Dismissed

John C L and another v. Peoples Urban Cooperative bank

DRT10 Oct 2024SA/672/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the Securitization Application filed by borrowers against the secured creditor. The Tribunal held the application time-barred and found no procedural irregularity in the bank's actions regarding NPA classification, notices, possession, and self- sale.

What did the court decide?

The Securitization Application No.672 of 2023 is dismissed without costs.

John C L and another versus Peoples Urban… — Contract and Commercial Disputes | DRT (2024)

¶1

Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 10^th DAY OF OCTOBER, 2024

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

¶5

S.A No. 672 of 2023

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Between

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John C.L., S/o. Lonan, Chemmammadiyil House, Kumbalam P.O., Kumbalam,

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Ernakulam-682 506.

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Mary @ Mary John, W/o.John, Chemmammadiyil House, Kumbalam P.O., Kumbalam,

Ernakulam-682 506.

--- Applicants

And

The Authorized Officer, M/s. Peoples Urban Co-operative Bank Ltd. No.51, Having Head office at Thrippunithura, Ernakulam -682 301.

¶14

--- Defendant

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This Securitization Application coming on 11.09.2024 for final hearing before me in the presence of Mr. A.G. Tissarant, Advocate appearing for the Applicants and Ms. Uma G. Krishnan, Advocate 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.672 of 2023

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O R D E R

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This Securitisation Application was filed on 10.11.2023 seeking to quash Annexure-A2 order of the Chief Judicial Magistrate Court, Ernakulam and Annexure-A3 notice issued by the Advocate Commissioner to take possession of the SA schedule property and to direct the defendant to pay the cost of this proceedings to the applicants.

¶19

The applicants have admitted the availment of credit facilities from the defendant bank upon creation of mortgage over the immovable property which comprises land and residential building situated in Re Sy. No.118/11 and Sy. No.156/4 of Kumbalam Village, Kanayannur Taluk, Ernakulam District, in favour of the defendant bank. The applicants have also admitted their default in repayment of the outstanding loan due to the defendant bank.

¶20

Hence the loan accounts of the applicant came to be classified as Non-performing Asset and demand notice dated 08.08.2018 pertaining to loan account No. ML 31/17/NT Annexure-B1 and another Demand Notice dated 08.08.2018 pertaining to loan account No. HL EMI/3/18/NT Annexure-B2 were issued to the applicants calling upon them to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. The defendant bank has produced copy of postal acknowledgement cards to prove the receipt of the Demand Notices by the applicants. Indisputably, the applicants neither sent any objection/representation to the Demand Notices nor did they clear off their liability due to the defendant bank.

¶21

Therefore, the defendant bank issued possession notice dated 14.11.2018, Annexure-B5 for symbolically taking physical possession of the secured asset. In Annexure-B5, both the applicants have put their signatures in token of receipt of the possession notice. The defendant bank has produced Annexure-B6 copy of photograph, Annexure-B7 and B8 copies of paper publications in order to prove their contention that possession notice was conspicuously affixed on the secured asset and that it was published in two leading newspapers one in Kerala Kaumudi edition dated 20.11.2018 and another one in The New Indian Express edition dated 20.11.2018.

¶22

Since the applicants failed to clear off their liability due to the defendant bank, the defendant bank issued the sale notice dated 09.07.2019, Annexure-B9 in order to bring the secured asset for sale.

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Page 2 of 9

¶24

SA No.672 of 2023

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The defendant bank has produced Annexure-B10 and B11 copies of paper publications in order to show that Annexure-B9 sale notice was published in Kerala Kaumudi edition dated 25.07.2019 and another one in The New Indian Express edition dated 25.07.2019. Admittedly, sale was not fructified for want of bidders. Therefore, another sale notice dated 06.03.2020, Annexure-B12 was issued to the applicants. The defendant bank has produced Annexure-B13 copy of photograph, B14 and B15 copies of paper publications in order to show that Annexure-B12 sale notice was affixed on the secured asset and that it was published in Kerala Kaumudi edition dated 09.03.2020 and another one in The New Indian Express edition dated 09.03.2020. According to the defendant bank, sale was not fructified on 25.03.2020 as no bidders came forward to bid the secured asset and therefore the defendant bank itself purchased the secured asset as per Section 13 (5A) of the SARFAESI Act, 2002.

¶26

The defendant bank filed petition, Annexure-A1 and affidavit before the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam. Order came to be passed in MC No. 257/2021 appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner issued notice dated 11.02.2022 to the applicants informing them that he would take physical possession of the secured asset on or before 30.03.2022.

