Allowed

M Shanthi v. Punjab National Bank

DRT4 Jul 2025SA/136/2024

Case brief

AI extract

What is this about?

An application under section 17 of the SARFAESI Act challenging the allocation of bid proceeds from an auction sale of a secured property was allowed. The Tribunal found that the bank failed to follow mandatory procedures regarding notice affixture, newspaper publication in the correct district, and valuation in consultation with the secured creditor, rendering the sale invalid. Reliefs included q

What did the court decide?

Sale Certificate dated 07.02.2024 and Sale Notice dated 22.12.2023 are set aside. Bank directed to refund purchase consideration plus 4% interest to auction purchaser.

M Shanthi versus Punjab National Bank — Banking and Recovery | DRT (2025)

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SA No.136/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 04^th DAY OF JULY, 2025 PRESENT: SEEMA SINHA [PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

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SA No. 136/2024

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M. Shanthi,

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W/o. Muthu Selvan, D.No. 118, Muthu Nagar, Pudukottai – 622 033. …. Applicant

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The Authorized Officer, Punjab National Bank, Sastra Centre, Circle Office, Trichy, PNB House Kailasapuram, Trichy – 14. …. 1^st Defendant Bank 2. G. Sabari Lakshmi, C/o. Rajesh, No. 1553, West 3^rd Street, Pudukottai, Pudukottai District …. 2^nd Defendant

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Appearance of Advocates:

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Mr. R. Ravichandran ---- Counsel for the Applicant Mr. S. Balasubramanian ---- Counsel for the 1^st Defendant Bank M/s. G. Mohan Kumar ---- Counsel for the 2^nd Defendant/Auction Purchaser

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This SARFAESI Application was heard in the presence of Counsels for the Applicant, 1^st Defendant Bank & 2^nd Defendant/Auction Purchaser and fixed for passing final order before me and upon hearing the arguments of

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Page 1 of 17

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SA No.136/2024

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the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

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O R D E R

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1 . This Application has been filed u/s. 17 of the SARFAESI Act, 2002 by the Applicant praying that this Hon'ble Tribunal may be pleased to call for records pertains to the initiation of proceedings under SARFAESI Act, ending up with the sale held on 18.01.2024 and sold to the 2^nd Defendant pursuant to the Sale Notice dated 22.12.2023 issued by the 1^st Defendant Bank.

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2 . The brief averments of the Application filed by the Applicant are as follows:-

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The Counsel for the Applicant submitted that the Applicant has approached the 1^st Defendant Bank and sought housing Term Loan for a sum of Rs. 57,00,000/- for the purpose of construction of new house. Considering the Applicant's request, the Defendant Bank has sanctioned the above said credit Housing Term Loan for a sum of Rs. 57.00 Lakhs in the year 2016. In order to secure the said loan amounts, the Applicant had executed necessary security documents in favour of the 1^st Defendant Bank and handed title deeds of her lands to the Bank.

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It is further submitted that the Applicant was very prompt in servicing the interest and repaying the loan facility as per the Sanction Letter. The Applicant's husband is a guarantor for the loan account and the Applicant has paid the EMI without any default upto 2018. Subsequently, in the year 2018, the Applicant incurred heavy loss in her transport business and in the result the Applicant could not pay some loan dues as agreed to. But she never allowed her account to become NPA. But the Defendant Bank has declared the Applicant's account as NPA without following the RBI norms and guidelines. In view of the same and for sole reason the Applicant could not repay the loan amount as agreed to. Even then, the Applicant took all earnest steps to regularize the loan account.

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It is further submitted that the Defendant Bank has issued Demand Notice dated 23.05.2022 u/s. 13(2) of the SARFAESI Act and followed by Possession Notice issued U/s. 13(4) of the SARFAESI Act. On receipt of the said notice, the Applicant approached the Defendant Bank and requested them to restructure the Housing Loan on payment of defaulted EMI. As the

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SA No.136/2024

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Authorised Officer, informed the Applicant that they will forward the said proposal to their higher authority for approval, the Applicant did not give any reply to the said notice. Further, the Authorised Officer advised the Applicant to pay the loan dues. Accordingly, the Applicant has paid the loan dues.

