Dismissed

Navas v. State Bank of India

DRT29 Jan 2025SA/447/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application challenging the bank's possession proceedings under the SARFAESI Act. The court held that the bank followed statutory procedures, no defect was found in the CERSAI registration, and the applicant failed to complete the One Time Settlement terms, thereby losing the benefit of the arrangement.

What did the court decide?

The application was dismissed and costs of Rs.20,000/- were awarded to the defendant bank.

Navas versus State 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

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PRESIDING OFFICER

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Dated this the 29^th day of January, 2025

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SECURITIZATION APPLICATION No.447/2024

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Between

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Navas, Proprietor, Navas Associates, S/o.Shamsudeen, Residing at Paradise, MRA – 159, Manayilkulangara, Thirumullavaram P.O., Kollam – 691 012. …Applicant

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And

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State Bank of India, Represented by the Authorised Officer/ Chief Manager,

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SARB, LMS Compound, Thiruvananthapuram – 695 033.

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Branch Manager, State Bank of India, Commercial Branch, Kollam – 691 012.

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Authorised Officer/ Chief Manager, SARB, LMS Compound, Thiruvananthapuram – 695 033. …Defendants

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This Securitization Application having been heard on 27.12.2024

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in the presence of Advocate Sri.Kishore R. for the applicant and Advocate Sri.Tom K.Thomas 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

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SA 447/2024

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Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’), the applicant/borrower has filed this SA under S.17(1) of the SARFAESI Act.

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Brief facts of the case :

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In the SA it is pleaded by the applicant/borrower and proprietor of ‘Navas Associates’ that he had availed cash credit limit of Rs.1.50 crores from the 1^st defendant on 04.01.2012 and the loan was enhanced from time to time. To secure the loan, three items of properties were mortgaged with the defendant bank. It is further stated that due to Covid-19 pandemic, the loan could not be repaid in time. Consequently, the defendant bank classified the loan as NPA and issued demand notice under S.13(2) of the SARFAESI Act claiming an amount of Rs.2,17,79,800/-. In the year 2023 the defendant bank has offered an OTS for the loan of Rs.1.50 crores including the housing loan. After selling two items of properties, the applicant deposited Rs.1,03,26,139/- in various loan accounts but the bank did not keep their promises and proceeded to take physical possession of the secured asset of an extent of 6.92 Ares.

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The defendant bank moved the CJM, Kollam under S.14 of the SARFAESI Act for taking physical possession of the mortgaged property. On the basis of the order passed by the CJM in MC No.172/2024, the Advocate Commissioner has issued notice to take possession of the secured asset. The claim of the defendant bank is illegal and they charged high rate of interest in the loan amount. The applicant has deposited Rs.1.03 crores towards the OTS amount of Rs.1.57 crores and only Rs.54 lakhs is outstanding. Without

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SA 447/2024

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considering the same, the defendants proceeded to take physical possession of the secured asset which is impugned in this proceeding.

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The defendants contested the claim by filing written statement and denied the averments in the SA and claimed inter alia that the applicant availed loans from time to time but he defaulted in repayment. The applicant submitted OTS proposal which was not acceptable to the defendant bank and the loan became highly irregular. Consequently, as per the guidelines issued by RBI, the loan was classified as NPA and demand notice under S.13(2) of the SARFAESI Act was issued to the applicant on 08.05.2023 calling him to pay the outstanding amount of Rs.2,09,64,782/- within the statutory period of 60 days but he did not comply the same nor submitted any objection/representation to the demand notice in disputing the claim. Thereafter measure under S.13(4) of the SARFAESI Act was initiated after following all the statutory requirements for taking possession of the secured asset.

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As the defendants find difficulty in taking physical possession of the secured asset, they filed MC No.172/2024 before the CJM, Kollam. Based on the order of the CJM, Advocate Commissioner has issued notice to take possession of the secured asset which is impugned in this SA. All the statutory measures are duly followed in taking steps under the SARFAESI Act and security interest was also registered in the CERSAI portal. The applicant has no bonafide in seeking any relief in this proceeding and hence the SA may be dismissed.

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SA 447/2024

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From the respective case of the applicant and defendants,

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the following points are emerged for adjudication in this case:

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(i) Whether the securitization proceedings suffer from any illegality or defect or irregularity to intervene with the same?

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

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FINDINGS:

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Point Nos.(i) & (ii):

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For the sake of convenience, both the points, being interlinked with each other, are taken up together for adjudication. Admittedly, the applicant availed the loan from the defendant bank by creating security interest in respect of the subject matter property. As per the demand notice marked Annexure-B1, the applicant availed four loans and the outstanding inclusive of interest as on 08.05.2023 is Rs.2,09,64,782/- and details of the relevant documents are mentioned therein regarding creation of equitable mortgage in respect of the subject matter property, arrangement letter etc. executed by the applicant at the time of availing the loan. Non-receipt of the demand notice is also not disputed.

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During arguments, learned counsel for the applicant raised the following points:-

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(i) All the procedural measures are not duly followed by the defendants in issuing the possession notice under S.13(4) of the SARFAESI Act and also in obtaining the order from the CJM under S.14 of the SARFAESI Act.

