Dismissed

J Charles v. Bank of Baroda

DRT3 Mar 2026SA/110/2023

Case brief

AI extract

What is this about?

In this securitization application under the SARFAESI Act, the applicant guarantor challenged a Sec.13(4) Possession Notice issued by the bank. The DRT found that the bank duly served the demand notice, classified the account as NPA, and followed statutory procedure for taking possession, thus dismissing the application.

What did the court decide?

Application dismissed; interim orders vacated; no order as to cost.

J Charles versus Bank of Baroda — Banking and Recovery | DRT (2026)

SA No.110/2023

03.03.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 03^rd day of March, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 110 of 2023

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J.Charles S/o, Mr.jayaraj, No.30, Vadivel Mudali Street, Venkatapuram, Ambattur, Chennai-600 053. ….Applicant -Vs-

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The Authorised Officer, M/s.Bank of Baroda, Chingleput Branch, No. 29A, G.10 Alagesan Road, Vadachalam Nagar, Chingleput -603 001.

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Ms.V.Hepsilene Sandra, No.42/65, Palur Kanniyappan Street, P.S.Sivasamisalai, Mylapore, Chennai- 600 004. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. K. Mukund Rao, M. Gopi & R. Sanjaykumar Counsel for 1^st respondent: M/s. S. Pandurangan and M. Karthik Counsel for 2^nd respondent: Placed ex-parte on 22.01.2026

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ORDER ON SA 110/2023

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The present Securitization Application [SA] is filed on 21.02.2023

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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

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creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

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The applicant has challenged Sec.13(4) Possession Notice dated 10.02.2023 and the outstanding amount due as per Possession Notice is Rs.1,45,45,144.89/-

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Pleadings of the applicant:

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The applicant stood as guarantor and mortgaged the schedule mentioned properties for the credit facilities availed by 2^nd respondent a sum of Rs.72 Lakhs as Term loan and Rs.84 Lakhs as overdraft facility during the year 2021 from 1^st respondent bank. Upon the insistence of 1^st respondent, applicant was inducted as a formal partner of M/s.DVH Homes & DVH Food and Agro Farm without any responsibility for the credit facilities availed.

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3.1 It is the case of applicant that he was made to sign blank papers, contents of which are not made known to the applicant, hence are not binding on the applicant. The 1^st respondent had issued demand notice dated 21.09.2022 calling upon applicant and 2^nd respondent to repay the outstanding dues within 60 days from date of notice, then 1^st respondent bank assured that on payment of Rs.16,55,000/-, the account will be regularized.

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3.2 On assurance of the bank that account will be regularized, applicant paid Rs.Rs.2,00,000/- on 20.07.2022, Rs.2,85,000/- on 25.07.2022,

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Rs.10.00 Lakhs on 30.12.2022 and Rs.1,70,000/- on 31.01.2023 totally the sum of Rs.16,55,000 to safeguard his property.

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3.3 As the 2^nd respondent failed to repay the dues, the 1^st respondent bank issued possession notice on 10.02.2023 in non-application of mind, without verifying the present outstanding and without considering the payments made by the applicant has invoked the provisions of the Act. As the 2^nd respondent failed to repay the dues. The applicant had approached the first respondent bank to grant time to settle the dues owed by the second respondent.

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3.4 The Respondent Bank demanded exorbitant amount without providing any proper calculation as to how the said amount was arrived for which the respondent bank is not entitled as the same is illegal. The Possession notice is tainted by several irregularities with the intention to sell the Applicants' property for unjust gain.

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3.5 In the grounds, it is contended that the secured creditor has not classified the loan accounts as NPA as per u/s. 2(o) of the Act as the Term Loan and OD Loan account of the applicant is not an NPA and is a regular account.

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3.6 The possession Notice under Rule 8(1), Appendix-IV of SIE Rules, dated 12.10.2021 are liable to be quashed as the bank failed to serve u/s.13(2) demand notice.

