Dismissed

K Sivakumar v. State Bank of India

DRT19 Sept 2025SA/54/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed an application challenging a Section 14 order of the Chief Judicial Magistrate under the SARFAESI Act. The Tribunal held that Section 14 powers are ministerial and non-adjudicatory, requiring only verification of the secured creditor's affidavit.

What did the court decide?

Securitization Application dismissed; interim order granted, if any, stands vacated; no order as to cost.

K Sivakumar versus State Bank of India — Banking and Recovery | DRT (2025)

SA No.54/2022

19.09.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 19^th day of September, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 54 of 2022

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Mr. K. Sivakumar, S/o. R. Kaliaperumal, No.1/80, Main Road, Villupuram T.K. -605 301. Tamil Nadu ….Applicant -VsState Bank of India, Rasmecc & Sarc, No.208, Anna salai, Pondicherry, Pin-605 001. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/r. C. Ramaiah and Mr. D. Dinakar Counsel for respondent : M/s. B. Raghavulu Naidu

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ORDER ON SA 54/2022

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The present Securitization Application [SA] is filed on 09.02.2022 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].

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The applicant has challenged Sec.14 order dated 29.12.2021 in Crl.M.P. No.151 of 2021 passed by Chief Judicial Magistrate, Villupuram and the outstanding amount due as per Sec.14 order is Rs.11,40,491/-

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Pleadings of the applicant:

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The applicant is the borrower and mortgagor, an un-educated person on daily wages had availed a Housing Loan of Rs.5,07,000/- on 21.07.2006 for construct of a building in his own land. Applicant had mortgaged the immovable property situated at Poonthottam Village, Koliyanur Panchayat Union Limits, Villupuram Taluk, and District Comprised in Survey No.238/3B1, Plot No2, with the Extent of 1508 sq.ft., in favour of the respondent, as security for the loan availed.

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It is contended that the applicant was regularly repaying the loan as per agreement, however the applicants account is classified as NPA by the respondent bank on 21.06.2017 in spite of payment of Rs.7,04,680/towards the loan account of Rs.5,07,000/-.

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It is alleged that the 1^st respondent bank rashly and illegally declared the account as NPA and proceeded under SARFAESI Act. The bank had not issued the S.13(2) demand notice nor issued the S.13(4) possession notice, not affixed, nor published the possession notice which are in violations of the mandatory provisions of Rule 8(1) and Rule 8(2) of the Security Interest Rules.

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However the applicant was shocked to receive the sale notice dated 18.12.2021, fixing sale on 20.01.2022, claiming an amount of Rs.11,40,491/-. Further the bank has also filed section 14 application before the Ld. CJM Villupuram, claiming an amount of Rs.6,36,714/- only.

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Hence the respondent have arrived at the imaginary claim amount of Rs.11,40,491/-.

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The sale notice has not been published which is mandatory and the bank has not considered the OTS under the SBI RINSAMATHAN scheme of 2021-2022. Thought the scheme was available up to 31.12.2021 and the applicant was arranging the funds and then received the impugned sale notice dated 18.12.2021, before the expiry of time limit for OTS on 31.12.2021.

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It is alleged that the bank has valued the property at Rs.26,70,000/which is under valuation where the property is worth more than Rs.40 Lakhs. However, the bank has quoted the upset price as Rs.26,70,000/which is unrealistic. Further the sale has taken place on 20.01.2022 only to a single purchaser namely Mr. K. Arunkumar who was put-up by the 1^st respondent to sell the property at a throw away price of Rs.26,95,000/-.

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The applicant has totally paid a sum of Rs.7,04,680/- into the loan account which clearly reflects the intention of the applicant to settle the account liability. The bank without considering the OTS proposal under the SBI RINSAMATHAN have issued the sale notice and have sold the property. The mortgage property is the residential property and the applicant will be disturbed if the possession is taken.

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It is alleged that the demand notice and possession notice were never issued or served to the applicant, however the filled the sec.14 application before the CJM, Villupurarm.

