Dismissed

Venu M R v. Sundaram Home Finance Limited

DRT16 Aug 2024SA/392/2022

Case brief

AI extract

What is this about?

This Securitization Application was dismissed. The Debt Recovery Tribunal upheld the validity of sale notices and the auction conducted under the SARFAESI Act. The Court rejected the claim that the reserve price was unreasonably low or that procedural mandates were violated. Additionally, the Tribunal ruled that relief for loan regularization does not fall under Section 13(4) of the Act.

What did the court decide?

Sale of secured asset pursuant to Annexure-A7 sale notice not set aside; application dismissed; no costs.

Venu M R versus Sundaram Home Finance 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 16^th DAY OF AUGUST, 2024

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

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S.A No. 392 of 2022

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Between

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Venu M.R., S/o. M.P. Rajan, Moolakkaparambil House, Thrikkakkara North, Thrikkakkara P.O., Kochi – 682 021.

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Baby K.N., W/o. M.P. Rajan, Moolakkaparambil House, Thrikkakkara North, Thrikkakkara P.O., Kochi – 682 021.

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--- Applicants

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And

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The Authorized Officer, M/s. Sundaram Home Finance Limited (formerly known as M/s. Sundaram BNP Paribas Home Finance Ltd.), Regd. Office No.21, Pattulos Road, Chennai-600 002, Having Corporate office at Sundaram Towers, No.46, 4^th Floor, Whites Road, Chennai – 600 014.

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SA No.392 of 2022

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M/s. Sundaram Home Finance Limited (formerly known as M/s. Sundaram BNP Paribas Home Finance Ltd.), Branch Office, 1^st Floor, Amritha Towers, Velloorkunnam, Muvattupuzha, Ernakulam – 686 673, Represented by its Branch Manager.

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--- Defendants

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This Securitization Application coming on 28.06.2024 for final hearing before me in the presence of Mr. Abu Mathew, Advocate for the Applicants and Mr. Jithin Saji Isaac 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 11.08.2022 seeking to declare that Annexure-A5, A6 and A7 sale notices issued by the defendants for sale of the scheduled property are illegal, fraudulent, invalid and void and to set aside Annexure-A5, A6 and A7 sale notices and direct the defendants to regularize the loan accounts by permitting the applicants to remit the overdue amount by instalments and set aside the auction sale dated 01.02.2024 of the scheduled property and restore possession of the scheduled property described in Annexure-A5 and A6 sale notices to the applicants and to direct the defendants to pay costs of this proceedings.

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The applicants have admitted the availment of a sum of Rs.98,30,000/- as per Annexure-D1 loan agreement and a sum of Rs.10,36,000/- as per Annexure-D2 loan agreement and a sum of Rs.23,65,000/- as per Annexure-D3 loan agreement by the 1^st applicant and the 2^nd applicant being the guarantor for the aforesaid credit facilities from the 2^nd defendant Finance Company.

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The applicants have averred in the SA that the 1^st applicant never mortgaged any of his properties by deposit of title deeds in favour of the 2^nd defendant Finance Company. The above averment of the applicants is stoutly refuted by the defendants in their written statement contending that the applicants had deposited the title deed of the property measuring an extent of 2.33 Ares in Sy. No.312/1-2 in Re Sy. No.383/2 of Kakkanad Village after obtaining the original

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Page 2 of 10

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SA No.392 of 2022

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document Annexure-D5 from Shriram Housing Finance Ltd. pursuant to the power of attorney Annexure-D4, executed by the applicants in favour of the defendants. A perusal of Annexure-D4 power of attorney strengthens the above contention of the defendants. It is revealed that the 1^st applicant has executed special power of attorney in favour of the 2^nd defendant Finance Company authorizing it to collect all his original documents pertaining to his loan account from M/s. Shriram Housing Finance Ltd. Therefore, this Tribunal does not find any substance in the contention of the defendants that security interest over the SA subject matter of the property has not been created in favour of the 2^nd defendant Finance Company by deposit of title deeds and that the 1^st applicant handed over his title deed to the Branch Manager of the 2^nd defendant Finance Company on his request in order to regularize the loan account of the applicants. The defendants have produced copies of security interest ID Based search report pertaining to the three loans of the applicants in order to show that security interest has been created over the mortgaged property.

