Dismissed

Venus Exports v. Bank of Baroda

DRT22 Dec 2025SA/477/2023

Case brief

AI extract

What is this about?

In a petition under Section 17 of the SARFAESI Act, applicants challenged an order of the Chief Metropolitan Magistrate allowing possession of secured assets. The tribunal examined claims of procedural non-compliance, including failure to issue notices and non-due process, finding that the bank had furnished evidence of compliance with the Act and Rules.

What did the court decide?

The sale application (SA No.477 of 2023) was dismissed, and the order of the Chief Metropolitan Magistrate dated 01.09.2022 was affirmed. Each party to bear its own costs.

Venus Exports versus Bank of Baroda — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 22^nd day of December, 2025

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PRESENT: SHRI SHARANG DHAR UPADHYAY Presiding Officer

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SA No.477 of 2023

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M/s Venus Exports D. No.77, 4^th Street, W Block Anna Nagar (Near Rountana) Chennai – 600 040 Represented by its Partners Mr. K.K. Maheswaran & Mrs. K. Kasthuri

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K.K. Maheswaran S/o Mr. A. Krishnan M/s Venus Exports No.54/23, Reddikuppam Road Saidapet, Chennai – 600 015 3. Mrs. K. Kasthuri W/o A. Krishnan M/s Venus Exports No.54/23, Reddikuppam Road Saidapet, Chennai – 600 015 4. Mrs. V. Shanthi W/o Mr. Vijaykumar. R No.54/23, Reddikuppam Road Saidapet, Chennai – 600 015 …Applicants

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Versus

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The Authorized Officer Bank of Baroda AGS Towers, 1^st Floor No.2, Abdul Razak 1^st Street Saidapet, Chennai – 600 015 …Respondent

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Counsel on Record / Appeared

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Applicant by : Ld. Counsel M/s G. Sanjeevi Defendant by : Ld. Counsel M/s S. Pandurangan & M. Karthik

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FINAL ORDER

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This petition is filed under Section 17(1) of the SARFAESI Act challenging the measures initiated by the respondent bank in pursuant of order dated 01.09.2022 made in Crl. M.P. No.17255 of 2022 on the file of Chief Metropolitan Magistrate, Egmore passed under Section 14 of the Act.

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Facts of the case in brief

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The 1^st applicant is a Partnership firm, represented by its Partners, applicants 2 and 3 herein had availed loan facilities from the respondent bank and had been regular in repayment. That being so, there was some delay in repayments due to business loss. The applicants prayed time for repayments, the respondent without considering the same classified the loan account as NPA on 31.03.2021 and issued the demand notice under Section 13(2) of the SARFAESI Act on 11.06.2021. The respondent thereafter issued the possession notice dated 30.10.2021.

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After the issuance of demand notice and possession notice the applicants remitted a sum of Rs.5,00,000/- on 17.1.2022. The respondent issued the first sale notice on 21.01.2022 without following the mandatory Rules 8(5), 8(6), 8(7) and 9(1) of the Security Interest (Enforcement) Rules, 2002.

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The Respondent without giving reasonable opportunity to the applicants to clear the dues, hurriedly initiated action under Section 14 of the SARFAESI

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Act and obtained an order dated 1.9.2022, passed by the Ld. Chief Metropolitan Magistrate, Egmore, Chennai and the applicants were served with the notice by the Advocate Commissioner dated 6.10.2023 on 07.10.2023.

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Grounds raised by the applicants

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(i) The respondent failed to issue the demand notice under Section 13(2) of the SARFAESI Act, thus depriving the right of the applicant under Section 13(3-A) of the Act.

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(ii) The declaration of the account as NPA is contrary to the guidelines of RBI.

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(iii) The respondent failed to issue the Possession Notice under Section 13(4) of the SARFAESI Act.

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(iv) The Ld. Magistrate failed to note that there is no averment in the affidavit regarding compliance of Rule 8(1) of the Security Interest (Enforcement) Rules, 2002.

