Dismissed

Fabeon Garments and Exports LLP v. Canara Bank

DRT25 Sept 2024SA/92/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the securitization application filed by M/s. Fabeon Garments & Exports LLP against Canara Bank. The Tribunal held that the bank complied with Section 14(1) of the SARFAESI Act and rejected the prayer to regularize the loan account as it is not a permissible relief under the Act.

What did the court decide?

The application to quash the possession notice and direct regularization of the loan account was dismissed. No costs awarded.

Fabeon Garments and Exports LLP versus Canara 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 25^th DAY OF SEPTEMBER, 2024

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

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S.A No. 92 of 2024

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Between

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M/s. Fabeon Garments & Exports LLP, Room No.21/252 D, M P Square, Mongam, Malappuram – 673 641, Represented by its Designated Partner Abdul Razak P.K., S/o. Abdul Azeez Puttekkatt, Fathima Manzil, Nedumparamba, Moonniyoor South P.O., Malappuram – 676 311.

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--- Applicant

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And

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Canara Bank Ltd., Malappuram Down Hill Branch, Represented by its Authorized Officer/ Divisional Manager, Canara Bank, Regional Office, Malappuram.

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--- Defendant

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SA No.92 of 2024

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This Securitization Application coming on 18.09.2024 for final hearing before me in the presence of Mr. P.K. Sreevalsakrishnan, Counsel appearing for the Applicant and Ms. Umarani M.N., Counsel 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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O R D E R

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This Securitisation Application was filed on 31.01.2024 seeking to set aside Annexure-A6 order of Chief Judicial Magistrate Court Manjeri and Annexure-3 Possession Notice issued by the Advocate Commissioner and to pass an order directing the defendant bank not to take any further steps on the property of the applicant as per Annexure-A3 and A6 and to direct the defendant bank to regularize the loan account of the applicant and to direct to pay the cost of this proceedings.

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Availment of term loan facility of Rs.3 Crores, Overdraft facility of Rs.1 Crore and subsequent enhancement of Overdraft facility of Rs.3 Crores and a funded interest term loan facility of Rs.13,07,000/from the defendant bank upon creation of security interest over the immovable property by deposit of title deeds in favour of the defendant bank and default in repayment of the outstanding loan due is conceded by the applicant in the S.A.

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On account of default in repayment of the outstanding loan due, the aforesaid loan accounts came to be classified as NPA on 27.12.2020. Demand Notice 30.08.2021, Annexure-A1 was 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 receipt of the Demand Notice is admitted by the applicant. Admittedly, the applicant neither sent any objection/representation to the demand notice nor did he clear off his liability due to the defendant bank. The averment of the applicant in the SA that his request not to take any further action pursuant to the Demand Notice and to regularize the loan account was accepted by the defendant bank is refuted by the defendant bank in its written statement.

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Subsequently, possession notice dated 22.07.2022, AnnexureA2 was issued for symbolically taking physical possession of the secured asset. The defendant bank has produced Annexure-D3 copy of photograph, D4 and D5 copies of paper publications in order to show that possession notice was affixed on the conspicuous part of the secured asset and that it was published in The New Indian Express edition dated 26.07.2022 and Madhyamam edition dated 26.07.2022. The receipt of the possession notice was also admitted by the applicant in the SA.

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Page 2 of 6

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SA No.92 of 2024

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Since the applicant failed to clear off the outstanding liability due to the defendant bank, even after Issuance of sale certificate if sale so held and confirmed shall stand deferred till then of the Possession Notice the defendant bank filed application Annexure-A4 and affidavit Annexure-A5 before the Chief Judicial Magistrate Court Manjeri. Order dated 08.12.2022, Annexure-A6 came to be passed in CMP No.2976/2022 appointing Advocate Commissioner for taking physical possession of the secured asset. The Advocate Commissioner issued notice dated 01.01.2024, Annexure-A3 to the applicant informing him that he would take possession of the property on 18.01.2024.

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It is submitted by the counsel appearing for the applicant that the defendant bank has not complied with the mandatory provisions of Section 14 (1) of the SARFAESI Act, 2002 and that there is no mention in Annexure-A5 affidavit that the objection or representation to the Demand Notice was received and considered by the secured creditor and also the reason for non-acceptance of said objection/ representation. Apart from the above said specific contention, there are no other contentions raised by the applicant in this S.A.

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Per contra, it is submitted by the counsel for the defendant bank that all the statutory requirements contemplated under Section 14 (1) of the SARFAESI Act, 2002 were complied with by the defendant bank in filing of Annexure-A5 affidavit before the Chief Judicial Magistrate Court, Manjeri.

