Dismissed

Suganthi Educational Trust v. Cfm Asset Reconstruction Private Limited

DRT11 Dec 2025SA/881/2024

Case brief

AI extract

What is this about?

The DRT dismissed a securitization application challenging an e-auction sale of mortgaged land. The court held a typographical error in the sale notice date caused no substantial prejudice. It ruled the applicant lost the right to redeem after the auction notice publication and that unauthorized buildings have no value for auction valuation.

What the court decided

AI extract

Suganthi Educational Trust versus Cfm Asset Reconstruction… — Company and Corporate | DRT (2025)

SA No.881/2024

11.12.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 11^th December, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 881 of 2024

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M/s. Suganthi Educational Trust

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Rep. by its Managing Trustee Dr. Sujatha Balasubramanian, Having is administrative office at No.15, Corporation Colony, Kodambakkam, Chennai 600 024.

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Dr. Sujatha Balasubramanian, W/o C. Balasubramanian

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No.15, Corporation Colony, Kodambakkam, Chennai 600 024.

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Dr. S. Rohini Jayapriya D/o C. Balasubramanian,

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No.15, Corporation Colony, Kodambakkam, Chennai 600 024.

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C. Balasubramanian,

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S/o. Late. Mr. Chelliah Pillai, No.15, Corporation Colony,

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Kodambakkam, Chennai 600 024. …Applicants

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-Vs-

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M/s. CFM Asset Reconstruction Pvt Ltd.

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1^st Floor, Wakefield House, Sprout Road, Ballard Estate, Mumbai – 400 038.

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G Square Realtors Private Limited, Rep. by its Managing Director, Registered Office: No.98, Harington Apartments, 3^rd Floor, Harrington Road, Chetpet, Chennai, Tamil Nadu – 600 031.

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The Karur Vysya Bank Ltd No.20 Erode Road, Vadivel Nagar, L.N.S, Karur – 639 002.

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ENRGE Frontier Pvt. Ltd. SF No.104/1, NM Medu, Nadukombai PO Namakkal – 637 404. …Respondents

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Counsels on record / appeared:

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Counsel for Applicant : M/s. S. Anuradha Balaji Counsel for 1^st Respondent : M/s. Ramachandran Counsel for 2^nd Respondent : M/s. Mohan Ragunath Counsel for 3^rd Respondent : M/s. Sathiya Narayanan Counsel for 4^th Respondent : M/s. Ananda Gomathy

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ORDER ON SA 881 /2024

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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].

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The applicants have challenged the e-auction sale held on 16.05.2024 pursuant to the Sale notice dated 25.04.2023 for the recovery of outstanding amount of Rs.89,01,04,746/-

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3. Factual matrix of the case :

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3.1 The case of the applicants as put forth is that the 1st Applicant is an Educational Trust established in 1993 and 2^nd Applicant is the founder Trustee of the applicant’s Trust. The 2^nd Applicant’ father late Mr.G. Kathamuthu owned land to an extent of 32.72 ½ Acres at Perungulathur,

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Chennai established educational trust Suganthi Educational Trust vide Trust deed dated 11.11.1993, registered as Doc.No.732 of 1993 dated 15.11.1993.

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3.2 M/s. Suganthi Educational Trust established G.K.M Institute of Marine Sciences and Technology in the year 1996 vide Certificate No. IRQS/190100735; and G.K.M. Vidyashram Senior Secondary School a CBSE School in the year 2010 in the premises at Perungulathur, Chennai – 600063 on land of 21.125 acres.

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3.3 The 1^st Applicant and its Managing Trustee availed a secured Term Overdraft loan for Rs.63,00,00,000/- from M/s. Yes Bank for running the educational institutions. Subsequently, credit facilities were taken over by M/s. Karur Vysya Bank in 2017 and M/s. Karur Vysya Bank granted an additional overdraft facility of Rs.5,00,00,000/- , thus the total loan liabilities of the 1^st applicant to M/s. Karur Vysya Bank stood at Rs.68,00,00,000/-. The credit facilities were secured by 2^nd to 4^th applicants

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as guarantors and mortgaged their property as security towards the credit facilities along with mortgaged immovable property of the 1^st applicant measuring an extent of 32.72 ½ acres of land in Mappedu Village, Tambaram Taluk, Chengalpattu District.

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3.4 Due to default in the repayments, the loan account was classified as NPA by the 3^rd respondent followed by issuance of Demand Notice under Section 13(2) dated 17.12.2018 of the SARFAESI Act claiming a sum of Rs.71,23,55,312.37 (Rupees Seventy one Crore Twenty three lakhs Fifty Five thousand three hundred and twelve and paise thirty seven only).

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3.5 On receipt of the Demand Notice, applicant sought for restructuring of monthly instalment and paid a sum of Rs.10.28 Crores since Dec 2018 to November 2019 and vide representation dated 15.02.2019 requested NOC to sell a portion of mortgaged property of 2^nd applicant to settle the dues which was granted by the 3^rd respondent vide letter dated 22.02.2019 granting 15 days’ time up to 09.03.2019.

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3.6 However, the applicants could not sell the property as undertaken within the stipulated time, hence 2^nd applicant vide letter dated 18.03.2019 sought extension of time for the sale of property. The 3^rd respondent under SARFAESI Act, issued S.13[4] Possession Notice in March 2019 followed by E-auction sale notice in the month of December 2019 and March 2020. The applicant has challenged the Sale notice dated 13.03.2020 scheduling the sale on 30.03.2020 before the Hon’ble High Court in WP. No.7415/2020 and the Hon’ble High Court vide order dated 30.03.2020 granted status quo

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in the matter directing the secured creditor not to proceed with the auction sale without the specific leave of the Court.

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3.7 In the meantime, the 3^rd Respondent assigned the debt of the applicants to the 1^st Respondent ARC vide assignment deed dated 30.03.2020 and the assignment of debt was intimated to the Applicants vide letter dated 12.05.2020. Pursuant to assignment, the 1^st respondent continued the measures under the Act and published Sale Note dated 07.10.2022 which the applicant challenged in SA.439/2022. The Tribunal vide interim order directed the applicant to deposit an amount of Rs.7,40,00.000/- and subsequently SA 439/2022 came to be disposed. 3.8 The 1^st applicant and the 2^nd respondent entered into agreement on 31.10.2022 in the form of a Term sheet for the sale of an extent of 7 acres and 7 cents for a consideration of Rs.6 crores per acres agreeing to terms and conditions of the agreement. Pursuant to the agreement, the 2^nd respondent paid an amount of Rs.7,40,00,000/- Rs.2,60,00,000, and Rs. 25,00,000 on 01.11.2022, 08.02.2023 and 18.03.2023 respectively.

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3.9 Subsequently, the applicants revised the Term Sheet dated 31.10.2022 vide LOI and MOU both dated 11.08.2023 entered into an agreement for sale of an extent of Acre 15.17 cents instead of 7 Acre 7and 07 cents fixing the rate at Rs. 6,00,00,000/- per acre for a total sum of Rs. 91,02,00,000/ and obtained fair market valuation for the entire extent of property assessed at Rs.333.32 Crores.

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3.10 The 2^nd Respondent sought for NOC in respect of 15 Acres and 17 Cents for remittance of Rs.60,82,00,000 and Applicants had sent letter dated 12.04.2024 for scheduled plan of payment from the 2^nd Respondent as per the MOU. Inversely, the 2^nd Respondent vide e-mail dated 12.04.2024 made frivolous allegations demanded applicants to enter into a new Tripartite Agreement with the 1^st Respondent enabling the 2^nd Respondent to redeem the entire property from the 1st Respondent and collect the Documents.

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3.11 The 2^nd Respondent did not comply with the terms of MOU and failed to make the scheduled payment and failed to pay the balance amount till the auction held on 16.05.2024. Hence, the applicant approached the 1^st respondent for an OTS of Rs.68.50 crores on 02.03.2023 and the 1^st Respondent vide letters dated 04.11.2023 and 27.01.2024 directed the Applicants to make upfront payment to consider the OTS.

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3.12 The 1^st Respondent had sent an e-mail dated 15.03.2024 vide letter

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No.CFMARC-1 KVB/Suganthi/2/2023-24 under Section 13(8) of the SARFAESI Act 2002 for redemption of the mortgaged properties for an amount of Rs.87,87,35,311/-. On receipt of the same, the applicant sought 2 weeks’ time from of the redemption date 15.03.2024 to the end of April 2024 which was rejected by 1^st respondent vide E-Mail dated 17.04.2024.

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3.13 On 25.04.2024, 1^st Respondent sent the Impugned letter by mail wrongly dated as 25.04.2023 issued under Rule 8 and 9 of the Security Interest (Enforcement) Rules 2002 which is an Intimation for the sale of

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Secured Asset by way of E-Auction to recover a total outstanding of Rs.89,01,04,746/- by fixing reserved price at Rs. 72,75,00,000/- without even adhering to the procedures to be followed under SARFAESI Act 2002.

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3.14 By mail dated 17.04.2024 applicant contended that the amended Section 13(8) takes away the right of redemption of the borrower upon publication of the auction notice and not to deal with or dispose of any of the secured assets mortgaged with respondent without prior written permission. However, the Auction notice issued by the 1^st respondent under Rule 8 and 9 of the Security Interest (Enforcement) Rules 2002, gave opportunity to applicants to come forward with a better offer and release the property, failing which 1^st Respondent shall sell the secured properties under SARFAESI Act 2002.

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3.15 It is further contended that the 1^st Respondent has helped the 2^nd Respondent to acquire St.John’s educational institution under private treaty. The 1^st and 2^nd Respondents has not accepted any of the OTS proposal nor given NOC for releasing certain extent of land to satisfy the debt when the value of the debt is only 1/8th value of the property and the valuation of the personal properties of the 2^nd Applicant alone comes around Rs.140.00 crores as per today’s market value and as per the Term Sheet and MOU the value of the property was more than Rs.6.00 crore per acre which is evident from the Sale Deed dated 21.08.2023 registered as Doc No. 8366/2023 dated 21.08.2023. Further an extent of 1250 sq. ft., was

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sold for the sale consideration of Rs. 19,00,000/- and the market value is Rs.43.75 lakhs and the applicants land situated in the same Thiruvancheri.

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3.16 The 2nd Respondent has started promoting the site in the name of “AZURE” at Rs.6000/- per sq. ft. without even making payment as per the MOU and also participated in the auction, hence the MOU is invalid and void.

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3.17 It is specifically contended that as per the valuation report dated 12.01.2024, the entire trust property and individual properties of the 2^nd applicant has been valued at Rs.333 Crores contrary to 1^st respondent letter dated 15.03.2024 issued for Rs. 87 Crore. Hence, the property put for auction fixing reserve price at Rs.72.00 crores is undervalued where the market value of the Property valued around Rs.400 Crores. During the pendency of the Writ Petition, the 1^st Respondent has given a proposal of Rs.80 crores to settle the outstanding dues, hence the Hon’ble High Court directed the Applicants to show their bonafides and the applicants filed the Affidavit submitting that they already paid Rs.30.20 Crore in Oct 2022, Aug 2023 and Sep 2023 respectively.

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3.18 The Applicants expressed their readiness to make payment of Rs.80 crore after deduction of Rs.30 crore amount, if this Tribunal allows the applicants to pay the balance amount and to release their documents. On these grounds the applicants prays to set aside the Impugned notice dated 25.04.2023 and the auction sale held on 16.05.2024.

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4. 1^st Respondent case:

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4.1 The 1^st respondent ARC in their counter raised the issue of maintainability of the SA as the applicant failed to redeem the mortgage as available under Section 13[8] of the Act. The challenge to the sale notice dated 25.04.2024 and sale held on 16.05.2024 is extinguished and placed reliance on the judgment of the Hon’ble Supreme Court in Celir LLP vs. Bafna Motors Pvt Ltd and Ors (2024 2 SCC 1) .

