Sarada K.M. v. The Authorised Officer, South Indian Bank Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **WEDNESDAY, THE 21[ST] DAY OF FEBRUARY 2024/2ND PHALGUNA, 1945** **OP (DRT) NO. 140 OF 2023 SA.539/2022 OF DEBT RECOVERY TRIBUNAL, ERNAKULAM** ## **PETITIONER/APPLICANT** **SARADA K.M., AGED 87 YEARS WIFE OF RAMACHANDRAN, RESIDING AT CHANDNI HOUSE, PUTHIYARA P.O., KOZHIKODE, PIN – 673004** **BY ADVS. A.S.DILEEP K.Y.SUDHEENDRAN P.BINOD SUSEELA DILEEP SUDEEP ARAVIND PANICKER** ## **RESPONDENT/DEFENDANT:** **THE AUTHORISED OFFICER, SOUTH INDIAN BANK LTD., REGIONAL OFFICE, HAPPY TOWER, VAIKKOM MOHAMMED BASHEER ROAD, MANANCHIRA, KOZHIKODE, PIN – 673001** **By ADVS. SRI.P.A.AUGUSTINE AREEKATTEL SMT.VIDYA GANGADHARAN SMT.SANDHRA.S SRI.K.K.CHANDRAN PILLAI (SR.)(C-41)** **THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 21.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** O.P.(DRT) No.140/2023 : 2 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## O.P.(DRT) No.140 of 2023 ````````````````````````````````````````````````````````````` _Dated this the 21[st] day of February, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner, who had offered her residential property as security for an Overdraft CC limit of ₹200 lakhs availed from the South Indian Bank Limited, has filed this OP(DRT) seeking to set aside Ext.P5 order passed by the Debts Recovery Tribunal-I, Ernakulam and to declare that the proceedings of the respondent under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is unlawful and violative of the rights guaranteed under Articles 14, 19 and 300A of the Constitution of India. 2. The petitioner states that the overdraft facility was extended to a Limited Liability Partnership named O.P.(DRT) No.140/2023 : 3 : M/s.Manjakkal Trade Links LLP. The Firm failed to service the OD facility promptly. The petitioner states that the Bank, without serving a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, obtained orders under Section 14 from the Chief Judicial Magistrate's Court, Kozhikode and issued Ext.P1 notice dated 19.08.2022 of the Advocate Commissioner, on the petitioner. 3. The petitioner impugn the proceedings on multiple grounds. Firstly, the petitioner would submit that the security interest was not registered with the Central Registry and therefore the security interest is not enforceable in view of Section 26B of the Act, 2002. 4. The petitioner would further argue that security interest has not been created over the property for two facilities of ₹40 lakhs and ₹11.26 lakhs. Those amounts were advanced without the knowledge or consent of the petitioner. According to the petitioner, as per Ext.P1, the Chief Judicial Magistrate has directed to take possession O.P.(DRT) No.140/2023 : 4 : only of the petition schedule property. But, the Advocate Commissioner is attempting to take possession of the residential building of the petitioner without authority. 5. The petitioner would further urge that the application filed by the respondent under Section 14 of the SARFAESI Act before the Chief Judicial Magistrate's Court does not meet the requirements of Section 14(1). The Chief Judicial Magistrate has passed orders mechanically. 6. Though the petitioner approached the Debts Recovery Tribunal, the Debts Recovery Tribunal has passed Ext.P5 order dated 02.03.2023 in IA No.2724/2022 in SA No.539/2022 dismissing the application for stay. Ext.P5 order is therefore liable to be set aside, contends the petitioner. 7. The counsel for the petitioner argued that the petitioner had mortgaged the property as guarantee only to the OD facility. However, the respondents are proceeding against the property for other liabilities of the partnership also. The security interest is not registered with the Central O.P.(DRT) No.140/2023 : 5 : Registry as contemplated under Section 26B of the SARFAESI Act. The Bank has not given 60 days mandatory notice as required under Section 13(2). The existence of a residential building was not indicated in the petition filed before the Chief Judicial Magistrate. The order of the Chief Judicial Magistrate also does not indicate existence of a building. 8. The Debts Recovery Tribunal omitted to consider all the points urged by the petitioner. The counsel for the petitioner further submitted that the rule as to alternate remedy is not absolute and the case of the petitioner is a genuine case warranting interference by this Court under Article 227 of the Constitution of India. 9. The respondent entered appearance and resisted the OP(DRT) filing a counter affidavit. The respondent questioned the maintainability of the OP(DRT) on the ground of alternate remedy. The respondent relied on the judgment of the Apex Court in _**Varimadugu Obi Reddy v. B. Sreenivasulu and others**_ [(2023) 2 SCC 168] and in the O.P.(DRT) No.140/2023 : 6 : _**South Indian Bank Limited v. Naveen Mathew Philip and another**_ [2023 (4) KLT 29]. 10. The respondent contended that on the failure to maintain accounts, the accounts of the Partnership was classified as NPA on 29.05.2021. The respondent issued Section 13(2) notice to the petitioner on 12.08.2021. Even after the expiry of the statutory period of 60 days, neither the petitioner nor the other borrowers did care to settle the outstanding dues. Therefore, the Bank issued possession notice in respect of the secured asset. The notice was sent by registered post to the petitioner and was also published in Malayalam and English Dailies. 11. In Section 14 proceedings, the Advocate Commissioner issued notice dated 19.08.2022 to the petitioner for taking possession. The petitioner thereupon filed W.P.