Dismissed

S Sankar v. Indian Bank

DRT11 May 2023SA/88/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal India upheld the validity of a possession notice issued by Indian Bank under the SARFAESI Act. The court rejected the applicant's claim that the property was agricultural and found that procedural requirements of the Enforcement Rules for service and publication were properly complied with.

What did the court decide?

Securitization Application dismissed and all pending applications closed; no orders as to costs.

S Sankar versus Indian Bank — Banking and Recovery | DRT (2023)

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BEFORE THE DEBTS RECOVERY TRIBUNAL –II AT CHENNAI

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Dated this 11^th day of May, 2023

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PRESENT: SHRI T. RAJESH PRESIDING OFFICER

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SA No.88 of 2023

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Mr. S. Shankar S/o Mr. Samivel 13A, East Street, Patharakudi Kovilacheri – 612 503 Kumbakonam

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Mrs. Geetha Rani W/o S. Sankar 13A, East Street, Patharakudi Kovilacheri – 612 503 Kumbakonam …Applicants

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Versus

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Indian Bank Recovery and Legal Department Zonal Office Kumbakonam H. No.34B-1, First Floor Thiruvidaimaruthur Road Nal Road, Kumbakonam – 612 001 …Respondent

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Counsel for the Applicant : Ms. Abitha Banu Counsel for Respondent : M/s P.V. Muralidhar

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FINAL ORDER

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This Securitization Application is filed under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 (SARFAESI Act), challenging the proceedings initiated by the respondent leading up to issuance of possession notice dated 6.2.2023.

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It is the case of the applicant that the 1^st applicant is a Road contractor and applicant‟s mother was holding a valuable property which had been mortgaged with the respondent as security for the credit facilities. It is also

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stated that due to the pandemic, the bills raised by applicant was not processed resulting defaults in the accounts. It is also admitted that the account had been classified as NPA. It is also stated that the applicant was not informed as to the classification of NPA and that but for the impugned possession notice, no other communication had been served on the applicant.

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In the grounds to the SA the applicant had reiterated the contention that the respondent had not followed the procedure and the issuance of possession notice is not in accordance with statute. It is also contended that the property is an agricultural one and there exist no security interest. Along with the SA the applicant had produced the possession notice, sale deed and photographs. An additional type set was also filed producing the sale notice e-mail communication and publication of sale notice in regard to the sale notice it is stated that the sale notice is issued despite the banks counsel sought time when the SA was sought to be moved. Hence on the above contention the applicant seeks to set aside the impugned possession notice.

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The respondent had filed their counter denying the averments as stated in the SA and contending that the measures taken by the respondent are in conformity with statute. it is stated that the property is not an agricultural land as contented by the applicant. It is also stated that the measures were initiated as the borrower failed in compliance of the terms of the agreement binding them to pay back the amount borrowed. It is also the case of the respondent that the applicant had not approached this Tribunal with clean hands. Along with the counter, the respondent had produced the following documents viz., Demand notice dated 3.12.2022, Acknowledgment card of

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the demand notice, Possession notice dated 6.2.2023, Acknowledgment card of the possession notice, Paper publication of the possession notice in English as well as Tamil daily, Photographs evidencing affixture of the possession notice, Sanction ticket dated 23.3.2018, Valuation reports dated 27.5.2016, 7.2.2023 and Certificate from the VAO dated 9.2.2013. On the basis of above documents and contentions in the counter the respondent seeks for dismissal of the SA.

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Heard the counsel for both sides and considered the rival contentions as taken in the SA and the counter affidavit in the light of documents produced by both sides. The following issues arise for consideration in this matter: -

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(i) Whether the secured asset is an agricultural land as contended by the applicant?

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(ii) Whether the measures taken by the respondent leading up to issuance of the impugned possession notice is in accordance with statute or not?

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Issue No. (i)

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Whether the secured asset is an agricultural land as contended by the applicant?

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The applicant is putting forward a contention that the property sought to be proceeded against is agricultural one and embargo under section 31(i) of the Act applies to the said proceedings. In support of their claims the applicant had produced the sale deed and also the photographs of the said property which according to the applicant evidences that the property is purely agricultural one. This contention is specifically denied by the respondent who

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contends that the property is a residential one as the description of the property in the sale deed itself evidences that the property is residential one. The respondent had also produced the photographs of the properties were existence of the building is evident. Reliance was also placed on the sanction ticket and the valuation procured at the time of disbursement of the facility in the valuation taken on 27.5.2016, which have direct relevance as to the nature of the property at the time of availment of the facility narrates the property as “residential one”. It is evident from the above document that the applicant created security interest on a land which though comes under „nanjai classification‟, no agricultural activity was carried out at that time and it also makes it clear that the land needs to be regularized under DTCP and is situated in a developing residential area. Apart from the above a certificate issued by the EAO is also produced by the respondent, which is dated 9.2.2013, which evidences that the property had been converted in to house site. The above documents negates the contention of the applicant as to the nature of the property. The applicant having availed the facility describing the property as non agricultural one is estopped from claiming that the property is an agricultural one. The burden is on the applicant to prove that the property was an agricultural one at the time of disbarment of the facility and creation of security interest. In the present matter the document produced by the applicants are hardly sufficient even to assume that the property is an agricultural one at the time of creation of security interest.

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On the basis of above findings the contention of the applicant that the provisions of the Act are not applicable as the security interest is created on

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an agricultural land is to be rejected and accordingly the issue no.i is decided against the applicant.

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Issue No. (ii)

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Whether the measures taken by the respondent leading up to issuance of the impugned possession notice is in accordance with statute or not?

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In regard to the legality of the measures leading to the issuance of impugned possession notice the applicant is contending that but for the impugned possession notice no intimation what so ever had been served on the applicant, which states in the denial of service of demand notice.

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The availment of the credit facility creation of security interest and defaults are admitted by the applicant. The respondent had produced the proof of service of demand notice dated 3.12.2022. The acknowledgment of the same dated 5.12.2022 is produced. The acknowledgment card evidencing the receipt of demand notice can only lead to the conclusion that there is due compliance of Rule 3 of the Security Interest (Enforcement) Rules and the contention of the applicant that no demand notice is served on them is without any basis and liable to be rejected.

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The respondent had also produced the proof of service of the possession notice as the acknowledgment card in relation to the possession notice is produced . The paper publication of the possession notice is also produced by the respondent, which evidences the publication of the possession notice in two dailies, one in English and the other in Vernacular. The proof of affixture of the possession notice is proved by production of photographs evidencing the affixture of the possession notice. The above documents

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makes it clear that there is due compliance of Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules and the contention of the applicant as to the legality of the measures are to be rejected.

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In view of the above finding as to the compliance of Rule 3, 8(1) and 8(2) of the Security Interest (Enforcement) Rules also to be found against the applicant.

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The findings entered in Issue No. (i) & (ii) can only lead to the irresistible conclusion that there is no merit in the SA and the SA is liable to be dismissed.

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In the result the SA stands dismissed and all pending IA‟s stands closed, no orders as to cost. Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal (Procedure) Rules 1993.

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(Dictated to PS, transcribed by him, corrected, signed and pronounced by me in Open Court on this the 11^th day of May, 2023)

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Sd/(T. RAJESH ) PRESIDING OFFICER DRT-II, CHENNAI

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S Sankar v. Indian Bank

Case brief

What is this about?

What did the court decide?

S Sankar v. Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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