Dismissed

Ms Om Sree Mathaji Engineers v. Union Bank of India (Andhra Bank)

DRT15 Sept 2025SA/395/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application seeking to set aside an e-auction sale under the SARFAESI Act. The Tribunal held that dismissal of a pending loan application does not bar enforcement under SARFAESI, silence on a One Time Settlement is a refusal, and post-sale challenges are not entertained unless proved by fraud or collusion.

What did the court decide?

The sale petition (SA No.395 of 2024) was dismissed; any interim stay was vacated; costs were disallowed.

Ms Om Sree Mathaji Engineers versus Union Bank of India (Andhra… — Cheque Dishonour | DRT (2025)

¶1

IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

¶2

Dated this 15^th day of September, 2025

¶3

PRESENT: SHRI SHARANG DHAR UPADHYAY Presiding Officer

¶4

SA No.395 of 2024

¶5

M/s Om Sree Mathaji Engineers Rep. by its Proprietor, Venkataramani. J Plot No.8, Door No.2/1137A Arumugam Nagar 1^st Street

¶6

Near Jeeva Nagar, Madipakkam

¶7

Chennai – 600 091

¶8

Kamakshi. V

¶9

W/o Mr. Venkataramani. J Plot No.8, Door No.2/1137A Arumugam Nagar 1^st Street Near Jeeva Nagar, Madipakkam Chennai – 600 091

¶10

… Applicants

¶11

Versus

¶12

The Authorised Officer M/s Union Bank of India Erstwhile Andhra Bank Asset Recovery Branch No.9, Casa Major Road, Egmore Chennai – 600 008

¶13

Mrs. Nagajothimani Suresh F1 Vasanth Flats No.17, 7^th Street, Govindasamy Nagar Madipakkam, Alandur Madipakkam, Kancheepuram Chennai – 600 091 …Respondents

¶14

Counsel on Record / Appeared

¶15

Applicant by : Ld. Counsel M/s N. Nandakumar, G. Sanjeevi & R. Priya 1^st Respondent by : Ld. Counsel Shri A. Jaishankar 2^nd Respondent by: Ld. Counsel M/s R. Sankarakutralingam / Shri. Kamalesh

¶16

¶17

O R D E R

¶18

This petition is filed under Section 17(1) of the SARFAESI Act seeking to set aside the e-auction sale notice dated 6.7.2024 issued by the 1^st respondent bank scheduling the sale to 26.07.2024.

¶19

Facts of the case as averred in the SA

¶20

2.0 The 1^st applicant is the Proprietary concern represented by its Proprietor Mr. J. Venkatramani, which had initially availed OD Limit of Rs.15 lakhs from the erstwhile Andhra Bank in the year 2012, which was subsequently enhanced to Rs.30 lakhs in the year 2013 against the schedule mentioned property.

¶21

2.1 The Proprietor of the first applicant Mr. J. Venkatramani and the 2^nd applicant his wife, who is the joint owners of the property, executed Memorandum of Deposit of Title deeds on 13.12.2013 registered as Doc. No.7195 of 2013.

¶22

2.2 Based on the credit history of the 1^st applicant, the bank enhanced the OD limit to Rs.60 lakhs during the year 2013 to 2019. The applicants were making the repayments regularly till 2019, however, due to non-receipt of money from its customers couples with general recession, the business of the 1^st applicant was badly affected the default had occurred and the loan account was classified as NPA on 30.11.2019.

¶23

¶24

2.3 The demand notice was issued by the respondent bank on 02.12.2019 demanding a sum of Rs.62,03,266.42p as on 02.12.2019. The demand notice is not served on one of the mortgagors. The respondent bank has charged exorbitant interest and failed to give credit the amounts remitted by the applicants.

¶25

2.4 The 1^st applicant raised objection under Section 13(3-A) of SARFAESI Act vide letter dated 05.02.2020 and the respondent bank had sent a reply on 17.02.2020.

¶26

2.5 The Memorandum of Deposit of Title deeds of the property has been registered only to the extent of Rs.30 lakhs and not 60 lakhs.

¶27

2.6 The Possession Notice dated 04.03.2020 was issued by the 1^st respondent. The applicant is given to understand that the possession notice is not published in two leading newspapers as mandated under law.

