Dismissed

George Alexander v. Indusind Bank Limited

DRT27 Mar 2024SA/350/2023

Case brief

AI extract

What is this about?

In this Securitization Application under S.17(1) of the SARFAESI Act, borrowers challenged securitization measures and sought to set aside proceedings initiated by the bank, arguing non-registration of security interest. The Bench found the security was validly registered prior to the demand notice and dismissed the application, awarding costs to the bank.

What did the court decide?

Securitization Application dismissed; costs of Rs.10,000 awarded to the defendant bank.

George Alexander versus Indusind Bank Limited — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated this the 27^th day of March, 2024

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SECURITIZATION APPLICATION No.350/2023

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Between

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George Alexander, S/o.Gee Varghese, Vazhavilayil, Thuvayur North,

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Manakkala P.O., Erath, Pathanamthitta – 691 551.

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Sali Alexander, W/o.George Alexander, Vazhavilayil,

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Thuvayur North,

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Manakkala P.O., Erath, Pathanamthitta – 691 551. …Applicants

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And

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IndusInd Bank Ltd., Adoor Branch, Chittundayil Shopping Complex, Near Parthasarathy Temple, Konnamankara, Adoor, Pathanamthitta – 691 523, represented by its Branch Manager.

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The Authorised Officer, IndusInd Bank Ltd., No.25, Steeple Reach, A Block, Third Floor, Cathedral Road, Gopalapuram, Chennai – 600 096. …Defendants

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This Securitization Application having been heard on 15.03.2024 in the presence of Advocates M/s.Sadchith P.Kurup, C.P.Anil Raj, Siva Suresh and Reshma Raj for the applicants and Advocates M/s.R.Renjith and Anju Mohan for the defendants, and stood over to this day for consideration, the Tribunal delivered the following:

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SA 350/2023

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F I N A L O R D E R

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This SA is filed by the borrower and guarantor under S.17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’) challenging the securitization measures initiated by the defendants and prayed to set aside the entire proceeding starting from the stage of issuance of demand notice under S.13(2) of the SARFAESI Act.

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Brief facts of the case :

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In the SA it is pleaded that the 2^nd applicant being the proprietor of M/s.Ben Group obtained various financial assistance viz., cash credit facility, long term loan, working capital term loan and FITL term loan, totaling to Rs.194.05 lakhs from the defendant bank. Due to default in repayment, the defendant bank classified the loans as NPA and issued demand notice on 07.12.2022 stating that in case of non-payment of the outstanding amount, the defendants will proceed against the properties mortgaged by the 1^st applicant. The demand notice was issued prior to registration of security interest in the Central Registry which is apparent from the document produced by the applicants marked Annexure-A2. Despite such illegality, the defendants moved CJM, Pathanamthitta under S.14 of the SARFAESI Act for taking physical possession of the secured assets. The learned CJ, without verifying all the materials, passed an order mechanically appointing an Advocate Commissioner to take physical possession of the secured assets which is illegal and the defendants cannot proceed to take possession of the secured assets in view of the statutory bar

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SA 350/2023

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contained in the SARFAESI Act. Hence the applicants prayed to set aside the securitization proceedings initiated by the defendants.

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The defendants filed written statement denying all the averments in the application and claimed inter alia that there is no illegality or irregularity in the securitization proceedings. After creation of security interest, the properties were registered with CERSAI which is apparent from the document produced along with the written statement. After receipt of the demand notice, no objection was raised by the applicants. More than Rs.1 crore is outstanding as on 30.11.2022. Instead of repaying the loans, the applicants raised vague contentions in the SA only to delay the recovery proceeding and hence the SA may be dismissed.

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From the respective case of the applicants and defendants,

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the following points are emerged for adjudication in this case:

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(i) Whether the securitization proceeding initiated by the defendants suffer from any defect or illegality?

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(ii) Whether the applicants are entitled to get any relief in this case?

