The Debt Recovery Tribunal dismissed the applicants' securitization application challenging a Section 14 possession order, ruling that such powers are ministerial, non-adjudicatory, and not subject to challenge under Section 14.
Application dismissed; no interference with Section 14 order; no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
SA No.31/2023
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09.07.2025
IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI
Dated this the 9th day of July, 2025
Present: SMT. S.V. GOWRAMMA Presiding Officer
SA No. 31 of 2023
Adambakkam, Chennai – 600 088. ….Applicants
-Vs-
The Authorized Officer Canara Bank, No. 375, Anna Salai, Saidapet, Chennai – 600 015. ….Respondent
Counsels on record / appeared:
Counsel for Applicant : M/s. Thanu Madhan N.S Counsel for respondent : M/s. T.S. Gopalan & CO
ORDER ON SA 31/2023
the ‘Act’) challenging the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].
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Pleadings of the applicant:
3.1 The applicant availed loan of Rs.175 Lakhs from the respondent bank on 27.11.2014 which was enhanced to Rs.300 Lakhs but released only Rs.35 Lakhs vide sanction dated 23.08.2017 and executed all the documents on 24.08.2017.
3.2 The applicants submit that the borrower concern defaulted in repayment and the bank has invoked power under the SARFAESI Act and issued Sec.13(2) Demand Notice on 11.11.2019 claiming an amount of Rs.2,53,66,651.95 as on 31.10.2019.
3.3 The declaration of account as NPA on 30.09.2018 and the date of default being 90 days prior is 30.06.2018. In the demand notice issued to the 3rd applicant namely the guarantor, date of NPA is missing and the notice is not sent to every applicants separately. The Sec.13(2) demand notice dated 11.11.2019 was posted on 20.11.2019 which is received on
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21.11.2019, as per the postal acknowledgement cards submitted before the Hon’ble CJM Chengalpet.
3.4 The bank have issued to Sec.13(4) Possession Notice on 07.02.2020 which is only affixed as per the order in Sec.14 and there is no copy of the Sec.13(4) possession notice issued to the 3rd applicant and the postal acknowledgment cards not enclosed. Hence there is no possession notice issued in the name of any of the applicants and the possession notice is not served on all the parties.
3.5 It is contented that the respondent has referred to sec.13(4) possession notice and taken symbolic possession of the property on 07.02.2020, affixed notice on the property on 07.02.2020 and published on 30.09.2018 and the balance amount due is less than 20% of the Principal Amount and Interest.
3.6 The Hon’ble CJM Chengalpet has gone by the false affidavit filed by the Authorized Officer and the claim made by the Bank is a clear case of “Unjust enrichment” which is barred under fiscal/law.
3.7 It is submitted that the prescribed period of limitation for cash credit limits commences on the date of execution of documents including renewal before default. The Terminus ad quem by which secured asset can be sold is on 24.08.2020 and the rights of the bank extinguished on that date.
3.8 The bank has already filed an OA.369 of 2020 on 17.08.2020 because the limitation as already expiring on 24.08.2020 for there is no provision in the Limitation which provides that the limitation extinguished under the
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SARFAESI Act and Sec.52 of the Transfer of property Act, 1882 actual apply in such multiple proceedings. The bank has claimed an amount of Rs.2,53,66,651.95 in the Sec.13(2) demand notice 11.11.2019, whereas the claimed debt due and recoverable of Rs.2,59,56,665/- as on 31.07.2020 where there exactly 9 months differences between the two claims which the borrows or guarantors have made by the bank.
3.9 The Certificate under Section 2(A)(a) of the banker’s Evidence Act, 1891 provided in the OA as Exhibit A 13 being assumed to be true would mean that the claim under the Sec.13(2) Demand Notice is false.
3.10 As per the Sec.13(1) the action under the SARFAESI Act must be completed without the intervention of any Court or Tribunal, which means the OA 369 of 2020 could not have been filed at all in the first place. As per sec.18(1) 2nd proviso that the maximum amount to be recovered is that claimed in the Sec.13(2) Demand Notice or that determined by the Hon’ble Tribunal.
3.11 The Hon’ble DRAT always imposes conditions based on the claim made in the Sec.13(2) Demand Notice only and the Hon’ble Supreme Court in a Judgment rendered last week has clearly stated that the “debt due” under the SARFAESI Act is that claimed in the Sec.13(2) Demand Notice issued.
