Dismissed

Poovai Amman Avency and Others v. City Union Bank Limited

DRT21 May 2026SA/531/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's petition to set aside the auction sale held under the SARFAESI Act. The Court held that statutory notices were legally deemed served and found no material irregularity in the reserve price or procedural violations sufficient to invalidate the concluded sale in favor of bonafide purchasers.

What did the court decide?

Sale conducted on 16.10.2023 and sale certificate dated 08.11.2023 confirmed in favor of auction purchasers; SA dismissed.

Poovai Amman Avency and Others versus City Union Bank Limited — Cheque Dishonour | DRT (2026)

¶1

IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

¶2

Dated this 21^st day of May, 2026

¶3

PRESENT: SHRI SHARANG DHAR UPADHYAY Presiding Officer

¶4

SA No.531 of 2023

¶5

1. M/s. Poovai Amman Agency,

¶6

No.87, East Street, Kongrayapalayam, Nagalur (Post) Villupuram District – 606 203

¶7

Also at

¶8

M/s. Poovai Amman Agency,

¶9

No.4 Panchayat Union Complex, Dugam Road, Kallakurichi – 606 202.

¶10

2. Mr. S. Selvaraj,

¶11

Son of SarangaGounder, No.89/1, Main Road, Kongrayapalayam, Nagalur (Post) Villupuram District – 606 203

¶12

3. Mrs. S. Chellammal, Wife of Selvaraj, No.89/1, Main Road, Kongrayapalayam, Nagalur (Post) Villupuram District – 606 203

¶13

4. Mr. S. Karthikeyan S/o Selvaraj No.89/1, Main Road, Kongrayapalayam, Nagalur (Post) Villupuram District – 606 203.

¶14

5. Mr. S. Prakash, S/o Selvaraj No.89/1, Main Road, Kongrayapalayam, Nagalur (Post) Villupuram District – 606 203.

...Applicants

Versus

1. THE AUTHORISED OFFICER, CITY UNION BANK LIMITED, Credit Recovery and Management Department, Administrative Office No.24-B, Gandhi Nagar, Kumbakonam - 612 001.

¶19

2. Mr. Rajeshkumar,

¶20

Son of Nagarajan, 64/10-A, 5^th Street, Eshil Nagar, Vazhappadi, Salem – 636 115.

¶21

3. Mr. Thakshnamoorthi,

¶22

Son of Srinivasan, No.29/1, Gramachavadi Street, Kallakurichi – 606 202.

¶23

4. Mr. Manoharan,

¶24

Son of Chinnasamy, No.63/10, PannaiyarSubbrayan Street, Kannankurichi, Salem – 636 008.

¶25

5. Mrs. Thilagamani,

¶26

D/o Kandasamy, No.6/367C, Goodluck Nagar, Mummudy, Thalaivasal, Salem – 636 112.

¶27

6. Mrs. Kalpana,

¶28

No.507/10, New Arun Nagar, Near ArunagiriVidyalaya School Alagapuram, Periyapudur, Salem – 636 016.

¶29

…Respondents

¶30

Counsel on Record / Appeared

¶31

Applicant by : M/s K.A. Ramakrishnan 1^st Respondent by : M/s Ananda Gomathy & R. Roshan Respondents 2 to 6 by: M/s R. Gopinath, R. Ayyappan & R. Anuppriyaa

¶32

¶33

O R D E R

¶34

This petition is filed under Section 17(1) of the SARFAESI Act seeking to set aside the e-auction sale held on 16.10.2023 in pursuance to the sale notice dated 25.09.2023 in respect of the schedule mentioned properties.

¶35

Facts as averred in the application

¶36

The 1^st applicant is a proprietorship concern, represented by the 2^nd Applicant as its Proprietor. Applicants 3 to 5 are the guarantors for the loan availed by the 2^nd applicant. The 2^nd applicant in order to improve the business of the 1^st applicant had approached the respondent bank in the year 2011 for financial assistance and had taken loan against the property, which was sanctioned by the Kallakurichi Branch of the Respondent bank.

¶37

To secure above said loan facility, the Respondent bank has obtained Signatures from the applicants in various printed forms and documents. Further the 2^nd applicant has created on equitable mortgage in respect of his agricultural properties which are more fully described in the Schedule ‗A‘ and ‗B‘ hereunder and in the sale notice to and in favour of Respondent bank, which are agricultural properties.

¶38

After availing the loan, the applicants were making the payments regularly, however, due COVID-19 pandemic they sustained heavy loss in the business and they could not to repay the dues. The Respondent bank without considering the remittance declared the loan account as NPA and initiated proceedings under the SARFAESI Act.