¶27

The counsel appearing for the applicants submitted that no prior notice was served to the applicants prior to the classification of the loan account as NPA and that classification of the loan account as NPA is improper and that though the applicants are ready to regularize their loan account, the defendant bank was not amenable for any settlement and that Demand Notice does not specify the actual amount as on the date of issuance of the Demand Notice and that the amount mentioned in the Demand Notice is not correct and that possession notice was not served on the applicants and that it was not affixed on the secured asset and that after the alleged issuance of the Demand Notice , the applicants remitted substantial amount to their loan accounts and also after receipt of the notice issued by the Advocate Commissioner and that the aforesaid payments has not been stated in Annexure-A1 petition and affidavit and that the applicants never received any sale notice and that sale notice was not published and also affixed and that the alleged purchase of the secured asset by the defendant bank is illegal and improper and that since the learned Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam failed to serve notice to the applicants, Annexure-A2 order and A3 notice is vitiated for non-compliance of mandatory provisions prescribed under the SARFAESI Act, 2002 and the Rules made thereunder and that therefore SA may be allowed as prayed for.

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Page 3 of 9

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SA No.672 of 2023

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The counsel appearing for the defendant bank submitted that since the applicants committed default in repayment of the outstanding loan account, their loan accounts were classified as NPA as per the RBI guidelines and that issuance of prior notice is not mandatory prior to classification of the loan account as NPA and that Demand Notices and possession notice were served on the applicants and that possession notice was published in two leading newspapers and that it was affixed conspicuously on the secured asset and that Annexure-B9 sale notice and B12 sale notice were served to the applicants and that it was published in two leading newspapers and that it was also affixed conspicuously on the secured asset and that sale was not fructified pursuant to issuance of the aforesaid sale notices and that therefore the defendant bank itself purchased the secured asset on 25.03.2020 and that possession notice and sale notices were not challenged within the period of 45 days from the date of issuance of the notices and that therefore the challenge of possession notice and the sale notices is barred by limitation and that there is no illegality or legal infirmity in Annexure-A2 order passed by the learned Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam and that all the statutory requirements stipulated under Section 14 (1) of the SARFAESI Act, 2002 has been complied with in respect of filing of Annexure-A1 petition and affidavit and that the order of the Hon’ble High Court of Kerala as per Annexure-B16 passed in WP(C) No. 34110/2022 permitting the applicants to pay the entire amount in eight equally installments was not complied with by the applicants and that applicants are not entitled to get any reliefs in the SA and that therefore SA may be dismissed with cost of the defendant bank.

¶31

The provisions of the SARFAESI Act, 2002 and the Rules made thereunder does not mandate issuance of prior notice before classification of the loan accounts as NPA. Hence the contention of the applicants that no prior notice was served to them with regard to classification of their loan accounts as NPA is unsustainable. Though the applicants have contended in the SA that classification of their loan account as NPA is improper, they had not specifically pointed out as to how the classification of the loan account as NPA is improper. The applicants having failed to send any objection/representation to the Demand Notice is estopped from contending now that the amount mentioned in the Demand Notice is not correct. However, they have not specifically pleaded in the SA as to how the amount mentioned in the Demand Notice is incorrect.

¶32

The provisions of Section 14 (1) of the SARFAESI Act, 2002 mandates that any person aggrieved by any of the measures referred to in sub-section 4 of Section 13 taken by the secured creditor or his

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Page 4 of 9

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SA No.672 of 2023

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authorized officer under this Chapter may make an application to the Debts Recovery Tribunal having jurisdiction in the matter within 45 days from the date on which such measure has been taken. It cannot be disputed that Annexure-B5 possession notice was issued on 14.11.2018 and that Annexure-B9 and B12 sale notices were issued on 09.07.2019 and 06.03.2020 respectively. But, this S.A was filed by the applicants only on 10.11.2023 challenging the aforesaid measures. On this ground alone the SA is not maintainable as it is barred by limitation.

¶36

Be that it may so, the defendant bank has produced relevant material before this Tribunal to show that Annexure-B5 possession notice and Annexure-B9 and B12 sale notices were issued in compliance with the mandatory requirements contemplated under the provisions of the SARFAESI Act and the Rules made thereunder. The applicants have not pleaded in the SA as to whether the reserve price fixed in the aforesaid sale notices is very low. Though two sale notices were issued, no purchasers came forward to bid the secured asset. Therefore, the defendant bank was constrained to purchase the secured asset. This Tribunal does not find any procedural irregularity or infirmity in respect of purchase of the secured asset by the defendant bank.

¶37

A perusal of the affidavit, Annexure-A1 filed in MC No. 257/2021 shows that all the statutory requirements contemplated under Clause (i) to (ix) to the proviso of Section 14(1) of the SARFAESI Act, 2002 were complied with. A perusal of the order Annexure-A2 order shows that the learned Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam passed order appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner issued Annexure-A3 notice to the applicants pursuant to the direction given to him by the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam to take physical possession of the secured asset. This Tribunal does not find any infirmity in AnnexureA2 order.

