Allowed

S Kasthuri v. Canara Bank

DRT5 Mar 2025SA/209/2023

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an application to set aside proceedings under Section 14 of the SARFAESI Act. The Tribunal found that the Bank failed to strictly follow the Sale Notice and Valuation provisions of the Security Interest Rules, leading to the quashing of the sale notice, certificate, and the Magistrate's order for possession.

What did the court decide?

Sale Notice dated 06.06.2014 and Sale Certificate dated 02.01.2020 were set aside; Impugned CJM order was quashed; Bank directed to refund auction purchaser.

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

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SA No.209/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 05^th DAY OF MARCH, 2025

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PRESENT: SEEMA SINHA

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

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SA No. 209/2023

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S. Kasthuri,

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W/o. Sivan, Proprietrix, M/s. Kasthuri Industries,

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No. 2/28A, Sivananda Nagar,

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Thoppur, Madurai District. --- Applicant

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-Vs-

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The Authorised Officer,

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Canara Bank, Thirunagar Branch,

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Madurai District – 625 006.

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The Branch Manager,

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Canara Bank, Thirunagar Branch, Madurai District – 625 006. --- 1^st & 2^nd Defendants Bank

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L. Veluchamy, Doctor

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S/o. P.L. Lakhsmanaperumal,

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Door No. 30, 1^st Street,

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Harvipatti, Thirupparankundram, Madurai – 625 005. --- 3^rd Defendant/Auction Purchaser

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The Hon'ble Chief Judicial Magistrate, The Chief Judicial Magistrate Court, Madurai District Court Buildings, Madurai. --- 4^th Defendant

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Appearance of Advocates:

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M/s. Vastlaw Associates ---- Counsel for the Applicant Mr. P. Madhan Alexander ---- Counsel for the 1^st & 2^nd Defendants Bank No representation for 3^rd Defendant/Auction Purchaser 4^th Defendant is none other than the Ld. CJM, Madurai

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Page 1 of 14

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SA No.209/2023

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This SARFAESI Application was heard in the presence of Counsels for the Applicant and the 1^st & 2^nd Defendants Bank 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 all the proceedings initiated under SARFAESI Act. The Impugned Order in Cr.M.P.No. 279 of 2023 dated 02.05.2023 passed by the 4^th Defendant U/s. 14 of the SARFAESI Act, 2002.

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

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The Applicant submitted that she is running a business of manufacturing of Aluminium Pan from Aluminium wastes under the name and style of M/s. Kasthuri Industries and availed business loan of TL OCC to develop and promote her business for a sum of Rs. 6,50,000/- (Rupees Six Lakhs Fifty Thousand only) on 22.01.2004. The Applicant had also executed necessary documents in favour of the Defendants Bank. The Applicant's husband 'Sivan' is the guarantor for the above said loan. He executed equitable mortgage by way of deposit of title deeds of Schedule mentioned property in favour of the Defendants Bank. He was died on 14.05.2021.

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It is further submitted that the 1^st Defendant Bank issued Demand Notice dated 26.11.2008 U/s. 13(2) of SARFAESI Act, 2002 for a sum of Rs. 6,67,465/- (Rupees Six Lakhs Sixty Seven Four Hundred and Sixty Five only). Subsequently, on 29.05.2009 the 1^st Defendant Bank issued the symbolic Possession Notice U/s. 13(4) of the SARFAESI Act, 2002. After that the 1^st Defendant Bank issued the Sale Notice dated 16.08.2010, U/s. 13(4) the SARFAESI Act, 2002. This material fact was suppressed by the 1^st and 2^nd Defendants in their Cr.M.P.No. 279 of 2023 and got the Impugned Order from the 4^th Defendant U/s. 14 of the SARFAESI Act, 2002.

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It is further submitted that the 3^rd Defendant with malafide intention had attempted to buy the guarantor's property from the 1^st and 2^nd Defendants Bank. His attempt is in vein. Because, the Sale Notice dated 16.08.2010 was challenged by this Applicant and his deceased husband

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Page 2 of 14

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SA No.209/2023

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jointly in SA No. 180 of 2010 before the Hon'ble DRT, Madurai. In that SA No. 180 of 2010 conditional payment was also paid by this Applicant Rs. 75,000/- on 21.09.2010 and also Rs. 25,000/- on 06.10.2010 to her Loan Account. The SA No. 180 of 2010 was also disposed of on 23.07.2012 by the Hon'ble DRT, Madurai.

