Dismissed

Fathima Bind v. The Kottakkal Co. operative Urban Bank Ltd.

DRT15 Dec 2023SA/337/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application seeking to quash SARFAESI proceedings and eviction proceedings on the grounds that mandatory statutory requirements were not met and the applicant waived objections. The Tribunal found the bank complied with the Act.

What did the court decide?

Application dismissed. Applicant not entitled to quash proceedings or prevent physical possession of the secured asset.

Fathima Bind versus The Kottakkal Co. operative Urban Bank Ltd. — 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 15^th DAY OF DECEMBER, 2023

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

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S.A No. 337 of 2023

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Between

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Fathima Bind, W/o.Saithalikutty, Kallingal House, Chenguvetti Kundu, Kottakkal P.O, Malappuram-676503.

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--- Applicant

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And

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The Authorised Officer The Kottakkal Co-operative Urban Bank Ltd. No.1378, Head Office Kottappady, Kottakkal, Malappuram -676 503.

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The Kottakkal Co-operative Urban Bank Ltd. No.1378, Head Office Kottappady, Kottakkal, Malappuram -676 503, Rep. by its Chief Executive Officer/Authorised Officer.

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--- Defendants

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This Securitization Application coming on 13.11.2023 for final hearing before me in the presence of Mr. Zakir Hussain, Advocate for the Applicant and Mr. B.Satheez Chandran, 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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SA No.337 of 2023

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O R D E R

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This Securitisation Application was filed on 03.07.2023 seeking to declare that the entire proceedings initiated by the defendants under SARFAESI Act, 2002 and Security Interest (Enforcement) Rules, 2002 as null and void and to declare that the entire proceedings initiated by the defendants against the applicant and her property under Section 14 of the SARFAESI Act, 2002 is illegal and vitiated by errors on the face of the record and to declare that the property of the applicant is not liable to be proceeded under SARFAESI Act, 2002 and the Rules by the defendants and to pass an order quashing AnnexureA3 demand notice and Annexure-A8 Order passed by the Chief Judicial Magistrate Court, Manjeri and all further proceedings thereto and to issue a direction to the defendants not to take physical possession of the residential property of the applicant and not to evict the applicant from the mortgaged property.

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The availment of mortgage loan to a tune of Rs.75,00,000/from the 2^nd defendant Bank upon creation of security interest over the applicant’s immovable property measuring an extent of 12.81 Ares in Re. Sy. No.114/13/2 of Kottakkal Village, Malappuram District and default in repayment of the outstanding loan due is admitted by the applicant. Hence the loan account of the applicant came to be classified as Non-Performing Asset on 30.06.2020 and Annexure-A3 demand notice was issued to the applicant calling upon her to pay the outstanding loan due within 60 days from the date of receipt of notice. Admittedly, the applicant neither sent any objection to the demand notice did she respond to the terms of the demand notice. Therefore, possession notice dated 03.02.2022 was issued for symbolically taking possession of the secured asset. The 1^st defendant filed Annexure-A6 petition and Annexure-A7 affidavit in Crl. MP No.3026/2022 before the Chief Judicial Magistrate Court, Manjeri, Order Annexure-A8 came to be passed appointing Advocate Commissioner to take physical possession of the secured asset. Pursuant to the direction given in Crl. MP No.3026/2022, the Advocate Commissioner issued notice to the applicant informing her that he would take physical possession of the secured asset on 14.06.2023.

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The Counsel appearing for the applicant submitted that the Government of India declared national lockdown due to Covid 19 pandemic on 24.03.2020 and that on 27.03.2020 the Reserve Bank of India directed all commercial Banks, Co-operative Banks, All India Financial Institutions including Housing Finance Companies and Micro Finance Institutions to allow moratorium of three months on payment of installments in respect of all term loans outstanding as on 1^st March, 2020 and that the aforesaid Banks and Financial Institutions were directed to allow a deferment of another three

