Dismissed

Ganesan v. Five Star Business Finance Limited

DRT6 Oct 2025SA/940/2024

Case brief

AI extract

What is this about?

Applicant challenged Section 14 order restoring possession to secured creditor alleging procedural lapses. Debt Recovery Tribunal held Section 14 powers are ministerial and non-adjudicatory, making the order final under Section 14(3). Application dismissed.

What did the court decide?

Application for stay/challenge to Section 14 order dismissed; order dated 30.10.2024 upheld as lawful.

Ganesan versus Five Star Business Finance Limited — Company and Corporate | DRT (2025)

SA No.940/2024

06.10.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 06^th day of October, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 940 of 2024

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Mr. S. Ganesan, S/o Sagadevan, No.128, Bharathiyar Street, Sogandi Village, Sunguvarchatram, Kancheepuram – 602 106. …Applicant

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-Vs-

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Five – Star Business Finance Limited., Rep. by its Authorized Officer, New No.27, Old No.4, Taylor’s Road,

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Kilpauk, Chennai – 600 010. …Defendant

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Counsels on record / appeared:

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Counsel for Applicant : M/s RKM Suresh Counsel for Respondent : Mr. T.K.M. Sai Krishnan

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ORDER ON SA 940 /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

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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 applicant has filed the present SA challenging S.14 order dated

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30.10.2024 in Crl.M.P.No.200 of 2024 passed by CJM, Kancheepuram and the outstanding amount due as per Order is Rs.21,12,310.90/-

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3. Pleadings of the applicant:

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3.1 The applicant is the owner of the property who had availed Housing Loan of Rs.10,00,000/- and mortgaged the property towards the loan availed. The applicant after availing the loan, was regularly repaying the loan amount and never allowed the loan account to become NPA. Due to Covid-19 pandemic and ill health, applicant could not able to repay the interest portion alone requested for regularization of the loan account. However, respondent has classified the loan account as NPA after Covid-19 pandemic

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3.2 It is alleged that Applicants and others were made to sign blank papers which the applicant was unaware of it. The respondent has charged interest and penal interest which is against the RBI Guidelines. The payments made by the applicant were not properly given credit to the loan account.

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3.3 The bank had issued Section 13(2) Demand Notice calling upon to pay the entire due amount within 60 days which is not served to all the parties. The respondent has no right to enforce their security as there is no proper service of Demand notice and Possession Notice. The respondent may take the physical possession of the property at any time; hence the present SA is filed.

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3.4 Further the respondent has filed Section 14 application before the Hon’ble CJM, Kancheepuram and have used back door method to evict the

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lawful possession of the property without compliance of the statutory requirements respondent has invoked the Section 14. There is no registration of the security before the Central Registry and respondent without adjusting the amount paid by applicant has charged interest and penal interest which is against the RBI guidelines.

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3.5 The Ld. CJM is only empowered to take physical possession of the property after taking inventory only, if necessary, with the assistance of Police. Applicant submits that Point (ix) of Section 14 should be affirmed in the affidavit being filed by the Authorized officer under the provisions of this Act. Applicant further contends that there is no mentioning of Total principal amount outstanding, Overdue principal amount, Total interest due.

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3.6 It is contended that the respondent has failed to inform about the classification of loan account as NPA and there is no service of Section 13(2) Demand Notice and without serving the Demand notice they have impaired the statutory right under Section 13(3A). The Authorized Officer failed to affix the Demand Notice dated 11.03.2024 and also neither served nor affixed the Possession Notice.

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3.7 On these grounds, applicant contends that proceedings of the respondent were against the settled principles of law and prays to set aside the Section 14 order dated 30.10.2024 passed by CJM Kancheepuram in Crl.M.P.No.200 of 2024.

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4. Objections of the respondent bank:

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4.1 The respondent has filed a detailed counter along with supporting documents inter alia contending that the respondent is a Finance company incorporated in India under the Companies Act 2013 and having its registered office at New No.27, Old No.4, Taylor’s Road, Kilpauk, Chennai – 600 010. The respondent offers different loan facility to its customers from time to time based on policy decisions. The respondent craves leave before this Hon’ble Tribunal to file any additional information and documents as and when the same are found in order to effectively adjudicate the proceedings.

