Dismissed

Expovan v. Cholamandalam Investment and Finance Company Ltd.

DRT20 Jan 2026SA/485/2024

Case brief

AI extract

What is this about?

This Debts Recovery Tribunal dismissed a Securitization Application filed by a borrower challenging a Posession Notice under Section 13(4) of the SARFAESI Act. The tribunal held that the secured creditor duly complied with all statutory procedures regarding notice, publication, and affixture.

What did the court decide?

The Securitization Application challenging the Posession Notice dated 06.07.2024 was dismissed. The interim order, if any, stood vacated.

Expovan versus Cholamandalam Investment and Finance Company Ltd. — Banking and Recovery | DRT (2026)

SA No.485/2024

20.01.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 20^th day of January, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 485 of 2024

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M/s. Expovan, Rep. by its Managing Partner, Dr. R. Mahendran, S.F. No.124/16, Vadakkipalayam Road, C. GopalapuramPirivu, R. Ponnapuram, Pollachi-642 002 Coimbatore District. ….Applicant

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-Vs-

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The Authorized Officer, M/s. Cholamandalam Investment & Finance Co.Ltd., “Chola Crest”, C-54-55 & Super B-4, Thiru-Vi-Ka Industrial Estate, Guindy Chennai -600 032. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : Mr. J. Prince Counsel for respondent : M/s. K.J. Parthasarathy

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ORDER ON SA 485/2024

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The present Securitization Application [SA] is filed on 18.07.2024 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.13(4) Possession Notice dated 06.07.2024 and the outstanding amount due as per Possession Notice is Rs.20,32,28,642/-

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Pleadings of the applicant:

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The applicant is 100% Export Oriented Partnership Firm carrying on the export business of natural vanilla and its value added products. The Managing Partner of the Applicant Firm Dr. R. Mahendran is a pioneer in field of Vannila Extraction has the factory premises of the applicant firm in the property belonging to Dr. R. Mahendran.

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The applicant firm had availed a Working Capital Demand Loan of Rs.10 Crores and Term Loan of Rs.10 Crores vide sanction letter dated 24.10.2019 from the respondent for the purpose of working capital requirements and also for purchase and installation of equipment’s and machineries for theirbusiness.

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It is submitted that the above limits were sanctioned by the bank from their Head Office at Chennai and disbursement of the loan amounts. The limits are secured by hypothecation of the current assets in the business of the applicant firm apart from common equitable mortgage of the immovable property comprising of land and building situated at 4243A, Vadakkipalayam Village, R. Ponnapuram village, Pollachi Taluk,which is described in the schedule and belonging to the Managing Partner Dr. R. Mahendran.

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The partners of the applicant firm viz. Dr. R. Mahendran, Mrs. AbhiramiMahendran, Mrs. KamatchiAmmal and Mr. KeerthenMahendran are the Guarantors for the above limits. Subsequently, the respondent was sanctioned a Top up limit of Rs.256.29 Lakhs in addition to the

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20.01.2026

Principal Outstanding of Rs.743.81 Lakhs in the Term Loan account, thereby totaling the sanction limit of Rs.10 Crores vide sanction letter dated 24.10.2019.

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In the meanwhile, Prices of Natural Vanilla products faced a severe downfall owing to various market factors and lead to excess productivity and land less sales, and resulting in severe loss of income generation, not only did the applicant fall prey for this economic downfall, but the agriculturalists in general faced identical issues.

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Due to Covid-19 pandemic situation and restriction by Government regulations applicant firm were severally affected. The management of the applicant initiated for a settlement of the account and no notices were issued by the respondent and applicant pleaded for time to find a way out of the crisis.

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The applicant requested the respondent to restructure the existing limits loans into a single term loan of Rs.20 Crores with a monthly EMI repayment of Rs.33 Lakhs, apart from other various other proposals, including takeover of the existing limits by another bank or financial institution failing which they would additional security for existing limits. The respondent by letter dated 31.03.2023, restructured the existing limits by converting the total exposure into a single term loan of Rs.19,78,26,509/-.

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The respondent enhanced the rate of interest to 15% of p.a from the existing rate of 12% p.a with compounded monthly rests. Subsequent

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20.01.2026

to the restructuring, they have made substantial repayments to the tune of Rs.1.80 Crores. However, the respondent failed to take into consideration applicants honoring their obligations instead, issue a loan recall notice dated 30.11.2023 without even extending the repayment period upon providing additional security classified the account as NPA.

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The respondent issued Demand Notice dated 03.01.2024 under Sec.13(2) of the SARFAESI Act, demanding a sum of Rs.20,32,28,642/as allegedly due and outstanding. On receipt of the demand notice, the applicant gained knowledge of the account having slipped into NPA. The respondent published the demand notice in English and Tamil dailies with sole intention of humiliating and defaming the partners of the applicant firm without making any effort to serve the notices on them individually. The respondent bank has not published demand notice in the two newspapers.

