Dismissed

Ags Rathna Stores Private Limited Rep by Its Director G Amutha and Four Others v. Canara Bank

DRT28 Jul 2025SA/96/2024

Case brief

AI extract

What is this about?

This judgment dismisses a secured application under Section 17 of SARFAESI Act challenging the fifth sale notice. The tribunal held the application infructuous because the auction did not materialize, leading the bank to proceed with a sixth sale which was subsequently confirmed.

What did the court decide?

The Securitization Application stands dismissed as infructuous since the sale has been confirmed by way of the sixth sale notice.

Ags Rathna Stores Private Limited Rep by Its Director G… — Company and Corporate | DRT (2025)

SA No.96/2024

28.07.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 28^th day of July, 2025

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 96 of 2024

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M/s. A.G.S Rathna Stores Private Limited, Represented by its Director G. Amutha, No.91, Pondy Bazaar, T. Nagar, Chennai – 600017.

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G. Amutha, W/o. S. Ganesh, No.3, Lakshmi Narasiman Street, T. Nagar, Chennai – 600017.

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Shravanthi Ganesh, No.16, Vyasar Street, Thyagaraya Nagar, Chennai – 600017.

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S. Ganesh, No.2, Lakshmi Narasiman Street, T. Nagar, Chennai – 600017.

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Kodai Valley View Resorts Pvt Ltd, Rep by its Director Amutha, Door No. 8/58, 8/59, Post Office Road, Kodaikanal, Dindigul District – 624 101. ….Applicants

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-Vs-

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Canara Bank Represented by its Authorised Officer Teynampet Branch, No. 563/1, Anna Salai, (Ground Floor), Teynampet, Chennai – 600018. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. B. Gurumurthy Counsel for respondent : M/s. S. Kesavan & M. Gopi

SA No.96/2024

28.07.2025

ORDER ON SA 96/2024

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The present Securitization Application [SA] is filed on 17.02.2024 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].

¶22

The applicant has filed the present SA challenging the Sale Notice dated 02.02.2024 where the auction sale is scheduled on 19.02.2024 and the outstanding amount due as per Sale Notice is Rs.7,10,44,662.38/-

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Facts of the case:

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The 1^st applicant is a Private Limited Company providing service in terms of Hotel and Resorts; the 2^nd and 3^rd applicants are Directors banking with the respondent bank from 2013 onwards. The 5^th applicant is the owner of the property mortgaged the property as collateral security; the 4^th applicant is the Guarantor/Mortgagor for the loan availed by the 1^st applicant. Besides the Prime securities consisting of Moveable property, stocks and receivables, the above facilities are collaterally secured by Equitable Mortgage of schedule mentioned property belonging to the 5^th applicant.

¶25

The 1^st applicant was regularly servicing the loan accounts and were periodically paying the monthly installments inspite of Covid related lock down. However the bank have issued the Sec.13(2) demand notice dated

SA No.96/2024

28.07.2025

18.11.2022 claiming the outstanding amount Rs.7,12,56,488.01 due as on 17.11.2022. The respondent issued the demand notice dated 18.11.2022 without including the 5^th applicant who is the title holder and owner of the Schedule mentioned property and is also necessary party. But he is seen as a necessary party in the Sec.14 order passed by Hon’ble CJM-Dindigul in CMP.No.20730 of 2023 dated 06.11.2023.

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The present SA is filed challenging the Auction Sale notice dated 02.02.2024 holding the auction is scheduled on 19.02.2024, in violation to rule 8(6),9(1) of the S.I.E. Rules,2002.

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The respondent bank submits that the sale did not take place and hence the prayer as sought for in the SA is rendered as infructuous. However counsel for the applicant insisted to adjudicate the infirmities in the measures taken by the respondent bank.

