Dismissed

Sony Sebastian v. Kerala Gramin Bank

DRT22 Oct 2025SA/463/2022

Case brief

AI extract

What is this about?

Debts Recovery Tribunal atErnakulam dismissed an application challenging possession measures under the SARFAESI Act. The Tribunal rejected claims that secured agricultural properties are exempt from enforcement by non-agriculturists and upheld the CJM's order under Section 14(1) despite the absence of a prior possession notice.

What did the court decide?

SA No.463/2022 stands dismissed; no order as to costs.

Sony Sebastian versus Kerala Gramin Bank — 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 22^nd DAY OF OCTOBER, 2025

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

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S.A No. 463 of 2022

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Between

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Sony Sebastian, S/o. Devasia, Vadakke Poondikulath,

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Thermala Vellad P.O.,

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Kannur District.

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Devasia P.A, S/o. Agusty, Palappurath House, Puthenpara, Alakkode P.O. Kannur District.

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Mercy Devasia, W/o. Devasia P.A. Palappurath House, Puthenpara, Alakkode P.O. Kannur District.

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Roy Joseph, S/o. Joseph, Lakshmi Nivas, Talap, Pallikkunnu P.O., Kannur District.

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Jessy Joseph, W/o. Sony Sebastian, Cheruvallath, Thermala

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Vellad P.O., Kannur District.

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Sheeba Joseph, W/o. Roy Joseph, Lakshmi Nivas, Talap, Pallikkunnu P.O., Kannur District.

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--- Petitioners/Applicants

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SA No.463 of 2022

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And

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Kerala Gramin Bank, Kannur Main Branch, Fort Road, Kannur P.O. Kannur -670 001.

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The Authorised Officer, Kerala Gramin Bank, Kannur Main Branch, Fort Road, Kannur P.O. Kannur -670 001.

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--- Respondents/Defendants

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This Securitization Application coming on 18.09.2025 for final hearing before me in the presence of Ms. Saurav, Counsel representing the counsel for the Applicants and Mr. Dileep Chandran 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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O R D E R

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This Securitisation Application was filed on 16.09.2022 seeking to stay the taking possession of property situated in Re-Survey No.292/IA having an extent of 10.53 acres situated in Vellad amsom, Naduvil Desom of Taliparamba Taluk, Kannur District, Kerala owned by the 1^st applicant, property situated in Re-Survey No.292/1A having an extent of 2.50 acres situated in Vellad amsom, Naduvil Desom of Taliparamba Taluk, Kannur District, Kerala owned by the 2^nd applicant and the property admeasuring an extent of 2.50 acres situated in Vellad amsom, Naduvil Desom, Taliparamba Taluk, Kannur District, Kerala owned by the 3^rd applicant is illegal and to declare that all the steps taken by the defendants under the Security Interest (Enforcement) Act are null and void and to direct the defendants not to proceed with taking over possession of the secured assets pending disposal of the SA.

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The applicants availed various credit facilities from the 1^st defendant bank upon creation of equitable mortgage by deposit of title deeds in favour of the 1^st defendant bank over the following properties:

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(a) Property situated in Re-Survey No,292/IA having an extent of 10.53 acres situated in Vellad amsom, Naduvil Desom of Taliparamba Taluk, Kannur District, Kerala owned by the 1^st applicant.

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SA No.463 of 2022

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(b) Property situated in Re-Survey No.292/1A having an extent of 2.50 acres situated in Vellad amsom, Naduvil Desom of Taliparamba Taluk, Kannur District, Kerala owned by the 2^nd applicant.

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(c) Property situated in Re-Survey No.292/1A having an extent of 2.50 acres situated in Vellad amsom, Naduvil Desom, Taliparamba Taluk, Kannur District, Kerala which is owned by the 3^rd applicant.

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The applicants have admitted their default in repayment of the outstanding loan due. Hence, the loan accounts of the applicants came to be classified as Non-Performing Asset and Annexure A5 demand notice dated 02.08.2018 was issued to the applicants calling upon them to repay the outstanding loan due within a period of 60 from the date of receipt of the demand notice. The applicants 1 to 3 sent Annexure A5 representation on 29.09.2018 to the 2^nd defendant inter alia stating that demand notice does not give the details of the limits granted to the applicants, and that secured assets are agricultural lands. The 2^nd defendant sent Annexure A6 reply on 15.10.2018 to the applicants 1 to 3 answering the issues raised in Annexure A5.