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4.2 It is the case of the 1^st respondent that they have conducted the public auction of the property pursuant to the sale notice dated 25.04.2024 on 16.05.2024 with the leave of the Hon’ble Madras High Court as per order dated 15.05.2024 in W.P no.13170/24, where 1^st respondent was allowed to conduct the auction on condition that the sale shall not be confirmed in favor of the highest bidder until further orders of the High Court.

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4.3 The 4th respondent has emerged as the highest bidder in the auction held on 16.05.2024 and was impleaded as a party to the writ petition filed by the applicant. Subsequently the W.P came to be dismissed as withdrawn on 20.11.2024 directing the 1^st respondent not to proceed with sale confirmation until 04.12.2024 subject to orders being obtained by the applicant before this Tribunal. As the applicants failed to obtain any interim orders and on the expiry of the stay granted by the High Court, 1^st respondent issued sale confirmation in favor 4^th respondent on 05.12.2024 upon the payment of Rs.11,10,00,000 on 05.12.2024. Thus, the prayer to set aside the auction notice 25.04.2024 and sale held on 16.05.2024 has

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been rendered infructuous, hence the SA deserves to be dismissed on these grounds.

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4.4 The applicants failed miserably to redeem the property or to settle the liability under OTS in spite of sufficient opportunities granted by this Tribunal. It is assertively contended that the applicant without settling the liability has repeatedly misused the legal process and the court of law since 2019. The 1^st respondent has resonated the availing of the loan by applicant from 3 respondent; classification of the account as NPA on 14.12 2018, followed by notice under Section 13(2) and applicant’s letter dated 15.02.2019 requesting the 3^rd respondent for NOC for sale of a portion of land of 2^nd applicant.

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4.5 Further the 1^st respondent has narrated the cases filed by the applicant in challenging the measures. On issuance of Possession Notice dated 28.03.2019 u/s 13(4) of the Act, applicant has challenged the possession notice in SA.No. 88/2019 which came to be dismissed on 06.06.2019; and the sale notice dated 22.01.2020 was challenged in SA 15/2020 which came to be dismissed as infructuous.

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4.6 After the assignment of the debt, the 1^st respondent continued the measure under the Act and issued Sale Notice dated 10.10.2022 which was challenged in SA 439 of 2022, the Tribunal vide order dated 01.11.2022 directed the applicant to deposit an amount of Rs.7.4 crores in two tranches, the applicant complied only the 1^st payment and didn’t adhere to

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the 2^nd tranche of payment. Hence SA 439/22 came to be dismissed as infructuous.

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4.7 Subsequently, 1^st respondent issued sale notice dated 29.06.2023 yet again challenged by the applicants in SA 14 of 2023 and the same came to be withdrawn and dismissed as infructuous. Further, another Sale notice dated 22.07.2023 was challenged by the applicants in SA No.15 of 2023 and an Interim Stay was obtained by the applicant for payment of Rs.20 crores and the same is complied, consequently the SA came to be dismissed on 02.02.2024.

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4.8 The 1^st respondent before issuing the impugned sale notice dated 25.04.2024 [wrongly mentioned as 25.04.2023] issued notice dated 15.03.2024 under S.13[8] granting 30 days’ time to redeem the mortgage relying on judgment of Celir LLP Vs Bafna Motors Pvt Ltd & Ors. . But, the applicants did not redeem the mortgage nor settled the due under OTS even after the expiry of 30 days and 10 days, hence auction notice dated 25.04.2024 came to be issued. The 1^st respondent had also filed caveat in first week of May 2024, being aware of the caveat the applicants invoked the writ jurisdiction in W.P.No.13170 of 2024 without exhausting the efficacious remedy and obtained interim stay on 15.05.2024 on the confirmation of sale, allowing the 1^st respondent to conduct the auction.

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4.9 The 4^th respondent is the successful bidder has paid Earnest Money Deposit and the auction purchaser was also impleaded as a party in Writ petition. The W.P.No.13170 of 2024 came to be withdrawn on 20.11.2024

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on the applicants affidavit seeking 2 months to settle the account as full and final settlement for Rs. 80 crore and an amount Rs.8.00 crore to be paid within a period of 15 days to show their bonafides.

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4.10 Subsequently, the applicant has approached this Tribunal 04.12.2024 on the last day of the interim order granted by Hon’ble Madras High Court and the order was extended. It is further reiterated that the averments raised in the SA only establishes the history of the cases filed the applicant.

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4.11 The 1^st respondent countering the averments para wise contends to have no privy to the transaction of the applicant and the 2^nd respondent. The agreement entered between the 2^nd respondent and applicant has no connection with the 1^st respondent and the 2^nd respondent has not emerged as successful bidder in any of the auction held by 1^st respondent and 3^rd respondent. The applicant is trying to establish a non-existent relationship between 1^st and 2^nd respondent by highlighting one isolated business transaction and 2^nd respondent was never declared as successful bidder in any of the auction held.

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4.12 The 1^st respondent denies that the value of the mortgage property exceed Rs. 300 crores as the building constructed on the mortgage land do not have any requisite approval from the statutory bodies which cannot be considered for any valuation report. The extent of 12 acres where the college is situated cannot be used for any other commercial use and the property is being used as a college and no purchaser would come to close

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down the college and immediately use the lands commercially. Further the applicant has failed to justify that the mortgage of property was undervalued at Rs.6 crore per acre when the applicant accepted the fact that the term sheet was never acted upon by the 2^nd respondent and applicant land does not hold such a market value.

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4.13 The valuation report dated 12.01.2024 obtained by the applicant failed to consider the commercial value of the land and the same is produced only to file it in W.P.No.13170 of 24. The valuator has failed to consider the building does not have any requisite approval from the concern statutory bodies and the buildings cannot be construed to have any monetary value and the same is liable for demolition. Secondly, the market range of the value per acre as mentioned in the valuation report is unfounded and erroneous as the term market enquiries does not provide any information or justification how the quantum of amount is arrived at

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4.14 The valuer has referred to Doc.No.132/23 dated 05.01.2023 wherein 10 cents were sold for consideration of Rs.72,36,000 and the sale value of one acre is determined at Rs.7,23,60,000 which is in contrary to the valuation Report. Infact, the referral Doc.No.132/23 is a settlement deed where a total extent of 27 cents were settled for sale consideration. Therefore, the value of the 1 acre would roughly be at Rs.3.25 crores which is in line with the valuation report obtained by the 1^st respondent.

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4.15 The 3^rd respondent and 1^st respondent’s attempts to recover the amount due failed for a period of 06 years due to the relentless interference

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in challenging the measure. In fact the 1^st respondent has issued letter under S. 13(8) on 15.03.2024 granting 30 days to redeem the property and issued sale notice on 25.04.2024 giving 40 days for the applicant to redeem the property. The 1^st respondent has followed procedures to recover its dues and applicant is frustrating the measures taken by the 1^st respondent to recover its dues.

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4.16 The outstanding debt of the applicant account is Rs.96,67,19,945/as on 10.01.2025 which is inclusive of all the amount paid by the applicant and applicant has challenged each and every auction notice issued by the 1^st respondent which resulted in prolonging the litigation, till the auction notices have rendered infructuous.

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4.17 The 1^st respondent have the right to reject the OTS and relies on the Judgment “The Bijnor Urban Cooperative Bank Limited & Ors Vs. Meenal Agarwal & Ors were it is ruled that

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” The benefit of OTS cannot be asked/prayed as a matter of right by any person who is in default.” The Supreme Court further ruled that “No bank can be compelled to accept a lesser amount under the OTS scheme despite the fact that the bank is able to recover the entire loan amount by auctioning the secured property/mortgaged property”

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4.18 The applicant is seeking to set aside the sale on the grounds of typographical error committed on the part of the respondent and failed to prove the sufficient reasons. The applicant has placed reliance on the

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judgment of UnniKrishnan Vs. The Authorized Officer UCO Bank and

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Ors.” does not apply to facts and circumstances of the case as the Hon’ble High Court has held “ No person shall be deprived of his authority save by the authority of law” .

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4.19 The 1^st respondent has not set the reserve price at a value significantly lower than the market value. As the market value of the one acre in that area is valued roughly at Rs.3.2 cores and the Reserve Price is at Rs.72.25 crores which would roughly come to Rs.96.00 crores which is line with the Hon’ble Kerela High Court’s ruling that the maximum price should be received from any secured asset.

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4.20 As per the valuation report the entire extent for the property is valued at Rs.80,25,52,000/against the outstanding loan of Rs.96,67,19,945. Therefore, there is no scope for this Tribunal to release one portion of the secured property to suffice the loan completely. Further, the applicant is seeking to sell the frontage portion of the property and selling that property would impact remaining portion of the property.

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4.21 The applicant’s further relies on the Judgment of Hon’ble Supreme Court in “Balakrishnan Vs. Malaiyandi Konar” where it is submitted that the proceedings initiated by 1^st respondent are in accordance with the Act not in accordance with the CPC. Further the impugned sale confirmed in favor of the 4^th respondent is only for a Rs.72,75,00,000 which is insufficient to recover the full value of the loan.

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4.22 The mortgage is registered before the central registry in two parts and the charge stands in the name of the 1^st respondent, as the 1^st

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respondent as complied all with the procedures and prays for dismissal of the present SA with exemplary cost.

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Objection of the 2^nd Respondent:

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4.23 The 2^nd respondent reiterates the applicants availing of credit facilities from M/s. Yes Bank, subsequently taken over by M/s. Karur Vysya Bank in 2017: further grant of additional overdraft facility totaling loan liabilities of the 1^st applicant to M/s. Karur Vysya Bank is Rs.68,00,00,000/ The 2^nd to 4^th applicants are guarantors and mortgagors mortgaged immovable properties admeasuring an extent of 32.72 ½ acres of land in Mappedu Village, Tambaram Taluk, Chengalpattu District.

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4.24 The default in repayment resulted in classification of the loan account as NPA on 17.12.2018, followed by issuance of Demand Notice under Section 13(2) of the SARFAESI Act. Even after the receipt of demand notice applicants neither regularized the loan nor repaid the outstanding due as demanded resultant in issuance of possession notice on 28.03.2019.

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4.25 Subsequently the debt of the applicants was assigned to the 1^st Respondent along with the underlying securities vide registered Assignment Agreement dated 30.03.2020. Subsequently, the 1^st Respondent had published sale notice for recovery of a total sum of Rs.72,08,00,000/- from the applicants, which the 1^st Applicant challenged the sale notice before this Hon’ble Tribunal in SA No.439 of 2022 and this Hon’ble Tribunal on 01.11.2022 had directed the Applicants to deposit two Demand Drafts for

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an amount of Rs.7,40,00,000/- and also directed an order of status quo subject to compliance of the said directions.

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4.26 The 2^nd applicant representing 1^st Applicant approached the 2^nd Respondent seeking for assistance and entered into an agreement on 31.10.2022 in the form of a Term Sheet for sale of a property admeasuring 7 acres and 7 cents comprised in Survey Nos. 16/3, 21/1A2, 21/1A3, 21/1A4 & 21/IC situated in Thiruvencheri-Mappedu Village, Tambaram Taluk, Kancheepuram District (presently Chengalpattu), for a consideration of Rs. 6,00,00,000/- per acre and as per terms of the Term Sheet the total consideration was to be paid to the 1^st Respondent directly.

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4.27 In terms of the Term sheet, the 2^nd Respondent had remitted an amount of Rs.7,40,00,000/- on 01.11.2022; Rs. 2,60,00,000/- on 08.02.2023 and Rs. 25,00,000/- on 18.03.2023. The Applicants submitted a One-Time Settlement of Rs.68,85,00,000/- to the 1^st Respondent vide letter dated 02.03.2023, which came to be rejected and the 1^st Respondent issued a sale notice on 22.07.2023 for sale of the mortgaged property through auction on 14.08.2023. The applicants challenged the sale notice dated 22.07.2023 before the Hon’ble DRT – I, Chennai and the Tribunal on 10.08.2023 granted a stay of the sale notice dated 22.07.2023 on condition to deposit of 10% of the debt value on or before 11.08.2023 along with an additional 10% of the debt amount after 30 days. The applicants sought the 2^nd Respondent to comply with a conditional stay order dated 10.08.2023 which led to the execution of a Memorandum of Understanding

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dated 11.08.2023 and expanded the scope of the transaction to 15.17 acres for a total consideration of Rs.91,02,00,000/-.

