Allowed

Syed Ali v. Indian Overseas Bank

DRT7 Jul 2025SA/546/2023

Case brief

AI extract

What is this about?

In this SARFAESI application, the applicant challenged a possession notice issued by the bank, alleging procedural failures in publishing and affixing the notice. The tribunal found the bank did not strictly follow statutory procedures regarding evidence of publication and affixation. Consequently, the application was allowed, and the possession notice was set aside.

What did the court decide?

The possession notice dated 04.10.2023 is set aside, and the expenditures incurred in issuing it shall not be included in the loan account.

Syed Ali versus Indian Overseas Bank — Banking and Recovery | DRT (2025)

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SA No.546/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 07^th DAY OF JULY, 2025

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PRESENT: SEEMA SINHA

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[PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

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SA No. 546/2023

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Mr. Syed Ali, S/o. Mohamed Fahuruthin, No. 2/183, Jaminisa Cottage, Pudhutheru, Near Muslim Arts College, Thiruvitham Code & PO, Kanyakumari District – 629 174.

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…. Applicant

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The Authorized Officer, Indian Overseas Bank, Regional Office, No. 552/3, MS Road, Vetturnimadam, Nagercoil – 629 003. …. Defendant Bank

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Appearance of Advocates: Mr. C.A. Arjun Shankar ---Counsel for the Applicant M/s. N. Dilip Kumar ---- Counsel for the Defendant Bank

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This SARFAESI Application was heard in the presence of Counsels for the Applicant and the Defendant Bank and fixed for passing final order before me and upon hearing the arguments of the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

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O R D E R

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1 . This Application has been filed u/s. 17(1) of the SARFAESI Act, 2002 by the Applicant praying that this Hon'ble Tribunal may be pleased to set

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Page 1 of 8

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SA No.546/2023

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aside the Possession Notice dated 04.10.2023 passed by the Defendant Bank.

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2 . The brief averments of the Application filed by the Applicant are as follows:-

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The Counsel for the Applicant submitted that the Applicant is the borrower and he availed Cash Credit Facility for a sum of Rs. 70.00 Lakhs and two Term Loans for a sum of Rs. 74.00 Lakhs from the Defendant Bank for developing business. He is a partner in the family business of fishnets trade in the name of M/s. Jaminisa Nets. The Applicant's Father and his wife had mortgaged their properties mentioned in the Schedule of Property in favour of the Defendant Bank. Initially, the Applicant repaid the loan amounts regularly. The Applicant has incurred heavy financial loss in business and also the Pandemic situation due to Covid-19, the Applicant faced serious loss in his business. Due to the hard situation the Applicant had failed in repaying the due amount, the Applicant is not a willful defaulter.

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It is further submitted that the Defendant Bank has classified the loan account as NPA on 21.06.23 without adhering the norms and the guidelines issued by the RBI. The Demand Notice was issued on 22.06.2023 and then issued Possession Notice on 04.10.2023 for Rs. 1,03,34,570/-. The said notice was not affixed on the conspicuous part of the property. The Applicant submitted that he is ready to settle his loan amount under OTS, but the Defendant Bank is not accepting the Applicant's request.

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It is further submitted that the Applicant's father had mortgaged his three properties and the Applicant's wife has also mortgaged her property with the Defendant Bank. The Item No. 1 of Schedule of Property is the dwelling house of the Applicant. If the Defendant Bank takes possession, the Applicant and his family will be sent to streets. The current market value of the properties is about Rs. 2.00 Crores. But the outstanding amount is only Rs. 1,03,34,570/- as per the Possession Notice issued by the Defendant Bank. Aggrieved over the above action of the Defendant Bank, the Applicant prefers the present appeal among the following and other,

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Main Grounds:

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The Impugned Possession Notice dated 04.10.2023 is liable to be set aside.

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The Defendant Bank failed to affix the Possession Notice on the conspicuous part of the property.

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Page 2 of 8

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SA No.546/2023

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The Defendant Bank had not given reply to the objection given by the Applicant for the Demand Notice.

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The Defendant Bank has not furnished the correct Statement of Account due to the loan accounts.

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The Defendant Bank has charged exorbitant interest for the loan account.

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Schedule of Property

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Item No. 1

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All that part and parcel of property containing an extent of 7 Cents 40 Sq. Links land (out of 14 cents 80 Sq links) with building No. 28/38A lying under Re.Sy.No. 605/17(Re Sy Sub Division 605/17A) of Kattathurai Panchayat, Taluk: Kalkulam, Village: Veeyanoor covered under Partition Deed No. 1101 dated 07.07.1995, SRO Verkilambi standing in the name of Mr. Mohamed Fahuruthin S/o. Mr. Meeran Maluk Mohamed

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Boundaries:

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East : Property of Malik Mohammed South : N H Road (Trivandrum-Nagercoil) West : Property of Mohammed Hanifa North : Property of Raj & Others

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Item No. 2

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All that part and parcel of property containing an Extent of 13 Cents 818 Sq.Links Property with building No. 2/183A1 lying in Re.Sy.No.382/8 (Old Sy 1282) of Thiruvithamcode Town Panchayat, Taluk: Kalkulam, Village: Thuckalay Covered under Sale Deed No. 1502 dated 15.06.2005, SRO Thuckalay standing in the name of Mr. Mohamed Fahuruthin S/o Mr. Meeran Maluk Mohamed.

