Dismissed

Sarju Shamsudeen v. Catholic Syrian Bank Limited

DRT12 Mar 2025SA/206/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application filed by a borrower challenging securitization proceedings under the SARFAESI Act. The court held that the borrower failed to object to the demand notice in time and that the statute of limitations for the out-of-court settlement scheme had lapsed, rendering the Tribunal powerless to revive it.

What did the court decide?

Application dismissed; applicant directed to pay costs of Rs.10,000/- to the respondent.

Sarju Shamsudeen versus Catholic Syrian Bank Limited — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated this the 12^th day of March, 2025

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SECURITIZATION APPLICATION No.206/2024

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Between

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Sarju Shamsudeen, S/o.late Shamsudeen, Panamootil No.13, Kadathoor, Kulasekharapuram P.O., Karunagapally, Kollam – 690 544. …Applicant

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And

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The Authorised Officer, Chief Manager (Law), CSB Bank Ltd., (Formerly Catholic Syrian Bank), Zonal Office, Thiruvananthapuram. …Defendant

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This Securitization Application having been heard on 18.02.2025 in the presence of Advocates M/s.P.R.Milton and R.Vishnuraj for the applicant and Advocates M/s.Madhu Radhakrishnan, Nelson Joseph, M.D.Joseph, Deepak Ashok Kumar and Nevil Noble for the defendant, and stood over to this day for consideration, the Tribunal delivered the following:

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F I N A L O R D E R

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Challenging the securitization proceedings initiated by the defendant under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’), the

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SA 206/2024

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applicant/borrower has filed this SA under S.17(1) of the SARFAESI Act.

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Brief facts of the case :

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The applicant, being the proprietor of M/s.Panamootil Cashew Impex, has availed credit facility from the Kollam Branch of the defendant in the year 2012 and his wife stood as guarantor for the loan. In the SA it is pleaded that from 2012 to 2019, the applicant was regular in repayment but due to some crisis in cashew business in the State of Kerala, the loan could not be repaid in time. Consequently, the defendant classified the loan as NPA and issued demand notice under S.13(2) of the SARFAESI Act on 25.02.2019 calling the applicant to pay an amount of Rs.30,46,186/- due as on 31.01.2019. In the demand notice, the relevant details are not stated which violates S.13(3) of the SARFAESI Act. There is no bifurcation of interest which causes prejudice to the applicant.

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It is also stated that possession notice was not issued in accordance with the statutory requirements and hence the same is not sustainable. The measure taken under S.14 of the SARFAESI Act to take physical possession of the secured asset by filing MC No.289/2020 is also not in accordance with the statutory requirements and hence the order passed by the CJM is illegal. On receipt of the notice issued by the Advocate Commissioner to take possession of the residential house, the applicant approached the Hon'ble High Court of Kerala by filing W.P.(C) No.22111/2020. As per the direction of the Hon'ble High Court, a sum of Rs.25,50,100/- was paid on different dates and submitted an OTS proposal and the securitization

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SA 206/2024

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proceeding is not sustainable. Hence this SA is filed challenging the entire measures initiated by the defendant.

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The defendant contested the claim by filing written statement denying the averments and claimed inter alia that after availing the loan, the applicant did not repay the amount. Consequently, the loan was classified as NPA and issued demand notice to the applicant on 25.02.2019 calling him to pay the outstanding amount. Due to non-compliance, possession notice dated 08.11.2019 was issued and all the statutory requirements are duly followed. In fact the defendant had granted an OTS to the applicant to remit Rs.30.50 lakhs payable on or before 31.01.2021 but the applicant has remitted only Rs.20,50,100/-. Consequently, the OTS was cancelled automatically. Though the applicant remitted Rs.5 lakhs on 03.10.2023 in pursuance of the order of the Hon'ble High Court of Kerala in W.P.(C) No.22111/2020, the OTS cannot be revived. All the statutory measures are duly followed. In the absence of any illegality, challenging the securitization proceeding is not sustainable and hence the SA may be dismissed.

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From the respective case of the applicant and the defendant, the following points are emerged for adjudication in this case:

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(i) Whether the securitization proceeding suffers from any illegality or defect or irregularity to intervene with the same?

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(ii) Whether the applicant is entitled to get any relief in this case?

SA 206/2024

FINDINGS:

Point Nos.(i) & (ii):

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For the sake of convenience, both the points, being interlinked with each other, are taken up together for adjudication. There is no dispute about availing of the loan by the applicant for running a cashew processing unit. Due to default in repayment, securitization proceeding was initiated. After receipt of the demand notice, no objection/representation was submitted by the applicant in disputing the claim. On perusal of Annexure-A1 demand notice, details of loan, interest charged, property mortgaged etc. are stated. In the absence of any objection/representation against the same, now he cannot challenge the demand notice in view of the ratio decided by the Hon'ble High Court of Kerala in the judgment reported in 2022 (3) KLT

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645 in the case of AGP City Gas Private Limited v. M/s.Lynx Properties & Developers & others wherein it is held as follows:-

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“21. Once the notice of demand is served, the mandate of the Act, as evident from section 13(3)-A, is the availability of an opportunity to the borrower to raise any objection against the notice issued. This statutory notice enables the borrower to raise an objection on any of the grounds available to him, including the objection regarding the quantum specified in the demand notice.

