Allowed

M R Mohandoss v. State Bank of India

DRT28 Aug 2025SA/313/2023

Case brief

AI extract

What is this about?

Applicant challenged the issuance of a Possession Notice under the SARFAESI Act, alleging failure to serve the mandatory Demand Notice. The Tribunal found the Demand Notice was undelivered and service was defective. Ruling that strict compliance with procedural rules is mandatory, the Tribunal held the recovery action invalid and set aside the Possession Notice.

What did the court decide?

The Possession Notice dated 14.07.2023 issued by the Defendant Bank is set aside. Expenditures for the invalid notice are not to be included in the loan account.

M R Mohandoss versus State Bank of India — Banking and Recovery | DRT (2025)

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SA 313/23

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Some clerical mistakes were found in the final order in SA 313/2023 dated 28.08.2025, uploaded on 12.09.2025 and the same has been suo moto corrected today. The Revised order has been uploaded. The earlier order may please be ignored.

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SA No.313/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 28^th DAY OF AUGUST, 2025 PRESENT: SEEMA SINHA [PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

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SA No. 313/2023

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Mr. M.R. Mohandoss, S/o. S.R. Muthuvel, Flat No. B-1/1, Ground Floor, Baskara Residential Apartments, No.1, Tollgate, Bikshander Kovil, Trichy – 621 216. …. Applicant Vs

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The Authorized Officer, State Bank of India, RACPC, Administrative Unit, Network-II, No.7, McDonalds Road, Tiruchirappalli – 620 001. …. Defendant Bank

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Appearance of Advocates:

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Mr. S. Suresh ---- Counsel for the Applicant Mr. R. Pandivel ---- Counsel for the Defendant Bank

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This SARFAESI Application was heard in the presence of Counsels for the Applicant and the Defendant 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 of the SARFAESI Act, 2002 by the Applicant praying that this Hon'ble Tribunal may be pleased to

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Page 1 of 9

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SA No. 313/2023

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set aside the entire SARFAESI Proceedings initiated by the Defendant Bank ending up with the affixture of Possession Notice dated 14.07.2023 for the Schedule Mentioned Property and pass such other orders.

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

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The Counsel for the Applicant submitted that the Applicant availed Housing Loan for a sum of Rs. 11.00 Lakhs from the Defendant Bank during the year 2005 for purchase of flat in Apartment. The Applicant was prompt in repayment till 2020. However, due to the Covid-19 Pandemic and the lock down announced by the Government life came to a standstill and the Applicant suffered for his livelihood and the life turned to be miserable. Hence, he is not in a position to repay the loan amount as per the repayment schedule of the Defendant Bank initiated recovery proceedings and initiated action under the SARFAESI Act and alleged to have issued 13(2) Demand Notice dated 24.08.2022 claiming a total sum of Rs. 8,94,982/- as on 24.08.2022. However, the said 13(2) Demand Notice was not served on the Applicant and the Applicant came to know about the same only through the Possession Notice dated 14.07.2023.

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It is further submitted that the Defendant Bank had unilaterally revised the rate of interest from 7.75% to 12% without any basis and without any notice to the Applicant and that is the main cause for default in repayment of EMI. In the meantime, all of a sudden, the Defendant Bank took symbolic Possession of the property on 14.07.2023 by affixing the Possession Notice. However, the said Possession Notice dated 14.07.23 was not served on the Applicant nor the same was published in 2 Newspapers as contemplated under the Rules. Since, the Defendant Bank had violated the procedures contemplated under the Rules by not publishing the Possession Notice dated 14.07.23, aggrieved over the above action of the Defendant, the Applicant is preferring the present Application among the following and other

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Main Grounds :

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The Possession Notice dated 14.07.23 issued by the Defendant Bank is arbitrary and is liable to be set aside.

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The Impugned action of the 1^st Defendant suffers from errors apparent on the face of the record and hence the same is liable to be set aside/quashed by this Hon'ble Tribunal.

