K. Shijo Jose v. The South Indian Bank Ltd. (Regional Office, Irinjalakuda) and The Authorized Officer, The South Indian Bank Ltd.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **FRIDAY, THE 5[TH] DAY OF JANUARY 2024 / 15TH POUSHA, 1945** **OP (DRT) NO. 336 OF 2023** **AGAINST THE ORDER IN LATER APPEAL NO.11/2023 ON THE FILE OF THE DEBT RECOVERY TRIBUNAL-2, ERNAKULAM** ## **PETITIONER/APPLICANT IN SA:** **K. SHIJO JOSE AGED 47 YEARS, S/O. LATE SRI. M.C JOSE MECHERY, MECHERY HOUSE, KOOVAKKATTUKUNNU, PUSHPAGIRI P.O, MELUR, THRISSUR, KERALA, PIN – 680311** **BY ADVS. K.SANEESH KUMAR V.B.SANTHINI** ## **RESPONDENTS/DEFENDANTS 1 AND 2 IN SA:** - **1 THE SOUTH INDIAN BANK LTD REGIONAL OFFICE, IRINJALAKUDA, VI/950-C&D, CHRIST NAGAR, AKP JUNCTION, IRINJALAKUDA, THRISSUR, PIN - 680125 REPRESENTED BY ITS AUTHORIZED OFFICER AND CHIEF MANAGER** - **2 THE AUTHORISED OFFICER THE SOUTH INDIAN BANK LTD., REGIONAL OFFICE, IRINJALAKUDA, VI/950-C&D, CHRIST NAGAR, AKP JUNCTION, IRINJALAKUDA, THRISSUR, PIN – 680125** **BY ADVS. SUNIL SHANKER JERIN GEORGE(K/863/2023) VIDYA GANGADHARAN(K/000424/2020) SANDHRA.S(K/001610/2021)** **THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 05.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** O.P.(DRT) No.336/2023 : 2 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## O.P.(DRT) No.336 of 2023 ````````````````````````````````````````````````````````````` _Dated this the 5[th] day of January, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner, who is the applicant in Ext.P5 SA, has filed this OP(DRT) seeking to set aside Ext.P8 and to direct the Debts Recovery Tribunal-II to number and consider Ext.P5 Securitisation Application in accordance with law and to declare that the same is not hit by limitation. 2. The petitioner, who is running a Partnership Firm, availed an overdraft facility of ₹1 Crore from the respondentBank in the year 2007. The petitioner created mortgage of 69.99 Ares of property situated in Kizhakkummuri Village of Chalakkudy Taluk. The petitioner availed a Kissan Cash Credit facility of ₹90 lakhs for another partnership venture. O.P.(DRT) No.336/2023 : 3 : Title document of 15.54 Ares of land along with residential building in Melur Village of Chalakkudy Taluk was mortgaged for the subsequent loan. 3. The 1[st] respondent-Bank issued Ext.P1 demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Ext.P2 demand notice was also issued on the petitioner. The petitioner states that in Exts.P1 and P2 demand notices, details of movable properties were not properly detailed. The respondents issued possession notice dated 05.01.2022 taking symbolic possession of the secured assets. Subsequently, a Section 13(8) notice was also issued. 4. The respondents proceeded under Section 14 filing MC No.152/2022 before the Chief Judicial Magistrate, Thrissur to take possession of 15.54 Ares of property with residential building. The Chief Judicial Magistrate passed Ext.P3 order on 30.06.2022 appointing Advocate Commissioner. O.P.(DRT) No.336/2023 : 4 : 5. The petitioner states that though Ext.P3 order was passed, no notice before taking possession as contemplated under Section 14 was issued by the Advocate Commissioner. The petitioner challenged the illegalities and irregularities under the Section 14 proceedings, filing Ext.P5 Securitisation Application dated 25.07.2023. The Registrar of the Debts Recovery Tribunal refused to accept Ext.P5 on the ground that the same is barred by limitation as Ext.P3 order was passed on 30.06.2022. The petitioner challenged Ext.P6 order filing Ext.P7 Appeal No.11/2023. The Debts Recovery Tribunal rejected the appeal on 07.08.2023 as per Ext.P8 order. The petitioner is aggrieved by Exts.P6 and P8 orders. 6. The counsel for the petitioner argued that the Debts Recovery Tribunal failed to consider the fact that each day after the issuance of order under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, would give right to the aggrieved party to file appeal, as the threat of dispossession is a continuing cause of action. In _**Roshan**_ O.P.(DRT) No.336/2023 : 5 : ## _**Narayanan C.S. v. Authorised Officer, Central Bank of**_ _**India and another** [2017 (3) KHC 617]_ , this Court has held that “measures” include any step commencing with the issuance of notice, stage of approaching Magistrate, obtaining an order from the Magistrate, issuance of notice by Advocate Commissioner culminating with the taking of actual possession of the secured asset, each of the said steps in the measures adopted would give rise to a cause of action for the borrower to approach the DRT through an application under Section 17 of the Act. Exts.P8 is therefore highly arbitrary. 7. The respondents resisted the OP(DRT) filing counter affidavit. The respondents pointed out that M/s.City Glass and Plywoods had availed CCOL, WCTL, ECLGS and FITL facilities from the Bank creating equitable mortgage of property of an extent of 15.54 Ares. The petitioner had also availed HL, VL, HL restructuring and KCC credit facilities. M/s.Chalakkudy Glass and Plywoods in which the petitioner is a partner, availed ECLGS facility. Due to default in O.P.