Allowed

Sss Sakthi Industry v. Fullerton India Credit Company Limited

DRT10 Jul 2025SA/207/2023

Case brief

AI extract

What is this about?

Debt Recovery Tribunal allowed the applicant's application challenging the physical possession order. The court held that the financial institution incorrectly classified the account as NPA against RBI guidelines, rendering subsequent SARFAESI proceedings unsustainable.

What did the court decide?

The SARFAESI application allowed with costs; the Possession Notice dated 29.03.2022 and the CRPM Order dated 21.12.2022 for taking physical possession were set aside; related expenditures excluded fro

Sss Sakthi Industry versus Fullerton India Credit Company… — Banking and Recovery | DRT (2025)

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SA No.207/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 10^th DAY OF JULY, 2025 PRESENT: SEEMA SINHA

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[PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

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SA No. 207/2023

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M/s. SSS Sakthi Industry, Represented by its Proprietor Shyam Pradeep, 8A, Anthoniyar Kovil Street, Edamalaipatti, Near SBI ATM, Trichy – 620 001.

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Residing at: No. 78, Kallar Street, Periya Milagu Parai, Near Amman Kovil, Trichy – 620 001. …. Applicant

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The Authorized Officer, SMFG India Credit Company Limited, Formerly Known as Fullerton India Credit Company Limited, (FICCL), Megh Towers, 3^rd Floor, No. 165, Poonamallee High Road, Maduravoyal, Chennai – 600 095. …. 1^st Defendant FI

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The Chief Judicial Magistrate, District Court Complex, Trichy. …. 2^nd Defendant

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Appearance of Advocates: Mr. M.V. Manibabu ---Counsel for the Applicant M/s. V. Balasubramani ---- Counsel for the 1^st Defendant FI 2^nd Defendant is none other than the Ld. CJM, Trichy.

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Page 1 of 8

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SA No.207/2023

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This SARFAESI Application was heard in the presence of Counsels for the Applicant and the 1^st Defendant FI and fixed for passing final order before me and upon hearing the arguments of 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(1) of the SARFAESI Act, 2002 by the Applicant praying that this Hon'ble Tribunal may be pleased to set aside the actions initiated by the Defendants under the provisions of the SARFAESI Act, 2002 ending up with the Order dated 21.12.2022 passed by the 2^nd Defendant U/s. 14 of the SARFAESI Act.

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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 this Application is filed challenging the Order passed by the Hon'ble CJM, Trichy, the 2^nd Defendant herein U/s. 14 of the SARFAESI Act dated 21.12.2022; for taking Physical Possession of the Schedule mentioned property offered as security for the alleged dues in respect of the loan facilities availed by the Applicant. The Applicant carrying on business in grill works & manufacturing stove woven and a Sole Proprietorship one. The entire business affairs are looked after by the Sole Proprietor Shyam Pradeep. The 1^st Defendant has sanctioned financial credit facility for the sanctioned sum of Rs. 30,32,347/- and had executed the loan documents during September 2018. The Applicant had promptly remitted the EMIs then & there.

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The Applicant submitted that the 1^st Defendant FI has all of a sudden classified the loan account as NPA on 31.12.2021. The Applicant submitted that the classification of NPA is not in accordance to the guidelines prescribed by the RBI regarding the asset classification. The 1^st Defendant had issued Demand Notice U/s. 13(2) dated 17.01.2022, Possession Notice U/s. 13(4) dated 29.03.2022 and had also initiated further recovery actions. While so, the Applicant had offered OTS Letter to the 1^st Defendant and also willing to remit upfront amount; but the 1^st Defendant has refused to accept the payment. The Applicant submitted that due to prevailing Pandemic situation was unable to make payment within the stipulated time. However, approached the 1^st Defendant to make payment afterwards, but the officials had stated that to come in a later period.

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Page 2 of 8

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SA No.207/2023

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It is further submitted that the 1^st Defendant has now obtained order dated 21.12.2022 U/s.14 Application before the 2^nd Defendant for taking Physical Possession of the Schedule mentioned property. Though the 2^nd Defendant has passed the Order on 21.12.2022, the Advocate Commissioner has contacted the Applicant on 25.01.2023 and conveyed that the Criminal Misc. Petition is now posted on 14.02.2023, before the 2^nd Defendant. Aggrieved over the above action of the Defendants, the Applicant prefers the present appeal among the following and other grounds:

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Main Grounds:

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The Order of the Ld. Chief Judicial Magistrate U/s. 14 of the SARFAESI Act dated 21.12.2022, for taking Physical Possession of the Schedule mentioned property is arbitrary and is liable to be set aside.

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The 1^st Defendant has not at all followed the guidelines and directions of the RBI to classify the loan as NPA.

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The Demand Notice not served properly.

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The Property mortgaged with the 1^st Defendant is residential property in which the Applicant and his aged parents are living in the said premises.

