Dismissed

S. Karthikeyan v. LIC Housing Finance Ltd.

DRT2 Jun 2026SA/275/2024

Case brief

AI extract

What is this about?

In SA No. 275/2024, the Debt Recovery Tribunal dismissed an application challenging a possession notice issued under Section 13(4) of the SARFAESI Act. The court held that the Respondent bank complied with all statutory procedures, including NPA classification, notice service, and newspaper publication.

What did the court decide?

The Securitization Application (SA No. 275/2024) is dismissed along with two interim applications.

S. Karthikeyan versus LIC Housing Finance Ltd. — Banking and Recovery | DRT (2026)

SA No.275/2024

02.06.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 02^nd day of June, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 275 of 2024

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Mr. S. Karhikenyan Old Door No.19, New Door No.4 Subbarayan Street Old Washermanpet Chennai-600021

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…Applicant

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-Vs-

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The Authorised Officer, LIC Housing Finance Limited Harrington chambers Block No.C, No.30/1A Abdul Razack 1^st Street Saidapet, Chennai-600015

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…Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. C. Balaji, A. Ramesh Babu, M. Dinesh, E. Sudhakar.

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Counsel for Respondent: M/s. Ramalingam & Associates

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ORDER ON SA No.275/2024

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The present Securitization Application [SA] is filed under sub section [1] of S.17 of the Securitization and Reconstruction of Financial Asset and Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging

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

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SA No.275/2024

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The applicant has challenged the Sec.13(4) Possession Notice dated 21.03.2024 and the outstanding amount due as per Possession notice is Rs.42,61,294.87p/-.

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The applicant is the borrower had availed a housing loan of Rs.35 Lakhs during in the month of October 2017 and had deposited the title deeds of the property to secure the credit facility availed. Applicant was regularly repaying the interest and defaulted due to the medical expenses of his wife and also due to devastating economic disruption which led to the business loss.

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3.1 The Authorized Officer of the respondent bank have issued the Section 13(2) Notice on 02.11.2023 under the SARFAESI Act claiming a sum of Rs.42,61,294.87p/- due as on 02.11.2023. The account has been classified as NPA on 10.09.2023 calculating the first unpaid premium on 10.06.2023, hence, the issuance of Section 13(2) is wrong and in violation of RBI guidelines and place d reliance on the Hon’ble High Court of Kerela in M. J .Betty vs Union Bank of India, contending that when power is conferred on an authority is exercised in an arbitrary manner the court is entitled to examine the manner in which the power has been exercised.

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3.2 It is found that there has been illegal exercise of power, the court will hold that the power conferred is not for exercised in the manner it has been done. Statutory power conferred for public purpose is conferred as it were upon trust, not absolutely and can validity be used only in the right and

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SA No.275/2024

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proper way which parliament when conferring it is presumed to have intended.

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3.3 In this case the bank has exercised the power conferred under the provisions of the Act in a most arbitrary manner and therefore all further action taken by them against the petitioners has to be declared null and void.” Therefore, the classification of the account as NPA by the respondent is illegal and contrary to principles of natural justice.

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3.4 Further, the demand Notice dated 02.11.2023 is issued under the wrong provision, though the applicant has sent an objection dated 17.11.2023 under Section 13(3-A). The bank has sent a reply on 07.12.2023 much beyond the statutory period of 15 days. Subsequently, the respondent have issued a possession notice dated 21.03.2024, which was not affixed on the property and claims to have taken the symbolic possession of the property.

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3.5 The respondent have claimed an exorbitant amount due in the Section 13(4) notice without considering payments made then it would disprove the claim made in the Section 13(4). It is contended that bank has not served the demand notice and the possession notice to all the borrowers and the guarantors violating Rule 3(4) of the Security Interest (Enforcement) Rules, nor affixed the possession notice not published in the two newspapers which is in violation of Rule 8(2) of the Security Interest Rules.

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SA No.275/2024

02.06.2026

3.6 Applicant approached the respondent on 19.10.2023 to settle the entire due under one time settlement but the bank has not considered this request and were only interested to sell the property. Hence, the applicant has challenged the possession notice and prays for setting aside of the possession notice dated 21.03.2024.

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The respondent bank filed detailed counter contending that the present application is neither maintainable in law nor in facts and the respondent has complied with all the mandatory procedures under the Act and the Rules.

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4.1 It is the case of the bank that the applicant availed a housing loan of Rs.35 Lakhs which was secured by the mortgage of the property by way of Memorandum of Deposit of Title Deeds dated 07.12.2017 registered as Doc.No.3694 of 2017 in the file of the SRO, Royapuram.

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4.2 Applicant at that availing the loan, had availed One-Time restructuring as a COVID-19 relief and a moratorium of 24 months from June 2021 to May 2023. Though the applicant availed COVID relief defaulted in the repayment of the monthly dues and the arrears of the month of June, July, and August of year 2023 remained unpaid for more than 90 days. Hence, the loan account was classified as a NPA on 10.09.2023 as per the RBI guidelines. Further, the bank has issued the demand notice dated 02.11.2023 calling upon the applicant to pay the entire outstanding amount due within 60 days.

