Partly allowed

Aniyan Kuruvila Alias Scaria v. Kerala State Co-Operative Bank Ltd.

DRT1 Jan 2026SA/607/2023

Case brief

AI extract

What is this about?

The Tribunal allowed the securitization application in part. It held that the applicant failed to prove the secured asset was agricultural land exempted under the SARFAESI Act. However, it found the Section 14 proceeding illegal because it was initiated before CERSAI registration, setting aside that specific order while allowing fresh proceedings.

What did the court decide?

The securitization proceeding from the stage of Section 14 of the SARFAESI Act and the Order passed by the Chief Judicial Magistrate, Kottayam is set aside. Defendant has liberty to initiate fresh pro

Aniyan Kuruvila Alias Scaria versus Kerala State Co-Operative… — Company and Corporate | 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 1^st day of January, 2026

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SECURITIZATION APPLICATION No.607/2023

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Between

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Aniyan Kuruvila @ Scaria, Aged 61 years, S/o. Kuruvila, Kannattukunnel House, Chemmalamattom P.O., Thidanadu, Meenachil, Kottayam – 686 508. …Applicant

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And 1. The Kerala State Co-operative Bank Ltd.,

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Represented by its Authorised Officer,

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(Formerly The Kottayam District Co-operative Bank Ltd.),

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Thidanad Branch, Kottayam – 686 508.

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The Branch Manager, The Kerala State Co-operative Bank Ltd., (Formerly The Kottayam District Co-operative Bank Ltd.),

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Thidanad Branch, Kottayam – 686 508. …Defendants

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This Securitization Application having been heard on

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05.12.2025 in the presence of Advocate Mr. V.K.Peer Mohamed Khan

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for the applicant and Advocate M/s. Sabitha C.A. for the defendants

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and stood over to this day for consideration, the Tribunal delivered the following:

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SA 607/2023

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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 applicant/borrower has filed this SA under S.17(1) of the SARFAESI Act praying to set aside the entire proceeding starting from the stage of issuance of the demand notice till the issuance of the notice by the Advocate Commissioner.

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Brief facts of the case:

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2.1 The applicant along with his wife Rosamma Scaria availed various loans from the defendant bank by creating security interest over an extent of 42.17 Ares of land as stated in the application. It is claimed in the SA that the applicant is an agriculturist, and the loans were taken for replantation and reorganization of agricultural activities. The subsequent two loans of Rs.20,00,000/- were adjusted for the repayment of the overdue amount of the first loan and the same was not released to the applicant. It is further claimed that the security interest was created over the property which is agriculture in nature. The Agricultural Officer has issued a certificate in support of the same. Despite the same, the defendant bank classified the loan as ‘NPA’ on 09.04.2017 and 01.08.2017 and issued demand notice on

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SA 607/2023

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01.11.2019 calling the applicant to pay the outstanding amount of Rs.38,23,308/-.

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2.2 The defendant bank proceeded with a proceeding under Section 14 of the SARFAESI Act before the Chief Judicial Magistrate Court, Kottayam vide MC No.94/2021 and the learned CJM passed an Order dated 27.04.2021 appointing an Advocate Commissioner to take possession of the secured asset. The notice issued by the Advocate Commissioner to take physical possession of the secured asset is also challenged in this proceeding claiming that the learned CJM has passed the order without applying mind to the documents placed and also proceeding is vitiated as the affidavit filed by the Authorised Officer is in violation of Clause (i) to (ix) of Section 14 of the SARFAESI Act. It is also contended that the security interest was not duly registered in CERSAI portal which vitiates the entire proceeding. Hence the SA is filed seeking to set aside the entire proceeding starting from the stage of issuance of the demand notice till the issuance of the notice by the Advocate Commissioner.

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3.1 On the other hand, the defendant has filed written statement denying the averments and claimed inter alia that there is no illegality in the securitization proceeding. The applicant and his wife availed 3 loans by mortgaging the subject matter property having with a residential building thereon.

