Dismissed

Muruganandham v. Iifl Home Finance Limited

DRT3 Mar 2026SA/385/2023

Case brief

AI extract

What is this about?

The Tribunal dismissed the Securitization Application filed to quash a Section 14 order of the Chief Judicial Magistrate allowing possession of mortgaged property. The court held that the bank duly served demand and possession notices with proof of publication and production of CERSAI documents were not challengeable as the power under Section 14 is ministerial and not adjudicatory.

What did the court decide?

The Securitization Application is dismissed, and the Section 14 order of the Chief Judicial Magistrate is upheld.

Muruganandham versus Iifl Home Finance Limited — Banking and Recovery | DRT (2026)

SA No.385/2023

03.03.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 03^rd day of March, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 385 of 2023

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Mr. N.Muruganandham, S/o. Mr.Navaneetha Kannan, No.1/128, Sangam Street, Thirumangalam village, Sunguvachathiram Near Government High School, Sriperambathur, Chennai-602 106. ….Applicant -Vs-

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The Authorized Officer, M/s.IIFL Home Finance Ltd,

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T.Nagar, Chennai – 600 017 ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. B. Rajesh Counsel for respondent : M/s. V. Balasubramani

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ORDER ON SA 385/2023

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The present Securitization Application [SA] is filed on 25.07.2023 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 Sec.14 order dated 25.08.2022 in C.M.P. No.7650 of 2022 passed by Chief Judicial Magistrate, Chengalpet and the outstanding amount due as per Sec.14 order is Rs.18,99,305/-

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Pleadings of the applicant:

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The applicant had availed Mortgage Loan facility to meet the urgent requirements from the respondent bank on 17.06.2014, for a sum of Rs.19,50,000/- by depositing the title deeds of the schedule mentioned property. The applicant had regularly repaid EMI without any default.

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The applicant executed all loan documents as required by the Respondent and initially was regular in repaying the loan without any delay or default. Due to the severe impact on the Covid-19 pandemic, the business of the applicant was not able to repay the interest portion alone and despite their difficulties and stringent situation they had made several payments and closed the two loan accounts as mentioned above. Due to some irregular payments, the accounts was declared as NPA.

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The respondent can initiated the measures under the SARFAESI Act only after the registration of the security interest before the central registry and as the respondent have not registered the charge in the central registry they cannot proceed under the SARFAESI Act.

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It is submitted that the Advocate commissioner came to the schedule mentioned property and issued notice dated 29.06.2023 and informed to take physical possession of the property. The applicant is shocked and surprised to notice as he is always ready and willing to pay outstanding amount. But the respondent deliberately failed to give details of debts and no demand notice served to the applicant at point of time.

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It is further submitted that the respondent had proceeded further under the Act and obtained order from CJM Chengalpet without clean hand. The Applicant to safeguard their interests have no other alternative except to invoke the jurisdiction of this Hon’ble Tribunal under Section 17(1) of the Securitization Act.

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In the grounds, it is contended that the respondent failed to serve the demand notice to all the parties and bank failed to take alternative service as per Rule 3 of SIE Rules. Hence, the classification of the loan Account as NPA is against the norms of RBI guidelines.

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However, all the borrowers have not been served with the demand notice under section 13(2) which is a sine quo non for further proceedings under the SARFAESI Act as mandated in 2010 (1) DRTC 489 (A.P.). The Publication of the Possession Notice had not been effected within 7 days as mandated under Rule 8(2) of SIE Rules and is liable to be set aside.

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The respondent bank has not filed with the Central Registry as per Section 23 of the SARFAESI Act. The outstanding shown in the demand notice is mischievous and imaginary not borne out of records and the same has not been arrived at adopting RBI norms. Hence, the applicant account as NPA is contrary to Section 2(o) of the Act.

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It is seen deliberately not serving the demand notice on all the borrowers and the valuable right of the other borrowers under Section 13(3A) had been taken away by the Respondent. Admittedly the

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respondent have resorted to alternate service of demand notice but have not affixed the same as prescribed in the rules.

