Allowed

Raja Rajeswari Marriage Hall v. Tamilnad Mercantile Bank Limited

DRT25 Feb 2026SA/248/2022

Case brief

AI extract

What is this about?

The Tribunal allowed an application filed under Section 17(1) of the SARFAESI Act to set aside an auction sale. It held that the bank failed to comply with Security Interest Enforcement Rules, 2002 regarding proper service of notices, valuation consultation, and failed to prove payment of the auction surplus proceeds to the mortgagors.

What did the court decide?

Sale Notice dated 24.01.2022 and sale held on 21.02.2022 set aside; Bank directed to refund auction proceeds to purchaser and undertake all corrective measures within one month.

Raja Rajeswari Marriage Hall versus Tamilnad Mercantile Bank… — Banking and Recovery | DRT (2026)

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SA No.248/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 25^th DAY OF FEBRUARY, 2026

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PRESENT: SEEMA SINHA

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[PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

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SA No. 248/2022

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1.	M/s. Raja Rajeswari Marriage Hall, Partnership Firm, No. 37/5, Karur Main Road, Kambarasampettai, Tiruchirapalli – 620 101.
2.	Mr. V. Rajasekaran, S/o. Mr. Varatha Rajan, (Managing Partner), No. 2/4, Park Residency Apartment, Mappillai Naiciken Tank Street, Tiruchirapalli – 620 008.
3.	Mr. K. Rajesh Kanna, S/o. Mr. Krishnamoorthy, (Partner), No. 81/180, Anbu Nagar Main Road, Crawford, Tiruchirapalli – 620 012. --- Petitioners/Applicants
	-Vs-
1.	The Authorized Officer, Tamilnad Mercantile Bank Ltd., D. No. 25/1, M.B.S. Araharam, Trichy – Karur Main Road, Kulithalai – 639 104. --- 1^stDefendant Bank
2.	Mrs. Devichand Chilkendevi, W/o. Mr. Devichand, C3/6K, Ground Floor, 1^stCross, Northeast Extension, Thillai Nagar, Tiruchirapalli – 620 018.--- 2^ndDefendant/AuctionPurchaser

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SA No.248/2022

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Appearance of Advocates: M/s. R. Venkatesh ---- Counsel for the Applicants M/s. T. Thevan ---- Counsel for the 1^st Defendant Bank M/s. K.S. Vamsidhar ---- Counsel for the 2^nd Defendant/Auction Purchaser

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

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O R D E R

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1 . This application has been filed under Sec.17(1) of the SARFAESI Act 2002 by the Applicants praying that this Hon'ble Tribunal may be pleased to pass an order setting aside the Auction Sale held on 21.02.2022 issued u/s.8(6) of the SARFAESI Act by the 1^st Defendant Bank and restrain them from taking further proceedings in this regard as the same is illegal.

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

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The Counsel for the Applicants submitted that the 1^st Applicant is a partnership Firm and 2^nd and 3^rd Applicants are partners in the 1^st Applicant Firm. The Applicants in order to expand the partnership firm business, approached the 1^st Defendant Bank for the loan to the tune of Rs. 25 Lakhs. The 2^nd Applicant had deposited his title deeds to the Defendant Bank. On perusal of the documents filed by the 2^nd Applicant, the Defendant Bank had sanctioned the loan of Rs. 25 lakhs vide sanction letter dated 27.07.2015. The Applicants had almost paid Rs. 16,80,000/- towards the loan account. As the Defendant Bank had pestering the Applicants for payment of installments the Applicants made further payment of Rs. 2,90,000/- (Rupees Two Lakhs Ninety Thousand only) and showed their Bonafide.

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It is further submitted that to the shock to the Petitioner, under Rule 8(6) & 9(1) of SARFAESI Act dated 14.11.2018 sale auction notice was issued informing about an auction of the suit property to be held on 28.12.2018. Paper Publication of Sale Notice has been done on 16.11.2018. It is further submitted that the share of 3^rd property is nowhere mentioned in the MOD.

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Therefore, the issuance of notices under the SARFAESI Act by the Defendant dated 14.11.2018 is illegal and not liable for attachment under the above act. In order to bring the above facts, the Applicant has filed a civil suit before the 1^st Additional District Munsif, Trichy in O.S. No. 1226 of 2018 for a permanent injunction restraining the Defendant Bank from initiating the auction process to be held on 28.12.2018. The same is pending before the concern court. Further, the 3^rd Applicant had issued a legal notice on 16.12.2018 to the bank not to initiate the auction process to be held on 28.12.2018.

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It is further submitted that in the meanwhile the Bank has approached the District Collector office to possess the property and handover the same to them and the due amount is Rs. 23,00,000/-. The 3^rd Applicant also had filed W.P.(MD) No. 5044 of 2020 before the Hon'ble High Court, Madurai bench to quash the proceedings dated 22.09.2010, which is still pending. The Applicants have been taking several steps to settle the issue and also informed the same and requested the Defendant Bank to extend the time to repay the entire balance amount and also wanted to foreclose the loan as OTS. But the Bank has not cooperated and the same is ended in vain. The Defendant Bank has increased the interest rates from 17.5% to exorbitant even without notice to them which results in the heavy burden and unscheduled hike in the interests’ rates and the monthly installment amount and other business loss, which rendered the Applicant to the pauper and it made him to default in some installments.

