Dismissed

Abu Thahir P B v. South Indian Bank

DRT13 Feb 2025SA/467/2024

Case brief

AI extract

What is this about?

Debts Recovery Tribunal heard an application seeking to set aside possession proceedings under the SARFAESI Act. The tribunal dismissed the application, rejecting late pleas regarding NPA classification and finding the bank complied with statutory notice requirements for demand and possession.

What did the court decide?

S.A. No. 467 of 2024 stands dismissed with no costs.

Abu Thahir P B versus South Indian 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 13^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. 467 of 2024

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Between

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Abu Thahir P.B.,

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Palliparambu, Mundur, Pudanur, Palakkad-678592.

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Basheer P.V., Palliparambu, Mundur, Pudanur, Palakkad-678592.

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Shabeer P.M., Palliparambu, Mundur, Zhakkad, Palakkad-678592.

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--- Applicants

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And

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The South Indian Bank Ltd. Represented by its Branch Manager, Palakkad Main Branch, G.B. Road, Palakkad-678 013.

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The Authorized Officer, South Indian Bank Ltd. Regional Office, First Floor, D & D Arcade Building, Chittur Road, Manappullikkavu, Kunnathurmedu P.O., Palakkad – 678 013.

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--- Defendants

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SA No.467 of 2024

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This Securitization Application coming on 12.12.2024 for final hearing before me in the presence of Mr. V.K. Peer Mohamed Khan Mohamed Khan, Counsel appearing for the Applicants and Mr.Anto Thomas Adipuzha, 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 28.06.2024 seeking to set aside Annexure-I to IV proceedings in taking possession of the properties scheduled therein and the Demand Notice and to order restricting the defendant bank from evicting the applicants and occupants from the properties and to declare that the defendant is not entitled to proceed under SARFAESI Act against the applicants and their properties and allow the cost of this proceeding from the defendant bank.

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The applicants have not refuted the averment of the defendants with regard to availment of cash credit facility of Rs.2 Crores and ESLGS facility of Rs.61,00,000/- from the 1^st defendant bank upon creation of security interest over the immovable properties which are the subject matter of the SA belonging to the applicants 1 and 2. Further, Annexure-B1 copy of credit facility agreement, B2 copy of master facility agreement and B3 copy of letter confirming deposit of title deeds strengthens the above availment of credit facilities upon creation of security interest over the properties belonging to the applicants 1 and 2.

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According to the defendants, since the applicants defaulted in repayment of the outstanding loan due, the loan accounts were came to be classified as Non-performing Asset. Annexure-B4 Demand Notice dated 31.07.2023 was issued to the applicants and other coborrower 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 defendants have produced Annexure-B5 copy of postal receipt and Annexure-B6 copy of acknowledgement cards in order to prove their contention that Demand Notice was served to the applicants and other co-borrower. Indisputably, the applicants neither sent any objection/ representation to the Demand Notice nor did they clear off their liability due to the 1^st defendant bank.

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Therefore, the defendants issued Annexure-B9 possession notice dated 29.11.2023 for symbolically taking physical possession of the secured asset. Annexure-B7 copy of postal receipts and AnnexureB8 copy of acknowledgement cards evidences the service of the

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Page 2 of 7

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SA No.467 of 2024

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possession notice to the applicants and other co-borrower. The defendants have produced Annexure-B9 to B11 in order to prove their contention that possession notice was published in The New Indian Express daily dated 29.11.2023 and Kerala Kaumudi daily dated 29.11.2023 and that the possession notice was conspicuously affixed on the secured asset.

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The defendants issued Annexure-B12 redemption notice dated 16.03.2024 to the applicants and other co-borrower. Annexure-B13 copy of postal receipts and B14 copy of acknowledgement cards evidences the service of redemption notice on the applicants and other co-borrower.

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Thereafter, the defendants approached the Chief Judicial Magistrate Court Palakkad and filed Annexure-II application and affidavit under Section 14 (1) of the SARFAESI Act, 2002. AnnexureIII Order dated 30.05.2024 came to be passed appointing Advocate Commissioner for taking physical possession of the secured asset. The Advocate Commissioner issued Annexure-IV notice dated 11.06.2024 to the applicants and other co-borrower informing them that she would take physical possession of the secured asset within 15 days from the date of receipt of the notice. The applicants having aggrieved against the above measures, filed this S.A seeking the reliefs stated supra.

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The applicants have merely averred in para 6 of the SA that the alleged classification of the account itself is bad and the account could not be continued as NPA. But they have not specifically averred as to how the classification of loan account is bad. But, for the first time in the notes of argument submitted on behalf of the applicants, it is contended that classification of loan account as NPA is not as per the guidelines of RBI and that it is not in accordance with RBI Master Circular – Prudential Norms on Income Recognition, Asset Classification. Now the issue which arises for consideration before this Tribunal is as to whether the litigant who fails or omits to specifically plead with regard to classification of loan account as NPA, is entitled to raise the aforesaid issue for the first time in the notes of argument. The answer would be in the negative. Without making specific plea in the SA, raising the said plea subsequently would definitely deprive the defendant of his right to refute the aforesaid plea. Moreover, the applicants having chosen to waive their statutory right of sending objection/representation to the Demand Notice are not entitled to raise the aforesaid issue now.

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The object of sending Demand Notice under Section 13 (2) of the SARFAESI Act, 2002 is to put the borrower/guarantor on notice that he committed default in repayment of the outstanding loan due and

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Page 3 of 7

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SA No.467 of 2024

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that the loan account classified as NPA. The provisions of Sec.13 (2) of the Act does not mandate the secured creditor to specifically state in the notice the reason for classifying the loan account as NPA. It is suffice to mention that on account of default in repayment of the outstanding loan, the loan account has been classified as NPA. Hence this Tribunal does not find any substance in the contention of the applicants in the written argument notes that the reason for classification of NPA is stated differently in Annexure-B4 Demand Notice and in the written statement.

