Dismissed

Mr K Sivakumar S o R Kaliaperumal v. State Bank of India

DRT13 May 2025SA/49/2022

Case brief

AI extract

What is this about?

In Securitization Application No.49/2022, the applicant challenged a property auction under the SARFAESI Act, alleging procedural irregularities. The Tribunal examined service of notices, possession procedures, and the sale process. It held that the secured creditor complied with statutory requirements and dismissed the application.

What did the court decide?

The Securitization Application No.49/2022 was dismissed with costs.

Mr K Sivakumar S o R Kaliaperumal versus State Bank of India — Banking and Recovery | DRT (2025)

SA No.49/2022

13.05.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 13^th day of May, 2025

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Present: SMT. S.V. GOWRAMMA

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Presiding Officer

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SA No. 49 of 2022

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Mr. K. Sivakumar, S/o. R. Kaliaperumal, No.1/80, Main Road, Villupuram T.K -605 301, Tamil Nadu. ….Applicant

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-Vs-

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State Bank of India, RASMECC & SARC, No.208, Annasalai, Pondicherry, Pin -605 001. ….1^st Respondent 2. Mr. K. Arunkumar, S/o. Kaliamoorthy, Balasubramani Nagar, E.S. Garden (North), Villupuram -605 602. ….2^nd Respondent/ Auction Purchaser

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Counsels on record / appeared:

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Counsel for Applicant : Mr. C. Ramaiah Counsel for respondent : M/s. B. Raghavulu Naidu

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ORDER ON SA 49/2022

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The present Securitization Application [SA] is filed 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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13.05.2025

The applicant has filed the present SA challenging the sale dated 20.01.2022 for recovery of Rs. 11,40,491/-

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Pleadings of the applicant:

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The applicant approached the respondent bank for a Housing Loan to construct a building in their own land and the respondent bank sanctioned a housing loan of Rs. 5,07,000/- on 18.07.2006 to be repaid along with 9.5 % p.a @ monthly rests calculated on the daily balanc1e of the loan amount. The applicant had mortgaged his only scheduled property at Poothottam Village, Koliyanur panchayat Union Limits, Vilupuram Taluk, and District comprised in Survey No. 238/3B1, Plot No. 2, with the Extent of 1508 sq.ft., in favor of the 1^st respondent as security to the loan.

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It is contended that the applicant was regularly repaying the loan as per agreement, however the applicants account has classified as NPA by the respondent bank on 21.06.2017 in spite of payment of Rs. 7,04,680/towards the loan account of Rs. 5,07,000/-.

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It is alleged that the 1^st respondent bank rashly and illegally declared the account as NPA and proceeded under SARFAESI Act. The bank had not issued the S. 13(2) demand notice nor issued the S. 13(4) possession notice, not affixed nor published which are in violations of the mandatory provisions of Rule 8(1)and Rule 8(2) of the Security Interest Rules.

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It is submitted that the bank have issued the sale notice dated 18.12.2021 fixing the sale on 20.01.2022 claiming a sum of Rs. 11,40,491/- contrary to the respondents letter dated 14.12.2021 where the

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total amount due is Rs. 6,64,781/- and the bank has claimed an imaginary claim amount of Rs. 11,40,491/- .

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The applicant contends that the sale notice is not published in the newspapers which is contrary under Rule 9(1) of the Security Interest Rules. In spite of that, the bank had given OTS under the SBI RINSAMATHAN OTS 2021-2022 to settle the loan, and the applicant had time up to 31.12.2021 and when the applicant arranged the amount they have received the impugned sale notice dated 18.12.2021 before the expiry of the OTS issued on 31.12.2021.

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It is contended that the reserve price fixed by the respondent is very low, which is valued at Rs. 26,70,000/- whereas, the original value is more than Rs. 40 Lakhs. Hence, the upset price of Rs. 26,70,000/- is unrealistic and unacceptable with no proof of any proper valuation.

