Dismissed

Mr Kumar Son of Kutti v. Equitas Small Finance Bank Limited

DRT24 Nov 2025SA/497/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal, Chennai, dismissed a Securitization Application challenging a Section 14 order passed by a Chief Judicial Magistrate. The Tribunal held that Section 14 proceedings are ministerial and non-adjudicatory, the secured creditor complied with Section 13(2) and 13(4) notice requirements, and the challenge to the possession notice was time-barred.

What did the court decide?

The Securitization Application was dismissed. The Section 14 order and Section 13(2) and 13(4) notices were upheld as valid.

Mr Kumar Son of Kutti versus Equitas Small Finance Bank Limited — Banking and Recovery | DRT (2025)

SA No.497/2024

24.11.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 24^th day of November, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 497 of 2024

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Mr. Kumar, S/o. Kutti, No.120, Manapakkam Ward 2, Kumaresan Nagar,

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Thirukazhukundram,

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Kanchipuram District -603 111.

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Mrs. Sundaravalli, W/o. Kumar, No.120, Manapakkam Ward 2, Kumaresan Nagar,

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Thirukazhukundram,

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Kanchipuram District -603 111. ….Applicants

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-Vs-

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M/s. Equitas Small Finance Bank Limited, Rep through its Authorised Officer, Head Office at, Spencer Plaza, No.769, 4^th Floor,

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Phase II, Anna Salai, Chennai -600 002. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. Durairaj .D Counsel for respondent : Mr. TKM Sai Krishnan

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ORDER ON SA 497/2024

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The present Securitization Application [SA] is filed on 01.08.2024

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under sub section [1] of S.17 of the Securitization And Reconstruction of

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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].

SA No.497/2024

24.11.2025

The applicant has challenged the Sec.14 order dated 22.03.2024 in C.M.P. No.8842 of 2023 passed by Chief Judicial Magistrate, Chengalpat and the outstanding amount due as per Sec.14 order is Rs.2,53,130/-

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Pleadings of the applicant:

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The applicant availed a Home Loan of Rs.2,50,000/- on 26.08.2021 and property bearing Survey No.14/1B part, New S.No.263/29, with an extents of 1377 sq.ft., situated at Manapakkam Village, Thirukazhukundram Taluk, Chengalpet District is mortgaged as security towards the credit facility. The applicant has paid a sum of Rs.30,000/regularly, due to business loss, lockdown could not continue the repayment schedule and the account was classified as NPA and Se.13(2) demand notice dated 21.11.2022 was issued. Further, the Sec.13(4) possession notice was issued taking the symbolic possession of the property.

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The respondent approached the CJM at Chengalpet under Sec.14 of the Act, and have obtained an order without the knowledge of the applicants. It is contented that there is no proper Sec.13(2) demand notice and Sec.13(4) possession notice and an advocate commissioner vide letter dated 25.07.2024 intimated the applicant informing to take the possession

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of the property. Until then the applicant had no knowledge regarding the measure taken.

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In the grounds, it is contented that the classification of the loan account is against the RBI guidelines, bank have not issued the Sec.13(2) demand notice, which impaired the statutory rights under Sec.13(3-A) of

SA No.497/2024

24.11.2025

the Act, there is no paper publication of the possession notice which violates the principles of natural justice and non-compliance of Rule 8, possession notice is not affixed on the property. On these grounds the applicant prays to set aside the Sec.14 order dated 22.03.2024.

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Objections of the respondent bank:

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The respondent bank in their counter submits that the applicants had approached the respondent bank and availed a loan of Rs.2,50,000/- on 29.08.2021 vide loan Account No.700001810430, agreeing to repay the amount as per the agreement and had executed all the loan documents. The applicant failed to repay the EMI amount in accordance with the terms and conditions, therefore the loan account was classified as NPA on 08.11.2022 under section 2(o) of the SARFAESI Act.

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The Sec.13(2) demand notice dated 21.11.2022 and possession notice dated 06.02.2023 is received by the applicants herein. Though the applicants received the notice, contradictorily contents to have not received the Sec13(2) demand notice. In fact the applicant admits in the grounds V(2), V(3) and V(4) that the demand notice dated 21.11.2022 is issued under Sec.13(2) was not served to the applicants. The bank issued the Sec.13(2) demand notice dated 21.11.2022 which was dispatched, served on the applicants and other borrowers on 19.12.2022 and the bank have produced the dispatch proof of service of the demand notice attached in the typed set.

SA No.497/2024

24.11.2025

In spite of receipt of demand notice, the applicants neither paid the outstanding amount of Rs.2,53,130/- within 60 days from the date of receipt of demand notice nor made any representation, hence, the bank issued the Sec.13(4) possession notice. The contention that the notices are issued by not a competent authority is denied as the Authorized Officer is the Chief Manager of the respondent bank who is competent to initiate recovery measures under the Act.

