Dismissed

Sivagnanam v. Indian Bank

DRT8 Jan 2026SA/244/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a Securitization Application filed by a guarantor challenging a possession notice. The applicant argued the mortgaged property was agricultural land, exempt under Section 31(i) of the SARFAESI Act. The Tribunal rejected this, finding the property was an industrial plot used for commercial purposes, and the applicant failed to prove agricultural activities were

What did the court decide?

The Securitization Application is dismissed; interim order granting stay is vacated.

Sivagnanam versus Indian Bank — Banking and Recovery | DRT (2026)

SA No.244/2023

08.01.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 08^th day of January, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 244 of 2023

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Mr. Sivagnanam, Son of Mr. Rajamanickam, No.44A, Angalamman Kovil Street, Pooranakuppam, Puducherry -605 007.

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….Applicant

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-Vs-

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M/s. Indian Bank, The Authorized Officer/Chief Manager, Shri. Mahipal Singh Rajpurohit, 100 Feet Road Branch, R.S. No.66/4A, East Coast Road, Pakkamudayanpet,

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Puducherry -605 008.

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Mr. E. Girishanth, Son of Mr. Elango, No.515, Bharathidasan Street, Ashok Nagar Lawspet, Puducherry -605 008.

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Mr. P. Elango, Son of Pattu, No.515, Bharathidasan Street, Ashok Nagar Lawspet, Puducherry -605 008. ….Respondents

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Counsels on record / appeared:

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Counsel for Applicant : M/s. T. Mathi Counsel for respondent : M/s. P.V. Murlidhar

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ORDER ON SA 244/2023

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The present Securitization Application [SA] is filed on 06.04.2023

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under sub section [1] of S.17 of the Securitization And Reconstruction of

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Financial Asset and Enforcement of Security Interest Act,2002 (for short

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

¶25

The applicant has challenged the Sec.13(4) Possession Notice dated 10.03.2023 and the outstanding amount due as per Possession Notice is Rs.41,77,487/-

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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 Possession Notice dated 10.03.2023 contending that the applicant belongs to an agriculturist’s family and he has studied till Xth standard, he stood as a guarantor for an educational loan A/c.No.6492024663, availed by the principle borrower/ 2^nd respondent Mr. Girishanth, who is a practicing M.B.B.S Doctor at Pondicherry and his father Mr. Elango is the 3^rd respondent Co-borrower.

¶28

The 2^nd and 3^rd respondent had Education loan of Rs.5 Lakhs in the year 2016 requesting the applicant to submit his title deeds of the agricultural land as collateral security and stood as guarantor to the education loan where there is no necessity for production of title deeds. which is an agricultural land.

¶29

The borrower and co-borrower did not repay the loan amount and cheated the applicant and the bank in possession in collusion have sent demand notice dated 27.12.2022 under Sec.13(2) under the Education Loan of Rs.27 lakhs claiming an amount of Rs.41,77,487/- . At the time of

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the availing the loan the borrower and the co-borrower had informed the applicant that the loan availed is an Educational Loan of only Rs.5 Lakhs.

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As per the demand notice dated 27.12.2022, it is seen that the applicant is arrayed as mortgagor and the loan availed is Rs.27 lakhs instead of Rs.5 Lakhs. The property is applicants ancestral agricultural land, derived by his father Shri. Rajamanikam @ Kandasamy through partition to a total extent of 28 Kuzhi 14 veesam (10,476 + 6,156 = 16,632 sq.ft.,) under R.S.No.106/2 which is settled in favor of appellant on 09.09.2015 and is cultivated by growing coconut and plantain trees on the property.

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On perusal of the Memorandum of Deposit of Title Deeds, it is clear that these lands are only agricultural lands and utilized for the same purpose and not for any other purpose and as per Section 31 (i) of the SARFAESI Act 2002 clearly states that “The Provision of this Act shall not apply to any security interest created in agricultural land”, even as per the patta issued by the revenue department, Pondicherry, and the valuation report as well as the legal opinion obtained by the 1^st respondent it is clearly mentioned that the property is agricultural land.