¶28

2.7 In the meantime, the applicants approached the bank for settlement under OTS and offered to pay a sum of Rs.30 lakhs but the same was not considered by the bank. The respondent proceeded under SARFAESI Act and issued the sale notice dated 10.03.2022 scheduling the sale to 30.03.2022.

¶29

2.8 The first applicant had earlier closed the two mortgage loans of Rs.15 lakhs and Rs.19 lakhs availed by him. The respondent without considering the long-standing relationship had issued the sale notice bringing the

¶30

¶31

residential property to sale at a throw away price. Aggrieved by the sale notice dated 10.03.2022 the applicants filed SA No.147 of 2022 before DRT-III Chennai, wherein the applicants had complied the interim order of deposit of 20% of the amount outstanding amounting to Rs.13.90 lakhs. Thereafter the Tribunal directed deposit of another 10% of the amount outstanding, which the applicants could not comply with and hence on 5.9.2022 the said SA was dismissed for non-compliance.

¶32

2.9 After the dismissal of SA No.147 of 2022, the respondent bank issued auction sale notice dated 25.10.2022 fixing the sale on 10.11.2022. Challenging the same the applicants filed SA No.590 of 2022 before DRT-II, Chennai and the Tribunal passed a conditional order on 16.11.2022 directing the applicants to deposit Rs.5 lakhs and the same was also complied with. Subsequently, SA No.590 of 2022 also came to be dismissed without appreciating the facts and circumstances of the case.

¶33

2.10 Thereafter, the respondent bank tried to bring the property to sale but they could not succeed, hence they filed TA No.3 of 2022 before DRT-III Chennai, which was dismissed for non-prosecution by the Tribunal on 27.02.2023.

¶34

2.11 While so, the respondent bank fixed the sale of the property on 10.03.2023 under SARFAESI Act. The applicants sent a legal notice dated 06.03.2023 asking the respondent to cancel the auction sale as their claim is not sustainable due to dismissal of TA No.3 of 2023. However, the auction

¶35

¶36

sale also did not materialize. The respondent bank neither taken steps to restore the TA nor replied to the legal notice dated 06.03.2023 sent by the applicants.

¶37

2.12 In these circumstances, the respondent bank issued sale notice dated 6.7.2024 scheduling the sale to 26.07.2024. Aggrieved by the same the present SA has been filed by the applicants.

¶38

Grounds Urged

¶39

3.0 (i) When the TA No.3 of 2022 filed by the respondent has been dismissed by DRT-III Chennai for non-prosecution the respondent bank has no locus standi to pursue the case against the applicants for recovery of money under SARFAESI Act and hence the auction sale notice dated 6.7.2024 is voild abinitio and is liable to be dismissed.

¶40

(ii) Despite the legal notice dated 06.03.2023 issued by the applicants the respondent bank has not taken steps to restore the TA No.3 of 2022 dismissed by DRT-III Chennai, which vitiates their claim not only under SARFAESI act but also under any other law for the time being.

¶41

(iii) The respondent bank failed to issue demand notice to one of the mortgagors as mandated under law, which is clearly evident from the possession notice which states that the demand notice is issued only to the borrower.

¶42

¶43

(iv) Respondent bank has not published the Possession Notice dated 04.03.2020 in two leading newspapers as per Rule 8(2) of the Security Interest (Enforcement) Rules, 2002.

¶44

(v) The respondent bank had grossly undervalued the scheduled property and fixed the reserve price as Rs.1,36,50,000/-.

¶45

(vi) The respondent bank failed to consider the huge receivables to the 1^st applicant from its clients / customers which would be received shortly and the same can be evidenced from the claim form submitted by the 1^st applicant with the Liquidator in the matter of M/s Krishnaa Energy Private Ltd., wherein the 1^st applicant has claimed a sum of Rs.1,15,54,502/-.

¶46

(vii) The respondent bank had violated Rule 8(6) & 8(7) of the Security Interest (Enforcement) Rules, 2002.

¶47

(viii) The respondent bank had registered the Memorandum of Deposit of Title deeds only for a sum of Rs.30 lakhs and hence the bank is entitled to claim only Rs.30 lakhs and not more than that.

¶48

(ix) The respondent bank without accepting or rejecting the OTS offered by the applicant has proceeded under SARFAESI Act, which is highly illegal.

¶49

(x) The respondent bank has failed to take into account the remittances made by the applicants in complying with the interim orders passed by the Tribunal and hence amount claimed in the impugned sale notice is not the actual reflection of dues and the same is in violation of Rule 8(6)(b) of the Security Interest (Enforcement) Rules, 2002.

