Allowed

Muhammed Samjad K S v. Idbi Bank

DRT9 Oct 2023SA/274/2023

Case brief

AI extract

What is this about?

The Tribunal quashed the possession notice issued under Section 13(4) of the SARFAESI Act as it was not published in two leading newspapers as mandatory under Rule 8(2) of the Security Interest (Enforcement) Rules, 2002, despite the bank's failure to produce proof of publication.

What did the court decide?

The possession notice (Annexure-A2) issued under Section 13(4) of SARFAESI Act was set aside as it violated Rule 8(2) of the Security Interest (Enforcement) Rules, 2002.

Muhammed Samjad K S versus Idbi Bank — Banking and Recovery | DRT (2023)

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 9^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. 274 of 2023

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Between

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Mammikutty, S/o.Moideenkutty, Annachambally House, Tirur P.O., Malappuram-676101.

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--- Applicant

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And

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The Tirur Urban Co-operative Bank Ltd, Tirur Main Branch, represented by its Authorised Officer, Head Office, Tirur, Malappuram – 676101.

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--- Defendant

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This Securitization Application coming on 18.08.2023 for final hearing before me in the presence of Mr. Tony Thomas Inchiparambil, Advocate for the Applicant and Mr.Venkideswaran S., Advocate for the Defendant 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 27.05.2022 seeking to quash Annexure-A1 and A2 notices issued by the defendant and all further proceedings thereto and to quash all steps initiated under the SARFAESI Act, by the defendant.

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SA No.274 of 2022

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

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Applicant availed a term loan of Rs.90,00,000/- Lakhs on 2019 from the defendant bank on various terms and conditions and on mortgage of his property. Applicant was infected with various ailments and he was not able to abide by the terms of sanction. Defendant had classified the account as Non-Performing Asset. The defendant bank issued demand notice dated 11.11.2019 under Section 13(2) of SARFAESI Act, 2002 to the parties to the loans. Copy of the same is produced herewith as Annexure-A1. The same is bad for noncompliance of the statutory provisions.

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The property against which the proceedings taken is having an extent of 50 cents in Re-Sy No.359/5 of Tirur Village, Tirur Taluk, Malappuram District. In the said property the residential house of the applicant is situated. The applicant is residing in the above property with his family. The defendant is now proceeding with the recovery measures without complying with the statutory requirements.

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Subsequently the defendant proceeded to take possession under Section 13(4) of the SARFAESI Act, a possession notice was issued on 19.02.2022. Copy of the same is produced herewith as Annexure-A2. Notice was affixed notice in the house of the applicant. Annexure-A2 notice is illegal and liable to be interfered with. Being highly aggrieved by Annexure-Annexure –A1 notice and also proceedings against secured assets under the provisions of SARFAESI Act and Security Interest (Enforcement) Rules, this S.A. is filed.

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The defendant came on record and filed Written Statement interalia contending as follows :

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The applicant had applied for a Cash Credit advance (renewal of existing limit) of Rs.90,00,000/- at the Tirur Main branch of the defendant Bank on 30.03.2019. Mrs. A.P. Safia, wife of the applicant was a co-obligant for the loan. The applicant submitted the necessary supporting documents, marked as Annexures-B3 to B8.

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The applicant has executed necessary security documents in favour of the defendant Bank for availing the loan. The documents are produced herewith as Annexures-B9 to B12.

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As the security for the loan, the applicant created valid equitable mortgage over his property, admeasuring 20.23 Ares (50 cents) of land in Re.Sy.No.359/5-8, Block 1 of Tirur Village and the

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Page 2 of 7

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SA No.274 of 2022

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residential building thereon bearing number 34/295 (New) 19/279N5 (Old) by depositing of title deeds with defendant Bank.

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The applicant submitted the Revenue/Village records of the residential property which is the secured asset as Annexure-B13 to B16. As the applicant failed to comply with the terms of the loan and made default in regular conduct of the loan, the defendant Bank classified the account as NPA on 30.07.2019.

