Allowed

A Santhi v. Punjab National Bank

DRT17 Dec 2025SA/85/2024

Case brief

AI extract

What is this about?

Debtor applied to set aside an E-auction sale of mortgaged property due to alleged procedural flaws by the bank. The Tribunal found irregularities in notice issuance, publication, and valuation. The auction sale was set aside, possession reverted, and costs allocated.

What did the court decide?

E-auction sale set aside; bank directed to refund sale consideration and 4% interest to auction purchaser; applicant to pay stamp duty and registration charges; expenditure on notices excluded from lo

A Santhi versus Punjab National Bank — Banking and Recovery | DRT (2025)

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SA No.85/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 17^th DAY OF DECEMBER, 2025

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PRESENT: SEEMA SINHA

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[PR. DISTRICT & SESSIONS JUDGE - Retd]

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PRESIDING OFFICER

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SA No.85/2024

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Mrs. A.Santhi, W/o. Arumugam, 3/212, Kuttralam Main Road, Maranthai Post, Alangulam Taluk, Tirunelveli – 627 851. --Applicant

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-Vs-

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The Authorised Officer, Punjab National Bank, SASTRA Centre, Circle Office Trichy, Punjab National Bank House, Trichy – Tanjore Road, Kailasapuram, Trichy – 620 014. --- 1^st Defendant Bank 2. The Branch Manager, Punjab National Bank, Tirunelveli Town Branch, No. 59, 1^st Floor, North Car Street, Tirunelveli – 627 006. --- 2^nd Defendant Bank 3. Mr. V.Selvamayandi, S/o. Vella Pandian, 6-76, Thangamman Kovil Stret, Keelanathan, Palayamkottai, Tirunelveli – 627 353. --- 3^rd Defendant / Auction Purchaser

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Page 1 of 17

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SA No.85/2024

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*Appearance of Advocates:*
*Mr.R.J. Karthick*	*---- Counsel for the Applicant*
*Mr.V.Kasirajan*	*---- Counsel for the 1^st& 2^nd Defendant Bank*
*Mr. M.Arun Murugan*	*---- Counsel for the 3rd Defendant /* *Auction Purchaser*

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This SARFAESI Application was heard in the presence of Counsels for the Applicant, 1^st & 2^nd Defendants Bank & 3^rd Defendant / Auction Purchaser and fixed for passing final order before me and upon hearing the arguments of the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

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O R D E R

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1 . This application has been filed under Sec.17(1) of the SARFAESI Act 2002 by the Applicant praying that this Hon'ble Tribunal may be pleased to pass an order to call for the records pertaining to the initiation of proceedings under the SARFAESI Act, 2002 ending up with E-Auction Sale conducted by the 1^st Defendant on 21.12.2023 in respect of the schedule of properties on the file of the Defendants and quash the same and restore encumbrance free possession to the Applicant.

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2 . The brief averments of the Application filed by the Applicant are as follows:-

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The Applicant submitted that she is the Proprietor of M/s. Aiswarya Fuel Station. The Applicant had availed loans viz, Cash Credit facility of Rs.30,00,000/- and Term Loan facility of Rs.40,00,000/totaling a sum of Rs.70,00,000/- from the 2^nd Defendant Bank.

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The Applicant further submitted that she had availed the above loan for development of her business by mortgaging her 4 acres of land. The Applicant’s son Mr.Pauldurai is the guarantor to the above loans. At the time of availing loan in the year 2016, the Panel Valuer of the 2^nd Defendant bank had valued the market value of the mortgaged Property

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Page 2 of 17

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SA No.85/2024

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as Rs.80 Lakhs. The Applicant had been regularly paying the monthly dues to the Bank without any default. But due to Covid-19 lock down, the applicant had sustained huge loss in the business. While being so, on 30.11.2020, the applicant’s loan account was classified as NPA and the 1^st Defendant had issued Demand Notice dated 27.09.2023 for recovery of Rs.1,01,41,918.35/- and issued Possession Notice dated 04.11.2023 for recovery of Rs.1,02,35,848.35/-.

