Dismissed

S Kannappan v. Canara Bank

DRT26 Nov 2025SA/120/2023

Case brief

AI extract

What is this about?

In this securitization application, the applicant challenged a possession notice under the SARFAESI Act, claiming the mortgaged agricultural land was exempt and procedural lapses occurred. The DRT held the applicant failed to prove the land's agricultural nature and found all statutory procedures regarding demand notices and possession were correctly followed.

What did the court decide?

The Securitization Application is dismissed. The Section 13(2) Demand Notice and Section 13(4) Possession Notice are upheld as valid. No order as to cost.

S Kannappan versus Canara Bank — Banking and Recovery | DRT (2025)

26.11.2025

SA No.120/2023

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 26^th day of November, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 120 of 2023

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S. Kannappan, S/o. K. Sambasivam, 4/212, Sothiryam, Irulneeki Post, Mannargudi ….Applicant

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-Vs-

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The Authorized Officer, Canara Bank, Mannargudi Branch, No.59, Natesan Street, Mannargudi - 614001 …Defendant

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Counsels on record / appeared: Counsel for Applicant : M/s. G. Sanjeevi Counsel for Respondent : M/s. Akshai Mani

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ORDER ON SA No.120/2023

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The present Securitization Application [SA] is filed under sub section [1] of S.17 of the Securitization And Reconstruction of Financial Asset and Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging

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the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

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The applicant has challenged the Possession Notice dated 04.02.2023 and the outstanding amount due as per Possession notice is Rs.6,02,608.23/-

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SA No.120/2023

3. Pleadings of the applicant:

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3.1 Applicant is the borrower had availed the Housing Loan for a sum of Rs.6,00,000/- in the year 2013 and executed all the loan documents and created the Equitable Mortgage of the property which is an agricultural property as security in favor of the respondent bank. It is submitted that the applicant paid EMI’s every month as per the loan agreement upto May 2022 and defaulted in the repayment due to Covid-19 pandemic situation.

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3.2 The respondent bank has classified the loan account as NPA and issued the Section 13(2) Demand Notice dated 31.10.2022 calling upon the borrower to repay the amount of Rs.5,88,699.36/-. After issuing Demand Notice, the Applicant issued letter, requested for OTS and for restructuring of the loan account. However, the respondent bank neither accepted nor replied to the reply made. Further, the applicant had requested to furnish the statement of account and the same is not furnished

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3.3 In fact, the respondent bank has not classified the loan account as NPA as per Section 2(o) of the Act which is mandatory under RBI guidelines. Subsequently, the respondent bank has issued Section 13(4) Possession Notice dated 04.02.2023. The respondent bank has charged heavy interest and also capitalized penal interest which is in violation of RBI guidelines. Moreover, the payments made by the applicant were not given credits to the loan account.

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SA No.120/2023

3.4 In the grounds, it is contended that the respondent bank had not entitle to invoke SARFAESI Act as property is agricultural land and is exempted under Section 31(i). The respondent bank had issued Possession Notice dated 04.02.2023 without issuing proper demand notice and the Possession notice is also not published in two Newspapers, as per Rule 8(2) of SIE Rules and the bank also failed to affix the Possession Notice on the conspicuous part of the property which is in violation of Rule 8(1) of the SIE Rules.

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3.5 Further the Possession Notice is not served on the Applicant and against the settled legal principles laid down by the Hon’ble Supreme Court. The outstanding amount are not crystallized before issuance of the notice under 13(4) (a) of the Act. Hence, the Applicant prays to set aside the Section 13 (4) Possession Notice on 04.02.2023.

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Objections of the Respondent bank:

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4.1 The Respondent Bank has filed a detailed counter, denying the averments made in the present SA. It is submitted that Mr. S. Kannappan had availed a Housing Loan of Rs.6,00,000/- on 29.11.2013 vide A/c. No.3731619000020. The applicant executed loan documents agreeing to repay in 126 EMI’s of Rs.7,912/- without any delay and default. It is pertinent to note that the execution of the Loan Agreement, registration of MODT and disbursal of Loan Amount has not been disputed by the Applicant.

