This application challenged the validity of a possession notice issued under the SARFAESI Act by a bank. The court examined whether the bank complied with procedural mandates, including service and publication of notices. Finding that the bank followed the requisite procedures, the Securitization Application was dismissed.
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.211/2025
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04.03.2026
IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI
Dated this the 04th day of March, 2026
Present: SMT. S.V. GOWRAMMA Presiding Officer
SARFAESI APPLICATION No. 211 of 2025
Counsels on record / appeared:
Counsel for Applicant : M/s. Pavithra. G, Akshitha Sai Counsel for respondent : Mr. Akshai Mani
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ORDER ON SA 211/2025
Pleadings of the applicant:
3.1 The business of the 1st Applicant was exemplary were promptly servicing the loan account with the respondent. However, due to Covid - 19 pandemic and the lock down by State and Central Government affected the business and the Applicants were not able to execute the Orders
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received from its Customers and receive payments from the vendors resulting in receivables becoming non realizable.
3.2 However, the Applicants had managed to service the loan account with utmost strain and difficulty but to the shock and surprise of the Applicants the loan Account of the 1st Applicant was declared as NPA without any proper reasoning and justification.
3.3 The 2nd Applicant sought for clarification and justification, which the respondent bank failed to explain in any manner. The 2nd Applicant received the impugned Possession Notice dated 07.02.2025 on 17.02.2025 wherein the Applicant No. 1, 3 and 4 and Mr. Manohar and Mrs. M. Chitra are arrayed as Parties. The Possession Notice was not served to Applicant No. 1, 3 and 4 which is blatant violation of the mandated stipulated under the Act.
3.4 It is contended that the applicant was shocked and surprised that 2nd Applicant received a Sale Notice dated 17.02.2025 on 19.02.2025 fixing sale of the schedule mentioned property on 25.03.2025, annulling the redemption rights of the Applicants under Section 13(8) of the Act.
3.5 In the grounds, it is contented that the account of the applicants cannot be declared as NPA in view of the mandates prescribed by law and RBI. The Sec.13(2) Demand Notice is not received by all the applicants, borrowers, guarantors, owners of the property which is mandatory under the Act and law.
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3.6 The respondent intention is on the high valued property of the 4th applicant and to extort money from the applicants has issued sale notice dated 17.02.2025 which curtailed and infringed the fundamental rights of the Applicants to redeem the secured assets under Section 13(8) of the Act, which is erroneous, illegal, arbitrary and violative of the principles of natural justice since, the respondent failed to comply rule 8(1) Appendix IV of the SIE Rules.
3.7 The impugned notice under challenge in the present application is not served to all borrowers, guarantors, owners of the secured asset, and notice is not published in two leading newspapers and impugned notice is not affixed in the schedule mentioned property which is also mandatory under the Act and Rules. Sub Rule 1, 2 and 2(A) of Rule 8 abruptly not complied by the respondent bank which is mandatory under the Act and Rules. Rule 8(4) of SIE Rules, is not complied by the respondent bank.
3.8 It is submitted that Rule 9(1) is not complied by the respondent in obtaining valuation of the Secured Asset from competent and approved valuer, as mandated under the Act and Rules. Hence, Rule 6 of SIE Rules, 2002 is not followed by the respondent bank, the impugned notice is not served, issued to all borrowers, guarantor, and owners of the Secured Asset. Similarly Rule 7 and 8 of SIE Rules is also not followed by the respondent bank.
3.9 Thus it is evident that the respondent bank has not followed any of the procedure mandated under the Act. However, the Applicant is always
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ready and willing the settle the entire loan account and connected account vide One Time Settlement. The respondent without issuing Demand Notice under Section 13(2) of the SARFAESI Act which is mandatory and without servicing the 13(4) Notice to all the Applicant herein, the proceedings under the SARFAESI Act is invalid.
3.10 The impugned possession notice is in grave violation of Rule 8(2), the possession notice has not been published in 2 leading newspapers within 7 days of taking possession. The Possession Notice affixed by the respondent outside the conspired premises herein is not as per the prescribed format under the Act. The Possession Notice is not issued to all and any Borrowers, Guarantors, Owners of the Property which is mandatory under the Act and Law.
3.11 The Authorized Officer failed to disclose the correct nature and description of the secured asset. The bank failed to give the proper details in notices regarding the actual outstanding dues. The Authorized Officer has claimed excessive interest.
