Dismissed

Naijo K Ouseph v. South Indian Bank

DRT10 May 2024SA/749/2023

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal, Ernakulam dismissed a Securitization Application filed by guarantors challenging the validity of default notices and possession actions taken by a bank under the SARFAESI Act due to alleged procedural lapses and inaccuracies.

What did the court decide?

Application dismissed with no costs to the applicants.

Naijo K Ouseph versus South Indian Bank — Insolvency and Bankruptcy | 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 10^th DAY OF MAY, 2024

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

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S.A No. 749 of 2023

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Between

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Naijo K. Ouseph, Koottala House, Themalipadam Road, Near Modern Cultural Society,

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Ollur P.O., Edakkunni, Thaikkattussery, Thrissur -680 306.

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Nice Naijo, Koottala House, Themalipadam Road, Near Modern Cultural Society, Ollur P.O., Edakkunni, Thaikkattussery,

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Thrissur -680 306.

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Thressiamma Ouseph, W/o. Ouseph, Koottala House, Themalipadam Road, Near Modern Cultural Society, Ollur P.O., Edakkunni, Thaikkattussery, Thrissur -680 306.

--- Applicants

SA No.749 of 2023

And

South Indian Bank Ltd., Thrissur East Fort Branch, St. John’s Arcade, Ayyanthole, Thrissur – 680005, Represented by its Manager.

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Authorized Officer,

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South Indian Bank Ltd. Regional Office, Thrissur, Platinum Jubilee Building, Civil Lane Road, Ayyanthole, Thrissur-680003.

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--- Defendants

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This Securitization Application coming on 19.02.2024 for final hearing before me in the presence of Mr. P.Shrihari, Advocate for the Applicants and Mr. C.Ajith Kumar, 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 05.11.2023 seeking to set aside Annexure-A2 Demand Notice, Annexure-A3 to A5 Possession Notices and Annexure-A11 Order passed in Crl. M.P. No.8060/2023 on the file of Chief Judicial Magistrate Court, Court, Thrissur and to order restoration of the possession of all the properties described in Annexure-A2 Demand Notice, Annexure-A3 to A5 Possession Notices and Annexure-A9 application and orders costs of this proceedings.

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Availment of cash credit facility of Rs.4.68 Crores on 16.5.2019 and ECLGS loan amount of Rs.1 Crore on 08.06.2020 by the borrower Company namely, M/s. Flame Jewellers Pvt. Ltd. in the 1^st defendant bank and the applicants being the guarantors for the aforesaid credit facilities and the default in repayment of the outstanding loan dues is admitted by the applicants in the S.A. According to the defendants, since the operation of the aforesaid account became irregular, the loan accounts were classified as NPA on 04.01.2023 and the Demand Notice dated 17.3.2023, Annexure-A2 was issued.

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Page 2 of 8

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SA No.749 of 2023

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The receipt of the Demand Notice is admitted by the applicants in the S.A. It cannot be disputed that the applicants neither sent any objection/representation to the Demand Notice nor did they clear their outstanding liability due to the 1^st defendant bank. Therefore the defendants issued Annexure-A3 to A5 Possession Notices for symbolically taking possession of the properties over which security interest has been created by the applicants by deposit of their title deeds.

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The defendants filed petition, Annexure-A9 and affidavit Annexure-A10 in Crl. MP No.8060/2023, Order Annexure-A11 was passed appointing Advocate Commissioner to take physical possession of the secured assets. Pursuant to the direction given in Crl. MP No.8060/2023, the Advocate Commissioner served Annexure-A12 notice to the borrower company and the applicants informing them that he would take physical possession of the secured assets on 05.11.2023. The applicants having aggrieved for the aforesaid measures, have filed this S.A. seeking for the reliefs stated therein.

