Dismissed

Varalakshmi v. Indian Bank

DRT10 Aug 2026SA/529/2025

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the Securitization Application filed by an applicant director challenging a Section 14 order passed by the Chief Metropolitan Magistrate. The Tribunal upheld the validity of the Section 14 order, ruling that the power under Section 14 is ministerial and non-adjudicatory, requiring no grounds for objection in the Tribunal under Section 17.

What did the court decide?

The Securitization Application was dismissed, and any interim order granted therein was vacated.

Varalakshmi versus Indian Bank — Banking and Recovery | DRT (2026)

SA No.529/2025

10.08.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 10^th day of August, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 529 of 2025

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Mrs.Varalakshmi, P2, 2nd Cross Street, Turn Bulls Road, Nandanam, Chennai-600 035. ….Applicant

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-Vs-

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The Authorized Officer, Indian Bank, Nandanam Branch, Khiviraj Complex, Ground Floor, No.480, Anna Salai, Chennai-600 035. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. RKM Suresh, Adhitya.D Counsel for respondent : M/s. P.V. Murlidhar, P.M. Surendhar

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ORDER ON SA 529/2025

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The present Securitization Application [SA] is filed on 31.07.2025 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.14 order dated 08.04.2025 in Crl.M.P. No.2719 of 2025 passed by Chief Metropolitan Magistrate, Egmore and the outstanding amount due as per Sec.14 order is Rs.4,43,17,037/-

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The Applicant is one of the Directors of M/s. Maxmimus Global Trade

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Links Private Limited, which is engaged in the business of coal trading. The

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company availed OCC – Trade Finance – MSE – REPO of Rs.4,00,00,000/-, MSME – IND GECLS COVID – REPO of Rs.40,00,000/-, and MSME – GECLS – EXTN – REPO of Rs.20,00,000/-, aggregating to a total sum of Rs.4,60,00,000/-, from the Respondent Bank during the years 2020–2023 for business purposes.

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3.1 It is submitted that in consideration of the loan granted to the borrower company, the necessary security documents were executed in favour of the respondent bank. Besides, the applicant had created registered equitable mortgage in respect of her property (SA Schedule Property is described in Items Nos. 1 and 2 of the Schedule to the application) in favour of the respondent bank as collateral security.

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3.2 It is further submitted that the borrower company was prompt in repaying the loan initially. Subsequently, due to the COVID-19 lockdown and the implementation of GST, the borrower company incurred heavy losses and was unable to repay certain loan instalments as scheduled. The applicant submits that, since the borrower failed to repay the loan instalments in accordance with the terms and conditions of the loan agreement, the respondent bank classified the loan accounts of the applicant as NPA and issued a demand notice dated 21.02.2024 U/s.13(2) of the SARFAESI Act, calling upon the applicants to repay the outstanding amount within 60 days from the date of receipt of the demand notice.

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3.3 After the receipt of the demand notice, the borrower company had approached the respondent bank and requested reasonable time to settle the loan amount. Without considering their request for settlement of the

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loan account, the respondent issued a Sale Notice dated 02.01.2025 and sold the secured property on 14.02.2025 for an amount of Rs.4,35,58,000/-, declaring Mr. Vinoth as the successful bidder. The applicants have challenged the sale in S.A. No. 171 of 2025 which is pending before this Tribunal for arguments, and the auction purchaser is also a party to the said S.A.

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3.4 However, the respondent bank, without considering the pending S.A. and the borrower's earlier request, obtained an order from the CMM, Egmore, in Crl.M.P. No. 2719 of 2025 dated 23-06-2025, claiming an amount of Rs.4,43,17,037/- without following the mandatory provisions of the SARFAESI Act and the Rules.

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3.5 It is submitted that the Authorized Officer filed a false affidavit before the Ld. CMM, claiming an amount of Rs.4,43,17,037/-. However, the Respondent Bank had already sold the property for Rs.4,35,58,000/-, which was suppressed while filing the affidavit before the Ld. CMM.

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3.6 The applicant was made to sign many blank papers, contents of which are not known to the applicant and same are not binding on the applicant. The respondent suddenly issued a Possession Notice to the applicant claiming to have issued a Demand Notice to the applicant calling upon to pay the due amount within 60 days from the date of notice. But the demand notice has not been served to all the parties.

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3.7 It is mandatory on the part of the respondent to classify the loan account as NPA as per Section 2(o) of the SARFAESI Act and in accordance

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with the RBI guidelines. The respondent does not have any authority to enforce their security interest over the schedule mentioned property. Without even proper demand made by the applicant, respondent issued possession notice in a mechanical manner without issuing Sec.13(2) Demand Notice to all the parties.

