Dismissed

Babu James v. Union Bank of India

DRT27 Mar 2026SA/354/2025

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the Securitization Application filed by borrowers challenging possession proceedings by Union Bank of India. The court held that admitted use of the property as a ration shop prevented it from being treated as agricultural land exempt under Section 31(i). The bulk application was dismissed but possession was deferred pending repayment of a partial sum.

What did the court decide?

Application dismissed without costs; possession deferred if remaining balance is cleared within three months.

Babu James versus Union Bank of India — Banking and Recovery | 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 27^th day of March, 2026

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SECURITIZATION APPLICATION No.354/2025

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Between

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Babu James, S/o. K.M. James, Aged 46 years,

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Kunnathusseril House,

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Kaliyar P.O., Vannappuram Village, Thodupuzha Taluk, Idukki District, PIN – 685 582.

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Molly James, Wo. K.M. James, Aged 67 years, Kunnathusseril House, Kaliyar P.O., Vannappuram Village, Thodupuzha Taluk, Idukki District, PIN – 685 582.

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Julie Babu, W/o. Babu James, Aged 43 years, Kunnathusseril House, Kaliyar P.O., Vannappuram Village, Thodupuzha Taluk, Idukki District, PIN – 685 582. …Applicants

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And

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Union Bank of India, Kodikulam Branch, St.Annes Church Building, Kodikulam P.O., Idukki District, PIN – 685 582.

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SA 354/2025

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Union Bank of India, Regional Office, 3^rd Floor, Amala Towers, Adichira Junction, Kottayam – 686 016.

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Union Bank of India, Head Office, 239, Vidhan Bhavan Margh, Nariman Point, Mumbai – 400 021. …Defendants

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This Securitization Application having been heard on 17.03.2026 in the presence of Advocate Nicey A. Menon representing counsel for Harikkrishnan R. for the applicants and Advocate Sreedevi B. for the defendants 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 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 all the securitization measures taken by the defendants to take possession of the secured asset.

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Brief facts of the case :

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2.1 The applicants availed cash credit facility of Rs.80 lakhs by creating security interest over the subject matter property on 31.10.2015. Subsequently the applicants availed housing loan of

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SA 354/2025

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Rs.20 lakhs and a car loan of Rs.6,50,000/- by extending mortgage of the property already created in favour of the bank for the previous loan. Due to default in repayment, a demand notice under Section 13(2) of the SARFAESI Act was issued calling the applicants to repay the outstanding amount of Rs.1,34,90,513/- as due on 05.04.2024. But due to non-repayment of the same, proceeding under Section 14 of the SARFAESI Act was initiated before the Chief Judicial Magistrate Court, Thodupuzha to take physical possession of the secured asset, which is impugned in this proceeding.

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2.2 During pendency of the SA, the applicants filed amendment application taking plea that the secured asset is agricultural land exempted under section 31(i) of the SARFAESI Act and claimed to set aside all the measures taken by the defendants to take possession of the said agricultural land.

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The defendants filed written statement denying the averments and claimed inter alia that all the securitization proceedings are taken in accordance with the law. No objection or representation was submitted by the applicants after receipt of the demand notice. At a belated stage the applicants have taken a plea that the secured asset is an agricultural land, which is not tenable. In absence of any illegality, the SA may be dismissed.

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SA 354/2025

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

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(i) Whether the securitization proceeding initiated by the defendants suffer 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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Both the points being interlinked with each other are taken up together for consideration. During hearing of the case, the learned counsel for the applicants confined her argument with the following points:

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(i) No demand notice was served on the applicants.

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(ii) The secured asset is an agricultural land for which securitization proceeding is not sustainable.

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She fairly conceded that there is no illegality in all other measures taken by the defendants.

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On the other hand, the learned counsel for the defendants would contend that in the SA the applicants admitted about the receipt of the demand notice. In their pleading they have admitted that there is a ration outlet over the subject matter property. Now taking contrary stand claiming the secured asset as agricultural

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SA 354/2025

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land is not sustainable. There is no other illegality in the securitization proceeding. After compliance of the interim order more than 1.25 Crores is outstanding in 3 loan accounts as on 16.09.2025. In absence of any illegality, the SA may be dismissed.

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There is no dispute about the availing of 3 loans by the applicants by creating security interest over the subject matter property. In paragraph 5.4 of the SA the applicants have admitted about receipt of the demand notice issued under Section 13(2) of the SARFAESI Act. So also, in paragraph 5.8 of the SA the applicants have admitted that the first applicant is a ration retail distributor having a ration outlet over the scheduled property. At the end of the proceeding, a new plea was advanced that the secured asset is an agricultural land exempted under the provision of SARFAESI Act based upon a certificate issued by the Agricultural Officer’s on 11.12.2025. In the certificate the Agricultural officer stated that the 2^nd applicant is a small and marginal farmer, cultivating crops like coconut, pepper, papaya and vegetables over the subject matter property. In the said certificate there is no indication when the applicant’s started cultivation over the subject matter property or whether the secured asset was used exclusively for cultivation at the time of availing the loan. Based upon the report of the agricultural officer of the year 2025, the secured asset

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SA 354/2025

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cannot be treated as agricultural land on the day of availing the loan. So also, the certificate is procured contrary to the admission in the SA stating that the secured asset is used for ration shop. Hence the certificate given by the agricultural officer has no value to establish the claim of the applicants.

