Dismissed

M S Vijay Timbers and Saw Mill and Others v. Karur Vysya Bank

DRT25 Mar 2025SA/647/2023

Case brief

AI extract

What is this about?

In this securitization application challenging enforcement measures under the SARFAESI Act, the DRT observed that the bank duly followed statutory procedures for NPA classification, notices, valuation, and auction posting. Finding the applicant failed to rebut compliance or prove under-valuation, the court dismissed the application as infructuous pending auctions.

What did the court decide?

Application dismissed as infructuous. Interim order, if any, vacated. No order as to costs.

M S Vijay Timbers and Saw Mill and Others versus Karur… — Execution and Attachment | DRT (2025)

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SA No. 647 of 2023

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25.03.2025

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IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 25^th day of March 2025

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Present: SMT. S.V. GOWRAMMA

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Presiding Officer

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SARFAESI APPLICATION No.647 of 2023

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M/s VijayTimbers and Saw mill

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Rep by its Prop. Mr. T. Vijayakumar No. 66, Erukum Street, Arani Village, Ponneri Thiruvallur – 600 052.

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Also at

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D.No. 1/1083 A Gandhi Nagar, Thriuvallur High Road Redhills Chennai 600 052

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Mr. T. Vijayakumar S/o Mr. K. Thiruthavadoss

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Mrs. V. Poornachandrika W/o M.V. Radhkrishnan

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2 and 3 residing at Old No.53/3, New No.36/3, Vinobha Street, (34^th Street) G.K.M. Colony, Chennai – 600 082. ….Apellants

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-Vs-

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Asset Recovery Branch Karur Vysya Bank Ltd No.1, Padmavathiyar Road, 2^nd Floor, (Off Peters Road) Gopalapuram, Chennai – 600 086.

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Karur Vysya Bank Ltd Redhills Branch GNT Road, Redhills, Chennai 600 052. ….Respondents

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SA No. 647 of 2023

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25.03.2025

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Counsels on record / appeared:

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Counsel for Applicant : M/s G. Sudhakar Counsel for Respondent : M/s A. Ilangovan

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ORDER

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The present Securitization Application [SA] is filed on 01.11.2023 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].

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The case of applicant as putforth in the S.A. is that the applicant is running a timber business in the name and style of M/s. “Vijay Timbers and Saw Mill” and the second applicant Mrs. V. Poornachandrika is sister of the first applicant

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The first applicant approached the bank and availed Over Draft facility of a amount of Rs.17,00,000/- and also a top up loan of Rs.1,89,000/- and paid huge amount towards processing charges and documental charges. As primary security the Respondent Bank had sought for the Personal Guarantees of the 3^rd appellant, and the 1^st appellant had mortgaged his property as collateral security towards the credit facilities

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In fact the bank had regularly benefitted by the loan accounts sanctioned to the applicant and issued huge interest running to lakhs of Rupees was paid. The applicant never had the intentions to default in the

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SA No. 647 of 2023

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25.03.2025

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repayment and not adequate opportunity and time was given to the applicant.

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Applicant contends that he has paid a sum of Rs.20,00,000/- as loan instalments by way of cash and the bank has not given proper credit to the cash payment. Due to Covid-19 applicant could not repay the interest and repayments regularly, however the bank has classified the account as NPA (Non-Performing Asset) The applicant made a payment of Rs.18,68,910/but the bank allegedly projected Rs.21,41,070/- as outstanding. Though the applicant has requested for further time to settle and regularise the account, the bank did not cooperated to the request, hence applicant wrote a letter dated 09.10.2023 requesting some time to settle the liabilities. Then the applicant received the notice for sale notice dated 04.11.2023 for the sale of the Mortgaged property by affixing the E-Auction sale to be held on 14.12.2023.

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It is contended that the bank has hurriedly issued the impugned sale notice dated 04.11.2023 for the recovery of Rs.21,41,070/- due as on 14.12.2023, the property is worth more than Rupees Eighty Lakhs and bank have put in sale without any proper valuation and undervalued the property. The bank is not justified to sell the property, as the applicant is bonafidely making repayments to the extend possible. It is alleged that the bank has not followed the procedures under Section 8(6) of the Security

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SA No. 647 of 2023

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25.03.2025

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Interest (Enforcement) Rules, 2002 no paper publication have been effected, the prescribed limitations for 13(2) and 13(4) notices have breached.

