Allowed

Tamilnad Mercantile Bank Limited v. R Dakshanamoorth

DRAT6 Nov 2025REGULAR APPEAL/111/2017

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed the appeal filed by the bank against an order of the Debt Recovery Tribunal. The lower Tribunal had illegally directed the bank (who was the applicant in the lower court) to deposit Rs. 2 lakhs to close the loan account and release secured assets. The higher Tribunal set aside this order as it was contrary to the SARFAESI Act.

What did the court decide?

The order dated 26.12.2012 passed by the learned Presiding Officer, DRT, Coimbatore, in SA 165/2008 is set aside and dismissed.

Tamilnad Mercantile Bank Limited versus R… — Contract and Commercial Disputes | DRAT (2025)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 6^th day of November, 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN

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CHAIRPERSON

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RA (SA) 111/2017 (Arising out of S.A. No. 165 of 2008 on the file of DRT, Coimbatore)

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Between

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The Authorised Officer, Tamilnad Mercantile Bank Ltd., No.233-236 Palladam Road, (Kamarajar Road), Tirupur 641 604. …..Appellant

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And

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R. Dakshinamoorthy, S/o Ramasamy, Prop. M/s. Sithi Vinayaga Cotton Mills, No. 59/45, Palladam Road, Kuppanachettiyar Street, Tirupur 641 601. …..Respondent

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Counsel for Appellant : Mr. V. Chandrasekaran Counsel for Respondent : Mr. V. Bhagyaraj

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ORDER

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This Appeal is filed against the order passed in SA 165/2008

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passed by Learned Presiding Officer, DRT, Coimbatore on 26.12.2012.

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The Respondent filed Securitisation Application to set aside Notice dated 11.12.2004 issued under Section 13(2) of SARFAESI Act and Possession Notice dated 18.02.2005 under Section 13(4) of SARFAESI Act. After contest, this SA was disposed of with a direction to the Respondent to deposit a sum of Rs.2 Lakhs within 60 days from the date of order to bring his account closed and redeem his property. If Respondent pays this amount, the Appellant Bank was directed to bring the account of Respondent to close, and release the secured assets. In case of failure on the part of Respondent to pay the amount, the Bank was given liberty to sell the property for recovery of its dues. Challenging this order, the Respondent Bank filed this Appeal.

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The Appellant Bank filed WP No. 13104/2014 on the file of Hon'ble High Court of Madras against the impugned order and the Appellant Bank was directed to approach DRAT for appropriate remedy. Accordingly, this Appeal is filed.

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It is the submission of Learned Counsel for Appellant Bank that in para 4 of SA, dealing with limitation aspect, the Respondent submitted that the proposed auction to be held on 15.12.2008 vide publication dated 29.11.2008 in Tamil Daily Dinakaran. Thus, it is claimed that Securitisation Application was

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filed in time. However, there is no relief asked against the sale measures and the challenge in SA was to set aside the demand notice dated 11.12.2004 and possession notice dated 18.02.2005. When this SA was pending. Respondent filed IA 943/2011 stating that he paid a sum of Rs.2 Lakhs to the Appellant Bank and that the amount to be considered and adjusted as OTS. Respondent has never given OTS proposal. Learned Presiding Officer recorded in the impugned order that the measures taken by the Bank under the SARFAESI Act was in order. Thus, IA 943/2011 was dismissed and Learned Presiding Officer passed the order directing to deposit a sum of Rs.2 Lakhs to bring his account to a close. This is factually and legally not correct. As amount due as on 31.12.2012 was Rs. 11,41,814.40p, the Bank to close the loan for redeeming of the property on receiving Rs.2 Lakhs is totally illegal. Therefore, this Appeal is filed.

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When this Tribunal quarried, the learned counsel for the

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respondent submitted that when the challenge in SA 165/2008 was against possession notice dated 18.02.2025, whether the learned Presiding Officer has given any finding with regard to non service of possession notice, the learned counsel for the respondent fairly conceded that no such finding was given by the

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learned Presiding Officer. This Tribunal also found from the grounds raised in Securitization Application that nothing is said about the non service of possession notice either personal service through post or by affixture and publication.

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This Tribunal finds from the order impugned that SA was disposed directing the respondent to deposit Rs.2 lakhs within sixty days from that date of the order if the applicant wants to bring his account to a close and redeem the property. The order of the Tribunal reads as follows:-

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“ Looking to the counter filed by the Bank today to the said interim application in IA 943/12, this Tribunal does not support the contentions of the appellant petitioner and hereby dismisses the said interim application for OTS along with the appeal petition giving directions to the appellant petitioner to deposit a sum of Rs.2 lakhs within 60 days from today, if he wants to bring his account to a close and in order to redeem his property from the bank. In case, the appellant petitioner pays to the respondent bank a sum of Rs.2 lakhs within 60 days from today, directions are given to the respondent bank to bring the account of the appellant petitioner to close and release the secured assets in favour of the appellant petitioner and in case the said amount is not paid there shall be no hindrance in the way of the respondent bank to

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bring the secured assets to sale and recover its dues whatever are found to be due outstanding and payable by applying contractual rate of interest on reducing balance basis. The Bank is requested to maintain restraint for 60 days from today. The above order is notwithstanding the strong objections raised by the representing Officer of the respondent bank as this Tribunal has found that the mortgaged property happens to be residential house of the appellant petitioner and in case stringent measures are taken the appellant petitioner will be on road. There shall be no order as to costs. Parties are left to bear their own costs. Appeal petition accordingly stands disposed off and the interim application in IA 943/12 stands closed.”

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When the challenge was to the possession notice, the

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job of the Tribunal is to find out whether the possession notice was issued in compliance of provisions of SARFAESI Act 2002. The Tribunal has no powers to order the respondent/applicant to deposit Rs.2 lakhs to close the account and redeem the property within sixty days. This order is totally an illegal order against the basic principles of SARFAESI Act. Therefore, this order is liable to be set aside and accordingly set aside. Consequently, this appeal is allowed.

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In the result,

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(i) This appeal is allowed with the costs of the appellant.

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(ii) The order dated 26.12.2012 passed by the learned Presiding Officer, DRT, Coimbatore, in SA 165/2008 is set aside and the same is dismissed.

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(iii) Pending IAs, if any, shall stand closed.

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[Dictated to Steno (RA) in open court, transcribed by her, corrected and signed, this 6^th day of November, 2025]

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Sd/-

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(JUSTICE G. CHANDRASEKHARAN) CHAIRPERSON

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Tamilnad Mercantile Bank Limited v. R Dakshanamoorth

Case brief

What is this about?

What did the court decide?

Tamilnad Mercantile Bank Limited v. R Dakshanamoorth

Case brief

What is this about?

What did the court decide?

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