Dismissed

P Soundarajan v. a O Tamilnad Mercantile Bank Ltd.

DRAT18 Mar 2025REGULAR APPEAL/39/2020

Case brief

AI extract

What is this about?

The appellate tribunal dismissed the appellant's appeal challenging a sale notice issued under the SARFAESI Act. The court held that appellants utilized the overdraft facility via self-cheques and settled third-party loans, failing to establish procedural infirmities in the statutory notices.

What did the court decide?

Appeal dismissed confirming the order dated 15.2.2019.

P Soundarajan versus a O Tamilnad Mercantile Bank Ltd. — Consumer Protection | DRAT (2025)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 18^th day of March, 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN CHAIRPERSON

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RA (SA) 39/2020

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(arising out of SA 195/2018 on the file of DRT-III, Chennai)

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Between

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1. Mr. P. Soundarajan S/o Purushotaman, No.37/169, 1^st Floor, Thiruvalluvar Street, East Tambaram, Chennai 600 059.

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2. Mrs. S. Radha, W/o P. Soundarajan, Thiruvalluvar Street, East Tambaram, Chennai 600 059. …..Appellants

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And

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The Authorised Officer, Tamilnad Mercantile Bank Limited, Chitlapakkam Branch, No.46/87, 1^st Floor, Gayatri Nagar, Hasthinapuram, Chitlapakkam, Chennai 600 064.

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…..Respondent Bank Counsel for Appellants : Shri D. Murugan Counsel for Respondent Bank : Shri E. KUmar

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ORDER

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This appeal is filed under Section 18 of the SARFAESI Act, challenging the order passed in SA No.195/2018 by Learned Presiding Officer, DRT-III, Chennai on 15.2.2019.

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SA No.195/2018 was filed challenging the Sale Notice dated 19.6.2018 fixing the sale on 27.7.2018. Learned Presiding Officer, DRT-III, Chennai, after enquiry found that appellants have not established any infirmity in the procedure adopted by the respondent bank, while issuing the impugned sale notice and dismissed the SA, against which, this appeal is filed.

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It is the submission of Learned Counsel for appellants that respondent bank had initially issued a demand notice under Section 13(2) of the SARFAESI Act, followed by Possession Notice under Section 13(4) of the Act. Without proceeding further on the basis of these notices, subsequent demand and possession notices dated 6.10.2017 and 14.12.2017 were issued respectively without any jurisdiction. Therefore, these notices and subsequent sale notice were also issued without following the provisions of SARFAESI Act. It is the further submission of Learned Counsel for appellants that without the knowledge of the appellants, respondent bank unilaterally sanctioned a sum

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of Rs.19.00 lakhs as Overdraft Facility to convert unsecured loan into a secured loan on 12.5.2016. When the first loan was declared as NPA, it is not

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possible for sanctioning a fresh loan. After sanctioning a fresh loan unilaterally, bank had issued demand and possession notices, which, as already stated is against law.

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Continuing his submissions, he submitted that loan of Rs.19.00 lakhs sanctioned was not credited into OD account of the appellants to facilitate closure of first loan. It is further submitted that bank has received two cheques for Rs.10.00 lakhs and Rs.9.00 lakhs from the appellants. This Rs.19.00 lakhs was used by the bank for a third party account i.e., brother in law of first appellant, Shri P. Lakshmi Narayanan and for closing the unsecured loan of the second appellant with the respondent bank.

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Learned Counsel for the appellants drew the attention of this Tribunal to the letter dated 18.4.2016 purported to have been given by the appellant to the respondent bank, wherein it is stated that “house property in the name of the appellant (already mortgaged with the bank) may be taken as an additional security for the Overdraft Facility of Rs.19.00 lakhs to be sanctioned. It was also stated that since loan amount sanctioned to Mrs. S. Radha and Mrs Sri Lakshmi Construction has been used for serial production, appellants agreed to close the term loan availed in the name of Mrs. S. Radha and M/s Sri Lakshmi Construction by availing OD Facility of Rs.19.00 lakhs”. It is the submission of Learned Counsel for the appellants that this letter clearly indicates that OD facility of Rs.19.00 lakhs was not in fact utilised by him but it

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was used for closure of loan account of Mrs. S. Radha and M/s Sri Lakshmi Construction. As per RBI Guidelines, one person’s loan account cannot be used for settling the loan account of others.

