Dismissed

Rajeshwari v. Idbi Bank

DRT28 Jan 2026SA/497/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed the application challenging a sale notice under the SARFAESI Act for the sale of a deceased mortgagor's property. The Tribunal held that since the demand notice was served during the mortgagor's lifetime, no fresh notice to legal heirs was required, and the sale remained valid despite an Income Tax attachment due to the bank's statutory priority.

What did the court decide?

The Sale Notice dated 17.11.2022 and the subsequent sale on 05.12.2022 were upheld as valid measures under the SARFAESI Act.

Rajeshwari versus Idbi Bank — Banking and Recovery | DRT (2026)

SA No.497/2022

28.01.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 28^th day of January, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 497 of 2022

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Mrs. Rajeswari W/o. Late Murugaiah No.104, North East Extension, Sasthri Road, Thillai Nagar, Thrichy – 620 018. ….Applicant -Vs-

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The Authorised Officer, IDBI Bank Limited, No.115, Annai Salai, Saidapet,

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Chennai – 600 015. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. Antony L.X. Selvam Counsel for respondent : M/s. Shree Law Services

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ORDER ON SA 497/2022

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The present Securitization Application [SA] is filed on 03.12.2022 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 filed the present SA challenging the Sale Notice dated 17.11.2022 and fixing the sale on 05.12.2022 and the outstanding amount due as per Sale Notice is Rs.31,28,22,439/-

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It is the case of the applicant she is an 74 years old was informed by

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well-wishers that her son’s property is put to sale as per the paper

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28.01.2026

publication in English Daily Hindu Chennai edition vide sale notice dated 17.11.2022 scheduling the property for sale on 05.12.2022.

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The property originally belonged to her son late Mr. A.M.Arun who died intestate on 16.11.2020 leaving behind his legal heirs namely Mrs. Meera Arjun [wife] Mr. Bala Yudish Murugaiah Arun [son], Ms. Tharana Arun [daughter] and Mrs. Rajeshwari [mother] applicant herein and contended that the applicant along with grand children have inherited 3/4^th share of the property.

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The respondent has issued impugned Sale Notice dated 17.11.2022 against a deceased person for selling the property without issuing any demand notice or possession notice to the legal heirs of the deceased person and that the proceedings initiated against a deceased person when he was alive would automatically stand abated immediately after his demise and that the authorized officer ought have initiated demand notice and possession notice afresh to the legal heirs of the deceased person.

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Further, there is an attachment dated 01.08.2016 by the Income Tax Department on the Schedule Property which is still in force, however bank has brought the property to sale without providing any details of Income tax attachment on the property.

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In the grounds it is contended that the authorized officer ought to have issued demand notice and possession notice afresh to the legal heirs of dead person before publishing the impugned sale notice for sale of immovable property dated 17.11.2022 for selling the same on 05.12.2022.

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28.01.2026

Hence, the entire action under SARFAESI Act is bad in law and liable to be set aside. The Authorized officer failed to note that the proceedings initiated against a person while he was alive would automatically stand abated immediately after his demise. Subsequently, demand notice will have to be issued to the owners of the property under Rule 3 of the SIE Rules.

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Therefore, published the impugned sale notice for sale of immovable dated 17.11.2022 in Hindu Newspaper on 18.11.2022 against the deceased person who is the mortgagor and the same is contrary to rule 8(6) and 9(1) of the SIE Rules. It is contended that the respondent issued the demand notice U/s.13(2) as against the dead person and without complying the mandatory provision the respondent ought not to have proceeded with the impugned sale notice for sale of immovable properties and same is bad in law and is liable to be set aside.

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The legal heirs of the borrower/guarantor and fail to discharge the liability the bank could proceed further by issuance of notice under subsection (4) of Sec.13 of the Act. The late Mr. A.M. Arun was the owner of the mortgaged property and executed mortgage and hence, the S.13(2) demand notice dated 01.06.2018 alleged to be issued and impugned sale notice for sale of immovable property is unsustainable and hence, the same is liable to be set aside as null and void. On these grounds the applicants prays to set aside the Sale Notice dated 17.11.2022.

SA No.497/2022

28.01.2026

The Respondent Bank filed their counter and typed set of documents evidencing their actions contending that Vasan Healthcare Pvt. Ltd., the borrower had approached the Respondent bank seeking grant of various facilities for setting up of nine new Eye Clinics at various Center. Pursuant to sanction, the borrower had executed loan documents and the facilities were secured by guarantees of promoters / directors viz., Mr.A.M.Arun and his spouse Mrs.Meera Arun. The guarantors had also created security interest in respect of schedule property.

