DRT Chennai dismissed the Securitization Application challenging a Sec. 13(4) Possession Notice under the SARFAESI Act. The tribunal found the bank followed due procedure, default was genuine, and third-party rights had already been created via an e-auction sale.
Securitization Application fails and is dismissed; interim orders granted earlier are 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 No.154/2022
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15.07.2026
IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI
Dated this the 15th day of July, 2026
Present: SMT. S.V. GOWRAMMA Presiding Officer
SARFAESI APPLICATION No. 154 of 2022
Mrs. Sulochana. S
No.16/82, Door No.A1, ICL Jubilee Apts, Second Main Road, Gandhi Nagar, Adyar, Chennai -600 020. ….Applicant -Vs-
Authorized Officer, Indian Bank, Adyar Branch, No.91, First Main Road, Gandhi Nagar,
Adyar, Chennai -600 020. ….Respondent
Counsels on record / appeared:
Counsel for Applicant: M/s. Antony.L.X.Selvam, RKM. Suresh & Adithya.D. Counsel for respondent : M/s. RRK Associates.
ORDER ON SA 154/2022
the loan availed by her son. It is contended that the applicant’s son as
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borrower was regular in repayment without any delay or default. However, due to covid-19 pandemic, and business loss, the borrower could not repay
the interest portion alone. Despite of their difficulties and stringent situation, the applicant was making efforts to regularize the loan account.
3.1 The respondent bank had wrongly classified the loan account as NPA and have initiated measures under the SARFAESI Act, by issuing the Sec.13(2) demand notice on 14.07.2021 claiming a sum of Rs.2,69,32,467.35/- and has also issued a possession notice dated 08.10.2021.
3.2 It is contented that the Reserve Bank of India has announced several Resolution Frame work for Covid-19 related to Stress namely 1. RBI/202021/16 DOR.No.BP.BC/3/21.04.048/2020-21, 2. RBI/2020-21/16 DOR.No.FIN.REC.46/20.16.056/2020-21, 3. RBI/2021-22/31 DOR. No. STR. REC.11/21.04.048/2021-22, 4. RBI/2021-22/32 DOR. No. STR. REC.12/21.04.048/2021-22, provided a window to enable lenders to implement a resolution plan. The respondent bank claiming to classify the applicant loan account as NPA is against the RBI guidelines during the Covid-19.
3.3 The loan account of the applicant was not considered for any such resolution, contrary to the violation of the Reserve Bank of India have proceeded further in recovering the amount due and has taken the symbolic possession on 08.10.2021. Being aggrieved, the applicant has filed the present SA on the ground that the Authorized Officer initiated measures
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under the SARFAESI Act without ascertaining whether there are dues to recover the amount.
3.4 The demand notice does not divulge any details of the amount payable, details of sanction, disbursement, repayment and outstanding due, but has mentioned only a consolidated figure of Rs.2,69,32,467.35/without any relevant breakup. The respondent bank has not complied with Sec.13(3-A) of the SARFAESI Act, thereby violating the provision of the Act.
3.5 The date of NPA in the demand notice is 30.03.2021 whereas in the subsequent letter dated 17.03.2022 issued by the respondent bank, date of NPA was mentioned as 31.03.2021. Hence, there is a discrepancy in the material particular, and the same is also against the RBI guidelines, and hence, the classification of the loan account as NPA on 30.03.2021 or 31.03.2021 is unconscionable and is untenable, bad in law.
3.6 Further the bank has issued the possession notice which is based on the demand notice hence, the entire action of the Authorized Officer is liable to be set aside as per Rule 8(2A) the Authorized Officer ought to have served the possession notice through electronic mode in addition to the modes prescribed in Rule 8(1) and (2). On these grounds, the applicant prays to set aside the Sec.13(4) possession notice dated 08.10.2021.
3.7 The applicant has filed an additional typed set of documents produced.
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4.1 The applicant had committed defaulted in the repayment of the loan amount, hence the respondent bank was constrained to classify the loan account as NPA on 30.03.2021. The respondent bank had initiated the measures under the SARFAESI Act by issuing the Sec.13(2) demand notice dated 14.07.2021, calling upon the borrower and guarantor to repay a sum of Rs.2,69,32,467.35/- being the outstanding amounts due.
4.2 The contention that the applicant had making efforts to regularize the loan account and bank has initiated measures in contravention to the RBI guidelines is denied. The demand notice sent to the borrower and the guarantor which was duly acknowledged by them as early as on 16.07.2021. In spite of the receipt of the demand notice, the applicant had not chosen to repay the outstanding amount, hence, the respondent bank has issued Sec. 13[4] Possession Notice on 08.10.2021.