¶50

¶51

3.1 Along with the SA, the applicants filed the following documents: -

¶52

(i) Demand Notice dated 02.12.2019 issued by the respondent bank.

¶53

(ii) Objections dated 05.02.2020 issued under Section 13(3-A) of the SARFAESI Act.

¶54

(iii) Reply letter dated 17.02.2020 sent by the respondent bank.

¶55

(iv) Possession Notice dated 04.03.2020 issued by the respondent bank.

¶56

(v) OTS Letter dated 10.08.2021 sent by the applicants.

¶57

(vi) Order of DRT-III Chennai dated 27.02.2023 in TA No.3 of 2022.

¶58

(vii) Legal notice dated 06.03.2023 issued by the applicants.

¶59

(viii) Impugned e-auction sale notice dated 06.07.2024 issued by the respondent bank.

¶60

Counter of 1^st Respondent

¶61

4.0 Upon notice the respondent filed counter affidavit stating therein that the applicant approached the respondent (erstwhile Andhra Bank) for grant of Working Capital and Term Loan facility and the bank considering the request of the applicant sanctioned credit facility of Rs.30 lakhs on 13.12.2013 and the applicants executed necessary loan and security documents. Again at the request of the applicants the said facility was enhanced to Rs.60 lakhs on 08.05.2018. The 2^nd applicant executed guarantee agreement dated 9.5.2018 and also deposited the title deeds of his property more fully described in the

¶62

¶63

SA Schedule by executing Memorandum of Deposit of Title deeds on 13.12.2013 registered as Doc. No.7195 of 2013. As the applicants was highly irregular in repayments, the account was classified as NPA on 30.11.2019.

¶64

4.1 The respondent bank invoked the provisions of SARFAESI Act and issued the demand notice under Section 13(2) of the Act on 02.12.2019. The applicants replied the said demand notice through their Counsel on 05.02.2020 and the same was replied by the respondent on 17.02.2020 under Section 13(3-A) of the SARFAESI Act.

¶65

4.2 As the applicants did not come forward to regularize the loan account the respondent bank issued the Possession Notice under Section 13(4) of the Act on 04.03.2020. The said possession notice was duly served on all the applicants, affixed on the secured asset and also published the same in “DT Next” English daily and “Dinakaran” Tamil daily. The said Possession Notice was not challenged by the applicants.

¶66

4.3 The respondent bank issued the sale notice on 25.01.2022 fixing the sale on 10.03.2022 after obtaining valuation of the property from the approved valuer. The sale notice is sent to all the applicants and 30 days clear notice is also given to the applicants as per Rule 8(6) of the Rules. The respondent has published the sale notice in “Dinamani” Tamil daily and “The New Indian Express” English daily on 03.02.2022. However, the no bids were received pursuant to the said sale notice.

¶67

¶68

4.4 The respondent bank issued the sale notice dated 10.03.2022 fixing the sale on 30.03.2022 after obtaining the valuation of the property from the approved valuer. The said sale notice was challenged by the applicants by filing SA No.147 of 2022 before DRT-III Chennai and the same came to be dismissed on 05.09.2022.

¶69

4.5 Thereafter, the respondent issued another sale notice dated 25.10.2022 fixing the sale on 18.11.2022. Challenging the same the applicants filed SA No. 590 of 2022, which also came to be dismissed on 27.03.2023 as having become infructuous as no sale took place on the scheduled date.

¶70

4.6 Thereafter, the respondent issued the impugned Sale Notice dated 06.07.2024 scheduling the sale on 26.07.2024. The sale notice was duly served on all the applicants, published in newspapers viz., Dinamani and Indian Express and affixed on the secured asset as mandated under the SARFAESI Act and the Rules made thereunder.

¶71

4.7 The auction was held on 26.07.2024 and one Mrs. Nagajothimani had quoted an amount of Rs.1,37,50,000/- as against the reserve price of Rs.1,36,50,000/- and she was declared as successful bidder. The auction purchaser remitted the entire amount on 14.8.2024 and the sale certificate was issued by the respondent bank on 18.8.2024 and the same is registered as Doc. No.5265 of 2024 in favour of auction purchaser on 17.08.2024.

¶72

¶73

4.8 The applicants had waited for conclusion of the sale and has filed the present SA. The applicant has not made out any valid ground to entertain the same.

