Dismissed

Faisal Nelliyattummel v. Federal Bank

DRT15 Dec 2023SA/57/2023

Case brief

AI extract

What is this about?

The Tribunal dismissed a Securitization Application challenging the classification of a loan as NPA, the legality of a demand notice issued by an Authorized Officer, the validity of a possession notice, and the order appointing an Advocate Commissioner under Section 14 of the SARFAESI Act.

What did the court decide?

Application for setting aside demand notice, possession notice, and Section 14 order dismissed. No costs.

Faisal Nelliyattummel versus Federal 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 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. 57 of 2023

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Between

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Faisal Nelliyattummel,, S/o. Mohammed Nelliyattummel, Meethale Puthalath House, Iringath P.O., Payyoli, Kozhikode -673 523.

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--- Applicant

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And

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The Federal Bank Ltd. Payyoli Branch, LCRD, Kozhikode Division, 1^st Floor, Federal Towers, Mavoor Road, Kozhikode-673 016, Represented by its Chief Manager.

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The Authorised Officer, The Federal Bank Ltd. LCRD, Kozhikode Division, 1^st Floor, Federal Towers, Mavoor Road, Kozhikode-673 016.

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--- Defendants

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This Securitization Application coming on 12.10.2023 for final hearing before me in the presence of Ms. Mary Nithiya, Advocate for the Applicant and Ms.Keerthy K. Narayan, 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.57 of 2023

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O R D E R

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This Securitisation Application was filed on 30.01.2023 seeking to declare that the Annexure-A1 Demand Notice and Annexure-A2 Possession Notice are invalid and set aside them and declare that the classification of accounts as NPA is illegal and declare that AnnexureA7 notice issued by the Advocate Commissioner, Annexure-A8 Section 14 application, Annexure-A9 affidavit and Annexure-A10 order in CMP No.796/2023 on the file of the CJM Court Kozhikode are illegal and to set aside Annexure-A7 Advocate Commissioner notice and AnnexureA10 Order in CMP No.796/2023 on the file of the CJM Court, Kozhikode and to order restoration of the possession of the properties described in Annexure-A1 demand notice and Annexure-A2 possession notice and costs and compensation to the applicant.

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Availment of housing loan of Rs.40,00,000/- from the 1^st defendant Bank upon creation of equitable mortgage by deposit of title deeds pertaining to the applicant’s three items of immovable properties is not disputed by the applicant. According to the defendants, since the applicant committed default in repayment of the outstanding loan due the loan account of the applicant was classified as NPA on 03.10.2022 in accordance with the RBI guidelines. Demand notice dated 11.10.2022, Annexure-A1 was issued to the applicant and his wife, who is the co-borrower in respect of availment of another loan of Rs.120 Lakhs, calling upon them to pay the outstanding loan due within a period of 60 days from the date of receipt of notice. It is not in dispute that the applicant and his wife neither sent any objection or representation to the demand notice nor did they liquidate the liability within the stipulated period of 60 days of receipt of the notice.

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Therefore, possession notice dated 26.12.2022, Annexure-A2 was issued by the 2^nd defendant for taking symbolic possession of the secured asset. The applicant himself has produced copies of postal envelop, Annexure-A3 and postal track report Annexure-A4 evidencing the receipt of the possession notice. The averments of the defendants in the written statement with regard to affixture of the possession notice on the conspicuous part of the secured assets and the publication of the possession notice in two leading news papers, “Mathrubhoomi Edition” and “The Hindu Edition” is not refuted or denied by the applicant.

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The 2^nd defendant filed petition, Annexure-A8 and affidavit Annexure-A9 in Crl. M.P. No.796/2023 before the Chief Judicial Magistrate Court, Kozhikode, Order Annexure-A10 came to be passed on 11.05.2023 in Crl. M.P. No.796/2023 appointing Advocate Commissioner to take physical possession of the secured asset. The

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SA No.57 of 2023

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Advocate Commissioner, pursuant to the direction given to him in Crl. M.P. No.796/2023, issued Annexure-A7 notice on 20.05.2023 to the applicant informing him that he would take possession of the secured asset on 07.06.2023. The applicant has filed this SA challenging the aforesaid measures.

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The contention of the applicant in the SA that the 1^st defendant had obtained several blank printed forms signed by the applicant and that the copies of the same were not supplied to him is refuted by the defendants in their written statement contending that the applicant and his wife had executed the loan documents expressly admitting and acknowledging their liability. If the above contention of the applicant had been true, nothing would have prevented him from raising the above said issue by sending objection or representation to the defendants sooner after receipt of Annexure-A1 demand notice. Indisputably, such objection or representation was not sent. In any event, the applicant having admitted his signatures in all the loan documents cannot turn around now and contend that his signatures were obtained on blank printed forms.