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The Counsel appearing for the applicants submitted that the request of the borrower company to clear the overdue amount of Rs.13.25 Lakhs was not considered by the 1^st defendant bank and that the OTS proposal dated 19.05.2023, Annexure-A6 submitted for an amount of Rs.400 Lakhs by the borrower company was rejected by the 1^st defendant bank without assigning any reason and that Annexure-A8 OTS proposal submitted by the borrower company for an amount of Rs.500 Lakhs was accepted by the 1^st defendant bank. Annexure-A2 Demand Notice was per se illegal as it was issued without complying with the mandatory requirement of giving details of the claim as well as the security interest and that the amount stated as due in Annexure-A2 Demand Notice and Annexure-A3 to A5 Possession Notices is incorrect and that Annexure-A3 to A5 Possession Notices are invalid and that the property described in Annexure-A9 and Annexure-A10 is not in congruent with the description given in Annexure-A2 to A4 and that the description of property in Annexure-A9 and A10 is incomplete and incorrect and that Annexure-A10 affidavit is also incomplete and invalid, since the amounts adjusted and appropriated pursuant to Annexure-A2 Demand Notice is not declared in Annexure-A10 affidavit and that Annexure-A11 order is invalid, since it was passed mechanically without verifying the veracity of declarations and without recording the satisfaction of declarations made in Annexure-A10 affidavit.

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Page 3 of 8

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SA No.749 of 2023

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The Counsel appearing for the defendants submitted that since the OTS proposal Annexure-A6 submitted was not in tune with one time settlement policy of the defendants, it was rejected by way of communication Annexure-A7 and that Annexure-A8 OTS proposal could not be considered by the defendants since the borrower company failed to make the initial remittance and that the applicants as a matter of right cannot stake any claim over the OTS proposal as it is the policy decision of the Bank and in accordance with the guidelines and that there is no discrepancy in the amount claimed in Annexure-A2, A4 and A5 notices and that in Annexure-A2 the claim brake up of the financial facilities as on 16.03.2023 is stated and that the total sum of the financial facilities as on 16.03.2023 is shown in Annexure-A4 and A5 and that therefore there is no ambiguity in the amounts in Annexure-A2, A4 and A5 and that the mandatory provisions stipulated under Section 14 of the SARFAESI Act, 2002 has been complied in Annexure-A9 and A10 and that there are no discrepancies with regard to description of the properties in AnnexureA9 and A10 and that the details of the financial assistance granted and the total claim of the Bank as on the date of filing of the application is stated in Annexure-A9 and A10 and that Annexure-A11 order is sustainable as it was passed in accordance with law.

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The averments raised by the applicants with regard to Annexure-A6 and Annexure-A8 OTS proposals does not fall within the measures of provisions of Section 13(4) of the SARFAESI Act, 2002. In any event, it is revealed from the perusal of the averments of the written statement filed by the defendants that since the OTS proposal Annexure-A6 submitted was not in tune with one time settlement policy of the defendants, it was rejected by way of communication Annexure-A7 and that Annexure-A8 OTS proposal could not be considered by the defendants since the borrower company failed to make the initial remittance.

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In Annexure-A2 Demand Notice, the details such as nature of facility availed by the borrower company and the balance outstanding as on 16.03.2023 is clearly stated. The outstanding amount as on 16.03.2023 is also clearly mentioned in Annexure-A4 and A5 Possession Notices. What is stated in Annexure-A4 and A5 Possession Notices is the total sum of both CCOL and ECLGS facilities. Hence the submission of the counsel for the applicants that the amount mentioned in Annexure-A2 is incorrect does not hold good.

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Page 4 of 8

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SA No.749 of 2023

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In Annexure-A2 Demand Notice, the immovable properties of the applicants are described in Schedule-B as Sl. Nos.1, 3 and 4 and the immovable property of the borrower company namely, M/s. Flame Jewels Pvt. Ltd. is described as Sl. No.2. In Annexure-A4 Possession Notice, the same description of the immovable property of the borrower company as mentioned in Sl. No.2 of Annexure-A2, is mentioned. Similarly in Annexure-A5 Possession Notice, the same description of the immovable properties of the applicants as mentioned in Sl. No.1, 3 and 4 of Annexure-A2 is mentioned. Therefore, the submission of the counsel for the applicants that description of the properties given in Annexure-A2, A4 and A5 is incorrect and incomplete is untenable. A perusal of Annexure- A9 petition and Annexure-A10 affidavit filed in Crl. MP No.8060/2023 would show that the description of properties mentioned therein and the description mentioned in Annexure-A2, A4 and A5 are one and the same.

