Dismissed

Thamarai Selvi Hi Tech Rice Mill v. Canara Bank

DRT8 May 2026SA/392/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a Securitization Application challenging a Section 13(2) Demand Notice and Section 13(4) Possession Notice issued by the Respondent Bank. The Tribunal found that the Bank duly complied with statutory provisions regarding notice service, publication, and objection replies, rejecting the Applicant's claims of procedural defaults.

What did the court decide?

The Securitization Application was dismissed upholding the validity of the Demand Notice dated 21.10.2022 and the Possession Notice dated 06.02.2023.

Thamarai Selvi Hi Tech Rice Mill versus Canara Bank — Banking and Recovery | DRT (2026)

SA No.392/2023

08.05.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 08^th day of May, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SA No. 392 of 2023

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M/s. Thamarai Selvi Hi Tech Rice Mill, Proprietor: Mr. P. Krishnan, 211A, Karmbedu village, Pallipattu – Nagari Road, Pallipattu Panchayat union, Thiruvallur District.

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Mrs. K. Thamarai Selvi, W/o. P. Krishnan, 5-3-38 Main Road, Ekambarakuppam, Nagari, Chittor, Andhra Pradesh – 517 592.

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…Applicants

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-Vs-

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The Authorised Officer, Canara Bank, Chennai Agricultural Finance Branch, 27/1, Anantha Bhavan, 10^th Avenue, Ashok Nagar, Chennai – 600 083.

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…Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. J. Prince Counsel for Respondent : M/s. Kavitha Singulri

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SA No.392/2023

08.05.2026

ORDER ON SA 392/2023

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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 Section 13(4) Possession Notice dated 06.02.2023 and the outstanding amount due as per Possession notice is Rs.9,38,07,364.34/-.

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The first applicant is M/s. Thamarai Selvi Hi Tech Rice Mill, proprietary concern represented by its proprietrix Mrs. Thamarai Selvi had approached the respondent bank for sanction of credit facilities and the bank sanctioned OCC Limit of Rs.5,50,00,000/- and also availed further credit facilities in the year 2020 and 2021 totaling to Rs.8.00 crores.

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The applicants executed all loan documents as required by the respondent bank and also executed equitable mortgage in favor of respondent bank for the properties mentioned in the schedule of the SA. The respondent bank upon request of the applicants has sanctioned Rs.93,00,000/- under Tamilnadu Civil Supplies Corporation which was valid up to 06.08.2025. Applicants were regular in the repayment and due to Covid-19, the business suffered loss and applicants were unable to repay the interest portion though made several payments.

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SA No.392/2023

08.05.2026

It is submitted that applicants have paid Rs.53,000/- to the credit of RFITL-2.0.1-AC 002, Rs.80,000/- to RFITL-2.0-2.AC 001, Rs.1,68,000/to Covid FITL which were paid on 29.05.2022. The applicants received the Section 13(2) Demand Notice dated 03.06.2022 alleging that loan account was classified as NPA on 29.05.2022. On receipt of the Demand Notice, the applicants raised objection dated 21.07.2022 under Section 13(3)A to which the respondent bank has issued vide reply dated 02.08.2022 without addressing the objections made by the applicants.

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It is contended that the respondent bank has not registered the security interest before the central registry which is in violation of circular issued by respondent bank and provisions of SARFAESI Act. The respondent bank has issued Section 13(4) Possession notice dated 11.08.2022 calling upon the applicants to pay sum of Rs.9,88,01,610.89/- which was challenged by the applicants in TSA No.134 of 2023 before this Tribunal which came to be allowed on 26.04.2023.

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Further the respondent bank has issued fresh Demand Notice dated 21.10.2022 to which the applicants have raised objections to the demand made under Section 13(3A) and the authorized officer had sent reply without addressing any objections made by the applicants. The respondent bank has proceeded further and issued Section 13(4) Possession Notice dated 06.02.2023 which came to the knowledge of the applicants vide paper publications dated 12.02.2023, though the respondent bank has failed to serve the Possession Notice dated 06.02.2023 to any of the borrower.

