Dismissed

K Srimathy v. Uco Bank

DRT19 Jan 2026SA/408/2025

Case brief

AI extract

What is this about?

In a Securitization Application, the Tribunal held that an unregistered sale deed executed after a mortgage by deposit of title deeds does not confer title on a third party to frustrate the bank's recovery measures under the SARFAESI Act. Consequently, the application was dismissed, and the conditional payment made for a stay was directed to be refunded.

What did the court decide?

SA dismissed; Interim Order vacated; Respondent directed to refund Rs. 34 lakh paid by applicant with simple interest.

K Srimathy versus Uco Bank — Banking and Recovery | DRT (2026)

SA No.408/2025

19.01.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

¶5

Dated this the 19^th day of January, 2026

¶6

Present: SMT. S.V. GOWRAMMA

¶7

Presiding Officer

¶8

SA No. 408 of 2025

¶9

Mrs. K. Srimathy, W/o Mr. P. Kesan, Flat No.5, 5^th floor, Plot No.B New Door No.28 & 26/ Old Door No.29 & 30, Raman Street, T. Nagar, Chennai – 600 017.

¶10

…Applicant

¶11

-Vs-

¶12

The Authorised Officer, UCO Bank, Mid Corporate T Nagar Branch, New No.26, Old No.21, Ground Floor, Dhandapani Street, T. Nagar, Chennai – 600 017.

¶13

…Respondent

¶14

Counsels on record / appeared: Counsel for Applicant : Mr. V. R. Mukundakumar Counsel for Respondent : Mr. T. Ravi Chandran

¶15

ORDER ON SA 408 /2025

¶16

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].

SA No.408/2025

19.01.2026

The applicant has challenged e-auction Sale notice dated 23.05.2025 scheduling the sale to be held on 27.06.2025 and the outstanding amount due as per Sale notice is Rs.2,74,88,133.01/-

¶21

3. Pleadings of the applicant:

¶22

3.1 The applicant is a third party who claims to be a bonafide purchaser of the mortgage property from Mrs. Rajeswari Rajagopalan vide un registered Sale deed dated 14.10.2023 and has produced the un registered Sale deed at Page No.11 of the SA along with the receipt dated 14.10.2023 reflecting that the applicant had made a payment of Rs.4,01,00,000/- to Mrs. R. Rajeswari.

¶23

3.2 The applicant has challenged the Sale notice dated 23.05.2025 scheduling the sale to be held on 27.06.2025 for recovery of sum of Rs.2,74,88,133.01/- and the Tribunal vide order dated 27.06.2025 had directed the applicant to make a payment of Rs.34.00 lakhs to be paid on or before 27.06.2025 which the applicant has complied the conditional order.

¶24

3.3 The applicant has challenged the Sale notice dated 23.05.2025 contending that he has made a payment of Rs.4,01,00,000/- by way of RTGS to Mrs. R. Rajeswari and had taken over the possession of the property and has also spent Rs.40,00,000/- for interior works and occupied the same. The applicant came to know about the auction sale is to be held on 27.06.2025 vide sale notice dated 23.05.2025 which was pasted on the entrance of the property without the knowledge of the

SA No.408/2025

19.01.2026

applicants and only after enquiring and verification of the Encumbrance Certificate it came to the knowledge that Mrs. R. Rajeswari has not discharge her liability with the respondent bank and the MODT dated 14.02.2020 is registered as Doc.No.416 of 2020 on the file of SRO, T. Nagar.

¶29

3.4 The applicant submits that the sale notice is not in accordance with the Rules 8(5) and failed to obtain valuation report under the Act. Further, the applicant undertakes to pay the balance sale consideration of Rs.34,00,000/- payable to Mrs. Rajeswari and willing to redeem the property and seeks for issuance of NOC from the respondent bank to facilitate the registration. On these grounds, applicant prays to set aside the Sale notice dated 23.05.2025.

¶30

4. Objections of the respondent bank:

¶31

4.1 The respondent bank has filed a detailed counter inter alia contending that the present SA is filed by third party who is not a aggrieved person claims to be in possession of the property having purchased the property vide un registered Sale deed dated 14.10.2023.

¶32

4.2 The applicant cannot claim to be a bonafide purchaser as she was aware of the encumbrance created in favor of the respondent bank by equitable mortgage without any due diligence has entered into un registered sale deed dated 14.10.2023 and also made payment as per the receipt produced, the respondent bank has produced the Memorandum of Deposit of Title Deeds dated 16.09.2020 (SIC 14.02.2020) which is

SA No.408/2025

19.01.2026

registered as Doc.No.1370/2020 (SIC Doc.No.416/2020) to evidence the charge on the property.

