DT Madurai set aside the e-Auction Sale Notice issued under the SARFAESI Act due to non-conduct of the sale, directing the bank not to recover notice issuance costs and permitting fresh action.
Directing the Bank not to include expenditures for the impugned Sale Notice in the loan account; liberty to initiate fresh action.
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.410/2022
Fair Order
IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI
DATED THIS 20th DAY OF MAY, 2026
PRESENT: SEEMA SINHA
[PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER
SA No. 410/2022
-Vs-
Appearance of Advocates:
Mr.M.Arunachalam ---- Counsel for the Applicants Mr.V.Sukumar ---- Counsel for the Defendant Bank
Page 1 of 15
SA No.410/2022
This SARFAESI Application was heard in the presence of Counsels for the Applicants, Defendant Bank and fixed for passing final order before me and upon hearing the arguments of the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:
O R D E R
1 . This application has been filed under Sec.17(1) of the SARFAESI Act 2002 by the Applicants praying that this Hon'ble Tribunal may be pleased to pass an order to set aside the e-Auction Sale Notice dated 22.11.2022 issued by the Defendant under SARFAESI Act 2002.
2 . The brief averments of the Application filed by the Applicants are as follows:-
Page 2 of 15
SA No.410/2022
the defendant again sanctioned a sum of Rs.5,00,000/- towards Working Capital Term Loan (GECL-MSME). The 2nd Applicant was servicing the interest and principal promptly and regularly and has so far paid a sum of Rs. 12,15,746/-.
Page 3 of 15
SA No.410/2022
on a conspicuous part of the properties, which is a mandatory requirement under the Rules framed under the SARFAESI Act. The Defendant has also failed to publish the said Possession Notice in two newspapers having wide circulation in the area where the properties are situated, which is also a mandatory requirement.
Page 4 of 15
SA No.410/2022
notice. Therefore, the very object of the SARFAESI Act is defeated by the defendant.
Page 5 of 15
SA No.410/2022
Therefore, it is prayed that this Hon'ble Tribunal may be pleased to allow this Application.
DESCRIPTION OF PROPERTIES
In Trichirappalli District & Registration District, Musiri Sub-Registration DT, Musiri Tk. Musiri Town, in Mudhaliar street, Ward No.7.
Page 6 of 15
SA No.410/2022
Item No.1:
Musiri west village Natham S.F No.616, Natham Nilavarithitta SF No.345/43 (Old SF No.271) a site measuring 34’ in East-West and 70’ in North-South, with terraced building thereon bearing door No.(old) 16, New No.40, situate within the following four Boundaries:
To North of East - West Street,
To East of Muthusamypillai’s House
To West of 2nd item
To South of Madhar Sahib Vahaiyara’s House.
Item No.2:
In the same street, a site measuring 25’ in East West and 70’ in NorthSouth, situate within the following four Boundaries:
To East of 1st item
To South of Madhar Sahib Vahaiyara’s House,
To West of Paramasivampillai’s House
To North of East – West Street.
The Applicants have filed the following List of documents in support of their claim in the SA, which are as follows:
| S.No. | Date | Description |
|---|---|---|
| 1. | 20.04.2022 | 13(2) notice issued to Applicants |
| 2. | 14.09.2022 | 13(4) notice issued to Applicants |
| 3. | 22.11.2022 | e-Auction Sale Notice issued to Applicants |
Page 7 of 15
SA No.410/2022
3. On the other hand, notices were issued to the Defendant Bank, and the Counsel for the Defendant Bank appeared before this Tribunal and filed Vakalat, Reply Statement, Written Arguments & Typed Set-I & II in which he has submitted that the 1st Applicant availed two loan facilities, namely Secured Overdraft and Working Capital Term Loan. The secured overdraft facility was periodically enhanced. The details of the loan facilities and their enhancements are as follows:
| S.NO | Nature of Facility | Date of Loan | Amount |
|---|---|---|---|
| 1. | SOD | 24.06.2006 | Rs.3,00,000/- |
| 2. | Enhancement (Rs.6 Lakhs) | 04.03.2014 | Rs.9,00,000/- |
| 3. | Enhancement (Rs.6 Lakhs) | 13.07.2015 | Rs.15,00,000/- |
| 4. | Enhancement (Rs.10 Lakhs) | 04.12.2017 | Rs.25,00,000/- |
| 5. | Working Capital Term Loan- GECL-MSME |
11.06.2020 | Rs.5,00,000/- |
Page 8 of 15
SA No.410/2022
also issued to the Applicants and was duly served upon them. The Possession Notice was further published in the newspapers, namely, The Times of India (English) and The Hindu (Tamil), dated 16.09.2022.
