Allowed

Lakshmi B v. South Indian Bank

DRT29 Oct 2025SA/612/2023

Case brief

AI extract

What is this about?

The Tribunal allowed the securitization applications, setting aside an order passed by the Civil Judge under Section 14 of the SARFAESI Act against a deceased guarantor, holding that such an order is void ab initio and the bank must proceed afresh by impleading the legal heirs.

What did the court decide?

The securitization application allowed by setting aside the order passed by the CJM in MC No.634/2023. The defendant can proceed afresh by impleading other legal heirs.

Lakshmi B versus South Indian Bank — Banking and Recovery | DRT (2025)

¶1

IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

¶2

PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

¶3

Dated this the 29^th day of October, 2025

¶4

SECURITIZATION APPLICATION No.612/2023

¶5

Between

¶6

Lakshmi B., Kadalikkandathil House, Kalakkal Road, Vaikom P.O., Naduvile Part, Kottayam – 686 141.

¶7

Binu P.K., Kadalikkandathil House, Kalakkal Road, Vaikom P.O., Naduvile Part, Kottayam – 686 141.

¶8

Savithri, Parambil House, Kumarakom P.O., Kottayam – 686 563. …Applicants

¶9

And

¶10

The Authorised Officer, South Indian Bank Ltd., Regional Office, SIB Building, Infopark Road, Rajagiri Valley P.O., Kakkanad, Ernakulam – 682 039. …Defendant

¶11

SA 612/2023

¶12

¶13

This Securitization Application having been heard on 27.10.2025 in the presence of Advocates M/s.Sasi N. and Jithendran S. for the applicants and Advocates M/s.Anto Thomas Adipuzha and Jiji Joseph for the defendant and stood over to this day for consideration, the Tribunal delivered the following:

¶14

F I N A L O R D E R

¶15

Challenging the securitization proceedings initiated by the defendant under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’), the applicants/borrowers have filed this SA under S.17(1) of the SARFAESI Act seeking relief to set aside the entire steps taken by the defendant under the SARFAESI Act.

¶16

Brief facts of the case :

¶17

2.1 In the SA it is averred that the 1^st applicant is the legal heir of deceased borrower Binoy K.T. and applicants 2 and 3 are coborrowers to six loans availed from the defendant bank for conducting business for M/s.Aiswarya Tiles and Granites, M/s.Aiswarya Collections and M/s.Minnara. As security for the loans, the applicants mortgaged 34.79 Ares of land in Vaikom Village and 25.53 Ares of land in Aymanam Village in Kottayam

¶18

SA 612/2023

¶19

¶20

District. The applicants were regularly remitting the loan installments and paid substantial amount. Thereafter some default occurred in repayments. Without prior intimation, the defendant issued possession notices marked Annexures-A1 to A6 under S.13(4) of the SARFAESI Act. The possession notices were not affixed or published as mandated under R.8 of the Security Interest Enforcement Rules. The defendant bank has failed to issue demand notice under S.13(2) of the SARFAESI Act to all the parties of the loan transaction. The classification of the loans as NPA is illegal and arbitrary. It is also claimed that the security interest created over the properties was not registered in the CERSAI portal and hence the entire proceeding is vitiated.

¶21

2.2 In the amended SA it is claimed that during pendency of the SA, the defendant approached the CJM, Kottayam by filing MC No.634/2023 for taking physical possession of the secured assets. The CJM passed an order marked Annexure-A9 on 02.12.2023 in appointing an Advocate Commissioner, who issued Annexure-A10 notice to the applicants intimating that possession of the property will be taken on 11.01.2024. The owner of the property Mr.Thankappan expired on 01.11.2023 and the defendant has failed to implead his heir Mrs.Latha K.L. in the proceeding

¶22

SA 612/2023

¶23

¶24

before the CJM Court. She derived interest over the property after the death of her father and hence S.14 proceeding against a dead person is vitiated. Meanwhile, the defendant issued sale notice marked Annexure-A12 for sale of the residential property to be held through e-auction on 12.01.2024. No clear 30 days’ sale notice was served on the applicants and the notice was neither affixed nor published as mandated under the statute. In view of the above, the entire securitization proceedings are liable to be set aside.

