Allowed

Bakery Amutham v. The Chief Judicial Magistrate

DRT5 Jun 2025SA/422/2022

Case brief

AI extract

What is this about?

In a SARFAESI application, the Debt Recovery Tribunal allowed the challenge to an order authorizing physical possession. The Tribunal found that the bank failed to strictly follow prescribed rules for serving and publishing the Possession Notice, including address discrepancies and wrong dates, and consequently set aside the Magistrate's order and the notice.

What did the court decide?

The impugned order of the Chief Judicial Magistrate and the Possession Notice dated 21.12.2021 were set aside. Costs of proceedings incurred were to be excluded from the loan account.

Bakery Amutham versus The Chief Judicial Magistrate — Banking and Recovery | DRT (2025)

¶1

SA No.422/2022

¶2

Fair Order

¶3

IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

¶4

DATED THIS 05^th DAY OF JUNE, 2025

¶5

PRESENT: SEEMA SINHA

¶6

[PR. DISTRICT & SESSIONS JUDGE - Retd]

¶7

PRESIDING OFFICER

¶8

SA No. 422/2022

¶9

M/s. Bakery Amutham, D. No.2, L1 Road, Sundararajapuram, Madurai – 625 011.

¶10

2.	Mr. G. Balasaravanan, S/o. M. Gnanasekar, D. No.2, L1 Road, Sundararajapuram, Madurai – 625 011.
3.	G. Kaleeswari, D/o. Sethuraman, D. No.2, L1 Road, Sundararajapuram, Madurai – 625 011.
4.	M. Gnanasekar, S/o. Muniyandi, D. No.2, L1 Road, Sundararajapuram, Madurai – 625 011. …. Applicants
	Vs
1.	The Chief Judicial Magistrate, Chief Judicial Magistrate Court, District Court Campus, Madurai. …. 1^stDefendant
2.	The Authorized Officer, IDFC Bank Limited, (Erstwhile Capital First Limited and amalgamated with IDFC Bank Ltd)

¶11

Page 1 of 11

¶12

SA No.422/2022

¶13

1^stFloor, Bypass Road,
Next to Rathina Hospital,
Madurai – 625 010.	…. 2^ndDefendant Bank

¶14

Appearance of Advocates:

¶15

Mr. M. Arun Murugan ---- Counsel for the Applicants Mr. A. Sivasubramanian ---- Counsel for the 2^nd Defendant Bank 1^st Defendant is none other than the Ld. CJM, Madurai

¶16

This SARFAESI Application was heard in the presence of Counsels for the Applicants and the 2^nd 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:

¶17

O R D E R

¶18

1 . This Application has been filed u/s. 17 of the SARFAESI Act, 2002 by the Applicants praying that this Hon'ble Tribunal may be pleased to set aside the Order dated 05.04.2022 passed by the 1^st Defendant in Crl.M.P.No. 221 of 2022 in respect of the schedule of properties and quash the same and pass Orders.

¶19

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

¶20

The Counsel for the Applicants submitted that the 1^st Applicant is the borrower and other Applicants are guarantors. The Applicants has borrowed the loan vide A/c. No. 17718785 for a sum of Rs. 45,00,000/- and another loan vide A/c. No. 34592212 for a sum of Rs. 8,77,046/- from the 2^nd Defendant Bank vide Sanction Letter dated 23.10.2018 and 28.09.2020 respectively by way of a Mortgage Loan and mortgaged their residential property. The 1^st Applicant was regular in repayment without any break or hindrance. Later on, his business of bakery shop was unable to reach full capacity as there was a national lockdown. Due to market fluctuation, price rise and COVID-19 Pandemic, his business was down and sustained huge loss. But Defendant Bank did not wait for those period and charged interest on interest and penal interest. Further, the Applicants have so far deposited

¶21

Page 2 of 11

¶22

SA No.422/2022

¶23

several lakhs and the account was regular but instead of that, the Defendant Bank declared the account as NPA on 01.08.2021 during the Pandemic COVID-19. And issued Demand Notice U/s. 13(2) on 01.10.2021 for a sum of Rs. 56,46,705/- as on 24.09.2021. The Applicants went to the Bank and made objections to the 2^nd Defendants mentioning the repayment of several EMI and imposing interest on interest and requested for regulatory package and also requested for re-assess and restructure or give opportunity under OTS. Further requested for waiver of interest during COVID-19 period as per RBI circular. But the 2^nd Defendant did not reply properly and did not consider the Applicant's request. Thereafter, the 2^nd Defendant Bank suddenly issued Possession Notice U/s. 13(4) on 21.12.2021 and no notice has been published in the newspaper as contemplated under the Act and Rules.