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The Counsel appearing for the applicant submitted that even though the applicant was eligible for the benefit under the resolution frame work 2.0 announced by the RBI on 05.05.2021 during the Covid 19 pandemic period, the 1^st defendant bank did not grant such benefit to the applicant which rendered the applicant to keep the loan account in order. But the rival submission of the Counsel appearing for the defendants is that the applicant was not entitled to the benefit of resolution frame work, since as per the circulars issued by the RBI, only those loans which were standard as on the cut off date provided under the circular is entitled to the benefit of the scheme and that since the applicant did not fulfil the criteria prescribed by the RBI, the 1^st defendant was unable to provide such benefit to the applicant. The applicant has not placed any material before this Tribunal to show that his account was standard at the time of issuance of the aforesaid circular. Hence this Tribunal finds considerable force in the above submission of the counsel for the defendants.

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The provisions of the SARFAESI Act, 2002 and the rules made thereunder does not contemplate issuance of notice to the borrower prior to classification of his loan account as NPA. Hence the contention of the applicant that classification of loan account as NPA without issuing prior notice is illegal does not hold good. The averment of the applicant that 1^st defendant bank failed to furnish the copies of the loan document to the applicant is refuted by the defendants in their written statement. The applicant has not filed any material before this Tribunal to show that he sent letter to the 1^st defendant bank for furnishing copies of loan account and that the latter refused to furnish the copies of the same. Hence this Tribunal is

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SA No.57 of 2023

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unable to accept the above contentions of the applicant and as such the reason stated by him for non-submission of objection/ representation to the demand notice on the ground of non availability of the copies of the loan documents, is untenable.

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Rule 2(b) of the Security Interest (Enforcement) Rules, 2002 defines “demand notice as the notice in writing issued by the secured creditor or Authorised Officer as the case may be, to any borrower pursuant to sub-section 2 of Section 13 of the SARFAESI Act, 2002.” Therefore, the submission of the counsel for the applicant that Annexure-A1 demand notice per se illegal since it was not issued by the secured creditor and that the Authorised Officer shall not act as the secured creditor is liable to be rejected.

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It is revealed from the perusal of the averments of the written statement of the defendants that since the applicant defaulted in repayment of the outstanding loan due, his loan account was rightly classified as NPA. In Annexure-A1 demand notice the quantum of availment of credit facilities by the applicant and his wife, the total outstanding loan due payable along with interest with monthly rests and overdue interest under the two loan accounts as on 05.10.2022 is clearly stated. Further the description of three items immovable properties which are secured assets with its boundaries also stated in Annexure-A1 demand notice. The applicant having waived his statutory right of raising the issue with regard to non furnishing of details of the claim showing the progressive total of the claim in Annexure-A1 notice by sending objection/representation to the 1^st defendant bank is estopped from raising the same issue now.

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It is not the contention of the applicant that three items of the immovable properties mentioned in the demand notice are not his properties or not the secured assets and that the description of the properties has been wrongly stated by the 1^st defendant bank. The 1^st defendant bank has furnished the description of the secured asset in Annexure-A1 demand notice as per the description of the properties found in the schedule to the title deeds of the applicant deposited with the 1^st defendant bank. Therefore, the mere mentioning of all the three items of properties containing buildings does not indicate that the 1^st defendant bank has not identified the properties. Hence, there is no force in the submission of the counsel for the applicant that the demand notice is invalid on the alleged ground of non identification of the secured assets. In any event, the applicant has not pointed out in the SA as to how he got prejudice over the aforesaid issue.

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It is the another submission of counsel for the applicant that description of the properties in Annexure-A2 possession notice is the same as stated in Annexure-A1 demand notice and that therefore the issuance of Annexure-A2 possession notice is per se illegal. The

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SA No.57 of 2023

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contention raised in respect of description of properties in AnnexureA1 demand notice has been rejected by this Tribunal in the preceding paragraph of its order. Further, the possession notice was issued as early as on 26.12.2022. The applicant did not file the SA challenging the possession notice on the aforesaid grounds within the period of limitation. Hence the applicant is estopped from raising the aforesaid contention in this SA.