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4.28 The 2^nd Applicant in order to comply with the Order dated 10.08.2023 sought further financial assistance from the 2^nd Respondent and the 1^st , 2^nd and 4^th Applicant entered into a Memorandum of Understanding dated 11.08.2023 in continuation of the Term Sheet dated 30.10.2022 for the sale of 15 acres and 17 cents for the land situated in Survey Nos. 16/3, 21/1A2, 21/1A3, 16/4A, 16/4B, 16/5A, 16/5B, 15/1, in Thiruvencheri-Mappedu Village, Tambaram Taluk, Kancheepuram District (presently Chengalpattu District) at a consideration of Rs. 6,00,00,000/per acre, for a total sale consideration of Rs. 91,02,00,000/-. Further out of 15.07 acres, only 12.93 acres were mortgaged to the 1^st Respondent and the remaining 2.24 acres were held as freehold by the 2^nd Applicant herein.

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4.29 Subsequently 2^nd respondent had remitted an amount of Rs.10,10,00,000/- to the 1^st applicant to comply with the directions of interim order dated 10.08.2023. However, the 1^st applicant has not extended full co-operation to the 2^nd Respondent in complying with the terms of the Term Sheet and the MoU and hand over possession of 7.5 acres of the mortgaged property in favor of the 2^nd Respondent pursuant to the Term Sheet dated 31.10.2022.

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4.30 Additionally, the applicants also failed to obtain a NOC from the 1^st Respondent to sell 12.93 acres of land and IA No. 178 of 2023 filed by the

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1^st Applicant in SA No.15 of 2023 seeking an order from the Hon’ble DRT –

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I, Chennai which resulted in directing the 1^st Respondent to release the said 12.93 acres of land and the same was dismissed by the Hon’ble Tribunal on 02.02.2024.

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4.31 The 2^nd Respondent approached the 1^st Respondent with a One-Time Settlement Proposal of Rs. 80,00,00,000/- on 05.02.2024 on behalf of the 1^st applicant in terms of Clause 7(vii) of the Term Sheet and Clause 8(vii) of the MoU. However, the 2^nd applicant vide notice dated 09.02.2024 had demanded the 2^nd Respondent to withdraw the One-Time Settlement by submitting that the 2^nd Respondent has no authority to propose the OneTime Settlement.

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4.32 Thereafter, the 1^st Respondent had issued a sale notice on 25.04.2024 scheduling to conduct the sale on 16.05.2024 to which the 2^nd Respondent had attempted to participate in the auction but the 4^th Respondent has emerged as the successful bidder. Thus, the contentions of the Applicants that the 2^nd Respondent had failed to make payment in accordance with the repayment schedule agreed under the Term Sheet and MoU are false.

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4.33 The 2^nd respondent denies the applicants averments that the 2^nd Respondent failed to adhere to payment schedules and the property was sold undervalued and the 2^nd respondent has paid a sum of Rs,6,00,00,000/- per acre which is based on prevailing market rates and the correspondence exchanged.

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4.34 As per Clauses 5(e) and 5(f) of the Term Sheet, the Applicants were to sign all necessary documents for Zone Conversion, Layout Approvals, RERA registration, and to hand over vacant possession of the site for marketing purposes and the applicants failed to redeem the mortgaged property title to the 2^nd Respondent as promised.

¶158

4.35 In terms of MoU the 1^st Applicant and 4^th Applicants were required to furnish all necessary documents and assistance in conducting due diligence, apart from signing all necessary documents for Zone Conversion, Layout Approval and other necessary documents. The Applicants had also agreed to execute the final conveyance deed of the "encumbrance free" property to the 2^nd Respondent along with NOC from the 1^st Respondent to sell 12.93 acres of land which was mortgaged with the 1^st Respondent. However, the 1^st Applicant had neither provided the authorization in terms of clause 8(vii) nor had obtained the NOC from the 1^st Respondent.

¶159

4.36 The 2^nd respondent remitted an amount of Rs.10,10,00,000/- in favor of the 1^st Respondent to comply with the directions of the Hon’ble DRT – I, Chennai dated 10.08.2023 and a payment of Rs.10,10,00,000/to the 1^st Applicant, totaling to Rs.30,45,00,000/- out of which an amount of Rs. 27,60,00,000/- was paid to the 1^st Respondent.

¶160

4.37 But, the 1^st applicant failed to provide authorization letter in terms of clause 8(vii) of the MoU and also failed to obtain NOC from the 1^st Respondent to sell 12.93 acres of land mortgaged. Though the 2^nd Respondent in terms of the MoU had approached the 1^st Respondent with a

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Proposal of One-Time Settlement for Rs.80,00,00,000/- on 05.02.2024, the Respondent vide letter dated 09.02.2024 stated that the 2^nd Respondent had no authority to offer the settlement proposal. Thus the applicants failed to follow the terms of the MoU despite in spite of receiving payments from the 2^nd Respondent.

¶165

4.38 The further allegation that the property is undervalued does not sustain as the applicants agreed to sell the land for a price of Rs.6,00,00,000/- per acre, but never intended to convey the properties as agreed under the Term Sheet and MoU to the 2^nd Respondent and only sought to get funds from 2^nd Respondent to meet its financial obligations to the 1^st Respondent.

¶166

4.39 The 1^st Applicant failed to issue the authorization in violation of the MoU and also directed the 2^nd Respondent to withdraw the settlement proposal. In fact the 2^nd Respondent had duly complied its obligations under the Term Sheet and the MoU and the applicants failed to adhere to the Term Sheet or the MoU but also made false allegations against the 2^nd Respondent. Therefore the 2^nd Respondent prays to dismiss the present SA.

¶167

Objections of the 3^rd Respondent:

¶168

4.40 The 1^st applicant has approached 3^rd respondent bank for credit facilities of Rs.68.00 crores which was sanctioned vide Sanction Letter dated 13.09.2017 to the 1^st applicant.

¶169

4.41 Pursuant to sanction, the 1^st applicant executed security documents on 14.09.2017 and 2^nd to 4^th applicants stood as guarantors and executed Guarantee Agreement dated 14.09.2017 in favor of the 3^rd

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respondent bank. Further the 2^nd and 3^rd applicants have executed equitable mortgage by way of Memorandum of Deposit of Title Deeds dated 13.10.2017 which is registered as Doc.No.8222 of 2017 at Sub Registrar Office, Pallavaram.

¶174

4.42 Since, the applicants were irregular in repayment, the loan account of the applicants was classified as NPA on 14.12.2018 as per the RBI Guidelines. After classifying the loan account as NPA, the 3^rd respondent has issued Demand Notice dated 17.12.2018 under Section 13(2) of the SARFAESI Act, which was duly served to the applicants. On receipt of the same, the applicants vide representation dated 15.02.2019 requested for NOC for sale of the 2^nd applicant’s property which is also vide letter dated 22.02.2019.

¶175

4.43 Even after the issuance of NOC, the applicants failed to sell the property, sought extension of time. Hence, the 3^rd respondent bank proceeded further and issued Possession Notice dated 28.03.2019 under Section 13(4) of the SARFAESI Act, and took symbolic possession of the mortgaged property. The Possession Notice is affixed on the conspicuous part of the property; published in “Dinamani” (Tamil) and “The New Indian Express” (English) both dated on 31.03.2019.

¶176

4.44 The 3^rd respondent had issued E-auctions notices which did not take place. Meanwhile the 3^rd respondent has assigned the entire outstanding dues of applicants to 1^st respondent ARC vide Assignment Agreement dated 30.03.2020 which is registered as Doc.No.4446 of 2021 at SRO Pallavaram.

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Thus the 1^st respondent is entitled to recover the outstanding dues of applicants as per the Assignment Agreement dated 30.03.2020.

¶181

4.45 As the applicants have filed the present SA only in respect of the debt due to the 1^st respondent and prays for dismissal of the present SA.

¶182

Objections of the 4^th Respondent: [Auction purchaser]

¶183

4.46 It is contended that the present SA is filed by the applicants is to stall the process initiated by the 1^st Respondent to recover outstanding dues vide sale notice dated 25.04.2024 (typo error read as 25.04.2023). The mortgaged properties of the 1^st and 4^th applicants were brought for sale with a reserve price of Rs.72,75,00,000/-; the 4th Respondent duly participated in the auction and the property was successfully bid for a sum of Rs.73,15,00,000/-. The 4^th respondent made initial payment of Rs.18,37,50,000/- towards 25% of the bid amount and a sale confirmation was issued by the 1^st respondent on 05.12.2024.

¶184

4.47 Meanwhile, the 1^st applicant filed a W.P.No.13170/24 seeking to quash the sale notice and sought for 3 months’ time to redeem the mortgage. The Hon’ble High Court granted an interim stay on 15.05.2024 and directed 1^st Respondent to conduct the sale, but not to confirm the auction. The Writ Petition was finally disposed on 20.11.2024 directing the applicants to approach the DRT and thus the present SA came to be filed. After the dismissal of the Writ Petition a Sale Confirmation was issued in favor of 4^th Respondent on 05.12.2024, directing to pay the balance amount

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within 15 days. The 4^th respondent has requested 1^st Respondent to extend the time for payment of balance amount Rs.54,77,50,000/- until 05.03.2025.

¶189

4.48 It is evident that the applicants admittedly received the auction sale notice dated 25.04.2024 (typo error read as 25.04.2023) on 27.04.2024. The 1^st Respondent in addition to service of sale notice, also affixed and published the sale notices as required under the SARFAESI Act. The valuation report has also been obtained by the 1^st respondent. It is further submitted that the applicants have not produced any valuation report to point out that the property is undervalued.

¶190

4.49 The 4^th Respondent relies on the Judgment of the Hon’ble Apex Court in Sanjay Sharma vs Kotak Mahindra Bank Ltd , where it is held that an auction in due compliance with the statutory requirement cannot be set aside unless there is a material irregularity or illegality committed in holding the auction or if such auction is committed in any fraud or collusion. Hence it is assertively submitted that the sale conducted in the name of 4^th Respondent cannot be set aside on any reason and on payment of the entire dues payable to the 1^st Respondent, and prays for the issuance of sale certificate as the applicants have lost the right of redemption.

¶191

4.50 The main contention as raised by the applicants is that the property is undervalued, the valuation report produced by the applicants dated 04.09.2017 had been obtained at the time of availing the loan, which clearly states that Survey Nos.12/1 and 14/4 admeasuring 1.25 acres, were

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government lands and equally mentioned the 46 institutional blocks, having 514,871 square feet of built-up area has been sanctioned by the local Panchayat President, who is not the competent authority to sanction the plan. Hence, the buildings were not considered even for the purpose of availing the loan and the applicants had accepted the valuation and availed the loan and now cannot raise their contention against respondent bank's valuation report.

¶196

4.51 The 4^th responded also relies on Judgment passed by Hon’ble Apex

¶197

Court in Rajendra Kumar Barjatya and Others vs. U.P. Avas Evam

¶198

Vikas Parishad and Others where and it has been clearly held that the unauthorized constructions should never be encouraged and they would only have to be demolished. Further, The Hon’ble Apex Court, in Dipak Kumar Mukherjee vs. Kolkata Municipal Corporation and Others has held that illegal and unauthorized constructions violate municipal laws and also affect fundamental and constitutional rights of other persons.

¶199

4.52 As the 4^th respondent as a successful bidder has already paid 25% of the bid amount and is ready to deposit the balance amount on orders of this Tribunal, as there was a status quo granted by this Tribunal to the balance 75% to be paid and prays for dismissal of the present SA.

