Dismissed

Jayamaran v. Housing Development Finance Corporation Limited

DRT12 Mar 2026SA/334/2023

Case brief

AI extract

What is this about?

The DRT dismissed the applicant's Securitization Application challenging the bank's recovery measures. The court upheld the validity of the Deposit of Title Deeds (CERSAI registration notwithstanding), confirmed the loan was an NPA, and validated the issuance and publication of the Section 13(2) Demand and Section 13(4) Possession notices.

What did the court decide?

The Securitization Application was dismissed; the Section 13(2) Demand Notice and Section 13(4) Possession Notice were upheld as valid.

Jayamaran versus Housing Development Finance… — Securities and Capital Markets | DRT (2026)

SA No.334/2023

12.03.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 12^th day of March, 2026

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Present: SMT. S.V. GOWRAMMA

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Presiding Officer

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SA No. 334 of 2023

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Mr. R. Jayaram, S/o. Rangasamy, Plot No.4, 1^st Floor, Adinath Avenue, Santhoshapuram, Chennai – 600 073.

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…Applicant

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-Vs-

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The Authorised Officer, Housing Development Finance Corporation Ltd, Second Floor, ITC Centre, 760, Anna Salai, Chennai – 600 002.

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…Respondent

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Counsels on record / appeared:

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Counsel for Applicant : Ms. J. Prince Counsel for Respondent : Ms. K. J. Parthasarathy

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ORDER ON SA 334 /2023

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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 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 Paper publication of Section 13(4) Possession Notice published in New Indian Express dated 02.05.2023 and the outstanding amount due is Rs.47,13,614/-

SA No.334/2023

12.03.2026

3. Pleadings of the applicant:

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3.1 The applicant had approached the respondent bank and obtained Rs.42,00,000/- in the year 2017, executed all the loan documents in favor of the respondent bank and was also regular in the repayments without any default. Due to covid-19 pandemic, applicant failed to repay the interest portion which resulted in classification of the loan account as NPA and also closed two loan accounts.

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3.2 The respondent bank has failed to register the security interest before the central registry and proceeded to issue Section 13(2) Demand Notice dated 09.01.2023 calling upon the applicant to pay a sum of Rs.47,13,614/- which was not served on all the parties. Further the Section 13(4) Possession Notice dated 26.04.2023 is published in the Newspaper but failed to issue to all the parties.

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3.3 It is contended that the respondent bank has charged heavy interest and also capitalized penal interest in the applicant’s loan account which is in violation of RBI Guidelines and also failed to produce the Statement of Account of the loan account in spite of several demands made by the applicant. Though the applicant is ready to settle the loan account if proper statement of account produced by the respondent bank.

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3.4 In the grounds, it is contended that the classification of loan account is in violation of RBI Guidelines and not as per Section 2(o) of the SARFAESI Act. The Section 13(2) Demand Notice is not issued to all the parties by the

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12.03.2026

respondent bank and Section 13(4) Possession Notice suffers from various errors which is also not issued to all the parties by the respondent bank.

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3.5 The respondent bank has failed to publish the Possession Notice in two leading newspapers and failed to affix on the schedule property. Hence applicant prays to set aside the Section 13(4) Possession Notice dated 02.05.2023.

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4. Objections of the respondent bank:

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4.1 The respondent bank has filed a detailed counter, inter alia contending that all the averments made in the present SA are denied as false. Applicant has approached the bank for sanction of credit facilities and availed Rs.35,68,000/-, Rs.6,35,000/- and Rs.1,84,607/- as Housing loan and executed loan agreements on 28.12.2017, 15.02.2018, 30.12.2017, vide loan accounts No.628957639, 629036717, 630129037 which have to repaid in 204 EMIs of Rs.32,088/-, Rs.6,216, Rs.1,661/-.

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4.2 The applicant has executed equitable mortgage by way of Memorandum of Deposit of Title Deeds over the schedule property and the applicant is legally not entitled to raise allegations with regard to CERSAI registration, though the security was duly registered before the Central Registry Vide Asset ID:200018226718, Interest ID:40018267117.

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4.3 The applicant has failed to comply with the terms and conditions of the loan agreement and defaulted in the repayment of monthly installments. Hence, the respondent bank has classified the loan account into NPA as per Section 2(o) of the SARFAESI Act and issued recall notice

SA No.334/2023

12.03.2026

on 02.04.2022 which is duly served on the applicant herein. The respondent bank has issued Section 13(2) Demand Notice on 09.01.2023 calling upon the applicant to discharge his entire liability within the period of 60 days.

