Dismissed

Dr R Hariharan v. Union Bank of India

DRT8 Apr 2026SA/212/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a Securitization Application filed by a guarantor challenging the auction of mortgaged properties by Union Bank of India. The Tribunal upheld the validity of the bank's proceedings, service of notices, and valuation report, finding no infirmity in the measures taken under the SARFAESI Act.

What did the court decide?

Application dismissed; bank's measures held valid; interim orders vacated.

Dr R Hariharan versus Union Bank of India — Execution and Attachment | DRT (2026)

SA No.212/2023

08.04.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 08^th day of April, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 212 of 2023

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Dr. R. Hariharan No. 18, 6th Street, Lakshmi Nagar, Nanganallur, Chennai – 600 061 …Applicant

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-Vs-

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Union Bank of India Asset Recovery Branch Chennai, “Elcanso Complex Building”, No. 9, Casa Major, Road, Egmore, Chennai – 600 008.

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Mr. S. Ramesh S/o Sabapathy, No.56, SBI Colony Extension, 2^nd Cross Street, Nanganallur Chennai – 600 061.

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(Impleaded as per IA No.1642 of 2024 vide proceedings dated 16.03.2026)

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…Respondents

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Counsels on record / appeared:

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Counsel for Applicant : M/s. S. Velayudham Pichaiya Counsel for 1^st respondent : M/s. Ananda Gomathy Counsel for 2^nd respondent : Mr. G. Sanjeevi

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ORDER ON SA 212/2023

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The present Securitization Application [SA] is filed on 30.03.2023 under sub section [1] of S.17 of the Securitization and Reconstruction of Financial Asset and Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

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The applicant has challenged the auction conducted on 10.03.2023 pursuant to the E-Auction Notice dated 16.02.2023 and the outstanding amount due as per Sale notice is Rs.6,16,87,900.36/-

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Pleadings of the applicant:

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The Applicant is the Guarantor who has filed the present SA challenging the Sale held on 10.03.2023 pursuant to the E-auction Sale Notice dated 16.02.2023 contending that applicant is running Gowri Hospital Private Limited at No.18 16^th street, Lakshmi Nagar, Nanganallur, Chennai 600 061 and had availed Term Loan facility of Rs.5,50,00,000/and had offered the Gowri Nursing Home situated at 18^th 6^th street, Lakshmi Nagar, Nanganallur as collateral security and montaged the same.

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As an additional collateral security towards the loan, another property situated at No.26, Mangaiyarkarasi Nagar, Now Lakshmi Nagar, 7^th Street, (opp. Madurai Murali Party Hall) 100 feet road, off Medavakkam road, Naganallur, Chennai -600 061 was also mortgaged by way of Memorandum

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SA No.212/2023

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of Deposit of Title Deeds executed in favor of the bank which are registered as Doc. No.1472 of 2017 and 1729 of 2018 at SRO, Alandur.

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Due to unprecedented down fall in the turnaround of the hospital, the applicant has defaulted in the repayment and respondent bank has classified the loan account as NPA on 31.12.2019, though the applicant has made a payment of more than Rs.1.3 cores towards the interest.

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The applicant came to know that the respondent bank has initiated measures and issued the demand notice dated 02.01.2020 and possession notice dated 23.02.2021 demanded an amount of Rs.5,54,37,895/- which were not served to the applicant herein vide sale notice dated 16.02.2023. The respondent bank failed to consider the applicant’s request to regularize the loan account.

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Applicant, once again made a request on 14.09.2021 assuring to pay a lump sum and requested the bank to drop the SARFAESI measures and issued a cheque of Rs.9 Lakhs on 14.09.2021 to normalize the account from the status of the NPA. However, the respondent bank has preferred an application before the Hon’ble CJM Chengalpattu under Section 14 of the SARFAESI Act to take the physical possession of the property which came to be allowed by Hon’ble court on 26.07.2022.

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Further, the bank has issued multiple auction sale notices inspite of applicant intention to settle the liability by way of One Time Settlement. The bank issued sale notice on 16.02.2023 against the applicant’s property and informed that they have sold the 2^nd schedule mentioned property.