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It is further submitted that the Defendant Bank had filed an OA No. 364 of 2021 before this Tribunal on 01.10.2020 for a sum of Rs. 34,15,170/only with an intention to drag on the legal process. The Applicants submitted that the Defendant Bank purposely issued the notice to all the above Applicants despite notice regarding the nature of the property and the fact that only an undivided portion of the property had been mortgaged to the bank, the Bank had gone forward to take action without following the due process of law. Now on 21.02.2022, the Defendant Bank held Tender cum auction sale u/s. 8(6) of SARFAESI Act for a sum of Rs. 39,42,587/- more than the amount stated in the OA No. 364 of 2021 filed by the Defendant Bank before this Hon'ble Tribunal, therefore the Applicants have preferred this appeal among the following and other

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Main Grounds:-

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i) The Auction Sale held on 21.02.22 by violating all the Rules under SARFAESI Act including even without service notice under Rule 8(6) of SARFAESI Act and also Rule 8(1) of SARFAESI Act.

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ii) The loan amount mentioned in the impugned notice is without any basis.

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iii) The Impugned notice is bad in as much as it refers to the incorrect notice u/s.13(2) and (4) of SARFAESI Act and as such the same is liable to be quashed.

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iv) The Defendant Bank has failed to classify the Applicant account as NPA as per Reserve Bank of India guidelines. v) The Impugned notice is issued taking symbolic possession of the secured asset is illegal. vi) The Impugned notice is issued with wrong calculations with respect to the rate of interest and capitalizing the same with principal against the terms of the loan agreement and without the consent of the Applicant. vii) The Defendant Bank has issued notice and made Paper Publication under SARFAESI Act for the whole property. The share of the 3^rd Applicant is nowhere mentioned in the MOD. Therefore, the issue of notice under SARFAESI Act by the Defendant dated 14.11.2018 is illegal. viii) The Defendant Bank failed to give an opportunity for setting right their debt account. The Defendant issued this impugned notice in haste and hurry manner and the Applicant is even now prepared to settle the dues on proper method of calculation along with sufficient time. ix) It is alleged that the surplus of the Auction Sale proceeds has been sent by Demand Draft which was not received by the Petitioners. Further it is learnt that the DD has been sent to one of its partners V. Rajasekaran, but it should be sent to the Partnership Firm.

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DESCRIPTION OF PROPERTY

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PROPERTY BELONGS to Mr. V. Rajasekaran

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Land to the extent of 12644 Sq. ft situated at S. No. 37/4 & 37/5 and Commercial building constructed thereat to the extent of 3454 S. ft at D. No. V-4/39, Kambarasampatti, Srirangam Taluk, Tiruchirapalli District.

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Item No.1 Boundaries (S.No. 37/4-5450 Sq. ft) North by: Karur Main Road, South by: Railway Line, East by: Land in S. No. 37/4-1526 Sq. ft mentioned below, West by: Land belongs to others

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Item No. 2 Boundaries (S.No. 37/4 – 1526 Sq. ft) North by: Land in S. No. 37/5 – 5668 Sq. ft mentioned below, South by: Railway Line, East by: Land belongs to Mr. Mani Iyer, West by: Land in S. No. 37/4 – 5450 Sq. ft mentioned above.

Item No. 3

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Boundaries (S.No. 37/5 – 5668 Sq. ft) North by: Karur Main Road, South by: Land in S. No. 37/4 – 1526 Sq. ft mentioned above and Mr. Mani Iyer Land,

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East by: Land belongs to Thyumanavar Temple, West by: Land in S. No. 37/4 – 5450 Sq. ft mentioned above.

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

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S.No.	Date	Description of Documents
1.	14.10.2014	Partnership Deed regarding Raja Rajeshwari MarriageHall
2.	10.01.2018	DefendantBank letterto theApplicant
3.	25.04.2018	Possession Notice
4.	05.07.2019	TenderCum AuctionSaleNotice
5.	09.10.2020	Applicantletterto theDefendantBank
6.	12.10.2020	Summon issued by the District Collector, Trichy
7.	19.10.2020	TheDefendantBank Reply
8.	19.11.2020	TheDefendantBank Reply
9.	24.01.2022	Paper PublicationofSaleNotice
10.	23.03.2022	Sale intimation Notice issued by the DefendantBank
11.	31.03.2022	Applicant’s letter to the DefendantBank and subsequent purchaser
12.		Memo
13	29.01.2019	DemandNotice

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3 . On the other hand, the Counsel for the 1^st Defendant Bank appeared before this Tribunal and filed Vakalat, Reply Statement, typed set & Additional Typed set of papers wherein they have submitted that the SARFAESI Application is unsustainable on facts in law and in equity. Further, though the Auction Sale Notice was issued on 24.01.2022 itself, the same was not questioned at all by the Applicants till the auction was successfully held on 21.02.2022. The Applicants have chosen to be silent and not whisper any word on the prior four successful auctions and even the present Sale Notice dated 24.01.2022 was not challenged in time. The Applicants admitted of sanction and availing of the loan for his business.

