Dismissed

1)M/S Charis Construction Pvt. Ltd, and Others v. Tamilnad Mercantile Bank Limited

DRT25 Mar 2025SA/469/2023

Case brief

AI extract

What is this about?

Security Application by borrowers and owners of mortgaged property, challenging the sale notice issued by the bank. The Debts Recovery Tribunal dismissed the application as infructuous because the applicant failed to comply with a conditional order and the subsequent auction faced a lack of bidders.

What did the court decide?

Sale Notice dated 10.08.2023 is dismissed as the application is infructuous due to non-compliance and lack of bidders.

1)M/S Charis Construction Pvt. Ltd, and Others versus Tamilnad… — Banking and Recovery | DRT (2025)

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SA No. 469 of 2023

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25.03.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 25^th day of March 2025

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Present: SMT. S.V. GOWRAMMA

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Presiding Officer

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SARFAESI APPLICATION No.469 of 2023

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M/s. Charis Constructions Pvt. Ltd.

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Rep. by its director Sharon Christabel Packiamuthu

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No. 63A, Ground Floor,

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Justice Rathinavel Pandian Road,

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Golden George Nagar,

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Nerkundram, Chennai – 600 107.

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Sharon Christabel Packiamuthu

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Daughter of D. Packiamuthu

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No.173/8, Golden Jubilee Flats,

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Paddikuppam Road, Thirumangalam,

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Chennai – 600 040.

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D. Packiamuthu

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S/o of David

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No.173/8, Golden Jubilee Flats,

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Paddikuppam Road, Thirumangalam,

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Chennai – 600 040.

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Mrs. P. Kalavathi

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W/o D. Packiamuthu

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No.173/8, Golden Jubilee Flats,

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Paddikuppam Road, Thirumangalam,

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Chennai – 600 040. ….Applicants

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-Vs-

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The Authorized Officer M/s. Tamilnad Mercantile Bank Ltd., Chennai Aminjikarai Branch at; No.650, Poonamalle High Road,

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SA No. 469 of 2023

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25.03.2025

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Aminjikarai, Chennai – 600 029. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s R. Chittibabu Counsel for Respondent : M/s V. Chandrasekaran

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ORDER

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The present Securitization Application [SA] is filed on 11.09.2023 under sub section [1] of S.17 of the Securitization And Reconstruction of Financial Asset and Enforcement of Security Interest Act,2002 (for short the „Act‟) challenging the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

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The applicant is the company and second applicant is the borrower and managing director and third applicant is legal director of M/s Charis Construction Pvt. Ltd. fourth applicant is owner of the property. The Company is in the business of construction and fourth applicant is absolute owner of the property having purchased under sale deed dated 13.02.2009, and the 1^st applicant is company and 2^nd applicant is borrower and 3^rd and 4^th applicant stands as co-borrower.

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The case of the applicant is that, first applicant availed educational loan of Rs.19,00,000/- on 11.12.2012 vide account No.142700900110001 which was agreed to be paid in EMI of Rs.91,000/- in 36 installments. It is contended that the applicant was paying regular repayments of the loan amount Rs.30,00,000/- and above as on 28.03.2021, the applicants has

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SA No. 469 of 2023

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25.03.2025

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also availed another Over Draft loan of Rs.25,00,000/- for the business of the first applicant vide account No.142430250803140 on March 2019 and have created mortgage of a property as collateral security towards the credit facility availed, due to Government rules of GST prices and recession, the business of the applicant fell and also the applicant had invested huge amount for the business. Further, due to Covid-19 situation in the year 2020 also affected the business

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However the bank was insisting and demanding monthly installments, hence the applicant requested for some more time and for consideration of waiver of penal interest and reschedule of the payment. The applicant were under bonafide impression that the bank would waive the penal interest and reschedule of payment. The interest claimed by the respondent bank is not as per terms of the loan sanction. The applicants had filed S.A. 12 of 2022 in challenging the first sale notice dated 20.12.2021 and had deposited 20% of the outstanding amounts as mentioned in the first sale notice as per the Tribunal direction

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The applicant requested for settlement under the OTS letter dated 02.02.2023, bank did not consider their request of OTS and refused by sending a reply notice dated 06.02.2023. During the month of march, a new manager considered the OTS request for a final settlement of Rs.10,50,000/- and the applicant made a payment on 21.03.2023 towards the recovery of the loan and paid Rs.1,00,000/- towards the OD loan

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SA No. 469 of 2023

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25.03.2025

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account and thereafter approached the bank for closure of the education loan, but the bank demanding additional charge of Rs.50,000/- which the applicant paid on 27.07.2023 and the request for the closure letter and the request for statement of account was refused by the respondent bank. The bank has issued the sale notice dated 10.08.2023 which was not affixed on the property and the applicants got sale notice on 14.08.2023 and requested the bank to withdraw the sale notice and give closure letter for education loan

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In the grounds it is contended that the sale notice dated 10.08.2023 is unlawful and warrants as it is not compliance of provisions under 13(2) and 13(4) of SARFAESI Act

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The bank has issued sale notice adopting coercive measure and have not mentioned loan account number anywhere in the sale notice. The bank without taking consideration of the representation made by the applicant and have failed to furnish the statement of account, bank have proceeded and issued sale notice. Further the sale notice is not published in the Newspapers and have not mentioned loan amount due as on date on the sale notice, a sum of Rs.48,54,000/- is the upset price which is not reasonable and not agreed, the respondent failed to offer opportunity to settle the liable. Further classifying the loan accounts as non-performing assets (NPA) is un lawful and on these grounds prays to set aside the sale notice dated 10.08.2023.

