Allowed

Mohammed Iqbal v. Canara Bank

DRT6 Apr 2026SA/203/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal quashed SARFAESI proceedings initiated against a deceased guarantor. The Tribunal set aside the auction sale and possession notices, ruling that the bank failed to serve legal heirs and violated Recovery Rules regarding notice affixture and valuation, rendering proceedings against a dead person invalid.

What did the court decide?

The auction sale and possession notices are set aside; the bank is directed to refund the auction purchaser's consideration with 4% interest, while applicants must pay stamp duties. The bank is free t

Mohammed Iqbal versus Canara Bank — Banking and Recovery | DRT (2026)

¶1

SA No.203/2023

¶2

Fair Order

¶3

IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI DATED THIS 06^th DAY OF APRIL, 2026 PRESENT: SEEMA SINHA [PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

¶4

SA No. 203/2023

¶5

Mr. Mohammed Iqbal, S/o. Sahul Hameed, Legal Heir of Razia Begum, No. 22, Asanathpuram 1^st Street, Vedapatti, Nagal Nagar Post, Dindigul – 624 003.

¶6

Mr. M. Asif Imran, S/o. Mohammed Iqbal, Legal Heir of Razia Begum, No. 22, Asanathpuram 1^st Street, Vedapatti, Nagal Nagar Post, Dindigul – 624 003. …. Applicants Vs

¶7

The Authorized Officer, Canara Bank, ARM Branch, St. Mary's Campus, Circle Office, 1^st Floor, East Veli Street, Madurai – 01. …. 1^st Defendant Bank

¶8

Mr. S. Safayathullah, S/o. A. Basheer Mohamed, 65/40, East Santhai Road, Adiyanuthu, Dindigul – 624 003. …. 2^nd Defendant/Auction Purchaser

¶9

Page 1 of 18

¶10

SA No.203/2023

¶11

The Chief Judicial Magistrate,

¶12

District Court Buildings, Dindigul. …. 3^rd Defendant

¶13

Appearance of Advocates:

¶14

M/s. S. Suresh ---- Counsel for the Applicants Mr. R. Pandivel ---- Counsel for the 1^st Defendant Bank M/s. S. Pugalendhi ---- Counsel for the 2^nd Defendant/Auction Purchaser

¶15

This SARFAESI Application was heard in the presence of Counsels for the Applicants, 1^st Defendant Bank & 2^nd Defendant/Auction Purchaser and fixed for passing final order before me and upon hearing the arguments of the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

¶16

O R D E R

¶17

1 . This Application has been filed u/s. 17 of the SARFAESI Act, 2002 by the Applicants praying that this Hon'ble Tribunal may be pleased to set aside the entire SARFAESI Proceedings initiated by the 1^st Defendant Bank ending up with the order dated 13.04.2023 passed by the 3^rd Defendant U/s. 14 of the SARFAESI Act in Cr.M.P.No.2542 of 2023.

¶18

2 . The brief averments of the Application filed by the Applicants are as follows:-

¶19

The Counsel for the Applicants submitted that the 1^st Applicant's wife and the mother of the 2^nd Applicant Mrs. Razia Begaum stood as Guarantor for the loan availed by M/s. Innaayaa Leather Exports to the tune of Rs. 75.00 Lakhs towards OCC limit during the year 2017 and offered her immovable property as collateral security for the due repayment of the loan. The said M/s. Innaayaa Leather Exports was prompt in repayment initially and operated the loan account well within the limits. However, due to the slump in the market they suffered loss and they were not able to adhere to the repayment schedule of the 1^st Defendant Bank. Hence, the 1^st Defendant had classified the loan account of M/s. Innaayaa Leather Exports as NPA during the year 2019. The 1^st Defendant initiated recovery proceedings and initiated action under the SARFAESI Act by issuing the 13(2) Demand Notice dated 28.08.2019 claiming a sum of Rs. 1,10,67,414/- as on date.

¶20

Page 2 of 18

¶21

SA No.203/2023

¶22

It is further submitted that thereafter, the 1^st Defendant took symbolic possession of the Schedule mentioned properties on 08.11.2019. In the meantime, the said Mrs. Razia Begum fell ill due to high sugar from March 2018 itself and she was under continuous treatment and subsequently died on 20.06.2021. In order to meet out her medical expenses, Applicants borrowed a sum of Rs. 15.00 Lakhs from one Mr. Abdulla by leasing out the Schedule mentioned property to him. The said Mr. Abdulla on coming to know about the recovery action initiated by the 1^st Defendant Bank filed a Civil Suit in O.S.No. 467 of 2019 for recovery of money against the deceased Mrs. Razia Begum and her demise he impleaded the Applicants as party to the proceedings in the above suit and the same is still pending for adjudication.

