Allowed

Mr Poremannan v. Indian Overseas Bank

DRT11 Jun 2025SA/195/2023

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal held that a term loan availed for land development and crop production on agricultural land is exempt from SARFAESI Act enforcement. Consequently, the possession notice and demand notices issued by the bank were set aside.

What did the court decide?

Quashing of Section 13(2) Demand Notice dated 29.11.2022 and Section 13(4) Possession Notice dated 18.02.2023.

Mr Poremannan versus Indian Overseas Bank — Contract and Commercial Disputes | DRT (2025)

SA No.195/2023

11.06.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 11^th day of June, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 195 of 2023

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Mr. Poremannan, S/o. Kaliappa Nadar, Residing at Old No.370 New No.24, Pappampadi, Pappireddipatti TK, Dharmapuri District – 636 905. ….Applicant

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-Vs-

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The Authorised Officer, Indian Overseas Bank, Regional Office, Five Roads, Salem -636 004. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. D. Vijayakumar Counsel for respondent : M/s. V. Rajeswari

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ORDER ON SA 195/2023

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The present Securitization Application [SA] is filed on 09.03.2023 under sub section [1] of S.17 of the Securitization And Reconstruction of Financial Asset and Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

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11.06.2025

The applicant has filed the present SA challenging the Possession Notice dated 18.02.2023 and the outstanding amount due as per the Auction notice is Rs.28,32,901/-

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Pleadings of the applicant:

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The case as putforth by the applicant is that he is an Agriculturist availed Term Loan on 29.07.2013 under IOB Green Credit Scheme for the development of the land and for the Crop Production. The property in question are exempted from the provisions of the SARFAESI Act in view of the section 31(i) of the SARFAESI Act and the revenue records, Pattadar Passbooks and the Title deeds shows the properties are Agricultural Properties.

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The property is used for Agricultural Purpose at the time the security was created on 10.07.2013, the land nature and character of the land, is an Agricultural which is exempted on which the security interest was created.

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It is for the contented that the applicant is carrying on the Agricultural Activities and approach the bank during February 2013 and the bank sanctioned a land development and crop production loan amount of Rs.15 Lakhs on 29.07.2013 to which the applicant had executed necessary documents agreeing to repay the loan at the rate of 10.25% p.a with half yearly rests.

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The applicant created a mortgage by deposit of title deeds as security for due repayment of the loan which is registered before the SRO

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11.06.2025

Pappireddipatti, and Dharmapuri District exempting the stamp duty by an eligibility Certificate for stamp duty exemption in respect of agricultural development of land on 29.06.2013.

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The 1^st applicant had been regularly repaying the money however the respondent have classified the account as NPA on 27.11.2022 and issued the Section 13 (2) demand notice on 29.11.2022 demanding to pay a sum of Rs.27,42,232/- due as on 16.11.2022 within 60 days.

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Subsequently Possession Notice dated 18.02.2023 is issued claiming and amount of Rs.28,32,901 due as to 17.02.2023. It is alleged that the bank has not considered the applicant’s objection raised vide his letter dated 24.02.2023 under section 13(3A) have proceeded to issue the possession notice dated 18.02.2023.

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It is contented that the loan in question is sanctioned for Agricultural purposes and security was created in respect of Agricultural Land to an extent of 3.55 acres and the bank cannot invoked the measures under SARFAESI Act as it is exempted under section 31(i) of the SARFAESI Act.

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In the grounds of the SA, it is contented that the respondent have issued the possession notice which is contrary to the law, and have bank not consider the objections of the applicants later dated 24.02.2023. The the bank is calming interest at 10.60% as against the contract rate at 10.25% p.a. Hence the alleged due claimed by the bank is illegal and possession notice is not in consonance with the provisions of the SARFAESI

SA No.195/2023

11.06.2025

Act as the same is in contravention of Section 31[i] of the SARFAAESI Act. Hence the prays for quashing of the Possession Notice dated 18.02.2023.

