Dismissed

Dr Ramprasad B v. Manipal Housing Finance Syndicate Ltd.

DRT21 Aug 2023SA/842/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal in Karnataka examined an application seeking to set aside an order allowing a bank to take physical possession of immovable property. The Tribunal held that the Chief Judicial Magistrate had jurisdiction, the procedural requirements were satisfied through affidavit and notice, and the bank was entitled to enforce its registered security interest. The application was dis

What did the court decide?

Securitisation Application dismissed; defendant bank permitted to resume further proceedings to obtain physical possession of the secured asset.

Dr Ramprasad B versus Manipal Housing Finance Syndicate Ltd. — Company and Corporate | DRT (2023)

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IN TIIE DEBTS RECOVERY^{TRIBUNAL - 1, KARNATAKA} ATBENGALURU

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PRESENT: SRI IMTIAZ^ALI PRESIDING OFFICER

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Dated the 2l't daY ofAugust,2023

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SECURITISATION^{APPLICATIONNO.842 OF 2022}

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Between

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Ramprasad B, S/o late H Sundar^Poojary, No.5-4, Stan Park^APartrnents, Parkview Road^Valencia, Mangaluru, Kamataka - 575002.

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...Applicant

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And

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Manipal Housing^{Finance Syndicate Ltd,} Manipal House,^{ManiPal'UduPi,} Defendant bank Karrct:frla-576104.

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This Securitisation^{Application having beenheardon 07.02.2023in the presence}

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of Advocates^{IvI/s O ShivaramaBhat and sangamesh B for the applicant, and Advocates} lvI/s B.S Mahendra^{and vinayJadavH for the defendant bank, and stood over to this day} for consideration,^{the Tribunaldelivered the following:-}

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FINAL ORDER

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TheapplicantfiledtheaboveSecuritisationApplication(SA)on28.l|,2022 under 5.17(1) of^{the SecuritisationandReconstruction of FinancialAssetsand} Enforcement^{of SecurityInterestAct, 2002 as amended from time to time - hereinafter} referredtoas.theAct'-prayingtosetasideAnnexureAlorderdated3l.10'2022passed bythePrincipalseniorCivilJudgeandCJMDakshinaKannada'MangaluruinCrlMisc No.356/2022.Theapplicantisnoneotherthantheborrowerofhomeloansavailedfrom the defendant bank.

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The case set out^{by the applicant in the SA in brief is as follows:-The} applicant availed^{andutilisedloansobtained fromthe defendant bank but failed to pay off}

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sA,842t2022

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the same within the stipulated time. The repayment of the amounts due^under the^same was collaterally secured by the equitable mortgage created by the applicant over the schedule immovable property in favour of the defendant bank. The account was classified as non-performing asset and the defendant bank issued a notice under S.l3(2) ofthe Act. The defendant bank filed Crl Misc No.35612022 before the Principal^Senior Civil^Judge and CJM Dakshina Kannada, Mangaluru under S.14 of the Act for^assistance in taking physical possession of the schedule immovable property. A Commissioner was appointed to take possession of the said immovable^property vide^{order dated 31.10.2022. However,} the impugned order is wrong and contrary to law.^The Principal^{SeniorCivilJudge and} CJM Dakshina Kannada, Mangaluru has no^jurisdiction to^pass the^{impugned order. The} mortgage created is not legal. No original documents^have been^{producedby the} defendant bank before the CJM Court.^{Hence, the defendant} bank^{is not entitled to take} possession as per the order. The CJM Court before^passing the order^has not considered as to whether the claim of^{the defendant bank is legal and as to whether there is any legal} mortgage in favour of the bank so^as to invoke^{the provisionsunderthe Act.The Court} below has not verified the original^documents and^{not offered any opporh"rnityto the} applicant before^passing the impugned order.^{The Court has alsonot considered as to} whether the rate of interest claimed by the^{defendantbank is in accordancewith the} Reserve Bank of India^{(RBI) Regulations and Rules.The CJM Court beforepassingthe} impugned order has not complied^{with the procedure prescribedunder the Act and the} Rules made thereunder. No notice^{has been served on this applicant as per Rr.4 and 8 of} the Rules. The description of the^{propertysoughtto be taken possession is wrong.The} extent ofthe^{propertyand the particulars shownareincorrect.On the above contentions,} the applicant prayed to set^{aside the order dated 31.10.2022passed by the Principal} Senior Civil Judge and^{CJMDakshinaKannada,Mangaluruin Crl MiscNo.35612022} and hence the SA.

