Dismissed

Raffic v. Kotak Mahindra Bank Limited

DRT22 Jun 2026SA/45/2024

Case brief

AI extract

What is this about?

In this Section 17 application under the SARFAESI Act, the applicants challenged an order of the Chief Judicial Magistrate and subsequent possession actions by a bank. The Tribunal examined compliance with Section 14 procedures, demand notices, and Rule 8 of the Security Interest Rules. The bank demonstrated sufficient compliance. The Tribunal found no illegality.

What did the court decide?

The Section 17 application is dismissed; the orders of the Chief Judicial Magistrate and subsequent actions by the Advocate Commissioner are affirmed; all pending IAs are disposed of.

Raffic versus Kotak Mahindra Bank Limited — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 22^nd day of June, 2026

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PRESENT: SHRI SHARANG DHAR UPADHYAY Presiding Officer

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SA No.45 of 2024

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Mr. Raffic Door No.66, Big Bazar Street Tiruvannamalai – 606 601

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Mrs. Yasmin Door No.66, Big Bazar Street Tiruvannamalai – 606 601 … Applicants

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Versus

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M/s Kotak Mahindra Bank Limited 5^th Floor, Samson Towers 4021, Pantheon Road Egmore, Chennai – 600 009 … Respondent

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Counsel on Record / Appeared

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Applicants by : M/s D. Rajesh, S. Bhuvaneswari & K. Lokesh Respondent by : M/s S.K. Mariyappan, R. Chandramohan & S. Ram Prasad

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O R D E R

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1. This petition is filed under Section 17(1) of the SARFAESI Act

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challenging the measures initiated by the respondent bank pursuant to the order of the Learned Chief Judicial Magistrate, Tiruvannamalai in Crl. M.P. No.1693 of 2022 dated 17.11.2022 and subsequent action taken by the Ld. Advocate Commissioner pursuant to his notice dated 05.01.2024.

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Brief facts of the case as averred in the application

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The facts leading the impugned order is that the applicant had availed a credit facility to the tune of Rs.2,89,56,000/- from the respondent on 05.02.2019. The applicants were initially making regular remittances, however, due to recession, they suffered loss in business and the default had occurred resulting in the account being classified as NPA by the respondent on 30.6.2019. Consequently, the respondent invoked the provisions of the SARFAESI Act and issued the demand notice under Section 13(2) of the Act on 03.02.2020.

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The respondent has failed to serve the demand and possession notices in accordance with law. The applicants were negotiating with the bank for settlement of the loan dues under OTS, but the respondent did not consider the same and instead obtained an order from the Ld. CJM, Tiruvannamalai for eviction.

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While the applicants were challenging the measures initiated by the respondent, the respondent bank officials along with the Advocate Commissioner entered the premises on 5.1.2024 attempted to take physical possession of the property. In order to safeguard their interests the applicants have filed the present SA.

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The following grounds are urged in the SA: -

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(a) The demand notice is not properly served.

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(b) The respondent failed to give due credit the remittances made by the applicants.

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(d) The respondent failed to affix the possession on the secured asset and also failed to publish the same in two newspapers thereby failed to comply with Rule 8 of the Security Interest (Enforcement) Rules, 2002.

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(e) The order of the Ld. CJM, Tiruvannamalai impugned herein is not proper and is against the judgment of the Hon’ble High Court of Madras in Suo Motto W.P. No.7413 of 2020.

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Counter by Respondent Bank

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Upon notice, the defendant bank filed its counter denying the averments in the SA and submitted that the SA is liable to be dismissed. The applicants along with M/s R.R. Traders approached the respondent for grant of working capital loans of Rs.1,39,56,000/- and Rs.1,50,00,000/against the schedule property. Considering the said request, the respondent vide its sanction letter dated 5.2.2019 sanctioned the same. The applicants along with the borrower executed loan and security documents and created equitable mortgage over the schedule mentioned property executing Memorandum of Deposit of Title deeds .

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As the applicants failed to regularize the loan account despite repeated demands the loan account was classified as NPA on 30.06.2019 strictly in accordance with the guidelines of RBI.

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The respondent issued the demand notice under Section 13(2) of the SARFAESI Act on 3.2.2020 demanding a sum of Rs.2,57,67,624.04p. The said notice was duly served and acknowledged by the applicants. By way of abundant caution the respondent also published the same in The New Indian Express and Dinamani on 18.2.2020. As the applicants did not come forward to clear the dues within the stipulated time the respondent took symbolic possession of the secured asset on 18.11.2020 by affixing the possession notice on the secured asset and publishing the same in The New Indan Express and Dinamani both dated 19.11.2020.

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The respondent bank thereafter filed application under Section 14 of the Act along with all documents as mandated along with supporting affidavit before the Ld. Chief Judicial Magistrate, Tiruvannamalai in Crl. M.P. No.1693 of 2022. The Ld. CJM by its order dated 17.11.2022 appointed Mr. S. Duraisami as Advocate Commissioner to take physical possession of the secured asset and to hand over the property to the respondent bank. The Advocate Commissioner issued letter dated 5.1.2024 to the applicants to vacate and surrender the secured asset. Thereafter, on 20.01.2024, The Advocate Commissioner along with the Authorized Officer had gone to the schedule property to execute the

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warrant, however, the applicants through their henchman along with 20 persons restrained the Advocate Commissioner from executing the warrant and hence the Advocate Commissioner made a police complaint dated 20.01.2024 to the Town Police Station, Tiruvannamalai.

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It is false to state that the respondent has failed to comply with the provisions of the SARFAESI Act and the Rules made thereunder. In fact, the respondent has scrupulously complied with the provisions of the Act and the Rules made thereunder. The Ld. CJM, Tiruvannamalai after scrutinizing all the documents had passed the impugned order dated 17.11.2022 in Crl. M.P. No.1693 of 2022.

