Partly allowed

Abdulla Kutty M a v. State Bank of India

DRT14 Jan 2026SA/443/2025

Case brief

AI extract

What is this about?

The Tribunal allowed the application in part, setting aside an order by the Chief Judicial Magistrate under Section 14 of the SARFAESI Act. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

What did the court decide?

The order passed by the Chief Judicial Magistrate under Section 14, Crl. M.P. No.6388/2025, and the appointment of the Advocate Commissioner are set aside; the defendant may proceed afresh.

Abdulla Kutty M a versus State Bank of India — Cheque Dishonour | 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 14^th day of January, 2026

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SECURITIZATION APPLICATION No.443/2025

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Between

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Abdulla Kutty M.A., Aged 55 years, S/o.Ali, Mavathu Parambil House, P.O. Kilimangalam, Chelakkara, Thrissur District – 680 586.

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Fousiya, Aged 47 years, W/o. Abdulla Kutty, Mavathu Parambil House, P.O. Kilimangalam, Chelakkara, Thrissur District – 680 586. …Applicants

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And

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The Authorised Officer, State Bank of India, Stressed Assets Recovery Branch-2, R.S. Building, M.G. Road, Ernakulam – 682 011. …Defendant

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This Securitization Application having been heard on

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25.11.2025 in the presence of Advocate Mr. P.Jayaram for the

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applicants and Advocate Tom K. Thomas for the defendant and

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SA 443/2025

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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 defendant 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/borrowers have filed this SA under S.17(1) of the SARFAESI Act praying to set aside the entire securitization proceeding including the order passed by the CJM in appointing an Advocate Commissioner to take physical possession of the secured asset.

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Brief facts of the case:

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2.1 The 1^st applicant had availed various loans from the defendant by creating security interest over the subject matter property. Due to default, demand notice was issued by the defendant calling to repay the outstanding. It is claimed by the applicants in the SA that the defendant bank is not entitled to recover Rs.99,04,302/- from the applicants. The amount due will be around Rs.50 lakhs.

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2.2 The SA was filed challenging the possession notice issued under section 13(4) of the SARFAESI Act. Subsequently the

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SA 443/2025

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defendant filed application under Section 14 of the SARFAESI Act before the Chief Judicial Magistrate Court, Thrissur and an order was passed in appointing an Advocate Commissioner to take physical possession of the secured asset. The applicant amended the SA in challenging such measure with a prayer to set aside the entire securitization proceeding including the order passed by the Chief Judicial Magistrate in appointing the Advocate Commissioner to take possession of the secured asset.

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On the other hand, the defendant has filed written statement denying the averments and claimed inter alia that there is no illegality or irregularity in the securitization proceeding. All the statutory provisions are duly complied. The applicants have raised vague contentions in this case. The applicants are liable to pay the claim amount. In the additional written statement it is averred that there is no illegality in the proceeding under section 14 of the SARFAESI Act. The contentions raised are not acceptable. Hence the SA may be dismissed.

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From the respective case of the applicants and defendant, the following points 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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SA 443/2025

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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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During argument the learned counsel for the applicants contended that the amount claimed is not actually due. Their objection was not duly considered by the defendant. So also after issuance of the demand notice, the applicant remitted Rs.30 lakhs, which was not mentioned in the affidavit filed by the Authorised Officer before the CJM. The applicants are also ready to settle the loan, if some breathing time is given. Hence the SA may be allowed.

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On the other hand the learned counsel for the defendant contended that demand notice was issued for payment of Rs.99,99,718/-. Due to non-repayment possession notice under section 13(4) of the SARFAESI Act was issued. All the statutory measures are duly complied. In absence of any illegality in the proceeding under Section 14 of the SARFAESI Act and the order passed by the Chief Judicial Magistrate, the SA may be dismissed.

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On careful consideration of the submission and available materials on record, availing of the loan by the applicants is not disputed and due to default the securitization proceeding was

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SA 443/2025

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initiated. The demand notice under Section 13(2) of the SARFAESI Act was issued on 25.02.2025 claiming the applicants to repay the outstanding in the loan account of Rs.99,04,302/-. But the same was not repaid. The applicants raised objection under Section 13(3) of the SARFAESI Act disputing the interest. The defendant issued a reply vide Annexure-A3 stating details of the loan account and the due from the applicant. Again, the applicants issued another letter through their Advocate raising the similar contentions and the reply was given by the secured creditor on 26.03.2025. Since no repayment was made, the defendant issued possession notice under section 13(4) of the SARFAESI Act on 09.06.2025. During pendency of this SA the defendant proceeded under Section 14 of the SARFAESI Act before the CJM, which was impugned in this proceeding by way of amendment.

