Dismissed

M/s Ojin Bakes v. South Indian Bank

DRT8 Dec 2025SA/240/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed an application by borrowers challenging a demand notice and possession proceedings initiated by a bank. The Tribunal held the borrowers were estopped from disputing the demand notice due to their failure to object previously. It found substantial compliance with Section 14(1) of the SARFAESI Act despite date discrepancies but declined relief regarding interest

What did the court decide?

The Application was dismissed; no order as to costs.

M/s Ojin Bakes versus South Indian Bank — Securities and Capital Markets | DRT (2025)

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 8^th DAY OF DECEMBER, 2025

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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S.A No. 240 of 2024

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Between

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M/s. Ojin Bakes, Represented by its partner N.P.Subair, Voor No.1/4780, A, B, C, D, E, G, Dhana Plaza, West Nadakkavu, Kozhikode -673011.

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N.P.Subair, S/o.Kutty Hassan, Partner, M/s.Ojin Bakes, Izeeth, Vellangara Thazham, East Moozhikkal, Chelayoor, Kozhikode -673571.

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P.V.Sulaikha, W/o.Muhammed, Partner, M/s.Ojin Bakes, Puthiyaveetil, Bait Baith Al Njah, Pullookkara, Peringathur P.O., Thalassery, Kannur-670675.

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A.K.Muhammed Fowzeer @ A.K.Mohammed Fousir, S/o.Kutty Hassan, Partner, M/s.Ojin Bakes residing at ‘Pleasant’ House, Pokkalath Parambal Chelavoor P.O, Kozhikode-673571.

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SA No.240 of 2024

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A.K.Junaise, S/o. Kutty Hassan, Partner, M/s.Ojin Bakes, Lalbak, East Moozhikkal, Chelavoor P.O. Kozhikode- 673571.

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P.V.Farisha, W/o. Junaise, Labak, Easr Moozhikkal, Chelavoor P.O., Chelavur, Kozhikode – 673571. --- Applicants

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And

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South Indian Bank Ltd. Regional Office, Happy Tower, Vaikam Muhammad Basheer Road, Mananchira, Kozhikode, registered office, South Indian Bank House, TB Road, Mission Quarters, Thrissur- 680001 Represented by its Chief Manager and Authorized Officer.

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The Authorized Officer and Chief Manager, South Indian Bank Ltd., Regional Office, Happy Tower, Vaikom Muhammed Basheer Road, Mannnchira, Kozhikode, Kerala – 673001.

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The Branch Manager, South Indian Bank, Mavoor Road Branch, Kozhikode, Kerala -673004.

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--- Defendants

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This Securitization Application coming on 18.08.2025 for final hearing before me in the presence of Mr. Peer Muhammed Khan Counsel appearing for the Applicants and Mr. Jojo George Advocate appearing for the defendants and upon hearing arguments of learned Counsels for all the parties and upon perusing the material on records, this Tribunal delivered the following:

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SA No.240 of 2024

O R D E R

This Securitisation Application was filed on 15.03.2024 seeking to declare that the defendants have wrongly computed the loan account No.0347083000000061 CCOL (GST Business Loan) and ECLDS Account No.0347656000000028 of the applicants and to direct the defendants 1 and 2 to recalculate the interest amount without capitalization of interest into the loan amount in Account No.0347083000000061 CCOL (GST Business Loan) and ECLGS Account No. 0347656000000028 with defendant bank and to direct the 2^nd defendant to produce all the records connected with the loan account No.0347083000000061 CCOL (GST Business Loan) and ECLGS Account No.0347656000000028 of the applicants by the 3^rd defendant and to direct the 3^rd defendant bank to have a negotiation with the applicants and permit the applicants to repay the overdue amount and to accept the loan in equally monthly instalments and to declare the issuance of Annexure A8 Advocate Commissioner notice is not proper and to set aside the Annexure A3 demand notice, Annexure A6 petition, Annexure A9 affidavit filed in CMP No.123/2024 on the file of the Chief Judicial Magistrate Court, Kozhikode, Annexure A10 order and Annexure A8 notice of Advocate Commissioner and to pass an order against taking possession of the secured asset and to restrict the defendants from evicting the applicants from the secured asset and to allow cost of the applicants.

