Dismissed

Kca Chidambaram v. Indian Bank

DRT7 Apr 2025SA/86/2023

Case brief

AI extract

What is this about?

In this SARFAESI application, the applicant challenged a sale initiated by a bank under the SARFAESI Act, citing procedural irregularities and alleged undervaluation of collateral property. The tribunal examined the records, verified service notices and publication evidence, and found the bank followed statutory procedures. Consequently, the application was dismissed.

What did the court decide?

No costs awarded. All pending IAs disposed of.

Kca Chidambaram versus Indian Bank — Banking and Recovery | DRT (2025)

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SA No.86/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 07^th DAY OF APRIL, 2025

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PRESENT: SEEMA SINHA

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[PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

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SA No. 86/2023

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KCA Chidambaram, S/o. KCA Arunagiri, No.8, Suvisesamuthu Vathiyar Street, Sivakasi – 626 123. --- Applicant -Vs1. The Authorised Officer, Indian Bank, Sattur Branch, No. 28, Old Trunk Road, Madurai Main Road, Sattur, Virudhunagar District – 626 203. 2. Indian Bank, Rep. by its Branch Manager, Sattur Branch, No. 28, Old Trunk Road, Madurai Main Road, Sattur, Virudhunagar District – 626 203. --- 1^st & 2^nd Defendants Bank 3. Mr. K. Chandrasekaran, S/o. Mr. Kulandaivel, No. 105, Chairman Shanmuga Nadar Road, Sivakasi – 626 123. 4. Ms. K. Vinayaki, D/o. Mr. Kulandaivel, No. 105, Chairman Shanmuga Nadar Road, Sivakasi – 626 123. --- 3^rd & 4^th Defendants/ Auction Purchasers Appearance of Advocates: M/s. Vastlaw Associates ---- Counsel for the Applicant Mr. R. Pandivel ---- Counsel for the 1^st & 2^nd Defendants Bank No representation for 3^rd & 4^th Defendants/Auction Purchasers & Set ex-parte.

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Page 1 of 11

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SA No.86/2023

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This SARFAESI Application was heard in the presence of Counsels for the Applicant and the 1^st & 2^nd Defendants Bank and for 3^rd & 4^th Defendants/Auction Purchasers there were no representation and hence, set ex-parte 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 u/s.17(1) of the SARFAESI Act, 2002 by the Applicant praying that this Hon'ble Tribunal may be pleased to call for the records pertaining to the initiation of proceedings under the SARFAESI Act, 2002 ending up with impugned Notice of intended sale dated 02.02.2023 and the subsequent Sale held on 23.02.2023 and quash the same and to set aside the Sale confirmation and subsequent Sale Certificate issued in favour of the Defendants No. 3 & 4/Auction Purchasers and to set aside the sale confirmation and subsequent Sale Certificate issued in favour of the Defendants 3 & 4/Auction Purchasers.

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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 the Applicant was doing fireworks raw material agencies business and allied chemical business as proprietorship firms in the name and style of M/s. KCA Chellappa Nagar, M/s. KCA Enterprises and M/s. KCA Info Tech at Sivakasi. The Applicant to develop his business approached the 2^nd Defendant and availed Over Draft loan facility of Rs. 20,00,000/- (Rupees Twenty Lakhs only) and another Over Draft loan facility of Rs. 20,00,000/- (Rupees Twenty Lakhs only) on 08.09.2016. The Applicant offered his Schedule mentioned property as Collateral Security. The Applicant's father and mother stood as guarantors for the above loan transactions. Initially, the Applicant was very prompt in repaying the loan amounts. But due to heavy financial problems and due to the impact of Covid-19 Pandemic, the repayment was little bid irregular. The 2^nd Defendant without considering the various circulars issued by the RBI and Ministry of Finance with regard to the bad impact on Covid-19 Pandemic wrongly classified the Applicant's loan account as NPA on 26.03.2021 and proceeded under SARFAESI Act. Thereafter the 1^st Defendant Bank has issued Demand Notice dated 06.05.2021 for a sum of Rs. 48,83,128/- u/s. 13(2) of the Act. The Applicant received the Demand Notice and approached the Defendants and requested to regularize the loan account and paid certain amounts to that effect.