¶32

The applicant had moved the matter SA.96.2024 on 19.02.2024, the Tribunal taking the memo filed by the applicant in SR.No.2569/2024 reporting the payment of Rs.72 Lakhs vide Demand Draft bearing No.508051 dated 17.02.2024 prayed for interim stay from this Tribunal. It seen that this Tribunal vide proceedings dated 19.02.2024 considering the bonafides of the applicant depositing 10% of the outstanding amount to the credit of borrower’s loan account ordered status quo as on the date and the applicant was further are directed to deposit yet another 10 % of the outstanding amount within a period of four weeks from 19.02.2024 and further it was clarified and there shall be an interim order stay of all further

SA No.96/2024

28.07.2025

proceedings under the SARFAESI Act and on none compliance of the above condition the bank was liberty to be entitled to proceed further.

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It is specific contention of the applicant an interim order was obtained on 19.02.2024 and the bank proceeded in issuing another sale notice which amounts to contempt of the proceeding. Further the applicant counsel submitted a contempt petition is filed and pray to adjudicate first the contempt before proceeding. On verification of the case papers, it seen that no such application is seen on record and the application is not numbered hence the same is not on record.

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The respondent bank counsel opposes of any contempt proceedings contending that the applicant had obtained an order of status quo on 19.02.2024 and as the sale was not held, the bank issued another sale notice which is not a contempt of the proceedings and assertively counters the contention of the applicant.

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Further the present sale notice which is challenged in SA.96.2024 is the 5^th E-Auction sale notice and the bank have produced the postal receipts for due service of the sale notice and its paper publication. The contention of contempt is strongly opposed by respondent bank counsel contenting though applicant had obtained status quo order on 19.02.2024, as sale notice dated 02.02.2024 did not seen any fruition rendering the SA as infructuous.

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The second specific contention of the applicant counsel is that property is undervalued as initially the property was valued at

SA No.96/2024

28.07.2025

Rs.8,00,50,000/- (Rupees Eight Crores Fifty Thousand Only) and the property was brought to sale for Rs.8,01,50,000/- (Rupees Eight Crore One Lakh Fifty Thousand Only). It is undisputed fact that the respondent has put the property for sale 5 times and did not succeeded for want of bidders for the fixed reserve price four times. However the applicant has not taken any valuation for any independent valuer to establish that the valuation of the bank is low, in absence of any competitive or comparative valuation the contention that property being undervalued also would not survive. Even otherwise it seen that the respondent bank have issued the 1^st E-Auction sale notice dated 08.06.2023, the 2^nd sale notice dated 19.08.2023 and the 3^rd sale notice dated 28.03.2023 and 4^th sale notice dated 11.01.2024 and the 5^th E-Auction sale notice dated 02.02.2024 and all sale notices have not materialized with the reserve price fixed.

¶45

As the respondent could not get bidders for the reserve price fixed the authorized officer has reduced the valuation of the property after obtaining the valuation report from the approval valuer. The applicant had challenged the 2^nd E-Auction sale notice dated 19.08.2023 in SA.441 of 2023 before the Hon’ble DRT, Madurai wherein an interim order of stay was granted on conditional payment. Inspite of issuing repeated sale notices the secured creditor could not get bidder for the reserve price fixed on earlier occasions. Hence the authorized officer has reduced the reserve price which is permissible under the Act and there is no infirmity in the procedures taken by the secured creditor.

SA No.96/2024

28.07.2025

The 3^rd contention raised by the applicant is that the bank issued yet another sale notice immediately on applicant obtaining an interim order and during the subsisting of the interim order, the sale notice is issued. Subsequent to the challenging the sale notice in the present SA and after obtaining the interim order of stay on 19.02.2024 as the sale did not take place as scheduled there is no question of subsisting interim order of stay in the proceedings as the prayer in the SA had become infructuous, hence there is no contempt or irregularity in the measures taken by the bank in issuing the another sale notice would not sustain.