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It is further submitted that the 1^st Defendant Bank issued another Sale Notice dated 17.02.2012 u/s. 13(4) of the SARFAESI Act, 2002. But, the Sale was not held in the particular date and the sale was not confirmed. This fact also suppressed by the Defendant Banks before the 4^th Defendant. Further, the 1^st Defendant Bank colluded with 3^rd Defendant sold the deceased guarantor's properties to the 3^rd Defendant. The Applicant came to know the same vide RTI reply 28.09.2015 for her RTI Application dated 13.09.2015. Further submitted that before the date of sale this Applicant filed a Civil Suit against the 1^st and 2^nd Defendants in O.S. No. 230 of 2014 before the Hon'ble District Munsif Court, Thirumangalam. The above said suit is pending on the date of sale. The suit is dismissed for default only on 07.01.2020, so the 1^st Defendant Bank suppressed the material facts in the Sale Certificate dated 02.01.2020 and stated falsely in the Sale Certificate as "The Sale of property was made free from all encumbrances known to the secured creditors" so the conditions of sale U/s. 54 of the Transfer of Property Act, 1882 was not fulfilled by the 1^st Defendant Bank. So, the sale is null and void one. This material fact was suppressed by the 1^st and 2^nd Defendant Banks and obtained the impugned order from the 4^th Defendant u/s. 14 of the SARFAESI Act, 2002.

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It is further submitted that as per the RTI Petition reply received by the Applicant, the Sale was confirmed on 21.07.2014, but the Sale Certificate issued by the 1^st Defendant Bank to the 3^rd Defendant only after 5^1/2 years i.e. 02.01.2020 without any reason. Because, the 1^st and 2^nd Defendants are colluded with the 3^rd Defendant. The deceased guarantor's property is the valuable property. So, the 3^rd Defendant is always eager to purchase that particular property. Further the 3^rd Defendant malafidely bought the higher value of the deceased/guarantor's property without following sale procedure U/s. 54 of the Transfer of Property Act, 1882. It is further submitted that before the date of sale one Krishnan as a Tenant of the property occupying the part of the deceased/guarantor's property for let out purpose and file a Civil Suit in O.S. No. 81 of 2018 before the Hon'ble District Munsif Court, Tirumangalam against this Applicant, which is still pending. Further submitted that the 3^rd Defendant had already known about the deceased/guarantor's property as it was not free from all encumbrances, hence there is no delivery of possession by the 1^st Defendant to 3^rd Defendant from the date of sale to still now. Further, the Applicant

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SA No.209/2023

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challenged the Sale Notice dated 16.08.2010 in SA No. 180 of 2010 before this Tribunal, which was also disposed of on 23.07.2012 by this Tribunal. Further it is submitted that the 1^st Defendant Bank issued another Sale Notice dated 17.02.2012. But the sale was not held in the particular date. After that the Defendant Bank not issued any notice to the borrower or deceased guarantor U/s. 13(2), 13(4) of the SARFAESI Act, 2002. But the Defendant Banks colluded with 3^rd Defendant and the 1^st Defendant sold the deceased guarantor's properties to the 3^rd Defendant, which was known to the Applicant through the RTI reply dated 28.09.2015. These material facts were suppressed by the 1^st and 2^nd Defendant Banks in their Cr.M.P.No. 279 of 2023 and got the Impugned Order from the 4^th Defendant U/s. 14 of the SARFAESI Act, 2002.

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It is further submitted that as per the RTI Petition reply received by the Applicant, the Sale was confirmed on 21.07.2014, but the Sale Certificate issued by the 1^st Defendant Bank to the 3^rd Defendant only after 5^1/2 years i.e. 02.01.2020 without any reason. Further, the 3^rd Defendant had already known about the deceased guarantor's property was not free from all encumbrances, But, the 3^rd Defendant colluded with 1^st Defendant bought the guarantor's valuable property without fulfilling the conditions of sale U/s. 54 of the Transfer of Property Act, 1882, because there is no delivery of possession by the 1^st Defendant to 3^rd Defendant from the date of sale to till now. Further, the 1^st Defendant Bank issued only symbolic Possession Notice dated 29.05.2009 U/s. 13(4) of SARFAESI Act, 2002. But, they did not take the actual possession of the property U/s. 14 of the SARFAESI Act. Further, after a long period of 15 years, in the year of 2023 1^st and 2^nd Defendants filed Cr.M.P.Petition vide Cr.M.P.No.273/2023 for taking actual possession. But the actual possession is still now in the hands of the Applicant. The Applicant filed Writ Petition in W.P.(MD) No. 13689/2023 before the Hon'ble High Court of Madras (Madurai Bench), which is also pending for filing counter on the side of 1^st and 2^nd Defendants.