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Page 2 of 11

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SA No.86/2023

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Thereafter, the 1^st Defendant went on further and issued notice of intended Sale dated 17.01.2022 fixing the E-Auction Sale on 09.03.2022. But the Defendants failed to issue symbolic Possession Notice to the Applicant and to the guarantors as stated in the Sale Notice. But the above sale could not be materialized for want of bidders. Subsequently, the 1^st Defendant issued yet another notice of intended sale fixing the E-Auction sale on 25.02.2022. But, again the above sale could not be materialized for want of bidders. Subsequently, the 1^st Defendant had issued the impugned notice of intended sale dated 02.02.2023 fixing the E-Auction Sale on 23.02.2023. The Applicant after receipt of the above Sale Notice approached the Defendants for One Time Settlement, but the same was not properly considered by the Defendants. The Applicant came to know that the 1^st Defendant has went on further and conducted the E-Auction sale of the Schedule mentioned property on 23.02.2023 without following the rules contemplated under the Act. Hence, the Applicant prefers the present Application U/s. 17(1) of the SARFAESI Act, challenging the Impugned Notice of Intended Sale dated 02.02.2023 and the subsequent sale held on 23.02.2023 before this Hon'ble Tribunal for the following and among other grounds:

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It is further submitted that the above matter was taken up for hearing on 10.03.2023 at DRT, Coimbatore, the Defendant Bank Counsel informed this Tribunal that the sale has already been conducted and the sale is confirmed in favour of the successful bidder and he has paid the entire sale consideration. This Hon'ble Tribunal directed the Defendant Bank to furnish the particulars regarding the Sale. Accordingly, the Defendant Bank sent a letter dated 14.03.2023 to the Applicant stating the particulars of the Auction Purchasers and informed the sale price of Rs. 1,02,25,000/- for which the property have been sold.

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Main Grounds :-

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The Impugned notice of intended Sale dated 02.02.2023 and the subsequent Sale held on 23.02.2023 and the entire measures initiated under the SARFAESI Act by the 1^st Defendant are arbitrary and illegal.

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The Defendants failed to follow the procedures contemplated in SARFAESI Act & Rules.

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The Defendants wrongly classified the Applicant's loan account as NPA. The Defendants have not followed the RBI guidelines while classifying the account as NPA without affording opportunity to regularize the account.

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Page 3 of 11

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SA No.86/2023

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The 1^st Defendant is put to strict proof of service of Demand Notice to all the parties concerned.

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The Defendants failed to publish the Possession Notice in Newspapers, failed to affix it on the property and failed to serve the same to all the parties concerned and also failed to serve the Possession Notice through electronic modes to all the parties concerned.

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The 1^st Defendant failed to serve 30 days of Sale Notice to the Applicant and all the parties concerned. Further, the 1^st Defendant failed to affix the Sale Notice on the property and failed to publish the same in two leading newspapers and also failed to update the Sale Notice in the Bank's official website.

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The Defendants have undervalued the properties and brought the same for sale against the principles of natural justice. The 1^st Defendant failed to obtain fresh valuation and failed to fix best reserve price and without assigning any reasons has simply reduced reserve price to Rs. 1.02 Crores from Rs. 1.36 Crores from the earlier Sale Notice. But the market value of the Schedule mentioned property will fetch more than 4 crores, since the Sivakasi Municipality has converted as Sivakasi Corporation.

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The Defendants have not furnished the complete Statement of Accounts as the details of certain credits to the account are not reflected.

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The Defendants have committed excess execution by bringing the entire property for sale for a lesser outstanding amount.