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SA No.392/2023

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4 08.05.2026

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The respondent bank has charged heavy interest and have capitalized penal interest from applicants’ loan account which is in contravention of RBI guidelines and Banking Jurisprudence. Even after several demands made by the applicants, respondent bank has failed to produce the statement of account.

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In the grounds it is contended that the classification of loan account as NPA is not in accordance with Section 2(o) of SARFAESI Act. Further, the respondent bank has failed to reply to the objections made under Section 13(3A) of SARFAESI Act and failed to issue the Section 13(4) Possession Notice dated 06.02.2023 to all the parties, has failed to publish the Possession Notice within time and failed to affix on the property as mandated under Rule 8 of SIE Rules and as specified under SARFAESI Act. Hence, the applicants prays to set aside the Section 13(4) Possession Notice dated 06.02.2023.

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The respondent bank has filed a detailed counter inter alia contending that the applicants have approached the respondent for availing credit facilities and respondent bank has sanctioned the following facilities to the applicants herein:

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i. Working Capital Limit for Rs.5,50,00,000/-

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ii. Term Loan of Rs.18.92 lakhs

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iii. Term Loan of Rs.51.45 lakhs

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iv. Working Capital Term Loan under GCEL of Rs.122 lakhs

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v. WCDL Canara support to Covid-19 of Rs.55 lakhs

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SA No.392/2023

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vi. Restructure loan of RBI guidelines vide RFITL 1.0 for Rs.8,73,485/-

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vii. RFITL 2.0 for Rs.25,61,643/-

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viii. Additional GECL for Rs.33 lakhs

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ix. Applicant agreed on production of bank guarantee for Rs.93,00,000/with Tamilnadu Civil Supplies Corporation.

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To secure the credit facilities availed, the applicants have executed equitable mortgage by way of following MODTs:

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i. Memorandum of Deposit of Title Deeds dated 31.07.2019 vide Doc.No.911 of 2019 in favour of respondent bank.

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ii. Memorandum of Deposit of Title Deeds dated 01.08.2019 vide Doc.No.1564 of 2019 in favour of respondent bank.

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iii. Supplemental Memorandum of Deposit of Title Deeds dated 06.07.2021 vide Doc.No.1049 of 2021 in favour of respondent bank.

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Further the respondent bank has initiated the SARFAESI measures and issued the Section 13(2) Demand Notice dated 03.06.2022 and Section 13(4) Possession Notice dated 11.08.2022 which was challenged by the applicant in SA No.461 of 2022. Due to the error in mentioning bank guarantee amount to the total outstanding amount, hence the respondent bank has withdrawn the Demand Notice dated 03.06.2022 and SA No.461 of 2022 came to be disposed.

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The respondent bank has initiated the measures a fresh by issuing Demand Notice dated 21.10.2022 and Possession Notice dated 06.02.2023 and also taken the symbolic possession of the property. The Possession

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SA No.392/2023

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notice is also affixed on conspicuous part of the property, published in two Newspapers on 12.02.2023. The respondent bank has duly sent an reply dated 03.01.2023 to the objections dated 17.12.2022 made by the applicant, therefore the present SA is filed by the applicant to stall the measures initiated by the respondent bank under SARFAESI Act.

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Further the respondent bank has countered each and every averment made by the applicants, the security interest is registered before the central registry. Subsequently the Bank Guarantee agreement was invoked for Rs.93,00,000/- vide request letter dated 08.12.2023 which is communicated through letter dated 11.12.2023. Hence, the respondent bank prays to dismiss the present SA with exemplary cost.

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

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It is discernible from the records that the applicants availed credit facilities and executed all the loan documents and the loan is secured by mortgaged the property which is not disputed by the applicants herein. The respondent bank has registered the security interest before the central registry which is evident from the CERSAI registration produced by the respondent bank at Page No.34 to 37 of the bank’s counter. Hence, the contention of the applicant that the respondent bank has failed to register the security interest before the central registry fails.

