Dismissed

ms E Fast Transports LLP v. South Indian Bank

DRT11 Jun 2025SA/361/2024

Case brief

AI extract

What is this about?

This tribunal dismissed the applicants' securitization application challenging the bank's NPA classification and possession proceedings. The court held the NPA status was valid under RBI guidelines and ruled a license agreement did not grant tenancy rights necessary to bar possession.

What did the court decide?

Securitization Application S.A No.361 of 2024 stood dismissed with no order as to costs.

ms E Fast Transports LLP versus South Indian Bank — Banking and Recovery | DRT (2025)

¶1

Fair Order

¶2

IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

¶3

DATED THIS 11^th DAY OF JUNE, 2025

¶4

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

¶5

S.A No. 361 of 2024

¶6

Between

¶7

M/s. E Fast Transports LLP,

¶8

Empora Views, 2^nd Floor, Door No.33/6625, B3 (B)

¶9

Malaparamba, Kozhikode,

¶10

Rep. by its Managing Partner

¶11

Haneefa M., S/o.N.P.C.Aboobacker,

¶12

Madhurambalathil, Kovoor, Medical College P.O.,

¶13

Kozhikode 673 008.

¶14

Haneefa M., S/o. N.P.C.Aboobacker, Madhurambalathil, Kovoor, Medical College P.O., Kozhikode 673 008 (Designated partner of 1^st Petitioner).

¶15

Aboobacker N.P.C., S/o. Moidu, Madhurambalathil, Kovoor, Medical College P.O., Kozhikode 673 008 (Designated partner of 1^st Petitioner).

¶16

Shareefa M., W/o. Muhasin K.M. Kanakkapillantakath, Makkachi Veedu, Old Military Road, Byepore, Kozhikode 673 015.

¶17

SA No.361 of 2024

¶18

Arifa M., D/o. Aboobacker N.P.C., 12/464, Kunhails, Paroppadi, Thachamkode, Marikkunnu P.O., Parambil, Kozhikode 673 012.

¶19

--- Applicants

¶20

And

¶21

The South Indian Bank Ltd. Main Branch, Door No.18/1175 B, 1^st Floor, TT Complex, Jail Road, Kozhikode 673 004, Rep. by its Branch Manager.

¶22

Chief Manager & Authorized Officer, The South Indian Bank Ltd., Regional Office, Kozhikode, First Floor, Happy Towers, Vaikom Muhammed Basheer Road, Mananchira, Kozhikode 673 001.

¶23

--- Defendants

¶24

This Securitization Application coming on 27.05.2025 for final hearing before me in the presence of Mr. N.K. Sanath Kumar, Counsel appearing for the Applicants and Mr. John Prakash B.J., Counsel appearing for the defendants and upon hearing arguments of learned Counsels for both the parties and upon perusing the material on records, this Tribunal delivered the following:

¶25

O R D E R

¶26

This Securitisation Application was filed on 12.04.2024 seeking to declare that classification of the account as NPA, issuance of Annexure-A3 notice, A4 possession notice is illegal and unsustainable and to declare that Annexure-A8 and A9 is illegal and quash the same and to declare that the secured asset cannot be taken possession as the same is occupied by a licensee for the residential purpose of his family as per a valid agreement and to direct the defendants to pay the entire costs of this proceedings and compensation to the applicants.

¶27

Availment of credit facilities from the 1^st defendant bank upon creation of primary security of hypothecation and mortgage of the immovable property by deposit of title deeds by the defendants 2 to 5 in favour of the 1^st defendant bank is admitted by the applicants in the S.A. Annexure-D3 copy of letter proves the creation of Equitable mortgage over the immovable property by deposit of title deeds.

¶28

Page 2 of 7

¶29

SA No.361 of 2024

¶30

It is the contention of the applicants in the SA that though the applicants made payment till April, 2023 as evidenced from AnnexureA1 and A2 statement of accounts, their loan account was classified as NPA on 30.04.2023 and that hence classification of loan account as NPA is illegal.

¶31

The rival contention of the defendants in their written statement is that the accounts of the applicants was classified as NPA as per RBI guidelines, since the credit facility availed for an amount of Rs.40,00,000/- was in overdrawn status and irregular since 31.01.2023 and that the applicants also failed to duly service the interest in the ECLGS facility.

¶32

A perusal of Annexures-A1 and A2 copies of statement of accounts shows that CCBD facility was in an overdrawn status since 31.01.2023 and that ECLGS facility was not on service for more than three months. Therefore, this Tribunal does not find any merit in the contention of the applicants that classification of both loan accounts as NPA is against RBI guidelines.

¶33

Annexure-A3 demand notice dated 28.07.2023 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. Annexure-D2 copies of postal acknowledgment cards evidences the receipt of demand notices by the applicants. The applicants neither sent any objection/representation to the demand notice nor did they clear off their liability due to the 1^st defendant bank.

¶34

The applicants have admitted in the SA with regard to issuance of possession notice dated 05.01.2024, Annexure-A4 and publication of the possession notice in The New Indian Express edition dated 05.01.2024 and in Mathrubhoomi edition dated 05.01.2024.

¶35

The defendants approached the Chief Judicial Magistrate Court Kozhikode and filed Annexure-A8 application and affidavit under Section 14 (1) of the SARFAESI Act, 2002. The applicants have averred in the SA that the above application was allowed by the learned Chief Judicial Magistrate, Kozhikode appointing Advocate Commissioner to take physical possession of the secured asset. The issuance of Annexure-A9 notice dated 27.02.2024 by the Advocate Commissioner to the applicants informing them that he would take physical possession of the secured asset on 18.03.2024 is also admitted in the SA. The applicants having aggrieved against the above measures filed this SA seeking for the reliefs stated supra.