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On the grounds it is contended that the mortgage is not registered in the central registry, hence there is no security interest created, the bank have not issued proper due statements of account to the applicant. The property is worth about Rs.80 lakhs and the bank without obtaining any proper valuation have proceeded to auction of the property with under valuation and no compliance with the formalities under Section 17 of the Securitisation Act and under Section 19(25) of the DRT Act, 1993‟. Hence on these grounds applicant prays to set aside the E-Auction sale notice dated 04.11.2023 and fixing the sale on 14.12.2023.

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The Respondent bank has filed a detailed counter inter alia contending that the applicants M/s.Vijay Timbers Rep by its Prop. Mr. T. Vijayakumar as borrower Mr. T. Vijayakumar, proprietor of M/s. Vijay Timbers and Saw mill as Guarantor / Mortgagor and Mrs. V. Poornachandrika as Mortgagor/Guarantor had availed SOD/RENEWAL CUM ENHANCEMENT under TIMBER PLUS loan of Rs.17,00,000/- to meet out the working capital requirements vide loa A/c. No.1664280000000123 on

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02.06.2014 and WC TL/GECL – MSME loan of Rs.3,40,000/- vide Loan A/c. No.1664808000000085 on 14.09.2020 from the 2^nd respondent.

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The borrowers agreed to repay the said amount with interest at 14.25% per annum compounding on monthly basis and 8.20% per annum, compounded monthly at rests in 48 equated monthly instalments. Further to the loan documents applicants 2 & 3 had executed a Memorandum of Deposit of Title Deeds dated 02.06.2014 in Doc. No.26269/2014 and M.O.D.T deeds for registration for additional loan of Rs.3,40,000/- dated 18.09.2020 as security towards the credit facility. Due to the default in the repayment, the account was classified as NPA on 28.02.2023, however the Borrower and Guarantors failed and ignored to regularize the account or to repay the dues.

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Hence the bank has initiated the action under SARFAESI Act, and issued Demand Notice dated 03.04.2023 u/s 13(2) of the SARFAESI Act. Which was duly served on the borrower and guarantors as per the Acknowledgement Cards produced by the bank. Despite the knowledge of statutory notices, being fully aware of the consequences and statutory obligation, applicants failed to discharge their liability within the statutory period and issued the section 13(4) notice, and had taken symbolic

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SA No. 647 of 2023

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25.03.2025

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possession of the property on 19.09.2023 and served the Possession Notice by affixing the notice on secured asset on 19.09.2021

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The Possession Notice is sent through the Registered Post which is received by the applicants and Possession Notice is also effected in English Daily “Business standard and Tamil Daily “Dhinakaran” on 23.09.2023

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The bank had obtained valuation report from the approved valuer on 25.07.2023 and the reserve price was fixed in due compliance of Rule 8(5) of the Security Interest Rules 2002, and also issued an E-Auction Sale notice dated 04.11.2023 fixing the sale on the 14.12.2023

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The E-Auction Sale notice is duly served on the applicants, the Acknowledgement cards are produced as proof of service, E-Auction Sale notice dated 04.11.2023 was also affixed on the conspicuous places of the Property and have produced the photograph as the proof of affixture. Besides that the said E-Auction sale notice dated 04.11.2023 was duly published in the English Newspaper “Business Standard” and in the Tamil Daily “Dhinakaran” on 07.11.2023 and the issuance of the sale notice is challenged in the present S.A.

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SA No. 647 of 2023

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However the Sale scheduled on 14.12.2023 did not take place for want of bidders and the applicant complied with the interim order passed by this Hon‟ble Tribunal.

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The Respondent bank have countered all the contentions as raised in the para No.5.1 to 5.19 and the grounds as raised in the S.A. as the bank has followed all the procedures under the SARFAESI Act, prays for dismissal of the S.A.

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Heard the Learned Counsels appearing for the respective parties and perused the records of the case.

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It is manifested from the records and also an admitted fact the

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applicant M.S. Vijay Timbers and Saw Mill, have availed the credit facility, it is seen that the applicant had availed the following loan amounts.

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Sl.No.	Nature of facility	Date of Loan	Amount (in Rs.)
1.	SOD Under Timber plus	26.12.2013	Rs.8,00,000.00
2.	SOD (RE) Lastly Renewed on 13.06.2022	02.06.2014	Rs.17,00,000.00
	GECL	17.09.2020	Rs.3,40,000.00
		Total	Rs.20,40,000.00

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The contentions of the Applicant that the mortgage created by them is

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not duly registered is countered by the Respondent bank by producing the

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MODT, there are two title deeds dated 20.05.2014, further the contentions of the applicant that the bank has not registered the mortgage in the central registry, hence bank does not proceeded under the SARFAESI Act is countered by the respondent bank by producing the CERSAI report at page No.34. The CERSAI report dated 26.07.2014 clearly reflects that the mortgage created by the applicants have been duly registered, as per Section 26 D of the SARFAESI Act hence the contentions of the applicant that the mortgage is not registered in the central registry fails.

