Dismissed

Smitha Peter v. State Bank of India

DRT30 May 2025SA/352/2023

Case brief

AI extract

What is this about?

The applicant challenged securitization proceedings under the SARFAESI Act, alleging defects in demand notices and absence of registered security interest. The Tribunal found all statutory measures were duly followed, including service, publication, and affixture of notices, and that the security interest was registered. The application was dismissed, and the applicant was ordered to pay costs.

What did the court decide?

Application dismissed with costs of Rs.20,000/- to be paid by the applicant to the respondent bank.

Smitha Peter versus State Bank of India — 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 30^th day of May, 2025

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SECURITIZATION APPLICATION No.352/2023

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Between

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Smitha Peter, W/o.Peter C.Michael, Cheruvallikkadu House, Sanathanapuram P.O., Alappuzha – 688 003. …Applicant

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And

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State Bank of India, Stressed Assets Recovery Branch, 32/1747, K1, 7^th Floor,

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Vankarath Towers, Palarivattom Bye Pass Junction, Ernakulam – 682 024, Represented by its Chief Manager.

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The Authorised Officer, State Bank of India, Stressed Assets Recovery Branch, 32/1747, K1, 7^th Floor, Vankarath Towers, Palarivattom Bye Pass Junction, Ernakulam – 682 024. …Defendants

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This Securitization Application having been heard on

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15.05.2025 in the presence of Advocates M/s.Varghese C.Kuriakose

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and Tincymaria Scaria for the applicant and Advocate Sri.Rajesh

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SA 352/2023

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Rajagopala Pillai for the defendants 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 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 applicant/borrower has filed this SA under S.17(1) of the SARFAESI Act seeking relief to declare the entire proceeding initiated by the defendants as illegal and unsustainable including the demand notices and Annexure-A8 notice issued by the Advocate Commissioner in MC No.252/2023.

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Brief facts of the case :

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2.1 In the SA the applicant claims that she along with her husband availed a home loan on 30.06.2016 from State Bank of Mysore, Thiruvampady Branch, Alappuzha which later got amalgamated with the defendant bank. Due to the outbreak of Covid-19 pandemic, the applicant’s husband lost his job in Kuwait which has caused some default in repayments. Resultantly, the defendant bank classified the loan as NPA and issued Annexure-A1 demand notice under S.13(2) of the SARFAESI Act on 18.10.2021.

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SA 352/2023

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The applicant raised objection to the demand notice marked Annexure-A2 but no reply was given by the defendants. It is challenged that Annexure-A1 demand notice is bereft of the requisite details as mandated in S.13(3) of the SARFAESI Act.

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2.2 Meanwhile, the defendant bank instituted OA No.361/2022 before the Tribunal which is pending. Thereafter issued a fresh demand notice marked Annexure-A5 and the legal requirements are absent in this notice also. Later a possession notice marked Annexure-A6 was delivered to the applicant on 24.05.2022. The defendants moved the CJM, Alappuzha under S.14 of the SARFAESI Act for taking physical possession of the secured asset and the Advocate Commissioner appointed by the CJM in MC No.252/2023 issued a notice marked Annexure-A8 on 01.07.2023 which is challenged in this proceeding.

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3.1 The defendants filed written statement denying the claim of the applicant and contending inter alia that the applicant along with her husband availed a home loan of Rs.44 lakhs as per arrangement letter dated 30.06.2016. To secure the loan, security interest was created over the property having an extent of 5.06 Ares in Re-Sy.No.317/5-2 of Paravoor Village along with a building therein belonging to the applicant and her husband. As the

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SA 352/2023

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borrowers did not respond to the request of the defendants to service the account, the bank was constrained to invoke the provisions of SARFAESI Act and issued demand notice to the applicant and her husband on 23.03.2022. The earlier demand notice dated 18.10.2021 was withdrawn as the notice sent to the applicant’s husband Mr.Peter C. Michael was returned unclaimed. Besides the same, the borrowers vide Annexure-A2 letter requested the bank to withdraw S.13(2) demand notice and promised to clear the dues immediately and hence the bank did not publish the demand notice. As the borrowers failed to adhere to the said promise, fresh demand notice was issued on 23.03.2022 which was served on the applicant and her husband vide postal acknowledgement cards marked Annexure-D1 series.

