Dismissed

T N Rajakumar v. The Catholic Syrian Bank Ltd. amp Anr.

DRAT23 Oct 2025MISC APPEAL/51/2016

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal held that a mortgage created by deposit of title deed copies is invalid. Consequently, a subsequent sale in SARFAESI proceedings based on such mortgage was illegal. A prior valid mortgage by deposit of original title deeds upheld the recovery sale.

What did the court decide?

Sale in favour of S. Ramakrishnan upheld; Appellant Rajakumar entitled to refund of sale consideration, stamp duty, registration charges, and interest from Punjab & Sind Bank.

T N Rajakumar versus The Catholic Syrian Bank Ltd. amp Anr. — Specific Performance | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 23^rd of October, 2025

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PRESENT: Hon’ble Mr. Justice G. Chandrasekharan CHAIRPERSON

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M.A. 22/2016

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(Appeal No.25/2015 in MA No.50/2015 in DRC No.21/2012 in OA No.1843/2001 of DRT-II, Chennai)

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and

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M.A. 51/2016

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(Appeal No.25/2015 in MA No.50/2015 in DRC No.21/2012 in OA No.1843/2001 of DRT-II, Chennai)

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M.A. 22/2016

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Between

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Punjab & Sind Bank Asset Recovery & Management Branch 1^st Floor, Dewa Towers, No.770 A, Anna Salai Chennai – 600 002

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… Appellant

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And

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The Recovery Officer Debts Recovery Tribunal-II Chennai.

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Mr. T.N. Rajakumar S/o. T.V. Natarajan Flat No.6, 1^st Floor, Prashant Garden Plot No.C-459, No.30, 46^th Street, Kodambakkam Village Ashok Nagar, Chennai – 600 083.

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The Catholic Syrian Bank Ltd., G.T. Branch

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Chennai.

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Mr. S. Ramakrishnan S/o. Shanmughasundaram Muthuraja Illam, No.9, Sheriff Colony 3^rd Street Extension Tirupur – 641 604 … … Respondents M.A. 51/2016 Between Mr. T.N. Rajakumar S/o. T.V. Natarajan Flat No.6, 1^st Floor, Prashant Garden Plot No.C-459, No.30, 46^th Street, Kodambakkam Village Ashok Nagar, Chennai – 600 083. …Appellant And 1. The Catholic Syrian Bank Ltd., G.T. Branch Chennai 2. Punjab & Sind Bank Assets Recovery & Management Branch 1^st Floor, Dewa Towers, No.770A, Anna Salai Chennai – 600 002 3. Mr. S. Ramakrishnan S/o. Shanmughasundaram Muthuraja Illam, No.9, Sheriff Colony 3^rd Street Extension Tirupur – 641 604 … Counsel for Appellant in MA 51/2016 & Counsel for R2 in MA 22/2016 : Ms. Vasudha for M/s. R. Thiagarajan Counsel for R1 in MA 51/2016 & Counsel for R3 in MA22/2016 : Ms. V.A. Rajeswari Counsel for R2 in MA 51/2016 & Counsel for the Appellant in MA22/2016 : Mr. V.J. Arulraj Counsel for R3 in MA 51/2016 : Ms. S. Anuradha Balaji

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ORDER

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M.A. No. 22/2016 and M.A. No. 51/2016 are filed against the order passed by the Learned Presiding Officer, DRT-II, Chennai, in Appeal No. 25/2015 in M.A. No. 50/2015 in DRC No. 21/2012 in OA No. 1843/2001.

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1.1 MA No. 50/2015 was filed by Appellant Mr. T.N. Rajakumar before Recovery Officer claiming right in item No.1 of description of properties detailed in E-Auction Sale Notice dated 11.03.2015 on the basis that he was the successful bidder in auction held by Punjab and Sind Bank and that the sale was concluded in his favour, Sale Certificate issued, registered, possession delivered and necessary mutation has been effected in revenue records and EB. He also sought for stay of all further proceedings in respect of item No.1 of the property in pursuance of E- auction Sale Notice and Proclamation of Sale dated 11.03.2015 in DRC No. 21/2012 in O.A. No. 1843/2001. The Recovery Officer, after hearing the parties, dismissed the MA 50/2015. As already stated, the order of dismissal was

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appealed before DRT-II, Chennai, in Appeal No. 25/2015 and that was also ended in dismissal. Against the dismissal of Appeal No. 25/2015, both Punjab and Sind Bank and T.N. Rajakumar filed these Appeals.

