Partly allowed

Siby Abraham v. L and T Housing Finance Ltd.

DRT17 Feb 2025SA/460/2024

Case brief

AI extract

What is this about?

In a Securitisation Application regarding recovery proceeds, the Tribunal rejected the applicant's claim that the demand and possession notices were illegal due to lacking a request for authorization from an official. However, it found the CJM court order appointing an Advocate Commissioner to be flawed due to non-compliance with SARFAESI Act requirements regarding the affidavit.

What did the court decide?

Relief to set aside Demand and Possession notices dismissed; relief to set aside CJM Order and Commissioner's notice allowed.

Siby Abraham versus L and T Housing Finance Ltd. — Execution and Attachment | 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 17^th DAY OF FEBRUARY, 2025

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

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S.A No. 460 of 2024

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Between

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Siby Abraham, S/o. M.C. Abraham, Mundaplackal House, Mayoora Apartment, Tripunithura P.O., Ernakulam – 682 301.

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--- Applicant

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And

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The Authorized Officer,

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L & T Housing Finance Ltd.

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Regd. Office, Brindavan, Plat No.177, CST Road, Kalina, Santracruz (East),

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Mumbai – 400 098.

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The Authorized Officer, CFM Asset Reconstruction Pvt. Ltd., 1^st Floor,

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Wakefield House, Sport Road, Ballard Estate, Mumbai – 400 038.

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--- Defendants

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This Securitization Application coming on 30.10.2024 and 13.11.2024 for final hearing before me in the presence of Mr.Retheeshkumar M., Counsel appearing for the Applicant and Mr.Sasidharan Nair M.N., Advocate 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:

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SA No.460 of 2024

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O R D E R

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This Securitisation Application was filed on 27.06.2024 seeking to declare that the 2^nd defendant is not an Authorised Officer as defined in Rule 2 (a) of Security Interest (Enforcement) Rules 2002 and to quash Annexure-A3, A3 (a) Demand Notices, Annexure-A4 possession notice, Annexure-A10 order of CJM Court, Ernakulam in MC No.130/2023 and Annexure-A11 notice issued by the Advocate Commissioner and to direct the defendants to pay cost to the applicant.

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The applicant had admitted the availment of credit facility from the 1^st defendant bank by mortgaging his immovable property situated in Re.Sy.No.33/290, Nadama Village of Kanayannoor Taluk, Ernakulam district. Annexure-B1 (a) copy of letter of continuity produced by the defendants shows that it was given in writing by the applicant to the 1^st defendant bank admitting the sanctioning of loan of Rs.42,00,000/- to him. Annexure-B1, B1(b) produced by the defendants shows that the applicant executed memorandum of creation of equitable mortgage by deposit of title deeds pertaining to his immovable property in favour of the 1^st defendant bank. Hence the contention of the applicant in the SA that, he did not execute any valid loan agreement is absolutely incorrect.

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According to the defendants, since the applicant defaulted in repayment of the outstanding loan due, the loan account of the applicant was declared as NPA on 05.12.2019. Since no repayment was made by the applicant, debt was assigned to Asset Reconstruction Company namely, M/s. CFM Asset Reconstruction Co. Ltd. with effect from 31.12.2020 which is the 2^nd defendant herein. The 1^st defendant sent Annexure-B3 notice/letter dated 25.05.2022 to the applicant informing him of assignment of the debt to the 2^nd defendant. The 1^st defendant again issued another letter, Annexure-B4, dated 19.06.2023 to the applicant informing him of assignment of the debt to the 2^nd defendant. Annexure-B5 postal receipts evidences the dispatch of the aforesaid notice/letter to the applicant. Annexure-B6 postal cover shows that notice/letter could not be served to the applicant and that it was returned with postal remark as “addressee left”.

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The 2^nd defendant issued Demand Notice dated 18.07.2023, Annexure-A3 (copy of Demand Notice has been produced by the defendant as Annexure-B7) to the applicant calling upon him to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. The applicant has admitted the receipt of Annexure-A3 Demand Notice.

