Dismissed

Ratheesh v. R v Urban Co. operative Bnak Ltd.

DRT27 Apr 2026SA/785/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's application to quash securitization measures initiated by the Co-operative Bank. The Tribunal held that the applicant was estopped from challenging the proceedings after previously filing and withdrawing a similar application and failing to comply with a High Court order to repay the loan in installments, holding the TDT hit record for prioriti

What did the court decide?

Securitization Application dismissed with an order for costs of Rs.20,000 payable by the applicant.

Ratheesh v R versus Urban Co. operative Bnak Ltd. — 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 April, 2026

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SECURITIZATION APPLICATION No.785/2024

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Between

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Ratheesh V.R., Aged 43 years, S/o. Rajan,

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Vanneri House, M.G. Kavu P.O., Thrissur District, PIN – 680 581. …Applicant

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And

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The Authorised Officer, The Trichur Urban Co-operative Bank Ltd., Post Box No.86, Head Office - Mission Quarters, Thrissur – PIN 689 107.

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The Trichur Urban Co-operative Bank Ltd., Pattupurackal Branch, Vivekananda Road, Thrissur District, PIN – 680 022. …Defendants

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This Securitization Application having been heard on

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10.03.2026 in the presence of Advocate Ms. Sheeba counsel for the

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applicant and Advocate Ms. Uma G Krishnan for the defendants and

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SA 785/2024

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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 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 filed this SA under S.17(1) of the SARFAESI Act praying to set aside and quash entire securitization measures including the notice issued by the Advocate commissioner.

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Brief facts of the case :

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2.1 In the SA the applicant has pleaded that he availed housing loan on 18.05.2016 from the 2^nd defendant by mortgaging 5.67 Ares of property with building thereon described in the SA. After availing the loan, he was repaying the instalments regularly till the year 2019.

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2.2 Due to default in repayment the defendant proceeded with Securitization measures and issued a demand notice u/s 13(2) of the SARFAESI Act calling the applicant to pay the outstanding within the statutory period.

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SA 785/2024

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2.3 The Hon’ble Apex Court passed an interim order in W.P.(C) No. 476/2020 during Covid period not to classify the loans from 03.09.2020 till 23.03.2021. It is claimed that the loan of the applicant was not classified as NPA as on 03.09.2020. Initiation of the Securitisation measure and issuance of the demand notice on 05.11.2020 is illegal and against the order passed by the Hon’ble Apex Court.

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2.4. The defendant filed application before the Chief Judicial Magistrate Court, Thrissur bearing Crl.M.C.No.3981/2022 praying to take physical possession of the secured asset. An Advocate commissioner appointed by the Chief Judicial Magistrate issued a notice to take possession of the secured asset. The applicant has filed the SA challenging the entire securitisation measures with a prayer to quash the same and the notice issued by the Advocate commissioner.

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The defendants filed written statement denying the averments and claimed inter alia that previously the applicant filed SA.No.572/2022 before this Tribunal and the same was withdrawn in pursuance to the direction of the Hon’ble High Court of Kerala passed in WP(C) No.41225/2023.

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Due to default in repayment the loan was classified as NPA and the demand notice was issued on 05.11.2020 calling the

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SA 785/2024

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applicant to pay the outstanding within the statutory period. But the applicant did not comply the same. Consequently, possession notice was issued after complying all the statutory measures. The applicant did not comply the direction of the Hon’ble High Court of Kerala. After withdrawal of the earlier SA, he cannot raise the similar contention again in this proceeding and hence, the SA may be dismissed.

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From the respective case of the applicant and

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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 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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During hearing and also in the argument notes the learned counsel for the applicant raised the issue that NPA classification is illegal and the demand notice u/s 13(2) of the SARFAESI Act dated 04.11.2020 was not duly served. So also, the defendant, having not taken any step under section 13(4) of the

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SARFAESI Act, initiation of the proceeding before the Chief Judicial Magistrate to take physical possession of the secured asset is illegal.

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On the other hand, the learned counsel for the defendant would contend that there is no illegality in the securitization proceeding. As the loan was out of order account, as per the guide line of the Reserve Bank of India, the loan was classified as NPA which cannot be said illegal. The applicant has approached the Hon’ble High Court of Kerala seeking indulgence to pay the out standing in the loan account within the statutory period. But he failed to comply the same. After withdrawing the earlier SA, the applicant has no bonafide to challenge the Securitization proceeding without any valid and legal ground and hence the SA, being devoid of any merit may be dismissed.