4.3 The respondent bank has followed the Reserve Bank of India resolution frame work for Covi-19 which is relating to the stress assets and were applicable for the accounts in active and in regular and not for the
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NPA accounts. Hence, the respondent bank has not violated the RBI directives under the guidelines of the recovering the outstanding amount.
4.4 As the applicant did not liquated the liability, the bank have issued the possession notice on 08.10.2021 and took symbolic possession of the property. The possession notice was sent to the borrower which was duly acknowledged by the applicants and also published in the two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 12.10.2021. The possession notice is also affixed on the mortgaged property and the bank has complied with the statutory requirements as envisaged under the Act.
4.5 The Tribunal on 04.04.2022 passed a conditional order directing the applicant to deposit of 10% of the outstanding amount within 3 weeks and on compliance of the same there shall be an order of Status Quo as on the date of compliance. Further permitted to deposit 10% of the outstanding amount, within a period of 3 weeks thereafter and on compliance of the Second part of the conditional order, there shall be an order of interim stay of all further proceedings under the SARFAESI Act. It was clarified that if the borrower fails to comply with any part, the bank is entitled to take further action in accordance with law.
4.6 Since the borrower failed to comply with the conditional order passed, the Bank subsequently issued a Sale Notice dated 07.07.2022, fixing the e-auction sale on 22.07.2022. The e-auction was conducted on the scheduled date, and Mr. Prabhu Kasi Sekar, who had participated in the
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auction, was declared the highest successful bidder. Thereafter, the Bank issued a Sale Certificate in his favour, which was duly registered on 29.07.2022 as Document No. 4055 of 2022 in the office of the SubRegistrar, Alandur.
4.8 The respondent bank has filed written submissions and produced an additional counter statement.
Heard both sides of the Counsels and perused the records of the case
5.1 The applicant also executed the necessary loan documents, including the Demand Promissory Note dated 16.03.2020 and letter of continuity dated 16.03.2020, the Ind Mortgage Agreement dated 16.03.2020, and the
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D-32 Letter from the Party to the Bank confirming the creation of an equitable mortgage dated 18.03.2020.
5.2 During the pendency of the SA, the applicant has filed the additional typed set of documents ie., the loan sanction letter dated 12.03.2020 and statement of accounts from 16.03.2020 to 28.12.2021 contending that the sanction letter dated 12.03.2020 reflects that the EMIs of Rs.3.13 and the applicant has made the repayments regularly, as reflected in the statement of account as produced.
5.3 The repayment details have been worked out at pg.9 contending that the applicant was making the regular repayment and in the month of December made a payment of Rs.335737, however could not make the payment in the month of January 2021 and from February 08.02.2021 and has relied upon the statement of calculation of the amounts paid, which shows that as on 31.03.2021, the total amount paid by the applicant was Rs.1065900.
5.4 Subsequently, the applicant made repayments on 30.12.2020 and 31.12.2020. After two months from the above dates of repayment, further payments were made on 08.02.2021, 09.03.2021, 15.03.2021, 29.03.2021, 30.03.2021 and 31.03.2021. However, all these payments were made after the borrower’s loan account had become classified as NPA.
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opportunity, hence, the respondent bank classified the loan account as NPA on 30.03.2021.
5.6 The respondent had issued the Sec.13(2) Demand Notice dated 14.07.2021 claiming an amount of Rs.2,69,32,467.35/- due as on 12.07.2021 along with other charges. The contentions that the account is classified as NPA on 30.03.2021, it is wrongly mentioned as 31.03.2021, cannot sustain as the demand notice produced at page 1 of the counter and the demand notice produced by applicant at page 11 of SA clearly reflects that the date of NPA is on 30.03.2021, hence classified is bad cannot sustain. The respondent bank on default of repayment of 90 days has classified the account as per RBI guidelines.
5.7 The demand notice sent by RPAD to borrowers and co-borrowers is as per the acknowledgement card which is produced at pg.4 and 5 of counter. In spite of receipt of Sec.13(2) demand notice as the borrowers and the guarantors did not liquated the liability within 60 days and nor raised any objections to the demand made, the respondent bank has proceeded further under the Act.
5.8 The respondent issued the Sec.13(4) Possession Notice on 08.10.2021 sent through Registered Post with Acknowledgment, which the borrowers and co-borrowers have received the possession notice as per tracking report which is produced at Pg.11, and affixture of possession notice produced at pg.8-10 of respondent bank’s typed set, evidences due service of possession notice and possession notice is also published in two
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newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 12.10.2021.