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Page 2 of 6

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SA No.460 of 2024

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It is the contention of the applicant that since Annexure-A3 Demand Notice was not signed by the Authorised Officer of the 2^nd defendant, he did not send any reply to the 2^nd defendant and that Annexure-A3 Demand Notice is per se illegal and invalid since it was not issued by the Authorised Officer of the bank. It is clearly mentioned in Annexure-A3 Demand Notice that the notice is issued by the Authorised Officer on behalf of the 2^nd defendant Asset Reconstruction Co. It is also mentioned in Annexure-A3 notice that debt was assigned by the 1^st defendant to the 2^nd defendant. The applicant having failed to send any objection/ representation to the Demand Notice is not entitled to contend now that since Demand Notice was not issued by the Authorised Officer of the 2^nd defendant, he did not send any objection/representation. Be that it may so, Annexure-A6 resolution of the Board of Directors of the 2^nd defendant and Annexure-A7 letter of granting authority by the 2^nd defendant evidences that officer of the 2^nd defendant was deputed to act as its Authorised Officer.

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Since the applicant failed to respond to the terms of the demand notice, Possession Notice dated 03.11.2023, Annexure-A4 (copy of the same is produced as Annexure-B11 by the defendants) was issued for taking physical possession of the secured asset. The applicant has admitted the receipt of the possession notice. Annexure-B12 and B13 produced by the defendants evidences the publication of the possession notice in Metro Vartha, Kochi Edition dated 6.11.2023 and Business Standard Kochi edition dated 6.11.2023.

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Thereafter, the 2^nd defendant approached the Additional Chief Judicial Magistrate (MPs/MLAs) Court, Ernakulam and filed Annexure-A8 application and Annexure-A9 affidavit under Section 14 (1) of the SARFAESI Act, 2002. Annexure-A10 Order dated 25.04.2024 came to be passed appointing Advocate Commissioner for taking physical possession of the secured asset. The Advocate Commissioner issued notice dated 10.6.2024 Annexure-A11 to the applicant informing him that he would take physical possession of the secured asset on or after 15 days from the date of receipt of the notice. The applicant having aggrieved against the above measures filed this SA seeking the reliefs stated supra.

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Annexure-B2 copy of Asset ID based register evidences the registration of security interest over the immovable property of the applicant with CERSAI. Hence the contention of the applicant that security interest was not registered with CERSAI is incorrect.

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In Annexure-A9 affidavit, the details such as, the availment of credit facility from the 1^st defendant bank upon creation of security interest over his immovable property, default in repayment of the

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Page 3 of 6

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SA No.460 of 2024

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outstanding loan due, classification of loan account as NPA on 05.12.2019, issuance of Demand Notice dated 18.07.2023 to the applicant, proof of service of Demand Notice to the applicant, publication of the Demand Notice in newspapers, are alone stated. But the outstanding amount as on the date of filing of the affidavit is not mentioned in Annexure-A9. Thus it is evident that the 2^nd defendant failed to comply with mandatory requirements contemplated under Clause (i) to the proviso of Section 14 (1) of the SARFAESI Act, 2002. It appears that the learned Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam passed Annexure-A10 order without noting the above non-compliance of the statutory requirement. Therefore, this Tribunal is constrained to interfere with Annexure-A10 order and as such it is liable to be set aside.

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In view of the foregoing reasons and discussions, this Tribunal holds that the applicant is not entitled to get the relief of declaration that the 2^nd defendant is not an Authorised Officer as defined in Rule 2 (a) of the Security Interest (Enforcement) Rules 2002 and to initiate measures under the SARFAESI Act, 2002 and also to get the relief of setting aside the Annexure-A3 Demand Notice and Annexure-A4 possession notice. However, this Tribunal holds that the applicant is entitled to get the relief of setting aside Annexure-A10 order passed by the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam in MC No.130/2023 and Annexure-A11 notice issued by the Advocate Commissioner pursuant to Annexure-A10 order.

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In the result, S.A No.460 of 2024 stands partly dismissed in respect of the relief for setting aside Annexure-A3 Demand Notice and Annexure-A4 possession notice and SA stands partly allowed in respect of the relief for setting aside Annexure-A10 order and Annexure-A11 notice. No costs.

