Dismissed

1.M/s. Gowri Fabricators v. Punjab National Bank

DRT9 Dec 2025SA/686/2023

Case brief

AI extract

What is this about?

This Securitization Application challenged the sale of mortgaged properties by the respondent bank under the SARFAESI Act. The Tribunal examined compliance with statutory notices, classification of the loan as NPA, and the right of redemption. Finding all procedures followed and the right to redemption extinguished upon notice publication, the Tribunal held the sale valid and dismissed the applica

What did the court decide?

The Securitization Application was dismissed, affirming the validity of the demand notice, possession notice, and the sale held on 15.09.2023.

1.M/s. Gowri Fabricators versus Punjab National Bank — Contract and Commercial Disputes | DRT (2025)

SA No.686/2023

09.12.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

¶5

Dated this the 09^th day of December, 2025

¶6

Present: SMT. S.V. GOWRAMMA Presiding Officer

¶7

SA No. 686 of 2023

¶8

M/s. Gowri Fabricators Rep. by its Proprietor Mr. R. Venkatesan, No.1A, Kamarajapuram, 10^th Street, TASS Industrial Estate, Ambattur,

¶9

Chennai – 600 098.

¶10

Mr. R. Venkatesan, Proprietor of M/s. Gowri Fabricators, Son of Ramachandran, Door No.10, Old No.36/2, Mettu Street, Periyakuppam, Tiruvallur – 602 001. …Applicant

¶11

-Vs-

¶12

The Authorised Officer, Punjab National Bank, Circle Sastra Centre, Chennai, Second Floor, Spencer Plaza, 769 Chennai – 600 002.

¶13

…Defendant

¶14

Counsels on record / appeared: Counsel for Applicant : Mr. M. Murali Counsel for Respondent : Mr. Rahul Jain

SA No.686/2023

09.12.2025

ORDER ON SA 686 /2023

¶19

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].

¶20

The applicant has challenged the e-auction sale held on 15.09.2023 pursuant to the Sale notice dated 29.08.2023 and the outstanding amount due as per Sale notice is Rs.72,31,048.41/-

¶21

3. Pleadings of the applicant:

¶22

3.1 The first applicant M/s. Gowri Fabricators is the proprietorship concern represented by its proprietor 2^nd applicant Mr. R. Venkatesan. The applicants have availed a cash credit hypothecation facility from the respondent bank for a tune of Rs.40,00,000/- on 25.10.2011 and further availed WCTL facility for a sum of Rs.10,00,000/-.

¶23

3.2 The respondent bank has filed an application before the Debts Recovery Tribunal – III in O.A.No.567 of 2018 to recover an amount of Rs.50,60,729. Further the respondent bank has issued Sale Notice dated 29.08.2023 and also conducted the sale on 15.09.2023. The respondent bank has failed to issue Demand Notice, Possession Notice and proceeded to issue Sale notice dated 29.08.2023.

SA No.686/2023

09.12.2025

3.3 The respondent bank has charged heavy interest which is in violation of agreed rate of interest and the total outstanding due mentioned in the sale notice is more than the actual amount due. The respondent bank has issued the sale notice dated 29.08.2023 without giving opportunity to the applicants and in spite of repeated requests made by the applicants.

¶28

3.4 It is submitted that the applicants have paid an amount of Rs.4,02,579/- to Account No.298000JH00033643 and Rs.24,29,100/- was paid to Account No.2980008700000417 and Rs.28,31,679/- which were not considered by the respondent bank and the schedule property is a dwelling house.

¶29

3.5 In the grounds, it is contended that the Section 13(2) Demand Notice and Section 13(4) Possession Notice is not served to borrower, guarantors and the same is also not issued by the Authorized officer. The respondent bank failed to give credit to the payments made by the applicant and the outstanding amount due as claimed by the respondent bank is incorrect.

¶30

3.6 The respondent bank has issued Sale notice dated 29.08.2023 without complying Rule 8(6) of the SIE Rules. The Possession Notice is not published in two Newspapers and also failed to affix the notice in the conspicuous part of the property. The description of the property is not clearly mentioned in the Possession Notice and the mortgaged property is not property stamped under Indian Stamp and Registration Act.