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In Annexure-A5 affidavit, the details such as the availment of various types of credit facilities upon creation of security interest over the immovable property, default in repayment of the outstanding loan due, classification of loan account as NPA, the outstanding amount as on the date of classification of NPA, issuance of Demand Notice to the borrower, non-submission of any objection/representation to the Demand Notice and also failure to repay the dues mentioned in the Demand Notice, issuance of possession notice and its affixture and publication in newspapers, the outstanding amount as on 19.10.2022 are furnished. Therefore it is evident that all the statutory requirements required under Clause (i) to (ix) to the proviso of Section 14 (1) of the SARFAESI Act, 2002 were complied with by the defendant bank in respect of Annexure-A5 affidavit.

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A perusal of Annexure-A6 order shows that the learned Chief Judicial Magistrate Manjeri after having perused the contents of the affidavit and having satisfied over the same, appointed Advocate Commissioner to take physical possession of the secured asset. This Tribunal does not find any infirmity in the above order the Advocate Commissioner issued Annexure-A3 notice to the applicant pursuant

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Page 3 of 6

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SA No.92 of 2024

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to the direction given to the former to take physical possession of the secured asst. Hence this notice cannot be considered as a measure.

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One of the reliefs sought for by the applicant in the SA is to direct the defendant bank to regularize the loan account of the applicant. It is upto the applicant to approach the defendant bank for regularization of his loan account. The issue for regularization of the loan account is not a measure under Section 13 (4) of the SARFAESI Act, 2002.

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The applicant has failed to prove his case so as to get the reliefs sought for in the SA. In view of the foregoing reasons, this Tribunal holds that the applicant is not entitled to get the reliefs sought for in this SA.

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In the result, S.A No.92 of 2024 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 25^th day of September, 2024.

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/

Page 4 of 6

SA No.92 of 2024

SCHEDULE OF PROPERTY

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ITEM No.1

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(Secured Assets – Immovable Properties)

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All that part and parcel of the property having an extent of 158 cents of land obtained as per Registered Janmam assignment deed No.216/2017 dated 17.02.2017 of SRO Mongam in Block No.58, Re.Sy.No.140/3-2 of Pulpatta Village, Eranadu Taluk, together with industrial buildings therein and all improvements thereon and easements attached thereto.

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BOUNDARIES

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East : 8 metre width Panchayat Road North : Property in possession of issues of Cherutty West : Property in possession of Kolakanni Veeran Moideen, Alihaji. South : Property in possession of Mattapadan Balakrishnan

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(Su. WILLYAHM) PRESIDING OFFICER

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Page 5 of 6

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SA No.92 of 2024

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

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Sl. No.	Date	Particulars
1.	30.08.2021	True copy of the notice U/s. Sec.13(2) of the SARFAESI Act, 2002.	Annexure-A1
2.	22.07.2022	True copy of the symbolic possession noticeissued by the defendant bank.	Annexure-A2
3.	01.01.2024	True copy of the Possession Notice under Sec.14 of SARFAESI Act, 2002 issued by theAdvocate Commissioner Vishakh M.	Annexure-A3
4.	18.10.2022	True copy of Crl. M. P. No. 2976/2022 filed before the Chief Judicial Magistrate Court,Manjeri.	Annexure-A4
5.	18.10.2022	True copy of the affidavit filed by the defendant in Crl. M. P. No. 2976/2022 filed before the Chief Judicial Magistrate Court,Manjeri.	Annexure-A5
6.	08.12.2022	True copy of the Order of Chief Judicial Magistrate Court Manjeri in Crl. M. P. No. 2976/2022.	Annexure-A6

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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.	04.11.2021	True copy of The New Indian Express Kozhikode edition, wherein the Demand Noticewas published.	Annexure-D1
2.	04.11.2021	True copy of Madhyamam, Malappuram edition, wherein the Demand Notice was published.	Annexure-D2
3.	--	True copy of the photograph showing affixture of Possession Notice.	Annexure-D3
4.	26.07.2022	True copy of the newspaper The New Indian Express,Kozhikode edition.	Annexure-D4
5.	26.07.2022	True copy of the newspaper Madhyamam,Malappuramedition.	Annexure-D5

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 6 of 6

Fabeon Garments and Exports LLP v. Canara Bank

Case brief

What is this about?

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Fabeon Garments and Exports LLP v. Canara Bank

Case brief

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