¶74

4.9 The contention of the applicants that the account was never NPA is incorrect, only due to the defaults committed by the applicants the respondent bank classified the loan account as NPA strictly in accordance with the guidelines of RBI.

¶75

4.10 The demand notice is duly served on the applicants. The applicants had replied the said demand notice through their Counsel on 05.02.2020 and the respondent had also replied the same on 17.02.2020. Similarly, the Possession Notice dated 04.03.2020 was also duly served on the applicants

¶76

and the respondent has scrupulously followed the provisions of the SARFAESI Act and the Rules made thereunder while issuing the possession notice.

¶77

4.11 When the respondent has enhanced the credit facility from Rs.30 lakhs to Rs. 60 lakhs the applicants had confirmed the re-deposit of title deeds with the respondent vide letter dated 09.05.2018.

¶78

4.12 It is wrong to say that the OTS proposal of the applicants was not considered. The respondent had rejected the same as the amount quoted is very low and the claim amount is fully settled.

¶79

¶80

4.13 Whenever the respondent issued a sale notice the applicants had filed

¶81

SA with the sole intention of delaying the recovery proceedings and not to settle the dues to the respondent and the present SA is also filed only after confirmation of sale.

¶82

4.14 The TA No.03 of 2022 came to be dismissed for default as there was a default in filing PA and OD by the bank. The respondent has filed application to restore TA No.3 of 2022 vide Dy. No.2940 of 2024 before DRT-III Chennai.

¶83

4.15 The applicants had not challenged the Possession Notice dated 04.03.2020. Further, all these grounds have been taken in the SA No.147 of 2022 filed before DRT-III Chennai which had adjudicated all the infirmity.

¶84

4.16 The respondent issued sale notice dated 6.7.2024 fixing the sale on 26.7.2024 after obtaining the valuation from the approved valuer. The respondent had served the impugned notice on all the applicants, published the sale notice in compliance of Rule 9 of the Rules in two leading newspapers viz., Indian Express and Dinamani.

¶85

4.17 The Authorised Officer has strictly complied with all the provisions of the SARFAESI Act, and the Rules made there under. The applicants have not made any valid ground for considering the SA. The SA is liable to be dismissed with costs.

¶86

¶87

Documents filed by the 1^st respondent bank

¶88

4.18 (i) Possession Notice dated 04.03.2020 along with postal acknowledgements.

¶89

(ii) Proof of affixture of Possession Notice.

¶90

(iii) Paper publication of the Possession Notice in DT Next English daily and Dinakaran Tamil daily dated 08.03.2024.

¶91

(iv) Final order dated 05.09.2022 in SA No.147 of 2022 passed by DRT-III Chennai.

¶92

(v) Order dated 27.03.2023 passed by DRT-II Chennai in SA No.590 of 2022.

¶93

(vi) Sale Notice dated 25.01.2022 along with postal acknowledgements, Proof of affixture of sale notice, paper publication of sale notice in “The New Indian Express” and “Dinamani”.

¶94

(vii) Valuation report dated 1.6.2024 in respect of schedule property.

¶95

(viii) Sale Notice dated 06.07.2024 along with postal acknowledgements.

¶96

(ix) Proof of Affixture of Sale Notice dated 06.07.2024

¶97

(x) Publication of sale notice dated 06.07.2024 in “The New Indian Express” and “Dinamani” dated 10.07.2024.

¶98

¶99

(xi) Sale Certificate dated 17.8.2024 issued by the respondent bank in favour of auction purchaser.

¶100

(xii) Letter dated 9.5.2018 confirming the re-deposit of title deeds for Rs.60 lakhs.

¶101

4.19 Documents filed by 1^st Respondent under Dy No.4985 dated

¶102

23.7.2025

¶103

(i) Order dated 05.02.2025 made in MA No.31, 34 and 35 of 2015 passed by DRT-III Chennai in TA No.3 of 2022.

¶104

(ii) Order dated 30.04.2025 made in TA No.3 of 2022 passed by DRT-III Chennai.

¶105

4.20 Documents filed by 1^st Respondent under Dy No.5185 dated

¶106

29.7.2025

¶107

(i) Demand Notice dated 02.12.2019 issued by the respondent bank along with postal acknowledgements.

¶108

(ii) Sale Intimation Letter dated 27.07.2024 and proof of payment of 75% of the sale consideration by auction purchaser.