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Admittedly, the defendant issued demand notice Annex.A1 dated 05.11.2020 calling the applicant to discharge the outstanding in the loan availed on 18.02.2016. Service of the demand notice is not disputed by the applicant. It is contended that no step was taken u/s 13(4) of the SARFAESI Act before initiating proceeding u/s 14 of the SARFAESI Act before the Chief Judicial Magistrate. The same is not essential. The secured creditor has choice either to take

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step u/s 13(4) of the SARFAESI Act or to proceed directly before the Chief Judicial Magistrate u/s 14 of the SARFAESI Act.

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In a judgement of the Hon'ble Apex Court in the case of Standard Chartered Bank vs. V.Noble Kumar & others, reported in 2013 KHC 4703, it is held as follows:

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“36. Thus, there will be three methods for the secured creditor to take possession of the secured assets:

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(i)The first method would be where the secured creditor gives the requisite notice under Rule 8(1) and where he does not meet with any resistance. In that case, the authorized officer will proceed to take steps as stipulated under Rule 8(2) onwards to take possession and thereafter for sale of the secured assets to realise the amounts that are claimed by the secured creditor. (ii) The second situation will arise where the secured creditor meets with resistance from the borrower after the notice under Rule 8(1) is given. In that case he will take recourse to the mechanism provided under Section 14 of the Act viz. making application to the Magistrate. The Magistrate will scrutinize the application as provided in Section 14, and then if satisfied, appoint an officer subordinate to him as provided under Section 14 (1)(A) to take possession of the assets and documents. For that purpose, the Magistrate may authorise the officer concerned to use such force as may be necessary. After the possession is taken the assets and documents will be forwarded to the secured creditor. (iii) The third situation will be one where the secured creditor approaches the Magistrate concerned directly

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under Section 14 of the Act. The Magistrate will thereafter scrutinize the application as provided in Section 14, and then if satisfied, authorise a subordinate officer to take possession of the assets and documents and forwards them to the secured creditor as under Clause (ii) above.”

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In view of this ratio, taking of step u/s 13(4) of the SARFAESI Act is not essential. The learned counsel for the applicant has failed to produce any material that the loan was classified as NPA after passing of the order by the Hon'ble Apex Court in WP(C) No.476/2020 dated 03.09.2020. The loan of the applicant was out of order account prior to order passed by the Hon'ble Apex Court during covid period and hence, the contention of the learned counsel for the applicant has no force to accept the same

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Besides the same applicant filed WP(C) No.41225/2023 before the Hon’ble High Court of Kerala challenging the securitization measure with permission to redeem the loan in easy monthly installments which was disposed by a judgement dated 08.12.2023 permitting the applicant to pay the outstanding by installments. But he did not comply the order. Previous SA No.572/2022 was filed by the applicant challenging the securitization measure and the order passed by the Chief Judicial Magistrate which was withdrawn by him after passing judgement in

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SA 785/2024

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the Writ application. Now he has no legal and valid right to challenge the same Securitization proceeding on vexatious ground.

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The Hon'ble Apex Court in a judgment reported in (2022) 2 SCC 221 in the case of Arce Polymers Private Limited v. Alphine Pharmaceuticals Private Limited and others, at paragraph 18 held as follows:-

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“18. ……….. Taking into consideration the entire facts of the case, which perspicuously reflect disingenuous conduct on part of the Borrower to gain indulgence, unfulfilled assurances and promises, their unwillingness to pay, and in light of the law laid down by this Court, we are of the view that the Borrower has waived and is estopped from challenging violation of Section 13(3A) of the SARFAESI Act and hence, the first issue is decided in favour of the Bank………”

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The applicant sought permission from the Hon’ble High Court of Kerala to repay the loan in easy installments which was granted. Without complying the same the applicant is estopped to challenge illegality or irregularity in the securitisation proceeding in view of the ratio decided by the Hon’ble Apex Court and hence, the applicant is not entitled to get any relief. Both the points are answered against the applicant.

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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 with cost of Rs.20,000/- payable by the applicant to the defendant for causing unnecessary delay in the securitisation proceeding without any valid reason.

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

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 785/2024

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Documents on the part of the applicant

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Annexures	Date	Particulars of documents
Annexure-A1	05.11.2020	True copy of the Demand notice with translation issued by the 1^st defendant to the applicant.
Annexure-A2	26.09.2024	True copy of the notice issued by the Advocate commissioner in
		Crl.M.C.No.398/2022.