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The applicant learned that the bank had sold the property on 20.01.2022 to the single bidder K. Arun kumar, who was put up by the 1^st respondent to sell the property which is sold for throw away price of sum of Rs. 26,95.000/- to a single bidder when the applicant offered the applicant to settle the due under OTS scheme SBI RINSAMATHAN OTS 2021-2022 pursuant to sale dated 18.12.2021. Further, the bank had obtained S. 14 order to take the physical possession of the property in CMP.No. 151/2021 from Chief Judicial Magistrate Court and are trying to evict the applicant when the applicant had paid a sum of Rs. 7,04,680/towards the loan amount of Rs. 5,07,000/-.

SA No.49/2022

13.05.2025

In the grounds, it is contended that the bank has not served S. 13(2) demand notice dated 10.09.2017 and S.13(4) possession notice dated 20.02.2018 and have also not published in the two newspapers as required under the Act.

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Further, the first respondent bank without giving credit to the payments made by the applicant till date wrongly declared the account as NPA which is illegal and against the provisions of SARFAESI Act. The interest rate claimed is very high than the usual norms of banking and without giving the statement of accounts in time and they called upon the applicant to repay the entire amount and the claim made by the respondent is wrong and also which is before the issuance of sale notice dated 18.12.2021. The sale notice is not published in two newspapers nor affixed on the property. On these grounds, the applicant prays to set aside the sale dated 20.01.2022.

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The applicants in their written submission reiterated the averments made in SA. it claimed that the 13(2) notice, which have issued to applicant was retuned unclaimed, but in contrary, the front side of the return cover is written as unclaimed, but in the back side, it written as no such addressee, hence return to sender and further the Demand notice date is 10.09.2017, but it is seen from the back side of the return cover that it was posted predated on 11.08.2017, the return cover is produced in the page No.7 of type set filed by the respondent along with counter in SA.49/2022 and further the respondent produced the acknowledgement card before the CJM, Villupuram, in CMP No.151/2021, as if the demand notice was served

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on the applicant, the same have been produces in page No.21 and 23 of the type set filed by applicant in SA No.54/2022.

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Objections of the respondent bank:

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The first respondent, the secured creditor has come on record and had filed a detailed counter countering all the contentions raised by the applicant herein. It is the case of the respondent that the applicant approached the respondent bank and availed housing loan of Rs. 5,07,000/-on 18.07.2006 HTLNo. 10831630068, accepted the arrangement letter dated 08.07.2006 agreeing to the terms and conditions of the sanction and also executed the loan agreement for memorandum of loan agreement favoring the bank on 08.07.2006 and they had agreed to pay equated monthly installment of Rs. 4,726/- @ 9.5% p.a@ monthly rests calculated on the daily balance of the loan amount.

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The applicant have also created equated mortgage favoring the bank by depositing title deeds which is also confirmed by confirmation of the deposit of title deeds on 26.07.2006.

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As the applicant failed to repay the EMI in terms of the loan agreements, the account was classified as NPA on 21.06.2017 and the bank have issued the S. 13(2) demand notice dated 10.09.2017 claiming upon the applicant to repay the outstanding amount of Rs. 5,74,786/- as on 09.08.2017 along with further interest. The said notice was returned as undelivered to the applicant. Hence, the respondent bank arranged for substituted service by way of paper publication on 07.11.2017 and by the

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13.05.2025

said notice which was intimated that the applicant can tender the entire amount along with costs ,charges and expenses incurred by the bank as per S. 13(8) of the Act.

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As the applicant failed to repay the amount demanded under S. 13(2) notice dated 10.09.2017, the respondent bank through its Authorized officer have taken physical possession under S. 13(4) of SARFAESI Act. The possession notice is published in two newspaper both in English and Vernacular language on 27.02.2018 and also affixed on the conspicuous place of the property. As the applicant failed to repay the dues, the bank issued the sale notice dated 11.02.2019 fixing the auction on 14.03.2019 for a reserve price of Rs. 26,28,000/-. The said sale notice is published in two newspapers on 11.02.2019 and the said auction fails for want of bidders.

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Further, the applicant failed to repay the dues and hence, the bank issued the second sale notice dated 23.09.2021 fixing the auction on 25.10.2021 for the reserve price of Rs. 26,70,000/- and the said sale notice was also published in the newspaper on 24.09.2021 which also did not materialized.