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The Applicant also submitted that the 1^st Defendant had filed O.A No. 653 of 2022 for recovery of Rs.89.27 Lakhs. While being so, the 1^st Respondent had issued the Sale Notice dated 14.11.2023 by fixing the sale on 21.12.2023. The said O.A was referred to Lok Adalat scheduled on 16.12.2023 and during the Lok Adalat proceedings, the applicant had agreed to pay a sum of Rs.70 Lakhs towards OTS. The subordinate of the Defendant Bank did not accept the offer and prayed to adjourn the matter to next Lok Adalat. The subordinate of the 1^st Defendant Bank had promised that the Defendant Bank will not conduct sale on 21.12.2023. Hence the Applicant had not challenged the Sale Notice dated 14.11.2023. On 18.12.2023, the Northern Part of Tamil Nadu State including Tirunelveli District had faced the onslaught of Cyclone Michaung and the Applicant’s house had submerged. As said District had reported historical heavy rainfall of 95 cm, due to which all mode of Communication had been Cut off.

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The Applicant submitted that under such hard time, on 21.12.2023, the 1^st Defendant had conducted the E-Auction Sale. The applicant's son Mr.Paulraj had approached 1st defendant to ascertain whether sale was held or not. The 1st defendant had suppressed the E- auction sale held on 21.12.2023 and informed that the sale was not held for want of bidders. Further the applicant did not take any action. On 29.01.2023 only, the applicant came to know through the Authorized

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Page 3 of 17

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SA No.85/2024

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Officer Mr.Palani Murugan, that the E-Auction sale was held on 21.12.2023 and the mortgaged property was sold to a third party for Rs.42 Lakhs. Since the 1st defendant had refused to furnish the particulars of the auction purchaser, the applicant had sent a representation to the defendants on the same day i.e. 30.01.2024 through email seeking to furnish the particulars of the successful bidder/auction purchaser. The applicant had also sent a representation dated 31.01.2024 to the defendants through post seeking to furnish the particulars of the successful bidder/auction purchaser. There was no response from the defendants. Hence the applicant was not in a position to implead the auction purchaser. The applicant learnt that the successful bidder/auction purchaser had not paid the 75 % of the bid amount to the 1st defendant and Hence the sale certificate has not been issued to the auction purchaser. The applicant learnt that the defendant bank acted in collusion with the auction purchaser and sold the property to him for a meagre price. The 1st respondent had fixed the reserve price as Rs.24 Lakhs, even when the market value was Rs.80 Lakhs which was fixed by the Panel Valuer of the 1st defendant in the year 2016 itself. T he Mortgaged Property is situated in the main stream of the city and its present market value is fixed as Rs.8 Crore and the government guideline value is fixed as Rs.1.30 Crore. Even then, the 1st defendant had sold the property for Rs.42 Lakh in collusion with the auction purchaser. The applicant learnt that the auction purchaser alone participated in the auction sale. The 1st defendant having witnessed the sole bidder ought not to have conducted the E-Auction sale. The 1st defendant had conducted the E-auction sale without following the procedure laid down in the SARFAESI Act and the Security Interest (Enforcement) Rules, 2002. Hence the applicant prefers the present application challenging the E-Auction sale conducted by the 1st defendant on 21.12.2023 on the following Grounds:-

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SA No.85/2024

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The impugned E-Auction conducted on 21.12.2023 by the 1st Defendant and the entire measures initiated under the SARFAESI Act are arbitrary in nature and thus liable to be set aside.

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The 1st defendant wrongly classified the applicant account as Non Performing Asset (NPA). The classification is not as per the RBI guidelines.

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Undervaluation: The 1st defendant bank has undervalued the property and brought the same for sale which is against principles of natural justice. The 1st defendant has not obtained fresh valuation report before bringing the property for sale as per Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 which is evident from the sale notice.

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Statement of Accounts not furnished: The applicant further alleged that the defendant bank has not furnished the complete statement of account as the details of certain credits to the account are not reflected. Hence the defendant bank has to be directed to produce/furnish a complete statement of accounts.