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No material is placed on record by the applicants that the calculation made by the defendant in the loan account suffers from any error or illegality. No specific contention was also raised in the objection under Section 13(3-A) of the SARFAESI Act. Only general allegation was made that the calculation is erroneous which was duly replied by the secured creditor stating that there is no error in the calculation.

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SA 443/2025

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The law is well settled on the point that under Section 17(1) of the SARFAESI Act, the Tribunal is required to consider whether there is any illegality or irregularity in the securitization proceeding which has no jurisdiction to decide any dispute regarding calculation of the interest in the loan account.

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The same point was considered by the Full Bench of Hon’ble Madras High Court in the case of M/s.Lakshmi Shankar

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Mills (P) Ltd. & Ors. vs. The Authorised Officer/Chief

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Manager, Indian Bank it is held as follows:-

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“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 Judgment, this Tribunal has no jurisdiction to

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consider the claim advanced by the learned counsel for the applicants.

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In respect of the measure taken under Section 14 of the SARFAESI Act, the learned counsel for the applicants could not succeed to raise any material illegality in such proceeding to interdict. It is only pointed out by the learned counsel for the

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SA 443/2025

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applicants that the learned CJM passed a mechanical order in a printed form, which is not acceptable.

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The learned CJM passed the order in CMP No.6388/2025 dated 18.07.2025, appointing an Advocate Commissioner to take possession of the secured asset. It appears from such order that the same is in a printed form and the learned CJM has only written the name of the advocate and the date in the said order which is contrary to the judgment of the Hon’ble High Court of Kerala, reported in 2025(2) KLT 480 in the case of The South Indian Bank Ltd. & Another v. Jahfer M. wherein it is held as follows:-

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“Thus, it is clear that, 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.”

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It appears that the learned CJM has not applied his mind to

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the affidavit and the documents produced in this case and the order appears not in consonance with the statutory requirement. Hence the same is not sustainable. However, the defendant may proceed afresh from the stage of under Section 14 of the SARFAESI Act and the learned CJM shall pass order in accordance with the law keeping in view of the guidelines issued by the Hon’ble High Court in the above referred case (supra). In the vent of challenge to the subsequent proceeding, the applicant shall not be permitted to raise

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SA 443/2025

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any point which is already adjudicated in this case and he shall be debarred to raise any dispute about securitization proceeding till the measure taken under Section 14 of the SARFAESI Act. Hence 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 and with the above observations, the SA is allowed in part. The order passed by the Chief Judicial Magistrate under Section 14 of the SARFAESI Act in Crl. M.P. No.6388/2025 dated 18.07.2025 and the appointment of the Advocate Commissioner is hereby set aside. Both parties shall bear their respective costs.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 14^th day of January, 2026.

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 443/2025

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Documents on the part of the applicants

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Annexures	Date	Particulars of documents
Annexure-A1	25.02.2025	True copy of the Demand Notice issued to the applicants by the defendant under Section 13(2) of the SARFAESI Act.
Annexure-A2	11.03.2025	True copy of the reply/objection sent by the applicant’s counsel to the defendant under Section 13(3A) of the SARFAESI Act.
Annexure-A3	24.03.2025	True copy of the notice sent by defendant’s counsel to the applicants claiming an amount of Rs.99,99,718/-
Annexure-A4	27.03.2025	True copy of the reply sent by applicants’ counsel to the defendant’s counsel with reference to Annexure- A3 notice along with English translation.
Annexure-A5	26.03.2025	True copy of the reply sent by the defendant to applicants’ counsel under Section 13(3A) of the SARFAESI Act.
Annexure-A6	09.06.2025	True copy of the notice issued to the applicants by the defendant under Section 13(4) of the SARFAESI Act.
Annexure-A7		Copy of the petition submitted under Section 14 of the SARFAESI Act in Crl. M.P. No.6388/2025 on the files of the Court of the Chief Judicial Magistrate, Thrissur.
Annexure-A8		Copy of the affidavit submitted under Section 14 of the SARFAESI Act in Crl. M.P. No.6388/2025 on the files of the Court of the Chief Judicial Magistrate, Thrissur.
Annexure-A9	18.07.2025	Copy of the Order in Crl. M.P. No.6388/2025 on the files of the Court of the Chief Judicial Magistrate, Thrissur.

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SA 443/2025

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Annexure-A10 27.10.2025 True copy of the notice issued by the Advocate Commissioner to take possession of the secured asset in Crl. M.P. No.6388/2025 on the files of the Court of the Chief Judicial Magistrate, Thrissur with translation.

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Documents on the part of the defendant

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Annexures	Date	Particulars of documents
Annexure-B1	12.06.2025	True copy of newspaper publication published in the ‘Indian Express’.
Annexure-B2	12.06.2025	True copy of newspaper publication published in Kerala Kaumudhi.
Annexure-B3		True copy of the CERSAI Registration Certificate registered before the Central Registry.