Dismissed

Padipoyil Mukundan v. Tata Capital Financial Services Ltd.

DRT3 Jul 2024SA/427/2022

Case brief

AI extract

What is this about?

This unreported judgment lays down that a Securitization Application filed under the СарFAESI Act to set aside auction proceedings was dismissed. The Tribunal held that the applicant could not challenge the sale due to lack of evidence regarding the low circulation of newspapers used for notice, validity of valuation reports, or mandatory electronic service of the sale notice.

What did the court decide?

Application dismissed; sale proceedings and auction sale affirmed; no costs awarded to the applicant.

Padipoyil Mukundan versus Tata Capital Financial Services Ltd. — 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 3^rd DAY OF JULY, 2024

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

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S.A No. 427 of 2022

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Between

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Mr.Padipoyil Mukundan, S/o. Appu, Padipoyil, Kottooli, Kuthiravattom, Kozhikode – 673 016.

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--- Applicant

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And

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M/s. TATA Capital Financial Services Ltd. Represented by the Authorized Officer, Tata Capital Financial Service Ltd. 1^st Floor, Plot No.3 to 6, Auto Plaza Road No.3, Opp. Times of India, Banjara Hills, Hyderabad-500 034. 2. Mr. Asharaf P., S/o. P.Muhammed, Perrisery, Puthoormadam, Pantheerankavu P.O., VTC, Perumanna, Kozhikode -673 019. (Impleaded as Additional D2 as per Order Dt.02.02.2024 in IA No.200/2024)

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--- Defendants

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SA No.427 of 2022

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This Securitization Application coming on 21.05.2024 for final hearing before me in the presence of Mr. Bijumon E.A, Advocate for the Applicant and Mr. Renjith R., Advocate for the 1^st Defendant and Mr. Rejeesh, Advocate for 2^nd Defendant/Auction Purchaser and upon hearing arguments of learned Counsels for all 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 31.08.2022 seeking to set aside the entire securitization proceedings initiated by 1^st defendant Bank and to declare that Annexure-A5 Demand Notice, Annexure-A6 Possession Notice and Annexure-A12 Advocate Commissioner notice are illegal and against law and to set aside the same and also to direct the 1^st defendant bank to keep in abeyance the securitization proceedings against the property till loan accounts are regularized and to declare that Annexure-A15 and A17 sale notices are illegal and to set aside Annexure-A17 sale proceedings and to direct the bank to produce the valuation report.

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It is not in dispute with regard to availment of four types of credit facilities to the total sum of Rs.4,77,86,898/- in the year 2016 - 2017 upon creation of security interest over the applicant’s immovable property measuring an extent of 21.14 cents with building therein situated at Mankavu, Kozhikode by deposit of title deeds in favour of the defendant bank. Though the applicant has not specifically averred in the SA as to whether he was repaying the outstanding loan due regularly, his averment that the payments were made without default till February, 2020 reveals the fact that the applicant committed default in repayment of the outstanding loan due after March, 2020. The applicant has produced Annexure-A1 copy of statement of account contending that payment till March, 2020 was proper. Thus it is evident that since the applicant committed default, his loan account was classified as NPA on 09.03.2021.

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The defendant issued Demand Notice dated 21.05.2021, Annexure-A5 to the applicant calling upon the applicant to repay the outstanding loan due within 60 days of receipt of the notice. Since the applicant was served with the Demand Notice, his contention in the SA that Demand Notice was not served upon him through electronic mode of service is untenable.

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It cannot be disputed that the applicant neither sent any objection/representation to the Demand Notice nor did he respond to the terms of the Demand Notice. Hence Possession Notice dated

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Page 2 of 8

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SA No.427 of 2022

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17.09.2021, Annexure-A6 was issued for symbolically taking possession of the secured asset. The receipt of the Possession Notice by the applicant is admitted by the applicant. Indisputably, the applicant did not challenge the above possession notice within the period of 45 days from issuance of the Possession Notice. Hence the applicant is not entitled to raise the plea in the SA that Possession Notice was not published in two leading newspapers.

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According to the applicant, the defendant issued sale notice dated 22.11.2021 and the sale was not held for want of bidders. Copy of the above sale notice has not been produced by the applicant. Admittedly, the sale notice dated 10.01.2022 Annexure-A11 was issued and that the sale was not held for want of bidders.

