Dismissed

M/s. Lakshmi Textiles v. City Union Bank Limited

DRT22 Oct 2024SA/225/2024

Case brief

AI extract

What is this about?

The DRT dismissed the applicants' application to quash sale notices and direct the bank to consider a revised one-time settlement proposal as the applicants admitted default and failed to comply with High Court directions.

What did the court decide?

Application to quash sale notices and direct consideration of revised OTS proposal dismissed.

M/s. Lakshmi Textiles versus City Union Bank Limited — 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 22^nd DAY OF OCTOBER, 2024

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

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S.A No. 225 of 2024

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Between

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M/s. Lakshmi Textiles, Represented by its Proprietor Mrs.Beena Anilkumar W/o. Anil Kumar V. No.40/938, W2,

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Kanchas Building, III Floor, Near New Bus Stand, Kozhikode District, Kerala State -673 001.

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Mrs. Beena Anilkumar, W/o. Anil Kumar V., No.IV/130, Sree Chithira P.O. Makkada via, Kakkodi, Kizhakkumuri, Kozhikode, Kerala State – 673 617.

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Mr. Anil Kumar V. S/o. Gopalan, No.IV/130, Sree Chithira P.O. Makkada via, Kakkodi, Kizhakkumuri, Kozhikode, Kerala State – 673 617.

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Mr. Vijayan, S/o. Gopalan, No.IV/130, Sree Chithira P.O. Makkada via, Kakkodi, Kizhakkumuri, Kozhikode, Kerala State – 673 617.

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SA No.225 of 2024

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Mrs. Beena N.P., W/o. Mr. Vijayan, No.IV/130, Sree Chithira P.O. Makkada via, Kakkodi, Kizhakkumuri, Kozhikode, Kerala State – 673 617. --- Applicants

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And

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The Authorized Officer, City Union Bank, Having Administrative Office At 24-b, Gandhi Nagar, Kumbakonam, Thanjavur District, Tamil Nadu – 612 001.

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City Union Bank, Calicut branch, Represented by its Manager, Having office at Esha Arcade, 1^st Floor, Azhakody Temple Road, Opp. Asma Tower, Kozhikode,

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Kerala State -673 004.

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--- Defendants

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This Securitization Application coming on 10.05.2024 for final hearing before me in the presence of Mr. Dhananjay Deepak, Advocate for the Applicants and Mr. K.P. Sujesh Kumar, 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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O R D E R

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This Securitisation Application was filed on 15.03.2024 seeking to quash Annexure – A8 intended sale notice, Annexure – A11 Tender Cum Auction Sale Notice and to direct the defendants to consider the revised OTS proposal of Rs.1,30,00,000/- dated 01.03.2024 as per the direction of the Hon'ble High Court of Kerala in WP(C) No.1893/2024 and to grant other reliefs as this Tribunal may deem fit.

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The applicants have admitted the availment of various credit facilities from the 2^nd defendant bank upon creation of security interest over the immovable property measuring an extent of 1.47 Ares

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Page 2 of 8

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SA No.225 of 2024

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of land situated in Re.Sy.No.91/4 in Kozhikode Taluk, Kozhikode District belonging to the 3^rd applicant and land with residential building measuring an extent of 8.5 Ares situated in Re.Sy.No.45/2 in Kozhikode Taluk, Kozhikode District in favour of the 2^nd defendant bank. The applicants have also admitted their default in repayment of the outstanding loan due to the defendant bank. Hence the loan accounts of the applicants came to be classified as Non-performing Asset and demand notice dated 17.05.2023 Annexure – A1 was issued to the applicants calling upon them to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. The receipt of the Demand Notice is admitted by the applicants. Indisputably, the applicants neither sent any objection/ representation to the demand notice nor did they clear off their liability due to the defendant bank.

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Therefore, the defendants issued possession notice dated 02.09.2023 Annexure – A2 for symbolically taking the physical possession of the secured assets. The applicants have admitted the receipt of the possession notice. The averments of the defendants in the SA with regard to affixture of the possession notice on the conspicuous part of the secured assets and its publication in two leading newspapers the Hindu Edition dated 06.09.2023 and Mangalam edition dated 06.09.2023 is neither challenged nor refuted by the applicants.

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The applicants filed WP(C) No.30732/2023 before the Hon’ble High Court of Kerala challenging Annexure – A2 notice. The interim order Annexure – A3 passed by the Hon’ble High Court of Kerala directing the applicants to remit a sum of Rs.10,00,000/- within the stipulated period and also by its judgment Annexure – A5 directing the applicants to pay the entire outstanding amount in six equal monthly installments was not complied with by the applicants.

