Dismissed

Aleyas Paul v. State Bank of India

DRT6 Jan 2025SA/427/2023

Case brief

AI extract

What is this about?

The Tribunal dismissed an application challenging the validity of notices and proceedings under the SARFAESI Act. It rejected the claim that the Chief Judicial Magistrate lacked jurisdiction and held the bank complied with statutory requirements regarding notices and possession.

What the court decided

AI extract

Aleyas Paul versus State Bank of India — Banking and Recovery | DRT (2025)

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 06^th DAY OF JANUARY, 2025

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

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S.A No. 427 of 2023

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Between

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Aleyas Paul,

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S/o. late C.P. Paulose, Chenayappillil House, Pulinthanam P.O., Anchalpetty, Muvattupuzha, Ernakulam – 686 671.

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Annamma Paulose, W/o. late C.P. Paulose, Chenayappillil House, Pulinthanam P.O., Anchalpetty, Muvattupuzha, Ernakulam – 686 671.

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--- Applicants

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And

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The Authorized Officer, State Bank of India, Stressed Asset Recovery Branch, 7^th Floor, Vankarath Towers, Palarivattom Byepass Junction, Cochin – 682 024.

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--- Defendant

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SA No.427 of 2023

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This Securitization Application coming on 04.12.2024 for final hearing before me in the presence of Mr. George Kuruvila, Counsel representing the Counsel for the Applicants and Ms. Sally Thomas, Counsel appearing for the defendant and upon hearing arguments of learned Counsels for both the parties and upon perusing the material on records, this Tribunal delivered the following:

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O R D E R

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This Securitisation Application was filed on 18.08.2023 seeking to declare that Annexure-A6 Demand Notice, Annexure-A9 application, Annexure-A10 Order of the Additional Chief Judicial Magistrate Court (MPs/MLAs) Ernakulam and Annexure-A11 notice of the Advocate Commissioner are all in violation of SARFAESI Act, 2002 and also Rule 3A of Security Interest (Enforcement) Rules, 2002 and to set aside Annexure-A10 Order and A11 Advocate Commissioner notice.

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The applicants have admitted the availment of credit facility to the tune of Rs.24,00,000/- from the defendant bank upon creation of equitable mortgage over their immovable property situated in Sy. No.398/13-2-2 of Enanallore Village, Muvattupuzha Taluk in favour of the defendant bank. The applicants have also admitted their default in repayment of the outstanding loan due to the defendant bank.

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Hence the loan account of the applicants came to be classified as Non-performing Asset and demand notice dated 16.02.2022 Annexure-A4 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. The applicants have admitted the receipt of the Demand Notice. Subsequently, Annexure-A5 possession notice dated 11.05.2022 was issued for symbolically taking physical possession of the secured asset. It is not in dispute that both the above said notices were withdrawn by the defendant and fresh Demand Notice dated 21.06.2022 Annexure-A6 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. The defendant also caused a lawyer notice dated 22.06.2022 Annexure-A7 to the applicants calling upon them to pay the outstanding amount.

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The applicants have admitted the receipt of Annexure-A6 and A7 notices, but according to the applicants, though they caused a reply notice dated 23.08.2022 Annexure-A8 to the defendant through

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SA No.427 of 2023

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their lawyer requesting for re-checking of their accounts, remittance made by them, rate of interest charged and for issuance of upto date statement of account, the defendant did not send any reply to Annexure-A8 notice as mandated under Section 13 (3A) of the SARFAESI Act, 2002. But the rival contention of the defendant is that Annexure-R2 reply notice dated 31.08.2022 was sent to the applicants. Annexure-R3 copy of the acknowledgement card produced by the defendant evidences the receipt of Annexure-R2 reply notice by the applicants. Therefore, the contention of the applicants that the defendant did not send any reply as mandated under Section 13 (3A) of the SARFAESI Act, 2002 is absolutely incorrect.

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Since the applicants failed to respond to the terms of AnnexureA6 Demand Notice and Annexure-A7 legal notice, the defendant approached the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam and filed application and affidavit, Annexure-A3 under Section 14 (1) of the SARFAESI Act, 2002. Order dated 12.05.2023 Annexure-A10 came to be passed appointing Advocate Commissioner for taking physical possession of the secured asset. The Advocate Commissioner issued notice Annexure-A11 to the applicants informing them that he would take physical possession of the secured asset on 21.08.2023. The applicants having aggrieved against the above measures have filed this SA seeking for the reliefs stated supra.

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The counsel appearing for the applicants submitted that the 1^st applicant availed the agricultural term loan of Rs.24,00,000/- for the purpose of cultivation of pineapple in the secured asset and that the secured asset is the agricultural land and that Annexure-A1 tax receipt issued by the Enanallore Village Office, Annexure-A2 certificate issued by the Agricultural Officer, Krishi Bhavan, Pothanicad and Annexure-A3 photograph proves that secured asset is agricultural property wherein mixed crops like, coconut trees, arecanut, pepper trees, mango trees, jackfruit and plantains are cultivated.