¶23

It is further submitted that in the meantime, the 1^st Defendant issued the present Auction Sale Notice dated 12.10.2022 in the name of the deceased Mrs. Razia Begum, for the property mortgaged by her, even though the 1^st Defendant is aware of the death of Razia Begum. Hence, the Auction Sale Notice dated 12.10.2022, issued by the 1^st Defendant fixing the date of Sale on 31.10.22 for the Schedule mentioned property is non-est in the eye of law as the same is issued against a dead person. Further it is submitted that no notice was served on the legal heirs of the deceased Mrs. Razia Begum. Since the property was leased out to one Mr. Abdullah, the Applicants are not aware about the affixture of the Auction Sale Notice dated 12.10.2022. The Applicants came to know about the notice and the auction Sale held on 31.10.22 in favour of the 2^nd Defendant only at the later stage.

¶24

It is further submitted that the Applicants were neither the borrower nor the guarantor and their liability is restricted to the extent of the estate inherited by them from the deceased Mrs. Razia Begum. It is further submitted that no notice was issued to the Applicants before bringing the property to the Sale and no opportunity was given to the Applicants to exercise their right of redemption to save the only available property. Hence, the Auction Sale Notice dated 12.10.2022 issued by the 1^st Defendant and the consequential Auction Sale held on 31.10.2022, in favour of the 2^nd Defendant is bad in law. The Applicants aggrieved over the above action of the Defendants had filed a Writ Petition in W.P.(MD) No. 27417 of 2022 before the Hon'ble High Court of Madras (Madurai Bench) challenging the Auction Sale Notice dated 12.10.22 and the consequential Auction Sale held on 31.10.2022. The Hon'ble High Court vide order dated 02.12.2022 granted interim stay on condition that the Applicants should deposit a sum of Rs. 40.00 Lakhs on or before 02.01.23 and the Writ Petition is still pending.

¶25

Page 3 of 18

¶26

SA No.203/2023

¶27

It is further submitted that taking advantage of the situation the 1^st Defendant obtained an Order dated 13.04.2023 from the 3^rd Defendant U/s. 14 of the SARFAESI Act in Cr.M.P.No. 2542 of 2023. Further, this Petition was also filed against a dead person and the property sought to be taken possession also in the name of the dead person. Aggrieved over the above action of the Defendants the Applicants as legal heirs are filing the present Application on the following and among other grounds:-

¶28

Main Grounds :

¶29

The Order passed by the 3^rd Defendant U/s. 14 of the SARFAESI Act dated 13.04.23 made in Cr.M.P. No. 2542 of 2023, appointing an Advocate Commissioner for taking Physical Possession of the Schedule mentioned properties is arbitrary and is liable to be set aside.

¶30

The Auction Sale Notice issued by the 1^st Defendant dated 12.10.2022 fixing the date of sale on 31.10.22 is non-est in the eye of law.

¶31

The 3^rd Defendant ought to have seen that no notice was issued by the 1^st Defendant to the Applicants who are the legal heirs of the deceased Mrs. Razia Begum, so as to enable the Applicants to exercise their right of redemption.

¶32

The 3^rd Defendant ought to see that the 1^st Defendant had suppressed the above material facts that the Sale Notice was issued against a Dead person and the property of the dead person was sold to the 2^nd Defendant.

¶33

The 3^rd Defendant ought to have seen that the 1^st Defendant had not filed an affidavit disclosing all the material facts as contemplated under the Act. Hence, the Petition ought to have dismissed by the 3^rd Defendant on this sole ground.

¶34

The 3^rd Defendant Order passed against a dead person and the property sought to be taken possession also stands in the name of the dead person and the same was ordered. Hence, this order is non-est in the eye of law.

¶35

Therefore, it is prayed that this Hon'ble Tribunal may be pleased to set aside the entire SARFAESI Proceedings initiated by the 1^st Defendant Bank ending up with the order passed by the 3^rd Defendant U/s. 14 of the SARFAESI Act dated 13.04.23 appointing an Advocate Commissioner for taking Physical Possession of the Schedule mentioned properties and pass such other order or orders.

¶36

Page 4 of 18

¶37

SA No.203/2023

¶38

SCHEDULE OF PROPERTIES

¶39

All that parts and parcel of the structure situated at Dindigul District RD, Nagal Nayakkanpatti SRD, Dindigul Town, Ward No. 6, T.S.No. 1942/4B, the land measuring 2.06 Acres were divided into proposed layout under the name and style as Vedapatty Solaivasudeviyer Kuppammal @ S.V.K. Nagar, T.S.No. 1942/4B, the Plot No. 30, measuring 1080 sq.ft. bounded on the

¶40

North : Plot No. 21, South : East – West 20 feet Road, East : Plot No. 29, belongs to Ramakrishnan and Maheswari, West : Plot No. 31

¶41

Admeasuring East West 30 feet on both sides and North South 36 feet on both sides.

