Dismissed

Mr Jk Sahaant v. City Union Bank Limited

DRT7 Apr 2025SA/538/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application challenging the bank's possession under the SARFAESI Act. The court held that the Section 13(2) and 13(4) notices were valid as parties received them, and judicial orders under Section 14 are not subject to Tribunal review.

What did the court decide?

The Section 14 order and the bank's notices under Section 13(2) and 13(4) are held valid; the application is dismissed.

Mr Jk Sahaant versus City Union Bank Limited — Banking and Recovery | DRT (2025)

SA No.538/2023 (C)

07.04.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

¶5

Dated this the 7^th day of April, 2025

¶6

Present: SMT. S.V. GOWRAMMA Presiding Officer

¶7

SA No. 538 of 2023

¶8

Mr. J.K. Sahaant, S/o. J.Jayakumar, Plot No.88, 9^th Street, Anbu Nagar, Valasaravakkam ….Applicant

¶9

-Vs-

¶10

The Authorized Officer, City Union Bank Limited, Credit Recovery and Management Department, “Narayana”, Administrative Office, No.24-B, Gandhi Nagar, Kumbakonam 612 001. ….Respondent

¶11

Counsels on record / appeared:

¶12

Counsel for Applicant : Mrs. V. Archana Counsel for respondent : M/s. Hasmukh.S.Surana

¶13

ORDER ON SA 538 /2023

¶14

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].

¶15

The applicant has challenged the Order dated 21.09.2023 in C.M.P. No.8867 of 2023 passed by Chief Judicial Magistrate, Thiruvallur and the outstanding amount for recovery of a sum of Rs.80,32,527/-

SA No.538/2023 (C)

07.04.2025

3. Pleadings of the applicant:

¶20

3.1 The Applicant availed Rs.80,00,000/- to start a Restaurant along with his mother, who is partner to the firm M/s. JKS Foods, executed necessary Loan Documents and property owned by his father was given as the Collateral Security to the loan availed.

¶21

3.2 The Applicant submits that the Loan was serviced properly without any default except during the Covid-19 Pandemic. The bank gave the Covid-19 Loan as per the RBI Guidelines and documents were also executed upon by Applicants.

¶22

3.3 Due to the Covid-19 impact, the restaurant business was totally closed and the applicant could not service the loan despite the best efforts and stringent situations. The respondent has invoked the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and issued a Section 13(2) Demand Notice dated 10/08/2022 calling upon the Applicant, the Partnership Firm and the Guarantor to pay the outstanding amount of Rs.80,32,527/- as per the demand notice is not served on all the parties, further the bank has issued the Possession Notice dated 17/10/2022 under Section 13(4) which is also not served on all the Parties.

¶23

3.4 The action of the Authorized Officer of the Respondent is arbitrary and high handedness, hence the applicant filed S.A. 22 of 23 before the Hon‟ble DRT II Chennai which is pending for adjudication, and the bank has not filed the counter yet.

SA No.538/2023 (C)

07.04.2025

3.7 It is contended that the bank has charged very high and heavy interest and have capitalized the penal interest which is against the RBI Guidelines and against the basic tenements of the bank jurisprudence. However, the Applicant is willing to repay and settle the loan availed if a proper statement of account is given and penal interest and other charges are waived in a reasonable time.

¶28

3.8 The bank has issued 3 sale notices which have not been challenged till date, as they were no bidders for the same despite low price fixed by the Respondent Bank, hence the bank is asked to produce the valuation report from the approved valuator.

¶29

3.9 It is contended that the applicant has made a payment of Rs.4.14 lakhs subsequent of the issuance of the Section 13(2) Demand Notice including Rs.3.00 Lakhs in late September 2023. The applicant enclosed a DD for Rs.8.00 Lakhs towards the Loan amount constituting 10% of the claim submitted to the Chief Judicial Magistrate, Tiruvallur in obtaining the Section 14 order to take Physical Possession. The Applicant further undertakes to pay a further sum of Rs.8.00 Lakhs with in a period of 4 weeks on getting order from this Hon‟ble Tribunal

¶30

3.11 In the grounds of the SA, it is contended that the date of classification of account as NPA in the Section 13(2) is without any basis and the bank has not issued any notice classifying the account has NPA.

SA No.538/2023 (C)

07.04.2025

3.12 The Bank has failed to issue the S.13(2) Demand notice to all the parties and the gap between the Section 13(2) Demand Notice and Section 13(4) Possession Notice is just over 60 days

¶35

3.13 The Applicant undertakes to obtain the served copy of the Affidavit, which is filed before the Learned Chief Judicial Magistrate, Tiruvallur. On these grounds, the applicant prays to settle the outstanding amount which makes it explicitly clear that they wish to settle the loan amount within a reasonable period not exceeding 6 months.

