Dismissed

Mohammed Sageer T K v. South Indian Bank

DRT14 Mar 2025SA/641/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed an application challenging the securitization proceedings initiated by a bank under the SARFAESI Act. The court found no substantial illegality, holding that the proceedings were administrative and the applicants failed to demonstrate prejudice.

What did the court decide?

Application dismissed with costs of Rs.20,000/- awarded to the defendant bank.

Mohammed Sageer T K versus South Indian Bank — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA

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AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated this the 14^th day of March, 2025

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SECURITIZATION APPLICATION No.641/2024

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Between

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Mohammed Sageer T.K., Aged 65 years, S/o.Khader, Thaivalappil House, Uzhavathu Kadavu, Lokamalleswaram, Santhipuram P.O., Thrissur District, PIN – 680 668.

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Laila Mohammed Sageer, Aged 54 years, W/o. Mohammed Sageer, Thaivalappil House, Uzhavathu Kadavu, Lokamalleswaram, Santhipuram P.O., Thrissur District – 680 668 …Applicants

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And 1. The South Indian Bank Ltd., Regional Office, Irinjalakuda, VI/950-B, Christ Nagar, AKP Junction, Irinjalakuda North, Thrissur District, PIN 680 125 represented by it’s Authorised Officer.

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The Authorised Officer, Regional Office, Irinjalakuda, VI/950-B, Christ Nagar, AKP Junction, Irinjalakuda North, Thrissur District, PIN 680 125. …Defendants

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SA 641/2024

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This Securitization Application having been heard on 12^th Day of March, 2025 in the presence of Advocates M/s.Susanth Shaji, Sidharth O. and Albin A.Joseph for the applicants and Advocates M/s.Mohan Jacob George, Parvathy P.V., Reena Thomas and Nigi George for the defendants 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 proceeding 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 applicants have filed this SA under S.17(1) of the SARFAESI Act.

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Brief facts of the case :

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This SA is filed by the applicants stating that they availed financial facility of Rs.1,70,00,000/- from the defendants for the construction of a shopping complex in the year 2017. The documents relating to subject matter property was handed over to the bank officials at the time of availing the loan. The loan was being serviced at the initial stage regularly. But due to covid pandemic and also due to wilful default of payment of rent by the tenant, the loan could not be repaid in time. Whenever any rent amount is credited into the personal account of the applicants, the same is transferred to the loan accounts. During covid, the defendant bank sanctioned two short term loans for an amount of Rs.18,89,000/-, which were converted to clear the pending arrears. Due to non-recovery of the rent from the tenant, the loan could not be repaid in time.

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SA 641/2024

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Subsequently, the defendant bank classified the loan as NPA and called the applicants by issuing a demand notice under Section 13(2) of the SARFAESI Act to pay the outstanding dues. Due to non-repayment of the amount, the defendants issued a possession notice under Section 13(4) of the SARFAESI Act to take symbolic possession of the secured asset on 12.03.2024. The defendants had also issued notice to the applicants under Section 13(8) of the SARFAESI Act giving intimation to sell the property in case of nonrepayment. Thereafter the defendant bank approached Chief Judicial Magistrate, Thrissur by filing application as Crl. M.P. No.3349/2024 under Section 14 of the SARFAESI Act to take physical possession of the secured asset. An advocate commissioner, being appointed by Chief Judicial magistrate, Thrissur issued a notice on 05.09.2024 to take possession of the secured asset, which is impugned in this proceeding. It is further claimed that the affidavit filed before the Chief Judicial Magistrate, Thrissur is not in accordance with the statutory requirement and hence the securitization proceeding is vitiated. Hence the applicants have filed this SA seeking relief to set aside the entire securitization proceeding starting from the stage of issuance of demand notice.

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The defendants filed written statement denying the averments in the SA and claimed inter alia that the applicants after availing the loan, did not take any step to repay the same for which securitization proceeding is initiated. All the statutory measures are duly followed. The applicants filed W.P.(C) No.12730/2024 before the Hon’ble High Court of Kerala but the direction given is not complied. In the absence of any illegality, the applicants cannot seek any relief

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SA 641/2024

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in respect of the securitization proceeding and hence the SA may be dismissed.