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A demand notice dated 11.11.2019, Annexure-A1 under the provisions of Section 13(2) of the SARFAESI Act, 2002 was served on the applicant. The applicant has not made any representation or raised any objections to the aforesaid notice to the defendant Bank. Copy of the postal acknowledgement card of Tirur Post Office has been produced as Annexure-B18.

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Since the applicant failed to repay the loan even after the receipt of the notice under Section 13(2) of the SARFAESI Act, 2002 the defendant issued a possession notice dated 19.02.2022, AnnexureB19 under Section 13(4) of the SARFAESI Act, 2002.

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Copy of Possession notice has been delivered to the applicant as well as affixed on a conspicuous place of the secured asset. Copy of photograph of the possession notice duly affixed at a conspicuous place, near to the KSEB electric meter of the secured asset, has been produced as Annexure-B20.

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The Court of Chief Judicial Magistrate, Manjeri passed an order on 02.09.2021, Annexure-B21 in Crl.MP No.961/2021 in favour of the defendant Bank. The proceedings in the Court of Chief Judicial Magistrate, Manjeri and order passed on 02.09.2021 in Crl. MP No.961/2021 in favour of the defendant Bank has not been mentioned at all by the applicant in the S.A. The statement of account for the period from 19.03.2018 to 22.09.2022 is produced as Annexure-B22. The S.A. may be dismissed with costs.

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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: Availment of cash credit advance to the tune of Rs.90,00,000/- from the defendant Bank upon creation of security interest equitable mortgage over his property, admeasuring 20.23 Ares (50 cents) of land in Re.Sy.No.359/5-8, Block 1 of Tirur Village and the residential building thereon bearing number 34/295 (New) 19/279N5 (Old) by depositing of title deeds with defendant Bank is

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Page 3 of 7

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SA No.274 of 2022

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admitted by the applicant. The wife of the applicant namely, Mrs.A.P.Safia stood as co-applicant for the aforesaid credit facility. The loan documents in respect of the aforesaid credit facilities have been produced as Annexure-B1, B2 and B9 to B12 by the defendant Bank. Since the applicant defaulted in repayment of the outstanding loan due, his loan account was classified as Non-Performing Asset on 30.7.2019.

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Demand notice dated 11.11.2019, Annexure-A1 was served to the applicant calling upon him to repay the outstanding loan due within 60 days from the date of receipt of the notice. It is not in dispute that the applicant neither sent any objection/representation to the demand notice nor did he comply with the terms of the demand notice. Therefore the defendant bank issued possession notice dated 19.2.2022, Annexure-A2, for taking symbolic possession of the secured asset. The receipt of the possession notice is admitted by the applicant.

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The defendant Bank has produced copy of photograph Annexure-B20 to show that possession notice was affixed on the conspicuous part of the secured asset.

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The main contention raised by the applicant in the grounds of appeal to the SA is that possession notice was not published as required under Rule 8(2) of Security Interest (Enforcement) Rules, 2002. According to the applicant, possession notice was not published in two leading newspapers and therefore Annexure-A2 possession notice is liable to be set aside. Even though the defendant bank has not specifically countered the above averment of the applicant in respect of non publication of the possession notice in two leading newspapers, in its written statement, there is also no averment in the written statement that possession notice was published in two leading newspapers. Even though the defendant bank has produced as many as 22 documents as Annexure-B1 to B22 along with the written statement, this Tribunal does not find any proof of document to show that possession notice was published in two leading newspapers. Thus it is evident that the defendant bank has committed a gross violation of Rule 8(2) of the Security Interest (Enforcement) Rules, 2002.