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It is further submitted that the marriage hall having a total extent of 17440 Sq.ft of land in which 2/3 share is held by the 2^nd Applicant and 1/3 share is held by the 3^rd Applicant are false. In fact, in para no. 4 of the facts of the case, the 2^nd Applicant admitted that the deposit of title deeds pertaining to an extent of 12644 sq. ft with the 1^st Defendant Bank and the said mortgage was duly evidenced by Memorandum of Deposit of Title Deeds dated 27.07.2015 and it was registered as Doc. No. 2647/2015. Further, the

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SA No.248/2022

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1^st Defendant Bank has taken auction under the SARFAESI Act only in respect of the 2^nd Applicant’s property to an extent of 12644 Sq.ft. duly mortgaged in favour of the 1^st Defendant Bank. The Applicants’ account slipped into NPA on 30.12.2017. Hence, the 1^st Defendant Bank has initiated proceedings under the SARFAESI Act and issued Demand Notice dated 08.01.2018, Possession Notice dated 25.04.2018 and the series of Sale Notices dated 14.11.2018, 06.02.2019, 06.05.2019 & 05.07.2019 and the same were duly served to the Applicants. The Applicants did not choose to challenge any of the above measures taken by the 1^st Defendant Bank.

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It is further submitted that the payments made by the Applicants were duly credited to the loan accounts. Further it is submitted that the Defendant Bank did not include the 3^rd Applicant undivided property in the said Sale Notice dated 14.11.2018 as alleged above and the bank has obtained valuation from the approved valuer and fixed the upset price of the secured assets. The 1^st Sale Notice dated 14.11.2018 rightly fixed the upset price at Rs. 1,62,59,000/- consistent with the valuation madein. The said Sale Notice was not questioned by the Applicants. As there was no bid, successive Sale Notices were issued on 06.02.2019, 06.05.2019 & 05.07.2019 with reduced upset price as per statutory stipulation. Yet there was no effective bid for any earlier auction and again on issuance of each of the successive Sale Notices, the Applicants did not even formally question the valuation. Hence, it is clear that the Defendant Bank never undervalued the property.

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It is further submitted that the Defendant Bank has obtained valuation only for the secured assets. In the relation to the civil suit filed by the 3^rd Applicant in O.S.No. 1226/2018 before the 1^st Additional District Munsif, Trichy, is in no way connected with this Application and the 3^rd Applicant has to pursue the case before the said court. Further, the allegations as the Defendant had charged exorbitant interest and has breached the loan agreement are denied as false. In fact, the Bank had acted as per the Terms and Conditions of the loan agreement and has not charged any exorbitant interest. In order to recover the loan dues, the Defendant Bank has filed OA No. 364/2021 before DRT, Madurai and the bank is entitled to initiate simultaneous proceeding under the Recovery of Debts and Bankruptcy Act, 1993 as well as the SARFAESI Act. It is further stated that the bank has duly adhered to follow the provisions stipulated in the act and rules while initiating the SARFAESI Proceedings.

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It is further submitted that the Bank has issued Possession Notice dated 25.04.2018 and took symbolic possession of the secured assets on 25.04.2018. The said notice was duly affixed on the conspicuous part of the mortgaged properties, besides publishing the Possession Notice in Dinamani

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vernacular language and another one in The New Indian Express English language on 01.05.2018 within stipulated period. It is further submitted that the Applicants themselves filed the sale intimation letter addressed to them which clearly furnishes the name of the auction purchaser. Further, the bank has rightly mentioned in the Sale Notice that the outstanding amount of Rs. 39,42,587/- with future interest and cost thereon. The bank has also denied the allegation that the bank failed to note that out of the undivided property of the partner in the Sale Notice publication. It is further reiterated that the Defendant Bank has issued notice only for the property of 2^nd Applicant herein.

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It is further submitted that the Defendant Bank has also denied the allegation of the Applicants that there is a lien tenancy prior to the loan transaction and the Defendant could not have jurisdiction over the subject matter as false and without any documents to substantiate the same. Further it is stated that the loan accounts of the Applicants were declared as NPA in the year of 2017 itself. Whereas the Covid-19 and lock down were only in the year of 2020. Further, Applicants did not take any steps to pay the loan dues since 2017 and the averments in contra are denied as false and misleading.

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Therefore, it is prayed that this Hon’ble Tribunal may be pleased to dismiss the Application and thus render justice.