¶200

Heard both sides of the Counsels and perused the records of the case. Heard arguments of the Counsels appearing for respective parties and perused the records of the case.

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5.1 For better appreciation of facts, it is germane to identify the parties in the SA, the 1^st respondent is the Asset Reconstruction Pvt. Ltd., [ARC] ; 2^nd respondent is a third party to loan transactions and also to the measures initiated by the 1^st and 3^rd respondent; the 3^rd respondent is the Original lender who has assigned the debt of the 1^st applicant to the 1^st respondent ARC, and the 4^th respondent is the Auction purchaser who has successfully bid the property in the auction held on 16.05.2024.

¶205

5.2 It is discernible from the records that the 1^st applicant is a Trust managed by the 2^nd applicant as Managing Director; Applicants No.2 to 4 are the guarantors and mortgagors of the properties as security towards the credit facilities. It is undisputed fact that the applicants has totally availed a sum of Rs.68.00 crores, the 1^st applicant has mortgaged a total extent of 21.125 acres together with building constructed in various survey numbers situated at Mappedu/Thiruvancheri Village, Tambaram Taluk, Chengalpattu District, Kanchipuram, Tamil Nadu 600 126 standing in the name of M/s. Suganthi Educational Trust.

¶206

5.3 The 2^nd and 4^th applicants as Guarantors have executed guarantee agreement and mortgaged a total extent of 8.30 acres together with building constructed in various survey numbers situated at Mappedu Village (Thiruvancheri – Mappedu Village), Tambaram Taluk, Kanchipuram, Tamil Nadu 600 126 standing in the name of Dr.Sujatha Balasubramanian.

¶207

5.4 Due to irregularities in the repayment towards the loan account, the loan account of the applicants is classified as NPA on 14.02.2018 and the

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original lender- 3^rd respondent has issued the Demand Notice dated 17.02.2018, on receipt of the same, the applicant has requested the 3^rd respondent to issue No Objection Certificate for sale of 2^nd applicant property vide representation dated 15.02.20219.

¶212

5.5 The applicant sought for restructuring the monthly instalment and requested NOC for sale of the 2^nd applicant property vide representation dated 15.02.2019, which was considered by the 3^rd respondent vide letter dated 22.02.2019. However, the applicant could not honor the commitment and sought further time to complete the sale vide letter dated 18.03.2019.

¶213

5.6 As the applicants failed to honor their commitment, the respondent has proceeded issued Possession Notice dated 28.03.2019 which was challenged in SA No.88/2019 which came to be dismissed. In fact the applicant does not dispute the issuance of the statutory notices – S.13[2] demand notice and S.13[4] possession notice under the Act, nor pointed out any illegality, but only sought time to sell the property after obtaining NOC.

¶214

5.7 Subsequently, the debt of the 3^rd respondent was assigned to the 1^st respondent ARC vide Assignment Agreement dated 30.03.2020; consequent to the assignment of debt, the 1^st respondent ARC has issued the Sale notice dated 10.10.2022 which was challenged by the applicant in SA No.439 of 2022 and the Tribunal vide order dated 01.11.2022 directed

¶215

the applicants to deposit two Demand Drafts totaling to Rs.7.4 crores and directed to deposit another 10% within four weeks of time, as the

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applicants could not comply with the second limb of the conditional order, the SA came to be dismissed on 10.03.2023.

¶220

5.8 The respondent issued the Sale notice dated 29.06.2023 which was yet again challenged by the applicant in SA No.14 of 2023, and another Sale notice dated 22.07.2023 is challenged by the applicant in SA No.15 of 2023. The applicant complied with the conditional payment of Rs.20,00,00,000/- and subsequently, the SA came to be dismissed as infructuous on 02.02.2024.

¶221

5.9 Further, records reveal that the 1^st respondent ARC issued notice dated 15.03.2024 u/s.13[8] of the Act. In spite of receipt of letter under S.13[8] notice, the applicant did not come forward to redeem the mortgage nor settled the entire outstanding liability to the respondent. Hence the 1^st respondent issued the sale notice dated 25.04.2024 (wrongly mentioned as 25.04.2023) which is impugned in the present SA.

¶222

5.10 On receipt of the sale notice, the applicant invoked the Writ Jurisdiction in Writ Petition No.13170/ 2024 challenging the Sale Notice dated 25.04.2024 without exhausting the statutory remedy available under the Section 17 of the Act. The 1^st respondent conducted the auction on 16.05.2024, the 4^th respondent participated and bid the property for an amount of Rs.73,15,00,000/as against the reserve price of Rs.72,75,00,000/- and paid 25% of bid amount of Rs 18,37,50,000/- in the auction held. The auction purchaser was impleaded as a necessary party in the Writ Petition and hence he is the 2^nd respondent in the instant matter.

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Subsequently, the Writ Petition came to be withdrawn on 20.11.2024 directing the 1^st respondent not to proceed with the sale confirmation until 04.12.2024 and subject to the orders from the Tribunal.

¶227

5.11 As the applicant failed to obtain any Interim order of stay from this Tribunal, the 1^st respondent ARC issued sale confirmation letter to 4^th respondent on 05.12.2024 and received the balance payment of Rs.11,10,00,000/- on 05.12.2024 in furtherance to the confirmation of the sale.

¶228

5.12 The applicant has challenged the impugned sale notice dated 25.04.2024 and auction held on 15.06.2024 mainly on two grounds, firstly that the auction sale held on 16.05.2024 in favor of the 4^th respondent is arbitrary and unreasonable, as the date in the sale notice is wrongly mentioned as 23.04.2023 and the property is undervalued due to noninclusion of the building value, hence the SARFAESI proceedings is vitiated by fraud, arbitrary and unreasonable.

¶229

The issue for consideration are:

¶230

Whether typographical error in mentioning the wrong date in the sale notice invalidates the measure?

¶231

Whether the non-inclusion of valuation of building in valuation of the property proper?

¶232

5.13 In fact, the applicant concedes that the sale notice dated 25.04.2023

¶233

issued under the Rule 8 and 9 of the Security Interest (Enforcement) Rules,

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is for recovery of total outstanding Rs.89,01,04,746/- which is wrongly dated as 25.04.2023. Hence, it is contended that the measures taken by the bank is not in accordance with the Act.

¶238

5.14 On perusal of Sale Notice dated 25.04.2023 produced at page 26-29 of the SA, it is noticed a typographical error has crept in mentioning the year and it is wrongly mentioned as 25.04.2023 instead of 25.04.2024. The applicants have not pointed out as how the mistake in mentioning the date as 25.04.2023 has prejudiced the applicants’ interest. It is pertinent to mention that applicant is aware of the measures taken by secured creditor under the Act and are in receipt of statutory notices, and sale notices issued by the 1^st and 3^rd respondent right from 09.10.2022, 29.06.2023, 22.07.2023 and even present Sale notice dated 25.04.2024.

¶239

5.15 It is matter of record that the earlier sale notices are challenged by the applicants in SA.No.439/2022, SA.No.14/23 and SA No.15/23 and Section 14 order dated 20.03.2025 passed by CJM, Chengalpattu in CMP.No.796/2025 is challenged in SA No.262/25.

¶240

5.16 In case, if the said contention is to be considered, then the challenge to the sale notice dated 25.04.2023 is hopelessly barred by limitation and applicants are called upon first to address why the applicants did not challenge the sale notice dated 25.04.2023 within 45 days as required under S.17 of the Act? Therefore, it is an admitted fact that the sale notice is wrongly mentioned as 24.04.2023 instead as 25.04.2024 and an unintentional typographical error would not take away

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the right of the secured creditor in enforcing the security and the applicants has not established any substantial prejudice caused to them in mentioning the wrong date which is a typographical error. As there is no substantial prejudice caused to the applicants, the measure challenging the sale notice dated 25.04.2023 [wrongly mentioned instead as 25.04.2024] cannot sustain on the ground of wrong mentioning of the date in the sale notice. In this regard, the Tribunal places relies on the Judgment of The Hon’ble

¶245

Supreme Court in the case of L & T Housing Finance Limited – Vs. – Trishul Developers and Another where in it is held that:

¶246

“trivial procedural lapse not a ground to nullify SARFAESI proceedings initiated by the secured creditor, if no substantial prejudice was caused to the borrower” .

¶247

5.17 The Hon’ble Apex Court observed that proceedings initiated under SARFAESI Act by the secured creditors cannot be nullified merely on the ground of technical defects and procedural lapses unless substantial prejudice are caused to the defaulter. The bench comprising Justices L.

¶248

Nageshwara Rao, Hemant Gupta and Ajay Rastogi observed:

¶249

"In the facts and circumstances, when the action has been taken by the competent authority as per the procedure prescribed by law and the person affected has a knowledge leaving no ambiguity or confusion in initiating proceedings under the provisions of the SARFAESI Act by the secured creditor, in our considered view, such action taken thereof cannot be held to be bad in law merely on raising a trivial objection which has no legs to stand unless the person is able to show any substantial prejudice being caused on account of the

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procedural lapse as prescribed under the Act or the rules framed thereunder still with a caveat that it always depends upon the facts of each case to decipher the nature of the procedural lapse being complained of and the resultant prejudiced if any, being caused and there cannot be a straitjacket formula which can be uniformly followed in all the transactions."

¶254

5.18 Further it held that the borrower did not suffer any confusion or substantial prejudice from the error and further affirmed that procedural lapses that do not cause substantial prejudice are not grounds to nullify the SARFAESI proceedings. The measure initiated by the secured creditor is as per the procedure prescribed under the Act and the applicants had knowledge leaving no ambiguity or confusion in proceedings under the Act.

¶255

5.19 Though the applicants challenged the sale notice before the Hon’ble High Court of Madras has now raised trivial and technical objections which has no legs to stand as the applicants have failed to show any substantial prejudice being caused on account of the procedural lapse as prescribed under the Act. Further there is no dispute about the service of sale notice dated 24.04.2024; the sale notice is served, affixed on the property and published in two newspapers as required under the Rule 8 and rule 9 of the SIE Rules and the applicant have failed to establish any illegality in issuance of the impugned sale notice. As the applicants failed to demonstrate that a substantial prejudice is caused in the typographical error in mentioning the year wrongly there is no illegality pointed in issuance of sale notice dated 25.04.2024 as per Rule 8 of SIE Rules.

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5.20 The judgment relied upon by the 1^st respondent also would support the Tribunal view that there is no substantial prejudiced caused to the borrower. The 1^st respondent places reliance on judgment in the case titled

¶260

Varimadugu Obi Reddy Vs. B. Sreenivasulu and Ors. (2023 2 SCC 168), where in it is held that:

¶261

“38. …although there was a typographical error, the borrowers failed to demonstrate any prejudice being caused on account of the inadvertent error being caused. At the same time, the borrower failed to demonstrate that because of a typographical inadvertent error as indicated above, the property could not have fetched the value as it ought to have fetched and that apart, there was no documentary evidence placed on record to substantiate the kind of prejudice if any, being caused” .

¶262

5.21 Hence the first contention that the sale notice dated 25.04.2023 instead of 25.04.2024, and measure taken by the respondent ARC is bad in law cannot sustain and the same fails.

¶263

5.22 On the other hand, the applicants without pointing out any illegality in the measures attempted to settle the loan through a third party ie., the 2^nd respondent herein and has attempted to create third party interest on the secured asset during the subsisting of the mortgage.

¶264

The 1^st respondent has raised the issue of maintainability of the SA under S.13[8] of the Act as the applicant have lost their right of redemption as the sale notice was published in Newspapers under Rule 9 of the SARFAESI Rules.