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Since the applicants failed to respond to the terms of Annexure A4 demand notice, the defendants approached the Chief Judicial Magistrate Court, Thalassery and filed application and affidavit under Section 14(1) of the SARAFAESI Act, 2002. Annexure A8 order dated 23.10.2021 came to be passed in CMP No.2778/2021 appointing advocate commissioner to take physical possession of the secured asset. The advocate commissioner issued Annexure A8(a) notice dated 12.11.2021 to the applicants informing them that she would take physical possession of the secured asset on 20.12.2021. 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 secured assets are agricultural properties and that Annexure A1 to A3 loan agreements evidences the nature of the properties as agricultural properties and that the defendants have also admitted that secured assets are agricultural properties and that the advocate commissioner has also noted in her report that secured assets are agricultural properties and that Annexure A11 certificate issued by the Agricultural officer also proves the nature of the secured assets as the agricultural properties.

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It is submitted further by the counsel for the applicants that over draft facility was availed by the applicants 4 and 5 and cash

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SA No.463 of 2022

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credit facility was availed by the 6^th applicant and two agricultural loans each was availed by the applicants 1 to 3 and that hence, clubbing the above transaction into one recovery proceedings is illegal and that separate demand notice ought to have issued to the applicants since the security interest created for each credit facility is separate.

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The counsel for the applicants submitted further that the learned Chief Judicial Magistrate Court, Thalassery overlooked the fact that no possession notice was issued to the applicants and that hence Annexure A8 order is illegal and that SA may be allowed as prayed for.

¶39

The counsel appearing for the defendants submitted that the loan accounts of the applicants were classified as Non-Performing Asset much prior to the COVID -19 pandemic and that the averment of the applicants that credit facilities could not be clubbed together in a single recovery proceedings is incorrect and that secured assets are not agricultural properties and that this Tribunal has held in its order dated 21.12.2022 passed in IA No. 2240/2022 that secured assets are not agricultural properties and that Annexure A11 certificate issued by the Agricultural Officer cannot be relied upon to prove the fact that secured assets were agricultural properties on the date of creation of security interest over the same and that Annexure A12 and Annexure A13 photographs are not the relevant documents to prove the above factum and that there are residential buildings in the secured assets and that for the report submitted by the Advocate Commissioner, objection has been filed by the defendants stating that secured assets are not agricultural properties.

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It is submitted further by the counsel for the defendants that applicants failed to point out any illegalities in the proceedings initiated by the defendants under Section 14 of the SARFAESI Act and that the learned Chief Judicial Magistrate, Thalassery passed order to take physical possession of the secured asset after having verified the documents and satisfied over the same and that the applicants are not entitled to get the reliefs sought for in the SA and that therefore, the SA may be dismissed with costs to the defendants.

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The applicants after having availed credit facilities upon creation of secured interest over the immovable properties are not entitled to contend now that the credit facilities cannot be clubbed together in a single recovery proceedings. The applicants have not pointed out as to which provision of the SARAFAESI Act, 2002 and Rules made thereunder bars the secured creditor and the authorised

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SA No.463 of 2022

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officer from clubbing the credit facilities availed by the borrowers so as to recover the outstanding loan due.

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It is not mandatory for the secured creditor and the Authorized Officer to approach the Chief Judicial Magistrate Court for taking physical possession of the secured asset without issuance of the possession notice under Section 13(4) of the SARFAESI Act, 2002 as laid down by the Hon’ble Supreme Court in Standard Chartered Bank & Ors. Vs. V. Noble Kumar & Ors. (MANU/SC/0874/2013).

¶46

The main contention raised by the applicants in the SA is that the secured assets are the agricultural properties and that defendants have also admitted the same. The applicants rely upon Annexures A1 to A3 copies of loan agreements entered into between them and the 1^st defendant bank. In Annexures A1 to A3, it is stated that credit facility was sanctioned by way of equitable mortgage or creation of charge on agricultural lands and also by hypothecation of crops standing timber or to be raised. It is also mentioned in Annexures A1 to A3 that the hypothecated crops are rubber, cocoa, coconut, arecanut etc.

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The applicants availed 8 credit facilities out of which two credit facilities are for the purpose of their business in respect of two partnership firms M/s. Leo Enterprises and M/s. Leo Agencies which are dealing with wholesale of refrigerators. It is not the contention of the applicants that they are eking out their livelihood from and out of the income derived from the agricultural properties. They have also not produced any material before this Tribunal in order to prove the above factum and also that they derived income from the agricultural operations.

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14. In Commissioner of Income Tax, West Bengal, Calcutta vs. Raja Benoy Kumar Sahas Roy (MANU/SC/0057/1957), the Hon’ble Supreme Court has held as follows :

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“101. If the term "agriculture" is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and the raising on the land of products which have some utility either for consumption or for trade and commerce, it will be seen that the term "agriculture" receives a wider interpretation both in regard to its operations as well as the results of the same.

