Dismissed

Logesh Babu v. Axis Bank

DRT23 Oct 2025SA/504/2023

Case brief

AI extract

What is this about?

This judgment dismisses a Securitization Application challenging a Section 14 order for possession under the SARFAESI Act. The court found the mortgaged property belonged to the applicant and affirmed the bank's right to take possession after classification as NPA, noting physical possession had already been taken.

What did the court decide?

The prayer to set aside the Section 14 order was dismissed as the bank had already taken physical possession in accordance with the law.

Logesh Babu versus Axis Bank — Banking and Recovery | DRT (2025)

SA No.504/2023

23.10.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

¶5

Dated this the 23^rd day of October, 2025

¶6

Present: SMT. S.V. GOWRAMMA Presiding Officer

¶7

SA No. 504 of 2023

¶8

M. Logesh Babu, S/o. Manohar, No.2, Bank of Baroda Colony, Madipakkam, Chennai 600 091. ….Applicant -VsM/s. Axis Bank Ltd., Retail assets Centre, 4^th Floor, Arcot Plaza, New No.38, Old No.165, Arcot Road, Kodambakkam, Chennai 600 024, Rep. by its Authorised Officer Ramakrishna. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. S. Balaji Counsel for respondent : M/s. KVP. Deepak Raj

¶11

ORDER ON SA 504/2023

¶12

The present Securitization Application [SA] is filed on 20.09.2023 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].

¶13

The applicant has challenged the Sec.14 order dated 24.08.2023 in Crl.M.P. No.4516 of 2023 passed by Chief Judicial Magistrate, Chengalpattu and the outstanding amount due as per Sec.14 order is Rs.43,83,778/-

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Pleadings of the applicant:

¶18

The applicant is running a ML Studios Business registered under the MSME with registered Number as UDYAM TN-02-0065498. Applicant borrowed two business loans from the respondent bank an amount of Rs.31,40,000/- on 11.01.2018 and Rs.7,19,000/- on 06.07.2018 for developing his business. It is contented that the bank failed to sanction the loans under the MSME Scheme, instead the loan was sanctioned under the ASSET POWER BRE Scheme. Hence, the applicant did not received any MSME benefit from the government and interest also.

¶19

Applicant was paying the regular EMI, however defaulted due to business loss during the Covid-19 pandemic and requested the respondent to restructure and provide Moratorium period of 18 months and also requested to provide ECGLS Loan of Rs.14,50,000/- for improving his business. The bank restructured the loans and provided 9 months Moratorium period for the repayment by “Link Document Cum Amendment Agreement for Restructuring of Facilities” on 09.08.2021 and ECGLS loan to the tune of Rs.1,82,000/- disbursed on 02.12.2021.

¶20

It is contented that the bank have not registered the charge before the Central Registry enabling them to invoke the measure under the SARFAESI Act. The demand notice dated 21.11.2022 issued demanding the entire loans after declaring the account as NPA on 06.08.2021. The Authorized Officer who has signed the demand notice, is not an authorized officer and in the demand notice ECGLS Loan is disbursed on 02.12.2022

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and the same was not rectified by the respondent bank which is an unsecured loan which the bank can claim from the government.

¶25

The applicant raised an objection to the demand notice under Sec.13(3A) of the Act on 04.01.2023 within the stipulated period contenting the declaration of the NPA is against the RBI norms and also RBI guidelines vide RBI/2021-2022/117; DOR.No.STR.REC.64/21.04.048/2021-22, dated 01.11.2021.

¶26

Subsequent to issuance of demand notice, the bank has sent a letter dated 05.12.2022 fixed ECGLS Loan EMI at Rs.5806 from 10.12.2022 which clearly reflected that the ECGLS loan is not declared as NPA. The two loan are restructured on 09.08.2021 and the ECGLS loan was disbursed on 02.12.2021. However, even the restructured loan is classified as NPA on 06.08.2021.

¶27

The Authorized Officer replied vide letter dated 20.01.2023 which the applicant received on hand on 24.01.2023 to the objection notice dated 04.01.2023. The ‘Secured Creditor’ has no power to give reply under Sec.13(3A) of the Act, as it should be given a reply within a period of 15 days. Hence the bank has violated and have proceeded under the SARFAESI Act.

¶28

Thought, the reply is given it is not in the proper format as per the rules and without looking into the objections of the applicant contentions bank have proceeded further in issuing the possession notice dated

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18.02.2023, which is affixed on the property and published in the two newspapers who is not an authorized person.