¶36

4. Objections of the respondent bank:

¶37

4.1 The Respondent Bank has filed detailed counter, inter alia contending that the M/s JKS Foods (A Partnership Firm) represented by its Partners: J. Apsarhaa and J.K. Sahaant, approached the M/s City Union Bank Limited, Anna Nagar (west) Branch for credit facilities.

¶38

4.2 Ms. Apsarhaa and J.K. Sahaant stood as co-obligants and J. Jayakumar stood as Guarantor and created the Equitable Mortgage as Security towards the loan availed by them. Thus, a charge has been created favoring the bank with respect to the credit facilities availed by the M/s. JKS Foods along with J. Apsarhaa, J.K. Sahaant and J. Jayakumar had borrowed a sum of Rs.76,49,000/- which is detailed below:-

SA No.538/2023 (C)

07.04.2025

Facility Availed/ Loan A/C No.	Amount Sanctioned	Date when availed	Sanctioned Rate of Interest
Emergency Credit Line SCH 501812080068016 JKS FOODS	Rs.11,00,000/-	16.06.2020	9.25% (P.A)
CUB OSL Term EMI –BR 501812080078812 JKS FOODS	Rs.59,00,000/-	30.03.2021	11% (P.A)
CUB OSL Term EMI – Br 501812080078812 JKS FOODS	Rs.6,49,000/-	30.03.2021	11% (P.A)

¶43

4.3 The Applicants have also executed On Demand Promissory Note and other loan documents at the time of availing the loan, and J. Jayakumar had executed a registered Memorandum of Extension of Equitable Mortgage Title Deed‟s dated 16/06/2020 and 30/03/2021

¶44

4.4 Applicant after availing the aforesaid credit facility had not adhered to the terms and conditions and failed to repay the outstanding amount due to the Respondent Bank nor the loan account was regularized or settled, in spite of various demands made by the Respondent on several occasions. Hence, the bank issued demand notice dated 10.08.2022 under section 13 (2) of the SARFAESI Act, calling upon the parties to pay the outstanding amount due as on 04/08/2022 and granted 60 days time period to settle the their dues.

SA No.538/2023 (C)

07.04.2025

4.5 The Section 13(2) Demand Notice was duly received by M/s. JKS Foods and J. Jayakumar and as all the other parties are residing at the same premises, it is served. Hence, they cannot plead that they didn‟t have knowledge of issuance of the 13 (2) Demand Notice to all the parties. The parties did not raise any objections under Section 13(3-A) and the bank has proceeded to issue Possession Notice under Section 13(4) on 17/10/2022 which is duly served on all the parties.

¶49

4.6 The symbolic possession of the property was taken on 17/10/2022 by affixing the Section 13(4) Notice at the S.A. Schedule mentioned property; the publication of the possession notice was published on 20/10/2022 in two Leading English and Tamil Newspapers. The bank has produced the Possession Notice under Section 13(4), acknowledgement cards, photographs, for having affixed the Possession Notice on the property.

¶50

4.7 The Applicant instead of clearing the dues has filed S.A. No.22 of 2023 before the Hon‟ble DRT-II, Chennai challenging the 13(4) Possession Notice on trivial issues. The Hon‟ble DRT-II, Chennai granted a conditional Order dated 20/01/2023 which was also not complied. However, the Applicant filed yet another S.A. before the Hon‟ble DRT-II, Chennai vide Dy. No. 15/2023 and the same was not pursued.

¶51

4.8 Now the Applicant has filed S.A. No. 538 of 2023 before the Hon‟ble DRT-III, Chennai, aggrieved by the Physical Possession Order dated

SA No.538/2023 (C)

07.04.2025

21/09/2023 passed under Section 14 of the SARFAESI Act in Crl.MP. No. 8867/2023

¶56

4.9 The Bank has followed the procedure as contemplated under Section 13(4) of the Act and also Rule 8 of the SARFAESI Act. The Applicant have received the S.13(2) Demand Notice and 13(4) Possession Notice have miserably failed and neglected to clear the liability have filed S.A. No. 22 of 2023 challenging the 13(4) Notice which came to be dismissed for non-prosecution on 01/12/2023 which cannot be disputed by the Applicant and the closing balance amount of Rs.88,12,874/- is due as on 18/10/2023

¶57

4.10 Pursuant to the Order passed by the Learned CJM, Thiruvallur in Crl. Mp. 8867/2023, an Advocate Commissioner have issued notice on 26/09/2023 to vacate the S.A. Schedule Property and the same was duly affixed on the mortgage property which cannot be disputed by the Applicant.

