Dismissed

Veerankutty v. State Bank of India

DRT11 Nov 2024SA/731/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application seeking to set aside repossession measures. The tribunal held the secured assets were not agricultural land, statutory procedures were followed, and the borrower could not raise the agricultural status post-security creation despite citing Supreme Court rulings to the contrary.

What did the court decide?

Securitization Application dismissed; no costs awarded to defendants.

Veerankutty versus State Bank of India — 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 11^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. 731 of 2023

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Between

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Veerankutty, S/o. Kunjayin, Proprietor, Hiba Super Market and General Merchant, Main Road, Perumanna P.O., Kozhikode – 673 019.

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--- Applicant

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And

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State Bank of India Asset Recovery Management Branch, R.S. Building, M.G. Road, Ernakulam – 682 011, Represented by its Chief Manager.

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The Authorized Officer, State Bank of India Asset Recovery Management Branch, R.S. Building, M.G. Road, Ernakulam – 682 011. --- Defendants

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SA No.731 of 2023

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This Securitization Application coming on 05.09.2024 for final hearing before me in the presence of Mr. P. Samsudin, Advocate for the Applicant and Ms. Thankam Mukundakrishnan, 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 16.11.2023 seeking to set aside Annexure-A5, A7, A8 and A11 and to declare that the secured assets are not liable to be proceeded with under the SARFAESI Act 2002 and to direct the defendants not to proceed with further steps to dispossess the applicant from the secured assets.

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The applicant has admitted availment of various cash credit facilities from the 1^st defendant bank upon creation of security interest over his immovable property situated in Sy. No.38/7 of Mavoor Village in Kozhikode District in the S.A. The default in repayment of the outstanding loan due to the defendant bank is also admitted by the applicant. Hence the loan accounts of the applicant came to be classified as Non-performing Asset on 18.11.2022 and demand notice dated 11.05.2023 Annexure-A5 was issued to the applicant calling upon him to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. Indisputably, the applicant neither sent any objection/representation to the demand notice nor did he clear off his liability due to the defendant bank.

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Therefore, possession notice dated 14.08.2023, Annexure-B1 was issued for taking symbolic possession of the secured asset. Annexure-B2 to B4 evidences the affixture of the possession notice on the secured asset and publication of the possession notice in the Hindu Daily dated 17.8.2023 and Mathrubhoomi daily dated 17.8.2023.

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Subsequently, the defendants approached the Chief Judicial Magistrate Court Kozhikode and filed application and affidavit Annexure-A7 under Section 14(1) of the SARFAESI Act, 2002. Order dated 05.10.2023, Annexure-A8 came to be passed appointing Advocate Commissioner to take physical possession of the secured assets. The Advocate Commissioner issued notice 03.11.2023, Annexure-A11 to the applicant informing him that he would take physical possession of the secured asset. The applicant having aggrieved against the aforesaid measures, had filed this S.A seeking for the reliefs stated supra.

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Page 2 of 7

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SA No.731 of 2023

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The counsel appearing for the applicant submitted that the secured assets are paddy lands and that measures cannot be initiated in view of the provisions of Section 31 (i) of the SARFAESI Act, 2002 and that the defendants have suppressed the above fact in AnnexureA7 application and affidavit and that the Demand Notice does not state the reason for declaring the loan account as NPA and that applicant paid amounts on various dates totalling to the tune of Rs.2,60,000/- and that therefore SA may be allowed as prayed for.

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The counsel appearing for the defendants submitted that since the applicant defaulted in repayment of the outstanding loan due, his loan accounts were classified as NPA as per RBI guidelines and that the secured assets are not agricultural lands and that Annexure-A10 certificate evidences that secured assets are not agricultural lands and that the Village officer issued certificate issued the certificate without visiting the properties and that there are several residential building in the adjacent and neighbouring properties and that the applicant has not produced any records to show that secured assets were the agricultural properties on the date of the creation of security interest as laid down by the Hon’ble Supreme Court in Indian Bank and Another Vs. K. Pappireddiyar and another [AIR 2018 SC 3540] and that in ITC Ltd. Vs. Blue Coast Hotels Ltd and others [2018 (4) SCC 793] the Hon’ble Supreme Court has held that the borrower or guarantor cannot claim the secured asset as agricultural land once security interest is created in respect of the agricultural land and that the defendants complied with the mandatory requirements contemplated under the SARFAESI Act 2002 and the Rules made thereunder and that the SA is liable to be dismissed with cost to these defendants.

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In Annexure-A5 Demand Notice it is clearly mentioned that since the applicant committed default in repayment of the outstanding loan due, his loan accounts were classified as NPA on 18.11.2022 in accordance with the directives/guidelines issued by the RBI. Hence this Tribunal does not find any substance in the submission of the counsel for the applicant that no reason was stated in the Demand Notice for classification of the loan account as NPA.