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The Defendants have failed to register with the Central Registry as per section 20 of the SARFAESI Act.

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The Defendants have charged excessive rate of interest than the agreed rate of interest.

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The 1^st Defendant has confirmed the auction sale of property in favour of the Defendants 3 & 4 herein immediately in a fraudulent and collusive manner for his personal enrichment.

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The 1^st Defendant has conducted and confirmed the auction sale of property in favour of single bidder without following the Rules and Procedures contemplated under the Act.

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Page 4 of 11

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SA No.86/2023

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Description of the Immovable Property (As mentioned in the Sale Notice)

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Property 1: (Residential Land and Buildings)

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In Virudhunagar District, Sivakasi Sub Registrar, Sivakasi Town, Commercial Building at Door No. 142, 142A, 142B, 142C, 142D, 142E, 144, 144A, 144B, 144C, 144D, 144E & 144F, Ayan Punja Survey Nos. 303/1A (Part) & 303/2 (Part), of an extent of 1.68 acres, i.e.Totally 3 acres 6 cents in which the site measuring east west on either side 35 ft and north south on west 87 ft and on east 86 ft i.e 3027.50 sq.ft = 281.26 sq.mt (as per parent document: east west on either side 35 ft and north south on west 82 ft and on east 83 ft only) with joint rights in the common pathway, Sivakasi Village, T.S Ward E, Town Survey No. 43 (Residential Class I, Type -1), Ward No. 22, Block No. 14, Chairman P.S. Ramasamy Road-1, Sivakasi Municipality, Virudhunagar District owned by Mr. KCA Chidambaram

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Four Boundaries:

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South by : 20 ft wide east west common road North by : A.M.A. Arunachala Nadar's Garden West by : Panchavarnam Ammal's Land East by : Kanagavel' building

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The Applicant has submitted the following List of documents in support of his claim in the SA, which are as follows:

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INDEX TO LIST OF DOCUMENTS/ANNEXURE

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S.No.	Date	Documents/Annexure
1	02.03.2017	Sanction Ticket
2	06.05.2021	Demand Notice U/s. 13(2)of the Act
3	17.01.2022	1^stNotice of intended sale
4	02.02.2023	Impugned Notice of intended sale

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INDEX TO ADDITIONAL TYPED SET OF PAPERS-II

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S.No.	Date	Documents/Annexure
1	08.09.2016	Sanction Letter
2	25.11.2016	Sanction Letters
3	25.10.2022	Valuation Report

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INDEX TO ADDITIONAL TYPED SET OF PAPERS-III

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S.No.	Date	Documents/Annexure
1	18.08.2016	Valuation Report at the time of sanction
2	21.10.2021	G.O.Ms.No.3 of 2022
3		Guideline value of the property obtained from the Sub-Registrar Office

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Page 5 of 11

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SA No.86/2023

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3 . On the other hand, the Counsel for the 1^st & 2^nd Defendants Bank appeared before this Tribunal and filed Vakalat, Reply Statement & Written Arguments in which they submitted that the Applicant had categorically admitted the borrowal of loan & execution of loan documents & creation of mortgage & default in payment & receipt of the SARFAESI Notices. Further submitted that the Bank has rightly classified the account as NPA and then Bank has issued the Demand Notice and the same was duly served on the Applicant. But the Applicant has not sent any reply to the Demand Notice. Then issued Possession Notice which is received by the Applicant but he did not challenge the Possession Notice, hence the Defendant Bank conducted the Sale by following all the rules contemplated under the Act and that the entire measures initiated by the Bank under the SARFAESI Act is neither arbitrary nor illegal nor against provisions of the Act & Rules and that the bank has followed all the procedures of SARFAESI Act & Rules and furnished all the particulars in Demand Notice. The Demand Notice, Possession Notice & Sale Notices were also served to all the defaulters and that the bank has served 30 days Sale Notice and published the Possession Notice & Sale Notices in two newspapers and affixed the notices on the conspicuous part of the property. Further, the bank has obtained fresh valuation and that the Bank has fixed best reserve price and brought the property for sale which is well within the principles of natural justice and that the Bank has not undervalued the property and that for the first three Sale Notices dated 17.01.22, 27.04.22 & 07.07.22 bank has fixed the reserve price as Rs. 1.36 Crores; but there is no bidder for all the three Sale Notices and so the Bank has again fixed the upset price for 4^th Sale Notice dated 19.10.22 as Rs. 1.10 Crore and for that also there is no bidders and so the Bank has again fixed the upset price as Rs. 1.02 Crore for the Sale Notice dated 02.02.23. It is also submitted that the property would not fetch Rs. 4 Crore as alleged by the Applicant and that the Applicant has not produced any Valuation Report to prove his allegation in his typeset already filed by him and so the sale is not liable to be set aside.