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In reply to the submissions made by the Learned Counsel for appellants, Learned Counsel for the respondent bank submitted that none of the submissions made before this Tribunal were taken before the DRT – III, Chennai. It is his further submission that Rs.19.00 Lakhs sanctioned as OD facility to the appellants was withdrawn by them by issuing various self cheques. This amount was not used either for closure of the loan account of Shri.P.Lakshmi Narayanan or for the closure of appellants’ account. There are no grounds made out to show that the measures taken by the respondent bank is against the law and that the bank has not followed the procedures under the SARFAESI Act.

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In reply to this, Learned Counsel for the appellants submitted that there is a pleading in the SA 195/2018 to the effect that no fresh loan can be sanctioned on the same property after SARFAESI action is initiated and that the bank had violated this basic principle of natural justice. There was also a ground taken that impugned sale notice for two loans dated 19.06.2018 is without jurisdiction.

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During the course of submissions, Learned Counsel for first respondent bank brought to my notice that the bank sanctioned two loans to appellants, one is a housing loan of Rs.30.00 lakhs sanctioned on 28.1.2013 and the other is Overdraft Facility for Rs.19.00 lakhs sanctioned on the basis of request made by the appellants on 18.4.2016. It is also brought to the notice of this Tribunal that appellants had withdrawn the amount sanctioned under the OD facility by issuing self-cheque for Rs.6.00 lakhs on 19.5.2016, Rs.7.50 lakhs on 20.5.2016, Rs.15,000/- on 21.5.2016 and Rs.4.50 lakhs on 21.5.2016 and these withdrawals are reflected in the accounts statement of the appellant for the Account No.234700050900086. Apart from these amounts, he has also withdrawn some other amounts, thus, the appellants exceeded the OD facility limit of Rs.19.00 lakhs.

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I have considered the rival submissions and perused the record.

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The main issue involved in this case is about availing of OD Facility of Rs.19.00 lakhs by the appellants. Though the appellants deny giving a letter dated 18.4.2016, the letter is available in black and white. This Tribunal is of the view that it is a far fetched defence in the loan transaction concerning business dealings. There is a letter given by the appellant authorizing the bank to use OD facility of Rs.19.00 lakhs for the closure of the loan availed by

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Mrs. Radha and M/s Sri Lakshmi Construction by using this amount. The fact that remains is that this Rs.19.00 lakhs had been withdrawn by the appellant

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by issuing self cheques. After withdrawal of this amount through self cheques, it appears that appellant paid the amount in the loan account of M/s Sri Lakshmi Construction by drawing challans. In fact, the OD facility of Rs.19.00 lakhs was utilized by the appellant by withdrawing this amount and then used this amount for settling the loan account of M/s Sri Lakshmi Construction. Therefore, he cannot say that he is not liable to pay this amount.

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SA 195/2018 was filed challenging the Sale Notice dated 19.6.2018 scheduling the sale non 27.7.2018. It is the submission of Learned Counsel for the respondent bank that in pursuance of this sale notice no sale had taken place. Still the property is not sold. Possession is also not taken. In such circumstances, this Tribunal finds that there are no merits in the appeal and it deserves to be dismissed.

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In the result, Appeal RA(SA) 39/2020 is dismissed, by confirming the order of the Learned Presiding Officer, DRT-II, Chennai dated 15.2.2019 passed in SA 195/2018 at the cost of respondent bank.

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Pending IAs, if any, stand closed.

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[Dictated to Steno(SN), transcribed by him, corrected, signed and pronounced by me in open court, this 18^th Day of March, 2025)

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Sd/- (JUSTICE G. CHANDRASEKHARAN) CHAIRPERSON

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P Soundarajan v. a O Tamilnad Mercantile Bank Ltd.

Case brief

What is this about?

What did the court decide?

P Soundarajan v. a O Tamilnad Mercantile Bank Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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Case details

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