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6.1 The 1^st respondent has issued notice on 15.03.2024 under Section 13(8) to the applicants granting 30 days’ time to redeem their mortgage. Further, the 1^st respondent also issued the sale notice dated 25.04.2024 which is published in the leading Newspapers in English language and local vernacular language on 26.04.2024. Hence, on the date of publication of the sale notice, the applicants have lost their right of redemption and has placed reliance on the judgment in the case titled Celier LLP Vs. Bafna Motors Pvt Ltd. and Ors (2024 2 SCC 1).

¶269

“91. …It is duty of the courts to zealously protect the sanctity of any auction conducted. The courts ought to be loath in interfering with auctions, otherwise it would frustrate the very object and purpose behind auctions and deter public confidence and participation in the same”

¶270

93. In view of the aforesaid discussion, we hold that as per the amended Section 13(8) of the SARFAESI Act, once the borrower fails to tender the entire amount of dues with all cost and changes to the secured creditor before the publication of auction-notice, his right of redemption of mortgage shall stand extinguished/waived on the date of publication of the auction-notice in the newspapers in accordance with Rule 8 of the 2002 Ruels.”

¶271

6.2 It is assertively contended that the applicants had 40 days’ time to redeem their mortgage, since it has not been redeemed, the applicants have lost their right of redemption available to them. Additionally, the 1^st respondent has conducted the auction on 16.05.2024 with the leave of Hon’ble Madras High Court vide order dated 15.05.2024 in

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W.P.No.13170/2024 and the 4^th respondent is the highest bidder who has bid the property for an amount of Rs.73,15,00,000/-..

¶276

6.3 As the W.P.No.13170 of 2024 came to be withdrawn by the applicant on 20.11.2024 and there was no stay from the Tribunal, the 1^st respondent proceeded in confirming the sale on 05.12.2024 to the 4^th respondent who has made payment and there is no illegality in the measures taken by the 1^st respondent. The applicants are frustrating the measure by challenging each measure and has not come forward to liquidate the entire outstanding liability due to the 1^st respondent.

¶277

6.4 Considering the contentions of the 1^st respondent, it is manifest from records that the loan account of the applicants is classified as NPA way back on 14.12.2018, consequent to NPA, the secured creditor has initiated measure and issued S.13[2] demand notice on 17.12.2018 followed by possession notice under S.13[4] on 28.03.2019 which is not disputed by the applicants. The applicant have failed to liquidate the entire liability and their attempts to settle the account under OTS from 2023 have not succeeded.

¶278

6.5 The applicant had given four OTS proposals dated 02.03.2023 for a sum of Rs.58.50 crores produced at Page No.69 of 1^st respondent’s typed set; second one dated 17.07.2023 for an amount of Rs.63 crores produced at Page No.75 of 1^st respondent’s typed set; third one dated 23.12.2023 for a sum of Rs.73.05 crores produced at Page No.92 of 1^st respondent’s typed set and fourth OTS proposal dated 11.01.2024 for a sum of Rs.73.50

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crores which is produced at Page No.94 of 1^st respondent’s typed set. The applicants have repeatedly failed to submit a concrete OTS proposal and also entered in a Memorandum of Understanding with the 2^nd respondent to settle the liability of the 1^st respondent by selling a portion of the property also failed despondently to settle the liability even as on today.

¶283

6.6 Though the applicant received the notice under S.13[8] to redeem the property yet again failed to clear entire liability. Hence it is clear that the appellant is not keen in liquidating the entire outstanding amount due in the loan account, but only harpens on the payment Rs.30.20 crores and has failed miserably to the opportunities granted by the secured creditor even in selling a portion of the property as per MoU.

¶284

6.7 In fact, the applicant have lost the right of redemption under S.13[8] of the Act where the amount due of secured creditor together with interest and other charges are tendered to the secured creditor at any time before the publication of sale notice. However it is pertinent to appreciate that the right to the redeem the property accrues on the borrower/mortgagor from the stage of issuance of S.13[2] and S.13[4] notices including the right under S.13[8]. The 1st respondent vide letter dated 15.03.2024 issued specifically under S.13[8] before the impugned sale notice. Hence, the Tribunal comes to inevitable conclusion that the applicant failed to exercise their right of redemption not only from the date of publication of sale notice but their right to redeem the property from the initiation of the measure.

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7.1 The second limb of argument put forth by applicant is with regard to the Rule 8(5), that the valuation report has to be obtained before the sale of the secured asset. The secured creditor has obtained valuation report from their approved valuer on 28.03.2024 before putting the property to sale on 16.05.2024 as is evident from the valuation report produced at Page No.102 of 1^st respondent’s counter and have complied with Rule 8(5) of SI Rules. The applicant produced valuation dated 12.01.2024 produced at page 49 of the SA where the land value is Rs.8 crore per acre and valuation dated 04.09.2017 is valued at Rs. 2.68 crore per acre and valuation dated 14.05.2022 the land is valued at Rs.2.68 crore per acre. [additional documents] The valuation produced by 1^st respondent dated 28.03.2024, the land is valued at Rs.4 crore per acre.

¶289

7.2 Per contra the Term Sheet dated 31.10.2022 entered between the applicant and the 2^nd respondent, the land is valued at Rs.6 crore per acre contrary to the second valuation of the applicant dated 14.05.2022. Evidently there is no valuation of building considered as the building plan is approved by the President, Village panchayat who is not the competent authority to sanction building plan as per law. The relevant portion of the valuation report of the applicant dated 04.09.2017 is extracted as under:

¶290

Remarks	 The buildings were not approved by competent
	authority. Hence Building value is not considered.
	Land value along considered for valuation.
	 Part of Land is leased to a School by the same trust.

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Since it is nearer to Air force station, there will be limiting conditions/ restrictive developments near to this land. Since High raised buildings are not permitted in the vicinity.

¶295

Air Force property is at Northern side. Hence no objection certificate to be obtained from Air force authorities for constructing any high raised building.

¶296

A private channel is running through the property the same has to be maintained without any hindrance to the water flow. And a copy of Tahsildar Certificate is produced for the same.

¶297

Since it is a Educational institutions, the marketability is restricted to the same line of activities only. And more over the Lands are not Vacant and the Buildings are existing and constructed for a specific purpose.

¶298

For Ownership / Title / Marketability / Enforceability / Legal opinion to be verified.

¶299

Valuation Report of Applicant dated 14.05.2022:

¶300

Part B (Valuation of Building & Amenities)

¶301

Originally the building was said to be constructed in the year 1997 and subsequent year. In these buildings, the land owner running an Engineering College in the name of GKM Engineering College.

¶302

In Tamil Nadu there are about 550 Engineering Colleges. Due to the mushroom growth of Engineering College, the demand has come down and the number of students taking Engineering Courses dropped considerably in the last 5 years only very few established colleges are

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able to fill their vacancies. In other colleges the occupancy is less and in the some colleges the occupancy is very less.

¶307

This resulted in Closing of several Engineering Colleges. The Covid-19 first, second and further created problem resulting in closure of several colleges. GKM Engineering College is one such College affected the above reasons.

¶308

In this circumstances there will not be any takers.

¶309

Further the buildings were approved by Panchayat President, who is not competent to approve institutional buildings. Hence building value cannot be considered.

¶310

At the same time, there is a good demand for residential plots in this area. Major extent of land is already classified as mixed residential by CMDA. Hence converting the land into residential plots is easier.

¶311

There will be some salvage value for buildings. However, the same will compensate the expense to be incurred in obtaining the demolition plan, demolition cost, carting the debris and clearing the site. Hence, we have considered ‘O’ Value for the buildings. However we have tabulated this building details in Table – C below for information purposes.

¶312

7.3 It is evident from the valuation reports relied upon by the applicant that the buildings is not approved by competent authority and the land value alone is considered for valuation. The applicant did not have any grievance for not valuing the building at the time of disbursal of loan and was aware that the building constructed on the property was not considered at the time of disbursal of loan, now cannot have any objection to the valuator in not considering the value of buildings.

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7.4 The 1^st respondent valuation report clearly depicts that the total extent of the land admeasures 30.285 acres as per patta registered in the name of Suganthi Educational Trust, Ms. Sujatha Balasubramanian and Mr. C. Balasubramanian and the lands are divided into 3 parts and registered under 3 separate documents. The educational institution admeasuring 12 acres is situated towards the back of the entire area of land and remaining extent of the land serves as the frontage access to the institute connecting 200-feet road. Since 200-feet road provides access for the educational institution and separate value of the vacant land cannot be fixed for any

¶317

one portion of the total area. Therefore, the market value has been derived on the basis of a distressed value of the total extent of 30.285 acres.

¶318

7.5 The valuator has deliberated the marketability of the property is restricted to educational activities where the major extent of land is already classified as mixed residential by CMDA and conversion of land to residential purpose is easier which involves cost along with the demolition of existing buildings where re-claim value of building involves the expense in obtaining the demolition plan, demolition cost, carting the debris and clearing the site and has value at ‘O’ Value for the buildings. Hence it is justified by the valuator in not considering the building value where the prospective purchaser would be incurring additional cost in purchasing the property under auction. The valuation calculated is as under:

¶319

1.	Total extent of land area	30.285 Acres
2.	Saleable Area of Building	5,24,091.00 sq.ft. value not consider)	(Bldg

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3.	Guide line value for land	Rs.4,00,00,000.00/Acre
4.	Assessed/Adopted rate for valuation – considering the location accessibility of this property.	Land Market Rate Range from Rs.2.5 to 2.8 Crore/Acre Land Valuation Adopted Rate
		Rs.2,65,00,000.00/ Acre

¶324

7.6 The 1^st respondent invalidates the applicant’s valuation report dated 12.01.2024 as the valuator failed to consider that the buildings constructed on the land does not have approvals from concerned statutory bodies and hence the buildings considered in the valuation report is in violation of the law and liable to be demolished.

¶325

7.7 In the applicant’s valuation, the valuator has relied on the Doc.No.132/2023 dated 05.01.2023 where 10 cents were sold for Rs.72,36,000/- fixing the value of 1 acre at Rs.7,23,60,000/-. However, the Doc.No.132/2023 is a settlement deed, wherein a total extent of 27 cents were settled for the consideration and the value of one acre would be roughly be Rs.3.25 crores. Hence the applicant’s reliance on the said documents would not justify the valuation arrived by the valuator.

¶326

7.8 Further the 1^st respondent relied on the valuation report, which is produced at Page No.102 of 1^st respondent typed set, the valuator has submitted that there is a land and building and also fixed the FMV values of the property at Rs.80,25,52,000.00/- and the realizable sale value is 72,22,96,800.00/and the Distress/Forced Sale value is Rs.64,20,41,600.00/-.

¶327

7.9 It is pertinent to note that the buildings were approved by the Panchayat President who is not a competent authority to approve the

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institutional buildings. Hence the building value cannot be considered. Further, there is a good demand for residential plots in the area and the major extent was already classified as mixed residential by CMDA, hence the conversion of land into residential plots is easier and the same will compensate expense incurred in obtaining the demolition plan, demolition cost and clearing the site. Hence the valuator has declared ‘O’ value for the building.

¶332

7.10 Further, it is specifically submitted by the applicant that the 2^nd respondent is put a play cards in the name of “AZURE” for promoting the sites/plots indicates that the property is suitable for residential purpose only after demolition of the building, after obtaining conversion which would incur expenses and demolition charges. Hence the valuator has not considered the valuation of the 27 years old building which is without approval from competent authority.

¶333

7.11 The educational institution measuring 12 Acres situated towards the back of the entire area of land and remaining extent of the land serves as the frontage access to the institute. Therefore, it forms a part of the educational institution as it connects the same with the 200-feet road. The land on which the educational institution is running does not have any commercial value immediately after sale. Since the vacant land provides access for the educational institution to the 200-feet road, it is treated as part of the institution. Separate value of the vacant land cannot be fixed for any one portion of the total area. Therefore, the market value has been

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derived on the basis of a distressed value of the total extent of 30.285 acres.