¶109

(iii) Proceedings dated 29.09.2022 in TA No.03 of 2022 passed by DRT-III Chennai.

¶110

¶111

Counter by 2^nd Respondent

¶112

5.0 Though the 2^nd Respondent / auction purchaser was represented by Ld. Counsel, the 2^nd Respondent did not choose to file their counter.

¶113

6.0 The parties were given liberty to file their written submissions, if any. Pursuant to which the Applicants and the 1^st respondent filed their written submissions.

¶114

Version of the applicant

¶115

7.0 The 1^st respondent is not entitled to proceed under the provisions of the SARFAESI Act unless and until TA No.3 of 2022 filed by the 1^st respondent against the applicants is restored on the file of DRT-III Chennai. The legal position was already informed to the respondent bank by legal notice dated 6.3.2023. Despite receiving the same the 1^st respondent proceeded to issue the sale notice. The legal position is that sale is ipso facto invalid. The legal position is reiterated by Hon’ble High Court of Kerala at Ernakulam in the case of “ Jamin K vs. SBI & Others under W.P. (c) No.11797 of 2018” which had held thus “ …..since an appeal has already been filed it is only appropriate that it should restore the liberty of the bank to proceed with the measures under Section 13(2) of the Act on successful reversal of the Judgment or Decree…..”.

¶116

7.1 The above judgment clearly states that on successful reversal, the bank is entitled to proceed from that point where they left. 1^st respondent herein

¶117

¶118

admittedly not commenced the auction proceedings at that point of time when the said TA has been under dismissal stage. The 1^st respondent hurriedly filed restoration application with inordinate delay of 593 days and the said TA got restores. So by virtue of filing restoration application, it is the selfadmission on the part of the 1^st respondent that they erred in conducting the auction sale under SARFAESI Act defying legal position and without replying to said legal notice issued by the Counsel for applicants conducted auction sale which is invalid in the eyes of law.

¶119

7.2 Possession Notice dated 04.03.2020 has been issued only on 1^st applicant and not on other two applicants who are mortgagors and no proof has been filed by the 1^st respondent to that effect. For this the 1^st respondent has taken a stand that applicants had not challenged possession notice and hence not entitled to agitate the issue when challenging the impugned auction sale notice. The issuance of possession notice on all the borrowers / guarantors is a statutory action on the part of the 1^st respondent which has to be scrupulously followed. The Tribunal had not considered this point on earlier occasion and simply dismissed the SA as infructuous without going into the merit of the case for want of bidders. Moreover, it is a continuous cause of action and every auction sale notice gives rise to cause of action and all infirmities can be taken as ground which renders the actions of the respondent bank invalid. Moreover, publication of possession notice is also made in DT Next which is not widely circulated newspaper and violates Rule 8 of the Security Interest (Enforcement) Rules, 2002.

¶120

¶121

7.3 The 75% of the balance money is not deposited by the successful bidder on time. The 75% of the money has been deposited by the bidder on 14.8.2024 in pursuance to the sale confirmation letter dated 29.7.2024 for the auction sale conducted on 26.7.2024, which is admittedly beyond the period of 15 days time permitted under the Act. Admittedly, no extension of time is entered into writing by the Authorised Officer and Auction purchaser as per provisions of the Act seeking extension of time for the deposit of balance money. During the course of arguments, the 1^st respondent stated that the date mentioned in the counter is a typographical mistake and in fact the auction purchaser has deposited the amount in time and produced a piece of paper captioned “Finacle” which is no way connected to auction proceedings which clearly demonstrates that piece of paper produced is manufactured one after the defence raised in the present case.

¶122

7.4 The 1^st respondent had not rejected OTS proposal dated 10.08.2021 offered by the applicants as of today but proceeded for auction sale to sell the property for undervalued price and the same is against the decision of the Hon’ble Supreme Court of India in “ State Bank of India Vs. Vijay Kumar” reported in AIR 2007 SC 1689.

¶123

Version of 1^st respondent bank

¶124

8.0 The 1^st respondent bank reiterated the facts of the case mentioned by them in their counter and reply to the arguments put forth by the applicants.

