Allowed

Nanda Kumar v. versus Reliance Commercial Finance Ltd.

DRT19 Feb 2026SA/256/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the application filed by borrowers to set aside a possession notice issued by the bank. The court found that the bank failed to comply with mandatory rules regarding the publication and affixation of the notice on the property, rendering it invalid.

What did the court decide?

Possession notice dated 06.03.2024 set aside; Defendant Bank directed not to include expenditure incurred in issuance of Possession Notice.

Nanda Kumar v versus Reliance Commercial Finance Ltd. — Banking and Recovery | DRT (2026)

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SA No.256/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 19^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. 256/2024

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Mr.Nanda Kumar V, No.2/159, Vellapommanpatti Velvarkottai, Thummalangundu Dindigul - 624 802.

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Mrs.Dhanalakshmi V, No.2/159, Vellapommanpatti Velvarkottai, Thummalangundu Dindigul - 624 802.

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Mrs.Murugeswari V, No.290/2A, Vellabommanatti, Vendsandur Taluk, Velvarkottai, Vadamadurai, Dindigul – 624 802.

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Mr.Veerasamy M, No.2/159, Vellapommanpatti Velvarkottai, Thummalangundu Dindigul - 624 802.

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Mr.Vijayakumar M, No.290/2A, Vellabommanatti, Vendsandur Taluk, Velvarkottai, Vadamadurai, Dindigul – 624 802.

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--- Applicants

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-Vs-

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The Authorized Officer, Reliance Commercial Finance Limited Home Finance Division,

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Page 1 of 11

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SA No.256/2024

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Value Co-work 444, first floor, 9th main Road, Managiri, KK Nagar, (Upstairs Bhils Bistro Bakers) Near HDFC Ltd, Madurai-625 020. --- Defendant Bank

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Appearance of Advocates: Mr.M.Arun Murugan. ---- Counsel for the Applicants Defendant Bank sets Ex-parte.

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This SARFAESI Application was heard in the presence of Counsel for the Applicants and the Defendant Bank for passing final order before me and upon hearing the arguments of the Counsel for the Applicants 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 set aside the Possession Notice dated 06.03.2024 in respect of scheduled property and quash the same as illegal, perverse, arbitrary and against the principles of natural justice.

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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 on 29th July 2017, the Applicant secured a business loan amounting to Rs.13,50,000/- from the Defendant. The loan agreement stipulated a monthly instalment of Rs.26,051/- for a duration of 84 months. This financial arrangement provided the Applicant with essential capital to pursue entrepreneurial endeavors, allowing investment in the growth and development of the business over an extended period.

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Page 2 of 11

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SA No.256/2024

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a) For the abovementioned loan, Mr.Vijaykumar pledged his highly valuable property as collateral for the partnership firm. However, it is noteworthy that the Defendant’s sanction letter did not explicitly specify the commercial building or its measurements as part of the collateral. This omission may potentially raise concerns regarding the clarity and comprehensiveness of the loan agreement, particularly with respect to the exact assets offered as security.

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b) It is submitted that initially the Applicant’s business was thriving, with consistent and timely payment of EMIs. However, the unforeseen onset of the COVID-19 pandemic inflicted significant losses on the business, disrupting its operations and financial stability. Despite the Applicant’s best efforts, these unprecedented circumstances led to a sharp decline in revenue, making it increasingly difficult to meet loan obligations. As the pandemic persisted, market conditions further deteriorated, exacerbating the financial strain on the business. Additionally, shortage of manpower due to various factors further compounded the challenges faced by the Applicant. Consequently, the combined effect of these factors rendered the Applicant unable to maintain the earlier repayment schedule, thereby necessitating a reassessment of the loan repayment plan in light of the prevailing economic realities.

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c) It is submitted that subsequently, on 30^th October 2023, the Defendant purportedly issued a demand notice in respect of the outstanding loan payments. However, it has come to light that no such notice was received by the Applicant. This absence of communication raises serious concerns regarding procedural irregularities. In the absence of proper notification and an opportunity for dialogue, the Applicant’s ability to

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Page 3 of 11

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SA No.256/2024

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address the alleged outstanding issues or negotiate alternative arrangements is compromised.

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d) It is submitted that, regrettably, the Applicant was not afforded any opportunity for loan restructuring or waiver in accordance with the Reserve Bank of India guidelines. Furthermore, no provision was given for the Applicant to settle the account under a one-time settlement scheme. This failure to provide avenues for negotiation and resolution contravenes established regulatory norms aimed at ensuring fair and transparent practices in the banking sector.

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e) It is submitted that by denying the Applicant the opportunity to explore alternatives such as restructuring or settlement, the Defendant has overlooked potential solutions that could have alleviated the financial burden on both parties. Adherence to regulatory guidelines and fair lending practices is essential to safeguarding the interests of applicants and maintaining trust in the banking system.