¶58

4.11 Though the Applicant has no intention of settling their outstanding liabilities, the bank has not violated any procedures nor filed any false affidavit. The Bank has also issued the Sale Notice as per Rule 8 (6) of the Securities Interest Enforcement Rules in respect of the S.A. Schedule Property, which was duly received by the Applicant and chose to remain as a silent spectator, and certainly taking advantages. The Sale Notice are not subject matter of the present S.A. where the Applicant challenged the

SA No.538/2023 (C)

07.04.2025

Physical Possession of the Order is not rightful in accordance with the law expecting the Respondent Bank to produce the Valuation Report.

¶63

4.12 The Respondent denies all the allegations raised by the applicant under Grounds “A” to “K” as untrue and submits that the bank has followed all the procedures and have produced proof of the service of Notice under section 13(2) and S.13(4) along with the Publications and photographs for having taken symbolic possession, hence respondent prays for dismissal for the current S.A.

¶64

Heard arguments of the Counsels and perused the records of the case.

¶65

5.1 It is manifested from the records that the Applicant is the partner of M/s. JKS Foods represented by partners and Mrs. J. Apsarhaa, Mr. J. K Sahaant and Applicant father J. Jayakumar is the Mortgagor who has Mortgaged the property as Collateral Security to the Credit Facilities availed by the Applicants. As per Section 13 (2) Demand Notice dated 10/08/2023, it is seen that the Applicant had availed the following: - credit facilities.

¶66

Facility Availed/ Loan A/C No.	Amount Sanctioned	Date when availed	Sanctioned Rate of Interest	Present Due as on 04/08/2022
Emergency Credit Line SCH 501812080068016 JKS FOODS	Rs.11,00,000/-	16.06.2020	9.25% (P.A)	Rs.11,46,482

SA No.538/2023 (C)

07.04.2025

CUB OSL Term EMI –BR 501812080078812 JKS FOODS	Rs.59,00,000/-	30.03.2021	11% (P.A)	Rs.62,08,563
CUB OSL Term EMI – Br	Rs.6,49,000/-	30.03.2021	11% (P.A)	Rs.6,77,482
501812080078812 JKS FOODS
Total Amount	Rs.76,49,000			Rs.80,32,527

¶71

5.2 The availing of the credit facilities in the name of the firm M/s. JKS

¶72

Foods represented by Mrs. J. Apsarhaa and Mr. J.K. Sahaant as coobligants to the loan availed is not disputed. The applicant and Mrs. J Apsarhaa along with Mr. J. Jayakumar has stood as guarantors and Mr. J. Jayakumar has mortgaged the property as Collateral Security is not disputed by the Applicant. In fact, the same is admitted by the Applicant in Paragraph (V) 1 to 3 of the SA.

¶73

5.3 It is also an admitted fact that the Applicant could not repay the loan as per the terms of the sanction and defaulted in servicing the loan account, though it is contended that the business faced several losses due to Covid-19, applicants had availed the Covid-19 loan granted by the respondent bank as per the RBI Guidelines and has enjoyed the benefits under Covid-19 Scheme.

¶74

5.4 As the Applicant defaulted in the repayments, the Respondent Bank has classified the account of the Applicant as NPA (Non-Performing Assets) as per the RBI Guidelines and have issued the Section 13 (2)

SA No.538/2023 (C)

07.04.2025

Demand Notice dated 10/08/2022 which is sent by RPAD which is admittedly received by the Applicant firm M/s. JKS Foods Private Limited and the Applicant‟s/mortgagor/guarantor Mr. J. Jayakumar as per the Postal Acknowledgement cards produced by the Respondent Bank at Page No. 13 and 15 of their counter and typed set.

¶79

5.5 Though the Applicant contended that the Section 13(2) Demand Notice is not served to all parties, Mr. J. K. Sahaant the Applicant herein is the Partner of the M/s. JKS Foods and residing in the address, Plot No. 88, 9^th Street, Anbu Nagar, Valasaravakkam, Chennai – 60 087, where demand notice is sent. The demand notice is sent to the same address as per the copy of the notice produced by the Respondent Bank at Page No.9(A) in their counter.