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It is further submitted that the Bank has not conducted the sale in fraudulent & collusive manner with Auction Purchasers for personal enrichment as alleged by the Applicant and that the said allegation is a highly defamatory one and that the bank has furnished complete Statement of Accounts to the Applicant "then & there" and "as & when" as it was requested by him and that payments made by the Applicant are duly credited in the loan account and that the bank has not committed excessive execution as such the Applicant is not entitled for regularization of account. Further, the bank has registered the transaction with Central Registry and that the bank has charged interest & penal interest as agreed by the Applicant in the loan documents. It is not correct to allege that the Applicant

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Page 6 of 11

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SA No.86/2023

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has approached the Bank after the issuance of Demand Notice & Sale Notices and that there is no fraudulent & collusion in conducting the sale and that the Auction Purchasers are not the Panel valuers and that merely because there is a single bid it doesn't mean that sale was confirmed without following the Rules & Procedures. So the Sale Notice & Sale held are not liable to be set aside.

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It is further submitted that the Bank has issued Sale Notice dated 02.02.23 to the Applicant by fixing the date of sale on 23.02.23 and sale held on 23.02.23 and the Auction Purchasers Thiru.K. Chandrasekaran & Tmt. K. Vinayaki were declared as successful bidders and sale was confirmed he has paid the entire sale consideration and that the Sale Certificate dated 13.03.23 was issued to them and sale was also registered on 03.08.23. The Auction Purchasers become the owner of the property and his interest is involved and the same has to be protected. Further, the Bank has issued five Sale Notices dated 17.01.22, 27.04.22, 07.07.22, 19.10.22 & 02.02.23. The sale was held on 5^th Sale Notice dated 02.02.23. Since, the Applicant has not challenged the earlier 4 Sale Notices, he is not entitled to question the reserve price fixed by the Bank.

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It is further submitted that the Applicant did not settle the dues on or before the date fixed for sale. The Applicant is well aware that the property was about to be sold in the public auction. Despite the same he neither redeemed the property by paying the loan nor brought buyer nor participated in the auction. The Applicant did not avail the opportunity granted by the Bank u/s.13(8) to retain/redeem the property. Now the Auction Purchasers became the absolute owner of the property and invested amount and their interest has to be safeguarded.

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It is further submitted that the actual possession was taken on 28.07.23 vide Order passed by the Ld. CJM, Virudhunagar in Crl.MP.No. 4997/23 and the same was handed over to the Auction Purchasers on 05.08.23. The Applicant has not challenged either the order passed in Crl.MP.No. 4997/23 or the actual possession taken & handed over to the Auction Purchasers. Further, the Applicant is willful & chronic defaulter. The SARFAESI Application is not maintainable either in law or on facts.

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Therefore, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the Application with cost and thus render justice.