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From the respective contentions of both sides, the

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following points are emerged for adjudication in this case:

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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 applicants are entitled to get any relief in this case?

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FINDINGS:

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For the sake of convenience, both the points, being interlinked with each other, are taken up together for adjudication. There is no dispute that applicants availed the loan from the defendants and due to non-repayment, the securitization proceeding is initiated by the defendants for realization of the outstanding dues. The learned counsel for the applicants submitted that there is some discrepancy in the written statement and the affidavit filed before the Chief Judicial Magistrate in the proceeding under Section 14 of the SARFAESI Act. In the affidavit the authorized officer has made a declaration that there is no tenant in the subject matter property. But in the written statement the defendants at paragraph 8 have admitted about the creation of tenancy in respect of the secured asset. It is further stated that after passing of the order by the Hon’ble High Court in W.P.(C) No.12730/2024 the applicants deposited Rs.23 lakhs in the loan account. But the same is not disclosed in the affidavit filed before the Chief Judicial Magistrate. Hence the entire proceedings under Section 14 of the SARFAESI Act is vitiated.

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SA 641/2024

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The learned counsel for the defendants refuted the contentions of the learned counsel for the applicants and contended that the defendants had never admitted either in the written statement or in the affidavit filed before the Chief Judicial Magistrate regarding the existence of any tenancy. The balance due as on 11.03.2024 is specifically stated in the application filed under Section 14 of the SARFAESI Act. Any deposit in the loan account prior to 11.03.2024 is taken into consideration. The contentions raised by the learned counsel for the applicants did not cause any prejudice to the applicants in any manner. In the absence of any illegality, the SA may be dismissed.

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On careful consideration of the submissions of both sides, the only dispute is raised by the applicants relating to defect in the declaration made by the authorized officer in the application under Section 14 of the SARFAESI Act filed before the Chief Judicial Magistrate. In the affidavit the authorized officer has specifically declared in paragraph 10 that there were no or any subsisting lease agreement with any person on the schedule property/secured asset. Presently there are no tenants residing in the secured asset as to the knowledge of the petitioners/applicants. In the written statement in paragraph 8 it is stated that the contentions with respect to the nonpayment of rent etc. are internal matter of the applicants and the defendant bank is not a party to the said transaction. By a plain reading of averments in the written statement and the declaration filed in the form of affidavit, no material discrepancy is noticed to interfere with the securitization proceeding. The defendants have never admitted about the existence of any tenancy either in the

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SA 641/2024

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written statement or in the affidavit filed before the Chief Judicial Magistrate. If the applicant deposited any amount in the loan account in pursuance to the direction of the Hon’ble High Court and the same is not reflected in the claim amount in the application under Section 14 of the SARFAESI Act, the applicants could have raised the issue before the defendants. No such step is taken by the applicants. In the absence of any dispute, the contentions raised by the learned counsel for the applicants regarding non-credit of deposit amount in the loan account is not sustainable.

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The proceeding under section 14 of the SARFAESI act is purely administrative in nature. The Chief Judicial Magistrate does not adjudicate the case on merit. Being satisfied with the claim of the secured creditor from the declaration filed by the Authorized officer and the materials produced, he renders assistance to the secured creditor in taking physical possession of the secured asset. The Hon'ble Apex Court in the judgment reported in [2023 (1) SCC 675] in the case of M/s.R.D.Jain and Co. vs. Capital First Ltd. & others at paragraph 8.1 it is held as follows:-

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“8.1 ……………. Thus, we reiterate that the step to be taken by the CMM/DM under Section 14 of the SARFAESI Act, is a ministerial step. While disposing of the application under Section 14 of the SARFAESI Act, no element of quasi-judicial function or application of mind would require. The Magistrate has to adjudicate and decide the correctness of the information given in the application and nothing more. Therefore, Section 14 does not involve an adjudicatory process qua points raised by the borrower against the secured creditor taking possession of secured assets.”