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3.7 The possession notice relied on by the respondent with regard to the schedule mentioned properties are defective, unlawful and illegal. The provisions of Rule 8(1) & 8(2) have been violated by the respondent.

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3.8 It is contended that the Possession notice under Rule 8(1), AppendixIV of SIE Rules dated 10.02.2023 is not served on the applicant, nor affixed on the property , not affixed in the two leading newspaper as contemplated under the Act. One these grounds, the applicant prays to set aside the Sec.13(4) possession notice dated 10.02.2023.

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Objections of the 1^st respondent bank:

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It is the case of the respondent bank that M/s. DHV Food and Agro Farm is a Proprietary Concern represented by Ms. Hepsilen Sandra 2nd respondent as its proprietrix, is carrying on business of Dairy unit approached for credit facilities availed Cash Credit Facility Limit of Rs.15 Lakhs and Term Loan Limit of Rs.72 Lakhs.

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4.1 M/s. DHV Homes is a Proprietary Concern represented by Ms. Hepsilen Sandra as its proprietrix, is carrying on business of Construction activity availed Overdraft Facility Limit of Rs.84 Lakhs. The Applicant stood as a Guarantor for the above credit facilities availed by the both M/s. DHV Food and Agro Farm and M/s. DHV Homes.

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4.2 Further, the above loans were also secured inter alia by the equitable mortgage over the immovable property belonging to the applicant as security for the due repayment of the above limits availed by the Borrowers

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M/s. DHV Food and Agro Farm and M/s.DVH Homes which was duly registered before the Central Registry.

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4.3 The applicant has executed Registered Memorandum of Deposit of title deeds confirming the mortgage in favour of the respondents over the above property. Admittedly the borrowers committed defaults despite several reminders and the Respondent bank was constrained to declare the loan accounts of the 2nd respondent/borrowers as NPA as 05.07.2022 in terms of RBI guidelines and the 1st Respondent had issued a Demand Notice dated 21.09.2022 under Section 13 (2) of the SARFAESI Act to the Applicant/ borrowers.

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4.4 The Demand Notice dated 21.09.2022 was duly served on the applicant and the 2nd respondent. Even after the receipt of the Demand Notice, they did not raised any objections to the demand notice and also failed to repay amount demanded within 60 days of the receipt of the demand notice. The applicant/borrowers deemed to have accepted the demand made in the S.13(2) notice now it is not open to them to challenge the claims made in the Sec.13(2) notice.

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4.5 Therefore the 1st Respondent was constrained to take symbolic possession of the secured asset belonging to the applicant by duly complying with the provisions of the SARFAESI Act. The possession notice dated 10.02.2023 is sent to all the Applicant/borrowers by Registered Post and affixed the Possession Notice dated 10.02.2023 at the conspicuous place of the mortgaged property. The 1st Respondent published the

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Possession Notice in two leading Newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 14.02.2023 within 7 days of taking possession.

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4.6 Further the applicant allegation that he was compelled by the Respondent Bank to join as a partner in the borrowing concerns/firms and that the applicant has signed the blank documents are denied and therefore it is vitiated.

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4.7 The Demand Notice was duly sent to the applicant at the last recorded address and in fact the notices were sent at the same addresses shown in the Cause Title. It is pertinent to point out that the Demand Notice was duly served at the same address.

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4.8 The applicant is admitting the availment of the Loans which are covered by the security by way of equitable mortgage of the application schedule property and also admits the execution of documents and creation of Security Interest over the Schedule Property.

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4.9 It is further submitted that the applicant admits the defaults committed by the applicant/borrowers. However falsely denying the receipt of the demand notice. The applicant is making inconsistent pleadings that the 2nd respondent/borrower requested the applicant to offer the schedule property as a security and that the 1st respondent insisted that the applicant should be a partner of the borrowing firms.