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3.2 Due to default in repayment of the demanded amount, possession notice was issued to the borrowers on 24.05.2022 which was served on them. The possession notice was also published in two newspapers and affixed the same on the secured asset. Thereafter, the defendant bank approached the CJM, Alappuzha for taking physical possession of the secured asset by filing application bearing MC No.252/2023 under S.14 of the SARFAESI Act. The CJM passed an order on 01.07.2023 appointing an Advocate

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SA 352/2023

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Commissioner to take physical possession of the secured asset. All the statutory measures are duly followed and the contentions of the applicant are untenable. Hence the SA, being devoid of any merit, may be dismissed.

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

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(i) Whether the securitization proceedings initiated by the defendants are vitiated in any manner to interdict with the same?

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

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FINDINGS:

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Point Nos.(i) & (ii):

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During the hearing, learned counsel for the applicant vehemently argued that no reply to Annexure-A2 demand notice was given by the defendant bank which vitiates the entire proceeding in view of section 13(3-A) of the SARFAESI Act. Further, it is claimed that the applicant availed the home loan from erstwhile State Bank of Mysore and no security interest was created in favour of the defendants. Hence they cannot enforce the security to

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SA 352/2023

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recover the dues. The possession notice was not published or affixed as mandated under the statute. The security interest was not registered in the Central Registry and in absence of the same, the present proceeding commencing from Annexure-A1 demand notice till Annexure-A8 notice of the Advocate Commissioner are illegal and liable to be set aside.

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Per contra, the learned counsel for the defendants submitted that acceding to the request of the applicant in the representation/objection marked Annexure-A2, which was not submitted within the statutory time limit, earlier demand notice marked Annexure-A1 was withdrawn and the borrowers were given time to discharge the liability. As the applicant did not honour her commitment, fresh demand notice was issued to the borrowers and no objection was submitted to the same. All the statutory measures are duly followed in taking possession of the secured asset. It is also submitted that State Bank of Mysore was merged with State Bank of India as per order No.GSR 160 (E) dated 22.02.2017 of the Ministry of Finance. Consequently, the assets and liabilities of the State Bank of Mysore were vested with State Bank of India and hence no further documentation from the applicant or her husband is warranted. All the documents regarding compliance of the

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SA 352/2023

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statutory requirements are filed in this case and there is no illegality or irregularity to intervene with the securitization proceedings properly initiated by the defendants.

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There is no dispute about availing of the home loan of Rs.44 lakhs and creation of security interest over the subject matter property by the applicant. Concededly, there is default in repayment of the loan. The materials on record would show that the 2^nd defendant issued Annexure-A1 demand notice dated 18.10.2021 under S.13(2) of the SARFAESI Act to Peter C.Michael and the applicant Smitha Peter calling upon them to repay the outstanding dues of Rs.51,28,242/- within 60 days from the date of notice. In the said notice, details of the amount payable by the borrowers as well as the secured asset are clearly stated as mandated in S.13(3) of the SARFAESI Act. The applicant produced an unsigned letter dated 04.02.2022 marked Annexure-A2 purportedly issued under S.13(3-A) of the SARFAESI Act wherein she requested the bank to reschedule the home loan and withdraw the demand notice dated 18.10.2021 to enable her to discharge the liability.

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Admittedly, Annexure-A2 was sent by the applicant after expiration of the statutory period of 60 days. According to the defendant bank, considering the request of the borrowers, they

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SA 352/2023

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have withdrawn the demand notice marked Annexure-A1 and granted time to discharge the liability. As the applicant failed to honour her commitment, the defendant bank proceeded to issue fresh demand notice under S.13(2) of the SARFAESI Act demanding the borrowers to pay the outstanding amount of Rs.52,90,204.57 due as on 23.03.2022. There is no specific bar in the statute to issue second demand notice under S.13(2) of the SARFAESI Act. After receipt of the fresh demand notice marked Annexure-A5, the applicant did not raise any objection or submitted any representation under S.13(3-A) of the SARFAESI Act nor remitted any amount as demanded in the notice. In such backdrop, the defendants proceeded to take possession of the secured asset.

