Dismissed

M S Reashma Cell Phone Sales and Services v. Indian Bank

DRT10 Sept 2025SA/252/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal examined a challenge to a possession notice issued by a bank under Section 13(4) of the SARFAESI Act. The applicants alleged procedural irregularities regarding service of notice and registration of security interest. The Tribunal found that the bank complied with all statutory requirements and dismissed the application.

What did the court decide?

Application No. 252 of 2024 stands dismissed; pending IAs are closed; parties to bear own costs.

M S Reashma Cell Phone Sales and Services versus Indian Bank — Company and Corporate | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 10^th day of September, 2025

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PRESENT: SHRI SHARANG DHAR UPADHYAY Presiding Officer

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SA No.252 of 2024

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M/s Reashma Cell Phone Sales and Services 36-B, New Burma Bazar Vijaya Theatre Road

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Thanjavur

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Mr. Jaheer Husssain

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S/o Mohammed Ibrahim

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Residing at Rathinasamy Nagar 5^th Street, RMS Colony, East Gate

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Thanjavur

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Mr. S.R. Amanulla S/o S.S. Rahmatulla

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Residing at 26, Ramasamy Pettai Street Manambuchavady, Thanjavur … Applicants

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Versus

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The Authorised Officer Indian Bank, Thanjavur Junction Branch No.1087, Ground Floor, Mission Street Thanjavur District – 613 001

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…Respondent

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Counsel on Record / Appeared

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Applicant by : Ld. Counsel M/s M. Sudhan & K. Jayaganga Respondent by : Ld. Counsel M/s P.V. Murlidhar

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O R D E R

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This petition is filed under Section 17(1) of the SARFAESI Act

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challenging the Possession Notice dated 06.05.2024 issued by the Respondent Bank under Section 13(4) of the SARFAESI Act.

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Facts of the case as averred in the SA

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2.0 The 1^st applicant approached the respondent bank for grant of credit facilities for urgent requirement of its business and considering the said request the respondent had sanctioned an aggregate loan of Rs.92,18,000/comprising of SOD Trade Well loan of Rs.75,00,000/-, IND GECLS loan of Rs.10,50,000/- and IND GECLS1 loan of Rs.6,68,000/-.

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2.1 The applicants executed necessary loan and security documents to secure the credit facility availed from the respondent. The 1^st applicant was initially regular in repaying the loan, however due to COVID-19 pandemic and the Municipality demolishing part of the shop premises, the 1^st applicant suffered huge loss resulting in default in repayment.

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2.2 The respondent bank despite being aware of the financial condition of the 1^st applicant without considering the several payments made by the 1^st applicant classified the loan account as NPA.

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2.3 The respondent without registering the security interest in the central registry has invoked the provisions of the SARFAESI Act, which action of the respondent is illegal and cannot be sustained.

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2.4 The respondent failed to serve the demand notice issued under Section 13(2) of the SARFAESI Act on 22.04.2024 on all the parties as required under law. The respondent failed to affix the demand notice on the secured asset

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and also failed to reply under Section 13(3-A) of the SARFAESI Act.

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2.5 The respondent bank failed to serve the impugned Possession Notice dated 06.05.2024 issued under Section 13(4) of the Act on all the parties. The respondent has charged usurious interest and has capitalized the penal interest against the guidelines of the RBI and the judgments of the Hon’ble Supreme Court of India. The respondent failed to serve the statement of accounts despite repeated requests made by the applicants.

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2.6 The impugned Possession Notice dated 06.05.2024 is illegal and liable to be set aside.

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Grounds Urged

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3.0 (i) The classification of the account as NPA is without any basis and contrary to the guidelines of the RBI.

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(ii) The respondent failed to serve the demand notice issued under Section 13(2) of the SARFAESI Act on all the parties and also failed to affix the same and also failed to reply under Section 13(3-A) of the Act.

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(iii) The impugned Possession Notice is not served on all the parties, it is neither affixed nor published in newspapers as mandated under the Act, thus the respondent has failed to comply with Rule 8(1) of the Security Interest (Enforcement) Rules, 2002.

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3.1 The applicants had filed impugned Possession Notice along with the SA.

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Counter of Respondent

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4.0 Upon notice the respondent filed counter affidavit stating therein that the applicant approached the respondent for grant of credit facilities and availed loan to the tune of 92,18,000/- for improving the business of the 1^st applicant.

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4.1 After availing the credit facilities the applicants were highly irregular in repayment and despite several demands and personal visits to the 1^st applicant, the applicants did not come forward to regularize the loan account and hence the loan account was classified as NPA on 21.02.2024.

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4.2 The respondent therefore invoked the provisions of the SARFAESI Act and issued the demand notice under Section 13(2) of the SARFAESI Act on 22.02.2024 and the same was duly served on the applicants. Hence there is no necessity for affixing the same on the secured asset.

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4.3 The applicants despite receiving the demand notice neither complied the same nor sent any reply, which resulted in issuing the impugned Possession Notice under Section 13(4) of the SARFAESI Act on 06.05.2024.

