Dismissed

R R and Co. v. Union Bank of India

DRT20 Feb 2025SA/308/2023

Case brief

AI extract

What is this about?

The applicant challenged a Sale Notice under the SARFAESI Act, alleging improper service of demand and possession notices. The Tribunal found the bank duly complied with statutory procedures via publication and accepted that the infl showcase notice had become infructuous as the auction did not materialize.

What did the court decide?

The SARFAESI Application No. 308 of 2023 is dismissed; any stays vacated.

R R and Co. versus Union Bank of India — Banking and Recovery | DRT (2025)

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SA. No. 308 of 2023(E)

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20.02.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 20^th day of February, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 308 of 2023

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M/s. R.R. & Co., Represented by its Proprietrix, Mrs. R. Usha Rani, Wife of G.K. Raja No.172/429, Konnur High Road, Ayanavaram, Chennai – 600 023.

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Mr. G.K. Raja No.172/429, Konnur High Road, Ayanavaram, Chennai – 600 023

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….Applicants

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-Vs-

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The Authorized Officer, Union Bank of India, Asset Recovery Branch, No.9, Elcanso Complex, CASA Major Road, Egmore, Chennai – 600 008

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….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. J. Prince Counsel for respondent : M/s. S. Parthasarathy

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ORDER ON SA 308/2023

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The applicant is the borrower who availed loan from respondent bank

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has filed the present SA impugning the sale notice dated 20.05.2023 wherein the property was scheduled to be sold on 14.06.2023.

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20.02.2025

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SA. No. 308 of 2023(E)

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The case of the applicant as putforth in the SA, is that the applicant is the Proprietrix of M/s. RR & CO in the business of Trading and have availed the overdraft facility from the respondent bank. Due to Demonetisation and GST implementation, was affected applicants business and also due to recession in the global market.

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It is contended that the respondent stopped permitting the applicant to operate the account, which further disrupted the applicants business and have hurriedly classified the account as NPA, which was not informed to the applicant.

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Bank has not followed the procedure and regulations as set forth in the SARFAESI Act. No demand notice was served to the borrower and the guarantor, the possession notice was also not served to all the borrowers and the guarantors; nor affixed or published. It is further contended that the bank deliberately mentioned wrong address of the borrower and the description of the property is not clear. The 1^st applicant had intimated the change of address to the respondent bank through letter dated 09.12.2016 and having knowledge about the change of address the applicant is not served the notice. However, the Bank has issued the sale notice dated 20.05.2023 fixing the sale to be held on 14.06.2023.

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20.02.2025

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SA. No. 308 of 2023(E)

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The applicants mortgage property is the only available property to the applicant family and sale notice dated 20.05.2023 issued by the respondent bank is not valid. The applicants have not received the S.13(2) demand notice and have not received the sale notice.

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Further it is contended that the bank has not affixed the possession

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notice and the sale notice and hence prays to set aside the auction sale notice dated 20.05.2023.

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Respondent bank has come on record and has filed a detailed counter along with the separate documents of the measures initiated by the respondent bank. It is submitted that applicant obtained the following facilities which are as under:-

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SI	Name of the borrower	Sanction date	Sanction amount(in crores)	Outstanding as on date
1	M/s. R.R. & Co. represented by its propretrix Mrs. R. UshaRani	03.04.2014	1.57	2,85,85,423.09
2	M/s. R.R. stores represented by its proprietor Mr. G.K. Raja	30.09.2015	0.24	8,39,641.86
3	M/s. Pix Carve represented by its partners, Mrs. Usha RaniandMr. Rahul	10.03.2016	0.245	33,10,679.01
4	M/s. Sri Sai Agencies represented by its proprietrix Mrs. R.UshaRani	1.03.2017	0.24	47,77,158.70
	Total		2.29	4,05,12,902.66

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SA. No. 308 of 2023(E)

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20.02.2025

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The Respondent bank has sanctioned Over draft facility of Rs. 1.57 Crores on 03.04.2014 to M/s. R.R. & Co., represented by its proprietrix, Mrs. Mrs. R. Usha Rani. The property under sale stands in the name of Mrs. Usha Rani and the 2^nd applicant G.K. Raja, is the guarantor to the loan availed by the group of firms. As the loan is availed jointly and severally liable for the entire outstanding of Rs. 4,05,12,902.66. Applicant as borrower has deposited the original title deeds registered as Document No.2749 of 2004 dated 05.07.2004.