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SA No.212/2023

08.04.2026

In the grounds, it is contented that the Section 13(2) demand notice issued without classifying the account as NPA in accordance with norms as per the master circular DCBR.BPD. (PCB) MC No.12/09.14.000/2015-16, dated 01.07.2015.RBI guidelines and relied on RBI circular in DOR.No.BP.BC/4/21.04.048/2020-21 dated 06.08.2020, clearly says “In view of the continued need to support the viable MSME entitles on account of the fallout of Covid 19 and to align these guidelines with the Resolution Framework for Covid 19 – related stress announced for other advances, it has been decided to extend the scheme permitted in terms of the aforesaid circular. Accordingly, existing loans to MSMEs classified as ‘standard’ may be restructured without a downgrade in the asset classification, subject to the following conditions…’ .

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It is submitted by the applicant that the respondent bank has undervalued the secured asset at a very lower price based on the old valuation report and does not value the properties after the issuance of the Section 13(4) notice thereby violating Rule 5 of SIE Rules.

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It is contended that the bank has issued the demand notice within days of classifying the loan account as NPA without even looking business of the applicant.

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It is pertinent to mention that the property is a hospital (commercial property) and the applicant is running a Nursing Home (Property 1) and the current market value of the property will fetch easily around 8.5 Crores along with all the machineries and inventories even sold at distress. Thus,

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SA No.212/2023

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the property No.2 located in the nearby locality is worth Rs.4.5 crores compressing of the commercial building and contents that the bank has not obtained the valuation report as required under rule 8(5) of SIE Rules.

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The applicant has relied on the judgment M/s Pochiraju Industries Ltd Vs Punjab Nation Bank and Others reported in 2018 (1) DRTC 904 by Telangana and AP High Court, contending that the reserve price fixed based on the earlier valuation cannot sustain. Further the judgment in M/s. Shanmugadurai and Firm Vs. Karnataka Bank contending that the order passed by the Hon’ble Chennai in SA.136.2019.

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Further reliance’s is placed on the judgment of the Madras High Court in P. Mohan Vs. The Authorized Officer dated 26 June, 2018, contending that the secured creditor has to obtain the maximum price which would help the borrower in settling the dues and the respondent had exploited the situation of the borrower and acted with ulterior motive.

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In the case J. Rajiv Subramaniyan and Ors. Vs. Pandiyas and Ors. 2014 –SCC P651, contending that the secured asset is not sold for a song. It is expected that all the banks and financial institutions which resort to the extreme measures under the SARFAESI Act for sale of the secured assets to ensure, that such sale of the asset provides maximum benefit to the borrower by the sale of such asset.

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Further reliance is also placed on the judgment of the Kerala High Court rulings in M.J. Betty Vs. Union Bank of India, contending that the statutory powers confirm for public purposes has to be exercised on the

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SA No.212/2023

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provisions of the Act and reliance is placed on the fair practices code for lenders released by the RBI on 05.05.2002 which are aimed safeguarding interest of the borrowers specify that the bank financial institution should take constructive approach in handling any lender related difficulties that borrowers might be facing. However, the bank instead of taking constructive approach took steps to protect the interest of the bank alone.

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The applicant as relied on the judgment Patel Piyushkumar Ranchhodbhai and Ors. Vs. Bank of Baroda-Ashram Road Branch and Ors., The Hon’ble Gujarat High Court and Mardia Chemical Vs. Union of India, the Hon’ble Supreme Court. Hence, the applicant prays to set aside the auction conducted on 10.03.2023 in pursuant to the e-auction sale notice dated 16.02.2023.

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Objections of the respondent bank:

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The respondent bank has filed the detailed counter along with the supporting document inter alia contending that the applicant admitted that the sale of the Hospital property alone has been adverted and has raised untenable contentions in the written arguments which do are not part of the pleadings.

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Further the applicant has raised contentions with regard to Sec.13(4) and the valuation which are not pleaded in the SA book. It is submitted that the bank issued the demand notice as early as 02.01.2020 which were personally served on the borrowers, and produced the proof of the services.

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SA No.212/2023

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Subsequently the respondent bank has proceeded further and issued Sec.13(4) Possession Notice dated 23.02.2021 which were duly served on all the borrowers on and paper publication of the possession notice has been affected in both English and Vernacular languages. The said notice has also been affixed on the property.

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Due to covid-19 pandemic and the consequent lockdowns were imposed only from March 2020, whereas the demand notice was issued much earlier in the month of January 2020 itself which clearly shows that the irregularity in payment by the applicant is not a resultant effect of the pandemic as stated by the applicant.