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The defendant filed application and affidavit under Section 14 of the SARFAESI Act, 2002 before the Chief Judicial Magistrate Court, Kozhikode. Order came to be passed appointing Advocate Commissioner to take physical possession of the secured asset. Pursuant to the above order, the Advocate Commissioner issued notice dated 30.07.2022, Annexure-A12 to the applicant informing that he would take physical possession of the secured asset on 16.08.2022.

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7, The applicant has not produced copies of the application and affidavit filed in Crl. M.P No.680/2021 under Section 14 of the SARFAESI Act, 2002 before the Chief Judicial Magistrate Court, Kozhikode by the defendant . He has also not produced copy of the order passed in Crl. M.P No.680/2021 by the Chief Judicial Magistrate Kozhikode. The applicant has also not averred in the SA that the details required under Clause (i) to (ix) to the provisions of Section 14 of SARFAESI Act, 2002 were not furnished in the affidavit filed in Crl. M.P No.680/2021. It is also not the contention of the applicant that the learned Chief Judicial Magistrate Kozhikode passed order in Crl. M.P No.680/2021 for taking physical possession of the secured asset without having perused and satisfied over the contents in the affidavit filed in Crl. M.P No.680/2021. To put it in other words, there is no challenge by the applicant in respect of the measures initiated by the defendant under Section 14 of the SARFAESI Act, 2002. Hence the applicant is not entitled to challenge Annexure-A12 notice.

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The defendant issued sale notice dated 31.03.2023 AnnexureA16. Secured asset was sold in the auction held on 14.09.2023 to the 2^nd defendant, who is the successful bidder. It is submitted by the counsel for the applicant that Annexure-A16 sale notice was issued without complying with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 and that the value of the commercial building which is near to the main road is more than Rs.6 Crores and

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Page 3 of 8

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SA No.427 of 2022

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that without considering the above aspect and obtaining valuation report from the approved Valuer, very low reserve price was fixed for the property and that sale notice was not published in two leading newspapers so as to get maximum circulation for the sale proclamation and that ‘Business Standard’ and ‘Metro Vartha’ newspapers are not widely circulated newspapers and that sale notice was not issued to all the parties and that the sale notice was not served on the applicant through electronic mode of service in addition to the modes prescribed under Sub Rule 1 and 2 of Rule 8 of Security Interest (Enforcement) Rules, 2002 and that therefore sale of the secured asset pursuant to Annexure-A16 sale notice is liable to be set aside.

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The Counsel appearing for the 1^st defendant submitted that the sale notice was issued in the ‘Business Standard’ English edition dated 20.10.2023 and ‘Metro Vartha’ malayalam edition dated 20.10.2023 and that both the newspapers are widely circulated newspapers in the concerned locality and that the value of the secured asset is not Rs.6 Crores as contended by the applicant and that secured asset was not situated near to the main road and that the reserve price for the property was fixed after obtaining two valuation reports, one report dated 29.7.2023, Annexure-D3 from one approved Valuer and another valuation report dated 28.7.2023, Annexure-D4 obtained from another approved Valuer prior to issuance of the sale notice and that the reserve price was fixed for the property as per the above valuation reports and that since sale notice was served to the applicant, it is not mandatory for service of sale notice to the applicant through electronic mode of service and that the property was sold to D2, who is the successful bidder and that sale of the secured asset is as per the provisions of SARFAESI Act and Rules made thereunder.

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The Counsel appearing for the 2^nd defendant submitted that the 2^nd defendant deposited 10% of the reserve price, which is Rs.35,00,000/and bided the property by depositing Rs.3,50,00,000/- in the auction held on 10.11.2023 and that on payment of the balance sale consideration amount, sale was confirmed in his favour as per Annexure-D1 and D2 sale confirmation letters and that 2^nd defendant is a bonafide purchaser of the secured asset and that therefore SA may be dismissed.

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The applicant has not produced any material before this Tribunal to substantiate his averment that ‘Business Standard’ and ‘Metro Vartha’, Annexure-A17 in which sale notice was published were not having wide circulation in the concerned locality. The applicant has himself admitted the receipt of Annexure-A17 sale notice. Therefore, there is no requirement for the 1^st defendant to serve the sale notice to the applicant through electronic mode of service. The

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Page 4 of 8

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SA No.427 of 2022

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applicant has not produced any document to show that the secured asset is near to the main road and that it is worth more than Rs.6 Crores. The 1^st defendant has produced copy of valuation report dated 29.07.2023 Annexure-D3 and another copy of valuation report dated 28.07.2023 Annexure-D4 to prove his contention that the reserve price for the property was fixed after obtaining valuation reports from the approved Valuers. In Annexure-A17 sale notice, there is mention that reserve price was fixed after consultation with the secured creditor.