¶36

Applicant sent a reply notice to the 1^st respondent on 03.01.2023 which is received on 04.01.2023, however the bank did not give any particulars as requested in the letter. The respondent did not disclose the details of the Educational Loan to the guarantor and has relied on the Hon’ble Apex Court in “Levett vs. Barclays Bank Plc (1995) 1 WLR 1260 declared as follows “the creditor (a bank in his case) is under a duty to

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08.01.2026

disclose to the surety contractual arrangement between the principal debtor and the creditor which made the terms of the principal contract something materially different in a particularly disadvantageous respect to those which the surety might actually expect”.

¶41

The applicant yet again vide letter dated 25.01.2023 brought to the notice of the bank about the in action of the borrower and co-borrower and the applicant was not aware that the loan amount was Rs.27 Lakhs and has the property is an agricultural land the bank cannot proceed further under the Act.

¶42

It is specifically contended that the property is an agricultural land the bank have proceeded further in spite of the valuation report and the legal opinion mentioned as it agricultural land. The 2^nd respondent borrower as completed his education M.B.B.S and he is now a practicing Doctor earing around Rs.1 Lakhs per month further, the 3^rd respondent who is the co-borrower is also a doctor working in a foreign country who is earing well.

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Hence, the respondent without proceedings against the borrower and the co-borrower have proceeded in enforcing the security available to them. The applicant learn from reliable source that the 2^nd respondent and the 3^rd respondent vide letter dated 14.12.2022 has requested one year time to settle the entire liability.

¶44

Even though the 2^nd and 3^rd respondent is ready and willing to pay the entire education loan within the stipulated period that is within

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08.01.2026

14.12.2023 the respondent bank is initiating the measures under the SARFAESI Act. In the grounds, it is contended that the impugned possession notice dated 10.03.2023 is illegal and arbitrary and though the bank has not considered the request letter of the borrower dated 14.12.2022 to clear the liability.

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Further the applicant family are farmers and have carrying on the agricultural activity on the schedule property, which is their only source of income. The respondent bank has cheated the applicant by mortgaging this property and deliberately has not disclosed the details of the loan account and are not proceeding against the 2^nd and 3^rd respondent who are Doctors and bank had initiated measures under the SARFAESI Act.

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Objections of the respondent bank:

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The respondent bank has filed their counter inter alia contending that the applicant who stood as a guarantor for the loan availed by the 2^nd respondent who was then student and 3^rd respondent is the father of the 2^nd respondent, availed Educational loan. The 3^rd respondent had approached the bank with the applicant and produced the title deeds (i.e) settlement deed and availed Educational Loan to the tune of Rs.27 lakhs.

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The applicant executed registered MOTD in favoring the bank and the valuation report filed by the applicant clearly reveals the valuation was done and the amount was fixed by the valuated based on the residential category. The applicant cannot blame the bank for having not explained the quantum of amount going to be sanctioned for doing MBBS. The

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08.01.2026

Sec.13(2) demand notice was issued to the applicant is replied through his advocate, seeking for documents. However, the applicant failed to comply with the demand notice resulting in issuing the Sec.13(4) possession Notice which is now under challenge contenting that the property is an ancestral agricultural land barred under sec.31(i) of the act.

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The respondent bank denies that the property is an agricultural land exempted under sec.31(i) as there are no agricultural activity carried on the property and even the property is valued describing it has only sq.ft, as Plot Area, in Page No.24 of the typeset. The Adangal extract will disclose the fact of the existences of brick built structure, plantain, coconut and a mongo tree that does not mean it is an agriculture land.

¶58

Even, the documents produced by the applicant stray receipts of selling mango and coconut in Pg.Nos.6,10 and 12 will not come to the rescue of classifying the property as agricultural land.

