Dismissed

Usman C v. South Indian Bank

DRT28 Nov 2024SA/509/2023

Case brief

AI extract

What is this about?

SARFAESI Securitization Application dismissed. Tribunal held secured creditor complied with statutory notices and provisions. Applicant failed to prove violation of Section 13(2) regarding prior intimation or interest rates. Challenge to possession measures without implicating impugned Chief Judicial Magistrate order deemed unsustainable.

What did the court decide?

Securitization Application dismissed with costs to the defendant bank.

Usman C versus South Indian Bank — 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 28^th DAY OF NOVEMBER, 2024

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

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S.A No.509 of 2023

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Between

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Usman C., Proprietor, M/s. Zain Wedding Castle, Chakkingathodi House, Vattaloor P.O., Padapparambu, Puzhakkattiri, Malappuram -676 507.

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--- Applicant

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And

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The South Indian Bank Ltd. Rep. by the Authorized Officer, Regional Office, Kozhikode, 1^st Floor, Happy Towers, Vaikom Mohammed Basheer Road, Mananchira, Kozhikode-673 001.

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--- Defendant

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This Securitization Application coming on 30.10.2024 for final hearing before me in the presence of Ms. Bhavana, Advocate representing Ms. Mumtaz Shamsuddin, Counsel appearing for the Applicant and Mr. Anto Thomas Adipuzha, Counsel appearing for the defendant 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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SA No.509 of 2023

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O R D E R

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This Securitisation Application was filed on 18.09.2023 seeking to call for the records leading to the issuance of the notices under the provisions of the SARFAESI Act, 200 and to declare that the steps taken thereon are as illegal.

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The applicant has admitted availment of cash credit facility of Rs.50,00,000/- and FSL-GEN NON EMI COMPOUND ECLGS credit facility of Rs.10,30,000/- from the defendant bank upon creation of mortgage over the immovable property measuring an extent of 5.8 Ares together with building comprised in Re.Sy.No.120/A1 in Puzhakkattiri village, Malappuram District. Default in repayment of the outstanding loan due is also admitted by the applicant. Hence the loan account of the applicant came to be classified as Non-performing Asset on 22.09.2022 and demand notice dated 06.12.2022 AnnexureB3 was issued to the applicant and guarantor calling upon them to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. Annexure-B4 copies of postal receipts and Annexure-B5 copies of acknowledgement cards evidences the service of Demand Notice on them. The applicant did not senD any objection/ representation to the demand notice. According to the defendant, the applicant remitted only a sum of Rs.1,00,000/- and he did not clear off his entire liability.

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Therefore, Possession Notice dated 16.03.2023, Annexure-A3 was issued for symbolically taking physical possession of the secured asset. The applicant has admitted the receipt of the possession notice. The defendant has also produced Annexure-B6 and B7 to prove the service of possession notice on the applicant and the guarantor. Annexures-B8, B9 and B10 produced by the defendant evidences the publication of the possession notice in two leading newspapers and affixture on the conspicuous part of the secured asset. Annexure-B11 shows that the security interest has been registered with the CERSAI.

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Subsequently, the defendants approached the Chief Judicial Magistrate Court, Manjeri and filed application and affidavit under Section 14 (1) of the SARFAESI Act, 2002. Order came to be passed appointing Advocate Commissioner for taking physical possession of the secured asset. The Advocate Commissioner issued notice Annexure-A2 to the applicant and the guarantor informing them that he would take physical possession of the secured asset on 20.09.2023. The applicant having aggrieved against the above measures, filed this SA seeking the reliefs stated as supra.

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Page 2 of 6

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SA No.509 of 2023

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The counsel appearing for the applicant submitted that the loan account was not properly recalled and that he was never given prior intimation before initiation of the SARFAESI proceedings and that the Chief Judicial Magistrate Court erred in concluding the compliance of Section 13 (2) of the SARFAESI Act, 2002 and that he failed to see as to whether notices were served on all the parties prior to passing of the Order and that rate of interest is against the contractual rates and that therefore the SA may be allowed.