(DRT) No.336/2023 : 6 : repayment, the credit facilities were classified as NPA. Demand notice was issued and the Bank filed MC No.152/2022. Though the petitioner challenged securitisation proceedings filing W.P.(C) No.11443/2022 and W.P.(C) No.11262/2023, this Court did not interfere with the securitisation proceedings though instalment facilities were given to the petitioner. 8. When the Advocate Commissioner issued notice, the petitioner filed SA in the Debts Recovery Tribunal. The Tribunal declined to register the SA since the petitioner did not produce Advocate Commissioner's notice. The appeal filed by the petitioner against the order of the Registrar, was dismissed by the Presiding Officer of the DRT as per Ext.P8. The time limit prescribed for challenging securitisation measures is 45 days. The petitioner filed the SA beyond the period of limitation. In the circumstances, the Advocate Commissioner is to be permitted to proceed with issuance of a fresh notice. O.P.(DRT) No.336/2023 : 7 : 9. I have heard the learned counsel for the petitioner and the learned Standing Counsel representing the respondents. 10. The petitioner is aggrieved by the Section 14 proceedings initiated by the respondents. The Chief Judicial Magistrate, Thrissur passed Ext.P3 order dated 30.06.2022 appointing Advocate Commissioner to assist the Bank to take possession of the petition schedule property. The Chief Judicial Magistrate's Court specifically directed the Advocate Commissioner to issue notice to respondents before taking possession of the petition schedule property. 11. The petitioner states that the Advocate Commissioner did not issue any notice to the petitioner before taking possession as contemplated under Section 14 and the MC was posted to 11.08.2023. The petitioner obtained a copy of order dated 03.06.2023 in MC No.152/2023 from the official website of the District Court. Thereafter, the petitioner challenged the measures taken under Section 14 by filing Ext.P5 SA on 25.07.2023. O.P.(DRT) No.336/2023 : 8 : 12. The Registrar, Debts Recovery Tribunal raised objections as the SA was filed after a lapse of more than 45 days from the passing of Ext.P4 order. The petitioner submitted before the Registrar that though Ext.P3 order was passed on 30.06.2022, the Advocate Commissioner has not issued notice to the petitioner and at the same time, the MC stands posted to 11.08.2023 for Commissioner's report. In the circumstances, it cannot be stated that the SA is barred by limitation. 13. The Registrar, however, took a view that since the order of the Chief Judicial Magistrate is dated 30.06.2022 and since the applicant failed to produce Advocate Commissioner's notice to validate the limitation, the SA cannot be registered. The petitioner challenged Ext.P6 order filing Appeal No.11/2023 before the Debts Recovery Tribunal. The Debts Recovery Tribunal also took the same view. The Debts Recovery Tribunal held that merely because Advocate Commissioner has not issued any notice to the appellant to take physical possession of the secured asset, he cannot file O.P.(DRT) No.336/2023 : 9 : the SA at this stage. 14. This Court considered a similar issue in OP(DRT) No.393/2022. By judgment dated 15.12.2022, this Court held that on each of the days after the issuance of the notice by the Advocate Commissioner, the petitioner had a cause of action to move the Debts Recovery Tribunal and therefore the limitation could not have been counted from the date of issuance of the notice. 15. In the judgment in _**Sami K. v. Branch Manager, Bank of India and others** [2011 (3) KHC 414]_ , this Court held as follows:- At the outset, I would note that although the Supreme Court has upheld the constitutional validity of the Act, it cannot be gainsaid that the Act is a very harsh legislation, which results in very disastrous consequences to the owner of the property against which a measure under Section 13 (4) of the Act has been taken. That being so, the provisions regarding the remedies provided for persons aggrieved by such action should be construed liberally. No doubt, the Supreme Court has categorically held that no application/appeal would lie against any action taken by the financial institution prior to taking a measure under Section 13(4). Therefore, the right to resort to remedies under Section 17 would arise only when any one of the measures contemplated under Section 13(4) or thereafter is initiated, is his contention. I am of O.P.