Allowed

Sri. v. Benjamin v State Bank of India

DRT17 Mar 2026SA/288/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal set aside a possession notice issued by the respondent bank under the SARFAESI Act. The court held that the bank's failure to consider the applicants' representation regarding property ownership and account classification, as mandated by Section 13(3A) and Rule 3A, constituted a fatal procedural irregularity vitiating the measure.

What did the court decide?

The appeal was allowed; the possession notice and measures initiated were set aside; costs of initiation were not to be mulcted.

Sri. v. Benjamin versus State Bank of India — Execution and Attachment | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL-II, BANGALORE

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Dated of 17^th day of March, 2026

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PRESENT: SHRI T. RAJESH

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Hon’ble Presiding Officer

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S.A.No.288 of 2023

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Sri V.Benjamin, S/o.Late Vasanth Kumar.

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Sri V.Vinod Kumar, S/o.Late Vasanth Kumar.

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Smt.Sudha Arnold, W/o.Late V.Wilson Arnold.

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Sri Prajwal Arnold, S/o.Late V.Wilson Arnold.

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All are residing at : No.444, 6^th Main, 2^nd Block, Banashankari 3^rd Stage, 3^rd Phase, Near Anjaneya Bhavan, Bengaluru – 560 085. . . . Applicants.

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Versus

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State Bank of India, Retail Assets Central Processing Centre, Having Branch at No.1, 13/1, Bull Temple Road, Opp. Ramakrishna Ashram, Basavangudi, Bengaluru – 560 004. Represented by its Authorized Officer. . . . Respondent.

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SA No.288/2023

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Ld. Counsels on record/appeared :-

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Counsel for Applicant :- M/s.VGB Associates. Counsel for Respondent :- M/s.R.N.S.P.Achanta.

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: - O R D E R - :

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The possession notice issued by the respondent u/s.17 of the “Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, herein after been referred to as SARFAESI Act or the Act is under challenge in this Securitization Application.

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The pleadings as made by the applicant can be encapsulated as follows. The applicants are the legal heirs of the deceased borrower late Vasanth Kumar who is admitted to have availed a Reverse Mortgage loan for Rs.78,60,000/-. The late borrower was regularly paying the amount and had not informed his children about the facilities and only after the demise of the borrower, the 1^st applicant came to know about the facility that too only when a letter dated 20.03.2022 was served on him.

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It is further case of the applicant that despite the various efforts of the applicants to settle the liability and request for statements are pending, the demand notice was issued on 27.04.2023, which the applicant produced along with the SA as Annexure 13. It is specifically contended by the applicants that they had issued a reply dated 05.06.2023 which is

SA No.288/2023

also produced as Annexure A14 in the SA. The issuance of impugned possession notice to the legal Representatives of the deceased borrower is also admitted by the applicants.

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In the grounds to the SA, the applicants contend that the term borrower will not taken in the legal heirs and hence the measures could not be initiated and continued by the respondent. It is also contended that he respondent ought to have freezed the account after the demise of the deceased borrower.

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Along with the SA, the following documents were produced by the applicants.

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1. Possession notice

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1. Sanction letter in favour of late borrower.

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1. Death certificate of Smt.V.Sarojamma.

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1. Death Certificate of Sri Vasanth Kumar.

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1. Statement of Reverse Mortgage Loan.

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1. Copy of the letter dated 29.3.2022.

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1. Copy of death certificate of Sri V.Wilson Arnold.

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1. Letter dated 06.02.2023 by the applicants.

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1. Letter dated 04.03.2023 by the applicants.

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1. Letter dated 10.04.2023 by the applicants.

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1. Letter dated 13.04.2023 by the applicants.

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1. Letter dated 30.03.2023 by the applicants.

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1. Copy of demand notice dated 27.04.2023.

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1. Copy of reply to the demand notice dt.05.06.2023.

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1. Copy of valuation report.

SA No.288/2023

The respondent had filed their objection admitting the contention of the applicants as to the availment of credit facility by the deceased borrower and creation of mortgage by him. The respondent had specifically denied all the contentions as taken by the applicant in the SA and reiterating the fact about the defaults initiation of measures by issuing a demand notice. It is also pointed out that as no repayment were forthcoming, the impugned possession notice was issued. The respondent had also reiterated that they had fully followed the procedure as mandated under the statute. Along with the objection the

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respondent had produced the following documents.

