Dismissed

Ms Habib Agro Industries Rep by Its Industries Rep by Its Partner and Legal Heirs of Late Sri Habib Khan and Others v. the Authorised Officer Indiabulls Housing Finance Ltd.

DRT19 Sept 2025SA/168/2023

Case brief

AI extract

What is this about?

The Tribunal dismissed a Securitization Application challenging the legality of a possession notice under SARFAESI Act. The court held that the respondent proved compliance with statutory requirements regarding security registration, demand notice service, and publication, and found no substantial prejudice to warrant interference.

What did the court decide?

Securitization Application No.168 of 2023 is dismissed; all pending Interim Applications are closed.

Ms Habib Agro Industries Rep by Its Industries Rep by Its… — Company and Corporate | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-II, BANGALORE

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Dated of 19^th day of September, 2025

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PRESENT: SHRI T. RAJESH Hon’ble Presiding Officer

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S.A.No.168 of 2023

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M/s.Habib Agro Industries, Represented by its Partners &,

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Legal Heirs of late Sri Habib Khan.

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(i) Mohammed Ali Khan, S/o.Late Mr.Habib Khan,

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No.4530, New No. L-7, Site No.23,

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1^st Cross, St. Mary’s Road, N.R.Mohalla, Mysuru – 570 007.

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(ii) Abid Ali Khan,

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S/o.Late Habib Khan,

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No.4530, New No. L-7, Site No.23,

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1^st Cross, St. Mary’s Road, N.R.Mohalla, Mysuru – 570 007.

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(iii) Sadath Ali Khan,

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S/o.Late Habib Khan,

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No.4530, New No. L-7, Site No.23, 1^st Cross, St. Mary’s Road, N.R.Mohalla, Mysuru – 570 007.

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(iv) Inayath Ali Khan,

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S/o.Late Mr.Habib Khan,

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No.4530, New No. L-7, Site No.23,

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1^st Cross, St. Mary’s Road, N.R.Mohalla, Mysuru – 570 007.

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(v) Mrs.Sayeeda Begaum,

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SA No. 168/2023

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W/o.Late Habib Khan, No.4530, New No. L-7, Site No.23, 1^st Cross, St. Mary’s Road, N.R.Mohalla, Mysuru – 570 007.

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(vi) Mrs.Farhana Khanum, D/o.Late Habib Khan, Flat No.103, Arafa Abode, Wheelers Road, Cooks Town, Bengaluru – 560 005.

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(vii) Mrs.Farzana Aga, D/o.Late Habib Khan, No.8/1, Campbell Street Cross, Ashok Nagar, Bengaluru – 560 025.

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. . . Applicants.

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Versus

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Asset Care and Reconstruction Enterprises Limited, Office at 2^nd Flooor, 13, Mohan Dev Building, Tolstoy Marg, New Delhi – 110 001.

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The Authorised Officer, Asset Care and Reconstruction Enterprise Limited, Anand Arcade, MIG No.11/11-A, 1^st Floor, Vishwamanava Double Road, Saraswathipuram, Mysuru – 570 023. . . . Respondents.

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Ld. Counsels on record / appeared :-

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Counsel for Applicants :- Sri M.A.Rajendra. Counsel for Respondents :-M/s.FX & Co.

SA No. 168/2023

: - O R D E R - :

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The Securitization Application, SA is filed under section 17 of the Securitization And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act; herein after been referred to as SARFAESI Act or the Act, as the case be challenging the measures leading to issuance of possession notices dated 18.11.2022.

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The Applicants 1 to 4 are the partners in M/s.Habib Agro Industries and legal heirs of late Habib Khan. The Applicants 5 to 7 are brought on record as legal heirs of late Mr.Habib Khan and are neither the guarantors/mortgagors to the loan sanctioned to the firm.