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Learned Counsel for Appellant in MA 22/2016, Punjab and Sind Bank submitted that M/s. Supreme Chemiplast Pipings Pvt. Ltd. was the borrower from Punjab and Sind Bank. One Simlee Sajid was the guarantor to the loan and offered her flat as security and created equitable mortgage by deposit of title deed for ensuring proper repayment of loan amount. The guarantor had given an undertaking on 12.10.2000 informing that she had not lodged or utilized the title deed relating to 530 square feet undivided share in plot No.C-459, 46^th Street, Ashok Nagar, Kodambakkam Village, Chennai 600083, Survey No. TS 56, Block No. 57 owned by her, under title deed No. 3269/1992, for raising any loan or facility prior to sanctioning credit facility by Appellant Bank to M/s. Supreme Chemiplast Pipings Pvt. Ltd. On the basis of this document, mortgage was created by deposit of title deeds on 27.04.2000.

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2.1 It appears that M/s. Supreme Chemiplast Pipings Pvt. Ltd. had also availed loan facility from the Catholic Syrian Bank Ltd., by mortgaging the same property by creating equitable mortgage by deposit of title deeds. The Catholic Syrian Bank filed OA No. 1843/2001 for recovery of its dues from M/s. Supreme Chemiplast Pipings Pvt. Ltd., and others, and that OA was allowed and DRC No. 21/2012 was issued.

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2.2 On the default of M/s. Supreme Chemiplast Pipings Pvt. Ltd. in paying the loan due, Appellant Punjab and Sind Bank, initiated measures under SARFAESI proceedings, and the property was sold to Appellant, T.N. Rajakumar, after following the necessary procedure. The sale was registered and registration is reflected in the encumbrance certificate. Despite that, Catholic Syrian Bank Ltd., proceeded to sell the property in recovery proceedings to Respondent No. 4 in MA 22/2016, Mr. S. Ramakrishnan. S. Ramakrishnan is aware of the sale in favour of the Appellant in MA 51/2016, Mr. Rajakumar. Despite that, he proceeded to buy the property in recovery proceeding initiated by the Catholic Syrian Bank Ltd. Respondent, S. Ramakrishnan is a

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speculative buyer. When the property was sold by Punjab and Sind Bank under SARFAESI Act, 2002 by following the necessary procedure in favour of the Appellant, T.N. Rajakumar, Learned Recovery Officer ought to have allowed the Claim Petition filed by the Appellant, T.N. Rajakumar. Without considering the merits in the claim, the Recovery Officer and Learned Presiding Officer, dismissed the claim of the Appellant, T.N. Rajakumar, and thus, he seeks to set aside the orders passed by the Recovery Officer and Learned Presiding Officer, DRT-II, Chennai.

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Learned Counsel for Appellant in M.A. No. 51/2016, T.N. Rajakumar submitted that SARFAESI proceeding against the borrower was initiated by Punjab and Sind Bank with the issuance of Demand Notice under Section 13(2) of SARFAESI Act, on 25.09.2004, followed by issuance of Possession Notice dated 04.09.2005, obtaining orders under Section 14 of SARFAESI Act, 2022 on 18.07.2006, and issuance of Sale Notice dated 06.11.2007. In the sale held on 14.12.2007, the Appellant was the successful bidder and sale was confirmed on 22.05.2008. The borrower had also filed SA SR 2208/2007 before DRT-II, Chennai, and that was

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dismissed, and the Appeal filed before DRAT was also dismissed. Only thereafter, the sale was confirmed in favour of Appellant, on 22.05.2008. On 01.08.2008, the Appellant was given possession of the property along with Sale Certificate and the sale was registered on 09.02.2009.