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It is further submitted that in the meantime, the Bank has issued Sale Notice against the secured assets and without the knowledge of the Applicant, her husband has filed SA No. 3109/2020 before this Hon'ble Tribunal challenging the Sale Notice and got conditional stay order but failed to comply the conditional order. The secured asset is the only dwelling house of the Applicant where she is residing along with her family members. Hence the Applicant once again approached the bank and requested them to regularize her loan accounts on pledge of her jewellery and to pay the loan dues. But the 1^st Defendant Bank issued another Sale Notice dated 18.05.2023. On receipt of the said Sale Notice, the Applicant has filed WP No. 14418/2023 before the Hon'ble High Court of Madras (Madurai Bench). The Hon'ble High Court was pleased to grant conditional stay order but again the same was not complied with.

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It is further submitted that in the meantime, the 1^st Defendant Bank has filed Crl.M.P.No. 107/2023 before the Ld. CJM, Pudukottai to take Physical Possession of the secured assets and the same was allowed and Advocate Commissioner was also appointed to take Physical Possession of the Applicant's dwelling house. The Applicant once again requested the Bank to settle the entire loan account under OTS, but the Bank has not considered the proposal and directed the Applicant to pay the entire loan amount without any delay. Followed by, the Applicant's husband has issued legal notice dated 27.04.23 through his advocate and more particularly about the reserve price fixed by the Bank. Despite receipt of the said notice, the 1^st Defendant did not give any reply to that effect. The 1^st Defendant has identified the proposed purchaser who is the 2^nd Defendant and took Physical Possession of the secured assets on 02.08.2023. On that day also the Applicant made request to the Authorised Officer to settle the loan account. The Authorised Officer with an intention to sell the property to the 2^nd Defendant and with the help of police forced the Applicant to vacate the property along with her family members. Hence, the Applicant is presently residing in the rental home along with her family members to the knowledge of the 1^st Defendant Bank.

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It is further submitted that without any option, the Applicant once again approached the Bank and requested to re-open her home. The

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SA No.136/2024

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Authorised Officer directed her to pay a sum of Rs. 13.00 Lakhs and he gave an assurance to re-open her house. Accordingly, the Applicant paid Rs. 13.00 Lakhs into her loan account on pledge of her jewellery and other utensils. Further, the 1^st Defendant Bank informed the Applicant that her loan account has been regularized and now they had to get a written approval from their higher authorities. But, the Defendant Bank has published Sale Notice by fixing auction sale on 18.01.2024, which the Applicant came to notice on 19.02.2024. When the Applicant enquired about the Sale Notice, the Bank informed that her property was sold to 2^nd Defendant on 18.01.2024. The Applicant made request to the Authorised Officer from the beginning that she is ready to close the loan account by One Time Settlement, but all were in vein. Then, the Applicant requested them to furnish the particulars of Auction proceedings, but the Bank has not furnished the same and sold the property colluding with 2^nd Defendant without giving notice to the Applicant. The Bank has given the copy of Sale Notice to the Applicant only after the Applicant and her husband requested the bank to furnish the same.

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It is therefore prayed that this Hon'ble Tribunal may be pleased to allow the SA as prayed for and thus render justice.

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Main Grounds :

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The 1^st Defendant Bank issued the Sale Notice dated 23.12.23

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and sold the property on 18.01.24 to the 2^nd Defendant, which is arbitrary in nature and liable to be set aside.

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The Defendant Bank failed to follow the SARFAESI Act & Rules.

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The Bank failed to publish the Sale Notice as per the Rules.

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The classification of Applicant's account as NPA is against the

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norms and guidelines of RBI. There are several irregularities in respect of classification of account as NPA.

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The Defendant Bank failed to register the alleged transactions

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registered with the Central Registry as per Sec.20 of the SARFAESI Act and also failed to upload its website.

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The Possession Notice was not delivered to the Applicant and

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the Guarantor, not published the Possession Notice in a Newspaper and not affixed the same in the property.

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The Sale Notice was not delivered to the Applicant and the Guarantor and not affixed the same on the property.

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Page 4 of 17

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SA No.136/2024

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The Defendant Bank fixed the reserve price for Rs. 85,85,000/-. In fact the value of the mortgaged property is worth about more than Rs. 1,80,00,000/-.