¶39

¶40

The respondent bank has failed to issue Demand notice and possession notice to all the applicants. Without following the mandatory provisions of the Act, the Respondent bank has issued sale notice dated 25.09.2023. The Sale notice is not served to the 1^st and 2^nd Applicant. On the date of issuance of sale notice, the 2^nd applicant was in Central Prison, Cuddalore, relating to a case for an offence u/s 138 of the N.I. Act. Aggrieved by the conviction and sentence, he filed Criminal Revision before the Hon‘ble High Court, Madras and the same is still pending and the second applicant continue to be in Central Prison, Cuddalore.

¶41

Without proper service of notice to the 2^nd applicant, who is the owner of the properties, to respondent bank wantonly and deliberately issued the sale notice and sold the properties without following mandatory provisions on contemplated under the SARFAESI Act and Rules, the Respondent bank has conducted the sale, not through e-auction sale, the sale is conducted by way of inviting Tender cum auction. Aggrieved by same, the present SA is being filed praying to set aside the sale held on 16.10.2023, and the sale certificates if any in pursuance of issued the sale notice dated 25.09.2023.

¶42

Grounds of Application

¶43

The applicants raised the following grounds: -

¶44

(a) The entire proceedings taken by the Respondent bank under the SARFAESI Act as against the property owned by the applicants is

¶45

¶46

illegal, unjust arbitrary and violating of the principals of the natural justice.

¶47

(b) The Respondent bank has failed to serve the demand notice and possession notice to all the applicants.

¶48

(c) The amount claimed in the sale notice not correct and the respondent bank has charged exorbitant interest and has arrived at the amount of Rs.1,72,38,007/-

¶49

(d) The Respondent bank has violated Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 and hence the impugned action is liable to be set aside.

¶50

(e) The Respondent bank has failed to register the security interest with CERSAI thereby violating Section 26D of the SARFAESI Act.

¶51

(f) The entire action taken by the Respondent Bank under the SARFEASI Act is in violation of mandatory provisions as contemplated under Rule 8(1), 8(2), 8(5,) 8(6), 8(7) and 9 of the Security Interest (Enforcement) Rules, 2002.

¶52

(g) The Respondent bank has failed to publish the sale notice dated 25.09.2023 in two leading newspapers one in vernacular Language and has also failed to affix the same on the secured asset.

¶53

¶54

(h) The Respondent Bank has failed to obtain a valuation report from the approved valuer as per Rule 8(5), of the Security Interest (Enforcement) Rules 2002.

¶55

(i) The Authorized officer has failed to give correct particulars of the mortgaged properties in the schedule to the sale Notice. Apart from that the Authorized Officer has failed to stated terms and conditions of the sale and also failed to mention correct due amount as on the date of issuance of the sale held on 16.10.2023.

¶56

(j) The auction purchaser has failed to deposit the entire sale consideration as per the terms and conditions of the sale notice.

¶57

(k) The Authorized Office has failed to obtain the maximum price for the secured asset.

¶58

Documents filed along with SA

¶59

The applicant filed the following documents along with the SA: -

¶60

(a) Sale notice dated 25.09.2023 issued by the Respondent Bank.

¶61

(b) Letters from the Respondents to the applicants dated 17.10.2023.

¶62

¶63

(d) Valuation Report issued by Registered Engineer M. Kalaimani in respect of Schedule ‗A‘ property dated 17.11.2023.

¶64

¶65

(e) Valuation Report issued by Charterd Engineer D. Kathavarayan in respect of Schedule ‗B‘ property dated 18.11.2023.

¶66

(f) Valuation Report issued by Registered Engineer M. Kalaimani in respect of Schedule ‗B‘ property dated 17.11.2023.

¶67

(g) Information, Guideline and property valuation Report obtained through online in respect of Schedule ‗A‘ & ‗B‘ properties.

¶68

Additional typed set filed by the applicants (IA No.1928/2025)

¶69

(a) Sale deed Registered as document No.2161 of 2025 SRO Nagalur dated 4.9.2025 along with its translated version.

¶70

(b) Sale deed Registered as document No.2330 of 2025 SRO Nagalur dated 24.09.2025 along with its translated version.

¶71

¶72

(d) Sale deed Registered as document No.2160 of 2025 SRO Nagalur dated 4.9.2025 along with its translated version.

¶73

(e) Sale deed Registered as document No.2334 of 2025 SRO Nagalur dated 24.09.2025 along with its translated version.

¶74

(f) Sale deed dated 24.09.2025 registered as document No.2335 of 2025 SRO Nagalur along with its translated version.

¶75

(g) Sale deed dated 4.9.2025 registered as document No.2159 of 2025 SRO Nagalur

¶76

(h) Sale deed dated 24.09.2025 registered as document No.2333 of 2025 SRO Nagalur.

¶77

¶78

(i) Encumbrance certificate issued by the Government of Tamil Nadu Registration Department in respect of Sale deed Executed by auction purchaser in favour of various persons dated 14.10.2025.