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Due to default in the repayment, the respondent bank has classified the loan account as NPA and issued Demand Notice dated 03.06.2022 and

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SA No.392/2023

08.05.2026

subsequently Possession Notice dated 11.08.2022 which was challenged by the applicant in SA No.461 of 2022 and due to error in adding the bank guarantee amount to the total liability, the respondent bank has withdrawn the Demand Notice dated 03.06.2022 and Possession Notice dated 11.08.2022.

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Further the respondent bank has initiated fresh measures and classified the loan account as NPA on 29.05.2022 and issued Section 13(2) Demand Notice dated 21.10.2022 calling upon the borrower and guarantors to discharge the liability of Rs.9,38,07,364.34/- as on 19.10.2022. The applicants raised a contention that the respondent bank has failed to classify the loan account as NPA as per Section 2(o) of SARFAESI Act , however the applicant has pointed out how the classification of account as NPA is wrong or not in accordance with S.2[O] of the Act which reads as under:

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Section 2(o):

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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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In the instant matter as the applicant did not adhere to the repayment schedule as agreed, the account is classified as NPA as per RBI guidelines and as per S.2[o] of the Act. A mere statement that the respondent bank has not classified the loan account as NPA as per Section

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SA No.392/2023

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2(o) of SARFAESI Act would not sustain without any specific non adherence of the RBI circulars.

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The respondent bank has issued the Section 13(2) Demand Notice dated 21.10.2022 to the applicants and the applicants have raised objection to the demand made vide letter dated 17.12.2022 to which the respondent bank has duly sent a reply to the objections made by applicants vide letter dated 03.01.2023 referring to every objection made by the applicants. Hence, the contention of the applicants with regard to Non service of Demand Notice, no proper reply to the objections made by the applicant fails.

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Even after the receipt of the Section 13(2) Demand Notice dated 21.10.2022, applicants have failed to discharge their entire liability within the period of 60 days. Hence, the respondent bank has proceeded further and issued Section 13(4) Possession Notice dated 06.02.2023 to the borrower and guarantors. The applicants have raised a specific contention that the respondent bank has failed to issue Possession Notice to the applicants is duly countered by the respondent bank by producing the clean copy of documents which reflects that the Possession notice was duly sent through RPAD and returned with an endorsement as “Addressee avoid to take” which is a deemed service. It is seen that M/s. Thamarai Selvi Hi Tech Rice Mill has received the Possession Notice as per the postal acknowledgement card produced by the respondent bank.

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SA No.392/2023

08.05.2026

The respondent bank has published the Possession Notice in three Newspapers as per Rule 8(2) of SIE Rules, one in “The New Sunday Express” (English), another in “Dhinamani” (Tamil), another in “Andhra Jothi” (Telugu) both dated on 12.02.2023. Further the Possession notice was affixed on the conspicuous place of the property as per Rule 8(1) of SIE Rules. The Postal receipts, returned covers, acknowledgement card, paper publications and photograph of affixture of Possession notice are produced evidencing the compliance of the procedures in issuance of possession notice as required under the Act and the Rules with supporting documents.

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The Bank Guarantee was invoked by the request letter dated 08.12.2023 which was honored for claim of Rs.93,00,000/- through RTGS on 11.12.2023 with reference No.CNRBR52023121169409171, further Bank Guarantee agreement invocation was intimated to the applicants vide letter dated 11.12.2023 and demanded for repayment. The letter dated 11.12.2023 was sent to M/s. Thamarai Selvi Hi Tech Rice Mill which returned with an endorsement as “refused to take notice” which is deemed service. Hence, the contention with regard to the Bank Guarantee agreement is not sustainable and fails.

