Allowed

T Sankarasubramaniyam v. City Union Bank Limited

DRT8 Dec 2025SA/317/2025

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal set aside SARFAESI proceedings initiated by a bank, including a possession notice dated 2017 and an auction sale in 2022. The violence proceeded due to procedural violations, including delayed affixation of possession notices, failure to consult the secured creditor on reserve price valuation, and non-compliance with notice serving rules. Consequently, the sale certifica

What did the court decide?

Set aside the possession notice dated 18.08.2017, the auction sale on 18.06.2022, and the Sale Certificate dated 03.08.2022. Banks directed to refund sale consideration with 4% interest to the purchas

T Sankarasubramaniyam versus City Union Bank Limited — Banking and Recovery | DRT (2025)

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SA No.316/2025 & Connected SA No. 317/2025

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 08^th DAY OF DECEMBER 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. 316/2025 &

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Connected SA 317/2025

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Mr. T. Sankarasubramanyam, S/o. K.P. Tirumalai, D. No. 22/26, Chittawar Street, W. Pudhupatti Post, Srivilliputhur – 626 116. Virudhunagar District. 2. Mr. K.P. Tirumalai, S/o. Parthasarathy, D.No. 22, Chittawar Street, W. Pudhupatti Post, Srivilliputhur – 626 116. Virudhunagar District. --- Applicants -Vs1. The Authorized Officer, City Union Bank Ltd, Credit Recovery and Management Department, “NARAYANA” Administrative Office, No. 24-B, Gandhi Nagar, Kumbakonam – 612 001. 2. The Bank Manager, City Union Bank Ltd, Srivilliputhur Branch, Srivilliputhur. --- 1^st & 2^nd Defendants Bank

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Page 1 of 20

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SA No.316/2025 & Connected SA No. 317/2025

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Smt. R. Shanmugapriya, W/o. Raja, No. 438, Mudukku Street, Watrrap – 626 132, Virudhunagar District. --- 3^rd Defendant/Auction Purchaser

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Appearance of Advocates:

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Mr. M. Arun Murugan ---- Counsel for the Applicants M/s. V.S. Karthi ---- Counsel for the 1^st & 2^nd Defendant Banks M/s. R. Aravind Raj ---- Counsel for the 3^rd Defendant/Auction Purchaser

¶15

These both SAs were heard together in the presence of Counsels for the Applicants, 1^st & 2^nd Defendant Banks and 3^rd Defendant/Auction Purchaser respectively and both SAs together have been fixed for passing final order before me as both cases aroused out of same cause of action 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 . a. SA No. 316/2025: This Application has been filed under Sec. 17(1) of the SARFAESI Act, 2002 by the Applicants praying that this Hon'ble Tribunal may be pleased to set aside the entire SARFAESI Proceedings initiated by the 1^st Defendant Bank more particularly the Auction Sale Notice dated 31.05.2022 and the consequential Auction Sale held on 18.06.2022 ending up with the issuance of Sale Certificate in favour of the 3^rd Defendant dated 03.08.2022 for the Schedule Mentioned Properties.

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Further in

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b. SA 317/2021: To set aside the entire SARFAESI Proceedings initiated by the 1^st Defendant Bank ending up with the issuance of Sale Certificate in favour of the 3^rd Defendant dated 03.08.2022 pursuant to the Auction Sale conducted on 18.06.2022 by the 1^st Defendant in pursuance of the Auction Sale Notice dated 31.05.2022 for the Schedule Mentioned Properties.

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

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The Counsel for the Applicants submitted that the 1^st Applicant along with one Mr. G. Muthusamy was doing Food Masala Manufacturing and selling business in the name and style of Maruthi Masala and set up the manufacturing and packaging unit in the subject property. Even though the

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Page 2 of 20

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SA No.316/2025 & Connected SA No. 317/2025

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name of the Partnership Firm is Sri Renganathar Rice Mill, the business was Masala manufacturing and selling the brand name of Maruthi Masala. The Partnership firm M/s. Sri Renganathar Rice Mill represented by its partners, the 1^st Applicant and Mr. G. Muthusamy have availed several credit facilities for a sum of Rs. 96,00,000/- from the 2^nd Defendant Bank. For all the above said credit facilities, the subject property was given as security and the same was valued around Rs. 100.00 Lakhs apart from stocks and raw materials available to the tune of Rs. 25.00 Lakhs. The Applicants were prompt in servicing interest and repayment of principal regularly as per the repayment schedule of the 2^nd Defendant Bank.

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It is further submitted that in the meantime, one of the partner Mr. G. Muthusamy was diagnosed with cancer and died on 03.02.2016. Further, during the same period, the 1^st Applicant suffered with a hole in the blood vessel leading to his brain and he underwent a lacer surgery during March 2017. Hence, he was not able to come out of the house and only for the past one year he is able to come out and travel. In view of the above developments, the firm was not able to continue the business activities any more and the unit was closed. In the meantime, the 1^st Defendant Bank classified the loan account of the Applicant as NPA on 03.10.2016 and issued a Demand Notice dated 22.02.2017 U/s. 13(2) of SARFAESI Act for a sum of Rs. 99,22,629/-. As the 1^st Applicant was under treatment, the 2^nd Applicant immediately rushed to the 1^st Defendant Bank and explained them about the situation and requested them to relieve the legal heirs of the deceased G. Muthusamy and grant time. The 1^st Defendant directed the Applicants to pay a sum of Rs. 12,00,000/- to relieve the legal heirs of late G. Muthusamy and accordingly the same was paid and the legal heirs were relieved by the 1^st Defendant.