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SA No. 469 of 2023

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25.03.2025

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The bank has filed a counter inter alia contending S.A. 469 of 2023 is an application filed challenging the sale notice dated 10.08.2023 fixing the date of sale on 13.09.2023, is not maintainable either in law or on facts and the same is liable to be dismissed.

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It is the case of the bank that in the year 2012, 1^st and 2^nd applicant approached the bank seeking for financial facilities and availed Education loan of Rs.19,00,000/- vide loan account No.142700900110001. The 3^rd and 4^th applicant stood as guarantors for the above credit facility and additionally 4^th applicant has executed memorandum of deposit of title deeds for the property mentioned in schedule.

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Due to irregularity in repayments towards the credit facility availed by the borrower and guarantor, loan account was classified as NPA on 31.03.2021 as per the RBI guidelines. The bank have issued a demand notice dated 28.05.2021 calling upon the borrower and the guarantors to repay the entire outstanding Rs.29,98,574.98/- as on 27.03.2019, the said

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demand notice was sent to first applicant which was returned with endorsement “Left” and the demand notice sent to 2^nd and 4^th applicant are served. Hence the bank has affixed the demand notice in the conspicuous part of the property and also published in two Newspapers “The New Sunday Express” English daily and “Dinakaran” Tamil daily on 20.06.2021 11. In spite of the service of the demand notice the applicant failed to close the credit facilities and bank has issued section 13(4) possession

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SA No. 469 of 2023

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25.03.2025

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notice on 26.08.2021, the possession notice is also affixed on the property and published in the in “The New Indian Express” English daily and “Dinakaran” Tamil daily on 01.09.2021 as contemplated under the act. The possession notice was sent through post on 27.08.2021 and notice sent to 1^st applicant was returned on 28.08.2021 with an endorsement “Left”. It is submitted that the bank has taken all the measures as required under the act.

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The contentions of the applicant that they made payment of Rs.30 lakhs and Rs.5 lakhs has not been substantiated by any evidence, and 2^nd applicant filed S.A. No.12/2022 challenging the sale notice dated 28.12.2021 wherein this Tribunal granted interim conditional order dated 19.01.2022 directing the 2^nd applicant to deposit 20% in two instalments one on 23.01.2022 and another in 3 weeks time. However the S.A. came to be dismissed on 01.11.2022 upholding the measures, the 2^nd applicant send OTS letter dated 02.02.2023 requesting to settle the educational loan for a sum of Rs.5,00,00/- which was rejected on 06.02.2023, as the account was not cleared the bank has issued sale notice dated 13.09.2023 fixing the auction sale on 13.09.2023 for recovery of sum of Rs.42,41,850.15/- due as on 31.07.2023

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The applicant has made a payment of Rs.4,00,000/- on 12.09.2023 to the loan account and filed a memo, based on the memo, the Hon‟ble

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SA No. 469 of 2023

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25.03.2025

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Tribunal on 15.09.2023 passed a conditional order which the applicant did not comply and nor sale taken place for want of bidders

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The sale notice sent to the applicant returned with endorsement “Left” however sale notice was sent to other applicant, borrower, guarantors is received on 12.08.2023 and the sale notice was duly affixed on the property and published in “The New Indian Express” English daily and “Dinakaran” Tamil daily on 13.08.2023, bank has affixed reserve price based on valuation report dated 07.12.2022 and the contentions of the applicant on undervaluation deserved to be brushed aside. Security interest created in favour of the respondent bank by the applicant is also registered with the central registry on 11.12.2012 as per the Act. On these grounds the respondent bank prays to dismiss the present S.A.

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Heard the Learned Counsels appearing for the respective parties and perused the records of the case.

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It is manifest from the record that the applicant does not dispute the default created in repaying of the credit facilities and executed memorandum of deposit of title deeds for the property mentioned in schedule as collateral security and the default in the repayments.

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The bank, after the mortgage is created, has registered before the central registry on 11.12.2012 as required under the SARFAESI Act which is constitutes a security asset and security interest created in favour of bank.

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SA No. 469 of 2023

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25.03.2025

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Due to default in the repayment, bank have classified the account as NPA and issued Section 13(2) demand notice dated 28.05.2021 and Section 13(4) Possession Notice dated 26.08.2021 which is not challenged by the applicant within a period of 45 days from the date of receipt. Further the present S.A. is filed challenging the sale notice dated 10.08.2023 and the Tribunal passed an interim conditional order dated 15.09.2023 which the applicant failed to comply. Further more the schedule sale did not take place for want of bidders, rendering the present S.A. as infructuous.

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Hence the S.A. is dismissed of as infructuous.

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Interim order granted if any, stands vacated. Pending IAs if any, are disposed of in terms of this order. No order as to costs.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Steno (Mogesh), transcribed by him, corrected, signed and pronounced by me in Open Court, on this the 25^th day of March, 2025)

1)M/S Charis Construction Pvt. Ltd, and Others v. Tamilnad Mercantile Bank Limited

Case brief

What is this about?

What did the court decide?

1)M/S Charis Construction Pvt. Ltd, and Others v. Tamilnad Mercantile Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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Case details

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