Allowed

Paul Antony v. Hdfc Bank

DRT26 Aug 2025SA/533/2024

Case brief

AI extract

What is this about?

In a Securitization Application, the Debt Recovery Tribunal allowed the applicants' challenge against the bank's recovery measures. While denying the exemption claim for a minor loan, the Tribunal set aside the Magistrate's order for taking possession, which was mechanically prepared on a printed format without applying mind, citing relevant precedents.

What did the court decide?

Set aside the order in MC No.296/2024 passed by the Additional Chief Judicial Magistrate Court (MPs/MLAs) Ernakulam and the notice issued by the Advocate Commissioner for taking physical possession of

Paul Antony versus Hdfc 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 26^th DAY OF AUGUST, 2025

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

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S.A No. 533 of 2024

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Between

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Paul Antony,

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S/o. Late Antony, Bavely, Puthanpally, Varappuzha P.O., Varappuzha, Ernakulam – 683517

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Mrs.Seema Paul, W/o.Paul Antony, Bavely,

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Puthanpally, Varappuzha P.O.,

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Varappuzha, Ernakulam – 683517.

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--- Applicants

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And

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HDFC Bank, M.G.Road Branch, HDFC House, Post Bag No.1667, Ravipuram Junction, M.G.Road,

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Ernakulam-682015 rep.by its Chief Manager.

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The Authorised Officer, HDFC Bank, HDFC House,

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Post Bag No.1667,

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Ravipuram Junction,

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M.G.Road, Ernakulam-682015.

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--- Defendants

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SA No.533 of 2024

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This Securitization Application coming on 21.07.2024 for final hearing before me in the presence of Mr. Kuruvila Mathew, Counsel appearing for the Applicants and Mr. Anto Thomas, Advocate appearing for the Defendants 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 23.07.2024 seeking to direct the defendants not to proceed against the property described in Annexure-A4 and A11 notices and not to effect dispossession, sale of the property.

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The applicants are husband and wife. There is no dispute with regard to the availment of credit facilities by the applicants from the 1^st defendant bank and that out of the aforesaid three loans, third loan was availed for payment of insurance premium amount for the insurance policy availed by the applicants. It is revealed from the written statement of the defendant that the applicants have created equitable mortgage by deposit of title deeds over the immovable property admeasuring 02.32 Ares of land comprised in Sy. No.255/4A/2/11 of Varapuzha Village, Paravur Taluk, Ernakulam District.

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The applicants have admitted in the SA that there was default and that the bank classified the loan accounts as Non-Performing Asset and issued demand notice dated 13.10.2023, Annexure-A4. Hence it is evident that the issuance and receipt of the demand notice is admitted by the applicants. It cannot be disputed that 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 approached the Chief Judicial Magistrate Court, Ernakulam and filed Annexure-A8 application and Annexure-A9 affidavit under Section 14 (1) of the SARFAESI Act, 2002. Subsequently, the matter was made over to the Additional Chief Judicial Magistrate Court (MPs/MLAs), Ernakulam. Annexure-A10 Order dated 29.6.2024 came to be passed in MC 296/24 appointing Advocate Commissioner for taking physical possession of the secured asset. The Advocate Commissioner issued Annexure-A11 notice to the applicants informing him that he would take physical possession of the secured asset on or after 25.07.2024. The applicants having aggrieved against the above measures filed this SA seeking for the reliefs stated supra.

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Page 2 of 9

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SA No.533 of 2024

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The counsel appearing for the applicants submitted that, measure in respect of loan pertaining to the insurance coverage ought not have been initiated by the defendant since the outstanding amount against the aforesaid loan account is Rs.28,966/- and that this loan could not be recovered in view of the exemption available u/s 31 (h) of the SARFAESI Act, 2002.

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The counsel appearing for the applicants submitted further that the loan had not become Non-Performing Asset on the date of demand notice or on the date shown as 03.06.2023. It is to be seen that the date of the notice is 13.10.2023. The outstanding EMI in relation to the bigger loan of Rs.51,88,012/- is said to be Rs.2,70,690/-. A close scrutiny of the notice would indicate that the figures are reckoned with effect from 31.07.2023. The monthly EMI is said to be Rs.68,560/-. In order to make up NPA status, there has to be three defaults. Therefore Rs.68,560/- x 3 = 2,05,680/-. This amount was not due on the alleged date of NPA. Exactly the same situation is getting attracted in relation to the loan of Rs.4 Lakhs. It is seen that the defaulted principal is Rs.10.572/-. The monthly EMI is Rs.3,537/Rs.3,537 x 3 will come to Rs.10.611/-. This does not tally with the amount of EMI default which is shown as Rs.10,572/-. Resultantly this account also was not in NPA status. The transaction had not become NPA as on 03.06.2023 and the bank had not taken into account the substantial payment effected on and after 03.06.2023 and even on the date when the account was wrongly classified as NPA, the transaction had not become NPA. This would indicate that the entire statement in Annexure-A4 is incorrect and misleading. Further, the description of the property as shown in Annexure-A4 is incorrect. This does mention the existence of a residential abode upon the property.