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The 4^th contention that the Sec.13(2) demand notice dated 18.11.2022 is not served on the 5^th applicant could not sustain as the 5^th applicant is not the guarantor or the mortgager to the working capital availed by the applicant and to the Canara Vehicle applied by the applicants herein. It seen from the Sec.13(2) demand notice which is produced by the respondent at pg.2 of the typeset that the applicants M/s. AGS Rathna Stores Pvt ltd., in the borrower and G. Amutha is the guarantor and Shravanthi Ganesh is a guarantor and S. Ganesh is the guarantor the notice was issued to Working Capital-OCC Loan of Rs.7,00,00,000.00 (Rupees Seven Crores) and the Canara Vehicle loan of Rs.11,00,000.00 (Rupees Eleven Lakhs) the separate notice is also issued to the borrowers against the Hypothecation of Stocks and Book Debts.

¶51

The applicants have received the Sec.13(2) demand notice as per the postal acknowledgement cards and have not raised any objections to the demand made within 60 days, nor raised any contention that the 5^th

SA No.96/2024

28.07.2025

applicant is not a party to the notices. As the outstanding amount due is not liquidated, bank has issued the Sec.13(4) possession notice which is also duly received as per the postal acknowledgement cards and the publication is also produced affixture is also evidenced.

¶56

Thought the applicant have received the Sec.13(2) demand notices had not raised any objections with regard to the issuance of non-service of notice to 5^th applicant Kodai valley view resorts Pvt ltd., It seen from Sec.13(4) possession notice that the 5^th applicant is a party in the Sec.13(4) possession notice which is issued by Teynampet Branch Chennai. The further contention is that the applicant has made a payment of Rs.1,29,00,000/- (Rupees One Crore twenty Nine Lakhs) on 10.10.2023 and 11.10.2023 which is not been appropriated is an untenable contention as the amount paid by the borrower is credited towards the loan account. Hence the contention also fails.

¶57

It seen that the applicant had already challenged the sale in SA.441 of 2023 and failed to liquated the liability and it seen from the typeset of documents produced by the bank that the present SA challenged the sale notice is the 5^th sale notice and subsequently the bank has issued the 6^th sale notice dated 20.02.2024 wherein the auction is already held and sale is also confirmed vide conformation of sale dated 11.03.2024 and the sale certificate is issued on 13.03.2024 and the physical possession is handed over on 13.03.2024 as per the documents.

SA No.96/2024

28.07.2025

As the prayer in the SA to set aside the sale admittedly the sale did not take place and the bank have proceeded further in issuing the sale notices which has culminated in confirmation of sale, issuance of sale certificate favoring the successful bidder. Hence nothing survives for adjudication in the present SA. Accordingly SA stands dismissed as infructuous. Interim Order granted, 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 (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 28^th day of July, 2025)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl. No.	Description of Documents	Documents No.
1.	Copy of the Demand Notice dated 18.11.2022.	A-1
2.	Copy of the Possession Notice dated 01.02.2023.	A-2
3.	Copy of the Order passed by the CJM-Dindigul in Crl.MP.No.20730 of 2023 dated 06.11.2023.	A-3
4.	Auction Sale Notice 02.02.2024.	A-4
5.	Auction Sale Notice-Paper Publication-Times of India 03.02.2024.	A-5
6.	Postal cover and Track sheet 09.02.2024.	A-6

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDENT

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Sl. No.	Description of Documents	Documents No.
1.	Demand Notice under Sec.13(2) of the SARFAESI Act dated 18.11.2022.	R-1
2.	Demand Notice in respect of Hypothecation of Stock and Book Debts dated 18.11.2022.	R-2
3.	Acknowledgement cards of the Applicants dated 21.11.2022.	R-3

