Dismissed

Smt Susan Johnson v. State Bank of India

DRT30 May 2025SA/60/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application challenging a securitization proceeding where the applicant claimed the process was vitiated by the death of a guarantor after the court order. The court held the order remained valid as it was passed when the guarantor was alive and noted the applicant’s non-compliance with a One Time Settlement acceptance.

What did the court decide?

The application was dismissed with costs of Rs. 20,000/- payable by the applicant to the defendant for causing unnecessary delay.

Smt Susan Johnson versus State Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated this the 30^th day of May, 2025

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SECURITIZATION APPLICATION No.60/2023

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Between

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Susan Johnson, Konnayil House, Edathitta P.O., Kodumon, Pathanamthitta – 691 555. …Applicant

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And

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State Bank of India, Represented by its Authorised Officer, Stressed Assets Recovery Branch, LMS Compound, Opp. Museum West Gate, Vikas Bhavan P.O., Thiruvananthapuram – 695 033. ...Defendant

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This Securitization Application having been heard on 28.05.2025 in the presence of Advocates M/s.Renjith R. and Anju Mohan for the applicant and Advocates M/s.Jithesh Menon, Indu K. and Mahesh Kumar P.G. for the defendant and stood over to this day for consideration, the Tribunal delivered the following:

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F I N A L O R D E R

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Challenging the securitization proceedings initiated by the

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defendant under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security

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SA 60/2023

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Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’), the applicant/borrower has filed this SA under S.17(1) of the SARFAESI Act seeking relief to set aside the proceeding initiated by defendant under S.14 of the SARFAESI Act.

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Brief facts of the case :

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2.1 In the SA the applicant claims that initially she availed a cash credit facility from the erstwhile State Bank of Travancore on 10.06.2008 and thereafter the limit was enhanced to Rs.1 crore on 04.02.2011 and two items of properties described in the SA were offered as security to the loan. The continued lockdown on account of the Covid pandemic has resulted in closure of her business. Due to the reasons beyond the control of applicant, there occurred some default in repayments. Hence the defendant classified the loan as NPA and initiated SARFAESI proceedings by issuing demand notice under S.13(2) of the SARFAESI Act on 14.11.2019 calling the applicant to pay an amount of Rs.1,07,08,557/-. Thereafter, the defendant initiated proceeding to take physical possession of the secured assets by filing application under S.14 of the SARFAESI Act before the CJM Court, Pathanamthitta. The CJM passed an order in MC No.105/2021 marked as Annexure-A2 appointing an Advocate Commissioner to take possession of the secured assets. It is

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SA 60/2023

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claimed by the applicant that the defendant has not complied with the statutory provisions contained in the SARFAESI Act and has not taken symbolic possession of the secured assets.

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2.2 Earlier the applicant preferred SA No.234/2021 challenging S.14 measures which was subsequently withdrawn to proceed with OTS. The applicant submitted an OTS proposal which was approved for Rs.70,02,409/-. Initially the applicant remitted Rs.42 lakhs and thereafter paid Rs.23 lakhs against the said OTS into the parking account of SARB of the defendant bank. The applicant challenged the sale notice issued by the defendant before the Hon'ble High Court of Kerala by preferring O.P.(DRT) No.133/2021 and W.P.(C) No.27224/2022 and the order passed by the Hon'ble Court was not complied which is not intentional. Challenging the notice issued by the Advocate Commissioner in MC No.105/2021 marked Annexure-A6, the applicant preferred this SA seeking relief to set aside the order passed by the CJM, Pathanamthitta as the same is erroneous.

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3.1 The defendant denied the averments and contended inter alia that the applicant is the sole proprietrix of M/s.Konnayil Rubbers. The applicant along with one K.P.George availed a cash credit limit of Rs.25 lakhs on 10.06.2008 which was later enhanced

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SA 60/2023

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to Rs.40 lakhs on 17.09.2009 and further enhanced to Rs.1 crore on 04.02.2011. The loans were collaterally secured by equitable mortgage over the properties of an extent of 19.50 Ares belonging to one K.P.George and 10.12 Ares of land belonging to Johnson George. Due to irregular repayments, the account turned NPA on 30.10.2019. The defendant issued a demand notice dated 14.11.2019 marked Annexure-D1 which was served on the applicant by hand. As the applicant failed to repay the demanded amount, the defendant issued possession notices dated 21.01.2020 and 29.01.2020 under S.13(4) of the SARFAESI Act in respect of the property mortgaged by Johnson George and K.P.George respectively and the said notices were served on the applicant. The possession notices were affixed on the secured assets and published in “The Hindu” and “Malayala Manorama” dailies dated 05.02.2020 vide Annexures-D3 and D4. The applicant did not raise any challenge against the said notices.