3.12 It is contended that the respondent has not adhered the Central Registry Rules, has not followed any procedure under Chapter IV of the SARFAESI Act. The respondent bank had taken signatures of the applicant is various blank, unfilled documents and made the applicant believe that the said blank unfilled documents would not be misused for any unlawful purpose.
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3.13 It is seen that the Possession Notice is not in accordance with Rule 8(1) of the SIE Rules and the judgment of this Hon'ble Tribunal reported in III (2005) BC 92 since publication is not made in English and vernacular language as mandated in the Act.
3.14 The outstanding shown in the impugned notice is liable to be justified and recanted by the respondent. The respondent failed to give credit of the various payments made by the applicants in the loan account those were paid by the applicant after declaration of the account as NPA. The sale notice is not issued to any of the applicant herein, the borrowers, guarantors which is mandatory under the Act and law. The Sale notice is not published in the vernacular newspapers and not affixed in the conspired premises which is mandatory under the Act.
Objections of the respondent bank:
| Loan Account No. | Nature of | Amount | Date of | Rate of |
|---|---|---|---|---|
| Facility | Sanctioned | Availed | Interest (Floating) |
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| 007003510000022 | ECLGS | Rs. 19,26,000/- |
15.12.2021 | 12.35% |
|---|---|---|---|---|
| 007002000001674 | CCPUB | Rs. 50,00,000/- |
22.01.2014 | 15.40% |
| 007003510000009 | TWCTL | Rs. 20,00,000/- |
30.11.2021 | 13.40% |
with interest at the rate specified against the loan account. The Borrower along with the Co-Borrower and Guarantor read and understood all the terms and conditions of the loan agreement and had executed the Loan Agreements. It is pertinent to note that execution of the Loan Agreement, registration of MODT and disbursal of Loan Amount has not been disputed by the Applicant herein. Therefore, it is abundantly clear that the Applicant, Co-Borrower and Guarantor are well informed about that terms and conditions of the Loan Agreement as well as the Registration of MODT. In fact, the Applicant, the Guarantor Mrs. M. Chitra has not been impleaded as Applicant in the present SA.
4.2 It is submitted that the Principal Borrower along with the Guarantor utilized the loan for their needs, but failed to repay the same as per the terms of the loan agreements executed by them in favour of the Respondent Bank. The Applicant failed to repay the legitimate amount on schedule dates in accordance to the terms and conditions of the Loan Agreement. Hence the loan account has been classified as NPA as per RBI guidelines. The date of the NPA for the individual contracts which was entered by the Applicant is mentioned as below:
| Loan Account | Nature of | Date of NPA | Present Due |
|---|---|---|---|
| No. | Facility | as on | |
| 14.10.2024 |
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| 007003510000022 ECLGS | 13.10.2024 | Rs. 9,85,682.09/- |
|---|---|---|
| 007002000001674 CCPUB | 13.10.2024 | Rs. 51,97,584.51/- |
| 007003510000009 TWCTL | 13.10.2024 | Rs. 9,62,520.67/ |
SARFAESI Procedure meticulously and the Loan account of the Applicant has classified as NPA and bank had issued demand notice under Section 13(2) of the SARFAESI Act on 18.10.2024 to the Applicant along with and Guarantor calling upon them to pay the loan amount due to the Bank to the tune of Rs.71,45,787.27/- as on 14.10.2024 with further interest inclusive of penal interest at the rate of 2% & costs w.e.f 15.10.2024 against Loan A/c.Nos.007003510000022; 007002000001674 and 007003510000009 by Registered post with acknowledgement due.
4.4 The Sec.13(2) Demand Notice was duly served upon the 2nd to 4th Applicant herein and with respect to the 1st Applicant, the same was returned with an endorsement as “Unclaimed” and “Left”., The Respondent had published the content of the Demand Notice in two leading Newspapers as envisaged in accordance to Rule 3 of the SIE Rules. However, the Demand Notice was published in two newspapers one in “The New Indian Express” and another one in “Dinamani” both dated 20.10.2024 and the same was affixed in the Secured Property.
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of the objections from the 2nd Applicant, the Respondent had acted upon and issued the detailed reply on 09.12.2024, within 15 days to the counsel from whom the objections was sent and marking copy to 2nd Applicant which is in accordance to Section 13(3-A) of the Act.