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Counter filed by the Respondent

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The respondent filed its counter stating therein that the Application is not maintainable in Law and on facts. It is stated that the applicants are challenging the order dated 01.09.2022 in Crl.M.P. No.17235/2022 passed by the Learned Chief Metropolitan Magistrate, Egmore, Chennai under Sec. 14 of the SARFAESI Act mainly on the ground that the order was passed without the respondent following mandatory procedures and without any notices

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issued by the Respondent Bank to the applicants. It is further contended that the order of the Learned the Learned Chief Metropolitan Magistrate, Egmore, Chennai is totally not in consonance of the section 14 of the SARFAESI Act.

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It is stated that the applicants did not dispute their liability to the Respondent bank and they only take objections for the enforcement of the liability which is without any legal basis. It is also pertinent to point out that the defaults by the Applicants still continuing despite the receipt of the demand notice and possession notice which clearly exhibits the malafides of the applicant in not willing to repay the dues of the Respondent Bank. It is stated that the applicants admit the availment of the loan, execution of the security documents and creation of Security Interest over the schedule mentioned property and commission of defaults in repayment of the loans and falsely denying the receipt of the Demand Notice dated 11.06.2021 and Possession Notice dated 30.10.2021.

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It is stated that the 1^st Applicant is a partnership firm represented by the 2^nd and 3^rd Applicants as its partners, availed credit facilities by way of over draft, term loans, working capital term loan and FITL from the Respondent bank. It is also submitted that the 1^st Applicant has availed Credit Facilities from time to time from the Respondent as mentioned in the demand notice and the above credit facilities are inter alia secured by the mortgage of the S.A. schedule immovable property belonging to the 3^rd and 4^h Applicants (i.e., Mrs. K. Kasthuri and Mrs. V. Shanthi) besides the hypothecation of the

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movables and the personal guarantees of the 2^nd , 3^rd and 4^th Applicants. The 3^rd and 4^th Applicants executed registered Memorandum of Deposit of Title Deeds dated 05.02.2009 bearing Doc. No.2112/2009, Supplemental Registered Memorandum of Deposit of Title Deeds dated 28.03.2014 bearing Doc. No.773/2014 and Supplementary Registered Deed of Deposit of Title Deeds dated 27.09.2017 bearing Doc. No.2313/2017 duly confirming creation of equitable mortgage in favor of the Bank over the schedule property as a security. The security interest created over the S.A. schedule property was duly registered with the Central Registry.

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It is stated that the borrowers failed to operate the account as per sanction and committed defaults and that despite reminders failed to regularize the loan account and hence the loan account was classified as Non-Performing Asset as on 31.03.2021 in terms of the guidelines of the Reserve Bank of India. The Authorised Officer of the Respondent Bank invoked the provisions of the SARFAESI Act and issued the Demand Notice dated 11.06.2021 to the Applicants herein, which was duly received by the Applicants. The borrower/guarantors did not submit any objections to the above demand notice and also failed to repay the amount demanded within 60 days after the receipt of the above demand notice. The applicants deemed to have accepted the demand made in the above 13 (2) notice and now it is not open to them to challenge the claims made in the Section 13 (2) notice.

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The respondent bank took symbolic possession of the S.A. schedule property by issuing the possession notice dated 30.10.2021. The possession

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notice was duly served, affixed at the conspicuous place of the secured asset on 30.10.2021 and published in two newspapers i.e., Indian Express and Dinamani on 02.11.2021. Thereby the Respondent has duly complied with the provisions of the SARFAESI Act and Security Interest (Enforcement), Rules, 2002.

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The respondent thereafter took steps for taking physical possession of the property and approached the learned Chief Metropolitan Magistrate, Egmore, Chennai by filing an application under section 14 of the SARFAESI Act bearing Crl.M.P.No.17235/2022 and also filed an affidavit containing all relevant particulars/documents required under the above section. The learned Chief Metropolitan Magistrate, Egmore, Chennai after satisfying the materials on record, was pleased to pass the impugned order dated 01.09.2022 allowing the above application bearing Crl.M.P.No. 17235/2022 and also was pleased to appoint an Advocate Commissioner to take physical possession of the secured asset with the directions to hand over the same to the respondent.

