High Court of KeralaSingle Judge2024-01-24Dismissed

M/S. KUMBUKATTU CASHEWS VALAKOM P.O, KOTTARAKKARA, KOLLAM vs SOUTH INDIAN BANK

Case / Petition Number:OP (DRT) No. 520 of 2023

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: N. Nagareesh
Judgment Date: 2024-01-24
Court Decision / Holding: OP (DRT) No.520/2023 is dismissed. The court did not interfere with Ext.P2 proceedings and left open the petitioners’ remedies to challenge the sale’s confirmation and issuance of the sale certificate, as well as any challenge to the reserve price, if pursued through appropriate SA/IA amendments or post-sale pleas.
Final Disposition: Dismissed

Parties to the Case

Appellants / Petitioners

M/S. KUMBUKATTU CASHEWS VALAKOM P.O, KOTTARAKKARA, KOLLAM, REPRESENTED BY ITS PROPRIETOR, ALEX M. KUMBUKADAN, PIN - 691532
ALEX M. KUMBUKADAN, AGED 52 YEARS S/O. K.L.MATHEW, RESIDING AT KUMBUKATTU HOUSE, VALAKOM P.O., KOTTARAKKARA, KOLLAM, PIN - 691532
REKHA ALEX, AGED 49 YEARS W/O. ALEX M, RESIDING AT KUMBUKATTU HOUSE, VALAKOM P.O, KOTTARAKKARA, KOLLAM, PIN – 691532

Respondents

SOUTH INDIAN BANK REPRESENTED BY ITS MANAGER, KOTTARAKKARA BRANCH, X/1234/1, QR ROAD, CITY TOWER BUILDING, KOTTARAKKARA, KOLLAM, KERALA, PIN – 691506

Legal Representation & Advocates

Counsels for Petitioners

• B.J. John Prakash
• Colin Alex
• P. Pramel
• Sooraj M.S.
• Varsha Vijayakumar Nair

Counsels for Respondents

• Mohan Jacob George

Case Synopsis & Summary

This High Court of Kerala, in OP (DRT) No. 520 of 2023, deals with a challenge by M/S. KUMBUKATTU CASHEWS VALAKOM and related individuals ( proprietor Alex M. Kumbukadan and Rekha Alex) to a sale notice issued under the SARFAESI Act and the continuing proceedings in SA 62/2023 before DRT-II, Ernakulam. The first petitioner, an MSME unit, had availed cash credit facilities from the respondent bank, which classified the loan as NPA on 28.02.2021 and initiated SARFAESI procedures. The petitioners moved SA 62/2023 but the bank proceeded with a sale notice dated 09.11.2023 for a sale on 01.12.2023. They filed IA 3834/2023 seeking a stay of the sale, challenging a purported undervaluation and a low reserve price. On 01.12.2023, the Tribunal, relying on submissions, dismissed IA 3834/2023 for lack of amendment to SA challenging the sale notice. The petitioners argued they had 45 days from the sale notice to challenge; they invoked Jimmy Thomas v. Indian Bank to emphasize interim-relief principles. The court observed the petitioners’ remedy lies in challenging sale confirmation and the sale certificate, and potentially the low reserve price. It declined to interfere with Ext.P2 and dismissed the OP(DRT). The decision records that the petitioners may pursue relief through post-sale challenges while avoiding prejudice from the sale that has already occurred.

Provisions of Law Cited

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Legal Doctrines & Maxims

Well settled principles governing the grant of interim relief

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners contend that the sale notice undervalues the secured assets and that the time window to challenge the sale (45 days from the notice) should be recognized, despite the sale being scheduled for 01.12.2023. They argue the Tribunal failed to consider a possible amendment to SA No.62/2023 and erred in dismissing IA 3834/2023 without adequate merit discussion. They rely on the power balance under SARFAESI and urge the Court to ensure interim relief principles are applied in a well-reasoned manner, citing Jimmy Thomas v. Indian Bank to emphasize due consideration before sale.