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In Annexure-A10 affidavit, the details such as availment of CCOL and ECLGS facilities by the borrower company upon creation of security interest in respect of the immovable properties by the applicants and upon creation of primary security for the movable property of the borrower company, default in repayment of the aforesaid credit facilities, classification of the loan accounts as NPA, recall of credit facilities, issuance of Demand Notice, receipt of the Demand Notice by the borrower company and the applicants, their failure to discharge their liabilities in full, issuance of Possession Notices and publication of Possession Notices, total sum of outstanding amount as on 23.08.2023, the description of the secured assets with boundaries are clearly mentioned. Therefore, this Tribunal does not find any force in the submission of the counsel for the applicants that Annexure-A10 is incomplete and invalid.

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A perusal of Annexure-A11 order shows that the learned Chief Judicial Magistrate, Thrissur after having perused the contents of the petition and the affidavit and having satisfied over the same, passed order to take physical possession of the secured assets. The mere omission to mention the word “satisfaction” in the order does not infer that the learned Chief Judicial Magistrate failed to get satisfied himself with contents of the petition and the affidavit. Hence the submission of the counsel for the applicants that Annexure-A11 order is invalid does not hold good.

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Page 5 of 8

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SA No.749 of 2023

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The outstanding amount as on the date of filing Annexure-A9 and A10 affidavit in Crl. MP No.8060/2023 is Rs.5,64,73,439.75. This huge amount which is the public money is payable by the borrower company and the applicants. The applicants instead of taking sincere steps to discharge their liability due to the 1^st defendant bank, have come forward with untenable averments in the S.A., challenging the measures initiated by the defendants. In any event, the applicants have miserably failed to prove their case that they are entitled to get the reliefs sought for in the S.A.

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In view of the foregoing reasons, this Tribunal holds that the applicants are not entitled to get the reliefs sought for in this SA. In the result, S.A No.749 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 May 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 6 of 8

SA No.749 of 2023

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

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Sl. No.	Date	Particulars
1.	31.01.2023	True copy of letter sent by the applicants.	Annexure-A1
2.	17.03.2023	True copy of Demand Notice issued under Section 13(2) issued by the 2^nd defendant.	Annexure-A2
3.	03.06.2023	True copy of Possession Notice issued by the 2^nd defendant.	Annexure-A3
4.	06.06.2023	True copy of Possession Notice issued by the 2^nd defendant.	Annexure-A4
5.	06.06.2023	True copy of Possession Notice issued by the 2^nd defendant.	Annexure-A5
6.	19.05.2023	True copy of OTS proposal submitted by the Borrower Company to the 1^st defendant.	Annexure-A6
7.	22.05.2023	True copy of reply letter received from the1^st defendant.	Annexure-A7
8.	19.06.2023	True copy of OTS proposal submitted to the1^st defendant.	Annexure-A8
9.	---	Certified copy of Section 14 application in Crl.MP No.8060/2023 on the file of Chief Judicial Magistrate Court, Thrissur.	Annexure-A9
10.	---	Certified copy of Section 14 affidavit in Crl.MP No.8060/2023 on the file of Chief Judicial Magistrate Court, Thrissur.	Annexure-A10
11.	20.09.2023	Certified copy of Section 14 Order in Crl.MP No.8060/2023 on the file of Chief Judicial Magistrate Court, Thrissur.	Annexure-A11
12.	19.10.2023	True copy of notice issued by the Advocate Commissioner in Crl.MP No.8060/2023 on the file of Chief Judicial Magistrate Court,Thrissur.	Annexure-A12

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Page 7 of 8

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SA No.749 of 2023

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13.	19.10.2023	True English translation of notice issued by the Advocate Commissioner in Crl.MP No.8060/2023 on the file of Chief Judicial Magistrate Court, Thrissur.	Annexure- A12(A)
		(Su. PRESIDI	WILLYAHM) NG OFFICER

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Mj/

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Page 8 of 8

Naijo K Ouseph v. South Indian Bank

Case brief

What is this about?

What did the court decide?

Naijo K Ouseph v. South Indian Bank

Case brief

What is this about?

What did the court decide?

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