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The claim of the Defendant Bank reflected in the impugned Sale Notice is unsustainable and is seriously disputed. It is apparently clear from the accounts statement that the Defendant Bank has debited exorbitant excessive amount on various heads including penal interest, unrealized interest, etc.

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The Defendant Bank failed to consider the payments made by the Applicant and the Applicant's request for regularization or re-schedule of the loan account. The amounts paid by the Applicant are not properly credited by the bank to the loan account.

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The Bank has sent the Sale Notice to the address of secured asset which was already under the custody of the Bank.

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The 2^nd Defendant failed to deposit 25% of the bid amount on the date of sale and failed to deposit the remaining entire balance 75 % within 15 days from the date of sale. But the 1^st Defendant has executed Sale Certificate in favour of the 2^nd Defendant herein which is violation under Sec.9(3) and 9(4) of the SARFAESI Act

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DESCRIPTION OF THE IMMOVABLE PROPERTY

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All the part and parcel of the land measuring to total extent of 2534^1/2 Sq.ft and building thereon situated at Pudukottai Taluk & District, Pudukottai Registration District, Pudukottai Town Municipality Limits, Pudukottai Village, Kalavayal Malaiyeedu Karai Thoppu, Muthu Nagar, Plot No. 118, New T.S.No. 59/11A AND 58/14B1 after subdivision property situates in new block No. 84 New T S No. 58/14B2 situated within the following

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Boundaries:

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East of North South 23 feet wide layout road,

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West of T.S.No. 8563/6

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South of Plot No. 117

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North of Approved layout as per approval No. LPR (R.P) No. 29/85

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The Applicant has submitted the following List of documents in support of her claim in the SA, which are as follows:

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Page 5 of 17

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SA No.136/2024

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S.No.	Date	Description
1.	16.06.2023	Order passed in W.P.no.14418/2023 by the Madurai
		Bench of Madras High Court
2.	22.12.23	Impugned Sale Notice
3.	23.12.23	Sale Notice Paper Publication

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3 . On the other hand, the Counsel for the 1^st Defendant Bank appeared before this Tribunal and filed Vakalat, Written Statement, Written Arguments & Typed set of papers in which the Bank has submitted that the Applicant has availed Housing Loan for a sum of Rs. 57.00 Lakhs during 2016 from the 1^st Defendant Bank on execution of necessary loan documents and also deposited title deeds of her immovable property with the 1^st Defendant Bank with an intention to create an equitable mortgage as security for the due repayment of the loan. Moreover, her husband S. Muthamil Selvan is a co-borrower in the said housing Term Loan, who stood as a guarantor for the said loan borrowed by them with binding obligations of repayment of the loan as per the terms of the loan agreement executed by them. The above facts are duly admitted by the Applicant by herself.

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It is further submitted that since the Applicant was irregular in repaying the loan amount on the date on which the due payment as per loan agreement and also denied the version that the Applicant was paid the EMI without any default upto 2018. Furthermore averments of the Applicant that she incurred heavy loss in her transport business and as the result of that the Applicant has not paid the loan dues is not true. Therefore, the Defendant Bank declared the account of the Applicant as NPA according to the norms and guidelines of RBI and there is no fault on the part of the Defendant Bank for the declaration of the Applicant's account as NPA. Further, the Applicant never took steps to regularize her loan account in spite of repeated reminders.

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It is further submitted that since the Applicant never approached the Defendant Bank at any time and had not given any request to restructure of the loan on payment of the defaulted EMI. The Demand Notice was issued on 18.07.2018, which was duly served both the Applicant and her husband on 27.07.2018. Since the Applicant never turned up to comply the Demand Notice, the Defendant Bank issued Possession Notice dated 09.10.2018 u/s. 13(4) of the Act. The same was duly served on the Applicant. The said possession was also published in English and Tamil Newspaper. Further, the Applicant fully aware of the SA No. 3109/2020 filed by her husband and purposely and wantonly not complied the conditional order.

