Dismissed

Shafi Adattil v. Can Fin Homes Ltd.

DRT24 May 2023SA/72/2023

Case brief

AI extract

What is this about?

S.A discharged under Securitisation Act challenging SARFAESI proceedings (Section 13(2), Section 14) initiated by Can Fin Homes Ltd. Debt Recovery Tribunal held applicant failed to file objections within 45 days for possession notice. Alleged lack of service or publication found unsustainable given evidence of receipt and publication in newspapers. Application dismissed.

What did the court decide?

Securitisation Application No.72 of 2023 dismissed; no costs awarded to the applicant.

Shafi Adattil versus Can Fin Homes Ltd. — Arbitration | 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 24^th DAY OF MAY, 2023

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

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S.A No.72 of 2023

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Between

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Mr. Shafi Adattil, S/o. Abdul Rahman, A1 Mas, Pookad, Chemanchery, Kozhikode – 673304.

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--- Petitioner/Applicant

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And

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Can Fin Homes Ltd. KT Commercial Complex, First Floor, Jail Road, Puthiyara, Kozhikode, Kerala – 673004, Represented by its Authorized Officer.

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--- Respondent/Defendant

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This Securitization Application coming on 19.04.2023 for hearing before me in the presence of Mr. Bijumon E.A., Advocate for the Applicant and Mr. C. Ajith Kumar, Advocate for the Defendant and upon hearing arguments of learned Counsels for both the sides’ 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 15.02.2023 seeking to pass an order setting aside Annexure-A6 Advocate Commissioner’s notice, Annexure-A8 Section 13(2) notice and Annexure-A9 possession notice proceedings initiated by the defendant in respect of the properties which are more particularly described in the schedule

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SA No.72 of 2023

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attached to this application and to pass an order declaring that the defendant bank has no legal right or authority to initiate proceedings against the applicant and the properties scheduled to the defendant bank based on Annexure-A6 Advocate Commissioner’s notice, Annexure-A8 Section 13(2) notice and Annexure-A9 possession are illegal, arbitrary, improper, bad and set-aside the same.

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

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The applicant availed two loans having account numbers as 112220100160 for an amount of Rs.10,00,000/- and an amount of Rs.25,00,000/- through the account No.112201005000. The applicant was an NRI who is really working hard to meet the basic needs of his family. The applicant never failed to re-pay the loan account till he sustained huge loss in the business he started with his partner, who cheated the applicant.

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Covid-19 pandemic hits on the applicant’s business too, this resulted in the non-repayment to the loan account. The defendant Bank initiated SARFAESI proceedings against the applicant’s property. There is no service of notice, publication of notice as per the provisions of law. On getting the section 13(2) notice under Securitization Act, 2002 dated 14.06.2019, one of the loan guarantors approached the Hon'ble High Court of Kerala by filing W.P. (C) No.23596/2019. While disposing the writ petition, it directed the applicant to remit an amount of Rs.1,76,899/- in five equal monthly installments, true copy of the judgment dated 30.08.2019 is produced herewith as Annexure-A1. The applicant could remit an amount of Rs.1,40,000/- and for getting further time to make the full payment the applicant approached the High Court by filing RP No.537/2021 and the RP was disposed of on 09.09.2022, directing the applicant to deposit Rs.3,98,083/- in six equated monthly installments, true copy of the judgment in RP No.537/2021 dated 09.09.2022 is produced as Annexure-A2. The applicant made remittance of Rs.3,00,000/- and filed IA No.1/2022 in RP No.537/2022 in W.P. (C) No.23596/2019 seeking further time to clear the liability and the Hon'ble High Court of Kerala granted time for making payment and the applicant remitted Rs.4,00,000/-. True copy of the order in IA No.1/2022 in RP No.537/2022 is produced herewith as Annexure-A3.

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The applicant then approached the defendant to get One Time Settlement benefit to close the loan liability in October, 2022 but there was no proper reply on the same. The applicant again approached the defendant with a settlement proposal dated 05.01.2023, Annexure-A4. The defendant bank replied demanding Rs.25 Lakhs for full and final settlement. True copy of the letter is produced as Annexure-A5.