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SA 607/2023

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3.2 A settlement deed was produced by the applicant at the time of availing the loan showing that the land is non-agricultural in nature. As on 10.12.2024 an amount of Rs.65,70,237/- is outstanding. There is no procedural illegality. As the defendants failed to take physical possession of the secured asset a proceeding bearing MC No.94/2021 under Section 14 of the SARFAESI Act was initiated before the CJM, Kottayam after complying all the statutory requirements. In absence of any illegality, interference with the securitization proceeding is not warranted. Besides the same the secured asset was also registered in the CERSAI Portal. Relevant certificate is already produced. Hence, the SA, being devoid of any merit, may be dismissed.

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From the respective case of the applicant and defendants,

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the following points emerged for adjudication in this case:

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(i) Whether the securitization proceeding initiated by the defendants suffers from any illegality or defect or irregularity to intervene with the same?

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(ii) Whether the applicant is 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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Admittedly the applicant and his wife availed 3 loans from

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the defendant bank after creating security interest over the subject

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SA 607/2023

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matter property. The applicant claimed that the secured asset as agricultural land exempted under the provision of SARFAESI Act. During hearing the learned counsel for the applicant contended that the secured asset being utilized for agriculture by the applicant, securitization proceeding is not maintainable. A certificate issued by the Agricultural Officer is produced as Annexure-A1 to prove the claim of the applicant. Hence the SA may be allowed by setting aside the entire securitization proceeding.

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On the other hand, the learned counsel for the defendants contended that the secured asset is not an agricultural land. The applicant produced settlement deed No.1470/2006 at the time of availing the loan which shows that the land is non-agricultural property having a residential building there on. Now the contrary claim is not sustainable. The applicant has also filed a civil suit which was disposed due to want of jurisdiction. The applicant also filed Writ Application bearing No.30653/2023 which was also disposed permitting the applicant to challenge the securitization proceeding in this Tribunal. There is no illegality in the securitization proceeding. In absence of any illegality, the SA may be dismissed.

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The main contention raised for adjudication in this proceeding is, whether the secured asset is an agricultural land exempted under the provision of the SARFAESI Act. The applicant in

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SA 607/2023

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the SA has stated general in paragraph 3 that the property in question is an agricultural land and the applicant and his family are earning income from the said property. Nothing is whispered in the SA from which year the land was utilized for agricultural activities and the nature of agricultural land.

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The Hon'ble Apex Court in the judgment reported in 2023 KHC 6012 in case of K.Sreedhar v. M/s.Raus Constructions Pvt. Ltd. & others has held that:

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“ When it was the case on behalf of the borrowers that in view of Section 31(i) of the SARFAESI Act, the properties were agricultural lands, the same were being exempted from the provisions of the SARFAESI Act, the burden was upon the borrower to prove that the secured properties were agricultural lands and actually being used as agricultural lands and/or agricultural activities were going on.”

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In view of the ratio the burden lies on the applicant to prove that at the time of availing the loan the secured asset is an agricultural land exempted under the provision of SARFAESI Act. No material is placed in support of the same that at the time of availing the loan the land was used for agricultural purpose. Based upon the certificate issued by the Agricultural Officer, marked Annexure-A1 dated 06.09.2022 it cannot be said that the land was utilised exclusively for agricultural purpose at the time of availing the loan in the year 2012 and during the subsequent loan on 2017. The applicant has failed to establish that the secured asset is agricultural land exempted under the provisions of SARFAESI Act. Hence the applicant cannot seek any relief based upon such claim.

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SA 607/2023

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The learned counsel for the applicant in the course of argument further submitted that unless the security interest is registered in the CERSAI portal, the securitization proceeding cannot be initiated and in view of the bar contained under Section 26-D of the SARFAESI Act. The CERSAI certificate produced by the defendant would indicate that it was registered in the CERSAI portal on 15.12.2021. Hence the proceeding initiated before the registration in CERSAI portal is barred under section 26-D of the SARFAESI Act.

