Dismissed

Mohammed Ashraf C a v. Indian Overseas Bank

DRT17 Sept 2025SA/865/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal at Ernakulam dismissed an application challenging the enforcement of security interest against a housing loan. The applicant contested the reduction of the reserve price and alleged collusion, arguing the property was undervalued. The Tribunal held that the sale followed due process, no collusion was proven, and the sale confirmation precluded setting aside the transact

What did the court decide?

Securitization Application No. 865 of 2024 dismissed with no order as to costs.

Mohammed Ashraf C a versus Indian Overseas Bank — Execution and Attachment | DRT (2025)

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 17^th DAY OF SEPTEMBER, 2025

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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S.A No. 865 of 2024

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Between

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Mohammed Ashraf C.A. S/o. Abdul Rahman, Kadangode House, Kalanad P.O., Kasaragod -671 317.

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--- Applicant

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And

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Indian Overseas Bank, Uduma Branch, 21/156-C, Ground Floor, City Mahal, Uduma, Kasaragod -671 319, Represented by its Manager.

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Authorized Officer/Chief Manager, Indian Overseas Bank, Regional Office, P.B. No.2384, Vettukattil Building, M.G. Road, Ernakulam -682 016

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Fathimath Shemnas K.A., W/o. Abdul Haris K.M. Haris Mansil, Kalnoth, Kalanad P.O., Kasaragod – 671 317.

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--- Defendants

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SA No.865 of 2024

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This Securitization Application coming on 28.08.2025 for final hearing before me in the presence of Mr. Sarun Raj, Counsel appearing for the Applicant and Mr. K.P. Sujesh Kumar Counsel appearing for the defendants 1 and 2 and Ms. Saraswathi P. Counsel appearing for D3 and upon hearing arguments of learned Counsels for all the parties and upon perusing the material on records, this Tribunal delivered the following:

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O R D E R

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This Securitisation Application was filed on 11.11.2024 seeking to set aside the sale held on 26.09.2024 in pursuance to Annexure-5 sale notice and to declare that the proceedings initiated pursuant to the issuance of Annexure-A1, A2 and A5 notices are null and void and to restrain the defendants 1 and 2 from proceeding to take physical possession of the secured assets pursuant to the sale of the secured asset and allow the cost of this proceedings from the defendants 1 and 2.

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The applicant and his wife availed a housing loan of Rs.15,00,000/- from the 1^st defendant bank. In order to secure the aforesaid credit facility, the applicant created equitable mortgage in respect of his immovable property admeasuring an extent of 6.57 Ares in Sy. No.90/D of Kalanad Village, Kasaragod Taluk, Kasaragod District by deposit of the title deed pertaining to his property.

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The applicant has admitted in the SA that since loan repayment became irregular, his loan account has declared as Non-Performing Asset. The defendants 1 and 2 have also averred in their written statement that due to the default of repayment of the loan amount, the applicant’s loan account was classified as Non-Performing Asset on 17.3.2023.

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Hence, demand notice dated 01.07.2023 Annexure-A1 was issued to the applicant and his wife calling upon them to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. Indisputably, the applicant and his wife neither sent any objection/representation to the demand notice nor did they clear off their liability due to the defendant bank.

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Since the applicant failed to respond to the terms of the demand notice, Annexure-A2 Possession Notice dated 10.102023 was issued for symbolically taking physical possession of the secured asset. The applicant has admitted the issuance of possession notice. He has also produced copy of the possession notice. Hence, it is evident that possession notice was served to him.

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Page 2 of 7

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SA No.865 of 2024

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Even after issuance of the possession notice, the applicant failed to discharge his liability due to the 1^st defendant bank. Therefore, Annexure-A3 sale notice dated 22.12.2023 was issued by the 2^nd defendant for sale of the secured asset. Sale was not fructified for want of bidders. Hence, Annexure-A4 sale notice dated 08.05.2024 was issued. Sale was not fructified for want of bidders. Therefore, another sale notice Annexure-A5 dated 04.09.2024 was issued. Sale of the secured asset was held on 25.09.2024. The 3^rd defendant purchased the secured asset for a sale consideration of Rs.35,25,000/-. Sale was confirmed in his favour. The sale of the secured asset was communicated to the applicant through AnnexureA8 letter dated 15.10.2024. The applicant having aggrieved against the aforesaid measures, filed this SA seeking for the reliefs stated supra.

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The counsel appearing for the applicant submitted that though the reserve price for the property in Annexure-A3 sale notice had been fixed at Rs.51,31,000/-, it was reduced drastically to Rs.35,00,000/in Annexure-A5 sale notice within a period of 9 months and that no reason was stated for such reduction of the reserve price in the written statement of the defendants 1 and 2. The defendants 1 and 2 have not obtained the valuation report from the approved valuer prior to fixing of the reserve price in the sale notices. The value of the two storied building is more than Rs.40,00,000/- as per the valuation report Annexure-A6 prepared by the approved Valuer. The fair value for the property situated in Sy. No.90 Sub Divn. 1D per Are is fixed at Rs.76,296/- as per Annexure-A7 guideline value issued by the Government. But, the approved Valuer has fixed Rs.74,000/- per Are in Annexure-B1 valuation report.

