
4.	---	True copy of the postal acknowledgment card.	Annexure-B4

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(Su. WILLYAHM) PRESIDING OFFICER

¶79

Mj/

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Page 11 of 11

K Haris v. Idbi Bank

Case brief

What is this about?

What did the court decide?

K Haris v. Idbi Bank

Case brief

What is this about?

What did the court decide?

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