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4.2 The respondent denies the allegations made in the present SA and submits that the applicant along with other borrowers had approached the respondent for a sum of Rs.10.00 lakhs which was sanctioned under Loan agreement bearing No.FSTNLALONS000005052528 dated 07.09.2018. To secure the repayments of the loan, applicant had created mortgage by way of Deposit of Title Deeds with respect to the property which is registered as Doc.No.2889 of 2018 on 04.09.2018 in respective SRO.

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4.3 The applicant and other borrowers had signed the loan agreement for availing the credit facilities with certain Terms and Conditions which includes the timely repayment. Despite several opportunities given by the respondent, applicant had failed to repay the loan. Hence the respondent has classified the loan account as NPA on 11.11.2020 under Section 2(o) of the Act and as per the RBI Guidelines.

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4.4 Even Covid-19 moratorium has been availed by the applicant, but the applicant has defaulted in repayment. Hence the contentions and allegations made in Para V (3,4,6,7,8,17,20,24,25) and grounds (d,k,n,m,o) of the present SA are strongly denied.

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4.5 The respondent has all the rights to initiate measures in accordance with law and never made any illegal practices, hence the averments and allegations made in Para V of the present SA are denied. After classifying the loan accounts as NPA, respondent has proceeded further and issued Section 13(2) Demand Notice dated 11.03.2024 calling upon the applicant and other borrowers to discharge their liabilities of Rs.21,12,310/- as on 11.03.2024.

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4.6 In fact the Demand notice were sent to applicant and other borrowers by way of RPAD to their respective addresses. Further the Demand Notice is also affixed on the conspicuous part of the property and the same was also published in two Newspapers, one in Tamil Newspaper and another in English Newspaper both dated on 24.03.2024. Therefore, the respondent has followed the procedures as contemplated under Rule 3(1) and 3(4) of the Security Interest (Enforcement) Rules and the allegations made in Para V (6,9,13) and grounds (c,f,h) of the present SA are strictly denied.

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4.7 The respondent has charged interest as per the Terms and Conditions of the loan agreement agreed by the applicant and the payments

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made by the applicant were properly credited into the loan account. Hence the averments made in Para V(11,12,19) and grounds (p) are denied.

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4.8 The applicant has failed to liquidate the total outstanding amount mentioned in the Demand Notice within the period of 60 days from the date of receipt of Notice. Hence the respondent has proceeded further and issued Section 13(4) Possession Notice dated 07.06.2024 to the applicant and coborrower.

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4.9 The Possession Notice was also published in two Newspapers, one in Tamil daily Newspaper and another in English daily Newspaper both dated on 11.06.2024 within 7 days from the date of Possession Notice. The Possession Notice is also affixed on the conspicuous part of the property, thus the allegations made by applicant in grounds (i,j,l) of the present SA are denied.

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4.10 Subsequently the respondent has filed a petition before the Chief Judicial Magistrate, Kancheepuram with affidavit and all relevant documents in Crl.M.P.No.200 of 2024 to take physical possession of the property. The petition was allowed on 30.10.2024 by appointing an Advocate Commissioner to take the physical possession of the property.

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4.11 In pursuance of the order dated 30.10.2024 passed by Hon’ble CJM, Kancheepuram, the Advocate Commissioner had intimated to the applicant about the Section 14 order. In fact, the scheduled property has been registered under Central Registry in accordance with SARFAESI Act.

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4.12 Further the applicant has filed the present SA challenging the order dated 30.10.2024 and this Hon’ble Tribunal has granted a Conditional order to pay 10% to pay within one week and the equal amount has to be paid within 30 days. Though the applicant had paid 20% of the amount and not within the stipulated time as per the order dated 01.01.2025 and the conditional order is automatically vacated. In fact respondent is always ready for amicable settlement with the applicant. Hence the respondent prays for dismissal of the present SA No.940 of 2024.

