Allowed

S P Dhamodharan v. Canara Bank

DRT18 Feb 2026SA/100/2023

Case brief

AI extract

What is this about?

The Tribunal allowed an application seeking to set aside a bank's possession and sale notices under the SARFAESI Act. The bank failed to prove it had affixed the possession notice at a conspicuous place on the property as mandated by the rules, leading to the setting aside of the notices.

What did the court decide?

Set aside of Possession Notice dated 17.02.2023 and Sale Notice dated 08.03.2023 with direction not to include expenditure incurred in their issuance in the loan account.

S P Dhamodharan versus Canara Bank — Banking and Recovery | DRT (2026)

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SA No. 100/2023

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 18^TH FEBRUARY, 2026

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PRESENT: SEEMA SINHA

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

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SA No. 100/2023

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Mr. S.P. Dhamodharan, S/o Paulraj Nadar, No. 44B, Tamil Sangam Street, Tirunelveli Town, Tirunelveli – 627 006. ---- Applicant

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The Authorised Officer, Canara Bank, Tirunelveli Town Branch, Tirunelveli – 627 006. --- Defendant

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Appearance of Advocates: Mr. M. Chinna Muthu ---- Counsel for the Applicant Mr. C. Jawahar Ravindran ---- Counsel for Defendant Bank

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This SARFAESI Application was heard together in the presence of Counsels for the Applicant and Defendant Bank respectively and fixed for passing final order before and upon hearing the arguments of the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

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O R D E R

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This application has been filed u/s 17(1) of the SARFAESI Act, 2002 by the applicant praying that this Hon’ble Tribunal may be pleased set to aside the Sale Notice dtd 08.03.2023 issued against the applicant for the schedule of properties on the file of the defendant and quash the same as illegal.

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Page 1 of 10

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SA No. 100/2023

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The brief averments of the Application filed by the applicants are as follows :-

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The applicant submitted that he borrowed the OCC cash credit facility from the defendant bank. The defendant bank had sanctioned an OCC for sum of Rs. 20,00,000/- on 22.06.2018 under the scheme "OCC Canara Trade" for which the applicant had mortgaged his properties mentioned in the Schedule in favour of the defendant bank.

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(ii) The applicant submitted that he has doing trade in the name of M/s. Narayanan and brothers and he had availed loan for developing his trade and he had paid regularly the loan amount to the defendant bank, but the business has incurred heavy financial loss in business and also the pandemic situation prevailing due to Covid-19 the applicant faces serious loss in his business. In this situation, it is hard for the applicant to survive in the business. It is only due to the hard situation the applicant had failed in repaying the due amount, the applicant is not a willful defaulter.

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(iii) The applicant further submitted that the respondent bank has classified the loan as Non Performing Asset on 29.11.2022 without adhering the norms and the guidelines issued by the Reserve Bank of India. The issuance of demand notice U/S 13 (2) of SARFAESI Act on 01.12.2022 without mentioning the date in the notice is illegal, arbitrary unconstitutional and unsustainable. The respondent bank has now issued possession notice Under Section 13 (2) of SARFAESI Act r/w Rule 8 of Security Interest (Enforcement Rules) 2002 to take symbolic possession on 17.02.2023 for Rs.21,17,446/- is also illegal, arbitrary unconstitutional and unsustainable. Now on 08.03.2023 the defendant bank has issued the sale notice for Rs.21,17,896/- fixing the E-auction on 19.04.2023. The said notice was not affixed on the conspicuous part of the property and also not published the said sale notice in the newspaper as contemplated under the rules.

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(iv) The applicant further submitted that the applicant is ready to settle his loan account under OTS but the defendant bank is not accepting the applicant's OTS proposal.

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(v) The applicant further submitted that he had mortgaged his three properties with the defendant bank in which mortgaged properties consists land and buildings. In schedule of property Item No.1 consists of land with an extent of 10,948.81 sq. ft., Item No.2 consists of land with an extent of 6101.36sq.ft. and Item No.3 consists of land with an extent of 2012.75 sq.ft. The current market value of the properties are about Rupees one crore. But the outstanding loan amount is only Rs. 21,17,446/- as per the possession notice issued by the defendant bank. Hence, the applicant prefers the present appeal among the following and other grounds :-

Page 2 of 10

SA No. 100/2023

MAIN GROUNDS:-

(a) The action of the defendant bank is against the principles of natural justice and they have not followed the provisions of SARFAESI Act and rules framed there under. The sale notice is issued on 08.03.2023 and the sale is fixed on 19.04.2023 violating Rule 8(6) and 8(8) of The Security Interest Enforcement Rules, 2002. The act of the defendant bank is illegal and therefore the alleged sale notice issued is liable to be set aside as ultra-vires.