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INDEX TO TYPED SET

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S.No.	Date	Particulars
1	27.07.15	Memorandumof Deposit of TitleDeeds
2	11.09.2013	SaleDeedNo.3140/2013
3	08.01.18	DemandNoticewith ADcards
4	25.4.18	Possession Notice
5	1.5.18	Possession NoticePaper Publication in Tamildaily
6	1.5.18	Possession NoticePaper Publication in Englishdaily
7	24.1.22	Impugned SaleNoticewith ADCards
8	1.2.22	SaleNoticePaper Publication in Tamildaily
9	1.2.22	SaleNoticePaper Publication in Englishdaily
10	24.1.22	Photo showingaffixture ofSaleNotice
11	16.02.21	Valuation Report

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Index to additional typed set filed on behalf of 1^st Defendant

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S.No.	Date	Particulars
1	25.04.18	Originalphoto showingaffixture of Possession Notice
2	1.5.18	Original Paper Publication of Possession Notice in the New Indian Express
3	1.5.18	Original Paper Publication of Possession Notice in TamildailyDinamani
4	14.11.18	Originalof 1^st SaleNotice

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5	06.02.19	Originalof2^nd SaleNoticewith Paper Publication
6	05.07.19	Originalof3^rd SaleNoticewith Paper Publication
7	24.01.22	Originalof 4^th SaleNoticewithoriginal ADCards
8	24.01.22	Originalphoto showingaffixture of Sale Notice
9	1.2.22	Original Paper PublicationofSaleNoticein TheHindu
10	1.2.22	Original Paper PublicationofSaleNoticein Tamildaily
11	16.07.21	FirstValuation Report givenbyEr. Ramswamy
12	01.12.21	2^ndValuation Reportgiven byEr. R. Kannan

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4. On the other hand, the Counsel for the 3^rd Defendant/Auction Purchaser appeared before this Tribunal filed Vakalat, Reply Statement and Typed set of papers in which they submitted that the entire property previously belonged to the 2^nd Applicant Rajasekharan and it now belongs to the 2^nd Defendant by virtue of the auction Sale made in her favour by the authorised signatory. Further, it is stated that in any case, a share in an immovable property can be transferred only by and under registered deed. It cannot be transferred by and under a mere unregistered partnership deed. Further, the entire property previously belonged to the 2^nd Applicant Rajashekaran and that consequent to the sale made by the Authorized Officer to the 2^nd Defendant, it now belongs to the 2^nd Defendant. The 2^nd Defendant is neither aware nor concerned about the reason for which the Applicants borrowed funds from the 1^st Defendant Bank or the quantum of borrowing.

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It is further submitted that the 2^nd Applicant deposited the title deeds leading to the property, with the 1^st Defendant Bank to secure repayment of the loan provided by the bank to the 1^st Applicant firm. The 2^nd Applicant was the sole owner of the property. Hence, he deposited the title deeds relating to the property, with the 2^nd Defendant Bank. Since the 3^rd Applicant did not have any right, title, interest share or claim over the property, there was no need for him to join in the deposit of title deeds. It is false and untenable to claim that the 2^nd Applicant mortgaged only his two third-share in the property, in favour of the 1^st Defendant Bank. As the 2^nd Applicant was the owner of the entire property, he mortgaged, the entire property to the bank. Allegations contra are totally false and untenable and have been made with an intention to create confusion. Further it is stated that the 2^nd Defendant, who is only the Auction Purchaser, is not aware of the details of the loan, its disbursal or repayment. Suffice to it say that the 2^nd Defendant is a bona fide purchaser of the Immovable Property previously belonging to the 2^nd Applicant, for a valuable consideration without any notice of any defect in the title.

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It is further submitted that it is utterly false and unable to claim that the property was worth over Rs. 6.00 crores. The value of the property was only around Rs. 1,50,00,000/- or thereabouts. It is false and untenable to claim that the 3^rd Applicant’s share has not been mentioned in the MOD. Firstly, the 3^rd Applicant did not have any share and secondly, the entire property has been clearly set out in the MOD. Merely repeating the claim that the 3^rd Applicant had one-third share in the property, will not make the lie become true. The fact remains that the 2^nd Applicant was the sole and

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absolute owner of the property on that it was sufficient for the 2^nd Applicant alone to mortgage the property in favour of the 1^st Defendant Bank. Further, it is stated that the Applicants do not deny the borrowing. In fact, the 3^rd Applicant as the partner of the 1^st Applicant firm, took the benefit of the borrowing and participated in the use of the funds in the business of the 1^st Applicant.