(C) No.28237/2022 challenging the securitisation measures. This Court relegated the petitioner to avail statutory remedy. O.P.(DRT) No.140/2023 : 7 : 12. The petitioner then filed SA No.539/2022 before the Debts Recovery Tribunal. IA No.2724/2022 was dismissed by the Tribunal. Instead of filing appeal against Ext.P4 order in the competent appellate forum, the petitioner has approached this Court. 13. The Senior Counsel assisted by the Standing Counsel representing the respondent pointed out that the petitioner has not cared to implead the borrowers in the OP(DRT). The petitioner is a Partner of the LLP. As the respondent sent notice to the petitioner in the correct address, there is a presumption that the petitioner had notice. 14. The Senior Counsel asserted that the mortgage of the petitioner's property is registered with the Central Registry. The petitioner has challenged the Advocate Commissioner's notice after expiry of 45 days. If the petitioner is aggrieved by the proceedings under the SARFAESI Act, the petitioner has to approach the Debts Recovery Appellate Tribunal. The OP(DRT) is without any O.P.(DRT) No.140/2023 : 8 : merit and it is liable to be dismissed, contended the Senior Counsel. 15. I have heard the learned counsel for the petitioner and the learned Senior Counsel assisted by the Standing Counsel of the respondent. 16. The petitioner would challenge the proceedings for enforcement of security interest contending that the security provided by the petitioner has not been registered with the Central Registry by the Bank, as mandated by Chapter IVA of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Therefore, in view of Section 26(d), the respondent is not entitled to exercise the rights of enforcement of security created by the petitioner in favour of the Bank. The respondent has stated that the security interest has been registered with the Central Registry. 17. The petitioner would then contend that no notice of proceedings under the SARFAESI Act was issued to the petitioner. In the counter affidavit filed by the respondent, the O.P.(DRT) No.140/2023 : 9 : respondent has stated that the accounts of the Partnership Firm was classified as NPA on 29.05.2021. A demand notice dated 12.08.2021 was issued under Section 13(2) of the SARFAESI Act. The petitioner is a Partner of the Firm. Even after receipt of demand notice and expiry of the statutory period of 60 days, the petitioner or other borrowers did not care to settle the outstanding dues in the account. 18. Subsequently, the Bank proceeded and issued possession notice on 27.10.2021. The possession notice was issued by registered post and it has been received by the petitioner. The possession notice was published in Mathrubhumi Kozhikode edition and New Indian Express Kozhikode edition on 03.11.2021. The possession notice was affixed on the secured asset as well. Therefore, the arguments of the petitioner in this regard are unsustainable. 19. The petitioner would contend that the security interest in respect of the petitioner's property was created only for two loan facilities. The respondent would controvert the said stand and would submit that the asset is also O.P.(DRT) No.140/2023 : 10 : mortgaged to secure the credit facilities availed by the sister concerns / relatives of the petitioner, her son and daughterin-law. The petitioner would argue that though the petitioner raised as many as six legal grounds before the Debts Recovery Tribunal, the Debts Recovery Tribunal has considered only two of the legal grounds. The petitioner would further urge that the rule relating to alternate remedy is not absolute and in a fit case this Court can interfere with the orders of the Debts Recovery Tribunal in exercise of the powers under Article 227 of the Constitution of India. 20. The respondent has answered the grounds raised by the petitioner in this OP(DRT). If the Debts Recovery Tribunal has not considered all the grounds put forth by the petitioner in its Ext.P5 order, the remedy available to the petitioner is under Section 18 of the SARFAESI Act and is before the Debts Recovery Appellate Tribunal. On a perusal of Ext.P5 order of the Tribunal, I do not find any illegality or irregularity which warrants interference by this Court under Article 227 of the Constitution of India, when an effective O.P.(DRT) No.140/2023 : 11 : statutory alternate remedy is available to the petitioner. The OP(DRT) is therefore devoid of any merit and hence dismissed. Sd/- **N. NAGARESH, JUDGE** aks O.P.(DRT) No.140/2023 ## : 12 : ## **APPENDIX OF OP (DRT) 140/2023** ## **PETITIONER's EXHIBITS** |**Exhibit.P1**|**A TRUE COPY OF THE **|**NOTICE DATED**| |---|---|---| ||**19/08/2022 ISSUED BY **|**THE ADVOCATE**| ||**COMMISSIONER**|| ||**BABU V. J.**|| |**Exhibit.P2**|**A TRUE COPY OF THE **|**SECURITISATION**| ||**APPLICATION NO. 539 OF 2022 FILED**|| ||**BEFORE THE HON'BLE **|**DEBT RECOVERY**| ||**TRIBUNAL-I, ERNAKULAM**|| |**Exhibit.P3**|**A TRUE COPY OF THE **|**INTERLOCUTORY**| ||**APPLICATION NO.2724/2022 FILED IN SA**|| ||**NO. 539 OF 2022**|| |**Exhibit.P4**|**A TRUE COPY OF THE COUNTER AFFIDAVIT**|| ||**FILED BY THE RESPONDENT BANK IN IA**|| ||**NO.2724/2022 IN SA NO.539 OF 2022**|| |**Exhibit.P5**|**A TRUE COPY OF THE ORDER DATED**|| ||**02/03/2022 IN IA 2724/2022 IN SA**|| ||**539/2022. OF HON'BLE **|**DEBT RECOVERY**| ||**TRIBUNAL-I ERNAKULAM**|| |**Exhibit.P6**|**A TRUE COPY OF THE **|**NOTICE DATED**| ||**08/03/2023**<br>**ISSUED**|**BY**<br>**ADVOCATE**| ||**COMMISSIONER BABU V.J.**||