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Page 6 of 17

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SA No.136/2024

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It is further submitted that since the Applicant had filed such SA & Writ Petition against the Defendant Bank without any proper cause of actions and the attitude of the Applicant and her husband clearly shows that they are only litigant and never have intention for repaying the loan account. The Defendant Bank approached the Ld. CJM, Pudukkottai and filed Petition u/s. 14 of SARFAESI Act in order to recover the loan dues from the Applicant by bringing the secured assets into auction of sale, and nothing had any violation of the act on the part of the Defendant Bank. The Defendant Bank also sent reply notice by bank panel advocate properly to the legal notice dated 27.04.23 denying all the averments of the Applicant.

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It is further submitted that the Defendant Bank issued Sale Notice dated 22.12.23 for selling the secured assets, fixing the sale on 18.01.2024 and the same was returned with postal remarks that the Applicant is left without instruction. The said notice was duly affixed in the conspicuous part of the property and also published in Tamil and English Newspapers. Further, Rs. 13.00 Lakhs was paid by the Applicant voluntarily with commitment of paying the remaining amount within the stipulated period, but she has not complied as she has committed for the remaining payment. Further, the Applicant is fully aware of the auction Sale Notice, Sale was fixed on 18.01.2024 and also known the facts that sale was effected and issuance of the Sale Certificate to the Auction Purchaser who is a 2^nd Defendant herein. The sale of secured property was sold in accordance with law. The Defendant Bank obtained the Valuation Report from the approved bank panel valuer properly and fix the reserve price appropriately and there is no any impediment of fixing the reserve price of the secured property on the part of the Defendant Bank and other ground of the appeal.

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It is further submitted that the Sale Notice dated 22.12.2023 is the third or fourth Sale Notice, which is valid in law and legally enforceable. The Applicant has very well-known this facts. The Defendant has to follow the guidelines of RBI in declaring the loan account as NPA and cannot act on its own. The Defendant strictly followed the guidelines of RBI. Hence, the allegation in para 7 of grounds of appeal is not sustainable. Further, the loan transaction was duly registered in entry Registry. Hence, the allegation of the Applicant is not maintainable. The Defendant Bank credited each and every payment made by the Applicant in her loan account. Hence the allegation of not properly credited the payment made by her is denied as baseless. The Defendant Bank properly followed the rules in issuing the Sale Certificate in favour of the 2^nd Defendant.

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Therefore, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the above SARFAESI Application with cost and thus render justice.

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SA No.136/2024

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TYPED SET OF DOCUMENTS FILED BY THE 1^st DEFENDANT BANK

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S.No.	Date	Particulars
1	18.07.2018	Demand Notice
2	27.07.2018	DemandNoticeADCard
3	09.10.2018	Possession Notice
4	13.10.2018	Possession NoticeADcard
5	13.10.2018	Paper Publication Tamil&English
6	16.06.2023	OrderCopyin WP(MD)No.14418/2023
7	27.04.23	Applicant'shusbandissuedlegal notice
8	09.05.23	ReplyNoticeissued byDefendantBank
9	11.05.23	AD Card
10	11.09.23	Valuation Report
11	22.12.23	SaleNotice
12	28.12.23	Sale Notice Return Cover
13	23.12.23	SaleNoticePaper Publication Tamil&English
14	05.01.2024	SaleNoticeAffixedPhoto

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ADDITIONAL TYPED SET OF PAPERS FILED BY THE 1^st DEFENDANT

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BANK

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S.No.	Date	Particulars
1	13.01.2016	Valuation Report

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ADDITIONAL TYPED SET OF PAPERS FILED BY THE 1^st DEFENDANT

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BANK

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S.No.	Date	Particulars
1	27.07.2018	DemandNoticeADCard–Original
2	05.01.2024	Sale Notice affixed Photo-Original

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4. The 2^nd Defendant/Auction Purchaser also appeared before this Tribunal and filed Vakalat, Written Statement, Written Argument & Typed set of papers in which the she denied all the allegations, assertions and averments that are contained in the Application as false and put the Applicant to strict proof of the same, except those that are specifically admitted hereunder as true.

