Allowed

State Bank of India v. Shri Narayana Traders

DRAT12 Jun 2025REGULAR APPEAL/89/2024

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal set aside an order dismissing a recovery application under Section 14 of the SARFAESI Act. The Tribunal held that minor clerical errors and failure to produce a clear publication copy did not justify quashing the order, and the bank was not restrained from sale proceedings given the respondent's failure to comply with a prior stay condition.

What did the court decide?

The appeal was allowed; the impugned order of the Presiding Officer, DRT, Madurai, setting aside the recovery application, was set aside. The recovery application in SA 704/2023 remains dismissed.

State Bank of India versus Shri Narayana Traders — Banking and Recovery | DRAT (2025)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 12^th of June, 2025

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PRESENT: Hon’ble Mr. Justice G. Chandrasekharan

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CHAIRPERSON

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RA (SA) 89/2024

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(SA 704/2023 on the file of DRT, Madurai)

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Between

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The Chief Manager State Bank of India Stressed Assets Recovery Branch (SAM) No. 8, First Floor, Vinayaga Nagar Branch Dr. Ambedkar Road, Madurai – 625 020

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… Appellant

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And

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M/s. Shri Narayana Traders, Rep by its partner Mrs. K. Chitra, No. 261, Dharmapuram Street, Rajapalayam – 626 117 2. Mrs. K.Chitra W/o. Mr. V.N.Kannan, No. 261, Dharmapuram Street. Rajayapalayam- 626 117 3. Mr. V.N.Kannan S/o Mr.V.S.Narayana Raja No. 261, Dharmapuram Street. Rajayapalayam- 626 117 4. Mr. V.N.Vijayan S/o Mr.V.S.Narayana Raja No. 261, Dharmapuram Street. Rajayapalayam- 626 117

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…Respondents

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Counsel for Appellant : Mr.M.L. Ganesh Counsel for Respondents : Ld. Sr. Counsel Mr. Jayesh B. Dolia

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ORDER

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This Appeal is filed against the order dated 17.05.2024 passed in SA 704/2023 by Learned Presiding Officer, DRT, Madurai.

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Learned Counsel for Appellant Bank submitted that SA 704/2023 was filed by the Respondents challenging Section 14 proceedings initiated before Learned Chief Judicial Magistrate (CJM), Srivilliputhur, in Crl. M.P.No. 8898/2023. It is the submission of the Learned Counsel for Appellant that the aforesaid SA filed by Respondents was allowed on the following grounds :

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i) Certain discrepancies with regard to the description of property in Demand Notice dated 21.04.2021 and Possess Notice dated 07.05.2022;

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ii) Clear copies of the paper publication was not produced by the Bank;

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iii) In SA 178/2023 filed by Respondents challenging the Auction Sale Notice dated 18.04.2023, there was conditional order passed for depositing certain amounts and on compliance of condition, there was a direction not to confirm the sale. When the status quo order was in force, the Bank filed Petition under Section 14 of the SARFASI Act, 2002 in Crl. MP No. 8898/2023 and obtained order.

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These are the grounds on which Learned Presiding Officer allowed the Application and set aside the order of Learned CJM.

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It is the further submission of Learned Counsel for

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Appellant that Learned Presiding Officer has not discussed anything about the merits of the order passed by Learned CJM. Discrepancies, if any, in the Demand Notice,

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Possession Notice with regard to description of property details, are only minor in nature and due to typographical error. When it is found that the paper publication with regard to publishing Possession Notice, both in English and vernacular language was produced before the Tribunal, rejecting publication on the ground that clear copy of publication was not produced, is not known to law. If at all the paper publication produced is not readable or legible, Learned Presiding Officer ought to have asked the Bank to produce a clear copy, but that cannot be certainly a ground for allowing the SA. As for as the status quo order granted in SA 178/2023, there was conditional order passed on 19.05.2023 by Learned Presiding Officer directing Respondents to deposit 70 Lakhs in two equal instalments and on such deposit, confirmation of sale was deferred. It appears that Respondents have paid only Rs.15 Lakhs and filed an Application for extension on 17.06.2023 seeking four weeks time to pay the balance first instalment of Rs.20 Lakhs along with second instalment of Rs.35 Lakhs. Since the Respondents failed to deposit first instalment as ordered

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by the Tribunal, the Bank proceeded with the sale of property. The conditional order specifically reads that only Auction Purchaser was required to maintain status quo . There is no order against the Bank that the Bank should not take any measures under SARFAESI Act, 2002, especially under Section 14 of the SARFAESI Act, 2002. Thus, he submitted that the order of Learned Presiding Officer cannot be sustained either on facts or on law and prayed to set aside the order and allowing this Appeal.

