Allowed

Abdul Jalal and Others v. Karnataka Bank Limited

DRT11 Jul 2025SA/61/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal-II, Bangalore allowed the Securitization Application filed by legal heirs of a deceased borrower. The Tribunal set aside measures obtained against the mortgager post-death, directing the bank to restore possession, noting the necessity of informing heirs about proceedings affecting their rights.

What did the court decide?

The Securitization Application is allowed; impugned measures resulting in the Section 14 order are set aside, and the respondent is directed to restore actual possession to the applicants.

Abdul Jalal and Others versus Karnataka Bank Limited — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-II, BANGALORE

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Dated 11^th day of July, 2025

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PRESENT: SHRI T. RAJESH Hon’ble Presiding Officer

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S.A. No. 61 of 2024

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Mr. Abdul Jalal S/o. Late Abubakkar, H.NO.4-17, Asma Manzil, Padukere, Kota, Udupi-576221.

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Mrs. Hajirabi, S/o. Late Abubakkar, H.NO.4-17, Asma Manzil, Padukere, Kota, Udupi-576221.

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Ms. Abdul Rehaman, S/o. Abubakkar, Residing at, H No.5-206(2), Kotathattu, Kota, Udupi District-576221.

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. . . Applicants

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Versus

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The Authorized Officer, Karnataka Bank Ltd, Asset Recovery Management Branch, 3^rd floor, Karnataka Bank Building, Kodialibail, Mangalore-575003

. . . Respondent

SA. 61/2024

Ld. Counsels on record / appeared :- Counsel for Applicants :- Sri. E. Devaraja Counsel for Respondent :- Sri. Y. P. Gokul

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: - O R D E R - :

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This Securitization Application, SA is filed under section 17 of the Securitization And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act; herein after been referred to as SARFAESI Act or the Act, as the case be impugned the measures initiated and continued by the respondent leading to the procurement of section 14 order from the learned Principal Senior Civil Judge and Chief Judicial Magistrate, Udupi in Crl.Misc. 37/2024.

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Applicants are the legal heirs of the deceased borrower. It is also admitted that the applicant 1 and 2 are the co-borrowers and 3^rd applicant is the guarantor. It is also stated that the deceased borrower left out five legal heirs including the co-borrower and Mortgagor. It is further contented that despite the death of the principal borrower the respondent failed to issue notice to the legal heirs.

SA. 61/2024

The applicants are not disputing the availment of the credit facility, creation of Security Interest. However, dispute is raised as to the service of demand notice and symbolic possession notice.

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Along with the SA. The applicant had produced the following documents.

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i) Death certificate of the borrower

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ii) Order in Crl.Misc. 37/2024 of CJM Uduppi iii) Application by the respondent bank

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iv) Affidavit filed in section 14 application

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v) Pass book loan account.

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The respondent filed their objection giving para-wise rebuttal of the

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statement of facts as put forth in the SA. It is also pointed out at the time of issuance and service of demand notice and possession notice,

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the borrower was alive, and that applicant had approached this Tribunal with unclean hands. It is also stated that the Bank had followed the procedure as required by statute and there is no procedure infirmity in the measures. In fact, the applicant remained silent about demise of late borrower.

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The respondent had also produced the following documents.

SA. 61/2024

i) Sanction order dated 02.01.2013 ii) Memorandum of deposit of title deeds dated 04.02.2013 iii) Sanction of 7 lakhs dated 19.09.2013 iv) Term loan agreement dated 20.09.2013 v) Letter of Authority dated 22.09.2013 vi) CERSAI certificate vii) Demand notice dated 24.10.2019 viii) Postal acknowledgment of demand notice ix) Possession notice dated 30.03.2021 x) Postal receipts in respect of possession notice xi) Returned envelopment of possession notice xii) Paper publication of possession notice. xiii) Photograph evidencing affixture of possession notice xiv) Notice issued by respondent to applicants.

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Hence on the above contentions, the respondent seeks for dismissal of

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the SA.

