Dismissed

Jalaludheen P H v. South Indian Bank

DRT29 Nov 2024SA/788/2023

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed an application seeking to set aside a demand notice, possession notice, and appointment of a commissioner under the SARFAESI Act. The Tribunal held that service of notices was proved and distinguished the cited High Court precedent as facts did not warrant partial sale.

What did the court decide?

Securitization Application No. 788 of 2023 stands dismissed with no costs to defendants.

Jalaludheen P H 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 29^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. 788 of 2023

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Between

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Jalaludheen P.H. XIII 8, NH Bypass, Kumbalam, Ernakulam-682 506, Also at Near Campco, Vidyanagar P.O., Kasaragod – 671 123, Proprietor M/s. Jalal Trading.

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Zainuddeen Anwar P.J., Near Campco, Vidyanagar P.O. Kasaragod – 671 123, Rep. by Power of Attorney Holder Mr. Faizal T.Z., Royal Garden, Convent Cross Road, Kasaragod – 671 121.

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--- Applicants

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And

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South Indian Bank Ltd. Represented by its Branch Manager Thoppumpady Branch, Door No. 2487 C, Kejees Building, Opp: St. Sebastian’s High School, Thoppumpady P.O., Ernakulam – 682 005.

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SA No.788 of 2023

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The Authorized Officer, South Indian Bank Ltd. Ground Floor, SIB Building, New Info Park Road, Rajagiri Valley P.O., Kakkanad, Ernakulam-682039.

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--- Defendants

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This Securitization Application coming on 28.10.2024 for final hearing before me in the presence of Mr. Peer Mohamed Khan, Counsel appearing for the Applicants and Mr. Anto Thomas Adipuzha, Counsel appearing 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 07.12.2023 seeking to set aside Annexure-I Demand Notice, Annexure-II possession notice, Annexure-III application, Annexure-IV order and Annexure-V sale notice and to restrain the defendant bank from evicting the occupants from the secured asset and to allow the cost of this proceeding from the defendant bank.

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The applicants have admitted the availment of CCOL facility of Rs.225 Lakhs on 14.10.2020 and another ECLGS limit of Rs.26,29,489/- on 20.06.2020 from the 1^st defendant bank upon creation of security interest over the landed property having an extent of 5.80 Ares along with building comprised in Re.Sy.No.232/1B in Kasaragode Village, Kasaragode District and another property having an extent of 14.16 Ares comprised in Re.Sy.No.232/1B in Kasargod Village, Kasaragode District.

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According to the defendants, since the applicants defaulted in repayment of the outstanding loan due, their loan account came to be classified as Non-performing Asset on 31.5.2023. Hence the defendants initiated measures under the SARFAESI Act and the Rules made thereunder by issuing demand notice Annexure-A1 and possession notice Annexure-A2. Subsequently the defendants approached the Chief Judicial Magistrate Court, Kasargod and filed application and affidavit Annexure-A3. Order dated 21.12.2023, Annexure-A4 came to be passed appointing Advocate Commissioner for taking physical possession of the secured asset. The defendants issued notice dated 18.12.2023 Annexure-V to the applicants under Section 13 (8) of the SARFAESI Act, 2002. The applicants sent reply dated 16.1.2024, Annexure-VI to the 2^nd defendant.

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Page 2 of 8

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SA No.788 of 2023

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The counsel appearing for the applicants submitted that the defendants failed to serve Demand Notice to the 2^nd applicant who had been Abroad for almost three years and that possession notice was not affixed and that it was also not published within the prescribed time as stipulated in Rule 8 (1) & (2) of the Security Interest (Enforcement) Rules 2002 and that possession notice was not served to all the parties and that hence issuance of possession notice is a violation of the provision of Rule 8 (1) & (2) of the Security Interest (Enforcement) Rules, 2002 and that in Annexure-V sale notice the defendants failed to state the value of the property. It is further submitted by the counsel for the applicants that residential building is situated in item No.1 of Schedule-B to the Demand Notice and that item No.2 which is the land is sufficient to satisfy the liability of the 1^st defendant bank and that therefore taking physical possession of item No.1 property is not warranted and that therefore SA may be allowed. In support of his above submission, he cited the judgment of the Hon’ble High Court of Kerala held in S. Anilkumar Vs. The Catholic Syrian Bank Limited & Anr. [2013 (3) KLJ 43] .

