DRT-III, Chennai allowed the respondent bank's defense that different recovery laws do not constitute the same cause of action under CPC, dismissed the applicant's Securitization Application challenging a Section 13(4) possession notice as it was regularly issued and served.
Securitization Application No.148/2023 is dismissed. Interim orders, if any, vacated.
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 No148/2023
26.03.2026
1
IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI
Dated this the 26th day of March, 2026
Present: SMT. S.V. GOWRAMMA
Presiding Officer
SA No. 148 of 2023
Mrs. S. Shyamala Proprietor: Siyamala Tech No.41, Sidco Industrial Estate, Orikkai, Kancheepuram 603 502. …Applicant
-Vs-
The Authorised Officer, Union Bank of India, Asset Recovery Branch, No.9, Elcanso Complex, Casa Major Road, Egmore, Chennai – 600 008.
…Respondent
Counsels on record / appeared:
Counsel for Applicant : M/s. G. Jeremiah Counsel for respondent : M/s. S. Parthasarathy
ORDER ON S.A. 148/2023
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 the action and the measure taken by the Respondent-Bank under the Security Interest Enforcement Rules, 2002 [for short the Rules].
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3. Pleadings of the applicant:
3.1 The applicant is the borrower; her husband is the guarantor for the credit facilities availed. It is submitted that the bank initially had sanctioned a sum of Rs.7.00 lakhs in 2011, which was enhanced by Rs.10.5 lakhs in 2012 and further enhanced to Rs.7.5 lakhs on 17.05.2014, totaling to Rs.25 lakhs.
3.2 Due to difficulties, the applicant defaulted in the repayment and the respondent bank has issued the demand notice dated 06.09.2019 demanding a debt due and payable of Rs.27,59,266.24 as on 31.08.2019.
3.3 The applicant further submits that the account was declared as NPA as on 31.08.2019 and issued a demand notice under Section 13(2) only for cash credit facility without mentioning the date of renewal of loan documents, has claimed the outstanding amount without split up of principal and interest from the date of default.
3.4 Further the respondent bank has issued second demand notice on 13.02.2020 declaring that the account as NPA as on 31.08.2019 claiming a debt due of Rs.24,97,109.24 as on 31.01.2020 when there is no provision to withdraw and issue a fresh section 13(2) Demand notice. Further the bank in the O.A.130/2020 has claimed that the account has been classified as NPA as on 06.08.2019.
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3.5 The bank in violation of the principles of natural justice embodied in Order.2 Rule.2 of the CPC has taken action under the SARFAESI Act, claimed same relief on the same cause of action in the OA which is pending before this Tribunal. The Section 13(2) Demand notice issued on 06.09.2019 is alone legal and valid compared to the second and third notice as the amount claimed is more than Rs.20 lakhs and hence the demand notice is legally invalid.
3.6 The bank has issued Possession Notice under Sec.13(4) dated 29.12.2020, affixed on the property on 29.01.2020 without being served on the applicant. The paper publication is on 03.01.2021 in the New Indian Express. The applicant challenged the possession notice under Sec.13(4) in S.A.106/2021 which came to be allowed on 17.02.2022 on the ground that the bank has not served the possession notice. The bank in their counter in S.A.106/2021 has referred to three loans including two term loans, while the Sec.13(2) demand notice refers only CC limit.
3.7 The applicant submits that the bank had admitted that the documents were last renewed on 30.03.2017. Hence the enforcement of security interest has to be enforced before 30.03.2020. Subsequently, SA 106/2021 came to be allowed by this Tribunal. The bank has now affixed the Section 13(4) possession notice dated 23.02.2023 published in the newspaper on 24.02.2023 and issued a copy of it on 24.02.2023 which was received on 27.02.2023 as per the Postal Tracking Report.
3.8 The possession notice dated 23.02.2023 relates to the demand notice dated 13.02.2020 which is more than three years earlier and the maximum
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26.03.2026
4
period prescribed for the SARFAESI Act is three years to enforce the security interest. The bank has to handed over the property documents to the applicant and restitution of Rs.9.369/- lakhs to be paid by the respondent bank as compensation. The respondent bank has the audacity to issue a fresh Section 13(4) possession notice again, which compensate the measure taken under the Limitation Act which cannot be amended retrospectively.