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sA 842D022

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The counsel-on-record for the defendant bank filed a statement of objection. It was desirable for the^{defendant bankto filea counteraffidavit verified and} sigrred by its principal offtcer in respect of the^{facts and} information^{known to it. It is also} not stated therein by the said counsel that the^samewas being^{filedas per the instructions} received from his client. The objection^{statement is not signedexcept on thelastpage.} However, the authorised officer of the^defendant bank^{filed a notary attested veri$ing} aflidavit along with the said statement of^{objection swearing that thecontentsin} paragraphs I to 21 in the accompanying statement of objection^{are trueandcorrect to the} best of her knowledge, information^{andbeliefand thatthe documentsproduced along} with the same are true copies of the original.^{The statementof objectionreadsas below:-} The application is not maintainable.^{Theapplicant availed a totalhousing loan of} {2,18,00,000/- on 28.12.2016 on due execution^{of loan security documents fromthe} defendant bank, which was to be^repaid in^{180 equated monthlyinstalments.The} repayment of the amounts due under^{the said loanswas collaterallysecuredby the} equitable mortgage created by the^{applicantin favour of the defendant bank overthe} schedule immovable^property by^{depositof titledeedsrelatingto the samewith it. The} account was classified^as non-performing^{asset. A notice under 5.13(2)of the Act was} issued on 17.06.2022 to the^{applicantcalling upon him to dischargethe debt of} <3,19,87,3031- as on 17.06.2022^{within sixty daysfromthe date of receipt of the same.} Though the applicant^{received the noticehe did not regularise the account. Therefore, the} defendant bank took symbolic^{possession of the secured asseton 30.08.2022 by} delivering the^{possessionnoticeand publishing the same in two leadingdailies. Hence,as} per the impugrred order dated^{31.10.2022of the cJM,the defendantbank tookphysical} possession of the secured asset on^{16.11.2022. The CJM Court has jurisdiction to pass} orders under S.l4 of^{the Actandthere is no need to issuea noticeto the borrower before}

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sA 842D022

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passing such order. The CJM Court has no^jurisdiction to^{consider the rateof interest. On} the above contentions, the defendant^{bankprayed for dismissalof the SA.}

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The applicant produced two documents along with the SA.^For convenience, they are referred to^{as Annexures} Al^{and A2. Similarly, the defendant bank} produced five documents along with the written statement, which are^{for convenience} referred to as Annexures B1 to 85.

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On the appreciation of the rival^{contentions,the followingpoints arisefor} consideration:-

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(i) Whether the CJM Court is having^{no jurisdiction to act uponthe} application filed under S.14 of the^{Act by thedefendantbeforeit as contendedby the} applicant?

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(ii) Whether the CJM Court before^{passingthe impugned order has not} complied with the^{procedure prescribed under the Act and the Rulesmadethereunderas} contended by the applicant?

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(iii) Whether the defendant bank is not entitled^{to enforce its security interest} over its secured asset^{as contendedby the applicant?}

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(iv) Relief and costs?

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This Tribunal would like to make^{a passiveremarkthat the authorised} offrcer who issued Annexure^{A2 possessionnoticehas not been madea party in the cause} title to the SA though^{the defendantbank is said to be represented by him. The right to} sue accrues under S.l7(1)^{ofthe Act to any person(including bonower)if he is aggrieved} by any of the measures referred^{to in sub-section(4) of S.l3 of the Act taken by the} secured creditor or his authorised^{ollicerunder the Act. Thesecuredcreditor is a creditor} holding security^the realisation^{of which wouldsatisff his claim.S.13(12)ofthe Actsays} that the right of the^{securedcreditor can be exercisedby oneor more of his officers} authorised in the^{manner as maybe prescribed. 'Authorised officer' under R.2(e) is an}

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sA 842D022

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omcer of the secured creditor who is competent to exercise the rights of the secured creditor as herein above and also right of the creditor secured under the Act to exercise power in respect to and also any other right of the secured creditor conferred under the Act. In the instant case, the secured creditor being a company, it can only be represented by its principal offrcer. On the showing of the applicant itseli he is aggrieved by Annexure 42 possession notice issued by the authorised offrcer of the defendant bank, who does not have an independent status without the^{existenceof thesecured creditor.} Therefore, in the opinion of the Tribunal, the authorised offtcer of the defendant bank should also have been made a^party in the cause title^along with^{the bank.}

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Point No.(i):- The applicant has admitted a few facts in the SA, which are that he availed and utilised loans obtained from^{the defendant} bank but^failed to^{pay off} the same within the stipulated time, that the repayment of^{the amounts due under the} same was collaterally secured by the equitable^{mortgagecreated} by^{the applicant over the} schedule immovable property in favour of the defendant^{bank, that the account was} classified as non-performing^{asset and} the^{defendantbank issued a notice under S.l3(2)} of the Act, that the defendant bank^{filed Crl Misc No.35612022beforethe Principal} Senior Civil Judge and CJM Dakshina^{Kannada,Mangaluru underS.14of the Act for} assistance in taking^{physicalpossessionof thescheduleimmovable propertyand that a} Commissioner was appointed to^{take possession of the saidimmovableproperty.} However, according to the^{applicant, the impugned order dated 31.10.2022is wrong and} contrary to law as the^{Principal Senior Civil Judge and CJM DakshinaKannada,} Mangaluru has no^{jurisdictionto passthe impugned order.}