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On perusal of the records it is seen that the respondent bank as a secured creditor has classified the loan accounts as NPA on 29.05.2022 and proceeded to issue Demand Notice 21.10.2022 which is admittedly received by the applicant. After the receipt of the Demand notice, applicants have made a representation dated 17.12.2022 and the same was rejected by the

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SA No.392/2023

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respondent company vide letter dated 03.01.2023 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 liability within 60 days even after raising objections to demand notice under Section 13[3A] of the Act.

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The respondent bank has proceeded further in issuing the Possession notice dated 06.02.2023 which is duly served to the 1^st applicant herein as per the acknowledgement card produced by the respondent, affixed on the conspicuous part of the property, published in two Newspapers as mandated under the SIE Rules. Thus, the applicants have failed to point out any illegality in the measures taken by the respondent bank and on the other hand the respondent bank has duly established the compliance of procedures in initiating the measure under the SARFAESI Act.

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For the forgoing reasons, the present SA is only to be dismissed upholding the Section 13(2) Demand notice dated 21.10.2022 and Section 13(4) possession notice dated 06.02.2023 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 08^th day of May, 2026)

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SA No.392/2023

08.05.2026

ANNEXURES

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl. No.	Description of Documents	Document No.
1.	Bank Guarantee dated 07.08.2020	A-1
2.	Statement of accounts	A-2
3.	Demand Notice dated 03.06.2022	A-3
4.	Objection to demand notice sent by the applicants dated 21.07.2022	A-4
5.	Demand Notice dated 21.10.2022	A-5
6.	Objection to demand notice sent by the applicants dated 17.12.2022	A-6
7.	Reply sent by the bank dated 03.01.2023	A-7
8.	Affixture of Impugned Possession Notice dated 06.02.2023	A-8
9.	Publication of Impugned Possession Notice dated 12.02.2023	A-9

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

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Sl. No.	Description of Documents	Document No.
1.	Demand notice by respondent bank dated 21.10.2022	R-1
2.	Objections to demand notice by applicant dated 17.12.2022	R-2
3.	Reply to objections by respondent bank dated 03.01.2023	R-3
4.	Possession Notice by respondent bank dated 06.02.2023	R-4
5.	Possession Notice affixed photos dated 06.02.2023	R-5
6.	Possession Notice paper publication dated 12.02.2023	R-6
7.	Bank Guarantee agreement was invoked by request letter dated 08.12.2023	R-7
8.	Bank Guarantee agreement invocation was intimated by a letter to applicant dated 11.12.2023	R-8
9.	Return Post	R-9

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SA No.392/2023

08.05.2026

SCHEDULE OF PROPERTY

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Schedule – 1

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Item No.1

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All that piece and parcel of vacant site situated at Kumara Venkata perumal Rajuvaripeta H/o No.85, Therani Village, comprised in Dry S.No.230/5 an extent of 11 cents out of 1.50 Acres within the Sub District of Nagari, Nagari Municipal area, Nagari Mandal, Sri Balaji Registration District, Tirupati, Chitoor District, A.P. and bounded by:

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North by: Land of the vendors K. Raja Reddy, K. Girija and K. Munusamy

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South by: 20 Feet east to west common road leads from main road

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East by: Lands of P.M. Gopalumudali

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West by: Lands of K. Raja Reddy

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Within the boundaries East to West North side 79 feet; south side 79 ½ ft., North to South feet 6 ½ which is equal to 537 sq. yards or 451 sq.meters or 4834 ½ sq.ft.,

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Situated within the sub registration district of Nagari (Andhrapradesh).

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Item No.2

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All that piece and parcel of vacant site situated at Kumaravenkata Perumal Rajuvaripeta H/o No.85, Therani Village, comprised in Dry S.No.230/5 an extent of 6.25 cents out of 1.50 Acres within the Sub District of Nagari, Nagari Municipal Area, Nagari Mandal, Sri Balaji Registration District, Tirupati, Chitoor District, A.P. and bounded by:

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North by: Lands of the K. Munusamy Reddy

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South by: 20 feet east to west common road leads from main road

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East by: Lands of K.Raja Reddy

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West by: Lands of Vendors

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Within these boundaries East to West North side 42 feet; South side 46 feet, North to South 61 feet which is equal to 2722 ½ sq.ft.,

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Situated within the Sub registration district of Nagari (Andhrapradesh).