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It is submitted by the counsel for the applicant that AnnexureA9 affidavit is invalid on the ground that there is no declaration of aggregate financial assistance granted by the 1^st defendant bank and that description of three items of properties scheduled in Annexure-A9 affidavit are incorrect since the 2^nd defendant has stated that all the three items of properties contain buildings. Admittedly, in the schedule to Annexure-A9 affidavit all the three items of properties are stated to contain buildings. The applicant has not produced the copies of the title deeds pertaining to the secured assets in order to enable this Tribunal to find as to whether the 2^nd defendant has mentioned the existence of building in all the three properties of his own accord or he has mentioned the existence of building in all the three properties as per the details contained in the description of the properties of the title deeds of the applicant. Further, this Tribunal finds considerable force in the submission of the counsel for the defendants that the properties over which the applicant has created security interest is lying contiguously as a single plot and that the defendants have never averred that the building was constructed in all the three properties and that the applicant has never disputed the identity of the secured assets. Therefore the submission of the counsel for the applicant that Annexure-A9 affidavit is invalid on the ground that the description of three items of properties is incorrect.

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The counsel appearing for the applicant submitted further that the learned Chief Judicial Magistrate before passing Annexure-A10 order failed to verify the veracity of the declarations made in Annexure-A9 affidavit and that the satisfaction of the declarations in Annexure-A9 affidavit in nine clauses is not recorded by the learned Chief Judicial Magistrate and that he passed order mechanically and that Annexure-A10 order is invalid and that therefore Annexure-A7 notice issued by the Advocate Commissioner is also invalid. The above submission of the counsel for the applicant is countered by the counsel for the defendants contending that the learned Chief Judicial Magistrate after having applied his mind to the contents of the affidavit passed orders to appoint Advocate Commissioner and that the learned Chief Judicial Magistrate is discharging only his ministerial act and that there is no absolutely adjudication process in the measures under Section 14(1) of the SARFAESI Act, 2002. This Tribunal fully concurs with the above submission of the counsel for the defendants. It is well settled law that since the duty performed by

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SA No.57 of 2023

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the District Magistrate or the Chief Judicial Magistrate under Section 14(1) of the SARFAESI Act, 2002 is only a ministerial act, he is not supposed to look into the veracity of contents of the affidavit or its niceties.

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A perusal of Annexure-A9 affidavit shows that the details such as availment of credit facilities by the applicant and his wife from the 1^st defendant bank upon creation of security interest by deposit of title deeds over the immovable properties of the applicant, commission of default in repayment of the loan amount, classification of loan account as NPA, issuance of demand notice to the applicant and his wife, receipt of the demand notice by them, total sum of outstanding loan due as on 05.10.2022 under the relevant loan accounts inclusive of future interest and overdue interest, non submission of representation/ objection to the demand notice, registration of the security interest with CERSAI, the aggregate amounts of the financial assistance under the loan accounts, rescheduled or restructure of the housing loan account, the total outstanding amount payable by the applicant and his wife on the date of filing of the application, non remittance of any amount after issuance of demand notice, the details of description of the secured assets with its boundaries are clearly stated. A perusal of Annexure-A10 order shows that the learned Chief Judicial Magistrate, Kozhikode after having perused the contents of the affidavit and after having satisfied over the same passed order appointing Advocate commissioner to take physical possession of the secured assets. The Advocate Commissioner issued Annexure-A7 notice pursuant to the direction given to him in Crl. M.P. No.796/2023, who is bound to execute the warrant. Hence AnnexureA7 notice cannot be challenged in any manner. This Tribunal does not find any infirmity in Annexure-A10 order passed in Crl. M. P. No.796/2023 which does not attract any interference by this Tribunal.

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The applicant has failed to prove and establish his case that he is entitled to get the reliefs sought for in the SA. In the result, S.A No. 57 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.57 of 2023

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

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Sl.	Date	Particulars
No.
1.	11.10.2022	True copy of demand notice issued by the 2^nd defendant.	Annexure-A1
2.	26.12.2022	True copy of possession notice issued by the 2^nd defendant.	Annexure-A2
3.	---	True copy of postal envelop relating to Annx.A2 possession notice.	Annexure-A3
4.	---	True copy of postal track report relating toAnnx.A2 possession notice.	Annexure-A4
5.	---	True copy of statements of accounts with respect toHousingLoan.	Annexure-A5
6.	---	True copy of statements of accounts with respect to property power loan.	Annexure-A6
7.	20.05.2023	True copy of notice issued by the Advocate Commissioner in CMP No.796/2023 on the file of CJM Court, Kozhikode.	Annexure-A7
8.	---	True copy of Section 14 application numbered as CMP No.796/2023 on the file ofCJMCourt,Kozhikode.	Annexure-A8
9.	---	True copy of affidavit in CMP No.796/2023 on the file of CJM Court, Kozhikode.	Annexure-A9
10.	11.05.2023	True copy of Section 14 Order in CMP No.796/2023 on the file of CJM Court, Kozhikode.	Annexure-A10

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Faisal Nelliyattummel v. Federal Bank

Case brief

What is this about?

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Faisal Nelliyattummel v. Federal Bank

Case brief

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