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Page 2 of 9

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SA No.72 of 2023

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The Advocate Commissioner appointed by the learned Chief Judicial Magistrate Court, Kozhikode in CMP No.491/2021 issued a notice dated 16.01.2023 stating that the possession of the property is proposed to be taken on 21.01.2023. True copy of the order is produced as Annexure-A6. The mandatory notices were not served on the borrower as well as the guarantor to the loan transaction. The true copy of the acknowledgment card produced by the defendants before the CJM Court in CMP No.491/2021 is produced as Annexure-A7. The defendant had not served the Section 13(2) notice on the parties to the loan agreement and the notices were returned unserved to the bank and there was no paper publication with seven days and affixture on the outdoor or on the property. True copy of the Section 13(2) demand notice dated 14.06.2019 is produce herewith as Annexure-A8.

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The applicant was not served with Section 13(4) of the Securitization Act 2002 or Rule 8(1) of the Security Interest (Enforcement) Rules 2002 notice. The true copy of the possession notice obtained from the learned Chief Judicial Magistrate Court is produced as Annexure-A9. The defendant approached the learned Chief Judicial Magistrate Court filing CMP No.491/2021, true copy of the CMP dated 01.09.2021 is produced herewith as Annexure-A10.

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The defendant has not provided with the statement of full accounts of the applicant till time. Being highly aggrieved by the action of the defendant Bank, the applicant begs to prefer this Securitization Application.

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The defendant Bank came on record and filed Written Statement inter-alia contending as follows :

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The applicant, as principal borrower along with his wife, Shereena, as co-borrower and mother, Ayishabi, as guarantor, was sanctioned a Housing Loan Facility, with a limit of Rs.25 Lakhs on 17.7.2014 by the defendant. In pursuance thereof, on 02.12.2014, the defendant sanctioned a personal loan, with a limit of Rs.10 Lakhs. For due repayment of the financial facility sanctioned, security interest was created, in respect of 3.24 Ares of property comprised in ReSurvey No.34/8 of Chemmanachery village, Koyilandy Taluk. Kozhikode District. Applicant committed default, in repaying the loan, resulting in the classification of the loan account as NPA on 31.05.2019. Notice under Section 13(2) produced as Annexure-A8 in the S.A, was issued by the defendant. The demand notice sent to the applicant and the co-borrower was returned with endorsement ‘left returned to sender’ and that of guarantor was returned with endorsement ‘unclaimed return to sender’. True copy of the returned

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Page 3 of 9

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SA No.72 of 2023

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Annexure-A8 notice with postal cover is produced herewith as Annexure-B1 series. Later on, Annexure-A8 was received in person by the applicant and the co-borrower from the office of the defendant. True copy of the acknowledgement by applicant and also co-borrower in Annexure-A8 is produced herewith as Annexure-B2. Despite receipt of Annexure-A8, as there was no response by the applicant, the defendant took symbolic possession of the secured asset, in accordance with Section 13(4) of the SARFAESI Act by affixing the same in the secured asset. True copy of the possession notice dated 26.03.2021 issued by the defendant is produced herewith as Annexure-B3. Annexure-B3 was thereafter published in the Kozhikode edition of New Indian Express daily and Madhyamam daily dated 01.04.2021. True copy of the paper publication dated 01.04.2021 issued by the defendant in New Indian Express daily is produced herewith as Annexure-B4. True copy of the paper publication dated 01.04.2021 issued by the defendant in Madhyamam Express daily is produced herewith as Annexure-B5. Thereafter defendant approached the Chief Judicial Magistrate Kozhikode and filed petition, AnnexureA10 under Section 14 of the SARFAESI Act, seeking physical possession of the secured asset.

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Having invited Annexure-A1 and A2 judgments, followed by Annexure-A3 order from the Hon'ble High Court of Kerala the applicant cannot now challenge the SARFAESI action through the above S.A. The allegation that he defendant is not ready to provide the detailed statement of account is absolutely false and denied by the defendant. As regards Annexure-A5, one time settlement is concerned, since the applicant did not avail the benefit under the said OTS, the same stood failed. No procedural irregularity can be attributed on Annexure-A6 order, the same does not suffer from any material irregularity.

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There is no merit in the allegations levelled in paragraphs 10 to 12 of the S.A as regards the non-compliance of mandatory requirements. Annexure-B1 to B5 documents produced above, would disprove the contentions of the applicant. Further, there is no basis in the averments in paragraph 13 of the S.A as regards the noncompliance. A perusal of Annexure-A10 would reveal that AnnexureA8 notice was duly served upon the applicant. A one-time settlement was permitted in the loan account, whereby applicant was directed to remit a sum of Rs.25 Lakhs, in full and final settlement, to be paid on or before 15.01.2023. But as applicant failed to comply with the same, the OTS stood failed. Whatever remittances effected in the loan account, were duly credited. True copy of the statement of loan account of the applicant maintained with the defendant is produced herewith as Annexure-B6. Annexure-B6 reflects the true entries.

