Dismissed

Sivakumar v. Sundaram Home Finance Limited

DRT2 Feb 2026SA/185/2023

Case brief

AI extract

What is this about?

In this securitization application, the applicants challenged the auction sale of their secured property by Sundaram Home Finance Limited, alleging procedural violations. The Tribunal observed statutory compliance by the bank, noted the applicants' failure to clear dues or object timely, and upheld the validity of the sale.

What did the court decide?

The Securitization Application challenging the auction sale on 10.03.2023 was dismissed; the sale was held valid.

Sivakumar versus Sundaram Home Finance Limited — Company and Corporate | DRT (2026)

SA No.185/2023

02.02.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 02^nd day of February, 2026

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Present: SMT. S.V. GOWRAMMA

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Presiding Officer

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SA No. 185 of 2023

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Mr. S. Sivakumar, Door No.11A, 6^th Cross Street, Dr. Subburaya Nagar,

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Near Ashok Nagar Police Station, Kodambakkam,

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Chennai – 600 024.

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Mrs. S. Janaki, Door No.11A, 6^th Cross Street, Dr. Subburaya Nagar, Near Ashok Nagar Police Station, Kodambakkam,

Chennai – 600 024

…Applicants

-Vs-

The Authorised Officer, M/s. Sundaram Home Finance Limited, Sundaram Towers, 46, White Road, Chennai – 600 014.

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…Respondent

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Counsels on record / appeared:

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Counsel for Applicant : Ms. V. Selva Perumal Counsel for Respondent : Mr. K. J. Parthasarathy

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ORDER ON SA 185/2023

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The present Securitization Application [SA] is filed under sub section [1] of S.17 of the Securitization and Reconstruction of Financial Asset and

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Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging

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the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

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The applicant has challenged the Sale held on 10.03.2023 pursuant to the Sale notice dated 15.02.2023 and the outstanding amount due as per Sale notice is Rs.1,82,62,825/-

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3. Pleadings of the applicant:

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3.1 It is submitted by the applicant that they were regular in repayment of credit facilities availed from the respondent finance institution due to the Chennai flood in 2015 and covid pandemic had resulted in financial loss and the applicants were unable to pay the monthly instalments regularly. The respondent bank has issued the Section 13(2) Demand Notice dated 01.06.2017 and the Section 13(4) Possession Notice on 18.12.2018 under the SARFAESI Act.

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3.2 The applicants had made more than Rs.90 lakhs towards the monthly instalments and approached the respondent for one time settlement which was rejected by the respondent institution without any cause. Further, the respondent has issued the auction sale notice dated 21.09.2022 fixing the sale to be held on 04.11.2022 and the applicants has filed an SA No.446 of 2022 before this Tribunal and also obtained an Interim Stay with a conditional payment of 10% of the outstanding amount to be paid before the auction and another 10% to be paid within 4 weeks thereafter.

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3.3 Further the applicants had complied the 1^st conditional order and unable to comply with the 2^nd conditional order and the SA No.446 of 2022

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came to be dismissed by this Tribunal on 28.02.2023. The respondent bank has issued another sale notice dated 15.02.2023 fixing the sale to be held on 10.03.2023 and the 1^st applicant fell sick and 2^nd applicant has taking care of the 1^st applicant, hence the applicants were unable to discharge the entire outstanding amount.

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3.4 The respondent bank has charged interest rates against the RBI guidelines and also failed to publish the impugned sale notice dated 15.02.2023 in two Newspapers. As the 1^st applicant is discharged from the hospital on 05.03.2023 failed to challenge the sale notice before the auction date. However, the applicants are ready and willing to settle the loan account by way of One Time Settlement.

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3.5 It is submitted by the applicant that on 13.03.2023, the respondent bank has intimated that the auction purchaser has quoted Rs.1,75,00,000/- as bid amount and also paid Rs.42,00,000/- as EMD amount. In spite of request of the applicants, the respondent bank has failed to furnish the details of the auction purchaser.