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Type set filed by the 1^st Defendant Bank

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S.No.	Date	Particulars
1	06.05.2021	Demand Notice with AD cards

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Page 7 of 11

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SA No.86/2023

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2	06.08.2021	Possession Notice
3	06.08.2021	Possession NoticePaper Publication in English Daily
4	06.08.2021	Possession NoticePaper Publication in Tamil Daily
5	06.08.2021	Photography showing affixture of Possession Notice
6	17.01.2022	Previous SaleNotice
7	27.04.2022	Previous Sale Notice
8	07.07.2022	Previous Sale Notice
9	19.10.2022	Previous Sale Notice
10	02.02.2023	Sale Notice on which sale was held
11	02.02.2023	Sale Notice Paper Publication in English daily
12	02.02.2023	Sale Notice Paper Publication in Tamil daily
13	02.02.2023	Photography showing affixture of Sale Notice
14	10.01.2023	Valuation Report
15	21.01.2023	Valuation Report
16	03.08.2023	Registered Sale Certificate
17	23.06.2023	Order passed by Ld. CJM, Virudhunagar
18	28.07.2023	Documents showing Physical Possession taken by the Advocate Commissioner and handed over to bank
19	05.08.23	Documents showing handing over of Physical Possession by the bank to the Auction Purchasers

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Additional Typed set filed on the side of the 1^st Defendant Bank

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S.No.	Date	Particulars
1	06.08.21	ADcardfor Possession Notice dt. 06.08.21
2	17.01.22	ADCardsfor Previous SaleNotice dt.17.01.22
3	27.04.22	AD Cards & Return Cover for Previous Sale Notice dt. 27.04.22
4	07.07.22	AD Cards & Return Cover for Previous Sale Notice dt. 07.07.22
5	19.10.22	ADCardsfor Previous SaleNotice dt.19.10.22
6	02.02.23	AD Cards & Return Cover for Sale Notice dt. 02.02.23 on whichsalewasheld

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2^nd Additional Typed set filed on the side of the 1^st Defendant Bank

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S.No.	Date	Particulars
1	23.02.23	BitHistory
2	23.02.23 & 25.02.23	Property Decision Details
3	23.02.23	SaleIntimation Letter
4	25.02.23	Sale Confirmation Letter
5	--	PaymentParticulars
6	--	Authorised Officer– Statement of Accounts

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Page 8 of 11

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SA No.86/2023

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3^rd Additional Typed set filed on the side of the 1^st Defendant Bank

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S.No.	Date	Particulars
1	---	CERSAI Report
2	11.11.24	Clarification by Bank Panel Valuer for the Valuation Report produced by theApplicant
3	09.08.24	Clarification by Bank Panel Valuer for the Valuation Reportproduced bythe Applicant

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

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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 the records, this Tribunal find that there is no dispute between the parties with regard to the availment of loan facilities by creating equitable mortgage on his property. In this case, the Applicant contended that initially the Applicant has repaid the monthly installments regularly however, due to heavy financial problems and due to the impact of Covid-19, there was default in repayment and hence the Defendant Bank has initiated recovery proceedings and classified the Applicant's loan account as NPA on 26.03.2021 and issued Demand Notice on 06.05.2021. The Defendant Bank has also stated in their Reply Statement that since the Applicant failed to repay the loan as agreed to and hence the loan account was declared as NPA. Thereafter, the Defendant Bank was constrained to issue Demand Notice dated 06.05.2021 U/s. 13(2) of SARFAESI Act for a sum of Rs. 48,83,128/- (Rupees Forty Eight Lakhs Eighty Three Thousand One Hundred and Twenty Eight only). I also perused the documents filed by both the parties and in the typed set of papers filed by the Defendant Bank, I find that the Bank has produced the copies of acknowledgement cards at page nos. 10 to 13 as an evidence for having sent the copy of Demand Notice to the Applicant. I also find that the Applicant has not replied to Demand Notice U/s. 13(3-A) of SARFAESI Act and failed to give any representation to the Defendant Bank.