¶26

Thereafter, the Defendant Bank issued Possession Notice U/s. 13(4) of the SARFAESI Act dated 18.08.2017 and took symbolic possession of the Schedule Mentioned Properties, which is illegal. The 1^st Defendant Bank failed to affix the Possession Notice on the conspicuous part of the property and failed to publish the said Possession Notice in two newspapers. Thereafter, the 1st Defendant brought the properties for Auction Sale and issued a Sale Notice dated 26.11.2018 and fixed the date of sale on 17.12.2018 and upset price for the 1^st Property was fixed as Rs. 45,00,000/- and Rs. 12,00,000/was fixed for the 2^nd Property and for machineries Rs. 10,00,000/- was fixed as upset price, totally the upset price fixed for a sum of Rs. 67,00,000/-. However, on the auction date no sale was taken place for want of bidders. Thereafter, the 1^st Defendant brought the properties for Auction Sale on more than 4 occasions and the sale did not materialize and bank has taken Physical Possession of the Schedule Mentioned Properties during 2019. The Applicants had also filed SA SR No. 500 of 2020 by challenging the Sale Notice in the

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Page 3 of 20

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SA No.316/2025 & Connected SA No. 317/2025

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year 2020 and the same was rejected without numbering and further appeal to the DRAT, Chennai was also ended against the Applicants.

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It is further submitted that in the meantime during COVID -19, the 2^nd Applicant also fell ill and he was also under medical treatment. In the meantime, the 1^st Defendant brought the Schedule Mentioned Properties for sale by issuing the Auction Sale Notice dated 31.05.2022 fixing the date of sale on 18.06.2022. The Applicants received the same only on 07.06.2022 and there was no 15 days from the date of service of notice as per Rule. Further, the Sale Notice was not affixed on the property and not published in newspapers. Further, it is mentioned that the upset price was drastically reduced to the immovable property and only Rs. 35,00,000/- as against the earlier upset price of Rs. 57,00,000/- was fixed during 2018 Auction Sale. Further, intentionally there is no whisper about the Machineries which was valued at Rs. 10,00,000/- in the earlier notice and nothing has been stated about the machineries in the present Sale Notice. On the date of Sale, i.e. 18.06.2022, the 1^st Applicant went to the Defendant Bank and informed the Defendant Bank that they have a buyer who is willing to buy the property. However, the 2^nd Defendant informed that no sale is going to take place on that day and asked them to come on some other day. The 1^st Applicant was there till 3.00 pm and no auction sale had taken place.

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It is further submitted that when the Applicants applied for Encumbrance Certificate, they came to know that the 1^st Defendant in order to favour the 3^rd Defendant had created documents to show that the subject property was sold to the 3^rd Defendant for a sum of Rs. 35,05,000/- on 18.06.2022 and played fraud. When the Sale Deed was presented for Registration before the concerned Sub Registrar, the same was kept as a pending document and ordered for field inspection as the property was valued as Rs. 45,65,000/- in the Annexure-1A. It is crystal clear that the property was undervalued and the 1^st Defendant in active collusion with the 3^rd Defendant had sold the property for a throw away price by playing fraud. Even before the document was released by the SRO, the 3^rd Defendant got the revenue records changed in her name. Aggrieved over the same, the Applicants are preferring the present Application among the following and other,

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Main Grounds:

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The Auction Sale Notice dated 31.05.2022, issued u/s. 13(4) of the SARFAESI Act by the 1^st Defendant and the alleged Auction Sale Notice conducted on 18.06.2022 in favour of the 3^rd Defendant ending up with the issuance of Sale Certificate in favour of the 3^rd

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Page 4 of 20

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SA No.316/2025 & Connected SA No. 317/2025

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Defendant dated 03.08.2022, is arbitrary and is liable to be set aside.

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The 1^st Defendant has not made proper Paper Publication of the notices issued u/s. 13(4) of SARFAESI Act. And, failed to affix the Auction Sale Notice on the property and not published the same in two leading newspapers.

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The reserve price fixed for the secured asset is very low price comparing to the market price prevailing at present.

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The 1^st Defendant ought to have seen that they themselves have fixed upset price as Rs. 67,00,000/- in their earlier Sale Notice in 2018.

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The 1^st Defendant colluding with the 3^rd Defendant had created documents as if they had conducted the Auction Sale in favour of the 3^rd Defendant for a sum of Rs. 5,000/- more than the upset price.

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The 1^st Defendant who was in Kumbakonam was not present in the premises where the Auction is scheduled to be held and no auction had taken place on 18.06.2022 at the premises of the 2^nd Defendant.

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The Defendants 1 to 3 in active collusion with each other played fraud and sold the property to a throw away price.

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The property was not sold to the best possible price by the 1^st Defendant and the Applicants are having a better purchaser who is ready and willing to purchase the property for a better price.

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Schedule of Properties

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Property-I (Owned by the 1^st Applicant)

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All that piece and parcel of vacant land along with buildings, Superstructure to be put up thereon in future, is situated at Virudhunagar Registration District, Watrap Sub-Registrar Office, W. Pudupatti Village in Patta No. 710, Survey No. 693/1, measuring 31 cents out of from 43 cents a building with Vacant Site bounded by:

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North : Odai,

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South : W. Pudhupatti to Goplapuram Main Road, East : Applicant Land, West : Land belongs to Thirumalai,

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Within the boundaries land measuring 31 cents i.e.13156 Sq.ft. Within the land with building measuring East West 60 feet, North South 30 feet total 1800 Sq.ft. (i.e.) 167.23 Sq.Mtr. With a mud wall with Thakarasippu Rise Mill and Flour Mills machineries and a thakarasaippu building measuring East to West 70 Feet and South to North 30 feet total 2100 Sq.Ft.(i.e.) 195.10 Sqr.Mtr., with Mud Wall with E.B.Connection No.4, (30 HP) and

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Page 5 of 20

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SA No.316/2025 & Connected SA No. 317/2025

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E.B.Connection No. 601 and it is situated at W.Pudhupatti Selection Grade Panchayat Ward No. 4, Melagopalapuram Road D.No. 4,5,7 with other facilities etc. Registration District of Coimbatore and with the Mettupalayam Sub-Registration District.