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It is further submitted that the 2^nd Defendant has not been served with any copy of the alleged Valuation Report. Its contents are specifically denied. However, a mere entry or non-entry in any Valuation Report, would not affect the legal and valid mortgage created in favour of the 1^st Defendant Bank. Further it is stated that the title deeds were deposited only by the 2^nd Applicant Rajasekaran. This was because he alone was the owner of the property. The 3^rd Applicant was only a partner of the firm. In any case, it is settled law that the civil courts do not have any jurisdiction in SARFAESI matters and hence, the pendency of the suit is of no avail. In any case, from the e-courts website, the 2^nd Defendant learns that the suit itself has been disposed of. This has been suppressed by the Applicants. Further it is stated that the Writ Petition filed by the 2^nd and 3^rd Applicants in the Hon’ble High Court have already been disposed of. The Applicants have not brought this fact to the notice of this Hon’ble Tribunal. Further it is stated that the property was brought to sale and has been sold to the 2^nd Defendant in the e-auction. Hence, there is no question of any settlement of the dues by the Applicants to the 1^st Defendant Bank. In any case, any such settlement would not bind this Defendant, as this Defendant is a bona fide purchaser of the property for a valuable consideration without notice of any defect in title. In the circumstances, there is no question of any one-time settlement or any settlement by payment of instalments.

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It is further submitted that the 3^rd Applicant did not have any right, title, interest, claim or share in the property. The property belonged to the 2^nd Applicant alone. He mortgaged the property in favour of the 1^st Defendant Bank to secure repayment of the loan granted to the 1^st Applicant firm. The 1^st Applicant firm defaulted in repaying the loan. Hence, the bank followed the due process under the SARFAESI Act, issued notice and sold it to the 2^nd Defendant. Everything has been done correctly.

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Therefore, the Application may be dismissed with costs as well as exemplary costs.

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INDEX TO TYPED SET OF PAPERS

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S.No.	Date	Description of the documents
1	28.08.2003	Sale Deed executed by P. Ramamoorthy in favour of G. Subramaniam alongwithtranslated copy
2	-	Patta in the name of the P. Ramamoorthy along with translated copy
3	12.11.2024	Encumbrance Certificatealongwithtranslated copy

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Typed set filed on the side of the Advocate Commissioner

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S.No.	Date	Particulars
1	14.05.25	Orderpassed byDRT
2	05.06.25	Notice sent byAdvocate Commissioner
3	11.06.25	Photograph
4	11.06.25	Acknowledgment ofOfficialpresence
5	16.06.25	Report submitted by surveyor
6	30.06.25	Advocate Commissioner Report

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

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I. Whether the Applicants have been able to prove their case in their favour?

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II. Whether the Applicants are entitled to get the reliefs as prayed for?

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6. Having heard the parties and after going through the entire documents available on records, I find that the Applicants had availed credit facilities for a sum of Rs. 25.00 Lakhs vide sanction intimation letter dated 27.07.2015 from the Defendant Bank in order to expand the partnership firm’s business. The 2^nd Applicant had deposited his title deeds pertaining to the Schedule Mentioned Property to an extent of 12,644 Sq.ft. out of a total extent of 17,440 Sq.ft. in favour of the 1^st Defendant Bank and also executed the registered Memorandum of Deposit of Title Deeds in favour of the 1^st Defendant Bank. I perused the Memorandum of Deposit of Title Deeds dated 27.07.2015 (page nos. 1 to 6 of typed set of papers filed by the Defendant Bank) and I find that all the 3 items of Schedule Mentioned Properties are available. However, I find that the boundaries mentioned in the Memorandum of Deposit of Title Deeds do not tally with the boundaries given in the Impugned Sale Notice dated 24.01.2022 for all the 3 items of Schedule Mentioned Properties. Hence, the 1^st Defendant Bank has failed to follow the Rule 8(7) of Security Interest Enforcement Rules, 2002, which clearly says,

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“8 (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;

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

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

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

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

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

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(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.”

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I also find that the one of the main grounds raised by the Applicants is that the Defendant Bank has included the properties which was not mortgaged in the SARFAESI Proceedings and the Bank has sold the undivided 1/3^rd share over the property of the 3^rd Applicant of Door No. 37/5 in the total extent of 17440 sq.ft. property to the 2^nd Defendant/Auction Purchaser vide Sale Notice dated 24.01.2022 and sale held on 21.02.2022. However, the Applicants have admitted the execution of loan documents in favour of the 1^st Defendant Bank. Further I find that the 2^nd Applicant has created a mortgage to an extent of 12644 sq.ft. in favour of the 1^st Defendant Bank and also executed a registered Memorandum of Deposit of Title Deeds in favour of the 1^st Defendant Bank (page nos. 1 to 6 of Bank’s Typed set of papers). The Memorandum of Deposit of Title Deeds clearly shows that he had mortgaged his absolute property to an extent of 12644 sq. ft. comprised in S. Nos. 37/4 & 37/5 with the 1^st Defendant Bank. I also perused the Impugned Sale Notice dated 24.01.2022 and Sale held on 21.01.2022 issued by the 1^st Defendant Bank for recovery of sum of Rs. 39,42,587/- (Rupees Thirty-Nine Lakhs FortyTwo Thousand Five Hundred and Eighty-Seven only) from the Applicants. Wherein the Schedule of Property mentioned in the Sale Notice is the same as mentioned in the Memorandum of Deposit of Title Deeds. Moreover, this Tribunal has also appointed an Advocate Commissioner vide IA No. 2096/2024 and directed him to inspect the mortgaged property with the help of area surveyor, whether un-divided portion of landed property and superstructure owned by Mr. Rajesh Kanna is included or not. The Advocate Commissioner after inspecting the Schedule Mentioned Property and reported as follows: “Upon survey of the suit property, both the extent in the revenue records & Memorandum of Deposit of Title Deeds measures accurately and there is no any deviation in the measurement but the Superstructure of Royal Enfield Show Room building & Vijay Anand Traders partly situated in the Suit property & partly situated in RS No. 37/6 ”. The Applicants further stated that