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Learned Senior Counsel for Respondents submitted that there are three proceedings initiated by Respondents in SA 178/2023, SA 508/2022 and SA 279/2024 are pending before the Tribunal. The matter may be remanded back to the Tribunal for joint enquiry of the matters in connection with the property mortgaged. When conditional order was in force, Bank proceeded with the measures under Section 14 of the SARFAESI Act, 2002, and it is illegal, especially, when an Application for extension of time for payment was pending. In support of his submission, Learned Senior

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Counsel for Respondents produced order dated 25.07.2023 of Hon’ble High Court of Madras in WP (MD) No. 17859/2023 in the case of P. Pandidurai and Anr. Vs. The City Union Bank Ltd., for the proposition that, when sale is stayed, it is not necessary for the Bank to proceed under Section 14 of the SARFAESI Act, 2002, and borrower cannot be harassed by multiple proceedings. Thus, he prayed for confirmation of order of Learned Presiding Officer and for dismissal of this Appeal.

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Considered the rival submissions and perused the records.

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The reading of the order impugned shows that, as rightly pointed out by Learned Counsel for Appellant Bank that Learned Presiding Officer allowed the SA primarily on the ground that (i) there are discrepancies in the description of the property in Demand Notice dated 21.04.2021 and Possess Notice dated 07.05.2022, (ii) Clear copies of the paper publication was not produced and (iii) The Bank

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suppressed the status quo order passed in SA 178/2023 and obtained order under Section 14 of the SARFAESI Act, 2002.

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Learned Presiding Officer extracted the alleged

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discrepancies in page 17 of the impugned order in excel format. Except in item Nos. 2 and 3, other columns in item Nos.1, 4, 5 and 6, do not show any discrepancies. The discrepancy with regard to item No.2 had occasioned due to the fact that Smt V. N. Dhanalakshmi, who was the owner when the Demand Notice was issued, bequeathed the property in favour of her daughter K. Chitra through a registered Will dated 11.11.2019. It was shown in the Possession Notice, and thus, there is no discrepancy. The discrepancy in column No.3 is typing the new connection number as 127/005/ 00458 instead 127/005/ 00428, was due to typographical error. Therefore, this Tribunal finds that these discrepancies do not worth consideration for allowing Securitisation Application.

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Same is the case with regard to finding recorded for non production of a clear copy of the paper publication. When it is found on evidence that publication of Possession Notice in “The Hindu” on 11.05.2022 and in “ Dinathandi ” dated 11.05.2022 is proved by production of copies of paper publication, it is expected from Learned Presiding Officer that if it is found that the copy of paper publication is not legible, Learned Presiding Officer should have given instruction to Counsel for Bank to produce legible copy. Without resorting to do so, taking this ground for allowing the Securitisation Application, is not correct.

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As already stated, though interim order is granted and status quo was ordered to be maintained with regard to confirmation of sale in SA 178/2023, the admitted position is that, the Respondents have not paid the very first instalment fully within time. Only part amount was paid and an extension Application was filed for paying the balance. It appears that their Application was not favourably decided in favour of Respondents. It is reported

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that it is still pending. The conditional order is clear that in case non compliance of either of the condition, the Bank was at liberty to proceed further. Therefore, on failure of Respondents in complying with first condition, the Bank took steps for sale of the property, which cannot be considered as illegal.

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Even as per the status quo order dated 07.09.2023 and 03.11.2023, it demands only Auction Purchaser to maintain status quo . There is no order restraining the Bank from proceeding, taking measures under SARFAESI Act, 2002, especially under Section 14 of the SARFEAI Act, 2002.

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In the order cited before me, it was a case where the conditional order passed in a SA challenging Sale Notice. The conditional order was complied with. In the said background, Hon’ble High Court found that when stay was in force, it was not necessary for the Bank to proceed under Section 14 of the SARFAESI Act, 2002. The facts of the case before hand are totally different. Here in this case, the

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conditional order was not complied with, therefore, Bank proceeded with sale of the property. This order cannot be applied to the facts of this case. Therefore, this Tribunal finds, the aforesaid reasons stated by Learned Presiding Officer for allowing the Securitisation Application to set aside the order passed by Learned CJM, cannot be accepted, either on facts or in law, and therefore, order is be set aside, and accordingly, set aside.

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In the result, the Appeal in R.A(S.A):89/2024 is allowed. Consequently, SA 704/2023 before DRT, Madurai is dismissed. Both parties shall bear their own costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS, transcribed by her, corrected and signed by me this 12^th of June, 2025]

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[ Justice G. Chandrasekharan] CHAIRPERSON

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State Bank of India v. Shri Narayana Traders

Case brief

What is this about?

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State Bank of India v. Shri Narayana Traders

Case brief

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