SA No.686/2023

09.12.2025

3.7 Further the respondent bank has not classified the loan account as NPA as per the RBI guidelines and Section 2(o) of the Act. Therefore, the respondent bank has issued Sale Notice dated 29.08.2023 without complying legal procedures as mandated under the Act and Rules, hence the sale notice dated 29.08.2023 is null and prays to set aside the impugned Sale notice.

¶35

4. Objections of the respondent bank:

¶36

4.1 The respondent bank has filed a detailed counter, inter alia contending that the applicants had availed a cash credit facility of Rs.40.00 lakhs and Term Loan of Rs.10.00 lakhs from the respondent bank and defaulted in the repayments which is in violation of the terms and conditions agreed in the sanction letter. Hence the loan account of the applicants has been classified as NPA on 31.12.2015.

¶37

4.2 Subsequently, after classifying the loan accounts as NPA, the respondent bank has proceeded further and issued Section 13(2) Demand Notice dated 24.06.2016 by calling upon the borrowers to repay an amount of Rs.50,62,713/-. Further, the respondent bank has issued Section 13(4) Possession Notice dated 28.06.2018 and also affixed on the conspicuous part of the property as per Rule 8(1) and (2) of the SIE Rules. The Possession Notice is also published in two Newspapers, one in “The New Indian Express” (English) and another in “Dinamani” (Tamil) both dated on 02.07.2018.

SA No.686/2023

09.12.2025

4.3 The applicants have approached the respondent bank and requested for One time settlement for Rs.36.00 lakhs vide letter dated 19.04.2023 which was agreed by the respondent bank and the same has to be paid on or before 25.06.2023. Further, the applicants have failed to comply with the OTS agreement and respondent bank vide letter dated 12.09.2023 submitted that OTS proposal was vacated and the payments were adjusted to the loan account.

¶42

4.4 The respondent bank has obtained an valuation report from an approved valuator to fix the reserve price for sale of the property. In spite of receipt of the statutory notices and opportunities given by the respondent bank, applicants did not come forward to settle the entire due amount and the respondent bank has issued Sale notice dated 03.08.2023 fixing the sale to be held on 22.08.2023 which does not materialize for want of bidders.

¶43

4.5 Further the respondent bank has issued 2^nd Sale notice dated 29.08.2023 fixing the property to be sold on 15.09.2023 which has been sold to the successful bidder, Mr. Delli babu and he also paid the entire sale consideration of Rs.47,92,000/-. The respondent bank has also issued sale certificate and the schedule property is also registered in favor of the auction purchaser.

¶44

4.6 It is submitted by the respondent bank that the respondent bank has classified the loan account as NPA on 31.12.2015 as per the RBI guidelines and issued Section 13(2) Demand notice dated 24.06.2016 by

SA No.686/2023

09.12.2025

complying all the procedures as contemplated under the SARFAESI Act. Further, the Section 13(4) Possession notice dated 28.06.2018 is also issued to the applicants and symbolic possession of the property was taken by affixing Possession notice in conspicuous place of the property on 28.06.2018. In fact, the Possession Notice is also duly published in two Newspapers as mandated under the Act and Rules made there under.

¶49

4.7 The respondent bank has issued 1^st sale notice dated 03.08.2023 which does not materialize for want of bidder and issued 2^nd sale notice dated 29.08.2023 fixing the sale to be held on 15.09.2023 which was duly published in two Newspapers and affixed on conspicuous place of the property in accordance with the law. Further the payments made by the applicants were duly given credit to their loan account and the mortgage deed has been registered and duly stamped as per the Indian Stamp Act and Registration Act.

¶50

4.8 Further the applicants have failed to comply with the terms and conditions of the OTS agreement and the same stood vacated. Though, the schedule property was successfully sold to the highest bidder Mr. Delli babu and he also paid the entire sale consideration amount. Hence the respondent bank has a secured creditor has duly followed all the provisions of the Act and prays for dismissal of the present SA with exemplary costs.

¶51

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

SA No.686/2023

09.12.2025

5.1 It is discernible of the records that the applicants have availed a Cash credit facility of Rs.40,00,000/- and Term Loan of Rs.10,00,000/from the respondent bank which is not disputed by the applicants herein. In fact, the applicant has executed various loan documents as security towards the repayment which is also not disputed by the applicants.