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The defendant bank has averred in the written statement with regard to filing of petition in Crl. MP No.961/2022 before the Chief Judicial Magistrate Court, Manjeri and passing of Order in Crl. MP No.961/2022 and that the applicant has not mentioned the above said proceedings in the SA. Admittedly, there is no averment in the SA with regard to the aforesaid proceedings pertaining to Crl MP

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Page 4 of 7

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SA No.274 of 2022

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No.961/2022. But the relief sought for by the applicant in the SA is only in respect of Annexure-A1 demand notice and Annexure-A2 possession notice. Thus it is evident that the applicant has not sought for any relief in respect of the order passed in Crl MP No.961/2022 by the Chief Judicial Magistrate Court, Manjeri.

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The failure of the defendant bank either to specifically aver in the written statement with regard to publication of the possession notice or to produce proof to show that possession notice was published in two leading newspapers one in vernacular language having circulating in the locality where the applicant was lastly residing strengthens the contention of the applicant that possession notice was not published as contemplated under Rule 8(2) of the Security Interest (Enforcement) Rules, 2002. Therefore, this Tribunal holds that on the aforesaid ground alone, Annexure-A2 possession notice is liable to be set aside.

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In view of the foregoing reasons, this Tribunal holds that the applicant is entitled to get the reliefs sought for in this SA. In the result, S.A No. 274 of 2022 stands allowed. 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 9^th October, 2023.

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/

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SA No.274 of 2022

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

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Sl. No.	Date	Particulars
1.	---	Copy of Section 13(2) Demand notice issued by the defendant with English translation.	Annexure-A1
2.	---	Copy of Section 13(4) possession notice issued by the defendant with English translation.	Annexure-A2

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

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SL. No.	Date	Particulars
1.	30.03.2019	Copy of loan application.	Annexure-B1
2.	30.03.2019	Annexure toLoan Application.	Annexure-B2
3.	---	True copy of Trade Licence bearing No.263/2017-18 issued by Tirur MunicipalCouncil.	Annexure-B3
4.	20.30.2019	True copy of the Computerised Receipt No.01/118010119766.	Annexure-B4
5.	20.03.2019	True copy of professional Tax Receipt bearingNo.559.	Annexure-B5
6.	---	True copy of certificate of Provisional Registration.	Annexure-B6
7.	---	True copy of certificate of Importer- ExporterCode (ICE)	Annexure-B7
8.	01.02.2022	True copy of LeaseAgreement	Annexure-B8
9.	30.03.2019	True copy of DemandPromissoryNote	Annexure-B9
10.	30.03.2019	True copy ofCashCreditLoan Bond.	Annexure-B10
11.	30.03.2019	True copy of Mortgage Deed and Annexure.	Annexure-B11
12.	30.03.2019	True copy of Memorandum of Deposit of Title deeds.	Annexure-B12
13.	13.12.2018	True copy of Land Tax Receipt No.KL10042604075/2018	Annexure-B13
14.	20.03.2019	True copy of Tax Receipt (Building Tax Receipt)No.551	Annexure-B14

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SA No.274 of 2022

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15.	12.03.2019	True copy of Possession Certificate No.38577281	Annexure-B15
16.	---	Copy of print out of CERSAI Registration details taken from the official website.	Annexure-B16
17.	---	Demand Notice under Sec.13(2) of the SARFAESI Act, 2002	Annexure-B17
18.	---	Copy of Postal acknowledgment card of Tirurpost Office.	Annexure-B18
19.	11.11.2019	Copy of possession notice issued under Sec.13(4) ofSARFAESI Act, 2002.	Annexure-B19
20.	11.11.2019	Copy of possession notice affixed on the secured asset.	Annexure-B20
21.	02.09.2021	Copy of order in Crl.M.P. No.961/2021 of the Court of Chief Judicial Magistrate Manjeri.	Annexure-B21
22.	---	Copy of Statement of Loan Account with Certificate under The Bankers Book EvidenceAct,1891(as amended)	Annexure-B22

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 7 of 7

Muhammed Samjad K S v. Idbi Bank

Case brief

What is this about?

What did the court decide?

Muhammed Samjad K S v. Idbi Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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