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It is further submitted that the property is the house property attached with the business. The deceased guarantor had a son, a daughter and mother. So, the entire family depends upon this property only for their livelihood. There is no source of means except this property. The Applicant already challenged the Sale Certificate dated 02.01.2020 in SASR No. 8691/2021 before this Tribunal, which is also pending for numbering. Though the Applicant is ready to settle the due, the Defendants Bank got an order U/s. 14 of SARFAESI Act dated 02.05.2023. Unless, the impugned possession is stayed, the Applicant will be put into great hardship and

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SA No.209/2023

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irreparable loss. Hence, this appeal is preferred on the following among other grounds:-

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Main Grounds :-

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The Defendant Banks have not followed the guidelines of the Reserve Bank of India in declaring the secured assets as Non Performing Assets.

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The Defendant Banks have not properly maintained the accounts.

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The Impugned order passed by the 4^th Defendant is violating of principles of natural justice and Article 14 of the Constitution of India, arbitrary and unreasonable and hence liable to be set aside.

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Therefore, it is prayed that this Hon'ble Tribunal may be pleased to stay of all further proceedings in the Impugned Order in Cr.M.P.No. 279 of 2023 dated 02.05.2023 passed by the 4^th Defendant.

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Description of the Immovable Property

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Madurai District, Madurai South Registration, Madurai South Taluk, Madurai Joint Sub Registry, Thoppur Village, site and house building bearing Door no. 2/28B in R.S. No. 73/8-2 Acres 85 cents, R.S. No. 74/4-46 cents, R.S.No. 74/5-36 cents and R.S.No. 74/8-1 Acre 31 cents totaling to 4 acres 98 cents which plotted out into 54 housing plots and one such plot bearing No. 17 comprised in S.No. 74/8 and 73/8 measuring North-South 64 feet and East-West 37 feet inclusive of 10 feet in the 20 feet breadth common pathway the South, bearing S.C.No. 593 and 594 within the following boundaries.

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North by : Plot No. 32 South by : 20 feet breadth common pathway East by : Plot No. 18 West by : Plot No. 16

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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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S.No.	Date	Description
1.		Copyof the Deposit of Title Deeds
2.	28.01.2004	Copyof the Loan Account Passbook

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SA No.209/2023

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3.	15.11.2006	Copyof the Payment Challan
4.	26.11.2008	Copyof Demand Notice
5.	13.02.2009	Copyof Valuation of Property
6.	29.05.2009	Copyof Possession Notice
7.	16.08.2010	Copyof Sale Notice
8.	21.09.2010	Copyof Payment Challan
9.	06.10.2010	Copyof Payment Challan
10.	16.02.2011	Copyof Sale Noticepublished bythe Defendant
11.	17.02.2012	Copyof Sale Notice
12.	13.06.2014	Copy of the Sale Notice U/s. 13(4) of the SARFAESI Act, 2002 published in Daily Thanthi Tamil Newspaper
13.		Copyof RTI Application
14.	28.09.2015	Copyof RTI Reply
15.	09.11.2015	Copyof the Canadalat Notice
16.	02.01.2020	Copyof Sale Certificate
17.	09.01.2020	Copyof Sale Deed
18.	17.05.2021	Copy of Registration of Death certificate of the Guarantor
19.	29.06.2021	Copyof the Legal Heir certificate
20.	20.12.2021	Copyof SA No. 180/2010 Final Order received
21.	09.05.2023	Copy of the Order passed under Rule 5(4) of DRT (Procedure)Rules 1993.
22.	28.03.2023	Copy of the Cr.M.P.No. 279/2023 Petition filed by the 1^stand 2^ndDefendants
23.	02.05.2023	Copy of the Impugned Order in Cr.M.P.No. 279 of 2023

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3 . On the other hand, the Counsel for the 1^st & 2^nd Defendant Banks appeared before this Tribunal and filed Vakalat, Reply Statement in which he has submitted that the claim of the Applicant is false, frivolous & baseless and he is not entitled to any relief as claimed in the SARFAESI Application. Hence, the SARFAESI Application has to be dismissed inlimine. Save those that are here-in-after expressly admitted all other allegations mentioned in the SARFAESI Application are denied as absolutely false & totally misleading and the Applicant is put to strict proof of every one of the said allegations.