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The interest levied by the defendant bank is against the principles laid down in Reserve Bank guideline rules. The defendant bank has charged penal interest which is against law.

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The 1^st Defendant has not registered the mortgaged property in CERSAI.

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The 1st defendant had failed to affix the sale notice in the conspicuous place of the mortgaged property and failed to upload it in the website of the defendant bank in terms of Rule 8(7).

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The defendant bank failed to affix the Possession Notice and Sale Notice on the outer side of the properties as per Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 and failed to publish it in two Newspapers, one in vernacular language as per Rule 8(2) and failed to send it through electronic mode to the applicant as per Rule 8(2A). Further, the 1st defendant has failed to publish the

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SA No.85/2024

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Sale Notice in two Newspapers, one in vernacular language as per Rule 8(6).

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As per the Sale Notice, the successful bidder shall deposit 25% of the sale price, immediately on declaring him/her as the successful bidder and the balance amount of 75% within 15 days from the confirmation of sale by the secured creditor. The time limit to pay the balance amount of 75% of the sale consideration had expired on 05.01.2024. Whereas, it was kept under dark by the 1st defendant showing that the auction purchaser had paid the balance amount of 75% within 05.01.2024.

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The 1st defendant had failed to intimate the sale confirmation to the applicant and failed to furnish the particulars of the auction purchaser.

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The date of demand notice under section 13(2) of the Act is mentioned as 06.07.2023 in the possession notice and the sale notice. But no such demand notice dated 06.07.2023 was issued to the applicant.

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Therefore, it is prayed that this Hon'ble Tribunal may be pleased to allow this Application.

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DESCRIPTION OF PROPERTIES

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All the piece and parcel of Tirunelveli District, Tenkasi Registration district, Alangulam Sub Registrar office, Maranthai Village, S. No. 980 measuring 4 acres out of 7 acres 10 cents.

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Bounded by:

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North : Tirunelveli - Tenkasi Main Road. South : Land of Subramanian. West : Land of Subramania Pillai. East : Land of A.Santhi.

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Page 6 of 17

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SA No.85/2024

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The Applicant has filed the following List of documents in support

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of their claim in the SA, which are as follows:

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S.No.	Date	Description
1.	****	Aadhaarcard ofthe applicant
2.	27.09.2016	Valuation report issued by the Panel Valuer of the defendants bank
3.	07.10.2016	Memorandum of the deposit of title deeds
4.	21.02.2023	Statement ofaccountfor Term loan
5.	21.02.2023	Statement of account for Cash Credit
6.	09.05.2023	Government guideline value of the mortgaged property
7.	27.09.2023	Demand notice issued by the 1st defendant under section 13(2) of the SARFAESI Act
8.	04.11.2023	Possession notice issued by the 1st defendant
9.	14.11.2023	E-Auction Sale Notice issued by the 1st defendant
10.	14.12.2023	Notice issued by this Hon'ble Tribunal inOA No.653 of2022for Lok Adalat
11.	18.12.2023	Status note issued by the Central Government in response to flood situation in four districts of southern Tamil Nadu
12.	18.12.2023	News publication regardingMichaung cyclone in four districts of southern Tamil Nadu
13.	29.01.2024	Email sent by the applicant to the defendants seeking to furnish the particulars of the auction purchaser
14.	31.01.2024	Representation given by the applicant to the defendantswithpostal receipt

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Typed Set of Papers Filed by the Applicant on 08.03.2024

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S.No.	Date	Descriptio	n
1.	29.01.2024	Email sent by the Ap Respondents bank seek the particulars of purchaser.	plicant to the ing to furnish the auction
2.	31.01.2024	Representation given by to the Respondent Ban Receipt	the Applicant k with Postal
3.	03.02.2024	Reply notice issued Respondent to theApplic	by the 1^st ant.

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Page 7 of 17

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SA No.85/2024

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3. On the other hand, notices were issued to the 1^st Defendant Bank, and the Counsel for the 1^st Defendant Bank appeared before this Tribunal and filed Vakalat & Counter in which he has submitted that the Applicant is the Proprietor of M/s. Aiswarya Fuel Station. In the year 2016, the applicant had availed the following loan from the 2^nd Defendant.