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Except contending that the CJM^{Court has no jurisdiction the applicant} has not proved as to^{how the said court is having no jurisdictionto act uponthe} application filed under^{S.14of the Act by the defendantbank before it. Apart from the} mere statement that the^{impugned order is wrongand contrary to law, the applicant has}

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sA842n022

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not divulged any information relating to that. The defendant^{bank in its statementof} objection has stated that the CJM Court^{has jurisdiction to pass orders underS.l4of the} Act. The CJM Court in the impugned^{order dated} 31.102022^{has found that the secured} asset is situated within the^jurisdiction of the said^{Court.Having confirmedthe} jurisdiction only the CJM Court has acted upon the application preferred by the defendant bank. The applicant has not^{controverted thisfact in issue.He hasno case that the situs of} the secured asset is not within the^jurisdiction of^{the said CJM Court.On the showingof} the applicant itself, the secured^asset is^{situatedwithinMangaluru CityCorporationlimit,} Dakshina Kannada District.^Therefore, tlere^{is no merit in tlre contentionraised by the} applicant regarding^jurisdiction of the CJM Court.^{S.l4 of the Act is very clearand} unambiguous. It states that the Chief Metropolitan^{Magistrate or the DistrictMagistrate} can assist the secured creditors in taking^{possessionof thesecured assets.It means, in} mehopolitan areas, the secured creditors can approach^{either the Chief Metropolitan} Magistrate or the District MagisEate and^{in non-metropolitanareas,where there is no} Chief Metropolitan Magistrate, the^{securedcreditorscan seek the assistanceof the} District Magishate alone,^as no^{power is vested on the Chief JudicialMagistrateto give} assistance to the secured creditors in non-metropolitan^{areas.The applicanthas no case} that the situs of the^{securedassetis not a metropolitanarea andthere is no Chief Judicial} Magistrate vested with^powe6 to^{give assistanceto thesecured creditor. The Hon'ble} Supreme Cotxt in Jain and^{Co v CapitalFirst Ltd freported in 2022 (5) KLT 361 /SC)l} has held that the^powervested in^{the Chief Metropolitan Magistrate/DistrictMagistrate is} not by way ofpersona^designate.

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g. ln Solar Svstems Pvt. Ltd^v. Oriental^{Bankof Commercefreportedin 2006} @ KLT¹² tt the^{Hon'ble High Courtof Kerala hasheld that Chief JudicialMagistrate} can exercise^powers under^{S.l4 of the Securitisation and Reconstructionof Financial} Enforcement of Security^{Interest Act, 2002 and it reads thus:-} ""0 :"r:".

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sA 842t2022

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"A Chief Judicial Magistrale in a non Metropolitan area stands on the same looting as a ChiE Metropolitan Magistrqte and he is vested wilh all^powers of a^{Chief Metropolitan Magistate in d} metropolitqn area. In that view of^{the matter, the contention raised by the pelitionerthat the ChiefJudicial} Magistrate, Ernakulam is not entitled to exercise^{lhe powersunderS.l4 oftheact is lidble lo be rejected."}

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It was held by the Hon'ble High Court of Kerala in Rosamma Joseoh^v State of Kerala [reported in 2011^(]) KLT SN^{70 (C.No.94)l that the ChiefJudicial}

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Magistrate has^jurisdiction to entertain an application^u/S.14 of^{the Act, and it reads so:-}

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"h is true that, in S.l4 it has been nentioned thdt, the application has to befiled before the Chief Metropolitan Magistrate or District Magistrale.^{In the decision reportedin Arockiaraj'scase(CDJ 2013} MHC 3970), the Full Bench of the Madras^{High Court relyingon the decisionsof Bombry High Court in} Induslnd Bank Ltd v The State of Maharashtra^{(CDJ 2008BHC 520)and Arjun Urban Co-operative Bank} Ltd, Solapur v CJM Solapur Court^{(2009 (2) DRTC 431 (Bon)heldthqt only Chief Metopolitan} Magistrates or District Magistates are^empowered lo^{entertointhe applicationunderS.l4 ofthe} SARFAESI Act. But, the^{DivisionBench of ,his Court in MuhammedAshraf& Anotherv Union of India &} Others^(2008(4) KLT l) has^{heldthatthe powers of the ChiefJudicial Magistratein non-metropolitan} area and the Chief Metropolitan^{Magistrate in metropolitan area are one und thesame and the applicalion} under S.l4 of the SARFAESI Act^{con be enterlainedby the ChiefJudicialMagistrate in a non-metropolitqn} atea.^"

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In the above circumstances and in^{view of the discussion as above, the} contention raised by the applicant^{regarding non-jurisdictionof the CJM Court to act} upon the application preferred under^{S.14of the Act by the defendantbank before the} said Court is not sustainable^and thus^{rejected.The point is thus answered against the}

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applicant.