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Property II (Owned by the 2^nd Applicant)

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All that piece and parcel of land is situated at Virudhunagar District, Virudhunagar Registration District, Watrap Sub Registrar Office, W. Pudupatti Village in Ayan Punjai Survey No. 693/1, on Western side measuring 12 Cents from out of from 43 Cents bounded by: North : Odai,

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South : W. Pudhupatti to Goplapuram Main Road, East : Borrower Rice Mill, West : Pudhupatti Bus Stand,

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Within the boundaries measuring 12 Cents i.e. 5532 Sq. From the. i.e. 486.07 Sq. Mtr. Land with a commercial building bearing Door No. 3 built thereon with E.B. Connection and all other facilities.

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The Applicants have submitted the following list of documents in support of their claim in the SA, which are as follows:

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S.No.	Date	Details of documents
1.	20.05.2015	Sanction Ticket
2.	22.02.2017	13(2)Demand Notice
3.	18.08.2017	Publication of Possession Notice
4.	26.11.2018	Auction Sale Notice issued bythe 1^stDefendant
5.	31.05.2022	Auction Sale Notice(Impugned Notice)
6.	03.08.2022	Sale Certificate
7.	26.08.2022	Encumbrance Certificate for the subjectproperty
8.	23.08.2022	Patta transferred in the name of the 3^rdDefendant
9.	10.01.2023	Order in W.P.(MD)No. 20914of2022

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Additional Typed set pages

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S.No.	Date	Particulars
1.	-	Photos ofplant andmachinery
2.	03.08.2025	Sale Certificate(English Translation copy)
3.	07.08.2025	Replyunder RTI with respect to machinery

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On the other hand, the Counsel for the 1^st & 2^nd Defendants Bank appeared before this Tribunal and filed Vakalat, Reply Statement, Written Arguments and Typed set of papers in which they have submitted that the appeal is not maintainable either in law or on facts, the Applicant will have to prove each and every ground. It is further submitted that the Applicants are

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Page 6 of 20

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SA No.316/2025 &

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Connected SA No. 317/2025

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applied and availed for OLS Term Loan to the tune of Rs. 15,00,000/- on 05.08.2014 and again they applied and availed OLCC Term Loan to the tune of Rs. 25,00,000/- on 19.09.2014 and additionally they obtained another OSL Term Loan to the tune of Rs. 15,00,000/- on 20.02.2015 and again they obtained another OSL Term Loan to the tune of Rs. 26,00,000/- on 25.07.2015 and finally they applied and availed another OSL SPL Term Loan to the tune of Rs. 15,00,000/- on 29.06.2016. The Applicants are agreed to pay interest 14.25%, 16.25% interest and 2% penal interest at such other rates as may be revised by the bank from time to time.

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It is further submitted that the Applicants have deposited the original title deeds as security for the various Loans agreement. For availing the loan, the Applicants have executed the following documents in favour of the Defendant Bank and has also executed the Registered Memorandum of Deposit of Title Deeds on 02.08.2014 vide doc.no.1064/2014 and also executed Registered Memorandum of Deposit of Title Deeds on 20.02.2015 vide doc.no. 209/2015 and further executed Registered Memorandum of Deposit of Title Deeds on 24.07.2015. It is further submitted that the facilities availed by the Applicants and there is due of Rs. 1,98,08,279/- as on 19.05.2022. Wherein, the Applicant had defaulted in repayments, and consequently account was declared as NPA by the bank on 03.10.2016 and thereafter it was intimated to the Applicants on 22.02.2017. The loans and interest at applicable rates are also agreed by way of above documents. As per the RBI guidelines, for the rate of interest, the bank is charging the interest, for which the Applicant has executed the documents in favour of the bank.

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The Applicants have agreed to repay the loan and interest. The Applicants are also agreed to pay interest at the applicable rates for each loan or at such other rates as may be revised by the bank from time to time. The Applicant had agreed to create an equitable mortgage of the property more fully described in Schedule “A” hereunder as security for the due repayment of the loans. As the Applicants have agreed for all the Terms and Conditions, the Defendant Bank had sanctioned the 5 loans sum of Rs. 96,00,000/- on various dates on 05.08.2014, 19.09.2014, 20.02.2015, 25.07.2015, 29.06.2016 to the Applicants.

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It is further submitted that the Applicants have been failed to adhere to the terms of the loan agreement and defaulted in repayment. Hence, the Defendant Bank had classified the Applicant’s account as NPA on 03.10.2016 and issued statutory Notice u/s. 13(2) of the above Act on 22.02.2017 for a sum of Rs. 99,22,629/- (Rupees Ninety-Nine Lakhs Twenty-Two Thousand Six Hundred and Twenty-Nine only). The above said Demand Notice was issued to the Applicants on 22.02.2017 and the same was served to

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Page 7 of 20

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SA No.316/2025 &

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Connected SA No. 317/2025

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Applicants on 28.02.2017 and in respect of other borrowers, AD Cards are returned on 25.02.2017 and also effected notice in the Bi-lingual Newspaper publications of Demand Notice in Tamil and English dailies like Dinamani and The New Indian Express respectively on 06.03.2017. The Applicants have not sent any objection or representation to the bank and after receiving the notice u/s. 13(2), bank has taken symbolic possession of the secured asset on 18.08.2017 by affixing notice in the property by the Authorized Officer, Panchanama was also taken on the same day. The Bank has also effected notice in the Bi-lingual Newspaper publications of Symbolic possession in Tamil and English dailies like, Dinamani and The New Indian Express respectively on 18.08.2017.