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The account turned NPA even before the issuance of the demand notice and any attribution for the nonpayment of dues cannot be attributed to Covid. Over three years have transferred that the applicants account was declared as NPA as they never paid the repayment the bank issued the Possession Notice dated 22.02.2021. Hence the bank has given sufficient opportunity to the applicant to settle the dues and issued the sale notice dated 16.02.2023 fixing the sale on 10.03.2023 which is served on the applicant as early as on 18.02.2023. Thus, the notice was served as per the act, the sale notice was published in the two newspapers and affixed on the property. Despite bringing the property to sale number of times the applicant did not come forward to settle the liabilities and has chosen to approach the Tribunal at the last stage after the secured asset has been sold.

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SA No.212/2023

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Further as per Section 13(8) of SARFAESI Act the borrowers could right to redeem the property is only if the dues of the secured creditor together with all cost and expense incurred by them are tendered to them before the dated of publication of the sale notice.

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The property was sold pursuant to auction sale notice dated 16.02.2023 and the sale was confirmed to the successful bidder on 10.03.2023, sale certificate has been issued on 28.03.2023, after the receipt of the entire sale consideration of Rs.2,98,00,000. The bank has also fixed a reserve price after obtaining the valuation report and the contentions that the property worth more then what it was sold is denied.

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The applicant could have always got a better buyer and arranged the sell the property having waited and watch attitude and allowed the bank to sell the property and now challenged the sale is unfair. The present SA is filed after the property was sold for an outstanding amount of RS,6,16,87,900.36 due as on 28.02.202. Hence, the respondent bank prays for dismissal of the SA.

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Heard both sides of the Counsels and perused the records of

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the case

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It is an admitted fact that the applicant is the guarantor to the loan availed for running the Gowri Hospital Private Limited, and had availed the Term Loan Facility of Rs.5,50,00,000/- from the respondent bank and the property Gowri hospital located at No.18 6^th street, Lakshmi Nagar Nanganallur, Chennai 600061 was mortgaged as collateral security.

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SA No.212/2023

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Additionally, the applicant has also mortgaged the property situated at No. 26, Mangaiyarkarasi Nagar, Now Lakshmi Nagar 7^th street, (Opp. Madurai Murali Party Hall) 100 feet road, off Medavakkam road, Naganallur, Chennai -600 061 was also mortgaged as property as collateral security towards the credit facility which is Registered as Doc.1472 of 2017 and 1729 of 2018 at SRO, Alandur on 10.04.2017 in favour of M/s. Corporation bank.

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As the borrower and the guarantor defaulted in the repayment and the secured creditor has initiated measures under the SARFAESI Act and classified the loan account as NPA on 31.12.2019, further the contention of the applicant is that the loan account was classified as NPA during covid19 period could not sustain, as the classification of the loan account is in the year 2019. After, classifying the loan account as NPA the respondent bank has issued the Section 13(2) demand notice dated 02.01.2020 demanding an amount of Rs.5,54,37,895/- along with other charges.

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Though the applicant has taken a specific contention that the demand notice dated 02.01.2020 is not been served on the applicants at para 6 of the SA to which the respondent bank has duly countered by producing the Demand notice dated 02.01.2020 with the applicants’ signature at Page No.9 and 14 of respondent’s counter which evidences that the applicants have duly received the Section 13(2) Demand Notice dated 02.01.2020. However, the bank has proceeded further and issued the possession notice dated 23.02.2021 which is sent by RPAD and the postal acknowledgement cards produced at pg.17 which clearly reflects the receipt of the Section

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SA No.212/2023

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13(4) notice on 26.02.2021. The possession notice is also published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated on 27.02.2021 and affixture of possession notice produced at Page No.18 which evidences the due service of possession notice to the applicant.

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However, the respondent bank has proceeded further and issued sale notice dated 16.02.2023 which is duly served on the applicant and acknowledgement card produced at Page No.26-28 of the respondent bank. The sale notice is published in two newspapers one in Tamil “Dinamani” and another one in English “The New Indian Express” both dated 21.02.2023 and also affixed on the conspicuous part of the property, the paper publications and the photograph of affixture of the sale notice is produced at Page No.29 to 33 of respondent’s counter.

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The next contention with regard to the valuation is also countered by the respondent bank that they have obtained valuation report from the approved valuer and also produced the valuation report of the property. It is seen that the property has been put for sale for the reserve price of Rs.2,50,00,000/- and the applicant has not filed any valuation report from an independent valuer to support their contention that the property valuation is low and in absence of the any valuation, the contention fails.

