Allowed

Mr Mahadevappa and Gurushantappa Gibbur v. State Bank of India

DRT9 Apr 2025SA/201/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal-II, Bangalore allowed the Section 17 application, setting aside the possession notice and Rs. 25,000 costs awarded to the applicant as the inclusion of an unsecured agricultural loan in recovery proceedings was legally unsustainable.

What did the court decide?

The possession notice is set aside. The applicant is allowed Rs. 25,000 towards costs to be adjusted upon closure of credit facilities.

Mr Mahadevappa and Gurushantappa Gibbur versus State Bank of… — Banking and Recovery | DRT (2025)

¶1

IN THE DEBTS RECOVERY TRIBUNAL-II, BANGALORE

¶2

Dated this 9th day of April 2025

¶3

PRESENT: SHRI T. RAJESH PRESIDING OFFICER

¶4

SA No. 201 of 2023

¶5

Mahadevappa S/o. Gurushantappa, Aged 54, Residing at: Bhusnoor Village, Aland Taluk, Kalaburgi 585 302.

¶6

… Applicant

¶7

Versus

¶8

Authorised Officer, State Bank of India, RASNECCC Kalburgi, No.2, Super Market, Kalaburagi 585 101.

¶9

Branch Manager, State Bank of India, Plot No.1-891/72, New Jawargi Road, Hotel Sun International Building, Kalaburagi 585 101.

¶10

M/s. Bidar Sakkare Karkhane, Hallikhed Sugar Factory, Humnabad, Bidar District, Karnataka 585 415. … Respondents 1 to 3

¶11

Ld. Counsels on record / appeared :-

¶12

For Applicants :- M/s. Varun M.G & P. Govindan For Respondents 1&2 :- Shri Shivayogi Jawoor For Respondent No.3 :- Ex parte

¶13

2 SA 201/2023

¶14

ORDER

¶15

The possession notice issued by the Respondent u/s.13(4)

¶16

of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( hereinafter referred to as the ‘Act’) is under challenge in this Section 17 Application.

¶17

The applicant admits having availed a housing loan from the 2^nd respondent and contends that the applicant was regular in repayment. It is also admitted that the applicant had availed an agricultural cash credit. It is the case of the applicant that no security interest was created in respect of the said facility and also the claim if any in respect of the said facility is barred by limitation.

¶18

The applicant further contends that the respondent bank had not issued any intimation regarding the account slipping in to NPA. It is also contended that the proceedings are bad since the respondent failed to comply with the provisions of the Act and the rules framed thereunder. The Respondent bank demands more than what is actually due in the account. In the grounds to the SA also, the applicant, apart from reiterating the

¶19

3 SA 201/2023

¶20

contentions taken in the statement of facts, contended that though the bank preferred a suit in respect of agricultural cash credit loan before the permanent Lok Adalath and the same had been dismissed on against the applicant and only the 3^rd respondent the sugar mill was held liable. Another contention taken is that the demand notice was not served on the applicant.

¶21

Along with the SA, the applicant had produced the

¶22

following documents:

¶23

Demand notice

¶24

Possession notice.

¶25

Statement of account of the housing loan

¶26

Mortgage Deed copy.

¶27

The Respondents 1 & 2 had filed their objection contending that the applicant had availed a Home loan to the extent of Rs.14,10,000/- in the year 2015 and also a cash Credit to the extent of Rs.7,00,000/- by executing necessary documents. It is also stated that there is default in repayments and hence the bank had initiated the present proceedings. In respect of the contention of the applicant that one account is not in default. The respondent contends that as per the Reserve Bank of India

¶28

4 SA 201/2023

¶29

circular, if the borrower is having more than one account, all the facilities granted by the bank are to be treated as NPA and not the particular facility or part thereof which has become irregular. The respondent further contends that the measures initiated by them and continued by them leading to the impugned possession notice are in accordance with the statute.

