The Debt Recovery Tribunal, Chennai dismissed an appeal challenging a secured creditor's auction sale. The Tribunal held that the borrowers lost their right of redemption upon the publication of the auction notice under Section 13(8) of the SARFAESI Act, making the sale valid.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
SA No.382/2025
1
12.03.2026
IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI
Dated this the 12th day of March, 2026
Present: SMT. S.V. GOWRAMMA Presiding Officer
SA No. 382 of 2025
-Vs-
The Authorized Officer, Punjab National Bank, Circle Sastra Centre, Chennai Second Floor, No.769, Spencer Plaza, Chennai – 600 002 …Respondent Counsels on record / appeared:
Counsel for applicants : M/s. D. Durairaj & B. Suganya Counsel for respondent : M/s. S. Vaidyanathan
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ORDER ON SA 382/2025
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].
3. Pleadings of the applicants:
3.1 The applicants approached the respondent bank for Housing loan in the year 2014 for construction of the property. The respondent bank has sanctioned Rs.1,25,00,000/- and the applicants were regular in repaying EMI and have paid Rs.1,55,000/- and also paid Rs.75,00,000/- till 2018.
3.2 Due to personal inconvenience, the applicants were irregular in the repayment and the loan account was classified as NPA without following RBI guidelines. The applicants have also raised objection to the interest charged and classification of loan account as NPA which was not considered by the respondent bank. Further, the respondent bank has issued Section 13(2) Demand Notice dated 05.01.2023 for a sum of Rs.2,98,07,963.72/- and the amount due as per the statement of account
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is Rs.75,00,000/-, hence the claim made by the respondent bank is totally wrong.
3.3 Further, the applicants have raised objections to the demand notice under Section 13(3A) and the respondent bank has failed to give reply to the objections made by the applicants. The respondent bank has issued the Possession notice which was challenged by the applicants and came to be allowed due to wrong mentioning of the outstanding amount. Due to Covid – 19 pandemic situation, the applicants’ business has fell down and the respondent bank has charged interest to interest, penal interest and the outstanding due amount as claimed by the respondent bank is in violation of the RBI Guidelines.
3.4 The respondent bank has not served the Sale notice to the applicants and conducted the sale on 19.03.2025 in spite of several requests made by the applicants. Further the respondent bank has failed to produce the statement of accounts and claimed outstanding amount Rs.3,32,98,447.40/-. In the grounds it is contended that the respondent bank has not served the Demand notice to the applicants and classification of the loan account is in violation of the RBI guidelines.
3.5 Further, the respondent bank has failed to comply with Rule 8(1) and (2) of SIE Rules in issuing the Possession Notice to the applicants and sold the property without obtaining proper valuation report from the approved valuer as per Rule 8(5) of SIE Rules. Though the property value is Rs.7,50,00,000/- and sold the property only for Rs.3,65,58,000/- which
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is in violation of the Hon’ble Supreme Court Judgment in Mathiw
Varghese Vase .
3.6 The respondent bank has initiated the sale proceedings without complying Rule 8(6), 9(1), 9(4) and 8(7) (a) of SIE Rules. The Sale notice and Possession notice is not affixed on the property and charged interest rate against the sanction ticket. The description of the property is not clearly mentioned in the sale notice including the land and building. On these grounds, the applicants prays to set aside the Sale held on 19.03.2025 pursuant to the Sale notice dated 27.02.2025.
4. Objections of the respondent bank:
4.1 The respondent bank has filed a detailed counter inter alia contending that all the allegations made by the applicants is denied. The applicants had applied for Housing Loan of Rs.1,60,96,000/- and also accepted terms and conditions of the sanction. To secure the repayment of the credit facilities availed, applicants have executed several loan documents and also created equitable mortgage by way of Memorandum of Deposit of Title Deeds.
4.2 The applicants have further availed Overdraft facility of Rs.25,00,000/- and Furnishing loan of Rs.5.00 lakhs from the respondent bank. Further the applicants have defaulted in the repayment which resulted in classification of the Housing loan account as NPA on 31.01.2020 and Overdraft facility account on 30.06.2020. Further, the
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contentions with regard to the Deman Notice, classification of loan account as NPA is adjudicated by this Tribunal in SA No.523/2024.