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SA No.120/2023

4.2 The respondent has relied on the Hon’ble Supreme Court in K. Sreedhar Vs Raus Construction Private Ltd reported in 2023 LiveLaw (SC) 13 where it had categorically held that the burden is upon the borrower to prove that the secured properties are agricultural lands and actually being used as agricultural activities.

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4.3 As the applicant failed to repay more than 90 days in respect of Housing Loan, hence the bank has classified the Account as NPA on 25.10.2022. Subsequently, the bank had issued Section 13(2) Demand Notice dated 31.10.2022 to the borrower calling upon them to pay a sum of Rs.5,88,699.36/- with further interest and penal interest of @2% vide Loan A/c No.3731619000020 by RPAD. Thus, the Demand Notice is served and acknowledged on 03.11.2022 and 04.11.2022.

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4.4 After 60 days of the demand notice, bank has proceeded further issuing the possession Notice under Section 13(4) and Authorized Officer had affixed the Possession notice on the property and taken the symbolic possession on 04.02.2023. The Possession Notice was sent by RPAD which is duly served and acknowledged by the Applicant on 09.02.2023, and also published in two leading newspaper one in “The Hindu” (English Daily) and another in “Dina Thandi” (Tamil Daily) both dated on 10.02.2023 within 7 days from the date of symbolic possession.

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4.5 It is submitted that the amount paid by the Applicant had been duly accounted and the same is reflected in the Statement of Accounts and the same is filed. Further, the bank had meticulously followed all provisions as

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SA No.120/2023

laid down in SARFAESI Act. Hence, the bank prays for dismissal of the present SA.

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Heard both sides of the Counsels and perused the records of the case.

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5.1 On perusal of the records it is seen that the applicant has availed Housing Loan of Rs.6,00,000/- in the year 2013 and to secure the credit facilities availed, applicant has executed necessary documents and also created equitable mortgage of their property in favor of the respondent bank which is not disputed by the applicant herein.

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5.2 Due to default in the repayment made by the applicant, respondent bank has classified the loan account as NPA on 25.10.2022. After classifying the loan account as NPA, the respondent has initiated measures and issued Section 13(2) Demand Notice dated 31.10.2022 calling upon the borrowers to repay an outstanding amount of Rs.5,88,699.36/-. The Demand Notice was duly served to the applicant as per the acknowledgement card produced at Page No.12 and 13 of respondent’s typed set.

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5.3 Even after the receipt of the demand notice, the applicant has failed to discharge their liabilities nor made any representation to the demand made. Hence, the respondent bank has proceeded further and issued Section 13(4) Possession Notice dated 04.02.2023. The Possession Notice is also duly served to the applicant as per the acknowledgement card produced at Page No.16 and 17 of respondent’s typed set, and the

26.11.2025

SA No.120/2023

possession notice is also affixed on conspicuous part of the property as reflected from the photograph of affixture produced at Page No.18 of their typed set.

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5.4 The Possession Notice is also duly published in two Newspapers, one in “The Hindu” (English) and “Dinathanthi” (Tamil) both dated on 10.02.2023 as evident from the paper publications produced at Page No.19 and 20 of respondent’s typed set.

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5.5 Though a specific contention is raised by the applicant is that the schedule property is an agricultural property and agricultural activities are being carried is not sustainable as the applicant has not produced any vital documents to establish the nature of the property is agricultural and there are agricultural activities being carried on the secured asset.

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5.6 In the instant matter the applicant has failed to establish that the property is actually being used as agricultural lands at the time when the security interest was created and agricultural activates are being carried on. There is no iota of documents produced by the applicant to show that the secured asset is put to use for agricultural purposes and there is agricultural activity going on the secured asset to avail the benefit/exempted under Section 31(i) of the SARFAESI Act.

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5.7 In this regard, the Tribunal places reliance on judgement of The Hon’ble Supreme Court in the case titled K. SREEDHAR versus M/S RAUS CONSTRUCTIONS PVT. LTD. & ORS where it is has held that

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the burden is upon the borrower to prove that the secured properties

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SA No.120/2023

were agricultural lands and actually being used as agricultural lands and/or agricultural activities were going on.