¶338

7.12 The applicant has produced the valuation report dated 12.01.2024 at Page No.75 of applicant’s additional typed set. It is seen that the applicant’s valuator has mentioned that the Prevailing Market Value is Rs.7.50 Crores to 8.50 Crores per acre which is conflicting to the Memorandum of Understanding entered by the applicants and 2^nd respondent, where the value was fixed at Rs.6.00 crores per acre and the same is produced by the applicant at Page No.58 of applicant’s additional typed set.

¶339

7.13 Further, it is also seen that the valuator has failed to mention the nature of construction, age of the buildings, and also not made a mention about the approvals of the building by the competent authority. The applicant’s valuer at Para No.13 has clearly mentioned that few building plans were approved by village panchayat President. However, as per the master plan the area is classified as mixed residential and primary residential. The applicant also produced the guideline value available at the government portal and have relied upon the sale deed dated 21.08.2023 which is registered as Doc.No.8366/2023 wherein the market value is fixed at Rs.3,500/- per sq.ft., and calculated as Rs.480,78,26,100/- which is in contrary to the valuation report produced by the 1^st respondent.

¶340

7.14 It is subsequently contended that the 1^st respondent has not considered the sale held in the nearby area to ascertain the valuation. The

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applicant contention is only with regard to property is under-valued. However, the valuation report produced by the applicant on 04.09.2017 is obtained at the time of availing the loan and clearly states that Survey Nos.12/1 and 14/4 admeasuring 1.25 acres, were government lands and mentioned that 46 institutional blocks, having 514,871 sq.ft of built up area has been sanctioned by Local Panchayat President, who is not a competent authority to sanction the plan. As the buildings were not considered for the purpose of availing the loan and the applicants accepted the valuation and availed the loan, now they cannot object to the bank’s valuation report in not considering the value for the building on the property.

¶345

7.15 It is therefore, opposed that the property without proper sanction has to be treated as unauthorized construction and the same would be demolished.

¶346

7.16 Now considering the position of law regard the building plan approved by non competent authority. It is settled position of law that the buildings which are not approved by competent authority in violation of Municipal by law and in violation of zonal classification, the Courts have held that the buildings which are not approved by competent authority are considered as unauthorized building which is only to be demolished. The Tribunal places reliance on the Judgment of the Hon’ble Supreme Court

¶347

in Kaniz Ahmed Vs. Sabuddin and Ors, where it is held that the unauthorized constructions have to be demolished and there is no way out, Judicial discretion would be guided by expediency and the courts are not

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free from statutory fetters. Further the 4^th respondent has placed reliance on the Rajendra Kumar Baratya and Ors Vs. U.P. Avas Evam Vikas Parishad and Ors and Dipak Kumar Mukherjee Vs. Kolkata Muncipal Corporation and Ors where it is held that the unauthorized constructions never be encouraged which violates municipal laws and have to be only demolished.

¶352

7.17 In the instant matter, it is seen that the building constructions on the property is approved by the President of Village Gram Panchayat and no such permission/licenses to conduct any business or trade must be given by any authorities including local bodies of States or Union Territories in any unauthorized building irrespective of it being residential or commercial building.

¶353

7.18 The Tribunal further places reliance on the Judgment of Hon’ble Madras High Court in S. Paulpandian Vs. The Additional Secretary (Technical), Housing and Urban Development Department and Ors

¶354

where it is held that the property put up by the applicant cannot be authorized and liable to be demolished. In the instant case it is very clear that the constructions which has put up in the schedule property and the same is not valued by the valuator when fixing the Reserve price is justifiable.

¶355

7.19 The Tribunal also places reliance on the Judgment in Kerala State Coastal Zone Management Authority Vs. Maradu Municipality,

¶356

MANU/SCOR/87485/2018: (2021) 16 SCC 822, it was once again

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reiterated that illegal and unauthorized constructions put up with brazen immunity cannot be permitted to remain and also held that permission granted by the Panchayat was illegal and void and no such development activity could have taken place. It is the case of the applicant that the valuation report has been obtained without considering the building constructions and the constructions are audacious which are constructed without complying building plan approval. Hence the contentions raised by the applicants that the valuator has not considered the building is not justified.

¶361

7.20 The 4^th respondent relies on Judgment passed by Hon’ble Apex Court in “Rajendra Kumar Barjatya and Others Vs. U.P.Avas Evam Vikas Parishad and Others” as held that the unauthorized construction should never be encouraged and they only to be demolished. Therefore, to impute any value for a structure which would ultimately be demolished would be against the principles established by the Hon’ble Apex Court.

¶362

7.21 Though the applicant has taken contention that there are contradictions in the valuation report of the property obtained by the 1^st respondent. The valuator has clearly verified the land and the building and the saleable area, it is subsequent to mention that the building is not considered by the valuator as the building has not been approved by the competent authorities. Thus, the contention with regard to the valuation of the property being less without considering the building fails.

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7.22 It is pertinent to note that the applicant has mortgaged the property and has entered into an agreement with the 2^nd respondent on 11.08.2023 with an intention to sell an extent of 15.17 acres of land for a total consideration of Rs.91,02,00,000/- to settle the liability with the 1^st respondent herein. Further, a Memorandum of Understanding also came to be entered between the applicant and 2^nd respondent on 11.08.2023 for the sale of 15.17 acres at the rate of Rs.6.00 crores per acre and for a total consideration of Rs.91,02,00,000/-. Thus, it is evident that the applicant had entered into a private transaction which the 2^nd respondent had come forward to redeem the property failed to redeem the property as per their MoU.

¶367

7.23 It is the case of 2^nd respondent that the applicant has wrongfully induced them for approximately a sum of Rs.30.35 crores under the pretext in settling the dues without any charge of interest and the 2^nd respondent had remitted a sum of Rs.10,10,00,000/- to 1^st applicant to comply with the orders of DRT-I, Chennai dated 10.08.2023 and alleges that the applicant has breached the Term Sheet and does not have any intention to sale the property. The contentions as raised by the 2^nd respondent and the documents relied is a matter of fact which the Tribunal is not inclined to do interfere with as it is a private agreement entered between the applicant and the 2^nd respondent which does not fall for consideration under the measures taken by the 1^st respondent under the Act. The 2^nd respondent if aggrieved by the non-adherence of the clauses in the

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agreement entered with the applicant has to approach appropriate court in accordance with law.

¶372

7.24 On receipt of the Section 13(2) notice, the applicant was restrained to deal with the property and being fully aware, the applicant has failed to adhere to the restrictions on the borrower under the provisions of the SARFAESI Act. The 4^th respondent is the successful bidder who has participated in the auction sale held on 16.05.2024 pursuant to the sale notice dated 25.04.2024 for an amount of Rs.73,15,00,000/- and sale confirmation was issued by the 1^st respondent on 05.12.2024 and an initial payment of Rs.18,37,50,000/- was paid towards the 25% of the bid amount.

¶373

7.25 It is apt to mention that the applicant has filed W.P.No.13170/2024 seeking three months’ time to redeem the mortgaged property and the Hon’ble High Court vide Interim Stay dated 15.05.2024 had directed the 1^st respondent to conduct the sale and further directed not to confirm the auction sale. As 4^th respondent has emerged as highest bidder paid 25% of the bid amount as required under the Act and under the terms and conditions of sale. The Writ Potion is finally disposed on 20.11.2024 relegating the applicant to the DRT and on the closure of the Writ Petition, a sale confirmation was issued by the 1^st respondent on 05.12.2024 directing the 4^th respondent to pay the balance amount to be paid within 15 days.

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7.26 The 4^th respondent had sought for extension of time to pay the balance amount of Rs.54,77,50,000/- till 05.03.2025 and the 4^th respondent is ready and willing to pay the balance sale consideration amount upon the orders of this Tribunal. As the 4^th respondent is the highest bidder who has paid the bid amount and a third party interest is created on successful sale, further as there is no illegality in the measures taken by the secured creditor, the sale cannot be set aside and places reliance on the Judgment of Hon’ble Apex Court in “ Sanjay Sharma Vs Kotak Mahindra Bank Ltd” where it is held that an auction held with due compliance and statutory requirement cannot be set aside unless there is a material irregularity or illegality committed in holding the auction..

¶378

7.27 The applicant having failed to clear the entire outstanding amount due from 2019 ie., from the date of NPA cannot be allowed to frustrate the measures taken under the Act, firstly on the pretext of settling the account under OTS; secondly having lost the right of redemption; thirdly on the contention that the building value is not considered and fourthly even after 1^st respondent issued NOC to sell a portion of the property be allowed to thwart the recovery measure taken by the secured creditor under the Act.

¶379

IA No.717 and 718:

¶380

8.1 The applicants have filed Additional typed set of 38 Documents on 27.02.2024 after serving copies to respective parties and without the leave of the Tribunal to take the same on record. Additionally, the applicants have

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filed an IA No.717/2025 to appoint an independent valuer as Commissioner The applicant and the 1^st respondent has produced valuations, wherein the applicant has relied upon two valuations dated 14.05.2022 and 04.9.2017 and the 1^st respondent valuation dated 28.03.2024 which is prior ot the sale. The Tribunal is placed with 03 valuations to ascertain the valuation of the property. The Tribunal has considered the valuations in detailed as mentioned above, hence the application for appointment of a commissioner does not merit any consideration. Further the 4^th respondent has relied on the Judgment passed in Bank of Baroda Vs. M/s. Shri Lakshmi Defence Solutions Limited where in it is held that the,

¶385

No commissioner can be appointed to act as witness for the cause of the party, particularly, the SARFAESI Proceedings, wherein there is no explicit provision for appointment of Advocate Commissioner and the procedure for adjudication/trial is summery in nature .

¶386

8.2 The IA No. 718/2025 seeking the names of the bidder and entire sale proceedings and mode of payment to which the 1^st respondent ARC and the auction purchaser have filed their counter contending that the borrower is not entitled to details of bidders who took part in the auction held on 16.05.2024 and the mode of the payment made by the highest bidder along with UTR numbers are available in the sale confirmation letter dated 05.12.2024 which are as under:

¶387

Rs.2 crore. (UTR: CITIH24340702940),

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Rs.1 crore. (UTR: CITIH24340703644)

¶392

Rs.3.10 crore. (UTR: CITIH24340703873)

¶393

Rs.2 crore. (UTR: CITIH24340703873)

¶394

Rs.3 crore. (UTR: CITIH24340705085) Totaling to Rs.11.10 crore

¶395

8.3 The further contention that the IA is filed to know the details of the participated bidder is already known to the applicant as the 2^nd respondent had participated in the auction held 16.05.2024, however he didn’t succeed to be a successful bidder which is an admitted fact by the applicants and the 4^th respondent has emerged as the successful bidder.

¶396

8.4 It is also pertinent to mention that the 2^nd respondent is none other than the party who had entered into MOU with the applicant who had agreed to purchase 15 acres of land under the MOU and both parties failed to adhere to the terms of the contract. Though the applicant has made 2^nd respondent as a party before the Writ Application and also in SA to which the 1^st respondent is not a party Hence the IA No.717/2025 is filed only to frustrate and an attempt to make out to develop a case of illegality in the auction process, where the applicant has failed to make a case of any illegality in auction process held. Hence IA No.718/2025 does not require any further consideration and the same stands dismissed.

¶397

8.5 On the other hand, the applicant makes frivolous allegations against the 2^nd respondent for a reason best known to them and contrary to the agreed terms as per the term sheet and as per the Memorandum of understanding.

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Applicant has relied on the Judgments;

¶402

i. State Bank of India Vs. Prashant Jhunjhunwala & Ors – 2011

¶403

SCC – Online Raj 2935 dated 10.02.2011 contending that the 1^st respondent has violated Rule 8(7) (a) of the Security Interest (Enforcement) Rules by not disclosing the lease hold rights given by the applicants 2 and 4 in their personal capacity to GKM Vidhyashram. In fact it is an admitted fact the applicants valuation report dated 04.09.2017 reflects that a part of land is leased a school by the same Trust the 1^st applicant herein. As the Trust is borrower who has mortgaged the property as security towards the credit facilities, the charge is also subject to mortgage. The charge is registered in the Central Registry on 07.11.2017 and the CERSAI report produced at page No.1 to 3 of the respondent type set.