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At the outset, these Defendants submitted that the present Application as framed is itself not maintainable in law or in fact. The relief as framed is not maintainable and the Applicant is put to the strict proof of the same. There is a limitation of 45 days. The Sale Notice is dated 22.12.2023, Auction was held on 18.01.2024. The SA is filed on 19.02.2024. Therefore, the Applicant could have only challenged the Auction Sale held

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SA No.136/2024

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on 18.01.2024. Further it is submitted that the Applicant borrower has filed the SA challenging the Auction Sale held on 18.01.2024 pursuant to the issuance of the Sale Notice dated 22.12.23 on various grounds. However, the claims made in the Application are entirely false and vexatious. The borrower has presented baseless arguments in an attempt to delay the recovery process which was initiated in the year 2018 and obstruct the lawful actions of the lender. The grounds mentioned lack merit and are intended to mislead the authorities and hinder the enforcement of the secured asset's sale as per the provisions of law.

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It is further submitted that when the SA was filed, sale held on 18.01.2024 had already concluded as the Auction Purchaser had paid the entire amount of Rs. 86,85,000/- and the Sale Certificate had already been issued on 7.2.24 in favour of the 2^nd Defendant, the Auction Purchaser. The borrower only challenged the Auction Sale, which had already been concluded. This failure to contest the Sale Certificate while focusing on an outdated Sale Notice further demonstrates the lack of substance in the Applicant's claims and suggests an attempt to delay or obstruct the legal process. Further, the Applicant has not taken any valid ground which would render the Auction Sale held on 18.01.24 as invalid.

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It is further submitted that the Sale Certificate was issued on 07.02.2024 in favour of the Auction Purchaser. However, the Applicant Borrower, by suppressing this crucial fact, misled this Hon'ble Tribunal and obtained a stay order on 28.02.2024 with respect to Sale Notice which is already over. The Applicant deliberately failed to disclose the issuance of the Sale Certificate, which had already concluded the sale process, and instead presented an incomplete narrative to secure the stay order. This intentional suppression of material facts demonstrates bad faith and an attempt to misuse the legal process to obstruct the rightful enforcement of the sale.

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It is further submitted that the 2^nd Defendant, has fully complied with the legal requirements by paying the entire sale amount of Rs. 86,85,000/within the stipulated time. Upon receipt of the full payment, the Sale Certificate was duly issued to the 2^nd Defendant in accordance with the law. This further solidifies the 2^nd Defendant's legitimate ownership of the property. Further, the Sale Certificate issued by the Bank has not been challenged by the Applicant Borrower, hence the SA filed by the Applicant is not maintainable. And, despite paying the entire auction sale amount in full compliance with the law and honestly participating in the auction process, the Auction Purchaser continues to suffer due to the ongoing legal challenges raised by the Applicant Borrower. Even thoughthe Auction

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SA No.136/2024

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Purchaser has fulfilled all legal obligations and secured the property through a legitimate process, the unwarranted delays due to the Applicant and vexatious claims are causing undue hardship.

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It is further submitted that there are no merits in the Application and the same is liable to be dismissed with cost. Therefore, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the above SARFAESI Application with cost and thus render justice.

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TYPED SET OF DOCUMENTS FILED BY THE 2^nd DEFENDANT/AUCTION

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PURCHASER

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S.No.	Date	Particulars
1	19.01.2024	Payment receipt towards balance of the 25%
		of the amount
2	01.02.2024	Payment receipt towards 75% of the amount

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5. ON THE BASIS OF ABOVE PLEADINGS THE POINT WHICH ARISES FOR CONSIDERATION IS:-

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WHETHER THE APPLICANT IS ENTITLED TO GET THE RELIEFS

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AS PRAYED FOR?

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6 . Having heard the parties and after going through the entire documents available on the records, and also after considering the arguments by all the Counsels, I find that it is admitted fact that the Applicant has availed Housing Term Loan for a sum of Rs. 57.00 Lakhs from the 1^st Defendant Bank for the purpose of construction of new house and executed necessary security documents in favour of the 1^st Defendant Bank. Initially, the Applicant was very prompt in repaying the loan amount, however, due to the heavy loss incurred in her transport business, she could not pay some loan dues as agreed to and she never allowed her account to become NPA. But the Defendant Bank has declared the Applicant's account as NPA without following the RBI Norms and guidelines. In addition to that the Applicant pointed out several irregularities made by the 1^st Defendant Bank in the recovery procedures.