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The counsel appearing for the defendant submitted that the applicant is a wilful defaulter and that he did not send any objection/ representation to the Demand Notice and that Demand Notice and possession notice were served on the applicant and the guarantor and that the defendant complied with the provisions of the SARFAESI Act, 2002 in respect of filing of the affidavit under Section 14 (1) of the SARFAESI Act, 2002 and that the learned Chief Judicial Magistrate passed order dated 04.07.2023 after appreciating the case of the defendant and that the challenge of the Advocate Commissioner notice without challenging the order of the Chief Judicial Magistrate Court is unsustainable and that therefore SA is liable to be dismissed with cost to the defendant.

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Neither the provisions of the SARFAESI Act, 2002 nor the Security Interest (Enforcement) Rules 2002 does contemplate issuance of prior notice to the borrower/guarantor before initiation of the measures by the secured creditor. The defendant has produced sufficient material as already observed by tis Tribunal to prove the service of the Demand Notice and the possession notice on the applicant and the guarantor. The applicant has not produced any material before this Tribunal to prove his claim that interest has been charged against the agreed contractual rate of interest.

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The applicant has not averred in the SA that the defendant failed to furnish the details contemplated under Clause (i) to (ix) to the proviso of Section 14 (1) (b) of the SARFAESI Act, 2002 . It is also not the contention of the applicant that the learned Chief Judicial Magistrate without having perused the contents of the affidavit and the documents 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. Without challenging the order of the Chief Judicial Magistrate Court passed in MC No. 195/2023, challenging Annexure-A2 Advocate Commissioner notice is unsustainable, since Advocate Commissioner is not the measure contemplated under Section 13 (4) of the SARFAESI Act, 2002.

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Page 3 of 6

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SA No.509 of 2023

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

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In the result, S.A No.509 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 28^th day of November, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 4 of 6

SA No.509 of 2023

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

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Sl. No.	Date	Particulars
1.	16.03.2023	True copy of the Possession Notice issued by the defendant bank.	Annexure-1
2.	04.09.2023	True copy of the Advocate Commissioner notice.	Annexure-2
3.	---	True copy of the postal envelope and postal tracking record of Annexure-2 notice.	Annexure-3

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List of documents filed by the defendant along with the written statement

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Sl. No.	Date	Particulars
1.	25.05.2018	True copy of the credit facility agreement.	Annexure-B1
2.	26.06.2020	True copy of the credit facility agreement.	Annexure-B2
3.	06.12.2022	True copy of the Demand Notice issued by the defendant bank.	Annexure-B3
4.	--	True copy of the postal receipts dated 08.12.2022 & 09.12.2022	Annexure-B4
5.	---	True copy of the acknowledgment cards addressed to the borrowers and guarantor.	Annexure-B5
6.	30.03.2023	True cop of the postal receipts issued by the postaldepartment.	Annexure-B6
7.	---	True copy of the acknowledgment cards addressed to the borrowers and guarantor.	Annexure-B7
8.	18.03.2023	True copy of the Possession Notice dated 16.03.2023 published in the New India Express daily.	Annexure-B8
9.	18.03.2023	True copy of the Possession Notice dated 16.03.2023 published in the Mathrubhumidaily.	Annexure-B9
10.	---	True copy of the photograph showing the affixture of the Possession Notice on the securedasset.	Annexure-B10

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Page 5 of 6

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SA No.509 of 2023

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11.	---	True copy of the CERSAI certificate relating to the secured asset.	Annexure-B11
12.	---	True copy of the Statement of Account ofCCOL A/c.No.0537083000000017	Annexure-B12
13.	---	True copy of the Statement of Account of ECLGSA/c.No.0537656000000064	Annexure-B13

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 6 of 6

Usman C v. South Indian Bank

Case brief

What is this about?

What did the court decide?

Usman C v. South Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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