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As the applicant was irregular in the repayment, the account has classified as NPA on 31.03.2017 as per RBI guidelines and the bank has issued the demand notice dated 03.11.2022 undersection 13(2) of the Act which was sent by Registered Post and the same Returned to the Respondent on 5.11.2022. Hence Bank has Published S.13(2) Demand Notice in Tamil and English dailies on 7.11.2022 having enough Circulation.

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As the Applicant did not come forward to pay the outstanding within a period of 60 days after the date of the receipt of the demand Notice, but raised objection to S. 13(2) notice, the Representation to S.13(2) received from the applicants dated 3.1.2023 was received by Bank on 5.01.2023 has been responded on 6.01.2023.

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20.02.2025

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SA. No. 308 of 2023(E)

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Hence, in furtherance Responded bank has issued possession notice dated 22.2.2023 under section 13 (4) of the SARFAESI act which was send by the registered post and the borrowers have duly acknowledged the possession notice on 25.2.2023 and some of the covers returned as unserved. The possession notice is affixed on the Mortgage Property and also have published in two newspapers having circulation.

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As the borrower did not liquidate, the bank has issued the 1^st Sale Notice on 06.03.2023 fixing the e-auction sale on 12.04.2023. The sale notice was sent by registered post on 07.03.2023 and the same was returned as “Addressee Left”. The sale Notice is affixed on the secured Property and is published in the newspapers on 07.03.2023 with the clear 30day’s Notice. However, the bank has issued 2^nd sale notice dated 20.05.2023 to the applicant and his group of Concerns with clear 15 days’

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Notice under Rule 8(6) and 9(1) of Security Interest Rules fixing the sale on 14.06.2023.

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The sale notice was sent by registered post on 24.05.2023 which is duly served on 25.05.2023 and some of the covers were returned as unserved. The sale notice is affixed on the mortgaged property and also published in the newspapers dated, 28.05.2023. The Bank has also obtained the valuation from the approved valuer and fixed the reserve

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20.02.2025

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SA. No. 308 of 2023(E)

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price. The Bank has classified the account as NPA as per RBI guidelines and have followed all the procedures as prescribed under the Act, hence prays for dismissal of SA/308/2023.

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Heard the submissions of the Ld. Counsels and perused the records of the case.

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At the outset, the prayer as sought for in the SA is to set aside the Sale Notice dated 20.05.2023 scheduling sale on 14.06.2023 which has not materialized and the prayer has become infructuous. However, the applicant has taken contentions with regard to the Section13(2) and 13(4) that the bank not served on the applicant and not affixed the notices on the

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secured asset.

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Respondent Bank have countered all the contentions in the SA by producing supporting documents. It is seen that after the classification of the account as NPA, the Bank has issued the S.13(2) demand notice dated 03.11.2022 which has returned unserved as evidenced at Page 27 of the objections. As it was not served the Bank has published S.13(2) demand notice in the Tamil and English newspapers dated 07.11.2022 and the copies of the same are produced at Pg.No. 34&35 of the counter.

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20.02.2025

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SA. No. 308 of 2023(E)

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The objection under Section 13(3) of the SARFAESI Act referring to the S.13(2) demand notice dated 03.11.2022 which was received by bank on 05.11.2022 and the copy of the objections raised by the applicant is at Pg.No. 36 of the copy of the counter.

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The objections raised by the applicant is duly replied by the respondent vide letter dated 06.01.2023 which is produced at Pg.No 41 of the objections. Thus, the respondent bank has initiated the measures after classifying the account as NPA and have issued the S.13(2) demand notice to which the borrower has raised their objections and the same is duly replied by the respondent bank as required by the Act and Rules made there under.

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As the applicant did not liquidate the liability within the period of 60 days as mandated under the Section 13(2) of the SARFAESI Act, the bank has proceeded with the issuance of possession notice dated 22.02.2023 the possession notice was not received by the applicants and the returned covers are produced at Pg.No.48. The bank has affixed the possession notice as required under Rule 8(1) of the relavant rules on the secured asset and the same is also published in English and Tamil Newspapers under Rule 8(2) of the SARFAESI Act.

