Dismissed

Sreekala K S v. State Bank of India

DRT25 Apr 2025SA/229/2025

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed the applicant's application challenging the bank's securitization proceedings. The court rejected the claim that the property was agricultural land due to lack of evidence and found no illegality in the service of demand notices or the execution of possession orders.

What did the court decide?

The application was dismissed with costs of Rs.10,000 payable by the applicant.

Sreekala K S versus State Bank of India — Banking and Recovery | DRT (2025)

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SA 229/2025

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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 25^th day of April, 2025

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SECURITISATION APPLICATION NO.229/2025

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Between

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Sreekala K.S., W/o. Harikrishnan T.N., Kadampinal House, Karakkad P.O., Chengannur, Alappuzha District, PIN 689 504 …Applicant

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And

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State Bank of India,

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LMS Compound,

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Opp. Museum West Gate, Vikas Bhavan P.O., Thiruvananthapuram.

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2 . The Authorized Officer,

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LMS Compound,

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Opp. Museum West Gate, Vikas Bhavan P.O., Thiruvananthapuram PIN – 695 033.

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The Branch Manager, State Bank of India, Kulanada Branch, Pathanamthitta District, PIN – 689 503. …Defendants

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SA 229/2025

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This Securitization Application having been heard on 15.04.2025 in the presence of Advocate Mr. Franklin Arackal for the applicant and Advocate Mr.Rajesh Rajagopala Pillai for the defendants 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 proceeding initiated by the defendants 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 applicants have filed this SA under S.17(1) of the SARFAESI Act seeking relief to declare the entire securitization proceeding as illegal with further relief to set aside the order passed by the Chief Judicial Magistrate in MC No.96/2025 in a proceeding under Section14(1) of the SARFAESI Act and the notice issued by the Advocate Commissioner in pursuance to such order.

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Brief facts of the case :

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2.1. The applicant and her husband namely Harikrishnan T.N. availed home loan of Rs20,00,000/ and Suraksha loan Rs

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SA 229/2025

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64,616.00 in total Rs.20,64,616 from the defendant bank on 11.11.2015. She created equitable mortgage in respect of the subject matter property of an extent of 08.06 Ares of land and with the residential building standing thereon.

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2.2. Due to default in repayment, the loan was classified as ‘NPA’ and the demand notice under Section 13(2) of the SARFAESI ACT was issued followed by the measure under Section 13(4) of the SARFAESI Act.

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2.3. Being unable to take physical possession of the secured asset, the defendants filed an application bearing MC No.96/25 under Section 14(1)of the SARFAESI Act before the Chief Judicial Magistrate, Alappuzha to take possession of the secured asset. The Order passed by the Chief Judicial Magistrate and the notice issued by the Advocate Commissioner are under challenge in this proceeding.

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2.4. The applicant claims that the demand notice was not duly served on her and her husband and all statutory measures are not duly followed. The secured asset is an agricultural land. Hence the SARFAESI proceeding is not maintainable in view of the bar contained under Section 31(i) of the SARFAESI Act. Hence the applicant seeks relief to declare the entire securitization proceeding

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SA 229/2025

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as illegal with further relief to set aside the order passed by the Chief Judicial Magistrate and the notice issued by the Advocate Commissioner to take physical possession of the secured asset.

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3.1 The defendants filed written statement denying the averments in the SA and claimed inter alia that the applicant and her husband Harikrishanan T.N. availed the housing loan by creating equitable mortgage over the subject matter property to secure the loan.

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3.2. Due to default in repayment of the loan in violation of the terms and conditions, the defendants classified the loan as ‘NPA’ on 30.05.2018 and a demand notice under Section 13(2) of the SARFAESI Act was issued on 26.08.2024 by registered post, which was duly served on the applicant.

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3.3. The notice to the husband of the applicant was returned with endorsement ‘addressee left’. Hence the demand notice was published in two widely circulated newspapers, viz. in Business Line Daily in English and Malayalam daily “Deepika”. Due to nonrepayment of the loan after over of the statutory period of 60 days, possession notice was issued under Section 13(4) of the SARFAESI Act. All the statutory measures in issuing possession notice are duly

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SA 229/2025

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followed. Relevant documents are filed in support of such compliance.

