Dismissed

Ashik N a v. South Indian Bank

DRT7 Jan 2025SA/551/2024

Case brief

AI extract

What is this about?

The Securitization Application filed by borrowers and guarantor against South Indian Bank Ltd. to quash possession proceedings under the SARFAESI Act was dismissed. The Tribunal held that the applicants were estopped from raising pleas about NPA classification and interest rates for not objecting earlier, and found the(Application-A1 and affidavit) complied with statutory requirements under Sectio

What did the court decide?

Securitization Application No. 551 of 2024 is dismissed. No order as to costs.

Ashik N a versus South Indian Bank — Banking and Recovery | DRT (2025)

¶1

Fair Order

¶2

IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

¶3

DATED THIS 7^th DAY OF JANUARY, 2025

¶4

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

¶5

S.A No. 551 of 2024

¶6

Between

¶7

Ashik N.A., S/o. Akbar Ali N.C., Ali Manzil, Nandankizhaya, Anamari P.O., Muthalamada, Palakkad – 678 506.

¶8

Akbar Ali N.C., S/o. Chinnamuthu, Ali Manzil, Nandankizhaya, Anamari P.O., Muthalamada, Palakkad – 678 506.

¶9

--- Applicants

¶10

And

¶11

The South Indian Bank Ltd. Muthalamada Branch, Represented by its Authorized Officer, Regional Office, Door No.733/2, First Floor, D & D Arcade Buiding, Chittur Road, Manappullikkavu, Kunnathurmedu P.O., Palakkad -678013.

¶12

--- Defendant

¶13

SA No.551 of 2024

¶14

This Securitization Application coming on 04.12.2024 for final hearing before me in the presence of Mr. Santhoshkumar K., Counsel appearing for the Applicants and Mr. Rajesh Rajagopala Pillai, Counsel appearing for the defendant and upon hearing arguments of learned Counsels for both the parties and upon perusing the material on records, this Tribunal delivered the following:

¶15

O R D E R

¶16

This Securitisation Application was filed on 31.07.2024 seeking to set aside Annexure-A1 application and Annexure-A2 order and to direct the defendant bank to restrain it from proceeding against the applicants and their property and to pass an order directing the defendant bank to pay the cost of this proceedings to the applicants.

¶17

The 1^st applicant is the borrower and the 2^nd applicant is the guarantor. The applicants have admitted the availment of overdraft facility of Rs.15,00,000/- in the year 2016 and also enhancement of the above limit of credit facility to Rs.22,00,000/- and subsequently to the limit of Rs.25,00,000/- from the defendant bank. The creation of security interest over the 2^nd applicant’s immovable property which comprises of land and building in Re. Sy. No.46/32 in MuthalamadaII Village, Chittoor Taluk, Palakkad District as the collateral security for the availment of the aforesaid credit facility in favour of the defendant bank is also admitted by the applicants in the S.A.

¶18

The applicants have also admitted their default in repayment of the outstanding loan due to the defendant bank. Hence the loan account of the applicants came to be classified as Non-performing Asset on 04.08.2022. Therefore, demand notice dated 26.12.2022 Annexure-D1 was issued to the applicants calling upon them to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. Annexure-D2 series postal acknowledgment cards evidences the demand notice by both the applicants. Admittedly, the applicants neither sent any objection/ representation to the demand notice nor did they clear off their liability due to the defendant bank.

¶19

Since the applicant failed to respond to the terms of the demand notice, Possession Notice dated 14.07.2023 Annexure-D3 was issued for symbolically taking physical possession of the secured asset. The defendant has produced Annexure-D4 series copy of postal acknowledgment cards to evidence the receipt of the Possession Notice by both the applicants. The defendant has produced Annexure-D5, D6 and D7 in order to show that Possession Notice was published in two leading newspapers, one in The New Indian Express edition dated 16.07.2023 (English version) and another in Kerala Kaumudi dated

¶20

Page 2 of 7

¶21

SA No.551 of 2024

¶22

16.07.2023 (vernacular version) and that it was affixed on conspicuously on the secured asset. Annexure-D9 copy of Asset ID Based Search Report shows that the security interest in respect of the secured asset has been registered with the Central Registry.

