Dismissed

Farhana K C v. Canara Bank

DRT18 Sept 2024SA/149/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed an applicant's application seeking to set aside a sale notice and prevent possession of mortgaged property. The court held that physical possession is not mandatory for a sale notice citing Transcore and rejected limitation claims.

What did the court decide?

Application to set aside sale notice and prevent possession was dismissed.

Farhana K C versus Canara Bank — Banking and Recovery | DRT (2024)

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 18^th DAY OF SEPTEMBER, 2024

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

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S.A No. 149 of 2024

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Between

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Farhana K.C., Proprietrix of M/s. KNT Indane Gramin Vitrek Gas Agency, D/o. Muhammed Iqbal K.C., Kappachali House, Mampad, Malappuram – 676 542.

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--- Applicant

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And

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Branch Manager,

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Canara Bank,

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Nilamboor Branch,

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CNG Road, Nilambur,

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Malappuram – 679 329.

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Authorized Officer,

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Canara Bank, Nilamboor Branch, CNG Road, Nilambur, Malappuram – 679 329.

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--- Defendants

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This Securitization Application coming on 12.09.2024 for final hearing before me in the presence of Mr. Rajan Pottayil, Advocate for the Applicant and Mr. Prem Das 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.149 of 2024

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O R D E R

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This Securitisation Application was filed on 05.02.2024 seeking to set aside Annexure-A2 Sale Notice dated 17.01.2024 and to pass an order to prevent the defendants and proposed purchasers from taking possession of the scheduled properties and not to confirm sale of the property and to direct the defendants to consider the request of the applicant for One Time Settlement of loan account.

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The applicant has averred in the SA with regard to availment of loan to the tune of Rs.30,00,000/- from the 1^st defendant bank upon creation of security interest over the immovable property belonging to the applicant as the collateral security for the availment of the aforesaid credit facility. The applicant has averred in the SA as if she availed the aforesaid credit facility alone, but the defendants have denied the above averment of the applicant contending in their written statement that the applicant availed MSME facility of Rs.39,33,800/on 09.01.2019 and OCC facility of Rs.7,50,000/- on 27.02.2019 by mortgaging her immovable property. The aforesaid details has been clearly mentioned as Schedule-A in the Demand Notice dated 30.08.2023.

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The applicant has not specifically averred in the SA as to whether she committed default in repayment of the outstanding loan due to the 1^st defendant bank. However, a perusal of Demand Notice dated 30.08.2023 produced by the defendants shows that since the applicant committed default in repayment of the outstanding loan due, her loan account was classified as Non-performing Asset on 27.8.2023.

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The applicant has averred in the SA that Demand Notice was not served to her. The above averment of the applicant is refuted by the defendants contending that Demand Notice was personally served to the applicant. It is seen from the perusal of the Demand Notice that the applicant and other guarantors have signed in the copy of the Demand Notice in token of receipt of the Demand Notice. Therefore it is evident that the above averment of the applicant is absolutely false.

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Indisputably, the applicant neither sent any objection/ representation to the Demand Notice nor did she clear off her liability due to the 1^st defendant bank. Hence possession notice dated 20.12.2023 Annexure-A1 was issued for symbolically taking possession of the secured asset. Subsequently Annexure-A2 sale notice dated 17.01.2024 was issued in order to sell the secured asset in auction on 28.02.2024. Admittedly, sale was not fructified for want of bidders.

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Page 2 of 7

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SA No.149 of 2024

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It is submitted by the counsel appearing for the applicant that statement of account was not furnished to the applicant and that the reserve price fixed for the property is too low when compared with the market value of similar property and that the market value of the secured asset is Rs.100 Lakhs and that the defendants are not entitled to demand the loan outstanding which is barred by limitation as per letter dated 23.12.2023 in terms of RBI resolution plan 2020 Annexure-A3, and that exorbitant rate of interest has been charged and that the applicant is not aware of the principal amount and interest charged by the 1^st defendant bank and that sale notice has been issued in violation of Rule 8 and 9 of the Security Interest (Enforcement) Rules 2002 and that issuance of sale notice without taking actual physical possession of the secured asset is in violation of Rule 8 (3) of the Security Interest (Enforcement) Rules 2002 and that sale notice is liable to be set aside and that therefore SA may be allowed as prayed for.

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It is submitted by the counsel appearing for the defendants that the reserve price for the property fixed is correct and that reserve price for the property was fixed only after having obtained valuation report dated 26.10.2023 from the approved Valuer and that the secured asset is not worth of Rs.100 lakhs as contended by the applicant and that interest has been charged as per contractual rate and banking norms and RBI guidelines and that the applicant did not make any request for getting copy of the account statement and that the outstanding amount and the interest payable against the outstanding loan due is clearly mentioned in the Demand Notice dated 30.08.2023 and that taking actual physical possession of the secured asset is not mandatory prior to issuance of the sale notice as held by the Hon’ble Supreme Court in M/s. Transcore Vs. Union of India and another [2008 KHC 4002] and that therefore the SA is liable to be dismissed with cost to the defendants.