Page 9 of 15
SA No.410/2022
loan amount nor issued any reply to the said Demand Notice to the Defendant Bank. The details of the NPA are properly stated in the said Demand Notice. As stated above, the bank issued the Possession Notice dated 14.02.2022 to the Applicants and also published the same in two vernacular newspapers. The bank also affixed the Possession Notice on the schedule of property.
Page 10 of 15
SA No.410/2022
the agreement. The grounds stated in Grounds (v) to (viii) are also false. As stated above, the defendant bank published the possession notice and the e-auction sale notice in two vernacular newspapers and issued the demand notice, possession notice, and e-auction sale notice to the applicants in accordance with the SARFAESI Act, which were duly received by them.
In view of the above facts, it is humbly prayed that this Hon'ble Tribunal may be pleased to dismiss the above application with cost and thus render Justice.
Typed set of Papers filed by the Defendant Bank on 07.02.2025
| S.No. | Date | Particulars |
|---|---|---|
| 1. | 20.04.2022 | Demand Notice issued by the Defendant Bank and Acknowledgement Card |
| 2. | 14.09.2022 | Possession Notice issued by the Defendant Bank and Acknowledgement Card |
| 3. | 16.09.2022 | Possession Notice – English published in Times of India |
| 4. | 16.09.2022 | Possession Notice – Tamilpublished in The Hindu |
| 5. | 22.11.2022 | Sale Notice issued bythe Defendant Bank |
Page 11 of 15
SA No.410/2022
| 6. | 22.11.2022 | Sale Notice affixed in the Subject Property |
|---|---|---|
| 7. | 26.11.2022 | Sale Notice – Tamilpublished in The Hindu |
| 8 | 26.11.2022 | Sale Notice – Englishpublished in The Hindu |
Typed set of Papers filed by the Defendant Bank
| S.No. | Date | Part | iculars |
|---|---|---|---|
| 1. | 26.11.2022 | Sale Notice – Tamil (Original) |
published in The Hindu |
| 2. | 26.11.2022 | Sale Notice – English (Original) |
published in The Hindu |
| 3. | **** | Original Photographs |
4. ON THE BASIS OF ABOVE PLEADINGSTHE POINT WHICH ARISES FOR CONSIDERATION IS:-
I. Whether the Applicant has been able to prove his case in his favour?
II. Whether the Applicant is entitled to get the reliefs as prayed for?
5 . Having heard the parties and upon perusal of the entire records, I find that the Applicants availed Secured Overdraft and Working Capital Term Loan – GECL–MSME facilities to the tune of Rs.30,00,000/- (Rupees Thirty Lakhs only) from the Defendant Bank by mortgaging the schedule-mentioned properties. It is further observed that the Applicants were initially regular in repayment as agreed with the Defendant Bank. It is also admitted by the Applicants in their pleadings that, due to demonetization, implementation of GST, labour problems, and the COVID-19 pandemic, they were unable to repay certain loan dues. Consequently, the Defendant Bank classified the loan account as NPA on 24.03.2022 and proceeded under the SARFAESI Act.
Page 12 of 15
SA No.410/2022
6 . Thereafter, the Defendant Bank issued a Demand Notice under Section 13(2) of the SARFAESI Act on 20.04.2022 to the borrowers for a sum of Rs.30,67,084.20p (Rupees Thirty Lakh Sixty-Seven Thousand Eighty-Four and Twenty Paise only) as on 05.04.2022 and sent the same to the Applicants by registered post. I have also perused the documents filed by the Defendant Bank, including the Xerox copies of the Demand Notice and the acknowledgment cards annexed at pages 01 to 09 of the Bank’s typed set of papers. However, I find that the Applicants have not filed any documents to show that they sent a reply or representation to the demand notice dated 20.04.2022 under Section 13(3-A) of the SARFAESI Act, though receipt of the said notice is admitted in their pleadings.