¶24

It is further submitted that the 2^nd Defendant was abreast with those facts, but suppressing all the above facts obtained the Order of Ld. CJM and the same has been known to the Applicants by way of a notice issued by the Advocate Commissioner dated 13.12.2022 for taking the Physical Possession of the property on 21.12.2022, which is against the basic principles of natural justice.

¶25

It is further submitted that in the impugned order in Cr.MP.No. 221 of 2022 dated 05.04.2022, the Ld. CJM failed to mention the date of the Possession Notice and its service. This omission clearly indicates that no Possession Notice was sent. Consequently, there is a violation of Section 14(ix) of the SARFAESI Act, which requires the CJM to ensure that the provisions of the Act and the rules made there under have been complied with. Further it is submitted that the address of the Schedule mentioned property is not correct and the Application has been filed by the Authorised Officer instead of secured creditor.

¶26

It is further submitted that the Applicants complied with the condition of paying 50% of the outstanding amount, which was duly fulfilled by the

¶27

Page 3 of 11

¶28

SA No.422/2022

¶29

Applicants. Following this, the Applicants approached the 2^nd Defendant to negotiate One Time Settlement for the loan. However, without providing any opportunity for resolution, the 2^nd Defendant intentionally and arbitrarily threatened the Applicants to take Physical Possession, in violation of law.

¶30

It is therefore prayed that this Hon'ble Tribunal may be pleased to allow the SA as prayed for and thus render justice.

¶31

Main Grounds:

¶32

The arbitrary action of the Defendant Bank in issuing Demand Notice, Possession Notice and Auction Sale Notice and declaring the account as NPA on 02.11.2020 during Pandemic COVID-19, is unfair being violative of Articles 14, 19(1) and 21 of the Constitution of India.

¶33

The Defendant Bank did not paste the Possession Notice on the conspicuous part of the property.

¶34

The Bank failed to disclose the actual measurement of the building in the Possession Notice and violated Rule 8(7) Security Interest (Enforcement) Rules 2002.

¶35

The 2^nd Defendant Bank failed to mention the details of the property in the Possession Notice and squarely violated the provisions of law.

¶36

The Defendant Bank failed to publish the Possession Notice in a Newspaper which is having sufficient circulation in the area and squarely violated Rule 8(2) & (6) of Security Interest (Enforcement) Rules 2002.

¶37

That the order of CJM is not in consonance with the section 14 of the SARFAESI Act and is full of violations of the mandatory provisions of law.

¶38

The Bank's impugned notice is violative of rule 3(4) and Rule 8(2) of the Security Interest (Enforcement) Rules 2002 and is no notice worth its name.

¶39

The Possession Notice was also not published in two leading newspapers within 7 days as contemplated in Rules and has also not been affixed on the property.

¶40

The 1^st Defendant has passed order and failed to find that the Petition is not maintainable and is not filed as contemplated in the Act and the name of the 1^st Applicant itself is erroneous.

¶41

Page 4 of 11

¶42

SA No.422/2022

¶43

The 2^nd Defendant has no locus to file the said Application as it has to be filed by the Secured Creditor. Authorized Officer is not the same as Secured Creditor.

¶44

The Description of property is not properly mentioned in the Impugned Order.