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4.10 It is seen that the applicant signed the loan documents in his capacity

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as a guarantor and not as a partner. In fact the borrowing concern is a

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proprietorship concern owned by Ms. V. Hapsilene Sandra, the 2nd respondent. The possession notice was issued in terms of Rule 8 (1) and Appendix IV of the SARFAESI Act. The demand notice and possession notice were issued by the Chief Manager and Authorized Officer of the bank, who is duly authorized by the Board of Directors of the bank.

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4.11 The Respondent bank denies all the averment made in the present SA and also followed all the measures as required. Hence respondent bank prays for dismissal of the SA.

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Heard both sides of the Counsels and perused the records of

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the case

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It is manifest from the records and undisputed fact that the M/s. DHV Food and Agro Farm a Proprietary Concern represented by Ms. Hepsilen Sandra 2nd respondent as its proprietrix availed Cash Credit Facility Limit of Rs.15 Lakhs and Term Loan Limit of Rs.72 Lakhs, and M/s. DHV Homes a Proprietary Concern represented by Ms. Hepsilen Sandra as its proprietrix availed Overdraft Facility Limit of Rs.84 Lakhs. There is no dispute that the Applicant stood as a Guarantor for the above credit facilities availed by the both M/s. DHV Food and Agro Farm and M/s. DHV Homes.

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5.1 The applicant mortgaged his immovable property as security by Memorandum of Deposit of Title Deeds dated 28.06.2021 vide Doc.No.8349/2021 towards the credit facility for the due repayment of the loans availed by the Borrowers M/s. DHV Food and Agro Farm and M/s. DVH Homes.

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5.2 The mortgage is duly registered before the sub registered office and the charge is duly registered before the Central Registry which constitute a secured asset favoring the respondent bank.

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5.3 In fact the borrowers though was served with notice on SA remained ex-parte agreeing to the availing of the credit facilities, mortgage of the property as security and the default in repayment. Due to continuous default in the repayment, the loan account of the 2^nd respondent (borrower) was classified as NPA on 05.07.2022, as per the RBI guidelines and as per S.2[o] of the Act. Though the applicant contends that classification of account is not an NPA as per RBI guidelines has not specifically pointed out how the classification is bad or against the RBI guidelines. Hence the said contention fails.

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5.4 Consequent to classification of account as NPA, the 1^st respondent issued the Sec.13(2) Demand Notice dated 21.09.2022 claiming an amount of Rs.1,49,66,090.02/- due as on 19.09.2022 along with other charges. The Demand Notice is sent by RPAD which the applicant and borrowers have received as per the Acknowledgement card produced at Pg-17 and 18 of counter.

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5.5 In spite of receipt of Sec.13(2) demand notice as the borrower and the guarantor did not liquated the liability within the period of 60 days and nor raised any objections to the demand made, the 1^st respondent proceeded further under the Act in issuing Sec.13(4) Possession Notice on 10.02.2023.

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5.6 The possession notice under Sec.13(4) dated 10.02.2023 is challenged on the ground that it is not received by the applicant. On the contrary, the notice is sent by RPAD which the applicant and borrowers have received the Possession Notice as per the Acknowledgement card produced at Pg.21-24. The Possession Notice is published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 14.02.2023 and the Possession Notice is affixed on the conspicuous place of the property as per the photograph of affixture produced at Page No.25 of 1^st respondent bank’s typed set.

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5.7 It is seen that the applicant submitted One Time Settlement proposal on 21.09.2023 which the 1^st respondent bank refused One Time Settlement proposal vide letter dated 29.09.2023 which is produced at Pg.31-33 of Applicant additional typed set of papers.

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5.8 Though the applicant has challenged the Sec.13(4) possession notice have not pointed out any illegalities in the measure taken by the bank in enforcing the security available to them. On the other hand, the respondent bank have established the procedures as contemplated under the Act in enforcing the security with supporting documents as required under the Act.