¶80

5.6 In fact applicant has also mentioned the same address in the SA and on perusal of the demand notice it is seen that all the parties ie., borrower, co-applicant, mortgagors cum guarantors are all residing at the same address at Plot No. 88, 9^th Street, Anbu Nagar, Valasaravakkam, Chennai – 60 087 who are the Borrower, the Mortgagor and the Guarantor are all a family members residing in the same Address as a family cannot deny the issuance of demand notice and now cannot content that notices are not served on all parties.

¶81

5.7 In fact, applicants admit the issuance of demand notice in the averments of the SA, and has raised a trival issue contenting that all parties have not been served with the demand notice, where all are

SA No.538/2023 (C)

07.04.2025

residing at the same address as Father, husband and wife . Additionally, the applicant has not made a case of substantial prejudice caused to him in respect of his contention that all parties are not served with demand notice and possession notice.

¶86

5.8 It is manifest from the records that the S.13[2] demand notice is served on the partnership firm where the applicant is the partner and the applicant himself has received the S.13[2] demand notice, did not raise any objections or made any representation under S.13[3A] to the demand made in the S.13[2] notice.

¶87

5.9 The applicant having slept over his right available under S.13[3A] now cannot take a trivial objection that the demand notice is not served on all parties. Even after the receipt of the demand notice personally by the applicant there is no substantial prejudice cause to the other parties who are not served, nor the other parties are made to the present SA. On this ground alone the SA deserves to be dismissed. Hence such insignificant averments that Section 13(2) and Section 13(4) notices are not sent to other parties who are family member, the Section 13(2) Demand notice is served on the partnership firm where in the applicant is one of the partners and has personally received the Section 13(2) Demand Notice.

¶88

5.10 Further the contentions that the notice is not served on the other parties and there is a illegality in the measures keen to sustained. On receipt of the Section 13(2) notice the applicants is aware of the

SA No.538/2023 (C)

07.04.2025

measures taken by the respondent bank under the SARFAESI Act and the applicant has a knowledge in the measures taken by the respondent bank as secured creditor under the SARFAESI Act. Though the applicant reserve a trival issue with the Section 13(2) is not served on the other parties were none other than the family members as failed to establish the subsequent prejudice cost, on account of the none service of Section 13(2) as prescribed under the Acts and Rules and the same deserves to be dismissed.

¶93

5.11 In this regard, the Tribunal relies on the judgement of the Hon‟ble Supreme Court in the case titled M/s. L& T Housing Finance Limited vs. M/s. Trishul Developers where in it is held that “the proceedings initiated under the SARFAESI Act would not nullify on the mere technicality as bank as secured creditor has complied with the procedures prescribed under the Act.

¶94

5.12 In the instant matter after the respondent bank has produced the Document R-1 S.13[2] demand notice along with proof of service. Furthermore, the applicant after receipt of possession notice has preferred an SA 22/2023N where even the other parties to the loan are aware of the measures taken by the bank. Hence, the contents raised that all parties are not served cannot sustain on technicalities.

¶95

5.13 As the Applicants did not liquidate the outstanding liability dues, under section 13(2) within 60 days nor raised any objections to the demand made, bank has proceeded further and issued under section

SA No.538/2023 (C)

07.04.2025

13(4) Possession Notice dated 17/10/2022, the Possession Notice is sent by the RPAD to the Applicant Mr. J. Jayakumar, M/s. JKS Foods, Mrs. J. Apsarhaa, Mr. J. Sahaant. Despite receipt of statutory notices they did not come and liquidate the out standing dues.

¶100

5.14 In furtherance to the measure the possession notice is affixed on the property on 17/10/2022 and possession notice is published in the two Newspapers, leading English and Tamil Newspapers as required of under section 13(4) and Rule 8 (6) of the Securities Interest Enforcement Rules, 1962. Thus, it is seen from the records that the Respondent Bank classified the Account as NPA (Non-Performing Assets) and has issued the 13(2) Demand Notice dated 10/08/2022 and S.13[4] possession notice. Hence, the measure taken in issuance of the Section 13(2) Demand Notice dated 10/08/2022 and the Possession Notice dated 17/10/2022 are held as valid notices issued under the SARFAESI Act

¶101

5.15 Furthermore it is also an admitted fact that the Applicant had challenged Possession Notice in S.A. 22 of 2023 and have obtained the interim order, which was not disputed and chosen to remain silent and they also filed another S.A. 538 of 2023 which was not pressed by the applicant here in.

¶102

5.16 The challenge to Section 13(4) notice in S.A. 22 of 2023 came to be dismissed by Hon‟ble Presiding Officer, DRT-II, Chennai which clearly reflects intention of the Applicant is only to thwart the proceedings taken by the Respondent Bank.