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SA No.275/2024

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4.3 The demand notice duly served on the applicant and the acknowledgement cards evidences the same. The applicant have raised their objections vide letter dated 17.11.2023 and the same was served on the bank on 21.11.2023 which is replied on 07.12.2023 rejecting all the allegations made in the objections. The reply was also duly served on the applicant. As the applicant failed to liquidate the liability, bank has proceeded in issuing the possession dated 21.03.2024 which is duly served on the applicant and the acknowledgement cards are evidences the same.

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4.4 The possession Notice dated 21.03.2024 is affixed in the property and also published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” dated 28.03.2024. However, the applicant has challenged the possession notice in the present SA with false and frivolous allegations. The contention that the applicant was paying prompting interest on the credit facility is denied and as the applicant committed default in the repayment that account was classified as NPA.

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4.5 The allegation that the respondent have charged exorbitant interest without giving credit to the payments made are absolutely baseless. The contention that the demand notice has issued under a wrong provision is denied as Section 13(2) notice is issued under the SARFAESI Act. The account was classified as NPA strictly adhering to the RBI guidelines and the applicant has quoted portion of the judgment which is not applicable to the present case.

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SA No.275/2024

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4.6 In fact, the applicant has also raised objections to the Section 13(2) which is duly replied by the bank and the payments made on given due credits to the loan account and the respondent bank has followed all the measures in accordance with the Act. The total outstanding amount due as on 16.11.2024 is Rs.49,91,866.82/- and the respondent have proceeded under the Act by following all the procedures as mandated under the Act. Hence, the respondent prays for dismissal of the SA.

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Heard both sides of the Counsels and perused the records of the case.

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It is an admitted fact that the applicant had availed a housing Loan of Rs.35 Lakhs and had created the mortgage by deposit of title deeds which is not disputed by the applicant herein. The bank has produced the Memorandum of Deposit of Title Deeds dated 07.12.2017 registered as Doc.No.3694 of 2017 favoring the respondent bank which is a secured asset.

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5.1 As the applicant defaulted in the repayment, the respondent as secured creditor has initiated measures under the SARFAESI Act after classifying the account as NPA.

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5.2 The applicant sought for restructuring of the loan admitting the liability vide application dated 07.09.2021 which is produced at Page No.14 and the same was considered by the respondent and sanctioned the onetime restructuring as COVID-19 relief with a moratorium of 24 months from June 2021 to May 2023 which admittedly availed by the applicant.

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SA No.275/2024

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However, the applicant committed default in the repayment of the monthly dues and the arrears of the month of June, July, August of 2023 fell unpaid which is more than 90 days, hence, the respondent as per the RBI guidelines have classified the loan account as NPA on 10.09.2023.

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5.3 The applicant’s contention that the classification of account as NPA was calculated FUP on 10.06.2023 without considering the EMI paid on 10.09.2023 cannot sustain. The applicant reliance on the Kerala High Court judgment is not applicable in the present case as the applicant has defaulted in the repayment for the month of June, July, August of 2023 and the account remained unpaid for a period of more than 90 days. Hence, the classification of the account as NPA is in accordance with the RBI guidelines.

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5.4 Further the applicant has taken a contention that Section 13(2) notice is not served on all the borrowers and the guarantors, on the contrary the applicant on receipt of the Section 13(2) have raised objections to the Section 13(3-A) vide letter dated 17.11.2023 under Section 13(3-A) which is produced at Page No.29 to 35.

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5.5 It is seen from the Section 13(3-A) objections that the applicant admits the liability and denies the authority in issuing the Section 13(4) notice and the claim made in the Section 13(2) notice. However, the Respondent have replied to the objections raised by reply dated 07.12.2023 clarifying all the objections raised by the applicant and have also clarified that the EMI amount from 10.06.2023 was not serviced and the account was found to be default for more than 175 days. Hence, the respondent

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SA No.275/2024

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have classified the loan account as NPA as per RBI guidelines and there is no arbitrariness or violation of the RBI guidelines.

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5.6 In fact, the respondent have also clarified the outstanding amount due and on failing to make the repayment of the outstanding amount due the respondent would initiate appropriate proceedings under the Act. Though it is seen from the Section 13(2) demand notice that applicant is the only borrower and the guarantor. Hence, the contention that notices are not served on all the borrowers and the guarantors cannot sustain.

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5.7 As the applicant did not liquidate the liability within the period of 60 days, the bank has proceeded further in issuing Section 13(4) possession notice and the possession notice is received by the applicant which is challenged in the present SA. The Possession notice is duly served on the applicant as per the postal acknowledgement card at Page No.39 and the possession notice is affixed on the property as per the photograph at Page No.40 and 41 and published in the two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” which they have mentioned in the counter as prescribed under the Act. Thus the secured creditor established the due compliance of the procedures in issuing Section 13(2) demand Notice under Rule 3 and the issuance of the Section 13(4) possession notice under Section 13(4) and Rule 8 of the Act.