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East : Palayyan Property South : Nabeezath Beevi Property West : Sowtha Beevi Property North : Mohamed Haneefa Propery

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Item No. 3:

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All that part and parcel of property containing an Extent of 16 Cents 114 Sq. Links lying in Re.Sy.No.382/7 (Old Sy 1282) Sub District : Thuckalay Taluk: Kalkulam, Village: Thuckalay of Thiruvithamcode Town Panchayat covered under Sale Deed

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Page 3 of 8

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SA No.546/2023

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No. 1182 dated 15.06.1998 registered on 17.06.1998, SRO Thuckalay standing in the name of Mr. Mohamed Fahuruthin S/o. Mr. Meeran Maluk Mohamed.

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Boundaries:

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East : Re Sy No.382/5 property South : Re Sy No.382/8 property West : Mohamed Haneefa Lekkam 7A in the plan Property North : Re Sy No.382/6 property

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Item No. 4:

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All that part and parcel of property containing an Extent of 2 Cents 505 Sq. Links land (pathway) lying Re Sy No.382/6 (Old Sy 1282) Sub Distric:Thuckalay Taluk: Kalkulam, Village: Thuckalay of Thiruvithamcode Town Panchayat covered under Pathway Deed No 3030 dated 10.12.13, SRO Thuckalay standing in the name of Mrs.Ameena W/o. Syed Ali.

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Boundaries:

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East : Mohamed Faharudeen, Syed Ali Property South : Mohamed Haneefa, Mohamed Faharudeen Property West : Azhakiyamandapam – Thinkal Chandai Road North : Mohamed Faharudeen, Syed Ali Property

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The Applicant has submitted the following List of documents in support of his claim in the SA, which are as follows:

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S.No.	Date	Description
1.	22.06.2023	Demand Notice issued bythe Defendant Bank
2.	04.10.2023	Possession Notice issued bythe Defendant Bank

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3 . On the other hand, the Counsel for the Defendant Bank appeared before this Tribunal and filed Vakalat & Reply Statement in which he has submitted that the Applicant is one of the Partner in M/s. Jaminisa Nets and approached the Defendant Bank seeking Cash Credit Facility for a sum of Rs. 70,00,000/- (Rupees Seventy Lakhs only), Term Loan facility for a sum of Rs. 49,00,000/- (Rupees Forty Nine Lakhs only) and another Term Loan facility for a sum of Rs. 25,00,000/- (Rupees Twenty Five Lakhs only). In consideration of the credit facility availed, the Applicant had deposited the title deeds with the Defendant Bank with an intent to create mortgage and confirmation of the Deposit of Title Deeds was made on 04.12.2013. The Applicant had defaulted in operation of the loan account. Despite sufficient

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Page 4 of 8

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SA No.546/2023

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opportunity, borrower failed to regularize the loan account and with no other alternative the loan accounts were classified as NPA on 21.06.2023.

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It is further submitted that the Demand Notice was issued on 22.06.2023 to the borrower and guarantor and the same is delivered to them. The said notice is sent through Registered Post to the address of the borrower and guarantor. The borrower had not replied to the notice and had not repaid the loan account within 60 days. Then, the Defendant Bank issued Possession Notice on 04.10.2023 and the same was published in two newspapers both in Tamil & English on 10.10.2023. The said notice was also delivered upon the borrowers and guarantors and it is also affixed in the property. Proof of service of the Possession and compliance of statutory requirement of publication in two newspapers, of which one is in vernacular and the affixture of the Possession Notice in the property are all attached in the typed set of papers.

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The Applicant himself admitted the default in the loan account in his affidavit filed and there is no procedural violation even according to their grounds of appeal. The Bank denied all the facts and grounds that are raised by the Applicant. The Applicant had failed to operate the loan account as agreed and promised. The Applicant himself in his own Application had admitted his default and failed to repay the loan outstanding. The Bank is empowered under the SARFAESI Act for the recovery of loan outstanding. The Possession Notice was issued on 04.10.2023 and the same was published in two newspapers one in Tamil and another in English on 10.10.2023. The said notice is also delivered upon the borrowers and guarantors and it is also affixed in the property. The Applicant had never approached the Defendant Bank seeking the Statement of Accounts. The loan account statements can be downloaded in E Format. The Bank had never charged of interest rather than that of agreed and promised. The amount paid by the Applicant is given credited and the same is reflected in the loan statement.

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It is further submitted that the Applicant had never approached the Defendant Bank seeking any OTS proposal. The Applicant had not annexed any document to substantiate the ground raised. The only intention of the borrower is to stop the legal proceeding initiated by the Defendant Bank and to drag on the legal process initiated. They do not have intention to repay the loan availed. Further, the Bank had followed the due procedure prescribed under the code and the allegation to the contra is false. The present outstanding in the loan account is Rs. 87,72,045.12p (Rupees Eighty seven Lakhs Seventy Two Thousand Forty Five and Paise Twelve only) as on 30.11.2023.