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3.8 The applicant apprehends that, pursuant to the possession notice, the respondent may at any time take forcible possession of the secured assets. The borrower is making efforts to mobilize funds to settle the outstanding account with the respondent. T he respondent did not properly adjust the amounts paid by the borrower and charged interest and penal interest in violation of the RBI guidelines.

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3.9 In the grounds it is contended that the respondent did not serve the Sec.13(2) notice there by impaired the statutory rights vested with the applicant under Sec.13(3-A) of the Act, The respondent wilfully suffocated the right of the applicant under Sec.13(3-A). The Authorised Officer of the respondent has not served or affixed the possession notice. The respondent bank has failed to satisfy the statutory requirements under the SARFAESI Act and the relevant rules framed there under. On these grounds, the applicant prays to set aside the Sec.14 order passed by the Ld. CMM, Egmore.

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The Respondent has filed a counter contending that the Applicant admitted availing the loan and creation of the equitable mortgage and execution of documents, Due to the losses suffered by the company after COVID-19 and the implementation of GST, the Applicant could not repay

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the loan dues as per the schedule and terms and conditions of the loan agreement. Consequently, the Respondent Bank classified the account as NPA and issued a Demand Notice U/s.13(2) of the SARFAESI Act on 21.02.2024, calling upon the Applicant to pay the outstanding amount within 60 days. The Applicant neither submitted any reply nor complied with the demand notice. However, the Applicant approached the Respondent Bank and requested reasonable time for settlement of the loan amount.

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4.1 It is submitted that, since there was no response to the Demand Notice issued U/s.13(2) of the SARFAESI Act, the Respondent Bank issued a Possession Notice U/s.3(4) and Sale Notice after complying with the SARFAESI Act and Rules. Subsequently, the secured asset was sold in a public auction on 14.02.2025 for a sum of Rs.4,35,58,000/- to Mr. Vinoth. The said sale was challenged by the Applicant in S.A. No. 171 of 2025, wherein the auction purchaser was also impleaded.

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4.2 It is further submitted that the respondent bank also filed an application before the Ld. CMM, Egmore, u/s.14 of the Act and obtained orders in Crl. M.P. No. 2719 of 2025. In fact, at the time of filing the Sec.14 application, the property had not been sold, hence, the amount mentioned in the Sec.13(2) Demand Notice was reflected. The contention of the applicant that after adjusting the sale proceeds, only the balance amount should have been mentioned in the Sec.14 application, which is totally wrong.

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4.3 The respondent denies the allegation in the SA that the respondent bank has obtained signatures of the applicant in the blank forms, which is totally in contradiction to the earlier paragraphs, wherein the applicant admitted the availment of loan, and creation of the MODT. The contention that the classification of the loan account as NPA is incorrect, is contrary to

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the Applicant’s earlier admission that due to heavy business losses, the EMIs could not be paid, resulting in the classification of the account as NPA. 4.4 The respondent submits that the Sec.13(2) Demand Notice was duly served to the borrowers and guarantors and acknowledged by them on 22.02.2024 and Sec.13(4) Possession Notice was also sent through registered post, and the tracking extract reveals it was duly delivered, and also published in two newspapers one English “The New Indian Express” and another one in Tamil “Dhinamani” both dated 01.05.2024, and the same was affixed in the conspicuous part of the property, and all the said documents has been enclosed in the present SA Paper Book.

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4.5 The respondent bank denies all the allegations made in the present SA and also followed all measures as required. Hence, the respondent bank 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 evident from the records that the applicant is one of the Director who had availed a Business Loan from the respondent bank, which was secured by way of a mortgage over the property. Due to default in the repayment of the loan, the respondent bank initiated measures under the

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SARFAESI Act. Consequently, the loan account was classified as NPA 20.02.2024, in accordance with the RBI guidelines.

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5.1 The respondent has issued Sec.13(2) Demand Notice to the borrowers and guarantors on 21.02.2024 calling upon them to pay the outstanding amount of Rs.4,43,17,037/- due as on 20.02.2024 along with other charges. The Demand 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 Sec.13(2) Demand Notice. The Sec.13(2) Demand Notice is sent by RPAD, which the borrowers and guarantors have received the Demand Notice as per the Acknowledgement Cards produced at Pg.11 of the counter.

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5.2 The contention of the applicants that Demand Notice was not served is disproved by the respondent bank by producing Acknowledgement Cards evidencing service of Demand Notice upon the borrower, guarantor and mortgagor. Accordingly, the contention of the applicant with regard to the issuance of the Demand Notice fails.