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The Possession notice is not in accordance with Rule 8(1) of SIE Rules since publication is not made in leading newspapers out of which one in vernacular language as mandated in the Act. The Possession Notice had neither been affixed on the properties nor delivered on all the borrowers as required under the SARFAESI Act. The outstanding shown in the Possession notice is mischievous and imaginary not borne out of records and the same has not been arrived at adopting RBI guidelines.

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The Possession Notice does not disclose the date of service of the demand notice said to have been issued under Section 13(2) of the Act which would establish that no demand notice was served on all the parties.

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The Possession notice are against the settled legal principles laid down by the Hon’ble Supreme Court in the Case of Mardia Chemicals and Transcore and the decision of the Hon’ble Madras High Court in Lakshmi Shankar Mills. In any view of the matter the obtain order dated 25/08/2022 in C.M.P.No.7650 of 2022 on the file of CJM, Chengalpet are without jurisdiction and deserves to be set aside in the interests of justice. The applicant pray to set aside the order passed by Hon’ble CJM, Chengalpat in C.M.P.No.7650 of 2022 dated 25.08.2022.

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Objections of the respondent bank:

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The respondent has filed the counter contending that the Applicant had approached the respondent for availing home Loan by mortgaging his

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property. The respondent considered their request and disbursed a sum of Rs.19,50,000/- and had executed a Loan Agreement vide Loan Account/Prospect No. 711706 dated 17.06.2014 in agreeing to repay the loan in 155 EMI's of Rs.28,395/- per month and also other relevant documents in favor of respondent.

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The Applicant have also executed Memorandum of Deposit of Title deeds dated 03.07.2014 vide DOC. No. 2866/2014. The Applicant failed to adhere to the terms of the loan agreement and defaulted in payments of monthly installments. Since the Applicant committed default in repayment of installments the respondent had classified the Applicant accounts as NPA on 13.09.2016 in accordance with section 2(o) of the SARFAESI Act.

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The respondent issued statutory Notice under Section 13(2) of the Act on 20.10.2016 calling upon the Applicant to discharge their liabilities in full within 60 days from the date of receipt of the said notice. Hence, the notices were duly served on the Applicant.

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It is submitted that being the secured creditor upon default by the borrower after statutory notice under Section 13(2) of the Act, they are entitled to proceed against the borrower under Section 13(4) of the Act to take possession of the secured Asset and as such the respondent issued possession notice dated 09.11.2018 and the same was also published in two newspapers one in English "Business Standard" and another one in Tamil "Dinakaran" both dated 14.11.2018.

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It is further submitted that despite of said notice the applicant has failed pay the outstanding dues despite of repeated reminder and request hence, filed section 14 petition under SARAFESI Act, in Chief Judicial Magistrate, Chengalpet in Crl.M.P.No.7650 of 2022 and order passed on 25.08.2022. The Respondent bank all the averment made in the present SA and also followed all the measures as required. Hence respondent bank prays for dismissal of the SA.

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Heard both sides of the Counsels and perused the records of

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the case

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It is manifest from the records that the applicant had availed home loan for a sum of Rs.19,50,000/- and had executed a loan agreement vide loan Account/Prospect No.711706 dated 17.06.2014 agreeing to repay the loan in 155 EMI's of Rs.28,395/- per month and also other relevant documents in favor of respondent.

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The applicant has deposited the title deeds of the property on 03.07.2014 vide Doc.No.2866/2014 as security and the mortgage is registered before the central registry dated 30.11.2016 which is produced by the respondent at pg.35 and 36. In fact the applicant does not dispute the availing of the facilities and the mortgage of the property including the default in the repayment. Due to continuous default in the repayment, the loan account of the applicant was classified as NPA on 13.09.2016 in accordance with RBI guidelines.

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The respondent had issued the Sec.13(2) Demand Notice dated 20.10.2016 claiming an amount of Rs.18,99,305/- due as on 20.10.2016 along with other charges. The applicant have received the demand notice as per the Postal Tracking Report produced at Pg.15-20 of counter. In spite of receipt of Sec.13(2) demand notice as the borrower and the guarantor did not liquated the liability within the period of 60 days and nor raised any objections to the demand made.

