Dismissed

Anirudhan K a v. Catholic Syrian Bank Limited

DRT29 May 2026SA/131/2025

Case brief

AI extract

What is this about?

This Debt Recovery Tribunal dismissed an application challenging securitization measures under the SARFAESI Act. The court held that the Tribunal cannot adjudicate the quantum of claim or interest errors but only the validity of enforcement measures. Since the applicants failed to object to the demand notice initially, the challenge to the proceedings was barred.

What did the court decide?

Securitization Application dismissed with costs of Rs.30,000/- for unnecessary delay.

Anirudhan K a versus Catholic Syrian Bank Limited — Company and Corporate | DRT (2026)

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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 29^th day of May, 2026

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SECURITIZATION APPLICATION No.131/2025

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Between

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Anirudhan K.A, aged 54 years, S/o Achuthan, Kovath House, Cheruval, Palazhy P.O Puthukkad - 680 301.

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Rajeevan C.M, aged 46 years, Cheerambath House, Mulangu, Thottipal Post, Thrissur, Kerala - 680 310.

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…Applicants

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And

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The Catholic Syrian Bank Ltd, Branch Parappukkara, St. John’S Forane Church Building, Parappukara P.O, Thrissur Represented by its Chief Manager/ Authorised Officer. …Defendant

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This Securitization Application having been heard on

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04.05.2026 in the presence of Advocate Mr. Sudhish R counsel for

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the applicants and Advocate Mr. C.A Joy for the defendant and stood over to this day for consideration, the Tribunal delivered the following:

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SA 131//2025

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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 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 filed this SA under S.17(1) of the SARFAESI Act praying to set aside the entire securitization measures u/s 13(2), 13(4) and 14 of the SARFAESI Act being

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Brief facts of the case :

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2.1 The applicants, being directors of “Goodwin Packpet” Private Limited, stood as guarantors for the loan of the company by mortgaging the properties described in the SA. It is claimed by the applicants that due to financial constraints, the repayment of the loan was affected in the year 2017. So also unprecedented flood and heavy loss in the business, the loan could not be repaid.

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2.2 The defendant issued a demand notice u/s 13 (2) of the SARFAESI Act on 02.01.2018 calling the applicant to pay the outstanding of Rs.4,93,20,666/- within the 60 days. It is claimed in the SA that the demand notice is illegal as the details of the loan account are not furnished in such notice.

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2.3 The defendant issued a possession notice u/s 13(4) of the SARFAESI Act and took symbolic possession of the secured asset on 16.01.2019. It is claimed in the SA that the statutory measures in

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SA 131//2025

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issuing the possession notice are not duly followed and hence, the Securitization proceeding is vitiated.

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2.4 The defendant filed CMP.469/2019 u/s 14 of the SARFAESI Act before the Chief Judicial Magistrate in which an Advocate commissioner was appointed to take possession of the secured asset.

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2.5 The applicant filed a writ application bearing WP(C) No.3150/2019 before the Hon’ble High Court of Kerala which was disposed with the direction to deposit Rs.50,00,000/- on or before 28.03.2019 and balance total outstanding in instalments. Applicant claims that 50 lakhs was remitted in time but the total outstanding cannot paid in pursuance to the direction of Hon’ble High Court of Kerala.

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2.6 Previously, the applicant has filed an SA No. 123/2019 challenging the securitization measures which was dismissed for default.

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2.7 The defendant has also filed an OA No. 534/2020 for recovery of an amount of Rs.6,63,76,603.05/- excluding the amount received from the liquidation proceeding.

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2.8 The Advocate commissioner has issued notice to take possession of the Secured asset on 03.01.2025 which is impugned in these proceedings. The applicant claims that the entire measures

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SA 131//2025

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u/s 13(2), 13(4) and 14 of the SARFAESI Act, being null and void, may be set aside.