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It is contended that the applicant made arrangements to make substantial repayment and took demand draft Rs.2 Crores on 12.06.2024, submitted a concrete repayment proposal requesting the bank not to precipitate the issue further.

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It is contended that the business of the applicant is agricultural based and despite showing bonafide in servicing the loan periodically, without showing indulgence in the matter hastily took drastic measures under the SARFAESI Act.

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Further, the respondent has affixed possession notice under Section 13(4) of the SARFAESI Act in the secured asset by taking symbolic possession of the property without serving the possession on the applicant. Further, none of procedures stipulated under the Act and SIE Rules, were followed by the respondent prior and subsequent to issuance of Possession Notice. The Authorized Officer in issuing the impugned possession notice without following any of the procedures laid down under the Act and Rules framed thereunder.

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In the grounds, it is contended that the classification of the loan account as NPA is illegal and contrary to the RBI guidelines. The respondent has not served the demand notice u/s.13(2) of the Act on the guarantors/partners of the applicant firm, not served the impugned possession notice on the applicant or its partners and notice has not been published in Vernacular and English dailies as mandated under the SIE Rules. The respondent has charged exorbitant interest as against the RBI guidelines.

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It is seen that the applicant’s property has not been registered with the Central Registry and consequently, the entire proceedings under the Ac is a nullity and unenforceable. Hence, the applicant prays to set aside the Sec.13(4) Possession Notice.

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Objections of the respondent bank:

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The respondent bank has filed the counter contending that the applicant is the mortgagor had availed credit facilities from the

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respondent bank in term loan of Rs.10.00 Crores and WDCL credit facility of Rs.10.00 Crores vide sanction letter dated 24.10.2019. The applicant and its partners including the guarantors and mortgagors had accepted the terms and condition of the sanction letters.

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The applicant availed the credit facilities and had executed loan agreements dated 30.10.2019 in favour of the respondent for due and proper repayment of the credit facilities availed, the terms and condition of the loan agreement.

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The applicant had created an equitable mortgage by way of Memorandum of Deposit of Title Deeds in favor of Respondent bank on 30.10.2019 registered as Doc.No.9885 of 2019 to facilities availed by the applicant. Further the applicant along with the guarantors approached the respondent and requested for term loan pop limit of Rs.1000.00 Lakhs which the respondent sanctioned a top up limit of Rs.256.19 Lakhs on 03.02.2022 apart from the principal outstanding term loan amount due and payable by the applicant to the tune of Rs.743.81 Lakhs.

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The applicant and its guarantors had executed loan documents dated 08.01.2022 and top up limit of Rs.256.19 Lakhs as per the terms and conditions of the loan agreement, and mortgagor had clearly confirmed that the existing collateral security is created in favour of the respondent and same has been accepted and endorsed by the applicant, the guarantor and the mortgagor confirming the existing collateral security.

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20.01.2026

The borrower defaulted in the repayment of EMI amounts and failed to adhere to the terms and conditions of the loan agreement despite of request of the applicant to restructure the facility. The restructured loan facility of Rs.19.78 Crores was repayable in 6 EMIs from 05.05.2023 till 05.10.2023 and the applicant had not paid single installment of restructured facility and denies that the applicants were compelled to restructure at a higher rate. Since, the borrower continued their default in payment of EMIs the respondent had classified the loan account as NPA in accordance with Section 2(o) of the SARFAESI Act.

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The bank has issued the Demand Notice under section 13(2) on 03.01.2024 calling upon the borrowers to discharge the liabilities in full within 60 days from the date of the notice. The Demand Notice returned/not delivered to the Borrowers/Co-Borrowers, hence the respondent had complied Rule 3 of the Security Enforcement Rules and effected paper publication of the demand notice in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 20.01.2024 and also affixed the notice. The respondent had resorted to compliance of Rule 3 of the Security Enforcement Rules by abundant caution to avoid untenable pleas of alleged non-service of notice.

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It is submitted that the Sec.13(2) demand notice the outstanding in the loan accounts was Rs.20,32,28,642/- even after giving credit to all the sums deposited and wilful default of the applicant. As the respondent failed to discharge the liability within the statutory period and as secured

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creditor the bank took symbolic possession on 06.07.2024 and Possession Notice was delivered to the borrower & Co-borrower and effected paper publication in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 11.07.2024. The possession notice was duly served on the borrowers and also affixed the notice.