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However, it is made clear that the 2^nd defendant shall be at liberty to approach the Chief Judicial Magistrate Court Ernakulam and to file fresh application and affidavit by complying with the statutory requirements contemplated under Clause (i) to (ix) to the proviso of Section 14 (1) of the SARFAESI Act, 2002.

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Dictated to Steno, taken down, transcribed, typed by him, corrected and

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pronounced by me in the open court on this the 17^th day of February, 2025.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 4 of 6

SA No.460 of 2024

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

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Sl. No.	Date	Particulars
1.	09.11.2017	True copy of the loan recall letter issued by the1^st defendant to the applicant.	Annexure-A1
2.	27.02.2020	True copy of the possession notice issued by the 1^stdefendant to the applicant.	Annexure-A2
3.	18.07.2023	True copy of the Demand Notice issued to the applicant.	Annexure-A3
4.	---	True copy of the Demand Notice stated to be published by the Authorised Officer which is produced before the CJMCourt,Ernakulam.	Annexure- A3(a)
5.	03.11.2023	True copy of the possession notice issued by the 2^nddefendant to the applicant.	Annexure-A4
6.	18.12.2023	True copy of the letter sent by the applicant to the 2^nd defendant.	Annexure-A5
7.	10.04.2023	True copy of the resolution of the Board of Directors of 2^nddefendant produced by the 1^stdefendant before the CJM CourtErnakulam.	Annexure-A6
8.	12.10.2023	True copy of the letter of grant of authority signed by the alleged CEO S.V. Shahofthe 2^nd defendant.	Annexure-A7
9.	---	True copy of MC No. 130/2023 filed by the 2^nddefendant before CJM Court Ernakulam.	Annexure-A8
10.	---	True copy of affidavit filed by the 2^nd defendant in MC No. 130/2023 before the CJMCourt,Ernakulam.	Annexure-A9
11.	25.04.2024	True copy of the order of the Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam in MCNo.130/2024.	Annexure-A10
12.	10.06.2024	True copy of the notice issued by the Advocate Commissioner in MC No. 130/2024.	Annexure-A11

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Page 5 of 6

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SA No.460 of 2024

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List of documents filed by the 2^nd defendant along with the written statement

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Sl. No.	Date	Particulars
1.	30.07.2015	Memorandum of Entry for recording EM	Annexure-B1
2.	30.07.2015	Copy of letter of continuity	Annexure-B1(a)
3.	30.07.2015	Copy of letter evidencing deposit of title deeds.	Annexure-B1(b)
4.	30.07.2015	Copy of affidavit cum undertaking	Annexure-B1(c)
5.	---	Copy of print out evidencing registrationof EM withCERSAI	Annexure-B2
6.	25.05.2022	Copy of the notice/letter regarding assignment of the debt to M/s. CFM ARCP Ltd.	Annexure-B3
7.	19.06.2023	Copy of the notice/letter regarding assignment of the debt to M/s. CFM ARCP Ltd.	Annexure-B4
8.	---	Copy of the postal receipts evidencing the despatch of the notice dt.19.6.2023	Annexure-B5
9.	---	Copy of the postal cover showing the non-delivery of the letter dt.19.6.2023 reason – “Addresseeleft”	Annexure-B6
10.	18.07.2023	Copy of Sec.13(2) notice	Annexure-B7
11.	---	Copy of the postal receipts evidencing dispatchofSec.13(2)notice.	Annexure-B8
12.	21.08.2023	Copy of the paper clipping of Metro Vartha (Malayalam)Kochiedition.	Annexure-B9
13.	21.08.2023	Copy of the paper clipping of Business Standard (English)Kochiedition.	Annexure-B10
14.	03.11.2023	Copy of Sec. 13(4) possession notice	Annexure-B11
15.	06.11.2023	Copy of possession notice published in Metro Vartha (Malayalam) Kochi edition.	Annexure-B12
16.	06.11.2023	Copy of possession notice published in Business Standard (English) Kochi edition.	Annexure-B13

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 6 of 6

Siby Abraham v. L and T Housing Finance Ltd.

Case brief

What is this about?

What did the court decide?

Siby Abraham v. L and T Housing Finance Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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