¶404

ii. Ram Kishun & Ors Vs. State of Uttar Pradesh & Ors – (2012)

¶405

11-SCC-511 dated 24.05.2012 wherein it is held that law requires a proper valuation report, it is acceptance by the authority concerned by application of mind and then fixing the reserve price accordingly and acceptance of the auction bid taking into consideration that there was no possibility of collusion of the bidders.

¶406

The 1^st respondent has obtained valuation report from an approved valuer and has fixed the reserve price considering the building plan is approved by President Village panchayat and have justified the valuation of the property.

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iii. Anita Sadana Vs. Rajinder Kour & Ors – 2014 SCC Online MP

¶411

8685 dated 09.01.2014 contending that valuation is a question of fact and valuation of the property is required to be determined fairly and reasonably.

¶412

iv. J Rajiv Subramaniyam & another Vs. Pandiyan & Ors – dated 14.03.2014 to the proposition that a sale effected without complying Rule 8 and 9(1) would be unconstitutional and therefore null and void. The 1^st respondent has complied with Rule 8 and Rule 9, hence the judgement is not applicable to the present case.

¶413

v. Celir LLP Vs. Sumati Prasad Bafna – Manu/SC/1343/2024

¶414

dated 13.12.2024 it is held that the Rule of the Act is enacted to ensure that the Asset is not sold for a song. The secured must ensure that there is minimum yield from such secured asset.

¶415

The judgment is not applicable as the secured asset is not sold below the reserve price and after due consideration of relevant factors has fixed the reserve price. In fact the property is sold at Rs.73,15,00,000/- as against the reserve price is Rs.72,75,00,00/-

¶416

vi. Final order of the Hon’ble Debts Recovery Tribunal – II, Karnataka at Bengaluru in S.A.No.306/2020

¶417

vii. Final order of the Hon’ble Debts Recovery Appellate Tribunal at Chennai in R.A.(S.A).16/2022 in SA No.306/2020 on the file of Hon’ble Debts Recovery Tribunal – II, Karnataka at Bengaluru in S.A.No.306/2020.

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8.6 The applicant has relied on the Order passed in SA No.306/2020 of the Hon’ble DRT – 2 Bengaluru to contend that the Sale certificate was set aside on the grounds that the secured creditor has not obtained proper valuation report. The Hon’ble DRAT Chennai in RA SA No.16/2022 upheld the order passed in SA No.306/2020 by the Hon’ble DRT - 2 Bengaluru.

¶422

8.7 The applicants relied on the said order would not come to the aid of the applicants as the issue considered in SA.306/2020 firstly was with regard to one year old valuation of the property where guidance value was calculated. Secondly, the sale certificate was issued in the name of the 2 persons who did not participated in the auction sale, wherein the successful bidder is only one person and the sale certificate was issued to the successful bidder along with another person. Thirdly, the respondent bank had disbursed loan to the auction purchaser to comply with the payment of balance sale considerations. Based on these fact the Tribunal has passed the orders on merits setting aside sale certificate. Hence reference to valuation of the property in isolation in SA 306/2020 cannot be applied to this case.

¶423

8.8 In the instant matter the secured creditor has obtained the valuation report dated 28.03.2024 which is prior to sale on 16.06.2024 which is within the period of 1 year Further the Sale confirmation is issued to the successful bidder only with the leave of Hon’ble High Court in W.P.No.13170/2024. Hence the Order dated 21.03.2025 passed in RA No.129/2024 would not assist the applicant in the present case.

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8.9 Further, the Hon’ble DRAT considered the Judgment in Celir LLP vs. Bafna Motors Pvt Ltd and Ors (2024 2 SCC 1) held that illegal and or irregularity in conducting the sale and issuance of sale certificate which was not an issue in the said judgment.

¶428

8.10 In the instant matter, the applicants have raised two contentions in challenging the sale , one is mentioning of the wrong date in the sale notice and secondly the building constructions on the mortgage property is not being considered for fixing the valuation of the property. The facts and circumstances of the present case is different from the facts and circumstances of the order passed in SA No.306/2020 and the contention that the DRT-2 Bangalore had considered the valuation in settling aside a concluded sale fails.

¶429

8.11 The 1^st respondent ARC has relied on the Judgment of Varimadugu Obi Reddy Vs. B. Sreenivasalu and Ors. (2023 2 SCC 168) where it is held that although there was a typographical error in the notice, the borrower failed to demonstrate any prejudice caused due to the inadvertent error.

¶430

8.12 Further the 1^st respondent has relied on the Judgment of Rajendra Kumar Barjatya & another Vs. U.P Avas Evam Vikas Parishad & Ors

¶431

(Civil appeal No.14604 of 2024), where it is held that any constructions put with up without the requisite approvals cannot be encouraged and further held that any unauthorized constructions shall be demolished and no chance for regularization shall be afforded except in the case of

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exceptional cases. The said judgment was further relied by Hon’ble Madras High Court in the case of M/s. Janpriya Builders Vs. The Commissioner, Greater Chennai Corporation & Ors (W.P.No.17011

¶436

of 2024) where in it is held that no leniency or sympathy can be shown by the courts merely on the ground that the person violating the rules have invested some amount into constructing the unauthorized buildings.

¶437

8.13 The 1^st respondent ARC has relied on the Judgment of Celir LLP Vs. Sumati Prasad Bafna – Manu/SC/1343/2024 where it is held that the right of the borrower to redeem the secured asset would be extinguished after the publication of the notice for public auction under Rule 9 of the SARFAESI Rules, 2002. Further the 1^st respondent bank has relied

¶438

on the Judgment “The Bijnor Urban Cooperative Bank Limited & Ors

¶439

Vs. Meenal Agarwal & Ors were it is ruled that

¶440

¶441

The 4^th respondent has relied on the following judgments :

¶442

i. Bank of Baroda Vs. M/s. Shri Lakshmi Defence Solutions

¶443

Limited contending that “No commissioner can be appointed to act as witness for the cause of the party, particularly, the SARFAESI

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proceedings, wherein there is no explicit provision for appointment of Advocate Commissioner and the procedure adopted for adjudication/trial is summery in nature”

¶448

ii. Sanjay Sharma Vs. Kotak Mahindra Bank Ltd held that an auction

¶449

in due compliance with the statutory requirement cannot be set aside unless there is a material irregularity or illegality committed in holding the auction or if such auction is committed in any fraud or collusion.

¶450

iii. Rajendra Kumar Barjatya and Ors Vs. U.P. Avas Evam Vikas

¶451

Parishad and Ors, has clearly held that unauthorized constructions should never be encouraged and that have to be demolished.

¶452

iv. Dipak Kumar Mukherjee Vs. Kolkata Municipal Corporation

¶453

and Ors, has held that illegal and unauthorized constructions violate municipal laws and also affect fundamental and constitutional rights of other persons.

¶454

8.14 Subsequent to the final order passed by the Hon’ble Madras High court on 15.05.2024 giving liberty for the borrower to approach the DRT within two weeks of time and continue to stay the sale till 04.12.2024 as the applicant failed to obtained any order of stay, hence the sale was held on 16.05.2024 and 4^th respondent has emerged as the highest bidder and on receipt of the bid amount, the sale confirmation letter is also issued.

¶455

8.15 For the foregoing reasons discussed above based on pleadings, documents produced by respective parties and on perusal of records, the

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Tribunal comes to inevitable conclusion that the 1^st respondent as secured creditor has initiated the measures under the Act for the enforcement of the security as prescribed under the Act and have established the due compliance of the procedures with supporting documents in support of the measures taken under the Act.

¶460

8.16 On the other hand, the applicant have failed to establish any irregularity in the auction held or in the measures taken under the Act.

¶461

Resultantly the present SA is dismissed. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost

¶462

Sd/-

¶463

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

¶464

(Dictated to Steno (Mogesh), transcribed by him, corrected, signed and pronounced by me on this the 11^th December, 2025.)

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ANNEXURES

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

¶470

Sl. No.	Description of Documents	Document No.
	Documents filed along with SA
1.	Impugned Sale Notice issued by the respondent bank dated 25.04.2023	A-1
2.	Copy of the Hon’ble Madras High Court Order in W.P.No.13170/2024 dated 20.11.2024	A-2
3.	Letter of intent and MOU signed by the 2^nd Respondent to purchase the schedule property dated 11.08.2023	A-3
4.	Valuation report dated 12.01.2024	A-4
5.	Copy of Sale Deed/Doc.No.8366/2023 dated 21.08.2023	A-5
6.	Email sent by the applicant to Respondent No.1 dated 26.07.2024	A-6
	Additional Typed Set of Papers
7.	Deed of Amendment of the applicant Suganthi educational trust dated 30.11.2016	A-7
8.	Credit sanction letter issued by the 3^rd respondent to the applicant dated 13.09.2017	A-8
9.	Deed of Simple Mortgage executed by the 2^nd and 4^thapplicant in favour of the 3^rdrespondent bank dated 26.11.2019	A-9
10.	Sale Notice issued by the 3^rdrespondent bank dated 12.12.2019	A-10
11.	Objection letter sent by the applicant to the 3^rd respondent bank objecting to the sale of the mortgaged property by private treaty during covidperiod dated 18.03.2020	A-11
12.	Letter issued by the 1^strespondent to the applicant stating that the debt is assigned by the 3^rdrespondent to the 1^strespondent dated 12.05.2020	A-12
13.	Intimation of 3^rdsale issued by 1^strespondent dated 10.10.2022	A-13
14.	Term Sheet executed between the 2^ndapplicant and 2^ndrespondent dated 31.10.2022	A-14

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15.	Letter and DD for payment to the tune of Rs.7.40 crores made by the applicant to the 1^st respondent dated 02.11.2022	A-15
16.	OTS request made by the applicant to the 1^st respondent dated 02.03.2023	A-16
17.	Rejection of OTS proposal of the applicant by the 1^strespondent(E-Mail)dated 27.06.2023	A-17
18.	Letter of intent between the 1^st, 2^ndand 4^th applicant with the 2^ndrespondent dated 11.08.2023	A-18
19.	Memorandum of Understanding between the applicant and the 2^ndrespondent dated 11.08.2023	A-19
20.	Photograph of the brand advertisement by the 2^ndrespondent inside the 1^stapplicant’s premises dated September 2023	A-20
21.	Request for OTS made by the Applicant to the 1^st respondent dated 17.10.2023	A-21
22.	Letter requesting OTS made by the applicant to the 1^strespondent dated 11.01.2024	A-22
23.	Valuation report of the secured asset dated 12.01.2024	A-23
24.	OTS rejection by the 1^strespondent to the applicant dated 17.01.2024	A-24
25.	Final order passed by DRT 1, Chennai in SA No.15 of 2023 dated 02.02.2024	A-25
26.	Letter sent by the 2^ndrespondent’s counsel to the 1^stapplicant dated 02.02.2024	A-26
27.	Letter sent by the 2^ndrespondent’s counsel to the 1^stapplicant seekingOTS dated 05.02.2024	A-27
28.	Letter sent by the 1^stapplicant to the 2^nd respondent’s advocate stating no authorization is given to send OTS proposal on behalf of the applicant dated 09.02.2024	A-28
29.	Encumbrance certificate reflecting the assignment of debt from the 3^rdrespondent to the 1^strespondent dated 17.02.2024	A-29
30.	Letter of the applicant seeking NOC from the 1^st respondent to sell property to repay the dues dated 21.02.2024	A-30

