Allowed

Radhakrishnan M v. versus Canara Bank

DRT5 Jun 2025SA/398/2024

Case brief

AI extract

What is this about?

This is a securitization application challenging a possession order under Section 14 of the SARFAESI Act. The tribunal held that the authorized officer's declaration did not comply with the statutory format, rendering the order invalid. The proceeding was set aside but the bank was permitted to initiate fresh proceedings with a correct declaration.

What did the court decide?

The sequestration proceedings initiated under Section 14, including the C.J.M. order, are set aside. The defendant must give credit for expenditures incurred.

Radhakrishnan M v versus Canara 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 5^th day of June, 2025

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SECURITIZATION APPLICATION No.398/2024

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Between

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Radhakrishnan M.V., aged 53 years, S/o. Vasu, Menothuparambil House, Valakkavu, Nellani, Mulayam, Thrissur-680 751.

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Latha Radhakrishnan, Aged 52 years, W/o.Radhakrishnan M.V., Menothuparambil House, Valakkavu, Nellani, Mulayam, Thrissur-680 751. …Applicants

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And

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Canara Bank, Ebenezer Shopping Complex, Post Office Road, Mannuthy P.O., Thrissur – 680 651, represented by its Authorised Officer. …Defendant

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This Securitization Application having been heard on 16.05.2025 in the presence of Advocate Shri.Jojo George for the

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applicants and Advocate Mrs.Thankom Mukundakrishnan for the

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SA 398/2024

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defendant 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 defendant 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/borrowers have filed this SA to set aside the entire measures under the provision of SARFAESI Act including the Order passed by the Chief Judicial Magistrate under Section 14 of the SARFAESI Act and the notice issued by the Advocate Commissioner.

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Brief facts of the case :

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2.1 The applicants are the borrowers in respect of the Housing Loan of Rs.12,00,000/- and OCC-Canara Vyapar Loan of Rs.4,95,000/- from the defendant bank by creating security interest over the property of the 2^nd applicant described in the SA. It is averred in the SA that, after availing the loan they were repaying the loan regularly. But due to Covid pandemic and the lock down, the loan could not be repaid in time.

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2.2. The defendant classified the loan as ‘NPA’ and proceeded with the securitization proceeding by issuing demand

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SA 398/2024

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notice to the applicants under Section 13(2) of the SARFAESI Act dated 23.01.2023 calling them to pay the outstanding amount of Rs.14,30,259.16 within the statutory period of 60 days. Due to failure to pay the same, the defendant proceeded and issued possession notice under Section 13(4) of the SARFAESI Act.

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2.3. Thereupon the applicants filed W.P. (C) No.16335/2023 before the Hon’ble High Court of Kerala, which was disposed directing the applicants to pay the overdue amounts in instalments along with a regular instalment. But the applicants failed to pay the same. The advocate commissioner has issued a notice to take possession of the secured asset in pursuance of the Order passed by the Chief Judicial Magistrate Court, Thrissur in Crl. M.C. No.4858/2024 in a proceeding under Section 14 of the SARFAESI Act, which is under challenge in this SA.

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2.4. It is claimed by the applicants that the declaration filed

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by the authorized officer is not as per the statutory requirement as contained in points (i) to (ix) of the proviso of the Section 14(1) of the SARFAESI Act. In absence of compliance of the statutory requirement, the defendant cannot proceed with the securitization proceeding. Hence the SA is filed challenging the securitization proceeding with a prayer to set aside the entire measures under

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SA 398/2024

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the provision of SARFAESI Act including the Order passed by the Chief Judicial Magistrate under Section 14 of the SARFAESI Act and the notice issued by the Advocate Commissioner.

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3.1. The defendant filed written statement denying the averments in the SA and claimed inter alia that all the statutory measures are duly followed. There is no illegality in the proceeding. Due to default committed by the applicants, the securitization proceeding was initiated after complying the statutory requirements. The relevant documents including the CERSAI certificate are filed.

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3.2 There is no illegality in any manner in the proceeding under Section 14 of the SARFAESI Act. In absence of any illegality in the security proceeding, the SA may be dismissed with costs.

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From the respective contentions of both sides, the

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following points are emerged for adjudication in this case:

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(i) Whether the securitization proceeding initiated by the defendant suffers from any illegality or irregularity to intervene with the same?

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(ii) Whether the applicants are entitled to get any relief in this case?

SA 398/2024

FINDINGS:

For the sake of convenience, both the points, being interlinked with each other, are taken up together for adjudication. Admittedly the applicants availed 2 loans from the defendant by mortgaging the secured asset of the 2^nd applicant to secure the loan. Due to non-repayment of the loan, the securitization proceeding was initiated by classifying the loan as ‘NPA’ and the demand notice was issued by the defendant under Section 13(2) of the SARFAESI Act calling the applicants to pay the outstanding amount within the statutory period of 60 days. No objection or representation was submitted by the applicants against the demand notice. Due to non-repayment of the loan, a possession notice under Section 13(4) of the SARFAESI Act was issued on 06.05.2023. The defendant produced relevant documents vide Annexures-B1 to B3 showing compliance of the statutory requirements in issuing the possession notice.