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3.6 The respondent bank has sold the schedule property lower than the market value and also failed to publish the Sale notice in two Newspapers which is in violation of Rule 8 of SIE Rules. The applicants have not received any information with regard to the confirmation of sale and the respondent bank has not furnished the details of the auction sale proceedings which is in violation of mandatory provisions of SARFAESI Act.

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3.7 In the grounds it is contended that the impugned sale notice issued by the respondent bank is illegal and arbitrary in nature. The respondent bank has failed to obtain valuation of the property and fixed lowest reserve price to the schedule property which is in violation of the SARFAESI Act. The interest charged by the respondent institution is not in accordance with the RBI stipulations and the total amount claimed is not correct.

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3.8 The respondent bank has failed to furnish the details of the auction purchaser to the sale held on 10.03.2023. In fact, the auction sale held on 10.03.2023 and the auction purchaser paid the bid amount on 13.03.2023 which is against the terms of sale notice and SIE Rules. Hence, the applicants prays to set aside the Sale held on 10.03.2023 pursuant to the sale notice dated 15.02.2023.

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4. Objections of the respondent bank:

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4.1 The respondent bank has filed a detailed counter inter alia contending that the present SA is not maintainable and deserved to be dismissed in limine and places reliance on the Hon'ble Supreme Court in the case of Dwarika Prasad Versus State of Uttar Pradesh reported in (2018) 5 SCC 491.

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4.2 Further it is submitted that the grounds raised in the present SA had been raised in the earlier S.A.No.446 of 2022 filed by the applicants which was dismissed by this Hon'ble Tribunal on 28.02.2023 by approving the measures of the Respondent under the Act and the same contentions are raised by the applicants in the present SA.

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4.3 The respondent bank has classified the loan account of the applicant as NPA on 31.05.2017 which the EMI became overdue at 4.97 EMI. Hence, the classification of the loan account as NPA is in accordance with the RBI guidelines. Further, the applicants have admitted the issuance of the Section 13(2) Demand Notice and Section 13(4) Possession Notice and failed to raise any objections nor challenged the measures initiated by the respondent bank. Hence, the applicants are not entitled to raise any contention under Rule 8 of SIE Rules.

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4.4 Further the respondent has charged the interest as per the terms in the clause 2.5 of the loan agreement and the respondent bank has obtained Section 14 order on 06.02.2020 before the Chief Metropolitan Magistrate, Chennai and physical possession of the property was taken on 08.08.2022 which was not challenged by the applicants here in. The applicant has challenged the Sale notice dated 21.09.2022 in SA 446 of 2022 before this Tribunal and came to be disposed as infructuous on 28.02.2023.

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4.5 The applicants have failed to comply with the OTS offer given by the respondent and demanded huge waiver from the outstanding amount which is untenable. Further, the respondent institution has obtained a valuation report dated 29.08.2022 from the approved valuer and sent the sale notice to the applicant on 15.02.2023 and served on 16.02.2023 and affixed on the conspicuous part of the property on 15.02.2023 which is also published in two Newspapers, one in “Dinamani” (Tamil) and another in “The New Indian Express” (English) both dated on 15.02.2023.

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4.6 The present 2^nd Sale notice is issued under Rule 9(1) of SIE Rules and also obtained valuation report dated 29.08.2022 from a approved valuer, further the applicant has failed to raise any objection with regard to the valuation and to find a prospective purchaser to participate in the auction. Hence, the applicants cannot raise any contention with regard to the valuation of the property. The respondent has relied on the Section 20 to 26 of SARFAESI Act, and applicant is not legally entitled to raise any contention with regard to non-registration of security under Section 26 of the Act and the security interest is duly created before the Central registry on 06.01.2014.

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4.7 It is submitted that there were bids for the auction sale, one for Rs.1,58,00,000/- by Dr.Senthil Kumar SK and another for Rs.1,75,00,000/by Mr. N.P. Prabhu which the upset price has fixed for Rs.1,56,56,000/-, therefore the auction was concluded in favor of the highest bidder Mr. N.P. Prabhu who has made payments as follows:

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i. 24% of amount Rs.42,00,000/- by way of Demand Draft dated 17.02.2023

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ii. 1% of amount Rs.1,75,000/- by way of RTGS dated 08.03.2023

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iii. 75% of amount Rs.1,31,25,000/- by way of Demand Draft dated 15.03.2023

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Hence, the measures initiated by the respondent in conducting the sale has no infirmities or irregularity.