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Nevertheless there is present all throughout the basic idea that there must be at the bottom of it cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar work done on the land itself. This basic conception is the essential sine qua non of any operation performed on the land constituting agricultural operation performed on the land constituting

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SA No.463 of 2022

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agricultural operation. If the basic operations are there, the rest of the operations found themselves upon the same.

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But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations.”

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The Advocate Commissioner who inspected the secured assets has stated in her report dated 28.08.2024, with regard to existence of various trees such as nutmeg, mango trees, arecanut, coconut, teak, jackfruit, plantain etc. in the secured assets. She has also stated in her report that all the three items of properties are situated in extreme hilly area. She has also noted the existence of residential buildings in item Nos. 1 and 2 of the secured assets. But it is pertinent to state here that she has not stated in her report as to whether any agricultural activities were being carried on in all the three items of the properties or as to whether there had been any signs of agricultural activities being carried on in the above properties. A perusal of photographs produced by the Advocate commissioner along with her report shows that there were no signs of agricultural activities being carried on in all the three items of the secured assets.

¶56

In Annexure – A11 certificate issued by the Agricultural Officer, Krishi Bhavan, Naduvil there is no mention as to whether the agricultural officer personally inspected the property and verified the nature of the lands and also as to whether agricultural operations were carried on in the properties. Hence, Annexure – A11 certificate cannot be relied upon to prove that secured asset are agricultural properties.

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In the present case on hand, the applicants run two partnership firms. They are not agriculturists by profession. They do not eke out their livelihood from and out of the income derived from their alleged agricultural operations. As per the dictum laid down in by aforecited judgment of the Hon’ble Supreme Court, this Tribunal holds that the secured assets cannot be an agricultural properties for want of any agricultural operations.

¶58

Even assuming for argument’s sake that all the three items of the secured assets are agricultural properties, the applicants cannot claim the exemption under Section 31(i) of the SARFAESI Act 2002 in view of the dictum laid down by the Hon’ble Supreme Court in ITC Limited Vs. Blue Coast Hotel Limited & Ors. (AIR 2018 SC 3063) wherein it has been held as follows :

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“38. The purpose of enacting Section 31(i) and the meaning of the term "agricultural land" assume significance. This provision, like many others is intended to protect agricultural land held for agricultural purposes by

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SA No.463 of 2022

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agriculturists from the extraordinary provisions of this Act, which provides for enforcement of security interest without intervention of the Court. The plain intention of the provision is to exempt agricultural land from the provisions of the Act. In other words, the creditor cannot enforce any security interest created in his favour without intervention of the Court or Tribunal, if such security interest is in respect of agricultural land. The exemption thus protects agriculturists from losing their source of livelihood and income i.e. the agricultural land, under the drastic provision of the Act. It is also intended to deter the creation of security interest over agricultural land as defined in Section 2 (zf). Thus, security interest cannot be created in respect of property specified in Section 31.

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40. It is undisputed that these lands were mortgaged in favour of the creditor under a deed dated 26.02.2010. Obviously, since no security interest can be created in respect of agricultural lands and yet it was so created, goes to show that the parties did not treat the land as agricultural land and that the debtor offered the land as security on this basis. The undisputed position is that the total land on which the Goa Hotel was located admeasures 182225 sq. mtrs. Of these, 2335 sq. mtrs. are used for growing vegetables, fruits, shrubs and trees for captive consumption of the hotel. There is no substantial evidence about the growing of vegetables but what seems to be on the land are some trees bearing curry leaves and coconut. This amounts to about 12.8 % of the total area.”

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The Hon'ble High Court of Kerala has held in Sharada Flour Products Pvt. Ltd. and Ors. vs. Dhanlaxmi Bank Ltd. and Ors. (MANU/KE/1979/2018), after referring to the judgment of the Hon’ble Supreme Court in ITC Limited Vs. Blue Coast Hotel Limited & Ors. as follows :

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“52. Going by the holding of Blue Coast Hotels, Section 31 intends to protect agricultural land held for agricultural purposes by agriculturists. It also notes that the exemption protects agriculturists from losing their source of livelihood and income-- that is, the agricultural land--under the drastic provision of the Act.”

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In the present case on hand, the applicants having offered their properties as security and having created a security interest on their properties with full knowledge of their obligations, they cannot turn around and contend now that the secured assets which are agricultural properties are exempted under the provisions of Section 31(i) of SARFAESI Act 2002. Therefore, this Tribunal holds that the above contention of the applicants is liable to be rejected.