(DRT) No.336/2023 : 10 : opinion that it is not necessary for an aggrieved person to wait till actual or symbolic possession is taken by the financial institution before resorting to the remedy as provided under Section 17. Take for example, a case where a person against whom proceedings under the securitization proceedings have been initiated, has a case that he was not a party to the loan transaction at all, but by fraud or forgery, he has been made a borrower or a surety. In such cases, it would be nothing but sheer injustice to say that he has to wait till the financial institution takes possession and throws him out into the street before he can resort to the only remedy available to him under law, which is filing of an application/appeal under Section 17 of the Act. I am of opinion that the rigour of the provisions of the Act should not be taken to that extreme extent to deny even the right of appeal under Section 17, which is the only remedy provided to an aggrieved person against a measure under Section 13(4). This is all the more so since the Supreme Court has time and again held that High Courts should not ordinarily entertain writ petitions challenging proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and should relegate the parties to the remedy by way of appeal under Section 17 of the Act before the Debt Recovery Tribunal. I am of opinion that despite the vehement protestations of counsel for the banks, particularly by the Union Bank of India, going by the decisions of the Supreme Court, the very fact of the financial institutions approaching the Magistrate under Section 14 itself would constitute a measure under Section 13(4) of the Act, against which an appeal can be filed by the aggrieved person before the Tribunal under Section 17. Counsel for the banks point out that in the decisions of Mardia Chemicals case & Transcore case (supra), the Supreme Court has held that only when a measure under Section 13(4) is actually taken, an appeal would lie. No doubt, that is the legal position. But the question is when exactly a measure under Section 13(4) can be stated to be actually taken. I am not inclined to O.P.(DRT) No.336/2023 : 11 : accept the contention of the counsel for the banks that that would only be when possession is actually taken by the financial institution. Any measure under Section 13(4) would constitute a cause of action for filing an appeal under Section 17. The mere decision of the financial institution to approach the Magistrate under Section 14 would also constitute a measure under Section 13(4). Reliance by the learned counsel for the Union Bank of India on the Division Bench decision of this court in Muhammed Ashrafs case (supra) is misplaced, according to me. That decision only says that no appeal would lie against an order of the Magistrate under Section 14or the action of the Commissioner appointed by the Magistrate to take possession. That decision does not say that the action of the bank in approaching the Magistrate under Section 14would not constitute a measure under Section 13(4). In view of the judgments of this Court referred to above, it has to be held that on each day, after the passing of the order by the Chief Judicial Magistrate, the petitioner has a cause of action to move the Debts Recovery Tribunal, even though the Advocate Commissioner has not issued a notice. Rejection of the petitioner's SA as time barred, in the circumstances, would cause grave injustice and failure of justice. 16. For the afore reasons, Ext.P8 order is set aside. The Debts Recovery Tribunal-II, Ernakulam is directed to O.P.(DRT) No.336/2023 : 12 : number Ext.P5 Securitisation Application filed by the petitioner and consider the said application on merits and in accordance with law, expeditiously. The benefit of the interim order passed by this Court on 24.08.2023 and extended from time to time will continue for a period of six weeks. OP(DRT) is disposed of as above. Sd/- **N. NAGARESH, JUDGE** aks/03.01.2024 O.P.(DRT) No.336/2023 : 13 : ## **APPENDIX OF OP (DRT) 336/2023** ## **PETITIONER’S EXHIBITS** - **Exhibit P1 TRUE COPY OF DEMAND NOTICE DATED 18/08/2021 UNDER SECTION 13(2) IN CONNECTION WITH THE M/S CITY GLASS AND PLY WOODS ISSUED BY THE 2ND RESPONDENT** - **Exhibit P2 TRUE COPY OF DEMAND NOTICE DATED 13/08/2021 UNDER SECTION 13(2) IN CONNECTION WITH THE M/S CHALAKKUDY GLASS AND PLY WOODS ISSUED BY THE 2ND RESPONDENT** - **Exhibit P3 TRUE COPY OF SECTION 14 ORDER DATED 30/06/2022 IN M.C.NO.152/2022 DATED ON THE FILES CHIEF JUDICIAL MAGISTRATE, THRISSUR.** - **Exhibit P4 TRUE COPY OF THE PROCEEDINGS DATED 03/06/2023 IN M.C.NO.152/2023 ON THE FILE OF CJM COURT, THRISSUR OBTAINED FROM THRISSUR/DISTRICT COURT IN INDIA | OFFICIAL WEBSITE OF DISTRICT COURT OF INDIA (ECOURTS.GOV.IN)** - **Exhibit P5 A TRUE COPY OF THE SECURITIZATION APPLICATION FILED BY THE PETITIONER DATED 25.7.2023.** - **Exhibit P6 A TRUE COPY OF THE ORDER PASSED BY THE REGISTRAR, DEBT RECOVERY TRIBUNAL-II, ERNAKULAM IN DIARY NO.1010/2023 DATED 4.8.2023.** - **Exhibit P7 A TRUE COPY OF THE MEMORANDUM OF APPEALNO.11 OF 2023 FILED BY THE PETITIONER BEFORE THE DRT-2, DATED 4.8.2023** - **Exhibit P8 A TRUE COPY OF THE ORDER IN APPEAL NO.11/2023 DATED 7.8.2023 PASSED BY THE DEBT RECOVERY TRIBUNAL-2, ERNAKULAM.**