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It is further submitted that the Applicant, under the heading "Facts of the Case" has categorically admitted the borrowal of loan, execution of loan documents, creation of mortgage, default in payment & receipt of the SARFAESI Notices in her SARFAESI Application. The Defendant Banks do not admit all the allegations under the heading "Facts of the Case" as true &

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SA No.209/2023

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Correct. The Applicant is put to strict proof of every one of the said allegations with valid & acceptable evidence. Most of the allegations are unwarranted so far as the matter-in-issue is concerned.

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It is further submitted that the Defendant Bank has produced the particulars of account to the Applicant 'as & when' and 'then & there' as requested by the Applicant and that the Defendant Bank initiated the recovery measures as mandated under SARFAESI Act & Rule and that the Defendant Bank declared the Applicant's account as NPA in accordance with guidelines as issued by the RBI and that the Defendant Bank neither acted against the principles of natural justice & nor arbitrary in nature. The Defendant Banks further submitted that the allegation of the Applicant with regard to the collusion of the Defendant Bank with the Purchaser was none other than an afterthought and further the Applicant is put on strict proof of everyone of the said allegations. The Defendant Bank has never suppressed any of the facts with regard to the issuance of notices, sale of property, issue of Sale Certificate & subsequent Registration of the same.

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It is further submitted that the Defendant Bank has issued Demand Notice and the same was also duly served on the Applicant. The Bank has taken symbolic Possession of the property & issued Possession Notice and the Possession Notice was duly served on the Applicant and affixed the Possession Notice on the conspicuous part of the property and the Possession Notice was also published in both Tamil & English daily. Further, the Applicant has not sent any reply to the 13(2) Demand Notice. Not sending reply to 13(2) Demand Notice is fatal to his case.

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It is further submitted that the Defendant Bank obtained Valuation Report from the approved valuer for the property and that the Defendant Bank has properly & rightly fixed the value of the property & reserve price. Thereafter, the Bank has issued Sale Notice, which was duly served on the Applicant and affixed the Sale Notice on the conspicuous part of the property and the Sale Notice was also published in both Tamil & English daily. Further, the Defendant Bank has sold the property to one Thiru. Veluchamy, who is 3^rd Defendant herein and that the 1^st Defendant Bank confirmed the sale & issued the Sale Certificate in favour of the Auction Purchaser, the said Thiru. Veluchamy.

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It is further submitted that the property was sold based on Sale Notice dated 06.06.2014, in which the Applicant has not taken any steps to challenge the said notices before DRT and even the Applicant never came forward for the settlement also. Further, the Defendant Bank issued number of Sale Notice prior to Sale Notice dated 06.06.2014. The Applicant allowed

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the Defendant Bank to sell the property and after realizing that the property was being sold & sale confirmed & Sale Certificate issued now the Applicant raised the various allegations.

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It is further submitted that the Applicant initially challenged the Sale Notice dated 16.08.10 in SA No. 180/10 before the Hon'ble DRT, Madurai and the same was dismissed. Further, the Physical Possession of the secured asset can be taken at any time from the date of issuance of the Demand Notice to till even after registration of the Sale Certificate. Further there is no time limit to take the Physical Possession of the secured asset even after Registration of the Sale Certificate. Further, the Defendant Bank is being the secured creditor, is liable to handover the Physical Possession of the secured asset to the Auction Purchaser. The Defendant Bank has filed proper Application along with Affidavit & supporting documents U/s. 14 of SARFAESI Act before the Hon'ble Chief Judicial Magistrate, Madurai and the same has been ordered on 2^nd May 2023. Further, the Applicant had nowhere pleaded with regard to proper violation of the procedure as per Act & Rules.

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The Defendant Bank further submitted that there is no procedural irregularity on the part of the Defendant Bank in issuing the Demand Notice & taking possession & issuing Possession Notice & issuing Sale Notice & bringing the property for sale & issuance of Sale Certificate & subsequent Registration of the Sale Certificate under the SARFAESI Act & Rules and that the alleged procedural irregularity mentioned in the SARFAESI Application are not factually & legally correct and that the Defendant Bank has issued the Demand Notice & Possession Notice, Sale Notice & obtained the Ld. CJM Order only as per the provisions & procedures of the SARFAESI Act & Rules. Hence, if the Sale Notice, Sale Certificate & the Chief Judicial Magistrate Order are set-aside, the Defendant Bank will be put to untold hardships and irreparable loss & injury; on the other hand no prejudice will be caused to the Applicant. The balance of convenience is only in favour of the Defendant Bank.