SA No.96/2024

28.07.2025

4.	Affixture of Demand Notice (Photo Copies) dated 18.11.2022.	R-4
5.	Possession notice under Sec.13(4) of the SARFAESI ACT issued by the Defendant to the Applicants dated 01.02.2023.	R-5
6.	Acknowledgement cards and return covers.	R-6
7.	1^stE-Auction Sale notice together with Postal registration Slip issued by the Defendant to the Applicants dated 08.06.2023.	R-7
8.	2^ndE-Auction Sale notice together with Postal registration Slip issued by the Defendant to the Applicants dated 19.08.2023.	R-8
9.	Letter by the 1^stApplicant dated 14.08.2023.	R-9
10.	Order Passed in S.A.No.441 of 2023 by the DRT, Madurai dated 12.09.2023.	R-10
11.	3^rdE-Auction Sale notice together with Postal registration Slip issued by the Defendant to the Applicants dated 28.03.2023.	R-11
12.	Order Passed in Crl.M.P.No.20730 of 2023 by the CJM, Dindugal dated 06.11.2023.	R-12
13.	4^thE-Auction Sale notice together with Postal registration Slip issued by the Defendant to the Applicants dated 11.01.2024.	R-13
14.	5^thE-Auction Sale notice together with Postal registration Slip issued by the Defendant to the Applicants dated 02.02.2024.	R-14
15.	Paper Publication in Dinathanthi Tamil Edition dated 03.02.2024.	R-15
16.	Paper Publication in Dinakaran 03.02.2024.	R-16
17.	Paper Publication English Edition in Times of India dated 03.02.2024.	R-17
18.	Paper Publication English Edition in “Hindu” dated 03.02.2024.	R-18
19.	Letter by the Applicants Counsel together with Order passed in S.A.No.96 of 2022 dated 20.02.2024.	R-19
20.	Postal Cover dated 02.03.2024.	R-20
21.	Statement of Account	R-21
22.	6^thE-Auction Sale notice together with Postal registration Slip issued by the Defendant to the Applicants dated 20.02.2024.	R-22
23.	(Photo Copy) 6^thE-Auction Sale notice together with Postal registration Slip issued by the Defendant to the Applicants dated 20.02.2024.	R-23
24.	E-Auction sale notice published in Tamil daily “Dinathanthi” in Madurai Edition dated 20.02.2024.	R-24

SA No.96/2024

28.07.2025

25.	E-Auction sale notice published in English daily “Times of India” in Madurai Edition dated 20.02.2024.	R-25
26.	E-Auction sale notice published in English daily “Times of India” in Chennai Edition dated 20.02.2024.	R-26
27.	E-Auction sale notice published in “Dinakaran” in Chennai Edition dated 21.02.2024.	R-27
28.	E-Auction Winner List dated 11.03.2024.	R-28
29.	Confirmation of Sale dated 11.03.2024.	R-29
30.	Letter by the Auction Bidder dated 13.03.2024.	R-30
31.	Certificate of Sale dated 13.03.2024.	R-31
32.	Letter regarding handover physical possession and annexure dated 13.03.2024.	R-32

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SCHEDULE OF PROPERTY

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EMT along with MODTD of Hotel Building at old R. S. No.325/1, T. S. No.15, Ward-D, Block-4, Door No 8/58 and 8/59, Post Office Road, Kodaikanal Town, Dindigul District – 624101 measuring an extent of 32 cents of land along with the building thereon and bounded on the

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North by : Property of Rahuman Bros in S.No. 325/1 South by : Hotel sunrise owned by Abdul Rahim East by : House of Selvanayakam West by : Post office Road

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The Property is owned by M/s. Kodai Valley View Resorts Pvt Ltd by virtue of title deed document number 884/1991 dated 02.09.1992.

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The Property is situated within the registration district of Dindigul and Sub Registration district of Kodaikanal.

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Sd/-

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

Ags Rathna Stores Private Limited Rep by Its Director G Amutha and Four Others v. Canara Bank

Case brief

What is this about?

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Ags Rathna Stores Private Limited Rep by Its Director G Amutha and Four Others v. Canara Bank

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