Dismissed

Velmurugan v. State Bank of India

DRT20 Mar 2025SA/525/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's Securitization Application challenging the possession notice issued by the bank. The court held that the bank fully complied with procedural requirements, including responding to objections, and the notice was validly issued after classification as NPA.

What did the court decide?

Securitization Application dismissed with no order as to cost.

Velmurugan versus State Bank of India — Contract and Commercial Disputes | DRT (2025)

SA No.525/2023

20.03.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 20^th day of March, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 525 of 2023

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Mr. D. Velmurugan, (Proprietor of M/s. Dharma Traders) S/o. Mr. Dharuman, No.88, North Mada Street, Acharapakkam Village, Madurantakam Village, Chengalpattu – 603 301

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….Applicant

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-Vs-

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The Authorized Officer, State Bank of India SME Chingleput Branch, PB No.9, Varadha Reddy Street, Vedachala Nagar, Chengalpattu – 603 001

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….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. Yuvaraj Counsel for Respondent : M/s. Anand Samy & Dhruva

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:O R D E R:

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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].

SA No.525/2023

20.03.2025

The Applicant is a borrower has challenged the 13(4) Possession Notice dated 08.09.2023 and the outstanding amount due is Rs.1,01,36,999/-, as per the Section 13(4) Possession Notice.

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Pleadings of the Applicant:

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3.1 The Applicant is doing business of Goods and Materials for the Construction in the name of M/s. Dharma Traders had availed a Cash Credit Loan from the Respondent Bank. The Applicant, as owner of the Schedule mentioned property has mortgaged the property as security towards the credit facility.

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3.2 It is contended that he was regular in repaying the loan without any delay or default. But due to loss in the business, he could not repay the interest portion alone and despite of difficulties he has made several repayments.

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3.3 It is contended that the classification of loan account as NPA is not in accordance with the RBI guidelines and is contrary to RBI guidelines. The action taken by the Respondent Bank is not in consonance of the procedures of law.

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3.4 The Applicant submits that after receiving the Section 13(2) Demand Notice, he raised objections to the Demand Notice dated 30.06.2023 on 12.07.2023 and the Bank never gave any reply to the objections dated 12.07.2023 and issued Possession Notice. It is submitted that the Applicant is ready to settle the Loan Account under OTS and prays for some time to settle the liability.

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3.5 It is alleged that the Bank was never fair or reasonable and without any justifiable reasons have issued the impugned Possession Notice

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dated 08.09.2023 and have intimated to take the possession in case the Applicant fails to make the payment.

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3.6 On the grounds it is contended that the Respondent proceedings are per se illegal and non-est in the eyes of law. Further, the proceedings suffers from non-application of mind and contrary to the facts and evidence of the case.

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3.7 The Bank has wrongly invoked the SARFAESI Act without any prior intimation about the status of the loan account of the borrower, which is against the RBI guidelines.

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3.8 The Bank has not published the Possession Notice dated 08.09.2023 and without the publication they proceeded which is against Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules.

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3.9 The Bank has failed to give reply to the objections dated 12.07.2023 and on these grounds the Applicant prays to set aside the proceedings initiated by the Respondent Bank under the SARFAESI Act and to set aside the Section 13(4) Possession Notice dated 08.09.2023.

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Objections of the Respondent Bank:

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4.1 Per contra, the Respondent Bank has filed their Counter along with supporting documents contending that the Applicant has no grounds or justifiable reason to file the present appeal before this Tribunal and denies all the contention raised in the SA and prays for dismissal of the SA in limini.

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4.2 The Respondent in their Counter denies the averment in Para-V and submits that the loan facility availed are self-serving statement, partially factual and the Applicant is bound to substantiate the claims therein with appropriate evidence produced.

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4.3 The Applicant case is that he could not pay the interest portion due to the business loss are merely words with an intention to evoke sympathy and disquiet in the mind of this Tribunal. The Bank denies that the Applicant had paid most of their instalment, but due to non-payment of instalment in spite of repeated notice vide letter dated 12.10.2022, 01.12.2022, 14.12.2022, 20.12.2022, 24.01.2023, 06.02.2023, 20.02.2023, 03.03.2023, 24.04.2023, 09.05.2023, 22.06.2023 and finally on 23.06.2023, the Bank has caused a legal notice to the Applicant and also in person intimating to regularize the account to pay interest dues without fail.