¶42

The Applicants have submitted the following List of documents in support of their claim in the SA, which are as follows:

¶43

S.No.	Date	Details of Documents
1.	28.08.2019	13(2)Demand Notice
2.	08.11.2019	13(4)Possession Notice
3.	13.01.2022	Death certificate of Mrs. Razia Begum
4.	22.03.2022	Legal Heir certificate
5.	02.12.2022	Interim Order in W.P.(MD)No. 27417 of 2023
6.	13.04.2023	Orderpassed bythe 3^rdDefendant U/s. 14(Impugned Order)
7.	05.06.2023	Notice issued bythe Advocate Commissioner

¶44

3 . On the other hand, the Counsel for the 1^st Defendant Bank appeared before this Tribunal and filed Vakalat, Reply Statement, Written Arguments & Typed set of papers in which the Bank has submitted that the 1^st Defendant Bank do not admit all the allegations under the heading "Facts of the case" & "Grounds" as true & correct. The Applicants are put to strict proof of every one of the said allegations with valid & acceptable evidence. Most of the allegations are unwarranted so far as the matter-inissue is concerned.

¶45

It is further submitted that the defaulters have not repaid the loan as per Terms & Conditions and that the reason stated by the Applicants for non repayment of loan is not true & correct that the Applicants have not leased out the property to anyone and that the bank is not aware of the death of Tmt. Raziya Begum and that either the borrower or legal heirs of the deceased have not at all intimated the death of Tmt. Raziya Begum to the bank and so the question that the Sale Notice & Sale held is non est in law does not & will not arise at all and that the Applicants are liable to pay

¶46

Page 5 of 18

¶47

SA No.203/2023

¶48

the remaining loan amount and that the bank has issued several Sale Notices and that the Applicants have been watching the proceedings behind the back and kept silence and so the question that no opportunities was given to the Applicants to exercise the right of redemption does not & will not arise at all and that the Sale Notice & Sale held is valid in law and that order passed by CJM is neither arbitrary nor unreasonable nor without jurisdiction nor against the principles of natural justice and that the CJM Order is legally sustainable and there is no error apparent on the face of the record and that the bank has not suppressed any material facts and that the bank has filed affidavit before CJM and that principles of natural justice & fair play has been followed and that the order of CJM is valid in law and the same is not liable to be set aside.

¶49

It is further submitted that the 1^st Defendant Bank has issued Demand Notice to the borrower & mortgagor cum guarantor and the same was also duly received by them. The Bank has taken symbolic possession of the property & issued Possession Notice and the Possession Notice was duly served and affixed the Possession Notice on the conspicuous part of the property and the Possession Notice was also published both in Tamil daily & in English daily. The 1^st Defendant Bank obtained Valuation Report from the approved valuer for the property who has assessed the value of the property and that the 1^st Defendant Bank has properly & rightly fixed the value of the property & reserve price. The Bank has issued Sale Notice to the borrower & mortgagor cum guarantor and the same was duly served and affixed the Sale Notice on the conspicuous part of the property and the Sale Notice was also published in both Tamil & English dailies.

¶50

It is further submitted that the borrower & mortgagor cum guarantor have not sent any reply to the 13(2) Demand Notice. The defaulters have not challenged the Possession Notice. Non challenging the Possession Notice is fatal to the case. Without challenging the Possession Notice, CJM Order cannot be challenged. The mortgaged property was sold and Sale Certificate has been issued & registered and that the sale proceeds were adjusted & appropriated towards the loan account. Further it is submitted that the Applicants have filed Writ Petition at High Court, Madurai in WP (MD) No. 27417/22 challenging the Sale Notice & Sale held. The Hon'ble High Court was pleased to pass conditional order of stay; but the Applicants have not complied with the conditional order. They have not availed the opportunity given to them. When the conditional order was not complied, the Applicants are not entitled to agitate the case on merits as per the "Prestige Lights case" of Supreme Court. The date of admission of WP (MD) No. 27417/22 is 02.12.22, whereas the Sale Notice was issued even on 12.10.22 and sale was held on 31.10.22 and Sale Certificate was issued on 29.11.22. Further,

¶51

Page 6 of 18

¶52

SA No.203/2023

¶53

the Bank has issued several Sale Notices and that none of the Sale Notices were challenged, non-challenging of Sale Notices are fatal to their case.

¶54

It is further submitted that the entire amount paid by the Auction Purchaser has been adjusted towards the loan account and even after adjusting the loan account, the defaulters are liable to pay a sum of Rs. 1,76,11,300.93p as on 31.08.23 with subsequent interest & cost. The defaulters have not settled the dues on or before the date fixed for sale. The defaulters are well aware that the property is about to be sold under the provisions of the SARFAESI Act. Despite the same, they neither redeemed the property by paying the loan nor brought buyer nor participated in the auction. The defaulters are not having any intention to pay off loan. The 1^st Defendant Bank has sold the property and that the Auction Purchaser became the absolute owner of the property and the Sale Certificate has been issued & registered and title deeds were handed over to the Auction Purchaser. Further, the Auction Purchaser invested huge amount and his interest has to be safeguarded.