4.6 Hence, Applicants contention that the demand Notice is not served upon them is non est in eye of law and SA is liable to be dismissed in laminin.
4.7 It is submitted that the despite of having knowledge about the consequences of the proceedings; the Applicant failed and neglected to repay the entire notice amount within the stipulated period of 60 days. Subsequently, the respondent bank has proceeded further and issued the possession notice under Section 13(4) and (12) of the SARFAESI Act and attempted to take physical possession of the property on 07.02.2025.
4.8 It is further submitted that the Applicant have resisted the Authorized Officer of the Respondent Bank from taking physical possession of the property and the Authorized Officer has affixed the possession notice on the scheduled property witnessing the symbolic possession on dated 07.02.2025. The said possession notice was served by Registered Post with Acknowledgement due to Applicant and the same was duly served upon the Applicant.
4.9 Hence, the bank caused paper publications of the contents of Possession Notice published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” within the period of
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4.10 The averments raised in Grounds “ss” of the Application filed by the Applicant are stoutly denied as false and Respondent Bank had registered transactions with the Central Registry in accordance to Section 20 of the SARFAESI Act and the CERSAI registration Certificate bearing Security Interest ID No. 400011032708 and Asset ID No.200011010844 dated 10.11.2015. As the respondent have followed all the procedures in accordance with act prays for dismissal of the SA.
Heard both sides of the Counsels and perused the records of
the case
| Loan Account No. |
Nature of Facility |
Amount Sanctioned |
Date of Availed |
Rate of Interest (Floating) |
|---|---|---|---|---|
| 007003510000022 | ECLGS | Rs. 19,26,000/- |
15.12.2021 | 12.35% |
| 007002000001674 | CCPUB | Rs. 50,00,000/- |
22.01.2014 | 15.40% |
| 007003510000009 | TWCTL | Rs. 20,00,000/- |
30.11.2021 | 13.40% |
5.1 On sanction and acceptance of the loan the borrower, guarantor and
mortgagor have executed the Loan Agreement, registration of MOTD as security towards the credit facilities availed has not been disputed by the
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Applicant. In fact, the Applicant, the Guarantor Mrs. M. Chitra has not been impleaded as Applicant in the present SA. The only contention raised is that the mortgage is not registered before Central Registry as required under the Act is countered by the bank by production of the Central Registry certificate evidencing the registration of charge as mandated under the Act and the CERSAI report is produced at page Pg.63-65 of counter.
5.2 In fact the applicant admits the default in the repayment resulting in classification of the loan account of the applicant was classified as NPA on 13.10.2024 in accordance with RBI guidelines.
5.3 Subsequent to classification of account as NPA, the respondent had issued Sec.13(2) Demand Notice dated 18.10.2024 claiming an amount of Rs.71,45,787.27/- due as on 14.10.2024 along with other charges. The Demand Notice is sent by RPAD which the applicants 2nd to 4th have received the Demand Notice as per the Acknowledgement card produced at Pg.17-26 of counter, and the notice sent to the 1st applicant, the same was returned with an endorsement as “Unclaimed” and “left”, the unclaimed returned cover are produced at Page No.15 and 16 of respondent bank’s typed set. Hence the Demand Notice is also published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 20.10.2024 and affixture of demand notice is produced at pg.27. Thus the respondent bank has followed the procedures in issuing of S.13[2] demand notice as per the Act.
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5.4 In fact the 2nd Applicant had replied to the Demand Notice dated 18.10.2024 through his counsel on 27.11.2024 raising the objections as per Section 13(3-A) of the Act. On receipt of the objections from the 2nd Applicant, the Respondent had acted upon and issued the detailed reply on 09.12.2024 which is produced at Pg.39-48, within 15 days to the counsel from whom the objections was sent and marking copy to 2nd Applicant which is in accordance to Section 13(3-A) of the Act.
5.5 In spite of receipt of Sec.13(2) Demand Notice, and compliance of bank reply under S.13[3A] as the Borrowers and the Guarantors did not liquated the liability within the period of 60 days the respondent has proceeded further and issued the Sec.13(4) Possession Notice on 07.02.2025.