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Annexure – A4 sale notice dated 27.09.2023 was issued for sale of the secured assets. Admittedly, the sale was not fructified.

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According to the applicants, they submitted one time settlement proposal on 14.11.2023 for a total amount of Rs.80,00,000/- to the Board of Directors, City Union Bank and the above OTS proposal was rejected by the letter dated 08.12.2023 Annexure – A7 on the ground that the amount offered was too low.

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Subsequently, the defendants issued sale notice dated 18.12.2023 Annexure – A8 for sale of the secured assets. Admittedly sale was not fructified for want of bidders.

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Page 3 of 8

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SA No.225 of 2024

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The 2^nd applicant submitted revised OTS proposal dated 01.01.2024 Annexure – A9 for an amount of Rs.1,10,00,000/- for consideration to the 1^st defendant bank and the same was not considered.

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In the meanwhile, the 2^nd applicant again approached the Hon’ble High Court of Kerala and filed WP(C) No.1893/2024 praying to consider her revised OTS proposal. The above writ petition was disposed of by way of judgment Annexure – A10 directing the 2^nd applicant to make a revised one-time settlement proposal increasing the amount offered. The 2^nd applicant submitted a revised OTS proposal for Rs.1,30,00,000/on 01.03.2024, Annexure–A12. According to the 2^nd applicant the above OTS proposal was not considered by the defendants.

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The defendants issued intended sale notice dated 17.02.2024 Annexure – A11. The receipt of the above sale notice is admitted by the applicants. The defendants issued sale notice dated 01.07.2024 Annexure – A17 for sale of the secured assets. Though the applicants filed petition to receive Annexure – A17 sale notice as additional document, they have not averred in the SA as to whether sale was held pursuant to issuance of Annexure – A17 sale notice.

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It is averred by the applicants in the SA submitted that the proceedings initiated by the 1^st defendant bank are per se illegal and that sale notice dated 27.09.2023 Annexure-A4 and sale notice dated 18.12.2023 Annexure-A8 are per se illegal and void and 30 days’ notice was not given prior to the sale of the property and that Annexure-A11 intended sale notice was sent only on 19.02.2024 and that no specific date of intended sale is mentioned in the notice and that the worth of the secured asset is higher and that but very low reserve price has fixed and that substantial amounts paid by the applicants was not considered by the defendants and that the defendants may be directed to consider the revised proposal for Rs.1,30,00,000/- as directed by the Hon’ble High Court of Kerala in WP(C) No.1893/2024.

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The defendants have averred in the written statement Annexure-A11 notice is only a communication issued by the defendants regarding proposed sale of assets and that hence Annexure-A11 does not constitute a cause of action for filing SA under Section 17(1) of the SARFAESI Act and that objection/representation was not sent to the Demand Notice and that possession notice was published in two leading newspapers and it was affixed on the conspicuous part of the secured asset and that the direction of the Hon’ble High Court of Kerala passed in WP(C) No. 30732/2023 was not complied with by the applicants and that sale was not held for

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Page 4 of 8

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SA No.225 of 2024

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want of bidders pursuant to issuance of Annexure-A4 and A8 sale notices and that since the applicants failed to comply with the direction, interim order was vacated and that the OTS proposal submitted by the applicants was not considered as the amount offered by the applicants was very low and that Annexure-A12 OTS proposal was submitted by the applicants with intention to stall the proceedings and that there is no illegality or irregularity in any of the proceeding initiated by the defendants under the SARFAESI Act and the Rules made thereunder.

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Indisputably, sale was not materialized for want of bidders pursuant to issuance of Annexure-A4 and A8 sale notices. Further, the applicants did not challenge the aforesaid sale notices within the stipulated period of 45 days from the date of issuance of the sale notices. Annexure-A11 notice is not the sale notice and it is merely a communicative letter sent to the applicants and other borrowers calling upon them to pay the outstanding loan due and to bring the secured asset for sale if they failed to pay the outstanding loan due. Hence the issue that Annexure-A11 was allegedly sent belatedly to the applicants cannot be considered as an irregularity committed by the defendants.

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Though the Hon’ble High Court of Kerala directed the applicants to submit OTS proposal as per Annexure-A5 judgment, the applicants failed to make use of the above said proposal. Hence the relief sought for by the applicants to direct the defendants to consider the revised proposal for Rs.1,30,00,000/- is unsustainable.