¶33

Both the demand notice and possession notice carries the schedule property which does not belongs to the applicant. The bank without following the procedures have initiated Sec.14 application and filed before CJM, Chengalpet by the Secured Creditor who is not filed by Authorized Officer and not by Secured Creditor.

¶34

The applicant also invoked the Sec.13 (8(1)) requesting the bank for an One Time Settlement vide letter dated 31.07.2023. However, bank approached the Magistrate in Crl.M.P.No.4516 of 2023 which came to be allowed. The Sec.14 Order does not mentioned about the schedule property, only has directed Ms. S. Vennila as the advocate commissioner to take the possession.

¶35

Further, the bank has charged penal interest and capitalized as mentioned in Sec.14 order and are trying to snatch the mortgaged property. The applicant did not challenge the Sec.13(4) before the Hon’ble DRT, the bank have used their power against the applicant by invoking the Sec.14 and trying to evict them from the premises.

¶36

One person named R. Vignesh representing as bank’s advocate affixed the “Vacation Notice for Seven days” on 13.09.2023 without the symbol or seal of the respondent bank. The Sec.14 order passed in the Crl.MP.No.4516 of 2023 by the CJM is arbitrary in blatant violation of the mandatory provisions and hence, prays to set aside the same.

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Objections of the respondent bank:

¶41

It is the case of the bank that the applicant had requested a loan against property (Loan I) for business purpose vide loan application dated 20.12.2017 which respondent bank sanctioned an amount of Rs.31,40,000/on 11.01.2018, vide loan agreement No.LPR008202907041, which is repayable in 180 EMI of Rs.32,789/-.

¶42

The applicant entered into loan agreement on 11.01.2018 agreeing to repay the same along with 9.5% p.a interest in 180 equated monthly installments of Rs.32,789/-. Applicant again approached the bank for another loan against the property (Loan II) for House Renovation vide loan application dated 03.07.2018 which the bank sanctioned an amount of Rs.7,19,000/on 06.07.2018, vide loan account agreement No.LTR008203300191, which was repayable in 180 EMI of monthly installment of Rs.8,285/- each.

¶43

The applicant also requested for a Term Loan under ECLGS Scheme that is (Loan III) vide loan application dated 23.09.2021 which sanctioned a sum of Rs.1,82,000/on 22.11.2021 vide loan agreement No.ECR008206793652. ECLGS was to be repaid in 48 monthly installments (1-12) months- interest to be served and next 13 to 48 months at Rs.5,809/- each.

¶44

Applicant had agreed to repay the same at 9.25% per annum. Further the applicant have deposited the title deeds vide memorandum of Agreement of Deposit of Title deeds dated 20.02.2018 which is registered

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as Doc.No.977/2018 and Doc.No.4515/2018 dated 06.08.2018, SRO Velachery.

¶49

As per the loan agreement, the applicant had requested the loan against the property and not for any business loan and had not mentioned MSME details. Hence after availing the loan facility, utilized the same and now cannot contented that the loan was sanctioned by the bank under Asset Power scheme instated of MSME Scheme.

¶50

As the applicant failed and neglected to repay in terms of the agreed terms and conditions, the account was classified as NPA on 06.08.2021 in terms of Sec.2(o) of the SARFAESI Act. In fact the applicant admits the default and irregularity in repayment in the year 2021 and the classification of the loan accounts of LPR008202907041 & LTR008203300191, and have declared as NPA on 06.08.2021.

¶51

At the request of the applicant, the loan was restructured on 09.08.2021 as per the circular dated 07.06.2019. As per the terms and condition of the restructure, the borrower had to pay the monthly EMI for 12 months regularly without any default from the date of restructure, failing which the loan account would be categorized as NPA and there would be no provision to be upgraded thereafter.

¶52

The applicant was intimated about the restructuring of loan accounts on 09.08.2021 and also sanctioned a Term Loan under ECLGS Scheme by extending support to the applicant. As the applicant defaulted, the loan account was classified as NPA and have initiated measure under the

SA No.504/2023

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SARFAESI Act. The bank issued the Sec.13(2) demand notice on 21.11.2022 claiming an outstanding amount of Rs.43,83,778/- which is served and the acknowledgment cards are produced in support of the same.

¶57

On receipt of the demand notice, the applicant sent an objection notice dated 04.01.2023 alleging that the classification of the account is not in accordance with law to which the bank has sent a rejoinder dated 20.01.2023, clearly explaining the reasons for issuing the demand notice and the classification of the account as NPA.