4.3 In fact, the applicants have made a delay in representation of the SA due to the receipt of Power of Attorney and the applicants have filed an SA No.523/2024 which was represented by their Power agent and also relies on the Judgment of Hon’ble High Court of Kerela in George Jacob Vs. Pooram Mills Koodalapad 2017 SCC and submits that there is no provision in extension of limitation under Section 5 or Section 29(2) of limitation act.
4.4 The respondent bank has issued 10th Sale notice dated 27.02.2025 scheduling the sale to be held on 19.03.2025 with clear 15 days’ notice, after obtaining order from Hon’ble CJM, Chengalpattu on 08.07.2024. Further, the sale notice was sent to all the applicants through registered post which came to be returned as “Left” and also published in Tamil and English Newspapers on 27.02.2025. The sale notice is also affixed on the mortgaged property on 01.03.2025.
4.5 Further, the auction sale was successfully held on 19.03.2025 in favor of M/s. Green and Grow Water Treatment Pvt. Ltd. for a bid amount of Rs.3,66,58,000/-, Sale certificate is issued after the receipt of entire sale consideration and registered in favor of the auction purchaser vide Doc.No.3154/2025 dated 07.04.2025 before SRO, Pammal. It is submitted by the respondent bank that there is no error in the loan
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accounts and the total outstanding due amount is Rs.3,32,98,447.40 as on 31.01.2025.
4.6 The respondent bank has obtained a valuation report dated 11.11.2024 from the approved valuator and fixed realizable value at Rs.3,65,40,000/- and Reserve price at Rs.3,65,58,000/-. Though the respondent bank relies on the Judgment of Celir LLP Vs. Ms. Sumathi Prasad Bafna and Ors before Hon’ble Apex Court.
4.7 It is submitted by the respondent bank that the applicants have lost the right of redemption and filed the present SA after the registration of Sale certificate on 07.04.2025, also relies on the Judgment of S.
Karthik and Ors Vs. N. Subhash Chand Jain and Ors in C.A.No.005920-005923/2021. The applicants have challenged the 10th
Sale notice and failed to redeem the property as Section 13(8) of the SARFAESI Act and relies on the Judgment of Arce Polymers Pvt. Ltd. Vs. Alphine Pharmaceuticals Pvt. Ltd. and Ors before Hon’ble Apex Court.
4.8 The respondent bank has countered the grounds as raised by the applicants by submitting that the issues with regard to the Demand Notice, Possession Notice, Classification of loan account as NPA is already dealt in SA 523/2024. Hence, the respondent bank prays for dismissal of the present SA.
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 applicants have admitted the availing of credit facilities from the respondent bank for construction of residential House. To secure the repayments of the credit facilities availed, the applicants has created an equitable mortgage in favor of the respondent bank which is also not disputed by the applicants herein.
5.2 Further the applicants have raised allegations and averments with regard to the classification of the loan account as NPA and issuance of statutory notices i.e., Section 13(2) Demand Notice, Section 13(4) Possession Notice were already dealt in the previous SA No.523 of 2024 by this Tribunal vide order dated 04.07.2025. The relevant portion of the final order in SA No.523/2024 is extracted here under:
“5.2 Subsequent to the classification of the account as NPA, Respondent bank as a secured creditor has issued Section 13(2) Demand Notice dated 05.01.2023 which is sent by RPAD and it is duly received by the applicants as per the Acknowledgement cards produced at page No.21 of bank typeset. In spite of receipt of Section 13(2) Demand Notice, as the applicants didn't liquidate the liability within a period of 60 days nor raised objections, the Respondent bank has proceeded further in issuing Section 13(4) Possession notice dated 16.03.2023 5.3 The Section 13(4) Possession notice is also sent by RPAD and the Postal Acknowledgement Cards evidences the receipt of Possession Notice. Further as per the procedure, bank have affixed the
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Possession notice on the property and also published in two Newspapers, one in "New Indian Express" (English) and another in "Dinamani" (Tamil) both dated on 18.03.2023 which is produced at Page No.31 to 33.”
Hence, the contentions with regard to the classification of the loan account as NPA and measures initiated by the respondent bank in issuing the Section 13(2) Demand Notice and Section 13(4) Possession is already adjudicated, hence the said contention fails. Further any challenge to other measures is not within the period of 45 days.