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The Clause (viii) to the proviso of Section 14 (1) of the SARFAESI Act, 2002 mandates the Authorised Officer to state any repayment made by the borrower/guarantor towards outstanding loan due after issuance of the Demand Notice, in the affidavit filed under Section 14 (1) of the SARFAESI Act, 2002. Annexure-A6 receipts shows that the applicant paid a sum of Rs.1,60,000/- prior to issuance of Annexure-

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Page 3 of 7

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SA No.731 of 2023

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A5 Demand Notice. Therefore, subsequent payments made prior to issuance of the Demand Notice need not be stated in the affidavit.

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The main contention raised by the applicant in the SA is that secured assets are paddy land. The applicant relies upon AnnexureA9, true copy of land tax receipt in respect of the two items of the properties, which are the secured assets and Annexure-A10, true copy of certificate issued by the Village Officer, Mavoor. In Annexure-A9 land tax receipt, the survey numbers pertaining to the both items of the secured assets is not mentioned. Therefore it is evident that Annexure-A9 is not pertaining to the secured assets. In Annexure-A10 it is merely stated that the land comprised in Re.Sy.No.38/6 and 38/7 in Mavoor Village is noted as ‘Nilam’ and that the same is not included in the data bank. In Annexure-A10 there is no specific mention that the land is agricultural land. Hence Annexure-A9 and A10 cannot be relied upon to accept the contention of the applicant that secured assets are agricultural properties.

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The applicant has not produced any material before this Tribunal to prove his contention that secured assets are agricultural properties on the date of creation of security interest over the same as laid down in Indian Bank and Another Vs. K. Pappireddiyar and another [AIR 2018 SC 3540] . Even assuming for argument’s sake that the secured assets are agricultural properties as contended by the applicant, he, having created security interest over the secured assets, is not entitled to raise the aforesaid issue now as laid down by the Hon’ble Supreme Court in ITC Ltd. Vs. Blue Coast Hotels Ltd and others [2018 (4) SCC 793] wherein it is held as follows :

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“ Obviously, since no security interest can be created in respect of agricultural lands and yet it was so created, goes to show that the parties did not treat the land as agricultural land and that the debtor offered the land as security on this basis .”

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Therefore, this Tribunal does not find any merits on the submission of the applicant that the secured assets are agricultural properties.

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It is also not the contention of the applicant that the statutory requirements contemplated under Clause (i) to (ix) to the proviso of Section 14(1) of the SARFAESI Act, 2002 was not complied with by the defendants in respect of filing of the affidavit in CMP No.1829/2023 and that the learned Chief Judicial Magistrate Kozhikode, passed order without having perused the contention of the affidavit and the documents filed in support of the affidavit and having satisfied over the same. A perusal of Annexure-A7 affidavit shows that all the details

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Page 4 of 7

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SA No.731 of 2023

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statutory requirements contemplated under Clause (i) to (ix) to the proviso of Section 14 (1) of the SARFAESI Act, 2002 were furnished in the affidavit. Annexure-A8 order shows that the learned Chief Judicial Magistrate Court Kozhikode 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 appointing Advocate Commissioner to take physical possession of the secured asset. This Tribunal does not find any flaw or infirmity in the above order.

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The applicant has failed to prove his case so as to get the reliefs sought for in this S.A.

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In the result, S.A No.731 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 11^th day of November, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 7

SA No.731 of 2023

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

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Sl. No.	Date	Particulars
1.	31.03.2023	True copy of the notice issued by the Asset Recovery Te3am of the defendant bankto the applicant.	Annexure-A1
2.	21.04.2022	True copy of the closure notice of credit facilitiesissued by the bank.	Annexure-A2
3.	---	True copy of the representation submitted by the applicant along with itsEnglishtranslation.	Annexure-A3
4.	---	True copy of the account statement.	Annexure-A4
5.	11.05.2023	True copy of the Demand Notice.	Annexure-A5
6.	---	True copies of receipts for payments.	Annexure-A6
7.	---	True copy of the petition and affidavit in CMP 1829/2023 filed u/s 14(1) of the Act.	Annexure-A7
8.	05.10.2023	True copy of the order in CMP 1829/2023 of the CJM Court, Kozhikode.	Annexure-A8
9.	---	True copy of the land tax receipt in respect of two items of the property and itsEnglishtranslation.	Annexure-A9
10.	02.05.2018	True copy of the certificate issued by the Village Officer Mavoor and its Englishtranslation.	Annexure-A10
11.	03.11.2023	True copy of the notice issued by the Advocate Commissioner in CMP No.1829/2023.	Annexure-A11

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Page 6 of 7

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SA No.731 of 2023

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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.	14.08.2023	True copy of the possession notice and A/Dcard	Annexure-B1
2.	---	True copy of photograph evidencing affixture ofpossession notice.	Annexure-B2
3.	17.08.2023	True copy of the publication of possession noticein TheHindu daily.	Annexure-B3
4.	17.08.2023	True copy of the publication of possession noticein Mathrubhumidaily	Annexure-B4

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 7 of 7

Veerankutty v. State Bank of India

Case brief

What is this about?

What did the court decide?

Veerankutty v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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