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It is further submitted that the Applicants being an influential person in the locality and hence the bank has approached the Hon’ble District Magistrate/District Collector Virudhunagar vide ROC. No. C3/32997/2017 since the Applicant/Borrower has resisted the Physical Possession taking of the secured asset. The Hon’ble District Magistrate/District Collector has passed an order on 07.02.2018 for execution of Physical Possession of the property in the presence of VAO and Tahsildar. The VAO and Tahsildar have assisted the Authorized Officer in taking Physical Possession on 25.01.2019 and the possession of secured asset was taken with inventories and sealed with wax seal in the lock. Since, the Borrower has failed to repay the dues, the Defendant Bank has taken e-sale process and notice was published on 01.06.2022 (31.05.2022 dated 5^th Sale Notice) for the auction sale of the secured asset. The sale was confirmed on 18.06.2022 to Mrs. R. Shanmugapriya, W/o. M. Raja, 1158/43B, Mudukkuth theru, Watrap626132 to the tune of Rs. 35,05,000/-. The bank has sent the 5^th E-Auction Sale Notice to the Applicants on 31.05.2022 and the same was served. The Bank has made Paper Publication in both English and Tamil dailies on 01.06.2022 and the bank fixed the E-auction on 18.06.2022 and Sale Certificate was issued on 12.07.2022 in favour of Mrs. R. Shanmugapriya and also the Registered Sale Certificate was executed by the bank in favour of R. Shanmugapriya vide doc.no.1477/2022 on 03.08.2022.

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It is further submitted that the procedures adapted by the bank invoking the SARFAESI Act in classifying the account as NPA, raising Demand Notice, taking symbolic possession of the secured asset, taking Physical Possession of the secured asset and finally e-auction sale of the secured asset are all well within the Law and nothing infringed so far. The Applicant has not appealed or agitated any of the procedures till the symbolic possession. The secured assets do not belong to the guarantors. The valuation is properly done with the value report and the Applicants have failed to prove as he has contended. Further, there was no machineries found at the time of taking the

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Page 8 of 20

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SA No.316/2025 & Connected SA No. 317/2025

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physical position that was notified by the revenue officer, since Applicant himself has taken all the movables/machineries for servicing the same but it’s learned that he hides the same in this custody still.

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It is further submitted that with a view to confuse the Hon'ble Tribunal, the Applicant has taken ground that the EMD amount has been paid at Rs. 3,50,000/- instead of Rs. 3,50,500/-. The Sale Notice dated 31.05.2022 has mentioned the upset price at Rs. 35,00,000/- for which the Auction Purchaser has to deposit the EMD amount at Rs. 3,50,000/-, that has been deposited by the Auction Purchaser in due time. Since, the auction price is at Rs. 35,05,000/-, one can easily understand that auctioned amount i.e., the sale price will not be counted for the prior Sale Notice EMD calculation. Hence, this ground taken by the Applicant is not proper and it is stated only to confuse this Tribunal.

¶79

Further, it is submitted that the Appeal against the Auction Sale Notice dated 31.05.2022 has been filed after several days i.e. after 78 days beyond the limitation period of 45 days and the appeal against the sale Registration dated 03.08.2022 has been filed after several days i.e. after 15 days beyond the limitation period of 45 days from the date of order. Although, the Defendant Bank was not a party to W.A.(MD) No. 1546 of 2025, decided on 16.06.2025 and hence he is not bound by the same, the Defendant Bank in the interest of justice, respectfully submit that none of the courts have either expressly or impliedly extended the prescribed limitation period for filing appeals u/s. 17 of the SARFAESI Act. Further, the Hon’ble Courts are well aware that they do not possess the jurisdiction to issue any order contrary to the statutory limitation prescribed under the Act. In view of this fundamental aspect, the present appeals are not maintainable and are liable to be rejected at the pre-admission stage itself.

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

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List of documents filed by the 1^st & 2^nd Defendants

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I. Physical Possession

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S.N	Date	Description
o.
1.	02.08.2014	Registered Memorandum of Deposit of Title Deeds vide doc.no. 1064/2014
2.	20.02.2015	Registered Memorandum of Deposit of Title Deeds vide doc.no. 209/2015

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Page 9 of 20

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SA No.316/2025 & Connected SA No. 317/2025

