Allowed

S R Ratheesh v. Cholamandalam Investment and Finance Company Ltd.

DRT12 Jan 2026SA/323/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application to set aside an auction sale and certificate. The court held the lender violated SARFAESI Rules by failing to prepare a panchanama for possession, defective service of notice, and selling the property below the bank's own past valuation without secured creditor consultation.

What did the court decide?

The application was allowed. The Possession Notice, Sale Notice, and Registered Sale Certificate were set aside. The 1st Defendant is directed to refund the sale amount with interest. The District Col

S R Ratheesh versus Cholamandalam Investment and Finance… — Company and Corporate | DRT (2026)

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SA No.323/2022

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 12^th DAY OF JANUARY 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. 323/2022

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S.R. Ratheesh, (M/52), D.No. 2-143/1, eraniel road, Muthalakurichy, Thuckalay Village & P.O.

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Kanyakumari District – 629 175.

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Madhavi Devi M.R. D.No. 2-143/1, eraniel road, Muthalakurichy, Thuckalay Village & P.O.

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Kanyakumari District – 629 175.

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ALSO AT:

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S.R. Ratheesh, (M/52), Door No. 22/76D, TVM main Road, Puliyoorkuruchi, kollamvilai, kalkulam Village, Kanyakumari District – 629 175.

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S.R. Ratheesh, (M/52),

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Door No. 22/76D, TVM main Road,

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Opposite to Govt. Higher Secondary School,

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Mettukadai, Thuckaly, Kanyakumari – 629 175. --- Applicants

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-Vs-

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1. The Authorized Officer/Chief Manager, M/s. Cholamandalam Investment And Finance Company Limited.

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DARE House, 1^st Floor, No. 1,

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N.S.C. Bose Road,

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Parrys, Chennai – 600 001. --- 1^st Defendant FI

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Page 1 of 15

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SA No.323/2022

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2. Mr. Arulanandham Bersyril Antow, S/o. Arulanandham, S – 7, Muthalankurichi, Thuckalay – 629 175. --- 2^nd Defendant/Auction Purchaser

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Appearance of Advocates: Mr. M. Arun Murugan ---- Counsel for the Applicants Mr. P. Pethu Rajesh ---- Counsel for the 1^st Defendant FI No representation for D-2.

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This SA was heard in the presence of Counsels for the Applicants and the 1^st Defendant FI and fixed for passing final order before me and upon hearing the arguments of the Counsels 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 Auction Sale Notice dated 25.05.2022 and Sale held on 15.06.2022 ending up with the issuance of Sale Certificate in favour of the 2^nd Defendant dated 01.12.2023 by the 1^st Defendant FI for the Schedule Mentioned Property.

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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 the borrower and the 2^nd Applicant is the guarantor. They both have availed a loan under Home Equity Loan from the 1^st Defendant Bank for a sum of Rs. 5,00,00,000/- by mortgaging two residential properties, referred to as item nos. 1 & 2. Additionally, these mortgaged properties, the 1^st Defendant Bank also required the Applicants to provide another property, which is agricultural in nature. Though this agricultural property was not mortgaged, it has been kept under the safe custody of the bank as an additional security measure.

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It is further submitted that the 1^st Applicant is a graduate in Mechanical Engineering and holds a Postgraduate degree in MBA. He is engaged in the business of LPG distribution and dealership of all leading home appliances under the name Adithya Bharat Gas Agencies, with significant potential for business growth and development. The 1^st Applicant had been making regular payments to the 1^st Defendant Bank as per the agreed repayment schedule,

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SA No.323/2022

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without any break or hindrance, until April 2020. Despite this compliance, the 1^st Defendant Bank subsequently issued continuous notices, creating undue pressure and disruptions. These actions not only hindered the smooth operation of the Applicant’s business but also severely impacted on both direct and indirect employees, ultimately jeopardizing their livelihoods.