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Per contra, the counsel appearing for the defendant submitted that, the applicants are not agriculturists and that in Annexure-R1 loan application submitted by the applicants it is mentioned that, 1^st applicant is doing the business of bus service and sale of used vehicles and that the applicants having given the above undertaking in Annexure-R1 application are estopped from contending now that the secured asset is agricultural land and that there is no mention in Annexure-A3 certificate that secured property is agricultural land and that it was issued only after availment of the credit facility. It is further submitted that, the term loan of Rs.24,00,000/- was availed

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SA No.427 of 2023

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by the applicants for pineapple cultivation in a leasehold property of about 21.5 Acres in Kuttamangalam Village and that there is a building in the secured asset.

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Annexure-R1 is the application submitted by the 1^st applicant to the defendant bank for availment of credit facility. In Annexure-R1 it is mentioned that the other source of income is derived from bus service and used vehicle business. There is also reference in Annexure-R1 with regard to hypothecation of crops as primary security in 21.44 Acres of leased land of Kuttamangalam Village. It is pertinent to mention herein that there is no reference in Annexure-R1 that the secured asset is agricultural land. Therefore, it is evident that the credit facility availed by the applicants is for the purpose of pineapple cultivation only in the above said leased land and not in the secured asset.

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Annexure-A1 tax receipt, it is mentioned that property is garden land. But the existence of the residential building is omitted to be mentioned in Annexure-A1. In Annexure-A2 which is the certificate issued by the Agricultural Officer, Krishi Bhavan, Pothanicadu also there is no mention with regard to existence of residential house which is shown in Annexure-A3 photograph. Therefore, it is evident that the Agricultural Officer issued the above certificate mechanically without having made personal visit to the property. Even otherwise the above certificate does not reveal that the secured asset is agricultural property for the reason that it is mentioned in the certificate that the 1^st applicant is cultivating coconut trees, 3 Nos., arecanut trees, 4 Nos., pepper 4 standards, fruit plant 4 Nos., and plantain 10 Nos . as mixed crops in the outside area of the residential house. Cultivation of the aforesaid few trees in the area adjoining the residential house cannot be stated that agricultural activities being carried on in the secured asset. Hence, this Tribunal rejects the contention of the applicants that secured asset is agricultural land.

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It is contended by the applicants in the SA that the Chief Judicial Magistrate is not entitled to entertain an application under Section 14 of the SARFAESI Act, 2002 so far as non-metropolitan areas are concerned since Chief Judicial Magistrate is appointed under Section 12 of the Criminal Procedure Code, 1973 and that the powers of the Chief Metropolitan Magistrate is defined under Section 8 of the Criminal Procedure Code, 1973 and that hence a District Magistrate appointed under Section 20 of the Criminal Procedure Code, 1973 in a District is the only person empowered by the above

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SA No.427 of 2023

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Act to entertain application under Section 14 of the SARFAESI Act, 2002.

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The above issue has been dealt with and decided by the Hon’ble Supreme Court in The Authorised Officer, Indian Bank Vs. D. Visalakshi upon referring the judgments of various High Courts on this issue. It is held in Paras 46 & 48 of the above judgment as follows:

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“46. Applying the principle underlying this decision, it must follow that substitution of functionaries (CMM as CJM) qua the administrative and executive or so to say nonjudicial functions discharged by them in light of the provisions of Cr.P.C., would not be inconsistent with Section 14 of the 2002 Act; nay, it would be a permissible approach in the matter of interpretation thereof and would further the legislative intent having regard to the subject and object of the enactment. That would be a meaningful, purposive and contextual construction of Section 14 of the 2002 Act, to include CJM as being competent to assist the secured creditor to take possession of the secured asset.

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48. To sum up, we hold that the CJM is equally competent to deal with the application moved by the secured creditor under Section 14 of the 2002 Act. We accordingly, uphold and approve the view taken by the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh and reverse the decisions of the High Courts of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand in that regard. Resultantly, it is unnecessary to dilate on the argument of prospective overruling pressed into service by the secured creditors (Banks).”

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Therefore, this Tribunal does not find any merit or substance in the above contention of the applicants.