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although the landed property was registered in the individual name of the partners, the superstructure, i.e., the Marriage Hall was constructed by the partnership firm as such the above marriage hall is that of the partnership firm and even till now it remains undivided. Further, the Applicants in their Written Arguments stated that in the Partnership deed No. 516 of 2014 dated 18.09.14, the partnership was fixed at 2/3^rd share is held by Mr. V. Rajasekaran and 1/3^rd share is held by Mr. K. Rajeshkanna. However, the Applicants have not filed the Partnership deed, whereas they have filed only the copy of Acknowledgement of Registration of firm M/s. Rajarajeswari Marriage Hall dated 14.10.2014 (Page no. 16 of Applicants’ main SA). However, a partnership deed can be considered to only for their business share and no partner can claim over the share of the property.

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I also find that the Applicants themselves have claimed in their Written Arguments at page no. 2, “although the landed property were registered in the individual name of the partners, the superstructure, i.e., the Marriage Hall was constructed by the partnership firm as such the above marriage hall is that of the Partnership Firm and even till now it remains undivided”. However, the Applicants have not filed any substantial evidence to prove that the Marriage Hall was constructed by the Partnership Firm. Hence, I do not find any irregularity in issuance of Sale Notice dated 24.01.2022 in respect of Schedule Mentioned Property. I also find that the Applicants have claimed that that Defendant Bank failed to maintain the loan account and failed to credit the loan amounts paid by the Applicants to the loan accounts. However, the Applicants have not filed any evidence to prove their allegations.

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I also find that the Applicants’ account has been declared as NPA on 30.12.2017. Thereafter, the Defendant Bank has issued Demand Notice dated 08.01.2018 U/s. 13(2) of the SARFAESI Act for a sum of Rs. 23,44,402/(Rupees Twenty-Three Lakhs Forty-Four Thousand Four Hundred and Two only). The Defendant Bank has also filed xerox copies of AD Cards for having delivered the Demand Notice dated 08.01.2018 to the Applicants (page nos. 19 to 23 of Bank’s Typed set of Papers). However, I find that the 1^st Defendant

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SA No.248/2022

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Bank has failed to file the original AD Cards as a proof for having delivered the Demand Notice dated 08.01.2018 to all the parties concerned. I also find that the xerox copies of AD cards filed by the 1^st Defendant Bank do not have the full address of the 2^nd & 3^rd Applicants as mentioned in the Demand Notice dated 08.01.2018. Moreover, the 1^st Defendant Bank has not filed the copy of AD card for having sent the Demand Notice to the 1^st Applicant Partnership Firm M/s. Raja Rajeswari Marriage Hall, Tiruchirapalli, because address of 1^st Applicant & 2^nd Applicant are different. I also find that the Applicants have also not discussed about the receipt of Demand Notice dated 08.01.2018 in their pleadings. Further, I have verified the Demand Notice dated 08.01.2018, wherein the complete details of the Schedule Mentioned Impugned Properties are not available. Apart from that the Applicants in their typed set of papers have filed one more Notice u/s. 13(2) of SARFAESI Act dated 29.01.2019 issued by the 1^st Defendant Bank u/s. 13(2) of the SARFAESI Act to the Applicants, wherein the outstanding amount as on 27.01.2019 was given as Rs. 23,53,685/- (Rupees Twenty-Three Lakhs Fifty-Three Thousand Six Hundred and Eighty-Five only), which was signed by the Branch Head of the 1^st Defendant Bank (Page nos. 18 & 18a of Applicants’ main SA), wherein it is mentioned as “ Due to non-payment of interest and installments in the loan account, the account became irregular on 30.09.2017 and subsequently turned into NPA on 30.12.2017. Further, we note with concern that you have not taken any efforts to regularize/close the account despite our repeated reminders, even though you are running the marriage hall in successful manner…..In this connection, you are hereby called upon to regularize/close the account within seven days from the date of receipt of this letter, failing which we shall be constrained to take possession of the hypothecated goods and auction the same to realize the loan amount as per the Terms and Conditions of the hypothecation Agreement duly executed in favour of us thereby authorized us to take possession and sale of goods hypothecated in case of default….). The said Notice was issued after the issuance of 1^st Sale Notice dated 14.11.2018 & before issuance of 2^nd Sale Notice dated 06.02.2019. Hence, it is established that there are some irregularities in issuance of Demand Notice dated 08.01.2018 to the Applicants and the said Demand Notice was not duly served on the Applicants.