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The respondent vehemently denies that applicant paid the amount regularly, as they failed to repay the amount, the bank issued the Sec.13(4) possession notice dated 06.02.2023 which is served on the applicants and other borrowers, and possession notice is affixed on the property on 06.02.2023 and also published in two leading newspapers one in Vernacular language and other in English Newspaper dated 11.02.2023, within 7 days from the date of the possession notice.

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Thus the respondent have followed all the procedures as contemplated under Rule 8(1) and 8(2) of the SI Rules and also produced the proof of following the measures. As the applicant failed to repay the legitimate amount, the respondent’s authorized officer filed Sec.14 application along with the affidavit before the Hon’ble CJM, Egmore seeking assistance to take the physical possession. The Ld. CJM Egmore vide order dated 22.03.2024 in C.M.P. No.8842 of 2023 allowed the application and directed the advocate commissioner to take the possession. It is contended that the present SA is filed on taking flimsy grounds without any basis and prays for dismissal of the SA.

SA No.497/2024

24.11.2025

Heard both sides of the Counsels and perused the records of the

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case

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There is no dispute with regard to availing of the credit facility, classification of the account as NPA due to default in repayment. In fact applicants admits the default in repayment and the account being classified as NPA in their SA averments. However, has denied the issuance of S.13[2] demand notice which is received by the applicant as per postal tracking report and the issuance of possession notice is also served, affixed and published in two newspapers as required under SI Rules. Though the applicants contends that the classification of the account as NPA is not in accordance with guidelines has not made a specific reason or justified as how the classification of the account as NA is not as per guidelines. A mere allegation without any justification does not sustain.

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As the outstanding amount of Rs.2,53,130/- is due as per possession notice dated 06.02.2023, the Tribunal directed the applicant to file an affidavit intimating the time required to close the loan account. In spite of opportunity granted to repay the loan amount by way of an affidavit the applicant did not come forwards to liquidate the liability.

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On the other hand, applicant counsel contents that the as per the Sec.13(2) demand notice the total outstanding amount is Rs.2,53,130/and the bank now claiming Rs.5,26,485/- due as on 17.10.2025. It is also matter of record that the total outstanding amount due as per S.13(2) is Rs.2,53,130/- as on 19.11.2022 and the outstanding amount due is

SA No.497/2024

24.11.2025

Rs.5,26,485/- as on 17.10.2025. The applicant did not consider that the outstanding amount as mentioned in the Sec.13(2) demand notice is way back in the year 2022 and the present outstanding as submitted by the respondent counsel is as on 17.10.2025. As the applicant did not consider to settle at the amount mentioned by the respondent counsel, the Tribunal proceeds to pass an order

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It seen from the records that there is no disputation of availing of the credit facility, mortgage of the property as security and classification of the account as NPA. Consequent to classification of the account as NPA on 08.11.2022, the respondent have issued Sec.13(2) demand notice on 21.11.2022 which clearly reflects the details of the borrower/guarantor/mortgagor, the type of loan availed and date of NPA on 08.11.2022 and the total outstanding amount due as on 18.11.2022 to be repaid along with the agreed rate of interest till the date of payment.

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Further, a 60 days’ time is also granted for the applicant to discharge the liability failing which the respondent would proceed under sec.13(4) of the Act and the description of the mortgage property is also clearly mentioned. The sec.13(2) demand notice is sent by RPAD as per the postal receipts produced at pg.9 which is delivered as per the postal consignment as produced by the respondent from pg. 10-13 of the typeset. In spite of receipt of S.13[2] notice, the applicant did not clear the entire liability as demanded in the Sec.13(2), hence the bank proceeded and issued the possession notice dated 06.02.2023.

SA No.497/2024

24.11.2025

The possession notice is also sent by RPAD as per the postal receipts and the track consignments reflects that the notice is delivered as per documents from 16-19. It is also seen that the possession notice is affixed on the property as per the photographs at pg.21 and 22. Further, the possession notice is also published in two leading newspapers one in English The New Indian Express and another one in Vernacular Language Dinamani dated 11.02.2023 as required under the Act.

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The respondent have established the due compliance of the procedures in issuance of demand notice and possession notice as required under the Act and Rules made thereunder. Thought the applicant have challenged the Sec.14 order has not made out a case or any illegality in the S.14 application or in the affidavit. Further, the challenge to sec.13(4) possession notice dated 06.02.2023 is not within the period of 45 days as required under sec.17(1) of the SARFAESI Act.