¶37

4.3 As the borrower and mortgagor did not comply with the repayments as per the Terms and conditions, the respondent bank has issued Section 13(2) Demand Notice dated 10.12.2024 and as there was no payment made by the borrower and mortgagor, the bank has issued Section 13(4) Possession Notice dated 08.04.2025. In spite of receipt of the notices, the borrower and the mortgagor did not liquidated the liability and the bank has proceeded further and issued Sale notice dated 23.05.2025 which is challenged by the applicant here in.

¶38

4.4 The subject matter of the property which the applicant has entered into an unregistered sale deed dated 14.10.2023 is subject to the mortgage as there is a security interest created favoring the respondent bank and on default, the bank has proceeded as per the Act. The applicant’s claim is based on a un registered sale deed which is barred under Section 17 of the Registration Act which reads as under:

¶39

“1(A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of Section 53(A) of the Transfer Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of Registration and other related laws (Amendment) Act (48 of 2001) and if such documents are not registered on or after such commencement, then, they shall have no effect for the purpose said Section 53A”

SA No.408/2025

19.01.2026

4.5 The applicant claiming to be in the possession of the property without any documents as mandated under the amended Section 53A of the Transferred of Property Act and S.17 of the Registration Act. Further the applicant who claims to be a Bonafide purchaser is at the eleventh hour to frustrate the measures taken by the bank. The contention that Mrs. R. Rajeswari undertook to close the mortgage and register the property in favor of the applicant is incomprehensible and no sane person will buy by paying a sum of Rs.4.00 crores without asking for discharge of the mortgage.

¶44

4.6 The applicant ought to have approached the respondent bank before depositing a sum of Rs.4.00 crores and ought to have obtained NOC from the bank. Further the payments made by the applicant between the period of 31.03.2023 and 03.07.2023 will not cloth the applicant right, title or interest over the property and receipt dated 14.10.2023 is of no avail.

¶45

4.7 The respondent bank has issued the Sale notice dated 23.05.2023 which is affixed on the property and the applicant have challenged on 26.05.2023 even though the applicant was aware that the property is under the mortgage. Further contention of the applicant that she is seeking for right of redemption would not be available as she is a third party to the loan transactions and further contentions as raised by the applicant is denied by the respondent bank and prays for dismissal of the present SA.

SA No.408/2025

19.01.2026

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

¶50

5.1 It is manifest from the records that the applicant is a third party to the loan transactions and to the measures taken by the respondent bank under the SARFAESI Act. The applicant has relied on the un-registered sale deed dated 14.10.2023 entered between Mrs. R. Rajeswari and the applicant here in.

¶51

5.2 It is seen from the Demand notice produced by the respondent bank at Page No.85 that Mrs. R. Rajeswari is the borrower who had availed the credit facility and also executed mortgage of the property dated 14.02.2020 by deposit of title deed which is registered as Doc.No.416 of 2020 in the Office of SRO, Thiyagaraya Nagar.

¶52

5.3 It is evident that the mortgage of the schedule property is registered in the officer of the SRO, and the applicant without verifying the encumbrances on the property and without any due diligence admittedly has made a payment of Rs.4,01,00,000/- by way of RTGS to the borrower i.e., Mrs. R. Rajeswari who had not made any payment towards the loan account of the respondent bank as contended by applicant. Further the categoric admission of the applicant that Mrs. R. Rajeswari has not cleared the loan and has failed to redeem the property from the amount paid by the applicant clearly reflects that the applicant is aware of mortgage of the property created by Mrs. R. Rajeswari in favor of the respondent bank.

SA No.408/2025

19.01.2026

5.4 Due to the continuous defaults in the repayment and having failed to comply with the Terms and conditions of the Sanction, the respondent bank has classified the loan account as NPA on 29.11.2024. Admittedly the unregistered Sale Deed is dated 14.10.2023 which is after the Mortgage of the property created on 14.02.2020. Further, the respondent bank submits that the applicant is the 3^rd party has failed to establish right or title over the property. However, the applicant has produced the Property Tax Receipt at Page No.32 which also reflects that the Assesse Name is registered as Mrs. R. Rajeswari.

¶57

5.5 Admittedly, the applicant is a 3^rd party who has no right or title claim over the property and un registered Sale Deed dated 14.10.2023 would not come to the aid of the applicant as per Section 17 of Registration Act and Section 53A of Transfer of property Act which reads as under:

Section 17

SA No.408/2025

19.01.2026

Section 53A:

53A. Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty,

¶65

and the transferee has. in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract,

¶66

and the transferee has performed or is willing to perform his part of the contract, then,

¶67

notwithstanding that or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed there for by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:

¶68

Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.]