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i) Cash Credit facilities of Rs.30 Lakhs.

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ii) Term Loan Facility of Rs.40 Lakhs.

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and a total of Rs.70 Lakhs loan was availed by the Applicant.

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It is further submitted that the Applicant had availed the above loan for development of her business by mortgaging her property and executed loan agreements and other related documents. The Property has been registered with CERSAI. The Applicant’s son Mr. Pauldurai is the guarantor of the Loans. The Applicant committed default in repayment of the loan and hence the loan account was classified as NPA on 30.11.2020.

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It is further submitted that the 2^nd Defendant pursuant to the Provision of the SARFAESI Act, issued Demand Notice dated 06.07.2023 under Section 13(2) of the SARFAESI Act for a sum of Rs.99,51,637.35 (Rupees Ninety Nine Lakhs Fifty One Thousand Six Hundred Thirty Seven and Thirty Five Paise Only) being the amount due as on 30.06.2023. The Demand Notice was sent to the Applicant’s Address and it was returned with endorsement “Refused”. Subsequently the Demand Notice was published in the New Indian Express daily dated 25.07.2023 and Dinamani Tamil daily dated 25.07.2023.

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It is further submitted that the 1^st Defendant issued the Possession Notice dated 04.11.2023 to the applicant, for the outstanding amount of Rs.1,02,35,848.35 (Rupees One Crore Two Lakhs Thirty-Five Thousand and Eight Hundred and Forty-Eight and Thirty-five Paise only) as on 30.09.2023. The said notice was served and received by the Applicant.

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Page 8 of 17

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SA No.85/2024

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Further the said notice was published in New Indian Express English daily dated 07.11.2023 and Tamil daily dated 07.11.2023. The Photo Affixture of the Possession Notice was also furnished alongwith Acknowledgement Card. Thereafter the Sale Notice was issued on 14.11.2023 and the date of auction was fixed on 21.12.2023. The Sale Notice was published in the New Indian Express English daily dated 16.11.2023 and Tamil daily dated 16.11.2023. The said notice was served and Acknowledgement Card was enclosed in typeset of Papers. Accordingly, the Applicant who had refused the Demand Notice (which amounts to service as per Law), also received the Possession Notice, Sale Notice had made false averments.

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It is further submitted that the applicant was well aware that the defendant bank had filed an Original Application No.653/2022 against her in this Hon'ble Tribunal and the case is reposted for filing PA/OD. This Hon'ble Tribunal has passed an order vide proceedings dated 15.03.2024 as follows:

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"Ld. Counsel Mr.R.Ajay Janarthana is representing counsel for the Applicant Bank. Service completed for the D-1 and D-2.They are called in open court, absent, Set Ex-Parte. For filing PA/OD, call on 07.08.24"

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It is submitted that the present appeal is not maintainable and the ground stated therein are not tenable under law. The SARFAESI Appeal has to be dismissed.

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It is submitted that before conducting the auction sale the defendant bank had taken a fresh valuation report dated 12.01.2022 which is filed as annexure in Type Set of papers. Furthermore, a second valuation report dated 06.05.2023 was also taken by the Defendant Bank to reconfirm the valuation report dated 12.01.2022. At the time of fresh valuation report dated 12.01.2022, the defendant bank came to know

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SA No.85/2024

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that the applicant had played a fraud with the bank. Without the knowledge of the bank the applicant after availing the loan in a later period of time, had mortgaged a portion of the mortgaged property to another bank. As a result, the property which stands mortgaged before us at the time of loan has no pathway now. The measurements have changed. Further there is no access to the property. The valuation report dated 27.09.2016 taken as a ground is not sustainable because it is not the same full property. The Panel Valuer of the Valuation report dated 27.09.2016 has been removed from the Panel.

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It is submitted that the Mortgaged Property of the Applicant has been registered in CERSAI by the Defendant. The allegation that Penal Interest was imposed during moratorium period was false.