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5.3 In spite of receipt of Sec.13(2) demand notice as the borrower, guarantor and the mortgagor did not liquidated the liability within 60 days nor raised any objections to the demand made, the respondent bank has proceeded further under the Act.

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5.4 The respondent issued the Sec.13(4) Possession Notice on 30.04.2024 sent through Registered Post with Acknowledgment, which the

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borrowers and guarantors have received the possession notice as per tracking consignment which is produced at Pg.15-17. The Possession Notice is published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 01.05.2024 and the Possession Notice is affixed on the conspicuous place of the property as per the photograph of affixture produced at Page No.20 and 21 of respondent bank’s typed set.

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5.5 The contention of the applicants that Possession Notice is not served, is refuted by the respondent bank by producing Tracking reports, evidencing service of Possession Notice to the borrower, guarantor and mortgagor. Accordingly, the contention of the applicant with regard to the issuance and affixture of the Possession notice fails.

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5.6 It is seen that the respondent has produced copies of the Demand Notice issued U/s.13(2) and the Possession Notice issued U/.s13(4) of the SARFAESI Act, together with the acknowledgement cards and tracking reports, evidencing due compliance of the statutory measures taken.

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5.7 The contention of the applicant, without considering the applicants' request for settlement of the loan account, the respondent issued a Sale Notice dated 02.01.2025 and sold the secured asset in the auction conducted on 14.02.2025 for a sum of Rs.4,35,58,000/-, declaring Mr. Vinoth as the successful bidder. The contention in challenging the sale is to

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be considered in pending S.A. No. 171 of 2025 as it is a separate cause of auction challenging the sale and the contentions of the auction purchaser is also to be considered in adjudicating the sale.

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5.8 As the applicants failed to repay the entire outstanding amount, the bank has approached the Ld. CMM, Egmore in u/s 14 of the SARFAESI Act. The Ld. CMM after perusal of the application and the loan documents produced by the respondent bank allowed the S.14 application on 08.04.2025.

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5.9 Thus, it is evident that the Ld. Magistrate on examination of the pleadings in the S.14 application supported by the documents, have passed an order dated 08.04.2025 directing the Advocate Commissioner to take the possession of the property. Though the applicant has filed the present SA impugning the Sec.14 order dated 08.04.2025 passed by Ld. CMM, Egmore, she has not pointed out any irregularity in the measures taken by the respondent herein.

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5.10 On the other hand, it is seen that the statutory notices, the Demand Notice dated 21.02.2024 and Possession Notice dated 30.04.2024 are issued to the applicants in accordance with the Act and Rules made thereunder.

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5.11 Now considering the challenge to S.14 Order, it is appropriate to mention the declaration of the Hon’ble Supreme Court and various Hon’ble High Courts in various judgments has held that the power of Designated Court under Section 14 SARFAESI Act, 2002 is ministerial and nonadjudicatory in nature and the process to be followed under Section 14 does not involve any element of quasi-judicial function nor it requires any application of mind.

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5.12 The Hon’ble Bombay High Court in the matter of Phoenix ARC Pvt. Ltd. Vs. The State of Maharashtra has held that Court is only required to verify the affidavit of Secured Creditor filed in pursuance of the proviso to Section 14 and nothing more. The above Bombay High Court judgment has since been confirmed by the Hon’ble Supreme Court by its judgment

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dated 26.09.2022 in the matter of Balakrishna Ram Tarle v. Phoenix ARC (P) Ltd. as under:

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“Thus, the powers exercisable by CMM/DM Under Section 14 of the SARFAESI Act are ministerial step and Section 14 does not involve any adjudicatory process qua points raised by the borrowers against the secured creditor taking possession of the secured assets. In that view of the matter once all the requirements Under Section 14 of the SARFAESI Act are complied with/satisfied by the secured creditor, it is the duty cast upon the CMM/DM to assist the secured creditor in obtaining the possession as well as the documents related to the secured assets even with the help of any officer subordinate to him and/or with the help of an advocate appointed as Advocate Commissioner. At that stage, the CMM/DM is not required to adjudicate the dispute between the borrower and the secured creditor and/or between any other third party and the secured creditor with respect to the secured assets and the aggrieved party to be relegated to raise objections in the proceedings Under Section 17 of the SARFAESI Act, before Debts Recovery Tribunal”.

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5.13 The Supreme Court in the judgment of Authorized Officer, Indian

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Bank v D Visalakshi and other, has held that a Chief Judicial Magistrate

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is equally competent to deal with the application moved by the secured creditor under Section 14 of the SARFAESI Act. Hence, the Sec.14 dated 08.04.2025 in Crl.M.P. No.2719/2025 passed by the Hon’ble CMM, Egmore is a valid Order.