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The counsel appearing for the applicant submitted further that sale notices were issued in gross violation of Rule 8 and 9 of the Security Interest (Enforcement) Rules 2002. The 2^nd defendant failed to get the maximum price for the property in the auction. Property was sold at a throw away price in collusion with the 3^rd defendant. Security interest was not registered with the Central Registry. Therefore, the S.A may be allowed as prayed for.

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The counsel appearing for the defendants 1 and 2 submitted that the applicant did not challenge Annexure-A3 to A5 sale notices and that he filed the S.A only after confirmation of the sale and issuance of the sale certificate to the 3^rd defendant. Sale was not fructified for want of bidders pursuant to Annexure-A3 sale notice. Therefore, Annexure-A4 sale notice was issued fixing the reserve price at Rs.35,00,000/- from Rs.51,31,000/- after obtaining fresh valuation report Annexure-B1 from the approved Valuer. Property was sold to

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Page 3 of 7

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SA No.865 of 2024

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the 3^rd defendant for the sale consideration of Rs.35,25,000/- which is the maximum amount that could be obtained for the secured asset.

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The counsel appearing for the defendants 1 and submitted further that value of the two storied building is more than Rs.40 Lakhs is imaginary and that Annexure-A7 G.O. is pertaining to the guideline value which was published for the purpose of registration and stamp duty and that hence, it will not reflect the market value of the property. The contention of the applicant that the property is worth more than Rs.1 Crore is absolutely baseless. There is no illegality or irregularity in respect of publication of the sale notices. The reserve price fixed for the property is much higher value than the guideline value. No document has been produced by the applicant to show that the property has the marketable value of Rs.1 Crore. Annexure-A6 valuation report cannot be relied upon. Therefore, the SA may be dismissed with cost to the defendants 1 and 2.

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The counsel appearing for the 3^rd defendant submitted that he is the bonafide purchaser of the property in the auction held on 25.09.2024 and that after payment of the entire consideration amount, sale was confirmed and sale certificate was issued to him and that there is no irregularity or fraud in respect of sale of the secured asset to him and that therefore, the SA may be dismissed.

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The defendants 1 and 2 obtained valuation report dated 09.11.2023 Annexure-B1 prior to issuance of the first sale notice dated 22.12.2023 Annexure-A3. Hence the submission of the counsel for the applicant that valuation report was not obtained prior to issuance of the sale notice is incorrect.

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In Annexure-A7 which is copy of GO (P) No.45/2023/Taxes dated 25.03.2023 notified by the Government of Kerala, the guideline value for the property comprised in Sy. No.90/D is fixed at Rs.76,296/- per Are whereas the guideline value for the secured asset which is situated in R.S No.90/D of Kalanad village, Kasaragod District is fixed at Rs.74,800/- per Are. Therefore, it is evident that there is no much difference in the value fixed in Annexure-A7 and B1.

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In Sakthi & Co. Vs. Shree Desichary [2006 KHC 1649] the Hon'ble High Court of Madras has held that guideline value as per Basic Valuation Register maintained by the revenue authorities on the basis of the notifications issued by Government cannot form basis for determination of the market value, since the same is meant to be a guide for collection of revenue and stamp duty and that the market value is the value as described in the sale deed. Hence, Annexure-A7 produced by the applicant cannot be considered as a conclusive proof to fix the market value for the secured asset.

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Page 4 of 7

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SA No.865 of 2024

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The applicant has produced Annexure-A6 valuation report dated 08.11.2024 which was issued by the approved Valuer. It is pertinent to mention that this report has only one page wherein the total value of the secured asset is estimated at Rs.40,14,000/-. A perusal of Annexure-B1 valuation report contains 14 pages prepared by the approved Valuer of the defendants 1 and 2 and that the approved Valuer after having inspected the secured asset on 08.11.2023 fixed the market value of the secured asset at Rs.59,38,000/-, realizable value at Rs.53,44,000/- and distressed sale value at Rs.48,10,000/-. In Annexure-A3 sale notice, the reserve price for the property was fixed at Rs.51,30,000/-. This Tribunal does not find any reason to accept the contention of the applicant that the above reserve price fixed is very low.

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It is pertinent to state that though the reserve price for the property is fixed at Rs.51,30,000/- in Annexure-A3 sale notice, no bidders came forward to bid the property. Probably the reason may be due to the fact that the above price could not have attracted the prospective purchaser to bid the property.

