Dismissed

Mr Mohammed Sami v. Kotak Mahindra Bank Limited

DRT21 Jul 2026SA/92/2024

Case brief

AI extract

What is this about?

In this Securitization Application under the SARFAESI Act, the applicant challenged possession notice issued by the secured creditor following assignment of his housing loan account. TheDebts Recovery Tribunal examined compliance with mandatory notices and procedural rules, finding evidence sufficient to validate the proceedings.

What did the court decide?

The Securitization Application is dismissed; measures under Section 13(4) of the SARFAESI Act by the Respondent Bank are upheld.

Mr Mohammed Sami versus Kotak Mahindra Bank Limited — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE 21ST DAY OF JULY, 2026

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PRESENT: SH. RAMESHWAR KOTHE, B.Com, L.LB. (Hons.), M.A. PRESIDING OFFICER

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Securitization Application No. 92 OF 2024

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Mr. Mohammed Sami S/o Mr. Yusuf Mohammed Age 54 years, O/c Business 12- L t -342, Wa rasiguda, Secunderabad, Telangana -500061

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.,.........Applica nt

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Versus

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Kotak Mahindra Bank Ltd Registered office at 27 BKC, C-27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai-400051 Maharashtra.

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Rep by Authorised officer

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Fullerton India Home Finance Company Ltd (FIHFCL) Fourth Floor, Brij Tarang No.6-3, Ll92ll-6, Kundanbagh Colony, Begumpet Hyderabad, Telangana-5000 16 Rep by Authorised officer .....Respondents

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Counsel for the Applicant : Mr. T. Ranadhir Singh Counsel for Respondent No.1 : Mr. B. Ravindra Reddy Counsel for Respondent No.2 : Ex-pafte

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-:ORDER:-

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The present Securitization Application is filed by the Applicant u/s.17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("Act" hereinafter for short) assailing action of taking physical possession of the SA

CY*'*

PaBe 2 of6

sA No. 9212024

Schedule Property in pursuance of possession notice dated 09.07.2024.

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The averments of the application, briefly, are that applicant availed a housing loan of Rs. 20,00,000 from Respondent No.2 in the year 2018, followed by a top-up loan of Rs. 10,00,000, by creating a mortgage OVer his residential property situated at Warasiguda, Secunderabad. He contends that he regularly remitted the EMIs till January, 2023 and thereafter defaulted due to business losses and personal difficulties, despite having repaid almost the entire loan amount. The applicant alleges that officials of Respondent No.1 unexpectedly visited the secured asset on 09.01.2024 and affixed the possession notice, informing him for the first time that the loan account had been assigned by Respondent No.2 to Respondent No.1. It is hls specific case that neither respondent had issued any prior notice regarding the classification of the loan account as NpA, the assignment of the debt, or the initiation of proceedings under the SARFAESI Act. The applicant further contends that, despite approaching Respondent No.2 for clarification regarding the transfer of the loan, the outstandlng dues and the statement of account, no information was furnished, and the outstanding amount mentioned in the possession notice was arbitrarily determined without adhering to the agreed rate of interest. It is further alleged that Respondent No.1 had no authority to initiate SARFAESI proceedings without proper assignment and communication of the same to the applicant, and that the transfer of the loan without notice is contrary to the principles of natural justice and the RBI guidelines. The applicant also alleges that the loan account was not validly classified as NpA and that no demand notice under Section 13(2) of the Act was served prior to issuance of the possession notice under Section 13(4), rendering the entire proceedings illegal and void. To SUpport his contentions applicant placed reliance upon the iudqment of the

N'ao-t

Page 3 of 6

SANo.92/2024

Hon'ble Supreme Court in Harshad Govardhan Sondagar v. International Assefs Reconstruction Co. Ltd., (2014) 6 SCC 1 and prays for setting aside the measures initiated by the respondent against the SA Schedule Property.