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Feeling difficulty in taking physical possession of the secured asset, the defendant filed application under Section 14 of the SARFAESI Act with the required declaration before the Chief Judicial Magistrate Court, Thrissur. The learned Chief Judicial Magistrate appointed an Advocate Commissioner to take

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SA 398/2024

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possession of the secured asset, which is impugned in this proceeding.

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The learned counsel for the applicants contended during argument stage that the affidavit filed by the Authorised Officer before the Chief Judicial Magistrate is not in accordance with the statutory requirement. The learned Chief Judicial Magistrate without application of mind passed a non-speaking Order, which vitiates the entire securitization proceeding.

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On the other hand, the learned counsel for the defendant contended that there is no error in the affidavit filed before the Chief Judicial Magistrate. Even if there is any error in the declaration, the same cannot be a ground to set aside the Order passed by the Chief Judicial Magistrate. Interference with the proceeding before the Chief Judicial Magistrate is not warranted. Hence the SA may be dismissed.

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On careful submission of both sides and materials on record, it appears that the declaration filed by the Authorised Officer is not as per the format prescribed in the proviso of Section 14 of the SARFAESI Act. When a statute prescribes to act in a particular manner, it is the bounden duty the Authorized Officer to follow the statutory mandate with modification or variation, if required. Total

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SA 398/2024

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ignoring the statutory provision is not acceptable. The learned Chief Judicial Magistrate did not consider the same. Without considering the said aspect, mechanically the impugned order, marked as Annexure-A5, was passed. The applicants have failed to establish any other defect in the securitization proceeding up to the stage of taking step under Section 14 of the SARFAESI Act. But they succeeded to prove that the proceeding under Section 14 of the Act is not initiated properly, which vitiates the proceeding. Hence the applicants are entitled to get relief in setting aside the proceeding under Section 14 of the SARFAESI Act. However, it is clarified that the defendant may proceed afresh by filing a fresh application under Section 14 of the SARFAESI Act with the required declaration before the Chief Judicial Magistrate as per the statutory mandate and may proceed to take physical possession of the secured asset in accordance with the law. In the event of challenge to such proceeding in future on fresh cause of action, the points already adjudicated, shall not be permitted to be raised by the applicant and findings in the this proceeding shall be treated as conclusive.

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Hence it is Ordered:-

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O R D E R

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In view of the foregoing reasons, this SA is allowed. The proceeding initiated by the defendant under Section 14 of the

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SA 398/2024

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SARFAESI Act including the Order passed by the Chief Judicial Magistrate in Crl. MC No.4858/2024 is hereby set aside. The defendant shall give proper credit to the expenditures charged in the loan account of the applicant for the proceeding under Section 14 of the SARFAESI Act.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 5^th day of June, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 398/2024

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D	ocuments on	the part of the applicants
Annexures	Date	Particulars of docume	nts
Annexure-A1	06.05.2023	True copy of the Possession No under Section 13(4) of the Secur Reconstruction of Financial Enforcement of security Interest	tice itiza Asse Act,	is tion ts 200	sued and and 2.
Annexure-A2	26.05.2023	True copy of the Judgment No.16335/2023 of the Hon’ble H Kerala.	in igh	W Cou	P(C) rt of
Annexure-A3	06.06.2024	True copy of the Notice iss Advocate Commissioner and translation.	ued its	by En	the glish
Annexure-A4		True certified copy of No.4858/2024, Chief Judicial Court, Thrissur along with the under section 14 of the Secur Reconstruction of Financial Enforcement of security Interest	Crl M affid itiza Asse Act,	. agis avit tion ts 200	M.P. trate filed and and 2.
Annexure-A5	23.04.2024	True certified copy of the Order No.4858/2024, Chief Judicial Court, Thrissur.	in M	Crl. agis	M.P. trate
Annexure-A6	10.03.2025	True certified copy of the Order No.4858/2024, Chief Judicial Court, Thrissur.	in M	Crl. agis	M.P. trate
Documents o Annexure-B1	n the part of t 09.05.2024	he defendant Publication of possession notice daily.	in T	he	Hindu
Annexure-B2	09.05.2024	Publication of possession no Deepika daily.	tice	in	The
Annexure-B3		Photograph evidencing affixture notice.	of p	osse	ssion
Annexure-B4		CERSAI registration certificate.

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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 5^th June, 2025

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SA No.398/2024

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Between

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Radhakrishnan M.V., aged 53 years, S/o. Vasu, Menothuparambil House, Valakkavu, Nellani, Mulayam, & Another. …Applicants

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And Canara Bank, Ebenezer Shopping Complex, Post Office Road, Mannuthy P.O., Thrissur – 680 651, represented by its Authorised Officer. …Defendant

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F I N A L O R D E R

Radhakrishnan M v. versus Canara Bank

Case brief

What is this about?

What did the court decide?

Radhakrishnan M v. versus Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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