¶58

The contention that the third loan was wrongly mentioned as NPA on 02.12.2022 which is not rectified by the respondent bank is denied and the applicant is put to strict proof. However, in the rejoinder it has been clearly mentioned that the Third loan was wrongly mentioned as 02.12.2022 instead of 02.12.2021 and the same was rectified.

¶59

After the classification of the loan account as NPA, the bank vide letter dated 05.12.2022 clarified about the classification of the account as NPA for ECGLS Loan. The contention taken by the applicant is that the bank failed to send a reply within 15 days from the date of the objection is denied. The respondent have received the objection notice on 09.01.2023 and sent a reply on 23.01.2023 to which the bank cannot be irresponsible in delaying the service of the notice.

¶60

The bank had given sufficient opportunity for the applicant to repay the total outstanding amount and as the applicant did not repay, bank issued the possession notice 18.02.2023 under the act and Rule 8 of the SI

SA No.504/2023

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Rules, the possession notice sent to the applicant is returned as not known, possession notice is affixed on the property and the photograph is produced along with the typeset. The possession notice is published in two leading newspapers one in “New Indian Express” and other in Vernacular Language in “Dinamani” on 24.02.2023 within 7 days from the date of the possession notice. Hence the bank has clearly followed the procedures has contemplated under Rule 8(1) and 8(2) of the SI Rules.

¶65

At the time of creating the mortgage, the applicant had mentioned that he has deposited the title deeds relating to his property being land measuring an extent of 1,164 Sq.ft., together with building thereon comprised in Old Survey Nos.156/4, New Survey No.156/4A4A1, bearing Plot No.2, in Bank of Baroda Colony situated at Madipakkam Village (Puzhuthivakkam), Sholinganallur Taluk, Chennai District, and the same is also mentioned in both the demand notice and possession notices.

¶66

As the applicant did not liquated the liability in spite of issuance of Sec.13(2) and Sec.13(4) the bank has filed the application before the CJM magistrate at Chengalpet, who after verification has passed the order. The bank has charged the interest as per the agreed terms and at the request of the applicant the loan was also restructured. As per the banking norms and rules prescribed by the RBI when one loan account of the borrower is classified as NPA all the other accounts will also being declared as NPA and the bank has to recover the full outstanding amount.

SA No.504/2023

23.10.2025

The bank denies that the statutory notices are not issued by the authorized officer and the property mentioned in the demand notice and possession notice is as per the documents and the contention that the property does not belong to the applicant is also denied. The Ld. CJM has passed an order on 24.08.2023 after the expiry of 2 years, after the classification of the account as NPA on 06.08.2021. The bank has taken physical possession of the property on 22.01.2024 and have produced the Panchnama Inventory.

¶71

Further, the bank denies all the averments has made in the SA is only for the convenience and the bank has followed all the measures in accordance with act, prays for setting aside of the Sec.14 order.

¶72

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

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case

¶74

The applicant admittedly availed the loan and also the creation of the mortgage as collateral security. The only contention raised is that the property as described in the S.13(2) and S.13(4) notice does not belong to the applicant. However, the bank has produced the memorandum of deposit of title deeds from pg.1-7, where it is clearly seen that the property as described in the sale deed is the land and building bearing Plot No.2, Baroda Colony (Bank of Baroda Colony), Madipakkam, Chennai -600 091, comprised in survey No.156/4, as per New Survey No.156/4A4A1, situated at Madipakkam Village (Puzhuthivakkam) now in Sozhinganallur Taluk, previously Tambaram Taluk, Kancheepuram District, within the

SA No.504/2023

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Registration District of Chennai south and Sub Registration District of Velachery, measuring an extent of 1164 sq.ft., land with building, electrical installations, and TNEB service connection with its security deposit.

¶79

On Verification of the description of the property in Sec.13(2) at pg.34-37 along with the memorandum of deposit of title deeds produced by the bank at pg.1-7, it is clear that the property is described clearly as per the sale deed and the contention that the property is not of the applicant cannot come to aid of the applicant. Further, the applicant of the applicant in the present SA is the same address is described as ‘No.2 Bank of Baroda Colony, Madipakkam’ which is admittedly the mortgaged property favoring the respondent bank. Hence, the contention that the mortgage property is not clearly described and it is not owned by the applicant fails.