¶125

¶126

8.1 In reply to the arguments that the bank has no locus standi to pursue the case under SARFAESI Act since TA No.3 of 2022 has been dismissed for non-prosecution, the 1^st respondent submits that the respondent had initiated SARFAESI proceedings against the secured asset much prior to the filing of the OA. The respondent has filed OA (TA No.3 of 2022) on 20.07.2020 against the applicants for recovery of its dues. In the TA the defendants were set ex-parte on 29.09.2022. The defendants have not filed any application to set aside the said ex-parte order till now in the TA before DRT-III Chennai. The TA came up on 27.02.2025 for filing PAOD by the bank. The case was called through e-DRT without affording opportunity to the applicant dismissed the TA for non filing of PA&OD. After coming to know of the same, the 1^st respondent took steps for restoration by filing application in Dy. No.2940 of 2024. The same are numbered as MA No.31 and 35 of 2025 in TA No.3 of 2022, the same was allowed by the Tribunal by order dated 05.02.2025. Since the respondent bank had filed full satisfaction memo in TA No.3 of 2022 before DRT-III Chennai on 30.04.2025, the TA was disposed of.

¶127

8.2 SARFAESI action is recovery by non-adjudicatory process, therefore the case referred by the applicants is per se not applicable to the present case for the reason being, the Kerala High Court has come to the conclusion that the SARFAESI proceedings are not applicable to the case on hand, as the final order / decree passed by the civil court after appreciating the evidence placed by the borrower that he had settled the entire liability, whereas in the case on hand the TA was dismissed for default and further it is not the case of

¶128

¶129

the applicants that they have discharged the entire liability. Therefore the case referred to is not applicable in the present case. Further, it has been held by the Hon’ble Supreme Court in “ Transcore Vs. Union of India and Ors.” that “…. withdrawal of OA pending before the DRT under the DRT Act is not a pre-condition for taking recourse to NPA Act. It is for the bank /FI to exercise its discretion as to cases in which it may apply for leave and in cases where they may not apply for leave to withdraw. We do not wish to spell out those circumstances because the said first proviso to Section 19(1) is an enabling provision which provision may deal with myriad circumstances which we do not wish to sell out herein” .

¶130

8.3 The demand notice and possession notices were served on the applicants but they did not choose to challenge the same. The respondent issued the sale notice dated 25.10.2022 fixing the sale on 18.11.2022. Challenging the same the applicants filed SA No.590 of 2022and the same came to be dismissed as having becoming infrutuous by order of this Tribunal dated 27.3.2023. The applicants have not taken any plea about the TA in the said SA. The present SA is the 4^th sale notice issued by the respondent and the applicant has forfeited its right of raising the said plea. In support of its contention the 1^st respondent bank relied on the judgment of the Hon’ble High Court of Andhra Pradesh at Hyderabad made in “ M/s Concern Readymix Vs. The Authorised Officer, Corporation Bank – W.P. No.20729 of 2018” .

¶131

8.4 In so far as the contention of the applicants that the auction purchaser failed to pay 75% of the amount within the period it is stated that the auction

¶132

¶133

purchaser has remitted entire sale consideration on 9.8.2024 within 15 days from the date of confirmation and the respondent had issued the sale certificate on 18.8.2024 registered as Doc. No.5265 of 2024 in favour of auction purchaser on 17.8.2024. The sale intimation letter dated 27.7.2024 along with statement of payment made by the auction purchaser stands proof of the same.

¶134

8.5 The applicants have approached this Tribunal only after conclusion of sale. The applicants waited till the outcome of the auction sale and after visualizing the sale was concluded the applicants have preferred the present SA challenging the auction sale held on 26.7.2024 with a dishonest intention to drag the recovery proceedings initiated by the respondent. Reference is made to the judgment of the Hon’ble Supreme Court in “ CELIR LLP Vs. Sumati Prasad Bafna and others” reported in 2024 SCC OnLine SC 3737.

¶135

8.6 The applicants have not approached this Tribunal with clean hands and the SA is liable to be dismissed.

¶136

Version of 2^nd Respondent

¶137

9.0 The Ld. Counsel appearing on behalf of the 2^nd respondent submitted that he is adopting the arguments of Ld. Counsel for 1^st respondent and added that the auction purchaser has invested huge sums in purchasing the property and need to be protected as per the dictum laid down by the Hon’ble Supreme Court referred to by the 1^st respondent bank. It is prayed that the SA is liable to be dismissed and prayed for dismissing the same.

