Allowed

Mr Saraswathi v. Equitas Small Finance Bank Limited

DRT4 Feb 2026SA/295/2023

Case brief

AI extract

What is this about?

The DRT allowed the applicant's application challenging a sale panic. The court held that the respondent bank failed to serve the third sale notice within the mandatory fifteen-day period required under Rule 9(1) of the SIE Rules, violating the SARFAESI Act procedures.

What did the court decide?

Sale held on 20.04.2023 and Sale Certificate dated 11.05.2023 set aside; Respondent directed to cancel the Sale Certificate.

Mr Saraswathi versus Equitas Small Finance Bank Limited — Execution and Attachment | DRT (2026)

SA No.295/2023

04.02.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 4^th day of February, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 295 of 2023

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Mrs. S. Saraswathi W/o. R. Srinivasan, No. 131, Ranganathar Koil Street Devadhanam, Ponneri Taluk, Tiruvellore District- 601203 …Applicant

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-Vs-

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M/s Authorized Officer, Equitas Small Finance Bank Ltd., 4^th Floor, Phase –II Spencer Plaza, No.769, Anna Salai, Chennai 600 002. …Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. T.R. Sundaram Counsel for respondent : M/s. T.K.M. Sai Krishnan

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ORDER ON SA 295/2023

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The present Securitization Application [SA] is filed on 21.04.2023 under sub section [1] of S.17 of the Securitization and Reconstruction of Financial Asset and Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

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The applicant has challenged the Sale held on 20.04.2023 pursuant to the Sale Notice dated 03.04.2023 and the outstanding amount due as per Sale Notice is Rs.28,90,603/-

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The applicant a house wife is the owner of schedule property by virtue of the Sale Deed in Doc.No.7853 of 2016 dated 01.09.2016 on the file of Sub-Registrar office, Ponneri purchased from M. Girija for a valuable sale consideration of Rs.3,20,2000/- and property was issued with online Patta No.6196 issued by the Thashildhar, Ponneri.

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3.1 The applicant approached the respondent and obtained Agricultural Loan of Rs.2,50,000/-, dispersed on 09.10.2017 vide A/c.No.700001809611 and the property was mortgaged with the respondent under a Memorandum of deposit of title deeds dated 03.10.2017 vide Doc.No.BK-1/5481/2017, on the file of the Sub Registrar Office, Ponneri for the agricultural loan.

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3.2 The applicant was unable to repay the loan during March 2020 to March 2022 due to covid 19 and was unable to make any effective agricultural operations, however has paid an amount of Rs.1,10,560/- to the respondent as evidenced by the statement up to March 2023.

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3.3 The applicant approached the respondent on issuance of Sale Notice dated 03.03.2023 and Sale notice dated 03.04.2023 contending that no notice under Sec.13(2) Demand Notice was served to the applicant. Hence, proceeding under Rule 8 and 9 of the SARFAESI Rules initiated is highly illegal.

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3.4 Further it is contended that the sale notice dated 29.11.2022, 03.03.2023 and 03.04.2023 does contained any date of Sec.13(2) notice

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issued under the SARFAESI Act and the Possession Notice as claimed by the respondent is also without any date.

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3.5 In the grounds, it is contended that the respondent has not classified the account as NPA as per RBI guidelines; nor served the Sec.13(2) Demand Notice and Sec.13(4) Possession notice and the notices are not issued by the competent person as provided U/s.2(a) of the Act. Further, the bank has not issued or published the possession notice as per appendix IV of amended act which is highly arbitrary, illegal and against all canons of law.

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3.6 The impugned sale notice dated 03.04.2023 is issued fixing the auction on 20.04.2023 without fixing reserve price from the approved valuer and secured creditor before auctioning the property as required under Sub-Rule 5 of Rule 8 of SIE Rules. Further bank has not given 30 day’s clear notice to all the applicants by all modes as required under SubRule 6 of Rule 8 of SIE Rules.