¶69

5.6 The unregistered sale deed dated 14.10.2023 would not create a

¶70

right, title and interest over the property more so, when it is subject to mortgage by deposit of title deeds favoring the secured creditor. In fact

SA No.408/2025

19.01.2026

applicant has failed to establish his right, title and interest over the secured asset and is only a third party who cannot frustrate the measures taken by the bank under the Act.

¶75

5.7 During the course of arguments the applicant submits her intention to redeem the property and also to safe guard the amount of Rs.4,01,00,000/- paid to the borrower. The Tribunal without going into the merits of the case and based on equity and principles of natural justice vide order dated 27.06.2025 had granted an Interim Order which applicant admittedly complied and seeks a week time to negotiate with the respondent bank.

¶76

5.8 The applicant is the 3^rd party who is willing to settle the liability with respondent bank is directed to approach the bank along with the borrower Mrs. Rajeshwari within a week time for any amicable settlement. It is clarified that the Tribunal has not adjudicated applicants’ right, title and interest over the property and concludes the applicant is a third party to the loan transaction and also to the measures taken under the Act.

¶77

5.9 Being a third party, applicant has complied with the payment of Rs.34,00,000/- being the conditional payment for obtaining a stay on the measure. Having failed to establish right, title and interest over the secured asset, the payment of Rs.34,00,000/- is only to be refunded to the applicant. Hence, the respondent bank is directed to refund the amount of Rs.34,00,000/- along with simple interest applicable to SBI

SA No.408/2025

19.01.2026

account from the date of payment till refund. The interest component being refunded be charged to the loan account of the borrower.

¶82

6. Resultantly the present SA is dismissed. Interim Order granted, if

¶83

any stands vacated, pending IAs are disposed of in terms of this final

¶84

order. No order as to cost. Sd/-

¶85

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

¶86

(Dictated to Steno (Mogesh), transcribed by him, corrected, signed and pronounced by me on this the 19^th day of January, 2026)

¶87

ANNEXURES

¶88

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

¶89

Sl.	Description of Documents	Document
No.		No.
1.	Unregistered Sale deed dated 14.10.2023, executed by Rajeswari to and in favour of the applicant in respect to the schedule mentioned property dated 14.10.2023.	A-1
2.	Receipt issued by Rajeswari to and in favour of the applicant in respect to the schedule mentioned property regarding the payments received dated 14.10.2023.	A-2
3.	E auction cum sale notice issued by the defendant to the applicant dated 23.05.2025.	A-3
4.	Vakalatnama.	A-4
5.	Property Tax.	A-5

¶90

LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

¶91

Sl.	Description of Documents	Document
No.		No.
1.	Memorandum of Deposit of Title Deed	R-1
	Doc.No.416/2020 dated 14.02.2020
2.	Copy of Sale Deed Doc.No.415/2020, and	R-2

SA No.408/2025

19.01.2026

	Construction Agreement Doc.No.414/2020 dated 14.02.2020
3.	Copy of the Demand Notice under Section 13(2) of SARFAESI Act 2002 dated 10.12.2024	R-3
4.	Copy of the Possession Notice dated 08.04.2025	R-4
5.	Copy of the Sale Notice dated 23.05.2025	R-5
6.	Copy of the Hon’ble Tribunal Order dated 27.06.2025	R-6

¶96

SCHEDULE OF PROPERTY

¶97

All that part and parcel of flat portion measuring about 2562 sq.ft., bearing Flat No.F-5, 5^th floor, in the apartment building known as Sai Krishna in the premises bearing sub division Plot No.B, Old Door No’s.29 and 30, New Door No’s 28 and 26, Raman Street, T Nagar, Chennai – 600017 together with 20% undivided share of land in the lands measuring an extent of about 497.53 sq.mtr. comprised in Survey No’s.55/3 and 53/2, now presently bearing T.S.No.7040/2, Block No.113, T. Nagar Village, Guindy Taluk, Chennai District and Bounded as under:

¶98

North by: Presently bearing door No.7, Venkataraman Street,

¶99

South by: 40 feet road, Raman Street,

¶100

East by: Presently bearing door No.24, Raman Street, West by: Door No.30, Raman Street,

¶101

Property falls within the Sub Registration District of T. Nagar.

¶102

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

K Srimathy v. Uco Bank

Case brief

What is this about?

What did the court decide?

K Srimathy v. Uco Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

State Bank of India versus Sivaraj

Punjab and Sind Bank versus M/S Akila Trading Corporation

P Manikandan versus Icici Bank Limited

Bank of Baroda versus Ramaswamy

Karur Vysya Bank versus N Devi

Ananthababu versus Uco Bank