Contentions of Respondents

The bank argues that sale was conducted in accordance with process, sale notice and subsequent confirmation; once sale is confirmed and sale certificate issued, intervention is restricted; the proper remedy for petitioners to challenge is to approach the Court against the sale confirmation and the sale certificate, including any challenge to reserve price, rather than seeking to stall the sale at this stage.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Jimmy Thomas v. Indian Bank	2023 LiveLaw (Ker) 241	Mentioned Only	Cited by the petitioners to underscore interim-relief principles; the court references it in the context of argument, but does not adopt it as binding doctrine or overrule any position.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **WEDNESDAY, THE 24[TH] DAY OF JANUARY 2024 / 4TH MAGHA, 1945** **OP (DRT) NO. 520 OF 2023** **AGAINST THE ORDER/JUDGMENT SA 62/2023 OF DEBT RECOVERY TRIBUNAL- 2, ERNAKULAM** ## **PETITIONERS/APPLICANTS IN SA:** - **1 M/S. KUMBUKATTU CASHEWS VALAKOM P.O, KOTTARAKKARA, KOLLAM, REPRESENTED BY ITS PROPRIETOR, ALEX M. KUMBUKADAN, PIN - 691532** - **2 ALEX M. KUMBUKADAN, AGED 52 YEARS S/O. K.L.MATHEW, RESIDING AT KUMBUKATTU HOUSE, VALAKOM P.O., KOTTARAKKARA, KOLLAM, PIN - 691532** - **3 REKHA ALEX, AGED 49 YEARS W/O. ALEX M, RESIDING AT KUMBUKATTU HOUSE, VALAKOM P.O, KOTTARAKKARA, KOLLAM, PIN – 691532** - **BY ADVS. B.J.JOHN PRAKASH COLIN ALEX P.PRAMEL SOORAJ M.S. VARSHA VIJAYAKUMAR NAIR** ## **RESPONDENTS:** - **1 SOUTH INDIAN BANK REPRESENTED BY ITS MANAGER, KOTTARAKKARA BRANCH, X/1234/1, QR ROAD, CITY TOWER BUILDING, KOTTARAKKARA, KOLLAM, KERALA, PIN – 691506** ## **BY ADV. SRI. MOHAN JACOB GEORGE** **THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 24.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** O.P.(DRT) No.520/2023 : 2 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## O.P.(DRT) No.520 of 2023 ````````````````````````````````````````````````````````````` _Dated this the 24[th] day of January, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The 1[st] petitioner in this OP(DRT) is an MSME Unit. The 2[nd] and 3[rd] petitioners are Proprietor and Guarantor respectively of the 1[st] petitioner. The OP(DRT) has been filed to quash Ext.P2 and to stay all further proceedings pursuant to Ext.P4 until Exts.P1 and P3 applications are considered on merits and disposed of by the Debts Recovery Tribunal-II, Ernakulam. 2. The petitioners state that the 1[st] petitioner had availed Cash Credit facilities from the respondent-Bank mortgaging several properties of the petitioners as collateral securities. The respondent classified the loan accounts as NPA on 28.02.2021 and invoked proceedings under the O.P.(DRT) No.520/2023 : 3 : Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The petitioners hence filed SA No.62/2023 before the Debts Recovery Tribunal-II, Ernakulam. The Bank, however, proceeded with and published a sale notice. 3. The petitioners therefore filed IA No.3834/2023 seeking stay of sale notice. Ext.P1 is the copy of IA No.3834/2023. Ext.P1 was filed challenging the low reserve price fixed by the respondent-Bank. According to the petitioners, the properties were thoroughly undervalued. 4. The petitioners state that Ext.P1 IA was taken up on 01.12.2023 by the Debts Recovery Tribunal-II. On that day, the respondent submitted that property specified as item No.8 in the sale notice is sold and the same was confirmed. Relying on that submission, the Debts Recovery Tribunal-II dismissed Ext.P1 IA finding that the petitioners have not filed any application for amendment of SA challenging the sale notice. The petitioners state that the said observation is wrong. The sale notice was issued on 09.11.2023 and the O.P.(DRT) No.520/2023 : 4 : petitioners are entitled to challenge the sale within 45 days of the sale notice. The non-filing of the amendment application along with Ext.P1 should not prejudice the petitioners, contended the petitioners. 