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The defendant filed written statement denying the averments and claimed inter alia that the applicants availed various credit facilities from the defendant by mortgaging the subject matter properties as described in paragraph 5(a) of the written statement. Due to default, SARFAESI proceeding was initiated. In liquidation proceeding before the Hon’ble NCLT Kochi, against the company M/s ‘Goodwin Packpet” Private Limited, an extent of 39.35 Ares of land and building including the hypothecated machineries are sold and the amount of Rs.4,15,00,000/- were received by the defendant bank which was duly credited in the loan account of the applicant. After crediting the amount an amount of Rs.7,87,51,826/- was due as on 31.03.2025. Hence, the defendant approached Chief Judicial Magistrate Court, Trissur u/s 14 of the SARFAESI Act bearing CMP.No694/2025 in which an Advocate commissioner was appointed to take the physical possession of the subject matter properties, which is impugned by the applicants in this forum. All the statutory measures u/s 13(2), 13(4) of the SARFAESI Act was duly complied. So also, there is no illegality in the proceeding initiated before Chief Judicial Magistrate and hence the SA may be dismissed.

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3.2 There is no error in the calculation of the outstanding due and the interest are charged as per the terms and conditions of the

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SA 131//2025

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agreement. The same having not challenged by the applicant after issuance of demand notice, raising dispute against the demand is not sustainable in this forum. Hence, the SA, being devoid of any merit, may be dismissed.

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

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(i) Whether the securitization proceeding initiated by the defendant 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 proceeding?

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FINDINGS:

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Point Nos.(i) & (ii):-

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Admittedly, the applicants mortgaged the subject matter properties for the loan availed by the company M/s Goodwin Packpet private limited. Due to default in repayment of the loans, it turned to NPA on 08.10.2017 as admitted by the applicants in paragraph 3 of the application.

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The demand notice u/s 13(2) of the SARFAESI Act was issued on 02.01.2018 calling the applicants to repay the outstanding dues in the loan account within the period of 60 days. The applicants claim that the amount claimed in the demand notice is exorbitant. The details of charging interest are not stated in the demand notice.

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SA 131//2025 6

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In absence of any account statement, the demand notice, being illegal, is not sustainable. The applicants admitted in the SA that the symbolical possession of the secured assets was taken on 16.01.2019. It is claimed that the statutory requirements in issuing possession notice were not duly complied. Further the applicants challenged the proceeding initiated by the defendant before Chief Judicial Magistrate Court, Thrissur vide CMP.NO.469/2019 u/s 14 of the SARFAESI Act before the Hon’ble High Court of Kerala in WP(C) No.3150/2019 which was disposed by a judgment dated 04.02.2019 directing the applicant to pay an amount of Rs.50,00,000/- on or before 28.03.2019 and Rs. 5,64,62,533.80/- in instalments or lumpsum by 05.08.2019. The applicants admitted in the SA that they remitted Rs.50,00,000/- but they could not comply the direction in paying the balance amount in installments. It is also admitted the case their challenge to the securitization measure in SA No.123/2019 was dismissed due to default.

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It is also admitted case that in the liquidation proceeding initiated before the Hon’ble NCLT an amount of Rs.4,15,00,000/was remitted to the defendant bank which the defendant has admitted to have received and credited the same in the loan account. Now the defendant is proceeding to take physical possession of the remaining secured asset by filing M.C.No.694/2025 which is impugned in this forum.

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SA 131//2025

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During argument the learned counsel for the applicant did not raise any contention regarding any illegality or irregularity in the measures taken u/s 13(2) and 13(4) of the SARFAESI Act. The same, having challenged in the earlier SA, was dismissed for default. Now after lapse of several years, they have no locus standi to challenge such measures in this forum. Further, in the writ application filed earlier, they accepted the claim of the defendant in admitting the demand and accordingly the Hon’ble High Court of Kerala directed them to pay Rs.50,00,000/- on or before 28.03.2019 and the balance amount of Rs.5,64,62,533.80/- before 05.08.2019 which is not complied.

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Now the applicant disputed the demand and claimed that exaggerated interest is charged in the loan account. To prove such contention the applicant engaged a Chartered Accountant namely JBA and company, to verify the accounts of the applicant. His report is produced by the applicant. The Chartered Accountant has also filed a separate affidavit in support of his report dated 23.02.2026 which are already taken as evidence into record. In the said report the Chartered Accountant opined in Clause 12 as follows:

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“12. Opinion:

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Based on the documents reviewed and our analysis,

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12.1 The contractual interest rate appears to have been applied as per sanction terms, loan agreements and pleadings by the bank. No material deviations were observed.