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It is further submitted that the mortgaged properties were highly valuable assets, with an estimated worth of Rs. 9.00 crores. The loan was approved based on the strength of these properties as security, ensuring sufficient coverage for the bank’s financial exposure. The Applicants submitted that during the pandemic crisis, the Applicant faced severe uncertainty, grappling with financial instability and operational challenges. Yet, instead of providing the necessary relief during this unprecedented crisis, the 1^st Defendant Bank acted hastily and willfully failed to offer any respite. Rather the bank levied interest on interest and imposed penal charges, further aggravating the financial burden on the Applicants. The Applicants have deposited several lakhs towards loan repayment, and the account has remained a regular account. But the 1^st Defendant Bank unlawfully classified the account as NPA on 05.07.2017. This was reflected in the Demand Notice dated 07.06.2018, wherein the bank alleged an outstanding amount of Rs. 5,10,97,446.45p as of 29.05.2018 and demanded repayment of the entire amount in one lump sum without offering any restructuring or relief measures to the Applicants. The Applicants sent a representation to the 1^st Defendant Bank by way of objections on 02.08.2018.

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It is further submitted that the Demand Notice issued by the 1^st Defendant Bank, willfully failed to mention the measurement and extent of the building. Additionally, the bank unlawfully included an agricultural property (Punja land) in the notice, despite the fact that it was not mortgaged. The Applicant had already paid a sum of Rs. 1,38,50,020/- upto March 2018, and such payments were made without any default. The Applicants further stated that various payments made by the Applicants have not been properly reflected in the account records. Further, it is stated that in an attempt to unlawfully grab the Applicant’s property, the 1^st Defendant FI issued a Possession Notice on 19.09.2018, in clear derogation of the original sanction period, thereby denying the Applicants’ right to repay the loan until 2031 as per the agreed terms.

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It is further submitted that even before conducting an auction, the 1^st Defendant FI coercively took Physical Possession of the property on 17.03.2020. All movable assets inside the premises were unlawfully taken away by the bank officials, causing severe financial and business losses to the Applicants. Further it is stated that despite several representations made on 24.04.2020 and 12.06.2020, the 1^st Defendant FI only returned a few

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SA No.323/2022

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movables, while the remaining assets were never handed over. Further, it is submitted that without considering the Applicant’s representations, the 1^st Defendant Bank suddenly issued an auction Sale Notice on 20.05.2022, fixing the auction date on 15.06.2022. Further, the second item of the property was sold to a known associate of the bank officials, raising serious concerns about collusion and absence of transparency in the auction process. The valuation fixed by the 1^st Defendant FI on 29.04.2014 for the 2^nd item of the property was Rs. 2,46,10,000/-. Yet in a blatantly unlawful manner, the bank sold the property for a meager amount of Rs. 1,50,00,000/- causing a significant loss to the Applicants.

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It is further submitted that the 1^st Defendant FI has given only a 15 days’ notice instead of giving 30 days’ notice period, depriving the Applicants of a fair opportunity to respond and take necessary steps to protect their rights. Aggrieved by this unlawful action, the Applicant promptly raised objections regarding the valuation even before the auction on 06.06.2022. Further, on 02.07.2022, the Applicants sent another representation seeking an opportunity to redeem the hard-earned residential property, yet no response was given, and the sale particulars remain undisclosed to date. The arbitrary actions of the 1^st Defendant FI, including the issuance of Demand Notice, Possession Notice and auction Sale Notice as well as the classification of the account as NPA on 05.11.2017 are patently unfair, unjust and violative of Articles 14, 19(1) and 21 of the Constitution of India.

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Grounds:-

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The 1^st Defendant FI has violated the mandatory provisions of Rule 3-A of the Security Interest Enforcement Rules, 2002, making its actions legally unsustainable.

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The 1^st Defendant FI did not follow the mandatory requirement of drawing a panchanama while taking possession of the property, thereby violating Rule 4 of the Security Interest Enforcement Rules, 2002.

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The 1^st Defendant FI willfully failed to paste the auction Sale Notice on a conspicuous part of the building and failed to publish the same in newspapers.

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The 1^st Defendant FI has grossly undervalued the property and has willfully failed to adhere to the Terms and Conditions prescribed in the auction Sale Notice.

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The 1^st Defendant FI did not obtain a valuation from an approved valuer and willfully failed to consult the secured creditor while fixing the reserve price.

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Despite the Applicants having paid a sum of Rs. 1,38,50,020/-, the 1^st Defendant FI proceeded with issuing the Demand Notice, Possession

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SA No.323/2022

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Notice and auction Sale Notice without declaring the Applicants as a willful defaulter.

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In the 1^st Sale Notice dated 30.10.2018 the reserve price was given as Rs. 2,40,00,000/-, but in the Sale Notice issued in 2022, the Bank undervalued the property by fixing the reserve price at just Rs. 1,50,00,000/- causing severe loss to the Applicant.