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Schedule of Property

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Thiruchirapalli District, Trichy Joint 1 & 2 Sub-Registration, Trichy Taluk, Trichy Town, K. Abishekapuram Village, Periyamilaguparai the property comprised in T.S.No. 43/2 an extent of 03 Cents equivalent to 1350 Sq.ft., together with thatched huse, Electric Light Fitings, Meter deposit and all easement rights situated within the following four boundaries:

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North of : East West Street

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South of : House belongs to Rethinam East of : House belongs to Vadivelu Sepillaiyar West of : House belongs to Kanthasamy and Muthukaruppa Kandiyar Plot

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East West measurement : North 30 feet South 30 feet North South measurement: East 45 feet West 45 feet

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Totally extent of 03 cents equivalent to 1350 Sq.ft., The property new ward no. K, New Block No. 13, New T.S.No. 10, and property Door No. 78, Tax No.26994, E.B. Connection No. 541, present New ward "AB".

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Page 3 of 8

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SA No.207/2023

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

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S.No.	Date	Particulars
1.	17.01.2022	Demand Notice issued bythe Defendant FI
2.	29.03.2022	Possession Notice issued bythe Defendant FI
3.	13.02.2023	Certified Copy of order dated 21.12.2022 passed u/s.14 Application filed by the FI before the 2^nd Defendant

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3 . On the other hand, the Counsel for the 1^st Defendant FI appeared before this Tribunal and filed Vakalat, Counter Affidavit along with typed set of papers & Written Arguments in which he has submitted that all the proceedings contemplated under the SARFAESI Act have been strictly followed by the 1^st Defendant. It is further submitted that during the course of their business, the Applicant had approached the 1^st Defendant FI for credit facilities and the 1^st Defendant sanctioned a sum of Rs. 30,32,347/and executed loan agreement by agreeing the Terms & Conditions, the Applicant has also provided security of the assets to secure the repayment of the said loan by executing Memorandum of Deposit of Title Deeds in respect of the subject property.

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It is further submitted that the Applicant failed to adhere to the Terms of the loan agreements and defaulted in payments of monthly installments despite the repeated request and reminders, therefore the 1^st Defendant has taken the SARFAESI proceedings against the Applicant and the Applicant's loan account was declared as NPA on 31.12.2021 within the meaning of Section 2(o) of the Act. The 1^st Defendant had issued Demand Notice dated 17.01.2022 U/s. 13(2) of SARFAESI Act. The Notice sent to the Applicant was duly served to the Applicant/Borrower. The 1^st Defendant also issued the Paper Publication in English "Trinity Mirror" and Tamil "Makkal Kural" and also affixed the Possession Notice in the premises of the borrower. Proceedings u/s.13(4) of the Act to take possession of the secured asset was issued on 29.03.2022 against the borrower/Applicant. The 1^st Defendant also issued the Paper Publication in English "Trinity Mirror" and Tamil "Makkal Kural" and also affixed in the premises of the borrower on 02.04.2022. The Applicant has failed to pay the outstanding dues therefore, the 1^st Defendant has approached the Ld. CJM, Trichy in Crl.M.P.No.26032 of 2022 and obtained the Section 14 order.

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It is further submitted that the Applicant has approached this Hon'ble Tribunal and obtained the Interim conditional order vide IA No. 1038/2023 in SA No. 207/2023 dated 19.07.2023. After the payment of Interim

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Page 4 of 8

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SA No.207/2023

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Conditional Order the Applicant/Borrower has never paid any further amount for the period of nearly 2.5 years and they have never made any fructified attempt to settle the outstanding dues till date but to evade the rightful payment which is due and payable by the Applicant/Borrower. The FI has taken all the proceedings as per the SARFAESI Act is contemplated. But willfully and unjustifiably, the Applicant has failed and neglected to make the payments till date. Further it is submitted that the Applicant has filed the SA without any substantial evidence and with to delay the recovery measures taken by the Defendants under SARFAESI Act. The 1^st Defendant also submitted that despite of several opportunities given by the 1^st Defendant to the Applicant to make outstanding due payable to them, the Applicant had not taken any steps to repay the said dues to the 1^st Defendant, whereas filed the above SA with false allegation is nothing but to prolong the measures taken by the 1^st Defendant to recovery their legitimate claim.

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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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S.No.	Date	Description
1		Counter filed bythe 1^stDefendant
2	29.09.18	Copyof Sanction Letter
3	3.10.18	Copyof MOD vide DOC.No. 5397/2018
4	17.01.22	Copy of Demand Notice with postal receipts, Postal track consignments
5	26.01.22	Copyof Paper Publication of Demand Notice in English
6	26.01.22	Copyof Paper Publication of Demand Notice in Tamil
7		Copyof affixture of Demand Notice
8	29.03.22	Copy of Possession Notice U/s. 13(4) with postal receipts and AD Cards
9	02.04.22	Copyof Paper Publication of Possession Notice in English
10	02.04.22	Copyof Paper Publication of Possession Notice in Tamil
11		Copyof Affixture ofphotos of Possession Notice
12	03.11.23	Copyof Statement of Accounts
13	20.07.23	Copyof Authorization Letter

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4. 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 AS PRAYED FOR?