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SA 131//2025

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12.2 However, the quantum claimed is primarily driven by long-term compounding and post-liquidation accrual of interest and penal interest.

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12.3 Penal interest, though contractually referenced, is not expressly quantified in the agreement and appears vaguely linked to RBI norms questioning validity of application of penal interest. Further charging of penal interest has not been mentioned in the loan sanction letters.

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12.4 Penal interest appears to be capitalised or compounded which is in violation of the principle established in Central Bank of India v. Ravindra (2002) 1 SCC 367 and RBI Circular dated 18 August 2023 vide RB1/2023-24/53 DoR.MCS.REC.28/01.01.001/2023-24 on Fair Lending Practices.

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12.5 Application of penal interest lacks mandate as per RBI Master Circular RBI/2013-14/73 DBOD.No. Dir.BC.15/13.03.00/2013-14 - Interest Rates on Advances dated July 1, 2013 with regards to reasonableness and transparency.

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12.6 The Guarantor's liability is co-extensive but cannot exceed contractual undertaking. The guarantee agreement entered into by the bank and the petitioners do not explicitly provide for recovery of penal interest whereas recovery of interest has been explicitly mentioned.

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12.7 Accordingly, enforceable liability may require exclusion of capitalised penal interest and interest upon penal interest.

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12.8 While the debt subsists post liquidation order of the Corporate Debtor, the Guarantor's enforceable liability may require recalibration to exclude:

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(a) Capitalised penal interest, if any,

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(b) Interest charged upon penal interest;

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(c) Any component not expressly covered under the guarantee terms,

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(d) Any compounding inconsistent with binding precedent and RBI mandate.

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(e) Any component in the loan outstanding which may be viewed impermissible, excessive or unreasonable.”

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The Chartered Accountant has also stated that his opinion

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was based on the documents placed before him as on the date of

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SA 131//2025

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this report. He has not followed the records of the bank, DRT register, CERSAI register or Court files. The Chartered Accountant also opined that the penal interest was capitalized or compounded which is in violation of the judgment of the Hon'ble Apex Court in Central Bank of India V. Ravindra (2002) 1 SCC 367 and the circular of the RBI. But his opinion does not reveal any error or mistake in the total outstanding claimed by the defendant except the calculation of the penal interest.

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Admittedly, after receipt of the demand notice the applicant has not disputed the demand nor claimed that excess amount is demanded. So also, no claim is advanced that the interest is not properly charged. No representation or objection is also submitted to the defendant by the applicants disputing the demand under sec.13(3-A) of the SARFAESI Act. For the first time i.e. at the end of the hearing the applicant produced a report of Chartered Accountant which indicates only excessive charge of penal interest in the loan account. Even that is accepted as correct the SARFAESI Act proceeding cannot be affected in any manner in view of the statutory provision contented u/s 17(2) of the SARFAESI Act which reads as follows….

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“ The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub section (4) of the section 13 taken

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SA 131//2025

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by the secured creditor for enforcement of security are in accordance

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with the provisions of this Act and the rules are made thereunder.”

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In view of this provision the scope of adjudication by this Tribunal is limited and it can only adjudicate whether the measures referred to 13(4) of the SARFAESI Act was duly complied or not. Even if excess amount is claimed by defendant by charging higher rate of interest or capitalizing penal interest the same cannot be a ground to hold the SARFAESI measure as illegal to interdict.

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In a Full Bench judgement of the Hon'ble Madras High Court in the case of M/s.Lakshmi Shankar Mills (P) Ltd. & others vs. The Authorised Officer/Chief Manager, Indian Bank & others [judgement dated 15.04.2008 in W.P.Nos.37148 & 37534/2007], at paragraph 21 it is held as follows:

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“21. …………. However, we hasten to add that while considering the question of validity of the action of the bank, it is not necessary for the Tribunal to adjudicate the exact amount due to the secured creditors. In other words, the purpose of an application under Section 17 is not the determination of the quantum of claim per se as the Tribunal is concerned with the issue of the validity of the measures taken by the banks/financial institutions under Section 13(4). In our opinion, the judgment of the Division Bench in Mison Leathers Ltd., lays down the law correctly and does not require any reconsideration.”