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3.	24.07.2015	Registered Memorandum of Deposit of Title Deeds vide doc.no. 991/2015
4.	24.07.2015	Registered Memorandum of Deposit of Title Deeds vide doc.no. 992/2015
5.	22.02.2017	Section 13(2) Demand Notice
6.	28.02.2017	AD Cards
7.	25.02.2017	Returned covers
8.	06.03.2017	Demand Notice -Paper Publication (Tamil & English)
9.	18.08.2017	Section 13(4) Symbolic Possession Notice
10	21.08.2017	ADcards
11	21.08.2017	Returned Covers
12	18.08.2017	Symbolic Possession Notice-Paper Publication (Tamil & English)
13	07.02.2018	Order in District Magistrate/District Collector Virudhunagar-ROC No. C3/32997/2017
14	25.01.2019	Execution of Physical Possession in the presence of VAO and Tahsildar
15	26.08.2021	Valuation Report (Property No. 1 & 2)
16	18.09.2021	Valuation Report (Property No. 1 & 2)
17	27.04.2022	Valuation Report (Property No. 1 & 2)
18	04.09.2018	1^stE-Auction Sale Notice – (Property No. 1-Rs.45,00,000/-+ PropertyNo.2-Rs. 12,00,000/-=57,00,000/-)
19	05.09.2018	Paper Publication (Tamil & English)
20	27.02.2019	2^ndE-Auction Sale Notice – (Property No. 1-Rs.35,00,000/-+ PropertyNo.2-Rs. 10,00,000/-=45,00,000/-)
21	29.05.2019	3^rdE-Auction Sale Notice – (Property No. 1-Rs.30,00,000/-+ PropertyNo.2-Rs. 5,00,000/-=35,00,000/-)
22	30.11.2019	4^thE-Auction Sale Notice (Property No. 1 & 2 – Rs. 30,00,000/-)
23	01.12.2019	Paper Publication
24	31.05.2022	5^thE-Auction Sale Notice (Property No. 1 & 2 – Rs. 35,00,000/-)
25	07.06.2022	AD Cards
26	01.06.2022	Paper Publication
27	17.06.2022	Application form for Tender Cum Sale
28	18.06.2022	Auction Proceedings & Sale confirmation
29	18.06.2022	Letter intimating to borrower about the e-auction sale, its value, its adjustment towards the loan
30	21.06.2022	Returned covers
31	12.07.2022	Sale Certificate
32	09.08.2022	Encumbrance Certificate
33	24.08.2022	Patta in the name of Auction Purchaser Mrs. Shanmugapriya (Patta No. 3458)

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Page 10 of 20

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SA No.316/2025 & Connected SA No. 317/2025

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34	29.11.2023	Order in W.P.(MD) No. 8393 of 2023 Madurai Bench of Madras High Court
35	10.01.2023	Order in W.P.(MD) No. 20914 of 2022 Madurai Bench of Madras High Court
36	03.08.2022	Registered Sale Certificate executed by bank in favour of R. Shanmugapriya vide doc.no. 1477/2022
	Common	typed set filed by the 1^st& 2^ndDefendants Bank

¶90

S.No.	Dates	Description
1.	07.02.2018	Proceedings of District Magistrate/District Collector, Virudhunagar-ROC.No.C3/32997/2017
2.	17.02.2015	Loan documents
3.	22.02.2017	Section 13(2)Demand Notice
4.	06.03.2017	Demand Notice – Paper Publication(Tamil & English)
5.	18.08.2017	Section 13(4)Symbolic Possession Notice
6.	18.08.2017	Symbolic Possession Notice – Paper Publication(Tamil & English)
7.	25.01.2019	Execution of Physical Possession in the presence of VAO and Tahsildar
8.	31.05.2022	5^thE-Auction Sale Notice(PropertyNo. 1 &2– Rs. 35,00,000/-
9.	07.06.2022	ADCards
10.	01.06.2022	Paper Publication
11.	21.06.2022	Returned covers
12.		Photos of affixingPossession Notice
13.		Photos of Physical Possession
14.	03.08.2022	Sale Certificate

¶91

4. The Counsel for the 3^rd Defendant/Auction Purchaser appeared before this Tribunal andfiled Vakalat, Counter Affidavit, Written Argument & Typed set of papers in which he has submitted that at the outset the Application is not at all maintainable, since the entire auction process was completed without any deviation and discrepancy and following due processes of law. Further, it reveals from the Memorandum of appeal filed in support of the SARFAESI Application by the Applicants herein, they have already exhausted their remedy by challenging Auction Sale Notice before this Hon'ble Tribunal, in the 2020 itself and got dismissed. Against which the Applicants also made an appeal before the DRAT at Chennai and same is also ended against the Applicants herein. Hence, the SARFAESI Application is liable to be dismissed as not maintainable.

¶92

It is further submitted that the 1^st and 2^nd Defendant Bank published the Retender cum Auction Sale Notice dated 31.05.2022 in Dinamani daily on 01.06.2022. Upon perusing the same, he enquired with 2^nd Defendant and he came to understand the fact that the Schedule Mentioned Properties mentioned in the Sale Notice dated 31.05.2022 was mortgaged by the Applicants herein with 2^nd Defendant Bank and it became NPA on 03.10.2016 and following the procedures contemplated under SARFAESI Act, the Schedule Mentioned Properties were brought to Sale from the year 2018 and

¶93

Page 11 of 20

¶94

SA No.316/2025 & Connected SA No. 317/2025

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for several times by the 1^st and 2^nd Defendant and due to non-availability of bidder, the Auction Sales were ended futile.

¶96

It is further submitted that he participated in Auction held on 18.06.2022 and sealed tenders were opened and a sale was knocked down in his favour. And, Sale confirmation was issued to him by the 1^st Defendant on 18.06.2022. Thereafter by abiding the conditions of the bank he arranged entire amount and paid within prescribed time to 1^st and 2^nd Defendants. For which Sale Certificate was also issued in his favour and based on which, on 03.08.2022, the officer of the bank executed a Sale Deed in Doc. No. 1477 of 2022. Further, he submitted that while execution of Sale Deed, he paid entire stamp duty as per the government guideline value as contemplated by the Registration department without any deviation. Thereafter, the revenue records also got mutated in his name in Patta No. 3458.