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3.4. Thereafter the defendants approached the Chief Judicial Magistrate, Alappuzha in a proceeding under section 14(1) of the SARFAESI Act seeking assistance in taking possession of the secured asset. After referring all the materials, the Chief Judicial Magistrate passed an order in taking possession of the secured asset with the assistance of an advocate commissioner. There is no illegality or defect in such proceeding and the applicant cannot seek any relief in respect of such proceeding.

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3.5. It is further averred by the defendants that the secured asset is not agricultural properties. No material is placed by the applicant to substantiate the same. The applicant and her husband filed various Writ Applications before the Hon’ble High Court of Kerala. Direction of the Hon'ble High Court of Kerala was not complied by them. In absence of any illegality the SA, being devoid of any merit, may be dismissed.

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From the respective contentions of both sides, the following points are emerged for adjudication in this case:

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SA 229/2025

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(i) Whether the securitization proceeding under Section 14(1) of the SARFAESI Act and the other proceeding taken by the defendants under the provision of the SARFAESI Act suffer from any illegality or irregularity to intervene with the same?

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(ii) Whether the secured asset is agricultural land exempted under SARFAESI Act?

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

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FINDINGS:

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For the sake of convenience, all the points, being

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interlinked with each other, are taken up together for adjudication. Admittedly, the applicant and her husband availed two loans from the defendants by mortgaging the subject matter property. Due to default in repayment, the securitization proceeding was initiated by the defendants under SARFAESI Act to realize the outstanding dues.

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During argument stage, the learned counsel for the applicant contended that the Section 13(2) demand notice under SARFAESI Act was not served on the husband of the applicant, who is the borrower in this case. In absence of service of demand notice, the securitization proceeding is not maintainable. It is also claimed that secured asset is agricultural land and hence the Securitization proceeding is not sustainable. Though the applicant has sought

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SA 229/2025

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relief against the proceeding under section 14(1) of the SARFAESI Act no material illegality or defect is pointed out during argument by the learned counsel for the applicant. It is only highlighted by the counsel for the applicant that securitization proceeding is not maintainable due to non-service of demand notice on the borrower, husband of the applicant.

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The learned counsel for the defendants would contend that all the relevant statutory measures are duly followed in issuing the demand notice under Section 13(2) of the SARFAESI Act and complied all the relevant statutory provisions in the proceeding under Section 14(1) of the SARFAESI Act. No material is placed to show that the secured asset is agricultural land at any point of time. In absence of any material illegality in the securitization proceeding, the SA may be dismissed. It is also contended that due to noncompliance of the directions of the Hon’ble High Court the applicant has no bonafide in seeking any protection in this case.

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The demand notice under Section 13(2) of the SARFAESI Act was issued on 26.08.2024 to the applicant and her husband Harikrishnan T.N. at the addresses furnished by him at the time of availing the loan. The defendants produced the postal AD card, marked Annexure Ext.B6 showing service of the demand notice on

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SA 229/2025

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the applicant. As the notice sent by R.P. was not served on her husband, the defendant No.1 and 2 published the demand notice in “Business line” and “Deepika” daily, both in English and vernacular language for service of demand notice on the husband of the applicant. The husband of the applicant filed W.P.(C) No.43625/2024 before the Hon’ble High Court of Kerala, which was disposed vide Judgment dated 16.12.2024. In the said case, he sought the relief to regularize the loan. The Hon’ble High Court permitted him to pay the outstanding amount of Rs.44,29,525/- in 8 consecutive and equal monthly instalments, which was not complied. Again her husband filed W.P. (C) No.8041/2025 before the Hon’ble High Court, which was disposed as withdrawn vide Judgment dated 03.03.2025. Again the husband of the applicant filed another W.P. (C) No.11495/2025 before the Hon’ble High Court, which was disposed vide Judgment dated 25.03.2025 as withdrawn. The husband of the applicant has knowledge about the securitization proceeding by filing various cases before the Hon’ble High Court of Kerala. No material is placed by the applicant showing the dispute raised by her husband about non-service of demand notice on him in the cases filed by him. Rather he agreed to pay the outstanding amount in installment. The claim of the applicant about

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SA 229/2025

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non-service of demand notice to her husband is not at all sustainable and acceptable in the facts and circumstances of this case.

