Dismissed

Mohanan U v. State Bank of India

DRT17 Oct 2024SA/30/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal dismissed an application challenging possession measures taken under the SARFAESI Act. The Tribunal held the applicant failed to prove irregularities in the process and rejected claims regarding property description and the validity of the application filed by the authorised officer.

What the court decided

AI extract

Mohanan U versus State Bank of India — 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 17^th 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. 30 of 2023

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Between

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Mohanan U., S/o. K.R.Nambiar, Sreenilayam House, Kannapuram, Mottammal P.O. Kannur – 670 331.

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--- Applicant

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And

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State Bank of India Asset Recovery Management Branch, R.S. Building, M.G. Road, Ernakulam, Kochi-682 011, Represented by its Chief Manager.

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Authorized Officer, State Bank of India Kannapuram Branch, Cherukunnu, Kannur-670301.

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Authorized Officer, State Bank of India, Asset Recovery Management Branch, R.S. Building, M.G. Road, Ernakulam, Kochi-682 011.

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--- Defendants

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SA No.30 of 2023

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This Securitization Application coming on 24.09.2024 for final hearing before me in the presence of Mr. P. Shrihari, Advocate for the Applicant and Mr. Tom K. Thomas, 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 16.01.2023 seeking to set aside Annexure-A1 Possession Notice, Annexure-3 Advocate Commissioner notice and Annexure-A4 order and to direct the defendants to restore the possession of the property and to pay compensatory costs to the applicant.

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The applicant have admitted the availment of overdraft credit facility of Rs.85,00,000/- from the 2^nd defendant bank. Default in repayment of the outstanding loan due to the defendant bank is admitted by the applicant. Hence the loan account of the applicant came to be classified as Non-performing Asset on 14.06.2016 and demand notice dated 11.02.2020 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. Indisputably, the applicant neither sent any objection/representation to the demand notice nor did he clear off his liability due to the 2^nd defendant bank.

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Since the applicant failed to respond to the terms of the Demand Notice, possession notice dated 06.09.2021, Annexure-A1 was published for symbolically taking physical possession of the secured asset. The defendants have produced Annexure-B2 copy of photograph, Annexure-B3 and B4 copies of newspaper publications in order to prove their contention that Annexure-A1 possession notice was consciously affixed on the secured asset and it was published in two newspapers one in The Hindu edition dated 10.09.2021 and another one in Mathruboomi edition dated 10.09.2021.

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Subsequently, the defendants filed Annexure-B5 application and affidavit before the Chief Judicial Magistrate Court, Thalassery under Section 14(1) of the SARFAESI Act, 2002. Order dated 29.07.2022, Annexure-A4 came to be passed in MC No.220/2022 appointing Advocate Commissioner to take physical possession of the secured asset. Pursuant to the direction given to the Advocate Commissioner, notice dated 06.01.2023, Annexure-A3 was served on the applicant informing him that the Advocate Commissioner would

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Page 2 of 6

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SA No.30 of 2023

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take physical possession of the secured asset on 18.01.2023. The applicant having aggrieved against the above measures filed the above SA seeking the reliefs stated supra.

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The counsel appearing for the applicant submitted that due to some dispute with respect to the finishing of the contract work done by the applicant, Ministry of Defence withheld the payment for the work finished and that it resulted in default in repayment of the cash credit limit and that the appellant has already initiated arbitral proceedings against the Ministry of Defence and that despite knowing fully well about the aforesaid issue the defendants initiated measures under the provisions of the SARFAESI Act and the Rules made thereunder and that the description of the property in Annexure – B1 Demand Notice and Annexure – A1 possession notice is incomplete on the ground that the details of the building are not stated and that the outstanding amount mentioned in Annexure – A1 possession notice is also not correct and that in derogation of the judgment of the Hon’ble Apex Court in Oasis Dealcom Pvt. Ltd. (M/s.) Vs. Khazana Dealcomm Pvt. Ltd. & Others reported in 2016 KHC 6746 : 2016 (10) SCC 214 : AIR 2016 SC 5405, when the matter was pending before DRAT the defendants showed haste in initiating measures under Section 14(1) of the SARFAESI Act for taking physical possession of the residential property of the applicant and that application and affidavit filed in MC No. 220/2022 before the Chief Judicial Magistrate Court, Thalassery are in violation of the provisions of Section 14 of SARFAESI Act and that Annexure–B4 application was not filed by the secured creditor and that the Authorised Officer shall not act as the secured creditor and that hence, Annexure–B5 application is invalid and illegal 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 since the overdraft cash credit facility of Rs.85 lakhs availed by the applicant became highly irregular in servicing the account, his loan account was classified as NPA and that the defendants have nothing to do with the alleged withholding of the amount allegedly due from the Ministry of Defence and that they were not aware of any arbitral proceedings which are alleged to be in progress in Chennai and that the description of property in Annexure – B1 Demand Notice and Annexure – A1 possession notice is correct and that Annexure – A1 possession notice was affixed on the secured asset and that it was published in two leading newspapers and that the pendency of a case before the DRAT/High Court is not a bar in proceeding with recovery of the amounts under the provisions of the SARFAESI Act especially when there is no order of stay and that Annexure – A4 order was passed strictly in compliance with the provisions of Section 14 of the SARFAESI Act and that order was passed after having perused the documents and affidavit filed in support of the application and that