3.12 It is contented that the property value is substantially more and closer to a minimum of Rs.9.00 crores and Hon’ble CJM Chengalpet appointed a lady advocate commissioner who being pregnant could not
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enforce the warrant and subsequently vide order dated 22.09.2022 has been modified by appointing Mr. Kingsly Paulraj vide Amendment endorsed in Page No.5 of the Order in CMP No.13001/2022 dated 20.12.2022.
3.13 The applicants submit that no affidavit has been filed in accordance with the 9 sub clauses to Sec.14(1) of the SARFAESI Act and the payments made subsequent to Sec.13(2) is not clarified. The applicant intents to use the right to redemption the property by paying under protest.
3.14 It is contented that the claim of the bank is barred by Limitation and the claim exceeds in the demand notice and in the OA claim. The demand notice is issued in violation of RBI Guidelines and Sec.13(4) possession notice is not served on any of the applicants.
3.15 In the grounds of SA, it is contented that the plea of limitation or a plea of resjudicata is a plea of law which concerns the jurisdiction of the court which tries that had held in.
3.16 That the Hon’ble Supreme Court in Gaurav Hargovindbhai Dave Vs Asset Reconstruction Company (India) Ltd., and Ors., 2019(14) SCALE38 held as follows applies.
Having heard the learned Counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being “an application” which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by learned Counsel appearing on behalf on the appellant, time, therefore, beings to run on 21.07.2011, as a result of which the
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application filed Under Section 7 would clearly be time-barred. So far as Mr. Banerjee’s reliance on para 7 of B.K. KQ Services Private Limited (Supra), suffice it to say that the Report of the Insolvency Law Committee itself stated that the intent of the code could not have been to give a new lease of life to debts which are already timebarred.
3.18 That reading the above with the judgment reflects Article 62 applies to “suits” and the Hon’ble DRT’s do not entertain suits. They entertain only “applications”. Limitation Act has been divided into 3 parts namely suits, appeals and application. By definition suit, does not include appeals and application. Hence Article 62 cannot apply to this SA. Hence only Article 137 of the limitation Act would apply. Date of documents executed or renewed provided by the defendant bank in its counter will prove by a simple rule of arithmetic whether the claim is barred by limitation or not.
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3.20 That the Hon’ble Supreme Court in Keshavlal Khemchand and Sons Pvt. Ltd., Vs. Union of India (UOI), AIR2015SC1168, held as follows.
5.. section 13(2) of the Act provides as follows; (2) where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment therefor, and his account in respect of such debt is classified by the secured creditor as NPA, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under Sub-Section(4).
6.. Sub-Section (2) also stipulates three conditions precedent for the issuance of such notice-(i) that the borrower must have a liability under a ‘security agreement’; (ii) that the borrower made a default in repayment of the debt or the instalment therefor; and (iii) that the account in respect of such debt is classified by the secured creditor as a ‘non-performing asset’ (hereinafter referred to as “NPA”).
3.21 Therefore the Sec.13(2) Demand Notice prepared as per the provisions of the Act including the date of NPA should have been served on the Guarantor, Omission of this single material fact will render the statutory notice void.
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3.22 That the ratio decidendi of the Hon’ble Supreme Court in State of Orissa and Anr vs Mamata Mohanty, (2011) 3SCC436 applies to the facts of this case wherein it held as follows.
It is settled legal proposition that if an order is bad in its inception, it does not get sanctified at a later stage. A subsequent action/development cannot validate an action which was not lawful at its inception, for the reason that the illegality strikes at the root of the order. It would be beyond the competence of any authority to validate such an order. It would be ironic to permit a person to rely upon a law, in violation of which he has obtained the benefits. If an order at the initial state is bad in law, then all further proceedings consequent thereto will be non est and have to be necessarily set aside. A right in law exists only and only when it has a lawful origin.
3.23 That it is alleged that no Sec.13(4) symbolic possession notice has been served on the applicants. Even assuming without admitting that it has been served, it had to be served anterior to affixing it on the property on 07.02.2020, ie., on the same date. With the practice of the Sec.13(2) Demand Notice itself being served 9 days after its issuance, the sec.13(4) possession notice is unlikely to have been served on 07.02.2020 and that would be an illegality since the provisions of the Act and it’s Rules are mandatory.
