Partly allowed

All in Oil Tech Engineers v. Karnataka Bank Limited

DRT20 Jan 2026SA/969/2024

Case brief

AI extract

What is this about?

The Tribunal set aside an e-auction sale notice due to procedural violations regarding notice publication, newspaper gazette, and valuation report compliance. It rejected requests to set aside possession notices and judicial orders. The Tribunal declined to interfere with loan restructuring as it falls outside the powers under the SARFAESI Act. The application was partly allowed and partly dismiss

What did the court decide?

Setting aside Annexure-A3 sale notice dated 03.12.2024. Dismissal of reliefs to set aside possession notice and Section 14 orders. No direction for loan restructuring granted.

All in Oil Tech Engineers versus Karnataka Bank Limited — Banking and Recovery | DRT (2026)

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paap

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 20^th DAY OF JANUARY, 2026

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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S.A No. 969 of 2024

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Between

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M/s. All in Oil Tech Engineers, XI/157, Palliparamb, Alangad, Ernakulam, Kerala 683 511 Represented by its Sole Proprietor Shery P.U.,

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Palliparambil, Karampady Kunnel Road, Alangad, Karumalloor, Ernakulam – 683 511.

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Shery P.U., Palliparambil, Karampady Kunnel Road, Alangad, Karumalloor, Ernakulam – 683 511.

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Shyna Shery, W/o. Shery P.U., Palliparambil, Karampady Kunnel Road, Alangad, Karumalloor,

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Ernakulam – 683 511.

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--- Applicants

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And

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The Karnataka Bank Ltd. Aluva Branch, represented by its Manager, D. No.19/271, Lakshmi Arcade, Ground Floor, Market Road, Bank Jn., Aluva, Ernakulam – 683 101.

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SA No.969 of 2024

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The Authorized Officer,

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The Karnataka Bank Ltd., Asset Recovery Management Branch, III Floor, Karnataka Bank Building, Kodialbail, Mangaluru -575 003.

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--- Defendants

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This Securitization Application coming on 07.01.2026 for final hearing before me in the presence of Ms. Arfana A.C., Counsel appearing for the Applicants and Ms. Keerthi K. Narayan, Advocate appearing for the defendants and upon hearing arguments of learned Counsels for both the parties and upon perusing the material on records, this Tribunal delivered the following:

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O R D E R

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This Securitisation Application was filed on 21.12.2024 seeking to set aside Annexure-I Possession Notice and Annexure-A3 e-auction sale notice dated 03.12.2024 and to set aside Annexure-A5 to A7 and to restrain the defendants from taking physical possession and selling of the immovable properties of the applicants and to direct the defendants to reschedule/regularize the loan accounts after paying the overdue amounts/interests in a phased manner and allow the cost of the proceedings from the defendants.

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The applicants availed various credit facilities from the 1^st defendant bank. As the collateral security for the aforesaid credit facilities, the 2^nd applicant created equitable mortgage in favour of the 1^st defendant by deposit of his title deeds pertaining to the immovable property admeasuring an extent of 5.67 Ares together with residential building situated at Alangad Panchayat, Thiruvalloor, Paravoor, Ernakulam district.

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Due to default in repayment of outstanding loan due, the loan accounts of the applicants came to be classified as Non-Performing Asset. Annexure-A2 demand notice dated 26.04.2022 was issued to the applicants calling upon them to repay the outstanding loan due within a period of 60 days from the date of receipt of the demand notice. The applicants neither sent any objection/representation to the demand notice nor did they clear off their liability due to the defendant bank.

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Since the applicant failed to respond to the terms of the above demand notice, Annexure-A1 Possession Notice dated 10.11.2022 was issued for symbolically taking physical possession of the secured asset. Thereafter Annexure-A3 sale notice dated 03.12.2024 was

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Page 2 of 8

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SA No.969 of 2024

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issued for sale of the secured asset on 24.12.2024. Sale was not materialized for want of bidder.

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Thereafter, the defendants approached the Additional Chief Judicial Magistrate Court (MPs/MLAs), Ernakulam and filed petition and affidavit Annexure-A5 u/s 14 (1) of the SARFAESI Act 2002. Annexure-A6 order dated 02.08.2024 came to be passed appointing Advocate Commissioner to take physical possession of the secured asset. The Advocate Commissioner issued notice dated 02.09.2024 Annexure-A7 to the applicants informing them that he would take physical possession of the secured asset after expiry of 14 days from the date of receipt of the notice. The applicants having aggrieved against the above measures filed this SA seeking for the reliefs stated supra.