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Page 2 of 9

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SA No. 313/2023

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The Defendant had not served the mandatory 13(2) Demand Notice to the Applicant and does not have any right or jurisdiction to proceed further under SARFAESI Act.

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The Defendant Bank ought not have unilaterally revised the rate of interest from 7.75% to 12% without any basis and without any notice to the Applicant and that is the main cause for default in repayment of EMI.

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The Possession Notice dated 14.07.23 was not served on the Applicant nor the same was published in 2 leading newspapers.

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The Applicant is not chronic defaulter and repaid substantial amount to the Defendant Bank.

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The Applicant was prompt in repayment till the intervention of Covid-19 Pandemic.

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The Claim of the Defendant Bank is not corresponding to the Statement of Accounts hence the claim is bad in law.

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The Applicant is aged about 72 years and the property is the dwelling house of the Applicant, where he resides with his family.

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Description of Property

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Schedule – A

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Tiruchirapalli District and Registration District and Manachanallur Sub-District in No.16, Bikshandarkoil Village in No. 1, Tollgate S.F.No. 70/4 (Re survey No. 70/4-B), Within this total an extent of 64655 Sq.Ft. and comprised in Block wise bounded on the

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North by: Plot Owner of Gopal and other portion of land & Road, South by: Iyyan Vaikal, East by : Private Land, West by : Petrol Bunk and Saw Mill,

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Measuring in all B Block of Residential Flats area together with usual pathway and easement rights relating thereto

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SA No. 313/2023

Schedule-B

339 Sq.ft. of Undivided share of land out of the land described in Schedule-A. In this a Flat (area 789 Sq.Ft.) in Block B, bearing No. B-1/1, Ground Floor, Baskara Residential Apartments, No. 1, Tollgate, Bikshander Kovil, Trichy-621216. This property belongs to Shri. M.R. Mohandas vide Sale Deed Document No. 1969/2005 dated 15.09.2005.

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

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S.No.	Date	Details of Documents
1.	14.07.2023	13(4)Possession Notice
2.		Statement of Accounts

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3 . On the other hand, the Counsel for the Defendant Bank appeared before this Tribunal and filed Vakalat, Reply Statement & Typed set of papers in which the 1^st Defendant Bank has vehemently denies each & every allegations under the heading "Facts of the case" & "Grounds" of the SARFAESI Application and further submitted the Applicant are put to strict proof of each and every one of the said allegations with valid & acceptable evidence. Most of the allegations are unwarranted so far as the matter-inissue is concerned.

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It is further submitted that the Applicant was not prompt in repayment of loan and that the bank is not accepting the reasons stated by the Applicant for non-repayment of loan and further the Demand Notice was served on the Applicant and that the Bank is always having all right to proceed further and that the bank has revised the rate of interest only as per the contract. It is also submitted that the Possession Notice was served on the Applicant and that the same was also published and the Possession Notice is neither arbitrary nor unreasonable nor unsustainable and further the action of the bank does not suffer from any errors apparent on the face of the record and that the Applicant is a chronic defaulter and the claim of the bank is corresponding with that of the Statement of Accounts and the action of the bank is neither unlawful nor unreasonable nor without jurisdiction nor against the principles of natural justice. Hence, the Possession Notice is not liable to be set aside.

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Page 4 of 9

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SA No. 313/2023

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It is further submitted that the 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 both in Tamil and English daily in time. But the Applicant has not sent any reply to the 13(2) Demand Notice.

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It is further submitted that there is no procedural irregularity on the part of the Defendant Bank in issuing Demand Notice & taking possession & issuing Possession Notice 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 only as per the provisions & procedures of the SARFAESI Act & Rules. Hence, if the Possession Notice is set-aside, the Defendant bank will be put to untold hardships & irreparable loss & injury on the other hand no prejudice will be caused to the Applicant.

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Therefore, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the Application with cost and thus render justice.