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It is the case of the Applicants that the firm M/s.HabibAgro Industries wherein the applicants 1 to 4 are the partners availed Loan against property of Rs.1,84,00,000/- on 13.10.2014, which was repayable in 180 months. According to the Applicants, the default in loan accounts is due to the business loss occurred apart from COVID-19 pandemic disasters and the accounts were classified as NPA on 26.03.2021 which they allege is without giving due weightage to the notifications issued by RBI during the pandemic lockdown period. It is also the case of the Applicants that the request of the applicants to extend concessional rate

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of interest since the repayment was based on the income to be

SA No. 168/2023

generated out from the Agro based industry and also COVID-19 package disasters, are not considered by the respondents. It is further contended by the applicants that the possession notice was neither affixed, nor published in two leading newspapers which is having wide publicity in the locality. It is also contended that the recovery proceedings are initiated without registering the charge/security interest with the Central Registry as per provisions of 26-D of the Act. It is further contention of the applicants that the debt is not a legally recoverable debt since compound, penal and other charges debited to the account during COVID-19 disaster period are claimed as the due amount. The applicants challenged the earlier possession notice dt.25.09.2021 in SA No.80/2022 and the same was disposed as the respondent bank withdrawn the said statutory notices on the ground that legal heirs of late Habib Khan as not brought on record. It is further case of the applicants that they informed the death of Mr.Habib Khan in 2017 itself and not belatedly after 5 years. Hence, the applicants prayed to set aside the impugned possession notice issued by the respondent institution.

SA No. 168/2023

Along with SA, the Applicants had produced the following documents:

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i) Copy of the impugned possession notice dt.18.11.2022.

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ii) Copy of sanction letter dt.13.10.2014.

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iii) Copy of demand notice dt.14.07.2022.

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iv) Copy of order in SA No.80/2022 dt.15.06.2022.

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v) Copy of order in SA No.268/2021 dt.20.10.2021.

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vi) Copy of the order in RA No. (SA) 52/2017 dt.23.12.2019.

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The respondent filed their statement of objection contending that the service of demand notice is admitted by the applicants in averments, but had in later pleadings raised the ground that they are not served with demand notice. The respondent contended that the classification of account of the applicants as NPA is justified as no material evidence has been placed by the applicants before this Tribunal in order to demonstrate that there was restriction imposed by the Government or RBI during the COVID period which applies in applicant’s case. It is contended that nothing is available on record to hold that the respondent could not be permitted to classify the loan account as NPA on 26.03.2021. It is further contended that the above contention is not raised by the applicants in response to the demand notice issued by the

SA No. 168/2023

defendant. The respondent also contended that the applicants have been provided with the benefits as per the criteria on which the applicant falls. The averments of the applicants that the possession notice was not affixed and that the security interest is not registered with Central Registry are also denied since the respondent has produced the proof for the same by way of documents. Hence, the respondent prayed for dismissing the SA.

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Along with objection, the respondent had produced the following

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documents:

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i) Copy of the authority letter. ii) Copy of the loan application. iii) Copy of the sanction letter dt.13.10.2014. iv) Copies of the loan agreement dt.21.10.2014 and declaration dt.21.10.2014.

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v) Copies of the demand notice dt.14.07.2022, courier receipts and Delivery status.

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vi) Copies of paper publications Vishwavani dt.02.08.2022 and Business Standard dt.02.08.2022.

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vii) Copies of the possession notice dt.18.11.2022, courier receipts and delivery status.

SA No. 168/2023

viii) Copies of photographs for having pasted the possession

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notice dt.18.11.2022 on the outer door of the premises.

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ix) Copies of paper pubications Business Standard and Vishwavani both covers Mysore on 23.11.2022.

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x) Copy of the CERSAI Certificate.

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Heard the Ld. counsel for both sides.

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The only issue that arises for consideration is as to the legality of measures initiated and continued leading to the impugned possession notice.

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The applicant is not disputing the availment of credit facility and creation of mortgage. The applicant though is admitting the creation of Security Interest is challenging the competency of the respondent initiating the measures contending that the Security Interest is not

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registered with the Central Registry. However, this contention is successfully rebutted by the respondent as they had produced the proof as to the registration of the Secured Asset with Central Registry.

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The next contention taken by the applicant is that they were not extended the benefits as directed by RBI in lieu of Covid-19. This contention has to be viewed in the light of clear admission of the

SA No. 168/2023

applicant as to the defaults committed by them in repayment. The applicant had not specifically pleaded which beneficial notification they were entitled for and which direction of RBI is not extended to them.

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The respondent along with their counter had produced the proof as to the Service of demand notice. Hence the respondent had proved the compliance of rule 3. The respondent had also published the demand notice is two dailies.

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The impugned possession notice is also served, published and affixed as required by statute as evidenced by the production of Annexure R9; proof as to the service, Annexure R10; proof as to the affixture and Annexure R11; proof as the publication. Even though the applicants had put forth a contention that the purported paper publication cannot be considered as compliance of rules as the publications were not taken out in newspapers having wide circulation in the area. The applicant had not placed on record any document which throws light as to the circulation of newspapers in which publications is taken out.