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

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5.1 It is manifest from the records that the applicant is the owner of the property had availed a Housing Loan of Rs.10,00,000/- vide Loan agreement No.FSTNLALONS000005052528, sanctioned on 07.09.2018. It is an admitted fact by both the applicant and respondent as security for the repayment, applicant has mortgaged the property by way of Memorandum of Deposit of Title Deeds which is registered as Doc.No.2889 of 2018 dated 04.09.2018 in the respective SRO.

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5.2 The Applicant and other borrowers had signed the loan agreement with certain Terms and Conditions, and admittedly the applicant has defaulted in repayment due to ill health and Covid-19 situation. Thus, the respondent has classified the loan account as NPA on 11.11.2020 as the applicant has violated the Terms and Conditions of the agreement.

SA No.940/2024

06.10.2025

5.3 Subsequent to classifying the loan account as NPA, respondent has proceeded and issued Section 13(2) Demand Notice dated 11.03.2024 calling upon the applicant and gaurantor to liquidate the entire outstanding amount of Rs.21,12,310/- due as on 11.03.2024. The Demand Notice clearly describes the details of the borrowers, nature of the loan facility availed, charges and interest levied, description of the property.

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5.4 The said Demand Notice dated 11.03.2024 is also sent through RPAD to the applicant and other borrowers, which is received by applicant Mr. S. Ganesan and other borrowers as per acknowledgement cards produced by the respondent at Page No.16 to 18. Though the respondent has published the Demand Notice in two Newspapers, one in Tamil daily and another in English daily, paper publications are also produced by respondent at Page No.19 and 20. The Demand Notice is also affixed on the conspicuous part of the property and the photograph of affixture is produced at Page No.21 and 22.

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5.5 The applicant after the receipt of the Demand Notice has failed to liquidate the entire outstanding amount nor made any representation or objections to the demand made in the Demand Notice within the period of 60 days from the date of receipt of the notice. Hence the respondent has proceeded further and issued Section 13(4) Possession Notice dated 07.06.2024 which is sent through RPAD and the same was returned with an endorsement “Refused” and “Insufficient Address” as per the returned covers produced by the respondent at Page No.26 to 29.

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5.6 The Possession Notice is also published in two Newspapers, one in Tamil daily Newspaper, another in English daily Newspaper both dated on 11.06.2024 and the same was affixed on conspicuous part of the property as per the photographs and paper publications produced by the respondent at Page No.30 to 33.

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5.7 Subsequently the respondent has proceeded further and filed a petition before Chief Judicial Magistrate, Kancheepuram in Crl.M.P.No.200 of 2024 to take physical possession of the property and the same came to be allowed on 30.10.2024 after considering all the documents, affidavit submitted by the Authorized officer.

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5.8 The contention as raised by the applicant is that there is no service of Demand Notice to all the parties, in fact the respondent has sent the Demand notice to all the parties as per the postal receipts produced by respondent at Page No.16. The acknowledgement cards produced by the respondent bank at Page No.17 and 18 clearly shows that the applicant Mr. S. Ganesan has received the Demand Notice and failed to repay the dues nor made a representation. Hence the contention raised by the applicant that the Demand Notice is not served to all the parties does not sustain, as the applicant has received the Demand Notice as per the Acknowledgement cards produced at Page No.17 and 18.

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5.9 The another contention is that Demand notice is not affixed on the property cannot sustain, as the respondent has produced the photograph of affixture at Page No.21 and 22. Applicant contends that the Possession

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Notice is not published in two Newspapers cannot sustain, as the respondent has produced a copy of paper publication at Page No.30 and 31 which the Possession Notice is published in two Newspapers, one in Tamil daily Newspaper and another in English daily Newspaper both dated on 11.06.2024.

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5.10 Now considering the challenge to Section 14 Order, it is appropriate to mention the declaration of The Hon’ble Supreme Court and various Hon’ble High Courts in various judgments has held that the power of Designated Court under Section 14 SARFAESI Act, 2002 is ministerial and non- adjudicatory in nature and the process to be followed under Section 14 does not involve any element of quasi-judicial function nor it requires any application of mind.