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3.1 The Punjab and Sind Bank had also filed OA No.129/2003 for recovery of money from borrower. The Bank and the borrower entered into a compromise, and DRC No. 114/2001 was issued. It was further submitted that the OA 710/2000 filed by the Catholic Syrian Bank Ltd., was renumbered as TOA 1843/2001. Punjab and Sind Bank is not a party to said OA. This OA was originally filed before DRT-I, Chennai in OA 710/2000 and on transfer to DRT-II, Chennai, it was renumbered as TOA 1843/2001. After allowing the OA, DRC No.21/2012 was issued on 07.12.2011, after the sale of property in favour of the Appellant, T.N. Rajakumar. The property was attached in recovery proceeding under II Schedule to the Income Tax Act, 1961, on 29.03.2012. The Recovery Officer ordered attachment of the property without verifying the

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encumbrance certificate. Had the Recovery Officer verified the encumbrance certificate, he would have known that the property was already sold in favour of Appellant, Mr. T.N. Rajakumar. Thus, the attachment of the property, and subsequent sale in favour of Mr. S. Ramakrishnan, was made without properly following the procedure under II Schedule to the Income Act, 1961 and Manual issued to the Tax Recovery Officers. The sale held by Recovery Officer in favour of Respondent, S. Ramakrishnan is nothing but fraud committed against the Appellant, T.N Rajakumar. The Catholic Syrian Bank Ltd., ought not have proceeded with sale of the property. A criminal complaint was registered against the officials of the Punjab and Sind Bank. There is no evidence produced by the Catholic Syrian Bank Ltd., that the mortgagor had deposited the original title deeds. When property was already sold in SARFAESI action, there is no more valid mortgage and right of sale in favour of Respondent S. Ramakrishnan. Thus, it is submitted by Learned Counsel for Appellant, T. N. Rajakumar that sale in favour of T. N. Rajakumar was prior in point of time and sale in favour of S. Ramakrishnan was later in point of time; and

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he purchased the property as bonafide purchaser by spending huge amount, in a properly concluded SARFAESI sale. This sale has to be protected, and thus, she prayed for allowing this Appeal by setting aside the orders of Recovery Officer and Learned Presiding Officer.

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In support of her submission, Learned Counsel for Appellant, T. N. Rajakumar, relied on the decision of Hon’ble Supreme Court in the case of Chinnammal and Ors. Vs. P. Arumugham and Anr., reported in (1990) 1 SCC 513 , for the proposition that protection is available to Auction Purchaser, who bonafidely purchase the property for investing the sale price. Based on this judgement Learned Counsel Appellant submitted that the Appellant is a bonafide purchaser, and therefore, the sale in favour of him has to be protected.

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Learned Counsel for the Catholic Syrian Bank Ltd., submitted that Punjab and Sind Bank had already filed IA 343/2012 in DRC No. 21/2012 in OA 1843/2001, raising the similar prayer as raised by Appellant T. N. Rajakumar, and that IA was dismissed by Recovery Officer. Against the

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dismissal, Appeal was filed in Appeal No. 14/2012 before the Tribunal, and that Appeal was dismissed. Against that, an Appeal filed in RA 12/2014 before this Tribunal had also been dismissed.

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5.1 The issue involved in this Appeal is which Bank has priority over the secured asset. The mortgage executed in favour of the Catholic Syrian Bank Ltd., was in prior in point of time, i.e. mortgage was executed by mortgagor on 01.09.1994 for securing the loan. All the original documents of title deeds had been deposited by mortgagor. On the borrower, namely M/s. Supreme Chemiplast Pipings Pvt. Ltd., failing to make payment, the Catholic Syrian Bank Ltd., filed OA 710/2000 before DRT-I, Chennai, and it was later transferred to DRT-II, Chennai, and renumbered as TOA 1843/2001.