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The Applicants sent several representations from 24^th April 2020 to 30^th June 2022, repeatedly requesting the bank to return the nonhypothecated household articles worth Rs. 40 lakhs which were inside the property, but the bank did not draw any Panchanama while taking Physical Possession, and the whereabouts of these articles are still not known.

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The Bank’s own Valuation Report dated 29.04.2014 valued the 2^nd Item of the property at Rs. 2,46,10,000/- and again on 12^th January 2016, the Bank’s valuation report assessed it at Rs. 3,18,45,000/-. Yet the bank intentionally reduced the price drastically in one stroke to a mere Rs. 1,50,00,000/-.

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Schedule of Property

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Property 2 – Property bearing Door No: 2-143/-, 0.07.0 are 17 cents and 500 links in which southern side half extent 8 cents and 750 sq links as per Plan 8 cents and 250 sq links 333.88 sq mtrs, vacant site (old S.No. 400/3,401) comprised in R.S.No. 687/7, Eraniel road, Thuckalay Village, Muthalakurichy Panchayat, Kalkulam Taluk, Kanyakumari District, Kanyakumari Registration District and bounded on : North : Building in D. No. 2/143, South-Land in R.S.No. 687/8, East-Road, West – Building of Suthakumari Vaigayara

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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	Particulars
1.	29.01.2016	Sanction Letter
2.	07.06.2018	Demand Notice
3.	02.08.2018	Replyof Applicant
4.		Payment details made byApplicant
5.	20.08.2018	Replyby1^stDefendant
6.	19.09.2018	Possession Notice
7.	25.05.2022	Auction Sale Notice
8.	06.06.2022	Representation of Applicant
9.	16.06.2022	Reply by the1^stDefendant
10	25.06.2022	Representation of Applicant
11	27.06.2022	Representation of Applicant

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SA No.323/2022

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12 02.07.2022 Representation of Applicant

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Additional Typed set pages

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S.No. Date Particulars 1. 01.12.2023 Sale Certificate Document No. 4519 of 2023

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2^nd Additional Typed set pages

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S.No.	Date	Particulars
1.	29.04.2014	Valuation Report of bankspanel valuer
2	12.01.2016	Valuation Report of bankspanel valuer
3	17.03.2020	Photos-Schedule of Property-2Residential House
4	30.10.2018	Earlier Sale Notice
5	---	Payment details made byAuction Purchaser
6	---	Extract of valuation and contents of violations

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3. On the other hand, the Counsel for the 1^st & 2^nd Defendants Bank appeared before this Tribunal and filed Vakalat, Written Statement, Typed set of papers & Additional Typed set of papers in which they have submitted that on pursuant to the loan agreement dated 21.01.2016 executed by the 1^st Applicant in favour of the 1^st Defendant, a Home Equity Loan to the tune of Rs. 5,00,00,000/- was disbursed to the 1^st Applicant. The 2^nd Applicant stands as a guarantor to the said transaction. The Applicant mortgaged three properties as security to the said loan transaction and the same came to be given as security by a Registered Memorandum of Deposit of Title Deeds dated 25.01.2016, registered on the file of the Sub-Registrar, Tuckalay in Doc No. 249 of 2016.

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It is further submitted that after availing the said facility, the Applicants failed to serve the said loan account and the said account classified as NPA on 05.11.2017. Thereafter, a Demand Notice dated 07.06.2018 was issued for a sum of Rs. 5,10,97,446.45p and the same was served to the 1^st Applicant on 11.06.2022 and to the 2^nd Applicant on 11.06.2022. The Applicants failed to give suitable reply for the same and also failed to repay the outstanding. Hence, the 1^st Defendant FI issued Possession Notice dated 19.09.2018 and the same is returned as Not known. The said Possession Notice was published in New Indian Express on 25.09.2018 and at DINAMANI Tamil daily newspaper on 25.09.2018 and Possession Notice was pasted in the mortgaged premise on 19.09.2018 and symbolic possession has been taken by the 1^st Defendant FI.