7. Subsequently, the Defendant Bank issued a possession notice dated 14.09.2022 under Section 13(4) of the SARFAESI Act for a sum of Rs.34,52,236.83p (Rupees Thirty-Four Lakhs Fifty-Two Thousand Two Hundred and Thirty-Six and Eighty-Three Paise only) and sent the same to the Applicants by registered post. The Defendant Bank has filed Xerox copies of the Possession Notice, acknowledgment cards, and paper publication annexed at pages 10 to 19 of the typed set of papers. On perusal, it is observed that the name of the newspaper and the date of publication in the paper publication appear to have been handwritten as “Times of India” dated 16.09.2022. However, the Bank has also produced Original photographs showing affixture of the possession notice on a conspicuous part of the property. In the absence of any contra evidence from the Applicants, I find that the Defendant Bank has substantially complied with the SARFAESI procedures while issuing the possession notice.
8 . Thereafter, the Defendant Bank issued a Sale Notice dated 22.11.2022 for a sum of Rs. 35,21,128.83p (Rupees Thirty-Five Lakhs
Page 13 of 15
SA No.410/2022
Twenty-One Thousand One Hundred and Twenty-Eight and Eighty-
Three Paise only) , scheduling the sale on 28.12.2022. The Bank has filed Xerox copies of acknowledgment cards evidencing service of the sale notice on the Applicants, annexed at pages 22 to 23. The Defendant has also filed original newspaper publications in both Tamil and English at pages 01 to 02 of the typed set of papers and produced photographs showing affixture of the sale notice on a conspicuous part of the property. Thus, I find that the Defendant Bank has strictly complied with the SARFAESI procedures in issuing the impugned Sale Notice.
9. Further, the Applicants have not placed any material evidence before this Tribunal to substantiate their claim that the rate of interest was excessive or in violation of RBI guidelines. The contention regarding wrongful classification of the loan account as NPA is also unsupported by any evidence. Moreover, no proof has been produced to show that the Applicants sought the statement of accounts from the Defendant Bank.
10 . Further, the Applicants have contended that the Bank failed to provide a correct description of the secured assets and the correct outstanding amount in the sale notice dated 22.11.2022. However, no documentary evidence has been filed to substantiate the said contention. On the contrary, the Sale Notice specifies the outstanding balance as on 01.11.2022 and 08.11.2022.
11. Further, I find that the Defendant Bank has not filed the valuation report obtained prior to issuance of the impugned sale notice dated 22.11.2022. However, it is submitted by the counsel for the Defendant Bank that the sale was not held for want of bidders, and a memo dated 09.05.2024 has been filed to that effect.
12 . In view of the above, and considering that the sale was not conducted, S.A. No. 410 of 2022 is disposed of with a direction that the Defendant Bank shall not include the expenditures incurred in issuing
Page 14 of 15
SA No.410/2022
the impugned Sale Notice dated 22.11.2022 in the loan account of the Applicants.
The Defendant Bank is at liberty to initiate fresh action against the Borrower/Co-borrower in accordance with the SARFAESI Act and Rules. Consequently, all pending IAs (if any) are also disposed of. No costs.
Dictated to Typist (SKP), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 20th May, 2026.
Sd/(SEEMA SINHA) PRESIDING OFFICER
Uploaded on 30.05.2026
Page 15 of 15
3 issues framed by the court
Whether the Debt Recovery Tribunal should set aside the e-Auction Sale Notice issued under the SARFAESI Act due to alleged procedural irregularities.
Whether the Respondent Bank complied with the statutory requirements for issuing the Demand Notice, Possession Notice, and Sale Notice.
Whether the sale of secured assets should be proceeded with or if the application to quash the auction should be allowed.
5 provisions across 2 enactments
M/s. BHARATH TIMES
M.A. Mohammed Yasin
B.M. Allah Bagash
The Authorized Officer, The Karur Vysya Bank ltd
SEEMA SINHA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