¶79

(j) Public Notice dated 12.06.2024 and 13.06.2024.

¶80

Counter of the 1^st Respondent Bank

¶81

The SA is devoid of merits and is liable to be dismissed in limini. The Applicants has borrowed financial facilities from the Respondent Bank totaling to a tune of Rs. 1,33,00,000/- through various facilities starting from 2015 itself viz., the first being a secured overdraft with Demand promissory note on 14.02.2015, the Second being the "Vidhyavani Educational loan" to the Respondent was sanctioned on 12.08.2015, the Special Loan-l was sanctioned on 18.03.2020 to the 1^st to 5^th Defendants, the FITL was sanctioned during January 2021, the Special Loan-II was sanctioned on 06.03.2021 and the same are secured by the mortgage of the schedule mentioned properties.

¶82

The applicants defaulted in repayments resulting in classification of the account as NPA during 2021 and as the applicants did not come forward to clear the dues, the respondent bank issued the Demand Notice on 03.09.2021 recalling the entire outstanding of Rs. 1,43,96,799/- with further contractual interests. This notice was served on all the borrowers. Thereafter Possession notice dated 11.11.2021 was issued.

¶83

¶84

After the classification of the loan account as NPA only the applicants

¶85

are raising frivolous allegations. The demand notice dated 03.09.2021 was duly served on all the borrowers, the postal acknowledgments are enclosed in the typed set of papers. The Applicants did not make any representation to the Respondent despite of receipt of the Notice.

¶86

As the applicants did not come forward to clear the dues, the respondent proceeded to issue the Possession Notice under Section 13(4) of the Act on 11.11.2021, which were duly served, affixed on the secured asset and published in both English and vernacular newspapers as mandated under law.

¶87

The loan accounts were classified as NPA due the continued default in payment of the dues only as per IRAC norms and any allegation of erroneous classification of accounts as NPA shall not hold ground. The Demand notice contains details to that effect. It is further submitted that the outstanding dues for the various facilities stand at Rs. 1,72,38,007/- as on 28.02.2023 and the same has been arrived at as per terms agreed at the time of availing the financial facilities with due credit given to all the sums paid by the Applicant.

¶88

It is submitted that even to this day, no payments have been made nor any effort taken to clear their dues. With no bonafide from the the Applicants, the Respondent Bank was once again Constrained to seek assistance for taking physical possession of the secured assets and filed a petition before

¶89

¶90

CJM, Villupuram through online filing which is now being transferred to CJM, Kallakurichi. The matter is pending for check and call.

¶91

The factual inaccuracies posed by the applicant is blunt misrepresentation of facts lack any material value. The Respondent bank has complied with the provisions of the SARFAESI Act and the Rules made thereunder. The sale notice dated 25.09.2023 was indeed served to the applicants and the postal acknowledgements are annexed.

¶92

The property was sold only through Tender Cum Public Auction sale in pursuant of the sale notice, further throughout the Application the applicants have themselves mentioned in detail the property was indeed sold in pursuant to the sale notice.

¶93

The demand notice and the possession notice was duly served to the applicants and the acknowledgement card bearing the applicants signature, affixtures in such conspicuous part of the premises and paper publications were effected in accordance to securitization rules 2002, Rule 3(1) and Rule 8(1) and (2) respectively

¶94

The contentions established in ground (c) and (3) is false and devoid of merits, as the applicant bank has charged interest in accordance to the contractual terms agreed by the borrower while availing credit facilities, further it is pertinent to note the applicant has consented unequivocally to the agreement upon which the loans were sanctioned, the same being subjected

¶95

¶96

to RBI guidelines. It is further submitted that all payments made by the Applicant have been given proper credits.

¶97

The subject properties mortgaged with the respondent bank have been registered with the central registry as required under section 26(D) of the SARFAESI Act 2002. With regard to allegations posed under para (h) respondent bank has given precise credits to the payment made by the Applicant.

¶98

It is humbly submitted that the contention posed in ground (i) is devoid of merits and repetition of the previous grounds, substantiated without any reasoning a evidentiary value, merely concocted to falsely substantiate this securitization application. It is humbly submitted that the defendant bank has complied with all the mandatory statutory measures as prescribed under Rule 8 of Security rules.

¶99

The respondent bank has delivered the possession notice prepared in accordance with the said format prescribed under Appendix IV of the securitization rules 2002 further the said demand notice and the sale notice have been issued to the applicants and it was duly served through post. The receipt of the possession and sale notices by the applicants is evidenced by the acknowledgment cards annexed herewith.