5.3 The applicants even after the receipt of statutory notices has failed to liquidate the entire outstanding liability, hence the respondent bank has proceeded further in issuing the Sale notice dated 27.02.2025. The sale notice was sent through RPAD to the applicants herein which came to be returned with an endorsement “Left” as evident from the postal receipts and returned covers produced at Page No.12 to 16 of the respondent’s counter. In fact, the sale notice dated is 27.02.2025 and scheduling the sale to be held on 19.03.2025, hence there is clear 15 days’ notice as it is the 10th Sale notice. Therefore, the contention of applicants that there is no proper 30 days’ notice issued to the applicants does not sustain.
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published in two Newspapers as per Rule 8(6) which is evident from the paper publications produced at Page No.18 and 19 of respondent’s counter. Hence, the allegations with regard to the publication and affixture of Sale notice is not sustainable which is also duly countered by the respondent bank with supporting documents.
5.5 The applicants have raised a contention that there is no proper description of the property in the Sale notice dated 27.02.2025 is not sustainable as there is a proper description of the property as per Rule 7(a) of SIE Rules. Hence, the contention of the applicants that there is no proper description of the property fails.
5.6 The applicants have raised a specific contention that the property is undervalued is duly countered by the respondent bank by producing the valuation report dated 11.11.2024 obtained from an approved valuator as per Rule 8(5) of SIE Rules. In fact, the applicants have failed to produce any valuation report to support their contention. Hence, the contention of the applicants that the property is under valued is not sustainable.
5.7 In fact, the applicants have not come forward to settle their entire liability even after the receipt of statutory notices i.e., Section 13(2) Demand Notice dated 05.01.2023, Section 13(4) Possession Notice dated 16.03.2023 and Sale notice dated 27.02.2025. Subsequently the auction sale was conducted on 19.03.2025 in favor of the highest bidder and Sale certificate is also registered before the SRO, Pammal. Hence, the applicants have lost their right of redemption and the Tribunal relies on
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the Judgment of Celir LLP –Vs. –Bafna Motors & Others – [2024 Live Law (SC) 991 , the Hon’ble Supreme Court has categorically held that the borrower loses right of redemption on the date of publication of the Sale Notice and the applicants having failed to redeem the property as required under Section 13(8) have waived her right.
Celir LLP v. Ms Sumati Prasad Bafna and others -Citation: 2024 Live Law (SC) 991 where it is held as
"Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set-aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding. Mere irregularity or deviation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding."
The court further held "In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity."
Further Section 13(8) had reiterated of the amended Act as under
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Section 13(8):
“ However, the amended provisions of Section 13(8) of the SARFAESI Act, make it clear that the right of the borrower to redeem the secured asset stands extinguished thereunder on the very date of publication of the notice for public auction under Rule 9(1) of the Rules of 2002. In effect, the right of redemption available to the borrower under the present statutory regime is drastically curtailed and would be available only till the date of publication of the notice under Rule 9(1) of the Rules of 2002 and not till the completion of the sale or transfer of the secured asset in favor of the auction purchaser”
5.8 It is pertinent to mention that the Applicants have lost their right of redemption as held by the Hon’ble Supreme Court in case titled “Celir LLP versus Bafna Motors (Mumbai) (P) Ltd.” considered the right of redemption under Section 13[8] after the amendment has held that borrower's right of redemption of mortgage under the SARFAESI Act will get extinguished once the bank publishes an auction notice for the sale of the secured asset and further held that the failure on the part of the borrower in tendering the entire dues before the publication of the auction notice as per Section 13(8) of the SARFAESI Act constituted an "extinguishment of right of redemption of mortgage”.
SA No.382/2025
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bank in issuance of issuance of Section 13(2) Demand Notice dated 05.01.2023 and Section 13(4) Possession notice dated 16.03.2023 are held as valid notices and the sale notice dated 27.02.2025; sale held on 19.03.2025; and sale certificate dated 25.03.2025 issued in favor of the auction purchaser are in accordance with the procedures as required under the Act and Rules made there under and same are held as valid measures.
Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI
ANNEXURES
LIST OF DOCUMENTS PRODUCED BY THE APPLICANTS
| Sl. | Description of Documents | Documents |
|---|---|---|
| No. | No. | |
| 1. | Sale Notice dated 27.02.2025. | A-1 |
| 2. | POA Notice | A-2 |
| 3. | Vakalath | A-3 |
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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET
| Sl. No. |
Description of Documents | Documents No. |
|---|---|---|
| 1. | Sale Notice dated 27.02.2025. | R-1 |
| 2. | Returned envelopes for sale notice with receipts affixed |
R-2 |
| 3. | Photograph of affixing of sale notice | R-3 |
| 4. | Publication of possession notice in English Newspaper “New Indian Express” and “Dinamani”dated 27.02.2025. |
R-4 |
| 5. | Confirmation of sale dated 21.03.2025. | R-5 |
| 6. | Intimation to borrowers to remove belongings dated 21.03.2025. |
R-6 |
| 7. | Sale Certificate dated 25.03.2025. | R-7 |
| 8. | Sale Certificate registered as Doc.No.3154/2025 with SRO, Pammal dated 07.04.2025. |
R-8 |
| 9. | Valuation report dated 11.11.2024. | R-9 |
| 10. | Statement of housing loan account from 01.01.2025. |
R-10 |
| 11. | Statement of OD account from 01.01.2025. | R-11 |
| 12. | Statement of personal loan account from 01.01.2025. |
R-12 |
SCHEDULE OF PROPERTY
Property-1
All the piece and parcel of the land measuring 2500 sq.ft bearing plot no.C4 (plot sub division approved by the commissioner, Kundrathur pancharyat, union at Padappai vide permit bearing No.7798 and D. Dis No.4963/2005 dated 10.06.2005) in maxworth Nagar, Pammal Chennai and comprised Chennai and comprised in the then survey No.82/2 and as per patta No.1199, Re survey No.82/2A2 in Kolapakkam village, Sriperumbudur Taluk in Kancheepuram District being Bounded on the
North by : Land in survey No.89 South by : 24 feet road
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East by : Plot No.C5 West by : Plot No.C3
Measuring on the
Northern side : 33 feet 6 inches Southern side : 33 feet Eastern side : 79 feet 9 inches Western side : 70 feet 4 inches Property-2
All the piece and parcel of the land measuring 3350 sq.ft bearing plot no.C5 (plot sub division approved by the commissioner, Kundrathur pancharyat, union at Padappai vide permit bearing No.7798 and D. Dis No.4963/2005 dated 10.06.2005) in maxworth Nagar, Pammal Chennai and comprised Chennai and comprised in the then survey No.82/2 and as per patta No.1199, Re survey No.82/2A2 in Kolapakkam village, Sriperumbudur Taluk in Kancheepuram District being
Bounded on the
North by : Land in survey No.89 South by : 24 feet road East by : Land in Survey No.82/2 part West by : Plot No.C4
Measuring on the
Northern side : 39 feet 6 inches Southern side : 39 feet Eastern side : 91 feet Western side : 79 feet 9 inches
Sd/-
(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI
3 issues framed by the court
Whether the borrowers lost their right of redemption after the publication of the auction notice.
Whether the Sale notice served and the auction conducted in accordance with the SARFAESI Act and Rules.
Whether the previous contentions regarding the Demand Notice and classification as NPA were already adjudicated.
Colour shows how this judgement treated each authority
Mathiw Varghese VaseReferred¶33
Mathiw Varghese Vase
George Jacob Vs. Pooram Mills KoodalapadReferred¶43
George Jacob Vs. Pooram Mills Koodalapad 2017 SCC
S. Karthik and Ors Vs. N. Subhash Chand Jain and OrsReferred¶51
S. Karthik and Ors Vs. N. Subhash Chand Jain and Ors in C.A.No.005920-005923/2021
Arce Polymers Pvt. Ltd. Vs. Alphine Pharmaceuticals Pvt. Ltd. and OrsReferred¶53
Arce Polymers Pvt. Ltd. Vs. Alphine Pharmaceuticals Pvt. Ltd. and Ors
Celir LLP v. Ms Sumati Prasad Bafna and othersRelied on¶79
Celir LLP Vs. Ms. Sumathi Prasad Bafna and Ors -Citation: 2024 Live Law (SC) 991
2 provisions across 1 enactments
Mr. Rajesh Elanchezian
C. Elanchezian
Mrs. Malini Elanchezian
The Authorized Officer, Punjab National Bank
SMT S.V. GOWRAMMA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