¶97

It is further submitted that he stoutly denied the allegation that he had colluded with the bank officials in order to get successful in auction. He had bonafidely participated in Re-Tender Cum Auction Sale conducted by the 1^st and 2^nd Defendant Banks. Further, he submitted that with lot of hurdle, he mortgaged some of jewels and sold out some of jewels and obtaining the debt from family members and friends, he participated in auction with due manner. Further, the Applicants herein challenged the Auction Sale before the Madurai Bench of Madras High Court in WP (MD) No. 20914 of 2022 and the same was dismissed by an order dated 10.01.2023. Further, he made development on property by putting constructions and installed flour machines. Further, the electricity bill and tax assessments are got mutated in his name and thereafter he was in peaceful possession and enjoyment in Schedule Mentioned Property by paying necessary taxes to local authority.

¶98

It is further submitted that with an intention to upgrade his business, he approached the financial institution for obtaining loan by mortgaging the properties which was brought through Auction Sale and thereby, he presented the Memorandum of Deposit of Title Deeds dated 03.03.2023 executed by him in favour of Vistaar Financial Services Pvt Ltd, Virudhunagar District and upon perusal of documents, the Defendant herein refused to register the same by issuing the refusal check slip by citing the reason that there was an order of Attachment before Judgment in respect of properties in S.No. 693/1 along with other survey numbers by the Deputy Registrar of Cooperative Societies, Virudhunagar District in his proceedings dated 25.05.2018. Aggrieved over the same, he filed the Writ Petition challenging refusal check slip in W.P(MD) No. 8393 of 2023 and the same is allowed by an order dated 29.11.2023.

¶99

Page 12 of 20

¶100

SA No.316/2025 & Connected SA No. 317/2025

¶101

It is further submitted that Mr. Sankarasubramanian’s Sister Bhavani, has obtained preliminary decree dated 25.03.2024 in partition suit in O.S.No. 70 of 2022 on file of Ld. Addl. District & Sessions Judge, Srivilliputtur by suppression of material facts that she had already gifted the subject property to her brother Sankarasubramanian through Doc. No. 370 of 2013 dated 13.03.2013 in order to circumvent the proceedings of the Bank under SARFAESI Act. Agreed over the preliminary decree dated 25.03.2024 in O.S.No. 70 of 2022 on file of Ld. Additional District & Sessions Judge, Srivilliputtur, he prefers an Appeal before the Hon'ble High Court in A.S.(MD) No. 312 of 2025 and same is pending adjudication.

¶102

It is further submitted that the 3^rd Defendant approached the nationalized bank namely Indian Overseas Bank, W. Pudupatti for financial assistance and after scrutinizing all his documents, sanctioned loan for him and he presented the Memorandum of Deposit of Title Deeds dated 11.02.2025 before the Defendant and upon perusal, the Defendant herein refused to register the same by issuing the refusal Check slip in Refusal Number RFL/Vaithirairuppu/2/2025 dated 11.02.2025 by citing the reason on O.S.No. 70 of 2022 dated 25.03.2024. Aggrieved over the refusal cheque slip he filed Writ Petition in WP (MD) No. 5301 of 2025 and the same was allowed by an Order dated 25.03.2025. Thereafter, he encumbered the Schedule Mentioned Property with IIFL finance limited by executing Memorandum of Deposit of Title Deeds in Doc. No. 693 of 2025 dated 15.04.2025.

¶103

It is further submitted that the grounds raised by the Applicants are not at all sustainable in the eye of law. The Applicants are defaulters and they have an ill intention to cheat the bank, caused mental agony to 3^rd Defendant and filed these frivolous Applications before this Tribunal and the same ought to be dismissed with exemplary cost.

¶104

It is therefore prayed that this Hon'ble Tribunal may be pleased to dismiss the above SARFAESI Application filed by the Applicants and render justice.

¶105

Common Typed set of papers filed by the 3^rd Defendant/Auction

¶106

Purchaser

¶107

S.No.	Date	Description
1.	22.02.2017	Demand Notice
2.	18.08.2017	Possession Notice
3.	07.02.2018	Execution of Physical Possession U/s. 14 of Act passed by the District Collector
4.	26.11.2018	Re tender cum Auction Sale Notice

¶108

Page 13 of 20

¶109

SA No.316/2025 & Connected SA No. 317/2025

¶110

5.	27.02.2019	Re tender cum Auction Sale Notice
6.	29.05.2019	Re tender cum Auction Sale Notice
7.	30.11.2019	Re tender cum Auction Sale Notice
8.	31.05.2022	Re tender cum Auction Sale Notice
9.	18.06.2022	Sale confirmation letter issued by the bank to the 3^rd Defendant
10	03.08.2022	Registration of Sale Certificate executed by bank in favour of the 3^rdDefendant in Doc.No. 1477/2022
11	26.08.2022	Pattainthename ofthe 3^rdDefendant
12	30.08.2022	Affidavit and Writ Petition in W.P.(MD) No. 20914 of 2022 filed by theApplicants
13	27.09.2022	Counter filed by the 3^rdDefendant in W.P.(MD)No. 20914 of 2022
14	10.01.2023	Orderpassedin W.P.(MD)No. 20914of2022
15	29.11.2023	Orderpassed in W.P.(MD)No. 8393 of2023
16	18.12.2024	Grounds of Appeal in A.S.(MD)No. 312of2025
17	15.04.2025	Memorandum of Deposit of Title Deeds executed by the 3^rd Defendant in favour of IIFL Finance Ltd., along with order in W.P.(MD)No. 5301 of2025
18		Tax receipts and EB receipts

¶111

5. ON THE BASIS OF ABOVE PLEADINGS, THE POINT WHICH ARISES FOR CONSIDERATION IS: -

¶112

WHETHER THE APPLICANTS ARE ENTITLED TO GET THE RELIEFS AS PRAYED FOR?