¶56

5.2 The first contention raised is that the officer is not authorized to initiate measures under the SARFAESI Act. On perusal of the Demand Notice, Possession Notice, Sale notices it is seen that the notices are issued by the Authorized officer along with the seal of the respondent bank as secured creditor and seal of the Authorized officer are affixed. As per the Rule 2(a) of the SIE Rules

¶57

(a) “authorized officer” means an officer not less than a chief manager of a public sector bank or equivalent, as specified by the Board of Directors or Board of Trustees of the secured creditor or any other person or authority or affairs of the secured creditor, as the case may be, to exercise the rights of a secured creditor under the [Act].

¶58

5.3 Hence the seal of the Authorized officer is an officer of the bank who exercises the power of superintendent and controls the business of the secured creditor, the contention that he is not a Authorized officer would not stand as per the Rule 2(a) of the SIE Rules. Even otherwise the applicants after receipt of the Section 13(2) Demand Notice did not raise any contention before the respondent bank about the officer being an

SA No.686/2023

09.12.2025

Authorized officer under SARFAESI Act. As per the board resolution, the Chief Manager has been appointed as the Authorized officer to exercise the rights under the SARFAESI Act.

¶63

5.4 Second contention taken by the applicants is that the debt is not a secured debt, the Tribunal places relies on the definition of secured debt under Section 2 (ze) of the SARFAESI Act which states that;

¶64

Section 2(ze):

¶65

“secured debt” means a debt which is secured by any security interest .

¶66

Admittedly, the applicants have availed the loan by mortgaging the property which forms a secured asset under Section 2(ze). Thus, the contention of the applicants that the debt is not secured debt does not hold and fails.

¶67

5.5 The further contention of the applicants is that pending conclusion in OA No.567 of 2018 and under SARFAESI Act, respondent bank is entitled to invoke the jurisdiction of the Tribunal under Section 13(10) of the Act and not under the provisions of RDB Act. As per the Section 13(10) of the Act,

¶68

Section 13(10): Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secure assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery Tribunal having jurisdiction or a competent court, as the case may be, for recovery of the balance amount from the borrower.

SA No.686/2023

09.12.2025

5.6 The secured creditor has to file an Original Application for the balance outstanding amount due after appropriating the sale considerations out of the sale of the mortgaged property. In the instant matter the respondent bank has filed an OA No.567 of 2018 in the year 2018 and the measures initiated by the respondent bank in the year 2016 as per the Demand Notice dated 24.06.2016 which is prior to the measures initiated under the SARFAESI Act.

¶73

5.7 In this regard, it is imperative to note that the SARFAESI Act is seen as an additional, complementary remedy to the DRT Act, not an alternative one. As the remedies are complementary, the bank is not required to choose only one and can proceed with both simultaneously without withdrawing the other. Because the two acts provide complementary remedies, and the "doctrine of election" does not apply. The Hon’ble Apex Court in Transcore vs. Union of India has held that the SARFAESI Act is an additional remedy to the DRT Act, and there is no legal bar to invoking both at the same time.

¶74

5.8 Due to default in their scheduled repayment, the respondent bank has classified the loan account as NPA on 31.12.2015 as per the Section 2(o) of the Act and RBI guidelines. The classification of the loan accounts as NPA is not disputed by the applicants herein, further the respondent bank has proceeded further and issued Section 13(2) Demand Notice dated 24.06.2016. On perusal of the Demand Notice produced by the respondent bank at Page No.1 of respondent’s typed set, clearly reflects

SA No.686/2023

09.12.2025

the; details of the borrower, amount due in the loan account, date of classification of loan accounts as NPA, description of the scheduled property.

¶79

5.9 The Demand Notice dated 24.06.2016 is duly served to the applicants as per the Acknowledgement card and postal tracking reports produced at Page No.4 to 6 of respondent’s typed set. Even after the receipt of the Demand notice, applicants failed to discharge their entire liabilities within 60 days nor made any representation.

¶80

5.10 Further, the respondent bank has initiated measures and issued Section 13(4) Possession Notice dated 28.06.2018. It is pertinent to note that the applicants have raised a contention that the Possession notice is not served is barred by limitation, as the contention with regard to the Possession Notice dated 28.06.2018 is not challenged within the period of 45 days. Hence the contention raised by the applicant that the Possession notice is not served cannot sustainable.

