DRT dismissed the securitization application filed by borrowers challenging the bank's recovery proceedings. The court held that mere inability to prove membership in the Co-operative Society does not constitute legal illegality in the securitization process under SARFAESI Act.
Securitization application dismissed without costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM
PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER
Dated this the 8th day of June, 2026
SECURITIZATION APPLICATION No.516/2023
Between
And
Authorised Officer, Irinjalakkuda Town Co-Operative Bank Ltd. No.55, Head Office, Irinjalakkuda, Pin – 680 121. …Defendant
This Securitization Application having been heard on 05.05.2026
in the presence of Advocate Mr.Gokul P Suresh, representing counsel
for Advocate Mr.N.K. Mohanlal for the applicants and Advocate Ms. Uma
G Krishnan for the defendant and stood over to this day for consideration, the Tribunal delivered the following:
SA 516/2023
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F I N A L O R D E R
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 seeking relief to set aside the securitization proceeding, including the notice issued by the Advocate Commissioner.
Brief facts of the case :
2.1 Applicants, husband and wife, availed business loan from the defendant bank by creating security interest over the residential property of an extent of 13 cents belonging to 2nd applicant and 16 cents of land belonging to first applicant agreeing to repay the loan of ₹75,00,000/- within a period of 120 months in monthly installments.
2.2 The 2nd applicant also availed another loan of ₹40,00,000/on 21.03.2018 agreeing to repay the loan within a period of 120 months extending the mortgage to the subsequent loan.
2.3 Due to default in repayment, proceedings u/s.13(2) of the SARFAESI Act was initiated and demand notice was issued to the applicants on 24.09.2019. On receipt of the demand notice, the applicants filed objection in disputing the classification of loan as NPA. The defendant issued a reply in denying the claim and contended that there is no moratorium in respect of the business loan.
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2.4 The applicants challenged the securitization proceeding in WP(C)1337/2020. While the matter was sub-judice, the applicants regularized the loan account and securitization proceeding was closed.
2.5 Due to subsequent default by the applicants, the defendant issued fresh demand notice u/s.13(2) of the SARFAESI Act on 24.08.2021 followed by issuance of possession notice u/s.13(4) of the SARFAESI Act.
2.6 Initially, the applicants filed the SA in challenging such measures with a prayer to set aside the same. During pendency of the SA, the applicants amended the claim in challenging the proceeding u/s.14 of the SARFAESI Act vide M.C.No.651/2024 initiated before the Chief Judicial Magistrate, Alappuzha. The applicants claimed that the Order passed by the CJM is illegal and the same was passed without application of mind. Hence, the claim for setting aside the entire securitization proceeding.
3.1 The defendant filed written statement claiming inter alia that there is no illegality or irregularity in any manner in the securitization proceeding. Due to default, the securitization proceeding was initiated to which the demand notice and possession notice were issued. As per the statutory requirement, all the relevant documents were produced.
3.2 The applicants are members of the Co-operative Society having membership Nos.500010010036075 and 500010010036076 dated 20.06.2016. The applicants, being the members of the
SA 516/2023
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Co-operative Society, availed the loan. There is also no bar to release the loan to a non-member of the society. The applicants, having no bonafide claim, the SA may be dismissed.
the following points emerged for adjudication in this case:
FINDINGS:
Point Nos.(i) & (ii):
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the Registrar of the Kerala Co-operative Society. But they have no right to challenge the same in the securitization proceeding. In absence of any illegality in the securitization proceedings, the SA may be dismissed.
Hence it is ordered:-
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ORDER
observation, the SA, being devoid of any merit, is hereby dismissed but in the circumstances without costs.
(Dictated to my steno, transcribed and typed by her, corrected and pronounced by me in the open Tribunal on this the 8th day of June, 2026)
[SOVAN KUMAR DASH] PRESIDING OFFICER
SA 516/2023
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Documents on the part of the Applicants
| Annexures | Date | Particulars of documents |
|---|---|---|
| A1 | 07.03.1990 | True copy of the SSI Registration certificate issued by the District Industries Centre, Alappuzha. |
| A2 | 16.03.1995 | True copy of the GST Registration Certificate details. |
| A3 | 13.02.2020 | True copy of the Judgment in WP(C) No.1337/2020(N) of the Hon’ble High Court of Kerala. |
| A4 | 24.08.2021 | True copy of demand notice issued to 1st applicant, demanding to pay ₹97,97,525/- |
| A5 | - | True copy of English translation of Annexure A4. |
| A6 | 24.08.2021 | True copy of demand notice issued to 2ndapplicant for ₹22,72,255/- |
| A7 | - | True copy of English translation of Annexure A6. |
| A8 | 17.08.2023 | True copy of possession notice issued by defendant to applicants. |
| A9 | - | English translation of Annexure A8. |
| A10 | - | True copy of the news report as obtained from Manorama Online. |
| A11 | 07.09.2018 | True copy of the certificate issued by Village Officer, Mullakkal. |
| A12 | - | English translation of Annexure A11. |
| A13 | - | True copy of Section 14 petition in MC 651/24 along with affidavit filed before the CJM Court, Alappuzha. |
| A14 | 15.11.2024 | True copy of Order in CMP 4639/2024 in MC 651/24 of the CJM Court, Alappuzha. |
| A15 | 18.11.2024 | True copy of notice issued by Advocate Commissioner. |
SA 516/2023
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Documents on the part of the defendant
| Annexures | Date | Particulars of documents |
|---|---|---|
| B1 | 24.08.2021 | The true attested copy of the demand notice in Loan No.BL11317 |
| B1-A | - | The true English Translation of Annexure B1. |
| B2 | 24.08.2021 | The true attested copy of the demand notice in Loan No.LT 113235 |
| B2-A | - | The true English translation of Annexure B2. |
| B3(series) | - | True attested copies of the endorsed postal acknowledgement cards of the demand notices in BL 11317 |
| B4(series) | - | True attested copies of the endorsed postal acknowledgement cards in loan No.LT 113235 |
| B5 | 17.08.2023 | The copy of the possession notice with endorsement of the applicants showing the receipt of notice |
| B5-A | - | The English translation of Annexure B5. |
| B6 | 17.08.2023 | The photographs showing the affixture of the possession notice on the secured asset |
| B7 | 17.08.2023 | True attested photostat copy of the relevant page of “Deepika” news daily dated 19.08.2023 having the advertisement of the possession notice. |
| B7-A | - | The true English translation of Annexures B7. |
| B8 | 17.08.2023 | The true attested photostat copy of the relevant page of “The New Indian Express” news daily dated 19.08.2023 |
| having the advertisement of the possession notice. |
PRESIDING OFFICER
IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM
PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER
Dated the 8th June, 2026
SA No.516/2023
Between
Roy, S/o. Antony, Thoppil Veettil House, Thathamppilly P.O., Alappuzha, Pin – 688 013 and another …Applicants
And
Authorised Officer, Irinjalakkuda Town Co-Operative Bank Ltd. No.55, Head Office, Irinjalakkuda, Pin – 680 121 …Defendant
F I N A L O R D E R
2 issues framed by the court
Whether securitization proceedings suffer from any illegality warranting intervention?
Whether dispute regarding applicant membership in Co-operative Bank can be adjudicated in SARFAESI securitization proceeding?
3 provisions across 1 enactments
Roy, S/o. Antony
Manikutty Alias Remani Joseph
Authorised Officer, Irinjalakkuda Town Co-Operative Bank Ltd.
Sovan Kumar Dash
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