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Even though the publication in ‘Business Standard’ cannot be consideration as a proper publication as required by rules, this Tribunal is not inclined to interfere with the measures on that sole ground, as no

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prejudice is caused to the applicant by the said publication or improper

SA No. 168/2023

publications. The Apex Court had in L&T Housing Finance Ltd. (M/s.)

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Vs. M/s.Trishul Developers and Another reported in AIR 2020 SC

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5339: 2020(10) SCC 659 laid down the proposition that unless the debtor is able to show any substantial prejudice caused on account of the procedural lapse as prescribed under the Act or the Rules framed thereunder, still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudice if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions.

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When the matter was listed for orders, the Ld. Counsel for the applicant produced an order of Hon’ble High Court of Karnataka in WP. No. 10906/2025 (GM-RES). From a perusal of the said order, it is evident that the applicant had approached the Hon’ble High Court challenging the action initiated by the respondent-bank, contending that the documents relied upon by the bank were not duly stamped, under the relevant law. It is also revealed from the order of the High Court that, the

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High Court taking the note of the fact that the matter is pending before this Tribunal disposed of the Writ Petition observing that this Tribunal

SA No. 168/2023

can examine whether the agreement relied upon by respondents are duly stamped and whether it requires registration.

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The applicant never raised the said issue in the pleading or at the time of hearing, so as to enable the respondents to come out with their reply to the same. It is also to be noted that the Hon’ble High Court has not passed any order specifically directing this tribunal to go into the said issue. In this regard it is to be noted that, in the decision relied upon by the applicant, the Hon’ble High Court of Madras in the case M/s. Veena Textiles Limited & Another Vs. The Authorised Officer, IFCI Limited & Another (supra) permitted the secured creditor proceed afresh, taking note of the fact that the statute governing the state of Tamilnadu mandates registration of the assignment deed, whereas the statute corresponding to Karnataka, namely The Karnataka Stamp Act, 1957 does not make registration mandatory. Section 19 of Karnataka Stamp Act,1957 reads;

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“Section 19. Payment of duty on certain instruments liable to increased duty in the [State of Karnataka] [Adapted by the Karnataka Adaptations of Laws Order, 1973 w.e.f. 1.11.1973].

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- Where any instrument of the nature described in any article in the Schedule and relating to any property situate or to any matter or thing

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done or to be done in the [State of Karnataka] [Adapted by the Karnataka Adaptations of Laws Order, 1973 w.e.f. 1.11.1973] is executed out of the said State and subsequently received in the said

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State,-

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(a) the amount of duty chargeable on such instrument shall be the amount of duty chargeable under the Schedule on a document

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of the like description executed in the [State of Karnataka] [Adapted by the Karnataka Adaptations of Laws Order, 1973 w.e.f. 1.11.1973] less the amount of duty, if any, already paid on such instrument in any other State in India,

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(b) and in addition to the stamps, if any, already affixed thereto, such instrument shall be stamped with the stamps necessary for the payment of the duty chargeable on it under clause (a) of this section, in the same manner and at the same time and by the

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same persons as though such instrument were an instrument received in the [State of Karnataka] [Adapted by the Karnataka Adaptations of Laws Order, 1973 w.e.f. 1.11.1973] for the first time at the time when it became chargeable with the higher duty,

and

SA No. 168/2023

(c)the provisions contained in clause (b) of the proviso to subsection (3) of section 32 shall apply to such instrument as if such were an instrument executed or first executed out of India and first received in the [State of Karnataka] [Adapted by the Karnataka Adaptations of Laws Order, 1973 w.e.f. 1.11.1973] when it became chargeable to the higher duty aforesaid, but the provision contained in clause (a) of the said proviso shall not apply thereto.

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D.-Of Valuations for Duty.”

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Where by stamp duty is payable only for the deficit.

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In the absence of any plea in the above regard much less any contention taken even at the time of hearing, this Tribunal is in view that the above contention is taken only to protract the proceedings. The decision (supra) will not help the case of the applicant for the aforementioned reason.

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Hence on consideration of the discussions as held in aforementioned paragraphs and findings therein, this Tribunal is satisfied that the measures initiated and continued by the Authorised officer is in accordance with statute. The applicant had failed in putting forward

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any valid challenges against the measures and hence this SA is liable to

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be dismissed.

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