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On perusal of Annexure-B19 and B20 statement of accounts pertaining to CCOL and ECLGS would show that the total outstanding amount was overdue. Hence the submission of the counsel for the applicants that the CCOL account was operated well during the period 01.01.2023 to 01.04.2023 and that outstanding balance was below the sanctioned limit on most of the days and that CCOL account has not been out of order for 90 days at any period of time till 26.05.2023 so as to warrant classification of loan account as NPA under RBI guidelines, cannot be accepted as correct.

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The applicants have averred in the SA that the defendants failed to comply with the provisions of Clause (i) to (ix) to the proviso of Section 14 (1) of the SARFAESI Act, 2002 and that Annexure-II application and affidavit is bad. In Annexure-II affidavit, the details such as, availment of credit facilities by the applicants upon creation of security interest over the immovable properties belonging to the respondents 2 and 3 (applicants 1 and 2 herein), default in repayment of outstanding loan due, classification of loan account as NPA, issuance of Demand Notice to the respondents and service of the same on the respondents, failure of the respondents to discharge their liability within the prescribed period, issuance of possession notice, the reason for approaching the Chief Judicial Magistrate Court, Palakkad for taking physical possession of the secured asset, the outstanding as on 08.04.2024, had been furnished. Hence, the submission of the counsel for the applicants that the details contemplated under Clause (i) to (ix) to the proviso of Section 14 (1) of the SARFAESI Act, 2002 were not furnished does not hold good.

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A perusal of Annexure-III order shows that the learned Chief Judicial Magistrate, Palakkad after having perused the contents of the application and affidavit and having satisfied over the same, passed order appointed Advocate Commissioner to take physical possession of the secured asset. This Tribunal does not find any infirmity or irregularity in the above order.

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Page 4 of 7

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SA No.467 of 2024

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The applicants have failed to establish their case so as to get the reliefs sought for in the SA.

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Resultantly, S.A No.467 of 2024 stands dismissed. No 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 13^th day of February, 2025.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 7

SA No.467 of 2024

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

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Sl. No.	Date	Particulars
1.	24.11.2023	True copy of the possession notice issued by the defendant bank.	Annexure-I
2.	09.04.2024	True copy of the petition in MC No. 233/2024 on the files of CJM Court Palakkad alongwithaffidavit.	Annexure-II
3.	30.05.2024	True copy of the order in MC No. 233/2024 on the files of CJM Court Palakkad.	Annexure-III
4.	11.06.2024	True copy of the notice issued by the Advocate Commissioner in MC No. 233/2024 on the files of CJM Court Palakkad.	Annexure-IV

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

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Sl.	Date	Particulars
No.
1.	19.10.2020	True copy of the Credit Facility Agreement executed by the applicant in favour of the bank in respect of CCOL facility.	Annexure-B1
2.	23.03.2022	True copy of the Master Facility Agreement executed by the applicant in favour of the bank in respect of ECLGS facility.	Annexure-B2
3.	24.03.2022	True copy of the Letter Conforming Deposit of Title Deeds executed by the applicantsin favourofthe bank.	Annexure-B3
4.	31.07.2023	True copy of the Demand Notice issued by the 2^nddefendant under Sec.13 (2) of the SARFAESI Act to the borrowers and guarantors.	Annexure-B4
5.	05.08.2023	True copy of the postal receipt addressing to the borrower and guarantors in respect of Demand Notice.	Annexure-B5
6.	---	True copy of the acknowledgement cards addressed to the borrowers and guarantorsin respect of DemandNotice	Annexure-B6

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Page 6 of 7

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SA No.467 of 2024

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7.	28.11.2023	True copy of the postal receipt addressing to the borrower and guarantors in respect of possession notice.	Annexure-B7
8.	---	True copy of the acknowledgement cards addressed to the borrowers and guarantors in respect of possession notice	Annexure-B8
9.	29.11.2023	True copy of the possession notice published in the New Indian Express daily.	Annexure-B9
10.	29.11.2023	True copy of the possession notice publishedintheKerala Kaumudidaily	Annexure-B10
11.	24.11.2023	True copy of photograph showing the affixture of possession notice on the secured asset.	Annexure-B11
12.	16.03.2024	True copy of the redemption notice issued to the borrowerand guarantors	Annexure-B12
13.	18.03.2024	True copy of the postal receipt addressing to the borrower and guarantors in respect of redemption notice.	Annexure-B13
14.	---	True copy of the acknowledgement card addressed to the borrower and guarantors in respect of redemption notice.	Annexure-B14
15.	---	True copy of photographs showing the affixture of Annexure-IV notice by the Advocate Commissioner on the secured asset.	Annexure-B15
16.	---	True copy of the CERSAI Certificate	Annexure-B16
17.	---	True copy of Statement of Account of CCOL A/cNo.0063083000002442	Annexure-B17
18.	---	True copy of the Statement of Account of ECLGSA/cNo.0063656000000166	Annexure-B18
19.	---	True copy of the Statement of Account of ECLGS A/c No.0063656000000166 for the period from 01.01.2023 to 01.04.2023	Annexure-B19
20.	---	True copy of the Statement of Account of CCOL A/c No.0063083000002442 for the period from 01.01.2023 to 01.04.2023.	Annexure-B20

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(Su. WILLYAHM) PRESIDING OFFICER

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Page 7 of 7

Abu Thahir P B v. South Indian Bank

Case brief

What is this about?

What did the court decide?

Abu Thahir P B v. South Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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