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Counsel appearing for the applicants submitted that loan accounts of the applicants was not classified in accordance with the Reserve Bank of India’s Prudential Norms of Asset classification and also RBI guidelines and that there was only a short fall in repayment of the credit facilities due to the acute financial stringency pursuant to the flood happened in the year 2018 and lockdown due to Covid-19. The demand notice was not served to the applicants in accordance with Rule 3 of the Security Interest (Enforcement) Rules 2002. Possession notice was not served to the applicants. 30 days’ sale notice was not given to the applicants. Sale notice was not published in two leading newspapers. The outstanding amount shown in the sale notice is incorrect and exorbitant. Meagre reserve price was fixed in the sale notice without obtaining the valuation report. Prior to issuance of the sale notice, physical possession of the secured asset was not taken. The affidavit filed in support of the petition MC No.540/24 is in contravention of Sec.14 (1) of the SARFAESI Act 2002. The secured asset mentioned in Annexure-A5 petition is not identifiable. Security interest was not registered with the Central registry. Therefore, the SA may be allowed as prayed for.

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The counsel appearing for the defendants submitted that though restructuring benefits and Covid-19 reliefs were granted to the applicants, they failed to adhere to the repayment schedule and committed defaults in repayment of the outstanding loan due and that therefore, their loan accounts were classified as Non-Performing Asset with the RBI’s Prudential Norms of Asset Classification. The applicants did not send any objection/representation to the demand notice, which was served to them. Annexure-B4 Possession notice was issued in compliance with the statutory formalities and procedures. It was affixed on the conspicuous part of the secured asset and was served on the applicants and was published in two leading newspapers. Annexure-A3 sale notice was issued after obtaining valuation report from the approved Valuer. The outstanding amount mentioned in the demand notice is correct. Sale was not

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Page 3 of 8

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SA No.969 of 2024

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fructified for want of bidders. All the statutory requirements contemplated u/s 14 (1) of the SARFAESI Act 2002 has been complied with in respect of filing of affidavit in MC No.540/24. Security interest has been registered with the Central Registry. Therefore, SA may be dismissed with costs to the defendants.

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The applicants have not specifically pointed out in the SA as to how the classification of the loan account is against RBI guidelines and its prudential norms. Further, they having failed to send objection/representation to the demand notice with regard to the classification o the loan account as Non-Performing Asset, are not entitled to raise the aforesaid contentions now. It is revealed from the perusal of the written statement of the defendants that since the applicants failed to adhere to the repayment reschedule, their loan accounts came to be classified as Non-Performing Asset in accordance with the RBI guidelines and its prudential norms. Annexure-B3 copies of postal acknowledgment cards evidences the service of demand notice to the applicants.

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Annexure-B7 copies of postal acknowledgment cards produced by the defendants evidences the service of possession notice to the applicants. The defendants have produced Annexure-B5 and B6 in order to prove their contention that possession notice was published in two leading newspapers one in English edition, The New Indian Express and Deepika (vernacular edition) dated 16.11.2022. Be that as it may, Annexure-A1 possession notice was issued as early as on 10.11.2022. The applicants having failed to challenge the possession notice raising the aforesaid contentions within the period of 45 days from the date of issuance of the possession notice, are not entitled to raise the issue with regard to the validity of the issuance of the possession notice, now.

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The applicants have not disputed the issuance of sale notice to them. Though the applicants have contended in the SA that 30 days’ notice was not given in Annexure-A3 sale notice for sale of the secured asset and that sale notice was not affixed and published and that valuation report was not obtained prior to fixing the reserve price in the sale notice. The defendants have conveniently omitted to answer the aforesaid contentions in their written statement. No proof has been produced by the defendants to show that the reserve price for the secured asset was fixed after obtaining valuation report from the approved Valuer and that Annexure-A3 sale notice was affixed on the conspicuous part of the secured asset and that it was published in two leading newspapers. A perusal of Annexure-A3 sale notice shows that it was issued on 03.12.2024 fixing the date of auction on 24.12.2024. Hence it is evident that 30 days was not given for sale of the secured asset from the date of issuance of Annexure-A3 sale notice. Therefore, it is established that Rule 8 (5), Rule 8 (6), Rule 8(7) and Rule 9(1) of the Security Interest (Enforcement) Rules 2002 were

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Page 4 of 8

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SA No.969 of 2024

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not complied with by the defendants in respect of Annexure-A3 sale notice. Hence, Annexure-A3 sale notice is liable to be set aside on the aforesaid grounds.