3.9 The applicant refers in the Limitation Act in the OA 130/2020 filed by the respondent bank and contents that the OA is barred by limitation. In the counter it is contended that the claim is barred by limitation based on Section 13(2) Demand Notice dated 13.2.2020 and the Sec.13(4) Possession Notice dated 23.02.2023. Hence on the principles of rule of resjudicata also applies to the SARFAESI Act.
3.10 The applicant also raised the issue that the claim is barred by limitation, the issue of limitation is statutory inhabitation and the Tribunal either accept the limitation is three years or grant stay in terms of Sec.13(2) r/w Sec.13(3) and then decide the SA. The applicant referred to
the Judgement of the Hon’ble Supreme Court in Syndicate Bank Vs. Channaveerappa Beleri contended that the amount payable on demand is always payable and a demand is not a condition precedent for the amount to become payable. Article 21 provides that for money lent under an agreement that it shall be payable on demand. Thus, it is clear that if the amount mentioned in the demand notice is not paid, the bank has to
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26.03.2026
5
recover the same by any one or more of the measures specified in subsection (4) of Section 13.
3.11 Further the applicant referred the Judgement of the Hon’ble Supreme Court in Transcore to the definition of debt under the SARFAESI Act “debt means any liability (inclusive of interest)” which is subsisting on and legally recoverable on the date of the application, therefore the reference is only to adding interest upto the date of issuance of demand notice.
3.12 The applicant further submits that Section 13(10) states that an application can be made as per Rule 11 in compliance with Sec 13(10) and Appendix VI only and has culled out Sec.13(4) r/w 8(1) and (2) in reply of Section 13(4) possession notice. The applicant admits the affixing of Section 13(4) notice on 23.02.2023, published it in the newspaper on 24.02.2023 and then served on the applicant on 24.02.2023 and the paper publication is in clear violation of Rule 8(2) as service should be anterior to affixing the same. On these ground, the applicant prays to set aside the Section 13(4) Possession notice dated 23.02.2023.
4. Objections of the respondent bank:
4.1 The respondent bank has filed a detailed counter along with the supporting documents inter alia contenting that the applicant has preferred SA 148/2023 challenging the possession notice dated 23.02.2023 is not maintainable either in law nor on facts and is liable to be dismissed in limine.
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4.2 It is the case of the bank that they have sanctioned financial facilities to the applicant/borrower with certain terms and conditions as stipulated in the sanction letter, sanctioned the General Loan of Rs.25 lakhs on 07.05.2019, Term Loan -I of Rs.7 lakhs on 24.2.2015 and Term Loan -II of Rs.8.46 lakhs on 01.09.2017. The applicant has executed all the loan documents and also stood as personal guarantor guaranteeing to repay the loan amount and has mortgaged the property as collateral security i.e., the property of land measuring an extent of measuring 0.254 Acres bearing Plot No.41 in the industrial estate comprised in S.F.No.50 part of Sevelimedu Village, Kancheepuram District within the SRO, Kancheepuram and Registration District of Kancheepuram.
4.3 The equitable mortgage was created by the borrower/guarantor Uthayam as Document No.7226/2011, 3449/2013 and 1170/2017 dated 29.09.2011, 06.06.2013 and 30.03.2017 respectively on the Office of the Sub-Registrar, Kancheepuram-2. As the amounts were overdue on 06.08.2019 and irregular in making repayment the loan account was classified as Non-Performing Asset on 31.08.2019 as per RBI guidelines.
4.4 The bank has issued Demand Notice under section 13(2) of the SARFAESI Act dated 13.02.2020 which was sent by the Registered Post to the borrower and the guarantor on 13.02.2020 which was served on the applicant. On the issuance of Demand Notice the loan was recalled as per the provisions of the Act and the applicant was specifically asked to repay the liability within 60 days from the date of the receipt. The applicant has
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26.03.2026
7
raised an objection vide letter dated 19.02.2020, which the bank has promptly replied vide their letter dated 04.03.2020.