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It is further submitted that the Applicant is a willful & Chronic Defaulter. She willfully, wantonly & deliberately not repaying the loan amount despite her sufficient means to repay the loan and that the main intention of the Applicants are only to drag on the proceedings without making any payment and to defeat & delay & defraud the valuable rights of the Defendant Bank.

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SA No.209/2023

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It is therefore 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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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 records, and also after considering the arguments by both the Counsels, I find that it is admitted fact that the Applicant has taken loan from the Defendant Bank but the Defendant Bank has submitted that since the Applicant failed to repay the loan amount the loan account has been classified as NPA and thereafter the Bank has issued Demand Notice u/s. 13(2) of the SARFAESI Act on 26.11.2008 and thereafter the Bank has also issued Symbolic Possession Notice on 29.05.2009. Thereafter, the 1^st Defendant Bank issued the Sale Notice dated 16.08.2010, U/s. 13(4) of the SARFAESI Act, 2002, which was challenged by the Applicant before this Tribunal in SA No. 180 of 2010 and the same was dismissed vide Final Order dated 23.07.2012 (Page No. 76 to 79 of Main SA). The Bank has issued another Sale Notice dated 17.02.2012 (Page No. 47 to 49 of Main SA), but the Sale did not happen. The Applicant in her averments says that afterwards, the Bank did not issue any notice to the borrower or the deceased guarantor.

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However, the Defendant Banks in their Reply Statement submitted that the Property has been sold based on Sale Notice dated 06.06.2014 (Para No. 14 of page no. 4 of Reply Statement) , in which the Applicant has not taken any steps to challenge the said notices before DRT. However, on perusal of documents filed by the Defendant Banks, I find that the Defendant Banks have not filed typed set of papers to prove that they have strictly followed the SARFAESI Procedures while issuing the said Sale Notice under the SARFAESI Acts & Rules against the Applicant. Whereas, the Applicant in her averments says that she came to know about the sale

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SA No.209/2023

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proceedings only after getting reply under RTI Act dated 28.09.2015 (Page No. 53 & 54 of Main SA) for her RTI Application dated 13.09.2015 (Page No. 51 & 52 of Main SA).

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I also find that though the Defendant Bank has failed to file the copies of Demand Notice, Possession Notice and Sale Notice dated 06.06.2014 issued to the Applicant and the Borrower and the Postal receipts as a proof for having sent the copies to the Borrower & Guarantor, but the Applicant has admitted in her averments that she has received the Demand Notice and the Possession Notice and for that SA No. 180/2010 also filed which was heard and Order was passed dismissing the said SA. However, the Applicant has submitted that she did not receive the copy of Sale Notice dated 06.06.2014, Copies of Paper Publication made both in Tamil & English and Photograph showing the affixture of Sale Notice dated 06.06.2014 on the conspicuous part of the Property and copy of Valuation Report and the Defendant Bank have also not filed the above mentioned documents to prove that they have strictly followed the procedures as prescribed in the SARFAESI Acts & Rules while selling the Property and failed to rebut the allegations made by the Applicant. Thus, I find that the Defendants Bank has not followed the Rule 8(6) & (7) of the Security Interest (Enforcement) Rules 2002, which clearly says that,

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"Rule 8(6) & (7) in the Security Interest (Enforcement) Rules, 2002:-

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

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Further, the Defendant Bank has failed to file the Valuation Report, since it is mandatory as per Rule 8(5) of the Security Interest (Enforcement) Rules, 2002, which says:-

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"(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" .

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Further, the Defendant Bank did not disclose the date of sale held in the light of Sale Notice dated 06.06.2014. I also find that the Defendant Bank has issued Sale Certificate only on 02.01.2020, i.e. after the lapse of six years of Sale held. (Page No. 56 of Main SA). I also find that the details of property given in the Sale Certificate do not match with the property details given in the Deposit of Title Deeds (Page No. 22A of Applicant's Main SA). I also find that the 1^st Defendant had executed the Sale Deed in favour of the 3^rd Defendant on 09.01.2020 (Page Nos. 57 to 73 of Applicant's Main SA). But neither the Defendant Bank nor the Applicant submitted the Registration of Sale Certificate.