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Objections of the respondent bank:

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The respondent bank has filed counter along with all the documents inter alia contenting the applicant have approached the Tribunal with a wrongful intention to delay the process of recovery. It’ is the case of respondent that the applicant was sanctioned Term Loan limit of Rs.15.00 Lakhs Under IOB Green Credit on 29.07.2013 against property at Dharmapuri District, Pappireddipatti S.R.O Pappampdi Village SF No.123/4A 0.20 Hec along with Mangalore tiled house building thereon. Bounded on the South of Poremannan in Land in SF No.123/2D; on the North of Ramasamy land in SF No.123/4B1; on the West of Nallaya goundar land in SF No.123/4B4 and on the East of Karuppannan land in SF No.110/3A.

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After availing the loan from April 2018 there was no repayment towards the facilities as evidenced by the Statement of account and as per Prudential norms of RBI and COVID 19 the loan account was classified as NPA as on 27.11.2022. Subsequent to classification of the account as account on NPA 27.11.2022, the bank has issued demand notice dated 29.11.2022 to be applicant and Guarantors which are duly served.

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The borrower and the guarantors did not show any bonafides to remit the dues and after the statutory period bank has been issued the possession notice on 18.02.2023 and took Symbolic Possession of the property. The

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Possession Notice was duly served on the borrower and guarantor, as per the postal acknowledgments cards enclosed, the Possession Notice was published in the “New Indian Express” and Dinamani on 24.02.2023 besides affixing in the Possession Notice on the property.

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The applicant the guarantors sent a representation to the demand notice letter dated 24.02.2023 which is more than 80 days the receipt of the demand notice. Hence the authorized officer issued a reply vide letter dated 02.03.2023, however the applicant misrepresented the facts with an ulterior intention to stall the proceeds.

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The bank in the para wise contentions submits they sanctioned the term loan for the development of the land and as a collateral security the the residential property was mortgaged which is enforced by the bank under SARFAESI Act. The Bank was forced to initiate measures under the SARFAESI as he applicant did not pay the loan amount. The bank has taken the possession of the residential property mortgaged under the SARFAESI Act and allegation that the applicant is carrying on the agricultural activities is put to strict proof.

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The Bank has charged the rate of interest as per the sanction the letter dated 29.07.2013 at 13% (Base rate +2.75%) and presently the rate applied is 11.40% (Base rate of 8.90% plus 2.50%). The bank has produced as the documents and establish to the supporting documents. Hence said the side the Possession Notice dated 18.02.2023.

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11.06.2025

Heard both sides of the Counsels and perused the records of the

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case

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Its manifest from the records that the applicant availed agricultural credit short term loan for the purpose of land development and crop production as per the application form and application for laon for improvement of land and bunding which clears reflects the particulars of improvement as removing/filing of earth and levelling of land dated 29.07.2013 for improvement of land and building as evident from the documents produced at page1 to 10 of the SA documents produced by the applicant. The applicant has mortgaged the property as collateral security by way of memorandum of deposit of title deeds 10.07.2013 after obtaining the eligibility certificate for exemption of stamp duty for registration of MOTD [Document at page 11 to15] which is not disputed by the both the parties.

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The applicant have produced the Adangal dated 24.02.2023, VAO Certificate on 24.02.2023. Patta computerized dated 24.02.2023. Adangal dated 24.02.2023 and Patta Passbook dated 17.11.1998 and also photograph showing the cultivation of crops in the lands.

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Though the revenue records reflecting the property as agricultural land is not conclusive proof of land being agricultural land. However, it is seen from the photograph at page 36 and 37 that agricultural activity is being carried on and samplings are seen in the photo which appears to be fresh saplings’ grown on the land.

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In fact records reflects that the loan availed by the applicant is for agricultural and land development of the agricultural land the crop production, which is also seen reflected in the memorandum of deposit of title deeds dated 10.07.2013 by the applicant herein favoring in the respondent bank.

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It is seem from the MOTD that the purpose of the loan is agricultural land and development loan and MOTD registration is tempted for stamp duty as per the Go.No.73/CT&RE Regn[JI]Dept.

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The list of document produced along with the MOTD clearly reflects that the property is an agricultural land. For contra the responded bank have produced the affixture of the demand notice on the property which is pg.6 of bank type set, which early reflects that house is an “sheet house” and not a Mangalore tiled house as seen described in the schedule of the property mortgaged by the applicant. The respondent has not produced any relevant documents to counter the contentions that the property mortgaged is not an agricultural land which does not come under the purview of exempted under S.31[i] of the Act.