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The applicant had not complied the conditional directions of this Hon’ble Tribunal dated 01.08.2024, the facility availed by the applicant has been duly created on 19.07.2023 and registered with the (CERSAI). The respondent had put up the properties for sale vide auction notice dated 25.11.2024 fixing the E-Auction sale on 07.01.2025 in SA.No.1068 of 2024 before the Hon’ble DRT Coimbator (before Madurai) and obtained conditional order on 07.01.2025, which was also not deliberately complied.

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The respondent had approached Hon’ble CJM, Coimbatore seeking for taking possession of the property and had passed an Order dated 30.12.2024 appointing Advocate Commissioner to assist the Secured Creditor to take possession of the property. The respondent again filed another appeal before this Hon’ble DRT-Coimbatore in SA.No.162.2025 challenging the Sec.13(4) of the Act and the said Appeal is pending adjudication.

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It is contended that the Authorized Officer of the respondent and competent to proceed under the Act. The schedule is in consonance of

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the original documents deposited with the respondent and the property is not exempted from the provisions of the Act. The respondent has acted within the scope and ambit of the SARFAESI Act and the applicant is adopting such dilatory tactics to defeat and delay the recovery.

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The respondent had adhered to procedure as contemplated under the Act and SIE Rules and there is no infirmity in the proceedings. The debt is admitted either way the liability is admitted and crystallized and the applicant is still due and liable for a sum of Rs.25,43,63,095/- as on 24.03.2025 after giving credit to all the payments made. The respondent is unable to recover the dues owing to the pendency of the appeal before this Hon’ble Tribunal hence, prays for dismissal of the SA.

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

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It is manifest from the records that the applicant is the borrower had availed a Working Capital Demand Loan of Rs.10.00 Crores and Term Loan of Rs.10.00 Crores vide sanction letter dated 24.10.2019 and created mortgage of the property by way of deposit of title deeds which is registered in the Office of SR as Document No Doc.No.9885/2019 Sub Registrar Pollachi which is produced at Pg.11-22. Further the equitable mortgage is registered before the central registry dated 19.07.2023, and the respondent bank had filed CERSAI report duly evidencing registration of the security interest with the central registry which is produced at Pg.23-25 of counter.

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Further at the request of the applicant along with the guarantors for top-up limit for the term loan limit of Rs.1000.00 Lakhs was sanctioned a top up limit of Rs.256.19 Lakhs by the respondent bank on 03.02.2022. The applicant and its guarantors had executed loan documents dated 08.01.2022 and top up limit of Rs.256.19 Lakhs as per the terms and conditions of the loan agreement, and mortgagor had clearly confirmed the existing collateral security created in favour of the respondent and same has been accepted and endorsed by the applicant, the guarantor and the mortgagor.

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However, the applicant alleges that respondent bank charged a rate of interest is 15% after restructuring is admitted by the applicants and in consent have executed the loan documents and now cannot raise any contentions that the rate of interest charged is higher. The restructured loan facility of Rs.19.78 Crores was repayable in 6 EMIs from 05.05.2023 up to 05.10.2023.

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The borrower defaulted in the repayment of EMI amounts and failed to adhere to the terms and conditions of the loan agreement. Despite the continuous default acceded to the request of the applicant and restructured the facility.

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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 24.09.2022. Subsequent to

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classification of the account as NPA, the bank has issued S.13(2) Demand Notice dated 03.01.2024, where the notice clearly describes the types of loan availed, the nature of facility and the documents executed by the borrowers. Further the description of the properties is clearly mentioned in the S.13(2) demand notice.

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The Sec.13(2) Demand Notice was sent by RPAD was not received by the borrower and it was “returned to the sender” as “unclaimed” which is produced at Pg.31 and 32 of counter, hence as per Rules the demand notice is published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 20.01.2024 and affixed on the property and the copy of affixture of demand notice is produced at Pg.33 Thus the service of demand notice is completed as contemplated under the Act and Rules made thereunder.

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In spite of service of demand notice, the applicant neither raised any objection to the demand made under S.13[3A] nor liquidated the entire liability within 60 days, hence the respondent issued the Sec.13(4) Possession Notice on 06.07.2024, which was duly served, as per Acknowledgement Cards produced at Pg.40 and 41 of counter, and affixture of Possession Notice produced at Pg.42 evidences due service of Possession Notice. Possession Notice is also published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 11.07.2024.

SA No.485/2024

20.01.2026

Though the applicant has challenged the Sec.13(4) possession notice have not pointed out any illegalities in the measure taken by the bank in enforcing the security available to them. On the other hand, the respondent bank established the procedures as contemplated under the Act in enforcing the security with supporting documents as required under the Act. Hence, it is concluded that the Sec.13(2) Demand Notice dated 03.01.2024 and Sec.13(4) Possession Notice dated 06.07.2024 are valid notices issued by the secured creditor as per the procedure as described under the Act and rules made there under.