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SA No.248/2022

¶101

Further I find that the 1^st Defendant Bank has issued Possession Notice dated 25.04.2018 u/s. 13(4) of the SARFAESI Act. I also find that the Bank has filed original Paper Publication of Possession Notice in both English & Tamil dailies (page nos. 2 & 3 of Additional typed set filed by bank) & original photos showing the affixture of Possession Notice dated 25.04.2018 (page no. 1 of Additional typed set filed by bank). However, it is not clearly shown in the photo that on which date and on which property it was affixed. But it is handwritten as “Affixture of Possession Notice on 25.04.2018”. Moreover, the 1^st Defendant Bank has not filed AD Cards as a proof for having delivered the Possession Notice dated 25.04.2018 to the Applicants as required under Rule 8(1) of Security Interest Enforcement Rules, 2002, which clearly says, "8. Sale of immovable secured assets.

¶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, I find that the 1^st Defendant Bank has issued 1^st Sale Notice dated 14.11.2018. The Applicants also admitted that they have received the same. However, the Defendant Bank in their notes of arguments submitted that the said sale did not take place for want of bidders. Then the Bank issued 2^nd Sale Notice dated 06.02.2019 fixing the auction sale on 07.03.2019, the said sale also did not take place for want of bidders. Thereafter, the Bank issued 3^rd Sale Notice dated 05.07.2019 fixing the auction sale on 29.07.2019, the said sale also did not take place for want of bidders.

¶104

Finally, the 1^st Defendant Bank has issued the impugned 4^th Sale Notice dated 24.01.2022 by fixing the auction Sale on 21.02.2022 for a sum of Rs. 1,59,08,000/- for recovery of sum of Rs. 39,42,587/- (Rupees Thirty-Nine Lakhs Forty-Two Thousand Five Hundred and Eighty-Seven only). I find that the Bank has filed original Paper Publication made in Both English & Tamil dailies of the Sale Notice (page nos. 31 & 32 of Bank’s Additional Typed set of paper). I also find that the Defendant Bank has filed the xerox copies of AD Cards (page nos. 36 to 38 of Bank’s Typed set of paper) as a proof for having delivered the Sale Notice dated 24.01.2022 to the Applicants. However, I find

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SA No.248/2022

¶107

that the Defendant Bank has not filed original AD Cards to prove the authenticity of the AD Cards and the AD cards do not bear the complete address of the Applicants and it is also not clear that who has signed in the AD Card. The Bank has also filed original photo showing affixture of Sale Notice (page no. 30 of Bank’s Additional Typed set of paper). However, it is not clearly shown in the photo that on which date it was affixed. But it is handwritten as “Affixture of Sale Notice on 24.01.2022”. Therefore, it is clear that the 1^st Defendant Bank has not followed the proviso of Rule 8(7) & Rule 9(1) of Security Interest (Enforcement) Rules 2002, which clearly say that,

¶108

"8 (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;

¶109

Rule 9. Time of sale, issue of sale certificate and delivery of possession, etc.

¶110

"[(1) No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) of rule 8 or notice of sale has been served to the borrower:

¶111

Provided further that if sale of immovable property by any one of the methods specified by sub rule (5) of rule 8 fails and sale is required to be conducted again, the authorized officer shall serve, affix and publish notice of sale of not less than fifteen days to the borrower, for any subsequent sale.]"

¶112

I also find that vide the Impugned Auction Sale Notice dated 24.01.2022, the 1^st Defendant Bank has sold Schedule Mentioned Properties, total Fair Market value has been given as Rs. 1,86,29,000/- in the Valuation Report dated 16.07.2021 (Page nos. 33 to 55 of Additional typed set of papers filed by the 1^st Defendant Bank) and Valuation Report dated 01.12.2021 (Page nos. 56 to 74 of Additional typed set of papers filed by the 1^st Defendant Bank), wherein the Present Market value has been given as Rs. 1,54,06,688/-. The Bank has given reserve price of Rs. 1,59,08,000/- for recovery of meagre amount of Rs. 39,42,587/-. Further, these Valuation Reports are not done in consultation with the secured creditor because there is no signature of the Branch Manager and also no proof has been filed to this effect, so how the Authorized Officer has sold the property without the consultation of the secured creditor. Hence, the 1^st Defendant Bank has failed to prove that they have strictly adhered to the Rule 8 (5) of Security Interest (Enforcement)

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SA No.248/2022

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Rules 2002, which clearly says:-

¶116

"(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" .