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5.9 Hence it is concluded that the Sec.13(2) Demand Notice dated 21.09.2022 and Sec.13(4) Possession Notice dated 10.02.2023 are valid notices issued by the secured creditor as per the procedure as described under the Act and rules made there under.

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5.10 For the foregoing reasons, 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. Sd/-

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Sd/-

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(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 03^rd day of March, 2026)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl.	Description of Documents	Documents
No.		No.
1.	Possession Notice dated 10.02.2023.	A-1

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ADDITIONAL TYPED SET OF PAPERS PRODUCED BY THE

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APPLICANT

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Sl. No.	Description of Documents	Documents No.
1.	Synopsis and Dates & Events dated 22.12.2023.	A-1
2.	Sanction Letter for overdraft facility dated 09.06.2021.	A-2
3.	Sanction Letter for term loan and credit facilities dated 09.06.2021.	A-3
4.	Memorandum of Deposit of Title Deeds dated 28.06.2021.	A-4
5.	Letter sent by the 1^strespondent regarding the NPA (Non-Performing assets) dated 06.07.2022.	A-5
6.	Demand Notice issued by the 1^strespondent bank to the 2^ndrespondent dated 21.09.2022.	A-6
7.	Demand Notice issued by the 1^strespondent bank to the 2^ndrespondent dated 21.09.2022.	A-7
8.	Possession Notice issued by the 1^strespondent bank dated 10.02.2023.	A-8
9.	One Time Settlement proposal made by the applicant to the 1^st respondent dated 21.09.2023.	A-9
10.	The 1^strespondent bank refused One Time Settlement proposal made by the petitioner dated 29.09.2023.	A-10

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11.	Representation sent by the applicant to the 1^st respondent dated 07.10.2023.	A-11
12.	RTI Letter sent by the Applicant to the 1^st respondent under Right to Information Act dated 15.11.2023.	A-12
13.	Reply letter of RTI issued by the 1^strespondent bank to the applicant dated 08.12.2023.	A-13
14.	Reply letter of RTI issued by the Regional office to the applicant dated 08.12.2023.	A-14
15.	Statement of account in the Term Loan Account No. 10450600011232 dated 06.12.2023.	A-15
16.	Statement of Account in the Cash Credit Account No.10450500005565 dated 06.12.2023.	A-16
17.	Statement of Account in the Over Draft Account No.10450400000278 dated 06.12.2023.	A-17

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LIST OF DOCUMENTS PRODUCED BY THE 1^st RESPONDNET

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Sl. No.	Description of Documents	Documents No.
1.	Demand Notice dated 21.09.2022.	R-1
2.	Postal Acknowledgements.	R-2
3.	Possession Notice dated 10.02.2023.	R-3
4.	Postal acknowledgements.	R-4
5.	Affixture of Possession Notice dated 10.02.2023.	R-5
6.	Paper Publication of Possession Notice in English Newspaper dated 14.02.2023.	R-6
7.	Paper Publication of Possession Notice in Tamil Newspaper dated 14.02.2023.	R-7
8.	MOD dated 28.06.2021.	R-8
9.	Statement of accounts.	R-9

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SCHEDULE OF PROPERTY

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All that piece and parcel of land building bearing Plot No’s 4 and 4A No.30, Vadivel Mudali Street, Ambattur (As per Layout Plot No.53) admeasuring 3860 Sq.ft., compromised in S.No.609, as per Patta T.S.No.98, block No.17, Ward B of Venkatapuram, Ambattur Village, Ambattur Taluk within Ambattu Municipal limits, presently within Chennai Corporation Area together with an individual bungalow with built up area of about 6000 sq.ft., in the name of Mr. J. Charles, S/o, Mr. Jayaraj.

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Bounded

On the North by : Vadivel Mudali Street, On the South by : Plot No.54, On the East by : Plot No.61 On the West by : Plot No.3

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And situated within the Registration Sub District of Ambattur and Registration District of Chennai North.

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