Debts Recovery Tribunal allowed the cause of action to be barred for lacking Section 17 applications. The applicant's appeal to set aside a sale notice was declared infructuous as the sale had not proceeded.
The Special Appeal was dismissed as the prayer sought to be made was already fructuous because the sale could not be held.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
SA No.96/2025
06.02.2025
IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI
Dated this the 06th of February, 2025
Present: SMT. S.V. GOWRAMMA Presiding Officer
SA No. 96 of 2025
Big Kancheepuram – 631 502
….Applicant . -VsThe Authorised Officer, M/s. HDB Financial Services Ltd., Registered Office at Radhika, 2nd Floor, Law Garden Road, Navranpura, Ahmedabad – 380 009
….Respondent Counsels on record / appeared: Counsel for Applicant : M/s. D. Durairaj
Counsels on record / appeared:
No caveat
The applicant has filed the present SA challenging the Section 14 order dated 31.07.2024 in Crl.M.P. No.78 /2024 before the Ld. CJM, Kancheepuram. Along with the SA, applicant has filed IA No.294/2025 for urgent hearing and IA.No.295/2025 for stay of all further proceedings pursuant to execution of the impugned Section 14 order dated 31.07.2024.
Considering the urgency, IA No.295/25 is allowed and matter taken on board.
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SA No.96/2025
06.02.2025
The Applicant is the borrower, who had availed financial assistance to develop his export business and had availed under the head MSME Credit Scheme by overdraft facility. At the request of the Applicant, the Bank sanctioned Rs.26,27,000/- vide sanction letter dated 28.02.2022 agreeing in terms, the Applicant has mortgaged property and executed Memorandum of Deposit of Title Deeds of his residential house in favour of the Respondent Bank.
The Applicant has agreed to repay the said loan in 120 Equated Monthly Installments to the tune of Rs.38,453/- Per Month.
The Applicant had made the payments promptly but due to sudden business loss, the applicant failed to repay the said loan installments and the Bank had recalled the entire loan account and consequently the account has been declared as NPA.
It is submitted that the Bank has issued demand notice under section 13 (2) of the SARFEASI Act dated 15.12.2023 calling upon them to discharge the liability, which is amounting to Rs.26,36,990/- within 60 days.
The Applicant has not been served with demand notice, however, the Bank has issued the possession notice under section 13(4) of the SARFEASI Act on 24.02.2024 and has taken symbolic possession of the property.
It is contended that the Bank has not served any possession notice, the Applicant has paid the interest periodically without any default, which the Bank has not considered. Though the Applicant requested the Bank to recall the said notices and to stop further proceedings, the Bank has not considered, the Applicants’ request.
Aggrieved by the SARFEASI actions taken by the Respondent issued sale notice on 30.12.2024 and the public action sale fixed on 05.02.2025 under Rule 8(6) Security Interest Rules 2002.
In the grounds, it is alleged that the classification of the account is not in accordance with the RBI guidelines “fixing the reserve price is very low” as the actual price of the residential property is at Rs.1,10,00,000/-.
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SA No.96/2025
06.02.2025
The Bank has failed to give clear 30 days sale notice and the sale notice is liable to be set aside.
Further, it is contended that the Applicant has challenged the CJM, Kancheepuram before this Tribunal in SA No.655 of 2024.
On these grounds, the applicant has prayed to set aside sale notice dated 30.12.2024. The Applicant along with SA has filed IA No.295 of 2025 seeking for stay for further proceedings against the order dated 31.07.2024 passed in Crl.M.P. No.78 /2024 passed by the Ld. CJM, Kancheepuram.
The Respondent Bank is present today before this Tribunal and submitted that the sale schedule to be held on 05.02.2025 against the sale notice dated 30.12.2024 could not be held and the prayer in the SA has become infructuous.
Heard the Learned Counsels appearing for the respective parties and pursuing the records of the case.
Admittedly, the Applicant has availed facility for her business and has mortgaged her residential property as collateral security towards the credit facilities availed.
There is no dispute with regard to the default in the repayment towards the loan account, hence the Respondent Bank has classified the account as NPA, as per the RBI guidelines.
It is also an admitted fact by Applicant, that the Respondent Bank had issued a demand notice under section 13(2) of the SARFEASI Act dated 15.12.2023 calling upon the Applicant to make the payment of Rs.26,36,990/- within 60 days.
Evidently, the Applicant has neither cleared the liability within 60 days, nor raised any objections to the demand made. After the expiry of 60 days, the Respondent Bank issued Section 13(4) possession notice dated 24.02.2024 and have taken symbolic possession, which is also admitted by the Applicant in Para 4 of the SA.
It is pertinent to note that the Applicant is also aware of the Section 14 Order obtained by the Respondent Bank. Hence, the Applicant has filed IA No.295 of 2025
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SA No.96/2025
06.02.2025
with a prayer to set aside the Order dated 31.07.2024 in Crl.M.P. No.78 /2024 passed by the Ld. CJM, Kancheepuram.
The records of the case clearly reflect that the Applicant is aware of the issuance of demand notice dated 15.12.2023 and the possession notice dated 24.02.2024 has not chosen to prefer an application before the Tribunal under Section 17(1) of the SARFEASI Act.
As per Section 17 (1), which reads as “Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this chapter, (may make an application along with such fee, as may be prescribed) to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken;
(PROVIDED that different fees may be prescribed for making the application by the borrower and the person other than the borrower.)”.
It is clear that the Applicant has not chosen to challenge 13(2) demand notice and 13(4) demand notice within the period of 45 days under Section 17(1) of the Act. However, the Applicant has challenged and filed the present SA challenging the sale notice dated 30.12.2024 and the prayer has sought for in the SA at the relief portion is to set aside the sale notice dated 30.12.2024, which has not fructified rendering the present SA as infructuous. Forgoing the present SA stands dismissed as infructuous.
Interim order granted, if any stands vacated, pending IA’s are disposed of in terms of this order.
No order as to cost.
Sd/-
PO
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2 issues framed by the court
Whether the applicant's Special Appeal challenging a sale notice was maintainable despite failure to file an application under Section 17(1) of the SARFAESI Act within the prescribed period.
Whether the sale proceedings fixed for the date of hearing had fructified when the sale could not be held.
2 provisions across 2 enactments
Mrs. R. Sangeethapriya and Mr. D. Ravikumar
The Authorised Officer, M/s. HDB Financial Services Ltd.
Smt. S.V. Gowramma
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