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Point No.(ii):- Yet^another contention^{raised by the applicantis thatthe} CJM Court before^passing the^{impugnedorder has not compliedwith the procedue} prescribed under the Act and the^{Rules madethereunder.According to the applicant, the} cJM Court before^{passingthe orderhasnot considered as to whether the claim of the} defendant bank is legal and^as to^{whether there is any legal mortgage in favour of the} bank so as to invoke the^{provisionsunderthe Act,the court below hasnot verified the} original documents^{andnot offered any opportunityto the applicant before passing the} impugned order, the Court^{also has not considered as to whetherthe rate of interest} claimed by the^{defendantbank is in accordance with theReserveBank of India (RBI)} Regulations and Rules^{and no notice has been servedon this applicant as per RI.4and 8} of the Rules.

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sA 842n022

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The defendant bank in its statement ofobjection has submitted that there is

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no need to issue a notice to the borrower before passing .an order by the CJM Court and the CJM Court has no^jurisdiction to consider the rate of interest. S.14 of the Act deals with the role of the Chief Metropolitan Magistrate or the District Magistrate to assist the secured creditor in taking possession of the secured asset. The further proviso to clause (b) of sub-section (l) of S.14 of the Act says that on receipt of the affidavit from the authorised offrceq the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfing the contents of the aflidavit^pass suitable orders for the purpose of taking possession ofthe secured assets within a period of thirty days from the date of application. The statute does not contemplate an.adjudicatory^order to^{be passed} by the Magistrate or to consider the application as in a^{judicialprocess.} The Chief Judicial Magistrate is not empowered with^{jurisdiction,powerand} authority to^{look into} the evidence and adjudicate upon the matter in dispute between the^{parties except} assisting the secured creditor in taking^{physicalpossession} of its^{securedasseteven} with police assistance, if needed. No document in evidence is to be^produced but what required after amendment by way of insertion of the first^proviso to^{sub-section(l) of} S.l4 of the Act made applicable with effect from^15.01.2013 by the^{secured creditor to} invoke the provision under S.14 of the Act^is that^{a mere'requestin writingby way of an} application accompanied by an affidavit duly affirmed^{by its authorisedofficerdeclaring} satisfactorily and convincingly the^{nine points dealtwith in clause (b) of sub-section (l)} of S.14 ofthe Act. The correctness or^{otherwiseofthe declaration, going by the scheme} of the provision, is not^{a matterat all for the Chief JudicialMagistrateto adjudicate,but} which is a matter for this Tribunal^{in exercising power under S.17 of the Act to} adjudicate upon, if so raised.

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The Hon'ble High Court of Kerala^{in StateBank of Indiav Chief Judicial} Masistrate treoortedin2021 6t^{KLT72:2021(4.1 KU 572:2021 ICO15921hasheld}

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that the statute does not contemplate an adjudicatory order to be passed by the Magistrate

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or to consider the application as in a^judicial process, and the relevant portion reads as

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below:-

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"The Mdgistrate under S.l4 is exercising a power which is sui generis. The legislative intention is evident from the first proviso to 5.14 thal the Magistrate can pass orders after sqrisfying the con ents of the afidnit, for lhe purpose ol tqking possession o/ the secured assets- Al the stage of passing orders the authorised Magistrate is not even mqndated lo issue notice to the borrower or eyen heor the borrower. The conferment of power upon the aulhorised Mqgistrate is with a singular focas to take possession of the seated asset. The Magistrate is also conferred with powers to e$ure compliance of taking possession by even rcsorting to steps by the use offorce, as is required in his opinion-

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The authorised Magistrate will have to^qct strictly in conformity with the statutory conferment of powers undet S.l4 and there is no scope for any opplication by the borrower for any purpose whatsoeyer. The borrower cannot maintain an, application under S.I4 of the SARFAESI Act nor cdn the borrov,er invoke the^jurisdiction of fie authorised mqgistrqte under S.l4 o/ the Act. Further, lhe statute does not contemplale an adjudicatory order to be possed by the Magistrale or lo consider the application as in a judicial process. The procedure prescribed under S.l4 of the SARFAESI Act is part ofa non-judicial process. The said power is no doubt peculiar to the special slatute.

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ln view of the proposition laid down as aboye, it is clear thal the learned Chief Judicial Magistrqte will not become functous olJicio by ixuing an order under 5.14 of the SAMAESI Act and also that the^jurisdiction under S-14 is only to render assistance to fitcilitate delivery of possession at the earliest.