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In the grounds, it is contented the sec.14 application is exfacie illegal as the applicant is the legal owner and his possession cannot be disturbed under the SARFAESI Act. The Ld. CJM has passed the order against the weight of evidence and all probabilities of the case, without ascertaining whether the respondent had duly served the statutory notices under sec.13(2) and Sec.13(4) of the SARFAESI Act which is mandatory requirements under the Act.

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Further the CJM has exceeded his jurisdiction in dispensing with service of statutory notices to the property to the parties, has acted on S.14 application filed by the bank on fulfilling the service of Sec.13(2) and Sec.13(4). On these grounds the applicant prays for to call for records pertaining to the measures taken pursuant to the order of the Ld. CJM dated 29.12.2021.

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Objections of the respondent bank:

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The bank has filled the counter inter alia contenting that the applicant had availed Housing Loan of Rs.5,07,000/- for the construction of house in the Plot no.2, in ES Garden, Vazhada Reddy, Villupuram on 18.07.2006 and had executed all the loan documents and had created mortgage of the property as security towards the loan account. As the applicant was irregular, the loan account became NPA on 21.06.2017 and the bank has issued the Sec.13(2) on 10.09.2017 calling upon the applicant to pay a sum of Rs.5,74,786/- due as on 09.08.2017 along with interest from 10.08.2017 within 60 days from the date of receipt of the notice.

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The S.13(2) demand notice was undelivered, hence the bank has arranged for substituted service by paper publication on 07.11.2017 and have issued the S.13(4) possession notice on 20.02.2018 claiming an amount of Rs.6,27,896/- due as on 07.02.2018. The possession notice also returned undelivered, hence the possession notice was published in English and Vernacular Newspaper on 27.02.2018 and also affixed on the mortgaged property.

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Further the bank has issued the first sale notice dated 11.02.2019 fixing the auction on 14.03.2019, the sale notice was also published on 11.02.2019 and the sale could not be completed for want of bidders. Hence the bank have issued the second sale notice on 23.09.2021 fixing the auction on 25.10.2021 which is published in two newspapers on 24.09.2021, however the sale could not be completed for want of bidders.

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The applicant/borrower through his counsel issued legal notice on 18.10.2021 seeking six months’ time for repayment of the dues. As the applicant failed to pay the outstanding loan amount, the bank issued the sale notice on 18.12.2021 calling upon to pay a sum of Rs.11,40,491/- due as on 14.12.2021 and fixed the reserve price @ Rs.26,70,000/-. The notice was published in English and Tamil Newspapers on 18.12.2021 for the sale to be held on 20.01.2022 and also affixed on the mortgaged property.

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The property was sold to the highest bidder on 20.01.2022 to Mr. Arun Kumar for a sum of Rs.26,95,000/- and sale certificate dated 09.02.2022 is issued and same was also intimated to the applicant vide

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letter dated 19.02.2022 to receive the balance amount of Rs.13,89,086/by way of banker cheque.

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The bank has produced the vouchers relating to various debit entries in relation to the SARFAESI Action by way of memo on 19.09.2022. Further has also filed the documents, the statement of account before this Tribunal on 24.08.2022 which reflected that a sum of Rs.80,493/- was debited towards court fee and the counsel fee of the account maintained by the borrower. Thus the bank has followed all the established procedures and there are no infirmities on the part of the bank in exercising the powers under the SARFAESI Act.

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The bank initiated the measures after the account became NPA on 21.06.2017 and issued the Sec.13(2) and Sec.13(4) notices and have produced the documents for the due service which was filed along with the statement of account under sec.14 of the Act. The Hon’ble Chief Judicial Magistrate vide order dated 29.12.2021 passed elaborate order and appointed advocate commissioner to take the possession of the property after taking inventory if necessary.