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Per contra, the counsel appearing for the defendants submitted that since the applicants defaulted in repayment of the outstanding loan due, their loan account was declared as NPA on 31.5.2023 as per the RBI guidelines and that Demand Notice was served on the 1^st applicant and that someone received the Demand Notice on behalf of the 2^nd applicant and that no proof has been filed to prove that 2^nd applicant had been abroad and that objection/representation was not sent to the Demand Notice and that possession notice was served on the 2^nd applicant and that possession notice sent to the 1^st applicant in two addresses was returned with endorsement as “addressee cannot be located” and that possession notice was published in two leading newspapers and that it was affixed on the conspicuous part of the secured asset. It is further submitted by the counsel for the defendants that the affidavit was filed in CMP No.4890/2023 before the Chief Judicial Magistrate Court, Kasargod in compliance with the provisions of Section 14 (1) of the SARFAESI Act, 2002 and that the learned Chief Judicial Magistrate passed order after having perused the contents of the affidavit and that since Annexure-V notice is the redemption notice issued under Section 13 (8) of the SARFAESI Act, 2002, there is no requirement to obtain the valuation report and mention the reserve price for the property in the above notice and that the defendants are entitled to take physical possession of the secured assets for sale and that therefore, SA is liable to be dismissed with cost to these defendants.

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There is no dispute with regard to receipt of the Demand Notice by the 1^st applicant. The photocopy of passport of the 2^nd applicant produced along with memo ID No.16372/2024 cannot be relied upon

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Page 3 of 8

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SA No.788 of 2023

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to accept the contention of the applicants that 2^nd applicant had been abroad during the issuance of the Demand Notice. Be that it may so, Annexure-B2 consists of copies of two postal acknowledgement cards wherein one of the postal acknowledgement card is signed by someone else on behalf of the 2^nd applicant. Annexure-B1, copy of postal receipts shows that Demand Notice was sent to the 2^nd applicant also through registered post. Even assuming for argument’s sake that the 2^nd applicant had been abroad during the time of issuance of the Demand Notice, the receipt of the Demand Notice by someone else on his behalf is deemed to have been served on him.

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A perusal of Annexure-B4 copy of the postal acknowledgement card shows that the possession notice sent to the 2^nd applicant was received by someone else on his behalf. It is pertinent to mention herein that the person who received the Demand Notice sent to the address of the 2^nd applicant has also signed in Annexure-B4. Hence it is evident that the defendants have proved the service of possession notice on the 2^nd applicant. Admittedly, possession notice sent to the known two addresses of the 1^st applicant was returned with postal remark as “addressee cannot be located”, as evidenced from the perusal of Annexure-B5 postal covers.

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Annexure-B6 and B7 evidences the publication of the possession notice in the New Indian Express daily dated 19.10.2023 and Deshabhimani daily dated 19.10.2023. Annexure-B8 series photographs shows that possession notice was affixed on the secured assets. Annexure-A2 Possession notice was issued on 18.10.2023 and it was published on 19.10.2023. Therefore, the contention of the applicants that possession notice was not affixed on the secured assets and that it was not published within seven days from the date of its issuance does not hold good.

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On perusal of Annexure-III application and affidavit filed under Section 14 (1) of the SARFAESI Act, 2002 shows that all the statutory requirements such as, availment of credit facilities by the applicants upon creation of security interest over the immovable properties, default in repayment of the financial assistance granted, classification of loan account as NPA on 31.5.2023, issuance of Demand Notice to the applicants, failure of the applicants to raise objection for the Demand Notice, issuance of possession notice for symbolically taking possession of the properties, publication of the possession notice, the total outstanding amount as on the date of filing of the application and affidavit, description of the secured assets with boundaries, were complied with. On perusal of Annexure-IV order shows that the learned Chief Judicial Magistrate Kasargod after having perused the contents of the application, affidavit and the documents filed in support of the affidavit and after having satisfied over the same passed order appointing Advocate Commissioner to take physical

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Page 4 of 8

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SA No.788 of 2023

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possession of the secured assets. This Tribunal does not find any infirmity or flaw in the above order.