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1. Sanction letter.

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1. Statement of accounts.

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1. Demand notice.

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1. Possession notice.

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1. Postal Acknowledgements and Postal Receipts.

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1. Photograph evidencing affixture of possession notice,

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1. Paper publication in Kannada.

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1. Paper publication in English.

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On the basis of above contentions, the respondent prays for the dismissal of the securitization application.

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Heard the Ld. counsel for both sides and considered the pleadings and defense as put forth in the SA and also the objection in the light of documentary evidence. The only issue that arises for consideration in

SA No.288/2023

the matter is whether the applicant had followed the procedure as required under the statute in their measures leading to the issuance of impugned possession notice.

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There is no dispute as to the availment of credit facility by the predecessor in interest of the applicant. The defaults occurred in the account and the subsequent issuance of demand notice are also not disputed by the applicants. The applicants’ contention that the measures cannot be continued against legal heirs have no legal footing as the measures are continued against the Secured Asset and the same is continued by issuing notice to the legal representatives of the deceased borrower.

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The only contention put forth by the applicants is that the reply to the demand notice is not considered and replied by the Secured Creditor. It is also to be noted that the respondent in their objection had not disputed the contention of the applicants as to the issuance of reply to demand notice.

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The issuance of representation by the borrower on receipt of demand notice is governed by section 13(3A) of the Act which reads “13(3A) if, on receipt of the notice under sub-section(2), the borrower makes any representation or raises any objection, the secured creditor shall consider

SA No.288/2023

such representation or objection and if the secured creditor come to the conclusion that such representation or objection the reasons for nonacceptance of the representation or objection to the borrower 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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Similarly rule 3A of the Security Interest (Enforcement) Rules reads as follows:

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“ 3A. Reply to Representation of the borrower

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(a) After issue of demand notice under sub-section 92) of Section 13, if the borrower makes any representation or raises any objection to the notice, the Authorized Officer shall consider such representation or objection and examine whether the same is acceptable or tenable.

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(b) If on examining the representation made or objection raised by the borrower, the secured creditor is satisfied that there is a need to make any changes or modifications in the demand notice, he shall modify the notice accordingly and serve a revised notice or pass such other suitable orders as deemed necessary within [fifteen days] from the date of receipt of the representation or objection.

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(c) If on examining the representation made or objection raised, the Authorized officer comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within [fifteen days] of receipt of such representation or objection, the reasons for non-acceptance of the representation or objection, to the borrower.”

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It is also settled that the compliance of Rule (3A) is not an empty

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formality and the failure in compliance of Rule 3A will vitiate the measures. In the above back ground, the representation put forth by the

SA No.288/2023

applicant is to be gone into. In the representation dated 05.06.2023 the applicants had raised the dispute as to the ownership of the property over which the Security Interest is claimed to have created. Dispute as to the classification of account as NPA is also put forth in the representation apart from the contention as to alleged illegal debits claimed to have made in the account. Hence going by the specific contention of the applicants that they had made in representation after the issuance of demand notice and service of the same proved by production of copy of the acknowledgment, this Tribunal of the view that the non-consideration of the same is fatal.

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Having found that the respondent failed in compliance of rule 3A, which

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is mandatory in nature, this Tribunal is of the view that the measures leading to the issuance of possession notice is flawed by procedural irregularity and is liable to be interfered with.

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In the result

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i. SA No.288 of 2023 stands allowed.

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ii. The measures initiated and continued by the respondent leading to the issuance by the possession notice dated 02.08.2023 is set aside.

SA No.288/2023

iii. The respondent is directed not to mulct the cost of initiation and continuation of measures on the applicant. Any debit, if made in this regard is to be reversed forth with.

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iv. In the facts and circumstances of the case no orders as to cost is passed.

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v. It will be open for the respondent for reinitiate the measures if they are otherwise entitled for.

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Issue copies in accordance with rule 16 of the Debt Recovery Tribunal

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(procedure) rule.

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( Dictated to PS, transcribed by him, corrected, signed and pronounced by me in the Open Court, this 17^th day of March, 2026 )

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Sd./- (T. RAJESH) PRESIDING OFFICER

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Sri. v. Benjamin v State Bank of India

Case brief

What is this about?

What did the court decide?

Sri. v. Benjamin v State 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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