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The applicants have conveniently omitted to state in the S.A as to whether they were regularly making repayment towards their outstanding loan due. According to the defendants, since the applicants committed default in repayment of the outstanding loan due, their loan accounts came to be classified as NPA and Demand Notice dated 01.01.2020 Annexure-D7, Demand Notice dated 01.01.2020 Annexure-D8 and Demand Notice dated 01.01.2020 Annexure-D9 were served to the applicants calling upon them to repay the outstanding loan due within 60 days from the date of receipt of notice.

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The defendants have produced copies of postal receipts and acknowledgment cards along with the copies of demand notices as Annexure-D7 to D9 to show that Annexure-D7 to D9 demand notices were served to the applicants. Hence the contention of the applicants that they were not served with demand notices is absolutely incorrect. Indisputably, the applicants neither sent any objection/representation to the demand notices nor did they clear off their liability due to the 2^nd defendant Finance Company.

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Therefore, the defendants issued possession notice dated 05.03.2021 for symbolically taking possession of the secured assets. The receipt of the possession notice is admitted by the applicants in the SA. The defendants have produced Annexure-D10 (i-ii) to show that possession notice was published in the newspapers. It is averred by the applicants in the SA that since the Branch Manager of the 2^nd defendant Finance Company assured the applicants that they would not take any action pursuant to the possession notice, the applicants did not challenge the possession notice. The above averment of the applicants is stoutly denied by the defendants in their written

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Page 3 of 10

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SA No.392 of 2022

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statement. The applicants have not placed any material before this Tribunal to prove their averment that the defendants assured the applicants that the defendants would not take any action pursuant to the possession notice. Hence this Tribunal does not find any substance in the above averment of the applicants.

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The defendants filed application, Annexure-A2 in M. C. No.402/2021 before the Additional Chief Judicial Magistrate Court, (MP’s and MLA’s), Ernakulam. Order dated 13.01.2022 Annexure-A3 came to be passed by the learned Additional Chief Judicial Magistrate, (MP’s and MLA’s), Ernakulam appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner issued notice Annexure-A4 dated 10.02.2021 to the applicants informing them that he would take physical possession of the secured asset after expiry of 14 days from the date of issuance of the notice.

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The applicants have not filed the copy of the affidavit filed by the defendants in M.C. No.402/2021 on the file of the Chief Judicial Magistrate Court, Ernakulam. However, they have filed the copy of the application filed in M. C. No.402/2021. The only grievance raised by the applicants in the SA is that the defendants had not produced statement of accounts in respect of the loan accounts of the applicants along with Annexure-A2 application and that without considering the true facts and verifying the account statement, the learned Additional Chief Judicial Magistrate (MP’s and MLA’s), Ernakulam passed order appointing Advocate Commissioner to take physical possession of the secured asset. The provision of Section 14 (1) Clause (i) to (ix) of the SARFAESI Act, 2002 does not mandate or require the filing of the statement of accounts along with the application filed under Section 14 (1) of the SARFAESI Act, 2002. However, in Annexure-A2 application the availment of three credit facilities by the applicants and that total aggregating amount payable under the three loan accounts is clearly stated. Be that it may so, it is also not the contention of the applicants in the SA that the mandatory requirements stipulated under Section 14 (1) of Clause (i) to (ix) of the SARFAESI Act, 2002 were not complied with by the defendants in respect of filing of the affidavit in M. C. No.402/2021. A perusal of Annexure-A3 order shows that the learned Additional Chief Judicial Magistrate, (MP’s and MLA’s), Ernakulam after having perused the contents of the affidavit and the documents filed in support of the affidavit and having satisfied over the same passed order to take physical possession of the secured assets. This Tribunal does not find any infirmity or procedural irregularity in Annexure-A3 order passed in M. C. No.402/2021 by the learned Additional Chief Judicial Magistrate (MP’s and MLA’s), Ernakulam. Hence this Tribunal holds that the applicants are not entitled for the relief of restoration of the secured assets.

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Page 4 of 10

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SA No.392 of 2022

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The defendants issued sale notice dated 08.07.2022 AnnexureA5. The applicants have admitted the receipt of the above sale notice and also the publication of the sale notice in the New Indian Express. The applicants have themselves produced copy of the paper publication of the sale notice as Annexure-A6. Both the applicants and the defendants have not averred in their respective pleadings as to whether sale was fructified pursuant to issuance of Annexure-A6 sale notice dated 08.07.2022. However, both of them have averred in their respective pleadings with regard to issuance of Annexure-A7 sale notice dated 12.01.2024. Therefore, it can be inferred that sale pursuant to issuance of Annexure-A6 sale notice could not have been fructified.