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No convincing material is placed on account that the secured asset is agricultural land at the time of availing the loan. Mere claiming the property as agricultural land, the secured asset cannot be exempted under the provision of the SARFAESI Act. In the SA the applicant has pleaded in paragraph 7 as follows:

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“The property against which now the proceedings are on is primary an agricultural property where in the applicant is staying with her family for agricultural activities. The property is an yielding plantation with all kind of crops pepper arecanut, coconut etc. T The applicant filed OP (DRT) No.111/2025 before the Hon’ble High Court seeking relief, which was disposed vide judgment dated 26.03.2025 and the same was dismissed as premature. hus the security interest involved is an agricultural land, as against that the defendants have no authority to proceed in view of Section 31(i) of the Act.”

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In view of such pleading and claim by the applicant burden

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lies on him to prove the secured asset as agricultural land at the time of availing the loan.

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The Hon'ble Apex Court in the judgment reported in 2023

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KHC 6012 in case of K.Sreedhar v. M/s.Raus Constructions Pvt.

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Ltd. & others has held that,

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SA 229/2025

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“ When it was the case on behalf of the borrowers that in view of Section 31(i) of the SARFAESI Act, the properties were agricultural lands, the same were being exempted from the provisions of the SARFAESI Act, the burden was upon the borrower to prove that the secured properties were agricultural lands and actually being used as agricultural lands and/or agricultural activities were going on.”

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No evidence is laid in this case to establish the nature of the land at the time of creation of security interest and that she was depending on the income derived from the agricultural activities over the secured asset. Mere existence of some trees would not lead to conclusion that at the time of creation of security interest the secured asset is agricultural land exempted under the SARFAESI Act. The applicant has failed to adduce any convincing evidence to establish that the secured asset is an agricultural land at the time of availing the loan or any point of time. So also, the applicant is unable to show any defect or illegality in the securitization proceeding initiated by the defendants to recover the outstanding amount and hence she is not entitled to get any relief. All the points are answered against the applicant.

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Hence it is ordered:-

SA 229/2025

ORDER

In view of the foregoing reasons, this SA, being devoid

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of any merit, is hereby dismissed with costs. Since the applicant had delayed the securitization proceeding without any valid reason, she is liable to pay cost of Rs.10,000/- (Rupees ten thousand only)

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to the defendants.

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(Dictated to my steno, corrected and pronounced by me in the open Tribunal on this the 25^th day of April, 2025)

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[SOVAN KUMAR DASH]

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Documents on the part of the applicant

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Annexures	Date	Particulars of documents
Annexure-A1	17.02.2025	True copy of the Notice issued by the Advocate Commissioner.
Annexure-A2		True extract of the undated MC 96/2025 filed before the Chief Judicial Magistrate Court, Alappuzha as obtained by the applicant.
Annexure-A3	26.08.2024	True copy of the notice issued U/s.13(2) of the SARFAESI Act, 2002.

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SA 229/2025

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Documents on the part of the defendants

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Annexure-B1	16.12.2024	True copy of the Judgment W.P. (C) No.43625/2024.	dated in
Annexure-B2	03.03.2025	True copy of the Judgment W.P. (C) No.8041/2025.	dated in
Annexure-B3	25.03.2025	True copy of the Judgment W.P. (C) No.11495/2025.	dated in
Annexure-B4	26.03.2025	True copy of the Judgment in 111/2025.	OP (DRT)
Annexure-B5	26.08.2024	True copy of the demand notice.
Annexure-B6		True copy of the postal acknow cards evidencing the receipt notice.	ledgement of demand
Annexure-B7	19.09.2024	True copy of the publication notice on 19.09.2024 in Bus Hindu and Deepika.	of demand iness Line
Annexure-B8	28.11.2024	True copy of the possession notic	e.
Annexure-B9		True copy of the postal acknow cards evidencing the receip possession notice.	ledgement t of the
Annexure-B10	30.11.2024	True copy of the possessi published in Business Line Daily	on notice (English).
Annexure-B11	30.11.2024	True copy of the possessi published in Deepika (Malayalam	on notice ) Daily.
Annexure-B12		True copy of the photograph affixture.	evidencing