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The applicants filed petition IA No.1943/2024 praying to amend the SA to incorporate the pleadings in the SA on the ground that secured asset was illegally sold to one Nisar Ahamad on 19.03.2024 and that trees in the property were cut and removed and that applicants lodged complaint with the Elathoor Police Station, Kozhikode and sale of the property is liable to be set be aside. This Tribunal after having heard both sides’ counsels dismissed the petition on 05.08.2024. The applicants having aggrieved for above order filed OP (DRT) No. 271/2024 before the Hon’ble High Court of Kerala. The Hon’ble High Court of Kerala dismissed the above OP (DRT) with the following observations:

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“3. The Tribunal, after considering the submissions and the averments made in the I.A, said that the matter had been reserved for passing final order after having heard the arguments of the Counsel for both the parties and at this stage the I.A. had been filed to amend the S.A. It was also noted that the secured asset was sold to the successful bidder, the sale was confirmed, the sales certificate was issued, and the sales certificate was also registered with the SRO concerned.

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Page 5 of 8

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SA No.225 of 2024

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Therefore, the petitioners did not have any right or title over the property sold to the auction purchaser, and so the petitioners were not entitled to raise any objection with regard to cutting the trees standing on the property.

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This Court, therefore, considering the conduct of the petitioners that they had earlier approached this Court twice and despite the liberty granted by this Court for making the payment of the overdue amount in six instalments did not comply with the order as well as the petitioners filed the I.A. at the time when the matter was reserved for orders, finds no illegality in the order passed by the Debts Recovery Tribunal which is impugned in the present O.P (DRT). However, if the petitioners are aggrieved by the said order, the petitioners have the remedy of filing an appeal before the Debts Recovery Appellate Tribunal. This Court does not like to entertain such a petition in the exercise of its jurisdiction under Article 227 of the Constitution of India.”

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The applicants did not prefer appeal before the DRAT as suggested by the Hon’ble High Court of Kerala in the above judgment. The applicants have failed to prove that the measures initiated by the defendants under the SARFAESI Act and the Rule made thereunder are per se illegal and invalid.

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In view of the foregoing reasons, this Tribunal holds that the applicants are not entitled to get the reliefs sought for in this SA. In the result, S.A No.225 of 2024 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 22^nd day of October, 2024.

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/

Page 6 of 8

SA No.225 of 2024

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

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Sl. No.	Date	Particulars
1.	17.05.2023	True copy of the notice under Sec.13(2)	Annexure-A1
2.	02.09.2023	True copy of the notice under Sec.13(4)	Annexure-A2
3.	19.09.2023	True copy of the interim order of the Hon'ble High Court of Kerala in WPC No.30732/2023.	Annexure-A3
4.	27.09.2023	True copy of the Tender cum Auction Sale Notice under 8(6) of the Security Interest (Enforcement) Rules, 2002 underSARFAESI Act, 2002.	Annexure-A4
5.	13.10.2023	True copy of the judgment of the Hon'ble High Court of Kerala in WPC No.30732 of2023.	Annexure-A5
6.	14.11.2023	True copy of the One Time Settlement (OTS) proposal to the Board of Directors City Union Bankby the 2^nd applicant.	Annexure-A6
7.	08.12.2023	True copy of the rejection of OTS proposal issued by the defendant bank	Annexure-A7
8.	18.12.2023	True copy of the Tender Cum Auction Sale notice under 8(6) of the Security Interest (Enforcement) Rules, 2002 underSARFAESI Act, 2002.	Annexure-A8
9.	01.01.2024	True copy of the OTS proposal to the Board of Directors, City Union Bank by the 2^nd applicant.	Annexure-A9
10.	02.02.2024	True copy of the judgment of Hon'ble High Court of Kerala in WPC No.1893 of 2024.	Annexure-A10
11.	17.02.2024	True copy of the intended sale notice issued by the1^st defendant bank.	Annexure-A11
12.	01.03.2024	True copy of revised and improved OTS proposalsubmitted by the 2^nd applicant	Annexure-A12
13.	06.05.2024	True copy of the complaint given to Elathur Police Station along with the Englishtranslation.	Annexure-A13
14.	---	True copy of the acknowledgement receipt No.1528809-2024-5-00211 given by the Elathur Police station alongwiththeEnglishtranslation.	Annexure-A14

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Page 7 of 8

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SA No.225 of 2024

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15.	---	True copy of the collection of ten photographs of the scheduled property takenafterthe decimationoftrees.	Annexure-A15
16.	19.03.2024	True copy of the certified copy of the SaleDocumentNo.798/2024.	Annexure-A16
17.	01.07.2024	True copy of the sale notice	Annexure-A17

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 8 of 8

M/s. Lakshmi Textiles v. City Union Bank Limited

Case brief

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M/s. Lakshmi Textiles v. City Union Bank Limited

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