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The contentions of the applicants that the Respondent did not serve the Demand Notice dated 11.06.2021 and the Possession Notice dated 30.10.2021 to the applicants is absolutely false. It is false to state that loan account is regular. The applicants admit the default committed by them in conducting the account in terms of sanction. The respondent bank at the request of the applicants has restructured the loan vide sanction letter dated 30.10.2020 and the applicants availed the restructured limits after executing

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loan security documents. Despite restructure, the applicants committed defaults and therefore the loan account has been declared as NPA as on 31.03.2021 in terms RBI guidelines. It is false to state that the respondent fixed low reserve price in the sale notice dated 21.01.2022.

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The respondent duly followed all the procedures as per the rules. There is no violation of the RBI guidelines in classifying the account as NPA. The amount claimed is as per the statement of account maintained by the respondent. The respondent has duly followed all the procedure while issuing the demand notice, possession notice and while approaching the Ld. Chief Judicial Magistrate. The impugned order is legally valid. The Ld. Chief Metropolitan Magistrate has examined all the relevant aspects and properly exercised the powers u/s.14 of the SARFAESI Act. The payments made by the applicants were duly credited in to the loan account of the applicants. It is stated that the impugned action is in accordance with law and Rules and not violative of any principles of Law. It is false to state that the impugned order is vitiated by material irregularities. It is submitted that the Ld. Chief Metropolitan Magistrate duly considered the mandatory procedures u/s. 14 of the SARFAESI Act, while passing the impugned order. The Ld. Chief Magistrate has duly considered the materials on record and passed the impugned order and has examined all the requirements u/s 14 of the SARFAESI Act while passing the impugned order.

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The Respondent bank has duly complied with the provisions of the SARFAESI Act and the Security Interest (Enforcement) Rules, 2002 while

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issuing the Demand Notice, possession notice and while approaching the Ld. Chief Metropolitan Magistrate & the allegations to the contra are denied as false. There is no infirmity in passing the impugned order dated 01.09.2022 by the Ld. Chief Metropolitan Magistrate, Egmore and therefore it is humbly submitted that the above S.A. is not maintainable and prayed for dismissing the SA.

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Documents filed by the Respondent

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(i) Demand notice dated 11.06.2021 issued to the borrowers along with postal receipts and postal acknowledgements.

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(ii) Possession Notice dated 30.10.2021 along with acknowledgement cards.

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(iii) Photographs evidencing affixture of possession notice.

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(iv) Paper publication of possession notice in newspapers dated 3.11.2021.

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(v) Registered Memorandum of Deposit of Title deeds dated 09.11.2009

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(vi) Supplementary MoD dated 28.03.2014.

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(vii) Supplementary MoD dated 27.09.2017

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(viii) Petition dated 01.06.2022 filed under Section 14 before the CMM

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(ix) Affidavit filed before CMM, Egmore dated 01.06.2022.

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(x) order of the Ld. CMM, Egmore dated 01.09.2022.

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(xi) Statement of accounts.

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Additional documents filed by the Respondent

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(i) Sale certificate dated 30.03.2024 issued by the respondent.

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(ii) Panchnama dated 23.12.2024. (iii) Section 24 of Partnership Act

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The matter is heard. In the wake of available material on record, the only question that arises for consideration in the present SA is:

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Whether the orders of the Learned CMM, Egmore is suffering from the impropriety or irregularity rendering it void in law?

