STATE BANK OF INDIA vs SMITHA JAMES on 7 May 2018

FINAL ORDER

This Original Application is filed on 16.12.2015 under Section 19(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 for recovery of a sum of Rs.23,21,492/- from the defendants together with future interest thereon @ 10.70% per annum with monthly rests from 11.12.2015 till realization and by sale of OA schedule property.

BRIEF FACTS OF THE CASE:

1. The applicant is a body corporate established under the State Bank of India (Subsidiary Banks) Act 1959 and having its Head Office at Trivandrum and branches among various places in India, including one at Marangattupally in Kottayam District. The Branch Manager is competent to verify and authorized to sign the pleadings and take all legal actions representing the applicant bank.

2. The application is continued by State Bank of India, a body corporate constituted under the State Bank of India Act, 1955 which, in terms of Acquisition of State Bank of Travancore Order, 2017 published in the Gazette of India dated 22.02.2017, is entitled to continue and enforce the claim from 01.04.2017.

3. The defendants executed loan documents on 15.06.2012 and availed the loan on 21.06.2012. Further the defendants created mortgage of the scheduled property on 08.04.2014 and confirmed the same in writing on 09.04.2014. The loan was payable in Equated Monthly Installments and the due date of the first installment was 10.09.2012. There has been part payment on several occasions including 31.03.2014, 30.06.2014, 26.09.2014 and 04.11.2014. The amount so remitted in the account has been adjusted towards the first six installments and the 7th installment due on 10.03.2012 and the subsequent installments have been defaulted by the defendants. Demand for payment of the entire dues was made by notice dated 02.11.2015. In the circumstances, the applicant declares that the application is within the limitation prescribed in Section 24 of the Recovery of Debts Due to Banks and Financial Institutions Act 1993.

4. It is the case of the applicant that the defendants 1 & 2 approached the applicant bank for a housing loan for purchase of a residential house. Since the 1st defendant was employed in Saudi Arabia she executed a Power of Attorney on 17.04.2012 authorizing her husband, the 2nd defendant to apply for the loan. Accordingly, the 2nd defendant on his behalf and on behalf of the 1st defendant as her Power of Attorney holder applied for a loan of Rs. 16,29,000/- for purchase of 8.09 Ares of land with a residential house situated at Kurichithanam Village from Sri.Cyril Joseph and his wife Smt.Valsa James. The loan was sanctioned for Rs.16,29,000/- on 15.06.2012 towards housing loan and an additional loan of Rs.27,650/- for payment of Insurance Premium for obtaining group insurance cover for the borrowers.

5. On 15.06.2012 the 2nd defendant executed Medium Term Loan agreement, agreeing to repay the loan in 180 Equated Monthly Installments of Rs. 19,200/-, the first installment payable on 10.09.2012 and thereafter on the same day everymonth. The loan amount of Rs.16,29,000/- was sanctioned on execution of documents by the defendants on 21.06.2012. On 08.04.2014 the 2nd defendant mortgaged the property purchased with the loan amount and deposited the sale deed with the applicant bank towards security for the loan. A Memorandum of deposit of the title deeds was executed on 09.04.2014 confirming the said deposit and creation of mortgage.

It is submitted that despite the undertaking made by the defendant, he failed to make payment of any installment of principal or interest and hence the account become irregular. On request of the applicant bank the defendants remitted and amount totaling to Rs.1,21,400/- on various dates from March 2014. Since the amount remitted was not sufficient to adjust the overdue EMI, the account was classified as NPA on 30.11.2014. Thereafter the applicant bank issued notice under Section 13(2) but still the defendants failed to close or regularize the account and then the applicant bank initiated proceedings under the SARFAESI Act.

7. The defendants filed a writ petition WP(c)17173/2015 and vide order dated 20.07.2015 the hon’ble high court stayed further proceedings pursuant to 13(2) notice on remittance of Rs. 1,50,000/- by the defendants within six weeks. As the defendants failed to pay the amount in accordance with the order, the applicant bank proceeded further under SARFAESI Act.

8. The defendants again approached the High Court when the applicant bank issued sale notice scheduling the secured asset for sale. The high court directed the applicant bank to defer the sale fixed on 30.10.2015 if the defendants remit an amount of Rs.1,50,000/-. The defendant did not complied by the order and the scheduled sale not take place as there were no bidders. Since the defendants failed to pay the entire dues or to regularize the account even after initiating the proceedings under the SARFAESI Act, a lawyer’s notice was issued to the defendants on 02.11.2015 demanding payment of the entire dues. As per the statement of account maintained by the applicant bank an amount Rs.23,21,492/- is due under the loan account and hence the applicant has constrained to file this original application for recovery of the said amount.

9. After filing of the OA, the applicant bank has taken out the summons as directed by the Tribunal and has filed the proof of service on 01.04.2016, 09.08.2016& 19.10.2016. The summons issued to the defendants is duly served and service of summons was completed as per the regulations. The defendants had neither filed the vakalath nor written statement. There was no appearance for the defendants nor represented by any counsel and hence the defendants were placed exparte on 13.03.2017.