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Yet again, the bank issued the sale notice dated 18.12.2021 fixing the auction on 20.01.2022 for the reserve price of Rs. 26,70,000/- and the said sale notice was also published on 19.12.2021 and the property was sold to the highest bidder for a sum of Rs. 26,95,000/- and the sale was confirmed by letter dated 20.01.2022 to the auction purchaser and the

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same was advised to the borrower on 20.01.2022. Thereafter, the bank has issued the sale certificate on 09.02.2022 favoring Mr. A. Arun Kumar, the auction purchaser.

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The bank submits that they had offered SBI OTS 2021-2022 for settling the amount on or before 31.12.2021, which the applicant failed to consider hence, the bank has proceeded further. In spite of several opportunities provided to the applicant including the OTS under the scheme, as the applicant fails to liquidate the loan amount, bank has proceeded and sold the property.

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The bank submits that there are no infirmities in the measures taken by them and the grounds raised by the applicant was denied by the bank and the Respondent bank have issued the notice and have produced the supporting documents.

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The statement of accounts clearly establishes the payments made by the applicant and as they were no bidders for the 2 sale and the same is not materialized and the third sale notice also published in two newspapers as required under the Act.

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It is seen that the account becomes NPA on 21.06.2017 and inspite of OTS under the SBI RINSAMATHAN OTS 2021-2022 the applicant has failed to settle the loan account hence, the bank has proceeded and auction the property.

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Thus, the bank submits that they have followed all the measures required under the act and also produced all the supporting documents and hence prayed for dismissal of the SA with costs.

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Heard and perused the records of the case.

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It is manifest from the records that applicant is a borrower, 1^st respondent is the secured creditor and 2^nd respondent is the auction purchaser.

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Undisputedly, after availing the loan, applicant has mortgaged property as collateral security which is a secured asset towards the credit facility. Due to default in repayment, the respondent bank classified the account as NPA on 21.06.2017 as per RBI guidelines.

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Subsequently, the respondent bank has issued S.13[2] demand notice dated 10.09.2017 which is denied as being served. The respondent in their counter have produced the copy of S.13[2] demand notice, unserved returned covers and paper publication of demand notice at Documents R-1 to R3.

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The Ld. Counsel for applicant negates that S.13[2] notice is served contending that the S.13[2] notice retuned unclaimed, but front side of the return cover is written as unclaimed, but in the back side, it has written as no such addressee, hence return to sender and further the Demand notice date is 10.09.2017. , but it is seen from the back side of the return cover that it was posted predated on 11.08.2017, the return cover is produced in the page No.7 of type set filed by the respondent

SA No.49/2022

13.05.2025

On perusal of the returned covers, it is seen that demand notice is sent by RPAD as required under Rule 3 of the Security Interest [Enforcement] rules,2002 to the address of the applicant which returned unclaimed. The applicant has not claimed the notice sent by the respondent to the address of the applicant. Even considering the endorsement ‘as no such addressee, hence return to sender ‘the endorsement would not come to help of applicant. Assuming that the applicant has changed his address, he has not intimated to the respondent bank of his change of address nor to the post office about his change of address for future correspdence to be redirected to his new address. Additionally, the respondent bank has published the demand notice in two newspapers, one in English ‘The Hindu’ and in Tamil newspaper.

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The ground urged is that demand notice was not served. This cannot be believed since there is a presumption under law with regard to the service of notices. In the ruling of Hon’ble Division Bench of Telangana High Court in matter of M/s. Dhanya and Co. Vs. Andhra Bank Indian Kanoon – Doc/96228426, it is held in para-15 that:-

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“Thus, it would be sufficient, it is shown that such notices were, in fact, issued and sent to the borrower at the address give. Once, it i shown as a fact that such a notice having been sent by registered post, Section 27 of General Clauses Act, 1897 would get attracted and the same shall be deemed to have been delivered in the ordinary course of post. In this regard reference can be made to the judgement rendered by the Apex Court in the case of CC Alavi Haji V. Polapetty Muhammed and Another 1,

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wherein the court dealt with the issue of deemed service of notice by applying the principle of ‘Presumption’ under Section 114 of Evidence Act and Section 27 of General Clauses Act, 1897. Further the Hon’ble Apex Court in the judgement rendered in the case of N. Parameswaran Unni V.G.Kannan2 also explained the circumstances when due service of notice has to be presumed”.

