Dismissed

Sudhi a v. Union Bank of India

DRT18 Feb 2025SA/89/2022

Case brief

AI extract

What is this about?

Applicants challenged securitization proceedings initiated under the SARFAESI Act by the bank, alleging irregularities in objection replies and possession notice under S.14. The Tribunal found no illegality, noting the objection reply was issued and procedural compliance met. The application was dismissed.

What did the court decide?

Securitization application dismissed; applicants ordered to pay costs of Rs.10,000 to the defendant.

Sudhi a versus Union Bank of India — Specific Performance | 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 18^th day of February, 2025

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SECURITIZATION APPLICATION No.89/2022

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Between

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Sudhi A., Sudhi Land, Muttappalam (P.O.), Varkala, Thiruvananthapuram – 695 145.

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Suresh A., Sudhi Land, Muttappalam (P.O.), Varkala, Thiruvananthapuram – 695 145.

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Nivasini, Haribhavan, Chavadimukku, Chemmaruthy, Varkala – 695 145. …Applicants

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And

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The Authorised Officer, Union Bank of India, Varkala Branch, Near Railway Station, Behind KSEB, Varkala. …Defendant

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This Securitization Application having been heard on 17.02.2025

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in the presence of Advocate Sri.Sasi N. for the applicants and Advocate Sri.Santhosh Kumar K. for the defendant, 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 proceedings initiated by the defendant under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security

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SA 89/2022

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Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’), the applicants/guarantors 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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In the SA it is pleaded that the loan was availed by M/s.J.S.Group, a proprietary concern through its proprietor Suthan A. by mortgaging the property of the applicants described in the SA. Initially the loan was availed in the year 2013 and the same was enhanced further in the year 2017 based on the mortgage already created over the subject matter property. The loan was regular upto March, 2020 but due to subsequent spread of Covid pandemic, business of the applicants was affected and the loan could not be repaid in time. Consequently, the defendant classified the loan as NPA and issued demand notice under S.13(2) of the SARFAESI Act on 22.04.2021 calling the proprietary concern as well as the applicants/guarantors to repay the outstanding amount of Rs.23,86,024.25. On receipt of the demand notice, objection was submitted by the applicants through their counsel purportedly under S.13(3-A) of the SARFAESI Act in disputing the claim. The defendant issued reply on 01.07.2021 denying the objection and claimed that there is no illegality in the securitization proceedings. The defendant issued possession notice under S.13(4) of the SARFAESI Act and took symbolic possession of the secured asset on 08.11.2021. Thereafter, they approached the CJM, Thiruvananthapuram by filing MC No.782/2021 under S.14 of the SARFAESI Act to take physical possession of the secured asset which is impugned in this SA. It is claimed that proper reply was not given to the objection raised by the

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SA 89/2022

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applicants and all the statutory measures are not complied. The proceeding under S.14 of the SARFAESI Act is not in accordance with the provisions of the SARFAESI Act. Hence the applicants prayed for setting aside the entire securitization proceeding starting from the stage of issuance of the demand notice.

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The defendant filed written statement as well as additional written statement denying all the allegations and claimed that all the statutory measures are duly complied and relevant documents are produced in this case. There is no illegality in any of the measures taken under the provisions of the SARFAESI Act. Proper reply was given on receiving the objection under S.13(3-A) of the SARFAESI Act. The applicants, having no valid ground in challenging the securitization proceeding, the SA may be dismissed.

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

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(i) Whether the securitization proceeding suffers from any illegality or defect 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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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. In the SA there is no dispute about availing of the loan by the proprietary

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SA 89/2022

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concern M/s.JS Group and the applicants stood as guarantors for the loan by mortgaging the subject matter property. Due to default committed by the borrower, the loan was classified as NPA and securitization proceeding was initiated. During argument, learned counsel for the applicants contended that in pursuance to the objection raised under S.13(3-A) of the SARFAESI Act, vague and irrational reply was given by the Authorised Officer which vitiates the proceeding. So also, statutory requirements in compliance of the possession notice and also measure under S.14 of the SARFAESI Act are not duly followed and hence the securitization proceeding may be set aside.

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There is no dispute that on receiving objection under S.13(3-A) of the SARFAESI Act, the defendant issued reply denying the contentions raised. The proviso to S.13(3-A) of the SARFAESI Act reads as follows:-

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“Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under Section 17 or the Court of District Judge under Section 17-A.”

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In view of this statutory provision, communication given to the borrower/guarantor in pursuance to objection under S.13(3-A) of the SARFAESI Act does not confer any right to prefer an application under S.17 of the SARFAESI Act. Besides the same, the borrower is not seen filed any case disputing the measures taken by the defendant as erroneous or illegal. The defendant has produced all the relevant documents viz., paper publications and affixture of possession notice in compliance of R.8(1) and R.8(2) of the Security Interest (Enforcement) Rules, 2002. No document is filed by the applicants

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SA 89/2022

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showing any defect in the measure under S.14 of the SARFAESI Act initiated by the defendant before the CJM, Thiruvananthapuram. On mere allegation of the applicants/guarantors, it cannot be said that the proceeding initiated before the CJM suffers from any illegality to interdict with the same. No case is made out by the applicants based on available materials to grant any relief in this case. Hence both the points are answered 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. Since the applicants have raised vexatious claim in this SA which resulted in delay of the securitization proceeding, they are liable to pay costs of Rs.10,000/- (Rupees ten thousand only) to the defendant.

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(Dictated to my PA, corrected, and pronounced by me in the open Tribunal on this the 18^th day of February, 2025)

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 89/2022

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Documents on the part of the applicants

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Annexures Date Particulars of documents Annexure-A1 22.04.2021 Copy of demand notice under S.13(2) of the SARFAESI Act issued to the applicants. Annexure-A2 18.06.2021 Copy of objection to the demand notice submitted to the defendant. Annexure-A3 01.07.2021 Reply to Annexure-A2 objection given by the defendant. Annexure-A4 08.11.2021 Copy of possession notice issued to the applicants. Annexure-A5 21.02.2022 Copy of notice issued by the Advocate Commissioner in MC No.782/2021. Annexure-A6 05.09.2022 Copy of notice issued by the Advocate Commissioner in MC No.782/2021. Documents on the part of the defendant Annexure-B1 14.11.2021 Copy of publication of possession notice in Deepika and Sunday Express dailies. Annexure-B2 … Photograph showing affixture of possession notice on the secured asset.

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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 18^th February, 2025

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SA No.89/2022

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Between

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Sudhi A., Sudhi Land, Muttappalam (P.O.), Varkala, Thiruvananthapuram & 2 others.

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…Applicants

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And

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The Authorised Officer, Union Bank of India, Varkala Branch, Near Railway Station, Behind KSEB, Varkala. …Defendant

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F I N A L O R D E R

Sudhi a v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Sudhi a v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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