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The documents produced by the defendants marked as Annexures-D2 to D5 would prove that the possession notice was served on the applicant and her husband on 27.05.2022. The same was published in “The New Indian Express” and “Mangalam dailies” on 30.05.2022 and affixed on the secured asset on 26.05.2022. It appears from the search report marked as Annexure-D7 that the security interest was registered in the CERSAI portal on 21.02.2019. As the applicant did not take any strenuous effort to pay off the dues, the defendants filed application bearing MC

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SA 352/2023

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No.252/2023 before the CJM, Alappuzha for taking physical possession of the secured asset and the Advocate Commissioner appointed by the CJM has issued Annexure-A8 notice for taking physical possession of the secured asset.

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No illegality or defect is found in the order passed by the CJM in the proceeding under S.14 of the SARFAESI Act in MC No.252/2023. After referring the affidavit and the documents, learned CJM was satisfied that the respondents therein created security interest in respect of the property at the time of availing the loan from the defendant bank and failed to repay the amount even after receipt of the statutory notice issued under S.13(2) of the SARFAESI Act. The order passed by the CJM cannot be said as illegal in any manner to interdict with the same. It is established by the defendants that all the statutory measures are duly followed in the securitization proceeding. In the absence of proof of any illegality, the applicant is not entitled to get any relief in this proceeding and hence both the points are answered against the applicant.

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SA 352/2023

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Hence it is ordered:-

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ORDER

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In view of the foregoing reasons and with the above observation, this SA, being devoid of any merit, is hereby dismissed with costs. The applicant shall pay costs of Rs.20,000/- (Rupees twenty thousand only) to the defendant bank for causing unnecessary delay in the securitization proceedings.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 30^th day of May, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 352/2023

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Documents on the part of the applicant

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Annexures	Date	Particulars of documents
Annexure-A1	18.10.2021	Copy of demand notice issued to the applicant.
Annexure-A2	04.02.2022	Copy of unsigned reply to the demand notice submitted by the applicant.
Annexure-A3	06.02.2022	Copy of acknowledgement card addressed to the defendant bank.
Annexure-A4	29.06.2022	Copy of summons issued to the applicant and another in OA No.361/2022.
Annexure-A5	23.03.2022	Copy of demand notice under S.13(2) of the SARFAESI Act issued to the applicant.
Annexure-A6	24.05.2022	Copy of possession notice issued to the applicant.
Annexure-A7	17.10.2022	Copy of judgment in W.P.(C) No.22677/2022 of the Hon'ble High Court of Kerala.
Annexure-A8	01.07.2023	Copy of notice issued by the Advocate Commissioner in MC No.252/2023.

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Documents on the part of the defendants

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Annexure-D1	11.04.2022	Copy of acknowledgement cards (2 Nos.) signed by the applicant and her husband evidencing the receipt of demand notice.
Annexure-D2	27.05.2022	Copy of acknowledgement cards (2 Nos.) signed by the applicant and her husband evidencing the receipt of possession notice.
Annexure-D3	30.05.2022	Copy of publication of possession notice in The New Indian Express daily.

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SA 352/2023

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Annexure-D4	30.05.2022	Copy of publication of possession
		notice in Mangalam daily.
Annexure-D5	26.05.2022	Copy of affixture report of possession
		notice on the secured asset.

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PRESIDING OFFICER

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IN THE DEBTS RECOVERY TRIBUNAL2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated the 30^th May, 2025

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SA No.352/2023

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Between

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Smitha Peter, W/o.Peter C.Michael, Cheruvallikkadu House, Sanathanapuram P.O., Alappuzha – 688 003. …Applicant

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And

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State Bank of India, Stressed Assets Recovery Branch, 32/1747, K1, 7^th Floor, Vankarath Towers, Palarivattom Bye Pass Junction, Ernakulam – 682 024, Represented by its Chief Manager & another. …Defendants

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F I N A L O R D E R

Smitha Peter v. State Bank of India

Case brief

What is this about?

What did the court decide?

Smitha Peter v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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