Dismissed

Joji Esthaphan v. Axis Bank

DRT11 Sept 2025SA/950/2024

Case brief

AI extract

What is this about?

In this Securitization Application, the Tribunal dismissed the applicant's plea to set aside bank recovery measures under the SARFAESI Act. The court held the applicant lacked locus standi to challenge the proceedings initiated against the borrower, suspecting the underlying sale agreement and payments were fraudulent collusion to delay the bank's secured asset recovery.

What did the court decide?

Securitization Application dismissed; applicant directed to pay exemplary costs of Rs.30,000 to the bank within 30 days.

Joji Esthaphan versus Axis Bank — Banking and Recovery | 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 11^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. 950 of 2024

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Between

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Joji Esthaphan, S/o.Esthaphan, Moolan House, Koodalappad, Koovappady P.O., Ernakulam- 695543.

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--- Applicant

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And

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Axis Bank Ltd., 5^th Floor, Chicago, Plaza, Rajaji Road, Ernakulam-682035, Represented by its Manager.

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Authorised Officer,

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Axis Bank Ltd.,5^th Floor,

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Chicaago Plaza, Rajaji Road, Ernakulam – 682035.

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Tomy P.D., S/o.Dominingose, Koodalappad Kara, Koovappady P.O., Ernakulam – 683544.

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--- Defendants

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SA No.950 of 2024

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This Securitization Application coming on 23.07.2025 for final hearing before me in the presence of Mr. P. Shrihari, Counsel appearing for the Applicant and Mr. Viswanathan Counsel appearing for defendants 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 17.12.2024 seeking to set aside Annexure A7 application, A9 Order and A10 Advocate Commissioner notice and to direct the defendant to restore the possession of the property and to allow the cost and compensation to the applicant.

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The applicant is a third party to the measures initiated by the defendants 1 and 2 against the 3^rd defendant who is the borrower and defaulter in repayment of the outstanding loan due to the 1^st defendant bank.

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According to the applicant, he entered into an agreement dated 10.01.2015 Annexure A1 for sale of the secured asset to him with the 3^rd defendant for a sale consideration of Rs.60 lakhs. Though he paid the entire sale consideration of Rs.60 lakhs to the 3^rd defendant, the latter failed to execute the deed of conveyance. Therefore, the applicant filed a suit in O.S No.39/2024 before the Sub Court, Perumbavoor. He obtained an order of attachment Annexure A13 over the suit property. Subsequently, the matter was referred to Lok Adalath for settlement and the suit was settled in the Lok Adalath by passing Award Annexure A4. Therefore, the Sub Court, Perumbavoor disposed of the above suit passing Judgment dated 20.11.2024 Annexure A6. On 20.11.2024, the applicant came to know of the availment of the loan by the 3^rd defendant from the 1^st defendant Bank upon creation of security interest over an extent of 11.54 Ares of property and due to default in repayment of the outstanding loan due the defendants 1 and 2 proceeded under Section 14 of the SARFAESI Act, 2002 before the Additional Chief Judicial Magistrate Court (MPs/MLAs), Ernakulam. The property purchased by the applicant has been included in the aforesaid measure.

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The defendants filed Annexure A7 application and Annexure A8 affidavit under Section 14(1) of the SARFAESI Act, 2002, before the Additional Chief Judicial Magistrate Court (MPs/MLAs), Ernakulam. Annexure A9 order dated 19.11.2024 Annexure A9 came to be passed appointing Advocate Commissioner to take physical possession of the property. The Advocate Commissioner issued Annexure A10 notice dated 05.12.2024 to the 3^rd defendant calling upon to hand over the

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Page 2 of 9

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SA No.950 of 2024

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possession of the property. The applicant having aggrieved against the aforesaid measures have filed this SA seeking for reliefs stated supra.

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The counsel appearing for the applicant submitted that the applicant paid the entire sale consideration of Rs.60 lakhs to the 3^rd defendant as per Annexure A1 agreement and that he obtained Annexure A4 Award passed in the Lok Adalath and Annexure A6 Judgment dated 20.11.2024 with charge over 15 cents (6.07 Ares) of land together with building comprised in Re.Sy.No.321/2-3-1, Block No.7 in Koovappady Village, Kunnathunadu Taluk, Ernakulam District.