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SA No.337 of 2023

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months from 01.06.2020 to 31.08.2020 and that Reserve Bank of India issued Annexure-A1 guidelines in this regard and that the applicant had spent more than Rs.15 Lakhs to the treatment of her husband, who is a chronic kidney patient and that Annexure-A3 demand notice does not contain any details as to the arrears and reason for classification of loan account as NPA and that exorbitant rate of interest has been charged and that the Hon'ble High Court of Kerala in its judgment dated 14.03.2023 in W.P (C) No.1531/2023 directed the applicant to pay Rs.15 Lakhs on or before 27.03.2023 and to pay the balance outstanding loan amount in ten installments starting from 27.04.2023 and that though the applicant remitted Rs.15 Lakhs to the 2^nd defendant bank as per Annexure-A5 receipt, she could not pay the installment amounts due to hospitalization of her husband. It is further submitted by the counsel for the applicant that the Chief Judicial Magistrate Court, Manjeri without proper application of mind, passed Annexure-A8 order appointing Advocate Commissioner to take physical possession of the secured asset and that the mandatory requirements contained in Section 14 of the SARFAESI Act, 2002 was not complied with in the affidavit, AnnexureA7 and that details of the residential property sought to be taken physical possession was not furnished in Annexure-A6 petition and that Annexure-A8 order passed in Crl. MP No.3026/2022 and issuance of notice by Advocate Commissioner is not sustainable and that therefore the SA may be allowed as prayed for.

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The Counsel appearing for the defendants submitted that Covid 19 relief shall be applicable only to those outstanding loans as on 01.03.2020 and that as on the said date the loan account must be a performing asset and must be under stress due to Covid 19 pandemic for paying installments in term loan accounts and servicing interest in cash credit facilities and that the borrower must submit a representation to the Bank for such relief and that Annexure-A1 submitted by the applicant refers to the circular of the Reserve Bank of India dated 27.03.2020 which stipulates conditions for the applicability of the scheme and that since cash credit facility was granted to the applicant, she is entitled for the benefit of Covid 19 relief and that the applicant did not approach the 2^nd defendant bank for such relief and that the loan account was classified as NonPerforming Asset as per the Reserve Bank of India guidelines and that all the details as required under Section 14(1) of the SARFAESI Act, 2002 were furnished in the affidavit filed before the Chief Judicial Magistrate Court, Manjeri and that the Hon’ble Supreme Court has held in Standard Chartered Bank Vs. Noble Kumar and others [2013 SCC 9635] that the satisfaction of the Magistrate contemplated under 2^nd proviso to Sec.14(1) of the SARFAESI Act, 2002 necessarily requires the Magistrate to examine the factual correctness of assertions made in such an affidavit but not the legal niceties of the

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SA No.337 of 2023

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transactions and that the Hon’ble Supreme Court has also held in M/s.R.D. Jain and Co. Vs. Capital Forst Ltd. and others that the step to be taken by the CMM/DM under Section 14 of the SARFAESI Act, 2002 is a ministerial step and that Section 14 does not involve any adjudicatory process qua points raised by the borrower against the secured creditor and that since the applicant failed to send any objection/representation to the demand notice it should be presumed that she has waived her statutory right and that therefore she is not entitled to raise any issue in respect of the demand notice and that the applicant failed to comply with the direction of the Hon'ble High Court of Kerala in W.P (C) No.1531/2023 and that therefore the SA is liable to be dismissed with cost to the defendants.

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The defendants have produced copy of circular dated 27.03.2020 issued by the Reserve Bank of India which is also referred to in Annexure-A1, copy of guidelines issued by Reserve Bank of India. A perusal of the same shows that the Covid 19 relief shall be applicable only to those outstanding loans as on 01.03.2020 and that the applicant was not eligible to avail the aforesaid facility since the loan was availed by her on 31.03.2020. Further the loan account must be sub-standard as on 01.03.2020. But the loan account of the applicant was not sub-standard on 01.03.2020. Further, no representation was submitted by the applicant before the 2^nd defendant bank to avail the aforesaid facility. Thus it is evident that the applicant is not entitled to avail the aforesaid facility.