3.24 It is well settled principle of law that when a statute requires a particular act to be performed in a particular manner, it shall be performed only in that manner and not in any other manner. This has been stated in the following judgment. If the Sec.13(4) Possession Notice has not been served, nothing survives. Explicitly alleged and evidence points towards the same. Simple to rebut. Hence prays to set aside sec.14 order dated 22.09.2022 as amended on 20.12.2022.
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Objections of the respondent bank:
4.1 As the applicants failed to operate the credit limits the account was classified as NPA on 30.09.2018 and issued the Sec.13(2) demand notice on 11.11.2019 to the 1st and 2nd applicant mentioning the date of NPA on 30.09.2018 and called upon them to remit sum of Rs.2,53,66,651.95 due as on 31.10.2019. All the three applicants are living in the same address namely No.6, Officer’s Colony 4th Main Road, Adambakkam, Chennai, 600 008. The Demand Notice sent by Registered Post AD was received by the applicants on 20.11.2019.
4.2 The applicants did not pay nor raised the objections, hence the bank issued the possession notice on 07.02.2020 and took symbolic possession of the property. Possession Notice is affixed on the property and published in the “The Indian Express” and Tami Daily “Dinamani” dated 11.02.2020.
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the Possession Notice, the property was advertised for sale 7 times and now the property is sold in an E-Auction held on 28.06.2022 to Mr. D. Balasubramaniam towards the tendered 25% of the bid amount on 08.08.2022. As he failed to tender the balance of 75% within 90 days’ time extended by the Authorized officer and the amount was forfeited.
4.4 The bank issued another sale notice scheduling the property to be sold on 15.11.2022 fixing the reserve price at Rs.6,42,00,000/- and the property is sold to M. Jagadesh, s/o Arunachalam for Rs.6,43,00,000. The bidder deposited Rs.64,20,000/- by way of earnest money on 11.11.2022, Rs.46,55,000/- on 15.11.2022 and completed the sale by 01.12.2022. The sale certificate was issued to him on 01.12.2022. As such, the sale has become final and binding as against applicants. Therefore, they cannot impugn the order of the Chief Judicial Magistrate granting assistance to the bank to take physical possession. Having acquiesced in the possession of the property and subsequent sale notices, it is not open the applicants to challenge the physical possession of the property. The Ld. CJM has considered the relevant circumstances required and has granted the order for taking physical possession.
Heard both sides of the Counsels and perused the records of the
case
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by deposit of title deeds on 21.01.2015, registered in the Sub-Registered as Document No.290 of 2015 which constitutes the secured assert.
5.1 Infact the applicant does not dispute the availing of the credit facilities and the mortgage of the property and also default in the repayment. It is also not disputed fact that the due to default in the repayment the bank has classified the loan account as NPA on 30.09.2018 and have initiated the measures under the SARFAEIS Act by issuing the S.13(2) demand notice dated 11.11.2019.
5.2 The 1st and 2nd applicant does not dispute the issuance of the 13(2) demand notice and the acknowledgement cards produced pg.22 and 24 of the typeset clearly reflects that the demand notice is received by them on 20.11.2019. As the borrowers and guarantors did not raise any objection to the demand made in the 13(2) demand notice the respondent bank has proceeded further and issued the Sec.13(4) possession notice dated 07.02.2020 which is received by the applicant herein as per the acknowledgements of the receipt of the possession notice. As per procedure the possession notice is affixed on the secured assert and is published in the two newspapers which is produced at pg. 27 to 29 of the typeset. Thus it is evident that the respondent bank has followed all the procedures as enumerated in the acts and rules made thereunder.
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possession the bank has filled the Section 14 application before CJM Kancheepuram District at Chengalpattu in CMP.8556 of 2022 dated 22.09.2022 as amended on 20.12.2022 and have obtained the order which is challenged in the present SA.
5.4 It is matter on record that the bank has issued the sale notice dated 07.10.2022 which is received by the applicants herein and the sale notice is also published in the two newspapers has required under the Act. The sale was successfully held and sale is also confirmed and auction purchaser and 16.11.2022. As the sale is not under challenge the Tribunal is confining only to the pleading with regard to sec.14 order the Ld. Counsel assertively submits that he has filed an application for amendment of the SA. However on verification of the case papers it is seen that no such application is pending or seen in file. It is pertinent to note though applicant has filed SA in 20123 has not made efforts to pursue the amendment application as put forth nor has made any application advancing the matter to consider the amendment appellation which is not seen on file.