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It is seen from the perusal of the SA that sale was held on 01.02.2024 on the basis of Annexure-A7 sale notice dated 12.01.2024 and that one Vishnu Vijayan residing at C 34/378, Kannampillai, Padivattom, Edappally, Kochi became the successful bidder for the secured asset.

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It is the submission of the counsel for the applicants that the defendants issued Annexure-A5 to A7 sale notices without complying with the mandatory provisions of the SARFAESI Act, 2002 and that the secured asset would fetch more value than the value fixed in Annexure-A5 to A7 sale notices and that the low reserve price was fixed for the property without obtaining valuation report and that the chartered engineer valued the property at Rs.1,00,67,010/- in the valuation certificate dated 08.02.2023, Annexure-A8 and that the property was sold for a meagre sum of Rs.53,06,600/- to the above said Vishnu Vijayan and that therefore the sale of the secured asset is liable to be set aside.

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Per contra , it is submitted by the counsel for the defendants that correct reserve price for the property was fixed in Annexure-7 sale notice after valuing the property correctly as per valuation report Annexure-D12 and that all the mandatory provisions under the SARFAESI Act and Rules were complied with in respect of issuance of Annexure-A5 to A7 sale notices and that the property did not have a value of Rs.64,50,000/- and that Annexure-A8 valuation report is fabricated for the purpose of the case and that therefore Annexure-A5 to A7 sale notices are not liable to be set aside.

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Annexure-A5 is the copy of the sale notice dated 08.07.2022 served to the applicants. Annexure-A6 is the copy of paper publication in which Annexure-A5 sale notice has been published. Admittedly sale was not fructified for want of bidders. Hence defendants issued

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Page 5 of 10

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SA No.392 of 2022

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Annexure-A7 sale notice dated 12.01.2024 and sale of the property was materialized on 01.02.2024.

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A perusal of Annexure-D12 valuation report dated 09.01.2024 shows that the approved Valuer for the defendants after having visited the secured asset and having considered the value of the building and the guideline value of the land and the details of two transactions in respect of the properties situated near to the secured asset fixed fare market value for the property at Rs.49,03,000/- realisable value at Rs.44,13,000/and distressed value at Rs.39,22,000/-. The applicants have produced a valuation report dated 08.02.2023, Annexure-A8 which was obtained from their Chartered Engineer in order to show that the total value of the land and the building is Rs.90,67,010/-. No reliance can be placed upon Annexure-A8 for the following reasons. Annexure-A8 was prepared on 08.02.2204. There is no mention in Annexure-A8 as to whether the Chartered Engineer visited the secured property prior to preparation of Annexure-A8. It cannot be disputed that the above said Chartered Engineer could not have visited the secured asset since it had already been taken possession by the defendants. Further there is no reference in Annexure-A8 as to whether the Chartered Engineer fixed the value for the land after having after having considered the guideline value and the market value of the property.

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In Annexure-A5 and A6 sale notice the reserve price for the property had been fixed at Rs.75,71,000/-, since sale was not fructified for want of bidders, Annexure-A7 sale notice was issued. In Annexure-A7 sale notice, the reserve price for the property had been fixed at Rs.50,00,000/- based upon the valuation report dated 08.02.2203, Annexure-A8. There is reasonable force in the submission of the counsel for the defendants that the bidders did not participate in the auction pursuant to Annexure-A6 sale notice on account fixation of the reserve price at Rs.75,71,000/-. The property was sold to the highest bidder who bidded the property for an amount of Rs.53,06,600/-. Hence this Tribunal does not find any substance in the argument of the counsel for the applicants that the reserve price fixed for the secured asset is very low and that it would fetch more than Rs.1 Crore. This Tribunal also does not find any procedural irregularity in respect of the sale of the secured asset. Therefore the sale of the secured asset pursuant to Annexure-A7 sale notice is not liable to be set.

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The one of the reliefs sought for by the applicants in the SA is to direct the defendants to regularize the loan accounts by permitting the applicants to remit the overdue amount by installments. This relief sought for by the applicants does not fall under any of the measures

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Page 6 of 10

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SA No.392 of 2022

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referred to under Section 13(4) of the SARFAESI Act, 2002. It is for the applicants to work out the above remedy with the defendants.