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The respondent submits that the applicant is not doing agricultural activity as defined who is agriculture unless a farmer who is coming under the category of agriculture must tilling the soil/ploughing/sowing seed/planting/harvesting the grains/(i.e) paddy or etc., but the case on hand the applicant is not doing any agricultural activity in adangal extract it is mentioned as he has mortgaged to the respondent bank and a Brick Built House. Therefore Sec.31(i) cannot be invoked by the applicant. Hence, the respondent bank prays for dismissal of the SA.

SA No.244/2023

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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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Admittedly the applicant stood as a guarantor and mortgaged the property bearing Item No.1 The free hold rights of that piece and parcel of plot of Pondicherry R.D, Puducherry Sub-R.D, Ariyankuppam Commune Panchayat, Village Number 71, Pooranakuppam revenue Village, Cad.No.1171, Paimash No.2235, 2236 (as per settlement record R.S.No.106/2, Cad. No.1171/3, 1171/2pt; Patta No.117) Plot area: 10,476 Sq.fts. and Item No.2. The free hold rights of that piece and parcel of plot at Pondicherry R.D, Puducherry Sub-R.D, Ariyankuppam Commune Panchayat, Village Number 71, Pooranakuppam revenue village, Cad. No.1171/2, (as per settlement record R.S. No.106/2, Cad. No.1171/3, 1171/2pt; Patta No.177) Plot area: 6156 sq.ft., as collateral security towards the credit facility availed by the 2^nd and 3^rd respondent.

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The records of the case reflects that the 2^nd respondent has availed an Education Loan of Rs.27 Lakhs vide loan A/c.No.6492024663 and had executed all the loan documents as per the Sec.13(2) demand notice produced by the bank at Pg.4 of the typeset. The 2^nd respondent Mr. Girishanth.E is the borrower and 3^rd respondent the father of the 2^nd respondent is the Co-borrower and the applicant is the mortgagor and guarantor to the education loan of Rs.27 Lakhs. 21. It is seen that the applicant have executed the guarantee agreement and had deposited the title deeds and had also executed the letter of acknowledgement. Hence the contention that the applicant was under

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impression that loan availed by Respondent No.2 and 3 is Rs.5 Lakhs and not Rs.27 lakhs cannot sustain. The applicant admittedly has executed guarantee agreement and MOTD which reflects the loan availed, after execution of documents, now applicant cannot contend he was not aware of quantum of loan availed.

¶71

As the borrower and the guarantor defaulted in the repayment, the bank have classified the account as NPA and have initiated measures under the SARFAESI Act for the enforcement of the security. The Sec.13(2) Demand Notice reflects the details of the loan, details of the borrower and the guarantor and the mortgagor and description of property. It is seen from the description of the property that the property mortgaged is plot at Puducherry and at any stretch of imagination it is not an agricultural land as contended by the applicant herein.

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Further it is seen from the affixture of the possession notice produced by the bank at Pg.16-20 the mortgage property is an industrial plot and the photographs clearly reflects that the Board of Amritha Coir Industries is put on the property, further the photographs at Pg.17 clearly reflects that there are buildings on the property which cannot be an agriculture land as contended by applicant.

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The applicant has not produced any document to establish that there are agricultural activities being carried on the property like ploughing, tilling or any type of activity connected to agricultural on the secured asset. Further applicant has produced the PM Kissan Samman Nidhi and Receipt

SA No.244/2023

08.01.2026

on farming products and receipt of revenue department on agricultural tax which does not reflects the name of the applicant, on the contrary it reflect the name of Sri. Rajamanickam who is the son of the appellant nowhere connected to the loan in question. There might be plantain banana and mango trees grown on the property which does not amount to be an agricultural land, as the plantain banana and mango trees are grown even on residential plots

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The contention that the mortgage property is an agricultural land would not come to the aid of the applicant as the Hon’ble Supreme Court in the ITC Limited Vs Blue Coast Hotels Limited as held that no security interest can be created in respect of agricultural lands and yet it was so created, goes to show that the parties did not treat the land as agricultural land and the debtor offered the land as security on this basis.

