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K.A. Joseph, Kannur District & Another v/s South Indian Bank Ltd, Kannur & Another


Company & Directors' Information:- THE SOUTH INDIAN BANK LIMITED [Active] CIN = L65191KL1929PLC001017

Company & Directors' Information:- JOSEPH AND CO PVT LTD [Active] CIN = U01211KL1954PTC000507

Company & Directors' Information:- E R JOSEPH & CO PVT LTD [Strike Off] CIN = U28920WB1955PTC022404

Company & Directors' Information:- SOUTH INDIAN BANK LIMITED [Dissolved] CIN = U65191KL1928PLC001011

    Securitisation Application No. 120 of 2018

    Decided On, 13 December 2018

    At, Debts Recovery Tribunal Ernakulam

    By, THE HONOURABLE MR. N. SOMASUNDAAR
    By, PRESIDING OFFICER

    For the Applicants: V.T. Madhavanunni, Advocate. For the Defendants: K.S. Dilip, Advocate.



Judgment Text


1. This Securitisation Application (for short – ‘SA’) is filed on 13.03.2018 seeking to quash Annexures – A1 & A2 possession notices dated 28.02.2018 and to permit regularization of the loan account.

2.1 The admitted factual matrix of this SA would be the applicants’ availment of loan, the 1st applicant’s creation of mortgage over his 10 cents of property in Re. Sy. No. 27/1AB of Thimiri Village and 2nd applicant’s creation of mortgage over his 10 cents of property in Re. Sy. No. 66/1 of Alakode Village with the 1st defendant bank and the defaults committed by them due to financial difficulties leading to the 2nd defendant’s issuance of Annexure – A1 possession notice dated 28.02.2018 in terms of Rule 8(1) and Annexure – A2 possession notice dated 28.02.2018 published in ‘Deepika’ daily dated 07.03.2018. It is the further case of the applicants that they are willing to regularize the loan account by paying the overdues if they would be permitted to pay the same in 30 equal monthly installments. The SARFAESIA measures proceeded with by the bank had impugned contending the property proceeded with by the bank is agricultural land and not a residential property.

2.2. Mr. V. T. Madhavanunni Ld. counsel for the applicants contended that the defendants’ measures are hit by Section 31(i) of the Act in as much as the applicants would contend it to be an agricultural land with their respective house properties thereon. The learned counsel would however in the course of his arguments admit that they had not adduced any evidence on their part to show the agricultural nature of the property.

3. Mr. K. S. Dilip Ld. counsel for the defendant bank emphatically contended that the property proceeded against are definitely not agricultural land as can be seen from its extent itself. It is submitted that it is too much to say that the 10 cents of land with a residential buildings of the applicants would have to be construed as agricultural lands in the absence of any iota of evidence on their side to demonstrate the same. According to him the property proceeded against is a residential plot and building and the bank has committed no illegality in proceeding against the 'secured asset'. The SA is sought to be dismissed with costs.

4.1. Going by the pleadings, submissions and evidence of the parties hereto, it is but obvious that there is no denying of the fact on the part of the applicants as to their availment of loan, creation of security interest and the amounts claimed by the defendant in their statutory notices. Except alleging the 10 cents of land and residential building to be agricultural ones, the applicants would not adduce any evidence to substantiate their such claim. Trite law it is that the person who asserts a fact is required to prove the same. The said principle of law stood reaffirmed in the judgment rendered by the Hon'ble High Court of Kerala in the case titled Krishnan v. Govindan reported in MANU/KE/0019/1989 : 1988 (1) KLT 687 and the judgment of the Hon'ble High Court of Calcutta rendered in the case titled Bhagchand Jain v. P.F. Inspector reported in MANU/WB/0285/1998 : CDJ 1998 Cal HC 112. The Hon'ble Supreme Court in the case titled Parimal v. Veena alias Beena reported in MANU/SC/0105/2011 : 2011 (1) KLT SN 84 (C. No. 114) SC: 2011 (3) SCC 545 held as follows:

"The provisions of S. 101 of the Evidence Act provide that the burden of proof of the facts rests on the party who substantially asserts it and not on the party who denies it. In fact, burden of proof means that a party has to prove an allegation before he is entitled to a judgment in his favour. S. 103 provides that burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any special law that the proof of that fact shall lie on any particular person. The provision of S. 103 amplifies the general rule of S. 101 that the burden of proof lies on the person who asserts the affirmative of the facts in issue."