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5.2. Federal Bank advanced loan to the same borrower, M/s. Supreme Chemiplast Pipings Pvt. Ltd., in 1999 on the basis of the same property. He submitted only the copies of documents for creating mortgage stating that original had been lost. That loan was taken over by Punjab and Sind

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Bank from Federal Bank, and additional loans were also sanctioned. The Federal Bank informed Punjab and Sind Bank about the fraud committed by borrower on 14.02.2000. Despite that, Punjab and Sind Bank’s officials proceeded to sanction loan to the M/s. Supreme Chemiplast Pipings Pvt. Ltd. without insisting on production of the original documents of title deeds by mortgagor. The charge against the mortgagor Simlee Simon is that she submitted a certified copy of title deeds claiming that original was lost and filed an Affidavit that she never offered the property to any other Bank. Therefore, the very SARFAESI action initiated on the basis of defective mortgage by Punjab and Sind Bank is not legal. When the Catholic Syrian Bank Ltd., has prior and valid mortgage, it rightly filed the OA and property was sold in recovery proceedings to Respondent, S. Ramakrishnan. The Recovery Officer and Learned Presiding Officer has rightly dismissed, the Claim Petition/Appeal, and thus, prayed for dismissal of this Appeal.

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In reply, Learned Counsel for Appellant, T. N.

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Rajakumar reiterated that the Recovery Officer has not

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verified the encumbrance certificate and has not exercised due and care caution while attaching and selling the property. The order of attachment was not communicated to the Sub-registrar Office. The Proclamation was not effected in accordance with law. In a fight between two Banks, Appellant is made to suffer a huge amount of loss. Necessary action has to be initiated against the erring Bank officials of both Banks. Appellant is in possession of the property ever since possession had been handed over. Revenue records are mutated in his name.

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In reply to this submission, Learned Counsel for the Catholic Syrian Bank Ltd., submitted that merely because T.N. Rajakumar is in possession of property and records have been mutated, the sale held in favour Respondent, S. Ramakrishnan, cannot be set at naught, especially, when the sale held by Punjab and Sind Bank was not legal. Appellant, T.N. Rajakumar, had sought refund of sale price with interest and compensation from Punjab and Sind Bank. Therefore, he cannot challenge the sale held in favour of Respondent, S. Ramakrishnan. Appellant Bank has not filed

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any Appeal before Learned Presiding Officer, DRT against the order passed by Recovery Officer. Without filing an Appeal before DRT, Appellant cannot file this Appeal.

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Learned Counsel for Punjab and Sind Bank adopted the submissions of Learned Counsel for Appellant T.N. Rajakumar.

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Considered the rival submissions and perused the records.

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The issue involved in this Appeal is whether the sale held by Punjab and Sind Bank in favour of Appellant T.N. Rajakumar in SARFAESI proceedings, is valid, or whether the sale held by the Catholic Syrian Bank Ltd., in favour of S. Ramakrishnan in recovery proceedings in TOA 1843/2001, is valid? Both the Banks claim that the mortgagor, Simlee Sajid, for the loan availed by M/s. Supreme Chemiplast Pipings Pvt. Ltd., created mortgage by deposit of title deeds. The Catholic Syrian Bank Ltd., claims that its mortgage is prior in point of time, executed on the basis of original documents of title, and therefore, it has

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preference over the secured assets. Thus, the primordial issue involved in these Appeals is, of these two Banks, whose mortgage was validly created and whose mortgage was prior mortgage?

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It is seen from the documents produced by the Catholic Syrian Bank Ltd. that the mortgagor Simlee Sajid sent confirmation letters dated 27.10.1994 and 26.09.1996 to the Catholic Syrian Bank Ltd., confirming the deposit of title documents, especially, original sale deed, document No. 3269/1992. On the other hand, it is seen from the documents produced by Punjab and Sind Bank, especially, the letter dated 20.03.2000 addressed by Simlee Simon shows that she already deposited with Bank, the documents of title as detailed in Schedule ‘A’, for creating of legal mortgage for the loan advanced to M/s. Supreme Chemiplastic Pipings Pvt. Ltd., for Rs.5.50 Crores. The description of property shows that only copy of the sale deed dated 30.03.1992 registered as document No.3269 was produced. Thus, it is seen from the documents of Punjab and Sind Bank, only copy of the sale deed dated 30.03.1992