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TYPED SET OF DOCUMENTS FILED BY THE DEFENDANT BANK

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S.No.	Date	Particulars
1	24.08.22	DemandNoticewith returncover
2	14.07.23	Possession Notice with AD Cards & Return Covers
3	14.07.23	Possession NoticePaper Publication in Englishdaily
4	14.07.23	Possession NoticePaper Publication in Tamildaily
5	14.07.23	Photography showing affixture of Possession Notice

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5. 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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6 . Having heard the parties and after going through the entire documents available on the records, and

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also after considering the arguments by all the Counsels, I find that it is

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SA No. 313/2023

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admitted fact that the Applicant has availed Housing Loan for a sum of Rs. 11.00 Lakhs (Rupees Eleven Lakhs only) from the Defendant Bank for purchase of Flat in Apartment and offered the Schedule Mentioned Property as security in favour of the Defendant Bank. It is alleged by the Applicant that due to the Covid-19 Pandemic and the lock down announced by the Government, the Applicant suffered for his livelihood and the life turned to be miserable. Hence, he is not in a position to repay the loan amount as per the repayment schedule of the Defendant Bank and hence the loan account was classified as NPA. It is further alleged that RBI had issued guidelines to restructure the Housing Loan during Covid-19 period. However, the Defendant Bank without considering the same had wrongly classified the loan account as NPA.

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On the contra, the Defendant Bank has submitted that the Applicant was not prompt in repayment of loan amount. Hence, the Bank has issued Demand Notice u/s. 13(2) of the SARFAESI Act on 24.08.2022 for a sum of Rs. 8,94,982/- (Rupees Eight Lakhs Ninety Four Thousand Nine Hundred and Eighty Two only). However, the Applicant claimed that the Demand Notice was not served to him by the Defendant Bank. I also perused the documents filed by both the parties and the typed set of papers filed by the Defendant Bank, I find that the Bank has produced the copies of Returned cover with postal remarks “Left” at page no. 4, which clearly shows that the Demand Notice was returned to the Defendant Bank and it was not served or delivered to the Applicant. I also find that the Defendant Bank sent the Possession Notice to the address of “No. 3/258, Ashok Nagar, Kumaresapuram, M Koothapur Post, Tiruchirapalli-620013”, which was bounced back with postal remarks “No such address….”. The Bank has filed AD Card in respect of Possession Notice at page no. 6 having the address of “Flat No. B-1/1, Ground Floor, Block B, Bhaskaraa Residential Apartments, No. 1, Tolgate, Bikshandar Kovil, Trichy-621216”, for which AD Card is filed by the Defendant Bank (Page No. 6 of Bank’s typed set of papers). Whereas, in respect of Demand Notice, the Bank has not sent the Demand Notice dated 24.08.2022, to the address of “Flat No. B-1/1, Ground Floor, Block B, Bhaskaraa Residential

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Page 6 of 9

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SA No. 313/2023

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Apartments, No. 1, Tolgate, Bikshandar Kovil, Trichy-621216”, instead they sent only to the address of “No. 3/258, Ashok Nagar, Kumaresapuram, M Koothapur Post, Tiruchirapalli-620013”, if the Bank would have sent the Demand Notice to the address of Trichy 621216, the Demand Notice might have been received by the Applicant, but the Bank failed to do so. I also find that the Defendant Bank has not submitted any evidence as a proof for having affixed the Demand Notice on the outer door of the property and also not published the Demand Notice in two leading newspapers, one in vernacular language, having sufficient circulation in that locality as prescribed under Rule 3 (1) of Security Interest Enforcement Rules, 2002, which clearly says: -

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“ 3. Demand notice. (1) The service of demand notice as referred to in subsection (2) of section 13 of the Act shall be made by delivering [including hand delivery] or transmitting at the place where the borrower or his agent, empowered to accept the notice or documents on behalf of the borrower, actually and voluntarily resides or carries on business or personally works for gain, by registered post with acknowledgment due, addressed to the borrower or his agent empowered to accept the service or by Speed Post or by courier or by any other means of transmission of documents like fax message or electronic mail service:

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Provided that where authorized officer has reason to believe that the borrower or his agent is avoiding the service of the notice or that for any other reason, the service cannot be made as aforesaid, the service shall be effected by affixing a copy of the demand notice on the outer door or some other conspicuous part of the house or building in which the borrower or his agent ordinarily resides or carries on business or personally works for gain and also by publishing the contents of the demand notice in two leading newspapers, one in vernacular language, having sufficient circulation in that locality.”