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3.7 The bank had not affixed sale notice in the schedule property which is mandatory as per Rule 8(6) and 9(1) of Act. Therefore, the non-service of notice by all modes without clear 30 days by the Bank is against the law as laid by Hon’ble Supreme in (i) Mathew Varghese case reported in 2014(3) Law weekly 289 (2) Vase P. Shetty reported in 2014 (4) law weekly 770 and (3) Rajiv Subramaniyam case reported in 2014 (5) SCC 651.

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3.8 The respondent has charged interest on the interest as against Act, Rules, Circulars and Guidance issued by RBI and has failed to consider the

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various representation given by the applicants for rehabilitation, restructure and other proposals in order to bring a quietest to the litigation.

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3.9 There is no legal security agreement from the respondent bank to invoke the provisions of SARFAESI Act, and there is no registered mortgage deed available as respondent bank has not created any security interest as provided under Section 26 D of the SARFAESI Act, which is mandatory in view of the Government dated 24.01.2020. The bank has violated the procedures in initiating the proceeding under the SARFAESI Act and rules made there under and prays to set aside the Sale Notice dated 03.04.2023

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Objections of the respondent bank:

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It is the case of the respondent bank that the Applicant along with her husband approached the Respondent Bank for availing Loan for a sum of Rs.2,50,000/-. The Respondent after considering the documents produced by the Applicant, agreed to sanction the financial assistance on the terms and conditions of the loan documents.

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4.1 The Applicant had executed the Loan Agreement No. SEPONRI0137042 dated 09.10.2017 agreeing to repay the loan facility with interest and other charges in accordance with the terms and conditions. To secure the repayment of the said loan facility, Applicant had created Equitable Mortgage by way of Memorandum of Deposit of Title Deeds dated 03.10.2017 has been registered vide Doc. No. 5481 of 2017 on the file of the SRO-Ponneri, in favor of the Respondent Bank.

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4.2 The Applicants defaulted in the repayment of monthly installments and failed to adhere to the terms and conditions of Loan Agreement, in spite of many reminder calls given to the applicant. Hence, the loan account was classified as NPA on 08.06.2019 in accordance with Section 2(o) of the SARFAESI Act.

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4.3 The Applicants did not make any repayment to regularize the loan account. Hence, the Bank has issued the Demand Notice under Section 13(2) on 22.07.2019 calling upon the applicants to repay an outstanding amount of Rs.2,55,409/- due as on 10.07.2019. The Demand Notice was duly dispatched to both the applicant and her husband by the respondent bank and the service of Demand Notice was completed as envisaged in Rule 3(1) of the SIE Rules.

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4.4 The interest rate charged by the respondent in accordance with the terms and conditions of the loan agreement and RBI guidelines. Hence, the applicant cannot seek any waivers on the interest or on other charged and very low OTS proposal when they have not paid the legitimate EMI amounts on schedule dates.

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4.5 Subsequently, the respondent bank has proceeded further and issued Possession Notice dated 20.01.2022 under Section 13(4) which has been duly dispatched to the applicant and her husband, and possession notice affixed in the conspicuous part of the property and also published in two leading newspapers one in vernacular Language Tamil and another in English on 25.01.2022 within 7 days from the date of issuance of the

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Possession Notice. The Bank had followed all the procedures as contemplated under SARFAESI Act and Rules 3(1), 8(1) & 8(2) of SIE Rules.

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4.6 The respondent bank had issued the 1^st Sale Notice dated 29.11.2022 which has been served to the applicant which includes clear 30 days’ notice to the applicant and her husband. The said notice was also published in two leading newspapers one in Vernacular language Tamil and another one in English and sale notice was also affixed in the conspicuous part of schedule mentioned property. The respondent bank had issued the 2^nd Sale Notice dated 03.03.2022 which has been served to the applicant and her husband. The notice was also published in two leading newspapers one in Vernacular language Tamil and another one in English and notice was also affixed in the conspicuous part of schedule mentioned property.