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The responded bank cannot content that there is a Mangalore tiled house and the property is not exempted under 31[i] under the SARFAESI Act. Even considering the documents produced by the applicant it is evident that the stamp duty exemption given by the sub-register office as the loan being disbursed is for agricultural and the development of the land. Thus it is only to be concluded that the property mortgaged is an

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agricultural land which is exempted under SARFAESI Act. It is to be concluded that the present that the mortgage property is the agricultural land.

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The statutory notices describes the land as agricultural land with Mangalore tiled house is not established by the bank contrary to the description or as seen in the photographs of affixture affixed on the property which reflects that it is a sheet house on the property.

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For the fore going reasons it is concluded that the measure initiated by the respondent bank on the mortgage property is an agricultural land which is exempted under SARFAESI Act and the secured creditor cannot proceed in enforcing the security available under the SARFAEIS Act which is exempted under section 31(i) of the act.

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Accordingly the SA stands allowed setting aside by the section 13(2) Demand Notice dated 29.11.2022 and Sec.13(4) Possession Notice dated 18.02.2023. Interim order of stay if granted stands vacated. Pending IA’s are disposed of in terms of this Order. No order as to cost.

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Sd/- (S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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( Dictated to Steno (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 11^th day of June, 2025)

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ANNEXURES

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl.	Description of Documents	Documents
No.		No.
1.	Applicant for Agricultural Credit short term loan submitted by Appellant dated 29.07.2013.	A-1
2.	Application for Loan for improvement of Land and Building dated 29.07.2013.	A-2
3.	Sanction of Credit limits by the Respondent to the Appellant dated 29.07.2013.	A-3
4.	MOTD showing the nature of land as Agricultural lands dated 10.07.2013.	A-4
5.	Eligibility Certificate exempting the land from stamp duty dated 29.06.2013.	A-5
6.	Demand Notice issued by Respondent dated 29.11.2022.	A-6
7.	Reply to Demand notice under section 13(3A) of the SARFAESI Act dated 24.02.2023.	A-7
8.	Possession Notice issued by the Respondent dated 18.02.2023.	A-8
9.	Paper Publication dated 24.02.2023.	A-9
10.	VAO Certificate dated 24.02.2023.	A-10
11.	Computerised Patta dated 24.02.2023.	A-11
12.	Adangal dated 24.02.2023.	A-12
13.	Photographs showing cultivation of crops in the lands.	A-13
14.	Patta pass book dated 17.11.1988.	A-14

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl. No.	Description of Documents	Documents No.
1.	Photographs of the property taken Possession by the Bank under SARFAESI Act.	R-1
2.	Demand notice issued to Borrower and Guarantors/Mortgagor who is the Applicant dated 29.11.2022.	R-2
3.	Postal acknowledgements for Demand Notice received from the borrower and guarantors including the applicant.	R-3
4.	Possession Notice issued to the borrower and guarantors including the Applicant dated 18.02.2023.	R-4

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5.	Postal Acknowledgements of Possession Notice from Borrower and Guarantors/Mortgagor, who is the applicant dated 21.02.2023.	R-5
6.	Photograph evidencing affixture of Possession Notice on the mortgaged property.	R-6
7.	Paper Publication of Possession Notice made in New Indian Express (English) and Dinamani (Vernacular) dated 24.02.2023.	R-7
8.	Reply to the representation dated 24.02.2023 of the Borrower (SA Applicant) and the Guarantors by the Authorised Officer of the Respondent Bank dated 02.03.2023.	R-8
9.	Postal Acknowledgments of reply sent by the Authorised Officer from Borrower and Guarantors.	R-9
10.	Statement of account in respect of TL facility availed by borrowers from 29.07.2013 to 20.05.2023.	R-10

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SCHEDULE OF PROPERTY

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Dharmapuri DT Pappireddipatti S.R.O Pappampadi village SF No.123/4A 0.29.0 Hec and Mangalore tiled house building there on boundaries:

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North	: Ramasamy land SF No.123/4b1.
South	: Poremannan in land in SF No.123/2D
East	: Karuppannan land in S.No.110/3A
West	: Nallaya Goundar land in SF.No.123/4B4.

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Sd/- (S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

Mr Poremannan v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

Mr Poremannan v. Indian Overseas Bank

Case brief

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