¶55

It is further submitted that there is no procedural irregularity on the part of the CJM in passing its Order. The CJM Order may not be stayed or set-aside that too when the Possession Notice & Issuance of Sale Certificate were not challenged. Further, when the right of redemption has been lost and that the Applicants cannot question the order of CJM. Further it is submitted that the borrower or the legal heirs of deceased guarantor cum mortgagor have not intimated the death of the deceased guarantor cum mortgagor namely Tmt. Raziya Begum to the Bank. They ought to have intimated the death of the deceased along with particulars of the legal heirs to the Bank. All the SARFAESI Notices sent to the guarantor cum mortgagor namely Tmt. Raziya Begum was duly received at their end and bank has also received the AD Cards. So, it indicates that the Tmt. Raziya Begum is alive. Only 02.12.22, when the Writ Petition in WP(MD) No. 27417/22 came up for admission, the bank came to know that Tmt. Raziya Begum was died and whereas the Sale Notice was issued even on 12.10.22 and the Sale Certificate was issued even on 29.11.22 and Petition u/s. 14 before CJM was filed even on 22.11.22. So, non-intimating the date of the death and particulars of legal heirs by the defaulters to the bank is fatal to their case.

¶56

The SARFAESI Application is not maintainable either in law or on facts. Therefore, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the above SARFAESI Application with cost and thus render justice.

¶57

Page 7 of 18

¶58

SA No.203/2023

¶59

TYPED SET OF DOCUMENTS FILED BY THE 1^st DEFENDANT BANK

¶60

S.No.	Date	Particulars
1	28.08.19	Demand Notice with AD Card
2	08.11.19	OldPossession Notice
3	08.11.19	Old Possession Notice published in English daily "New Indian Express"on 12.11.19
4	08.11.19	Old Possession Notice published in Tamil daily "Dhinathanthi" on 12.11.19
5	24.02.20	1^st SaleNoticewith ADCard &ReturnCovers
6	30.09.20	2^nd SaleNotice
7	09.11.20	3^rdSaleNotice
8	05.02.21	4^thSaleNoticewith ADCard &returncovers
9	11.03.21	5^thSaleNoticewith ADCard &returncovers
10	1.04.21	6^thSaleNoticewith ADCard &returncovers
11	22.07.21	7^thSaleNoticewith ADCard &returncovers
12	16.08.21	8^thSaleNoticewith returncovers
13	03.09.21	9^thSaleNoticewith ADCard &returncovers
14	29.10.21	10^thSaleNoticewith ADCard &returncovers
15	01.12.21	11^thSaleNoticewith ADCard &returncovers
16	21.12.21	12^thSaleNoticewith ADCard &returncovers
17	10.01.22	13^thSaleNoticewith ADCard &returncovers
18	02.04.22	14^thSaleNoticewith ADCard &returncovers
19	28.04.22	15^thSaleNoticewith returncovers
20	08.7.22	16^thSaleNoticewith ADCard &returncovers
21	25.7.22	Fresh Possession Noticewith ADCard &returncovers
22	25.07.22	Fresh Possession Notice published in English daily "The HINDU" on28.07.22
23	25.07.22	Fresh Possession Notice published in Tamil daily "HINDUTamil"on28.07.22
24	25.07.22	Photography showing affixture of fresh Possession Notice
25	25.08.22	SaleNoticewith returncovers
26	12.10.22	Sale Notice (on which sale was held) with AD Cards & returncover
27	12.10.22	Sale Notice (on which sale was held) published on 13.10.22in Englishdaily"Hindu"
28	12.10.22	Sale Notice (on which sale was held) published on 13.10.22in Tamildaily"HinduTamil"
29	29.11.22	Unregistered Sale Certificate
30	09.01.23	Registered Sale Certificate
31	15.11.21	Valuation Report
32	05.09.22	Petition filed by theBankbefore CJM
33	13.4.23	Orderpassed by CJM
34	27.10.23	Letter showing handing over of Physical Possession by Advocate CommissionertoAuthorised Officer
35	27.10.23	Letter by Auction Purchaser to Authorised Officer confirming that the Authorised Officer has handed over thePhysical Possessiontohim
36	02.12.22	Interim Order passed by High Court in WP (MD) No. 27417/22

¶61

Page 8 of 18

¶62

SA No.203/2023

¶63

37	03.01.24	Final Order passed by High Court in WP (MD) No. 27417/22
38	---	Notes of arguments by bank in IA 1017/23 in SA 203/23
39	16.10.23	Order passed by this Hon'ble Tribunal in IA 1017/23 in SA203/23
40	26.10.23	Final Order passed by High Court in WP (MD) No. 25908/23
41	09.04.24	ProceedingsinSA215/23filed byalleged occupants

¶64

ADDITIONAL TYPED SET OF PAPERS FILED BY THE 1^st DEFENDANT

¶65

BANK

¶66

S.No.	Date	Particulars
1	12.10.2022	Photography showing affixture of Sale Notice (on whichsalewasheld)