¶113

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

¶114

also after considering the arguments by all the Counsels, I find that it is admitted fact that the 1^st Applicant along with one Mr. G. Muthusamy was doing Food Masala manufacturing and selling business in the name and style of Maruthi Masala and set up the manufacturing and packing unit in the subject property. The name of the Partnership Firm is Sri Renganathar Rice Mill represented by its partners the 1^st Applicant and Mr. G. Muthusamy who had approached the 2^nd Defendant Bank and availed credit facilities for a sum of Rs. 96,00,000/- (Rupees Ninety-Six Lakhs only). For the above said credit facilities, the subject property was given as security. The Applicants were prompt in servicing the interest and repayment of principal regularly as per the repayment schedule of the 2^nd Defendant Bank.

¶115

Page 14 of 20

¶116

SA No.316/2025 & Connected SA No. 317/2025

¶117

It is further submitted that in the meantime, one of the partner Mr. G. Muthusamy was diagnosed with cancer and died on 03.02.2016. Further during the same period, the 1^st Applicant was also diagnosed that there was a hole in the blood vessel leading to his brain and thereafter he was under continuous treatment and was treated by the PSG Hospital, Coimbatore during March 2017. Thereafter also the 1^st Applicant was under continuous treatment and medication and he often get allergytic to dust once he come out to a public place. Hence, he was not able to come out of the house and only for the past one year he is able to come out and travel. In view of the above developments, the firm was not able to continue the business activities any more and the unit was closed. In the meantime, the 1^st Defendant Bank classified the loan account of the Applicants as NPA on 03.10.2016 and issued a Demand Notice dated 22.02.2017 u/s. 13(2) of SARFAESI Act for a sum of Rs. 99,22,629/- (Rupees Ninety-Nine Lakhs Twenty-Two Thousand Six Hundred and Twenty-Nine only). It is further submitted that thereafter, the Applicants have approached the 1^st Defendant Bank and paid a sum of Rs. 12,00,000/- as directed by the Bank and the legal heirs of late G. Muthusamy were relieved by the 1^st Defendant Bank.

¶118

Thereafter, the 1^st Defendant Bank issued Possession Notice dated 18.08.2017 U/s. 13(4) of SARFAESI Act and took symbolic possession of the Schedule Mentioned Properties. The Applicants further submitted that the 1^st Defendant has not made proper Paper Publication of Possession Notice dated 18.08.2017. I have gone through the documents filed by the Defendant Bank and I find that the Defendant Banks have filed the copies of AD Cards and returned covers (Page nos. 54 to 59 of typed set of 1^st & 2^nd Defendant Banks). The Banks have also filed copies of Paper Publication of Possession Notice dated 18.08.2017 in both Tamil & English dailies (Page nos. 65 to 67 of Common typed set of papers) made on 23.08.2017. I also find that the Defendant Banks have filed the copy of affixture of Possession Notice dated 18.08.2017 (Page no. 81 of Common typed set of papers). But I find that the affixture has been made on 08.09.2018 only, whereas the date of Possession Notice is issued on 18.08.2017. Hence, I find that the Defendant Banks have

¶119

Page 15 of 20

¶120

SA No.316/2025 & Connected SA No. 317/2025

¶121

affixed the Possession Notice after a lapse of more than one year, which amounts not to following the Rules prescribed under Rule 8(1) of the Security Interest (Enforcement) Rules 2002, which clearly says:- “8. Sale of immovable secured assets.

¶122

(1) Where the secured asset is an immovable property, the authorized 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.

¶123

Thereafter, the Defendant Bank has submitted that they had approached the Hon’ble District Magistrate/District Collector, Virudhunagar and obtained an Order dated 07.02.2018 vide ROC.No. C3/32997/2017 (Page nos. 62 to 65 of Typed set of papers filed by the 1^st & 2^nd Defendant Bank) and has taken Physical Possession on 25.01.2019 with inventories and sealed with wax seal in the lock. The date is not clearly mentioned in the Order of the Hon’ble District Magistrate/District Collector, Virudhunagar. The Bank has also not filed any evidence for having informed the same to the Applicants.

¶124

I also find that the Defendant Bank has issued 1^st E-Auction Sale Notice dated 04.09.2018 and 2^nd E-Auction Sale Notice dated 27.02.2019 and 3^rd E- Auction Sale Notice dated 29.05.2019, 4^th E-Auction Sale Notice dated 30.11.2019 and finally the 5^th E-Auction Sale Notice dated 31.05.2022 for Property Nos. 1 & 2 for a sum of Rs. 35,00,000/- (Rupees Thirty-Five Lakhs only) (Page nos. 70 to 72 of Bank’s Common typed set of papers) and has filed AD Cards (Page nos. 73 to 74(A) of Bank’s Common typed set of papers), wherein the Applicants stated that they had received the Sale Notice dated 31.05.2022 only on 07.06.2022 and auction held on 18.06.2022 and there was no 15 days from the date of service of notice as per Rule. Further, the Original Paper Publication copies published in both English and Tamil dailies dated 01.06.2022 (Page nos. 75 & 76 of Bank’s Common typed set of papers) and returned postal covers 4 nos. including 2^nd Applicant (Page nos. 77 to 80 of Bank’s Common typed set of papers). However, the Bank has not filed the photos as a proof for having affixed the impugned Sale Notice dated 31.05.2022 on the conspicuous part of the properties. Thus, I find that the

¶125

Page 16 of 20

¶126

SA No.316/2025 & Connected SA No. 317/2025

¶127

Defendant Banks have not followed the Rule 8(7) & Rule 9(1) of the Security Interest (Enforcement) Rules 2002, which clearly says that, "Rule 8(7) in the Security Interest (Enforcement) Rules, 2002:-

¶128

"( 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;

¶129

(a) the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

¶130

(b) the secured debt for recovery of which the property is to be sold;

¶131

(c) reserve price of the immovable secured assets below which the property may not be sold;

¶132

(d) time and place of public auction or the time after which sale by any other mode shall be

¶133

completed;

¶134

(e) deposit of earnest money as may be stipulated by the secured creditor;

¶135

(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.]"