¶25

3.1 The defendant filed written statement denying the averments and claimed that the following credit facilities were

¶26

availed from the defendant bank:

¶27

Date of sanction	Type of loan	Amount	Borrower(s)	Guarantor(s)	Mortgagor(s)
10.03.2008 08.06.2020	CCOL ECLGS	Rs.1.05 crores Rs.21.37 lakhs	M/s.Aiswarya Collections and its partners late Binoy K.T. and 2^ndapplicant	Thankappan and 3^rd applicant	Thankappan (34.79 Ares) & 3^rd applicant (25.53 Ares)
31.03.2022	CCOL	Rs.1.30 crores	M/s.Aiswarya Enterprises through	Thankappan and	Thankappan (34.79 Ares)
08.06.2020	ECLGS	Rs.26.31 lakhs	its proprietor late Binoy K.T.	applicants 2 & 3	& 3^rd applicant (25.53 Ares)
31.03.2022 08.06.2020	CCOL ECLGS	Rs.50 lakhs Rs.10.26 lakhs	M/s.Aiswarya Tiles and Granites through its proprietor 2^nd applicant	Late Binoy K.T., Thankappan & 3^rd applicant	Thankappan (34.79 Ares) & 3^rd applicant (25.53 Ares)
10.03.2016	TL mortgage loan	Rs.65 lakhs	Late Binoy K.T. (borrower) and 2^nd applicant (co- borrower)	Thankappan	Thankappan (34.79 Ares)

¶28

SA 612/2023

¶29

¶30

31.03.2022	TL mortgage loan	Rs.1 crore	2^nd applicant (borrower) and Late Binoy K.T. (co- borrower)	Thankappan and 3^rd applicant	Thankappan (34.79 Ares) & 3^rd applicant (25.53 Ares)
31.03.2022 08.06.2020	CCOL ECLGS	Rs.1 crore Rs.20 lakhs	M/s.Minnara through its proprietrix Lakshmi B.	Thankappan and applicants 2 & 3	Thankappan (34.79 Ares) & 3^rd applicant (25.53 Ares)

¶31

3.2 The borrowers and guarantors defaulted in repayment

¶32

of the loans and hence the accounts were declared as NPA on 25.01.2023 as per RBI guidelines. Thereafter recovery proceedings were initiated and demand notices under S.13(2) of the SARFAESI Act marked as Annexures-B1, B4, B7, B10, B13 and B16 were issued to the borrowers as well as guarantors on 25.05.2023 which were received by them vide Annexures-B3, B6, B9, B12, B15 and B18 acknowledgement cards. Despite receipt of the demand notices, the borrowers or their legal heirs have not repaid the outstanding dues nor submitted any representation under S.13(3A) of the SARFAESI Act. Consequently, the defendant took possession of the secured assets on 11.09.2023. The possession notices were received by the applicants and the same was published in two leading newspapers on 15.09.2023 vide Annexures-B19 and B20 and affixed on the secured assets vide Annexure-B21 photographs.

¶33

SA 612/2023

¶34

¶35

3.3 As the borrowers resisted to handover physical possession of the secured assets, the defendant approached the CJM, Kottayam by filing MC No.634/2023 in strict compliance with S.14(1) of the SARFAESI Act. After fully appreciating the case of the defendant, the CJM passed an order on 02.12.2023 and appointed an Advocate Commissioner to take physical possession of the secured assets. The mortgage was created by Thankappan during his life time and he died on 01.11.2023 but the said fact was not intimated to the bank. Since a valid mortgage subsists, it is not necessary to implead the legal heirs in S.14 application and no prejudice would be caused to them due to such non-impleadment. Except his wife Savithri, other legal heirs of late Thankappan are parties to S.14 application. The Hon'ble Apex Court in Sri Ram Pasricha vs. Jagannath & others [AIR 1976 SC 2335] and Subhendu Prosad Roy Choudhury & others vs. Kamala Bala Roy Choudhury & others [AIR 1978 SC 835] had held that notice to one of the legal heirs is sufficient notice.