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Therefore the respondent bank has established due service of S.13[2] notice and any contra submissions by the applicant cannot sustain. Hence S.13[2] demand notice is held as valid notice issued in compliance of the procedures as required under the Act.

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Further it is contended that no possession notice is not served, not affixed is countered by respondent and produced the possession notice dated 20.02.2018 at page 15 of bank typeset along with the affixture of possession notices on the secured asset as required under mandatory provision of the Act and under rule 8(1) & 8(2) of the Security Interest (Enforcement) Rules 2002. The respondent have published the possession notice in two newspapers one in English “The Hindu” and in Tamil Newspaper “Hindu Tamil”. Further any challenge to S.13[4] possession notice dated 20.02.2018 is not within period of 45 day as required under S.17 of the Act.

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It is urged that respondent had offered for OTS under the SBI RINSAMATHAN OTS 2021-2022, to settle the loan account loan by 31.12.2021. As the applicant was arranging the amount to settle the due,

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the impugned sale notice dated 18.12.2021 is issued, before the expiry of for OTS upto 31.12.2021.

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In fact though applicant was given time to settle under RIN SAMADHAN scheme upto 31.12.2021, as there was no response from the applicant, the bank has issued sale notice on 18.12.2021, scheduling the property for sale on 20.01.2022. However, the applicant did not make any efforts even after the receipt of the sale notice to settle the loan account. Hence bank has proceeded in conducting auction on schedule day which is held successfully and Mr. Arun Kumar is the successful bidder who had paid the entire sale consideration and on receipt of the same , the respondent bank has issued sale certificate dated 09.02.2022 which is produced at page 26 of bank typeset.

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The applicant in their written submission has pleaded additional grounds which is not in SA averments contended that claimed sum of Rs.11,40,491/- in the sale notice dated 18.12.2021, but after the sale the 1^st respondent illegally debited sum of Rs.15,90,078/- on 19.02.2022, from the applicant loan account. ie, further more amount of Rs.4,49,587/claimed in the sale notice, without any reason, that too within the period of 60 days.

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Further the 1^st Respondent continuously debiting the interest part and penal interest from the date of NPA up to date, but the 1^st respondent now illegally claiming a sum of Rs.9,25,297/- as further more amount as interest part. The respondent claiming a sum of Rs.80,493/- as suit filing fee and debited the same amount on 07.12.2020 in the loan account, but there is

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no suit have been filed so far before any civil court by the 1^st respondent bank.

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The respondent had filed the documents countering such allegations , viz., the statement of account on 24.08.2022 where it reflected that a sum of Rs.80,493/- was debited towards court fee and counsel fee to the account maintained by the borrower, in relation to a suit preferred by the Bank before Principal District Judge, Villupuram against the borrower.

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It is apt to mention that the respondent bank has charged interest and penal charges if any as per the terms of sanction and the legal fee charges incurred by the bunk in defending their case in any court of law and the legal charges cannot be confined only to civil court.

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The records reflects that 1^st Respondent issued first sale notice on 11.02.2019 fixing the auction the auction on 14.03.2019 and the second sale notice on 23.09.2021 fixing the auction of the on 25.10.2021 which die not materialised for want of bidders. The applicant through his counsel issued legal notice on 18.10.2021 seeking six months’ time for payment of the dues.

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As the applicant failed to comply, Bank issued sale notice on 18.12.2021 calling upon to pay a sum of Rs.11,40,491/- as on 14.12.2021 and fixed the reserve price @ Rs.26,70,000/- auction notice also been published in newspaper (both in English and Tamil News papers) on 18.12.2021 for the sale to be conducted on 20.01.2022. The notice has also been affixed on the conspicuous part of the mortgaged property.