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5 . Having heard the parties and after going through the entire documents available on the records, this Tribunal find that there is no

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Page 5 of 8

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SA No.207/2023

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dispute between the parties with regard to the availment of loan facilities by creating equitable mortgage on their property. In this case, the Applicant contended that the Applicant had promptly remitted the EMIs then & there. And, all of a sudden the 1^st Defendant FI has classified the Applicant's loan account as NPA on 31.12.2021. I also perused the Statement of Accounts (page nos. 36 to 50 of FI's Counter Affidavit) at page no. 44, it is seen that the Borrower has paid in the month of October 2021 as Rs. 47,392/- on 04.10.21 & Rs. 40,000/- on 21.10.21 & Rs. 7,400/- on 26.10.21 and as such I find that there is no clear overdue of 90 days shown in the Statement of Accounts. Moreover, the Statement of Accounts filed by the 1^st Defendant FI is also incomplete. Hence, I find that FI has not classified the Applicant's loan account as NPA as per guidelines issued by the RBI and as such it is not sustainable in the eye of law.

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Thereafter, I find that the 1^st Defendant FI has issued Demand Notice dated 17.01.2022 u/s. 13(2) of SARFAESI Act for a sum of Rs. 31,30,954/(Rupees Thirty One Lakhs Thirty Thousand Nine Hundred and Fifty Four only). I also find that the 1^st Defendant FI has submitted the AD Card, Paper Publication & Affixture of Demand Notice as a proof for having communicated the Demand Notice to the Applicant (Page nos.13 to 20 of FI's Counter Affidavit). 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 1^st Defendant FI in respect of Demand Notice.

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Thereafter, the 1^st Defendant FI issued Possession Notice U/s. 13(4) of SARFAESI Act dated 29.03.2022. The FI has filed the AD Card & returned postal cover with postal remarks "Left without instruction" as a proof for having communicated the Possession Notice to the Applicant (Page nos.25 to 31 of FI's Counter Affidavit). I also find that the 1^st Defendant FI has filed copy of Paper Publication of Possession Notice both in English & Tamil (Page nos.32 & 33 of FI's Counter Affidavit) and Photos of Affixture of Possession Notice on the conspicuous part of the property (Page nos.34 & 35 of FI's Counter Affidavit) but it is not clear that on which date the 1^st Defendant FI

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Page 6 of 8

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SA No.207/2023

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has affixed the Possession Notice on the conspicuous part of the property. Thereafter, the 1^st Defendant FI obtained the Impugned Order dated 21.12.2022, passed by the Ld. CJM, Tiruchirappalli for taking Physical Possession of the Property, which is challenged by the Applicant in this SARFAESI Application.

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In view of the above facts and discussions, I find that since the classification of loan account as NPA is wrong i.e. not as per guideline of RBI, the entire proceeding conducted by the FI under the SARFAESI Act is not sustainable in the eye of law.

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However, in this case, I also find that this Tribunal has granted an Ad-Interim Stay Order dated 19.07.2023. The Applicant has also complied with the conditions imposed by this Tribunal and paid a total sum of Rs. 15,00,000/(Rupees Fifteen Lakhs

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to the 1^st Defendant FI and showed his bona-fide.

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The Applicant has no doubt being defaulter is liable to pay the loan amount to the 1^st Defendant FI and the FI has been given ample power to recover the outstanding loan amount from the borrower by invoking the SARFAESI Act and without the intervention of any Court. But, it shall not allow the FI to take the Physical Possession of the property of the Applicant without following the due process of law strictly.

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In view of the above facts and circumstances of the case, I find that the Applicant has been able to prove his case.

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In the result,

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(a) SA No. 207/2023 is allowed with costs. The Possession Notice dated 29.03.2022 issued by the 1^st Defendant FI is hereby set aside.

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(b) The Impugned Order dated 21.12.2022 passed by the Ld. CJM, Tiruchirappalli in Cr.M.P.No.26032/2022 is also hereby set aside.

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Page 7 of 8

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SA No.207/2023

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(c) All the expenditures incurred in issuance of Impugned Possession Notice dated 29.03.2022 and the Impugned Order dated 21.12.2022 passed by the Ld. CJM, Tiruchirappalli in Cr.M.P.No.26032/2022 shall not be included in the loan account of the Applicant.

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Consequently, all pending IAs (if any) are also disposed of.

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Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 10^th July, 2025.

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sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 18.07.2025

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Sss Sakthi Industry v. Fullerton India Credit Company Limited

Case brief

What is this about?

What did the court decide?

Sss Sakthi Industry v. Fullerton India Credit Company Limited

Case brief

What is this about?

What did the court decide?

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