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The Magistrdte authorised under S.l4 of lhe SARFAESI Acl have no power of adjudication. "

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While dealing with the powers of Chief Judicial Magistrate, the Hon'ble

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High Court of Kerala in Bank of India v. Pankaj Dilipbhai Hemnani freported in 2008

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(l) KLT SN 7l has held that the Chief Judicial Magistrate do not have any adjudicatory

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powers, and it reads so:-

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"The atthority who is called upon to act under S. l4 of the Securitisation Act can only assist, and, is bound to assist the sectred creditor in taking possession of the secared asset. Atty dispute betneen the parties regdrding lhe secared asse, rqised before the^quthority cqnnot be gone into by lhe aulhority; lhe aulhority has to relegate the aggrieved person to seek slatutory remedy tnder lhe Secaritisation Act ofter taking possession and handing ovet to the secured creditor. The authorily cannot be permitted to read anything beyond this, k S.l4 ofthe Secaritisqtion Act. "

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The Hon'ble Supreme Cowt in Jain and Co v Caoital First Ltd freported

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in 2022⁽⁵⁾ KLT 361 6C)l has held that there is no element of exercise of adjudicatory

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powers under S.l4 ofthe SARIAESI Act. The relevant portion reads as below:-

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"lf the interprelation which we propose that, lhe District Magisnab/Chief Metropolilan Magistr(tte under S.14 o/ the SARFAESI Act includes the Additional^{District Magistrate/Additional} Chief Metropolitan Mogistrate, the same cqn be said to be a^purposive interpretation to achieve the object and purpose of proceedings under the SARFAESI Acl, more partialarly when^qs observed hereinabove, the orders to be passed under S.l4 ofthe SARFAESI Acl are uinisterial steps and^{lo assist the} secared^oeditor in getting/obtaining the^possession of the seared^{property.?hus, there} is^{no elemenl} of^etercise of adjudicatory powers under S. 14 of the SARFAEII^{Act. All these aspects have been consideredin detail by} the High Cout in the impugnedjudgement and order.^"

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sA 842D022

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The Hon'ble Supreme Court in Standord Chartered Bank v V Noble Kumar treported in 2013^($ KLT 531^(SO :⁽²⁰¹³⁾ 9 SCC 6201 has held that the

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Receiver appointed by Magistrate is not required to follow Rule 8, and it reads so:-

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"There is no^{justification} for the conclusion that the receiver appointed b) magislrale is also required tofollow R8 of the Sectrity lntercst^{(Enforcement)} Rules, 2002. The^procedure to befollowed by lhe receiver is otherwise regulated by law. R.8^prwides for the^procedure to be followed by sectred creditor taking possession of lhe secured asset wilhout the intervention of Court. Such^{q process} wqs unknov)n prior to rhe SARFAESI Act. So, specilic^provision is mqde under R8 lo ensure transparency in taking such possession l(e do nol see an, conlict between dfferent^{proceduresprescribed} by low for taking possession ofthe secured asset."

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ln Noble Kumar's case^(supra), the Hon'ble Supreme Court has discussed

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the three different methods for the secured creditor to take^possession of the secured

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assets. The same is as below:-

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"There will be three methods for the secared creditor to take possession of the seatred assets:- (i) The first method would be where the secured credilor gives lhe requisite notice under R.8(l) and where he does not meet with ary/ resistance. ln that case, the outhofised oflicer will proceed lo lake steps as stipulared under R.8(2) oruards to lake possession and thereafter for sale ofthe secured assets to redlise the amounts that are claimed by the secured credilor. (ii) The second situation will arise where the secared credilor meets wilh resistance from the borrower afrer lhe nolice under R8(l) is given. ln lhal cqse hewill tqke recourse lo the mechanism provided under 5.14 of the Aa vA making application to the Mqgistrqte. The Magistrate will scrutinizes the application as prwided in 5.14, and then ifsatislied, appoint an olJicer subordinate to him as provided under S.l4(1)(A) to take possession of the assels and docttments. For that purpose the Magistrate mcy anthorise the olicer concerned to use such force os may be necessary. Afler the possession is taken the assets and doctments will be forwarded to the seqtred creditor. (iii) The thnd situalion will be one where the secured creditor approaches lhe Magistale concerned directly under S.l4 of the Act. The Magistrate will thereafter s$utinize the application as provided in 5.14, and then il sarisfied, authorise a subordinate oflicer lo take possession ofthe assets and doctmenls andforwards them to lhe seared creditor as under clause⁽ⁱⁱ⁾ above. "

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The Hon'ble High Court of Kerala it Catholic Svrian Bank Ltd v Orma Marble World [reported in 2018⁽³⁾ KLT SN 60^(C.No.67)l has held that in appropriate

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c:$es the Chief Judicial Magistrate can dispense with notice to the debtor before

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exercising his powers under S.14, and the relevant portion reads as below:-