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Page 10 of 17

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SA No.136/2024

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On the contra, the 1^st Defendant Bank has submitted that since the Applicant has failed to repay the loan amount, the loan account became irregular and the account has been classified as NPA on 30.06.2018 and thereafter, the Bank has issued Demand Notice u/s. 13(2) of the SARFAESI Act on 18.07.2018 for a sum of Rs. 65,04,096.50p (Rupees Sixty Five Lakhs Four Thousand Ninety Six and Paise Fifty only). I also perused the documents filed by both the parties and the typed set of papers filed by the Defendant Bank, I find that the Bank has produced the copies of acknowledgement cards at page nos. 4 to 11 and at page nos. 1 to 8, Bank has filed the original AD cards as an evidence for having sent the copy of Demand Notice to the Applicant and her husband, the Co-borrower & the Guarantor of the loan account. I also find that the Applicant has not filed any reply sent U/s. 13(3-A) of SARFAESI Act and also failed to give any representation to the Defendant Bank in respect of Demand Notice. The Applicant in their averments stated that date of Demand Notice is 23.05.2022, the Applicant has also not filed the copy of Demand Notice in her Typed set of papers. Whereas, the Copy of Demand Notice filed by the Defendant Bank is dated 18.07.2018.

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Thereafter, the 1^st Defendant Bank has issued Possession Notice U/s. 13(4) of SARFAESI Act on 09.10.2018 (Page Nos. 12 to 14 of Bank's typed set of papers). I perused the documents produced by the Bank and I find that the Defendant Bank has filed AD cards (Page Nos. 15 to 22 of Bank's typed set of papers) as an evidence to prove that they had sent the Possession Notice to the borrower/guarantor. I also find that the Defendant Bank has filed copies of Paper Publication of Possession Notice in newspapers in English & Tamil (Page nos. 23 & 24 of Bank's typed set of papers). However, it is not clear that on which Newspaper and in which locality the Defendant Bank published the Possession Notice in respect of Tamil Paper Publication. In English Paper Publication also the property is situated at Pudukottai District, but Paper Publication has been done in Trichy District. But the Defendant Bank has not filed the photos showing

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SA No.136/2024

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the affixture of Possession Notice on the conspicuous part of the property. Since there are irregularities found in the documents filed by the Defendant Bank in issuance of Possession Notice, it amounts to not following the Rules prescribed under Rule 8(1) of the Security Interest (Enforcement) Rules 2002, which clearly says:-

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"8. Sale of immovable secured assets.

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(1) Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property."

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Thereafter, the Defendant Bank has issued Sale Notice, which was challenged by the Applicant in SA No. 3109/2020 but the Applicant failed to comply with the Conditional Order passed by this Tribunal. Thereafter, the Defendant Bank has issued another Sale Notice dated 18.05.2023, challenging the same, the Applicant filed WP No. 14418/2023 before the Hon'ble High Court of Madras (Madurai Bench), the Applicant was again granted a conditional order, which was also not complied by the Applicant. Thereafter, the 1^st Defendant Bank has filed Crl.M.P.No. 107/2023 before the Ld. CJM, Pudukottai to take Physical Possession of the secured assets and the same was allowed and Advocate Commissioner was also appointed to take Physical Possession of the Applicant's dwelling house. Thereafter, the Applicant's husband sent a legal notice dated 27.04.23 (page nos. 29 & 30 of Bank's typed set of papers) and the Bank also sent a reply notice dated 09.05.2023 (page nos. 31 to 34 of Bank's typed set of papers). The Bank has also filed an AD Card (page nos. 35 of Bank's typed set of papers) in this regard. Thereafter, the Defendant Bank has taken the Physical Possession of the secured asset on 02.08.2023.

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Thereafter, the Applicant submitted that she had paid Rs. 13.00 Lakhs, which was also acknowledged by the Defendant Bank in the Written Statement. Thereafter, the Defendant Bank has issued Sale Notice dated 22.12.2023, scheduled to be held on 18.01.2024 and the Bank has filed a