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A perusal of Annexure-A5 affidavit filed in MC No.540/24 on the file of the Additional Chief Judicial Magistrate Court (MPs/MLAs), Ernakulam shows that the statutory requirements contemplated under Clause (i) to (ix) to the provisions of Section 14 (1) of the SARFAESI Act 2002 has been substantially complied with by the defendants.

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A perusal of Annexure-A5 shows that the learned Additional Chief Judicial Magistrate (MPs/MLAs), Ernakulam after having perused the contents of the affidavit and the documents filed in support of the affidavit and after having satisfied over the same, appointed Advocate Commissioner to take physical possession of the secured asset. This Tribunal does not find any infirmity or illegality in the above order.

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Annexure-B1 copy of ID based asset search report produced by the defendants shows that security interest in respect of the secured asset has been registered with the Central Registry.

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One of the reliefs sought for by the applicants in the SA is to direct the defendants to reschedule/regularize the loan accounts of the applicants on payment of the overdue amounts/interest in a phased manner. The above said relief does not fall under the measures referred to in Sec. 13 (4) of the SARFAESI Act 2002. It is for the applicants to approach the 1^st defendant bank for such relief.

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This Tribunal does not find any procedural irregularity or illegality in respect of classification of loan accounts of the applicants as Non-Performing Asset, issuance of Annexure-A2 demand notice and Annexure-A1 possession notice and the measures initiated u/s 14 (1) of the SARFAESI Act 2002. However, this Tribunal finds that the defendants have committed procedural irregularities in respect of issuance of Annexure-A3 sale notice as observed by this Tribunal in paragraph 10 of its order.

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In view of the foregoing reasons, this Tribunal holds that the applicants are not entitled to get the reliefs sought for in this SA in respect of the reliefs of setting aside Annexure-A1 possession notice and Annexure-A5 to A7 and that the applicants are entitled to get the relief of setting aside Annexure-A3 sale notice dated 03.12.2024.

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Resultantly, S.A No.969/2024 stands partly allowed in respect of the relief of setting aside Annexure-A3 sale notice dated 03.12.2024 and SA stands partly dismissed in respect of the reliefs of setting aside

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Page 5 of 8

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SA No.969 of 2024

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Annexure-A1 possession notice and Annexure-A5 to A7. However, there shall be no order as to costs.

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It is made clear that the defendants are at liberty to issue fresh sale notice in accordance with law.

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Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 20^th day of January, 2026.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 6 of 8

SA No.969 of 2024

List of documents filed by the Applicants along with the S.A.

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Sl. No.	Date	Particulars
1.	10.12.2022	True copy of the Possession Notice issued by the 2^nd defendant.	Annexure-A1
2.	26.04.2022	True copy of the Demand Notice issued by the 2^nd defendant.	Annexure-A2
3.	03.12.2024	True copy of the tender cum auction sale notice issued by the 2^nddefendant to the applicants.	Annexure-A3
4.	29.08.2013	True copy of medical certificate of 2^nd applicant.	Annexure-A4
5.	30.04.2024	True copy of the MC No. No.540 of 2024 and the supporting affidavit filed by the defendant before the Additional Chief Judicial Magistrate Court (MPs/MLAs) Ernakulam.	Annexure-A5
6.	02.08.2024	True copy of the order in MC No. No.540 of 2024 of the Additional Chief Judicial Magistrate Court (MPs/MLAs) Ernakulam.	Annexure-A6
7.	02.09.2024	True copy of the Advocate Commissioner’s notice.	Annexure-A7

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List of documents filed by the defendants along with the written statement

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Sl. No.	Date	Particulars
1.	---	True copy of the registration particulars of the secured asset with the Central Registry.	Annexure-B1
2.	26.04.2022	True copy of Demand Notice issued by the defendant.	Annexure-B2
3.	---	True copy of the postal Acknowledgment cards evidencing service of Annexure-B2DemandNotice.	Annexure-B3
4.	10.11.2022	True copy of the Possession Notice issued by the 2^nd defendant.	Annexure-B4
5.	16.11.2022	True copy of the Possession Notice publishedin TheNew Indian Express	Annexure-B5

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Page 7 of 8

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SA No.969 of 2024

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6.	16.11.2022	True copy of the Possession Notice	Annexure-B6
		publishedin Deepika (vernaculardaily)
7.	---	True copy of postal Acknowledgment	Annexure-B7
		cards evidencing service of Possession
		Notice on the borrowers.

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 8 of 8

All in Oil Tech Engineers v. Karnataka Bank Limited

Case brief

What is this about?

What did the court decide?

All in Oil Tech Engineers v. Karnataka Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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