Dismissed

Rajesh Venugopal v. South Indian Bank

DRT13 Dec 2023SA/375/2022

Case brief

AI extract

What is this about?

In this Securitization Application, the applicants challenged the South Indian Bank's recovery measures under the SARFAESI Act, 2002. The Tribunal held that the Authorised Officer validly issued demand notices, the possession notice was duly served and published, and the request for compensation and setting aside of recovery actions was dismissed.

What did the court decide?

The Securitization Application stands dismissed. No costs were awarded to the respondents.

Rajesh Venugopal versus South Indian 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 13^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. 375 of 2022

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Between

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Rajesh Venugopal,

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S/o. K.P. Venugopal, Partner, M/s. Suncreations,

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Residing at 35/181B, Devadatham,

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Near Muthoot Honda Showroom, Palarivattom, Kochi -682 025, Represented by his POA Holder

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K. Balakrishnan.

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Malini Rajesh,

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W/o. Rajesh Venugopal, Partner, M/s. Suncreations, Residing at 35/181B, Devadatham, Near Muthoot Honda Showroom, Palarivattom, Kochi -682 025, Represented by his POA Holder K. Balakrishnan.

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Lekshmykutty Amma, W/o. late Kumarankutty Menon, Residing at 35/181B, Devadatham,

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Near Muthoot Honda Showroom, Palarivattom, Kochi -682 025.

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SA No.375 of 2022

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Balakrishnan K., S/o. late Kumarankutty Menon, Residing at 35/181B, Devadatham, Near Muthoot Honda Showroom, Palarivattom, Kochi -682 025.

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--- Applicants

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And

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The Authorised Officer. The South Indian Bank Ltd. Regional Office, SIB Building, Infopark Road, Rajagiri Valley P.O Kakkanad, Kochi – 682 039.

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--- Defendant

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This Securitization Application coming on 11.10.2023 for final hearing before me in the presence of Mr. Jithendran, Advocate representing the Counsel for the Applicants and Mr. Jojo George, Counsel 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 30.07.2022 seeking to declare that the possession of secured assets of the applicants by the defendant is illegal and to set aside all the steps taken by the defendant under the SARFAESI Act, 2002 and order payment of compensation to the applicants for the loss sustained by the illegal act of the defendant.

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Availment of credit facilities and term loan from the defendant Bank upon creation of equitable mortgage by deposit of title deeds in respect of the immovable property is admitted by the applicants. The applicants have not specifically averred in the SA as to whether they were repaying the outstanding loan due without default. However, it is revealed from the perusal of the written statement of the defendant that since the loan accounts of the applicants became irregular, their loan accounts was classified as Non-Performing Asset on 24.03.2019. Therefore the contention of the applicants that classification of the loan account as Non-Performing Asset is illegal and arbitrary, since

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Page 2 of 6

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SA No.375 of 2022

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the credit facilities were operating within the permitted limits is liable to be rejected.

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Demand notice dated 17.09.2019, Annexure-A3 was issued to the applicants calling upon them to pay the entire outstanding dues within 60 days from the date of service of notice. Admittedly, the applicants did not send any objection/representation to the demand notice and they also did not clear the outstanding loan due. Therefore the defendant issued possession notice dated 30.07.2020, AnnexureA4 for taking symbolic possession of the secured asset.

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The defendant filed Annexure-A5 petition and Annexure-A6 affidavit under Section 14 of the SARFAESI Act, 2002 before the Chief Judicial Magistrate Court, Ernakulam. Order Annexure-A7 came to be passed in M. C. No. 29/2021 appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner issued notice Annexure-A8 to the applicants calling upon them to hand over the vacant possession of the secured asset within 14 days from the date of receipt of the notice. The applicants having aggrieved against the above said measures, have filed this S.A. seeking for the reliefs stated supra.

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The representing Counsel for the Counsel on record for the applicants submitted that exorbitant rate of interest has been charged and that issuance of demand notice is illegal, since it was not issued by the secured creditor and that possession notice was not affixed as per the statute and that Annexure-A6 affidavit is not in accordance with the provisions of Section 14(1) of the SARFAESI Act, 2002 and that therefore all the measures initiated by the defendant are liable to be set aside.

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The counsel appearing for the defendant submitted that issuance of demand notice is proper, since demand notice can be issued either by the secured creditor or the authorised officer and that possession notice was served to the applicants and that it was published in two leading news papers and that it was affixed on the conspicuous part of the secured asset and that the learned Chief Judicial Magistrate, Ernakulam appointed Advocate Commissioner to take physical possession of the secured asset and that Annexure-A6 affidavit is in accordance with the provisions of Section 14(1) of the SARFAESI Act, 2002 and that security interest has been registered with CERSAI and that therefore the SA is liable to be dismissed with cost.