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It is relevant to mention that bank has filed O.A.No.40 of 2018 before the Hon’ble DRT II, Chennai against the borrower/guarantors/mortgagors viz Mr.A.M.Arun and his spouse which is pending. Since Mr.A.M.Arun died, his legal representatives were impleaded in OA vide order dated 16.02.2022 in IA No.1094 of 2021.

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It is further case of the Respondent Bank that since the facilities of financial assistance becoming NPA, the Respondent Bank issued demand notice dated 20.06.2018. Mr.A.M.Arun died on 16.11.2020 leaving behind his legal heirs, a possession notice dated 31.08.2021 was issued to the legal heirs of the deceased borrower including the applicant and his spouse as well. Subsequently, a Sale Notice dated 29.10.2022 was issued to the guarantors/mortgagors/legal heirs of the deceased. Sale Notice was published in the newspapers on 17.11.2022 giving notice to general public scheduling the e-auction on 05.12.2022.

SA No.497/2022

28.01.2026

It is submitted that the E-Auction held on 05.12.2022, MGM Health Care Pvt. Ltd., became the successful bidder who deposited 25% of sale price. As per Section 13(8) of the SARFAESI Act, the mortgagors have lost their right of redemption. As regards plea on income tax attachment, the Respondent Bank is having priority as per Section 26 E of the Act. Hence, the contentions of the applicant herein are liable to be rejected and SA to be dismissed.

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Heard the counsels appearing for respective parties and perused the records.

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It is manifest from the records that the applicant is the mother of the mortgagor Late Mr. Arun who had offered his property as security towards the credit facilities by Vasan Health Care Pvt. Ltd., from the respondent bank. Due to default in the repayment, the account was classified as NPA in accordance with RBI guidelines and followed by issuance of S.13[2] demand notice on 20.06.2018.

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It is matter of record that the borrower Mr. Arun is deceased on 16.11.2020 as per the death certificate issued by Greater Chennai Corporation reflecting the death of Mr. Aun which is produced at page 10 of SA paper book and the legal heir certificate produced at page 11 reflects the legal heirs namely Mrs. Meera Arun, Mr. Bala Yudish Murugaiah Arun, Ms. Tharana Arun, Mrs. Rajeswari.

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It is seen from Annexure D1 that the demand notice dated 20.06.2018 was issued to the mortgagors Mr. A.M. Arun who is deceased

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on 16.11.2020 which is subsequent to issuance of demand notice. In fact, he died after two years from the date of issuance of demand notice. Hence, contention of the applicant that a fresh demand notice to the legal heirs of the deceased is untenable.

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The specific contention of the applicant is that the mortgagor

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Mr. A.M. Arun died on 16.11.2020 and bank has issued Sale Notice dated 17.11.2022, against a dead person is void.

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The issue for consideration whether the secured creditor to initiate fresh measure on the death of mortgagor?

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It is manifest from the records that the loan account of the borrower is classified as NPA in accordance with RBI guidelines, S.13[2] demand notice is issued on 20.06.2018 which is served on the mortgagor on 29.06.2018 during his life time who was in receipt of the notice and the one of the legal heir being Mrs. Meera Arun herein is the wife of the deceased Mr. A.M. Arun, hence there is sufficient representation of the legal heirs of the deceased mortgagor as per legal heir certificate produced by the applicant at Pg.11.

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The issue for consideration at this juncture whether it is necessary for a secured creditor to issue a fresh notice under S.13[2] measure under Act on the death of mortgagor is answered by the recent judgements of the Hon’ble Jammu and Kashmir High Court and the Hon’ble Kerala High Court on the issue.

SA No.497/2022

28.01.2026

The Tribunal places reliance on the judgment of The Jammu & Kashmir High Court in the case titled Mst. Sundri and Ors Vs J&K Bank &Anr where it is held that a secured creditor is not required to issue a fresh notice to the legal heirs of a deceased mortgagor before invoking Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

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23. The Hon’ble High Court observed that once notice under Section 13(2) has been served upon the mortgagor and the liability is not discharged within 60 days, the secured creditor is well within its rights to proceed under Section 14 to take possession of the secured assets as the statutory procedure under Sections 13 and 14 had been followed, and that no fresh notice to the legal heirs was warranted under the law. Further it held that such a requirement is not envisaged under the scheme of the SARFAESI Act.