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The counsel for the applicants submitted further the requirements contemplated under the proviso to Sec.14 of the SARFAESI Act 2002 is conspicuously absent in Annexure-A9 affidavit and that the date of Non-Performing Asset and rate of interest is not mentioned in the affidavit and that since Annexure-A10 Order was prepared on printed format, it is illegal and is liable to be set aside. Security interest was not registered with the Central registry before initiation of the measures under Chapter III of the SARFAESI Act 2002. Therefore, SA may be allowed as prayed for.

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The counsel appearing for the defendants submitted that though the demand notice was served to the applicants, they did not send any objection/representation to the demand notice. As on the date of Annexure-A4 demand notice, the applicants had defaulted more than three instalments in their loan account bearing No.624492736 which makes it conducive to classify the accounts as Non-Performing Asset. The bar under Section 31 (h) of the SARFAESI

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Page 3 of 9

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SA No.533 of 2024

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Act is not applicable in the case of the applicants since in terms of paragraph 2.2.2 of the Master Circular issued by RBI, treatment of NPAs are borrower wise and not facility-wise and in respect of a borrow having more than one credit facility with a bank, all the facilities granted by the bank will have to be treated as NonPerforming Asset if any one of the loan account slips in default more than 3 months and is classified as Non-Performing Asset. Hence the averment of the applicants that the transaction has not become NonPerforming Asset as on 03.06.2023 and that the bank had not taken into account the substantial payment effected after 03.06.2023, are untrue and hence denied. The loan accounts were declared as NonPerforming Asset in accordance with the norms of RBI and there is no illegality or impropriety in the demand notice.

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It is submitted further by the counsel for the defendants that it is not mandatory as per Sec.13 (3) of the SARFAESI Act 2002 to mention the rate of interest charged, the building No. and the plinth area of the building situated in the secured assets. Interest has been charged as per the terms of the loan agreement and RBI guidelines. Annexure-A1 to A3 are not genuine documents, since these documents were not issued by the defendants relating to the loan accounts of the applicants. The averment of the applicants that on the representation of the applicants that they would make payment, the defendants promised that they will not proceed further is untrue and baseless. Annexure-A5 notice is not a possession notice.

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It is submitted further by the counsel for the defendants that there is no illegality in Annexure-A8 application and A9 affidavit and that property sought to be proceeded is mentioned in Annexure-A9 affidavit and that the proviso to Section 14 (1) of the SARFAESI Act 2002 does not mandate the mentioning of the rate of interest in application and affidavit. Account statements has been produced along with Annexure-A8 affidavit. Date of classification of loan account as Non-Performing Asset is also mentioned in Annexure-A8 and A9. Essential requirements u/s 14 were complied with in respect of filing of Annexure-A8 and A9. There is no illegality in Annexure-A10 order and Annexure-A11 notice. Therefore, the SA may be dismissed with cost to the defendants.

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This Tribunal finds considerable force in the submission of the counsel for the defendants that as per in terms of paragraph 2.2.2 of the Master circular issued by the RBI, classification of loan account as NPA has to be done borrower-wise and not facility-wise. Indisputably, in the present case on hand, the applicants have availed three types of loans. Though the outstanding due of the third loan is Rs.28,966/the applicants are not entitled to get the benefit of the exemption u/s 31 (h) of the SARFAESI Act, 2002 for the aforesaid reason. Further, the applicants having failed to send any objection/representation to

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Page 4 of 9

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SA No.533 of 2024

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the demand notice are not entitled to raise the issue with regard to wrongful classification of the loan accounts as NPA.

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The provisions of Sec.13 (3) of the SARFAESI Act, 2002 does not contemplate the mentioning of the rate of interest charged, building No. and the plinth area of the building of the secured asset in the demand notice. No material has been placed by the applicants to substantiate their contention that, interest charged is against the RBI guidelines. Annexure-A1 to A3 repayment schedule produced by the applicants cannot be relied upon, since these documents are not the authenticated documents.

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This Tribunal does not find any illegality in respect of classification of loan accounts of the applicants as NPA, and issuance of Annexure-A4 demand notice.

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In Sri Dulal Nath Sharma Vs. The State of West Bengal & ors) , the order passed by the Additional District Magistrate for taking physical possession of the secured asset was in a printed format with only the blank spaces filled up. Therefore, the Hon'ble High Court of Culcutta observed as follows:

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“It is unfortunate that an order has been passed mechanically and without application of mind. For the reasons aforesaid, the order impugned is set aside.”