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20.02.2025

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SA. No. 308 of 2023(E)

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Inspite of receipt of Section 13(2) and Section 13(4) the notices, the applicant did not liquidate the liability, hence, the bank has published the sale notice dated 20.05.2023 and the property to be sold on 14.06.2023. The sale notice was sent by RPAD as per postal receipt which has produced at Pg.No. 66. Further the sale notice was also published in English and Tamil daily newspaper on 07.11.2022 as per Rule 8(6) which is also produced at Pg.No. 68.

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As the sale did not materialized the bank has issued second sale notice fixing the sale to be held on 14.06.2023 and the second sale notice was sent by RPAD and the postal receipts and the returned covers are produced at Pg.No. 74 & 75 of the objections. It is seen that the second sale notice was published in the English and Tamil Newspaper dated 28.05.2023. The Bank has produced the valuation report obtained from

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their approved valuer for fixing of the reserve price and for putting the property to auction.

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It is submitted that the sale did not take place and the prayer in the SA has become infructuous. However, the applicant though had raised objections to 13(2) demand notice had not challenged the S.13(4) possession notice dated 22.02.2023.

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20.02.2025

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SA. No. 308 of 2023(E)

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The challenge to possession notice dated 22.02.2023 is not within the period of 45 days as required under Section 17(1) of the SARFAESI Act. Applicant had intimated the change of address to the respondent bank vide letter dated 09.12.2016 and the notice is being sent to old address at 141, AUDIAPPA NAICKEN STREET. Applicant further produced the change of address at Pg.No. 10 evidently the letter is received by the respondent bank and it is seen from the letter that the applicant has intimated the shifting of the office to its new address Mrs. 172, Konnur High Road, Ayanavaram, Chennai -23.

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Further, on perused of the sanction letter, it is seen that the address of the company at the time of the sanction is No.141, Audiappa Naicken street, Parrys Chennai. They issued the demand notice intimated that the applicant due is for a sum of Rs. 2,80,30,657.09 and S.13(2) demand notice was also issued to the address at No. 141, Audiappa Naicken street which was produced at the Pg. No. 23 of the typed set. Hence, the contention that notices are sent to old address will not sustain. Further notices are duly served and bank has complied the due compliance of procedures as required under the Act.

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The Ld. Counsel Mr. P.M. Surrendhar had filed the vakalath on

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04.02.2025 for the applicant submitted his arguments on the main SA.

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20.02.2025

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SA. No. 308 of 2023(E)

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Upon examining of the facts and the circumstances and the documents produced by both the parties, it is evident that the prayer sought for in the SA is to set aside the Sale Notice dated 20.05.2023 as become infructuous. On perusal of the documents produced by the bank they have established the due compliance of the measures taken under the SARFAESI Act and Rules made there under. The Respondent Bank have adhered to the procedures in initiating the measures u/s 13(4) and the same is supported by documents which establishes due compliance of the measures as mandated under the Act.

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For the foregoing reasons, the present SA 308/2023 stands dismissed.

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Accordingly, SA stands dismissed.

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I/O if any stays vacated.

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Pending I.A’s are disposed off.

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No order as to cost.

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(Dictated to the Stenographer, transcribed by her, corrected, signed and pronounced by me in Open Court, on this the 20^th day of February, 2025)

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Sd/-

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S.V. GOWRAMMA PRESIDING OFFICER-DRT III

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SA. No. 308 of 2023(E)

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20.02.2025

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SCHEDULE OF PROPERTY

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All that piece and parcel of vacant land bearing plot no.74 measuring 2040 Sq.ft., comprised in Survey Nos. 23/1, 23/2 and 23/3 situated at Murugan Nagar Layout, Thozhuvar Village, Thiruvalluvar Taluk and District.