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Additionally, the Tribunal places reliance of on the judgment of the Hon’ble Kerala High court in the case titled Abhijith B. v. Bank of Maharashtra and Ors where it is held that Bank's Right to recover becomes absolute once demand notice is served in mortgagor lifetime, fresh notice to legal heirs is not needed.

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In the instant matter the account is classified as NPA in accordance with RBI guidelines, S.13[2] demand notice is issued on 20.06.2018 which is served on the mortgagor on 29.06.2018 during the life time

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of the borrower. Hence the contention that a fresh notice be issued

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to the legal heirs does not sustain, as per position of law.

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Subsequently possession notice dated 31.08.2021 was issued to legal heirs of the deceased mortgagor namely Mrs. Meera Arun, Mr. Bala Yudish Murugaiah Arun, Ms. Tharana Arun, Mrs. Rajeswari which are duly served as per the postal acknowledgement cards produced from Page No.22 to 28 of respondent’s documents. Though the applicant has received the possession notice along with the other legal heirs have not challenged the same within the period of 45 days and the same is time barred under S.17 of the Act.

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Another contention raised to set aside the sale notice is that there is income tax attachment on the property and the respondent bank cannot proceeds under the SARFAESI Act cannot sustain. It is settled position of law that the charge of secured creditor has a priority of charge over other charges as per S.26D of the Act. Hence the said contention fails.

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On perusal of the records it is seen that the respondent bank has issued Section 13(2) Demand Notice to Rentworks India Pvt Ltd., vide letter dated 30.10.2018 and also produced postal tracking reports of Mrs. Rajeswari, Ms. Tharana Arun, Mr. Bala Yudish Murugaiah. The respondent bank has produced the Sale confirmation letter dated 06.12.2022 in favor of the MGM Healthcare Pvt Ltd by stating that “DRT III has not granted any stay on the application filed by Mrs. Rajeswari”, further the auction

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purchaser has made the entire sale consideration as per the proof of payment produced at Page No.43 to 48 of respondent’s documents.

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For the foregoing reasons, the present SA is only to be dismissed by upholding the Section 13(2) Demand Notice dated 20.06.2018 and Section 13(4) Possession Notice dated 31.08.2021 are held as statutory notices and the Sale notice dated 17.11.2022 and the sale held on 05.12.2022 as valid measures taken by the respondent bank under the provisions of SARFAESI Act and Rules made there under.

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Resultantly, the present SA stands Dismissed. Interim Order, if any granted and subsisting till this day stands vacated and all other IAs, if any

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pending stand closed. 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 28^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.	Death Certificate of Late Mr. A.M. Arun dated 20.11.2020.	A-1
2.	Legal Heir Certificate dated 17.12.2020.	A-2
3.	Impugned Sale Notice dated 17.11.2022.	A-3
4.	Certificate of encumbrance on property described in the Schedule dated 01.12.2022.	A-4

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl.	Description of Documents	Documents
No.		No.
1.	Notice issued under Section 13(2) of SARFAESI	R-1
	Act dated 20.06.2018.

SA No.497/2022

28.01.2026

2.	Notice issued under Section 13(4) of the Act read with Rule-8 of the Security Interest Enforcement Rules dated 31.08.2021.	R-2
3.	Notice issued by the respondent together with acknowledgement due dated 29.10.2022.	R-3
4.	Letter issued by the respondent bank to the successful bidder and the proof of payment of the successful bidder dated 06.12.2022.	R-4

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SCHEDULE OF PROPERTY

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All those piece and parcel of land comprised in and forming part of RS.No.3926/12 and situated on Plot No.D, Old Door No.44, then 126 and then 126/1 and now bearing New No.199, St.Marys Road, Block No.86, Mylapore, Chennai -18 in the registration District Chennai, Sub District Alwarpet admeasuring 3600 sq.ft., and which in bounded as follows: on the East by : Private Road in R.S.O.3926/3, On the West By : Property owned by Mrs. Meena Sampath & Others in R.S.No.3926/11, On the South by : Old Door No.127, belonging to Mrs. Regina Nagesh, On the North By : St. Mary’s Road, Block No.73, together with the building and structure constructed to be constructed thereon and all fixed plant, Machinery, Fixture and Fittings annexed thereto.

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Sd/-

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

Rajeshwari v. Idbi Bank

Case brief

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Rajeshwari v. Idbi Bank

Case brief

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