4.5 The respondent bank has issued possession notice dated 09.10.2020 intimating the applicant to enforce the security in case of any default. The applicant has challenged the possession notice dated 29.12.2020 in SA 106/2021 which came to be allowed. The Tribunal while setting aside the possession notice dated 29.12.2020, granted liberty to the Secured Creditor to issue fresh possession notice in case of further default. The applicant has filed M.A. SR No.1598/2022 in IA No.106/2021 seeking modification of the order and for restitution of Rs.9.36 lakhs which came to be posed for further clarification.
4.6 The bank has issued possession notice dated 23.02.2023 under Section 13(4) of the SARFAESI Act, which is served to the applicant. The possession notice was affixed in the conspicuous place of the property which is proved by way of taking photographs of the possession notice and paper publication was affected in Tamil and English dailies on 24.02.2023. The applicant has referred to the Judgments of the Hon’ble Supreme Court is not attracted in the present case and the loan account of the applicant has been classified as Non-Performing Asset in accordance with the provision under Section 2(o) of the Act and as per the RBI Guidelines that asset including a leased asset, becomes non-performing asset (NPA) when it ceased to generate income from the bank
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a. Interest and/or instalment of principal remains overdue (unpaid
for a period of more than 90 days in respect of term loan,
b. The account remains ‘out of order’ for a period of more than 90 days (the outstanding balance being debit or in excess of the limit sanctioned) in respect of an overdraft/cash credit,
c. The bills remain overdue (unpaid) for a period of more than 90 days in case of the bills purchased and discounted,
d. The instalment of principal or interest thereon remains overdue for two crop reasons for short duration crops,
e. The instalment of principal or interest thereon remains overdue for one crop season for long duration crops.
The account remains continuously in excess of the sanctioned limit for which more than 90 days; hence the account was classified as NPA.
Heard both sides of the Counsels and perused the records of the case.
5.1 It is manifest from the records that applicant has admitted the availing a total loan of Rs.34,16,017/- and mortgaged the property as collateral security, which was registered in the office of the Sub-Registrar Office, Kancheepuram which is a security interest favoring the bank. Due
SA No148/2023
9
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to default in the repayment, the account was overdue and the respondent classified the loan account as NPA on 31.08.2019 as per the RBI Guidelines and has issued Section 13(2) demand notice on 13.02.2020.
5.2 The S.13(2) notice is issued to the borrower and guarantor as per the postal receipts at Page No.50 and the postal acknowledgement cards at Page No.60 and 70 evidences the receipt of the Section 13(2) demand notice served to the borrower and the guarantor.
5.3 On receipt of Section 13(2) demand notice the applicant vide letter dated 19.02.2020 admitted the credit facility availed and sought two years’ time to settle the cash credit loan limit of Rs.25 lakhs. The respondent bank on receipt of objections have replied vide letter dated 04.03.2020 clarifying the issues of Section 13(2) demand notice and submitted that the application for conversion of cash credit loan is not permissible.
5.4 The bank has clarified the objections raised and complied as per Section 13(3A). As the borrower and the guarantor did not repay the entire outstanding amount due as per Section 13(2) demand notice, the bank had issued an intimation of taking possession vide letter dated 09.10.2020 which was posted by Registered Post with Acknowledgement Due which is received by the applicant herein as per the postal acknowledgement cards produced by the bank – Page No.22 to 25.
5.5 Further the bank had issued Section 13(4) Possession notice on 23.02.2023 which is also sent by Registered Post with Acknowledgement Due and received by the applicant herein as per the postal
SA No148/2023
10
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acknowledgement cards which reflects in Page Nos.27 to 29. Further the possession notice is also affixed on the property and the photographs evidencing the affixture of the possession is at Page Nos. 34 & 35. Thus, it is evident that the respondent bank has initiated measure as prescribed under the Act and the Rules made their in.