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Since sale was not fructified, another sale notice dated 08.05.2024 Annexure-A4 was issued for sale of the property. The reserve price fixed was Rs.38,48,000/-. The reserve price was drastically reduced from Rs.51,30,000/- as submitted by the applicant. Even for this reserve price, no bidders came forward to bid the property. Hence, it is evident that the above reserve price could not be considered as the lowest reserve price.

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Since sale was not fructified, third sale notice dated 04.09.2024, Annexure-A5 was issued fixing the reserve price for the property at Rs.35,00,000/-. The 3^rd defendant, who bidded the property for a sum of Rs.35,25,000/- was declared as the successful bidder. Hence, property was sold to him. The applicant who claims that the value of the two storied building and the land is more than Rs.1 Crore, did not bring any prospective purchaser to the defendants 1 and 2 to sell the property for the aforesaid price. Therefore this Tribunal does not find any force in the submission of the counsel for the applicant that property was sold at a throw away price. Though the applicant has vaguely contented in the SA that sale notices were issued in gross violation of Rule 8 and 9 of the Security Interest (Enforcement) Rules 2002, he has not specifically pointed out as to what was the gross violation of Rule 8 and 9 of Security Interest (Enforcement) Rules 2002.

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The counsel appearing for the applicant submitted that property should be properly valued prior to sale of the property. In support of his above submission, he relied on the judgment of the Hon’ble Apex

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Page 5 of 7

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SA No.865 of 2024

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Court delivered in Ram Kishun and others Vs. State of U.P. and others [2012 KHC 4365] . It has been held that before sale of the property a proper valuation report has to be obtained so that reserve price can be fixed and that valuation is a question of fact which is to be determined fairly and reasonably. In the present case on hand, reserve price for the property was fixed after obtaining Annexure-B1 valuation report from the approved Valuer.

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The 3^rd defendant is the bonafide purchaser of the property in the auction held on 25.09.2024 after payment of the entire sale consideration amount. Sale was confirmed in his favour and sale certificate was issued to him. No material has been placed before this Tribunal in order to prove the contention of the applicant that, there was collusion between the 1^st and 2^nd defendants and the 3^rd defendant. Even in the above cited judgment, the Hon’ble Supreme Court has held that once the sale has confirmed it cannot be set aside unless a fundamental procedural error has occurred or sale certificate has been obtained by misrepresentation or fraud. In the present case at hand, the applicant has not pointed out any fundamental procedural error in respect of sale of the secured asset, confirmation of sale and issuance of sale certificate.

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This Tribunal does not find any illegality or procedural irregularity in respect of classification of the applicant as NonPerforming Asset, issuance of Annexure-A1 demand notice and A2 possession notice, issuance of A3 to A5 sale notices and sale of the secured asset to the 3^rd defendant.

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In view of the foregoing reasons and discussions, this Tribunal holds that the applicant is not entitled to get the reliefs sought for in the SA.

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Resultantly, S.A No.865 of 2024 stands dismissed. However, there shall be no order as to costs.

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Dictated to Steno, taken down, transcribed, typed by him, corrected and

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pronounced by me in the open court on this the 17^th day of September, 2025.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 6 of 7

SA No.865 of 2024

List of documents filed by the Applicant along with the S.A.

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Sl. No.	Date	Particulars
1.	01.07.2023	True copy of the demand notice issued bythe2^nddefendant	Annexure-A1
2.	10.10.2023	True copy of the possession notice issued bythe2^nddefendant	Annexure-A2
3.	22.12.2023	True copy of the sale notice issued by the 2^nd defendant	Annexure-A3
4.	08.05.2024	True copy of the sale notice issued by the 2^nd defendant	Annexure-A4
5.	04.09.2024	True copy of the sale notice issued by the 2^nddefendant	Annexure-A5
6.	08.11.2024	True copy of the valuation report issued by the approved valuer with respect to the two storied residential building situatedinthemortgaged property.	Annexure-A6
7.	25.03.2023	True copy of G.O.(P) No.45/2023/TAXES notified by government showing the fair value of thepetitioner’sproperty.	Annexure-A7
8.	15.10.2024	True copy of the notice issued y the 1^st defendant bank to the applicant.	Annexure-A8

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List of documents filed by the defendants 1 & 2 along with the written statement

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Sl. No.	Date	Particulars
1.	09.11.2023	True copy of the valuation report issued by the approved Valuer	Annexure-B1
2.	---	True copy of particulars of the CERSAI registration.	Annexure-B2
3.	10.10.2023	True copy of possession notice published in The New Indian Express daily.	Annexure-B3
4.	10.10.2023	True copy of possession notice publishedin Deshabhimanidaily.	Annexure-B4

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 7 of 7

Mohammed Ashraf C a v. Indian Overseas Bank

Case brief

What is this about?

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Mohammed Ashraf C a v. Indian Overseas Bank

Case brief

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