5.5 The applicant admittedly availed loan of Rs.175 Lakhs and the 3rd applicant is the mortgagor & guarantor. The contention that the claim made by the respondent in the Sec.13(2) demand notice dated 11.11.2019 and in the OA.369 of 2020 differs and OA is filed to cover as limitation period was expiring on 24.08.2020. The applicant has taken contentions in respect of the OA.369.2020 and admits that the OA is filed within the period of limitation and is contesting the matter. However, the respondent bank as secured creditor has initiated the measures after the account was
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classified as NPA and have issued the Sec.13(2) demand notice on 11.11.2019 demanding to pay the entire outstanding amount due.
5.6 Further the amount due in Sec.13(4) Possession Notice is also payable by the applicant and the contention that the debt is time barred cannot sustain an admittedly OA is filed within the period of Limitation as contended by the applicant in SA averments.
5.7 The contention that the right to enforce the security interest had extinguished on 23.01.2021 does not sustain as the financial intuition can proceed both under the RDDB Act and also SARFAESI Act as per the judgments of the Hon’ble Supreme court which is settled position of law. The applicant has to raise all the contention in the OA.
5.8 Now considering the challenge to S.14 Order, it is appropriate to mention the declaration of The Hon’ble Supreme Court and various Hon’ble High Courts in various judgments has held that the power of Designated Court under Section 14 SARFAESI Act, 2002 is ministerial and nonadjudicatory in nature and the process to be followed under Section 14 does not involve any element of quasi-judicial function nor it requires any application of mind.
5.9 The Hon’ble Supreme Court in the matter of Kotak Mahindra Bank vs Girnar Corrugators Pvt. Ltd. & Others , held that while exercising power under Section 14 of the SARFAESI Act, District Magistrate or even the Chief Metropolitan Magistrate has no jurisdiction to adjudicate the dispute between secured creditor and debtor.”
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5.10 The Hon’ble Bombay High Court in the matter of Phoenix ARC
Pvt. Ltd. Vs. The State of Maharashtra has held that Court is only required to verify the affidavit of Secured Creditor filed in pursuance of the proviso to Section 14 and nothing more. The above Bombay High Court judgment has since been confirmed by the Hon’ble Supreme Court by its judgment dated 26.09.2022 in the matter of Balakrishna Ram Tarle v.
Phoenix ARC (P) Ltd. as under:
“Thus, the powers exercisable by CMM/DM Under Section 14 of the SARFAESI Act are ministerial step and Section 14 does not involve any adjudicatory process qua points raised by the borrowers against the secured creditor taking possession of the secured assets. In that view of the matter once all the requirements Under Section 14 of the SARFAESI Act are complied with/satisfied by the secured creditor, it is the duty cast upon the CMM/DM to assist the secured creditor in obtaining the possession as well as the documents related to the secured assets even with the help of any officer subordinate to him and/or with the help of an advocate appointed as Advocate Commissioner. At that stage, the CMM/DM is not required to adjudicate the dispute between the borrower and the secured creditor and/or between any other third party and the secured creditor with respect to the secured assets and the aggrieved party to be relegated to raise objections in the proceedings Under Section 17 of the SARFAESI Act, before Debts Recovery Tribunal”.
5.11 Additionally, Section 14(3) of the SARFAESI Act statuses that no action taken by the Chief Metropolitan Magistrate or District Magistrate (or
any officer authorized by them) under S.14 can be challenged in court or before any other authority. This provision ensures that the authority of these officials in enforcing security interests is final and not subject to further review.
5.12 T hus, the S. 14 order dated 20.12.2022 passed by the Ld. CMP in Crl.M.P. No.8556/2022 is after due consideration and is only an execution
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order where no adjudication is required. The Order is passed considering the compliance of the provisions of the S. 14 [i-ix].
5.13 For the foregoing reasons, the Tribunal is not inclined to interfere in the S.14 Order as it is passed after due consideration of the petition, followed by Affidavit and the documents in compliance of the procedures has allowed the S.14 application which does not requires any intervention from this Tribunal. Accordingly SA stands dismissed.
5.14 Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.