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4.4 The Applicant in spite of receipt of the same has failed to repay the dues and consequently the account was declared as NPA on 29.06.2023. Thereafter, the Bank, as per procedure issued Section 13(2) Demand Notice dated 30.06.2023, which has been received by the Applicant but did not care to repay the dues, as per the Demand Notice.

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4.5. The contention that the Respondent Bank failed to reply to the objection under section 13(3A) dated 12.07.2023 is denied and further it is clarified that having received the objection under Section 13(3A), the Bank has replied in detail to the objection dated 21.07.2023. On 24.07.2023, the Respondent yet again replied to the said objection, enclosing all the required documents and correspondence, as demanded by the Applicant to the objection letter dated 12.07.2023.

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4.6. As a final chance, the Respondent issued a reminder letter dated 29.09.2023 enclosing all the required documents seeking to regularize the account by paying the dues, failing which the Bank would proceed with the securitisation process.

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4.7. As the Applicant failed to pay the dues, as per the demand notice and having failed to do anything till date, the Bank proceeded and issued the Possession Notice under Section 13(4) dated 08.09.2023 after following the due procedures of law, as enumerated under the Acts and Rules.

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4.8 The OTS proposal is nothing but wholly incredulous and an absurd dilatory tactics indulged in with the intent of buying time and delaying repayment. Yet again the Applicant time and again always gave false commitments on the closure of loan by selling property worth Rs.3.00 crores, which are evidenced vide letter dated 07.10.2022, 14.12.2022, 09.02.2023, 28.02.2023, 20.06.2023.

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4.9 The Applicant consistently failed to do anything but gave false promises. The Bank has accommodated the Applicant and was ever willing to extend help and denies the allegation in Para 8 of the SA. Despite of all these, Applicant failed to pay the amount and misled the Respondent, wilfully dodged payments.

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4.10 The averments in grounds A, B, C, E, F, I & J have no substantive reasoning for claiming that the proceedings under Securitization norms (i.e. SARFAESI Act) are bad. The notices have been issued and would substantively reveal the situation as regard to the loan account of the Applicant and the Securitization proceedings were

SA No.525/2023

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initiated after every effort in resolving the issue failed on account of the Applicant‟s failure to live up to its commitment.

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4.11 Further, the Bank has clarified to the Applicant that the payments made by them were highly erratic and not as per the installments prescribed in the loan agreement. Hence, the Bank, as a Secured Creditor is fully justified in taking the measures and the amount mentioned in the Possession Notice is a legitimate claim of the Applicant‟s outstanding in the Loan account.

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4.12 The Possession Notice dated 08.09.2023 issued under Rule 8(1) of the SARFAESI Act was followed, notices are affixed and photographs are also produced. Further, the Bank has published the Possession Notice in two Newspapers one in Tamil Newspaper „Dinamani‟ and another in English Newspaper „Indian Express‟ on 13.09.2023. Hence, the Bank has followed all the procedures, as prescribed under the Act. The Bank vide letter dated 24.07.2023, yet again replied to the said objection, enclosing all the documents and correspondence as demanded and even a final chance vide letter dated 29.09.2023 was also issued enclosing all the documents. Thus, the Bank has fully followed the procedure with sub rules (1), (2) of Rule 8, Security Interest (Enforcement) Rules, 2002.

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4.13 The averments in the Grounds are denied and the Bank has followed the procedure after classification of Account as NPA and have issued the notices, which are in accordance with the procedures. Hence, on these grounds the Respondent Bank prays to dismiss the SA with cost.

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5. Heard the submissions of both the Counsels and perused the records of the case.

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5.1 Admittedly, Applicant has availed the Cash Credit facility in the name of the firm M/s. Dharma Traders for an amount of Rs.95,00,000/-. The Applicant has mortgaged the property “All that piece and parcel of land and building comprised in Old Gramanatham S.No.260/2B, New Gramanatham S.No.388/8, measuring about 1066 Sq.ft., situated at No.88, North Mada Street, Acharapakkam Village, Madurantakkam Taluk, Chengalpattu District, within the Registration District of Chengalpattu and Sub-Registration of Acharapakkam”, as collateral security towards the credit facility availed.

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5.2 It is also admitted fact that the Applicant was irregular in repayment towards the loan facility availed and hence the Bank has classified the account as NPA on 29.06.2023. Additionally, the Applicant admits the receipt of the Section 13(2) Demand Notice dated 30.06.2023, on 12.07.2023 and have given a representation vide letter dated 12.07.2023 admitting the receipt of the Section 13(2) Demand Notice and have requested time for regularization of the loan account and have submitted that certain amount have been paid and intended to settle the account by regularizing it.