¶36

3.4 The sale notice dated 27.11.2023 marked AnnexureA12 was issued for sale of the vacant land of 25.53 Ares owned by the 3^rd applicant and the notice was served on all the borrowers except Thankappan. The postal receipts and acknowledgement

¶37

SA 612/2023

¶38

¶39

cards are produced in this case and marked as Annexure-B22 series and Annexure-B23 series. The sale notice sent to Thankappan was returned with the postal endorsement ‘Expired’ vide Annexure-B24. The sale notice was published in Deshabhimani and The Hindu dailies on 28.11.2023. However, the sale did not fructify. The security interest was registered in the CERSAI portal and the CERSAI registration certificate is marked as Annexure-B27. There is no manner of illegality or irregularity in the securitization proceedings. Hence the SA, being devoid of any merit, may be dismissed.

¶40

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

¶41

(i) Whether the securitization proceeding is vitiated due to continuation of the proceeding against a dead person?

¶42

(ii) Whether the applicants are entitled to get any relief in this case?

¶43

FINDINGS:

¶44

Point Nos.(i) & (ii):

¶45

In the SA the applicants challenged the possession notice dated 11.09.2023 issued by the defendant under S.13(4) of

¶46

SA 612/2023

¶47

¶48

the SARFAESI Act. Subsequently, after amending the SA, the applicants challenged the proceeding under S.14 of the SARFAESI Act. The father of the principal borrower viz., Thankappan M. expired on 01.11.2023 which is apparent from the death certificate dated 15.11.2023 marked Annexure-A13. The learned CJM passed the order in MC No.634/2023 against the dead person on 02.12.2023. The defendant did not take any step to substitute legal heirs of the deceased. Hence the order passed by the CJM is void ab initio and based on the same, the defendant cannot proceed with the securitization proceedings.

¶49

On the other hand, learned counsel for the defendant contended that death of the deceased was not within the knowledge of the Authorised Officer and hence there is no scope for impleading other legal heirs of the deceased. If there is any illegality in the proceeding before the CJM, permission may be given to the defendant to proceed afresh under S.14 of the SARFAESI Act by impleading other legal heirs of the deceased. But there is no necessity to start the proceeding afresh against the legal heirs and the contention of the learned counsel for the applicants is not sustainable. Hence the SA is liable to be dismissed.

¶50

SA 612/2023

¶51

¶52

Admittedly, financial assistance was given to M/s.Binoy K.T. and Binu P.K. on execution of necessary loan documents. Late Binoy K.T. is the principal borrower and the 2^nd applicant in the SA is the co-borrower and father of late Binoy K.T. Mr.Thankappan M. was the guarantor to the loan transaction. On perusal of the demand notice dated 25.05.2023 issued under S.13(2) of the SARFAESI Act, it is seen that Annexure-B1 demand notice was issued to Mr.Thankappan including other legal heirs of the principal borrower late Binoy K.T. and co-borrower. No dispute is raised about service of demand notice. During pendency of the securitisation proceeding, Thankappan expired which is not disputed by the defendant. It is only claimed by the defendant that death of guarantor was not within the knowledge of the Authorised Officer which took place on 01.11.2023 before passing of the order by the CJM. The defendant has also filed a memo in withdrawing Annexure-A7 application filed under S.14 of the SARFAESI Act. Subsequently, such memo was withdrawn which is recorded in the proceeding dated 01.07.2025.

¶53

The question arises whether the death of

¶54

Mr.Thankappan, who is one of the guarantors to the loan, vitiated the order passed by the CJM and whether it is necessary on the

¶55

SA 612/2023

¶56

¶57

part of the defendant to proceed afresh against co-borrower and guarantors as well as other legal heirs of the deceased?

¶58

The Hon'ble High Court of Kerala in the judgment reported in 2019 KHC 7606 in the case of The Authorised Officer, Tamilnadu Mercantile Bank Limited vs. Devi Prasad at

¶59

paragraph 14 held as follows:-

¶60

“14.............Question is whether the death of the original borrower occurred at that stage of the proceedings will abate the entire steps taken. Or in other words, whether the secured creditor is at an obligation to initiate fresh steps, right from issuing notice under sub-section (2) of Section 13. Considering the object, nature and scheme of the above said provisions of the SARFAESI Act, we can only answer the above question in the negative........”