¶45

Schedule of Property

¶46

All that piece and parcel of property in Madurai District, Madurai South Registration District Joint IV Sub Registration District, Thirupparankundram Taluk, No. 24, Madakulam Village, Palanganatham Hamplet Keezhakaraipuravil at present Madurai Corporation limit Sundararapuram, R.S.No. 32/2B measuring 2 acres 35 cents R.S.No. 32/4 measuring 47 cents and thus totally measuring 2 acres 82 cents in which sold the land of Municipality and left for sold the land and balance measuring 84 cents in which Southern measuring 27-1/2 cents in which measuring 16 cents 22 sqft in R.S.No. 32/2B, measuring 2 acres 35 cents in that plot no. 39 measuring 2-3/4 cents land within these admeasuring in East to West on northern 30 feet, Southern 30 feet and South to North on eastern 40 feet, western 40 feet and plot measuring 1200 sqft and bounded as

¶47

East : Nandarajan sold the house West : Plot No. 38 of Narayanan North : Rettiyar Mandam South : 30ft scheme Road

¶48

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

¶49

S.No.	Date	Particulars
1.	01.10.2021	Demand Notice
2.	21.12.2021	Possession Notice
3.	05.04.2022	Order of CJM in Cr.M.P.No. 221/2022
4.	13.12.2022	Noticegiven byAdvocate Commissioner

¶50

ADDITIONAL TYPED SET PAGES

¶51

S.No.	Date	Particulars
1.	19.10.2020	BuildingWater Tax receipt
2.	19.10.2020	Buildingdrainage tax receipt
3.	---	Photographs of the building

¶52

Page 5 of 11

¶53

SA No.422/2022

¶54

3 . On the other hand, the Counsel for the 2^nd Defendant Bank appeared before this Tribunal and filed Vakalat, Counter/Reply Statement, Written Arguments & Typed set of papers in which he has submitted that the 2^nd Defendant do not admit all the allegations under the heading 'Facts of the Case' as true & Correct. Most of the allegations are unwarranted so far as the matter-in-issue is concerned. The Applicant stated that the Defendant Bank failed to consider & provide waiver to the Applicant for occurring of the pandemic situation due to COVID-19 is nothing but tissues of falsehood. The 2^nd Defendant Bank denied the allegation of charging exorbitant interest and stated that interest rate is fixed under the guidelines fixed by the Reserve Bank of India and as per the agreement entered upon.

¶55

It is further submitted that the loan account of the petitioner was declared as Non Performing Assets within the meaning of Section 2(o) of the Act and in accordance with the directions issued by the Reserve Bank of India as 01.08.2021 and intimation letter for the same has been sent to the petitioner. The Petitioner is willful & chronic defaulter and the 2^nd Defendant Bank issued Demand Notice was also duly served on the Petitioner. The Petitioner failed to discharge their liability within the statutory period and the reason cited by the Petitioner that the 2^nd Defendant Bank failed to provide waiver to the petitioner for occurring pandemic situation due to COVID-19 is nothing but tissue of falsehood. As per RBI guidelines the moratorium period is only between March 2020 to August 2020. During that period the Bank had followed the guidelines and no payment in any sort of mode was received by the 2^nd Defendant Bank. In spite of all attempts made under due process of law by the 2^nd Defendant Bank, the petitioners failed to repay the dues and the 2^nd Defendant Bank issued Possession Notice on 21.12.2021 and the Possession Notice was also published both in Tamil daily & in English daily. Even after receiving the notices u/s. 13(2) & 13(4) of SARFAESI Act, the Applicants kept the dues unpaid. Hence, the 2^nd Defendant Bank filed petition U/s.14 of the SARFAESI Act before Ld. CJM, Madurai in Cr.M.P.No. 221 of 2022 and the same were ordered on 05.04.2022.

¶56

It is further submitted that the Applicants have not raised any legally sustainable grounds. The 2^nd Defendant Bank issued Possession Notice on 21.12.2021 and the Possession Notice were also published both in Tamil Daily & in English daily on 25.12.2021. Further it is submitted that the Applicants complied with the conditional order passed by this Hon'ble Tribunal dated 30.12.2022. The 2^nd Defendant Bank further submitted that the Petitioner taking advantage of order of Hon'ble Tribunal is unnecessarily dragging the SARFAESI proceedings and the loan account was declared NPA as early as 01.08.2021 and petitioner is not ready to pay the balance

¶57

Page 6 of 11

¶58

SA No.422/2022

¶59

amount and intended to evading from repay the loan and repeatedly defaulted and any further default will cause much hardship to the 2^nd Defendant Bank.

