Dismissed

Sajid Babu P v. versus Federal Bank

DRT19 Feb 2024SA/545/2022

Case brief

AI extract

What is this about?

Applicant challenged the bank's possession of secured assets under the SARFAESI Act, citing pandemic-era notice violations and procedural flaws. The Debt Recovery Tribunal found the bank complied with statutory requirements, rejecting claims of arbitrary NPA classification and proper notice issuance.

What did the court decide?

Application dismissed; no costs awarded to the applicant.

Sajid Babu P v versus Federal 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 19^th DAY OF FEBRUARY, 2024

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

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S.A No. 545 of 2022

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Between

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Sajid Babu P.V., Puthenveettil House, Edavanna P.O., Malappuram – 676 541.

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--- Applicant

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And

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The Authorized Officer, Federal Bank Ltd., LCRD/Kozhikode Division, 1^st Floor, Federal Towers, Arayidathupalam, Kozhikode – 673 016,

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--- Defendant

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This Securitization Application coming on 24.01.2024 for final hearing before me in the presence of Mr. Jithendran, Advocate representing the Counsel for the Applicant on record and Mr.Santhosh Kumar, Advocate 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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O R D E R

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This Securitisation Application was filed on 08.09.2022 seeking to hold that the possession of secured assets of the applicant by the defendant bank is illegal and to set aside all the steps taken by the

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SA No.545 of 2022

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defendant under the SARFAESI Act, 2002 and order payment of compensation to the applicant for the loss sustained by the illegal act of the defendant.

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The counsel appearing for the applicant submitted that issuance of Demand Notice during Covid-19 pandemic situation is violation of Section 6(2) (i) of National Disaster Management Act 2005 and that classification of loan account as NPA is illegal and arbitrary and that Demand Notice was not issued by the Authorized Officer of the defendant bank and that date of classification of loan account as NPA is not mentioned in the Demand Notice and that Annexure-A2 Possession Notice was not published in two leading newspapers and that Possession Notice was not published within a period of seven days from the date of taking possession of the property and that statutory affidavit containing all the details was not filed before the Chief Judicial Magistrate Court, Manjeri and that therefore the SA may be allowed.

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The Counsel appearing for the defendant submitted that since the applicant after having availed cash credit facilities defaulted in repayment, the loan account was classified as NPA and that Demand Notice was served to the applicant and other co–obligants and that at the time of classification of loan account as NPA, Covid-19 pandemic situation was not in existence and that objection was not sent to the Demand Notice and that repayment was also not made and that therefore Possession Notice was issued and that it was affixed on the conspicuous part of the secured asset and that it was also published in two leading newspapers within the statutory period and that petition under Section 14 of the SARFAESI Act, 2002 was filed before the Chief Judicial Magistrate Court, Manjeri and that Order was passed appointing Advocate Commissioner to take physical possession of the secured asset and that all the details required under Section 14 of the SARFAESI Act, 2002 were furnished in the affidavit filed along with the application before the Chief Judicial Magistrate Court, Manjeri and that therefore the SA is liable to be dismissed.

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Availment of FKCC loan to the tune of Rs.20,00,000/- and also another sum of Rs.20,00,000/- from the defendant bank upon creation of security interest over the applicant’s immovable property having an extent of 15 cents with residential building in Sy. No.87/1 in Block No.72 of Edavanna village, Ernad Taluk in Malappuram District and default in repayment of the loan due is admitted by the applicant in the SA. Issuance of Annexure-A1 demand notice and receipt of the same is also admitted by the applicant in the SA. The provisions under Section 13(2) of the SARFAESI Act, 2002 or the Rules made thereunder, does not mandate the mentioning of date of classification of loan account as NPA. Further, the applicant has not specifically averred in the SA as to whether he got prejudice for non-

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Page 2 of 5

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SA No.545 of 2022

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mentioning of date of classification of loan account as NPA in the Demand Notice. The applicant having failed to send any objection/ representation to the Demand Notice, is not entitled to raise the aforesaid issue now. The loan account of the applicant was classified as NPA and Demand Notice was issued on 17.05.2022. Hence the contention of the applicant that the Demand Notice was issued during the period of Covid-19 pandemic situation does not hold good.