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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. Sd/-

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(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 20^th day of January, 2026)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl. No.	Description of Documents	Documents No.
1.	Sanction Letter for Working Capital Demand Loan dated 24.10.2019.	A-1
2.	Sanction Letter for Term Loan dated 24.10.2019.	A-2
3.	Sanction Letter for Top Up of Term Loan dated 03.02.2022.	A-3
4.	Letter seeking restructuring of Limits dated 21.02.2023.	A-4
5.	Sanction Letter for Restructuring of Limits dated 31.03.2023.	A-5
6.	Loan Recall Notice dated 30.11.2023.	A-6

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7.	Demand Notice issued Under sec.13(2) of SARFAESI Act 2002 dated 03.01.2024.	A-7
8.	Demand Notice under Sec.13(2) published in English and Tamil Dailies dated 20.01.2024.	A-8
9.	E-Mail Correspondence Between the Applicant and Respondent.	A-9
10.	Statement of Account.	A-10
11.	Possession Notice Under Sec.13(4) of SARFAESI Act 2002 affixed in the secured asset dated 06.07.2024.	A-11
12.	DD No.063327 for Rs.200,00,000/- drawn on Axis Bank dated 12.06.2024.	A-12

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl. No.	Description of Documents	Documents No.
1.	MODT dated 30.10.2019.	R-1
2.	CERSAI Registration dated 19.07.2023.	R-2
3.	13(2) Notice with returned covers dated 03.01.2024.	R-3
4.	13(2) Affixture.	R-4
5.	13(2) Publication dated 20.01.2024.	R-5
6.	Possession Notice with Postal Receipts & Acknowledgements dated 06.07.2024.	R-6
7.	Affixture of Possession Notice.	R-7
8.	Possession Notice Publication dated 11.07.2024.	R-8
9.	Nomination as Authorised Officer.	R-9

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SCHEDULE OF PROPERTIES

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(As given in the impugned possession notice)

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Item 1:

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Coimbatore Registration District, Pollachi Sub Registration District, Pollachi Taluk, R. Ponnapuram village, S.F. No.42/1B in Punjai acre 1.58 land within the following boundaries & measurement.

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South of - S.F. No.42/3A Land; West of - S.F.No.42/3A Land belongs to Chandaravadhana; East of - S.F. No.42/1B Land belongs to MuthusamyGounder; North of - S.F.No.42/3B land, P.A.P Vaikkal, Itteri,

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Admeasuring in this middle punjai acre 0.35 extent of land with using the right to road common usage and common pathways etc, as per subdivision new S.F.No.42/1B2.

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Item 2:

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Coimbatore Registration District, Pollachi Sub Registration District, Pollachi Taluk, R. Ponnapuram Village, S.F.No.42/4A in punjai acre 0.84 land within the following boundaries & measurement

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West of – S.F.No.43 Land, Vadakkipalayam Road, North of – S.F.No.42/3B Land, P.A.P Vaikkal, Itteri; East of – S.F.No.42/3A Land & South of – S.F.No.42/3A Land belong to Rukmani&Parameswaran,

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Admeasuring in this middle punjai acre 0.84 extent of land & S.F.No.42/3A in Punjai acre 1.68 land in one portion within the following boundaries and measurement.

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North of - S.F.No.42/3B Land, P.A.P. Vaikkal, Itteri; South of - S.F.No.42/3A Land belong to Rukmani&Parameswaran; West of - S.F.No.42/4A Land, Vadakkipalayam Road & East of - S.F. No.42/1B land belongs to MuthusamyGounder.

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Admeasuring in this middle punjai acre 0.91 extent of land, totally admeasuring Punjai Acre 1.75 extent of land with using the rights to common usage and common pathways etc.,

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Item 3:

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Coimbatore Registration District, Pollachi Sub Registration District, Pollachi Taluk, R. Ponnapuram Village, S.F.No.42/3A in Punjai acre 2.68 land within the following boundaries & measurement.

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North of – S.F.No.42/3A & S.F.No.42/4A Land belonging to Chandravadana, S.F.No.42/1B land belongs to Mahendran; East of - S.F.No.42/2 Land belongs to MuthusamyGounder, South of - S.F.No.53;

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West of - S.F.No.43 land &PollachiVadakkipalayam Road, Admeasuring in this middle Punjai Acre 1.77 extent of land, Totally admeasuring 3.87 acres extent of land and building with doors, windows, water connection, electricity connection and both deposits, with using the nights to road common usage and common pathways etc.,

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Sd/-

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

Expovan v. Cholamandalam Investment and Finance Company Ltd.

Case brief

What is this about?

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Expovan v. Cholamandalam Investment and Finance Company Ltd.

Case brief

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