Dismissed

Davis Paul v. South Indian Bank

DRT31 Jan 2025SA/64/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal disposed of a Securitization Application filed by a borrower challenging possession notice and recovery measures under SARFAESI Act. The Tribunal held that the proceedings were legal and no illegality existed. Consequently, the application was dismissed, and costs were awarded to the bank.

What did the court decide?

Application dismissed; applicant ordered to pay costs of Rs.50,000 to the bank.

Davis Paul versus South Indian Bank — Insolvency and Bankruptcy | 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 31^st day of January, 2025

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SECURITIZATION APPLICATION No.64/2024

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Between

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Davis Paul, Residing at: Vadakkethala House, Round road, Puthoor, Thrissur – 680 014. Managing Director, M/s.Eminent Automotives(India) Private Ltd., 13/116G, Bypass, Marathakara, Thrissur – 680 320. …Applicant

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And

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The Authorised Officer, The South Indian Bank Ltd., Regional Office, Thrissur, 1^st Floor, Platinum Jubilee Building, Civil Line Road, Near Children’s Park, Ayyanthole, Thrissur – 680 003.

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The South Indian Bank Ltd., Ollur Branch, D.No.645, Holy Angels School Building, Holy Angels Road, Ollur P.O., Thrissur – 680 306, Represented by its Manager. …Defendants

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This Securitization Application having been heard on 10.01.2025

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in the presence of Advocates M/s.Soniya M. and Sarath M.S. for the applicant and Advocate Sri.Anto Thomas Adipuzha for the defendants and stood over to this day for consideration, the Tribunal delivered the

following:

SA 64/2024

F I N A L O R D E R

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Challenging the securitization proceedings initiated by the defendants 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 applicant/borrower has filed this SA under S.17(1) of the SARFAESI Act.

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Brief facts of the case :

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The applicant availed a mortgage loan from the 2^nd defendant by creating equitable mortgage in respect of the subject matter properties. Due to default in repayment, securitization proceeding was initiated by the defendants and possession notice under S.13(4) of the SARFAESI Act was issued on 21.02.2023. The applicant claims that in spite of several requests made by him to consider his representations, the defendant bank did not consider the same and issued a notice under S.13(8) of the SARFAESI Act on 12.04.2023 claiming an amount of Rs.2,09,49,547.95 due as on 11.04.2023 with further interest and penal interest. The applicant submitted an OTS proposal for Rs.1.60 crores and remitted some amount. Without considering such proposal and the deposit made by the applicant, Advocate Commissioner issued notice dated 22.11.2023 for taking physical possession of the secured asset. Hence this SA is filed with a prayer to set aside the notice issued by the Advocate Commissioner and other securitization measures initiated by the defendants.

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The defendants filed written statement denying the averments in the SA and claimed inter alia that the applicant availed

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SA 64/2024

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various credit facilities from the defendant bank after executing necessary documents and creating equitable mortgage in respect of the properties described in the written statement. Due to default in repayment, the loans were classified as NPA on 01.10.2022 as per the guidelines of RBI. In spite of issuance of demand notice dated 25.11.2022 under S.13(2) of the SARFAESI Act calling the applicant to pay the outstanding amount within the statutory period of 60 days, he did not respond to the same nor filed any objection against such demand notice. The OTS proposal submitted by the applicant was not accepted.

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The applicant filed W.P.(C) No.44068/2023 before the Hon'ble High Court of Kerala which was disposed vide judgment dated 22.12.2023 permitting the applicant to submit revised proposal and to remit Rs.20 lakhs before 15.01.2024 but the same was not complied. Consequently, the writ application was dismissed vide judgment dated 09.02.2024. Due to obstruction raised by the applicant in taking physical possession of the secured asset, defendants filed Crl.M.P.No.8210/2023 before the CJM, Thrissur under S.14 of the SARFAESI Act. After being satisfied with the documents, the CJM appointed an Advocate Commissioner to take physical possession of the secured asset. No proposal for OTS is pending for consideration. More than Rs.2 crores is outstanding in the loan accounts. In absence of any illegality, this SA, having no merit, may be dismissed.

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From the respective contentions of both sides, the following points are emerged for adjudication in this case:

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SA 64/2024

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(i) Whether the securitization proceeding initiated by the defendants suffer from any illegality or irregularity to intervene with the same?