¶67

2^nd ADDITIONAL TYPED SET OF PAPERS FILED BY THE 1^st DEFENDANT

¶68

BANK

¶69

S.No.	Date	Particulars
1	---	Original certified copy of petition &
		Affidavitfiled by bankbefore CJM

¶70

3^rd ADDITIONAL TYPED SET OF PAPERS FILED BY THE 1^st DEFENDANT

¶71

BANK

¶72

S.No.	Date	Particulars
1	07.11.22 &	Original certified copy of petition & Affidavit
	07.11.22	filedalongwith Petitionbefore CJM

¶73

4^th ADDITIONAL TYPED SET OF PAPERS FILED BY THE 1^st DEFENDANT

¶74

BANK

¶75

S.No.	Date	Particulars
1	07.11.22	Original certified copy of Affidavit filed along
		with Petitionbefore CJM

¶76

5^th ADDITIONAL TYPED SET OF PAPERS FILED BY THE 1^st DEFENDANT

¶77

BANK

¶78

S.No.	Date	Particulars
1	25.07.22	Possession Notice published in English daily “TheHindu”published on28.07.22-original
2	25.07.22	Possession Notice published in Tamil daily “The Hindu Tamil” published on 28.07.22- original
3	25.07.22	Original Photography showing affixture of Possession Notice
4	12.10.22	SaleNotice publishedin Englishdaily“The

¶79

Page 9 of 18

¶80

SA No.203/2023

¶81

		Hindu”published on 13.10.22-Original
5	12.10.22	Sale Notice published in Tamli daily “The Hindu Tamil” published on 13.10.22- Original
6	12.10.22	Original Photography showing affixture of SaleNotice

¶82

4. The 2^nd Defendant/Auction Purchaser also appeared before this Tribunal and filed Vakalat, Reply Statement, Written Argument & Typed set of papers in which the he denied all the allegations contained in the Application as false and put the Applicants to strict proof of the same.

¶83

It is further submitted that the 2^nd Defendant has been residing in the above said address along with family for the past 40 years and also the 2^nd Defendant is working in Mumbai, Ahluwalia Contracts (India) Limited Company. On 13.10.2022, the 2^nd Defendant had seen in the Hindu Newspaper that the suit mentioned property was going to be sold on e- auction on 31.10.2022. Thereafter, the 2^nd Defendant has met the 1^st Defendant for e-auction. Thereafter on 17.10.2022, the 2^nd Defendant has deposited Rs. 1 Lakh of 25% of outstanding amount with 1^st Defendant. Thereafter the 2^nd Defendant has participated in the e-auction and also bid amount a sum of Rs. 39,50,000/- entered in the e-auction. On 31.10.2022, the 1^st Defendant has accepted the bid amount of 2^nd Defendant. The 2^nd Defendant is a successful bidder in the e-auction. Thereafter, on 31.10.2022, the 1^st Defendant has issued the Sale acceptance certificate and sale confirmation certificate to the 2^nd Defendant. Thereafter, the 2^nd Defendant has paid a sum of Rs. 38,50,000/- to the 1^st Defendant.

¶84

It is further submitted that on 09.01.2023, the 1^st Defendant has executed the Sale Deed in favour of the 2^nd Defendant. Thereafter, on 27.10.2023, the 1^st Defendant has handed over the Physical Possession to the 2^nd Defendant. Thereafter, the 2^nd Defendant has been residing in the suit mentioned property along with family and also the 2^nd Defendant has invested more than 5 Lakhs for renovation of the building. The 2^nd Defendant obtained loan for a sum of Rs. 30.00 Lakhs for purchase of the suit schedule property from State Bank of India, Dindigul and also the ICICI Bank, Chennai. Therefore, the SARFAESI Application is not maintainable either in law or fact.

¶85

Hence, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the above SARFAESI Application with cost and thus render justice.

¶86

Page 10 of 18

¶87

SA No.203/2023

¶88

TYPED SET OF PAPERS FILED BY THE 2^nd DEFENDANT/AUCTION

¶89

PURCHASER

¶90

S.No.	Date	Particulars
1	18.12.2023	Reply Statementfiled by the 2^ndDefendant
2	31.10.2022	Saleacceptance certificate
3	31.10.2022	Sale Confirmationcertificate
4	09.01.2023	Sale Deed executed by 1^stDefendant to the 2^ndDefendant
5	27.10.2023	Physical Possession handed over to the 2^nd Defendant by1^stDefendant
6	18.12.2023	Statement ofStateBankof India
7	28.11.2023	Statement of ICICI Bank

¶91

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

¶92

WHETHER THE APPLICANTS ARE ENTITLED TO GET THE RELIEFS AS PRAYED FOR?

