Dismissed

V P Rasheed v. Tamilnad Mercantile Bank Limited

DRT14 Dec 2023SA/407/2023

Case brief

AI extract

What is this about?

This order dismissed an applicant's security application challenging the bank's right to sell properties and claiming the proceedings were illegal due to insufficient service of notices and lack of proper registration of security interests.

What did the court decide?

Application dismissed. No costs awarded.

What the court decided

V P Rasheed versus Tamilnad Mercantile Bank Limited — Execution and Attachment | 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 14^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. 407 of 2023

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Between

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V.P. Rasheed, S/o. Pareed Khan, NH Bypass, Opp.Chaithanya Marbles, Edappally, Ernakulam-682 024.

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--- Applicant

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And

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The Tamilnadu Mercantile Bank,

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Ernakulam Branch, D.No.64/3334 A, Chittoor Road, Next to Sri Sudheendra Hospital, Kacherippady, Ernakulam -18 Rep. by Branch Manager,

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The Authorised Officer, The Tamilnadu Mercantile Bank, Ernakulam Branch, D.No.64/3334 A, Chittoor Road, Next to Sri Sudheendra Hospital, Kacherippady, Ernakulam -18

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--- Defendants

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This Securitization Application coming on 05.10.2023 for final hearing before me in the presence of Mr. C.P. Anil Raj, Advocate for the Applicant and Mr. V.V. Surendran, 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.407 of 2023

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O R D E R

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This Securitisation Application was filed on 07.08.2023 seeking to declare that all proceedings initiated by the defendants under the Securitization Act right from classification of account as NPA, issuance of Section 13(2) notice and inclusive of the measures under Section 13(4) are illegal and unsustainable and declare that Annexure-A1 M.C. is totally illegal and pass an order quashing the same and declare that the defendants are not entitled to sell the properties mentioned in Annexure-A1 M.C and Annexure-A2 notice of dispossession under the provisions of the Securitization Act and the sale held by the defendants on 15.3.2023 on the basis of Annexure-A1 M.C. is illegal and liable to be set aside and declare that the 2^nd defendant is not entitled to act as an authorised officer under the Securitization Act and direct the defendants to pay the entire cost of this proceeding to the applicant and a further compensation amount of Rs.10 lakhs.

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The applicant is the Proprietor of M/s. Oriental Woods and partner of M/s. Oriental Timbers. Availment of credit limit to a tune of Rs.5 Crore by M/s. Oriental Timbers and credit limit to a tune of Rs.3 Crore by M/s. Oriental Woods from the 1^st defendant Bank upon creation of security interest over the applicant’s immovable property measuring an extent of 30 cents in Re Sy. No.134/1 in Block No.8, Pallipram kara, Vazhakkala Villlage, Kanayannur Taluk, Ernakulam District is admitted by the applicant. Default in repayment of the outstanding loan due is also admitted by the applicant. Therefore, the loan accounts of the applicant came to be classified as NonPerforming Asset on 30.09.2015 and 30.06.2015 respectively.

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The averment of the defendants in the written statement with regard to issuance of the demand notice to the applicant and other borrowers and sending of reply for the representation/objection made by the borrowers on receipt of the demand notice is not refuted by the applicant.

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The 2^nd defendant filed petition, Annexure-A1 in M.C. No.107/2015 before the Chief Judicial Magistrate Court, Ernakulam. Thereafter the matter was transferred to the Additional Chief Judicial Magistrate Court, (MP’s and MLA’s), Ernakulam where it was numbered as M.C. No.602/2018. Order came to be passed appointing Advocate Commissioner to take physical possession of the secured assets. Pursuant to the direction given in M.C. No.602/2018, the Advocate Commissioner issued notice, Annexure-A2 to the applicant calling upon him to hand over the vacant possession of the secured assets within 15 days of receipt of the notice.

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Page 2 of 6

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SA No.407 of 2023

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The Counsel appearing for the applicant submitted that there was no proper service of demand notice to all the parties and that classification of loan accounts as Non-Performing Asset is not proper and that without taking possession of the property under Section 13(4), the defendants approached the Chief Judicial Magistrate Court, Ernakulam to take physical possession of the secured assets and that the 2^nd defendant has no authority to act as an Authorised Officer and that Annexure-A1 petition does not reveal as to whether the signatory was authorized to act as Authorised Officer and that security interest was not registered with Central Registry and that Annexure-A1 and A2 are illegal and that therefore the SA may be allowed as prayed for.