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It is further submitted that even after the receipt of the said Possession Notice, the Applicants failed to repay the outstanding dues. The 1^st Defendant proceeded further and issued a Sale Notice dated 20.08.2020 to the Applicants including two properties out of three and Paper Publication was

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effected in this regard in Tamil & English on 21.08.2020. Since, there is no bidder the said sale was not concluded. Once again, a second Sale Notice was issued to the Applicants on 19.08.2021 and Paper Publication effected in both English & Tamil dailies on 20.08.21. Since, there is no bidder, the said sale was not concluded. Subsequently, the 3^rd Sale Notice was issued to the Applicants on 25.04.2022 by including two of the properties and the same has been served on the Applicants on 27.04.2022. A Paper Publication was effected in this regard in both English & Tamil dailies on 26.04.2022, since there was no bidder the said sale was not concluded. Once again, the 4^th Sale Notice was issued on 25.05.2022, which is served to the Applicants on 27.05.2022. Paper Publication was effected on 26.05.2022 in both English & Tamil dailies. But this time, there is a bid in respect of the 2^nd Property. The 2^nd Defendant is the Auction Purchaser/Successful bidder.

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It is further submitted that the property has been sold to the 2^nd Defendant and he has paid for a sum of Rs. 1,50,00,000/- on 30.06.2022. The 1^st Defendant FI had also issued Sale Certificate in favour of the 2^nd Defendant. Before conducting the sale, the 1^st Defendant had valued the property with qualified person. The mandates required u/s. 13(2) and 13(4) of the SARFAESI Act is clearly complied with. The auction was conducted in a fair manner. As of now, the sale was held and the 3^rd party interest was created. The Applicants had not disputed any of the proceedings taken by the Bank. In fact, he had admitted the same. Keeping silent and agitating the sale proceedings after the confirmation of the sale process is not maintainable.

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It is further submitted that classification of NPA is in accordance with law. The 1^st Defendant FI issued proper Demand Notice, Possession Notice and Auction Sale Notice as of now. The provisions u/s. 3A of the Act is clearly followed. Necessary Panchanamas were taken at the time of taking the Physical Possession of the property. The person like Applicant who borrowed a huge amount by mortgaging the property and committing default cannot claim constitutional rights. All the notices that have to be pasted in the mortgaged property is pasted in the said property immediately after issuance of notices. The rate of interest is correct. The property is sold in e-auction and there is no question that the same is sold to known persons. All measurement of the property is mentioned in the Sale Notice. Before the sale of the property, it is properly valued by the qualified valuer and there is no question of undervaluation of the property. Auction Sale Notice is published in vide manner and the same is published in a reputed Paper Publication. The account becomes NPA on 05.11.2017 itself. Mandated Rules 3(4), 8(2) and 9(2) of the Security Interest Enforcement Rules, 2002 is completely followed. Act done is under the SARFAESI Act and relevant rules. There is no question of fraud, criminal conspiracy of personal gain in the said matter.

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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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Typed set of Papers filed by the 1^st Defendant FI

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S.No.	Date	Particulars
1.	07.06.2018	Demand Notice
2.	19.09.2018	Possession Notice
3.	19.09.2018	Affixture of the Possession Notice in the mortgagedproperties
4.	25.09.2018	Paper Publication of the Possession Notice in Tamil and English dailyNewspaper
5.	21.10.2019	Order passed by the District Magistrate, Kanyakumari u/s. 14 of the SARFAESI Act for taking Physical Possession of the mortgaged property
6.	23.02.2023	Valuation Report for the 1^stproperty mentioned in the Sale Notice
7.	21.04.23	Valuation Report for the 2^ndproperty mentioned in the Sale Notice
8.	25.05.2022	E-Auction Sale Notice
9.	26.05.2022	Paper Publication for the E-Auction Sale Notice in English and Tamil dailyNewspaper
10	26.05.2022	Affixture of the Sale Notice in the property mentioned in the Sale Notice
11	15.06.2022	Item wise breakup of the bid for the sold property
12	12.04.2015	CERSAI Registration for the property mentioned in the Sale Notice

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Additional typed set filed by the 1^st Defendant FI

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S.No.	Date	Particulars
1.	13.06.2022	Demand Draft for thepayment of the EMD amount
2.	15.06.2022	Auction Hall report for thepropertysole in the E-Auction
3.	15.06.2022	Successful Bid Confirmation Letter
4.	16.06.2022	Proof for payment of 25% (payment excluding the 10% of the EMD amount)of the Sale Amount
5.	01.12.2023	Registered Sale Certificate in favour of the2^ndDefendant

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4. The Counsel for the 2^nd Defendant/Auction Purchaser has not appeared before this Tribunal inspite of sufficient opportunities granted to him. Hence, he made ex-parte vide order dated 01.10.2024.

