Dismissed

A and S Marketing Associates v. Union Bank of India

DRT24 Mar 2025SA/410/2024

Case brief

AI extract

What is this about?

This application challenged the securitization proceedings initiated by the bank, including a sale notice and an order under Section 14 for physical possession. The tribunal examined allegations of non-service of notices and defective Section 14 applications, finding statutory procedures were duly followed.

What did the court decide?

Securitization application dismissed with costs of Rs. 10,000/- against applicants.

A and S Marketing Associates versus Union 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 24^th day of March, 2025

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SECURITIZATION APPLICATION No.410/2024

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Between

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A and S Marketing Associates,

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Represented by its sole Proprietor Mr. Aji E.R., Kallar Tea and Coffee, Thazhathedathu Building, Puttady P.O., Idukki – 685 551.

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Mr. Aji E.R., Aged 47, S/o. Ramankutty, A and S Marketing Associates, Thazhathedathu Building, Puttady P.O., Idukki – 685 551. …Applicants

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And

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The Authorised Officer, Union Bank of India, Regional Office-Kottayam, IIIrd Floor, Amala Tower, Adichira Junction, Kottayam – 686 016.

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Branch Manager, Union Bank of India, Puttady Branch, Spice Park, Puttady, Idukki, PIN 685 551

…Defendants

SA 410/2024

This Securitization Application having been heard on 20.03.2025 in the presence of Advocates M/s. Praveen K Joy and Deepu Rajagopal for the applicants and Advocate M/s.Santhosh Kumar K. 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 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 have filed this SA under S.17(1) of the SARFAESI Act seeking relief to declare the entire securitization proceeding as illegal.

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Brief facts of the case :

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In the SA the applicants claimed that , they availed loans from the defendants by mortgaging the subject matter properties. After availing the loan they deposited substantial amount in the loan account. But due to the pandemic situation in

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SA 410/2024

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the entire country, the loan could not be repaid in time. Consequently, the defendants classified the loan as NPA and proceeded under the provisions of SURFAESI Act. They issued a sale notice dated 14.05.2024 for auction of the subject matter property, which is impugned in this case by the applicants claiming that the sale notice is not in accordance with the statutory provision. It is also averred in the SA that the security interest is not registered in the CERSAI portal and hence the entire securitization proceeding is vitiated. It is also claimed that the demand notice and possession notice were not served on them. In absence of service of demand notice, the entire proceeding is vitiated and claimed in the SA to set aside the entire securitization proceeding including the sale notice issued by the defendants. The sale notices did not fructify due to non-participation of bidders. Thereafter the defendants initiated proceeding under Section 14 of the SARFAESI Act before the Chief Judicial Magistrate Court, Thodupuzha to take physical possession of the secured asset. It is claimed by way of amendment of the SA that all the statutory procedures are not duly followed in obtaining order under Section 14 of the SARFAESI Act and the order passed by the Chief Judicial

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SA 410/2024

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Magistrate in M.C. No.296/2024 and the notice issued by the Advocate Commissioner are liable to be set aside.

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The defendants filed written statement denying the averments in the SA and claimed inter alia that the securitization application is not maintainable. After availing various loans the applicants did not repay the same in violation of the terms and conditions. Consequently, the securitization proceeding was initiated after classifying the loan as NPA. All the statutory measures are duly followed. There is also no defect or any illegality in the measure taken under Section 14 of the SARFAESI Act. Hence the SA, being devoid of any merit, may be dismissed.

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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 defendants 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?

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FINDINGS:

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For the sake of convenience, both the points, being interlinked with each other, are taken up together for adjudication.

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SA 410/2024

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In this SA initially the applicants challenged the sale notices Annexure A1 and A2. But the sale did not fructify due to nonparticipation of the bidders. Thereafter the defendant filed M.C. No.296/2024 before the C.J.M. Court, Thodupuzha under Section 14 of the SARFAESI Act to take physical possession of the secured asset. The learned Chief Judicial Magistrate passed an order on dated 24.09.2024 appointing an Advocate commissioner to take physical possession of the secured asset. On receiving the notice of the Advocate Commissioner to take physical possession of the secured asset the same is challenged in this SA by way of amendment.