¶61

In view of this ratio, either the borrower or guarantor dies after issuance of the demand notice, it is not necessary on the part of the secured creditor to proceed afresh by issuing fresh demand notice to the other legal heirs of the deceased. In the said judgment, the Hon'ble High Court has held that it is necessary to implead the legal heirs of the deceased in the proceeding under S.14 of the SARFAESI Act which was not done in this case. Though it was not necessary on the part of the defendant to issue fresh demand notice to other left out legal heirs of the deceased, it was incumbent upon the defendant to delete the name of the deceased from the

¶62

SA 612/2023

¶63

¶64

proceeding and to implead other legal heirs to avoid any future complications.

¶65

It is true that the applicants did not intimate the death of Mr.Thankappn and the defendant has no scope to know the same. In such premises, the defendant cannot be blamed for nonsubstitution of the legal heirs of the deceased in the proceeding under S.14 of the SARFAESI Act. In view of the ratio decided by the Hon'ble High Court of Kerala, the proceeding and the order passed by the CJM against the dead person is not legally sustainable. Admittedly the sale notice issued by the defendant did not fructify and hence there is no necessity to adjudicate any claim in respect of the same. No other point except non-impletion of LR of the deceased in the proceeding under section 14 of the SARFAESI Act was raised by the learned counsel for the applicants. It is already found that the defendant has no fault as the death of the deceased Mr.Thankappn took place few days before passing of the order by the CJM. The defendant can proceed afresh in such proceeding under section 14 of the SARFAESI Act by impleading other legal heir of the deceased in accordance with law. The points framed are answered accordingly.

¶66

Hence it is ordered:-

SA 612/2023

ORDER

In view of the foregoing reason and with the above observation, this SA is allowed by setting aside the order passed by CJM, Kottayam in MC No.634/2023 but in the circumstances without costs. The expenses if any debited in the account of the borrowers in respect of the proceeding initiated under S.14 of the SARFAESI Act, the same shall be deducted before proceeding afresh with such measures by the defendant.

¶71

(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 29^th day of October, 2025)

¶72

[SOVAN KUMAR DASH] PRESIDING OFFICER

¶73

SA 612/2023

¶74

¶75

Documents on the part of the applicants

¶76

Annexures	Date	Particulars of documents
Annexure-A1	11.09.2023	Copy of possession notice defendant to recover Rs.46,95,635.40.	issued by the dues	the of
Annexure-A2	11.09.2023	Copy of possession notice defendant to recover Rs.62,91,012.28.	issued by the dues	the of
Annexure-A3	11.09.2023	Copy of possession notice defendant to recover Rs.1,26,69,520.53.	issued by the dues	the of
Annexure-A4	11.09.2023	Copy of possession notice defendant to recover Rs.1,63,67,709.74.	issued by the dues	the of
Annexure-A5	11.09.2023	Copy of possession notice defendant to recover Rs.1,32,54,332.45.	issued by the dues	the of
Annexure-A6	11.09.2023	Copy of possession notice defendant to recover Rs.1,13,36,375.70.	issued by the dues	the of
Annexure-A7	23.11.2023	Copy of S.14 application defendant bank befor Kottayam.	filed by e the C	the JM,
Annexure-A8	18.11.2023	Copy of affidavit filed before the CJM, Kottayam	by the b .	ank
Annexure-A9	02.12.2023	Copy of order in MC No the CJM, Kottayam.	.634/2023	of
Annexure-A10	28.12.2023	Copy of notice issued by Commissioner in MC No.6	the Advo 34/2023.	cate
Annexure-A11	05.03.2012	Copy of search report CERSAI portal.	obtained f	rom
Annexure-A12	27.11.2023	Tender-cum-auction sale by the defendant.	notice iss	ued
Annexure-A13	15.11.2023	Copy of death certificate M.Thankappan.	in respec	t of