¶80

The second contention as raised by the applicant is that though he had applied for a MSME loan, bank had sanctioned an Asset power scheme is also not supported by the any document produced by the applicant. However, it is clear from the sec.13(2) demand notice that the applicant had availed Asset Power Bre loan on 27.07.2018. The S.13[2] notice is served as per acknowledgement cards produced at 38-47.

¶81

It seen from the proceeding that the applicant had obtained an interim order of stay on 04.10.2023 on conditional payment of 10% of the total outstanding amount within two weeks and Rs.3 Lakhs within four

SA No.504/2023

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weeks and an another sum of Rs.1,50,000/- on or before six weeks thereafter.

¶86

As the applicant did not prove his bonafides and made any payment, the SIAs 1436/24 and 1437/23 came to be dismissed with costs of Rs.1000/- each payable to ‘Library Fund’ of DRT and DRAT Bar Association. The stay petition was dismissed, giving liberty for the respondent to proceed further in accordance with law. It seen from the records that the bank has taken physical possession on 22.01.2024 and have produced the photograph at Ex.A-12 and the Panchnama Inventory marked as Ex.A-13.

¶87

Thought the applicant had raised various contentions to which the bank has already counted in detail. It is also an admitted fact that the bank granted ECGLS loan and at the time of disbursal there was a typographical error which was rectified subsequently, hence the contention that ECGLS loan could not have classified as NPA cannot sustain. In fact applicant has not made out a case of any prejudiced caused to them by the typographical error which has crept in. In fact availing of ECGLS loan is not disputed.

¶88

The other contention raised by the applicant is that the statutory notices, the demand notice and the possession notice and the Sec.14 application is filed by the secured creditor who is not an authorized officer.

¶89

In this regard it is apt to understand who is an authorized officer as per the Act. The definition of the Authorized Officer under Sec.2(a) of the security interest enforcement rules 2002.

SA No.504/2023

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“Authorized Officer” means an officer not less than a chief manager of a public sector bank or equivalent, as specified by the Board of Directors or Board of Trustees of the secured creditor or any other person or authority exercising powers of superintendence, direction and control of the business or affairs of the secured creditor, as the case may be, to exercise the right of a secured creditor under the Act.

¶94

It seen that the Authorized Officer is an officer who is the rank of not less than a chief manager of the public sector bank, who has been empowered to exercise the right of a secured creditor.

¶95

It seen that the notices are signed by the authorized officer who has been empowered by the board of directors. The applicant’s objection to the S.13(2) demand notice is duly replied by the respondent bank vide reply letter dated 23.01.2023 and have complied S.13[3A] of the Act establishing the issuance of S.13[2] notice as prescribed under the Act and Rules. As the applicant did not liquated the liability, the bank has proceeded further in issuing the possession notice dated 18.02.2023, which is also affixed on the property and the paper publication is also effected in The New Indian Express and Dinamani on 24.02.2023.

¶96

As the applicant failed to repay the outstanding amount due the bank has proceeded further under S.14 and filed an application before the Ld. CJM Chengalpattu along with the affidavit and the documents in support of the measures taken by them. The Ld. CJM after due verification of the affidavit and the documents supporting the measure taken has allowed the

SA No.504/2023

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Sec.14 application vide order dated 24.08.2023, directing advocate Ms. S. Vennila, to take the physical possession of the property.

¶101

Admittedly the physical possession is taken on 22.01.2024 and the bank has produced the Panchnama Inventory and the photographs evidencing the taking of physical possession. The prayer as sought for in the SA is to set aside the Sec.14 order and as the respondent secured creditor has taken the physical possession in accordance with law the prayer itself has become infructuous and nothing survive further adjudication.

¶102

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. Sd/-

¶103

(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 23^rd day of October, 2025)

¶105

ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

¶107

Sl. No.	Description of Documents	Documents No.
1.	Impugned Order of Crl.M.P.No.4516 of 2023 passed by CJM, Chengalpattu dated 24.08.2023.	A-1
2.	“Vacation Notice” by Respondent Bank dated 13.09.2023.	A-2
3.	MSME registration & UDYAM Registration Certificate dated 01.09.2008.	A-3
4.	Document in favour of Applicant dated 05.03.2008.	A-4
5.	Patta in the name of applicant dated 31.07.2008.	A-5