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(b) The defendant bank has not affixed the sale notice on the conspicuous part of the property which is a must on the part of the respondent bank and the same was not also published in leading two Newspaper as contemplated under the Rules.

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(c) The defendant had not given reply to the objection given by the applicant for the demand notice issued by the defendant bank U/S 13 (2) of SARFAESI Act. The demand notice is not valid as it does not have any date.

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(d) The defendant bank has not furnished the correct statement of account due to the loan accounts and charged exorbitant interest for the loan account.

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(e) The defendant bank has not come forwarded to settle the loan on one time settlement, request made by the applicant.

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(f) In any event, action of the defendant bank is unlawful and unreasonable without jurisdiction and against principle of natural justice and the same is liable to be set aside.

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(g) The applicant reserves its rights to raise additional grounds if any at the time of arguments.

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SCHEDULE OF PROPERTY

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Item No.1

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Tirunelveli registration district, Tirunelveli Joint No.2, Sub-Registrar Saragam, Tirunelveli corporation, in which Ward No.51, Tirunelveli taluk, Kandiaperi village, Kandiaperi Kulam, Kariyadi Patcheri, in T.S. Ward No.9, Block No. 16, T.S. No.2546/2 part land measuring 76.50 ft., on east west at northern side 73.25 ft, on southern side 110 ft., on south north at eastern side and 109ft., on western side totally 8198.81 sq. ft.

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Page 3 of 10

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SA No. 100/2023

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Next a triangle shape land measuring east west on northern side Oft., southern side 50ft., south north at eastern side Oft., and western side 55ft., comprising an are of 1375 sq. ft., next to that a triangle shape site measuring east west on northern side 50ft., southern side Oft., south north at eastern side 0ft., and western side 55ft., comprising an area of 1375sq.ft. Hence the total area of 10,948,81 sq. ft.(1,017.17sq.m) with usual rights and bounded by:

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North : Eastern side of T.S. No. 2584 (2nd item property) South : T.S. No. 2544, Ward No.9, Block No.15 Courtallam Road East : T.S. No. 2546/3 (3^rd item property) and belongs to Dhamodharan West : T.S. No.2 546/2 Part the (1 item of schedule property)

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Item No.2

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Tirunelveli Corporation, Ward No.51, Block 16, Kandiperi Village, Kandiperi Kulam, Kariyadi Patcheri, in T.S. No.2584 in which an area of 28 cents at eastern side land, south to north east west northern side 38ft., southern side 39ft., south north eastern side 30ft., western side 30 ft., totally 1155sq.ft.

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Next northern side 2nd part measuring east west on northern side 31.25sq.ft., southern side 38ft., south north at eastern side 109ft., and western side 100ft., comprising an area of 3618.31sq.ft., next 3 part on the northern side to 2 part triangle shape vacant site measuring east west on the northern side Oft., southern side 0ft., and south north 109ft.

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A right angle triangle shape site measuring east western the northern side Oft., southern side 31.25ft. south north Eastern side Oft. and western side 65,50ft, totally 972sq.ft., next a right angle triangle shape land an eastern side land east west on the north side 7ft., cast west on the side Oft., south north on the eastern side 77ft and south north on the western side Oft., totally 252sq.ft.

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Thus the 2nd item is totally 6106.31 sq. ft., which is equivalent to 567.29 Sq.m with all usual rights is bounded by:

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North : T.S. No. 2583 Nanja land of Tharvees Mohamad Thaika South : T.S. No. 2546/2, east part of 1 item property East : T.S. No. 2585 Nanja land of Tharvees Mohamad Thaika West : T.S. No. 2584 west part of 1 and 2nd property

Page 4 of 10

SA No. 100/2023

Item No.3

Tirunelveli Corporation, Ward No.51, Block 16, Kandiperi Village, Kandiperi Kulam, Kariyadi Patcheri, in T.S. No.2546/3 a site measuring east west on the north side 56ft., southern side 27ft., south north on the eastern side 39ft., and western side 58ft., totally 2012.75sq.ft. (186.99sq.m) = 4cents and in bounded by:

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North : T.S. No. 2546/1 1.5cents belongs to Dhamodharam South : T.S. No. 2544, Ward No.9, Block No.15 Courtallam Road East : T.S. No. 2586/2 Nanja land of Subbiah Konar West : T.S. No. 2546/2 Part (1" item of schedule property)

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

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INDEX TO TYPED SET PAPERS

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Sl No.	Date	Particulars
01	01.12.2022	Demand Notice issued byDefendant Bank
02	17.02.2023	Possession Notice issued byDefendant Bank
03	08.03.2023	Sale Notice issued byDefendant Bank

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3 . On the other hand, the counsel for the defendant bank appeared before this Tribunal and filed Vakalat, Reply Statement and Typed set of papers in which they have submitted the following rebuttal of charges :-

