Dismissed

Aalayaams Agro Foods LLP v. Indian Bank

DRT5 Aug 2025SA/777/2024

Case brief

AI extract

What is this about?

The Tribunal dismissed the applicant LLP's application challenging a Section 14 order. The court held that the applicant lacked standing as it was a borrower, not the mortgagor, and found the bank had properly exhausted pre-recourse notices under Sections 13(2) and 13(4). The Section 14 order was upheld as ministerial and non-adjudicatory.

What did the court decide?

The Securitization Application stands dismissed; the Section 14 Order dated 19.10.2024 is upheld.

Aalayaams Agro Foods LLP versus Indian Bank — Company and Corporate | DRT (2025)

SA No.777/2024

05.08.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

¶5

Dated this the 5^th day of August, 2025

¶6

Present: SMT. S.V. GOWRAMMA Presiding Officer

¶7

SA No. 777 of 2024

¶8

M/s. Aalayaams Agro Foods LLP Represented by its Partner Mr.M.Murali No.6/118B, Mettupalayam Road, Banaveduthottam, Poonamalle Post, Chennai – 600 056. ….Applicant -Vs-

¶9

The Authorised Officer M/s. Indian Bank SAM Branch

¶10

Egmore, Chennai – 600 008. ….Respondent

¶11

Counsels on record / appeared:

¶12

Counsel for Applicant : M/s. S. Vignesh Counsel for respondent : M/s. M. Balachandar Associates

¶13

ORDER ON SA 777/2024

¶14

The present Securitization Application [SA] is filed on 08.11.2024 under sub section [1] of S.17 of the Securitization And Reconstruction of

¶15

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].

¶16

The applicant has challenged the S.14 Order dated 19.10.2024 in Crl.M.P. No.9551 of 2024 passed by Chief Judicial Magistrate, Tiruvallur and the outstanding amount due as per Sec.14 order is Rs.2,57,45,359/-

SA No.777/2024

05.08.2025

Pleadings of the applicant:

¶21

The applicant is LLP partnership firm involved in the business of manufacturing and distributing food and beverages, marketing its products under the name and style “Marudham”. In the year 2020, the applicant was sanctioned a credit facility of Rs.1.43 Crores in the nature of Working Capital, SME Term Loan-I, Term Loan-II and GECL Loan towards procurement of machineries and vehicle.

¶22

Though the applicant had sought for credit facility of Rs.6 crores along with the detailed project report, the respondent bank sanctioned only Rs.1.43 Crores citing it will step up the credit facility periodically. The credit facility was guaranteed by the mortgage of the property which was extended as security towards the credit facilities. It is contented by the applicant that they suffered loss in the business due to the payment of margin money towards construction and manufacturing Unit and GST amount towards the purchase of the machineries and the applicant was not having sufficient financial support to run the business effectively.

¶23

Further the respondent did not come forward to sanction further financial support, hence the applicant was unable to run the business resulting in the classification of the account as NPA, inspite of repeated request to extent additional facility. Hence the very classification of the account as NPA has been done mechanically and against the running the unit with a meagre 20 employees and any measure taken by the bank in lock and seal of the unit would cause loss.

SA No.777/2024

05.08.2025

The applicant came to know about the Order dated 19.10.2024 in Crl.M.P.No.9551/2024 when the advocate commissioner issued the notice on 05.11.2024 which was pasted on the property requesting the applicant to vacate the premises within 7 days from 05.11.2024 (i.e., on or before 11.11.2024) in executing the order.

¶28

It seen from the said order dated 19.10.2024 thought the respondent bank had issued the demand notice under Sec.13(2) is not served upon the Applicant/Borrower/Guarantors as contemplated and further have proceeded under the Act by issuing the Sec.13(4) notice.

¶29

It is specifically contented that the bank has not complied with the mandated under section 14(1) (b) and there is no mention of total aggregate amount due on the date of filing the Sec.14 application. Further the bank has not registered the security interest created in its favour with the Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI) under section 26D. Hence the bank cannot proceed under the Act.

¶30

Further the application filed by the authorized officer is denied and approval of the board as the authorized officer. Thus the Sec.14 application is allowed without proper application, hence the applicant prays to set aside the Sec.14 Order dated 19.10.2024 in Crl.M.P.No.9551/2024.

¶31

Objections of the respondent bank:

¶32

The respondent bank has filed detailed counter Inter alia contenting that the very SA filed by the applicant is not maintainable. It is the case of

SA No.777/2024

05.08.2025

the respondent that the applicant is a limited liability partnership firm whose partners are Mr. Murali, Mr. Sudhakar and Mr. Rajesh and the property which is mortgaged is owned by Mr. Munirathinam who has created the Memorandum of Deposit of Title Deeds dated 11.12.2020, registered as Document No.16634 of 2020, and a Supplemental Memorandum of Deposit of Title Deeds in favour of bank dated 24.12.2021, which is registered as Document No.24050 of 2021.

¶37

The Mortgager of the property Mr. Munirathinam is not the applicant, infact the applicant is a limited liability partnership firm which is not owner of the property, hence the applicant is not aggrieved and no order can be passed against the respondent bank and in respect of the property.