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Thus the Mortgage created by the applicants by deposit of title deeds as collateral security towards the cash credit facilities availed is duly registered in the office of the Sub Registrar constitute security asset in that, additionally the mortgage created is also registered before the Central Registry, which is a security interest and security asset favouring the respondent bank. Hence the contentions of the applicant, that there is no security interest created and the same is not registered before the Central Registry fails. The bank as secured creditor has enforced the security available to them under section 26 D of the SARFAESI Act.

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The Applicants defaulted in the repayments resulting in the classification of the account as NPA on 28.02.2023 and in spite of the irregularities the applicants did not come and pay the outstanding due

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amount nor regularized the account, hence the bank has issued Section 13(2) Demand Notice dated 03.04.2023. The copy of Section 13(2) Demand Notice is produced at page No.35 clearly reflects the credit facilities availed; creation of the mortgage and the outstanding amount due to the respondent bank. Further it is also seen in the Section 13(2) Demand Notice that date of classification of account as NPA is clearly mentioned. The applicant are also put to notice on Sub-Section (8) of Section 13 giving them a opportunity to redeem the property and also intimated about the restriction in dealing with the property, without any prior consent as per Sec. 13(13) of the SARFAESI Act.

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The Section 13(2) Demand Notice which is duly sent by RPAD, acknowledgement cards produced by the bank at page No.39 and 40, evidence the receipt of the Section 13(2) notice of the applicant here in. As the applicants did not liquidate the liability within a period of 60 days nor raised any objections to the demand made, bank has proceeded and issued a Section 13(4) Possession Notice dated 19.09.2023 which is also sent by RPAD and the Acknowledgement cards are also produced at page No.43. The bank has issued Section 13(4) Possession Notice as per the procedure, and has affixed the possession notice on the property and photograph of affixture is also produced by the bank at page No.44. Further the publication of Section 13(4) notice in the Two Newspapers one in Daily English “Business Standard” and in Tamil Daily “Dhinakaran” is also

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produced. Thus the respondent bank have established the due compliance of the measures taken after the classifying the account as NPA and the issuance of the statutory notices as required under the Act.

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As the Applicant, Borrower and the Guarantor did not liquidate the liable in spite of services of the notices, bank has proceeded further in putting property to auction and have obtained valuation report from the valuer which is produced in the page No.47 to 54

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Hence the contentions of the applicant that the bank has put the property to sale without obtaining valuation report is not sustained, on the other hand the contentions of the applicant that the property is worth more than Rs.75 lakhs and the bank has under valued the property and not obtained valuation report is countered by the respondent bank by producing valuation report where in, it reflects that the valuator has considered all the aspects in sustaining and in filing the property. Per contra the applicant has not produced any independent valuation report to counter the valuation of the respondent bank and the stay allowance is not supported by any documents, hence the allegations with property sold under valued is sustained.

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The bank has issued the sale notice and have sent the same by RPAD which is duly served as per Acknowledgement cards at page No.61 and photo of affixture of sale notice produced at page No.62 and 63. In

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compliance of the measures the bank has published the sale notice on the two Newspapers, in English daily “Business Standard” and Tamil Daily “Dhinakaran” and have issued the same to the applicants.

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It is seen that the bank have followed all the prescribed procedures and have initiated the measures in due compliance of procedure the Acts and Rules made their under along with the supporting documents as required under, on the other hand applicant has failed to make out a case to set aside the Sale notice dated 07.11.2023, however the sale did not materialize. The prayers sought for the present S.A. is rendered as infructuous and accordingly S.A. stands dismissed as infructuous.

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Interim order granted if any, stands vacated. Pending IAs if any, are disposed of in terms of this order. No order as to costs.

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

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(Dictated to Mogesh, transcribed by her, corrected, signed and pronounced by me in Open Court, on this the 25^th day of March, 2025)

M S Vijay Timbers and Saw Mill and Others v. Karur Vysya Bank

Case brief

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M S Vijay Timbers and Saw Mill and Others v. Karur Vysya Bank

Case brief

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