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Boundaries of the property:

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North by : Plot No.73 South by : Road East by : 30 feet road West by : Plot No.75

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INDEX TO THE TYPED SET OF DOCUMENTS FILED ALONG WITH THE APPEAL

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Sl. No.	Description of Documents	Page No.
1.	Appeal U/s. 17(1) of the SARFAESI Act, dated 12.06.2016	1-9
2.	Change of address intimation to the Respondent dated 09.12.2016	10
3.	Impugned SaleNotice dated20.05.2023	11-15
4.	Vakalath dated 12.06.2023	16

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INDEX TO TYPED SET OF DOCUMENTS PRODUCED BY THE RESPONDENT

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Sl. No.	Description of Documents	Page No.
1.	Counter Affidavit dated14.08.2023	1
2.	Sanction Intimation to M/s. R.R. & Co., for Rs.1.57 Crores towards CashCreditfacility dated 03.04.2014	10
3.	Sanction letter issued to M/s. R.R. & Co., for Rs.24.00 Lakhs dated 30.09.2015	18
4.	Sanction letter issued to M/s. Pix Carve for Rs.24.50 Lakhs dated10.03.2016	19
5.	Sanction letter issued to M/s. Sri Sai Agencies for Rs.24.00Lakhs dated 31.03.2017	21
6.	13 (2) Demand Notice issued to the Borrower/Guarantor dated 03.11.2022	23

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SA. No. 308 of 2023(E)

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20.02.2025

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7.	Postal Receipts dated 04.11.2022	26
8.	Acknowledgement Cards and Returned Covers dated 05.11.2022	27
9.	Paper Publication in Englishdated17.11.2022	34
10.	Paper Publication in Tamildated17.11.2022	35
11.	Objection raised by the Borrower/Guarantors dt:03.01.2023	36
12.	Reply to Objection letter by the Respondent Bank dt:06.01.2023	41
13.	Possession Notice under Rule 8 (1) dt: 22.02.2023	45
14.	Postal Receipts dt:24.02.2023	47
15.	Acknowledgement Cards/Returned Covers dt:25.02.2023	48
16.	AffixingPossession Notice– PhotographsRule 8 (1)	57
17.	Paper publication in English under Rule 8(2) dt.:23.02.2023	58
18.	Paperpublication in Tamilunder Rule 8(2) dt.:23.02.2023	59
19.	1^stSale Notice for sale of immovable properties under Rule 8(6) and 9(1) fixing up e-auction sale on 12.04.2023 dt.:06.03.2023	60
20.	Postal Receipts dt.07.03.2023	66
21.	Paper Publication in English under Rule 8(6) dt.07.03.2023	67
22.	Paper Publication in Tamil under Rule 8(6) dt.07.03.2023	68
23.	2^ndSale Notice for sale of immovable properties under Rule 8 (6) and 9 (1) fixing up e-auction sale on 14.06.2023 dt.20.05.2023	69
24.	Postal Receipts dt:24.05.2023	74
25.	Acknowledgement Cards/Returned Covers dt;25.05.2023	75
26.	Affixing Salenotice– PhotographsRule 8 (7)	91
27.	Paper Publication in English under Rule 8(6) dt.28.05.2023	92
28.	Paper Publication in Tamilunder Rule 8(6) dt.28.05.2023	94
29.	Valuation Report for Plot No.74 – 2040 Sq.ft., dt:20.02.2023	95
30.	Sale Deed in Document No.8433 of 2004 stands in the name of Mrs. R.Usharanidt:27.12.2004	114
31.	Memorandum of Deposit of Title Deeds in Doc No.1808 of2014 dt.05.05.2014	119
32.	Statement of Account for Loan A/c No.560361000001787 with Certificate under Bankers’ Book Evidence Act. Dt;09.08.2023	128
33.	Statement of Account for Loan A/c No.565101000016881 withCertificate under Bankers’	132

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SA. No. 308 of 2023(E)

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20.02.2025

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34.	Book EvidenceAct. Dt;14.08.2023 Statement of Account for No.560101000004389 with Certificate Book EvidenceAct. Dt;14.08.2023	Loa under	n A/c Bankers’	136
35.	Statement of Account for No.565101000004061 with Certificate Book EvidenceAct. Dt;09.08.2023	Loa under	n A/c Bankers’	139

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Sd/-

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S.V. GOWRAMMA

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PRESIDING OFFICER-DRT III

R R and Co. v. Union Bank of India

Case brief

What is this about?

What did the court decide?

R R and Co. v. Union Bank of India

Case brief

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