¶23

Subsequently, the defendant bank approached the Chief Judicial Magistrate Court Palakkad and filed Annexure-A1 application and affidavit under Section 14 (1) of the SARFAESI Act, 2002. Order Annexure-A2 dated 04.06.2024 came to be passed appointing Advocate Commissioner for taking physical possession of the secured asset. The Advocate Commissioner issued notice dated 05.07.2024 Annexure-A3 to the applicants informing them that he would inspect the property on 05.07.2024. The applicants having aggrieved against the above measures have filed this SA seeking the reliefs stated supra.

¶24

The counsel appearing for the applicants submitted that the Officer who represents the defendant is not the Authorized Officer and that classification of loan account is not in accordance with the RBI guidelines and that interest charged is not in accordance with RBI guidelines and that penal interest has been capitalized.

¶25

It is further submitted by the counsel appearing for the applicants that Annexure-A1 application and the affidavit was not filed as per the provisions of the SARFAESI Act, 2002 and that the description and boundaries of the property shown in Annexure-A1 application and the affidavit are incorrect.

¶26

It is further submitted by the counsel for the applicants that the learned Chief Judicial Magistrate, Palakkad appointed Advocate Commissioner to take physical possession of the secured asset without verifying the contents of Annexure-A1 and that affidavit filed along with Annexure-A1 application is not in accordance with the provisions of Section 14 (1) (i) to (ix) of the SARFAESI Act, 2002 and that therefore, the SA may be allowed as prayed for.

¶27

Per contra , the counsel appearing for the defendant submitted that Annexure-A1 application and affidavit has been filed by the Authorized Officer of the defendant bank and that loan account of the applicants was classified as per the RBI guidelines and that the rate of interest and penal interest has been charged as per the terms of the loan agreement.

¶28

It is further submitted by the counsel appearing for the defendant bank that correct description of the property has been furnished in Annexure-A1 application and affidavit and all the details contemplated under Clause (i) to (ix) to the provisos of Section 14 (1) of the SARFAESI Act, 2002 has been furnished in Annexure-A1 application and affidavit and that the learned Chief Judicial

¶29

Page 3 of 7

¶30

SA No.551 of 2024

¶31

Magistrate Palakkad passed Annexure-A2 order after having satisfied with the contents of the affidavit and that this SA is filed with ulterior motive of obstructing the recovery proceedings legally by the defendant and that therefore the SA is liable to be dismissed with cost to the defendant.

¶32

The applicants having admitted their default in repayment of the outstanding loan due is estopped from contending now that the classification of the loan account as NPA is not in accordance with the RBI guidelines. Further the applicants having admitted the rate of interest and penal interest payable by them in the loan account, in case of default in repayment of the loan due, is not entitled to come forward with the plea now that rate of interest and penal interest is not as per the RBI guidelines. Above all, the applicants having failed to raise the aforesaid pleas by sending objection/representation to the demand notice, is not entitled to raise the above said pleas now.

¶33

In Annexure-D1 demand notice and Annexure-A1 application and affidavit, the Officer, who signed is designated as the Authorized Officer of the defendant bank. Therefore, this Tribunal does not find any substance in the submission of the counsel for the applicants that the officer who signed the Annexure-A1 application and affidavit is not the Authorized Officer of the defendant bank.

¶34

On perusal of Annexure-A1 application shows that the description of the secured asset including the residential building with reference to the sale deed and the boundaries for the property is clearly furnished. In para 3 of the affidavit filed along with AnnexureA1 application it is averred as follows :

¶35

“For the above mentioned credit facility, respondent No.2 created security interest over the property mentioned below belonging to him by virtue of Sale Deed No.640/1983 dated 07.05.1983 of SRO Kollengode, which was already deposited in favour of the petitioner bank on 28.12.2016 and letter evidencing deposit of title deed, executed on 17.09.2018.”

¶36

The aforesaid particulars, in the opinion of this Tribunal, is sufficient to furnish the details of the secured asset. Further it is not the case of the applicants that the property referred to in Annexure-A1 application and affidavit is not the secured asset or it does not belong to the 2^nd applicant. Hence this Tribunal does not find any force in the submission of the counsel for the applicants that description of the secured asset was not furnished in the in Annexure-A1 application and affidavit.