SA No.538/2023 (C)

07.04.2025

5.17 Though the Applicant has Challenged section 14 Order dated 21/09/2023 have not made out of case for interference of this tribunal under the Section 14 order. Even there is no infirmities in section 14 application or in the 14 order passed by the Hon‟ble Chief Judicial Magistrate.

¶107

5.18 On the other hand, the applicant in the averments to the SA expresses to clear the entire liabilities within 6months. However, despite the receipt of the statutory notices which were challenging before the DRT-II Chennai applicant has failed to liquidate the liability and are challenging each measures taken by the bank without showing any bonafide‟s to clear the entire liabilities.

¶108

5.19 It is pertinent to note that the applicant in para 9 of the SA contends that they have made a payment of Rs.4.14 lakhs after the issuance of S.13[2] demand notice including an amount of Rs.3 lakhs which is paid in Sep,2023 and had a DD for Rs. 8 lakhs which is 10 @% of the amount claimed in S.1 order to be paid after obtaining an order from the Tribunal. 5.20 It is apt to mention that the demand notice is issued demanding the entire total outstanding due to be paid within 60 days, hence the payment made after the issuance of demand notice is only a portion of outstanding liable and has not cleared the entire liability as per Section 14(2) demand notice, hence the contention that payment were made after Section 13(2) notice.

SA No.538/2023 (C)

07.04.2025

5.21 Even otherwise as per S.14[3] no act of the magistrate done under S.14 can be challenged in any court of law. The Ld. Magistrate after perusal of the S.14 application supported by the documents supporting the measures taken has allowed the petition directing the bank to take physical possession of the property. On the other hand the applicant has failed to make out case for interference of this Tribunal in S.14 Order.

¶113

5.22 For the foregoing reasons the Section 14 order dated 01/12/2023 is held as valid order which is in compliance of Section.14 and the section 13 (2) Demand Notice dated 10/08/2022 and section 13 (4) Possession Notice dated 17/10/2022 are issued in due compliance of the measures taken by the Respondent Bank under the SARFAESI Act and the same are held as valid notices.

¶114

5.23 Accordingly, SA stands dismissed. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

¶115

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

¶116

(Dictated to Steno (Mogesh), transcribed by him, corrected, signed and pronounced by me on this the 07^th day of March, 2025)

¶117

ANNEXURES

¶118

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

SA No.538/2023 (C)

07.04.2025

Sl. No.	Description of Documents	Page No.
1.	Sec 13(2) Demand Notice 10/08/2022	A-1
2.	Sec 13 (4) Possession Notice 17/10/2022	A-2
3.	Order in Crl.M.P. No.8867/2023 CJM Tiruvallur 21/09/2023	A-3
4.	Vacation Notice from Authorised Officer 26/09/2023	A-4

¶123

LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

¶124

Sl. No.	Description of Documents	Page No.
1.	Notice issued u/s 13(2) of the SARFAESI Act, 2002 issued by the Respondent Bank to the Applicant along with proof of service;10/08/2022	R-1
2.	Possession Notice u/s 13(4) issued by the Respondent Bank to the Applicant along with proof of service; 17/10/2022	R-2
3.	Photographs for having affixed 13(4) Notice by the Respondent Bank ; 17/10/2022	R-3
4.	Newspaper advertisement of Possession Notice in the New Indian Express and Dinamani 20/10/2022	R-4
5.	Order passed by Hon‟ble CJM, Tiruvallur in Crl.Mp. 8867/2023 for taking physical possession; 21/09/2023	R-5
6.	Photographs for having affixed the Notice to vacate the S.A. scheduled property; 26/09/2023	R-6
7.	Conditional Order passed by this Hon‟ble tribunal in SA.No. 538 of 2023; 18/10/2023	R-7
8.	Order passed by the HPO, DRT-II, Chennai in SA. No.22/2023 against 13(4) Possession Notice; 01.12.2023	R-8

¶125

SCHEDULE OF PROPERTY

¶126

All that piece and parcel of land bearing Plot No.88, measuring 2600 Sq. Ft., comprised in S.Nos 354/1A and 354/2 (as per Patta No.12301, New S. Nos 354/29 and 354/2B), Nerkundram village, Maduravoya Taluk, Thiruvallur District, together with Building, Ground Floor and first Floor measuring in all 2413 Sq.Ft. standing thereon at Plot No.88, 9^th Street, Anbu Nagar, Nerkundram, Chennai 600 107.

SA No.538/2023 (C)

07.04.2025

Land Being bounded on the

¶131

North by property in Mettukuppam Gramanatham in S.No. 361

¶132

South by 30 Feet Road, 9^th Street,

¶133