5. Relying on the judgment in _**Jimmy Thomas v. Indian Bank** [2023 LiveLaw (Ker) 241]_ , the counsel for the petitioners argued that considering the drastic nature of the powers conferred on the Banks / Financial Institutions under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, this Court must expect that the Tribunal will apply its mind to the contentions taken in the SA and a decision on whether or not an interim stay should be granted will be taken on well settled principles governing the grant of interim relief. 6. The counsel for the petitioners argued that the Debts Recovery Tribunal omitted to consider the fact that the petitioners were still within the allowed time frame to file an amendment application in SA No.62/2023, given that the sale O.P.(DRT) No.520/2023 : 5 : notice was dated 09.11.2023 and the sale was on 01.12.2023. 7. I have heard the learned counsel for the petitioners and the learned Standing Counsel representing the respondents. 8. From the pleadings in the OP(DRT), it is clear that the 1[st] respondent-Bank had declared the loan accounts of the petitioners as NPA. Thereupon, the petitioners filed SA No.62/2023. Ext.P1 sale notice was published on 09.11.2023 proposing the sale of secured asset to be conducted on 01.12.2023. 9. The petitioners filed IA No.3834/2023 on 15.11.2023 seeking stay of sale, on the ground of low reserve price fixed and undervaluation of the assets mortgaged. Ext.P1 IA was taken up on 01.12.2023 on which date the sale was also scheduled. On that day, the Bank informed the Debts Recovery Tribunal that sale was conducted and confirmed. Therefore, the Debts Recovery Tribunal dismissed IA No.3834/2023 on the ground that no O.P.(DRT) No.520/2023 : 6 : amendment was made to the SA challenging the sale notice. 10. The argument of the petitioners is that they have 45 days time to challenge the sale notice and therefore Ext.P2 order ought not have been passed dismissing IA No.3834/2023. 11. It is to be noted that in IA No.3834/2023, the petitioners had challenged the sale notice contending that the reserve price is too low. In the absence of any stay order in favour of the petitioners, the Bank conducted and confirmed the sale. As the sale is confirmed, any decision thereafter can be taken only after hearing the purchaser also. The petitioners can still challenge the confirmation of the sale. The Standing Counsel for the Bank would submit that the sale certificate was also issued on 06.12.2023 in favour of the purchaser. If that be so, to get any relief from the Tribunal, the petitioners will have to challenge the sale certificate also. 12. In the afore facts of the case, I am not inclined to interfere with Ext.P2 proceedings of the Debts Recovery O.P.(DRT) No.520/2023 : 7 : Tribunal, because the petitioners have still a remedy against the sale by way of challenging confirmation of sale and issuance of sale certificate. If the petitioners opt to do so, I make it clear that the petitioners will be at liberty to agitate the issue of low reserve price also. With the afore observations, the OP(DRT) is dismissed. Sd/- **N. NAGARESH, JUDGE** aks/23.01.2024 O.P.(DRT) No.520/2023 : 8 : ## **APPENDIX OF OP (DRT) 520/2023** ## **PETITIONERS' EXHIBITS** **Exhibit-P1 THE TRUE COPY OF I.A NO.3834 OF 2023 FILED BY THE PETITIONER SEEKING STAY ON THE SALE NOTICE DATED 09.11.2023 Exhibit-P2 THE TRUE COPY OF THE DAILY ORDER DATED 01.12.2023 IN S.A 62 OF 2023. Exhibit-P3 TRUE COPY OF THE I.A. 2189 OF 2023 IN S. A. NO.62 OF 2023 FILED BY THE PETITIONER** **Exhibit-P4 TRUE COPY OF THE SALE NOTICE DATED 09.11.2023 ISSUED BY THE RESPONDENT BANK.** - **Exhibit-P5 TRUE COPY OF THE SA NO. 62 OF 2023 WITHOUT ANNEXURES FILED BEFORE THE DRT-2 AT ERNAKULAM.** - **Exhibit-P6 TRUE COPY OF THE I. A. NO.4017 OF 2023 IN S.A. NO.62 OF 2023 WITHOUT ANNEXURE FILED BEFORE THE HON'BLE DRT-2.** - **Exhibit-P7 TRUE COPY OF THE I.A. NO.4016 OF 2023 IN S.A. NO.62 OF 2023 FILED BEFORE THE HON'BLE DRT-2.** - **Exhibit-P8 TRUE COPY OF THE I.A. NO. 4015 OF 2023 IN S.A. NO.62 OF 2023 FILED BEFORE THE HON'BLE DRT-2** **Exhibit-P9 TRUE COPY OF THE AMENDMENT APPLICATION WITHOUT THE ANNEXURE IN I.D. NO. 1074 OF 2024 IN SA NO.62 OF 2023 BEFORE DRT-II AT ERNAKULAM** - **Exhibit-P10 TRUE COPY OF THE SALE NOTICE DATED 30.12.2023 ISSUED BY THE RESPONDENT BANK** **Exhibit-P11 TRUE COPY OF THE STAY PETITION ALONG WITH THE AFFIDAVIT IN I.D. NO.1075 OF 2024 IN SA NO.62 OF 2023 BEFORE DRT-II AT ERNAKULAM**