SA No.504/2023

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6.	Loan amount Rs.31,40,000/- sanctioned by respondent bank dated 11.01.2018.	A-6
7.	Loan amount Rs.7,19,000/- sanctioned by respondent bank dated 06.07.2018.	A-7
8.	Link Document Cum Amendment Agreement for Restructuring of facilities of A/c No.LTR008203300191 dated 09.08.2021.	A-8
9.	Link Document Cum Amendment Agreement for Restructuring of facilities of A/c No.LPR008202907041 dated 09.08.2021.	A-9
10.	OAS-Main Form dated 08.06.2021.	A-10
11.	Disbursement intimation letter of A/c No.LPR008202907041 dated 16.08.2021.	A-11
12.	Disbursement intimation letter of A/c No.LTR008203300191 dated 16.08.2021.	A-12
13.	Mail Conversation between Applicant and Respondent relating to ECGLS Loan dated 20.10.2021.	A-13
14.	Sanction Letter of ECGLS Loan dated 22.11.2021.	A-14
15.	Welcome intimation of ECGLS loan dated 03.12.2021.	A-15
16.	Repayment Schedule of ECGLS dated 03.12.2021.	A-16
17.	Demand Notice issued by Respondent Bank to Applicant dated 21.11.2022.	A-17
18.	Objection letter sent by applicant to respondent bank dated 04.01.2023.	A-18
19.	Reply letter for objection letter by respondent to applicant dated 20.01.2023.	A-19
20.	Possession Notice issued by Respondent Bank to Applicant dated 18.02.2023.	A-20
21.	OTS Letter by Applicant dated 31.07.2023.	A-21
22.	Patta of mentioned property in Demand Notice and Possession Notice along with English Translation dated 17.09.2023.	A-22
23.	Respondent bank sent the letter to the applicant relating to the ECGLS Loan dated 05.12.2022.	A-23
24.	Account Statement of LTR 008203300191 dated 20.02.2023.	A-24
25.	Account Statement of LPR 008202907041 dated 20.02.2023.	A-25

¶112

ADDITIONAL TYPED SET OF PAPERS

¶113

Sl.	Description of Documents	Documents
No.		No.

SA No.504/2023

23.10.2025

1.	Agreement relating to Doc.No.977 of 2018, 20.02.2018.	deposit of title deeds SRO Velachery dated	A-1
2.	Agreement relating to	deposit of title deeds	A-2
	Doc.No.4515 of 2018, 06.08.2018.	SRO Velachery dated
3.	Tamilnadu G.O. (MS) No	.491 dated 31.07.2021.	A-3
4.	Tamilnadu G.O. (MS) No	.03 dated 03.01.2022.	A-4

¶118

LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

¶119

Sl.	Description of Documents	Documents
No.		No.
1.	Memorandum of Agreement of Deposit of Title Deeds Registered as Document No.4515/2018 dated 06.08.2018.	R-1
2.	RBI Circular dated 07.06.2019.	R-2
3.	Demand Notice issued by the Respondent dated 21.11.2022.	R-3
4.	Acknowledgement Cards.	R-4
5.	Reply Notice to the Objection Notice issued by the Respondent dated 23.01.2023.	R-5
6.	Possession Notice issued by the Respondent dated 18.02.2023.	R-6
7.	Photo Affixture of Possession Notice.	R-7
8.	Paper publication of Possession dated 24.02.2023.	R-8
9.	Statement of Accounts Loan I.	R-9
10.	Statement of Accounts Loan II.	R-10
11.	Statement of Accounts Loan III.	R-11
12.	Photographs taken at the Physical Possession of the Property.	R-12
13.	Panchnama Inventory.	R-13

¶120

Order dated 24.08.2023 in CMP.No.4516 of 2023, CNR No.TNKP030038682023 Affidavit & Petition in CMP.No.4516 of 2023 filed Before the Special Jude/Chief Judicial Magistrate, Chengalpat.

¶121

SCHEDULE OF PROPERTY

¶122

All that piece and parcel of the property being land measuring an extent of 1,164 Sq.ft., together with a building thereon, comprised in Survey No.156/4, New Survey No.156/4A4A1, bearing Plot No.2, Baroda Colony (Bank of Baroda Colony), Madipakkam, Chennai 600 091, situated

SA No.504/2023

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at Madipakkam Village (Puzhuthivakkam) Sholinganallur Taluk, Now Chennai District and bounded on the

¶127

North by : Plot No.3 South by : Plot No.1 East by : 20 feet wide Road West by : Vacant House Plots.

¶128

And situated within the Registration District of Chennai South and the Sub Registration District of Velachery.

¶129

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

Logesh Babu v. Axis Bank

Case brief

What is this about?

What did the court decide?

Logesh Babu v. Axis Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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