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was produced by Simlee Simon, for creation of mortgage by

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deposit of title deeds and the original sale deed was not produced. It is confirmed by letter dated 12.10.2000 by Simlee Simon to Punjab and Sind Bank, wherein she claims that she had not lodged or utilized the title deed No.3269/1992 for raising any loan or facility prior to sanctioning credit facilities to M/s. Supreme Chemiplast Pipings Pvt. Ltd.

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It is relevant here to mention that the General Manager (Vig) & CVO, Punjab and Sind Bank, No. 21, Rajendra Place New Delhi, gave a complaint to CBI, Economic Offices Wing, Chennai, on 13.01.2005 and this complaint was registered as FIR No.RC.I/E/2005/CBI/EOW/Chennai against M/s. Supreme Chemiplast Pipings Pvt. Ltd., and six others including A6 and A7, the Bank officials. The reading of this complaint shows that M/s. Supreme Chemiplast Pipings Pvt. Ltd. committed fraudulent activities and out of eight title documents produced, three were forged documents and this fact was informed to Punjab and Sind Bank by Federal Bank on 14.02.2000. It appears that the accused Simon Joseph produced a forged letter of Federal Bank dated 15.11.1999

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addressed to A1 Company that Federal Bank released three title deeds to them. Then, A1 offered duplicate documents to the Bank. Without verifying the genuineness of letter dated 15.11.1999 and that three title deeds and others are forged documents, forged letters were accepted by ACCMP and loan was sanctioned. The allegation made in the complaint is very clear that by producing forged/fraudulent documents or copies of the documents, the accused had cheated the Punjab and Sind Bank in availing the loan. The officials of Punjab and Sind Bank had not properly verified the communications with Federal Bank for verifying genuineness of the claim made in those letters, but proceeded to sanction the loan. Thus, it is clear that Punjab and Sind Bank had sanctioned loan in favour of M/s. Supreme Chemiplast Pipings Pvt. Ltd., on the basis of copy of the sale deed produced by the mortgagor, Simlee Simon. Equitable mortgage by deposit of title deeds has to be executed by production of original document of title deeds. When that was not done, it goes without saying that on the basis of mortgage created by deposit of copy of documents of title, the claim cannot be enforced. Assuming for the sake

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of arguments that it can be enforced, it can be enforced only subject to the valid mortgage created in favour of the Catholic Syrian Bank Ltd.

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The Catholic Syrian Bank Ltd., filed TOA No.1843/2001 and it was allowed on 07.12.2011. The property was attached on 29.03.2012 and sold to Respondent S. Ramakrishnan on 21.12.2015. The property was a mortgage property. The property was attached in the recovery proceedings. The submission of Learned Counsel for Appellant, T. N. Rajakumar that Recovery Officer ought to have verified the sale in favour of him by obtaining encumbrance certificate, in the considered view of this Tribunal, it is not correct. What is required of the Recovery Officer as per the Tax Recovery Officers’ Manual submitted by Learned Counsel for Appellant is that the Tax Recovery Officer is required to find out, (a) whether there was income tax return filed by defaulter showing the property/ (b) he obtain complete description of the property with all boundaries, and if necessary, by personal visit to the site/ (c) in case, the property stands in the name of another

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person, say the defaulter’s wife, he must make sure that there may not be any objection from the wife of the defaulter.

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Here in this case, there is no doubt with regard to the fact that the property stood in the name of Simlee Simon, the mortgagor. She produced the original document of title namely the sale deed No. 3269/1992 for creation of mortgage by deposit of title deeds in favour of Catholic Syrian Bank Ltd. On failure of the borrower in paying the debt, Original Application (OA) was filed, DRC issued and afterwards the Recovery Officer attached the property and sold. On the other hand, the very mortgage in favour of the Punjab and Sind Bank is not legal, and cannot be enforced. In the said circumstances, this Tribunal finds that the SARFAESI proceedings initiated on the basis of mortgage created by Simlee Simon, on the basis of copy of the sale deed, is not legal. Consequently, the sale held in favour of the Appellant, T. N. Rajakumar, is also not legal.