¶38

The S.A property has been sold by the bank in favour of Mr. Kanala Srinivasarao and a Sale Certificate dated 10.04.2024 has been executed, registered as Document No.8054 of 2024, SRO, Kundrathur.

¶39

Due to default in the repayment for a consecutive period of 90 days the account was declared as NPA.The bank issued Demand Notice on 01.11.2022 classifying the loan account as NPA on 30.10.2022, which is received by the applicant on 03.11.2022. As there was no reply or compliance was made by the applicant, the bank have issued the possession notice on 04.01.2023, affixed on the mortgaged property on 04.01.2023. The possession notice is also published in the New Indian Express and in Dinamani on 10.01.2023. Hence the bank had complied with the measures under 13(4). The property was brought for sale under

SA No.777/2024

05.08.2025

E-Auction on 28.06.2023 for reserve price of Rs.224.95 Lakh. However the sale failed and the property was again brought to sale on various dates viz 24.01.2024 and 22.02.2024 and notices sent to the borrower and guarantor were returned as “unclaimed” and the sale did not materialize for want of bidders.

¶44

The respondent has issued the sale notice dated 01.03.2024 and the notices returned “unclaimed” on 20.03.2024. The sale has been successfully held, the property was sold for Rs.225.45 Lakhs against the reserve price of Rs.224.95 Lakhs and the sale certificate is also issued on 10.04.2024 registered as Document No.8054 of 2024, SRO Kundrathur in favour of Mr. Kanala Srinivasarao. However the sale has also not been questioned by the applicant or by the mortgagor Mr. Munirathinam and hence sale has become final.

¶45

In fact the applicant admits the availing of the credit facility for amount of Rs.1.43 crores at para 5.2 and the mortgage favoring the respondent bank which is duly registered with the central registry 22.01.2021 and report is also filed.

¶46

The applicant is blaming the bank for not granting credit facility of Rs.6 crores but did not have any objection at time of sanction of the credit facility or after utilizing it and now cannot raise the contentions. The bank has classified account as NPA as per the RBI guidelines and have issued the Sec.13(2) demand notice and 13(4) possession notice and there is nothing illegal in obtaining the Sec.14 order.

SA No.777/2024

05.08.2025

The contention that sec.14 application is not filed by a person who is not the Authorized officer is denied and the respondent bank have produced the Authorization for Mrs. A. Manjula and the affidavit has been filed on behalf of the Respondent bank by her. The authorization letter issued by the respondent bank on 02.01.2024 in favour of Mrs. A. Manjula and also the authorized letter in Mrs. A.J. Shenbagavalli dated 25.09.2024 are produced. Thus the bank has followed all the measures and hence prays for dismissal of the SA.

¶51

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

¶52

The applicant is limited liability partnership who has filed the present SA challenging the Sec.14 Order. It seen from the 14 application the 5^th respondent Mr. Munirathnam is the mortgagor who has mortgaged the property towards the credit facilities availed by M/s. Aalayaams Agro Foods LLP, and perusal of sec.14 application produced by the respondent bank typeset at pg.124, it is seen that Mrs. A. Manjula who is the Chief Manager and Authorized Officer of the bank has filed the application and sworn to the affidavit. The Authorization of Mrs. A. Manjula as a Chief Manager as the Authorized Officer is supported by the authorization letter dated 02.01.2024.

¶53

Thus the very contention that the sec.14 application is filed not by an authorized officer does not sustain even otherwise as per the security

SA No.777/2024

05.08.2025

Interest (Enforcement) Rules, 2002 the definitions of the Authorized

¶58

Officer.

¶59

“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 exercising powers of superintendence, direction and control of the business or affairs of the secured creditor, as the case may be, to exercise the rights of a secured creditor under the (Act).

¶60

In the instant matter the authorized officer exercising power of superintendence, direction and control of the business is by Mrs. A. Manjula who is working as a Chief Manager and thus is an Authorized officer under Sec.2(a) is an officer of the secured creditor who is competent to exercise the rights of a secured creditor.

¶61

Further Mrs. A. Manjula as a Chief Manager and Administrative officer has been authorized by the bank as the Authorized Officer to the loan account of the applicant M/s. Aalayaams Agro Foods LLP. Hence, as authorized officer has initiated the measures under the SARFAESI Act. Hence the contention that the sec.14 application and the affidavit is not filed by authorized officer fails.

¶62

It seen in the S.14 applicant that the secured creditor has described loan availed by the applicant, the mortgage of the property as collateral security, details of the memorandum of the title deeds. Due to default in the repayment the account was classified as NPA on 30.10.2022 and demand notice was issued on 01.11.2022 demanding the outstanding amount due to be repaid from 01.11.2022. It seen at para 8 the demand

SA No.777/2024

05.08.2025

notice dated 01.11.2022 was sent to the respondent by RPAD and same is produced by the respondent bank at pg.51 of the typeset. It seen that the demand notice was booked by RPAD and tracking consignment reflects that the S.13[2] notices were deliver to the applicants.