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Page 3 of 6

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SA No.30 of 2023

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Annexure – B5 application was filed by the secured creditor which is represented by the Authorised Officer who is competent and authorised under the SARFAESI Act to file such an application and that therefore, SA is liable to be dismissed with costs.

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The alleged withholding of the amount by the Ministry of Defence to the applicant cannot be a justifiable reason for the default committed by the applicant in repayment of the outstanding loan due to the 2^nd defendant bank. In Oasis Dealcom Pvt. Ltd. (M/s.) Vs. Khazana Dealcomm Pvt. Ltd. & Others cited by the counsel for the applicant the gist of the facts of the case is that both the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal had given concurring findings that material irregularities were committed in conducting the sale of the flat in the auction and that when the matter was taken up before the Hon’ble Apex Court it observed that undue haste was made by the creditor bank in holding the auction and that it could have waited for sometime when the proceedings were pending before the Tribunal as well as the High Court before conducting the auction and confirming the same. The above observation of the Hon’ble Apex Court is an obiter dictum which is applicable to the above facts of the case. Hence, this Tribunal holds that the aforecited judgment has no application to the facts of the present case.

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In Annexure – B1 Demand Notice and Annexure – A1 possession notice, the secured asset is described as “all that part and parcel of the property with extent and survey number and assignment deed number with residential building, structures, all improvements and easements attached thereto”. Boundaries are also clearly furnished in the description of the property. Hence, this Tribunal does not find any valid force in the submission of the counsel for the applicant that the description of the property in the Demand Notice and the possession notice is incorrect.

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Admittedly, application and affidavit Annexure – B1 are signed by one Mr. Sudheesh who is the Chief Manager as well as Authorised Officer of the 1^st defendant Asset Recovery Management Branch. When the Chief Manager of 1^st defendant is designated as Authorised Officer he can alone file application and affidavit. Hence, the submission of the counsel for the applicant that since the Authorised Officer shall not act as the secured creditor Annexure – B5 application is invalid and illegal does not hold hood.

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A perusal of Annexure – B5 affidavit shows that all the details contemplated under Clause (i) to (ix) to the proviso of Section 14(1) of the SARFAESI Act, 2002 were furnished. A perusal of the Annexure – A4 order shows that the Chief Judicial Magistrate Court, Thalassery after having perused the contention of the affidavit and the documents

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Page 4 of 6

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SA No.30 of 2023

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filed in support of the affidavit and having satisfied over the same passed order appointing Advocate Commissioner to take physical possession of the secured asset. This Tribunal does not find any infirmity or procedural infirmity in the above order.

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

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In the result, SA No.30 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 17^th day of October, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 6

SA No.30 of 2023

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

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Sl. No.	Date	Particulars
1.	06.09.2021	True copy of Possession Notice issued by the 2^nd defendant.	Annexure-A1
2.	03.11.2022	True copy of the order in W.P.(C) No.25980/2021 passed by Hon'ble High Court of Kerala.	Annexure-A2
3.	06.01.2023	Original notice received from the Advocate Commissioner in MC No.220/2022 on the file of CJM Court Thalassery.	Annexure-A3
4.	29.07.2022	Photocopy of Order in MC No.220/2022 onthefile ofCJMcourt,Thalassery.	Annexure-A4

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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.	11.02.2020	True copy of notice under Sec.13(2) of SARFAESI Act.	Annexure-B1
2.	---	Copy of the photograph showing the affixture of Annexure-A1 notice on the secured asset.	Annexure-B2
3.	10.09.2021	True copy of the paper publication publishedin TheHindu daily.	Annexure-B3
4.	10.09.2021	True copy of the paper publication publishedin Mathrubhumidaily.	Annexure-B4
5.	---	True copy of the application before the Chief Judicial Magistrate Court Thalasseryalongwith affidavit.	Annexure-B5

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 6 of 6

Mohanan U v. State Bank of India

Case brief

What is this about?

What the court decided

Mohanan U v. State Bank of India

Case brief

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What the court decided

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