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Annexure-V notice is not the sale notice as contended by the applicants in the S.A. Annexure-V notice was issued under Section 13(8) of the SARFAESI Act, 2002 informing the applicants to pay the outstanding loan due and in case of default, the immovable properties will be sold on expiry of 30 days from the date of receipt of the notice. It is also clearly mentioned in the notice as follows :

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“The date and time of auction shall be informed through a separate sale notice ”

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“Hence in terms of the provisions of the subject Act and the Rules made thereunder, this notice is issued to you to enable you to discharge the amount due to the Bank before the publication of the sale notice mentioned supra .”

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Therefore it is evident that Annexure-V notice is the notice issued to the applicants to redeem the secured assets after discharge of the entire outstanding liability due to the 1^st defendant bank.

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The brief facts of the case in S. Anilkumar Vs. The Catholic Syrian Bank Limited & Anr. [2013 (3) KLJ 43] , relied on by the counsel for the applicants is that the issue which arose before the Hon’ble High Court of Kerala was as to whether all items of the properties offered as security interest be put to sale or not. Item No.1 property had no valid alienable interest, since the land belonged to the Industries Department. Hence direction was given by the Hon’ble High Court of Kerala that, item No.3 property shall be sold if the sale proceeds of item No.2 property was sufficient to satisfy the debt and that item No.4 property shall be sold, if the sale proceeds of item Nos.2 and 3 properties was insufficient to satisfy the debt. The condition put forth in the above judgment is that all the items of the properties shall be put to sale on the same date and venue, and that sale can proceed item wise as indicated above. In the present case at hand, no sale notice has been issued in order to bring both the items of the secured assets for sale. Hence, the contention of the applicants that second item of the properties alone shall be brought for sale leaving the first item of the properties does not require for consideration by this Tribunal at this stage. The applicants have failed to prove their case so as to get the reliefs sought for in the S.A.

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Page 5 of 8

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SA No.788 of 2023

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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.

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In the result, S.A No.788 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 29^th day of November, 2024.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 6 of 8

SA No.788 of 2023

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

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Sl. No.	Date	Particulars
1.	15.07.2023	True copy of the Demand Notice issued by the defendant bank.	Annexure-I
2.	18.10.2023	True copy of the possession notice issued by the defendant bank.	Annexure-II
3.	---	True copy of the application in CMP No. 4890/2023filed by the defendant bank	Annexure-III
4.	21.12.2023	True copy of the order in CMP No. 4890/2023 on the file of CJM Court, Kasaragod.	Annexure-IV
5.	18.12.2023	True copy of the sale notice issued by the defendant bank.	Annexure-V
6.	16.01.2024	True copy of the reply letter issued by the1^stapplicant to the defendant bank.	Annexure-VI

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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.	---	True copy of the postal receipts of DemandNotice.	Annexure-B1
2.	---	True copy of the acknowledgement cardsaddressed to theapplicants.	Annexure-B2
3.	---	True copy of the postal cover of the Demand Notice sent to the 1^stapplicant in 2^ndaddress returned with the endorsement addressee cannot be located.	Annexure-B3
4.	---	True copy of the acknowledgement cards of possession notice addressing the 2^nd applicant.	Annexure-B4
5.	---	True copy of the postal cover of possession notice addressing the 1^st defendant (in two address) returned with the endorsement as addressee cannot belocated.	Annexure-B5

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Page 7 of 8

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SA No.788 of 2023

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6.	19.10.2023	True copy of the possession notice published in the New India Express daily.	Annexure-B6
7.	19.10.2023	True copy of the possession notice publishedintheDeshabhimanidaily.	Annexure-B7
8.	---	True copy of the photograph showing the affixture of the possession notice on the securedasset.	Annexure-B8 series

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 8 of 8

Jalaludheen P H v. South Indian Bank

Case brief

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Jalaludheen P H v. South Indian Bank

Case brief

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