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"llhile dealing with the secured creditor's u)ritten request rnder S.l4 of the Searritisation Act, the ChiefJudicial Magistrate need not^give notice to or heor the bo ower or any^person in^possession oJ the secured asset. Coupled with the circumstances under which^'prior' norice could be dispensed with, even the hypothecation agreement has deqlt with this contingenc!.^In fact, the^debtors in that agreement have waived rhe right to nolice. Given lhe consensual^procedural mechanism^agreed to^betweenthe parties, I reckon this is aJit case, in which lhe learned CJM could dispense with notice to the borrowers.^"

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In the above circumstances and in view of the law enunciated by^the

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Higher Judicial Forums in the Judgements cited supra, this Tribunal is of the firm view

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that the^grounds raised by the applicant to show that the CJM Court^{before passing the}

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sA 842t2022

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impugned order has not complied with the procedure prescribed under the Act and the Rules made thereunder are not sustainable in the eye of law and it is onty idle for him to hang on such bald defences. The point is thus answered against the applicant.

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Point No.(iii):- The applicant has raised a contention that no original documents have been produced by the defendant bank before the CJM Court and, hence, the defendant bank is not entitled to take possession as per the order. Admittedly, the applicant has created mortgage over the SA schedule immovable property to collaterally secure the repayment of tle amounts due under the housing loans availed by him from the defendant bank. According to the defendant bank there is a valid mortgage created over the SA schedule immovable property.

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S.13 of the Act deals with enforcement of security interest and the subsection (1) thereto says that notwithstanding anything contained in 5.69 or 5.694 of the Transfer of Property Act, 1882, any security interest cieated in favour of any secured creditor may be enforced, without the intervention of court or tribunal, by such creditor in accordance with the provisions of the Act. Chapter IVA [Ss26B to 26E[ deals with registration by secured creditors and other creditors. The central Registry under chapter IV of the Act is defined as the Registry set up or caused to be set up turder S.20(l) of the Act by the Central Govemment vide notification No.GSR 277(E) dated 31.03.2011 for the purposes of registration of transaction of securitisation and reconstruction of financial assets and creation of security interest under the Act. Any provisions of the Act specified in 3.20(4) or any other law requiring registration of charges are in addition to the registration with the central Registry. The central Govemment vide the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous provisions (Amendment) Act, 2016 r/w the notification No.SO 4619(E) dated 26.12.2019 inserted Chapter IV A [Registration by secured creditors and other creditors - Ss.26B to 26E] apdicable with effect from 24.01.2020. Sub-section (2) to 5.268 says that from the date

sA a4212022

of notification under sub-section (l), any creditor including the secured creditor may file particulars of transactions of creation, modification or satisfaction of any security interest with the Central Registry in such form and manner as may be prescribed. Sub-section (3) thereof says that a creditor other than the secured creditor filing particulars of transactions of creation, modification and satisfaction of security interest over properties created in its favour shall not be entitled to exercise any right of enforcement of securities under this Act. In sub-section 26D under the head 'right of enforcement of securities', it is specifically stated that notwithstanding anything contained in any other law for the time being in force, from the date of commencement ofthe provisions of this Chapter, no secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter III unless the security interest created in its favour by the borrower has been registered with the Central Registry. The defendant bank vide Annexure Bl has shown that the demand notice under S.l3(2) of the Act has been issued on 17.06.2022 (which was received by the applicant on 18.06.2022 as could be inferred from the copy of the postal acknowledgement card produced along with Annexure Bl signed by the applicant for having received Annexure 81 notice sent to him by registered post) and vide Annexure 82 that the possession notice under S.l3(4) of the Act has been issued on 30.08.2022 (which also was received by the applicant on 01.09.2022 as could be infened from the copy of the postal acknowledgement card produced along with Annexure 82 signed by the applicant for having received Annexure B2 notice sent to him by registered post). The defendant bank also produced photocopies ofthe extract ofpublications made in two leading dailies, namely, the Samuktha Kamataka and the New Sunday Express dailies dated 04.09.2022 of the possession notice dated 30.08.2022. According to the defendant bank, the security interest created in its favour by the borrower has been registered with the Central Registry and Annexure 85 is a copy ofthe security interest id based search report with the Central Registry of Securitisation Asset Reconstruction and

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sA 842D022

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Security Interest of India (CERSAI), which reveals that the defendant bank on 06.01.2017 registered in CERSAI portal the security interest created by way of registered mortgage with it by the borrower on26.12.2016.

¶103

Notwithstanding anlhing contained in this Act, admittedly there is a registered mortgage created over the secured asset under the provisions of the Transfer of Properties Act, l88l, which has already been registered with CERSAI also. The applicant has no case that the SA schedule immovable property is not a secured asset, the defendant bank is not a secured creditor and that the right of the secured creditor over such property is not its security interest as defined under S.2 of the Act. In the above circumstances, there is no lawful substance in the contention raised by the applicant that the defendant bank is not entitled to enforce its security interest over its secured asset. The point is thus answered against the applicant.