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Page 5 of 8

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SA No.546/2023

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Therefore, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the above SARFAESI Application with cost and thus render justice.

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TYPED SET OF DOCUMENTS FILED BY THE DEFENDANT BANK

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S.No.	Date	Particulars
1	22.06.2023	Demand Notice with AD Cards
2	04.10.2023	Possession Noticewith ADCards
3	04.10.2023	Affixture of Possession Notice
4	10.10.2023	Paper Publication of Possession Notice

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4. ON THE BASIS OF ABOVE PLEADINGS THE POINT WHICH ARISES FOR CONSIDERATION IS:-

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WHETHER THE APPLICANT IS ENTITLED TO GET THE RELIEFS AS PRAYED FOR?

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5 . Having heard the parties and after going through the entire documents available on the records, this Tribunal find that there is no dispute between the parties with regard to the availment of loan facilities by creating equitable mortgage on their property. In this case, the Applicant contended that initially the Applicant has repaid the monthly installments regularly however, due to heavy financial loss in his business and also the Pandemic situation due to Covid-19, he failed to repay the due amount. Hence, the Defendant Bank has classified the Applicant's loan account as NPA on 21.06.2023.

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The Defendant Bank issued Demand Notice dated 22.06.2023 u/s. 13(2) of SARFAESI Act for a sum of Rs. 99,51,175/- (Rupees Ninety Nine Lakhs Fifty One Thousand One Hundred and Seventy Five only). I find that the Defendant Bank has filed AD Cards (Page Nos. 1 to 14 of Bank's Typed set of papers) as a proof for having sent the Demand Notice to the borrowers and Guarantors. I also find that the Applicant has not filed any reply sent U/s. 13(3-A) of SARFAESI Act and also failed to give any representation sent to the Defendant Bank in respect of Demand Notice. Therefore, the Defendant Bank issued Possession Notice dated 04.10.2023 (copy filed by the Applicant at page no. 16 & 17 of Applicant's main SA). Challenging the same, the

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Page 6 of 8

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SA No.546/2023

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Applicant filed this SARFAESI Application. I also find that the Bank has filed AD Cards as a proof (Page Nos. 15 to 19 of Bank's Typed set of papers) for having sent the Demand Notice to the borrowers and Guarantors. The Bank has also filed the xerox copies of Paper Publication of Possession Notice in two newspapers one in English and another in Tamil (Bank's Typed set of papers at page nos. 23 to 25). But, the copies provided do not exhibit the details, such as Name of the Newspaper, date of publication. Further, the bank has filed photos at page nos. 20 to 22 of Typed set of papers as a proof for having affixed the Possession Notice on the conspicuous part of the properties but the copies provided are not clear to verify the genuineness of the documents to show that the Possession Notice is originally affixed on the Impugned properties and on which date it was affixed. Thus, I do not find that the Defendant Bank has strictly followed the SARFAESI procedures, while issuing Possession Notice to the Applicant. The Rule 8(1) & (2) of the Security Interest (Enforcement) Rules 2002 clearly says:-

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"8. Sale of immovable secured assets.

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(1) Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property."

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(2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newspaper, one in vernacular language having sufficient circulation in that locality, by the authorized officer.

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I also find that both the parties have failed to produce the Statement of Accounts to verify the genuineness of the accounts. Further, the Applicant has not placed any material evidence before this Tribunal to substantiate his claim that the rate of interest has been charged excessively against the guidelines of RBI and has not filed any proof for having requested for Statement of Accounts from the Defendant Bank.

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However, in this case, I also find that this Tribunal has granted an AdInterim Stay Order dated 18.10.2023. The Applicant has also complied with the conditions imposed by this Tribunal and paid a total sum of Rs.

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Page 7 of 8

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SA No.546/2023

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36,18,000/- (vide Memo in SR No. 11281 of 2023 dated 21.12.23) to the Defendant Bank and showed his bona-fide.

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The Applicant has no doubt being defaulter is liable to pay the loan amount to the Defendant Bank and the Bank has been given ample power to recover the outstanding loan amount from the borrower by invoking the SARFAESI Act and without the intervention of any Court. But, it shall not allow the Bank to take the Physical Possession of the property of the Applicant without following the due process of law strictly.

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In view of the above facts and circumstances of the case, I find that the Applicant has been able to prove his case.

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In the result,

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(a) SA No. 546/2023 is allowed as prayed for. The Possession Notice dated 04.10.2023 issued by the Defendant Bank is hereby set aside.

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(b) All the expenditures incurred in issuance of Impugned Possession Notice dated 04.10.2023 shall not be included in the loan account of the Applicant.

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(c) The Defendant Bank is at liberty to initiate fresh action against the Applicant for recovery of outstanding loan amount as per the SARFAESI Acts & Rules.

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Consequently, all pending IAs (if any) are also disposed of. No costs.

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Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 07^th July, 2025.

sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Uploaded on 09.07.2025

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Syed Ali v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

Syed Ali v. Indian Overseas Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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