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4.8 The applicants even in spite of receipt of the Sale notice dated 15.02.2023 have failed to challenge the Sale notice and allowed the sale to be held on 10.03.2023 and Sale certificate executed in favor of the auction purchaser on 23.03.2023. Further, the auction purchaser had remitted the entire sale consideration of Rs.1,75,00,000/-. Hence, the respondent institution as secured has initiated measures in accordance with the SARFAESI Act.

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4.9 Further, the applicants have lost their right of redemption under Section 13(8) of the Act and Section 60 of Transfer of Property Act and Order XXI Rule 90 C.P.C. Hence, the applicants had approached this Tribunal with unclean hands and respondent institution as secured creditor has initiated measures under the SARFAESI Act and prays for dismissal of the present SA.

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Heard both sides of the Counsels and perused the records of the case.

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5.1 It is discernible from the records that the applicants admitted the availing of credit facilities and there is no dispute with regard to the creation of security in favor of the respondent institution by way of Memorandum of Deposit of Title Deeds dated 06.01.2024. Further, the security interest was duly registered before the central registry under Section 26(D) of the SARFAESI which is evident from the CERSAI report produced at Page No.8 to 10 of the respondent’s counter.

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5.2 Further due to default in the repayment made by the applicant for a period of 90 days, respondent institution has classified the loan account

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as NPA on 31.01.2017. After, classifying the loan account as NPA the respondent bank has proceeded further and issued Section 13(2) Demand Notice dated 01.06.2017 which is admittedly received by the borrower as per the Para No.2 of the present SA.

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5.3 It is seen that the applicants had made payments after the issuance of Demand Notice dated 01.06.2017 and regularized the account, however the applicants yet again defaulted in the repayments which resulted in classification of loan account as NPA on 31.05.2018 followed by issuance of Section 13(2) Demand Notice dated 01.09.2018. Further, the applicants failed to raise any objection to the demand made nor discharged their entire liabilities and the respondent bank has proceeded further and issued Section 13(4) Possession Notice dated 18.12.2018 which is also admittedly received by the applicants as evident from the Para No.2 of the present SA.

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5.4 It is pertinent to note that even in spite of receipt of the statutory notices the applicants have failed to discharge their liabilities nor made any representation. Hence, the respondent institution has proceeded further and issued 1^st Sale notice dated 21.09.2022 fixing the sale to be held on 04.11.2022 which was challenged by the applicants in SA No.446 of 2022 before this Tribunal, though Tribunal granted conditional orders and the applicants complied the 1^st condition and failed to comply with the 2^nd condition of the conditional order.

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5.5 The Sale notice dated 21.09.2022 fixing the sale to be held on 04.11.2022 challenged by the applicants in SA No.446 of 2022 failed to

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take place for want of bidders. Hence, the SA No.446 of 2022 came to be disposed as infructuous on 28.02.2023. The respondent bank has proceeded further and issued 2^nd Sale notice dated 15.02.2023 fixing the sale to be held on 10.03.2023 which is sent through RPAD and received by the applicants as per the Postal tracking reports and acknowledgment cards produced by the respondent at Page No.50 to 57 of respondent’s counter.

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5.6 The impugned sale notice dated 15.02.2023 is affixed on the conspicuous part of the property as per Rule 8(1) which is reflected from the photograph of affixture produced at Page No.58 and 59 of respondent’s counter, the Sale notice is also published in two Newspapers as per Rule 8(2) which is evident from the paper publications produced at Page No.60 and 61 of respondent’s counter.

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5.7 The contention as raised by the applicants is that the respondent has failed to consider the OTS offer is countered by the respondent bank contending that the applicants demanded huge waiver from the principal amount which is untenable and the OTS offer was rejected by the respondent. It is apt to mention that consideration of OTS is the direction of the bank, the Tribunal cannot direct the bank to consider OTS.