¶93

6 . Having heard the parties and after going through the entire documents available on the records, and also after considering the arguments by all the Counsels, I find that it is admitted fact that the Applicants have availed O.C.C. Limit for a sum of Rs. 75,00,000/- (Rupees Seventy-Five Lakhs only) from the 1^st Defendant Bank in the year 2017. The 1^st Applicant’s wife and the mother of the 2^nd Applicant Mrs. Razia Begaum stood as guarantor for the loan availed by M/s. Innaayaa Leather Exsports and offered her immovable property as collateral security for the due repayment of the loan. Initially, the Applicants were very prompt in repaying the loan amount, however, due to the slump in the market they suffered loss and they were not able to adhere to the repayment schedule of the 1^st Defendant Bank. Hence, the 1^st Defendant Bank has classified the loan account of M/s. Innaayaa Leather Exsports as NPA during the year 2019.

¶94

I also find that thereafter, the 1^st Defendant Bank has issued Demand Notice u/s. 13(2) of the SARFAESI Act on 28.08.2019 for a sum of Rs.

¶95

Page 11 of 18

¶96

SA No.203/2023

¶97

1,10,67,414/- (Rupees One Crore Ten Lakhs Sixty-Seven Thousand Four Hundred and Fourteen only) to the borrowers and guarantors (Page nos. 1 to 6 of Bank’s typed set of papers). The Applicants also admitted the fact that they had received the Demand Notice dated 28.08.2019. I also perused the documents filed by both the parties and the typed set of papers filed by the Defendant Bank; I find that the Bank has produced the copies of acknowledgement cards at page no. 7 as evidence for having sent the copy of Demand Notice to the Guarantor of the loan account. I also find that the Applicants have not filed any reply sent U/s. 13(3-A) of SARFAESI Act and also failed to give any representation to the Defendant Bank in respect of Demand Notice.

¶98

Thereafter, the 1^st Defendant Bank has issued Old Possession Notice U/s. 13(4) of SARFAESI Act on 08.11.2019 (Page Nos. 8 & 9 of Bank's typed set of papers). I perused the documents produced by the Bank and I find that the Defendant Bank has filed 16 Sale Notices which was issued by the Bank before issuance of Fresh Possession Notice dated 25.07.2022 issued u/s. 13(4) of the SARFAESI Act (Page nos. 179 & 180 of Bank’s Typed set of papers) The Bank has also filed AD Card & Returned covers at page nos. 181 to 186 in the typed set of papers as evidence to prove that they had sent the Possession Notice to the borrower/guarantor. I also find that the Defendant Bank has filed Original Paper Publication of Possession Notice in newspapers in English & Tamil (Page nos. 1 & 2 of Bank's 5^th Additional typed set of papers). But the Defendant Bank has not filed the Original photos showing the affixture of Possession Notice on the conspicuous part of the property having the date and place of the Notice affixed. However, the Bank has filed the xerox of photo affixed and it is handwritten as Possession Notice dated 25.07.22 affixed on 25.07.22 (Page no. 3 of Bank's 5^th Additional typed set of papers). Since there are irregularities found in the documents filed by the Defendant Bank in issuance of Possession Notice, it amounts to not following the Rules prescribed under Rule 8(1) of the Security Interest (Enforcement) Rules 2002, which clearly says:-

¶99

"8. Sale of immovable secured assets.

¶100

Page 12 of 18

¶101

SA No.203/2023

¶102

(1) Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property."

¶103

Thereafter, the Defendant Bank has issued Sale Notice dated 12.10.2022 (on which sale was held) (Page nos. 201 to 206 of Bank’s Typed set of papers) to the Borrower/Guarantor/Mortgagor. By challenging the same, the Applicants filed a Writ Petition in W.P. (MD) No. 27417 of 2022 before the Hon'ble High Court of Madras (Madurai Bench) and the Hon’ble Court granted an Interim stay on condition to deposit a sum of Rs. 40.00 Lakhs on or before 02.01.2023, but the Applicants could not comply with the conditional stay order and the Writ Petition is still pending for adjudication. I also find that the Bank has filed AD Card & Returned covers at page nos. 207 to 211 in the typed set of papers as evidence to prove that they had sent the Sale Notice to the borrower/guarantor. I also find that the Defendant Bank has filed Original Paper Publication of Sale Notice dated 12.10.2022 in newspapers in English & Tamil (Page nos. 4 & 5 of Bank's 5^th Additional typed set of papers). And, the Defendant Bank has filed original photos showing the affixture of Sale Notice on the conspicuous part of the property (Page no. 1 of Bank's Additional typed set of papers), but, on which date and place, the Sale Notice was affixed is not reflected in the photo. However, it is handwritten as Sale Notice dated 12.10.2022 affixed on 12.10.22. Therefore, it is clear that the 1^st Defendant Bank has not followed the proviso of Rule 8(7) of Security Interest (Enforcement) Rules 2002, which clearly say that,

¶104

"(7) [Every notice of sale shall be affixed on the conspicuous part of the immovable property and the authorised officer shall upload the detailed terms and conditions of the sale, on the web- site of the secured creditor, which shall include;

¶105

(a) the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

¶106

(b) the secured debt for recovery of which the property is to be sold;

¶107

(c) reserve price of the immovable secured assets below which the property may not be sold;

¶108

Page 13 of 18

¶109

SA No.203/2023

¶110

(d) time and place of public auction or the time after which sale by any other mode shall be completed;

¶111

(e) deposit of earnest money as may be stipulated by the secured creditor;

¶112

(f)any other terms and conditions, which the authorized officer considers it necessary for a purchaser to know the nature and value of the property.]"