¶30

Along with the objections, Respondents 1 & 2 produced

¶31

the following documents.

¶32

Copy of demand notice

¶33

Postal receipts and postal acknowledgment

¶34

Possession notice copy

¶35

Postal receipts and acknowledgment

¶36

Paper publications of possession notice

¶37

Central registry registration proof

¶38

Statement of accounts.

¶39

There was no representation for the 3^rd respondent.

¶40

However the 3^rd respondent is not a proper or necessary party in

¶41

the present proceedings and the matter is proceeded without the

¶42

3^rd respondent.

¶43

5 SA 201/2023

¶44

Heard both the Counsels and considered their contentions

¶45

in the light of pleadings and evidence. The only issue that arises for consideration in the matter is, whether the measures initiated and continued up to the issuance of impugned possession notice is in accordance with statute or not?

¶46

As far as the question as to the availment of credit facility and default in one account, there is no dispute between the contending parties. There cannot be any dispute as to the entitlement of the 2^nd respondent even to classify a regular account as NPA, if the other account of the same borrower is in default. Hence this Tribunal is of the view that the NPA classification is in accordance with the statute.

¶47

Respondents 1 & 2 had produced proof as to the service of demand notice and proof of service as well as the publication of possession notice. Therefore, this Tribunal is of the view that there is prompt compliance of rule 3, 8(1) and 8(2) of the Rules.

¶48

The next contention taken by the applicant is that the respondent had clubbed an unsecured loan and initiated the

¶49

6 SA 201/2023

¶50

proceedings. According to the applicant, only the housing loan availed from the respondent loan is secured. In support of the said contention, the applicant had produced the mortgage deed admitted to have been executed by him. Even though the applicant had taken the specific contention as to the nonextension of security interest to agricultural cash credit no denial is made from the side of the Respondent.

¶51

In the absence of denial by the respondent as to the specific contention coupled with the production of mortgage deed by the applicant, leads this Tribunal to hold that the measures initiated and continued including the unsecured loan, the agricultural cash credit is legally unsustainable and liable to be interfered with .

¶52

Since the measures are found to be unsustainable, this Tribunal is of the view that the applicant who had been compelled to approach this Tribunal impugning the measures which is per se illegal, the applicant is entitled to get cost of this proceedings and hence this Tribunal, after considering the fact that a fee of Rs.7,455/- is paid while filing the SA, is entitled to

¶53

7 SA 201/2023

¶54

allow a cost of Rs.25,000/- to the applicant. However as the

¶55

applicant has no dispute as to the fact that he owes the applicant

¶56

the amount due in one loan account, this Tribunal is of the

¶57

opinion that there cannot be any direction to pay the cost directly.

¶58

In the result ,

¶59

(a) SA No.201 of 2023 stands allowed. The measures initiated by the Respondent bank leading to the issuance of impugned possession notice are found to be not in accordance with statute and hence set-aside;

¶60

(b) The applicant is allowed a cost of Rs.25,000/- which is to be adjusted at the time of settlement of the credit facilities or closure of the same.

¶61

Copy of this order be communicated to the parties concerned.

¶62

(Dictated to my PS directly on the Computer, corrected and pronounced by me in the open Court on this the 9th day of April 2025)

¶63

Sd/(T. RAJESH) PRESIDING OFFICER

Mr Mahadevappa and Gurushantappa Gibbur v. State Bank of India

Case brief

What is this about?

What did the court decide?

Mr Mahadevappa and Gurushantappa Gibbur v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Ms Shree Shyam Fashions versus Edelweiss Asset Reconstruction Co. Ltd.

Bank of Baroda versus M/s Maa Sarswati Note Book Printers

Bank of Baroda versus M/s Mahadeo Namkeen Udyog

Sri Babajigouda Satagouda Patil Since Deceased by His Lrs versus Canara Bank

Karnataka Bank Limited versus Deepak Kumar

Canara Bank versus M/S Addu Mod Kidz