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Contrary to documents applicant denies the receipt of S.13[2] demand and alleges of taking away the right of the applicant under S.13[3A] which cannot sustain. The respondent has produced the tracking report of service of demand notice. As the borrower and guarantor did not liquidate the liability within 60 days, the respondent has proceeded further under the Act.

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The respondent issued the Sec.13(4) possession notice on 09.11.2018 and Postal Receipts produced at pg.24, and possession notice is also published in two newspapers one in Tamil “Dinakkaran” and another one in English “Business Standard” both dated 14.11.2018 produced at Pg.25 and 26, and affixture of possession notice produced at pg.27 and 28 evidences due service of possession notice.

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It is an admitted fact that applicant has not challenged the Sec.13(4) Possession Notice dated 09.11.2018 within the period of 45 days as required under section 17(1) of the SARFAESI Act. It seen that the respondent has produced the copies of the S.13(2) Demand Notice and

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S.13(4) Possession Notice and its acknowledgement cards for due compliance of the measures taken.

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As the applicants failed to repay the entire outstanding amount the bank has proceeded and approached the CJM, Chengalpat in u/s 14 of the SARFAESI Act. The Hon’ble CJM after perusal of the application and the loan documents produced by the respondent bank respondent have allowed the S.14 application on 25.08.2022.

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The Ld. Magistrate after due verification of the documents and the pleadings in Sec.14 application have allowed the S.14 petition filed by the secured creditor by directing the Advocate Mr. Ajithkumar.J, as the Advocate Commissioner to inspect the petition mentioned property, take inventories if necessary and thereafter take possession of the petition mentioned property and hand over the same to the petitioner/bank. The Ld. Advocate Commissioner the Tahsildar, Sriperumpudur is hereby directed to assist the Ld. Advocate commissioner to identify the petition mentioned property by deputing competent revenue and survey officials.

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Thus it is evident that the Ld. Magistrate on examination of the pleadings in the S.14 application which is supported by the documents, have passed an order dated 25.08.2022 directing the Advocate Commissioner to take the possession of the property. Though the applicant have filed the present SA impugning the Sec.14 order dated 25.08.2022 passed by Ld. CJM, Chengalpet has not pointed out any illegality in the measures taken by the respondent herein.

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On the other hand, though the statutory notices, the Demand Notice dated 20.10.2016 and Possession Notice dated 09.11.2018 are issued to the applicants in accordance to law, applicants have waived right to raise any contention with regard to Sec.13(4) Possession Notice within the period of 45 days. Hence any contentions to Sec.13(4) Notice is barred by limitation.

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Now considering the challenge to S.14 Order, it is appropriate to mention the declaration of The Hon’ble Supreme Court and various Hon’ble High Courts in various judgments has held that the power of Designated Court under Section 14 SARFAESI Act, 2002 is ministerial and nonadjudicatory in nature and the process to be followed under Section 14 does not involve any element of quasi-judicial function nor it requires any application of mind.

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Furthermore, the Hon’ble Supreme Court in the matter of Kotak Mahindra Bank vs Girnar Corrugators Pvt. Ltd. & Others , held that while exercising power under Section 14 of the SARFAESI Act, even the District Magistrate has no jurisdiction and/or District Magistrate and/or even the Chief Metropolitan Magistrate has no jurisdiction to adjudicate the dispute between secured creditor and debtor.”

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The Hon’ble Bombay High Court in the matter of Phoenix ARC Pvt.

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Ltd. Vs. The State of Maharashtra has held that Court is only required to verify the affidavit of Secured Creditor filed in pursuance of the proviso to Section 14 and nothing more. The above Bombay High Court judgment

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has since been confirmed by the Hon’ble Supreme Court by its judgment dated 26.09.2022 in the matter of Balakrishna Ram Tarle v. Phoenix

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ARC (P) Ltd. as under:

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“Thus, the powers exercisable by CMM/DM Under Section 14 of the SARFAESI Act are ministerial step and Section 14 does not involve any adjudicatory process qua points raised by the borrowers against the secured creditor taking possession of the secured assets. In that view of the matter once all the requirements Under Section 14 of the SARFAESI Act are complied with/satisfied by the secured creditor, it is the duty cast upon the CMM/DM to assist the secured creditor in obtaining the possession as well as the documents related to the secured assets even with the help of any officer subordinate to him and/or with the help of an advocate appointed as Advocate Commissioner. At that stage, the CMM/DM is not required to adjudicate the dispute between the borrower and the secured creditor and/or between any other third party and the secured creditor with respect to the secured assets and the aggrieved party to be relegated to raise objections in the proceedings Under Section 17 of the SARFAESI Act, before Debts Recovery Tribunal”.