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f) It is submitted that during the interim period, without affording the Applicant any opportunity for resolution or negotiation, the Defendant abruptly initiated arbitration proceedings before the sole arbitrator in Arbitration No. 211 of 2023. The Defendant thereafter swiftly obtained an order dated 16^th January 2024, which further exacerbated the challenges faced by the Applicant’s business.

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g) It is submitted that this sudden legal action, taken without prior discussion or mediation, has inflicted undue hardship on the business, depriving the Applicant of the opportunity to present their case or explore potential alternatives. The lack of procedural fairness and absence of an opportunity for dialogue underscore the urgency of equitable and transparent dispute

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Page 4 of 11

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SA No.256/2024

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resolution mechanisms within the banking sector, to ensure that all parties are treated fairly and justly.

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h) It is submitted that following the arbitration order, on 6^th March 2024, the Defendant allegedly issued a possession notice without providing any prior notice to the Applicant. This action appears to contravene legal provisions, as the notice failed to include essential details, such as the measurements of the commercial building, an omission that could significantly affect the validity and enforceability of the notice.

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i) It is submitted that, additionally, it has come to light that the Defendant failed to comply with statutory requirements regarding the publication and affixture of the possession notice, as mandated by the relevant laws and regulations. Specifically, the Defendant neglected to publish the possession notice in accordance with the applicable Act and rules. Furthermore, the Defendant did not affix the notice on any conspicuous part of the building, as required under the legal provisions.

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j) It is submitted that the entirety of the actions taken under the SARFAESI Act against the Applicants stands in flagrant violation of legal principles and the fundamental tenets of natural justice. By failing to adhere to statutory provisions, including proper notification procedures and the provision of opportunities for negotiation and settlement, the actions taken by the Defendant are manifestly illegal.

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k) It is submitted that the possession notice issued by the Defendant is unequivocally illegal and warrants immediate action of set-aside in accordance with the provisions of law. The notice fails to meet the requisite legal standards, as it disregards crucial procedural requirements, including

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Page 5 of 11

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SA No.256/2024

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publication and affixation on conspicuous part of the building, as mandated by the relevant statutes and regulations.

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l) It is submitted that the Bank’s possession notice issued without specifying the address and without serving any notice to the Applicant, constitutes a clear breach of legal requirements and fundamental principles of fairness. The absence of a specified address renders the notice ambiguous and inadequate, failing to provide the Applicant with essential information necessary to understand the scope and implications of the action taken by the Bank.

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m) It is submitted that the Applicant states that, without prejudice to the foregoing contentions, the notice is illegal, wholly misconceived, and baseless, having been issued in contravention of the object, purpose, and provisions of the SARFAESI Act under which it is purported to have been issued, inter alia, on the following grounds:

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The arbitrary actions of the Defendant Bank in issuing the Demand Notice, Possession Notice, and Auction Sale Notice, and in declaring the account as NPA, are unfair and constitute a violation of Articles 14, 19(1), and 21 of the Constitution of India.

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The Defendant failed to send the Demand Notice in accordance with mandatory provisions of law, demonstrating arbitrariness and illegal exercise of powers.

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The repayment and closure of the loans have been suppressed by the Bank.

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The Defendant failed to acknowledge that the Applicant and other borrowers are not willful defaulters. Unless classified

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Page 6 of 11

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SA No.256/2024

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as a willful defaulter under the NPA Act, the Bank is not justified in issuing notices under the SARFAESI Act.

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It is evident from the account statements that most of the loan accounts have been settled and closed. Yet, the Bank, without providing an opportunity to carry on business, issued notices demanding the entire outstanding amount, constituting arbitrary exercise of power.

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Despite regular payments, the Defendant ought not to have issued SARFAESI notices, as the Applicant had settled most of the loans even after the Demand Notice, with settlement and closure letters having been issued.

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The right to hold property is both a constitutional and human right. No person can be deprived of property except in accordance with statutory provisions, as categorically held by the Hon’ble Supreme Court of India in Ram Kishan & Others v. State of U.P. and Others, IV (2012) BC 527 (SC). This judgment has been flagrantly violated by the Defendant.

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The Defendant Bank neither affixed the Possession Notice on a conspicuous part of the building nor published it in any newspaper, thereby violating mandatory provisions under the Security Interest (Enforcement) Rules.

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The Defendant failed to serve the Possession Notice to the Applicant and did not mention the address of the property in the notice.

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The Defendant failed to specify the exact secured debt as required under Rule 8(7)(b) of the Security Interest (Enforcement) Rules, 2002.

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Page 7 of 11

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SA No.256/2024

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Under Section 13 of the SARFAESI Act, the Bank is required to disclose in the notice the measures it will take regarding the maintenance and upkeep of the property, along with a full description of the property. No such details have been provided.