¶36

Page 3 of 7

¶37

SA No.361 of 2024

¶38

The defendants have produced Annexure-D5 copy of Asset id Based search Report in order to prove their contention that security interest over the SA subject matter of the property has been registered with the Central Registry. Hence the contention of the applicants that security interest was not registered with the Central Registry is incorrect.

¶39

One of the main contentions raised by the applicants in the SA is that out of the four residential flats in the mortgaged property is occupied by a licensee as per Annexure-A7 license agreement executed prior to creation of the mortgage and that hence possession of the secured asset is not with the borrower or guarantors.

¶40

The rival contention of the defendants is that the averment of the applicants with regard to occupancy of one of the flats by a tenant is false and that Annexure-A7 is not a valid lease agreement since it is not a registered instrument and is merely license agreement which does not confer any right on the tenant.

¶41

A perusal of English translated version of Annexure-A7, it is seen that, it is not a lease agreement and it is a deed of license executed between one Rukkiya (1^st party) and Abdul Salim (2^nd party). It is recited under the terms and conditions as follows :

¶42

“1. This is a simple license right. The second party shall not have any tenancy right over the house .

¶43

The possession of the house described in the schedule hereunder shall always be with the 1^st party and 2^nd party shall have only license right to use the house”.

¶44

The afore cited recitals of Annexure-A7 is sufficient to disprove the contention of the applicants that the 2^nd party is a tenant of one of the flats of the secured assets and that possession of the secured asset is not with the borrower or with the guarantors.

¶45

Indisputably, Annexure-A7 is not a registered lease agreement. There are no recitals in Annexure-A7 with regard to the status of the 1^st party as the landlord and the status of the 2^nd party as the tenant. There is also no mention in Annexure-A7 with regard to payment of monthly rent by the alleged tenant. Therefore, this Tribunal does not find any substance or merit in the contention of the applicants that one of the flats is occupied by the tenant.

¶46

The applicants have not made any specific challenge in the SA with regard to issuance of Annexure-A4 possession notice. They have merely averred in the SA that the measures taken u/s 14 of the

¶47

Page 4 of 7

¶48

SA No.361 of 2024

¶49

SARFAESI Act 2002 are illegal and unsustainable. They have not pleaded in the SA as to whether the defendants failed to comply with the statutory requirements contemplated under Clause (i) to (ix) to the provisions of Section 14 (1) of the SARFAESI Act 2002 in respect of filing of the affidavit. The applicants have even not produced the copy of the affidavit filed in CMP No.160/2024.

¶50

The applicants have not averred in the SA as to whether the order passed by the learned Chief Judicial Magistrate, Kozhikode in CMP No.160/24 suffers from any infirmity or illegality. The applicants have also not produced the copy of the order passed in CMP No.160/2024.

¶51

The applicants have failed to prove their case so as to get the reliefs sought for in the SA. In view of the foregoing reasons, this Tribunal holds that the applicants are not entitled to get the reliefs sought for in this SA.

¶52

Resultantly, S.A No.361 of 2024 stands dismissed. However, there shall be no order as to costs.

¶53

Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 11^th day of June, 2025.

¶54

(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 7

SA No.361 of 2024

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

¶59

Sl.	Date	Particulars
No.
1.	16.01.2024	True copy of statement of loan account No.0038083000002521.	Annexure-A1
2.	16.01.2024	True copy of statement of loan account No.0038656000000037	Annexure-A2
3.	28.07.2023	True copy of notice u/s 13 (2) of SARFAESI Act 2002	Annexure-A3
4.	05.01.2024	True copy of notice u/s 13(4) of SARFAESI Act 2002	Annexure-A4
5.	05.01.2024	True copy of paper publication of 13 (4) noticein New Indian Express	Annexure-A5
6.	05.01.2024	True copy of paper publication of 13 (4) noticein Mathrubhoomi	Annexure-A6
7.	15.05.2014	True copy of license agreement executed by Rukhiya in favour of Abdul Saleem.	Annexure-A7
8.	17.01.2024	True copy of application CMP No.160/2024 filed before Chief Judicial Magistrate Court,Kozhikode	Annexure-A8
9.	27.02.2024	True copy of notice issued by the Advocate Commissioner.	Annexure-A9

¶60

List of documents filed by the defendants along with the written statement

¶61

Sl. No.	Date	Particulars
1.	28.07.2023	True copy of demand notice duly acknowledged by the staff of the 1^st applicant.	Annexure-D1
2.	--	True copy of the acknowledgment cards received by the defendant bank evidencing acknowledgment of receipt of demandnotice by the guarantors.	Annexure-D2
3.	27.12.2019	True copy of the Equitable mortgage of the security interest in favour of the defendant bank created by applicants 2 to 5.	Annexure-D3
4.	05.05.2022	True copy of the last sanction/renewal letter.	Annexure-D4

¶62

Page 6 of 7

¶63

SA No.361 of 2024

¶64

True copy of the	extract from	the
Central Registry	evidencing	due
registration of the	property with	the
Central Registry.

¶65

(Su. WILLYAHM) PRESIDING OFFICER

¶66

Mj/

¶67

Page 7 of 7

ms E Fast Transports LLP v. South Indian Bank

Case brief

What is this about?

What did the court decide?

ms E Fast Transports LLP v. South Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Autocross Private Ltd. Represented by its Managing Director versus South Indian Bank

Hdfc Bank Limited versus Rohan Rawat

Punjab National Bank versus M/S Capsag Consulting Services Private Limited

Uco Bank versus Sri Biprajit Deb And Ors.

Anilkumar versus Bank of Baroda

Hasina Bibi versus State Bank of India