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The learned counsel for the applicants contended that there are multiple illegalities in the securitization proceeding including the proceeding under Section 14 of the SARFAESI Act initiated before the Chief Judicial Magistrate Court. In the application under Section 14 of the SARFAESI Act, the date of NPA is stated on 31.05.2023. But the demand notice was issued earlier to classification of the loan as NPA, which vitiates the entire securitization proceeding. Further it is argued by the learned counsel for the applicants that the affidavit furnished by the authorized officer before the Chief Judicial Magistrate is not in

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SA 410/2024

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accordance with the statutory requirements. Hence the order passed by the Chief Judicial Magistrate is not sustainable. It is also submitted that the security interest is not registered in the CERSAI Portal. In the absence of the same, the entire securitization proceeding is not maintainable in view of the bar contained in Section 26-D of the SARFAESI Act.

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On the other hand, the learned counsel for the defendants submitted that the housing loan was classified as NPA on 29.05.2023 and other loans availed by the applicants were classified as NPA on 01.05.2023. Two separate demand notices were issued on 05.06.2023. Due to any typographical error in the application filed before the Chief Judicial Magistrate, the entire securitization proceeding cannot be held as illegal. It is also submitted that no objection or representation was submitted by the applicants on receiving the demand notice. Now they cannot raise any dispute about the demand. All statutory measures are duly followed. Security interest was duly registered in the CERSAI portal. In the absence of any illegality, the applicants are not entitled to seek any relief. Hence the SA may be dismissed.

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Thouigh in the SA the applicants claim non-service of the demand notice but during argument the same was not raised by the

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SA 410/2024

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learned counsel for the applicant. The defendant produced postal acknowledgement card showing service of the demand notice. Admittedly no objection or representation was filed by the applicants disputing the demand advanced by the learned counsel for the applicant. The defendants also produced relevant documents showing compliance of the measure under section 13(4) of the SARFAESI Act. The paper publications both in vernacular and English language are produced. Copy of the photograph showing affixture of the possession notice is also produced. It is discernible from the materials placed by the defendanst that no illegality was committed in the securitization proceeding up to taking measure under 13(4) of the SARFAESI Act.

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In the SA no specific illegality or any material defect in the application under Section 14 of the SARFAESI Act and the order passed by the Chief Judicial Magistrate except are raised. During argument stage the learned counsel gave much importance to the averment about the date classification of loan as NPA. The demand notice issued by the defendants, marked as Annexure-B1 and B2, indicate that the housing loan was classified as NPA on 29.05.2023 and the other loans were classified as NPA on 01.05.2023. Merely because the date of NPA is stated erroneously in the application

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SA 410/2024

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under Section 14 of the SARFAESI Act, it cannot be said that the order passed by the Chief Judicial Magistrate is illegal. Due to wrong mentioning of such date of NPA no substantial prejudice was caused to the applicants to challenge the same in this proceeding.

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The law is well settled on the point that order passed by the Chief Judicial Magistrate is purely administrative in nature. Nothing is adjudicated by the Chief Judicial Magistrate. Being satisfied with the materials, the Chief Judicial Magistrate assists the secured creditor in taking possession of the secured asset. In this case all the relevant documents were filed by the defendants before the Chief Judicial Magistrate and after perusing the same, an order was passed which cannot be said as illegal in any manner.