¶60

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

¶61

TYPED SET OF DOCUMENTS FILED BY THE 2^ND DEFENDANT BANK

¶62

S.No.	DATE	Description of Documents
1	23.11.2018	Memorandum of Deposit of Title Deeds
2	29.09.2020	Memorandum of Deposit of Title Deeds
3	01.10.2021	Demand Notice
4	19.10.2021	Demand Notice Paper Publication in Tamil daily
5	19.10.2021	Demand Notice Paper Publication in English daily
6	22.12.2021	Intimation letter after Possession Notice
7	25.12.2021	Possession Notice Paper Publication in English daily
8	25.12.2021	Possession Notice Paper Publication in Tamil daily

¶63

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

¶64

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

¶65

5 . Having heard the parties and after going through the entire documents available on the records, this Tribunal find that there is no dispute between the parties with regard to the availment of loan facilities by creating equitable mortgage on their property. In this case, the Applicants contended that initially the Applicants have repaid the monthly installments regularly however, during the national lockdown due to the COVID-19 Pandemic, their business was severely impacted and sustained huge losses. Despite these challenges, the Applicants continued to pay the EMIs promptly. However without giving any opportunity for a waiver of the loan and interest, the 2^nd Defendant Bank has initiated recovery proceedings and classified the Applicant's loan account as NPA on 01.08.2021 and issued Demand Notice on 01.10.2021 U/s.13(2) of SARFAESI Act for a sum of Rs. 56,46,705.63p (Rupees Fifty Six Lakhs Forty Six Thousand Seven Hundred and Five and Paise Sixty Three only) and the Applicants have admitted the

¶66

Page 7 of 11

¶67

SA No.422/2022

¶68

receipt of Demand Notice dated 01.10.2021 issued by the 2^nd Defendant Bank. However, the Applicants have not filed any documents for having sent a reply/ representation to Demand Notice dated 01.10.2021 U/s. 13(3-A) of SARFAESI Act to the 2^nd Defendant Bank.

¶69

The Applicants further contended that they did not receive Possession Notice dated 21.12.2021 issued by the 2^nd Defendant Bank and they only came to know about the Possession Notice when the Advocate Commissioner handed over the Possession Notice and the Order passed in Cr.M.P.No. 221 of 2022. I also perused the typed set of papers filed by the 2^nd Defendant Bank and I find that the Bank has produced the copies of acknowledgement cards for having sent the Possession Notice dated 21.12.2021 at page nos. 59 & 60 of typed set of papers. I also find that at page nos. 48 to 51 of typed set of papers, Bank has filed a copy of Demand Notice dated 01.10.2021, wherein the address of borrowers/guarantors are given as Madurai District and at page nos. 52 & 53, the Bank has filed copies of Postal receipts addressed as Madurai District. Whereas, at page nos. 59 & 60 of typed set of papers here the Bank has filed copies of Postal receipts addressed as Chennai District. Moreover, the date of Possession Notice is 21.12.2021, here the postal receipts are dated 28.12.2021. I also find that in Possession Notice, it is shown as if the Notice is issued by the IDFC First Bank Ltd, Madurai, Place of issue is given as Madurai and Madurai Bank Seal is also affixed in the Possession Notice. But in the postal receipts the sender address is given as " IDFC First Bank, Thane ". Further, in the Possession Notice address of the borrowers/co-borrowers/guarantors are not given. The Bank has also failed to mention the name of owner of the impugned property in the Possession Notice. Hence, I find that there are irregularities in issuance of Possession Notice. The Applicants also in their Written Arguments contended that they are residing in Madurai, but the postal receipts show the addresses of Chennai, which is not at correct address. The 2^nd Defendant Bank also failed to rebut the allegations of the Applicants in this particular issue. Further, at page no. 58 of typed set of papers, the Bank has filed an illegible photocopy which is also not properly addressed by the Bank whether it is an affixture of Possession Notice or not? Even if it

¶70

Page 8 of 11

¶71

SA No.422/2022

¶72

is an affixture of Possession Notice, it is not clear to know that on which date it was affixed. I also find that the Bank has produced the xerox copies of Paper Publication of Possession Notice in two newspapers one in English and another in Tamil (Bank's Typed set of papers at page nos. 61 & 62). But, the copies provided do not exhibit the details, such as Name of the Newspaper, date of publication. I also find that the date of Possession Notice at the bottom of the notice was given as 21 & 22.09.2021, while the date of Possession Notice is 21.12.2021. Hence, I find that date of Possession Notice in Paper Publication is wrongly mentioned. Thus, I do not find that the 2^nd Defendant Bank has strictly followed the SARFAESI procedures, while issuing Possession Notice to the Applicants. The Rule 8(1) (2) & (2-A) of the Security Interest (Enforcement) Rules 2002 clearly says:-

¶73

"8. Sale of immovable secured assets.