¶113

I also find that the 1^st Defendant Bank has filed the Valuation Report dated 15.11.21 (page nos. 239 to 254 of Bank’s Typed set of papers) in respect of the Impugned Property, wherein the maximum value was given as Present Market value, i.e. Rs. 49,63,000/- & the minimum value was given in Distress value, i.e. Rs. 39,70,000 /-. I also find that the Defendant Bank has taken valuation of the property before issuance of Possession Notice dated 25.07.2022. The Bank has not taken recent valuation of the Impugned Property before issuance of the Sale Notice dated 12.10.2022. Moreover, the Bank has given the reserve price of Rs. 39,28,500 /- (Rupees Thirty-Nine Lakhs Twenty-Eight Thousand and Five Hundred only), which is less than the minimum amount given in the Valuation Report dated 15.11.2021. Further, though the Valuation Report 15.11.2021 is filed by the Bank, this Valuation Report is not in consultation with the secured creditor since there is no signature of the Branch Manager and also no proof has been filed to this effect. Hence, the 1^st Defendant Bank has failed to prove that they have strictly adhered to the Rule 8 (5) of Security Interest (Enforcement) Rules 2002, which clearly says:-

¶114

"(5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorized officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor , fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the methods provided therein" .

¶115

I also find that the 1^st Defendant Bank has issued Unregistered Sale Certificate dated 29.11.2022 (Page nos. 214 & 215 of Bank’s Typed set of papers) and Registered Sale Certificate dated 09.01.2023 (Page nos. 216 to 238 of Bank’s Typed set of papers) issued to the Auction Purchaser. Thereafter, the 1^st Defendant Bank has filed the Petition in Cr.M.P.No.

¶116

Page 14 of 18

¶117

SA No.203/2023

¶118

2542/2023 before the Ld. CJM, Dindigul (Page nos. 1 to 25 of Bank’s 3^rd Additional Typed set of papers) to take Physical Possession of the Impugned Property and the same was allowed by the Ld. CJM, Dindigul vide the Impugned Order dated 13.04.2023 in Cr.M.P.No. 2542/2023 and Advocate Commissioner was also appointed to take Physical Possession of the Impugned Property.

¶119

I also find that the Defendant Bank has issued the Sale Notice dated 12.10.2022 (on which sale was held), whereas, I find that the 1^st Defendant Bank has issued the Sale Notice in the name of the deceased Guarantor/Mortgagor, Smt. Razia Begam, who had already died on 20.06.2021 (Death Certificate dated 13.01.2022 is enclosed vide page no. 19 of SA), well before the issuance of the Impugned Sale Notice dated 12.10.2022. I also noticed that the Bank has not only issued the Impugned Sale Notice dated 12.10.2021 in the name of the deceased mortgagor, but also the fresh Possession Notice dated 25.07.2022 was issued after the death of the Guarantor/Mortgagor. The Applicants further stated that the Impugned Property is leased out to Mr. Abdulla for a sum of Rs. 15,00,000/(Rupees Fifteen Lakhs only) to meet out the medical expenses incurred in respect of the deceased mortgagor Mrs. Razia Begum, who fell ill and was under continuous treatment due to high sugar. A Civil Suit in O.S.No. 467 of 2019 was also filed by Mr. Abdulla against the deceased Mrs. Razia Begum and after her demise, he impleaded the Applicants as party to the proceedings, which is still pending for adjudication.

¶120

In this connection, the 1^st Defendant Bank without impleading the legal heirs of the deceased Mortgagor/Guarantor Mrs. Razia Begum, initiated action against the Impugned Property and sold the same. Here again, after the demise of the guarantor/mortgagor, the possession notice & Sale Notice should have been delivered to the legal heirs of the guarantor/mortgagor and also by affixing the said notice on the outer door or at such conspicuous place of the property of the guarantor/mortgagor. The Affixture is in addition to delivery of the possession notice & Sale Notice

