Dismissed

Muhammed v. Idbi Bank

DRT2 Dec 2024SA/198/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's Securitization Application challenging the bank's steps to take possession of mortgaged property. The court held that the applicant failed to prove violations regarding NPA classification or possession notice requirements and could not challenge the CJM's order without averring non-compliance with Section 14 safeguard clauses.

What did the court decide?

The entire Securitization Application (S.A No. 198 of 2023) stands dismissed with no costs awarded to the applicant.

Muhammed versus Idbi 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 2^nd DAY OF DECEMBER, 2024

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

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S.A No. 198 of 2023

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Between

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Muhammed, S/o. Ali, Varithottil House, Kambalakkad, Kalpetta, Wayanad Dist. -673 121.

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--- Applicant

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And

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IDBI Bank Ltd. Rep. by Manager Kalpetta Branch, Wayanad Dist. 673 121.

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The IDBI Bank Ltd., Rep. by its General Manager and Authorized Officer Retail Recovery, Regional Office, Panampilly Nagar, Ernakulam -682 036.

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--- Defendants

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This Securitization Application coming on 18.10.2024 for final hearing before me in the presence of Ms. Archana, Advocate representing Ms. Celine Joseph, Counsel appearing for the Applicant and Ms. Keerthi K. Narayan, Advocate appearing 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.198 of 2023

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O R D E R

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This Securitisation Application was filed on 13.04.2023 seeking to declare that the entire proceedings initiated by the defendant bank against the applicant is vitiated by errors on the face of the record and to declare that the properties covered by Annexure-A2 are not liable to be proceeded by the defendants and to quash Annexure-A3 notice and all further proceedings thereto and to direct the defendants not to take physical possession of the properties mentioned in Annexure-A1 petition and Annexure-A2 order and to direct the defendants to pay the cost of this proceeding to the applicant.

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The applicant had admitted the availment of an Agricultural KCC facility with a limit of Rs.50,00,000/- on 27.2.2017 from the 1^st defendant bank upon creation of mortgage over by deposit of titledeeds over his land admeasuring 6.07 Ares comprised in Re.Sy.No.789/1 of Kaniyampetta Village, Vythiri Taluk, Wayanad District as the collateral security for the availment of the aforesaid credit facility. The applicant has not averred in the S.A with regard to availment of funded interest term loan of Rs.6,67,883/- in order to enable him to repay the same in convenient installments. However, the aforesaid availment of the credit facility is stated in the written statement filed by the defendants.

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The applicant has admitted his default in repayment of the outstanding loan due to the defendant bank. Hence the loan account of the applicant came to be classified as Non-performing Asset on 05.09.2020 and demand notice dated 22.09.2021 Annexure-B1 was issued to the applicant calling upon him to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. Annexure-B2 copy of the postal acknowledgement card evidences the receipt of the Demand Notice by the applicant. The applicant neither sent any objection/representation to the demand notice nor did he clear off his liability due to the 1^st defendant bank.

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Since the applicant failed to respond to the terms of the demand notice, Possession Notice dated 21.12.2021, Annexure-B3 was issued for taking physical possession of the secured asset. Defendants have produced copy of paper publications, Annexure-B4 and B5 in order to show that possession notice was published Madhyamam daily and The New Indian Express daily.

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Subsequently, the defendants approached the Chief Judicial Magistrate Court Kalpetta and filed Annexure-A1 application and affidavit under Section 14 (1) of the SARFAESI Act, 2002. Order dated 07.01.2023 Annexure-A2 came to be passed appointing Advocate

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Page 2 of 5

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SA No.198 of 2023

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Commissioner for taking physical possession of the secured asset. The Advocate Commissioner issued notice dated 27.01.2023 Annexure-A3 to the applicant informing him that he would take physical possession of the secured asset on 12.02.2023. The applicant having aggrieved against the aforesaid measures filed this SA seeking the reliefs stated supra.

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It is submitted by the counsel for the applicant that since possession notice was not served to the applicant subsequent measures are unsustainable and that after Annexure-A2 order and Annexure-A3 notice, the applicant remitted Rs.7,00,000/- as per Annexure-A4 and A5 receipts and that applicant was not heard prior to classification of loan account as NPA and that exorbitant rate of interest has been charged and that the defendants are entitled to claim only interest at the rate of 7% per annum as the loan availed by the applicant is agricultural loan and that therefore the SA may be allowed as prayed for.