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Hence, it is established that the Defendant Bank failed to serve or deliver Demand Notice to the Applicant as prescribed under Rule 3 (1) of Security Interest Enforcement Rules, 2002, as there is lack of evidence. Hence, the question of sending reply/representation to the Demand Notice by the Applicant U/s. 13(3-A) of SARFAESI Act to the Defendant Bank does not arise.

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SA No. 313/2023

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Thereafter, the Defendant Bank has issued Possession Notice U/s. 13(4) of SARFAESI Act on 14.07.2023 (Page No. 5 of Bank's typed set of papers). I perused the documents produced by the Bank and I find that the Defendant Bank has filed AD cards & returned cover (Page Nos. 6 to 9 of Bank's typed set of papers) and Bank has also filed Paper Publication of Possession Notice dated 14.07.23 in English Daily “New Indian Express” published on 21.07.2023 (page nos. 10 & 11 of Bank’s typed set of papers) and Paper Publication in Tamil Daily “Dhinamani” published on 21.07.23 (page nos. 12 & 13 of Bank’s typed set of papers), I also find that in both publications, date of Possession Notice is given as 20.07.23 (page nos. 10 & 12 of Bank’s typed set of papers), whereas the original date of Possession Notice is 14.07.2023. So, the Defendant Bank has published the Possession Notice in both newspapers only on the 7^th day, which is as per Rule 8 (2) of Security Interest Enforcement Rules, 2002.

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The Bank has also filed the photos at page no.14 of Bank’s typed set of papers as evidence showing the affixture of the Possession Notice on the conspicuous part of the property, but date was not mentioned on which date it was affixed. However, on the affixture of Notice date is handwritten as 14.07.2023. However, the Applicant has admitted in his pleading that Bank has affixed the Possession Notice on the property on 14.07.23. So, I find that Bank has not violated the Rule 8(1) of Security Interest Enforcement Rules, 2002.

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Having considered the entire evidence adduced by both the parties and also in view of the above facts and circumstances of the case, I find that the Defendant Bank has not followed the due procedures for recovery of the loan amount under SARFAESI Act in issuance of Demand Notice as well as Possession Notice to the Applicant. It is true that Applicant has challenged the Possession Notice but Cause of action arises since from the date of issuance of Demand Notice and the Demand Notice was not served to the

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Page 8 of 9

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SA No. 313/2023

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Applicant as it appears from perusal of record but when the Applicant received the Possession Notice, he has challenged the same by filing this SA.

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It is well settled law that Bank can recover the due loan amount from the borrower under the SARFAESI Act and without intervention of the Court provided he has to follow the procedure mentioned under the SARFAESI Act & Rules strictly, because property is the constitutional right of the individual and hence, the Bank cannot take the possession of the property without following the mandatory provisions of Act & Rules. As such, I find merit in the above SARFAESI Application. Therefore, this Tribunal holds that the Applicant is entitled to get the reliefs as prayed for in SA No. 313/2023.

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In the result,

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(a) SA No. 313/2023 is allowed. The Possession Notice dated 14.07.2023 issued by the Defendant Bank is hereby set aside as Demand Notice was not served to the Applicant as per SARFAESI Act & Rules.

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(b) All the expenditures incurred in issuance of Impugned Possession Notice dated 14.07.2023 shall not be included in the loan account of the Applicant.

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(c) The Defendant Bank is at liberty to initiate fresh action against the Applicant for recovery of loan amount following strictly the SARFAESI Acts & Rules.

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

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Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 28^th August, 2025.

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(SEEMA SINHA)

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PRESIDING OFFICER

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Uploaded on 19.09.2025

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Page 9 of 9

M R Mohandoss v. State Bank of India

Case brief

What is this about?

What did the court decide?

M R Mohandoss v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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