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Page 9 of 11

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SA No.86/2023

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Further, I find that the Defendant Bank had issued Possession Notice U/s. 13(4) of SARFAESI Act on 06.08.2021. The Applicant in his averment stated that the Bank has failed to issue symbolic Possession Notice to the Applicant and the guarantors. But, I find that the Defendant Bank has filed AD Card proof for having sent the copy of Possession Notice to the Applicant by Post vide the Additional Typed set at page no. 1. I also find that the Bank has produced the xerox copies of Paper Publication of Possession Notice in two newspapers one in English and another in Tamil (Bank's Typed set of papers at page nos. 16 & 17). Further, at page no.18, the Bank has submitted the photo as evidence showing the affixture of the Possession Notice on the conspicuous part of the property.

¶80

Thereafter, the Bank has issued four Sale Notices, i.e. dated 17.01.22, 27.04.22, 07.07.22 & 19.10.22 which were not held due to want of bidders and then the Bank has issued the Impugned Sale Notice dated 02.02.23, which was scheduled to be held on 23.02.2023 in which Sale was held. I perused the documents filed by the Defendant Bank and I find that the Defendant Bank has filed the copy of Sale Notice dated 02.02.23 (page nos. 36-45 of Bank's typed set). The Applicant in his averment submitted that the Defendant Bank has not served the Impugned Sale Notice for all parties concerned and failed to affix the Sale Notice on the property as well as failed to publish the same in two leading newspapers and failed to update the Sale Notice in the bank's official website. I perused the documents and I find that the Bank has produced two AD Cards and one returned undelivered postal cover with remarks 'unclaimed' (page nos. 16 to 19 of Bank's Additional typed set). I also find that the Bank has produced the xerox copies of Paper Publication of Sale Notice in two newspapers one in English and another in Tamil (page nos. 46 & 47 of Bank's typed set). Further, at page no.48 of Bank's typed set, the Bank has submitted the photo as an evidence to show the affixture of the Sale Notice on the conspicuous part of the property.

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I also find that the Defendant Bank has filed Valuation Reports dated 10.01.23 & 21.01.23 (page nos. 49 to 64 of Bank's typed set), which were obtained before issuing the Impugned Sale Notice dated 02.02.23. The

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Page 10 of 11

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SA No.86/2023

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Defendant Bank has also filed the CERSAI Report (page nos. 1 to 3 of Bank's 3^rd Additional typed set). The Defendant Bank has also produced the copy of Sale Intimation Letter dated 23.02.23 (page no. 5 of Bank's 2^nd Additional typed set). Sale Confirmation Letter dated 25.02.23 (page no. 6 of Bank's 2^nd Additional typed set) and payment particulars by the Auction Purchasers (page no. 7 of Bank's 2^nd Additional typed set). Further, the Bank has produced the Statement of Accounts (page nos. 8 to 12 of Bank's 2^nd Additional typed set) and Registered Sale Certificate No. 7791/2023 dated 03.08.2023 (page nos. 65 to 84 of Bank's typed set).

¶85

Further, the Applicant has not placed any material evidence before this Tribunal to substantiate their claim that the classification of loan account as NPA was wrong and rate of interest has been charged excessively against the guidelines of RBI. Further, the Applicant has not produced any proof of document that they made representations to the Defendant Bank to furnish the copy of Statement of Accounts.

¶86

Under the above facts and circumstances of the case, this Tribunal is of the considered view that Applicant has failed to prove his case and on the other hand, I find that the Bank has followed the procedures for recovery of loan amount under SARFAESI Act as such I do not find any merit in the above SARFAESI Application.

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In the result, SA No. 86/2023 stands dismissed with no costs. Consequently, all pending IAs (if any) are also disposed of. No costs.

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Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 07^th April, 2025.

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sd/-

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(SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 28.04.2025

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Page 11 of 11

Kca Chidambaram v. Indian Bank

Case brief

What is this about?

What did the court decide?

Kca Chidambaram v. Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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