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5.8 The applicants have contended that the respondent bank has charged heavy interest which is in violation of RBI guidelines is duly countered by the respondent bank that the interest rates are charged as per the loan agreement and the sanction letter. Further the applicants have admittedly received the statutory notices and have failed to raise such a

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contention that the interest rate charges is in violation of the RBI guidelines. Hence, the contention of the applicant that the respondent has charged the interest after classifying the loan account as NPA is not sustainable.

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5.9 Further contention as raised by the applicants is that the respondent has failed to publish the contents of the impugned Sale notice dated 15.02.2023 is not sustainable as the respondent bank has duly published the contents of the Sale notice dated 15.02.2023 in two Newspapers as per Rule 8(6) of SIE Rules, one in “New Indian Express” (English) and another in “Dinamani” (Tamil) both dated on 60 and 61 of respondent’s counter. The Rule 8(6) reads as under:’

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Rule 8(6):

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T he authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5):

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[PROVIDED: that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in the Form given in Appendix IV-A to be published in two leading newspapers including one in vernacular language having wide circulation in the locality.]

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Hence, the contention of the applicant that the respondent has not published the Sale Notice dated 15.02.2023 in two Newspapers is legally unsustainable.

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5.10 A specific contention as raised by the applicants is that the respondent has failed to obtain valuation report before issuing the

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impugned sale notice dated 15.02.2023 also fails as the respondent institution as a secured creditor has obtained a valuation report dated 29.08.2022 from an approved valuator and fixed the upset price, reserve price for the sale notice dated 15.02.2023. However, applicant has failed to produce any valuation report to support their contention. Hence, the contention of under valuation.

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5.11 The further contention that the details of the auction purchaser and the payments are not rendered is duly countered by the respondent submitting that there are two bids for the auction sale, one for Rs.1,58,00,000/by Dr. Senthil Kumar SK and another for Rs.1,75,00,000/- by Mr. N.P. Prabhu for the upset price of Rs.1,56,56,000/, and the auction was concluded in favor of the highest bidder Mr. N.P. Prabhu and made payments as follows:

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i. 24% of amount Rs.42,00,000/- by way of Demand Draft dated 17.02.2023

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ii. 1% of amount Rs.1,75,000/- by way of RTGS dated 08.03.2023

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iii. 75% of amount Rs.1,31,25,000/- by way of Demand Draft dated 15.03.2023

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5.12 Further, the respondent institution has also produced the Bid document at Page No.62 to 70 of respondent’s counter which clearly reflects that Mr. N.P. Prabhu is the highest bidder and auction purchaser for an amount of Rs.1,75,00,000/- and the transaction details of the payments made as evident from the payment receipt produced at Page

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No.75 and also ID proofs of the auction purchaser produced at Page No.64 and 65 of respondent’s counter. The respondent institution has also produced the sale confirmation letter dated 10.03.2023 issued to auction purchaser which is also received as per the postal tracking report and acknowledgment card produced at Page No.73 and 74 of the respondent’s counter. Therefore, the contention of the applicant that the respondent institution has failed to furnish the details of the auction purchaser and details of the auction sale is not sustainable.

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5.13 The contention that the auction purchaser has made belated payments as against the SIE Rules is contrary to the documents on record. It is seen from the Auction proceedings that Mr. N.P. Prabhu is the successful bidder who has bid the property for a sum of Rs.1,75,00,000/and deposited EMD amount of Rs.43,75,000/- being the 25% of the bid amount on 17.02.2023 i.e., Rs.42,00,000/- by way of DD on 17.02.2023 and Rs.1,75,000/- by way of RTGS on 08.03.2023 and the balance consideration of Rs.1,31,25,000/- to be paid within 15 days from the date of sale confirmation. Further, the balance 75% of the sale consideration was paid by way of DD dated 15.03.2023 and on receipt of the entire sale consideration the Sale certificate is executed in favor of the auction purchaser on 23.03.2023 and there is no illegality in the payment made by the auction purchaser as per the terms of the Sale notice.