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Per contra , the Counsel appearing for the defendants submitted that though possession notice was issued much earlier on 21.12.2021 the applicant did not challenge the possession notice and that therefore, challenge of possession notice is unsustainable and that the applicant having failed to submit any objection/representation to the Demand Notice, is not entitled to contend that amount mentioned in the Demand Notice is incorrect and that rate of interest is exorbitant and that interest is charged as per the agreed terms of the contract and that no act of the Chief Judicial Magistrate Court or the District Magistrate done in pursuance of Section 14 of the SARFAESI Act, 2002 cannot be challenged and that notice issued by the Advocate Commissioner is not challengeable and that therefore the SA may be dismissed with exemplary cost to these defendants.

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The provisions under Section 13 (2) of the SARFAESI Act, 2002 does not contemplate issuance of prior notice to the borrower/ guarantor before classification of the loan account as NPA. The applicant did not send any objection/representation to the Demand Notice stating that exorbitant rate of interest has been charged. Further it is revealed from the perusal of the written statement that the rate of interest has been charged as per the agreed terms of the contract.

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Possession notice was issued as early as on 21.12.2021. The applicant did not file this SA within a period of 45 days from the date of issuance of the possession notice. Hence the applicant is not entitled to raise any issue with regard to the issuance of the possession notice. Be that it may so, for approaching the Chief Judicial Magistrate Court to take physical possession of the secured

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Page 3 of 5

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SA No.198 of 2023

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asset, issuance of the possession notice under Section 13 (4) of the SARFAESI Act, 2002 is not a condition precedent.

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The applicant has not averred in the SA as to whether the statutory requirements under Clause (i) to (ix) to the proviso of Section 14 (1) (b) of the SARFAESI Act, 2002 in respect of filing of the affidavit in CMP No.119/2023 on the file of the Chief Judicial Magistrate Court Kalpetta was not complied with. The applicant has also not produced copy of the affidavit filed in CMP No.119/2023 in order to enable this Tribunal to ascertain as to whether the aforesaid statutory requirements was complied with or not by the defendants. On perusal of Annexure-A2 shows that the learned Chief Judicial Magistrate Kalpetta after having perused the contents of the affidavit and the documents filed in support of the affidavit and having satisfied over the same, passed a detailed order Annexure-A2 to take physical possession of the secured asset. This Tribunal does not find any flaw or infirmity in the above order.

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In view of the foregoing reasons, this Tribunal holds that the applicant has failed to prove his case, so as to get the reliefs sought for in this SA.

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In the result, S.A No.198 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 2^nd day of December, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

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SA No.198 of 2023

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

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Sl. No.	Date	Particulars
1.	01.12.2022	True copy of the application filed before the Chief Judicial Magistrate Court Kalpetta.	Annexure-A1
2.	07.01.2023	True copy of the order of Chief Judicial Magistrate Court Kalpetta in CMP No.119/2023.	Annexure-A2
3.	27.01.2023	True copy of the notice for inspection issued by the Advocate Commissioner inCMP No.119/2023.	Annexure-A3
4.	08.02.2023	True copy of the receipt issued by the 1^st defendant.	Annexure-A4
5.	03.03.2023	True copy of the receipt issued by the 1^st defendant.	Annexure-A5
6.	03.04.2023	True copy of the judgment of the Hon’ble High Court of Kerala in WP(C) No.9517of2023.	Annexure-A6

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

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Sl. No.	Date	Particulars
1.	22.09.2021	True copy of the Demand Notice issued by the 2^nd defendant.	Annexure-B1
2.	---	True copy of the acknowledgement card evidencing receipt of the Demand Notice.	Annexure-B2
3.	21.12.2021	True copy of the possession notice issued by the 2^nd defendant.	Annexure-B3
4.	---	True copy of the possession notice publishedin ‘Madhyamam’daily.	Annexure-B4
5.	---	True copy of the possession notice publishedin ‘New Indian Express’daily	Annexure-B5

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 5 of 5

Muhammed v. Idbi Bank

Case brief

What is this about?

What did the court decide?

Muhammed v. Idbi Bank

Case brief

What is this about?

What did the court decide?

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