Partly allowed

Sainaba v. Urban Co. operative Bnak Ltd.

DRT16 Jul 2026SA/384/2023

Case brief

AI extract

What is this about?

The DRT set aside an order by the Chief Judicial Magistrate appointing an Advocate Commissioner for physical possession, ruling it was a mechanical printed format lacking judicial application of mind. However, the Tribunal dismissed the challenge regarding the NPA classification, demand notice, and possession notice, allowing the bank to reform the application later.

What did the court decide?

Relief of setting aside the order appointing the Advocate Commissioner (Annexure-A2) allowed; relief regarding NPA classification and notices dismissed.

Sainaba versus Urban Co. operative Bnak Ltd. — Banking and Recovery | DRT (2026)

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 16th DAY OF JULY, 2026

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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S.A No. 384 of 2023

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Between

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Sainaba, W/o Jamal Moideen, Kaniarayil Peringott Thoti House, Irrimbiyam Post, Malappuram – 679 572.

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--- Applicant

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And

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The Ponani Co-operative Urban Bank Ltd. Pookkattiri Branch, represented by its Authorized Officer, Head Office, Perinthalmanna, Malappuram – 679 577.

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--- Defendant

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This Securitization Application coming on 21.10.2024, 07.11.2024, 03.04.2025 and 11.06.2026 for final hearing before me in the presence of Mr. Tony Thomas Inchiparambil, Counsel for the Applicant and Ms. Bindhumol Joseph, Counsel for the defendant and upon hearing arguments of learned Counsels for both the parties 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 14.07.2023 seeking to set aside Annexure-I notice issued by the Advocate Commissioner and to set aside all the measures initiated by the defendants against the scheduled property and to declare that Annexure-A3 application is incorrect and illegal since it violates the statutory stipulation/

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SA No.384 of 2023

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requirements as illegal and void and allow the applicant to upgrade the loan account facility by paying the defaulted interest and also permitting the applicant to regularize the term loan after paying the present arrears.

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The applicant availed the credit facility to the tune of Rs. 15,00,000/- on 31.03.2020 from the defendant bank. One Mr. Muhammed Rasal and two others stood as guarantors to the aforesaid credit facility. The borrowers have credited equal mortgage on the immovable property admeasuring and extend of 16 cents of land comprised in Re.Sy. no 274/5/49 of Tirur Taluk, Irimbiliyam village. Due to the default in repayment of outstanding loan due, the loan account came to be classified as NPA on 29.07.2020. After issuance of Annexure-AA5, demand notice Annexure B1(a) possession notice dated 15.01.2022 was issued. Thereafter, the defendant approached the Chief Judicial Magistrate Court, Manjeri and filed Annexure- A3 application and Annexure A4 affidavit under Section 14 of the SARFAESI Act, 2002. Annexure A2 order came to be passed in CMP No. 3152/2022 appointing an Advocate Commissioner to take physical possession of the secured asset. The advocate commissioner issued Annexure A1 notice to the applicant and other guarantors informing them that he would take physical possession of the secured asset on 05.06.2023. The aforesaid measures is under challenge by the applicant before this Tribunal.

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The applicant after having received Annexure A5 demand notice did not send any objection/ representation to the demand notice stating that classification of the loan account as NPA is in defiance of the guidelines of the Reserve Bank of India. The applicant has not produced any documents to show that to prove his contention that he did not commit default in repayment of the outstanding loan due. However defendant has produced copy of the statement of account as Annexure B1 (c ) in order to prove his contention that since the borrowers defaulted in repayment of the outstanding loan due, the loan account was classified as NPA as per RBI guidelines has to be accepted as correct. The defendant has produced Annexure B1 (a) copy of acknowledgement card in order to prove his contention that possession notice was personally served to the applicant. It is not in dispute that the applicant did not challenge the above possession notice.

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The defendant has produced copy of the security interest, ID based searched report Annexure-B1(b) in order to disprove the contention of the applicant that security interest was not registered with the Central Registry. A perusal of the above document shows that security interest over the secured assets has been registered with Central Registry on 30.12.2021.

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Page 2 of 5

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SA No.384 of 2023

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A perusal of Annexure A4 affidavit shows that all statutory requirements contemplated under the Clauses (i) to (ix) of the first proviso to Section 14 (1) of the SARFAESI Act has been substantially complied with the defendant. However a perusal of Annexure A3 order passed by the learned Chief Judicial Magistrate, Manjeri in CMP No. 3152/2022 apparently shows that it is a printed format order.

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In Sri Dulal Nath Sharma Vs. The State of West Bengal & ors) the order passed by the Additional District Magistrate for taking physical possession of the secured asset was in a printed format with only the blank spaces filled up. Therefore, the Hon'ble High Court of Culcutta observed as follows:

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“It is unfortunate that an order has been passed mechanically and without application of mind. For the reasons aforesaid, the order impugned is set aside.”