¶74

(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."

¶75

(2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newspaper, one in vernacular language having sufficient circulation in that locality, by the authorized officer.

¶76

(2-A) All notices under these rules may also be served upon the borrower through electronic mode of service, in addition to the modes prescribed under sub-rule (1) and sub-rule (2) of rule 8.] ".

¶77

Thereafter, the 2^nd Defendant Bank had obtained an Order dated 05.04.2022 passed by the Ld. CJM, Madurai in Cr.M.P.No. 221/2022 for taking Physical Possession of the Schedule mentioned property and an Advocate Commissioner have also been appointed to take the Physical Possession of the secured asset. Challenging the same, Applicants filed this SARFAESI Application. I perused the Order of the Ld. CJM dated 05.04.2022 and I find that in the Impugned Order dated 05.04.2022, there is no mention about the Possession Notice, date of Possession Notice and its service and the outstanding amount for which the Physical Possession has to be taken has been mentioned as Rs. 61,81,310.83 p. The 2^nd Defendant Bank has also not filed the Affidavit to verify the amount mentioned in the Ld. CJM Order dated 05.04.2022. Moreover, in the Impugned order dated

¶78

Page 9 of 11

¶79

SA No.422/2022

¶80

05.04.2022, the name of the Applicants and their respective addresses are also wrongly given.

¶81

I also find that both the parties have failed to produce the Statement of Accounts to verify the genuineness of the accounts. Further, the Applicants have not placed any material evidence before this Tribunal to substantiate their claim that the classification of loan account as NPA is wrong and rate of interest has been charged excessively against the guidelines of RBI.

¶82

Further I find that during the pendency of the case, this Tribunal has granted a conditional stay order dated 30.12.22 for a sum of Rs. 24,00,000/- (Rupees Twenty Four Lakhs only) to be paid in two installments by the Applicants, the Applicants have also complied with the conditional order and proved their bona-fide.

¶83

The Applicants have no doubt being defaulters are liable to pay the loan amount to the 2^nd 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 Physical Possession of the property of the Applicants without following the due process of law strictly.

¶84

In view of the above facts and circumstances of the case, I find that the Applicants have been able to prove their case.

¶85

In the result,

¶86

(a) SA No. 422/2022 is allowed as prayed for. The Impugned Order passed by the Ld. CJM, Madurai in Cr.M.P.No. 221/2022 dated 05.04.2022 is hereby set aside.

¶87

(b) The Possession Notice dated 21.12.2021 is also hereby set aside.

¶88

(c) All the expenditures incurred in issuance of Impugned Order passed by the Ld. CJM, Madurai in Cr.M.P.No. 221/2022 dated 05.04.2022 and further all the expenditures incurred in respect of Possession Notice dated 21.12.2021 shall not be included in the loan account of the Applicants.

¶89

Page 10 of 11

¶90

SA No.422/2022

¶91

(d) The 2^nd Defendant Bank is at liberty to initiate fresh action against the Applicants for recovery of outstanding loan amount as per the SARFAESI Acts & Rules.

¶92

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

¶93

Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 05^th June, 2025.

¶94

sd/- (SEEMA SINHA) PRESIDING OFFICER

¶95

Uploaded on 09.06.2025

¶96

Page 11 of 11

Bakery Amutham v. The Chief Judicial Magistrate

Case brief

What is this about?

What did the court decide?

Bakery Amutham v. The Chief Judicial Magistrate

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Kaniamudha versus Canara Bank

J Syed Ali Fathima versus Indian Bank

K Pandiyammal versus Union Bank of India

Muthu Poultry Farm versus Bank of Baroda

Y Dennison versus Tamilnad Mercantile Bank Limited

M Shanthi versus Punjab National Bank