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4.4 In fact the applicant has received the Section 13(2) Demand Notice and replied to the demand made on 11.02.2023 to which the respondent bank has issued a rejoinder on 24.02.2023. Even in spite of receipt of the Section 13(2) Demand Notice, the applicant has failed to discharge his entire liability and the respondent bank has taken physical possession on 26.04.2023. The possession notice was published on two newspapers and affixed on the schedule property on 26.04.2023.

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4.5 Further the respondent has not charged penal interest and the outstanding amount as on 25.03.2024 is Rs.50,45,687/- after giving credit to all the payments made by the applicant. It is submitted that the applicant has not approached this Tribunal with clean hands and prays for dismissal of the present SA.

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

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5.1 It is discernible from the records that the applicant is the borrower who has availed the credit facilities from the respondent bank and executed loan documents, created equitable mortgage by way of Memorandum of Deposit of Title Deeds which are admitted and not disputed by the applicant herein. Further, the security interest was duly registered before the central registry under Section 26(D) of the SARFAESI which is evident from Asset

SA No.334/2023

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ID:200018226718, Interest ID:40018267117 which is a secured asset under the Act.

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5.2 The applicant has failed to comply with the Terms and Conditions of the sanction and failed to make payment for a period of 90 days resulting in classification of the loan account as NPA on 06.04.2021 in accordance with the RBI guidelines and in accordance with Section 2(o) of the Act, which reads as under

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Section 2(o): Non-performing asset means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, [doubtful or loss asset,

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5.3 A mere statement that the account is not classified as per RBI guidelines and Section 2[o] does not merit any consideration without any specifically pointing out the illegality in classifying the account as NPA. Hence, the contention as raised by the applicant that the respondent bank has not classified the loan account as NPA fails.

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5.4 After, classifying the loan account as NPA on 06.04.2021, the respondent bank has proceeded further and issued Section 13(2) Demand Notice dated 09.01.2023 calling upon the borrowers to repay the total outstanding amount of Rs.96,11,532/- which is duly served to the applicant herein as per the acknowledgement card produced at Page No.9 of respondent’s counter. In fact, the applicant has replied to the Demand Notice vide letter dated 11.02.2022 which is also duly replied by the

SA No.334/2023

12.03.2026

respondent bank vide letter dated 24.02.2023 in compliance of S.13[3A] of the Act.

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5.5 Even after the receipt of Section 13(2) Demand Notice dated 09.01.2023, the applicant has failed to discharge the entire liability within the period of 60 days, hence the respondent bank has proceeded further and issued Section 13(4) Possession Notice 26.04.2023 which is received by the applicant as per the acknowledgment cards produced at Page No.17 to 20 of respondent’s counter. The possession Notice is also affixed on the schedule property as per Rule 8(7) as is reflected from photograph of affixture produced at Page No.21 and also published in two Newspapers, one in “The New Indian Express” (English) and another in “Dhinamani” (Tamil) both dated on 02.05.2023 as per Rule 8(6) which is evident from the paper publications produced at Page No.22 to 25 of respondent’s counter. Hence, the contention of the applicant that the Possession Notice is neither affixed nor published in two Newspapers as per Rule 8 is not sustainable.

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5.6 Though a specific contention is raised by the applicant in the present SA that the respondent bank has rendered the details of the charge before the Central Registry and CERSAI vide Asset ID:200018226718, Interest ID:40018267117 as contemplated under Section 26D of the Act. It is apt to extract S.26D which reads as under:

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26D: Right of enforcement of securities:

SA No.334/2023

12.03.2026

Notwithstanding anything contained in any other law for the time being in force, from the date of commencement of the provisions of this Chapter, no secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter III unless the security interest created in its favor by the borrower has been registered with the Central Registry.

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It is seen that the applicant has created equitable mortgage for the credit facilities availed, deposited the title deeds and there is no dispute about the mortgage of the property as security towards the credit facility availed which constitutes a secured asset.

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5.7 The registration of charge of any type on the secured asset or on the property is to ascertain the priority of charge, as per Section 26 E - After the registration of security interest with CERSAI, the debts of the secured creditor i.e., banks, FIs, NBFCs, ARCs, etc. shall be paid in priority over all other debts and all revenue, taxes, cesses and other rates payable to Central Government or State Government or Local Authority. Default in filing the charge as required under Section 23 would attract punishment with fine, but not invalidated the mortgage or charge on the property. Thus, it is evident that the bank or any NBFC who have mortgage of the property favoring them is a secured creditor and the mortgage of the property is a secured asset and registration of such charge is to ascertain the priority of charge.