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One of the contentions raised by the applicants in the SA is that the declaration made by the defendant in Annexure-A9 affidavit that the applicants did not send any reply to the Demand Notice is totally incorrect. Admittedly, in Annexure-A9 affidavit submitted before the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam it is averred as follows :

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“The borrowers had not sent any objection/representation to the above mentioned 13 (2) notice”

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The above declaration, in the opinion of this Tribunal is absolutely correct for the following reasons. Annexure-A6 Demand Notice was issued on 21.06.2022 to the applicants calling upon them to repay the outstanding loan within a period of 60 days from the date of receipt of the notice. Annexure-A7 legal notice was issued by the defendant to

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SA No.427 of 2023

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the applicants as an additional notice. The applicants ought to have sent their objection/representation to the above Demand Notice within a period of 60 days from the date of receipt of the notice. But they sent a legal notice through their Advocate only on 23.08.2022 ie. more than after lapse of 60 days. Hence Annexure-A8 reply notice cannot be considered as the objection/representation to Annexure-A6 Demand Notice. However, Annexure-A8 notice sent by the applicants could be considered as a reply notice to the lawyer notice AnnexureA7 issued on behalf of the defendant. Hence this Tribunal does not find any substance in the contention of the applicants that incorrect declaration has been made in Annexure-A9 affidavit with regard to non-issuance of objection/representation by the applicants to the Demand Notice.

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The other contention raised by the applicants in the SA is that there is a patent illegality in the description of the secured asset in Annexure-A6 Demand Notice and A9 application. On careful perusal of Annexure-A6 Demand Notice and A9 application filed in MC No. 1000/2022 before the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam, this Tribunal does not find any discrepancy in respect of description of the secured asset and its boundaries. The applicants have also not specifically pointed out in the SA as to what is the illegality of the description of the secured asset. Hence the above contention of the applicants is liable to be rejected in toto.

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In Annexure-A6 Demand Notice and Annexure-A9 application the existence of the residential building is clearly mentioned, though the Door No. for the building is omitted to be mentioned. It is not the case of the applicants that the property in Annexure-A6 Demand Notice and Annexure-A9 application is not the secured asset. Hence the mere omission to mention the Door No. for the residential building does not render the above Demand Notice and Annexure-A9 application as invalid. Hence this Tribunal does not find any substance in the contention of the applicants that Door No. is not mentioned in Annexure-A6 Demand Notice and Annexure-A9 application.

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On perusal of Annexure-A9 application filed in MC No. 1000/2022 shows that all the statutory requirements contemplated under Clause (i) to (ix) to the proviso of Section 14 (1) of the SARFAESI Act, 2002 has been furnished. A perusal of Annexure-A10 order shows that the learned Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam after having perused the contents of the affidavit and the documents filed in support of the affidavit and after

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SA No.427 of 2023

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having satisfied over the same passed order appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner issued notice pursuant to the direction given to him by the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam to take physical possession of the secured asset. This Tribunal does not find any procedural irregularity in respect of filing of Annexure-A9 application and affidavit in MC No. 1000/2022 and also no infirmity or procedural lapse in the Annexure-A10 order passed in MC No. 1000/2022.

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

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In the result, S.A No.427 of 2023 stands dismissed. There shall be no order as to costs.

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Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 06^th day of January, 2025.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

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SA No.427 of 2023

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

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Sl. No.	Date	Particulars
1.	25.05.2020	True copy of the land tax receipt with itsEnglishtranslation.	Annexure-A1
2.	25.05.2022	True copy of the certificate issued by the Agriculture Officer, Krishibhavan Pothanicadu.	Annexure-A2
3.	---	True photographs of the property of the applicants.	Annexure-A3
4.	16.02.2022	True copy of the Demand Notice issued underSec.13(2) ofthe SARFAESI Act.	Annexure-A4
5.	11.05.2022	True copy of the Possession Notice	Annexure-A5
6.	21.06.2022	True copy of the Demand Notice	Annexure-A6
7.	22.06.2022	True copy of the lawyer notice issued by the defendant bank.	Annexure-A7
8.	23.08.2022	True copy of the reply notice issued by theapplicants.	Annexure-A8
9.	---	True copy of Sec.14 application in MC No.1004/2022 before the Additional Chief Judicial Magistrate Court (MPs/MLAs)Ernakulam.	Annexure-A9
10.	12.05.2023	True copy of the order of the Additional Chief Judicial Magistrate Court (MPs/MLAs) Ernakulam in MC No. 1004/2022.	Annexure-A10
11.	---	True copy of the notice issued by the Advocate Commissioner.	Annexure-A11
12.	14.03.2017	True copy of the medical certificate issued to the 2^nd applicant.	Annexure-A12

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SA No.427 of 2023

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

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Sl. No.	Date	Particulars
1.	---	True copy of the application form submitted by the applicants	Annexure-R1
2.	31.08.2022	True copy of the reply notice issued by the defendant to the counsel for the applicants.	Annexure-R2
3.	---	True copy of the Acknowledgment card	Annexure-R3

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Aleyas Paul v. State Bank of India

Case brief

What is this about?

What the court decided

Aleyas Paul v. State Bank of India

Case brief

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What the court decided

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