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It is submitted further by the counsel for the applicant that he came to know about the availment of loan by the 3^rd defendant from the 1^st defendant bank on creation of security interest over 11.54 Ares of property which includes the property purchased by the applicant as per Annexure-A1 agreement. No valid security interest has been created and registered with the Central Registry prior to initiation of the measures under the SARFAESI Act and Rules made there under. Annexure-A7 application ad Annexure-A8 affidavit are in the writing of one Mr. Ajai M. claiming the Authorized Officer of the 1^st defendant and hence Annexure-A7 application A8 affidavit are illegal. The amount mentioned in Annexure-A8 affidavit is not correct. There is no compliance of Clauses (i) to (ix) to the provisions of Section 14 of the SARFAESI Act, 2002. Annexure-A9 order was passed without verifying the compliance of Clauses (i) to (ix) to the provisions of Section 14 of the SARFAESI Act, 2002 and hence Annexure-A9 order is illegal. Therefore, SA may be allowed as prayed for.

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Per contra, the counsel appearing for the defendants 1 and 2 submitted that this SA is not maintainable and is barred by limitation and also by estoppal and that the applicant is not an aggrieved person as per Sec.17 of the SARFAESI Act, 2002. The alleged agreement for sale Annexure-A1 is a fraudulent deed executed by the applicant and the 3^rd defendant. As per the recital of Annexure-A1 the entire consideration of Rs.60 Lakhs was paid by 12.10.2015 ie., within 10 months from the date of alleged agreement date. If it is so, no reason is provided for periodical alleged extension of time on various dates from 10.11.2015 to 12.08.2021.

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It is submitted further by the counsel for the defendants 1 and 2 that the applicant has not provided any reason for non-filing of any suit for specific performance of the alleged contract when he had obtained order in IA No.2/2024 in his favour from the Sub Court, Perumbavoor. The Award Annexure-A4 passed in the Lok Adalath on 02.10.2024 was not complied with by the 3^rd defendant. Though the agreement was made for 15 cents, the applicant was aware of the fact at the time of the agreement itself that the actual extent of the

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Page 3 of 9

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SA No.950 of 2024

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property is 28.51 cents. Without making any effort for sub division of the land for 15 cents, the sale agreement was entered into with the malicious intention to defraud the 1^st defendant bank. The boundaries given for both 15 cents as well as for 28.51 cents are one and the same.

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The counsel for the defendants 1 and 2 submitted further that the validity of alleged unregistered sale agreement Annexure-A1 became invalid as on 10.01.2018 since it was not registered and that hence, Annexure-A1 is not an enforceable document as per Sec.49 of the Registration Act 1908. The mode of payment and evidence of such payment amounting to Rs.60 Lakhs is also not stated in Annexure-A1 agreement. The applicant, being a third party to the SARFAESI proceedings, has no locus standi to challenge the proceedings initiated under the SARFAESI Act by the defendants 1 and 2. In view of Sec.34 of the SARFAESI Act 2002, the outcome of O.S. No.39/2024 will not have any impact on the proceedings initiated by the defendants 1 and 2. The security interest has been registered with Central Registry as per Annexure-B1. Valid security interest over the property has been created by the 3^rd defendant by deposit of title deeds as Annexure-D2 and D3. The Authorized Officer Mr. Ajai M., who has been designated as Authorized Officer as per the resolution passed by the Board of Directors of the 1^st defendant bank. Therefore, he is empowered to act as secured creditor and Authorized Officer. All the statutory requirements contemplated under Clauses (i) to (ix) of Section 14 of the SARFAESI Act, 2002 has been complied with by the defendants 1 and 2. This SA has been filed at the instigation of the 3^rd defendant so as to stall the measures initiated by the defendants 1 and 2. Therefore, SA may be dismissed with exemplary costs.

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It cannot be disputed that Annexure-A1 agreement for sale (English translated version of Annexure-A1 has been produced as Annexure-A2) which is said to have been entered into between the applicant and the 3^rd defendant is an unregistered deed. On perusal of Annexure-A2 shows there is no specific boundaries provided for the alleged purchase of an extent of 15 cents of the property. It cannot be disputed a property cannot be purchased without demarcating its boundaries. Therefore, the alleged purchase of 15 cents of property by the applicant appears to be suspicious.