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4.7 The respondent bank had issued the Third Sale Notice dated 03.04.2023 fixing a Reserve Price of Rs.5 Lakhs and the Earnest Money Deposit (EMD) was fixed as Rs.50,000/- to participate in the auction. The Respondent Bank served the Notice to the Applicant and her husband with clear 15 days’ notice. The said Sale Notice was also published in two leading News Papers one in vernacular language Tamil “Dinamani” and another in English “The New Indian Express” both dated 03.04.2023, affixed in conspicuous part of the schedule mentioned property. The Bank had followed all the procedures meticulously, as contemplated under Rule 9(1) of SIE Rules.

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4.8 The Reserve price of Rs.5 Lakhs was fixed by the Authorized Officer after valuing the schedule mentioned property with the secured creditor. The Loan amount borrowed by the Applicant is nothing but the public money invested in the Respondent Bank, when the monthly instalments are not paid in accordance with the terms and conditions of the loan agreement, the Respondent Bank is put to humongous loss and has no way to recover the loan amount except by selling the mortgaged property.

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4.9 The Sale Notice dated 03.04.2023 issued under Rule 9(1) of SIE Rules, and E-auction Sale date as 20.04.2023 and the recovery measures have been initiated by the respondent bank without violating any procedures laid down in SARFAESI Act and without violating the principles of natural justice.

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4.10 The Applicants made false statements in their affidavit before this Tribunal with the intention to mislead for wrongful gain in accordance with the Judgment of the Hon’ble High Court of Madras in order dated 11.10.2017 in W.A.No.367 of 2017 M. Lilly Vs District Collector . Hence respondent bank 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 manifest from the records that the applicant along with her husband had availed a sum of Rs.2,50,000/- on 09.10.2017 vide loan bearing Agreement No. SEPONRI0137042 with M/s. Equitas Small Finance

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Bank Limited and had executed the Loan Agreements and other documents in favor of respondent bank.

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5.1 To secure the credit facilities availed, applicant has executed the Memorandum of Deposit of Title Deeds dated 03.10.2017 vide Doc.No.5481 of 2017 which is registered in the office of the SRO, Ponneri and the equitable mortgage is registered before the Central Registry dated 23.08.2023 as per the CERSAI report produced at Pg.50-52 of counter. Thus, the mortgage created is a secured asset in compliance of S.26D of the Act. Hence the contention that there is no security available to the respondent to proceed under the Act fails.

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5.2 In fact the applicant does not dispute the availing of the credit facilities and the mortgage of the property and the default in the repayment. Due to continuous default in the repayment, the loan account of the applicant was classified as NPA on 08.06.2019 in accordance with RBI guidelines.

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5.3 The applicant contends that the classification of account as NPA is not in terms of RBI guidelines, failed to point out how the classification is bad or not in accordance without any specific violation of the clauses of IRAC Norms. Further the challenge to S.2[o] of Act was upheld by the Hon’ble Supreme Court. A mere statement that classification of account as NPA is bad would not sustain.

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5.4 The respondent had issued the Sec.13(2) Demand Notice dated 22.07.2019 claiming an amount of Rs.2,55,409/- due as on 10.07.2019

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along with other charges which was sent RPAD which the applicant has received the Demand Notice as per postal track produced at Pg.15 and 16 of counter.

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5.5 The applicant after receipt of Sale notice dated 29.11.2022, 03.03.2023 and 03.04.2023 contends that there is no S.13[2] notice is served, is against the documents produced by the bank. The demand notice is admittedly received by the applicant as per tracking report which reflects that the “item is delivered”. In spite of receipt of Sec.13(2) demand notice as the borrower and the guarantor did not liquate the liability within the period of 60 days nor raised any objections to the demand made.