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It is submitted that after the sale was conducted on 21.12.2023, the successful bidder had paid the 25% of the purchase price in compliance to sec 9 (3) of the SARFAESI ACT 2002. Further as per sec 9 (4) of the SARFAESI ACT2002, the successful bidder had also paid the remaining 75% Of the purchase price to the bank and we have received the full Sale Amount. The applicant account was classified as NPA in 2020 itself, the bank took every legal steps as prescribed in the law.

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It is further submitted that the secured creditor had declared the loan account as NPA in the year 2020, the symbolic possession of the schedule property was also finalized on 04.11.2023. This Litigation comes nearly after three years of complete exhaustion of SARFAESI Proceedings without taking steps for the repayment of loan.

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In view of the above facts, It is humbly prayed that this Hon'ble Tribunal may be pleased to dismiss the above application with cost and thus render Justice.

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Page 10 of 17

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SA No.85/2024

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Typed set of Papers filed by the 1^st and 2^nd DefendantBank on 22.06.2024

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S.No.	Date	Particulars
1.	06.07.2023	13(2) Demand Notice issued Bank.	by the Defendant
2.	10.07.2023	Postal cover returned as “Ref	used”
3.	04.11.2023	13(4) Possession Notice Defendant Bank.	issued by the
4.	11.11.2023	Acknowledgement card Applicants.	received from
5.	07.11.2023	Possession Notice published English.	in both Tamil and
6.	****	Photo affixture of Possession	Notice.
7.	12.01.2022	Valuation report Er.R.Manikandasaravana Mo	given by orthy.
8	06.05.2023	Valuation reportgiven byEr.	Murugesan.
9.	14.11.2023	Sale Notice issued bythe Def	endant Bank.
10.	20.11.2023	Acknowledgement card Applicants.	received from
11.	16.11.2023	Sale Notice Paper Publication	.
12.	21.12.2023	Sale Confirmation Letter.
13.	****	Statement of Accounts.

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4. ON THE BASIS OF ABOVE PLEADINGSTHE POINT WHICH ARISES FOR CONSIDERATION IS:-

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I. Whether the Applicant has been able to prove his case in his favour?

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II. Whether the Applicant is entitled to get the reliefs as prayed for?

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5 . Having heard the parties and after going through the entire documents available on records, I find that the Applicant has availed some credit facility from the Defendant Bank for her business purpose by mortgaging the Schedule Mentioned Property. Initially, the Applicant was regular in repayment as agreed to the Defendant Bank. However, since

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SA No.85/2024

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she could not get expected returns in her business due to Covid-19, she was unable to repay some loan dues to the Defendant Bank.

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I perused the documents filed by the Defendants Bank and I find that the Defendants Bank have filed a Demand Notice (Page nos. 1 to 3 of Defendants Bank common typed set of papers) U/s. 13(2) of the SARFAESI Act dated 06.07.2023 for a sum of Rs. 99,51,637.35/- as on 30.06.2023, and mentioned in the typed set index that they had attached the returned cover with endorsement “Reused”. Moreover the Applicant has also filed Demand Notice dated 27.09.2023 for a sum of Rs.1,01,41,918.35 as on 31.08.2023 (Page nos.37 to 39 of the Applicant SARFAESI Application) but the Applicant has not filed any proof that she has represented the said Demand Notice U/s 13(3-A) of the SARFAESI Act to the Bank even after receipt of notice U/s. 13(2) of the Act. On the other hand there is no whisper regarding this Demand Notice dated 27.09.2023 by the Defendants Bank either in their Counter or in their argument. Hence, the Defendants Bank have failed to prove that they had actually issued the Demand Notice dated 27.09.2023 to the borrowers under the SARFAESI Act & Rules.