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Section 26-D of the SARFAESI Act reads as follows:-

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“26-D. Notwithstanding anything contained in any other law for the time being in force, from the date of commencement of the provisions of this Chapter, no secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter III unless the security interest created in its favour by the borrower has been registered with the Central Registry.”

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In view of this statutory provision no enforcement of security interest is permissible without registration of the security interest in the CERSAI Portal. It appears from the CERSAI Certificate that the security interest was registered in the CERSAI Portal on 15.12.2021. The proceeding before the CJM, Kottayam was initiated prior to registration of the security interest in the CERSAI Portal and the MC No.94/2021 was disposed by Order dated 27.04.2021. Issuance of demand notice is not enforcement of security interest. Enforcement starts from the stage of taking step under section 13(4) of the SARFAESI Act. Step taken under section 14 of the SARFAESI Act is an

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SA 607/2023

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enforcement which is not at all permissible before registration of the secured interest in the CERSAI Portal. Hence the order passed by the Chief Judicial Magistrate in a proceeding under section 14 of the SARFAESI Act is illegal and the same is not sustainable. However, the defendant has liberty to initiate fresh proceeding under section 14 of the SARFAESI Act before the CJM and can proceed to enforce the security interest in accordance with the law. In the event of any future litigation, the applicant shall not be permitted to raise any issue against the securitization proceeding up to the stage of Section 14 of the SARFAESI Act and also, they shall be debarred to raise any question finally adjudicated in this proceeding.

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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 observation, the SA is allowed in part. The securitization proceeding from the stage of Section 14 of the SARFAESI Act and the Order passed by the CJM, Kottayam is hereby set aside. Both the parties shall bear their respective costs of the proceedings.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 1^st day of January, 2026.

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 607/2023

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Documents on the part of the applicant

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Annexures	Date	Particulars of documents
Annexure-1	06.09.2022	True copy of the Certificate issued by the Agricultural Officer, Thidanadu.
Annexure-II	22.04.2021	True copy of the petition filed by the defendant bank before the Chief Judicial Magistrate, Kottayam in MC No.94/2021 along with affidavit.
Annexure-III	27.04.2021	True copy of the Order of the Chief Judicial Magistrate, Kottayam in MC No.94/2021 along with affidavit.
Annexure-IV	19.08.2023	True copy of the Notice issued by the Advocate Commissioner.
Annexure-V	28.09.2022	True copy of the plaint filed by the petitioner before the Munsiff’s Court, Erattupetta in OS No.180/2022.
Annexure-VI	29.09.2022	True copy of the temporary injunction ordered by the Munsiff’s Court, Erattupetta.
Annexure-VII	16.10.2023	True copy of the Judgment in WP(C) No.30653/2023 of the Hon’ble High Court of Kerala.

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Documents on the part of the defendants

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Annexures	Date	Particulars of documents
Annexure-D1	05.10.2018	True copies of 13(2) Demand Notices issued to the applicant.
Annexure- D1(a)		True copy of the English translation of demand notice.
Annexure-D2		True copy of the postal AD cards.
Annexure-D3	16.10.2023	High Court Order in WP(C) No.30653/2023.

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PRESIDING OFFICER

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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 1^st January, 2026

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SA No.607/2023

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Between

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Aniyan Kuruvila @ Scaria, Aged 61 years, S/o. Kuruvila, Kannattukunnel House, Chemmalamattom P.O., Thidanadu, Meenachil, Kottayam – 686 508. …Applicant

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And

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The Kerala State Co-operative Bank Ltd., Represented by its Authorised Officer, (Formerly The Kottayam District Co-operative Bank Ltd.), Thidanad Branch, Kottayam – 686 508 & Another. …Defendants

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F I N A L O R D E R

Aniyan Kuruvila Alias Scaria v. Kerala State Co-Operative Bank Ltd.

Case brief

What is this about?

What did the court decide?

Aniyan Kuruvila Alias Scaria v. Kerala State Co-Operative Bank Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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