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5.14 Additionally, Section 14(3) of the SARFAESI Act statuses that no action taken by the Chief Judicial Magistrate or District Magistrate (or any

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officer authorized by them) under S.14 can be challenged in court or before any other authority. This provision ensures that the authority of these officials in enforcing security interests is final and not subject to further review.

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5.15 Thus, the Sec.14 order dated 08.04.2025 in Crl.M.P. No.2719/2025 passed by the Hon’ble CMM, Egmore is after due consideration of the application, affidavit in support of compliance of procedures along with documents is an execution Order issued where no adjudication is required. The Order is passed considering the due compliance of the provisions of the S. 14 [i-ix].

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5.16 On examination of pleadings and documents produced by respective parties, the Tribunal comes to conclusion that the respondent bank as secured creditor has initiated measures under the Act after classifying the account as NPA.

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5.17 Consequent to classification of account as NPA has issued S.13[2] Demand Notice followed by Possession Notice and have complied all the procedures as contemplated under the Act and the Rules with supporting documents. Thus it is held that the Demand Notice u/s S.13[2] dated 21.02.2024 and S.13[4] Possession Notice dated 30.04.2024 are held as valid notices issued under the Act.

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5.18 The contention of the applicants that Demand Notice and Possession Notice is not served, is disproved by the respondent bank by producing Acknowledgement Cards evidencing service of Demand Notice and

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Possession Notice to the borrower and co-borrowers. Despite receipt of Demand Notice and Possession Notice, as applicants did not come forward to repay the dues, respondent bank proceeded further under SA and had approached Ld. CMM for taking physical possession of secured asset.

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5.19 For the foregoing reasons, the present SA fails and accordingly SA stands dismissed. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

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Sd/- (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 10^th day of August, 2026)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl.	Description of Documents	Documents
No.		No.
1.	Order passed by Chief Metropolitan Magistrate, Egmore in Crl.M.P.No.2719 of 2025 dated 08.04.2025.	A-1
2.	Notice affixed by the Advocate Commissioner dated 24.07.2025.	A-2

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl. No.	Description of Documents	Documents No.
1.	13(2) demand notice dated 21.02.2024.	R-1
2.	Acknowledgment Cards dated 22.02.2024.	R-2
3.	13(4) Possession Notice dated 30.04.2024.	R-3
4.	Postal Tracking dated 01.05.2024.	R-4
5.	Paper publication in English The New Indian Express dated 01.05.2024.	R-5
6.	Paper Publication in Tamil Dhinamani dated 01.05.2024.	R-6
7.	Affixture of Possession Notice dated 30.04.2024.	R-7

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SCHEDULE OF PROPERTY

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Item No.1:-

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All that piece and parcel of land and building bearing Flat No.2 (P/2), in the Ground Floor No.P2, 2nd Cross Street, Turn Bulls Road, Nandanam, Chennai - 600 035, of the building in Turn Bulls Road, Block No.P, erected on the land in Survey No bearing R.S. No.3905/Part, 3906/Part and 3907/Part, of Block No 85, Ground of 1065 Sq. ft. and Re allotment changed undivided share 1345 Sq. ft. land out of total extent of 3 Ground and 872 Sq. ft. i.e. 8072 Sq. ft.) Teynampet Village (formerly Mylapore Village), Flat measuring as per document 1065 Sq. ft.

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Bounded on the: -

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North by : Block L, South by : 20 feet Road (Turn Bulls 2nd Street), East by : 30 feet Road (Turn Bulls 1st Street), West by Flat No.P1.

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Situated within the Registration District of Central Chennai South and Sub Registration District of Central Chennai Joint I.

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Item No.2:-

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All that piece and parcel of land and building bearing Flat No.4 (P/4), in the First Floor No.P4, 2nd Cross Street, Turn Bulls Road, Nandanam, Chennai - 600 035, of the building in Turn Bulls Road, Block No.P, erected on the land in Survey No Bearing R.S. No.3905/Part, 3906/Part and 3907/Part of Block No 85, Ground of 1065 Sq. ft. and Re allotment changed undivided share 1345 Sq. ft. land out of total extent of 3 Ground and 872 Sq. ft. (i.e. 8072 Sq. ft.) Teynampet Village (formerly Mylapore Village), Flat measuring as per document 1065 Sq. ft.

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Bounded on the:-

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North by Block L,

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South by: 20 feet Road (Turn Bulls 2nd street),

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