5.6 The applicant after availing the credit facilities, created equitable mortgage of the property has failed to point out any illegality in the measures taken by the respondent bank. On the other hand, frivolous contentions are raised about the limitations in the OA as well as in the SARFAESI Act, it is pertinent to note that it is a settled position of law that the financial institutions are at liberty to initiate measures under RDB Act and SARFAESI Act for the recovery of the amount due.
5.7 Admittedly the bank has filed Original Application No.130/2020 for recovery of the amount to which the applicant has failed to raise any contentions in respect of the limitation in the Securitization Application. The present Securitization Application filed challenging the Section 13(4) possession notice issued by the respondent bank and has duly established
the service of the notice and on the other hand the applicant has failed to establish any violation of the measure taken by the respondent bank.
5.8 The applicant has taken a specific contention that the loan account was classified as NPA on 31.08.2019 and have issued Section 13(2) Demand Notice and also filed OA No.130/2020 contending that the classification of the loan account as NPA is on 06.08.2019, further the applicant has also relied on Order 2 Rule 2 of CPC contending that the OA
SA No148/2023
26.03.2026
11
and SA measures are claiming same reliefs and the same cause of action. Hence, measures under SARFAESI Act is barred under Order 2 Rule 2 of CPC.
5.9 Further the applicants have received the Section 13(2) Demand Notice on 06.09.2019 contending it to be valid when compared to other Section 13(2) Demand Notices. Further, contentions of the applicant that the documents were last renewed on 30.03.2017 and the respondent bank has proceeded in enforcing the security by issuing the Section 13(2) Demand Notice where they ought to have enforced the security on 30.03.2020.
5.10 Admittedly the loan account was classified as NPA on 31.08.2019 which is within the period of limitation based on loan document and Mortgage Deeds dated 29.09.2011, 06.06.2013, 30.03.2017 where the validity is for 12 years. Hence, the contention that the measures is not within the period of limitation and the measures initiated after more than three years cannot sustain.
5.11 The next contention is raised on the Order 2 Rule 2, it is pertinent to mention that the respondent bank as a secured creditor can initiate the recovery measures under the RDB Act (The Recovery of Debts and Bankruptcy Act, 1993) and enforce the security available to them under the SARFAESI Act. The respondent bank is at liberty to initiate either of the recovery proceedings and can also initiate recovery in both the acts as held in Mardia Chemicals Ltd. Vs. Union of India (2004).
SA No148/2023
12
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5.12 Further, the Hon’ble Supreme court in recent Judgment in Cuddalore Powergem Corporate Ltd. Vs. Chemplast Cuddalore Vinyls Ltd. and Anr. where it is held that the subsequent suit filed on different cause of action also would not be barred under Order 2 Rule 2 of CPC.
5.13 The Order 2 Rule 2 of CPC mandates that a plaintiff to include whole claim as the borrower is entitled to, arising from the same cause of action, in a same suit. However, in the instant matter the outstanding claim of the respondent bank can be recovered under the RDB Act and by enforcing the security available to the secured creditor under the SARFAESI Act. Hence, the contention of the applicant that the respondent bank is barred to recover the amount under the OA as well as SARFAESI Act cannot sustain.
5.14 The applicant has specifically not made out a case of respondent splitting up the claim but placed reliance on Order II Rule 2 of CPC. It is pertinent to note that SARFAESI proceedings is not a civil proceeding before a Court, as the SARFAESI Act is specialized legislation that operates on specific procedures for enforcement of the security interest without the intervention of the court. Further the measure under Section 13[4] is to be adjudicated under Section 17 of the Act and the cause of action continues till the security is sold and liquidated towards the recovery of the amount due. Hence there is no question of the secured creditor giving up the claim as per Order II Rule 2 of CPC.