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

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WHETHER THE APPLICANTS ARE ENTITLED TO GET THE RELIEFS

AS PRAYED FOR?

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SA No.323/2022

6. Having heard the parties and after going through the entire documents available on records, and

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also after considering the arguments by all the Counsels, I find that it is admitted fact that the 1^st Applicant has availed a Home Equity Loan from the 1^st Defendant FI for a sum of Rs. 5,00,00,000/- (Rupees Five Crore only). The 2^nd Applicant is the Guarantor. The Applicant submitted that for the availment of credit facilities they have mortgaged two residential properties, apart from that one agricultural property has been kept by the Bank under the safe custody not being mortgaged. Whereas the 1^st Defendant FI in their Reply Statement stated that the Applicants mortgaged three properties as security to the said loan transaction by a registered Memorandum of Deposit of Title Deeds dated 25.01.2016, registered on the file of the Sub-Registrar, Tuckalay in Doc. No. 249 of 2016. But the 1^st Defendant FI has failed to file the said title deeds dated 25.01.2016. So, the 1^st Defendant FI has not proved that the Applicants have mortgaged the 3^rd Property also.

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I also find that the 1^st Defendant FI has issued Demand Notice dated 07.06.2018 for all the three Items of properties and also the 1^st Defendant FI has issued Possession Notice dated 19.09.2018 for all the three Properties. However, in the Impugned Sale Notice dated 25.05.2022, the 1^st Defendant FI has added only two Items of properties. I also find that the 1^st Defendant FI has obtained an Order dated 21.10.2019 in K.Dis.No.C4/368/2019 from the Ld. District Collector, Kanyakumari District @ Nagercoil and has taken Physical Possession of the properties of Item Nos. 1 & 2 only, but the 1^st Defendant FI has not filed any proof to show that he has taken inventory list and prepared the Panchanama, which proves that the 1^st Defendant FI has failed to follow Rule 4(1) of Security Interest Enforcement Rules, 2002, which clearly says:-

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4. Procedure after issue of notice.

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(1)Where the possession of the secured assets to be taken by the secured creditor are movable

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property in possession of the borrower, the authorized officer shall take possession of such

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movable property in the presence of two witnesses after Panchnama drawn and signed by the witnesses as nearly as possible in Appendix I to these rules.”

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Page 9 of 15

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I also find that the 1^st Defendant FI has filed the CERSAI Registration dated 12.04.2015, for the properties of Item Nos. 1 & 2 only, the 1^st Defendant FI has not filed any CERSAI report for the property of Item No. 3. Hence, it is established that the Applicants have mortgaged only 1^st & 2^nd Items of the properties and no evidence has been filed for having mortgaged the 3^rd Item of the Properties. Hence, the Demand Notice dated 07.06.2018 & the Possession Notice dated 19.09.2018 having included with three properties cannot be considered to be correct in the eye of law.

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I also find that the 1^st Defendant FI has classified the Applicants’ loan account as NPA on 05.11.2017, whereas I find that at page no. 43 & 44 of Applicants’ main SA, the Applicants have filed the Statement of Accounts wherein I find that the Applicants made payment of Rs. 3,00,000/- (Rupees Three Lakhs only) on 31.08.2017, Rs. 3,06,000/- (Rupees Three Lakhs Six Thousand only) on 12.09.2017, Rs. 3,00,000/- (Rupees Three Lakhs only) on 30.09.2017 and Rs. 3,00,000/- (Rupees Three Lakhs only) on 06.10.2017. Hence, No 90 days gap has been found to declare the loan account as NPA on 05.11.2017. Hence, the classification of loan account as NPA itself is not considered to be correct in the eye of law as it is not in the light of guidelines issued by RBI.