¶138

¶139

Points for consideration

¶140

10.0 Having heard at length the arguments of the Ld. Counsels appearing on behalf of the parties and after going through the documents available on record, the following point arises for determination in these proceedings: -

¶141

Whether the impugned action of the 1^st respondent bank is in accordance with the Act and the Rules framed thereunder?

¶142

Answers to the point for consideration

¶143

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

¶144

11.1 In so far as the contention of the applicant that the 1^st respondent bank is not entitled to proceed under the provisions of SARFAESI Act, unless and until, TA No.3 of 2002 filed by the 1^st Respondent herein against the applicants herein is restored on file of DRT-III Chennai is concerned, it is to be stated that a bank can proceed under the SARFAESI Act even if its Original Application (OA) before the DRT was dismissed in default, as the SARFAESI Act and the DRT Act (which deals with the OA) are considered complementary and not mutually exclusive. The bank can either pursue its recovery efforts under the SARFAESI Act or seek to have its OA restored, but it is not prevented from using the SARFAESI Act simply because the OA was dismissed for default.

¶145

¶146

The SARFAESI Act provides a separate mechanism for banks to enforce their security interests without the need of the court intervention.

¶147

There is no legal bar invoking both the SARFAESI Act and RDB Act, as has been held by the Hon’ble Supreme Court in the case of “M/s Transcore Vs. Union of India & Ors.” Referred supra.

¶148

The dismissal of an OA for default at the DRT only affects the bank ability to recover the debts through the RDB Act’s judicial process in that particular forum; it does not bar the bank from using the SARFAESI Act a more direct enforcement mechanism.

¶149

In simpler form the bank has two tools to get its money back:- a law suit (OA at the DRT) and a direction action to seize the collateral (the SARFAESI Act). If the law suit is dismissed, the bank can still use the SARFAESI Act’s tool to recover the debt by taking and auctioning the pledged property.

¶150

Therefore, if a bank’s OA is dismissed for default, it can still leverage the SARFAESI Act to recover its dues from the defaulted loan by enforcing the security interest it holds in the collateral.

¶151

11.2 In so far as the ground taken by the applicants regarding non rejection of the OTS proposal dated 10.08.2021 offered by the applicants, it is to be stated that it has been held by the Hon’ble Supreme Court that, Banks are not mandatory to respond to every One Time Settlement (OTS) proposal from a borrower. While banks have an internal policy for OTS and need to consider

¶152

¶153

such proposals, it is the sole discretion of the banks to accept or reject them. Banks are not compelled to offer an OTS, if they believe they can recover the full loan dues through other means, such as auctioning the assets or if the borrower has the capacity to pay.

¶154

The decision to offer or accept an OTS is based on the bank’s commercial wisdom and internal policies. If the bank believes that they can fully recover the defaulted amount, they may choose to decline the OTS proposal.

¶155

If a prayer is entertained on the part of the defaulting unit / person to compel or direct the financial institution / bank to enter into an OTS on the terms proposed by it / him, then every defaulting unit / person which / who is capable of paying its / his dues as per the terms of agreement entered into by it / him would like to get one time settlement in its / his favour, who would not like to get his liability reduced and pay lesser amount than the amount he / she is liable to pay under the loan accounts. This view finds favour of the judgment of the Hon’ble Supreme Court in the case of “Bijnor Urban Cooperative Bank Ltd., Vs. Meenal Agarwal” reported in 2021 SCC OnLine SC 1255 decided on 15.12.2021.

¶156

Moreover, it is well know maxim that “Silence amounts to Refusal”. Even if the bank did not reply the OTS proposal of the applicants and choose to keep silent also amounts to refusal.

¶157

¶158

Further it is stated that if it is held that the borrower can still, as a matter

¶159

of right, pray for benefit under the OTS scheme, in that case, it would be giving a premium to a dishonest borrower, who despite the fact that he is able to make the payment and the fact that the bank is able to recover the entire loan amount even by selling the mortgaged / secured properties, either from the borrower and / or guarantor. This is because under the OTS scheme a debtor has to pay a lesser amount than the actual amount due and payable under the loan account. Thus it cannot be the purpose of OTS scheme, which may encourage such dishonesty.