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The property was sold to the highest bidder of 20.01.2022 to the highest bidder Mr. Arun Kumar for a sum of Rs.26,95,000/-. The sale certificate dated 09.02.2022 is issued and the same is intimated to applicant vide letter dated 19.02.2022 to receive the balance amount of Rs.13,89,086/- by way of banker cheque. The 1^st Respondent had furnished the vouchers relating to various debit entries in relation to the SARFAESI Action initiated by the 1^st Respondent by way of memo on 19.09.2022 to the applicant/borrower.

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A cumulative reading of the pleading, documents relied upon by both parties, the respondent bank as secured creditor has initiated measures under the Act after classifying the account as NPA, issued S.13[2] and S.13[4] notices as prescribed under the Act and have due compliance of procedures.

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Inspite of extending OTS RINSAMDHAN scheme, applicant failed and bank has proceeded with sale and the sale is successful held and sale certificate is also issued favouring the successful bidder. Thus respondent bank has established compliance of all measures as required under the Act, resulting in upholding the sale notice, sale held and issuance of sale certificate as valid measures, which does not require any interference of this Tribunal.

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On the other hand, the applicant failed to establish any illegality in the measures resulting in the dismissal of SA.

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Accordingly, SA 49/2022 stands dismissed. Interim order granted, if

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any stand vacated, pending IAs are disposed of in terms of in terms of this

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final order. No order as to cost.

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(Dictated to Steno (MS), transcribed by her, corrected, signed and pronounced by me on this the 13^th day of May, 2025)

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Sd/-

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S.V. GOWRAMMA

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PRESIDING OFFICER-DRT III

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SCHEDULE OF PROPERTY

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All that piece and parcel of land Building at Villupuram R.D. Villupuram Joint II, R.D. Poonthottam Village, Koliyanur Panchayat Union Limits, Villupuram Taluk, and District Comprised in Survey No.238/3B1, Plot No.2, with the Extent of 1508 sq.ft.

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Bounded on the.

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East by : 20 Feet width Road, West by : Property of Selvaraj, South by : Property of Seethapathi, North by : Plot No.2 belongs to Poongavanam.

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Shri. K. Sivakumar S/o. Shri. R. Kaliaperumal are the owners of the property. Together with land building and all other appurtenance

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl.	Description of Documents	Page No.
No.
1.	Original Application dated 03.02.2022.	A-1

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2.	Letter of demand by Respondent to Applicant dated 14.12.2021.	A-2
3.	Letter by Respondent to Applicant regarding OTS–RI-SAMADAN SCHEME-2021-2022.	A-3
4.	English Translation – Letter by Respondent to Applicant Regarding OTS-R1-SAMADAN SCHEME-2021-2022.	A-4
5.	Sale Notice (copy) dated 18.12.2021.	A-5
6.	Sale Notice (Original) dated 18.12.2021.	A-6
7.	Advocated Notice to Branch Office of Respondent dated 11.01.2022.	A-7
8.	Notice Issued by advocate Commissioner dated 01.02.2022.	A-8
9.	Statement of Account.	A-9

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl. No.	Description of Documents	Page No.
1.	Notice under Section 13(2) by Respondent to Applicant dated 10.09.2017.	R-1
2.	Unserved returned cover for Section 13(2) Notice.	R-2
3.	Substituted service of Notice through paper publication by Respondent dated 07.11.2017.	R-3
4.	Possession Notice issued under Section 13(4) by Respondent to Applicant dated 20.02.2018.	R-4
5.	Unserved returned cover for Section 13(4) notice.	R-5
6.	Paper publication possession notice of Section 13(4) in English and Vernacular issued by Respondent dated 27.02.2018.	R-6
7.	Photograph showing the possession notice affixed on the property.	R-7
8.	E-auction Sale notice issued by respondent dated 18.12.2021.	R-8
9.	Sale notice Returned by Applicant.	R-9
10.	Notice published in news Paper publication in English and Vernacular by Respondent dated 18.12.2021.	R-10
11.	Photograph affixing the auction sale notice on the property.	R-11
12.	Sale confirmation by Respondent dated 20.01.2022.	R-12
13.	Sale Certificate dated 09.02.2022.	R-13