¶104

Issue No.(iv):- According to the applicant, the description of the property sought to be taken possession is wrong and the extent ofthe property and the particulars shown are incorrect. But it may be noted that the description and the extent of the property fumished by him in the schedule to the SA are also the same with that shown by the defendant bank in Annexure ,4,2 possession notice. He has not explained as to what the discrepancies are therein and what the correct details are thereto. He has no case that the identification, character, lie and nature of the property cannot be made with respect to the details given therein. He has also no case that the revenue details with respect to the secured asset have been changed by the e{flux of time.

¶105

¶106

The applicant has raised a contention that no notice as prescribed under Rr.4 and 8 of the Rules has been served on him. R.4 of the Security Interest (Enforcement) Rules, 2002 (as amended from time to time) - for short' the Rules' - prescribes the procedure to take possession of the secured asset after issue of demand notice under R.2 of the Act. R.4 with sub-rules^(l) and (2) of the same reads as below:-

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sA,842t2022

¶109

"lf lhe amount mentioned in lhe demand notice is not paid wilhin lhe time specified therei4 the authorised oficer shall proceed to realise the amount by adopting any one or more of the measures speci/ied in sub-section (4) ofS. l3 ofthe Act for tak@ possession of movable properly, namely:-

¶110

(1) llhere the possession of the secared assets to be laken b, lhe secured creditor are movable property in possession of the borrower, lhe aulhorised ofrcer shall take possession of such movable properry in the plesence of tn)o witnesses afier a panchnama drawn and signed by the wilnesses as nearly os possible in Appendix to these rules.

¶111

(2) After taking possession under sub-rule (l ) above, the authorised ofrcer shall makt or cause to be made an in)entory of the property os nearly as possible in lhe form given in Appendix lI to these rules and deliver or cause to be delivered, a copy of such irNentory to the borrower or to any person entitled to receive on behalfof the borrower.''

¶112

As per the amendment vide GSR 1046(E) dated 03.11.2016 made

¶113

applicable with effect from 04.1 1.2016 by virtue of insertion of sub-rules (2A) and (2B)

¶114

to R.4 of the Rules, the borrower shall be intimated by a notice, enclosing the panchnama

¶115

and the inventory, and it reads as below:-

¶116

"(2A) The borrower shall be intinated by o notice, enclosing the panchnama drawn in Appendix I and the iruentory made I Appendb II.

¶117

(28) All notices under these rules may also be sen ed upon the borrower through electronic mode ofservice, in addition to the modes specified under R.3."

¶118

R.8 of the Rules prescribes the mode of delivery of the possession notice

¶119

in respect of the immovable secured asset. Sub-sections (1) and (2) read as below:-

¶120

"(l) lVhere the secured ssset is an immovable property, the authorised ofrcer shall take or cause to be tdken possession, by delivering a possession notice prepared as nearly as possible in Appendix-lY to these rules, lo lhe borrower and by afaing the possession notice on the outer door or al such conspicttous place ofthe property.

¶121

(2) The possession notice as relerred to in sub-rule (l) shall also be published, as soon as possible but in ory case not lqter than seven dqts lrom the date of taking possession, in two leoding newspapers, one in vernacttlar language hoving suflicient circulation in that localiry, by the authorised ofricer.^"

¶122

The defendant bank took physical possession of the secured asset on

¶123

¶124

16.11.2022 in the presence of five witnesses after drawing Annexure 83 panchnama and inventory in respect of loan accounts bearing Nos.HL/33/160066, HLl13ll60067 and, HL/331190067. A copy of such panchnama and inventory was delivered to the borrower himself who has signed in presence of the authorised officer and the witnesses for having received the same. Annexure 82 is a copy of the possession notice issued under S.13(4) of the Act r/w R.8(1) of the Rules ot 30.08.2022 by the authorised officer of the defendant bank. The same was received by the applicant on 01.09.2022 as could be