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Further the act of the Hon’ble Chief Judicial Magistrate is purely ministerial and limited only assisting the Secured Creditors in taking possession of the secured assets and nothing more. As per Section 14, is only envisage to ascertain that the secured assets falls within its jurisdiction and secured creditor has complied with requirements of Section 13 and 14 of the SARFAESI Act, which was upheld by the Hon’ble Supreme Court of

SA No.54/2022

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India in various judgments. The respondent has relied upon the judgment dated 03.08.2022 of the Hon’ble Division Bench of the High Court of Bombay in WP No.9749 of 2021 in the case of Phoenix ARC Pvt. Ltd. –vsState of Maharashtra wherein the Hon’ble Division Bench discussed in detail about the scope and object of Section 14 and the power of CJM under Section 14 of the SARFAESI Act and also referred to Hon’ble Supreme Court passed in NKGSB Coop. Bank Ltd., -vs- Subir Chakravarthy & ors. (MANU/SC/0247/2022). Hence prays for dismissal of the SA.

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

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The records of the case reflect that the applicant is the borrower had availed Housing Loan and executed all the loan documents, created mortgage of the property as collateral security towards the repayment of the loan amount. In fact applicant does not dispute the availing of the credit facility creation of mortgage and the default in the repayment. On continuous default in the repayment, bank has classified the account as NPA on 21.06.2017 as per the RBI guidelines and have issued the Sec.13(2) demand notice dated 10.09.2017 which is denied as being served.

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The same contention were also raised in SA.No.49.2022 wherein the applicant had challenged the sale notice dated 18.12.2021. The Tribunal has adjudicated the averment in respect of the S.13(2) demand notice dated 10.09.2017 at para 24,25,26,27 of the order dated 13.05.2025 in

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SA.No.49.2022 and had held that the bank has established due service of S.13(2) and also with regard to averment pertaining to Sec.13(4).

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It seen that the applicant has raised the same averments with regard to the submission of the OTS proposal under the SBI RINSAMATHAN Scheme which is also adjudicated by the Tribunal in para 29,30,31 in SA.No.49.2022 vide order dated 13.05.2025. Yet another contention raised by the applicant is that the amount claimed in the sale notice dated 18.12.2021 is Rs.11,40,491/- but after the sale the 1^st respondent illegally debited sum of Rs.15,90,078/- on 19.02.2022, from the applicant loan account. ie, further more amount of Rs.4,49,587/- claimed in the sale notice, without any reason, that too within the period of 60 days.

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Further the 1^st Respondent continuously debiting the interest part and penal interest from the date of NPA up to date, but the 1^st respondent now illegally claiming a sum of Rs.9,25,297/- as further more amount as interest part. The respondent claiming a sum of Rs.80,493/- as suit filing fee and debited the same amount on 07.12.2020 in the loan account, but there is no suit have been filed so far before any civil court by the 1^st respondent bank.

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The respondent had filed the documents countering such allegations , viz., the statement of account on 24.08.2022 where it reflected that a sum of Rs.80,493/- was debited towards court fee and counsel fee to the account maintained by the borrower, in relation to a suit preferred by the Bank before Principal District Judge, Villupuram against the borrower.

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The applicant had challenged the sale notice which is already been adjudicated in SA.No.49.2022. Hence does not require further adjudication of the sale. The present SA is filed challenging the sec.14 order and it seen that the respondent bank has filed the Sec.14 application giving the details of the loan availed by the applicant the amount sanctioned and the outstanding amount due as per the bank statement which was also supported by the statement of account of the loan account.

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Further it seen in Sec.14 application that the bank has classified the account as NPA on 21.06.2017 and subsequently have issued the sec.13(2) demand notice dated 10.09.2017. Further the order also reflects that the applicant herein did not clear the outstanding amount due, hence bank has filed the Sec.14 application and the Ld. CJM Villupuram after due verification of the documents and the measures taken by the respondent bank has allowed the Sec.14 application appointing the advocate commissioner to take the physical possession of the property and handover the same to the bank.

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Now considering the challenge to S.14 Order, it is appropriate to mention the declaration of The Hon’ble Supreme Court and various Hon’ble High Courts in various judgments it has held that the power of Designated Court under Section 14 SARFAESI Act, 2002 is ministerial and nonadjudicatory 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.