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Answers to the point for consideration

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It is to be noted that the Hon'ble Supreme Court in “ NKGSB Cooperative Bank Limited Vs. Suber Chakravarty” and “ R.D. Jain and Company Vs. Capital First Limited CA 1755 of 2022 dated 27.07.2022 ” ruled that no adjudicatory powers are vested while deciding the application under Section 14. In the matter of “Indian Bank Vs. Vishalakshi and Another CA 6295/2015 dated 23.09.2019” , the Hon'ble Supreme Court had further held that the proceedings under Section 14 is a procedural step and purely an administrative order and there is no adjudicatory process involved. Keeping in mind the above rulings, this Tribunal can only examine whether there was compliance of the provisions by the defendant bank before the Learned CMM as mandated under Section 14(1) of the SARFAESI Act.

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As per Section 14(1) of the SARFAESI Act, on a request being made by

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the by the secured creditor, the Chief Metropolitan Magistrate or the District

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Magistrate as the case be take possession of such asset and documents relating thereto and forward such assets and documents to the secured creditor. The financial institutions are to declare under the affidavit the aggregate sum of financial assistance and dues payable as on the date of the application. It should be averred that the borrower / guarantor having created security interest over the property and that the borrower had committed default; upon such default the account must have been classified as NPA. It is also mandatory to aver in the affidavit regarding the issuance of demand notice, the reply thereof and the response of the secured creditor and that the borrower had not made any repayment and therefore entitled to take possession and that the other provisions of the Act have been complied.

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The grounds raised in the petition are classification of NPA is bad, the respondent bank failed to comply with the mandatory conditions before invoking Section 14 of the SARFAESI Act, the respondent bank failed to issue the demand notice and the possession notice under Section 13(2) and 13(4) of the SARFAESI Act respectively. The Ld. CMM, Egmore has failed to note that the respondent without complying Rule 8(1) of the Rules has filed this petition under Section 14 of the SARFAESI Act.

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In so far as the ground that the classification of NPA is bad, it is to be noted that the demand notice was issued as far back as 11.06.2021. Though it is contended by the applicant that the demand notice under Section 13(2) of the SARFAESI Act was not issued and hence the applicant was deprived of the rights under Section 13(3-A), the respondent has produced the demand

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notice dated 11.6.2021 along with the postal receipts and postal acknowledgements (Page Nos. 1 to 14) of the typed set of papers to show that the same is issued and served on the applicants. When the demand notice is issued, the same is issued after classifying the account as NPA. The grievance, if any, regarding the classification of NPA should have been protested under Section 13(3A) of the Act. Therefore, the applicant has not availed the opportunity of answering the demand notice and to protest the further measures.

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It is canvassed that the defendant bank has failed to comply with the mandatory conditions while complying Section 14 of the SARFAESI Act before the Learned CJM. The mandatory requirement is to comply the affidavit as prescribed under Section 14(1) of the Act. The defendant submits that proper affidavit is filed and a copy of the same is also filed in the typed set of documents dated 4.4.2024 (Page 60 of the typed set). This Tribunal perused the affidavit filed before the Learned CJM. The required material particulars to be furnished to the Learned CJM are sworn to by an affidavit through the Authorised Officer. The details as required under the affidavit are complied.

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The other grounds of the applicant that the defendant has failed to issue the possession notice under Section 13(4) and the respondent has failed to comply with Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules is concerned, the document furnished by the respondent bank is carefully perused. The respondent bank has filed the copy of the possession notice dated 30.10.2021 along with postal acknowledgements and copy of paper

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publication of the same in New Indian Express and Dinamani and photographs evidencing affixture of possession notice (Page Nos. 18 to 25 of the typed set of documents filed by the respondent dated 4.4.2024). Thus it is clearly evident that the respondent bank has complied with the provisions of the Act and the Rules made thereunder in issuing the possession notice.

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Further, the applicant has not urged any grounds with regard to noncompliance of provisions under Section 14(1) of the SARFAESI Act by the secured creditor. Further the present SA has been filed suppressing the fact that the sale has taken place and the sale certificate has been issued.

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Therefore, in the absence of any allegations regarding non-compliance

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of the provisions of Section 14(1) of the Act and documentary evidence produced by the defendant bank, this Tribunal is unable to find any illegality, impropriety or otherwise to set aside the impugned order. Hence the following:

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O R D E R

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