Sd/-
(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI
( Dictated to Steno (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 9th day of July, 2025)
LIST OF DOCUMENTS PRODUCED BY THE APPLICANT
| Sl. No. |
Description of Documents | Documents No. |
|---|---|---|
| 1. | Adhoc sanction commitment letter dated 24.08.2017 |
A-1 |
| 2. | Recall Notice dated 01.07.2019 | A-2 |
| 3. | Sec 13(2) Demand Notice to Guarantor dated 11.11.2019 |
A-3 |
| 4. | Postal Acknowledgement Cards dated 21.11.2019 |
A-4 |
| 5. | Sec 13(4) Possession Notice dated 07.02.2020 | A-5 |
| 6. | Paper Publication in 2 Papers dated 11.02.2020 | A-6 |
| 7. | 3 Certificates in OA 369 of 2020 dated 10.08.2020 |
A-7 |
| 8. | Sec 14 petition dated 15.10.2020 | A-8 |
| 9. | Index to Sec 14 Application dated 15.10.2020 | A-9 |
| 10. | Sec 14 affidavit dated 15.10.2020 | A-10 |
| 11. | Statement of account last 2 pages dated 16.10.2020 |
A-11 |
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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET
| Sl. | Description of Documents | Documents |
|---|---|---|
| No. | No. | |
| 1. | Copy of Demand Notice dated 11.11.2019 | R-1 |
| 2. | Acknowledgement of receipt of demand notice dated 21.11.2019 |
R-2 |
| 3. | Copy of possession Notice dated 07.02.2020 | R-3 |
| 4. | Acknowledgement of receipt of Possession Notice |
R-4 |
| 5. | Photographs showing affixture of possession notice |
R-5 |
| 6. | News Paper Publication of Possession Notice – Tamil & English dated 11.02.2020 |
R-6 |
| 7. | Copy of sale notice and postal receipts dated 07.10.2022 |
R-7 |
| 8. | Paper publication of sale notice | R-8 |
| 9. | Acceptance letter to given by the respondent dated 15.11.2022 |
R-9 |
| 10. | Letter of Confirmation given by the respondent dated 16.11.2022 |
R-10 |
| 11. | Statement of Accounts | R-11 |
SCHEDULE OF PROPERTY
Property belongs to Mrs. Devi N.
All that piece and parcel of land and building situated at Chennai District, formerly Saidapet taluk and now lying within the limits of Corporation of Chennai, No. 137 Velachery Village, comprised in S. No. 578, bearing Plot No. 46, Shaw Wallace Colony 3rd Street, Brindavan Nagar Main Road, Adambakkam, Chennai – 600 088. Land measuring 8439 sq ft and building measuring 1740 sq ft. Property in the name of Mrs. N. Devi,
Bounded by:
North : Plot No.45 South : Channel East : Road West : Plot No. 43 Sd/-
(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI
3 issues framed by the court
Whether the Securitization Application was maintainable by the Debts Recovery Tribunal to challenge a Section 14 order.
Whether the impugned Section 14 order allowing possession was liable to be set aside due to alleged procedural irregularities or bar of limitation.
Whether the power of the Designated Court under Section 14 of the SARFAESI Act is ministerial and non-adjudicatory.
Colour shows how this judgement treated each authority
Gaurav Hargovindbhai Dave vs. Asset Reconstruction Company (India) Ltd.Explained¶56
Gaurav Hargovindbhai Dave Vs Asset Reconstruction Company (India) Ltd., 2019(14) SCALE 38
Vashdeo R. Bhojwani vs. Abhyudaya Co-operative Bank Ltd.Explained¶69
Vashdeo R. Bhojwani Vs. Abhyudaya Co-operative bank ltd., AIR2019SC4671
Keshavlal Khemchand and Sons Pvt. Ltd. vs. Union of IndiaExplained¶70
Keshavlal Khemchand and Sons Pvt. Ltd., Vs. Union of India, AIR2015SC1168
State of Orissa vs. Mamata MohantyExplained¶77
State of Orissa and Anr vs Mamata Mohanty, (2011) 3SCC436
Kotak Mahindra Bank vs. Girnar Corrugators Pvt. Ltd.Explained¶119
Kotak Mahindra Bank vs Girnar Corrugators Pvt. Ltd. & Others
Balakrishna Ram Tarle vs. Phoenix ARC (P) Ltd.Applied¶122
Balakrishna Ram Tarle v. Phoenix ARC (P) Ltd.
Phoenix ARC Pvt. Ltd. vs. The State of MaharashtraExplained¶120
Phoenix ARC Pvt. Ltd. Vs. The State of Maharashtra
4 provisions across 1 enactments
M/s. K. Enterprises - Rep by Mr. Sekaran N.
M. Sekaran N.
Mrs. Devi N.
Authorized Officer Canara Bank
S.V. Gowramma
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
S.V. Gowramma
Parties & counsel