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In paragraph 5 of Annexure-A2 the following documents are referred to :

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(i) Sketch showing the measurement and boundaries;

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(ii) Government tax paid receipt;

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(iii) Location sketch; (iv) Encumbrance certificate for 15 years;

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(v) Possession certificate;

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SA No.950 of 2024

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(vi) Thandaper account records are to be furnished by the 1^st party to the 2^nd party.

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It is pertinent to state that an important and essential document which is required for execution of sale agreement has been omitted to be listed in paragraph 5. The said document is the original title deed which confers right and title and ownership upon the 3^rd defendant in respect of the property which was to be sold. No prudent and reasonable man can enter into an sale agreement with the seller without asking for the production and inspection of the original title deeds pertaining to the property. In the present case at hand, it is manifestly evident that the applicant entered into Annexure-A1 sale agreement without insisting for production of original title deeds pertaining to the SA subject matter of the property. The above conduct of the applicant itself is sufficient to draw the irrefutable presumption that Annexure-A1 agreement for sale is a fraudulent agreement entered into between him and the 3^rd defendant.

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The sale consideration for the property is stated as Rs.60 Lakhs in Annexure-A1. There is recital in Annexure-A1 for payment of Rs.15,00,000/- on the date of execution of the agreement, ie. on 10.01.2015. There are endorsements which were made subsequently for receipt of payment of Rs.15,00,000/on 25.02.2015, Rs.10,00,000/- on 25.04.2015, Rs.10,00,000/- on 05.06.2015 and Rs.10,00,000/- on 12.10.2015. If the aforesaid amounts are added together, the total amount would come to Rs.60,00,000/- which is the entire sale consideration amount for the property. Hence it is evident that as per the recitals and endorsement made in the agreement, the entire sale consideration of Rs.60,00,000/- had allegedly been paid by the applicant as on 12.10.2015.

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But, both applicant and the 3^rd defendant did not disclose the aforesaid payment of the entire sale consideration before the Lok Adalath held on 02.10.2024 at Perumbavor. It is interesting to note that both applicant and the 3^rd defendant have agreed for the terms of compromise in the Award which stipulates as follows:

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“ Out of Rs.60 Lakhs a sum of Rs.20 Lakhs shall be paid to the plaintiff on or before 02.11.2024 and a receipt for the same shall be obtained. The remaining sum of Rs.40 lakhs shall be paid to the applicant in ten equal monthly instalments commencing from 03.12.2024 and receipts for the same shall be fully obtained.”

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It cannot be disputed that both applicant and the 3^rd defendant having agreed to the above terms of the Award put their signatures in the Award. If it is so, the recitals found in Annexure-A1 sale agreement with regard to payment of the entire sale consideration of

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Page 5 of 9

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SA No.950 of 2024

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Rs.60 Lakhs ought to have been false. This is further example for the conclusion of this Tribunal that Annexure-A1 sale agreement is a fraudulent agreement.

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It is also pertinent to state that there is no endorsement in Annexure-A1 sale agreement with regard to mode of payment of huge amounts, such as Rs.25 Lakhs, Rs.10 Lakhs by the applicant to the 3^rd defendant. Though, Annexure-A1 sale agreement was executed as early as on 10.01.2015 and entire sale consideration of Rs.60 Lakhs had allegedly been paid to the 3^rd defendant as on 12.10.2015, nothing could have prevented the applicant from seeking the execution of the sale deed by the 3^rd defendant. The applicant having been kept quite since 10.01.2015, approached the Sub Court, Perumbavoor and filed O.S. No.39/2024 and petition for attachment of property in the year 2024 after initiation of the measures by the defendants 1 and 2 with issuance of demand notice dated 31.12.2023 and filing of Annexure-A7 application and Annexure-A8 affidavit on 05.09.2024 for taking physical possession of the secured asset. Therefore, it is established that the applicant filed OS No.39/2024 before the Sub Court, Perumbavoor which referred the matter to be settled in the Lok Adalath in collusion with the 3^rd defendant with the sole object of thwarting the measures initiated by the defendants 1 and 2 under the SARFAESI Act, 2002 and the Rules made there under.