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Though the secured creditor has initiated the measures under the SARFAESI Act, after classifying the account as NPA the bank has issued the demand notice dated 02.01.2020 and the borrower, guarantor have failed

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SA No.212/2023

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to liquidate the liability within the period of 60 days as demanded in Section 13(2) Demand notice. Thus, the secured creditor proceeded further in issuing the Section 13(4) Possession notice dated 23.02.2021. The applicant has taken a specific contention that Section 13(2) Demand notice is not served to which the respondent bank has produced the copy of the Section 13(2) Demand notice which is duly received by the applicant Mr. R. Hariharan as per the signature at Page No.9 of the respondent bank’s counter, hence the respondent bank has complied the measures in issuing the Demand Notice. Further the applicant has contended that the respondent bank has undervalued the property to which the applicant has failed to produce any valuation report to support their contention.

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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 Section 13(2) Demand Notice dated 02.01.2020 and Section 13(4) Possession Notice dated 23.02.2021 are valid notices and the Sale notice dated 16.02.2023; sale held on 10.03.2023 and Sale certificate dated 28.03.2023 issued favoring the auction purchaser are in accordance with the procedures as required under the Act and Rules made there under and the same are held as valid measures. Further, the applicant has failed to make out any ground of violation or any infirmity in the measures taken by the respondent bank.

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SA No.212/2023

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For the foregoing reasons, the present SA is 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 (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 08^th day of April, 2026)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl.	Description of Documents	Documents
No.		No.
1.	Copy of the Sale Notice issued by the respondent dated 16.02.2023.	A-1
2.	Letter from the borrower to the respondent dated 11.03.2022.	A-2
3.	Copy of Aadhar Card of the 2^ndrespondent.	A-3

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl. No.	Description of Documents	Documents No.
1.	Demand Notice with Acknowledgement dated 02.01.2020.	R-1
2.	Possession Notice with Acknowledgement dated 23.02.2021	R-2
3.	Affixture of Possession Notice dated 23.02.2021.	R-3
4.	Paper Publications of Possession Notice dated 27.02.2021.	R-4
5.	Sale Notice with Acknowledgment dated 16.02.2023.	R-5
6.	Affixture of Sale Notice dated 16.02.2023.	R-6
7.	Paper Publications of Sale Notice dated 21.02.2023.	R-7

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8.	Valuation Report dated 04.02.2023.	R-8
9.	Sale Certificated dated 28.03.2023	R-9

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SCHEDULE OF PROPERTIES;

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The schedule of Properties that were included in the Notice dated 1602-2023 is as follows:

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Property 1

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All that Piece and parcel of Land and Building, measuring an extent of 4300 sq.ft., together with a two storied building, with a built-up area of about 3000 sq.ft., bearing Plot No 26, Mangaiyarkarasinagar, Now Lakshmi Nagar 7th Street, Opp. Madurai Murali party Hal, 100 feet Road, Off Medavakkam Road, 35 Nanganallur, Chennai 600061. in approved layout plan No.L.P.D.M/D.T.P.no.44/66, situated at No. Thalakanacheri Village comprised in Survey No. 7, Saidapet taluk, now Alandur Taluk, Kanchipuram district, in the name of Dr. R. Hariharan

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It is a RCC Roofed Commercial Building with B + stilt + 2 floors (Under Construction)

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and bounded on the:

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North by : Plot no 20 South by : sanctioned 80 feet road East by : Plot no 27 West by : Plot no 25 Measuring North by : 46 1/2 feet South by : 44 feet East by : 105 feet West by : 85 feet

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In all admeasuring an extent of 4300 sq.ft., or thereabouts and situated within the Registration District of Chennai south, and Sub Registration District of Alandur.

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Property 2

All that Piece and parcel of Land and tholding messuring an extent of 3450 sq.ft., together with a two storied building, with built up area of about 3000 sq.ft., bearing Plot Not18, Lakshmi Nagar 6th Street, 100 feet Road, Off Medavakkam na Nanganallur, Chennai 600061, situsted int Thalakanacheri Village comprised in Survey No. 7. Haidapet No. 123, taluk, now Alandur Taluk, Kancheepuram district, in the name of Dr R Hariharan.

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It is an RCC Roofed Commercial Building with G+1 floors only and bounded on the:-

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North by : PlotNo.11 South by : 20 feet width road East by : approved layout LPH/DTP/2/65 West by : Plot No. 17 Measuring North by : 49 feet South by : 50 feet East by : 69feet West by : 70 feet

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In all admeasuring an extent of 3450 sq.ft, or thereabouts and situated within the Registration District of Chennai south, and Sub Registration District of Alandur.

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Sd/-

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

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Dr R Hariharan v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Dr R Hariharan v. Union Bank of India

Case brief

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