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5.8 Further the Tribunal places reliance on the judgment of ITC Limited Vs Blue Coast Hotels Limited where the Hon’ble Supreme Court held that no security interest can be created in respect of agricultural lands and yet it was so created, goes to show that the parties did not treat the land as agricultural land and the debtor offered the land as security on that basis. As the applicant has mortgaged the property as security, it is concluded that the property is not an agricultural land which is exempted under S.31[j] of the Act and the said contentions cannot sustain and it fails.

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5.9 The another contention as raised by the applicant is that the Possession notice dated 04.02.2023 is neither affixed on the property nor published in two Newspapers nor the property is clearly described which is not sustainable and the same is duly countered by the respondent bank, by producing the photographs of affixture of the Possession Notice ed on the conspicuous part of the property as reflected from the photograph of affixture produced at Page No.18 of respondent bank’s typed set. The Possession Notice dated 04.02.2023 is also duly published in two Newspapers, one in “The Hindu” (English) and another in “Dina Thandi” (Tamil) both dated on 10.02.2023 as evident from the paper publications produced at Page No.19 and 20 of respondent bank’s typed set and the

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SA No.120/2023

schedule property is also clearly described as per the Provisions of the Acts and Rules made there under.

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5.10 The Possession Notice dated 04.02.2023 is also duly served to the applicant as per the acknowledgement card produced at Page No.16 of respondent bank’s typed set, hence the applicant’s contention that the Possession Notice is not served on the applicant fails.

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5.11 On perusal of the records, it is seen that the respondent bank as a secured creditor has classified the loan accounts as NPA on 25.10.2022 and proceeded to issue Demand Notice 31.10.2022 which is received by the applicant as evident from the acknowledgment card produced at Page No.12 of respondent bank’s typed set. In spite of receipt of Section 13(2) Demand notice, the applicant failed to liquidate the liability within 60 days.

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5.12 The respondent bank proceeded further in issuing the Possession notice dated 04.02.2023 which is duly served to the applicants herein as per the acknowledgements produced by the respondent, affixed on the conspicuous part of the property, published in two Newspapers as mandated under the Act. Thus, the respondent bank has established the compliance of procedures in initiating the measure under the Act.

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5.13 For the forgoing reasons, the present SA is only to be dismissed upholding the Section 13(2) Demand notice dated 31.10.2022 and Section 13(4) possession notice dated 04.02.2023 as valid notices.

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SA No.120/2023

Resultantly, the present SA is dismissed. Interim Order granted, if

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any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Steno (Deepika), transcribed by her, corrected, signed and pronounced by me on this the 26^th day of November, 2025)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl.	Description of Documents	Document
No.		No.
1.	Possession Notice dated 04.02.2023.	A-1

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDENT

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Sl. No.	Description of Documents	Document No.
1.	Office Copy of Demand Notice issued U/s.13(2) of “SARFAESI Act”, 2002 along with Acknowledgement Card dated 31.10.2022.	R-1
2.	Office Copy of Possession Notice issued U/s. 13(4) of SARFAESI Act, 2002 along with Hand Delivery Acknowledgement and Photograph dated 04.02.2023.	R-2
3.	Copy of the Paper Publication of Possession Notice U/s. 13(4) of Securitization Act in The Hindu dated 10.02.2023.	R-3
4.	Copy of the Paper Publication of Possession Notice U/s. 13(4) of Securitization Act in Dina Thandi dated 10.02.2023.	R-4
5.	Statement of Accounts	R-5

26.11.2025

SA No.120/2023

SCHEDULE OF PROPERTY

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All part and parcel of the structures situated in Nagapattinam Registration District, Mannargudi Sub-Registry, Mannargudi Taluk, 47, Irulniki Village, Punjai, Vacan Manai.

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Survey No.	Ares.	A.C.	Sq.Ft.	Sq. Meter
146-4	03.0	0.07.1/2	3198	297.10 Poora

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Bounded on the:

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Street on North, Sellayan Manai on East, and West and Pasana Vaikal on South

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Sd/(S.V.GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

S Kannappan v. Canara Bank

Case brief

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S Kannappan v. Canara Bank

Case brief

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