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In this case there is no case that the no declaration in the form of affidavit is filed. It is only claimed that the amount due on the date of

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SA 641/2024

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filing the application and existence of tenant is not stated in the affidavit. It is already found that the applicant has not admitted about presence of tenant in the subject matter property. The applicant has also not disputed the outstanding amount as stated in the affidavit. Even there is any error or omission in such affidavit, no substantial prejudice is caused to the applicant. In absence of any substantial prejudice, the order of the Chief Judicial Magistrate cannot be held as illegal in view of the ratio decided by the Hon’ble Apex Court in the decision cited above.

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The defendants produced all relevant documents regarding compliance of all the statutory requirements. No material illegality is noticed in the securitization proceeding to interfere with the measure taken by the defendants and hence the applicants are not entitled to get any relief in this case. Both the points are found against the applicants.

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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. As the applicants caused unnecessary delay in the securitization proceeding without any valid ground, they are liable to pay costs of Rs.20,000/- (Rupees twenty 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 14^th day of March, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 641/2024

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Documents on the part of the applicants

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Annexures	Date	Particulars of documents
Annexure-A1	……………….	Copy of the passbook of the first applicant maintained with the defendant bank.
Annexure-A2	……………….	Copy of the passbook of M/s.Concord Towers maintained with the defendant bank.
Annexure-A3	30.12.2023	Copy of the demand notice issued under Section 13(2) of the SARFAESI Act by the 2^nddefendant to the applicants.
Annexure-A4	12.03.2024	Copy of the possession notice issued by the second defendant.
Annexure-A5	13.03.2024	Copy of the notice.
Annexure-A6	11.03.2024	Copy of the petition submitted by the defendants as Crl.M.P.No.3349/2024 before the CJM Court, Thrissur.
Annexure-A7	………………	Copy of the affidavit submitted by the 2^nd respondent in Crl.M.P.No.3349/2024 before the CJM Court, Thrissur.
Annexure-A8	18.03.2024	Copy of the Order in Crl.M.P. No.3349/2024 on the files of the CJM Court, Thrissur.
Annexure-A9	05.09.2024	Copy of the notice memo issued by Advocate Commissioner in Crl.M.P. No.3349/2024 on the files of the CJM Court, Thrissur with translation.
D	ocuments on	the part of the defendants
Annexure-B1	17.01.2017	Copy of the letter evidencing the creation of equitable mortgage.
Annexure-B2	30.12.2023	Copy of Section 13(2) notice.
Annexure-B3	…	Copy of the postal receipts evidencing Section 13(2) notice.
Annexure-B4	…	Copy of acknowledgement cards evidencing the receipt of section 13(2) notice by the applicants.
Annexure-B5	12.03.2024	Copy of the section 13(4) of the possession notice.
Annexure-B6	12.03.2024	Copy of the postal receipts evidencing the issuance of section 13(4) possession notice.
Annexure-B7	12.03.2024	Copy of the photographs evidencing affixture of the possession notice in the security properties.

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SA 641/2024		9
Annexure-B8	…………………	Copy of the paper publication made in “The New Indian Express”, Thrissur edition on 13.03.2024.
Annexure-B9	13.03.2024	Copy of the paper publication made in the Malayalam vernacular daily “Mathrubhumi”.
Annexure-B10	………………	Copy of CERSAI certificate evidencing the registration of the security property with the Central Registry.
Annexure-B11	………………	Copy of account statement with respect to Term Loan-CRE Restructured (A/c.0020652000001149).
Annexure- B11(a)	………………	Copy of account statement with respect to FILT-1 (A/c.0020652000001343).
Annexure- B11(b)	………………	Copy of account statement with respect to FILT-2 (A/c.0020652000001344).

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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 14^th day of March 2025

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SA No.641/2024

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Between

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Mohammed Sageer T.K., Aged 65 years, S/o.Khader, Thaivalappil House, Uzhavathu Kadavu, Lokamalleswaram, Santhipuram P.O., Thrissur District, PIN – 680 668 & another. …Applicants

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And

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The South Indian Bank Ltd., Regional Office, Irinjalakuda, VI/950-B, Christ Nagar, AKP Junction, Irinjalakuda North, Thrissur District, PIN 680 125 represented by it’s Authorised Officer & another. …Defendants

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F I N A L O R D E R

Mohammed Sageer T K v. South Indian Bank

Case brief

What is this about?

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Mohammed Sageer T K v. South Indian Bank

Case brief

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