Allowed

Sujith Thankappan Vasanthakumari v. Federal Bank

DRT31 Oct 2025SA/358/2024

Case brief

AI extract

What is this about?

In a securitization application challenging proceedings under the SARFAESI Act, the Tribunal held that service of the demand notice was defective. Citing Rule 3 of 2002 Rules, the court ruled that mere publication in newspapers is insufficient when there is no proof of affixing the notice at the borrower's residence. The application was allowed, and proceedings were set aside.

What did the court decide?

Securitization proceeding starting from the stage of issuance of demand notice set aside; amounts debited to be credited back.

Sujith Thankappan Vasanthakumari versus Federal Bank — 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 31^st day of October, 2025

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SECURITIZATION APPLICATION No.358/2024

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Between

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Sujith Thankappan Vasanthakumari, Aged 46, S/o. Thankappan Nadar, Valiyavila Vadakke Veedu, Kanjiramkulam P.O., Puthankad Desam, Thiruvananthapuram District, PIN – 695 524. …Applicant

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And

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Federal Bank Ltd., Kanjiramkulam Branch, Represented by its Branch Manager, NH Bypass Kanjiramkulam, Near PWD Section Office, Thiruvananthapuram – 695 524.

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Federal Bank Ltd., Loan Collection Recovery Department, Represented by its Authorised Officer, 4^th Floor, Federal Towers, Statue, Thiruvananthapuram–695 001. …Defendants

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This Securitization Application having been heard on 27.10.2025 in the presence of Advocate Ms. Athira Vijayan for the

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SA 358/2024

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applicant and Advocate Shri. Jojo George 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 proceeding initiated by the defendants for the subject matter property 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, has filed this SA under S.17(1) of the SARFAESI Act praying to set aside the said proceeding.

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Brief facts of the case :

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2.1 The applicant along with his wife had availed two loan facilities from the defendant bank by mortgaging subject matter property of an extent of 14.75 Ares of land comprised in Re.Sy. No.454/14, Block No.17 of SRO, Kanjiramkulam. Due to default in re-payment, the loan was classified as ‘NPA’ and the securitization measure was initiated. The proceedings initiated under Section 14 of the SARFAESI Act before the Chief Judicial Magistrate Court, Thiruvananthapuram, bearing MC No.183/2024 and the notice issued by the Advocate Commissioner to take physical possession of the secured asset based upon the Order of the Chief Judicial

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SA 358/2024

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Magistrate are under challenge in this proceeding. It is pleaded in the SA that the demand notice was not duly served on him and the statutory measure was not duly followed in securitization proceeding. The learned Chief Judicial Magistrate passed an illegal Order without carefully perusing the materials placed by the defendant.

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2.2 It is also claimed in the SA that no CERSAI Certificate was produced before the Chief Judicial Magistrate, which vitiates the proceeding. In such premises, the applicant seeks relief to set aside the entire proceeding with further relief that he cannot be dispossessed by the Advocate Commissioner in pursuance of said illegal order of the CJM.

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The defendants filed written statement denying the averments in the SA. It is claimed that due to default in repayment of the loans availed by the applicant, the same was classified as ‘NPA’ and a demand notice under Section 13(2) of the SARFAEST Act was issued to him, which was returned with the endorsement “Addressee Left India”. No such intimation was given to the defendants. The demand notice was issued at the address furnished by the applicant in the loan application. After return of the summons, notice was published in two widely circulated daily

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newspapers of the locality, both in English and vernacular language. No step was taken by the applicant in repaying the loan in pursuance to such demand notice. There is no illegality in any manner in the proceeding initiated under Section 14 of the SARFAESI Act. In absence of any illegality, the applicant has no valid claim to resist the securitization proceeding. All the statutory measures are duly followed. Relevant documents are produced. In absence of any illegality in the securitization proceeding, the SA may be dismissed.

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

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(i) Whether the securitization proceeding initiated by the defendants suffers from any illegality to interdict?

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

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FINDINGS:

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Point No.(i) and (ii):-

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During argument, the learned counsel for the applicant raised the following points about the illegality in the securitization proceeding, i.e.,

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SA 358/2024

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(i). The demand notice was not duly served. In absence of due service of demand notice, the securitization proceeding is not maintainable.

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(ii) The Order passed by the Chief Judicial Magistrate is illegal, as the same was passed without applying mind to the documents produced.

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(iii) In absence of the CERSAI Registration and the certificate having not filed before the Chief Judicial Magistrate, the Order is vitiated.

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In such premises, the SA may be allowed by setting aside the entire securitization proceeding.

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On the other hand, the learned counsel for the

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defendants would contend that there is no illegality in the proceeding initiated by the applicant. The demand notice was issued to the applicant and his wife at the address furnished in the loan documents. The relevant documents about sending of notice by registered post is produced as Annexure-B2. The demand notice issued to the applicant in the address furnished was returned with the endorsement “Addressee Left India”. Since the applicant and his

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wife evaded to receive the demand notice, which could not be served on them. Step was taken for publication of the demand

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SA 358/2024

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notice in the widely circulated newspapers in the locality. The relevant papers are produced in this case. The CERSAI Certificate is also produced as Annexure-B5. The contention of the learned counsel for the applicant on this aspect has no force. So also, there is no illegality in the proceeding initiated before the Chief Judicial Magistrate under Section 14 of the SARFAESI Act. Hence the SA, being devoid of any merit, is liable to be dismissed.