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5.6 The respondent issued the Sec.13(4) Possession Notice on 20.01.2022 and the notice sent through RPAD, with Postal Track Report produced at pg.19 and 20. The Possession Notice is published in two newspapers one in Vernacular Language Tamil and another one in English both dated 25.01.2022 and the Possession Notice is affixed on the conspicuous place of the property as per the photograph of affixture produced at Page No.23-25 of respondent bank’s typed set. The photographs reflects that the secured asset is a vacant plot and the respondent bank has produced the Inventory and Panchanama as prescribed under Rule 4[1] and [2] of SIE Rules and have established due compliance of procedures as prescribed under the Act.

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5.7 It is seen that the 1^st Sale Notice dated 29.11.2022 served to the applicant with clear 30 days’ notice to the applicant and 2^nd Sale Notice

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dated 03.03.2022 has been served to the applicant. As the sale did not materialize, the respondent has issued the Third sale notice dated 03.04.2023 fixing a Reserve Price of Rs.5 Lakhs and the Earnest Money Deposit (EMD) was fixed as Rs.50,000/- to participate in the auction, which is impugned sale notice, as the sale notice dated 03.04.2023 is the 3^rd sale notice there is no requirement of 30 days as per Rule 9[1]

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Rule 9(1)

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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:

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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

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5.8 The respondent has sent the notice by RPAD and has produced the

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postal receipt and on verification of the tracking report it reflects that ‘item

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bagged’’ not delivered. Further it is seen that the Sale Notice dated 03.04.2023 is sent through RPAD only on 06.04.2023 scheduling the property to be sold on 20.04.2023 which is evidently without clear 15 days’ notice. The respondent has published the Sale notice in two newspapers as per Rule 8(6), one in Vernacular Language Tamil “Dinamani” and another one in English “The New Indian Express” both dated on 03.04.2023 is also affixed on the property as per Rule 8(7) and the photograph of the notice is produced at pg.44-47.

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5.9 The Tribunal places reliance on the Judgment of High Court of Kerela in E.K. Rajan Vs. Authorized Officer, Canara Bank where Hon’ble Kerela High Court has held that the Sale notice issued without clear 15 days is bad in law and ruled that three methods of servicing, affixing and publishing the notice of 15 days for subsequent sale is mandated under Rule 9(1) is mandatory in nature and the said requirement cannot be interfered with.

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5.10 It is a specific case of the applicant that there is no clear 15 days notice and Sale notice is not even served on the applicant herein which the respondent bank has failed to establish the due compliance of service of sale notice. On the other hand, the documents relied on by the respondent in the written submissions filed on 13.01.2026 contending that the applicants have duly acknowledged the Sale notice is contrary to the sale notice produced by the applicant at page 34to 38 of the SA as the Serial Number reflected in the sale notice produced by the respondent is “ 3248861” which is differ from the original sale notice produced by the applicant reflecting the serial number as 3177223 at Page No.34 to 38 of the SA.

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5.11 It is pertinent to note that the respondent has produced the acknowledged sale notice which is a photo copy and also produced only the last page of the Sale notice. Further, the documents relied upon is also contrary to their own Sale notice produced along with the Sale certificate at Page No.29 with the same serial number “ 3248861” does not have any acknowledgements as produced at Page No.42 of the written arguments.

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Hence, the respondent has not produced any original Sale notice dated 03.04.2023 with acknowledgement cards to evidence the due service of the impugned sale notice dated 03.04.2023, however the applicant has made out a case that there is no clear 15 days sale notice.

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5.12 The postal tracking report produced by the respondent clearly reflects that the sale notice dated 03.04.2023 is sent by RPAD on 06.04.2023 is not within the period of 15 days and the impugned sale notice is not received by the applicants within the period of 15 days nor the bank has established the service of sale notice. The situation would have been different if the delay in service of the notice was on account of the applicant’s default or that the applicant has evaded the service of the notice and the respondent have not clarified the service of the sale notice is within 15 days.

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5.13 The Tribunal places reliance on the judgment of the High Court of Kerela in E.K. Rajan Vs. Authorized Officer, Canara Bank where it has held that

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“ That the conjunction ‘and’ employed in the proviso to Rule 9 indicates that all three methods of service specified therein are mandatory in nature.