¶136

“9. Time of sale, issue of sale certificate and delivery of possession, etc.

¶137

- [(1) No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) of rule 8 or notice of sale has been served to the borrower :

¶138

Provided further that if sale of immovable property by any one of the methods specified by sub rule (5) of rule 8 fails and sale is required to be conducted again, the authorized officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale.]

¶139

I also perused the documents and I find that the Defendant Bank has filed a Valuation Report dated 27.04.2022 of the Impugned property at page nos. 88 to 111 of typed set of papers. From careful scrutinizing of Valuation Report, I find that in the Valuation Report the estimated realizable value is given as Rs. 37.95 Lakhs, Forced Sale Value is given as 35,84,000/- & the Fair Market Value is given as Rs. 42,17,000/-. But Reserve Price given in the Sale Notice is Rs. 35,00,000/- (Rupees Thirty-Five Lakhs only). Further, though the Valuation Report is filed by the Bank, this Valuation Report is not

¶140

Page 17 of 20

¶141

SA No.316/2025 & Connected SA No. 317/2025

¶142

in consultation with the secured creditor because there is no signature of the Branch Manager and also no proof has been filed to this effect, so how the Authorised Officer has sold the property without the consultation of the secured creditor. As such, this Valuation Report cannot be considered as the reliable one and cannot be considered to be correct , since the land value tends to appreciate over the long term, while the building structure itself depreciates due to wear and tear and obsolescence. H ence, the Defendant Banks have failed to prove that they have strictly adhered to the Rule 8 (5) of Security Interest (Enforcement)

¶143

Rules 2002, which clearly says:-

¶144

"(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" .

¶145

Since, the Defendant Banks have failed to follow the SARFAESI Act & Rules strictly in issuance of Possession Notice dated 18.08.2017, the Order dated 07.02.2018 passed by the District Collector & District Magistrate, Virudhunagar is not sustainable. I also find that the Defendant Bank had issued Sale Certificate dated 03.08.2022 on the basis of Sale Notice dated 31.05.2022 and sale held on 18.06.2022, by not following the SARFAESI Act & Rules strictly before issuance of Sale Certificate. Hence, the Sale Certificate dated 03.08.2022 is also not sustainable under law.

¶146

The Applicants have no doubt being defaulters are 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 borrowers by invoking the SARFAESI Act and without the intervention of any Court. But it shall not allow the Bank to take the possession of the property of the Applicants without following the due process of law strictly.

¶147

In view of the above discussions, I find that the Defendant Banks have proceeded under the SARFAESI Act and rules for recovery of money from the

¶148

Page 18 of 20

¶149

SA No.316/2025 & Connected SA No. 317/2025

¶150

Applicants but they have not followed the procedure as mentioned in the SARFAESI Act & Rules strictly and failed to produce the substantial evidences and failed to rebut successfully the allegations made by the Applicants. Therefore, this Tribunal holds that the Applicants are entitled to get the reliefs as prayed for in SA No. 316/2025 & SA No. 317/2025 .

¶151

In the result,

¶152

(a) SA No. 316/2025 is allowed. The Possession Notice dated 18.08.2017 issued by the 1^st Defendant Bank is hereby set aside. Sale held on 18.06.2022 is not in accordance with law and as there is violation the Sale Notice dated 31.05.2022 is hereby set aside.

¶153

(b) SA No. 317/2025 is allowed. Registered Sale Certificate dated 03.08.2022 is hereby set aside by this Tribunal.

¶154

(c) The 1^st & 2^nd Defendant Banks are 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.

¶155

(d) The Applicants shall make the payment of the amount incurred by the Auction Purchaser towards the Stamp duty and Registration charges within one month from the date of receipt of copy of the Order.

¶156

(e) The Applicants are also directed to pay the interest at the rate of 4% of the sale price to the Defendants Bank from the date of payment of Sale price by 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.

¶157

(f) The Impugned Order passed by the Ld. District Collector and District Magistrate, Virudhunagar District in ROC.No.C3/32997/2017 dated 07.02.2018 is also hereby set aside.

¶158

(g) All the expenditures incurred in issuance of Impugned Order passed by the Ld. District Collector and District Magistrate, Virudhunagar District in ROC.No.C3/32997/2017 dated 07.02.2018 and further all the expenditures incurred in respect of Sale Notice dated 31.05.2022 &

¶159

Page 19 of 20

¶160

SA No.316/2025 & Connected SA No. 317/2025

¶161

Registered Sale Certificate dated 03.08.2022 shall not be included in the loan account of the Applicants.

¶162

(h) The 1^st & 2^nd Defendant Banks are at liberty to initiate fresh action against the Applicants for recovery of loan amount following strictly the SARFAESI Acts & Rules.

¶163

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

¶164

Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 08^th December 2025.

¶165

sd/- (SEEMA SINHA) PRESIDING OFFICER

¶166

Dictated & corrected by me

¶167

sd/-

¶168

(SEEMA SINHA)