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The Counsel appearing for the defendants submitted that since the applicant defaulted in making repayment of the outstanding loan due, his loan accounts were classified as Non-Performing Asset as per the guidelines issued by the Reserve Bank of India and that objection/ representation sent by the applicant to the demand notice was appropriately replied by the defendants and that demand notice was issued by the Officer, who is none other than the Chief Manager of the defendant bank, and that the authorised officer has stated all the required details in the affidavit filed in M.C. No.602/2018 and that the learned Additional Chief Judicial Magistrate, (MP’s and MLA’s), Ernakulam after having perused the contents of the affidavit passed order to take physical possession of the secured assets and that there is no illegality or irregularity in the order passed in M.C.No.602/2018 and that the security interest has been registered with the Central Registry and that the reliefs claimed by the applicant in the SA are unworthy and without any basis and that therefore the SA may be dismissed with cost to the defendants.

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The applicant and other borrowers sent representation/ objection for the demand notice to the 2^nd defendant. Thus it is evident that there was proper service of demand notice to the applicant and other borrowers. The applicant has not pointed out any irregularity in the SA as to how the classification of the loan accounts as Non-Performing Asset is improper. The provisions of the SARFAESI Act, 2002 and the Rules made thereunder does not contemplate or mandate the secured creditor to take symbolic possession of the property prior to approaching the District Magistrate or the Chief Judicial Magistrate, for taking physical possession of the secured assets. Hence the submission of the counsel for the applicant in this regard does not hold good.

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Page 3 of 6

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SA No.407 of 2023

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The petition, Annexure-A1 was filed by the Authorised Officer who is the Chief Manager of the defendant Bank. It is averred in the petition that the defendant Bank is represented by the authorised officer. Hence the contention of the applicant that 2^nd defendant has no authority to act as an authorised officer of the defendant bank is liable to be rejected. Admittedly, in the copy of the affidavit filed by the 2^nd defendant in M.C. No.602/2018, it is stated as “I, K.Venkadesan, ........ do solemnly affirm and state as follows”. The designation of the deponent is not mentioned after the name of the deponent as rightly pointed out by the counsel for the applicant. However, in the preceding paragraph 1, it is clearly stated that he is the authorised officer of the petitioner bank. Therefore, the submission of the counsel for the applicant that the designation of the deponent in the affidavit is not mentioned does not hold good.

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The applicant has also filed the copy of the affidavit in M.C. No.602/2018. In Annexure-A1 petition all the details such as availment of credit facilities by the applicant in the name of M/s.E Oriental Timbers and M/s. Oriental Woods upon creation of security interest over the immovable property of the applicant, default in repayment of the loan due, classification of loan accounts as NonPerforming Assets, issuance of demand notice to the applicant and other borrowers, sending reply to the objection raised by the applicant and other borrowers, failure of the applicant to discharge the liability even after receipt of the demand notice, the total outstanding amount as on 30.09.2016 (on the date of filing of the petition), the reason for not taking symbolic possession of the secured assets, the description of the secured assets with its boundaries are stated. Thus it is evident that the 2^nd defendant has furnished all the details as required under clause (i) to (ix) to the provisions of Section 14(1) of the SARFAESI Act, 2002.

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The defendants have produced Annexure-B1, true copy of certificate to show that security interest has been registered with Central Registry. Hence the contention of the applicant that the secured assets was not registered with the Central Registry does not hold good.

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The applicant has not averred in the SA as to whether sale notice was issued and as to whether which property was sold. The relief sought for by the applicant to declare that the defendants are not entitled to sell the properties mentioned in Annexure-A1 is untenable. The applicant has failed to prove his case so as to get the relief sought for in the SA.

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Page 4 of 6

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SA No.407 of 2023

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In the result, S.A No. 407 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 14^th day of December, 2023.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 6

SA No.407 of 2023

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

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Sl. No.	Date	Particulars
1.	---	A true copy of M. C. No.602/2018 filed before CJM (MP/MLA) Court, Ernakulam.	Annexure-A1
2.	25.07.2023	A true copy of the notice issued by the Advocate Commissioner.	Annexure-A2

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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.	19.08.2019	True copy of the judgment in W.P (C) No. 21750/2019 of the Hon'ble High Court of Kerala.	Annexure-B
2.	---	True copy of certificate evidencing the registration of the security interest with central Registry.	Annexure-B1

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 6 of 6

V P Rasheed v. Tamilnad Mercantile Bank Limited

Case brief

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What the court decided

V P Rasheed v. Tamilnad Mercantile Bank Limited

Case brief

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What did the court decide?

What the court decided

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