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The applicants have not produced the copy of the affidavit filed in CMP No.2778/2021 on the file of the Chief Judicial Magistrate Court, Thalassery. However, they have filed the copy of the application filed in CMP No.2778/2021. A perusal of the same shows that all the statutory requirements contemplated under Clauses (i) to (ix) to the proviso of Section 14(1) of the SARFAESI Act 2002 has been

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SA No.463 of 2022

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complied with by the defendants. It is seen from perusal of Annexure – A8 order dated 23.10.2021 that the learned Chief Judicial Magistrate, Thalassery after having perused the contents of the application, affidavit and documents produced and after having satisfied over the same passed order to appoint Advocate Commissioner to take physical possession of the secured asset. This Tribunal does not find any infirmity or illegality in the above order. It is pertinent to state that there is no specific challenge by the applicants in the SA in respect of Annexure – A8 order except a vague contention that the Chief Judicial Magistrate, Thalassery ought to have verified as to whether a notice under Section 13(4) of the SARFAESI Act 2002 and Rule 8(1) of the Security Interest (Enforcement) Rules 2002 was issued before entertaining a petition under Section 14 of the SARFAESI Act 2002. This Tribunal has already observed supra that issuance of possession notice under Section 13(4) of the SARFAESI Act 2002 is not at all required prior to filing of petition and affidavit under Section 14 of SARFAESI Act 2002. Hence, the above contention of the applicants does not hold hood.

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In view of the forgoing reasons, this Tribunal holds that the applicants have failed to prove their case so as to get the reliefs sought for in the SA.

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Resultantly, SA No.463/2022 stands dismissed. However, 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 22^nd day of October, 2025.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

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SA No.463 of 2022

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

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Sl. No.	Date	Particulars
1.	10.08.2015	True copy of the loan agreement entered into between the 1^stApplicant and the 1^stDefendant.	Annexure-A1
2.	11.08.2015	True copy of the loan agreement entered into between the 2^ndApplicant and the 1^stDefendant.	Annexure-A2
3.	30.03.2015	True copy of the loan agreement entered into between the 3^rdApplicant and the 1^stDefendant.	Annexure-A3
4.	02.08.2018	True copy of the demand notice under S.13(2) of the SARFAESI Act, 2002 issued by the 2^nddefendant to the 3^rd Applicant.	Annexure-A4
5.	29.09.2018	The Office copy of the representation submitted by the Applicants 1 to3 to the 2^ndDefendant.	Annexure-A5
6.	15.10.2018	True copy of the reply issued by the 2^nd defendant to theApplicants1to 3.	Annexure-A6
7.	11.10.2021	True copy of CMP No.2778/2021 preferred by the 1^stdefendant dated 11.10.2021.	Annexure-A7
8.	23.10.2021	True copy of the order in CMP No.2778/2021 by the Chief Judicial Magistrate,Thalassery.	Annexure-A8
9.	12.11.2021	True copy of the notice dated 12.11.2021 issued by the Advocate Commissioner.	Annexure- A8(a)
10.	10.08.2022	True copy of the order dated 22.12.201 in W.P.(c) No.30023 of 2021 by the Hon’bleHighCourt of Kerala.	Annexure-A9
11.	…….	True copy of the Judgment dated 10.08.2022 in W.P.(c) No.30023 of 2021 by the Hon’ble High Court of Kerala.	Annexure-A10
12.	….	True copy of the certificate issued by the concerned agriculturalofficer.	Annexure A11
13	……	Copies of the photographs of the 2 items of properties owned by the 1^st petitioner.	Annexure A12

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SA No.463 of 2022

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14	……	Copies of the photographs of the two	Annexure A13
		items of properties owned by the 2^nd
		and 3^rd petitioners.

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

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Sl.	Date		Particulars
No.
1.	……	The true acknowled	copy of the postal gment in connection	Annexure B1
		with the notice.	receipt of demand

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List of documents filed by the Advocate Commissioner along with the S.A.

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Sl. No.	Date	Particulars
1.	…..	Commission report.
2	……	A copy of rough sketch prepared by the Advocate Commissioner (item Nos.2 and 3 properties)	Document No.C1
3.		A copy of rough sketch prepared by the Advocate Commissioner(item No.1)	Document No.C2
4.	…….	Photographs of the schedule property (item No.2)	Document No.C3
	…..	Photographs of the schedule propertyitem No.3.	Document No.C4
		Photographs of the schedule propertyitem No.1	Document No.C5
5.	…….	The copy of the notice issued to the parties with list of persons present at the time of inspection	Document No.C4
6.	……	Commission warrant.

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Su. WILLYAHM) PRESIDING OFFICER

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al/-

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Sony Sebastian v. Kerala Gramin Bank

Case brief

What is this about?

What did the court decide?

Sony Sebastian v. Kerala Gramin Bank

Case brief

What is this about?

What did the court decide?

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