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31.	Redemption notice issued by the 1^strespondent dated 15.03.2024	A-31
32.	Letter issued by the 2^ndrespondent to the 1^st applicant seeking NOC for 15 acres and 17 cents of the mortgagedpropertydated 03.04.2024	A-32
33.	Applicant seeking payment schedule from the 2^nd respondent to redeem the mortgaged property dated 08.04.2024	A-33
34.	Applicant seeking payment schedule from the 2^nd respondent to redeem the mortgaged property dated 09.04.2024	A-34
35.	Applicant seeking payment schedule from the 2^nd respondent to redeem the mortgaged property dated 12.04.2024	A-35
36.	Letter of 2^ndrespondent’s counsel asking the applicant to enter into a Tripartite Agreement dated 12.04.2024	A-36
37.	E Mail sent by the applicant to the 1^strespondent seeking extension of time to redeem the mortgagedpropertydated 14.04.2024	A-37
38.	Rejection Email issued by the 1^strespondent denying the extension sought by the applicant to redeem the mortgaged property dated 17.04.2024	A-38
39.	Intimation for the sale of the Secured Asset by way of E-Auction scheduled on 16.05.2024 dated 25.04.2023(ought to be 25.04.2024)	A-39
40.	Letter addressed to the managing director, Karur Vysya Bank dated 21.01.2025	A-40
41.	Letter addressed to the Assistant General Manager,Karur Vysya Bank dated 21.01.2025	A-41
42.	Acknowledgement cards in proof of service of letter sent to MD and AGM, Karur Vysya Bank dated 22.01.2025	A-42
43.	Photographs of Advertisement of the 2^nd respondent of the property at GKM Nagar, Tambaram – 2 Nos. dated 17.02.2025	A-43
44.	Letter intimating sale of secured asset by the authorized officer, CFM Asset Reconstruction Pvt. Ltd., addressed to the applicants dated 29.06.2023	A-44

SA No.881/2024

11.12.2025

	Documents filed along with written arguments
45.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey No.6/3 of Thiruvancherry Village dated 30.06.2024	A-45
46.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.7/5A and 7/5B of Thiruvancherry Village dated 30.06.2024	A-46
47.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.11/1, 11/2, 11/3A and 11/3B of Thiruvancherry Village dated 30.06.2024	A-47
48.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.13/1, 13/2, 13/3, 13/4A and 13/6 of Thiruvancherry Village dated 30.06.2024	A-48
49.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.14/6A of Thiruvancherry Village dated 30.06.2024	A-49
50.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.15/5 of Thiruvancherry Village dated 30.06.2024	A-50
51.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.16/4A, 16/4B, and 16/5B of Thiruvancherry Village dated 30.06.2024	A-51
52.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.17/2A, 17/2B, 17/5, 17/6A, 17/6B, 17/6C, 17/6D, 17/6E, 17/6F, 17/6G, 17/7A and 17/7B of Thiruvancherry Village dated 30.06.2024	A-52
53.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.21/1A, 21/1A1, 21/1A2(new), 21/1A3, 21/1A4(old) and 21/1C of Thiruvancherry Village dated 30.06.2024	A-53
54.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.22/3, 22/3A, 22/3A2 and 22/3A4 of Thiruvancherry Village dated 30.06.2024	A-54
55.	Valuation report by Prasaad Associates for the 3^rdrespondent of the property owned by the applicants dated 04.09.2017	A-55

SA No.881/2024

11.12.2025

56.	Valuation report by D. Parthasarathy Associates LLP for the 1^strespondent of the property owned by the applicants dated 14.05.2022	A-56
45.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey No.6/3 of Thiruvancherry Village dated 30.06.2024	A-45
46.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.7/5A and 7/5B of Thiruvancherry Village dated 30.06.2024	A-46
47.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.11/1, 11/2, 11/3A and 11/3B of Thiruvancherry Village dated 30.06.2024	A-47
48.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.13/1, 13/2, 13/3, 13/4A and 13/6 of Thiruvancherry Village dated 30.06.2024	A-48
49.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.14/6A of Thiruvancherry Village dated 30.06.2024	A-49
50.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.15/5 of Thiruvancherry Village dated 30.06.2024	A-50
51.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.16/4A, 16/4B, and 16/5B of Thiruvancherry Village dated 30.06.2024	A-51
52.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.17/2A, 17/2B, 17/5, 17/6A, 17/6B, 17/6C, 17/6D, 17/6E, 17/6F, 17/6G, 17/7A and 17/7B of Thiruvancherry Village dated 30.06.2024	A-52
53.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.21/1A, 21/1A1, 21/1A2(new), 21/1A3, 21/1A4(old) and 21/1C of Thiruvancherry Village dated 30.06.2024	A-53
54.	Guideline value downloaded from the website of Tamil Nadu Registration Department for Survey Nos.22/3, 22/3A, 22/3A2 and 22/3A4 of Thiruvancherry Village dated 30.06.2024	A-54

SA No.881/2024

11.12.2025

55.	Valuation report by Prasaad Associates for the 3^rdrespondent of the property owned by the applicants dated 04.09.2017	A-55
56.	Valuation report by D. Parthasarathy Associates LLP for the 1^strespondent of the property owned by the applicants dated 14.05.2022	A-56

¶491

LIST OF DOCUMENTS PRODUCED BY THE 1^st RESPONDENT

¶492

Sl.	Description of Documents	Document
No.		No.
1.	CERSAI Registration for the secured property – plot Nos.21/1A3, 21/1A4, 21/1C, and 21/1A1 dated 07.11.2017	R-1
2.	CERSAI Registration for the secured property – plot Nos.13/2, 3, 6, 1, 17/2B, 6A dated 07.11.2017	R-2
3.	NOC issued by the 3^rdrespondent to the applicants dated 14.11.2019	R-3
4.	Assignment Deed between 1^strespondent and 3^rd respondent dated 30.03.2020	R-4
5.	Final order passed by the Hon’ble DRT III, Chennai in SA No.15 of 2020 dated 13.04.2021	R-5
6.	Order passed by the Hon’ble DRT III, Chennai in SA No.439 of 2022 dated 01.11.2022	R-6
7.	Certified copy of the settlement deed registered as Doc.No.132/2023 in the books of the SRO, Pallavaram dated 03.01.2023	R-7
8.	Encumbrance Certificate Doc.No.132/2023, in the books of the SRO, Pallavaram dated 05.01.2023	R-8
9.	One Time Settlement proposal issued by the petitioner for a value of Rs.58.50 crores dated 02.03.2023	R-9
10.	Final order passed by the Hon’ble DRT III, Chennai in SA No.439 of 2022 dated 31.03.2023	R-10
11.	Final order passed by the Hon’ble DRT I, Chennai in SA No.14 of 2023 dated 10.07.2023	R-11
12.	One Time Settlement proposal issued by the Petitioner for a value of Rs.63 crores dated 17.07.2023	R-12

SA No.881/2024

11.12.2025

13.	Intimation for the sale of secured asset addressed to the borrower dated 21.07.2023	R-13
14.	Paper publication of notice for auction sale in Business Standard,Chennai 22.07.2023	R-14
15.	Paper publication of notice for auction sale in Dinakaran dated 22.07.2023	R-15
16.	Conditional order passed by the Hon’ble DRT – I, Chennai in S.A.No.15 of 2023 staying the auction dated 14.08.2023	R-16
17.	Order passed by the Hon’ble DRT – I, Chennai in SA 15 of 2023 directing the petitioner to submit a concrete OTSproposal dated 21.12.2023	R-17
18.	One Time Settlement proposal issued by the petitioner for a value of Rs.43.05 crores dated 23.12.2023	R-18
19.	One Time Settlement proposal issued by the petitioner for a value of Rs.43.05 crores dated 11.01.2024	R-19
20.	Final order passed by Hon’ble DRT-I, Chennai in SA No.15 of 2023 dated 02.02.2024	R-20
21.	Board resolution passed by the 1^strespondent designating the authorized signatory dated 22.02.2024	R-21
22.	Notice issued to the petitioner under Section 13(8) of the SARFAESI Act, 2002 dated 15.03.2024	R-22
23.	Valuation report obtained by the 1^strespondent dated 28.03.2024	R-23
24.	Intimation for the sale of secured asset addressed to the borrower dated 25.04.2024	R-24
25.	Paper publication of notice for auction sale in Business Standard,Chennai 26.04.2024	R-25
26.	Paper publication of notice for auction sale in Dinakaran dated 26.04.2024	R-26
27.	Photographs depicting the notice being affixed at the securedpropertydated 26.04.2024	R-27
28.	Order passed by Hon’ble Madras High Court in W.P.No.13170 of 2024	R-28
29.	Order passed by Hon’ble Madras High Court in W.P.No.13170 of 2024	R-29

SA No.881/2024

11.12.2025

30.	Sale Confirmation Letter issued to the 4^th respondent dated 05.12.2024	R-30
31.	Letter confirming receipt of payments from the 4^threspondent dated 05.12.2024	R-31
32.	First Information Report vide FIR No.94/2004	R-32
33.	Gist of Crime No.94/2024 dated 12.12.2024	R-33
34.	Status of Crime No.94/2024 dated 08.01.2025	R-34

¶501

SCHEDULE OF PROPERTY

¶502

All that piece and parcel of land admeasuring a total extent of 21.125 acres together with building constructed therein at S.Nos.13/2 (17 cents), S.No.13/3 (47 cents), S.No.13/6 (2 acres), 13/1 (1 acre), 17/2B (81 cents), 17/6A (18.5 cents), 17/6B (18 cents), 17/6C (14 cents), 17/6D (23 cents), 17/6E (26 cents), 17/6F (20 cents), 17/6G (19 cents), 14/6A (2.19 acres), 11/3A (1.58 cents), 17/2A (51 cents), 11/3B (1.40 acres), 13/1 (96 cents), 7/5A (1.70 cents), 7/5B (60 cents), 11/1 (25 cents), 13/4A (1.84 cents), 11/2 (06 cents), 17/4 (1.27 cents), 12/1 (87 cents), 14/4 (38 cents), 16/4A (31 cents), 16/4B (27 cents), 16/5A (35 cents), 16/5B (35 cents) 7 15/5 (50 cents) Bye-pass Road,

¶503

Mappedu/Thiruvancheri Village, Tambaram taluk, Chinglepetu District, Kanchipuram, Tamil Nadu – 600 126, bounded on the following :

¶504

North by : S.Nos.11/182, 11/5B2, 11/5A, 14, 15 and 23 part

¶505

South by : S.Nos.12/2 and 18 part Panchayat Road/Bye Pass Road East by : S.Nos.23 part and partly by property owned by Sujatha West by : Panchayat road and S.Nos.9 part

¶506

In the name of M/s. Suganthi Educational Trust.

¶507

All that piece and parcel of land admeasuring a total extent of 5.77 acres together with building constructed therein at S.No.21/1A2 (2.50 acres), 17/7A (47 cents), 17/7B (29 cents), 22/3A2 (33 cents), 22/3A4 (25 cents), 16/3 (1.93 acres), Bye-pass road, Mappedu/Thiruvancheri

SA No.881/2024

11.12.2025

Village, Tambaram Taluk, Kanchipuram District, Tamil Nadu 600 126 bounded on the following

¶512

North by: S.No.23

¶513

South by: Bye pass road

¶514

East by: S.No.22 part

¶515

West by: S.Nos.18 part & 16 part

¶516

In the name of Mrs. Sujatha Balasubramanian, together with leasehold rights in favour of suganthi educational trust

¶517

All the piece and parcel of land admeasuring a total extent of 4.64 acres together with building constructed therein at S.Nos.21/1A3 (2.32 acres), 21/1A4 (2.17 acres), 21/1C, (15 cents), Bye-pass Road,

¶518

Mappedu/Thiruvancheri Village, Tambaram Taluk, Kanchipuram District, Tamil Nadu 600 126, bounded on the following:

¶519

North by: S.No.23

¶520

South by: Bye Pass road

¶521

East by: S.No.22 part

¶522

West by: S.Nos.18 part & 16 part

¶523

In the name of Mr. C. Balasubramanian, S/o Mr. Chelliah Pillai together with leasehold rights in favour of suganthi educational trust