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22. In the instant case, admittedly no objection was raised by the borrower or guarantor on the quantum specified in the demand notice issued under section 13(2) of the Act. Therefore, the opportunity available to the borrower as well as the guarantor, to object to the quantum mentioned in the demand notice was not availed by them. Hence, they cannot thereafter, turn around and question the quantum mentioned in the demand notice to contend that the notice is bad in law. ……”

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The learned counsel for the applicant has mainly given stress in the course of argument that out of the OTS amount, he has remitted Rs.20.50 lakhs within time and balance Rs.5 lakhs was paid subsequently. The defendant should have accepted the same towards OTS granted and claiming excess amount is not permissible. Hence

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SA 206/2024

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the SA may be allowed. On the other hand, learned counsel for the defendant contended that the OTS, having not been complied within the stipulated time, the same is deemed to have been cancelled. By depositing the amount after the period fixed for OTS, the same cannot be revived and the applicant is not entitled to get any benefit of the same.

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The question arises for adjudication is whether deposit of the OTS amount by the applicant after the stipulated date, any benefit of OTS granted can be given to him. The applicant submitted a letter dated 01.11.2023 marked Annexure-A6 stating the amount remitted by him and requesting to release the document by closing the loan account. The defendant issued a reply to the said letter on 09.11.2023 vide Annexure-A7 stating that the last remittance of Rs.5 lakhs was made on 03.10.2023 in pursuance of the order of the Hon'ble High Court of Kerala in W.P.(C) No.22111/2020. It is further stated that as the settled amount was not paid on or before 31.01.2021 as per the OTS scheme, the OTS granted was cancelled automatically and now the applicant cannot take any benefit of the same.

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The Tribunal cannot interfere with the rejection of OTS by the defendant in view of the ratio decided by the Hon'ble Apex Court in the judgment reported in (2022) 2 SCC 805 in the case of Bijnor Urban Co-operative Bank Limited, Bijnor & others vs. Meenal Agarwal & others and another judgment reported in (2023) 1 SCC 540 in the case of State Bank of India vs. Arvindra Electronics

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Pvt. Ltd. Further, the Division Bench of the Hon'ble High Court of Kerala in the judgment dated 05.12.2024 in W.A.No.1275/2024 in the

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SA 206/2024

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case of State Bank of India vs. Sham P.S. at paragraph 14 it is held as follows:-

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“14. ………….. If the borrower is not in a position to or unwilling to act in accordance with any of the terms and conditions of the OTS Scheme or committed breach of the terms he cannot be permitted to seek direction from the Court to compel the bank to honour its obligations. If such pleas are acceded to, that will definitely amount to re-writing of the agreement between the creditor and the borrower.”

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In view of this ratio, once the OTS is cancelled or deemed to be cancelled due to non-compliance of the conditions within the statutory period, Court/Tribunal has no jurisdiction to direct the secured creditor to revive the OTS and give benefit of the same to the borrower. Hence the contention on this aspect by the learned counsel for the applicant is not at all sustainable.

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All the statutory measures are duly complied and the defendant has produced CERSAI certificate regarding registration of security interest in the CERSAI portal. In absence of any illegality, interference with the securitization proceeding is not at all warranted. The learned counsel for the applicant has also failed to show any specific defect in the measure taken under S.14 of the SARFAESI Act to interdict with the order passed by the CJM. Hence the applicant is not entitled to get any relief and both the points are answered against the applicant.

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Hence it is ordered:-

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ORDER

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In view of the foregoing reasons, this SA, being devoid of any merit, is hereby dismissed. The applicant shall pay costs of Rs.10,000/- (Rupees ten thousand only) to the defendant as he

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SA 206/2024

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caused unnecessary delay in the securitization proceeding without any

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valid reason.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 12^th day of March, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 206/2024

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	Documents o	n the part of the applicant
Annexures	Date	Particulars of documents
Annexure-A1	25.02.2019	Copy of demand notice issued to the applicant.
Annexure-A2	08.11.2019	Copy of possession notice issued to the applicant.
Annexure-A3	10.03.2020	Copy of petition filed by the defendant before the CJM, Kollam.
Annexure-A4	16.03.2020	Copy of order in MC No.289/2020 passed by the CJM, Kollam.
Annexure-A5	04.10.2023	Copy of order in W.P.(C) No.22111/2020 of the Hon'ble High Court of Kerala.
Annexure-A6	01.11.2023	Copy of OTS proposal submitted to the defendant by the applicant.
Annexure-A7	09.11.2023	Copy of reply to Annexure-A6 given by the defendant.
Annexure-A8	20.02.2024	Copy of notice issued by the Advocate Commissioner in MC No.289/2020.

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Documents on the part of the defendant

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Annexure-B1	13.11.2019	Copy of publication of possession notice in Kerala Kaumudi daily.
Annexure-B2	13.11.2019	Copy of publication of possession notice in The New Indian Express daily.
Annexure-B3	09.04.2024	Copy of CERSAI registration report.