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5.8 Though the applicant have challenged the Section 13(4) possession notice has failed to point out any illegality in the measure, on the other hand, the respondent have duly established the compliance of the

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SA No.275/2024

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procedures as mandated under the Act and Rules. Hence it is concluded that the Sec.13(2) Demand Notice dated 02.11.2023 and Sec.13(4) Possession Notice dated 21.03.2024 are valid notices issued by the secured creditor as per the procedure as described under the Act and rules made there under.

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5.9 For the foregoing reasons the present SA is liable to be dismissed and accordingly, SA stands dismissed. IA.No.810.2024 filed for urgent hearing and IA.No.811.2024 filed for stay is also dismissed as infructuous. Interim

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Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

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Sd/- (S.V. GOWRAMMA) PRESIDING OFFICER,

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DRT-III, CHENNAI

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(Dictated to Steno (Arti), transcribed by her, corrected, signed and pronounced by me on this the 02^nd day of June, 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	Document No.
1.	Demand Notice issued by the Defendant Bank U/s 13(2) of SARFAESI Ordinance, 2002 dated 02.11.2023	A-1
2.	Applicant’s reply under Sec 13(3-A) of SARFAESI Act,2002 dated 17.11.2023	A-2
3.	Defendant’s response to objections under Sec. 13(3-A) of SARFAESI Act dated 07.12.2023	A-3
4.	Statement of Account	A-4
5.	Impugned Possession Notice U/s. 13(4) of SARFAESI Act issued by the Defendant Bank dated 21.03.2024	A-5

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

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Sl. No.	Description of Documents	Document No.
1.	MoDT dated 07.12.2017 executed by Applicant in favour of the Defendant Bank, which was registered as Doc.No.3694/2017 on the file of the SRO, Royapuram dated 07.12.2017	R-1
2.	Application by the Applicant seeking Restructuring from the Defendant dated 07.09.2021	R-2
3.	Declaration and undertaking executed by Applicant in favour of Defendant Bank dated 07.09.2021	R-3
4.	Acknowledgement executed by Applicant in favour of Defendant Bank dated 07.09.2021	R-4
5.	Sanction Letter issued by the Defendant to the Applicant dated 14.09.2021	R-5
6.	Demand Notice issued by the Defendant Bank to the Applicant under Section 13(2) of the said Act along with Postal receipt and Acknowledgement Cards of the Demand Notice dated 02.11.2023	R-6
7.	Reply of the Borrower under Section 13(A) of the SARFAESI Act, 2002 for the Demand Notice dated 17.11.2023	R-7
8.	Letter issued by Defendant Bank to the Applicant dated 07.12.2023	R-8
9.	Possession Notice issued by Defendant Bank to the Applicant under Section 13(4) of the SARFAESI Act,2002 along with Postal receipt and Acknowledgement Cards of the Possession Notice dated 21.03.2024	R-9
10.	Proof of Affixture of Possession Notice	R-10
11.	Paper Publication of Possession Notice in English daily “The New Indian Express” dated 28.03.2024	R-11
12.	Paper publication of Possession Notice in Tamil daily“Dinamani”dated 28.03.2024	R-12

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SCHEDULE OF PROPERTY

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Item No.1

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All that piece and parcel of property at No.19, New No.4 (Part), Subburaya Chetty Street, Old Washermanpet, Chennai-600021, comprised in O.S.No.1762, C.C.No.1527, R.S.No.2638/1 (Part) as per Patta present R.S.No.2638/4, Block No.41 of Fort-Tondiarpet Taluk admeasuring as per

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SA No.275/2024

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physical measurement, East to West on the Northern Side: 18 ft., On the Southern Side: 19.5 ft., North to South on the Eastern Side: 23 ft., On the Western Side: 23.5 ft. In all admeasuring 430 sq.ft., and half share in the common passage measuring 3 ft. breadth and 18 ft. length in all 54 sq.ft., half right in the common passage measuring 54 sq.ft., viz, 27 sq.ft., in all totally measuring 457 sq.ft., and the land bounded on the North by: Item II property, South by: Mr. Chelappa’s property, East by: Mr. Dhayalan’s property and West by: Theagaraya Park.

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Item No.2

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The house ground and premises bearing Old Door No. 19, present New Door No.4 (Part), Subbarayan Street, Old Washermenpet, Chennai600021, comprised in O.S.No.1762, C.C.No.1527, Old R.S.No.2638/1 (Part) as per Patta present R.S.No.2638/4, Block No.41 of Fort-Tondiarpet Taluk measuring as per physical measurement, East to West on the Northern Side: 131.25 ft., On the Southern Side: 15 ft., North to South on the Eastern Side: 18 ft., On the Western Side: 18 ft. In all admeasuring 256 sq.ft., and the common passage measuring 3 ft. breadth and 18 ft. length in all 54 sq.ft., the half share right i.e 27 sq.ft. and in all 283 sq.ft., bounded on the North by: Mr.Panduranga’s property, South by: Item No.1 property, East By: common passage and Mr. Dhayalan’s property and West by: Theagaraya Park, situated within the Sub-Registration District of Royapuram and Registration District of North Chennai.

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Sd/-

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

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S. Karthikeyan v. LIC Housing Finance Ltd.

Case brief

What is this about?

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S. Karthikeyan v. LIC Housing Finance Ltd.

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