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Admittedly the applicant and his wife availed loan from the defendants and due to non-repayment, the securitization proceeding was initiated. So also it appears from the documents produced by the defendants that the demand notice was issued to the applicant and his wife in the address furnished by them by registered post, which was returned due to their absence.

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Rule 3 of The Security Interest (Enforcement) Rules, 2002 reads as follows:-

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“3. Demand notice.

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(1) The service of demand notice as referred to in sub- section (2) of section 13 of the Act shall be made by delivering [including hand delivery] or transmitting at the place where the borrower or his agent, empowered to accept the notice or documents on behalf of the borrower, actually and voluntarily resides or carries on business or personally works for gain, by registered post with acknowledgment due,

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SA 358/2024

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addressed to the borrower or his agent empowered to accept the service or by Speed Post or by courier or by any other means of transmission of documents like fax message or electronic mail service:

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Provided that where authorized officer has reason to believe that the borrower or his agent is avoiding the service of the notice or that for any other reason, the service cannot be made as aforesaid, the service shall be effected by affixing a copy of the demand notice on the outer door or some other conspicuous part of the house or building in which the borrower or his agent ordinarily resides or carries on business or personally works for gain and also by publishing the contents of the demand notice in two leading newspapers, one in vernacular language, having sufficient circulation in that locality.”

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In view of the above Rule, if the borrower or his agent avoided the service of the notice or that for any other reason the service cannot be made, the same shall be effected by affixing the copy of the demand notice on the outer door or some other conspicuous part of the house or building in which borrower or his agent ordinarily resides or carries on business and personally works in then and also by putting the contents of the demand notice in two leading newspapers out of which, one in vernacular language having sufficient circulation in the locality.

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SA 358/2024

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Here in this case the defendant has produced two paper publications showing publication of the demand notice, ie., in “Deepika” daily in vernacular language and the “Business Line” in English language. No material is placed on record showing affixture of the copy of the demand notice at the required place as specified under the Rules. Mere paper publication is not sufficient compliance of the statutory requirement for due service of the demand notice. In a securitization proceeding service of the demand notice is very essential. Unless the demand notice is duly served on the borrower or guarantor, the securitization proceeding is vitiated. In absence of proof of compliance of statutory requirement, it can be held that the securitization proceeding is illegal having not complied the statutory requirement and the applicant has a good case in challenging the securitization proceeding. In absence of due service of the demand notice, the order passed by the Chief Judicial Magistrate is also not valid and legal. Hence both the points are answered in favour of 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 the SA is allowed and the securitization proceeding starting from the stage of issuance of

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SA 358/2024

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demand notice is hereby set aside and the amount debited from the loan account for such securitization proceeding shall be properly credited in the loan account. The defendant may proceed afresh against the borrowers and guarantors from the stage of issuance of demand notice in accordance with the law.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 31^st day of October, 2025).

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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Documents on the part of the applicant

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Annexures	Date	Particulars of documents
Annexure-A1		True copy of the S.14 petition filed as MC No.183/2024 before the CJM Court, Thiruvananthapuram.
Annexure-A2	12.03.2024	True copy of the Order of the CJM Court, Thiruvananthapuram in MC No.183/2024 before the CJM Court, Thiruvananthapuram.
Annexure-A3		True copy of the notice of the Advocate Commissioner dated ‘Nil’.

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Documents on the part of the defendants

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Annexure-B1	09.06.2023	True copy of the under Section 13( and Reconstruction Enforcement of Sec	demand 2) of the of Financ urity Inter	notice issu Securitizati ial Assets a est Act, 200	ed on nd 2.
Annexure-B2		True copy of the re	turned pos	tal article.
Annexure-B3	14.07.2023	True copy of the 09.06.2023 issued the Securitization Financial Assets	demand under Se and Rec and Enf	notice dat ction 13(2) onstruction orcement	ed of of of
		Security Interest Deepika daily.	Act, 2002	published	in
Annexure-B4	14.07.2023	True copy of the 09.06.2023 issued the Securitization	demand under Se and Rec	notice dat ction 13(2) onstruction	ed of of
		Financial Assets Security Interest The Business Line d	and Enf Act, 2002 aily.	orcement published	of in
Annexure-B5		True copy of the Report.	Asset Id	Based Sear	ch

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PRESIDING OFFICER

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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 the 31st October, 2025

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SA No.358/2024

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Between

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Sujith Thankappan Vasanthakumari, Aged 46, S/o. Thankappan Nadar, Valiyavila Vadakke Veedu, Kanjiramkulam P.O., Puthankad Desam, Thiruvananthapuram District, PIN – 695 524. …Applicant

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And

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Federal Bank Ltd., Kanjiramkulam Branch, Represented by its Branch Manager, NH Bypass Kanjiramkulam, Near PWD Section Office, Thiruvananthapuram, PIN – 695 524 & Anr. …Defendants

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F I N A L O R D E R

Sujith Thankappan Vasanthakumari v. Federal Bank

Case brief

What is this about?

What did the court decide?

Sujith Thankappan Vasanthakumari v. Federal Bank

Case brief

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