¶160

11.3 In so far as the ground that despite the legal notice dated 06.03.2023, informing the bank about legal position the defendant bank has not taken any steps for restoration of the OA is concerned, it is to be stated that legally in most cases, response to legal notice is not obligatory, important, however is that a legal notice functions as formal correspondence of the grievance or intention on the part of the author to go legal. Even if law does not bind any one to respond, it leaves you weaker for action should the other party move to court because absence of either consideration or communication interprets in to non co-operation or perhaps even as an implied admission judging by the situation. Reply creates free grounds to clear your opinion on it, go for negotiation or resolve the grievance amicably before rising to the next level.

¶161

Moreover, from perusal of additional typed set as filed by the Respondent Bank it appears that subsequently at the instance of bank the TA No.03/2023 said to be dismissed in default has been restored by DRT-III

¶162

¶163

Chennai vide his order dated 05.02.2025 passed in MA Nos.31/2025, 34/2025 and 35/2025. Further it is also seen that the said TA No.3/2023 has also been disposed by DRT-III Chennai on 30.04.2025.

¶164

11.4 The next ground of the applicants is that the respondent bank has failed to serve the demand notice on all the applicants. In this regard, from a perusal of the second additional typed set of documents viz., the copy of the demand notice and postal acknowledgements at Pages 1 to 4, as filed by the bank, it is evident that the demand notice dated 02.12.2019 has been served on all the applicants. Hence this ground of the applicants fails.

¶165

11.5 In so far as the ground relating to non-publishing of the possession notice dated 04.03.2020 in two leading newspapers is concerned, it can be seen from the documents at Pages 19 and 20 filed along with the counter by the 1^st respondent bank that the Possession Notice dated 04.03.2020 has been published in DT Next English daily and Dinakaran Tamil daily on 08.03.2020. Hence this ground of the applicants also fails.

¶166

11.6 In so far as the ground raised by the applicants that the 75% of the balance sale consideration has not been deposited within time is concerned, the second typed set of documents filed by the 1^st respondent bank at Page 5 i.e., Sale Intimation Letter dated 27.07.2024 and the Account Ledger Inquiry filed by the 1^st respondent bank at Pages 7 and 8 are relevant to be noticed. It is not in dispute that the sale was held on 26.07.2024 and the same was confirmed on 29.07.2024. As per Rule 9(4), the balance amount of purchase

¶167

¶168

price payable shall be paid by the purchaser to the authorized officer on or before the 15^th day of confirmation of sale of immovable property. Therefore, the payment has to be made on or before 13.08.2024. A perusal of the account ledger produced by the 1^st respondent bank reveals that the balance sale consideration has been paid by the auction purchaser on 09.08.2024 and hence the same has been paid within 15 days from the date of confirmation of sale. In view of the same this ground of the applicants also fail.

¶169

11.7 From the records it is seen that this the third sale notice issued by the 1^st respondent bank for recovery of its dues. It is also seen that the earlier two sale notices viz., first sale notice dated 25.01.2022 fixing the e-auction sale on 10.3.2022, however, as the respondent did not receive any bids in the said auction sale, the second sale notice dated 10.3.2022 scheduling the sale on 30.3.2022 came to be issued. The applicants challenged the said sale notice by filing SA No.147 of 2022, however, the same was dismissed by the order of DRT-III Chennai dated 05.09.2022. Thereafter the 1^st respondent bank issued the third sale notice on 25.10.2022 fixing the sale on 18.11.2022. This sale notice is challenged by the applicants by filing SA No.590 of 2022, which application was also dismissed by the order of the Tribunal dated 27.03.2023. The present sale notice is the 4^th sale notice issued by the 1^st respondent bank, wherein the property has been sold and the bank had realized a sum of Rs.1,37,50,000/-. Further the present SA has been filed only after the conclusion of the sale.

¶170

¶171

11.8 It has been consistently held by the Hon’ble Supreme Court and various courts that confirmed sale under SARFAESI Act cannot be set aside on mere irregularities except on the ground of collusion, fraud, inadequate pricing etc., and none of these grounds have been pleaded by the applicants in the

¶172

present SA.

¶173

11.9 Further, the Hon’ble Supreme Court in the case of “CELIR LLP Vs. Sumati Prasad Bafna and Others” reported in 2024 SCC OnLine 3727 has held as follows: -

¶174

“Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set-aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding. Mere irregularity or deviation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding. In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity.”

¶175

11.20 Therefore, for the aforesaid reasons, the Tribunal finds no merit or substance in the application as such, the same does not warrant any interference from this Tribunal.

¶176

12.0 Hence the following:

¶177

ORDER

¶178