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The Hon'ble High Court of Kerala has held in The South Indian Bank Ltd. Vs. Jahfer M. [judgment dated 18.03.2025 in OP (DRT) No.336 of 2024] as follows :

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“Though the exercise of jurisdiction by the Magistrate under Section 14 of the SARFAESI Act does not involve any adjudication, the act of the Magistrate in passing orders in printed form by filling in necessary details in blank spaces cannot be justified under any circumstances. It cannot be forgotten that the power under Section 14 of the SARFAESI Act involves drastic consequences and that is why the Parliament conferred the power to take action under Section 14 of the SARFAESI Act on high officials such as District Magistrate or the Chief Judicial Magistrate Court. While it may not be necessary to examine the correctness of the averments in the affidavit filed by a bank/financial institution in support of the application for orders under Section 14 of the SARFAESI Act, the Magistrate must clearly apply his mind to the averments in the application and determine as to whether procedure contemplated has been followed before passing an order under Section 14 of the SARFAESI Act. Therefore, I have no doubt in my mind that the Tribunal was justified in setting aside the order of the Chief Judicial Magistrate Court, Manjeri in MC No.929/2023.”

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In Annexure-A2 order of date and month, names of the parties, CMP No., name of the bank, total outstanding amount as on date, name of the Advocate Commissioner, particulars of village office and police station has been written with pen. Therefore, it is crystal clear that the above order was passed in an already prepared printed format. Hence it is doubtful as to whether the learned Chief Judicial

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Page 3 of 5

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SA No.384 of 2023

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Magistrate, Manjeri would have applied his judicial mind to the contents of the affidavit and documents filed in support of the affidavit. In the above circumstances, Annexure-A2 order passed in CMP No. 3152/2022 is liable to be set aside. Consequently, Annexure -A1 notice issued by the Advocate Commissioner to take physical possession of the secured asset is also liable to be set aside.

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However, this Tribunal does not find any illegality or procedural irregularity in respect of classification of loan account of the applicant as NPA, issuance of Annexure-A5 demand notice and Annexure-B1(a) possession notice.

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Therefore, this Tribunal holds that applicant is not entitled to get the relief of setting aside the classification of loan account as NPA issuance of Annexure-A5 demand notice and Annexure-AB1(a) possession notice.

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However, the applicant is entitled to get the relief of setting aside Annexure-A2 order passed in CMP No. 3152/2022 for taking physical possession of the secured asset.

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In view of the foregoing reasons and discussions, SA No. 384/2023 stands partly allowed in respect of the relief pertaining to Annexure-A2 order in CMP No. 3152/2022 of Chief Judicial Magistrate, Manjeri and partly stands dismissed in respect of the relief pertaining to setting aside the measures, classification of loan account as NPA, issuance of Annexure-A5 demand notice and Annexure-B1(a) possession notice.

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However, it is made clear that there shall be no bar for the defendant to approach the Chief Judicial Magistrate Court, Manjeri again for taking physical possession of the secured asset in accordance with law.

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There shall be no order as to costs.

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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 16^th day of July, 2026.

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(Su. WILLYAHM) PRESIDING OFFICER

Rn/

Page 4 of 5

SA No.384 of 2023

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

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Sl. No.	Date	Particulars
1.	05.06.2023	True copy of the notice issued by the Advocate Commissioner	Annexure-A1
2.	03.11.2022	True copy of the order passed by the Chief Judicial Magistrate Court, Manjeri inCMP No.3152/2022.	Annexure-A2
3.	28.10.2022	Certified copy of the application filed before the Chief Judicial Magistrate Court, Manjeri.	Annexure-A3
4.	28.10.2022	Certified copy of the affidavit filed before the Chief Judicial Magistrate Court, Manjeri.	Annexure-A4
5.	29.09.2021	True copy of the demand notice along with Englishtranslation.	Annexure-A5

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

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Sl. No.	Date	Particulars
1.	15.01.2022	True copy of the possession notice issued to the applicant duly acknowledged by the applicant with English translation.	Annexure-B1 (a)
2.	---	True copy of the Security Interest ID based Search Report of CERSAI evidencing theregistrationof mortgage	Annexure -B1 (b)
3.	---	True copy of the statement of account of the applicant.	Annexure-B1 (c)

(Su. WILLYAHM)

PRESIDING OFFICER

Rn/

Page 5 of 5

Sainaba v. Urban Co. operative Bnak Ltd.

Case brief

What is this about?

What did the court decide?

Sainaba v. Urban Co. operative Bnak Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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