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As per the Section 31(i) the term agricultural land is intended to protect the agriculturist from the Act, and is to protect the agriculturists from losing their source of livelihood of income from the agricultural land under the drastic provision of the Act. Further it is also to deter the creation of security interest over the agricultural land as defined in Section 2(zf). Hence it is held that the security interest cannot be created in respect of the property specified in Section 31(i) of the Act.

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In the instant matter, though the applicant contends that the property is agricultural land has not produced the vital documents to establish the nature of the property is agricultural and there are

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agricultural activities being carried on the secured asset. The Tribunal places reliance of the Hon’ble Apex Court in the case of Blue Coast Hotels Limited and Others and K. Pappireddiyar and Another , where it is held that merely revenue records reflects that secured properties are shown as agricultural land is not sufficient to attract Section 31(i) of the SARFAESI Act. In the instant matter the applicant has failed to show that the property is actually being used as agricultural lands at the time when the security interest was created and agricultural activates are being carried on. There is no iota of documents produced by the applicant to show that the secured asset is put to use for agricultural purposes and there is agricultural activity going on, the secured asset to avail the benefit/exempted under Section 31(i) of the SARFAESI Act.

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The Hon’ble Supreme Court in the case titled K. SREEDHAR versus M/S RAUS CONSTRUCTIONS PVT. LTD. & ORS has held that the

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burden is upon the borrower to prove that the secured properties were agricultural lands and actually being used as agricultural lands and/or agricultural activities were going on.

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The applicant being aware of the measures initiated by the bank under the Act, issuance of Section 13(2) Demand Notice dated 27.12.2022 had not raised the contention that the secured asset is an agricultural land at any time of measures taken by the bank. Thus, it is concluded that the contention that secured asset is an agricultural land

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is an afterthought and the same is exempted under S.31[i] of the Act is unsustainable.

¶92

In fact the applicant does not dispute the issuance of the demand notice nor the service of the Sec.13(2) Demand Notice. As the borrower and the guarantors failed to repay the loan as demanded in the Sec.13(2) Notice the bank have proceeded further and issued the Possession Notice dated 10.03.2023 which is impugned in the present SA.

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The Possession Notice is produced by the bank at Pg.9 and the Postal Receipts for having sent the possession notice is at Pg.10 dated 10.03.2023 the applicant herein, as received in Sec.13(4) Possession Notice as per the postal acknowledgement cards at Pg.11 the borrower, and the co-borrower have also received as per the postal cards at Pg.12 and 13.

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Further as per the procedure the respondent bank have published the possession notice in two newspapers one in English “The New Indian Express” and another one in Tamil “Dhinamalar” both dated 14.03.2023. It seen from the affixture of the possession notice produced by the bank at Pg.16-20 the mortgage property is an industrial plot and the photographs clearly reflects that the Board of Amritha Coir Industries is put on the property where commercial activity is being carried on and the photographs at Pg.17 clearly reflects that there are buildings on the property which cannot be an agriculture land at any state of imagination.

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The applicant has failed to make out case of infirmities in the measures initiated by the bank and on the other hand the respondent as

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secured creditor has established the due compliance of the measures taken as prescribed under the Act and the Rules made thereunder.

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For the foregoing reasons, the present SA fails and accordingly SA stands dismissed. Interim Order granted, if any stands vacated, pending

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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 January, 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	Documents No.
1.	Willing letter from the principal borrower/ 2^nd respondent and co-borrower/ 3^rdrespondent dated 14.12.2022.	A-1
2.	Demand Notice dated 27.12.2022.	A-2
3.	Legal Notice sent by the applicant request the documents dated 03.01.2023.	A-3
4.	Reply Notice by the 1^strespondent dated 17.01.2023.	A-4
5.	Letter by the applicant to the 1^strespondent dated 25.01.2023.	A-5
6.	Reply notice from the 1^strespondent to the applicant dated 08.02.2023.	A-6
7.	Patta for the said cultivable land (along with translation copy).	A-7
8.	Agriculture card of the applicant’s father Mr. Rajamanickam (along with translation copy).	A-8
9.	Possession Notice dated 10.03.2023.	A-9
10.	Photograph of the Agricultural land in the demand notice schedule and Possession Notice schedule.	A-10
11.	Bonafide Certificate of the Principal Borrower/ 2^ndrespondent dated 19.08.2015.	A-11