10. The evidence on the side of the applicant bank consists of the proof affidavit of its Branch Manager, AW1 and Exhibits A1 to A13is marked on the side of applicant and closed their side of evidence.

11. Heard arguments of the applicant bank and perused the records of the case. The following points arise for my consideration:

(i) Whether the applicant is entitled for the reliefs prayed for in the OA?

(ii) What order?

My findings on the above points are as follows:- Point No.(i):

In the affirmative

Point No.(ii):

As per final order.

Reasons:-

12. The evidence of the applicant bank by way of proof affidavit of Branch Manager AW1 reiterates the facts pleaded in the OA and the affidavit is corroborated by the above referred Exhibits A1 to A13 which clearly establishes the case of the applicant bank to allow the present OA. Added to this, it appears that the defendant did not contest the matter as he admitted the entire case of the applicant as sought for in the OA.In view of the above, the present OA is to be allowed with costs as sought by the applicant bank.

13. Having regard to the amount advanced, the interest applied, the conduct and operations in the account and the default committed, I am of the view that the applicant bank is entitled to get a final order on the following lines:-

ORDER

(a) The OA is allowed with costs.

(b) The defendants 1 and 2 jointly and severally are directed to pay a sum of Rs.23,21,492/-(Rupees TwentyThree lakhs TwentyOne Thousand Four Hundred and NinetyTwo only) together with future interest @10.70% per annum with monthly rests from 11.12.2015till realization and also its costs from the defendants;

(c) In the event of failure of the defendants to pay the OA claim amount, the bank is at liberty to sell the OA schedule property of the defendants and the sale proceeds be appropriated towards the OA claim amount as required under law; (d) In the event of non-realization of the OA claim amount despite the sale of the mortgaged property referred above, the bank is at liberty to proceed against the other properties of the defendants, as required under law;

(e) Schedule property shown in the OA shall become part and parcel of the final order of the OA and Recovery Certificate of present OA; (f) The applicant bank shall file memo of costs within ten days from the date of this final order; (g) Recovery Certificate shall be drawn up and issued to the Recovery Officer in terms of the final order.

11. The Registry is directed to communicate copy of the order to the parties concerned by speed post or registered post with AD. [Dictated to the steno, transcribed by her, corrected by me and then pronounced in the open court on this the07thday of May, 2018]

(S.V.GOWRAMMA)

A P P E N D I X

Witness for Applicant: AW1: Mr. Sathyan.T.A, Branch Manager of the applicant bank.

Witness for Defendant(s): Nil

Exhibits on the part of the applicant

Ext.No. Date Particulars of documents A1 17.04.2012 Power of Attorney executed by defendant No.1 A2 - Sanction Letter acknowledged by the 2nd defendant for himself and on behalf of the 1st defendant A3

Medium Term loan agreement for Housing Loan A4 15.05.2012 Agreement to Mortgage A5(a) 17.02.2014 Sale Deed registered as Document No377/2014 of Kuravilangad SRO A5(b) - English translation of the Sale Deed No. 377/2014of Kuravilangad SRO A6

09.04.2014 Memorandum of Deposit of the Title deed with cover A7

05.01.2015 Notice issued by the applicant bank to defendants under Section 13(2) of SARFAESI Act A8

20.07.2015 Order dated 20.07.2015 of the High Court of Kerala in WP(c) No. 17173 of 2015 A9 02.11.2015 Copy of Lawyer’s notice dated 02.11.2015 A10(a) - Postal Receipt in respect of lawyer’s notice A10(b) - Postal Receipt in respect of lawyer’s notice A11 - Statement regarding rates of interest applied A12 10.12.2015 Copy of Accounts certified under Banker’s Books evidence Act A13 - Calculation statement of amount due

Defendant’s Exhibits – Nil

(PRESIDING OFFICER)

SCHEDULE

District

:

Kottayam Sub District

:

Kuravilangad Taluk

:

Meenachil Village

:

Kurichithanam Panchayath

:

Marangattupally Old. Sy.No.

:

394, 395 Old Sy.Sub.Div.No :

9, 10 Block No.

:

Resurvey No.

:

Re.Sy.Sub.Div.No. :

Extent

:

08 Are 09 Sq. Mtrs DESCRIPTION OF PROPERTY 8.09 Ares of land in Re.Sy.No. 402/14 in Block No.6 of Kurichithanam Village within the boundaries stated below together with the residential building therein bearing No. VI/333B and the Electric Connection with consumer No. 13012 and all other rights of the defendant therein and more specifically described in the schedule thereunder. BOUNDARIES

East : Land belonging to ManimalatharayilPappachan North : Road and land belonging to Anasseril Kumaran West : Land belonging to Anasseril Kumaran

South : Land belonging to MundattuChundayil Kurian [PRESIDING OFFICER]

IN THE DEBTS RECOVERY TRIBUNAL-II, KERALA AT ERNAKULAM Dated this the 07thday of May, 2018 Present: S.V.Gowramma, B.A., LL.B

T.A.No.5 /2016 (OA.No.33 /2016)

Between State Bank of India, (Successor of SBT), Marangattupally Branch, …Applicant And

Ms Smitha James, & another

…Defendants

FINAL ORDER