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4.4 As the applicants did not sent any reply / objection to the demand notice, the question of complying with Section 13(3-A) of the Act by the respondent does not arise at all.

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4.5 The secured asset is duly registered with CERSAI vide ID No.400026851858 dated 24.12.2021.

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4.6 The present SA filed by the respondent is liable to be dismissed.

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4.7 The respondent bank filed following documents in support of its contention: -

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(i) Demand Notice dated 22.02.2024 issued by the respondent under Section 13(2) of the Act and the postal acknowledgments.

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(ii) The impugned Possession Notice dated 06.05.2024 along with postal acknowledgements.

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(iii) Paper publication of the Possession Notice in English and Tamil dailies.

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(iv) Proof of affixture of Possession Notice on the secured asset.

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Points for consideration

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5.0 Having heard at length the arguments of the Ld. Counsels appearing on

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behalf of the parties and after going through the documents available on

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record, the following point arises for determination in these proceedings: -

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Whether the impugned possession notice is in accordance with the Act and the Rules framed thereunder?

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Answers to the point for consideration

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6.0 At the outset, it is to be stated that while the secured creditor has been given the right to enforce the security interest without the intervention of the Court or Tribunal, the secured creditor while enforcing the same shall invariably comply the provisions of the SARFAESI Act and the Rules made thereunder, lest, the Tribunal can set aside the same if questioned.

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6.1 Hon’ble Supreme Court of India, in re Mathew Vargheese Vs. M.

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Amirtha Kumar and others 2014 (5) SCC P-610( paragraph 24) held :

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“that a free hand is given to the SECURED CREDITOR for the purpose of enforcing any security interest created in favour of SECURED CREDITOR, without the intervention of the Court or Tribunal. The only other relevant aspect contained in the said sub- section is that such enforcement should be in accordance with the provisions of this Act . A reading of Section 13(1), therefore, is clear to the effect that while on the one hand any SECURED CREDITOR may be entitled to enforce the SECURED ASSET created in its favour on its own without resorting to any court proceedings or approaching the Tribunal, such enforcement should be in conformity with the other provisions of the SARFAESI Act ”

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6.2 In so far as the case on hand is concerned, since the subject matter of

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challenge is Possession Notice issued in terms of Section 13(4) of the SARFAESI Act, the same shall be in conformity with Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002, which are as follows:

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“ 8. Sale of immovable secured assets.—

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(1) Where the secured asset is an immovable property, the authorised 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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(2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer.”

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6.3 The respondent bank, in its counter affidavit, have firmly asserted that

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they had complied with the required mandatory procedure and also filed

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documents in support of the said contention.

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6.4 In so far as the ground raised by the applicant with regard to nonservice of demand notice dated 22.02.2024 on all the parties and the

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respondent failed to comply with Section 13(3-A) of the SARFAESI Act, it is to be stated that the respondent bank has filed the demand notice dated 22.02.2024 and the postal acknowledgements of having served the same on the applicants at Pages 5 to 8 of its typed set of documents filed along with the SA. It is also seen that the applicants have appended their signature in the demand notice for having received the same. Therefore, there is no necessity for affixing the demand notice on the secured asset. Further, as the applicants did not give any reply / objection to the demand notice issued by the respondent, the question of respondent giving reply under Section 13(3-A) of the Act does not arise at all. Hence this ground raised by the applicants fails.

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6.5 As regards the other ground of the applicants that the impugned Possession Notice dated 06.05.2024 is not served on the parties, it was neither affixed nor published in newspapers as contemplated under the SARFAESI Act and the respondent has thus failed to comply with Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 is concerned, it is to be stated that the respondent bank in its typed set of documents has produced the Possession Notice dated 06.05.2024 and the postal acknowledgements dated 08.05.2024 for having served the same on the applicants at Pages 10 to 13 of the typed set. The respondent has also produced the copies of paper publication dated 06.05.2024 at pages 14A and 15A of the typed set for having published the same in English and Tamil dailies well within 7 days of the notice. Further the respondent has filed the photographs evidencing

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affixture of the possession notice on the secured asset at Pages 16 to 18 of the typed set. Thus this ground raised by the applicants also fails.

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6.6 In so far as the ground of the applicants that the security interest is not registered with the Central Registry is concerned, the respondent has submitted that the same has been done vide ID No.400026851858 dated 24.12.2021 and hence this ground also falls to the ground.

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6.7 Thus, there is compliance of mandatory provisions of the SARFAESI Act and the Rules made thereunder by the Authorised Officer while issuing the possession notice impugned in this application, hence, the same does not call for any interference by this Tribunal. Point is answered accordingly.

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7.0 Therefore, for the aforesaid reasons, the Tribunal finds no merit or substance in the application and the measures as initiated by the respondent bank are in conformity with the provisions of the SARFAESI Act and the Rules made thereunder, as such, the same does not warrant any interference from the this Tribunal.

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