sA 842n022

inferred from the copy of the postal acknowledgement card produced along with Arurexure 82 and signed by the applicant for having received Arurexure 82 notice sent to him by registered post. The defendant bank also produced photocopies of the extract of publications made in two leading dailies, namely, the Samuktha Kamataka and the New Sunday Express dailies dated 04.09.2022 of the possession notice dated 30.08.2022. In the above circumstances, the contention raised by the applicant to the effect that the notices as prescribed under Rr.4 and 8 of the Rules have not been served on him cannot be believed even for a moment. The applicant has not controverted by reason or otherwise the evidences produced by the defendant bank. Therefore, there is no other option for this Tribunal than to believe the words of the defendant bank. The photograph produced by the defendant bank along with Annexure 82 shows that the same was affixed on the outer door ofthe property. However, no report of affixture produced. The applicant could not disprove the said facts or could not produce any evidence in contra to the same. Thus, the defendant bank has acted in accordance with S.l3(4) of the Act r/w Rr.4 and 8 of the Rules. Thus, it may be seen that the defendant bank invoked the provisions under the Act and the Rules meticulously. In the above circumstances and in view of the discussions under point Nos.(i) to (iii) it is found that the recourse taken by the defendant bank under sub-section (a) of S.l3 of the Act by virtue of Annexures 82 possession notice and 83 order under S.l4 application coupled with panchnama and inventory are in accordance with the provisions of the Act and the Rules made thereunder and this Tribunal declares so. It may be noted that though the counsel-on-record for the applicant in the proceedings on 05.01.2023 submitted that a substantial amount has been remitted towards the debt due to the defendant bank and in the proceedings on 20.01.2023 that the matter is under consideration for one time settlement, neither side has so far reported before this Tribunal that the matter in dispute has already been settled amicably between the parties out of the Tribunal in full and final satisfaction ofthe claim

¶129

¶130

sA 842D022

¶131

demanded by the defendant bank from the applicant. Therefore, notwithstanding anything contained in any other law for the time being in force, the defendant bank secured creditor is entitled to continue with the proceedings pursuant to Annexure 82 possession notice and Annexure 83 action in obtaining the physical possession of the secured asset for recovery of its secured debt by enforcing its secwity interest over the SA schedule

¶132

secured asset.

¶133

In the result, SA dismissed. IA No.3191/2022 closed. Defendant bank is permitted to resume further proceedings pursuant to Annexures 82 and B3. No costs.

¶134

Communicate copy of this final order to both parties as provided in subsection (7) of S.17 of the Act r/w R.l6 of the Debs Recovery Tribunal^(Procedure) Rules,

¶135

1993 (as amended from time to time).

¶136

[Diclored^{to DtyPA directly on the computer, correcredondpronounced bymein the openTribunalon thisthe2ld} doy ofAugust, 2023J

¶137

. fi'')q Yo'I^IMTIAZALI ] PRESIDING OFFICER

¶138

¶139

Appendix to SA 842/2022

¶140

APPENDIX

¶141

Applicant's Exhibits

¶142

Wiiressforthe	applicant	Nil
Witnessfordef	endant	Nil
ExhibitNo.	Date	Particularsof documents
Annexure-Al		Certified copyofthe ordersheetinthe CourtofPrinipal SeniorCivilJudgeand CJM,Dakshina KannadainCrl MiscNo.356/2022 betweenthedefendantbankandthe applicantandanother
Armexure-A	230.08.2022	Possessionnoticeissuedunder 5.13(4)oftheActr/w R.8(l) oftheRules
		Defendant'sExhibits
Annexure-B	l17.06.2022	Copyofdemandnoticeissuedunder 5.13(2)ofthe Securitisation and ReconstructionofFinancialAssetsand EnforcementofSecurity InterestAct,2002bythe authorisedofficerofthedefendantbanktotheapplicant andanothercallingupon themtodischargethedebtof {3,19,87,303/-ason17.06.2022(alongwiththe^postal acknowledgmentcards)
Annexure-B	230.08.2022	Photocopyofpossessionnoticeissuedbythedefendant bankinrespectofthesecured asset(alongwith^postal acknowledgement cardand theextractofpaper publications and thephotographinoriginal)
Annexure-B3		Photocopyofthe certified copyofthe ordersheetinthe CourtofPrinipalSeniorCivilJudge andCJM,Dakshina Kannadain CrlMiscNo.35612022 betweenthe^defendant bankandtheapplicant andanother^(alongwithcopyof panchnama andinventory)
Annexure84		Statementofaccountinrespectof^account Nos.HL/33/190067,HLI33 I¹60067 and HLl33/
Annexure85	06.01.2017	Security interestidbased portal searchreportfromCERSAI

¶143

,.,,^}),u"ll

¶144

Schedule to 5A84212022

SC}IEDULE

All that piece and^parcel of^{property bearing RS No.l0l-B2, TS} No.749/2 measuring 0.100 cents^{situated in Kadri Village of Mangaluru} Taluk, consisting of building bearing^{D No.l5-12-63712(l)and 15-12-637/2} within Mangaluru City Corporation^{limits,Dakshina Kannadaand bounded} on:

¶149

Boundaries : SY S.D Line East by : Road West by : Road North by South by ; Property^{of same surveynumber.}

¶150

PREsrDrNh::.

¶151

IN THE DEBTS RECOVERY TRIBIJNAL. I, KARNATAKA AT BANGALORE

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PRESENT: SRI IMTIAZ ALI PRESIDING OFFICER

¶153

Dated the 2l't day ofAugust, 2023

¶154

SECURITISATION APPLICATION NO. 842 OF 2022