4.2. This Tribunal is unable to hold the property proceeded against as an agricultural land going by the applicants own admission as to the existence of their residential buildings over it. It respectfully reminisces the judgment rendered by the Hon'ble Supreme Court of India in the case titled Thimmappa Rai Vs. Ramanna Rai and others, reported in CDJ 2007 SC 573 = 2007 (14) SCC 63 which reads as follows:-

“…………..25. An admission made by a party to the suit in an earlier proceedings is admissible as against him. Such an admission being a relevant fact, the courts below in our opinion were entitled to take notice thereof for arriving at a decision relying on or on the basis thereof together with other materials brought on records by the parties. Once a party to the suit makes an admission, the same can be taken in aid, for determination of the issue having regard to the provisions of Section 58 of the Indian Evidence Act”

4.3 The Tribunal proceeds to consider whether the defendant bank could be directed to allow regularization of the loan account and permit repayment of the same in 30 monthly installments as sought for by the applicants and the answer it gets to such a query is unfortunately in negative. The jurisdiction and authority vested on this Tribunal in terms of Section 17(1) of the Act entitles it to adjudicate upon the legality or otherwise of the measures or actions taken by the secured creditor or its authorized officer in terms of Section 13(4) of the Act and not beyond. This Tribunal is afraid that the constricted jurisdiction conferred on it could not be stretched too far or enlarged to the extent of directing the secured creditor bank to restructure/reschedule the tenure of repayment of loan as sought for by the applicant. It arrives at such an inevitable conclusion fortified by the decision of Hon'ble High Court of Delhi rendered in the case of Satnam Agri Products Ltd. v. Union of India (MANU/DE/3270/2014) which reads thus:

“17. It is relevant to note that though the legislature had in the year 1993 enacted the Recovery of Debts due to Banks and Financial Institutions Act (DRT Act) for the establishment of Tribunals for expeditious adjudication and recovery of debts due to Banks and Financial Institutions and for matters connected therewith or incidental thereto but still finding the slow pace of recovery of defaulting loans and mounting levels of Non-Performing Assets (NPAs) of Banks and Financial Institutions and further finding no legal provision for facilitating securitisation of financial assets of Banks and Financial Institutions, the Securitization Act was enacted, inter alia to empower the Banks and Financial Institutions to take possession of securities given for financial assets and sell or lease the same or take over the management, in the event of default i.e. classification of borrower's account as NPA. The Securitization Act vide Sections 13 to 15 thereof, enables the Banks or Financial Institutions to, notwithstanding anything contrary contained in Sections 69 or 69A of the Transfer of Property Act, 1882 and after providing an opportunity of hearing to the borrower, without being required to first prove or have adjudicated the debt, take possession of the secured assets of the borrower and / or the management of business of the borrower. However, Section 17 of the said Act provides to any person including borrower, who may be aggrieved by such action by the Bank / Financial Institution taking over possession of the secured assets and / or management of the business of the borrower, a right of appeal to the DRT. However, the scope of adjudication by the DRT in such appeal is limited by Section 17(2) , which provides that the DRT "shall consider, whether any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor for enforcement of security, are in accordance with the provisions of this Act and the Rules made thereunder". (Emphasis is mine) If the DRT comes to the conclusion that the action of taking over possession / management of business was not in accordance with the provisions of the Securitization Act and the Rules made thereunder, the DRT under Section 17(3) is to make the order of restoration of the possession of the secured assets / management of the secured assets to the borrower. However if the DRT finds, that the taking over of possession of the secured assets / management

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of the business was in accordance with the provisions of the Securitization Act and the Rules made thereunder, then the secured creditor shall be entitled to proceed with measures as provided under Section 13 of the Act. 21. It may also be added that DRT being a statutory Tribunal can perform only such functions as the Statute provides. From a reading of the Securitization Act, we are unable to find any provision empowering DRT, in a proceeding under Section 17, to issue any such direction to the creditor Bank/Financial Institution to consider the proposal for rehabilitation. 23. We are thus, of the view that DRT does not have any power to issue any direction to the creditor bank to consider the rehabilitation or settlement proposal, if any submitted by the borrower.”(Emphasis is mine) 5. Ergo, the SA fails and stands dismissed accordingly. Consequently IA 733/2018 stands closed. No order as to costs.
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