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“A reading of the proviso to Rule 9(1) of the Rules makes it explicit that the authorized officer must serve, affix and publish the notice of sale of not less than 15 days to the borrower, for any subsequent sale. The word ‘serve’ relates to personal service of notice, affixture relates to the notice being affixed on the property and the publication relates to the publication of notice in the newspaper dailies. The conjunction ‘and’ employed in the proviso also indicate the mandatory nature of all three methods of notice. Further, in spite of the amendment to Section 13(8) of the Act, the proviso to Rule 9(1) mandates the three methods of serve, affix and publish the notice to be carried out, with 15 days clear notice”

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5.14 In the instant matter there is a infirmity on the part of the respondent bank in serving the 3^rd sale notice within the period of 15 days, nor has established the due service of the sale notice to the applicant. Hence, the sale notice dated 03.04.2023 is in violation of the procedures and is an infirmity in the measures which is bad in law.

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5.15 Consequently, the sale held on 20.04.2023 and the Sale certificate issued on 11.05.2023 which is registered as Doc.No.4202 of 2023 before the SRO, Ponneri is set aside. Accordinly, the respondent is hereby directed to cancel the Sale certificate which is registered in the office of Sub Registrar, Ponneri by way of cancellation deed and the same is to be reflected in the Encumbrance Certificate of the property.

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5.16 It is further clarified that only after the Sale certificate is cancelled and registered in the office of the Sub Registrar, Ponneri the respondent bank is at liberty to proceed further in continuing with the measures under the SARFAESI Act.

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5.17 Resultantly the present SA is allowed. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

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Sd/-

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(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 04^th day of February, 2026)

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ANNEXURES

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl. No.	Description of Documents	Documents No.
1.	Memorandum confirming deposit of Title Deed dated 03.10.2017.	A-1
2.	Copy of 1^stSale Notice dated 29.11.2022.	A-2
3.	Copy of 2^ndSale Notice dated 03.03.2023.	A-3
4.	Copy of Account Statement dated 17.03.2023.	A-4
5.	Copy of 3^rdSale Notice (impugned Sale Notice) dated 03.04.2023.	A-5

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl. No.	Description of Documents	Documents No.
1.	Copy of the Demand Notice issued U/s.13(2) of SARFAESI Act along with Dispatch proof and Service Proof dated 22.07.2019.	R-1
2.	Copy of the Possession Notice issued U/s.13(4) of SARFAESI Act along with Dispatch proof, Service Proof, Paper Publication, Affixture, Panchnama and Inventory dated 20.01.2022.	R-2
3.	Copy of the First Sale Notice along with Dispatch Proof dated 29.11.2022.	R-3
4.	Copy of the Third Sale Notice along with Dispatch proof, Service Proof, Paper Publication and Affixture dated 03.04.2023.	R-4
5.	Valuation Report dated 20.10.2022.	R-5
6.	CERSAI Report dated 23.09.2023.	R-6

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SCHEDULE OF PROPERTY

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All that piece and parcel of land and building bearing Plot No. 54, Comprised in S. No. 182/4B with an extent of 800 sq. ft. situated at “ K.G.P. Plot House” No. 58, Thadaperumpakkam Village Ponneri taluk, Thiruvallur District and bounded on the four boundaries of: North by: Plot No. 51 South by: Plot No. 57 East by: 18 feet road West by: Plot No. 53,

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Measurement: Nil

Situated at within the Sub-Registration District of Ponneri and Registration District of North Chennai.

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Together with all buildings and structures attached to the earth or permanently fastened to anything attached to earth, both present and future and all easamentary/mamool rights annexed thereto.

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Sd/-

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

Mr Saraswathi v. Equitas Small Finance Bank Limited

Case brief

What is this about?

What did the court decide?

Mr Saraswathi v. Equitas Small Finance Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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