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A perusal of Annexure-D1 produced by the defendants 1 and 2 shows that security interest over the 3^rd defendant’s property has been registered with the Central Registry. Annexure-D2 declaration cum confirmation deed and Annexure-D3 memorandum of entry evidences the deposit of original title deed dated 18.06.2016 by the 3^rd defendant with the 1^st defendant bank as a token of creation of equitable mortgage over the 3^rd defendant’s property. Be that it may so, the applicant who has no locus standi to challenge the measures initiated by the defendants 1 and 2 under the SARFAESI Act, 2002 and the Rules made there under is not entitled to challenge the measures initiated by the defendants 1 and 2.

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This Tribunal having perused the materials on record and having heard both sides’ counsels, comes to a conclusion that the SA filed by the applicant is not at all maintainable and that it has been filed with the connivance and the instigation of the 3^rd defendant against the defendants 1 and 2. Therefore, this SA, which is totally devoid of merits is liable to be dismissed with appropriate exemplary costs.

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Page 6 of 9

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SA No.950 of 2024

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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. Therefore, the SA stands dismissed with exemplary cost of Rs.30,000/- payable by the applicant to the 1^st defendant bank within a period of 30 days from today.

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Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 11^th day of Septembers, 2025.

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/-

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SA No.950 of 2024

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

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Sl. No.	Date	Particulars
1.	10.01.2015	True copy of agreement executed by 3^rd defendant Tomy P.D and Applicant.	Annexure A1
2.	15.01.2025	True English translation of Annexure A1 Agreement dated 10.01.2025.	Annexure A2
3.	26.09.2024	True copy of attachment order in I.A. No.2/2024 in O.S. No.39/2024 on the file ofthe Sub Court,Perumbavoor.	Annexure A3
4.	02.10.2024	True copy of the Award passed in the Lok Adalath.	Annexure A4
5.	02.10.2024	The English translation of Award passed in the Lok Adalath.	Annexure A5
6.	20.11.2024	True copy of Judgment in O.S.No.39/2024 on the file of Sub Court, Perumbavoor.	Annexure A6
7.	…	True copy of Section 14 Application numbered as M.C.No. 1024/2024 on the file of Special Additional Chief Judicial Magistrate(MPs/MLAs), Ernakulam.	Annexure A7
8.	…….	True copy of affidavit in M.C. No. 1024 on the file of Special Additional Chief Judicial Magistrate (MPs/MLAs), Ernakulam.	Annexure A8
9.	……	True copy of Section 14 Application numbered as M.C.No. 1024/2024 on the file of Special Additional Chief Judicial Magistrate(MPs/MLAs), Ernakulam.	Annexure A9
10.	05.12.2024	True copy of Notice issued by the Advocate Commissioner in M.C.No.1024/2024 on the file of the Special Additional Chief Judicial Magistrate(MPs/MLAs), Ernakulam	Annexure A10

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Page 8 of 9

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SA No.950 of 2024

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List of documents filed by the defendants along with the written statement

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Sl.	Date	Particulars
No.
1.	………	The copy of CERSAI regn with id No.200308681624.	Annexure D1
2.	18.08.2016	The copy of Declaration-cum- confirmation Deed Evidencig deposit of Original Title Deeds dated 18.06.2016 by the Defendant No.3.	Annexure-D2
3.	17.08.2016	The copy of Memorandum of Entry recording the Equitable Mortgage by Deposit of Title Deeds with the DefendantBankdt. 17.08.2016.	Annexure-D3
4.	29.07.2016	The copy loan sanction letter duly acknowledged by the borrower (3^rd defendant) and Co-borrower.	Annexure-D4
5.	…..	The copy of Sale Deed No.5274/2008.	Annexure-D5
6.	……..	The copy of Sale Deed No.5274/2008 (English Version).	Annexure-D6
7.	26.08.2024	The copy of the authorization letter dated 26.08.2024 in favour of the Authorized Officer.	Annexure D7

(Su. WILLYAHM)

PRESIDING OFFICER

Mj/-

Page 9 of 9

Joji Esthaphan v. Axis Bank

Case brief

What is this about?

What did the court decide?

Joji Esthaphan v. Axis Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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