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I also find that the 1^st Defendant FI has issued Demand Notice dated 07.06.2018 u/s. 13(2) of the SARFAESI Act for a sum of Rs. 5,10,97,446.45p (Rupees Five Crore Ten Lakhs Ninety-Seven Thousand Four Hundred FortySix and paise Forty-Five only). The Applicants have also sent a reply dated 02.08.2018 to the Demand Notice dated 07.06.2018 u/s. 13(3A) of the SARFAESI Act. I also find that the 1^st Defendant FI has also replied to the letter dated 02.08.2018 sent by the Applicants vide letter dated 20.08.2018. Thereafter, the 1^st Defendant FI has issued a Possession Notice dated 19.09.2018 u/s. 13(4) of the SARFAESI Act. The 1^st Defendant FI has filed the copies of Paper Publication of Possession Notice dated 19.09.2018 & a copy of affixture of Possession Notice on the conspicuous part of the properties (Page nos. 10 to 14 of typed set filed by the 1^st Defendant FI). Thereafter, the

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1^st Defendant FI has obtained an Order dated 21.10.2019 in K.Dis.No.C4/368/2019 from the Ld. District Collector, Kanyakumari District @ Nagercoil for taking Physical Possession in respect of the Item nos. 1 & 2. Thereafter, the 1^st Defendant FI has issued a Sale Notice dated 20.08.2020, but the sale was not held for want of bidders. The 1^st Defendant FI also issued 2^nd Sale Notice dated 19.08.2021 to the Applicants and since there is no bidder the said sale was also not concluded. The 1^st Defendant FI has also issued a 3^rd Sale Notice dated 25.04.2022, for this also sale was not held for want of bidders. Thereafter, the 1^st Defendant FI has issued the 5^th Impugned Sale Notice dated 25.05.2022 & Sale is scheduled to be held on 15.06.2022. I also find that the 1^st Defendant FI has not filed any AD Cards as a proof for having delivered the Impugned Sale Notice dated 25.05.2022 to the Applicants, giving 15 days’ time. However, the 1^st Defendant FI has filed the copies of Paper Publication made in both English & Tamil Newspapers on 26.05.2022 (page nos. 40 & 41 of typed set of papers filed by the 1^st Defendant FI) and copies of affixture of Sale Notice on the conspicuous part of the properties Item nos. 1 & 2 (Page nos. 42 & 44 of typed set of papers filed by the 1^st Defendant FI). But the date of affixture is hand written in the evidence. The 1^st Defendant FI has not filed original documents to verify the genuineness of the documents inspite of directions of this Court. Therefore, it is clear that the 1^st Defendant FI has not followed the proviso of Rule 8(6) & (7) & Rule 9(1) of Security Interest (Enforcement) Rules 2002, which clearly say that,

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"( 6 ) The authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5):

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[Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in the Form given in Appendix IV-A to be published in two leading newspapers including one in vernacular language having wide circulation in the locality.]" "(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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And,

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

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"[(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:

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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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I also find that vide the Impugned Auction Sale Notice dated 25.05.2022, the 1^st Defendant FI has sold Item No. 2 of the Properties, total estimated value has been given as Rs. 1,83,66,750/- in the Valuation Report dated 21.04.2022 (Page nos. 21 to 25 of typed set of papers filed by the 1^st Defendant FI), however, Reserve Price has only been given as Rs. 1,50,00,000/- and the property has been sold for a sum of Rs. 1,50,00,000/(Rupees One Crore Fifty Lakhs only) to the 2^nd Defendant/Auction Purchaser. I also find that the Applicants have filed the Valuation Reports of 1^st Defendant FI panel valuer in respect of the Impugned Property dated 29.04.2014 & 12.01.2016, wherein the value of the Impugned Property has been given as Rs. 2,46,10,000/- (Rupees Two Crore Forty-Six Lakhs and Ten Thousand only) & Rs. 3,18,45,000/- (Rupees Three Crore Eighteen Lakhs and Forty-Five Thousand only) respectively. As such, this Valuation Report 21.04.2022 cannot be considered as the reliable one and cannot be considered to be correct , since the land value tends to appreciate over the long term, while the building structure itself depreciates due to wear and tear and obsolescence. Further, though the Valuation Report 21.04.2022 is filed by the Bank, this Valuation Report is not in consultation with the secured creditor

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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 FI has failed to prove that they have strictly adhered to the Rule 8 (5) of Security Interest (Enforcement)

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Rules 2002, which clearly says:-

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"(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" .