5.9 Further, it is seen that the applicant, though obtained a conditional order vide order dated 04.04.2022, since the borrower failed to comply with the conditional order, the Bank subsequently issued a Sale Notice dated 07.07.2022, fixing the e-auction sale on 22.07.2022, which was not challenged by the borrower. The e-auction was conducted on the scheduled date, and Mr. Prabhu Kasi Sekar, who had participated in the auction, was declared the highest successful bidder. Thereafter, the Bank issued a Sale Certificate in his favour, and the same was duly registered on 29.07.2022 as Document No. 4055 of 2022 in the office of the Sub-Registrar, Alandur.
5.10 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.
5.11 Hence it is concluded that the Sec.13(2) Demand Notice dated 14.07.2021 and Sec.13(4) Possession Notice dated 08.10.2021 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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5.12 For the foregoing reasons, the present SA fails and accordingly SA
stands 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/- (S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI
ANNEXURES
LIST OF DOCUMENTS PRODUCED BY THE APPLICANT
| Sl. No. |
Description of Documents | Documents No. |
|---|---|---|
| 1. | Reserve Bank of India Guidelines dated 05.05.2021 |
A-1 |
| 2. | Letter to the bank by the applicant dated 05.07.2021. |
A-2 |
| 3. | Demand Notice dated 14.07.2021. | A-3 |
| 4. | Impugned Possession Notice dated 08.10.2021. | A-4 |
| 5. | Reply sent by the bank for Applicants E-Mail dated 17.03.2022. |
A-5 |
ADDITIONAL TYPED SET OF DOCUMENTS PRODUCED BY THE
APPLICANT
| Sl. | Description of Documents | Documents |
|---|---|---|
| No. | No. | |
| 1. | Loan Sanction Letter dated 12.03.2020. | A-1 |
| 2. | Statement of accounts from 16.03.2020 to | A-2 |
| 28.12.2021 dated 28.12.2021. |
LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET
| Sl. | Description of Documents | Documents | |
|---|---|---|---|
| No. | No. | ||
| 1. | Demand Notice under Sec.13(2) of SARFAESI Act dated 14.07.2021 |
the | R-1 |
| 2. | Postal Acknowledgement dated 16.07.2021. | R-2 | |
| 3. | Possession Notice under Sec.13(4) of | the | R-3 |
| SARFAESI Act dated 08.10.2021. |
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| 4. | Affixture of Possession Notice in the mortgaged asset dated 08.10.2021. |
R-4 |
|---|---|---|
| 5. | Speed post postal receipts for the possession notice sent to the borrower/guarantor. |
R-5 |
| 6. | Paper publication of possession notice in the New Indian Express (English Daily) dated 12.10.2021. |
R-6 |
| 7. | Paper publication of possession notice in Dinamani (Tamil Daily) dated 12.10.2021. |
R-7 |
| 8. | Statement of account. | R-8 |
SCHEDULE OF PROPERTY
All that piece and parcel of the land and building bearing and plot No.3, Medavakkam, Main Road, Ullagaram, Chennai -600 091 in the sanctioned lay out LPDM/DDTP No.34/62, Comprised in Survey No.83/2-D part and 83/2E part, Measuring 750 Sq.ft., and 1316 Sq.ft., in all 2066 Sq.ft., shop site comprised in Survey No.83/2C measuring 2346 sq.ft., and both the plot and shop site measuring 1 Ground and 2012 Sq.ft., (i.e.4412 Sq.ft.,) and situated in Ullgaram Village lies within the registration district of Chennai South and Sub-Registration District of Alandur.
North by: Part of Plot No.2
South by: 20 Feet wide Road,
East by: Part of Plot No.9
West by: Road leading to St. Thomas Mount Railway station
Sd/-
(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI
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3 issues framed by the court
Whether the Applicant's challenge to the Securitization Application succeeds on grounds of alleged NPA classification discrepancies and failure to follow issuance procedures under Rule 8(2A).
Whether the bank's measures under Sections 13(2) and 13(4) of the SARFAESI Act were validly enforced after default and non-payment of reiterated demands.
Whether the Applicant's filing is premature or unsustainable given the sale and creation of third-party rights via registered auction.
3 provisions across 2 enactments
Mrs. Sulochana. S
Authorized Officer, Indian Bank, Adyar Branch
S.V. GOWRAMMA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
S.V. GOWRAMMA