SA No.334/2023

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5.8 Further the respondent also relied on the Section 20 of the SARFAESI Act and submitted that the applicant is not legally entitled to raise an objection of non-registration under the Act . Further in non-registration of the charge would only ensure penalty under Section 27 of the Act and it does not take away the right of the secured creditor to ensure the security available to them under the Act.

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5.9 The applicant has raised another contention that the respondent bank has failed to issue Possession Notice dated 26.04.2023 to all the parties and the same is duly countered by the respondent by producing the Postal receipts and returned cover which clearly reflects that the notices to other parties were sent through RPAD which came to be returned with an endorsement as “Unclaimed” at Page No.18 to 20 of respondent’s counter. Further the possession is published in two Newspapers and affixed on the schedule property as per Rule 8 of SIE Rules.

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5.10 Further the applicant has taken a contention that there is no proper description of the schedule property is not sustainable on perusal of the Possession Notice it is evident that the property is clearly described as per Rule 8 (7) (a) of SIE Rules. Hence, the contention of the applicant that the property is not clearly described in the possession notice fails.

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5.11 On perusal of the records it is seen that the respondent bank as a secured creditor has classified the loan accounts as NPA on 06.04.2021 and proceeded to issue Demand Notice 09.01.2023 which is admittedly received by the applicant. After the receipt of the Demand notice, applicant has

SA No.334/2023

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made an representation dated 11.02.2023 and the same was rejected by the respondent bank vide letter dated 24.02.2023 as required under Section 13(3A) of the Act. In spite of receipt of Section 13(2) Demand notice, the applicant failed to liquidate the entire liability within 60 days even after raising objections to demand notice under Section 13[3A] of the Act.

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5.12 The respondent bank proceeded further in issuing the Possession notice dated 26.04.2023 which is duly served to the applicant herein as per the acknowledgement cards produced by the respondent, affixed on the conspicuous part of the property, published in two Newspapers as mandated under the Act. Thus, the respondent bank has established the due compliance of procedures in initiating the measure under the Act.

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5.13 For the forgoing reasons, the present SA is only to be dismissed upholding the Section 13(2) Demand notice dated 09.01.2023 and Section 13(4) possession notice dated 26.04.2023 as valid notices.

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Resultantly the present SA dismissed. 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/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Steno (Mogesh), transcribed by him, corrected, signed and pronounced by me on this the 12^th day of March, 2026)

SA No.334/2023

12.03.2026

ANNEXURES

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl.	Description of Documents	Document
No.		No.
1.	Impugned Publication of Possession Notice dated	A-1
	02.05.2023
2.	Vakalath	A-2

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

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Sl. No.	Description of Documents	Document No.
1.	Section 13(2) Notice with acknowledgement dated 09.01.2023	R-1
2.	Reply to 13(2) Notice by applicant (sent on 14.02.2023) date 11.02.2023.	R-2
3.	Communication by authorized officer dated 24.02.2023	R-3
4.	Possession Notice with acknowledgment and returned cover dated 26.04.2023.	R-4
5.	Affixture of Possession Notice dated 26.04.2023	R-5
6.	Possession Notice publication 02.05.2023.	R-6

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SCHEDULE OF PROPERTY

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All that piece and parcel of the property bearing Flat No.F1 on the First Floor, in the building called as "Sam-Sai Flats" having super Built-up area of 955 sq.ft., inclusive of common area and Covered car Parking marked as F-1, together with 546 sq.ft., UDS of land in and out of land measuring an extent of 2,130 sq.ft., bearing Plot No.4, comprised in Old Survey No.44/7C and 44/7A, Old Patta No.658, New Patta No.4651, as Per Patta Survey No.44/1A1A2, in Adinaath Avenue Phase-II, Situated at No.176, Vengaivasal Village, Tambaram Taluk, Now Sholinganallur Talk, Kancheepuram District, bounded on;

North by: Plot No.3,

SA No.334/2023

12.03.2026

South by: Plot Nos.5 and 6,

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East by: 33 feet Road,

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West by: Vacant Land,

Measuring;

North side: 74 feet,

South side: 68 feet,

East side: 30 feet,

West side: 30 feet,

And the property situated within the Registration District of Chennai South and Sub Registration District of Selaiyur.

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

Jayamaran v. Housing Development Finance Corporation Limited

Case brief

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Jayamaran v. Housing Development Finance Corporation Limited

Case brief

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