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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 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.

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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

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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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Additionally, Section 14(3) of the SARFAESI Act statuses that no

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action taken by the Chief Metropolitan Magistrate or District Magistrate (or

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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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32. T hus, the Sec.14 order passed by the Ld. Section 14 order dated 29.12.2021 in Crl.M.P. No.151/2021 passed by CJM, Villupuram 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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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.

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Consequent to classification of account as NPA has 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 10.09.2017 and S.13[4] possession notice dated 20.02.2018 are held as valid notices issued under the Act. The applicant has failed to make out a case for interference of this Tribunal in the S.14 order dated 29.12.2021 passed by Ld. CJM, Villupuram in Crl.M.P.No.151/2021.

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For the foregoing reasons, the present SA is dismissed. Interim Order

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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 (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 19^th day of September, 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.	Letter of Demand by Respondent to applicant dated 14.12.2021.	A-1
2.	Letter by Respondent to applicant Regarding OTS-RI-SAMADAN SCHEME-2021-2022.	A-2
3.	English Translation-Letter by Respondent to Applicant Regarding OTS-RI-SAMADAN SCHEME-2021-2022.	A-3
4.	Sale Notice dated 18.12.2021.	A-4
5.	Application copy filed before CJM, Villupuram dated 08.04.2021.	A-5
6.	Forged Acknowledgement cards used by respondent before CJM, Villupuram.	A-6
7.	Documents produced before CJM, Villupuram.	A-7
8.	Statements of Account filed by respondent before CJM, Villupuram.	A-8
9.	Impugned order passed by CJM, Villupuram dated 29.12.2021.	A-9
10.	Notice issued by the advocate commissioner dated 01.02.2022.	A-10

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl.	Description of Documents	Documents
No.		No.
1.	Notice under section 13(2) by respondent to applicant dated 10.09.2017.	R-1
2.	Unserved returned cover for section 13(2) notice.	R-2

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3.	Substituted service of Notice through paper publication by respondent dated 07.11.2017.	R-3
4.	Possession Notice issued under section 13(4) by respondent to applicant dated 20.02.2018.	R-4
5.	Unserved returned cover for section 13(4) notice.	R-5
6.	Paper publication possession notice of section 13(4) in English and Vernacular issued by respondent dated 27.02.2018.	R-6
7.	Photograph showing the possession notice affixed on the property.	R-7
8.	E-auction sale notice issued by respondent dated 18.12.2021.	R-8
9.	Sale Notice returned by applicant.	R-9
10.	Notice published in newspaper publication in English and Vernacular by Respondent dated 18.12.2021.	R-10
11.	Photograph affixing the auction sale notice on the property.	R-11
12.	Sale confirmation by Respondent dated 20.01.2022.	R-12
13.	Sale Certificate dated 09.02.2022.	R-13
14.	Respondent Letter to Applicant informing sale of property and to receive the balance sale consideration dated 19.02.2022.	R-14
15.	Order passed by Chief Judicial Magistrate, Villupuram in CMP.No.151/2021 dated 29.12.2021.	R-15

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INDEX TO CITATION FILED BY THE RESPONDENT

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Sl.	Description of Documents	Documents
No.		No.
1.	Judgment of the Hon’ble High Court of Bombay	A-1
	inPhoenix ARC Pvt. Ltd. –Vs- State of
	Maharashtradated 03.08.2022.

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SCHEDULE OF PROPERTY

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All that piece and parcel of land Building at Villupuram R.D. Villupuram Joint II, R.D. Poonthottam Village, Koliyanur Panchayat Union Limits, Villupuram Taluk, and District Comprised in Survey No.238/3B1, Plot No.2, with the Extent of 1508 sq.ft., Bounded on the

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East by : 20 Feet width Road, West by : Property of Selvaraj,

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South by : Property of Seethapathi, North by : Plot No.2 belongs to Poongavanam.

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Shri. K. Sivakumar S/o. Shri. R. Kaliaperumal are the owners of the property. Together with land buildings and all other appurtenances.

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