¶121

Page 15 of 18

¶122

SA No.203/2023

¶123

to the guarantor/mortgagor. In the given case, the 1^st Defendant Bank had admittedly affixed the possession notice & Sale Notice only in the property and there is no material to show that the notice was delivered to the legal heirs of the guarantor/mortgagor and it is not the stand of the Defendant Bank as well. In the event the possession notice & Sale Notice are not delivered on the guarantor/mortgagor or the legal heirs of the guarantor/mortgagor, as the case may be, the provisions of Rule 8 of the Security Interest (Enforcement) Rules are not complied with and in that sense, the Defendant Bank cannot claim to have complied with those provisions. That apart, the affixture of notice by showing the name of the guarantor/mortgagor as the owner of the property cannot be sustained on the facts of this case, as the said notice was neither delivered on the legal heirs nor was affixed showing the names of the legal heirs on the outer door or at such conspicuous place of the property. Further, the contention of the 1^st Defendant Bank in their Reply Statement stating that neither the borrower nor the legal heirs of deceased guarantor cum mortgagor have intimated the death of the deceased guarantor cum mortgagor Tmt. Razia Begum to the Bank, cannot be accepted in the eye of law, since the Bank officials have gone to affix the Possession Notice dated 25.07.2022 & the impugned Sale Notice on the conspicuous place of the property on 12.10.2022. If it is so, the Bank officials would have come to know the fact that the owner of the Impugned property is no more, because she died on 20.06.2021. In that view of the matter, the 1^st Defendant Bank has not complied with the provisions of Section 13(4) of the SARFAESI Act. Hence, the entire proceedings against Mrs. Razia Begum, Guarantor/Mortgagor, who died on 20.06.2021 is considered to be initiated against a dead person and cannot be sustained in the eye of law.

¶124

In view of the above facts and circumstances of the case, I find that the 1^st Defendant Bank has not followed the due procedures for recovery of the loan amount under SARFAESI Act. It is well settled law that Bank can recover the due loan amount from the borrower under the SARFAESI Act and without intervention of the Court provided that he has followed the

¶125

Page 16 of 18

¶126

SA No.203/2023

¶127

procedure mentioned under the SARFAESI Act & Rules strictly, because property is the constitutional right of the individual and hence, Bank cannot sell the property without following the mandatory provisions of Act & Rules. As such, I find merit in the above SARFAESI Application. Accordingly, the SA is liable to be allowed and the entire proceedings initiated by the 1^st Defendant Bank against the dead person Mrs. Razia Begum are declared invalid. Therefore, this Tribunal holds that the Applicants are entitled to get the reliefs as prayed for in SA No. 203/2023 .

¶128

In the result,

¶129

(a) SA No. 203/2023 is allowed. Sale held on 29.10.2022 is not in accordance with law as there is violation the Sale Notice dated 12.10.2022 & Sale Certificate dated 09.01.2023 are hereby set aside by this Tribunal.

¶130

(b) The Impugned Possession Notice dated 25.07.2022 issued by the 1^st Defendant Bank U/s. 13(4) of the SARFAESI Act is hereby set aside.

¶131

(c) The Impugned Order dated 13.04.2023 passed by the Ld. CJM, Dindigul in Cr.M.P.No. 2542 of 2023 u/s. 14 of SARFAESI Act is also not sustainable, hence it is hereby set aside.

¶132

(d) The 1^st Defendant Bank is directed to refund the entire sale consideration amount paid by the Auction purchaser along with 4% of interest to the Auction purchaser from the date of deposit of money till the refund within one month from the date of receipt of copy of the Order.

¶133

(e) The Applicants shall make the payment of the amount incurred by the Auction Purchaser towards the Stamp duty and Registration charges within one month from the date of receipt of copy of the Order.

¶134

(f) The Applicants are also directed to pay the interest at the rate of 4% of the sale price to the 1^st Defendant Bank from the date of payment of Sale price by the Auction Purchaser till the date of refund to the Auction Purchaser by the Bank within one month from the date of receipt of copy of the Order.

¶135

Page 17 of 18

¶136

SA No.203/2023

¶137

(g) All the expenditures incurred in issuance of Impugned Order passed by the Ld. CJM, Dindigul in Cr.M.P.No. 2542 of 2023 and further all the expenditures incurred in respect of Sale Notice dated 12.10.2022 & Sale Certificate dated 09.01.2023 as well as the Possession Notice dated 25.07.2022 shall not be included in the loan account of the Applicants.

¶138

(h) The 1^st Defendant Bank is at liberty to initiate fresh action against the Applicants for recovery of loan amount following strictly the SARFAESI Acts & Rules.

¶139

Consequently, all pending IAs (if any) are also disposed of. No costs.

¶140

Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 06^th April, 2026.

¶141

sd/-

¶142

(SEEMA SINHA) PRESIDING OFFICER

¶143

Dictated & corrected by me

sd/-

(SEEMA SINHA)

PRESIDING OFFICER

Uploaded on 16.04.26

Page 18 of 18

Mohammed Iqbal v. Canara Bank

Case brief

What is this about?

What did the court decide?

Mohammed Iqbal v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Canara Bank versus K Vijayalakshmi

Bank of Baroda versus v.Saravana kumar

K Ganesan versus Omkara Assets Reconstruction Private Limited

Punjab National Bank versus J and J Plastics

Canara Bank versus Pappa

Canara Bank versus J Vinoth Kumar Peinba Raj