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I also find that after the lapse of three years, the Bank has approached Ld. Chief Judicial Magistrate, Madurai during the year 2023 for taking Physical Possession of the already sold Property i.e. in the year 2014. I also perused the Petition filed by the Defendant Bank before the Ld. CJM, Madurai U/s. 14 of SARFAESI Act (Page No. 92 & 93 of Main SA filed by the Applicant), whereas, the Bank did not mention any documents related to the Sale Notice dated 06.06.2014 rather the Bank has filed copies of Demand Notice, Possession Notice & Sale Notice AD Cards dated 04.06.2009. It is not clear that why the Bank has not disclosed the details of Sale held in the light of Sale Notice dated 06.06.2014 before the Ld. CJM, Madurai, when the Property was already sold during the year 2014 vide Sale Notice dated 06.06.2014, and the Bank has filed the Application for taking Physical Possession for the same property in the year 2023. Moreover, the Bank had already issued Sale Certificate on 02.01.2020 . These facts are not reflected in the Impugned Ld. Chief Judicial Magistrate, Madurai Order dated 02.05.2023 in Cr.M.P.No. 279 of 2023. Hence, I find so many irregularities in the issuance of Sale Notice dated 06.06.2014, Sale Certificate, etc. by the 1^st & 2^nd Defendants Bank. The Reply Statement given by the Defendant Banks is also not satisfactory which is lack of supporting documents and evidences.

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Further, the Impugned Order was passed on 02.05.2023 by the Ld. Chief Judicial Magistrate, Madurai against the Applicant (1^st Respondent) and her Husband Mr. Sivan, the guarantor (2^nd Respondent) and the 2^nd Respondent had already died on 14.05.2021 . So, the Impugned Order passed by the Ld. CJM, Madurai dated 02.05.2023 cannot be treated as correct and is considered to be null and void. Therefore, this court is of the view that the impugned order dated 02.05.2023 passed by the Ld. Chief Judicial Magistrate, Madurai for taking Physical Possession of the Schedule mentioned property is not sustainable in the eye of law and is liable to be set aside.

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The Applicant has no doubt being a defaulter is liable to pay the loan amount to the Defendant Bank and the Bank 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 Bank to sell the property of the Applicant without following the due process of law strictly.

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6 . In view of the above facts and discussions, this Tribunal holds that the Defendant Banks have failed to file the typed set of Papers to rebut the allegations of the Applicant and also failed to prove that they have strictly followed the SARFAESI Acts & Rules, while issuing the Sale Notice dated 06.06.2014, Sale Certificate, etc., and obtaining the Order dated 02.05.2023 passed by the Ld. CJM, Madurai U/s. 14 of the SARFAESI Act, 2002. Hence, this Tribunal is of the considered view to allow this SARFAESI Application as prayed for.

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In the result,

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(a) SA No.209/2023 is allowed as prayed for. Sale Notice dated 06.06.2014 is not in accordance with law as there is violation, the Sale Notice dated 06.06.2014 & Sale Certificate dated 02.01.2020 are hereby set aside by this Tribunal.

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

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(c) The Applicant shall make the payment of the amount incurred by the Auction Purchaser towards the Stamp duty and Registration charges, if the Sale Certificate has already been registered within one month from the date of receipt of copy of the Order.

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(d) The Applicant is also directed to pay the interest at the rate of 4% of the sale price to the Bank from the date of payment of Sale price by

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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.

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(e) Sale Certificate dated 02.01.2020 issued by the 1^st Defendant Bank in favour of 3^rd Defendant is not in accordance with law as there is violation in following the proceedings under the SARFAESI Acts and Rules as such the Sale Certificate is also hereby set aside.

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(f) The Impugned Order passed by the Ld. CJM, Madurai in Cr.M.P.No. 279 of 2023 dated 02.05.2023 is also hereby set aside.

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(g) All the expenditures incurred in issuance of Impugned Order passed by the Ld. CJM, Madurai in Cr.M.P.No. 279 of 2023 dated 02.05.2023 and further all the expenditures incurred in respect of Sale Notice dated 06.06.2014 and subsequent Sale Certificate, etc. shall not be included in the loan account of the Applicant.

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(h) The 1^st & 2^nd Defendant Banks are at liberty to initiate fresh action against the Applicant as per the SARFAESI Acts & Rules.

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

¶122

Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 05^th March, 2025.

sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Dictated & Corrected by me

sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Typed by me

(D. Krishnaveni, PA)

¶132

Uploaded on 19.03.2025

¶133

Page 14 of 14

S Kasthuri v. Canara Bank

Case brief

What is this about?

What did the court decide?

S Kasthuri v. Canara 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

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