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

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Ltd. Vs. The State of Maharashtra , held that Court is only required to verify the affidavit of Secured Creditor filed in pursuance of the proviso to Section 14 and nothing more. The Bombay High Court judgement is confirmed by the Hon’ble Supreme Court by its judgement dated 26.09.2022 in the matter of Balakrishna Ram Tarle vs. Phoenix ARC (P) Ltd. as under:

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“Thus, the powers exercisable by CMM/DM Under Section 14 of the SARFAESI Act are ministerial step and Section 14 does not involve any adjudicatory process qua points raised by the borrowers against the secured creditor taking possession of the secured assets. In that view of the matter once all the requirements Under Section 14 of the

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SARFAESI Act are complied with/satisfied by the secured creditor, it is the duty cast upon the CMM/DM to assist the secured creditor in obtaining the possession as well as the documents related to the secured assets even with the help of any officer subordinate to him and/or with the help of an advocate appointed as Advocate Commissioner. At that stage, the CMM/DM is not required to adjudicate the dispute between the borrower and the secured creditor and/or between any other third party and the secured creditor with respect to the secured assets and the aggrieved party to be relegated to raise objections in the proceedings Under Section 17 of the SARFAESI Act, before Debts Recovery Tribunal”.

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5.12 Furthermore, the Hon’ble Supreme Court in the matter of Kotak Mahindra Bank vs Girnar Corrugators Pvt. Ltd. & Ors. , held that while exercising power under Section 14 of the SARFAESI Act, even the District Magistrate has no jurisdiction and/or District Magistrate and/or even the Chief Metropolitan Magistrate has no jurisdiction to adjudicate the dispute between secured creditor and debtor.”

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5.13 In the instant matter, it is seen from the Section 14 application filed by the secured creditor along with the affidavit confirming the due compliance of Section 14[1] to [ix] by rendering all the details as required under the provision and on examination of the same the Hon’ble CJM has allowed the petition.

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5.14 Additionally, Section 14(3) of the SARFAESI Act statuses that no action taken by the Chief Metropolitan Magistrate or District Magistrate (or any officer authorized by them) under Section 14 can be challenged in court

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or before any other authority. Thus, the provision ensures that the action

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taken under Section 14 is final and not subject to further review. Therefore, it is held that the Section 14 order passed by the Ld. CJM is after due consideration the compliance of the provisions of the Section 14 [i-ix] is only an execution order where no adjudication is required.

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5.15 Therefore the Tribunal is not persuaded to interfere in the Section 14 Order dated 30.10.2024 passed by the Hon’ble CJM, Kancheepuram in Crl.M.P No.200/2024 and the same is held as lawful order.

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Resultantly the present SA stands dismissed. Interim Order granted,

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if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

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

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(Dictated to Steno (Mogesh), transcribed by him, corrected, signed and pronounced by me on this the 06^th day of October, 2025)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl.	Description of Documents	Document
No.		No.
1.	Memorandum of Appeal dated 23.12.2024	A-1

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2.	Order passed by Chief Judicial Magistrate,	A-2
	Kancheepuram in Crl.M.P.No.200 of 2024 dated 30.10.2024
3.	Advocate Commissioner Notice dated	A-3
	09.11.2024
4.	Vakalat dated 23.12.2024	A-4

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

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Sl. No.	Description of Documents	Document No.
1.	Counter affidavit filed by the respondent dated 28.02.2025	R-1
2.	Demand Notice issued by the respondent under Section 13(2) of SARFAESI Act along with Dispatch proof, Service proof, Affixture and Paper Publication dated 11.03.2024	R-2
3.	Possession Notice issued by the respondent under Section 13(4) of SARFAESI Act along with Dispatch proof, Service proof, Affixture and Paper Publication dated 07.06.2024	R-3
4.	CERSAI Report dated 29.01.2024	R-4

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SCHEDULE OF PROPERTY

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All that piece and parcel of land and building, situated at No.118, Sokandi Village, Sriperumbudur Taluk, MGR District presently Kanchipuram District, Comprised in S.No.85/2, Land measuring to an extent of 2398 sq.ft., and bounded on the

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North by: Road,

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South by: Kenaiyan Property,

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East by: Kenaiyan Property,

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West by: Common Passage,

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