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The Hon'ble Apex Court in the judgment reported in 2023 KHC 6012 in the case of K.Sreedhar v. M/s.Raus Constructions Pvt. Ltd. & others by referring its earlier two judgments reported in 2018 (4) SCC 793 and 2018 (18) SCC 252 in the case of ITC Limited vs. Blue Coast Hotels Ltd. & others and Indian Bank

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& another vs. K.Pappireddiyar & another, held as follows:-

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“7.1 The purpose of enacting Section 31(i) of the SARFAESI Act has been considered by this Court in the case of Blue Coast Hotels Ltd. (Supra) in paragraph 36, which reads as under:

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“36. The purpose of enacting Section 31(i) and the meaning of the term “agricultural land” assume significance. This provision, like many others is intended to protect agricultural land held for agricultural purposes by agriculturists from the extraordinary provisions of this Act, which provides for enforcement of security interest without intervention of the Court. The plain intention of the provision is to exempt agricultural land from the provisions of the Act. In other words, the creditor cannot enforce any security interest created in his favour without intervention of the court or tribunal, if such security interest is in respect of agricultural land. The exemption thus protects agriculturists from losing their source of livelihood and income i.e. the agricultural land, under the drastic provision of the Act. It is also intended to deter the creation of security interest over agricultural land as defined in Section 2(1)(zf)35. Thus, security interest cannot be created in respect of property specified in Section 31.”

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7.2 Thus, as per the law laid down by this Court in the aforesaid two decisions, only in a case where the secured property is actually put to use as agricultural land and solely on the basis of the revenue records / Pattadar and once the secured property is put as a security by way of mortgage etc. meaning thereby the same was not treated as agricultural land, such properties cannot be said to

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SA 354/2025

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be exempted from the provisions of the SARFAESI Act under Section 31(i) of the SARFAESI Act. Applying the law laid down in the aforesaid two decisions to the facts of the case on hand and when no evidence was led at all on behalf of the borrowers that the secured properties in question were actually put to use as agricultural land and/or any agricultural activity was going on, the High Court has committed an error in applying Section 31(i) of the SARFAESI Act and quashing and setting aside the entire Possession Notice, Auction Notice as well as Sale etc.”

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In view of this Judgment, the burden lies on the applicants to prove that the secured asset is agricultural land at the time of availing the loan to claim exemption under the provision of SARFAESI Act.

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No convincing material is placed on record to establish that at the time of availing the loan, the secured asset is exclusively used by the applicants for agricultural purpose. Mere raising cultivating crops and raising coconut, pepper, papaya and vegetables would not change the nature of land as agricultural particularly when the applicants have admitted that the secured asset is used as a ration outlet by the applicants. Hence the contention is not acceptable.

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No other defect in the securitization proceeding is pointed out and established by the applicants. In absence of any illegality, interference with the securitization proceeding is not at all warranted and both the points are answered against the applicants.

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It is seen from the proceeding that the applicants remitted

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SA 354/2025

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Rs.35 lakhs in total in 2 loan accounts. If the applicants will remit the balance outstanding amount within a period of 3 months from passing of the Judgment, the defendants may consider to defer taking possession of the secured asset till then. Hence both the points are answered accordingly.

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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 but in the circumstances without costs.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 27^th day of March, 2026).

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 354/2025

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Documents on the part of the applicants

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Annexures	Date	Parti	culars of documents
Annexure-A1	10.03.2025	True applic	copy of the Section ation filed by the petitioner.	14
Annexure-A2	01.04.2025	True No.1 bank Magis	copy of the order in 59/2025 filed by the respond before the Chief Jud trate Court, Thodupuzha.	MC ent icial
Annexure-A3	13.05.2025	True issue comm	copy of the possession no d by the Advo issioner.	tice cate
Annexure-A4	14.02.2011	True Distri appoi autho	copy of the order issued ct Supply officer, Idu nting 1^st applicant as rised retail distributor.	by kki, an

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Documents on the part of the defendants … NIL

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PRESIDING OFFICER

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SA 354/2025

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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 the 27^th March, 2026

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SA No.354/2025

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Between

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Babu James, S/o. K.M. James, Aged 46 years, Kunnathusseril House, Kaliyar P.O., Vannappuram Village, Thodupuzha Taluk, Idukki District, PIN – 685 582 & 2 Ors. …Applicants

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And

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Union Bank of India, Kodikulam Branch, St.Annes Church Building, Kodikulam P.O., Idukki District, PIN – 685 582 & 2 Ors. …Defendants

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F I N A L O R D E R

Babu James v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Babu James v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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