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The 1^st applicant is a partnership Firm. The applicants have admitted the availment of CCOL loan of Rs.60 lakhs and ECLGS loan of Rs.6,16,000/- from the 3^rd defendant bank upon creation of equitable mortgage over the immovable properties belonging to the defendants 5 and 6, situated in Sy. Nos.208/1, 209/5, Re. Sy.No.75/6, 76/5 in Chelavoor village, Kozhikode Taluk, Kozhikode District by deposit of title deeds in favour of the 3^rd defendant as collateral security for the availment of the above said credit facilities.

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Though the applicants have not specifically averred in the SA as to whether they were prompt in repayment of the outstanding loan due, the averments stated in paragraph 4 of the SA would indicate that they failed to repay the outstanding loan due. However, it is revealed from the perusal of Annexure-A3 demand notice and written statement of the defendants that since the applicants defaulted in repayment of the outstanding loan due, the loan account came to be classified as Non-Performing Asset on 06.08.2023.

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Therefore, Annexure-A3 demand notice dated 26.09.2023 was issued to the applicants calling upon them to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. The issuance of the demand notice is admitted by the applicants. The applicants have themselves produced the copy of the

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SA No.240 of 2024

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demand notice as Annexure-A3. Indisputably, the applicants neither sent any objection/representation to the demand notice nor did they clear off their liability due to the defendant bank.

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Since the applicants failed to respond to the terms of the demand notice, Possession Notice dated 30.12.2023 Annexure-A4 was issued for symbolically taking physical possession of the secured assets. Annexure-B2 and B3 produced by the defendants evidences the publication of the possession notice in the Malayala Manorama daily edition dated 31.12.2023 and the New Indian Express daily edition dated 31.12.2023 and affixture of the possession notice on the conspicuous part of the secured assets.

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Subsequently, the defendants approached the Chief Judicial Magistrate Court Kozhikode and filed Annexure-A6 application and Annexure-A9 affidavit under Section 14 (1) of the SARFAESI Act, 2002. Annexure-A10 Order dated 17.01.2024 in CMP No.123/24 came to be passed appointing Advocate Commissioner for taking physical possession of the secured assets. The Advocate Commissioner issued Annexure-A8 notice dated 19.02.2024 to the applicants informing them that he would take physical possession of the secured assets on 02.03.2024. The applicants having aggrieved against the above measures have filed this SA seeking for the reliefs stated supra.

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The counsel appearing for the applicants submitted that the first loan account of the applicants could not be termed as out of order as on the date of classification of the loan account as NonPerforming Asset and that classification of loan account as NonPerforming Asset is not as per the RBI guidelines issued in Master circular on prudential norms on Income recognition, Asset classification and provisioning pertaining to advances dated 01.04.2023. In respect of second loan account after moratorium period of 12 months, repayment started after 25.06.2023 and hence as on 06.08.23 another ten months repayment period was remaining and the balance permissible amount under the above account as on 06.08.23 was Rs.1,83,330/-.

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The counsel appearing for the applicants submitted further security interest has not been created over the secured assets in respect of ECL limit of Rs.6.60 Lakhs and that security interest was not registered with the Central registry. As per Annexure-B4, copy of Asset ID based search report, security interest over the properties of the applicants 5 and 6 has been registered on 09.09.2015 with the Central registry for an amount of Rs.35 lakhs and the registration modified on 26.9.23 on which date demand notice was issued for an amount of Rs.1,73,50,000/-. Therefore, registration of security

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SA No.240 of 2024

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interest is not in compliance with the provisions of Sec.26 D of the SARFAESI Act 2002.

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It is submitted further by the counsel for the applicants that the provisions of Sec. 14 (1) Clause (i) of the SARFAESI Act 2002 was not complied with in respect of Annexure-A9 affidavit and that the amount remitted by the applicants after issuance of demand notice was not disclosed in the affidavit as per the provisions of Sec.14 (1) (viii) of SARFAESI Act 2002. Therefore, SA may be allowed as prayed for.