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Page 3 of 6

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SA No.375 of 2022

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Rule 2 (b) of the Security Interest (Enforcement) Rules, 2002 provides that demand notice may be issued by a secured creditor or authorised officer, as the case may be, to any borrower. Rule 2 (a) of the Security Interest (Enforcement) Rules, 2002 defines an authorised officer as an Officer not less than a Chief Manager of a public sector Bank or equivalent as specified by the Board of Directors or Board of Trustees of the secured creditor or any other person or authority exercising powers of Superintendents, direction and control of the business or affairs of the secured creditor as the case may be to exercise the right of a secured creditor under the Act. In the present case at hand, Annexure-A3 demand notice was issued by the authorised officer, who is the Chief Manager of the defendant bank. Hence the submission of the counsel appearing for the applicants that demand notice is illegal, since it was not issued by the secured creditor, does not hold good.

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The applicants have not produced any material before this Tribunal to substantiate their contention that exorbitant rate of interest has been charged by the defendant.

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The defendant has produced copies of paper publication, Annexure-B1 and B2 to prove his contention that, possession notice was published in two leading news papers one in Kerala Kaumudi edition dated 31.7.2020 and the New Indian Express daily dated 31.7.2020. Annexure-B3 copy of photograph evidences the affixture of the possession notice on the conspicuous part of the secured asset.

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A perusal of copy of petition Annexure-A5 and copy of affidavit Annexure-A6 filed in M.C. No.29/2021 on the file of the Chief Judicial Magistrate Court, Ernakulam would show that all the details, such as, availment of credit facilities by the applicants from the defendant bank upon creation of security interest by deposit of title deed pertaining to the immovable property of the respondents 3, 4 and 5 and also hypothecation of movables assets including book debts, default in repayment of the outstanding loan due, classification of loan account as Non-Performing Asset on 24.3.2019, issuance of demand notice dated 17.9.2019, failure of the respondents to respond to the terms of the demand notice, service of demand notice to the respondents, issuance of possession notice and its publication in news papers and its affixture on the secured asset premises, total aggregating outstanding amount as on the date of filing of the application, description of the secured assets with its boundaries, secured asset being free of any leasehold interest, registration of the security interest with CERSAI, are clearly furnished. A perusal of

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Page 4 of 6

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SA No.375 of 2022

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Order Annexure-A7 shows that the learned Additional Chief Judicial Magistrate (MP’s and MLA’s), Ernakulam, upon having perused the contents of the affidavit and verified the documents filed in support of the affidavit passed order appointed Advocate Commissioner to take physical possession of the secured asset. This Tribunal does not find any flaw or infirmity in the Order Annexure-A7. The Advocate Commissioner issued notice Annexure-A 8 pursuant to the direction given to him by the learned Additional Chief Judicial Magistrate (MP’s and MLA’s), Ernakulam to take physical possession of the secured asset. This Tribunal does not find any procedural irregularity or lapse in respect of Annexure-A6 affidavit filed in M. C. No. 29/2021.

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The applicants have failed to establish their case so as to set aside all the measures taken by the defendant under the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002. Hence this Tribunal holds that the applicants are not entitled to get the reliefs sought for in the SA.

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In the result, S.A No.375 of 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 day of December, 2023.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 6

SA No.375 of 2022

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

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Sl. No.	Date	Particulars
1.	14.10.2020	True copy of the Power of Attorney	Annexure-A1
2.	14.10.2020	True copy of the Power of Attorney	Annexure-A2
3.	17.09.2019	True copy of the demand notice	Annexure-A3
4.	30.07.2020	True copy of the possession notice underSection 13(4)	Annexure-A4
5.	---	True copy of the CMP No.29/21 filed before the Chief Judicial Magistrate Court,Ernakulam.	Annexure-A5
6.	----	True copy of the affidavit filed by the defendant.	Annexure-A6
7.	06.07.2022	True copy of the order in MC No.29/2021	Annexure-A7
8.	19.07.2022	True copy of the notice issued by the Advocate Commissioner.	Annexure-A8

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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.	31.07.2020	True copy of possession notice published in KeralaKaumudidaily.	Annexure-B1
2.	31.07.2020	True copy of possession notice published in Thenew Indian Express daily.	Annexure-B2
3.	30.07.2020	True copy of the photograph regarding the affixture ofpossession notice.	Annexure-B3

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/

Page 6 of 6

Rajesh Venugopal v. South Indian Bank

Case brief

What is this about?

What did the court decide?

Rajesh Venugopal v. South Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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