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It is also wrong to state that the respondent has given due credit the remittances made by the applicants. Further the applicants have not given the details of the amounts that were not given credit to.

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In view of the foregoing, the present SA is liable to be dismissed.

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Documents filed by the Respondent Bank

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The Respondent Bank filed the following documents viz., Demand Notice dated 03.02.2020 along with postal receipts and acknowledgements; Paper Publication of demand notice in “The New Indian Express” and “Dinamani” dated 18.2.2020; Possession Notice dated 18.11.2020, Photograph evidencing affixture of possession notice; Intimation of Possession Notice along with postal receipts and

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acknowledgements; Paper Publication of Possession Notice in “The New Indian Express” and “Dinamani” dated 19.11.2020; photographs taken at the time of execution proceedings, Police complaint dated 20.1.2024 given by the Advocate Commissioner along its translation and copy of authority letter dated 1.4.2023.

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The matter is heard. In the wake of available material on record, the following points arise for consideration in the present SA:

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“Whether the impugned order of Ld. Chief Judicial Magistrate, Tiruvannalai dated 17.11.2022 in Crl. M.P. No.1693/2022 suffers from any illegality or impropriety rendering it void in law?”

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Answers to Point for Consideration

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It is to be noted that the Hon'ble Supreme Court in “ NKGSB Cooperative Bank Limited Vs. Suber Chakravarty” and “ R.D. Jain and Company Vs. Capital First Limited CA 1755 of 2022 dated 27.07.2022 ” ruled that no adjudicatory powers are vested while deciding the application under Section 14. In the matter of “Indian Bank Vs. Vishalakshi and Another CA 6295/2015 dated 23.09.2019” , the Hon'ble Supreme Court had further held that the proceedings under Section 14 is a procedural step and purely an administrative order and there is no adjudicatory process involved. Keeping in mind the above rulings, this Tribunal can only examine whether there was compliance of

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the provisions by the defendant bank before the Learned CMM as mandated under Section 14(1) of the SARFAESI Act.

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As per Section 14(1) of the SARFAESI Act, on a request being made by the by the secured creditor, the Chief Metropolitan Magistrate or the District Magistrate as the case be take possession of such asset and documents relating thereto and forward such assets and documents to the secured creditor. The financial institutions are to declare under the affidavit the aggregate sum of financial assistance and dues payable as on the date of the application. It should be averred that the borrower / guarantor having created security interest over the property and that the borrower had committed default; upon such default the account must have been classified as NPA. It is also mandatory to aver in the affidavit regarding the issuance of demand notice, the reply thereof and the response of the secured creditor and that the borrower had not made any repayment and therefore entitled to take possession and that the other provisions of the Act have been complied.

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This Tribunal is aware of the Ruling of the Hon’ble Supreme Court in “Authorised Officer, Indian Bank Vs. Vishalakshi and another CA No.6295/2015 disposed on 23.09.2019” holding that the spirit of Section 14 of the SARFAESI Act is only a procedural step. It is purely an administrative order and no adjudication is involved. The orders of the Ld. CMM / DM is only an aid to the proceedings initiated u/s.13(4) of the Act.

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It is only to be looked into whether the provision of section 14(1) of the Act is complied or not. From the impugned order it is seen the necessary details to be furnished u/s.14(1) of the Act has been complied.

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However, this Tribunal has also considered the documents filed by the defendant. This includes the documents produced at S. No. 2 and 3 which is the demand notice dated 04.04.2022, the postal acknowledgements and the publication of demand notice in “The New Indian Express” and “Dinamani” dated 18.2.2020, the same clearly reveals that the demand notice is duly served on the applicants.

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As regards the contention of the applicants that the respondent has failed to comply with the Rule 8 (1) and 8(2) of the Security Interest (Enforcement) Rules, 2002 is concerned the respondent has filed the possession notice dated 18.11.2020 at Sl. No.4 (Pages 25-27), the proof of affixture of the possession notice at Sl. No.5 (Pages 28-32), the proof of service of possession notice at Srl No.6 (Pages 33-37) and the proof of publication of the “the New Indian Express” and “Dinamani” both dated 19.11.2020 at Sl. No. 7 (Page 38 & 39) which clearly evidence that the possession notice has been served, published and affixed on the secured asset. Therefore, this ground of the applicants fall to the ground.

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Further, the applicants have not urged any grounds with regard to noncompliance of provisions under Section 14(1) of the SARFAESI Act by the secured creditor.

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Therefore, in the absence of any allegations regarding non-compliance of the provisions of Section 14(1) of the Act and documentary evidence produced by the defendant bank, this Tribunal is unable to find any illegality, impropriety or otherwise to set aside the impugned order. Hence the following:

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ORDER

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(i) The SA stands dismissed. The orders of the Ld. Chief Judicial Magistrate, Tiruvanamalai dated 17.11.2022 in Crl. M.P. No.1693 of 2022 and the subsequent actions taken by the Ld. Advocate Commissioner pursuant to his notice dated 5.1.2024 are hereby affirmed. All other pending IAs thus stand disposed of. Parties to bear their own costs.

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(ii) A copy of this order be communicated to the parties concerned.

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(SHARANG DHAR UPADHYAY) PRESIDING OFFICER DRT-II, CHENNAI

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(Dictated to PS, who typed in the system directly, corrected, signed and pronounced by me in Open Court, on this 22^nd day of June, 2026)

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Raffic v. Kotak Mahindra Bank Limited

Case brief

What is this about?

What did the court decide?

Raffic v. Kotak Mahindra Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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Cases cited

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