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The counsel appearing for the defendants submitted that on account of irregular repayments, the loan accounts of the applicants were classified as Non-Performing Asset and that objection/ representation was not sent by the applicants and that therefore, the pleas advanced by the applicants in the written argument notes with regard to the alleged improper of classification of loan accounts of the applicants at the belated stage, is not sustainable and that no payments has been made by the applicants after issuance of the demand notice.

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It is submitted further by the counsel for the defendants that all the statutory requirements contemplated under Clauses (i) to (ix) to the provisions of Section 14 (1) of the SARFAESI Act 2002 were complied with in respect of filing of Annexure-A9 affidavit and that the learned Chief Judicial Magistrate Kozhikode after having applied his mind to the averments of the application and affidavit and having satisfied over the same passed order appointing Advocate Commissioner to take physical possession of the secured asset. Therefore, the SA may be dismissed with costs to the defendants.

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Though, the applicants received Annexure-A3 demand notice they did not bother to send any objection/representation to the demand notice as per Sec. 13 (3 A) of the SARFAESI Act 2002, stating the averments with regard to the improper classification of loan accounts as Non-Performing Asset as per the RBI guidelines and the circulars issued on prudential norms. Further, there is also no specific plea in the SA in respect of the aforesaid issue. Therefore, the pleas raised by the counsel on behalf of the applicants in the written argument notes for the first time with regard to the improper classification of loan account as Non-Performing Asset is unsustainable. In AGP City Gas Pvt. Ltd. Vs. Lynx Properties Developers and others [2022 KHC 355], the Hon'ble High Court of Kerala has categorically held that if no reply/objection was sent by the applicants to the demand notice, they are estopped from challenging the validity of the demand notice subsequently. Therefore, this Tribunal holds that the applicants are estopped from challenging the validity of the demand notice now.

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SA No.240 of 2024

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A perusal of Annexure-B4 Asset ID based search report shows that the security interest in respect of both the secured assets has been registered with Central registry on 09.09.2015. Therefore, this Tribunal does not find any force in the submission of the counsel for the applicants that faulty registration has been effected in respect of the secured assets. On perusal of Annexure-A6 application and Annexure-A9 affidavit shows that all the details such as availment of credit facilities by the applicants upon creation of equitable mortgage over the immovable properties belonging to the applicants 5 and 6, description of the secured assets with boundaries, default in repayment of the outstanding loan due, classification of the loan accounts of the applicants as Non-Performing Asset, issuance of demand notice to the applicants, non-submission of objection/ representation for the demand notice, the outstanding amount as on 31.12.2023 in respect of CCOL limit account and as on 30.12.2023 in respect of ECLGS loan account, issuance of possession notice and its publication and affixture, secured assets being free of any tenancy hold right, were furnished. Though this Tribunal finds that the date of outstanding amount in both the loan accounts and the date of filing of Annexure-A6 application and A9 affidavit does not tally with each other, this Tribunal finds that excluding the above discrepancy, all other statutory requirements contemplated under Sec. 14 (1) of the SARFAESI Act 2002 has been substantially complied with. In this context, this Tribunal relies upon the judgment rendered by the Hon'ble High Court of State of Telungana in Tulsi Rocks Pvt. Ltd. and ors. Vs. Bank of India and ors [MANU/TL/0034/2019] wherein it has been stated as follows:

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“17. wherever this Court finds that the parameters indicated in Clauses (i) to (ix) of the first proviso to Section 14 (1) of the Act are broadly complied with, the Court is bound to invoke the doctrine of substantial compliance. It must be remembered that Clauses (i) to (ix) of the first proviso to Section 14 (1) of the Act merely provide the form in which the essential averments for an application under Section 14 of the Act are to be made. Therefore, what is important, is the substance and not the form.