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Page 4 of 9

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SA No.72 of 2023

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The various grounds raised in the S.A are devoid of merits and is only to be ignored. There is no procedural illegality committed by the defendant in the initiation of SARFAESI Action, so far taken. The above S.A is filed by the applicant with unclean hands and the S.A is devoid of merits and is only liable to be dismissed.

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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: The availment of credit facilities by the applicant from the defendant upon creation of security interest over his immovable property measuring 3.24 Ares comprised in Re-Sy. No.34/8 of Chemmanachery village, Koyilandy Taluk, Kozhikode District and his default in repayment of the outstanding loan due has been admitted by the applicant in the S.A. Since the applicant committed default in repaying the loan due, the loan account has been classified as NonPerforming asset on 31.05.2019 and the demand notice dated 14.06.2019, Annexure-A8 was issued calling upon the applicant to repay the outstanding loan due within 60 days from the date of receipt of the notice.

¶38

The applicant has averred in the S.A. that the demand notice was not served to him and that it was not published in the newspaper and that he came to know of the issuance of the demand notice from one of the borrowers. The defendant has countered the above averment of the applicant in his written statement contending that the demand notice sent to the applicant and the co-borrower, who is his wife was returned with the endorsement ‘left’ returned to sender’ and that of the guarantor was returned with the endorsement ‘unclaimed, return to sender’ and that subsequently the applicant and the coborrower received the demand notice from the office of the defendant. The defendant has produced photocopies of postal acknowledgment cards as Annexure-B1 series to prove his contention that the demand notice sent to the applicant and the co-borrower was returned unserved. The defendant has also produced copy of demand notice, Annexure-B2, wherein the signatures of the applicant and the coborrower are found for receipt of the demand notice. Therefore, the contention of the applicant that the demand notice was not served to him is totally incorrect.

¶39

Admittedly, the applicant did not send any objection/ representation to the demand notice nor did he comply with the terms of the demand notice. Hence the defendant issued possession notice dated 26.3.2021, Annexure-B3, for taking symbolic possession of the secured asset. The applicant has also produced true copy of the possession notice as Annexure-A9. It cannot be disputed that the

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Page 5 of 9

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SA No.72 of 2023

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applicant did not file the S.A before this Tribunal challenging the possession notice within the period of 45 days from the date of issuance of the same. Therefore, the contention of the applicant that the possession notice was not served to him and that he obtained the true copy of the possession notice from the Chief Judicial Magistrate Court, Kozhikode is unsustainable. But defendant has produced copies of paper publications as Annexure-B4 and B5 to prove his contention that the possession notice was published in two widely circulated newspapers, New Indian Express daily dated 01.04.2021 and Madhyamam daily dated 01.04.2021. Thus it is evident that issuance of the possession notice in respect of the secured asset is in accordance with Rule 8(2) of the Security Interest (Enforcement) Rules, 2002.

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In the W.P.(C) No.23596/2019 filed by one of the loan guarantors before the Hon'ble High Court of Kerala, judgment Annexure-A1 was delivered directing the applicant to remit an amount of Rs.1,76,899/- in five equal monthly instalments. Admittedly, the applicant did not comply with the above direction of the Hon'ble High Court of Kerala. Instead, he filed petition R.P. No.537/2021 seeking to grant further time to make full payment. Judgement, Annexure-A2 was passed permitting the applicant to deposit Rs.3,98,083/- in six equated monthly instalments. The above direction of the Hon'ble High Court of Kerala was also not complied with by the petitioners. Instead, petition, IA No.1/2022 in RP No.537/2022 in W.P.(C) No. 23596/2019 seeking further time to clear the liability. However, the request of the petitioners was not considered in Annexure-A3 order. So the conduct of the applicant in not complying with the directions issued by the Hon'ble High Court of Kerala in the aforesaid proceedings would show that he had no intention to discharge his liability due to the defendant.