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In view of the foregoing reasons and discussions, this Tribunal holds that the applicants are not entitled to get the reliefs sought for in this SA. In the result, S.A No.392 of 2022 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 16^th day of August, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

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SA No.392 of 2022

S C H E D U L E

District : Ernakulam Sub District : Thrikkakkara Taluk : Kanayannur Village : Kakkanad Kara : Kakkanad Municipality : Thrikkakkara Survey No. : 312/1-2 Re. Sy. No. : 383/2 Re. Sy. Block No. : 9 Extent : 2.33 Ares

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Description

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All that piece and parcel of the property having an extent of 2.33 Ares in Sy. No.312/1-2 (Re. Sy.No.383/2) in Block No.9 of Kakkanad village, Kanayannoor Taluk, Ernakulam District under Sale Deed No.1526/2014 of Thrikkakara SRO together with all rights and improvements therein.

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Boundaries

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East : Private road North : Property of K.E. Kuriakose West : Property of third party in Sy.383/2 South : Property of Punnasserry Joseph

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Page 8 of 10

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SA No.392 of 2022

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

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Sl. No.	Date	Particulars
1.	05.03.2021	True copy of the notice issued by the defendants to the applicants in respect of loanaccountNo.MTP20180129	Annexure-A1
2.	05.03.2021	True copy of the notice issued by the defendants to the applicants in respect of loan accountNo.20180133	Annexure-A1a
3.	05.03.2021	True copy of the notice issued by the defendants to the applicants in respect of loanaccountNo.20180138	Annexure-A1b
4.	---	True copy of the application submitted by the defendants before the Additional Chief Judicial Magistrate Court Ernakulam asMCNo.402 of2021.	Annexure-A2
5.	13.01.2022	True copy of the order passed in MC No.402 of 2021 on the file of the Additional Chief Judicial Magistrate CourtErnakulam.	Annexure-A3
6.	10.02.2022	True copy of the notice issued by the Advocate Commissioner in MC No.402 of 2021 on the file of the Additional Chief Judicial Magistrate Court Ernakulam.	Annexure-A4
7.	08.07.2022	True copy of the sale notice issued by the1^st defendant to the applicants.	Annexure-A5
8.	08.07.2022	True copy of the sale notice published in TheNew Indian Express daily.	Annexure-A6
9.	12.01.2024	True copy of the sale notice issued by the defendantsBank.	Annexure-A7
10.	08.02.2023	True copy of Valuation Certificate issued by Xavier Sixon P.M., Chartered Engineer, Sixtech Design,Kakkanad.	Annexure-A8

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Page 9 of 10

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SA No.392 of 2022

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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.	28.02.2018	True copy of the loan agreement in Loan AccountNo.MTP20180133.	Annexure-D1
2.	28.02.2018	True copy of the loan agreement in Loan AccountNo.MTP20180138.	Annexure-D2
3.	28.02.2018	True copy of the loan agreement in Loan AccountNo.MTP20180129.	Annexure-D3
4.	27.02.2018	True copy of the power of attorney given by the1^st applicant to the defendant.	Annexure-D4
5.	---	True copy of Sale Deed No.1526 of 2014 of ThrikkakaraSRO.	Annexure-D5
6.	31.01.2024	True copy of CERSAI registration downloaded.	Annexure-D6
7.	01.01.2020	True copy of the notice issued under Sec.13(2) of the SARFAESI Act, issued to the applicants by the defendants in Loan AccountNo.MTP20180133.	Annexure-D7
8.	01.01.2020	True copy of the notice issued under Sec.13(2) of the SARFAESI Act, issued to the applicants by the defendants in Loan AccountNo.MTP20180138.	Annexure-D8
9.	01.01.2020	True copy of the notice issued under Sec.13(2) of the SARFAESI Act, issued to the applicants by the defendants in Loan AccountNo. MTP20180129.	Annexure-D9
10.	05.03.2021	True copy of the newspaper publication ofthePossession Notices.	Annexure-D10
11.	31.01.2024	True copy of the statement of accounts of the applicants for all the loan accounts.	Annexure-D11
12.	09.01.2024	True copy of the valuation report.	Annexure-D12
13.	12.01.2024	True cop of the paper publications.	Annexure-D13

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 10 of 10

Venu M R v. Sundaram Home Finance Limited

Case brief

What is this about?

What did the court decide?

Venu M R v. Sundaram Home Finance Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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