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

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FINDINGS:

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Point Nos.(i) & (ii):

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For the sake of convenience, both the points, being interlinked with each other, are taken up together for adjudication. Admittedly, the applicant availed various loans from the 2^nd defendant by creating security interest over the subject matter properties. Due to irregular repayment of the loan, the defendant bank classified the loans as NPA and proceeded with the securitization measures. Admittedly, after receipt of the demand notice, no objection/representation was submitted by the applicant in disputing the claim. The OTS proposal submitted by the applicant was rejected which was impugned by the applicant before the Hon'ble High Court of Kerala in W.P.(C) No.44068/2023. An opportunity was given to the applicant by the Hon'ble High Court to submit revised OTS proposal and to deposit Rs.20 lakhs but the same was also not complied.

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In the course of arguments, learned counsel for the applicant did not point out any illegality in the securitization proceedings and it is only contended that OTS proposal was not properly considered by the defendants. The Hon'ble High Court of Kerala in the judgment dated 05.12.2024 in W.A.No.1275/2024 in the case of State Bank of India vs. Sham P.S. at paragraph 14 it is held as follows:-

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SA 64/2024

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“14. Banks deal with public money. Loans are provided out of their funds on specific terms and conditions. The loan agreement between the creditor bank and borrower has its own sanctity. Banks provide special schemes such as One Time Settlement Schemes to enable defaulters to wipe off the liabilities. Terms and conditions of such schemes are formulated on the basis of commercial prudence. Often, waiver of penal interest or other components is offered as benefit to the borrowers. A borrower availing the benefit of the Scheme is bound by terms and conditions of the Scheme in its entirety. If the borrower is not in a position to or unwilling to act in accordance with any of the terms and conditions of the OTS Scheme or committed breach of the terms he cannot be permitted to seek direction from the Court to compel the bank to honour its obligations. If such pleas are acceded to, that will definitely amount to re-writing of the agreement between the creditor and the borrower.”

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In view of this ratio, the Tribunal has no jurisdiction to direct the secured creditor to grant any OTS. In spite of indulgence shown to the applicant by the Hon'ble High Court, he did not submit any revised application nor deposited the amount fixed by the Hon'ble Court. In absence of any illegality or irregularity in the securitization proceedings, the applicant has no case for adjudication in this case and hance he is not entitled to get any relief in this case. Both points 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 on contest. Since the securitization proceeding initiated by the defendants are deliberately delayed by the applicant by filing various litigations, he is liable to pay costs of Rs.50,000/- (Rupees fifty thousand only) to the defendant bank.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 31^st day of January, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 64/2024

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Documents on the part of the applicant

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Annexures	Date	Particulars of documents
Annexure-A1	21.02.2023	Copy of possession notice issued to the applicant.
Annexure-A2	12.04.2023	Copy of notice under S.13(8) of the SARFAESI Act issued to the borrowers.
Annexure-A3	21.06.2023	Copy of OTS proposal submitted to the defendant bank by the applicant.
Annexure-A4	30.06.2023	Copy of email communication sent to the defendant bank by the applicant regarding the remittance of Rs.5 lakhs.
Annexure-A5	30.06.2023	Copy of cheque for Rs.5 lakhs.
Annexure-A6	22.11.2023	Copy of notice issued by the Advocate Commissioner in Crl.M.P.No.8210/2023.

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Documents on the part of the defendants

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Annexure-B1	22.12.2023	Copy of order in W.P.(C) No.44068/2023 of the Hon'ble High Court of Kerala.
Annexure-B2	09.02.2024	Copy of judgment in W.P.(C) No.44068/2023 of the Hon'ble High Court of Kerala.
Annexure-B3	…	Copy of statement of account in respect of CCOL account.
Annexure-B4	…	Copy of statement of account in respect of mortgage loan account.
Annexure-B5	…	Copy of statement of account in respect of ECLGS account.

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PRESIDING OFFICER

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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 the 31^st January, 2025

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SA No.64/2024

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Between Davis Paul, Residing at: Vadakkethala House, Round road, Puthoor, Thrissur – 680 014. Managing Director, M/s.Eminent Automotives(India) Private Ltd., 13/116G, Bypass, Marathakara, Thrissur – 680 320. …Applicant

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And

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The Authorised Officer, The South Indian Bank Ltd., Regional Office, Thrissur, 1^st Floor, Platinum Jubilee Building, Civil Line Road, Near Children’s Park, Ayyanthole, Thrissur – 680 003 & another. …Defendants

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F I N A L O R D E R

Davis Paul v. South Indian Bank

Case brief

What is this about?

What did the court decide?

Davis Paul v. South Indian Bank

Case brief

What is this about?

What did the court decide?

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