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FINDINGS:

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Point Nos.(i) & (ii):

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For the sake of convenience, both the points being interlinked with each other are taken up together for adjudication. During the hearing, learned counsel for the applicants raised a limited point that security interest was not registered with CERSAI on the date of issuance of demand notice on 07.12.2022 which is apparent from the CERSAI registration certificates marked Annexures-A2 and A3.

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SA 350/2023

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Further, it is contended that in view of S.26-D of the SARFAESI Act, no secured creditor shall be entitled to exercise the right of enforcement of securities unless the security interest created in its favour by the borrower has been registered with the Central Registry. Since security interest is not registered, issuance of demand notice is illegal and void and hence the SA may be allowed. Refuting the contention of the applicants, learned counsel appearing for the defendants contended that the documents produced by them clearly indicate that security interest was registered in the CERSAI portal on 25.09.2019. The contention raised by the applicants on this point has no force and hence the SA may be dismissed.

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On careful consideration of the submissions and the materials produced by both the parties along with their pleadings, it is seen that security interest creation date in bank is 25.09.2019 and the security interest registration date in CERSAI portal is 18.10.2019, which is prior to issuance of demand notice on 07.12.2022. The learned counsel for the applicants pointed out that in the transaction details, creation date is shown as 12.05.2023. But the same is not the date of registration of security interest with CERSAI and it is the date of transaction for obtaining the CERSAI certificate, which is clear from the subsequent particulars furnished in the security interest details. Hence the contention raised by the applicants on this aspect has no force. No other point is raised by the applicants challenging the securitization measures. In absence of any illegality or irregularity or defect in the proceeding, the applicants are not entitled to get any relief in this case and both the points are answered against the applicants.

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SA 350/2023

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Hence it is ordered:-

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ORDER

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In view of the foregoing reasons, this SA, being devoid of any merit, is hereby dismissed with costs of Rs.10,000/- (Rupees ten thousand only), payable by the applicants to the defendant bank.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 27^th day of March, 2024)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 350/2023

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Documents on the part of the applicants

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Annexures	Date	Particulars of documents
Annexure-A1	07.12.2022	Copy of demand notice issued to the applicants.
Annexure-A2	…	Copy of CERSAI registration certificate produced before the CJM Court.
Annexure-A3	17.05.2023	Copy of MC No.179/2023 filed before the CJM, Pathanamthitta.
Annexure-A4	12.06.2023	Copy of order in MC No.179/2023 of the CJM, Pathanamthitta.
Annexure-A5	17.06.2023	Copy of notice issued by the Advocate Commissioner in MC No.179/2023.
Annexure-A6	16.11.2022	Copy of specific Power of Attorney in the name of the 2^nddefendant.

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Documents on the part of the defendants

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Annexure-B1	…	Copy of CERSAI registration acknowledgement report.
Annexure-B2	07.12.2022	Copy of demand notice issued to the applicants.
Annexure-B3	17.05.2023	Application filed by the defendants under S.14 of the SARFAESI Act before the CJM, Pathanamthitta.
Annexure-B4	08.12.2023	Copy of order of the Hon'ble High Court of Kerala in O.P.(DRT) No.376/2023.

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PRESIDING OFFICER

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated the 27^th March, 2024

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SA No.350/2023

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Between George Alexander, S/o.Gee Varghese, Vazhavilayil, Thuvayur North, Manakkala P.O., Erath, Pathanamthitta – 691 551 & another. …Applicants

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And

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IndusInd Bank Ltd., Adoor Branch, Chittundayil Shopping Complex, Near Parthasarathy Temple, Konnamankara, Adoor, Pathanamthitta – 691 523, represented by its Branch Manager & another. …Defendants

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…Defendants

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F I N A L O R D E R

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SA No.350/2023 27.03.2024

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……………….. In view of the foregoing reasons, this SA, being devoid of any merit, is hereby dismissed (vide separate final order) with costs of Rs.10,000/- (Rupees ten thousand only), payable by the applicants to the defendant bank.

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Presiding Officer

George Alexander v. Indusind Bank Limited

Case brief

What is this about?

What did the court decide?

George Alexander v. Indusind Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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