5.15 It is seen from the records that the applicants had also challenged the earlier Section 13(4) Possession Notice dated 29.12.2020 in SA
SA No148/2023
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No.106/2021 which came to be allowed as the respondent bank failed to furnish the postal receipts nor acknowledgement cards for the Possession Notice dated 29.12.2020. In the instant matter the applicant has challenged the Possession Notice dated 23.02.2023. However, the applicants have relied on the Judgment in W.P.No.40794 of 2016 and W.M.P.No.34762 of 2016 in the case title of Sri Ramani Resorts and Hotels Pvt. Ltd. Vs. The A.O, State Bank of Travancore contending that the notice to be served anterior before taking over the possession and cannot be issued after taking the physical possession of the property.
5.16 In the instant matter the applicants are in receipt of the OA summons which is produced by the applicant at Page No.28 of SA and the respondent bank has produced the intimation notice dated 09.10.2020 at Page No.22 of respondent’s counter intimating to take the physical possession of the property. However, on perusal of the letter dated 09.10.2020 it is clear that it is an intimation to the applicant in exercising the power available to the secured creditor under Section 13(4) of the SARFAESI Act.
5.17 Hence, the secured creditor under Section 13(4) of the Act read with Rule 8(4) of SIE Rules demanded to hand over the possession to the secured creditor. It is evident that the respondent bank has intimated to hand over the physical possession before the issuance of Section 13(4) Possession Notice dated 23.02.2023 and the contention that the respondent bank has issued the Possession Notice after the physical possession of the property was taken is not sustainable.
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26.03.2026
14
5.18 The respondent bank as a secured creditor has initiated the measures after classifying the loan accounts as NPA on 31.08.2019 and issued Section 13(2) Demand Notice dated 13.02.2020 which is received by the applicants as per the acknowledgement cards produced at Page No.15 to 16 of the respondent’s counter and have duly complied the issuance of Section 13(2) Demand Notice. As the borrower and guarantor did not liquidated the entire liability within the period of 60 days and the respondent bank has issued the Section 13(4) Possession Notice dated 23.02.2023 which is challenged in the present SA. However, the applicants have failed to make out any illegality or violations in the measures in issuance of the Section 13(4) Possession Notice dated 23.02.2023, on the other hand the bank has established the due compliance of the measures initiated under the SARFAESI Act. For the foregoing reasons, the SA is only to be dismissed
(Dictated to Steno (Mabel Christy), transcribed by her, corrected, signed and pronounced by me on this the 26th day of March, 2026)
SA No148/2023
26.03.2026
15
ANNEXURES
LIST OF DOCUMENTS PRODUCED BY THE APPLICANT
| Sl. No. |
Description of Documents | Document No. |
|---|---|---|
| 1. | Sec. 13(2) Demand Notice dated 06.09.2019 | A-1 |
| 2. | Sec. 13(2) Demand Notice dated 13.02.2020 | A-2 |
| 3. | Sec. 13(4) Possession Notice dated 29.12.2020 | A-3 |
| 4. | OA 130/2020 filed dated 19.03.2020 | A-4 |
| 5. | Summons in OA 130/2020 dated 20.08.2020 | A-5 |
| 6. | Counter in SA 106/2021 dated 13.12.2021 | A-6 |
| 7. | Order in SA 106/2021 dated 17.02.2022 | A-7 |
| 8. | Sec.13(4) Possession Notice dated 23.02.2023 | A-8 |
| 9. | Postal cover of the above notice dated 24.02.2023 |
A-9 |
| 10. | Tracking Report of the above notice dated 27.02.2023 |
A-10 |
| 11. | WP 4-796/2016-Judgment dated 05.09.2019 | A-11 |
LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS