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I also find that the Defendants have issued a Possession Notice dated 04.11.2023 and also filed in the Typed set the AD cards, Paper Publication, Photo Affixture of the Possession Notice (Page nos. 10-14 of Defendants Bank common typed set of papers). The Bank has also filed xerox copy of AD cards for having sent the copy of Possession Notice to the Applicant at page nos. 10 to 11 of Typed set of papers. Moreover, In the filed Paper Publication, the Name of the Newspaper, date and Place are not available. Further, In affixture of Possession Notice dated 04.11.2023 no such details of date and place are shown in the evidence. Since there are irregularities found in the documents filed by the Defendants Bank in issuance of Paper Publication and Photo Affixture of the Possession Notice, this Possession Notice is not sustainable in the eye of law. The

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Page 12 of 17

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SA No.85/2024

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Defendants Bank have not filed the Original Documents inspite of direction. The Rule 8(1) & (2) of Security Interest Enforcement Rules, 2002, clearly says that

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"8. Sale of immovable secured assets.

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(1) Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property."

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(2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newspaper, one in vernacular language having sufficient circulation in that locality , by the authorized officer.

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In view of the above Provision, I find that the Defendants Bank have not followed the above provision in issuance of Possession Notice.

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The Applicant further claimed that the Defendants Bank have not registered the mortgaged property in Central Registry of CERSAI established under section 20 of the Act. I also find that the Defendants Bank have stated that they have duly registered the property with CERSAI (Page nos. 3 of Defendants Bank Counter). But, the Defendant have not filed any such CERSAI report for having registered the mortgage in the Central Registry of CERSAI to rebut the allegation of the Applicant.

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Thereafter, The Defendants Bank have issued Sale Notice dated 14.11.2023 without giving the applicant adequate time i.e. clear 30 days after the issuance of possession notice dated 04.11.2023 and proceeded to sell the impugned property in favour of 3^rd Defendant on 21.12.2023. I also find that the Defendants Bank have filed the copy of Sale Notice dated 14.11.2023. The Bank has also filed xerox copy of AD cards for having sent the copy of Sale Notice to the Applicant at page nos. 74 to 75 of Typed set of papers. Further, the Bank has not filed the copy of photograph showing affixture of Sale Notice on conspicuous part of the property. Further, the Defendant Bank has filed Paper Publication made both in Tamil & English Newspaper at page nos. 76 to 77 of Typed set of papers. But the

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SA No.85/2024

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copies are not legible to verify the genuineness of the Sale Notice. The Name of the Tamil Publication, date and place is not available. Thus, I find that the Defendants Bank have not followed the Rule 8(6) & (7) of the Security Interest (Enforcement) Rules 2002, which clearly says that, "Rule 8(6) & (7) in the Security Interest (Enforcement) Rules, 2002:-

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"( 6 ) The authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5):

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[Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in the Form given in Appendix IV-A to be published in two leading newspapers including one in vernacular language having wide circulation in the locality.]"

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"( 7 ) [Every notice of sale shall be affixed on the conspicuous part of the immovable property and the authorised officer shall upload the detailed terms and conditions of the sale, on the web- site of the secured creditor, which shall include;

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( a)the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

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(b)the secured debt for recovery of which the property is to be sold;

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(c)reserve price of the immovable secured assets below which the property may not be sold;

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(d)time and place of public auction or the time after which sale by any other mode shall be

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completed;

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(e)deposit of earnest money as may be stipulated by the secured creditor;

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(f)any other terms and conditions, which the authorized officer considers it necessary for a purchaser to know the nature and value of the property.]"

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On scrutiny of the Valuation Reports filed by the Bank the following observations are brought on record:-

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(a) Valuation Report dated 12.01.2022 (Page No. 15 to 39 of Defendants Bank typed set of Papers)

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i) Guideline Value of the property -- Rs. 87,12,000/ii) Market Value of the property -- Rs. 30,00,000/iii) Forced Value of the Property -- RS. 25,50,000/-

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Page 14 of 17

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SA No.85/2024

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(b) Valuation Report dated 06.05.2023 (Page No. 40 to 67 of Defendants Bank typed set of Papers)

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i) Guideline Value of the property -- Rs. 13,06,800/ii) Market Value of the property -- Rs. 24,00,000/iii)Forced Value of the Property -- RS. 20,40,000/-

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The Valuation Reports filed by the Applicant in the S.A at page no. 11 to 19 the following observations are brought on record:-

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a) Valuation Report dated 27.06.2016 assessed by the valuer of the Defendants Bank at the time of mortgaging the property to the Defendants Bank.