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It is seen from the letter of Appellant T.N. Rajakumar addressed to the Manager, Punjab and Sind Bank and three others, filed in pages 148 to 151 of the typed set of Punjab

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and Sind Bank that Appellant made allegations against the Punjab and Sind Bank that it fraudulently cheated him claiming that it is a real mortgagee, and that he had no other option but to proceed against the Bank officials by a) filing a complaint before CBI b) recovery proceedings against R1 to R3 and c) damages and mental agony. He has also requested to refund the sale price of Rs.24.84 Lakhs with interest at 24% p.a. with monthly rests with all expenses including registration charges of the sale certificate plus

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damages/compensation of not less than 25 Lakhs.

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It is also seen from the documents produced by Appellant T.N. Rajakumar that despite knowing the criminal case pending against the borrower and others, including Punjab and Sind Bank officials, Punjab and Sind Bank proceeded with sale of the property in favour of Appellant, T.N. Rajakumar. It specifically informed to the Appellant, T. N. Rajakumar on 21.08.2008, in response to his letter dated

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16.08.2008 seeking original documents, CBI informed that all the documents are filed in court and trial is still in precharge stage and the documents shall be returned only after

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completion of trial. It is very clearly evident from the documents produced that Punjab and Sind Bank despite knowing the fact that no valid mortgage was created by Simlee Simon, had proceeded to sell the property in SARFAESI proceedings to Appellant, T. N. Rajakumar, a bonafide purchaser and caused him monetary loss.

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It is no doubt that the Appellant, T. N. Rajakumar is a bonafide purchaser, but the sale was not held properly on the basis of valid mortgage. The judgement relied by the Learned Counsel for Appellant aforesaid, there was a valid sale in execution proceedings in respect of the property owned by the Judgement Debtor. That is not the case here. The property is not owned by the borrower but by the mortgagor. No valid mortgage was created in favour of Punjab and Sind Bank and that was the cause for dismissal of the Claim Petition filed by the Appellant. This Tribunal finds that the aforesaid judgement is not applicable to the facts and circumstances of the case.

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The sale held in favour of S. Ramakrishnan was the outcome of the valid mortgage and order passed in TOA No.

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1843/2001 and in recovery proceedings. The discrepancy with regard to the alleged description of property is properly answered by Recovery Officer, therefore, this Tribunal finds that dismissal of the Claim Petition filed by the Appellant, T.N. Rajakumar by Recovery Officer and confirmed by Learned Presiding Officer, DRT-II, Chennai, are correct, and do not call for any interference. It is also to be borne in mind that the identical proceedings initiated by Punjab and Sind Bank in IA 343/2012 before Recovery Officer, ended with dismissal and Appeal filed before DRT in Appeal No. 14/2012 and Appeal before DRAT in RA No. 12/2014 had also met with the same fate of dismissal. Appellant, T. N. Rajakumar is entitled for refund of sale consideration with stamp duty and registration charges with interest at 12% p.a. (simple) from the date of payment till the date of realization from Punjab and Sind Bank.

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In the result, the Appeals in M.A. 22/2016 and M.A.51/2016 are dismissed. Appellant, T. N. Rajakumar is entitled for refund of sale consideration with stamp duty and registration charges with interest at 12% p.a. (simple) from

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the date of payment till the date of realization from Punjab

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and Sind Bank. Both the parties shall bear their own costs.

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All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS, in open court, transcribed by her, corrected and signed by me this 23^rd of October, 2025]

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[ Justice G. Chandrasekharan]

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CHAIRPERSON

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T N Rajakumar v. The Catholic Syrian Bank Ltd. amp Anr.

Case brief

What is this about?

What did the court decide?

T N Rajakumar v. The Catholic Syrian Bank Ltd. amp Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

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