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The main contention was raised by the applicants that the security interest was not registered in the CERSAI Portal which vitiates the securitization proceeding. In the written statement the defendants mentioned the registration number of the security interest in the CERSAI portal as 400083202369 . But no registration certificate is produced by the defendants. It appears from the materials on record that the CERSAI Registration Certificate was attached with the application under Section 14 of the SARFAESI Act. The Chief Judicial Magistrate passed the order

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SA 410/2024

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after carefully referring the documents. No counter affidavit is also filed by the applicants that the registration no. furnished by the defendants is not correct. Merely because the certificate is not produced by the defendants the securitization proceeding cannot be said as illegal in absence of any dispute of the registration number by the applicants. In the SA only general averment is made that the secured asset is agricultural land. But no material is placed on record by the applicants to substantiate the claim. The same is also not raised during argument stage. In the absence of any illegality in the securitization proceeding, the applicants are not entitled to get any relief and hence both the points are answered against them.

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Hence it is ordered:-

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ORDER

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In view of the foregoing reasons, this SA, being devoid of any merit, is hereby dismissed with costs. Since the applicants had delayed the securitization proceeding without any valid reason, they are liable to pay cost of Rs.10,000/- (Rupees ten thousand only) to the defendants.

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(Dictated to my steno, corrected and pronounced by me in the open Tribunal on this the 24^th day of March, 2025)

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SA 410/2024

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[SOVAN KUMAR DASH] PRESIDING

OFFICER

SA 410/2024

Documents on the part of the applicants

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Annexures	Date	Particulars of documents
Annexure-A1	14.05.2024	True copy of the Sale Notice.
Annexure-A2	14.05.2024	True copy of the Sale Notice.
Annexure-A3	27.11.2021	True copy of the Echo Cardiogram Report of Medical Trust Hospital, Kochi.
Annexure-A4	06.09.2024	True copy of the Sale Notice by 1^st respondent.
Annexure-A5	14.08.2024	True copy of the Petition in M.C. No. 296/2024 filed before the Chief Judicial Magistrate Court, Thodupuzha.
Annexure-A6	14.08.2024	True copy of the Affidavit in M.C. No. 296/2024 filed before the Chief Judicial Magistrate Court, Thodupuzha.
Annexure-A7	24.09.2024	True copy of the Order in MC No.296/2024 filed before the Chief Judicial Magistrate Court, Thodupuzha.
Annexure-A8	28.08.2024	True copy of the Account Statement.
Annexure-A9	05.06.2023	True copy of the 13(2) Notice.
Annexure-A10	………………..	True copy of the Advocate Commission Notice stating possession to be taken on 05.11.2024 with date 28.11.2024.

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Documents on the part of the defendants

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Annexure-B1	True copy of the Demand Notice under Section 13(2) of the SARFAESI Act.
Annexure-B2	True copy of the Demand Notice under Section 13(2) of the SARFAESI Act.
Annexure-B3	True copy of the Postal acknowledgment card signed by the borrower as well as the co-borrowers.
Annexure-B4	True copy of the Postal acknowledgment card signed by the borrower as well as the co-borrowers.
Annexure-B5	True copy of the Notice dated 15.01.2024.
Annexure-B6	True copy of the Postal acknowledgment cards (2 numbers).
Annexure-B7	True copy of the Possession Notice dated 04.01.2024.
Annexure-B8	True copies of the Postal acknowledgment card.

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SA 410/2024

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Annexure-B9 True copy of Newspaper publication (The New Indian Express) Annexure-B10 True copy of the Photographs of affixture of Possession Notice.

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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 24^th March, 2025

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SA No.410/2024

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Between

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A and S Marketing Associates, Represented by its sole Proprietor Mr. Aji E.R., Kallar Tea and Coffee, Thazhathedathu Building, Puttady P.O., Idukki – 685 551. & Another

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…Applicants

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And

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The Authorised Officer, Union Bank of India, Regional Office-Kottayam, IIIrd Floor, Amala Tower, Adichira Junction, Kottayam–686 016. & Another

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…Defendants

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F I N A L O R D E R

A and S Marketing Associates v. Union Bank of India

Case brief

What is this about?

What did the court decide?

A and S Marketing Associates v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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