¶77

SA 612/2023

¶78

¶79

Documents on the part of the defendant

¶80

Annexures	Date	Particulars of documents
Annexure-B1	25.05.2023	Copy of demand notice issued under Section 13(2) of the SARFAESI
		Act in respect of CCOL A/c
		No.0091083000000026 and ECLGS A/c. No. 009165000000252.
Annexure-B2	29.05.2023	Copies of the postal receipts issued from the Postal Department evidencing the dispatch of Demand Notices.
Annexure-B3 series	31.05.2023	True copies of the acknowledgment cards evidencing the receipt of demand notice by the borrowers and guarantors.
Annexure-B4	25.05.2023	Copy of Demand Notice issued under Section 13(2) of the SARFAESI
		Act in respect of CCOL A/c.
		No.0091083000000060 and ECLGS A/c. No.0091656000000250.
Annexure-B5	29.05.2023	Copies of postal receipts issued from the postal department evidencing the dispatch of Demand Notices.
Annexure-B6 series	31.05.2023	Copies of acknowledgment cards evidencing the receipt of demand
		notice by the borrowers and guarantors.
Annexure-B7	25.05.2023	Copy of Demand notice issued under Section 13(2) of the SARFAESI Act in respect of CCOL A/c.
		No.0091083000000034 and ECLGS A/c. No.0091656000000254.

¶81

SA 612/2023

¶82

¶83

Annexure-B8	29.05.2023	Copies of postal receipts issued from the postal department evidencing the dispatch of Demand Notices.
Annexure-B9	31.05.2023	Copies of acknowledgment cards
series		evidencing the receipt of demand
		notice by the borrowers and guarantors.
Annexure- B10	25.05.2023	Copy of demand notice issued under Section 13(2) of the SARFAESI Act in respect of TL Mortgage Loan A/c. No.0091655000000322.
Annexure- B11	29.05.2023	Copies of postal receipts issued from the postal department evidencing the dispatch of Demand Notices.
Annexure-	31.05.2023	Copies of acknowledgment cards
B12 series		evidencing the receipt of demand
		notice by the borrowers and guarantors.
Annexure- B13	25.05.2023	Copy of Demand Notice issued under section 13(2) of the SARFAESI Act in respect of TL Mortgage Loan A/c. No.0091652000001243.
Annexure- B14	29.05.2023	Copies of postal receipts evidencing the dispatch of Demand Notices.
Annexure-	31.05.2023	Copies of acknowledgment cards
B15 series		evidencing the receipt of demand
		notice by the borrowers and guarantors.
Annexure- B16	25.05.2023	Copy of Demand Notice issued under Section 13(2) of the SARFAESI Act in
		respect of CCOL A/c.
		No.0091083000000080 and ECLGS A/c. No. 0091656000000256.

¶84

SA 612/2023

¶85

¶86

Annexure- B17	29.05.2023	Copies of postal receipts issued from the postal department evidencing the dispatch of Demand Notices.
Annexure-	31.05.2023	Copies of acknowledgment cards
B18 series		evidencing the receipt of demand
		notice by the borrowers and guarantors.
Annexure- B19	15.09.2023	Copy of possession notice published in the Hindu Daily.
Annexure- B20	15.09.2023	Copy of possession notice published in Deshabhimani daily.
Annexure- B21 series	11.09.2023	Copy of photographs showing the affixture of possession notices on the secured assets.
Annexure- B22 series	02.12.2023	Copy of postal receipts evidencing the dispatch of Annexure-A12 sale notice.
Annexure- B23 series	04.12.2023	Copy of acknowledgement cards evidencing the receipt of sale notice.
Annexure-	…	Copy of returned postal envelope
B24 series		addressed to Thankappan with the endorsement ‘expired’.
Annexure- B25	28.11.2023	Copy of Sale Notice published in Deshabhimani daily (Malayalam).
Annexure- B26	28.11.2023	Copy of sale notice published in the Hindu Daily (English).
Annexure- B27	25.04.2017	True copies of the CERSAI Registration Certificates.