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In the sale notice dated 22.11.2021, Annexure-A11 the reserve price for the property had been fixed as Rs.4,15,00,000/-. According to the applicant in another sale notice dated 10.01.2022 the reserve price for the property is fixed as Rs.3,94,25,000/-. In Annexure-A15 sale notice dated 31.03.2023, the reserve price for the property was fixed as Rs.4,03,00,000/-. In Annexure-A16 sale notice dated 23.08.2023, the reserve price for the property was fixed as Rs.3,63,00,000/- and in Annexure-A17 sale notice dated 20.10.2023 the reserve price for the property was fixed as Rs.3,50,00,000/-. The applicant has himself admitted in the SA that sale was not held pursuant to issuance of earlier sale notices for want of bidders. The fixation of the reserve price for the property in the aforesaid sale notices would show that the 1^st defendant was constrained to reduce the reserve price considerably on account of non-participation of the bidders to bid the property. Therefore this Tribunal does not find any force in the contention of the applicant that the reserve price fixed for the property is very low and that it was fixed without obtaining valuation report and without consulting the secured creditor.

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In view of the foregoing reasons and discussions, this Tribunal holds that the applicant is not entitled to get the reliefs sought for in this SA.

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In the result, S.A No.427 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 3^rd day of July, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 8

SA No.427 of 2022

S C H E D U L E

District : Kozhikode Taluk : Kozhikode Village : Valayanadu Re. Sy. No. : 25,19,545/2A

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Description

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All that part and parcel of property is having an extent of 8.56 Ares of land in Re Sy. No.25,19,545/2A, Block No.19 (Old Sy. No.54/2) in Valayanadu Village, together with building bearing door No.25/208-H, 25/208-H1, 25/208-H2, 25/208-H3, 25/208-H4, 25/208-H5, 25/208-H6 and 25/208-H7, Kozhikode Corporation.

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Boundaries

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East : Drainage North : Road West : Church East : Property of Balan

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Page 6 of 8

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SA No.427 of 2022

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

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Sl. No.	Date	Particulars
1.	---	True copy of the statement fortheA/cNo.6725512.	of account	Annexure-A1
2.	---	True copy of the statement fortheA/cNo.6829011.	of account	Annexure-A2
3.	---	True copy of the statement fortheA/cNo.7117376.	of account	Annexure-A3
4.	---	True copy of the statement fortheA/cNo.20383261.	of account	Annexure-A4
5.	21.05.2021	True copy of Sec.13(2) notice the1^st defendant.	issued by	Annexure-A5
6.	17.09.2021	True copy of Rule 8(1) of Interest (Enforcement)Rules,	Security 2002.	Annexure-A6
7.	07.10.2021	True copy of summons No.4128/2021.	in CC	Annexure-A7
8.	07.10.2021	True copy of summons No.4134/2021.	in CC	Annexure-A8
9.	07.10.2021	True copy of summons No.4136/2021.	in CC	Annexure-A9
10.	07.10.2021	True copy of summons No.4152/2021.	in CC	Annexure-A10
11.	22.11.2021	True copy of the sale notice u 8(6)issued by the1^st defenda	nder Rule nt.	Annexure-A11
12.	30.07.2022	True copy of the Commissioner notice.	Advocate	Annexure-A12
13.	01.12.2022	True copy of the sale notice.		Annexure-A13
14.	01.12.2022	True copy of the paper publ salenoticein MetroVartha.	ication on	Annexure-A14
15.	31.03.2023	True copy of the sale notice the bank.	issued by	Annexure-A15
16.	23.08.2023	True copy of the sale notice the bank.	issued by	Annexure-A16
17.	20.10.2023	True copy of the sale notice the bank.	issued by	Annexure-A17

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Page 7 of 8

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SA No.427 of 2022

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List of documents filed by the 1^st defendant along with the written statement

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Sl. No.	Date	Particulars
1.	10.11.2023	True copy of bid confirmation letter.	Annexure-D1
2.	13.11.2023	True copy of Sale confirmation letter	Annexure-DII
3.	29.07.2023	True copy of Valuation report by Renjith B.,approvedvaluer.	Annexure-DIII
4.	28.07.2023	True copy of Valuation report by AssociatedEngineers.	Annexure-DIV

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 8 of 8

Padipoyil Mukundan v. Tata Capital Financial Services Ltd.

Case brief

What is this about?

What did the court decide?

Padipoyil Mukundan v. Tata Capital Financial Services Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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