5.6 The Possession Notice is sent by RPAD which the applicants 2nd to 4th have received the Possession Notice as per the Acknowledgement card produced at additional document vide dairy No.1083/2026, and with respect to the 1st applicant, the same was returned with an endorsement as “left”, which is produced at additional document vide dairy No.1083/2026. The Possession Notice is published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 08.02.2025 and the Possession Notice is affixed on the conspicuous place of the property as per the photograph of affixture produced at Page No.52-57 of respondent bank’s typed set. On examination of the documents relied upon by the bank, it is established that the
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possession notice dated 07.02.2025 is issued and served as per the
procedures as required under the Act and the Rules made thereunder.
5.7 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 has established the due compliance of the procedures as contemplated under the Act in enforcing the security with supporting documents as required under the Act. Hence it is concluded that the Sec.13(2) Demand Notice dated 18.10.2024 and Sec.13(4) Possession Notice dated 07.02.2025 are valid notices issued by the secured creditor as per the procedure as described under the Act and rules made there under.
(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI
ANNEXURES
LIST OF DOCUMENTS PRODUCED BY THE APPLICANT
| Sl. No. |
Description of Documents | Documents No. |
|---|---|---|
| 1. | Impugned Possession Notice dated 07.02.2025. | A-1 |
| L | IST OF DOCUMENTS PRODUCED BY THE RESP | ONDNET |
| Sl. No. |
Description of Documents | Documents No. |
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| 1. | Office Copy of Demand Notice issued U/s.13(2) of ‘SARFAESI Act’, 2002 along with acknowledgement card and returned covers dated 18.10.2024. |
R-1 |
|---|---|---|
| 2. | Copy of the Affixture Photograph of the Demand Notice. |
R-2 |
| 3. | Copy of the Paper publication of Demand Notice U/s.13(2) of Securitization Act in The New Indian Express dated 20.10.2024. |
R-3 |
| 4. | Copy of the Paper publication of Demand Notice U/s.13(2) of Securitization Act in Dinamani dated 20.10.2024. |
R-4 |
| 5. | Reply to Demand Notice issued by the Applicant herein dated 27.11.2024. |
R-5 |
| 6. | Statutory Reply under Section 13(3-A) issued by the Respondent bank dated 09.12.2024. |
R-6 |
| 7. | Statutory Reply under Section 13(3-A) issued by the respondent bank duly Acknowledged by the applicants herein. |
R-7 |
| 8. | Office Copy of Possession Notice issued U/s.13(4) of SARFAESI Act, 2002 along with Postal Acknowledgement Card and Photograph dated 07.02.2025. |
R-8 |
| 9. | Copy of the Paper Publication of Possession Notice U/s.13(4) of Securitization Act in The New Indian Express dated 08.02.2025. |
R-9 |
| 10. 11. |
Copy of the Paper Publication of Possession Notice U/s.13(4) of Securitization Act in Dinamani dated 08.02.2025. CERSAI Certificate. |
R-10 R-11 |
SCHEDULE OF PROPERTY
Schedule A:
All that piece and parcel of land situated at Plot No. 8 - B, Seevaram Village, comprised· in Survey No. 38/1A and Plot No. 8 - A, Panchayath Road, Perungudi Village, comprised in Survey No. 100/2C, Tambaram Taluk, now Sholinganallur Taluk, Kancheepuram District, Chennai Corporation area, measuring an extent of 61512.66 Square Feet (25.63 Grounds) or thereabouts and land being bounded on the: North by : S.No. 50, Perungudi Village South by : S.No. 38/1B, 38/1C and S.No. 98 of Seevaram Village
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East by : S.No. 38/2A West by : Panchayath Road
And lying within the Registration District of South Chennai and Sub Registration District of Neelangarai.
SCHEDULE B
(Subject Property)
528.14 Square Feet undivided Share or land in the Schedule A mentioned Property together with Flat No. G1 in Jains Anumitha Apartment, First Floor, "B'' Block, having built up area of 789 Square Feet, common area 126 Square Feet, covered Car Parking No.11.
This property is in the name of Mr P S Mourali S/o. P Sundaram and Mrs M Chitra W/o. Mr P Mourali.
Sd/-
(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI
3 issues framed by the court
Whether the possession notice issued under Section 13(4) of the SARFAESI Act was validly served and published in compliance with the Act and Rules.
Whether procedural irregularities alleged by the applicant regarding the issuance of notices justify setting aside the possession notice.
Whether the applicant's admission of default supports the declaration of the loan account as NPA and subsequent enforcement actions.
2 provisions across 2 enactments
M/s. V3 MultiPackz
India Overseas Bank Pondicherry Main Branch
S.V. Gowramma
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