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5.3 It is further seen that the Applicant contends that they paid an amount of Rs.45,00,000/-, which was not adjusted to the loan account, as reflected in the demand notice dated 30.06.2023. However, the Applicant admits that the Bank has issued a letter dated 30.06.2023 intimating the balance amount due in the loan account, which is exorbitant and also the liability as mentioned in the demand notice aggregating to total amount of Rs.1,01,36,999/and has expressed the shock of the total amount claimed in the 13(2) Demand Notice.

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5.4 It is further seen that the Applicant sought for details of the accounts to substantiate the amount claimed in the 13(2) Demand Notice and sought for certain documents alleged loan facility availed by them and the documents claiming to have been executed by them. However, the Bank has initiated the measures under the SARFAESI Act, and it is alleged that the secured property is being used by the Applicant and any sort of the proceedings he would lose the reputation. The Applicant has expressed his willingness to settle the liability seeking for six months time to close both the loan accounts. The Applicant has produced the objections to the demand notice under section 13 (3A) at Page No.10-17 of the SA papers.

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5.5 Though it is contended by the Applicant that the Bank has not given reply to the 13 (3A) objections, the Respondent Bank has filed the additional set of documents and have produced the 13(2) demand notice dated 30.06.2023 and the objections of the Applicant raised under Section 13 (3A). The Bank has replied to the objections raised by the Applicant vide letter dated 14.07.2023, 21.07.2023 and 24.07.2023 and the same are produced at Page No.14-16 of the Bank typed set.

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5.6 It is also seen that the Bank has replied confirming that the documents sought for by the Applicant is rendered along with the reply objections. In spite of such a reply, the Applicant contention that the Bank has not replied under Section 13(3A) would fail and the same is not sustainable. Prior to the reply, the Bank have issued the legal notice, which is at Page No. 23-24 and it is seen that vide legal notice dated 23.06.2023, bank informed the Applicant about the availment of the credit facility of Rs.90,00,000/- and Rs.5,00,000/- respectively.

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5.7 Further, it is seen that the Applicant was also informed about the overdue amount in both the loan accounts and on account of non-payment, the classification of the account has been classified as NPA. Further, the Bank has also intimated that an amount of Rs.5,10,000/- both interest payment and renewal fee has become due and the Applicant has not paid contrary to the assurance given by them. It is also brought to the notice of the Applicant that the sale transaction were not routed and the frequent dis-honour of cheques issued by the Applicant towards the clearance of the liability was also mentioned in the legal notice and hence requested them to repay or settle the outstanding amount due, failing which the Bank would proceed for recovery proceedings before the Competent Court of Law.

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5.8 In spite of all the reminder letters and the repeated request the Applicant has not bothered to clear the liability, as demanded and more so in spite of reply given by the Respondent Bank to the objections raised.

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5.9 As the Applicant did not liquidate the liability in spite of sufficient opportunities, even after the period of 60 days, the Bank has proceeded further and have issued the Section 13(2) Demand Notice on 08.09.2023, the Possession Notice is under challenge and the receipt of the same is not disputed by the Applicant herein.

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5.10 The Respondent Bank, as per the procedures have published the Section 13(4) Possession Notice in two Newspapers one in Tamil Newspaper „Dinamani‟ and another in English Newspaper „Indian Express‟ on 13.09.2023 and the same are produced at Page No.18 & 19 of the Respondent Bank‟s typed set. In furtherance to the procedure, the Bank has affixed the Possession Notice and the

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photograph evidencing the affixture of the Possession Notice is produced at Page No.20 & 21.

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5.11 Additionally, the Bank has also produced the letter dated 23.09.2023, drawing reference to the letter dated 24.07.2023 wherein the list of documents were enclosed, as requested by the Applicant herein. However, the Bank had not received any communication from the Applicant and hence they had sent the duplicate copies of the document once again along with the letter dated 23.09.2023. In spite of Respondent Bank giving the documents, as requested by the Applicant twice, the Applicant did not clear the liability nor came forward to regularize the account. Contrary to promise of clearing the liability, the Applicant challenged the Section 13(4) Possession Notice in the present SA.