¶38

The applicants have miserably failed to prove their case so as to get the reliefs sought for in this S.A.

¶39

Resultantly, S.A No.672 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 10^th day of October, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 9

SA No.672 of 2023

S C H E D U L E

District	: Ernakulam
Taluk	: Kanayannur
Village	: Kumbalam
Re. Sy.No.	: 118/11
Sy. No.	: 156/4
Extent	: 1.21 Ares

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Description of property

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1.21 Ares of land comprised in Re.Sy.No.118/11 and Sy. No.156/4 situated at Kumbalam village, Kanayannoor Taluk, Ernakulam District with a residential building and all improvements therein.

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Boundaries

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East	: Property of Reshma and Sara Joseph
North	: Properties in Re.Sy.No.118/11
West	: Private way having 3 meter width
South	: Property of Reshma and Sara Joseph

(Su. WILLYAHM)

PRESIDING OFFICER

Page 6 of 9

SA No.672 of 2023

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

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Sl. No.	Date	Particulars
1.	---	True copy of petition MC No. 257/2021 filed by the defendant before the Chief Judicial Magistrate CourtErnakulam.	Annexure-A1
2.	13.01.2022	True cop of the order in MC No. 257/2021 by the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam.	Annexure-A2
3.	11.02.2022	True copy of the Advocate Commissioner notice.	Annexure-A3
4.	30.10.2023	True copy of the order downloaded from Ecourts,Kerala	Annexure-A4

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

¶58

Sl. No.	Date	Particulars
1.	08.08.2018	True attested photocopy of the Demand Noticein loan No. ML31/17/NT.	Annexure-B1
2.	---	True English translation of Annexure- B1.	Annexure-B1A
3.	08.08.2018	True attested photocopy of the Demand Noticein loan No.HL EMI3/18/NT	Annexure-B2
4.	---	True English translation of Annexure- B2.	Annexure-B2A
5.	---	True attested photocopy of the postal A/d in ML 31/17/NT	Annexure-B3 Series
6.	---	True English translation of Annexure- B3.	Annexure-B3A
7.	---	True attested photocopy of the postal A/din HL EMI3/18/NT	Annexure-B4
8.	---	True English translation of Annexure- B4.	Annexure-B4A
9.	14.11.2018	True attested photocopy of the possession notice with endorsement of the 2^ndapplicant showing the receipt of parties as well as affixture on secured asset.	Annexure-B5

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Page 7 of 9

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SA No.672 of 2023

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10.	---	True English translation of Annexure- B5.	Annexure-B5A
11.	---	Photographs showing affixture of Annexure-B5 possession notice	Annexure-B6 Series
12.	20.11.2018	True attested photocopy of the relevant page of “Kerala Kaumudi” news daily having the advertisement of possession notice.	Annexure-B7
13.	---	True English translation of Annexure- B7.	Annexure-B7A
14.	20.11.2018	True attested photocopy of the relevant page of “The New Indian Express” news daily having the advertisement of possession notice.	Annexure-B8
15.	09.07.2019	True attested photocopy of the sale noticewiththe endorsement.	Annexure-B9
16.	---	True English translation of Annexure- B9	Annexure-B9A
17.	25.07.2019	True attested photocopy of the relevant page of “Kerala Kaumudi” news daily having the advertisement of sale notice dated 09.07.2019.	Annexure-B10
18.	---	True English translation of Annexure- B10	Annexure- B10A
19.	25.07.2019	True attested photocopy of the relevant page of “The New Indian Express” news daily having the advertisement of sale notice dated 09.07.2019.	Annexure-B11
20.	06.03.2020	True attested photocopy of sale notice.	Annexure-B12
21.	---	True English translation of Annexure- B12.	Annexure- B12A
22.	---	Photographs showing affixture of the sale notice dated 06.03.2020	Annexure-B13 series
23.	09.03.2020	True attested photocopy of the relevant page of “Kerala Kaumudi” news daily having the advertisement of sale notice dated 06.03.2020.	Annexure-B14
24.	---	True English translation of Annexure- B14.	Annexure- B14A
25.	09.03.2020	True attested photocopy of the relevant page of “TheNew Indian Express” news	Annexure-B15

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Page 8 of 9

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SA No.672 of 2023

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		daily having the advertisement of sale notice dated 06.03.2020.
26.	08.12.2022	True attested photocopy of the	Annexure-B16
		judgment of the Hon’ble High Court of Keralain WP(C)No. 34110/2022

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 9 of 9

John C L and another v. Peoples Urban Cooperative bank

Case brief

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John C L and another v. Peoples Urban Cooperative bank

Case brief

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