¶37

If the applicants had sent any objection/representation to the demand notice, then it will be the bounden duty of the defendant

¶38

Page 4 of 7

¶39

SA No.551 of 2024

¶40

bank to mention the above factum in Annexure-A1 application and affidavit. Indisputably, the applicants did not send any objection/ representation to the demand notice, that is why, the defendant did not mention about sending of objection/representation to the demand notice in Annexure-A1 application and affidavit.

¶41

On perusal of the affidavit filed along with Annexure-A1 application, this Tribunal finds that all the statutory requirements contemplated under Clause (i) to (ix) to the provisos of Section 14 (1) of the SARFAESI Act, 2002 has been complied with. A perusal of Annexure-A2 Order shows that the learned Chief Judicial Magistrate Palakkad after having perused the contents of the affidavit and the documents prouduced in support of the affidavit and having satisfied over the same, passed order appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner issued notice Annexure-A3 to the applicants pursuant to the direction given to him by the Chief Judicial Magistrate Court Palakkad in MC No.257/2024 to take physical possession of the secured asset.

¶42

In view of the foregoing reasons and discussions, this Tribunal holds that the applicant is not entitled to get the reliefs sought for in this SA.

¶43

In the result, S.A No.551 of 2024 stands dismissed. There shall be no order as to costs.

¶44

Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 7^th day of January, 2025.

¶45

(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 5 of 7

SA No.551 of 2024

S C H E D U L E

District : Palakkad Taluk : Chittur Village : Muthalamada No.2 Re.Sy. No. : 46/32 pt Extent : 5.97 Ares

¶51

Description

¶52

All part and parcel of land and building having an extent of 5.97 Ares (6.20 Ares as per revenue records) in Re. Sy. No. 46/32 pt of Muthalamada No.2 Village, Chittur Taluk, Palakkad District.

¶53

Boundaries

¶54

East	: Property of Shoukathali
North	: Property of Kamaludheen
West	: Property of Rsiya & others
South	: PWD Road

(Su. WILLYAHM)

PRESIDING OFFICER

Page 6 of 7

SA No.551 of 2024

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

¶60

Sl. No.	Date	Particulars
1.	---	True copy of MC No.257/2024 along with its affidavit filed before the Chief Judicial Magistrate CourtPalakkad.	Annexure-A1
2.	04.06.2024	True copy of the order in MC No.257/2024 of the Chief Judicial Magistrate CourtPalakkad.	Annexure-A2
3.	05.07.2024	True copy of the notice issued by the Advocate Commissioner.	Annexure-A3

¶61

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

¶62

Sl. No.	Date	Particulars
1.	26.12.2022	True copy of the Demand Notice.	Annexure-D1
2.	---	True copy of the postal Acknowledgment cards signed by the applicants.	Annexure-D2 series
3.	14.07.2023	True copy of the Possession Notice	Annexure-D3
4.	---	True copy of the postal Acknowledgment cards evidencing the receipt ofthePossession Notice.	Annexure-D4 series
5.	16.07.2023	True copy of the Possession Notice published in New Indian Express daily (English)	Annexure-D5
6.	16.07.2023	True copy of the Possession Notice published in Kerala Kaumudi (Malayalam) daily	Annexure-D6
7.	14.07.2023	True copy of the photograph evidencing affixture onthe scheduled property	Annexure-D7
8.	14.11.2022	True copy of the relevant resolution of the board of Directors of the defendant bank	Annexure-D8
9.	---	True copy of the printout regarding CERSAI registration.	Annexure-D9

¶63

(Su. WILLYAHM) PRESIDING OFFICER

¶64

Mj/

¶65

Page 7 of 7

Ashik N a v. South Indian Bank

Case brief

What is this about?

What did the court decide?

Ashik N a v. South Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Aleyas Paul versus State Bank of India

Ms Prtibha Food Industries and Others versus Punjab National Bank

Punjab National Bank versus Shree Ganesh Steel Hardware

Mona Jaitly versus Icici Home Finance

Bank of India versus Sri.. K. Ramdas @ Ramdasu

State Bank of India versus Sri. T. P. Vikram