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The Respondent No.1 filed reply statement along with documents. The averments thereof, briefly, are that the applicant availed two housing loan facilities from 2nd respondent, namely, a housing loan of Rs. 20,86,000/- and a top-up loan of Rs. 10,00,000/-, by creating an equitable mortgage over the secured asset. It is submitted that, owing to persistent defaults in repayment, both loan accounts were classified as NPA on 05.10.2022 in accordance with the RBI guidelines. The respondent further contends that the loan accounts, together with all underlying securities and enforcement rights, were validly assigned to Kotak Mahindra Bank Limited under a Deed of Assignment dated 28.03.2023, and the Applicant were duly intimated of the assignment through letters dated t3.04.2023, 25.05.2023 and 01.06.2023. It is further submitted that, after the assignment, demand notices dated 10.08.2023 under Section 13(2) of the Act were issued calling upon the Applicant to discharge the outstanding dues, but they failed to comply with the same. The respondent asserts that the Applicant were fully aware of the assignment and the recovery proceedings, as evidenced by their request dated 04.12.2023 seeking a One Time Settlement, which belies their plea of having no knowledge of the transfer of the loan accounts. Upon expiry of the statutory period, the respondent lawfully initiated measures under Section 13(4) of the Act by taking symbolic possession of the secured asset on 09.01.2024, after duly affixing the possession notice on the property, dispatching the same to the Applicant by registered^post, and^publishing it in Business Standard (Enslish) and Mana Telansana (Telusu) ^"-ffW;n 11.01.2024.

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page 4 of 6

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SANo.92/2024

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The respondent specificaily denies the ailegations that the possession notice was issued without prior notice, that the assignment of the loan accounts was illegal, or that it lacked authority to initiate proceedings under the SARFAESI Act. Accordingly, the Respondent prays for dismissal of the SA with costs.

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Summons served on 2nd respondent and was set ex_parte on 13.03.2025 as called absent and no representation.

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Learned counsel for the applicant reported no that orders may be passed based on record. Heard learned counsel for the l't respondent. perused the material brought on record.

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Learned counsel for the Respondent Bank, in the written arguments, denied the averments made by the Applicant, and placed reliance on the documents annexed thereto. It was contended that the roan account was righry crassified as a NpA in accordance with the RBI guidelines and that all measures under Sections 13(2) and 13(4) ofthe SARFAEST Act, 2002 read with Rutes B(1) and B(2) ofthe Rules, 2002 were initiated after strict compriance with the statutory provisions. Accordingly, learned counsel prayed for dismissal of the SA.

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The points for consideration are as follows : _

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i) Whether the App.li62117 made out any valid ground to interdict the _action or ,iipoiiiri,,.oan* from takino physicat possession "r tii. se-,iirn;;;i pr";";;,,,i, pursuant fo the possess ion notice aaii os.o1.2o2a?

ii) To what retief?

Page 5 of 6

sA No.9212024

Point No.(i):

Admittedly, applicant availed housing loan and top up loan facilities against mortgage of schedule property and failed to make payment as per repayment schedule. Hence the action of the Respondent Bank in classiflcation of account as NpA and initiating the SARFESI proceedings cannot be termed as illegal or irregular as contended by the applicant.

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The Respondent Bank filed material documents along with reply statement as proof of compliance of due procedure of law. pages 21 to 26 of the material paper filed separately are the^photostat copies of postal receipts and track report proving service of demand nouce. Similarly, Pages 36 to 41 are the Photostat copies of postal receipt of Possession Notice dated 09.07.2024, photographs as proof of afflxture on secured assets and publication of the same in English and Telugu (vernacular language) newspapers on 77.07.2024. In view of sufficient proof place on record, I find no infraction of section 13(2) & 13(4) of the Act and Rules 3, 8(1) & 8(2) of the Rutes, 2002. As a secured creditor the Respondent Bank initiated the SARFESI proceedings, which cannot be categorized as illegal or arbitrary.

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In view of the above observations, it is concluded that the Applicant has failed to establish any valid ground to interdict the measures initiated by the Respondent Bank under the provisions of the Act against the SA schedule property. Accordingly, the SA is liable to be dismissed.

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Point No.(iil:

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