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It is also settled principle of law that the order passed by the Magistrate/ Designated Court under Section 14 SARFAESI Act, 2002 is ministerial and non- adjudicatory in nature and the process to be followed under Section 14 does not involve any element of quasi-judicial function nor it requires any application of mind. The

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Furthermore, the Hon’ble Supreme Court in the matter of Kotak Mahindra Bank vs Girnar Corrugators Pvt. Ltd. & Others , held that while exercising power under Section 14 of the SARFAESI Act, even the District Magistrate has no jurisdiction and/or District Magistrate and/or

SA No.497/2024

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even the Chief Metropolitan Magistrate has no jurisdiction to adjudicate the dispute between secured creditor and debtor.”

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The Hon’ble Bombay High Court in the matter of Phoenix ARC Pvt. Ltd. Vs. The State of Maharashtra has held that Court is only required to verify the affidavit of Secured Creditor filed in pursuance of the proviso to Section 14 and nothing more. The above Bombay High Court judgment has since been confirmed by the Hon’ble Supreme Court by its judgment dated 26.09.2022 in the matter of Balakrishna Ram Tarle v. Phoenix ARC (P) Ltd. as under:

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“Thus, the powers exercisable by CMM/DM Under Section 14 of the SARFAESI Act are ministerial step and Section 14 does not involve any adjudicatory process qua points raised by the borrowers against the secured creditor taking possession of the secured assets. In that view of the matter once all the requirements Under Section 14 of the SARFAESI Act are complied with/satisfied by the secured creditor, it is the duty cast upon the CMM/DM to assist the secured creditor in obtaining the possession as well as the documents related to the secured assets even with the help of any officer subordinate to him and/or with the help of an advocate appointed as Advocate Commissioner. At that stage, the CMM/DM is not required to adjudicate the dispute between the borrower and the secured creditor and/or between any other third party and the secured creditor with respect to the secured assets and the aggrieved party to be relegated to raise objections in the proceedings Under Section 17 of the SARFAESI Act, before Debts Recovery Tribunal”.

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21. It has been held in various judgments that the power of Designated

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Court under Section 14 SARFAESI Act, 2002 is ministerial and nonadjudicatory in nature and the process to be followed under Section 14 does

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not involve any element of quasi-judicial function nor it requires any application of mind.

SA No.497/2024

24.11.2025

Additionally, Section 14(3) of the SARFAESI Act statuses that no action taken by the Chief Metropolitan Magistrate or District Magistrate (or any officer authorized by them) under S.14 can be challenged in court or before any other authority. This provision ensures that the authority of these officials in enforcing security interests is final and not subject to further review.

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23. T hus, the Sec.14 order passed by the Ld. Section 14 order dated 22.03.2024 in C.M.P. No.8842/2023 passed by CJM, Chengalpat is after due consideration of the application, affidavit in support of compliance of procedures along with documents is an execution Order issued where no adjudication is required. The Order is passed considering the due compliance of the provisions of the S. 14 [i-ix].

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Consequent to classification of account as NPA, a demand notice is issued S.13[2] demand notice followed by possession notice and have complied all the procedures as contemplated under the Act and the Rules with supporting documents. Thus it is held that the demand notice u/s S.13[2] dated 21.11.2022 and S.13[4] possession notice dated 06.02.2023 are held as valid notices issued under the Act.

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On examination of pleadings and documents produced by respective parties, the Tribunal comes to conclusion that the respondent bank as secured creditor has initiated measures under the Act after classifying the account as NPA and has followed all the procedures as mandated and

SA No.497/2024

24.11.2025

has failed to establish any irregularity in initiating the measure under

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the Act.

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For the foregoing reasons, the present SA is dismissed. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

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Sd/-

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

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( Dictated to Steno (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 24^th day of November, 2025)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl. No.	Description of Documents		Documents No.
1.	Copy of the CJM, Chengalpet order 22.03.2024.	dated	A-1
2.	Copy of the Warrant dated 22.03.2024.		A-2
3.	Advocate commissioner notice 25.07.2024.	dated	A-3

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl. No.	Description of Documents	Documents No.
1.	Copy of the Demand Notice issued U/s. 13(2) of SARFAESI Act along with Dispatch Proof and Service Proof dated 21.11.2022.	R-1
2.	Copy of the Possession Notice issued U/s. 13(4) of SARFAESI Act along with its Despatch proof, Service Proof, Affixture and Paper Publication dated 06.02.2023.	R-2

SA No.497/2024

24.11.2025

SCHEDULE OF PROPERTY

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All that piece and parcel of the land and building comprised in Old S.No.14/1B part, New S.No.263/29 with an extents of 1377 sq.ft., situated at Manapakkam village, thirukazhukundram taluk, chengalpet district within the registration district of chengalpet joint-1 and registration district of chengalpet, bounded the

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North by : S.No.263/22 South by : Street East by : S.No.263/30, Ellappan West by : S.No.263/28 Thusali Measurement-Nil

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

Mr Kumar Son of Kutti v. Equitas Small Finance Bank Limited

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Mr Kumar Son of Kutti v. Equitas Small Finance Bank Limited

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