| 1 | Description of Documents | Document No. |
|
|---|---|---|---|
| 1. | Sanction Advice for Rs.7.00 lakhs 21.04.2023 |
dated | R-1 |
| 2. | Sanction for Rs.17.50 lakhs dated 06.03.2 | 013 | R-2 |
| 3. | Sanction advice for Rs.25.00 Lakhs 07.05.2019 |
dated | R-3 |
| 4. | 13(2) Demand Notice issued to the borrow guarantor dated 13.02.2020 |
er and | R-4 |
| 5. | Postal receipts dated 13.02.2020 | R-5 | |
| 6. | Acknowledgement of Applicant | R-6 | |
| 7. | Objections of Applicant dated 19.02.2020 | R-7 | |
| 8. | Reply of the Respondent dated 04.03.202 | 0 | R-8 |
| 9. | Intimation of taking possession 09.10.2020. |
dated | R-9 |
| 10. | Postal Receipts dt.13.10.2020 | R-10 | |
| 11. | Acknowledgement of applicant | R-11 | |
| 12. | Possession Notice under Rule 8(1) 23.02.2023 |
dated | R-12 |
| 13. | Postal Receipts dated 13.10.2020 | R-13 | |
| 14. | Acknowledgement of applicant | R-14 | |
| 15. | Paper publication in Tamil - Rule 8(2) 24.02.2023 |
dated | R-15 |
SA No148/2023
26.03.2026
16
| 16. | Paper publication 24.02.2023 |
in English -Rule 8(2) | dated | R-16 |
|---|---|---|---|---|
| 17. | Affixing of posses | sion Notice dated 23.02.2 | 023 | R-17 |
| 18. | Sale deed registe stands in the nam |
red as Document No.114/ e of applicant dated 4.12. |
2010 2009 |
R-18 |
| 19. | Memorandum of D as document No.7 |
eposit of Title deeds regis 226/2011 dated 29.09.2 |
tered 011 |
R-19 |
| 20. | Memorandum of D as document No.3 |
eposit of Title deeds regis 449/2013 dated 06.06.2 |
tered 013 |
R-20 |
| 21. |
Memorandum of D as document No.1 |
eposit of Title deeds regis 170/2017 dated 30.03.2 |
tered 017 |
R-21 |
| 22. | Statement of No.40740501006 |
Account in Loan 0168 dated 20.04.2023 |
A/c | R-22 |
| 23. | Statement of |
Account in Loan |
A/c | R-23 |
| No.40740668000 |
0057 dated 2.12.2022 |
|||
| 24. | Statement of No.40740668000 |
Account in Loan 0065 dated 2.12.2022 |
A/c | R-24 |
SCHEDULE OF PROPERTY
Description of immovable property (Secured Property)
All the piece and parcel of the land measuring an extent of measuring 0.254 Acres and known as Plot No.41 in the industrial estate comprised in S.F.No.50 of Sevelimedu Village, Kancheepuram District, bounded on the
East by: D.P.No.46
Westby: 12M wide SIDCO Road North by: D.P.No.40
South by: D.P.No.42
East to West on Northern side: 45.60m East to West on the South side: 45.55m
North to South on East side: 22.55m
North to South on West side: 22.5m
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And situated within the Sub Registration District of Kancheepuram and Registration District of Kancheepuram with electricity service connection No.392 and its deposits.
Sd/- (S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI
3 issues framed by the court
Whether measures under the SARFAESI Act and RDB Act are barred by Order II Rule 2 of the CPC due to same cause of action.
Whether the Section 13(4) possession notice issued after the initial notice is invalid on grounds of limitation or violation of service rules.
Whether the applicant established any illegality or violation in the measures taken by the bank under the SARFAESI Act.
Colour shows how this judgement treated each authority
Mardia Chemicals Ltd. Vs. Union of IndiaRelied on¶5
Mardia Chemicals Ltd. Vs. Union of India (2004)
Cuddalore Powergem Corporate Ltd. Vs. Chemplast Cuddalore Vinyls Ltd. and Anr.Relied on¶5
Cuddalore Powergem Corporate Ltd. Vs. Chemplast Cuddalore Vinyls Ltd. and Anr.
Sri Ramani Resorts and Hotels Pvt. Ltd. Vs. The A.O, State Bank of TravancoreDistinguished¶5
Sri Ramani Resorts and Hotels Pvt. Ltd. Vs. The A.O, State Bank of Travancore
3 provisions across 2 enactments
Mrs. S. Shyamala
The Authorised Officer, Union Bank of India
S.V. Gowramma
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