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Item No.3

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All that piece and parcel of vacant site situated at Kumaravenkata Perumal Rajuvaripeta H/o No.85, Therani Village, Comprised in Dry S.NO.230/5 an extent of 11 cents out of 90 ½ cents out of 1.50 acres within the sub district of Nagari, Nagari Municipal Area, Nagari Mandal, Sri Balaji Registration District, Tirupati, Chitoor District, A.P. and bounded by:

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North by: The vendor’s land

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South by: 20 feet east to west common road leads from main road

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East by: Site belongs to the purchaser

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West by: Site belongs to the purchaser

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Situated within the Sub registration district of Nagari

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(Andhrapradesh)

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Schedule – 2

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All that piece and parcel of land measuring 73 cents, Karimbedu Group, comprised in S.No.29/1 of Karimbedu Village, Karimbedu Taluk, Tiruvallur District the land being situated within the registration district of Kancheepuram and sub registration district of pallipattu.

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Schedule – 3

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Item No.1

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All that piece and parcel of land together with the superstructure constructed thereon and to be constructed in future there at measuring 74 cents in S.No.25/7 of Karmibedu village, Karimbedu Taluk, Tiruvallur District the land being situated within the registration District of Kancheepuram and sub registration district of pallipattu.

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Item No.2

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All that piece and parcel of land together with the superstructure constructed thereon and to be constructed in future there at measuring 56 cents, Karimbedu Village, Karimbedu Taluk, Tiruvallur District the land being situated within the registration district of Kancheepuram and sub registration district of pallipattu.

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Item No.3

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All that piece and parcel of land together with the superstructure constructed thereon and to be constructed in future there at measuring 2 Acres 37 cents along with well, 3HP motor pump and wiring articles, Karimbedu group comprised in S.No.25/1A - 1.54 extent in acres, S.NO.25/1B – 0.30 extent in acres, S.No.25/1C – 0.26 extent in acres, S.NO.25/4 – 0.27 extent in acres. Karimbedu Village, Karimbedu Taluk, Tiruvallur District the land being situated within the registration district of Kancheepuram and sub registration district of pallipattu.

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Schedule 4

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Item No.1

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All that piece and parcel of at No.79, Kumara Bommarajapuram village accounts, comprising Dry S.No.133/1 and extent of 4.75 cents out of acre 2.07 or 230 sq within the sub District of Puttur, Puttur Mandal, Chitoor District, Andhra Pradesh and bounded by:

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North: Kaluva(channel)

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South: Land belongs to K. Venkataraju

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East: Land belongs to K. Ramakrishnamraju

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West: Land belongs to K. Venkatraju

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Within boundaries 4.75 cents or 230 sq. yds of land only.

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Item No.2

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Ground with RCC and ACC buildings, machineries and license of Sri Lakshmi Narayana Modern Rice Mill situated at No.79, Kumara Bommarajapuram Village accounts, Comprising Dry Survey No.132/13 and 132/14 an extent of 968 sq. yds or 813.12 sq.meters or 20 cents out of 33 cents within the sub district of puttur, Sri Balaji Registration District, Tirupathi, Puttur Mandal, Chittoor District, Andhra Pradesh and bounded by:

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North: Peddakaluva (big channel)

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South: Panchayat Building an Quarters building belonging to G. Naryanamma, G. Krishnavenamma, W/o G. Venkatramraju

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East: Land belongs to chengalvarayalu

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West: Rajukaldriga Village Road

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Within boundaries 968 sq.yds or 20 cents of site

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Within these built up area details given below