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Heard the Ld. counsels appearing for both sides.

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The main contentions put forth by applicants is that the section 14

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order is produced against a dead person as the deceased Abubakkar,

SA. 61/2024

who’s death is evidenced by Annexure A1 sale certificate is bad in law. The Ld. counsel for the applicant contents that the death of the original borrower will automatically result is abatement of the proceedings already initiated. This Tribunal is of the view that the contention as to abatement of proceedings will not arise at all as some of the legal heirs are already in the party array. It is also to be noted that the demand notice as well as possession notice were duly served on the deceased borrower during his lifetime. In contra the Ld. counsel for the respondent placing reliance on “SP. Chengal varaya Naidu v/s. Jaganath & others “(1994)1 SCC known disclosure of and contend that all the legal heirs were aware as to the default as they are residing together.

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The issue whether the bank need to initiate de novo measures is delt with various high court and rendered divergent views. No authority from Hon’ble High Court of Karnataka is placed before this Tribunal. The Madras High court in “ Subaina Banu and Ors. V/s Indian ARM Branch and Ors” (MANU/TN/3149/2010) held as follows.

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“ proceedings initiated against a person while he was alive would automatically stand abated immediately after his death and the only course open to the Bank was to initiate proceedings by

SA. 61/2024

issuance of a fresh notice to the legal heirs of the borrower/guarantor, as the case may be, as such legal heirs would then have an opportunity to discharge the liability in sixty days.”

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Similarly, the Kerala High court in “ Emmey Jose V/s. Indian Bank (MANU/KE/1881/2014) had observed that “ the sale held without notice to the legal heirs of the deceased defaulter/ mortgager, is invalid in the eye of law and is liable to be declared void.”

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However the High court of Andhra Pradesh in “Hotel pearl City Hyderabad V/s. Debt Recovery Tribunal Hyderabad and Ors (MANU/AP/0798/2017) took a different view and observed that the idea behind serving notice is to implead the legal heirs on the basis that borrower is no more able to pay the liability and only to apprise the legal heir about the borrowing and also to provide them an opportunity to pay of the same.

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In the case in hand the order is procured against a dead person. In respect of the possession notice and demand notice it is to be noted that the same was served when the borrower was alive. Thereafter the impugned order is obtained without putting the legal heirs on notice. Hence it is evident that at least some of the legal

SA. 61/2024

heirs who are not the co-borrower is not informed about the

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proceedings.

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Since all the legal heirs are having right over the property of the deceased borrowers, it will be just and necessary to inform the legal heirs about the proceedings against the property over which they are having some rights.

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Even though the applicant contends that no demand notice and possession notice is served, the same stands rebutted by the respondent by producing proof as to compliance as to rule 3, Rule 8(1) and Rule 8(2) of the Security Interest (Enforcement) Rules.

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The discussion as held above leads to the conclusion that the

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order obtained against the dead person who is the mortgager cannot be sustained in the eye of law and is liable to be set aside.

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In the result

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i) SA.61 of 2024 stands allowed.

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ii) The measures leading to the procurement of order in Crl.Misc. 37 of 2024 of the Chief Judicial Magistrate Court, Uduppi is set aside.

SA. 61/2024

iii) If actual possession is taken pursuant to the impugned order the respondent is directed to put the applicant back in possession.

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iv) Taking into consideration the fact that the Bank officials are not informed about the death of the borrower even by coborrowers who are also some of the legal heirs, no orders as to cost is passed.

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All pending IAs stands closed. Issue copies in accordance with rule 16 of the Debt Recovery Tribunal (procedure) rule.

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(Dictated to PY directly on the Computer, after its transcription, corrected and pronounced by me in the open Court on this the 11^th day of July, 2025)

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Sd/-

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(T. RAJESH) PRESIDING OFFICER

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Abdul Jalal and Others v. Karnataka Bank Limited

Case brief

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Abdul Jalal and Others v. Karnataka Bank Limited

Case brief

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