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SA 447/2024

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(ii) OTS proposal was accepted by the defendant bank. Accordingly, the applicant deposited Rs.1,03,26,139/- and the balance amount to be paid is Rs.54 lakhs. Hence the claim of the defendants for more than Rs.2 crores is uncalled for and not correct.

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(iii) The security interest created over the subject matter property is not registered in the CERSAI portal and hence the securitization proceedings is vitiated.

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To counter the contentions, the defendants produced all the relevant documents regarding compliance of the statutory procedures and the CERSAI certificate marked Annexure-B8. No defect is noticed in compliance of the statutory requirements in issuing possession notice. The possession notice was also published in two newspapers viz., Kerala Kaumudi in vernacular language and The New Indian Express in English language. So also, photograph showing affixture of the possession notice on the secured asset is produced and marked as Annexure-B7. No specific allegation is made by the applicant about any defect or illegality in the proceeding initiated under S.14 of the SARFAESI Act. In absence of any challenge, securitization proceeding including the measure under section.14 of the SARFAESI act cannot be said as illegal to intervene with the same.

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So far as the claim of the applicant that OTS proposal was accepted by the defendant bank and Rs.54 lakhs is required to be deposited after adjusting deposited amount of Rs.1,03,26,139/-, no material is produced about acceptance of OTS and deposit of any amount in pursuance to terms and conditions of the OTS. Even if assuming for a moment that the OTS was accepted, admittedly the

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SA 447/2024

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applicant has not deposited the entire settled amount within the time schedule. Subsequently, the applicant cannot claim benefit of the OTS after over of the stipulated period. In the Division Bench judgment of the Hon'ble High Court of Kerala in the case of State Bank of India vs. Sham P.S. [Judgment dated 05.12.2024 in W.A.No.1275/2024] at paragraph 14 it is held as follows:-

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“14. Banks deal with public money. Loans are provided out of their funds on specific terms and conditions. The loan agreement between the creditor bank and borrower has its own sanctity. Banks provide special schemes such as One Time Settlement Schemes to enable defaulters to wipe off the liabilities. Terms and conditions of such schemes are formulated on the basis of commercial prudence. Often, waiver of penal interest or other components is offered as benefit to the borrowers. A borrower availing the benefit of the Scheme is bound by terms and conditions of the Scheme in its entirety. If the borrower is not in a position to or unwilling to act in accordance with any of the terms and conditions of the OTS Scheme or committed breach of the terms he cannot be permitted to seek direction from the Court to compel the bank to honour its obligations. If such pleas are acceded to, that will definitely amount to re-writing of the agreement between the creditor and the borrower.”

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In view of this ratio, the applicant has no bonafide in raising such issue in this forum. The applicant, having failed to establish any illegality or irregularity or defect in this proceeding, is not entitled to get any relief in this case.

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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. Since the applicant has raised vexatious claim causing unnecessary delay in the securitization proceedings, he is liable to pay costs of Rs.20,000/- (Rupees twenty thousand only) to the defendant bank.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 29^th day of January, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 447/2024

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Documents on the part of the applicant

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Annexures	Date	Particulars of documents
Annexure-A1	25.08.2023	Copy of possession notice issued to the applicant.
Annexure-A2	10.10.2023	Copy of lawyer notice issued to the applicant.
Annexure-A3	20.12.2023	Copy of MC No.172/2024 filed by the defendant bank before the CJM, Kollam.
Annexure-A4	12.02.2024	Copy of order in MC No.172/2024 passed by the CJM, Kollam.
Annexure-A5	25.03.2024	Copy of notice issued by the Advocate Commissioner in MC No.172/2024.
Annexure-A6	22.06.2024	Copy of notice issued by the Advocate Commissioner in MC No.172/2024.
Annexure-A7 D	… ocuments on	Copy of the statement of account. the part of the defendants
Annexure-B1	08.05.2023	Copy of demand notice issued by the defendant bank.
Annexure-B2	…	Copy of acknowledgement card signed by the applicant.
Annexure-B3	25.08.2023	Copy of possession notice issued by the defendant bank.
Annexure-B4	…	Copy of acknowledgement card signed by the applicant.
Annexure-B5	26.08.2023	Copy of possession notice published in Kerala Kaumudi daily.
Annexure-B6	26.08.2023	Copy of possession notice published in The New Indian Express daily.
Annexure-B7	25.08.2023	Copy of photograph evidencing affixture of possession notice on the property.
Annexure-B8	27.10.2021	Copy of CERSAI registration certificate.

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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 29^th January, 2025

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SA No.447/2024

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Between

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Navas, Proprietor, Navas Associates, S/o.Shamsudeen, Residing at Paradise, MRA – 159, Manayilkulangara, Thirumullavaram P.O., Kollam – 691 012. …Applicant

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And

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State Bank of India, Represented by the Authorised Officer/ Chief Manager, SARB, LMS Compound, Thiruvananthapuram – 695 033 & 2 others. …Defendants

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F I N A L O R D E R

Navas v. State Bank of India

Case brief

What is this about?

What did the court decide?

Navas v. State Bank of India

Case brief

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