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I also find that the 1^st Defendant FI has enclosed a Sale Certificate Document No. 4519 of 2023 dated 01.12.2023. The 1^st Defendant FI has also filed a copy of DD dated 13.06.2022 for a sum of Rs. 15,00,000/- (Rupees Fifteen Lakhs only) (Page no. 1 of Additional typed set filed by the 1^st Defendant FI) and proof of payment of 25% of the Sale Amount Rs. 22,50,000/- (Rupees Twenty-Two Lakhs and Fifty Thousand only) (Page no. 6 of Additional typed set filed by the 1^st Defendant FI) and Registered Sale Certificate in favour of the 2^nd Defendant (Page nos. 7 to 16 of Additional typed set filed by the 1^st Defendant FI) Successful Bid Confirmation Letter (Page nos. 4 & 5 of Additional typed set filed by the 1^st Defendant FI), wherein at page no. 4, it is mentioned that remaining & Final amount to be paid by the Bidder (Compulsory within 10 days of the Bid Opening date) (i.e. before 26.06.2022), however, in Registered Sale Certificate dated 01.12.2023 at page no. 6 the date of payment of remaining final amount has been given as 30.06.2022, on which date the Auction Purchaser has paid Rs. 1,12,50,000/- (Rupees One Crore Twelve Lakhs and Fifty Thousand only), which is clear violation of Terms and Conditions of the Successful Bid Confirmation Letter dated 15.06.2022(Page nos. 4 & 5 of Additional typed set filed by the 1^st Defendant FI).

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Since, the 1^st Defendant FI has failed to follow the SARFAESI Act & Rules strictly in issuance of Possession Notice dated 19.09.2018, hence the Order dated 21.10.2019 passed by the Ld. District Collector, Kanyakumari

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Page 13 of 15

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SA No.323/2022

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District is not sustainable. I also find that the 1^st Defendant FI had issued Registered Sale Certificate dated 01.12.2023 on the basis of Sale Notice dated 25.05.2022 and sale held on 15.06.2022, by not following the SARFAESI Act & Rules strictly before issuance of Sale Certificate. Hence, the Registered Sale Certificate dated 01.12.2023 is also not sustainable under law.

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The Applicants have no doubt being defaulters are liable to pay the loan amount to the Defendant Bank and the Bank has been given ample power to recover the outstanding loan amount from the borrowers by invoking the SARFAESI Act and without the intervention of any Court. But it shall not allow the Bank to take the possession & to sell of the property of the Applicants without following the due process of law strictly.

¶129

In view of the above discussions, I find that the 1^st Defendant FI has proceeded under the SARFAESI Act and rules for recovery of money from the Applicants but they have not followed the procedure as mentioned in the SARFAESI Act & Rules strictly and failed to produce the substantial evidences and failed to rebut successfully the allegations made by the Applicants. Therefore, this Tribunal holds that the Applicants are entitled to get the reliefs as prayed for in SA No. 323/2022 .

¶130

In the result,

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(a) SA No. 323/2022 is allowed. The Possession Notice dated 19.09.2018 issued by the 1^st Defendant FI is hereby set aside. Sale held on 15.06.2022 is not in accordance with law and as there is violation the Sale Notice dated 25.05.2022 is hereby set aside.

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(b) Registered Sale Certificate Document No. 4519 of 2023 dated 01.12.2023 is hereby set aside by this Tribunal.

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(c) The 1^st Defendant FI 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.

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Page 14 of 15

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SA No.323/2022

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(d) 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.

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(e) The Applicants are also directed to pay the interest at the rate of 4% of the sale price to the 1^st Defendant FI from the date of payment of Sale price by the Auction Purchaser till the date of refund to the Auction Purchaser by the FI within one month from the date of receipt of copy of the Order.

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(f) The Impugned Order passed by the Ld. District Collector, Kanyakumari District @ Nagercoil in K.Dis.No.C4/368/2019 dated 21.10.2019 is also hereby set aside.

¶139

(g) All the expenditures incurred in issuance of Impugned Order passed by the Ld. District Collector, Kanyakumari District @ Nagercoil in K.Dis.No.C4/368/2019 dated 21.10.2019 and further all the expenditures incurred in respect of Sale Notice dated 25.05.2022 & Registered Sale Certificate dated 01.12.2023 shall not be included in the loan account of the Applicants.

¶140

(h) The 1^st Defendant FI is at liberty to initiate fresh action against the Applicants for recovery of loan amount following strictly the SARFAESI Acts & Rules.

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

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Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 12^th January 2026.

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sd/- (SEEMA SINHA) PRESIDING OFFICER

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Dictated & corrected by me

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sd/-

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(SEEMA SINHA)