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The impugned notice issued by the Defendant violates Rule 3(4) and Rule 8(2) of the Security Interest (Enforcement) Rules, 2002, and is therefore invalid and not a notice in the eyes of law.

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The Defendant failed to mention the actual measurement of the building and violated the mandatory provisions of the law.

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DESCRIPTION OF THE IMMOVABLE PROPERTY

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All that part and parcel of the commercial building bearing Door No. 2/290A, Vellapommanpatti, Thummalagundu, Vadamadurai, Dindigul624 802, Dindigul Bazar.

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Description of Property: The Schdule - B Referred to hereinabove, the immovable properties Dindigul District, Palani Registration District, Vadamadurai sub Registration District, Vadasandur Talk, Velvarkottal Village. Ayan punjai survey No. 450/2B, in 0.065. hectors in eastern measuring 3488 sq.ft. i.e. 324 sq.meter (i.e. 8 cents ) out of 16 cents land and house site bounded within the following four Boundaries:

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North By - House of Rajaram.

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East By - House of Muthukrishnan

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South By - House of Vallichamy and 15 feet wide East – West common road.

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West By - Settlement property of M.Maheswaran.

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Within these land measuring 8 cents le. 3488 sq.ft i.e. 324sq.meter of the vacant house plot.

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Page 8 of 11

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SA No.256/2024

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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
1.	29.07.2017	Sanction Letter
2.	06.03.2024	Possession Notice

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3. On the other hand, the Counsel for the Defendant Bank appeared before this Tribunal and undertook to file a Vakalatnama but failed to do so. Subsequently, he remained absent; despite being called in open court, he did not appear and was therefore set ex parte on 21.01.2025.

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

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I. Whether the Applicant has been able to prove his case in his favour?

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II. Whether the Applicant is entitled to get the reliefs as prayed for?

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5. Having heard the parties and after going through the entire documents available on records, I find that the Applicants have availed the Cash credit facilities for a sum of Rs.13,50,000/- (Rupees Thirteen Lakhs Fifty Thousand only) from the Defendant Bank in the year 2017 for their business purpose by mortgaging the Schedule Mentioned Property. It is further stated that, Initially, the Applicants were regular in repayment as agreed to the Defendant Bank. It is admitted by the Applicants in their pleadings that due to heavy loss in the business and Covid - 19, they could not repay the loan amount properly and hence the Defendant Bank classified the loan account as NPA and proceeded under SARFAESI Act. Thereafter, the Defendant Bank issued Demand Notice dated 30.10.2023 U/s. 13(2) of SARFAESI Act for a sum of Rs. 22,11,140/- (Rupees Twenty Two Lakhs Eleven Thousand One Hundred and Forty only). Further, the Defendant Bank has issued Possession Notice dated 06.03.2024 U/s. 13(4)

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Page 9 of 11

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SA No.256/2024

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of SARFAESI Act. The Applicants have contended that the Defendant Bank has not followed the Rules and Act in issuing the Demand Notice and Possession Notice and Auction Sale Notice. On the Other hand, the Defendant Bank though appeared but did not adduce any evidence to rebut the contention of the Applicants. However, I find that Applicants have filed only Sanction Letter and Possession Notice but he has not filed any prove that Defendant Bank has issued Auction Sale Notice. So far Possession Notice is concerned, It is issued by the Bank on 06.03.2024 for an amount of Rs.22,11,140/- (Rupees Twenty Two Lakhs Eleven Thousand One Hundred and Forty only). On the Other hand, Defendant Bank has not filed any document to rebut the contention of the Applicants that he has followed the Rules and Act in issuance of Possession Notice. No Proper Paper Publication and Affixture of Possession Notice on the conspicuous part of the property has been filed. Hence I find that Applicants have been able to prove their case. I also find that this Tribunal had granted a conditional stay order dated 09.04.2024 for a sum of Rs.7,74,000/(Rupees Seven Lakhs Seventy Four Thousand Only) to be paid in two instalments by the Applicants and the Applicants have filed Proof of Payment for having complied with conditional order and proved their bonafide.

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In the result ,

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SA No. 256/2024 is allowed. No costs. Accordingly, the Possession Notice dated 06.03.2024 is hereby set aside and Defendant Bank is directed not to include the expenditure incurred in issuance for Possession Notice.

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The Defendant Bank is at liberty to initiate fresh action against the Applicants for recovery of loan amount following the Rules & Act strictly.

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Page 10 of 11

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SA No.256/2024

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

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Dictated to MTS (KK), taken down, transcribed, typed by him, corrected and pronounced by me in the Open Court in this the 19^th February 2026.

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Sd/- (SEEMA SINHA) PRESIDING OFFICER

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Uploaded on 02.03.2026

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Page 11 of 11

Nanda Kumar v. versus Reliance Commercial Finance Ltd.

Case brief

What is this about?

What did the court decide?

Nanda Kumar v. versus Reliance Commercial Finance Ltd.

Case brief

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