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The applicant has not produced any material before this Tribunal to substantiate her claim that exorbitant rate of interest has been charged. In the Demand Notice dated 30.08.2023, the outstanding amount and the interest payable against the outstanding loan due in respect of both accounts is clearly and separately mentioned. Hence the contention of the applicant that she is not aware of the principal amount and interest charged by the 1^st defendant bank is absolutely incorrect.

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Annexure-A3 is the copy of arrangement letter for restructuring the loan account No.67354088408 which was issued by the 1^st defendant bank pursuant to the letter dated 21.12.2020 sent by the applicant. In Annexure-A3, the present outstanding loan amount including principal, interest and charges debited to the above loan

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Page 3 of 7

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SA No.149 of 2024

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account which was proposed to be restructured in terms of repayment of EMI amount with interest is stated. There is a clause in AnnexureA3 that if all the co-borrowers and guarantors agree to accept the revised term mentioned therein, they shall convey their acceptance of offer by signing on the duplicate of the letter. It cannot be disputed that only one person has signed in Annexure-A3. Be that it may so, the applicant has not stated in the SA as to whether Annexure-A3 was acted upon. Hence this Tribunal does not find any substance in the contention of the applicant that the defendants are not entitled to realize the outstanding loan due since the claim is barred by limitation as per Annexure-A3.

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The applicant has not produced any cogent material before this Tribunal to substantiate her claim that reserve price fixed for the property is very low and that the present market value of the property is Rs.100 Lakhs. The mere production of Annexure-A4 photograph which depicts the frontage of the secured asset does not support the above claim of the applicant. However, a perusal of the valuation report dated 26.10.2023 produced by the defendants would show that the approved valuer after having visited the property on 19.10.2023 and having considered the guideline value pertaining to the land and assessed the value of the building has fixed the market value of the property at Rs.74,73,926/- and distressed value at Rs.59,79,141/and realizable value of the property at Rs.67,26,533/-. This Tribunal finds that the above fixation of the value for the property is just and correct. The 2^nd defendant after having considered the above valuation report, fixed the reserve price for the property at Rs.68,00,000/-.

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It is discernable from perusal of Section 13 (4) of SARFAESI Act, 2002 and Rule 8 (1) and Rule 8 (3) of SARFAESI Act, 2002 that taking actual physical possession of the secured asset is not contemplated prior to issuance of sale notice. In M/s. Transcore Vs. Union of India and another [2008 KHC 4002] cited by the counsel for the defendants, the Hon’ble Supreme Court has clarified in para 50 of its judgment that the word possession is a relative concept and is not an absolute concept and that dichotomy between symbolic and physical possession does not find place in the Act. Therefore, this Tribunal does not find any substance in the argument advanced by the applicant that actual taking physical possession of the property is a condition precedent for issuance of sale notice.

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One of the reliefs sought for by the applicant in the SA is to direct the defendants to consider the request of the applicant for one time settlement of the loan account. The applicant has not averred in the SA as to whether she made any request in writing to the 1^st defendant bank that her request for one time settlement had to be considered. She has also not produced any proof to show her willingness for one time settlement. However, it is for the applicant to

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Page 4 of 7

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SA No.149 of 2024

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approach the 1^st defendant bank for such relief. This Tribunal cannot direct the 1^st defendant bank to consider the request of the applicant for one time settlement of the loan account. The applicant has miserably failed to establish her case so as to get the reliefs sought for in the S.A.

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Resultantly, this S.A No.417 of 2018 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 18^th day of September, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 7

SA No.149 of 2024

S C H E D U L E

District : Malappuram Taluk : Nilambur Village : Mampad Re. Sy. No. : 252/1-26 Extent : 17 cents

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Description

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All that is part and parcel of the property with residential building and all improvements thereon and having total extent of 17 cents of land situated in Re. Sy. No.251/1-26 of Mampad Village, Nilambur Taluk & Malappuram District.

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Boundaries

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East	: Road
South	: Property of Kareem
West	: Property of Neelandan
North	: Property of Mosque

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(Su. WILLYAHM) PRESIDING OFFICER

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Page 6 of 7

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SA No.149 of 2024

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

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Sl.	Date	Particulars
No.
1.	20.12.2023	True copy of the Possession Notice issued by the 2^nd defendant.	Annexure-A1
2.	17.01.2024	True copy of the sale notice issued by the 2^nd defendant	Annexure-A2
3.	23.12.2023	True copy of letter in terms of RBI Resolution Plan2020	Annexure-A3
4.	---	Photo of the residential building.	Annexure-A4

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List of documents filed by the defendants along with the written statement

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Sl.	Date	Particulars
No.
1.	11.06.2024	True copy of the Demand Notice	Annexure-B1
2.	26.10.2023	True copy of the valuation report.	Annexure-B2

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 7 of 7

Farhana K C v. Canara Bank

Case brief

What is this about?

What did the court decide?

Farhana K C v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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