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3.2 The defendant issued sale notice dated 27.08.2021 putting both the items of properties for sale to be held on 30.09.2021 but the sale did not fructify for want of bidders and the O.P.(DRT) No.133/2021 filed by the applicant challenging the sale was dismissed as infructuous. The OTS offered by the defendant

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SA 60/2023

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was accepted by the applicant and she remitted only Rs.14.08 lakhs and non-adherence of the recitals in Annexure-A3 OTS letter rendered it infructuous and the same was treated as failed. The averment in the SA that the applicant remitted an amount of Rs.42 lakhs as part of the settlement is incorrect. Thereafter the defendant approached the CJM, Pathanamthitta by filing MC No.501/2021 wherein an Advocate Commissioner was appointed who issued notice for taking possession of the secured assets. Meanwhile, the defendant issued a sale notice dated 03.08.2022 scheduling the sale to be held on 30.08.2022.

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3.3 Challenging the notice issued by the Advocate Commissioner as well as the sale notice issued by the defendant, the applicant preferred W.P.(C) No.27224/2022 before the Hon'ble High Court of Kerala. The Hon'ble High Court passed an interim order on 29.08.2022 vide Annexure-D6 directing the defendant to defer the sale on condition that the applicant remits an amount of Rs.10 lakhs on 29.08.2022 and a further sum of Rs.15 lakhs on or before 19.09.2022. But the applicant did not comply with the conditions and the writ petition was dismissed by the Hon'ble High Court vide Annexure-D7 judgment dated 23.09.2022. The applicant has not pointed out any illegality in the measures initiated by the

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SA 60/2023

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defendant and hence the SA, being devoid of any merit, may be dismissed.

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From the respective case of the applicant and the defendant, the following points are emerged for adjudication in this case:

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(i) Whether the securitization proceedings initiated by the defendant under the provisions of the SARFAESI Act suffer from any illegality to interdict with the same?

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(ii) Whether the applicant is entitled to get any relief in this proceeding?

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FINDINGS:

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Point Nos.(i) and (ii):

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Admittedly, the applicant availed a cash credit limit of Rs.1 crore from the bank and security interest was created over two items of properties to secure the loan. It is also the admitted case of the applicant that the loan could not be repaid promptly. Due to default, the defendant initiated the securitization proceeding and issued demand notice to the applicant and other guarantors to repay the loan. Due to non-compliance of the demand, further measure was taken by the defendant in the securitization

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SA 60/2023

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proceeding. The defendant has produced all the relevant documents showing compliance of the statutory requirements.

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During argument stage, learned counsel for the applicant did not raise any objection against the securitization measures taken by the defendant till passing of the order by the CJM under S.14 of the SARFAESI Act. It is only contended that the guarantor K.P.George, who is the owner of the secured asset, has created security interest over his property, expired on 23.09.2023 and the death certificate marked Annexure-A7 is filed in this case. Without taking steps to include the legal heirs of the said guarantor, the defendant proceeded against the dead person and hence the securitization proceeding is vitiated. Hence the order passed by the CJM on 28.06.2024 against the dead person is void and based upon the same, the defendant cannot proceed with the securitization proceedings.

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On the other hand, learned counsel for the defendant contended that the CJM has passed the order in MC No.105/2021 on 24.09.2021 appointing an Advocate Commissioner to take possession of the secured assets. At that time, K.P.George was alive and he was a party to the said proceeding. The subsequent order passed by the CJM marked Annexure-A9 in the said

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SA 60/2023

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proceeding dated 28.06.2024 is in continuation of the earlier order and the Advocate Commissioner appointed earlier was substituted by another Advocate Commissioner. As the said order was passed during the life time of K.P.George, the same cannot be said as illegal or void in the eye of law. Hence the contention on this aspect is not acceptable.

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Admittedly, K.P.George was one of the guarantors to the loan availed by the applicant and his property was mortgaged to secure the loan. Due to default in repayment, securitization proceeding was initiated and all the statutory measures are duly followed. The learned counsel for the applicant did not dispute any illegality in such proceeding. Admittedly, the order was passed by the learned CJM in MC No.105/2021 during the life time of K.P.George and that order is not yet executed. The subsequent order is not a fresh order passed by the CJM and it is only in continuation of the previous order for substituting the name of the Advocate Commissioner. Hence the said order cannot be said as illegal or void in any manner.