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Since the applicant failed to discharge the outstanding liability to the defendant bank even after receipt of Demand Notice, AnnexureA2 Possession Notice dated 29.07.2022 was issued for taking symbolic possession of the secured asset. The defendant has produced copies of Annexure-B1, B2 and B3 to show that Possession Notice was affixed on the conspicuous part of the secured asset and that it was also published in The Hindu edition dated 31.07.2022 and Madhyamam edition dated 31.07.2022. Hence the contention of the applicant that Possession Notice was not published within seven days from the date of its issuance and that it was not published in two leading newspapers is liable to be rejected.

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The defendant filed Annexure-A3 application and Annexure-A4 affidavit before the Chief Judicial Magistrate Court, Manjeri. Order came to be passed in Crl. MP No.954/2023 appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner issued Annexure-A5 notice to the applicant informing him and other borrowers that physical possession of the property will be taken after 15 days from the date of receipt of the notice. The above said notice is now under challenge before this Tribunal.

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In Annexure-A4 affidavit, the details such as availment of credit facilities by the applicant and other co-obligants from the defendant bank upon creation of equitable mortgage by deposit of title deeds over the immovable property, default in repayment of the outstanding loan due, classification of loan accounts as NPA, issuance of Demand Notice to the applicant and other co-obligants, receipt of the Demand Notice, failure to send representation/objection to the Demand Notice, registration of security interest with Central Registry, the aggregate amount of financial assistance granted and the aggregate outstanding amount as on the date of filing of the petition, description of properties with its boundaries are furnished. Thus it is evident that the mandatory requirements as contemplated under proviso (i) to (ix) to the provisions of Section 14 of the SARFAESI Act, 2002 were complied with. The applicant has not produced copy of the Order passed in Crl. MP No.954/2023. Further, it is also not the contention of the applicant that the order passed by the learned Chief Judicial Magistrate Manjeri in Crl.MP No.954/2023 is not in consonance with the mandatory requirements of the provisions 14(1) of the SARFAESI

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Page 3 of 5

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SA No.545 of 2022

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Act, 2002. The Advocate Commissioner issued Annexure-A5 notice to the applicant pursuant to the direction given to him in Crl.MP No.954/2023. Hence this notice cannot be challenged in any manner.

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The applicant has miserably failed to prove his case that he is entitled to get reliefs sought for in the SA.

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In view of the foregoing reasons, this Tribunal holds that the applicant is not entitled to get the reliefs sought for in this SA. In the result, S.A No.545 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 19^th day of February, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 4 of 5

SA No.545 of 2022

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

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Sl. No.	Date	Particulars
1.	17.05.2022	True copy of the Demand Notice	Annexure-A1
2.	29.07.2022	True copy of the Possession Notice	Annexure-A2
3.	15.03.2023	True copy of CMP No.954/2023.	Annexure-A3
4.	15.03.2023	True copy of affidavit filed along CMP No.954/2023.	Annexure-A4
5.	10.05.2023	True copy of the Advocate Commissioner.	Annexure-A5

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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.	---	True copy of the photograph of the affixture of Possession Notice.	Annexure-B1
2.	31.07.2022	True copy of the newspaper publication of Possession Noticein TheHindu	Annexure-B2
3.	31.07.2022	True copy of the newspaper publication of Possession Noticein Madhyamam.	Annexure-B3

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 5 of 5

Sajid Babu P v. versus Federal Bank

Case brief

What is this about?

What did the court decide?

Sajid Babu P v. versus Federal Bank

Case brief

What is this about?

What did the court decide?

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