Dismissed

K Manivannan v. Indian Bank

DRT26 Jun 2025SA/53/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application challenging possession orders obtained by Indian Bank under Section 14 of the SARFAESI Act. The Tribunal held that the bank complied with statutory requirements for notices, including CERSAI registration, finding no illegality in the impugned order to the Supreme Court's extent.

What did the court decide?

SA No.53 of 2023 stands dismissed; all other pending IAs disposed of; parties to bear own costs.

K Manivannan versus Indian Bank — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this the 26^th day of June, 2025

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PRESENT: SHRI SHARANG DHAR UPADHYAY Presiding Officer

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SA No.53 of 2023

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K. Manivannan S/o V. Kandaiyan 1025/126, 6^th Avenue Anna Nagar, Chennai – 600 040

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…Applicant

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Versus

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The Authorised Officer Indian Bank, Ethiray Salai Branch No.26, Ethiraj Salai, Fagun Chambers Chennai – 600 008

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…Respondent

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Counsel on Record / Appeared

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Applicants by : Ld. Counsel M/s J. Prince Respondent by : Ld. Counsel M/s R. Jagadeesan

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O R D E R

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This petition is filed under Section 17(1) of the SARFAESI Act

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challenging the measures initiated by the respondent bank pursuant to the order dated 09.01.2023 made in Crl. M.P. No.37823 of 2022 on the file of Chief Metropolitan Magistrate, Egmore passed under Section 14 of the Act.

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Facts of the Case

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The applicant is the mortgagor for the Term Loan of Rs.75,00,000/- sanctioned by the respondent bank on 21.03.2018 and Secured OD Loan of Rs.7,00,000/- sanctioned by the respondent on 21.03.2018 and 04.10.2018. The borrower has been making the remittances of the dues without any default and never allowed the loan account to become NPA. The applicant and others were made to sign blank documents, the content of which is not known to them and hence same are not binding on the applicant. The respondent classified the loan account as NPA contrary to the guidelines of the Reserve Bank of India.

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While so, the Possession Notice came to be issued by the respondent claiming therein that the demand notice has been issued on 12.07.2021, a copy of which was never served on the applicant and the borrower. It could be seen from the possession notice that the applicant had made several payments even after the alleged demand notice dated 12.07.2021.

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The respondent suppressing all the above facts has hastily proceeded to file a petition under Section 14 before the Learned CMM, Egmore and has obtained the impugned order dated 09.01.2023, which is liable to be set aside for the reasons stated above.

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Grounds Urged

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The grounds urged are that the demand notice under Section 13(2) of the SARFAESI Act was not served on all the parties to the loan, thereby the applicant / borrower is deprived of right under Section 13 (3-A) of the Act. The respondent has failed to affix, publish the possession notice and thereby failed to comply with Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002. The classification of the loan account as NPA is bad in law, in which the respondent has failed to comply with the guidelines of the RBI.

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Documents filed by the Applicant

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The applicant had filed the certified copy of the order of the Chief Metropolitan Magistrate, Egmore, Chennai dated 09.01.2023 made in Crl. M.P. no.37823/2022.

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Counter of the Respondent

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The respondent bank filed its counter and typed set of documents. It is contended by the respondent that the allegation made by the application are false and denied. It is stated that the entire grounds raised in the SA are totally false and hence denied. It is submitted that the respondent has strictly complied with the provisions of the SARFAESI Act and the Rules made thereunder.

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It is stated that the respondent along with the Section 14 petition filed before the Learned CMM, Egmore, Chennai had filed various documents being the demand notice dated 12.07.2021 issued by the respondent under Section 13(2) of the SARFAESI Act along with postal acknowledgement, the possession notice dated 29.03.2022, the proof of paper publication of the possession notice in two dailies viz., English and vernacular language dated 31.03.2022, photographs evidencing affixture of the possession notice, the valuation report dated 31.01.2022 and the statement of accounts in respect of all the loan accounts. The Ld. CMM after perusing the same allowed the petition and also appointed an Advocate Commissioner to take possession of the property. It is also recorded in the order that the Authorized Officer of the bank has filed an affidavit and the contents of the proof affidavit are sufficient to satisfy the Court to pass an order for taking physical possession of the secured asset.

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It is also stated that the sale was conducted 29.07.2022 and the property at Jai Nagar, Arumbakkam has been sold for a sum of Rs.37,10,000/- and a sale certificate has also been issued on 27.10.2022. It is further stated that the applicant has failed to comply with the interim order passed by this Tribunal on 10.2.2023. Respondent bank prayed for dismissing the SA with exemplary costs.

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The respondent bank filed following documents in support of its contentions: -

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(a) The demand notice dated 12.07.2021 issued by the respondent bank under Section 13(2) of the SARFAESI Act along with postal receipts.

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(b) The possession notice dated 29.03.2022 along with postal acknowledgement.

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(d) Photograph evidencing affixture of possession notice on the secured asset.

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(e) Valuation report dated 31.01.2022.

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(f) Statement of Accounts in respect of the loan accounts.

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(g) During the course of the hearing, the respondent bank had filed a memo on 5.4.2024, enclosing therewith the proof of registration of the secured asset with CERSAI.

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The matter is heard. In the wake of available material on record,

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the only question that arises for consideration in the present SA is:

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

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Answers to Point for Consideration

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

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As per Section 14(1) of the SARFAESI Act, on a request being made by the by the secured creditor, the Chief Metropolitan Magistrate or the District Magistrate as the case be take possession of such asset and documents relating thereto and forward such assets and documents to the secured creditor. The financial institutions are to declare under the affidavit the aggregate sum of financial assistance and dues payable

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as on the date of the application. It should be averred that the borrower

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/ guarantor having created security interest over the property and that the borrower had committed default; upon such default the account must have been classified as NPA. It is also mandatory to aver in the affidavit regarding the issuance of demand notice, the reply thereof and the response of the secured creditor and that the borrower had not made any repayment and therefore entitled to take possession and that the other provisions of the Act have been complied.

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The grounds raised by the applicant in the SA are that the demand notice under Section 13(2) of the SARFAESI Act dated 12.07.2021 was not served on all the parties prior to issuance of notice under Section 13(4) of the Act thereby depriving the applicant of his right under Section 13(3-A) of the Act, the possession notice was neither published nor affixed thereby failed to comply with provisions of Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002, failed to satisfy the statutory requirements prescribed under the provisions of the SARFAESI Act and the Rules made thereunder.

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On the other hand, the respondent bank had filed copies of the documents viz., demand notice dated 12.07.2021 along with postal receipts, possession notice dated 29.03.2022 along with postal acknowledgement, proof of paper publication of the possession notice in

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two dailies viz., “The New Indian Express” and “Dinamani” both dated 31.03.2022, photograph evidencing affixture of the possession notice on the secured asset. Thus it is clearly evident that the defendant bank has complied with the provisions of the Act and the Rules made thereunder in issuing the possession notice.

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During the course of the arguments, the Ld. Counsel J. Prince appearing on behalf of the applicant fairly conceded that after filing of the counter and typed set of documents by the respondent bank the only ground that was available to the applicant was with regard to proof of CERSAI registration, which the respondent had filed along with its Memo dated 5.4.2024 and therefore the applicant is left with no other grounds for challenge.

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

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Therefore, in the absence of any allegations regarding noncompliance of the provisions of Section 14(1) of the Act and documentary evidence produced by the defendant bank, this Tribunal is

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unable to find any illegality, impropriety or otherwise to set aside the

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impugned order. Hence the following:

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O R D E R

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