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The Supreme Court in the judgment of Authorized Officer, Indian Bank v D Visalakshi and other, has held that a Chief Judicial Magistrate is equally competent to deal with the application moved by the secured creditor under Section 14 of the SARFAESI Act. Hence, the Sec.14 dated 25.08.2022 in C.M.P. No.7650/2022 passed by Ld. CJM, Chengalpet is a valid Order.

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Additionally, Section 14(3) of the SARFAESI Act statuses that no action taken by the Chief Metropolitan Magistrate or District Magistrate (or any officer authorized by them) under S.14 can be challenged in court or before any other authority. This provision ensures that the authority of these officials in enforcing security interests is final and not subject to further review.

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35. T hus, the Sec.14 order passed by the Ld. Section 14 order dated 25.08.2022 in C.M.P. No.7650/2022 passed by CJM, Chengalpet is after due consideration of the application, affidavit in support of compliance of procedures along with documents is an execution Order issued where no adjudication is required. The Order is passed considering the due compliance of the provisions of the S. 14 [i-ix].

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On examination of pleadings and documents produced by respective parties, the Tribunal comes to conclusion that the respondent bank as secured creditor has initiated measures under the Act after classifying the

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account as NPA.

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Consequent to classification of account as NPA has issued S.13[2] Demand Notice followed by Possession Notice and have complied all the procedures as contemplated under the Act and the Rules with supporting documents. Thus it is held that the Demand Notice u/s S.13[2] dated 20.10.2016 and S.13[4] Possession Notice dated 09.11.2018 are held as valid notices issued under the Act.

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For the foregoing reasons, the present SA is 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 (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 03^rd day of March, 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 of Deposit of Title Deeds executed by the applicant dated 03.07.2014.	A-1
2.	Impugned order in C.M.P.No.7650 of 2022 on the file of CJM Chengalpet dated 25.08.2022.	A-2
3.	Letter given by the Advocate Commissioner dated 29.06.2023.	A-3

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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 MOD vide Doc.No.2868/2014 in respect of Loan Account/Prospect No.711706 dated 03.07.2014.	R-1
2.	Copy of Demand Notice with postal receipts, online India Postal Track Consignments dated 20.10.2016.	R-2
3.	Copy of Possession Notice under Sec.13(4) with postal receipts and acknowledgement cards dated 09.11.2018.	R-3
4.	Copy of paper publication of possession notice (English-Business Standard) dated 14.11.2018.	R-4
5.	Copy of Paper publication of Possession Notice (Tamil–Dinakkaran) dated 14.11.2018.	R-5
6.	Copy of Affixture photos of Possession Notice.	R-6
7.	Copy of Section 14 order passed by the Hon’ble Chief judicial Magistrate, Chengalpet in Crl.M.P.No.7650 of 2022 dated 25.08.2022.	R-7
8.	Copy of CERSAI Certificate.	R-8
9.	Statement of account.	R-9
10.	Copy of Authorization Letter.	R-10

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SCHEDULE OF PROPERTY

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All that piece and parcel of the vacant house site measuring an extent of 2627 Sq.ft (241 Sq.meter), with R.C.C. Building 630 Sq.feet, E.B. No.559- 002-249, in comprised Grama Natham Old Survey No.122/Part, Patta No.301, as Per Patta New Survey No.387/26, ‘PONNIAMMAN KOIL STREET’, situated at No.38, Thirumangalam Village,

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Sriperumbudur Taluk, Kancheepuram District, Registration District of Chengalpet, and Sub Registration District of Sunguvarchathiram.

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Bounded on the

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North by : Ponniamman Koil Street South by : Vendor’s Remaining Land East by : Mr.Sarangan’s Land West by : Kanniappan’s Land

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