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(i) The Defendant Bank submitted that except those admitted by this respondent, all other allegations contained in the above SARFAESI Appeal are all denied as false, frivolous and vexatious and the applicant is put to strict proof of the same. The application is not maintainable either in law or on facts and it has to be dismissed in limini. The applicant is doing trading business in the name of M/s. Narayanan and brothers and availed OCC advance of Rs.20,00,000/- under OCC Canara Trade scheme for the development of his business on 22.06.2018. The applicant had deposited the title deeds of his properties described in the schedule to the SARFAESI appeal with the defendant bank with an intention to create equitable mortgage. The defendant had created an equitable mortgage as security for the due repayment of the loan amount.

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Page 5 of 10

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SA No. 100/2023

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(ii) It is further submitted that after availing the OCC limit, the applicant has failed to comply with the terms of the loan agreement and committed default in repayment of the secured debt. Hence, the defendant bank had classified the loan account of the applicant as 'Non-Performing Asset' on 29.11.2022 as per the banking Rules and RBI guidelines. Further, the defendant bank through the authorized officer had issued the demand notice dated 01.12.2022 U/s 13 (2) of the SARFAESI Act and the same was received by the applicant. Even after receiving the demand notice, he had not come forward to clear the outstanding amount. Hence, the defendant bank issued Possession Notice on 17.02.2023 U/s 13 (4) of the SARFAESI Act and the same was received by the applicant. The possession notice was published in 'The New Indian Express' English News Daily on 24.02.2023 and "Thinamani Tamil News Daily on 23.02.2023. The possession notice was affixed in the conspicuous place of the secured asset. The defendant bank had complied all the preconditions while initiating proceedings under the SARFAESI Act.

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(iii) It is further submitted that it is false to allege that the applicant from the date of availing the loan has paid the loan amount regularly and the applicant's business has incurred heavy financial loss, because of pandemic situation due to Covid-19, the applicant faces serious loss in his business. It is also false to allege that due to this situation it became hard for the applicant to survive in the business and only because of this hard situation he had failed in repay the due amount. The applicant is a willful defaulter.

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(iv) The allegations that the defendant bank has classified the loan not as per RBI guidelines and demand notice [dated 01.10.2022] was issued without a date is denied as false, illegal, arbitrary unconstitutional and unsustainable. This defendant submits that there was no violation in issuing the said notice. The allegation that the possession notice was not affixed on the conspicuous part of the property and not published the possession notice as contemplated under the rules, is also denied as false since, the same was affixed and also published the said notice as contemplated under the rules.

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(v) It is false to allege that the applicant is ready to settle his loan account under OTS, but the defendant bank is not accepting the applicant's OTS proposal. Till date the applicant has not submitted any letter for OTS. Only to drag on the payment to the bank, the applicant has made all sorts of false allegations.

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(vi) It is further submitted that the defendant had not given reply to the objection given by the applicant for the demand notice issued by the defendant bank U/S 13 (2) of SARFAESI Act and the defendant bank has not furnished the correct statement of account and the defendant bank has charged exorbitant interest for the loan account and the defendant bank has not come forward to settle the loan under one time settlement are all denied

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Page 6 of 10

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SA No. 100/2023

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as false and imaginary. Only to drag on the payment the applicant has made the above false allegations in the SARFAESI Appeal. The applicant has not even filed the alleged objection letter given by him for the demand notice issued by the bank. The defendant bank has furnished the loan account statement as an when required by the applicant. There is no mistake or exorbitant interest charged in the loan account statement. On the other hand, interest was charged as per the contractual rate of interest.

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(vii) It is submitted that the defendant bank has taken legal proceedings against the applicant under the SARFAESI Act, since he had failed to repay the balance due amount to the defendant bank. There is no impediment or hurdle or legal bar in taking action against the applicant under SARFAESI Act. The defendant reserves its right to file additional reply statement, if necessary, later on. Therefore, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the application with costs of the defendant and thus render justice.

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TYPED SET FILED BY THE DEFENDANTS BANK

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Sl. No.	Date	Particulars
01.	01.12.2022	Demand Notice
02.	02.12.2022	Postal Receipt
03.	03.12.2022	Acknowledgement Card for receiving the Demand Notice
04.	17.02.2023	Possession Notice
05.	10.03.2023	Postal Receipt
06	11.03.2023	Return cover for Possession Notice
07	23.02.2023	Possession Notice Paper Publication in Dhinamani Tamil New Daily
08	23.02.2023	Possession Notice Paper Publication in Indian Express English New Daily

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

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WHETHER THE APPLICANT IS ENTITLED TO GET THE RELIEFS AS PRAYED FOR ?