¶81

5.11 The Possession Notice is also duly published in two Newspapers, one in “New Indian Express” (English) and another in “Dinamani” (Tamil) both dated on 02.07.2018 as evident from the paper publications produced at Page No.11 and 12 of respondent’s counter. The applicants even after the receipt of the statutory notices have failed to discharge their entire liabilities nor made any representation. Hence, the respondent bank has proceeded further and obtained a valuation report from an approved valuator for fixation of reserve price for the property, and

SA No.686/2023

09.12.2025

issued 1^st Sale notice dated 03.08.2023 fixing the sale to be held on 22.08.2023 which did not materialize for want of bidders.

¶86

5.12 On perusal of the records, it is seen in the written arguments filed by the applicants have produced a valuation report dated 17.07.2025 which is consequent to the sale held on 15.09.2023. Further the respondent bank has obtained a valuation report from an approved valuer before conducting the sale as per the Rule 8(5) of the SIE Rules. Though the applicants have obtained the valuation report on 17.07.2025 even after the sale was conducted on 15.09.2023 has failed to establish undervaluation of the property. Hence the contention that the respondent bank has under valued the property does not sustain.

¶87

5.13 Subsequently, the respondent bank has proceeded further and issued 2^nd sale notice dated 29.08.2023 scheduling the property to be sold on 15.09.2023. The Sale notice was duly served to the applicant Mr. R. Venkatesan who is also the proprietor for M/s. Gowri Fabricators, as evident from the acknowledgement card produced at Page No.17 of respondent’s counter. Further the Sale notice is also duly affixed on the conspicuous part of the property as reflected from the photograph of affixture produced at Page No.20 and 21 of respondent’s counter. The sale notice is also published in two Newspapers, one in “The New Indian Express” (English) and another in “Dinamani” (Tamil) both dated on 31.08.2023 as evident from the paper publications produced at Page No.22 and 23 of their typed set.

SA No.686/2023

09.12.2025

5.14 It is pertinent to note that the scheduled property was successfully sold to Mr. Delli Babu who is the highest bidder and also paid the entire sale consideration of Rs.47,92,000/- pursuant to the sale notice dated 29.08.2023.

¶92

5.15 The main contention as raised by the applicants is that the statutory notices were not been issued by the respondent bank before issuing the E-Auction notice is duly countered by the respondent bank, though the Demand notice dated 24.06.2016 is received by the applicants as per the Acknowledgement card and postal tracking reports produced by the respondent bank at Page No.4 to 6 of their counter.

¶93

5.16 The Possession Notice dated 28.06.2018 is duly published in two Newspapers, one in “The New Indian Express” (English) and another in “Dinamani” (Tamil) both dated on 02.07.2018 which is evident from the paper publications produced at Page No.11 and 12 of respondent’s counter. It is pertinent to note that the applicants have failed to challenge the Possession notice within the period of 45 days, hence the contention raised by the applicants that the Possession notice is not served by the respondent bank is barred by limitation and does not sustain.

¶94

5.17 A specific contention as raised by the applicants is that the respondent bank has not considered their request of OTS proposal is not sustainable as the respondent bank has granted an OTS for sum of Rs.36,00,000/- as evident from the OTS sanction letter produced at Page No.24 and 25 of respondent’s counter which is duly signed and received

SA No.686/2023

09.12.2025

by the applicant herein. However, the applicants have failed to comply with the terms and conditions of the OTS agreement and the same was cancelled by the respondent bank vide cancellation of OTS letter dated 12.09.2023 and the same is produced at Page No.26 of respondent’s counter. Therefore, the contention as raised by the applicant that the respondent bank failed to consider their OTS proposal is not sustainable.

¶99

5.18 It is pertinent to mention that the Applicants had lost their right of redemption as per Section 13(8) of the Act. In this regard this Tribunal places reliance on the judgment of t he Hon’ble Supreme Court in case titled “Celir LLP versus Bafna Motors (Mumbai) (P) Ltd.” considered the right of redemption under S.13(8) after the amendment has held that borrower's right of redemption of mortgage under the SARFAESI Act will get extinguished once the bank publishes an auction notice for the sale of the secured asset and further held that the failure on

¶100

the part of the borrower in tendering the entire dues before the publication of the auction notice as per Section 13(8) of the SARFAESI Act constituted an "extinguishment of right of redemption of mortgage.