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Before parting with the case, it is necessary to point out

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that the applicant has raised various untenable contentions from time to time. Even if some indulgence was shown to her by the

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SA 60/2023

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Hon'ble High Court of Kerala, she did not comply with the same. The OTS granted to the applicant was also not complied. Such conduct of the applicant indicates that she has no intention to repay the loan and has sole intention to protract the securitization proceeding by raising some vexatious claim. Even if there is any illegality in the proceeding, the applicant having agreed to repay the loan by way of OTS, she cannot turn back and challenge the proceeding as illegal in view of the ratio decided by the Hon'ble Apex Court in the judgment reported in (2022) 2 SCC 221 in the case of Arce Polymers Private Limited v. Alphine

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Pharmaceuticals Private Limited and others .

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Here in this case, the applicant failed to point out any illegality in the securitization proceeding except non-taking of step by the defendant to substitute the legal heirs of deceased K.P.George in the proceeding before the CJM, Pathanamthitta. The same can be rectified by the defendant but the contention raised is not a ground to set aside the order passed by the CJM and to hold that the same is illegal or void in any manner. The defendant is at liberty to substitute the legal heirs of the deceased K.P.George in the proceeding initiated before the CJM, Pathanamthitta in MC No.105/2021 and proceed further in accordance with law. In the

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SA 60/2023

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absence of proof of any illegality, the applicant is not entitled to get any relief. Point Nos.(i) and (ii) are answered against the applicant.

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Hence it is ordered:-

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ORDER

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In view of the foregoing reasons, this SA, being devoid of any merit, is hereby dismissed with costs. The applicant shall pay costs of Rs.20,000/- (Rupees twenty thousand only) to the defendant for causing unnecessary delay in the securitization proceedings.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 30^th day of May, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 60/2023

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Documents on the part of the applicant

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Annexures	Date	Particulars of documents
Annexure-A1	18.03.2021	Copy of MC No.105/2021 filed by the defendant before the CJM Court, Pathanamthitta.
Annexure-A2	24.09.2021	Copy of order in MC No.105/2021 of the CJM, Pathanamthitta.
Annexure-A3	10.02.2022	Copy of OTS letter issued by the defendant bank.
Annexure-A4	...	Copy of payment receipts (3 Nos.).
Annexure-A5	19.09.2022	Copy of publication of obituary notice.
Annexure-A6	23.01.2023	Copy of notice issued by the Advocate Commissioner in MC No.105/2021.
Annexure-A7	23.09.2023	Copy of death certificate in respect of K.P.George.
Annexure-A8	31.08.2024	Copy of notice issued by the Advocate Commissioner in MC No.105/2021.
Annexure-A9	28.06.2024	Copy of order of the CJM, Pathanamthitta in MC No.105/2021.
Annexure-A10	18.03.2021	Copy of MC No.105/2021 filed by the defendant before the CJM, Pathanamthitta.

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Documents on the part of the defendant

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Annexure-D1 14.11.2019	Copy of demand notice issued to the applicant.
Annexure-D2 29.01.2020	Copy of possession notice issued by the defendant.
Annexure-D3 05.02.2020	Copy of publication of possession notice in The Hindu daily.
Annexure-D4 05.02.2020	Copy of publication of possession notice in Malayala Manorama daily.

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SA 60/2023

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Annexure-D5	22.08.2022	Copy of W.P.(C) No.272 by the applicant befor High Court of Kerala.	24/2022 filed e the Hon'ble
Annexure-D6	29.08.2022	Copy of order No.27224/2022 of the Court of Kerala.	in W.P.(C) Hon'ble High
Annexure-D7	23.09.2022	Copy of judgment No.27224/2022 of the Court of Kerala.	in W.P.(C) Hon'ble High

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PRESIDING OFFICER

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IN THE DEBTS RECOVERY TRIBUNAL2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated the 30^th May, 2025

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SA No.60/2023

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Between

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Susan Johnson, Konnayil House, Edathitta P.O., Kodumon, Pathanamthitta. …Applicant

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And

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State Bank of India, Represented by its Authorised Officer, Stressed Assets Recovery Branch, LMS Compound, Opp. Museum West Gate, Vikas Bhavan P.O., Thiruvananthapuram. …Defendant

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F I N A L O R D E R

Smt Susan Johnson v. State Bank of India

Case brief

What is this about?

What did the court decide?

Smt Susan Johnson v. State Bank of India

Case brief

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What did the court decide?

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