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5.14 It is pertinent to mention that the Applicant had lost their right of redemption as held by the Hon’ble Supreme Court in case titled “Celir LLP versus Bafna Motors (Mumbai) (P) Ltd.” considered the right

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of redemption under S.13[8] after the amendment has held that borrower's right of redemption of mortgage under the SARFAESI Act will get extinguished once the bank publishes an auction notice for the sale of the secured asset and further held that t he failure on the part of the borrower in tendering the entire dues before the publication of the auction notice as per Section 13(8) of the SARFAESI Act.

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where it is held as

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"Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set-aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding. Mere irregularity or deviation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding."

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The court further held "In such cases, courts in particular

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should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity."

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5.15 For the foregoing reasons, the applicants as borrowers even after receipt of the statutory notices has failed to liquidate the entire liabilities

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and failed to point out any illegality or irregularity in the measures taken by the respondent bank. The present SA is challenging the Sale held on 10.03.2023 and the respondent has initiated measures as per the provisions prescribed under the SARFAESI Act. It is seen that the Sale notice dated 15.02.2023 is served and the sale held on 10.03.2023 and issuance of Sale certificate dated 23.03.2023 are held as valid measures initiated by the respondent bank under the provisions of the SARFAESI Act and Rules made there under.

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Resultantly the present SA dismissed. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Steno (Mogesh), transcribed by him, corrected, signed and pronounced by me on this the 02^nd day of February, 2026)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl. No.	Description of Documents	Document No.
1.	Demand Notice issued by the respondent u/s 13(2) of SARFAESI Act dated 01.06.2017	A-1
2.	Possession Notice issued by the respondent u/s 13(4) of SARFAESI Act dated 18.12.2018	A-2

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3.	Impugned auction sale notice issued by the respondent dated 15.02.2023	A-3
4.	Mail correspondence between 1^stapplicant and respondent dated 16.03.2023	A-4

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

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Sl. No.	Description of Documents	Document No.
1.	Counter Statement dated 31.05.2023	R-1
2.	CERSAI Registration dated 06.01.2014	R-2
3.	Order passed U/s 14 of the Act dated 06.02.2020	R-3
4.	Valuation report dated 29.08.2022	R-4
5.	1^stSale notice dated 21.09.2022	R-5
6.	Appeal grounds in SA No.446 of 2022 dated 31.10.2022	R-6
7.	Interim Order in SA No.446 of 2022 dated 03.11.2022	R-7
8.	Counter statement in SA No.446 of 2022 dated 30.01.2023	R-8
9.	Final order in SA No.446 of 2022 dated 28.02.2023	R-9
10.	2^ndSale notice along with tracking report dated 15.02.2023	R-10
11.	2^ndSale notice affixture dated 15.02.2023	R-11
12.	2^ndSale notice publication dated 15.02.2023	R-12
13.	Bid document dated 08.03.2023	R-13
14.	Sale confirmation dated 10.03.2023	R-14
15.	Proof of payments made by purchaser dated 15.03.2023	R-15
16.	Sale certificate dated 23.03.2023	R-16

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SCHEDULE OF PROPERTY

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All that part and parcel of the property admeasuring 1809 sq.ft., comprised in R.S.No.21/1, T.S.No.84/3, situated at Door No.11A, 6^th New Cross Street, Dr. Subburaya Nagar, Kodambakkam, Chennai situated at within the following boundaries:

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North by: Property belongs to Janaki Ammal,

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South by: 15 feet Road, 6^th Cross street,

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East by: Common pathway & property belongs to Rajagopal,

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West by: Property belongs to Meenakshi,

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Measuring: East to West on the Northern side: 33’, East to West on the Southern side: 30’, North to South on the Eastern side:56’ 6’’, North to South on the Western Side:56’ 6’’, within the Registration District of Chennai Central and Sub-Registration District of Ashok Nagar, which is more fully and particularly described in the Title Deed No.2493/2005.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

Sivakumar v. Sundaram Home Finance Limited

Case brief

What is this about?

What did the court decide?

Sivakumar v. Sundaram Home Finance Limited

Case brief

What is this about?

What did the court decide?

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