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The loan was availed by the applicant on 31.03.2020, but her husband fell sick and she had to spent huge amount for his medical treatment only during the year 2023. Therefore, the contention of the applicant that she could not pay the outstanding loan, due to spending of huge amount for the medical treatment of her husband cannot be accepted as correct and also as a valid reason.

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It is revealed from the averments of the written statement of the defendants that even though the loan account of the applicant became Non-Performing Asset in June 2020, it was classified as NonPerforming Asset only on 30.06.2020 and that demand notice was issued on 07.10.2021. Therefore, thus it is evident that no coercive step was taken by the defendant during the Covid 19 pandemic.

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8., The applicant has not produced any material before this Tribunal to substantiate her claim that exorbitant rate of interest has been charged. In Annexure-A4 (English translated version of Annexure-A3 demand notice) the total outstanding amount inclusive of the principal and interest caused till 31.08.2021 is mentioned as Rs.91,03,032/-. The details of the mortgaged property is also mentioned as separate schedule in Annexure-A4. Further, the

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SA No.337 of 2023

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applicant herself is quite aware of the details of the mortgaged property which is a residential property. Therefore, there is no necessity to specifically mention in the demand notice about the nature of the mortgaged property.

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In Annexure-A7 affidavit filed in Crl MP 3026/2022 before the Chief Judicial Magistrate Court, Manjeri by the 1^st defendant, all the details such as availment of loan by the applicant upon creation of security over her immovable property, default in repayment of the outstanding loan due, classification of loan account as NonPerforming Asset on 30.06.2020, issuance of demand notice and receipt of the same by the applicant, failure of the applicant to send any objection/representation to the demand notice and to discharge the liability, secured asset being free of any other pledge or lease are stated. In Annexure-A6 petition, the details of the secured asset is stated. A perusal of Annexure-A8 order passed in Crl. MP No.3026/2022 would show that the learned Chief Judicial Magistrate Manjeri after having perused the contents of the petition and the documents passed order appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner issued notice Annexure-A9 to the applicant pursuant to the direction given to him in Crl. MP No.3026/2022. He is bound to comply with the above direction. It is clearly established that all the details as required under clause (i) to (ix) to the provisions of Section 14(1) of the SARFAESI Act, 2002 are furnished in Annexure-A6 and A7. This Tribunal does not find any infirmity or flaw in Annexure-A8 order.

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This Tribunal upon perusal of the averments of the SA and the written statement and the documents filed by both sides comes to a conclusion that there are no grounds or merits so as to grant relief sought for in the SA to the applicant.

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In the result, S.A No. 337 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 15^th day of December, 2023.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

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SA No.337 of 2023

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

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Sl.	Date	Particulars
No.
1.	22.05.2020	True copy of the guidelines issued by theRBI.	Annexure-A1
2.	---	True copy of the Medical certificate issued by Dr.Aby Abraham M., MD.DM, DNB, FISN, FRCP (UK), Lekshore Hospital and Research Centre Ltd. Ernakulam.	Annexure-A2
3.	07.10.2021	True copy of the demand notice issued by the1^st defendant.	Annexure-A3
4.	---	True English translation of Annexure- A3 demandnotice.	Annexure-A4
5.	27.03.2023	True copy of the receipt issued by the 2^nd defendant bank.	Annexure-A5
6.	---	True copy of the Crl. MP No.3026/2022 filed before the Chief Judicial Magistrate Court,Manjeri.	Annexure-A6
7.	---	True copy of the affidavit in Crl. MP No.3026/2022 filed before the Chief Judicial Magistrate Court,Manjeri.	Annexure-A7
8.	28.10.2022	True copy of the order of the Chief Judicial Magistrate Court, Manjeri in Crl.MP No.3026/2022	Annexure-A8
9.	09.06.2023	True copy of the notice issued by the Advocate Commissioner in Crl. MP No.3026/2022.	Annexure-A9

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 6 of 6

Fathima Bind v. The Kottakkal Co. operative Urban Bank Ltd.

Case brief

What is this about?

What did the court decide?

Fathima Bind v. The Kottakkal Co. operative Urban Bank Ltd.

Case brief

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What did the court decide?

What the court decided

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