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The Hon'ble High Court of Kerala has held in The South Indian Bank Ltd. Vs. Jahfer M. [judgment dated 18.03.2025 in OP (DRT) No.336 of 2024] has held as follows :

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“Though the exercise of jurisdiction by the Magistrate under Section 14 of the SARFAESI Act does not involve any adjudication, the act of the Magistrate in passing orders in printed form by filling in necessary details in blank spaces cannot be justified under any circumstances. It cannot be forgotten that the power under Section 14 of the SARFAESI Act involves drastic consequences and that is why the Parliament conferred the power to take action under Section 14 of the SARFAESI Act on high officials such as District Magistrate or the Chief Judicial Magistrate Court. While it may not be necessary to examine the correctness of the averments in the affidavit filed by a bank/financial institution in support of the application for orders under Section 14 of the SARFAESI Act, the Magistrate must clearly apply his mind to the averments in the application and determine as to whether procedure contemplated has been followed before passing an order under Section 14 of the SARFAESI Act. Therefore, I have no doubt in my mind

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Page 5 of 9

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SA No.533 of 2024

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that the Tribunal was justified in setting aside the order of the Chief Judicial Magistrate Court, Manjeri in MC No.929/2023.”

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On perusal of Annexure-A10 order shows that that it was prepared on the printed format. The date of the order, MC No., the names of the petitioner and the respondents (defendant and applicants herein), the name of the Advocate Commissioner and the date of submission of report by the Advocate Commissioner were subsequently filled up in ink.

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Therefore, it is evident that the learned Additional Chief Judicial Magistrate Court (MPs/MLAs) Ernakulam had no occasion to apply his mind to the contents of Annexure-A9 affidavit and the documents filed in support of the affidavit. In the above said circumstances and in the light of the afore cited judgments, this Tribunal is constrained to hold that Annexure-A10 order passed in MC No.296/2024 by the learned Additional Chief Judicial Magistrate (MPs/MLAs) Ernakulam and Annexure-A11 notice dated 10.07.2024 issued by the Advocate Commissioner is liable to be set aside and accordingly it is set aside.

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In view of the foregoing reasons and discussions, S.A. No.533/2024 stands allowed as prayed for setting aside AnnexureA10 Order passed by the learned Additional Chief Judicial Magistrate Court (MPs/MLAs) Ernakulam in MC No.296/2024 and Annexure-A11 notice issued by the Advocate Commissioner for taking physical possession of the secured asset.

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However, it is made clear that there shall be no bar for the defendant bank to approach the Chief Judicial Magistrate Court, Ernakulam for taking physical possession of the secured asset in accordance with law.

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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 26^th day of August, 2025.

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/-

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SA No.533 of 2024

SCHEDULE OF THE PROPERTY

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2.32 Ares in Sy. No.255/4A/2/11 of Varappuzha village, Paravur Taluk, Ernakulam district and the construction thereon, present and future with all rights and easements appurtenant to it covered by Sale Deed No.3739/2010 Alangad SRO.

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	Boundaries
East	: Property of George
South	: Property of Kochamma
West	: 5 feet wide road
North	: Panchayat road.

(Su. WILLYAHM)

PRESIDING OFFICER

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SA No.533 of 2024

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

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Sl. No.	Date	Particulars
1.	……	True copy of Repayment schedule in respect of Account No.624492736.	Annexure A1
2.	……	True copy of Repayment schedule in respect of Account No.624899865.	Annexure A2
3.		True copy of Repayment schedule in respect of Account No. 624492774	Annexure A3
4.	13.10.2023	True copy of Demand Notice issued by the defendants.	Annexure A4
5.	07.02.2024	Notice issued by the defendants.	Annexure A5
6.	11.06.2024	Reply submitted by the applicants.	Annexure A6
7.	15.07.2024	Reply issued by the defendants	Annexure A7
8.	02.01.2014	True copy of application filed in M.C.No.296/2024 on the file of ACJM(MP/MLAs) Court, Ernakulam.	Annexure A8
9.	…….	True copy of affidavit filed in M.C.No.296/2024 on the file of ACJM(MP/MLAs) Court,Ernakulam.	Annexure A9
10.	--	Copy of the Order in M.C. No.296/2024 on the files of the Additional Chief Judicial Magistrate Court (MPs/MLAs), Ernakulam.	Annexure A10
11	10.07.2024	Notice issued by the Advocate Commissioner appointed in M.C.No.296/2024 of ACJM(MP/MLAs) Court, Ernakulam.	Annexure A11
12.	…..	True copy of the Account statement pertaining to the loan account No.624492736	Annexure A12
13.		True copy of the Account statement pertaining to the loan account No.624492774	Annexure A13
14.		True copy of the Account statement pertaining to the loan account No. 624899865	Annexure A14

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Page 8 of 9

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SA No.533 of 2024

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

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Sl. No.	Date	Particulars
1.	06.08.2024	The copy of the covering letter issued by the defendant to theapplicant.	Annexure B1
2.	…………….	True Copy of the CERSAI registration certificate.	Annexure-B2

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/-

Page 9 of 9

Paul Antony v. Hdfc Bank

Case brief

What is this about?

What did the court decide?

Paul Antony v. Hdfc Bank

Case brief

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