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18. Let us take a converse case where Clauses (i) to (ix) of the first proviso to Section 14 (1) of the Act are simply cut and pasted in an affidavit filed by the Authorized Officer before the Chief Metropolitan Magistrate, without indicating the amounts due and the steps taken under Section 13 (2) and 13 (4) of the Act. Such an affidavit will be frowned upon as something that is a mere skeleton without flesh and bone. Courts have repeatedly held that parrot-like repetition of the language employed in a Statute as if it is a

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SA No.240 of 2024

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mantra will not help a party. The doctrine of substantial compliance is a twin-sister of the said principle of law.”

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The applicants have not produced any material before this Tribunal to prove their claim that interest has been charged against the guidelines issued by the RBI and that interest has been capitalized.

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The other reliefs sought for by the applicants in the SA are to direct the defendants 1 and 2 to recalculate the interest amount without capitalization of interest into the loan amount in Account No.0347083000000061 CCOL (GST Business Loan) and ECLGS Account No. 0347656000000028 with defendant bank and to direct the 2^nd defendant to produce all the records connected with the loan account No.0347083000000061 CCOL (GST Business Loan) and ECLGS Account No.0347656000000028 of the applicants and to direct the 3^rd defendant bank to have a negotiation with the applicants and permit the applicants to repay the overdue amount and to accept the loan in equally monthly instalments. The aforesaid reliefs are not the measures referred to in Sec.13 (4) of the SARFAESI Act 2002. It is for the applicants to approach the 2^nd and 3^rd defendants for such reliefs.

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In view of the foregoing reasons and discussions, this Tribunal holds that the applicants are not entitled to get the reliefs sought for in this SA.

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Resultantly, S.A No.240 of 2024 stands dismissed. However, there shall be no order as to costs.

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Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 8^th day of December, 2025.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

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SA No.240 of 2024

List of documents filed by the Applicants along with the S.A.

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Sl. No.	Date	Particulars	Annexures
1.	30.06.2008 22.01.2009	True copy of the jenmom Assignment deed of 5^thand 6^thapplicants along with Englishtranslation.	Annexure-A1
2.	27.12.2008 03.01.2024	True copy of the bank statement in Account No.034708000000061 with the defendant bank.	Annexure-A2
3.	26.09.2023	True copy of the notice under Section 13(2)issued by the 2^nd defendant.	Annexure-A3
4.	30.12.2023	True copy of the possession taking notice issued by the 2^nddefendant to the applicants.	Annexure-A4
5.	31.12.2023	True copy of notice published by the 2^nd defendant in newspaper which was produced in CMP No.123/2024 on the files of the Chief Judicial Magistrate Court,Kozhikode.	Annexure-A5
6.	06.01.2024	True copy of the petition No.CMP No.123/2024 on the file of the Hon’ble Chief Judicial Magistrate Court, Kozhikodefiled by the1^st defendant.	Annexure-A6
7.	01.03.2024	True copy of the representation dated 01.03.2024 preferred by the applicants before the defendants along with Englishtranslation.	Annexure-A7
8.	19.02.2024	True copy of the notice dated 19.02.2024 issued by the Advocate Commissioner.	Annexure-A8
9.	06.01.2024	True copy of the affidavit dated 06.1.2024 filed by the defendant bank in CMP No.123/2024 before the Chief Judicial Magistrate Court,Kozhikode.	Annexure-A9
10.	17.01.2024	True copy of the order dated 17.01.2024 in CMP 123/2024 on the files of the Chief Judicial Magistrate Court, Kozhikode.	Annexure-A10

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SA No.240 of 2024

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List of documents filed by the Defendants along with the S.A.

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Sl.No.	Date	Particulars	Annexures
1.	31.12.2023	True copy of the possession notice published in Malayala Manorama.	Annexure B1
2	31.12.2023	True copy of the possession notice published in the New Indian Express daily	Annexure B2
3	30.12.2023	The true copy of the photograph regarding the affixture ofpossession notice.	Annexure B3
4	….	The true copy of the Asset Id based search report.	Annexure B4

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/-

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M/s Ojin Bakes v. South Indian Bank

Case brief

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M/s Ojin Bakes v. South Indian Bank

Case brief

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