¶101

5.19 Though the applicant has challenged the sale held on 15.09.2023 pursuant to the sale notice dated 29.08.2023 has not made out a case for interference of Sale notice dated 29.08.2023 and sale held on 15.09.2023 and the issuance of Sale confirmation to the Auction purchaser. On the other hand the respondent bank has established the due compliance of measures taken under the SARFAESI Act.

SA No.686/2023

09.12.2025

5.20 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. After classifying the loan account as NPA has issued Section 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.

¶106

5.21 Thus, it is held that Section 13[2] Demand notice dated 24.06.2016 and Section 13[4] Possession notice dated 28.06.2018 and the sale notice dated 29.08.2023; sale held on 15.09.2023 in favor of Mr. Delli Babu are in accordance with the procedures as required under the Act and Rules made there under and same are held as valid measures and held as valid notices issued under the Act.

¶107

Resultantly the present SA is dismissed. The respondent bank is at liberty to issue the Sale Certificate and register the same if not issued so far in accordance with law. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

¶108

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

¶109

(Dictated to Steno (Mogesh), transcribed by him, corrected, signed and pronounced by me on this the 09^th day of December, 2025)

SA No.686/2023

09.12.2025

ANNEXURES

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

¶115

Sl.	Description of Documents	Document
No.		No.
1.	Application filed under Section 17(1) of securitization and reconstruction of financial assets and enforcement of security interest act, 2002 dated 17.10.2023	A-1
2.	E-Auction sale notice dated 29.08.2023	A-2
3.	Statement of accounts	A-3

¶116

LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

¶117

Sl. No.	Description of Documents	Document No.
1.	Demand Notice under Section 13(2) of the Sarfaesi Act issued by the Respondent to the Applicants dated 24.06.2016.	R-1
2.	Postal receipts and Acknowledgment card issued by the Postal Authority	R-2
3.	Online Track consignments issued by the Postal Authority	R-3
4.	Possession Notice issued by the Respondent to the Applicants dated 28.06.2018	R-4
5.	Publication of the Possession Notice dated 02.07.2018	R-5
6.	Sale Notice issued by the Respondent to the Applicants dated 29.08.2023	R-6
7.	Postal receipts and Acknowledgment card issued by the Postal Authority	R-7
8.	Affixture of the Sale Notice by the Respondent dated 29.08.2023	R-8
9.	Publication of the Sale Notice by the Respondent dated 31.08.2023	R-9
10.	OTS Request letter issued by the Respondent to the Applicants dated 19.04.2023	R-10
11.	OTS Sanction letter issued by the Respondent to the Applicants dated 28.04.2023	R-11
12.	Cancellation OTS letter issued by the Respondent to the Applicants dated 12.09.2023	R-12
13.	Letter of Confirmation of Sale issued by the Respondent to the Auction Purchaser dated 22.09.2023	R-13
14.	Statement of Account	R-14

SA No.686/2023

09.12.2025

SCHEDULE OF PROPERTY

¶122

All that piece and parcel of land and building bearing plot No.4 Door No.1A, Kamarajapuram, 10^th Street, TASS Industrial Estate, Ambattur Chennai, 600 098, comprising Survey No.157 as per patta, T S No.26, Block No.31, Ambattur Village land measuring an extent of 1308 sq.ft as per deed (1184 sq.ft as per physical measurement) together with building thereon and bounded on the

¶123

North by: Plot No.5,

¶124

South by: Vacant Land,

¶125

East by: 30 ft wide road,

¶126

West by: Vacant land.

¶127

Lying within the Registration District of Chennai North, Sub Registration District of Ambattur.

¶128

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

1.M/s. Gowri Fabricators v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

1.M/s. Gowri Fabricators v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

State Bank of India versus Ayyathurai Naidu

Yes Bank versus Arun Kumar Nath

Canara Bank versus M/s Raaya Leather Exporters

Bank of Baroda versus Rathinavel Kanthasamy

Durga Catering Service Rep by Venkatakrishnan versus Fullerton India Credit Company

Canara Bank versus Moorthy