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In view of this ratio the scope of adjudication by the Tribunal is limited and it cannot adjudicate the claim of the applicant that the loan account is erroneous. The applicants can raise the issue before

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SA 131//2025

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the secured creditor by submitting proper representation for waiving excess interest or they can raise the same in the OA filed by the defendant in OA 534/2020. But they cannot raise the same in this securitization proceeding. Hence, contention of the applicant has no force to hold the SARFAESI proceeding as illegal.

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Besides the same, the applicant has not raised any dispute at the initial stage after receipt of demand notice u/s 13(2) of the SARFAESI Act by filing representation or objection u/s 13(3)(a) of the SARFAESI Act. In a judgment of Hon'ble High Court of Kerala reported in 2022 (3) KLT 645 in the case titled AGP City

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Gas Private Limited v. M/s.Lynx Properties & Developers &

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others, it was held as follows:-

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‘‘ 22 ………… The demand of a higher quantum through the demand notice cannot by itself invalidate the notice in the circumstances of this case since the mistake in the quantum was not brought to the notice of the secured creditor. Even if a higher amount was demanded in the notice under Section 13(2) of the Act, that by itself will not erode the sanctity of the notice, unless the secured creditor refused to correct the mistake, even after bringing it to the notice of the secured creditor. Had the borrower or the guarantor objected to the demand notice, necessarily the bank would have got an opportunity to correct the quantum in the reply to their objections. Having failed to even object to the notice under Section 13(2), respondents 1 and 2 cannot now turn around and question the validity of the notice issued under section 13(2) of the Act, merely on the ground that a higher quantum is demanded.’’

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SA 131//2025 12

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In view of the ratio, applicant has no basis to challenge the securitization proceeding solely on the ground of excessive charge of penal interest without filing any objection to demand. It is true the applicants can raise the dispute of claim by filing proper application or representation before the secured creditor for re calculation or can raise dispute about the claim in the OA filed by the defendant. But for that reason, the interdiction with the securitization proceeding by this Tribunal is not at all warranted. In absence of proof of any illegality or irregularity in the securitization proceeding, the applicants are not entitled to get any relief in this proceeding and both 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, the SA, being devoid of any merit, is hereby dismissed with cost of Rs.30,000/- for causing unnecessary delay for more than 8 years in the securitization proceeding, having no merit of claim.

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(Dictated to steno, corrected and pronounced by me in the open Tribunal on this the 29^th day of May, 2026).

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 131/2025

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Documents on the part of the applicant

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Annexures	Date	Particulars o	f docum	ents
Annexure-A1	17.01.2019	Certified copy with the No.469/2019.	of the affidavit	petition in	along CMP
Annexure-A2	04.02.2019	True copy of No.3150/2019	the judgm	ent in	WP(C)
Annexure-A3	05.11.2019	True copy of No.123/2019.	the final	order	in SA.
Annexure-A4	25.09.2024	Copy of the meeting of	minutes the	of th stakeh	e 22^nd older’s
		Consultation company.	committ	ee of	the
Annexure-A5	03.01.2025	True copy of t Advocate com	he notice missioner	issued .	by the

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Documents on the part of the defendants

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Annexures	Date	Particulars of documents
Annexure-B1	..	True copy of the CMP No.649/2025 filed by the 1^stapplicant.
Annexure-B2	..	True copy of the counter affidavit filed by the respondent in CMP.No.694/2025 before the Chief Judicial Magistrate Court, Thrissur.
Annexure-B3	..	True copy of the S.13(2) notice, postal receipt with acknowledgment card.
Annexure-B4	..	True copy of the S.13(4) notice with postal receipt, Acknowledgment card, newspaper publication and photograph.

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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 29^th May, 2026

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SA No.131/2025

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Between

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Anirudhan K.A, aged 54 years, S/o Achuthan, Kovath House, Cheruval, Palazhy P.O Puthukkad - 680 301. And another. …Applicants And

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The Catholic Syrian Bank Ltd, Branch Parappukkara, St. John’S Forane Church Building, Parappukara P.O Represented by its Chief Manager/ Authorised Officer. …Defendant

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F I N A L O R D E R

Anirudhan K a v. Catholic Syrian Bank Limited

Case brief

What is this about?

What did the court decide?

Anirudhan K a v. Catholic Syrian Bank Limited

Case brief

What is this about?

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