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SA No.136/2024

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returned/undelivered postal covers with postal remarks 'Left without instruction'. But I also find that the Defendant Bank has sent Demand Notice & Possession Notice to the Applicant and her husband in two different addresses, i.e. one is "Koodal Nagar, Pudukottai District" and another is "Muthu Nagar, Pudukottai District" (page nos. 1 to 11 & 12 to 22 of Bank's Typed set of papers). Whereas, the Bank has sent the Copy of Sale Notice to the Applicant and her husband only to the address of "Koodal Nagar, Pudukottai District", which was bounced back to the Defendant Bank. The Bank has not sent the copy of Sale Notice to the address of "Muthu Nagar, Pudukottai District". The Defendant Bank has also filed the copies of Paper Publication made in both English & Tamil dailies (Page nos. 68 & 69 of Bank's typed set of papers). However, it is not clear that on which Newspaper and in which locality the Defendant Bank has published the Sale Notice in respect of Tamil Paper Publication. In English Paper Publication also the property is situated at Pudukottai District, but Paper Publication has been done in Trichy District. The Bank has also filed affixture of Sale Notice (Page no. 70 of Bank's typed set of papers) on the conspicuous part of the property on 05.01.2024. The Defendant Bank issued Sale Notice dated 22.12.2023 and sale held on 18.01.2024 , here the Sale Notice was affixed on the property on 05.01.2024 , i.e. less than 15 days as prescribed in Rule 9(1) of Security Interest (Enforcement) Rules, 2002. Hence, it is established that the 1^st Defendant Bank has not taken sincere steps to let the Applicant know about the Sale Notice and sale of the residential house, where the Applicant and her husband, the co-borrower and their family members reside. Moreover, the Defendant Bank has already been taken the Physical Possession of the Impugned property through the Ld. CJM, Pudukottai in Crl.M.P.No. 107/2023 before selling the same. Hence, even if the Bank has taken steps to affix the Impugned Sale Notice on the Impugned property it may not be reached to the knowledge of the Applicant. Hence, the postal cover is also returned undelivered and Paper Publication also done in the jurisdiction of Trichy District and the attempt of affixture of Sale Notice is also go in vein, since the Possession of the property is in the hands of Defendant Bank that too is made with delay. Therefore, it is clear that the

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SA No.136/2024

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1^st Defendant Bank has been failed to follow Rule 8(6) & (7) & Rule 9(1) of Security Interest (Enforcement) Rules 2002, which clearly say that,

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"( 6 ) The authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5):

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[Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in the Form given in Appendix IV-A to be published in two leading newspapers including one in vernacular language having wide circulation in the locality.]"

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"(7) [Every notice of sale shall be affixed on the conspicuous part of the immovable property and the authorised officer shall upload the detailed terms and conditions of the sale, on the web- site of the secured creditor, which shall include;

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(a) the description of the immovable property to be sold, including the details of the

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encumbrances known to the secured creditor;

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(b) the secured debt for recovery of which the property is to be sold;

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(c) reserve price of the immovable secured assets below which the property may not

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be sold;

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(d) time and place of public auction or the time after which sale by any other mode shall be completed;

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(e) deposit of earnest money as may be stipulated by the secured creditor;

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(f)any other terms and conditions, which the authorized officer considers it necessary

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for a purchaser to know the nature and value of the property.]"

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And,

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Rule 9. Time of sale, issue of sale certificate and delivery of possession, etc.

¶130

"[(1) No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) of rule 8 or notice of sale has been served to the borrower:

¶131

Provided further that if sale of immovable property by any one of the methods specified by sub rule (5) of rule 8 fails and sale is required to be conducted again, the authorized officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale.]"

¶132

I also find that vide Additional Typed set, the 1^st Defendant Bank has filed and it is indexed as Original Demand Notice AD Cards & Sale Notice

¶133

Page 14 of 17

¶134

SA No.136/2024

¶135

affixed Photo-Original. Whereas, I find that the Defendant Bank has filed the Photo of affixture of Possession Notice instead of Sale Notice. This amounts to misleading the Court and cannot be accepted. Even, if we take as a proof for affixture of Possession Notice, it also lacks of the detail that on which date it was affixed, in index the date of affixture is given as 05.01.2024, which cannot be accepted and also not sustainable in the eye of law, since the date of Possession Notice is 09.10.2018 and the affixture has been done after six years which cannot be considered as correct.