SA No.244/2023

08.01.2026

12.	Thavalakuppam Primary Agricultural Co- operative Bank Ltd., Pass Book of the Applicants father.	A-12
13.	Joint account pass book of applicants father and mother for agricultural schemed stipend.	A-13
14.	Application to Agricultural department on special agricultural patta in the name of applicant (with Translation copy) dated 22.12.2022.	A-14
15.	Registration form for Agristack and farmers identity number for the applicant dated 14.12.2022.	A-15
16.	Payment receipt for PM-Kisan Samman Nidhi dated 10.01.2023.	A-16
17.	Receipt on farming products dated 10.01.2021.	A-17
18.	Receipt of Revenue department on agricultural tax (along with translation copy) dated 14.06.2007.	A-18
19.	Receipt for the product from Pondicherry agricultural department. (Along with translation copy) dated 24.09.2009 & 18.08.2010.	A-19
20.	Aadhaar card of the Principal Borrower/ 2^nd respondent dated 08.08.2011.	A-20
21.	Aadhaar card of the Co-Borrower/ 3^rd respondent dated 08.08.2011.	A-21
22.	Passport of Mrs. Subathra daughter of 3^rd respondent and sister of 2^ndrespondent.	A-22
23.	Translation copy of the document No.1 willing letter dated 14.12.2022.	A-23

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

¶112

Sl. No.	Description of Documents	Documents No.
1.	Sec.13(2) Demand Notice dated 27.12.2022.	R-1
2.	Delivery Letter given by Superintendent of Post Office, Pondicherry dated 31.10.2023.	R-2
3.	Sec.13(4) Possession Notice dated 10.03.2023.	R-3
4.	Acknowledgment Card received by the Applicant dated 11.03.2023.	R-4
5.	Returned Cover dated 11.03.2023.	R-5
6.	Paper Publication in English in one edition of New Indian Express dated 14.03.2023.	R-6
7.	Paper Publication in Tamil in one edition of Dhinamalar dated 14.03.2023.	R-7
8.	Affixture of 13(4) Possession Notice in the property.	R-8

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SCHEDULE OF THE PROPERTY

SA No.244/2023

08.01.2026

Item No.1. The free hold rights of that piece and parcel of plot of Pondicherry R.D, Puducherry Sub-R.D, Ariyankuppam Commune Panchayat, Village Number 71, Pooranakuppam revenue Village, Cad.No.1171, Paimash No.2235, 2236 (as per settlement record R.S.No.106/2, Cad. No.1171/3, 1171/2pt; Patta No.117) Plot area: 10,476 Sq.fts.,

¶118

Boundaries:

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North by : Kamarajar Salai, Pooranakuppam Road, of Sivaganam mill building South of : Rajamanikkam and Kandasamy Pillai’s Land; East by : Palani Pillai and others’ land West by : Radha Krishnan Layout, Jayashankar and Murugan’s Land.

¶120

Item No.2. The free hold rights of that piece and parcel of plot at Pondicherry R.D, Puducherry Sub-R.D, Ariyankuppam Commune Panchayat, Village Number 71, Pooranakuppam revenue village, Cad. No.1171/2, (as per settlement record R.S. No.106/2, Cad. No.1171/3, 1171/2pt; Patta No.177) Plot area: 6156 sq.ft.,

¶121

Boundaries:

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North by : Radha Krishnan Layout and settler’s land South by : Rajamanikkam @ Kandasamy Pillai’s Land East by : Rajamanikkam @ Kandasamy Pillai’s Remaining Land West of : Rajamanikkam @ Kandasamy Pillai’s land of Nadesa counder’s house, Radha Krishnan Layout and Road.

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Sd/-

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

Sivagnanam v. Indian Bank

Case brief

What is this about?

What did the court decide?

Sivagnanam v. Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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