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5.12 The averments raised by the Applicant in the present SA is duly countered by the Respondent Bank with supporting documents to contend that the measures have been taken as prescribed under the Acts and the Rules. Even otherwise, the Applicant admits the borrowing, creation of mortgage of property, default committed by them, classification of Account as NPA on 29.06.2023 and issuance of Section 13(2) Demand Notice dated 19.12.2022.

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5.13 On receipt of the Section 13(2) Demand Notice, Applicant also raised objection under Section 13(3A), which is duly replied by the Respondent Bank and have complied Section 13(3A), as per the Act.

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5.14 The documents reveal that the Bank has followed the procedures in issuing the statutory notices i.e. Section 13(2) Demand Notice dated 19.12.2022, Section 13(4) Possession Notice dated 13.04.2023 and have followed the procedures and the provision, as prescribed under the Acts and Rules made thereunder.

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5.15 As the Bank has established the due compliance of the procedure and the Applicant have failed to establish any illegality in the measures taken by the Respondent Bank, as prescribed under the Acts and Rules made thereunder.

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5.16 As the Respondent Bank, as secured creditor has established the due compliance of the measures, the Tribunal comes to inevitable conclusion that the Respondent Bank has followed all the measures and the Section 13(2) Demand Notice dated 19.12.2022 and Section 13(4) Possession Notice dated 13.04.2023 are issued in due compliance, hence they are held as valid notices issued as per the procedures under the Acts and Rules made thereunder.

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5.17 For the foregoing reasons, the present SA stands dismissed.

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

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(Dictated to Steno (Sudhakar), transcribed by him, corrected, signed and pronounced by me on this the 20^th day of March, 2025)

SA No.525/2023

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ANNEXURES

INDEX TO TYPED SET OF DOCUMENTS FILED BY THE APPLICANT

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Exhibits on the part of the Applicant:

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Sl. No.	Description of Documents	Exhibit No.
1.	Memorandum of Appeal dated 19.09.2023	A-1
2.	Demand Notice dated 30.06.2023	A-2
3.	Rely U/s 13(3A) for Demand Notice dated 12.07.2023	A-3
4.	Impugned Possession Notice dated 08.09.2023	A-4
5.	Vakalat dated 19.09.2023	A-5

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Exhibits on the part of the Respondent:

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TYPED SET OF DOCUMENTS FILED BY THE RESPONDENT

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Sl. No.	Description of Documents	Exhibit No.
1.	Copy of Demand Notice U/s 13(2) along with acknowledgement dated 30.06.2023	R-1
2.	Copy of Objection to Notice U/s 13(2) issued by Applicant dated 12.07.2023	R-2
3.	Replies to the objection raised by Applicant dated 14.07.2013, 21.07.2023, 24.07.2023.	R-3
4.	Copy of Possession Notice U/s 13(4) issued by Respondent dated 08.09.2023	R-4
5.	Copy of the Paper Publication in English News Paper dated 29.09.2023	R-5
6.	Copy of the Paper Publication in Tamil News Paper dated 29.09.2023	R-6
7.	Photograph – Copy of Possession Notice U/s 13(4) affixed at the Applicant residence.	R-7
8.	Copy of letter sending duplicate copies of requested documents to the Applicant dated 29.09.2023	R-8
9.	Copy of Legal Notice issued by the Respondent dated 23.06.2023	R-9

SA No.525/2023

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SCHEDULE OF PROPERTY

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DESCRIPTION OF THE IMMOVABLE PROPERTY

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All that piece and parcel of land and building comprised in Old Gramanatham S.No.260/2B, New Gramanatham S.No.388/8, measuring about 1066 Sq.ft., situated at No.88, North Mada Street, Acharapakkam Village, Madurantakkam Taluk, Chengalpattu District, within the Registration District of Chengalpattu and Sub-Registration of Acharapakkam.

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Bounded on the ; North by : Street and Common Passage South by : Common Passage East by : Common Passage West by : Ramakrishnan Pillai

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Measurements:

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East to West on the Northern Side : 30 Feet East to West on the Southern Side: 30 Feet North to South on the Eastern Side : 36 Feet North to South on the Western Side: 36 Feet

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In all measuring an extent 1066 Sq.t., of land (as per Patta).

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And situated within the Registration District of Chengalpattu and SubRegistration District of Acharapakkam.

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

Velmurugan v. State Bank of India

Case brief

What is this about?

What did the court decide?

Velmurugan v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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