¶44

The contention of the defendant in his written statement that One Time Settlement was permitted by directing the applicant to remit an amount of Rs.25 Lakhs in full and final settlement on or before 15.01.2023 and that the applicant failed to comply with the same has not been specifically refuted or denied by the applicant. Therefore, the contention of the applicant that his request for One Time Settlement was not considered by the defendant is liable to be rejected. A perusal of Annexure-B6 statement of loan account of the applicant shows that the payments made by the applicant has been given credited. Hence the contention of the applicant that payment made by him were not credited to the loan account cannot be accepted as correct.

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On application filed in CMP No.491/2021, Annexure-A10 by the defendant before the Chief Judicial Magistrate Court, Kozhikode,

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Page 6 of 9

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SA No.72 of 2023

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Order was passed for taking physical possession of the secured asset. Pursuant to the above Order, the Advocate Commissioner issued notice dated 16.01.2023, Annexure-A6 informing the applicant that he would take possession of the property on 21.01.2023. Applicant has not produced true copy of the affidavit filed by the defendant under Section 14(1) of the SARFAESI Act, 2002 before the Chief Judicial Magistrate Court, Kozhikode and also the true copy of the Order passed in CMP No.491/2021.

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The applicants did not file any objection/representation to the demand notice dated 14.06.2019, Annexure-A8. The applicant has also not challenged the order of the learned Chief Judicial Magistrate Court, Kozhikode for taking physical possession of the secured asset on the ground that the affidavit filed by the defendants under Section 14(1) of the SARFAESI Act, 2002 suffers from want of compliance of mandatory requirements as stipulated under Section 14(1) (i) to (ix) of the SARFAESI Act, 2002. Advocate Commissioner issued notice, Annexure-A8 pursuant to the direction given to him by the learned Chief Judicial Magistrate Court Kozhikode. Hence Annexure-A8 notice cannot be challenged in any manner.

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The applicant did not send any objection/representation to the demand notice, Annexure-A8 and also did not challenge the possession notice, Annexure-A9, within the period of 45 days from the date of issuance of the same. The applicant has also failed to place on record before this Tribunal that the affidavit filed by the defendant under Section 14(1) of the SARFAESI Act, 2002 before the Chief Judicial Magistrate Court, Kozhikode is not in accordance with the mandatory requirements stipulated under Section 14(1) (i) to (ix) of the SARFAESI Act, 2002.

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In view of the foregoing reasons, this Tribunal holds that the applicant is not entitled to get the reliefs sought for in this SA. In the result, S.A No. 72 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 24^th May, 2023.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 7 of 9

SA No.72 of 2023

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

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Sl. No.	Date	Particulars	Annexures
1.	30.08.2019	True copy of the judgment in W.P. (C) No.23596/2019 of the Hon'ble High Court of Kerala.	Annexure-A1
2.	09.09.2021	True copy of the Order in RP No.537/2021 of the Hon'ble High Court of Kerala.	Annexure-A2
3.	05.08.2022	True copy of the order in IA No.1/2022 in RP No.537/2021 of the Hon'ble High Court of Kerala.	Annexure-A3
4.	05.01.2023	True copy of the Onetime settlement proposal.	Annexure-A4
5.	---	True copy of reply to Onetime settlement proposal.	Annexure-A5
6.	16.01.2023	True copy of the Advocate Commissioner’snotice	Annexure-A6
7.	15.06.2019	True copy of the A/D on issuance of Section 13(2)notice by theBank.	Annexure-A7
8.	14.06.2019	True copy of the Section 13(2) notice	Annexure-A8
9.	26.03.2021	True copy ofthe possession notice.	Annexure-A9
10.	01.09.2021	True copy of the CMP No.491/2021 on the file of Chief Judicial Magistrate Kozhikode.	Annexure-A10

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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	Annexures
1.	---	True copy of the returned Annexure-A8 noticewithpostalcover	Annexure-B1 series
2.	---	True copy of A/D by applicant and also co-borrower in Annexure-A8	Annexure-B2
3.	26.03.2021	True copy of the possession notice issued by the defendant.	Annexure-B3
4.	01.04.2021	True copy of the paper publication issued by the defendant in New Indian Express daily.	Annexure-B4
5.	01.04.2021	True copy of the paper publication issued by the defendant in Madhyamam daily.	Annexure-B5

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Page 8 of 9

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SA No.72 of 2023

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--True copy of the statement of loan Annexure-B6 account of the applicant maintained with the defendant.

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 9 of 9

Shafi Adattil v. Can Fin Homes Ltd.

Case brief

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Shafi Adattil v. Can Fin Homes Ltd.

Case brief

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