¶67

As the borrower/guarantor and mortgagor inspite of receipt of the S.13[2] demand notice did not raise any objections to the demand made nor paid the entire liability as required in the demand notice. Hence the bank has proceeded further and issued the Sec.13(4) possession notice dated 04.01.2023 which was also sent by the RPID. It seen that the possession notice is affixed on the property as per pg.65 the photograph of the affixture and the same is also published in the English and Tamil newspapers on 10.01.2023. Thus the respondent as secured creditor as issued the Sec.13(4) possession notice which is duly served as required under the Acts and rules.

¶68

Thus the S.14 application clearly describes all the details has required under sec.14 (i) to (ix). The only contention raised by the applicant is that there is no mention of the outstanding amount due in the S.14 application. However it seen that the bank has detailed the nature of the loan availed and the sanction date and outstanding due. Further the consolidated outstanding liability of the loan of Rs.2,57,45,359/- is also mentioned which is due from 04.01.2023 along with the applicable interest and other expenses till the clearance of the entire liability.

SA No.777/2024

05.08.2025

Hence the contention that the bank has not complied with sec.14 (1) (b) also fails. Infact the applicant who is not a mortgagor but as a borrower has challenged the Sec.14 Order have failed to make out a case of any illegality in the Sec.14 Order. Hence the present application fails.

¶73

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 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.

¶74

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.”

¶75

The Hon’ble Bombay High Court in the matter of Phoenix ARC Pvt. 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

SA No.777/2024

05.08.2025

26.09.2022 in the matter of Balakrishna Ram Tarle v. Phoenix ARC (P)

¶80

Ltd. as under:

¶81

“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”.

¶82

Additionally, Section 14(3) of the SARFAESI Act statuses that no action taken by the Chief Metropolitan Magistrate or District Magistrate (or 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.

¶83

30. T hus, the Sec.14 order passed by the Ld. Section 14 order dated 19.10.2024 in Crl.M.P. No.9551/2024 passed by CJM, Tiruvallur 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].

SA No.777/2024

05.08.2025

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.

¶88

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 01.11.2022 and S.13[4] possession notice dated 04.01.2023 are held as valid notices issued under the Act.

¶89

For the foregoing reasons, the present SA fails and 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.

¶90

Sd/-

¶91

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

¶92

( Dictated to Steno (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 05^th day of August, 2025)

¶93

ANNEXURES

¶94

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

¶95

Sl. No.	Description of Documents	Documents No.
1.	Impugned order passed by the Hon’ble Chief Judicial Magistrate, Thiruvallur in Crl.M.P.No.9551/2024 dated 19.10.2024.	A-1
2.	Notice issued by the Advocate Commission intimating the execution of impugned order dated 05.11.2024.	A-2

SA No.777/2024

05.08.2025

LIST OF DOCUMENTS PRODUCED BY THE RESPONDENT

¶100

Sl. No.	Description of Documents	Documents No.
1.	Sale Deed in favour of Mr. Munirathinam dated 13.07.2000.	R-1
2.	Memorandum of Deposit of Title Deeds by Mr. Munirathinam in favour of Indian Bank dated 11.12.2020.	R-2
3.	Supplemental Memorandum of Deposit of Title Deeds by Mr. Munirathinam in favour of Indian Bank dated 24.12.2021.	R-3
4.	Demand Notice under section 13(2) of SARFAESI Act dated 01.11.2022.	R-4
5.	Possession Notice under section 13(4) of SARFAESI Act dated 04.01.2023.	R-5
6.	Affixture of Possession Notice dated 04.01.2023.	R-6
7.	Paper publication of Possession Notice – English dated 10.01.2023.	R-7
8.	Paper publication of Possession Notice – Tamil dated 10.01.2023.	R-8
9.	Notice of Sale dated 28.12.2023.	R-9
10.	Notice of Sale dated 31.01.2024.	R-10
11.	Notice of Sale dated 01.03.2024.	R-11
12.	Sale Certificate in favour of Kanala Srinivasarao dated 10.04.2024.	R-12
13.	Affidavit and Petition filed in Crl.M.P. No. 9551/2024 before the Chief Judicial Magistrate, Thiruvallur.	R-13
14.	Authorisation Letter in favour of Mrs. A. Manjula dated 02.01.2024.	R-14
15.	Authorisation Letter in favour of Mrs. A.J. Shenbagavalli dated 25.09.2024.	R-15
16.	CERSAI Registration dated 01.03.2021.	R-16
17.	Statement of Accounts from 10.12.2020 to 02.04.2024 dated 03.04.2024.	R-17

¶101

SCHEDULE PROPERTY

¶102

All that piece and parcel of land with building comprised in Old S.No.277/1B, as per patta No.224, Sub-Division S.No.277/1B1, (as per recent computerized Patta No.504, S.No.277/3) Door No.6/118, Banavedu Kannapalayam Road, Kannapalayam Village, Poonamallee Taluk, Thiruvallur District, land measuring an extent of 60 cents and being:

¶103

North by : Property belonging to the sellers (Jayammal & others)

SA No.777/2024

05.08.2025

South by : Kalam Poramboke Land

¶108

East by : Property belonging to Mr.Sathyanarayanan, Mr.Babu

¶109