¶117

I also find that although the Applicants have challenged the Impugned Sale held on 21.02.2022, 1^st Defendant Bank has not produced any documentary evidence, such as Sale confirmation letter, Sale Certificate, etc., for having sold the Impugned property to the 2^nd Defendant/Auction Purchaser for a sum of Rs. 1,59,33,000/- (Rupees One Crore Fifty-Nine Lakhs and Thirty-Three Thousand only). However, I find that the Applicants in main SA have filed a Sale Intimation letter dated 23.03.2022, wherein the 1^st Defendant Bank has adjusted an amount of Rs. 41,15,022/- as on 23.03.2022 out of the total sale amount of Rs. 1,59,33,000/- and surplus amount of Rs. 1,12,37,168.59p has been sent through DD No. 340465 dated 24.03.2022. But the Defendant Bank has not filed any evidence for having paid the said amount to the Applicants. Moreover, the Applicants in their pleadings stated that they have not received the said DD. Hence, it is established that the 1^st Defendant Bank has not proved that they had paid the said amount through DD to the Applicants’ account.

¶118

I also find that during the adjudication of the case, the Applicants have filed Writ Petition, challenging the Impugned Order passed by the Ld. CJM, Tiruchirapalli in Crl.M.P.No. 28865 of 2022 dated 13.10.2023 before the Hon'ble High Court of Madras (Madurai Bench) in W.P(MD) No. 25998 of 2023 dated 26.10.23, which was disposed by the Hon'ble High Court vide Order dated 26.10.2023 with directions of mentioning that the Applicants shown his bonafide by producing a DD for a sum of Rs. 10.00 Lakhs favoring the bank and the Applicants are ready to pay the balance amount by the next day evening itself. Hence, the Hon'ble High Court directed the Applicants to deposit the entire amount of Rs. 41.00 Lakhs to the credit of SA No. 248 of 2022 on the file of DRT, Madurai by the evening on the date of 27.10.2023. The Applicants have also made the payment of Rs. 41.00 Lakhs in favour of “THE REGISTRAR, DRT, MADURAI”. The Applicants have also made the

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SA No.248/2022

¶121

payment of Rs. 41,00,000/- vide DD Nos. 000413, 000414 & 000415 vide Memorandum dated 27.10.2023. And, as per the directions of Hon'ble High Court of Madras (Madurai Bench), the Registry of DRT, Madurai has sent all the above DDs of Rs. 41,00,000/- (Rupees Forty-One Lakhs only) to the “The Bank Manager, Tamilnad Mercantile Bank Ltd., Othakkadai Branch, Madurai” to deposit the same in interest bearing “No lien account” for a period of 3 months in the name of “The Registrar, DRT, Madurai-SA No. 248/2022”.

¶122

I also find that as per the directions of the Hon'ble High Court of Madras (Madurai Bench) vide Order dated 26.10.2023, the Applicants had filed SA No. 675/2023 challenging the Impugned Order dated 13.10.2023 made in Crl.M.P.No. 28865 of 2022 passed by the Ld. CJM, Tiruchirappalli, which was later on informed by the Applicants, in the presence of Counsel for the Defendant Bank and before this Tribunal that the Ld. CJM has closed the Application filed u/s. 14(1) & (2) of SARFAESI Act on 16.05.2024 in Cr.M.P.No. 28865/2022, hence, the SA becomes infructuous and prayed that SA may be closed as infructuous. Hence, this Tribunal has closed the SA No. 675/23 along with all connected pending IAs vide Order dated 06.06.2024.

¶123

In view of the above discussion, it is observed that it is true that the Applicants are a defaulter in payment of loan amount and as such Bank has every right to sale the property and to adjust the sale proceed in the loan account without intervention of the Court but the Bank shall not be allowed to sale the property without following the due process of law because property is the constitutional right of an individual. Since the 1^st Defendant Bank has not been able to rebut the allegations of Applicants as such, I find that Applicants have proved the case in their favour. Hence, this SA is liable to be allowed.

¶124

In the result ,

¶125

SA No. 248/2022 is allowed. No costs. Accordingly, the Sale Notice dated 24.01.2022 and sale held on 21.02.2022 is hereby set aside. The 1^st Defendant Bank is directed not to include the expenditures incurred in issuance of Sale Notice dated 24.01.2022 in the loan account of the Applicants.

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SA No.248/2022

¶128

The 1^st Defendant Bank is directed to deposit the amount of Rs. 41,00,000/- (Rupees Forty-One Lakhs only), along with interest till date which was deposited in the Tamilnad Mercantile Bank Ltd., Madurai by the Registry of DRT, Madurai vide letter dated 30.10.2023 in pursuance of Orders passed by the Hon'ble High Court of Madras (Madurai Bench) dated 26.10.2023 in WP(MD) No. 25998/2023 and WMP (MD) Nos. 22374 & 22375/2023 and adjust the amount in the loan account.

¶129

If the Bank has issued any Sale Certificate in respect of the impugned Sale Notice dated 24.01.2022 which is also hereby set aside. The Expenditure incurred towards the issuance of Sale Certificate, if any shall not be included in the loan account of the Applicants.

¶130

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.

¶131

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.

¶132

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

¶133

Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 25^th February 2026.

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sd/-

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(SEEMA SINHA) PRESIDING OFFICER

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Dictated & corrected by me

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sd/-

¶138

(SEEMA SINHA) PRESIDING OFFICER Typed by me