¶136

I also perused the documents and I find that the Defendant Bank has filed a Valuation Report dated 13.09.2023 of the Impugned property at page nos. 36 to 61 of typed set of papers. From careful scrutinizing of Valuation Report, I find that though the Valuation Report is filed by the Bank this Valuation Report is not in consultation with the secured creditor because there is no signature of the Branch Manager and also no proof has been filed to this effect, so how the Authorised Officer has sold the property without the consultation of the secured creditor. As such, this Valuation Report cannot be considered as the reliable one. Hence, the Defendant Bank has failed to prove that they have strictly adhered to the Rule 8 (5) of Security Interest (Enforcement) Rules which clearly says:-

¶137

"(5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorized officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor , fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the methods provided therein" .

¶138

The Applicant further contended that the property has been sold by the 1^st Defendant Bank on throw away price colluding with the 2^nd Defendant. But, the Applicant has not filed any such Valuation Report or any other substantial evidences and failed to prove her allegations.

¶139

Page 15 of 17

¶140

SA No.136/2024

¶141

I also find that although the Impugned Sale has been held on 18.01.2024, and as per the Written Argument & Written Statement made by the 1^st Defendant Bank as well as the Written Statement filed by the 2^nd Defendant/Auction Purchaser it is understood that the 1^st Defendant Bank has issued Sale Certificate to the 2^nd Defendant on 07.02.2024 to the Auction Purchaser. However, none of the parties has filed the copy of Sale Certificate before this Tribunal. Since the 1^st Defendant Bank has failed to prove that they have strictly followed the SARFAESI Act & Rules during the entire recovery process, the Sale Certificate dated 07.02.2024 issued by the 1^st Defendant Bank cannot be considered as valid and not sustainable under the law.

¶142

In view of the above facts and circumstances of the case, I find that the 1^st Defendant Bank has not followed the due procedures for recovery of the loan amount under SARFAESI Act. It is well settled law that Bank can recover the due loan amount from the borrower under the SARFAESI Act and without intervention of the Court provided he has to follow the procedure mentioned under the SARFAESI Act & Rules strictly, because property is the constitutional right of the individual and hence, Bank cannot sell the property without following the mandatory provisions of Act & Rules. As such, I find merit in the above SARFAESI Application. Therefore, this Tribunal holds that the Applicant is entitled to get the reliefs as prayed for in SA No. 136/2024 .

¶143

In the result,

¶144

(a) SA No.136/2024 is allowed. Sale held on 18.01.2024 is not in accordance with law and as there is violation the Sale Notice dated 22.12.2023 & Sale Certificate dated 07.02.2024 are hereby set aside by this Tribunal.

¶145

(b) The 1^st Defendant Bank is directed to refund the entire sale consideration amount paid by the Auction purchaser along with 4% of interest to the Auction purchaser from the date of deposit of money till

¶146

Page 16 of 17

¶147

SA No.136/2024

¶148

the refund within one month from the date of receipt of copy of the Order.

¶149

(c) The Applicant shall make the payment of the amount incurred by the Auction Purchaser towards the Stamp duty and Registration charges within one month from the date of receipt of copy of the Order.

¶150

(d) The Applicant is also directed to pay the interest at the rate of 4% of the sale price to the 1^st Defendant Bank from the date of payment of Sale price by the Auction Purchaser till the date of refund to the Auction Purchaser by the Bank within one month from the date of receipt of copy of the Order.

¶151

(e) The Impugned Order passed by the Ld. CJM, Pudukottai in Crl.M.P.No. 107/2023 for taking Physical Possession of the Impugned Property is also hereby set aside.

¶152

(f) All the expenditures incurred in issuance of Impugned Order passed by the Ld. CJM, Pudukottai in Crl.M.P.No. 107/2023 and further all the expenditures incurred in respect of Sale Notice dated 22.12.2023 shall not be included in the loan account of the Applicant.

¶153

(g) The 1^st Defendant Bank is at liberty to initiate fresh action against the Applicant for recovery of loan amount following strictly the SARFAESI Acts & Rules.

¶154

Consequently, all pending IAs (if any) are also disposed of. No costs.

¶155

Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 04^th July, 2025.

¶156

sd/- (SEEMA SINHA) PRESIDING OFFICER

¶157

Dictated & Corrected by me sd/- (SEEMA SINHA) PRESIDING OFFICER

¶158

Typed by me (D. Krishnaveni, PA)

¶159

Uploaded on 07.07.2025

¶160

Page 17 of 17

M Shanthi v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

M Shanthi v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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