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i) Guideline Value of the property -- Rs. 1,28,93,600/ii) Market Value of the property -- Rs. 80,00,000/iii) Forced Value of the Property -- RS. 68,00,000/-

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From the above valuation reports, it is found that there is a substantially reduction in the valuation of the Property during the relevant period, as the Guideline Value has significantly reduced from Rs.87,12,000/- in 2022 to Rs.13,06,800/- in 2023, while the Market Value has also been decreased. We all know that the value of the landed property increases day by day while the valuation filed by the Bank clearly shows that they have drastically reduced the value of the property since 27.06.2016 to 06.05.2023. Further, the signature of the secured creditor is not found in the valuation reports. These irregularities in the Valuation Reports filed by the Defendants Bank indicate non-compliance with the prescribed procedures and demonstrate that the Bank has failed to establish strict adherence to Rule 8(5) of the Security Interest (Enforcement) Rules. which clearly says:-

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"(5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorized officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor , fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the methods provided therein" .

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Page 15 of 17

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SA No.85/2024

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In view of the above discussion, I find that the Defendants Bank have proceeded under the SARFAESI Act and rules for recovery of money from the Applicant but they have not followed the procedure as mentioned in the SARFAESI Act & Rules strictly and failed to rebut successfully the allegations made by the Applicant. The Applicant has no doubt being defaulter is liable to pay the loan amount to the Defendants Bank and the Banks have been given ample power to recover the outstanding loan amount from the borrower by invoking the SARFAESI Act and without the intervention of the Court, but it shall not allow the Banks to take the possession of the properties of the Applicant without following the due process of law strictly. Hence, I find that there are several irregularities in the procedures adopted by the Defendant Banks while selling the property. Therefore, this Tribunal holds that the Applicant is entitled to get the reliefs as prayed for in SA No. 85/2024 .

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In the result,

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(a) SA No.85/2024 is allowed. The Possession Notice dated 04.11.2023 issued by the 1^st Defendant Bank is not as per law as such it is not sustainable and liable to be set aside.

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(b) The E-auction Sale Notice dated 14.11.2023 and the sale held on 21.12.2023 conducted by the 1^st Defendant Bank is hereby set aside.

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(c) The 1^st & 2^nd Defendants Bank are directed to refund the entire sale consideration amount paid by the Auction purchaser along with 4% of interest to the Auction purchaser from the date of deposit of money till the refund within one month from the date of receipt of copy of the Order.

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(d) The Applicant shall make the payment of the amount incurred by the Auction Purchaser towards the Stamp duty and Registration charges within one month from the date of receipt of copy of the Order.

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SA No.85/2024

¶137

(e) The Applicant is also directed to pay the interest at the rate of 4% of the sale price to the 1^st & 2^nd Defendants Bank from the date of payment of Sale price by the Auction Purchaser till the date of refund to the Auction Purchaser by the Bank within one month from the date of receipt of copy of the Order.

¶138

(f) All the expenditures incurred in issuance of Possession Notice dated 04.11.2023 and Sale Notice dated 14.11.2023 shall not be included in the loan account of the Applicants.

¶139

(g) The 1^st & 2^nd Defendants Bank are at liberty to initiate fresh action against the Applicant for recovery of loan amount following strictly the SARFAESI Acts & Rules.

¶140

Consequently, all pending IAs (if any) are also disposed of. No costs.

¶141

Dictated to KK, taken down, transcribed, typed by him, corrected and pronounced by me in the Open Court in this the 17^th December, 2025.

¶142

Sd/- (SEEMA SINHA) PRESIDING OFFICER

¶143

Uploaded on 26.12.2025

¶144

Page 17 of 17

A Santhi v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

A Santhi 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

Statutes considered

Parties & counsel

Coram

Case details

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