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5. Having heard the parties and after going through the entire documents available on records, this Tribunal find that there is no dispute between the parties with regard to the availment of loan facilities by creating equitable

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Page 7 of 10

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SA No. 100/2023

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mortgage over the Schedule mentioned property. In this case, the Applicant contended that initially the Applicant has repaid the monthly installments regularly however, due to Covid-19 Pandemic, there was only a minor delay in repayment.

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The Defendants Bank in their Reply Statement stated that the borrower’s account was declared as NPA on 29.11.2022 and pursuant to the same earlier SARFAESI proceedings were initiated and issued Demand Notice under Sec13(2) of SARFAESI Act, on 01.12.2022 but thereafter the Applicant did not normalize the account on payment of necessary dues. I also find that though the applicant has stated in his SA that Demand Notice was not published as per guide lines of RBI, but on the other hand he has also not replied the Demand Notice U/s 13 (3-A) of SARFAESI Act and he has also not filed any proof to show that he had given any letter to the Defendant Bank for OTS proposal. It is stated by the Bank that since the Applicant has defaulted in paying the loan amount and the Applicant had also not taken any steps to regularize the account or repay the loan. And, the Applicant never approached the bank for any regularization or repayment.

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I also find that the Defendants Bank had filed copies of AD Cards (Page No. 9 of Bank's Typed set of papers) as a proof for having delivered the Demand Notice to the Applicant.

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Thereafter, I find that the Defendant Banks had issued Possession Notice U/s 13(4) of SARFAESI Act on 17.02.2023 for a sum of Rs. 21,17,446/(Rupees Twenty One Lakhs Seventeen Thousand Four Hundred and Forty Six only).

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The Applicant in his pleading has alleged that the Bank has failed to affix the Possession Notice on the conspicuous part of the property and not published the same in leading newspapers. I also perused the typed set of papers filed by the Defendant Bank and I find that the Defendant Bank had filed the copy of Possession Notice, Postal Receipt, Return cover and Paper Publication of Possession Notice dated 17.02.2023 (Page nos. 10 to 18 of Bank’s Typed set of papers) in both English and Tamil Newspapers. But I do not find that the Bank has filed any copy of affixture of Possession Notice dated 17.02.2023 which is a mandatory provision under the SARFAESI Act. Thus, I find that the Defendant Bank has not followed Rule 8(1) of Security Interest Enforcement Rules, 2002 strictly, which clearly says,

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Page 8 of 10

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SA No. 100/2023

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"8. Sale of immovable secured assets.

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(1) Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession no�ce prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession no�ce on the outer door or at such conspicuous place of the property."

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In view of the above Provision, I find that the Defendants Bank have not followed the above provision in issuance of Possession Notice.

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I also find that both the parties have failed to produce the Statement of Accounts to verify the genuineness of the accounts. Further, the Applicant has not placed any material evidence before this Tribunal to substantiate his claim that the classification of loan account as NPA is wrong and rate of interest has been charged excessively against the guidelines of RBI.

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On the other hand the Defendant Bank has not produced the details of Sale Notice, publication of Sale Notice and affixture of Sale Notice to rebut the allegation of affidavit.

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Further I find that during the pendency of the case, this Tribunal has granted a conditional stay order dated 11.04.23 for a sum of Rs. 10,00,000/(Rupees Ten Lakhs only) to be paid in two instalments each Rs. 5,00,000/by the Applicant but no party has informed this court whether conditional order was complied or not.

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The Applicant has no doubt being a defaulter is liable to pay the loan amount to the Defendants Bank and the Banks have been given ample power to recover the outstanding loan amount from the borrower by invoking the SARFAESI Act and without the intervention of any Court. But, it shall not allow the Bank to take the possession of the property of the Applicant without following the due process of law strictly.

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In view of the above facts and circumstances of the case, I find that the Applicant has been able to prove his case.

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In the result,

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SA No. 100/2023 is allowed. The Possession Notice dated 17.02.2023 and Sale Notice dated 08.03.2023 are hereby set aside with direction to the Defendant Bank not to include all the expenditures incurred in issuance of Impugned Possession Notice dated 17.02.2023 and Sale Notice dated 08.03.2023 in the loan account of the Applicant.

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Page 9 of 10

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SA No. 100/2023

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The 1^st & 2^nd Defendant Banks are at liberty to initiate fresh action against the Applicant as per the SARFAESI Acts & Rules. Consequently, all pending IAs (if any) are also disposed of. No costs.

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Dictated to Typist (SKP), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 18^th February 2026.

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Sd/(SEEMA SINHA)

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PRESIDING OFFICER

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Uploaded on 25.02.2026

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Page 10 of 10

S P Dhamodharan v. Canara Bank

Case brief

What is this about?

What did the court decide?

S P Dhamodharan v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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