¶100

The statutory notices were affixed at such conspicuous part of the property and in finality the possession, the proof of which is enclosed herewith as proof of affixture and sale notice was published in two leading newspaper

¶101

¶102

English and the other in vernacular language with sufficient circulation in that locality of the subject property the proof of which has been enclosed herewith,

¶103

Prior to the proceedings taken to effect the sale of the subject property, the respondent bank had valued the subject property with the panel valuers with remarkable credentials and is in accordance to SARFAESI Rules, further the bank cannot evaluate the property on its own whims and fancies, but on the dictums of statutory obligations posed under Rule 8(5) of the Rules. The property was valued by the authorized valuer on 31.12.2021 and the subject properties were sold on 16.10.2023 through Tender Cum Auction Sale.

¶104

It is false to state that the valuation report of the applicant is overestimate under the influence of the applicant's instructions. Further, the valuation report is genuine as the appraisers has evaluated the property considering, location, size, condition, and recent sales of similar properties in the area, rather merely in accordance to instruction of the applicants desires. It is further submitted that the bank has taken measure to sell the property at market price in par with the valuation reports, due diligence was the moto during the course of the recovery proceedings. The property description have been meticulously described without any deviation in the description in the property.

¶105

The sale has concluded, upon which such third party interest being created is free of any infirmities and the auction purchaser duly paid the sum proposed via bidding process in accordance to SARFAESI Act and rules

¶106

¶107

thereof. The applicants had obtained OD facility to run their business and had neither availed any loan for agriculture purpose nor utilized the mortgaged property for agricultural activities. Therefore, in the light of judgment delivered in ITC Limited V Blue Coast Hotel Limited and Others (2018) by our Hon'ble Apex court and followed in the case of Rakesh Kumar Kashyap V State Bank Of India (2023) by the Hon'ble High Court of Himachal Pradesh, the Applicant shall not claim the exemption provided under Section 31(i) of the SARFASEI Act.

¶108

The respondent bank has scrupulously followed the provisions of the SARFAESI Act and the Rules made thereunder and hence the SA is liable to be dismissed.

¶109

Documents filed by 1^st Respondent along with counter

¶110

The following documents are filed by the 1^st respondent along with its counter: -

¶111

(a) Demand notice dated 03.09.2021 along with postal acknowledgements. (b) Possession Notice dated 10.11.2021 along with postal acknowledgements.

¶112

¶113

(d) Proof of affixture of possession notice.

¶114

¶115

(e) Sale Notice dated 25.09.2023 along with postal

¶116

acknowledgements.

¶117

(f) Paper publication of the sale notice in English and Vernacular newspapers.

¶118

(g) Affixture of Sale Notice.

¶119

(h) Valuation Report

¶120

(i) CERSAI Report

¶121

The 1^st Respondent filed additional typed set dated 19.7.2025: -

¶122

(a) Sale notice issued by the respondent bank dated 03.01.2022, 22.03.2022, 12.05.2022, 08.03.2023.

¶123

(b) Legal notice dated 10.10.2023 issued by the applicants.

¶124

¶125

(d) Legal notice issued by the 5^th applicant dated 5.12.2023.

¶126

(e) Reply of the respondent bank dated 6.12.2023.

¶127

Counter by Respondents 3 to 6

¶128

These Respondents submitted that they are adopting the counter filed by the 1^st Respondent.

¶129

Written Submissions by the Applicants

¶130

The applicants reiterated the facts of the case as averred in the SA and raised the following issues for consideration.

¶131

¶132

(a) The Respondent failed to serve the sale notice dated

¶133

25.9.2023 on the applicants : -

¶134

The Respondent bank has issued Sale Notice dated 25.09.2023 by fixing the sale on 16.10.2023. The said sale notice has not served to the 1^st and 2^nd applicants herein. The 1^st applicant is a Proprietary ship concern, represented by the 2^nd applicant herein. On the date of issuance of sale notice dated 25.09.2023, the 2^nd applicant was in Central Prison, Cuddalore as convicted prisoner for an offence under Section 138 of the NI Act. He was in prison from 05.09.2023 to 10.01.2024. The Superintendent Central Prison, Cuddalore has issued a letter dated 31.01.2024 it proves that the 2^nd applicant was in prison. The 2^nd applicant is admitted as a convicted prisoner on 05.09.2023 and released on 10.01.2024. In this case, when the 2^nd applicant was in prison, the alleged sale notice was issued on 25.09.2023 and conducted tender cum Auction Sale on 16.10.2023. The sale Notice has not been served to the applicants 1 and 2. It is the duty of the Authorized Officer to serve the Sale Notice to the Borrower as well as the Guarantor. Knowing fully well that the 2^nd applicant was in prison, the respondent bank wantonly and deliberately issued re tender cum auction sale Notice on 25.09.2023 by fixing the sale on 16.10.2023. The Respondent bank has violated Rule 8 (6) of the Security Interest (Enforcement Rules) 2002.

¶135

¶136

It is submitted that the respondent bank has filed a counter in the above S.A. along with documents. At page No.33 of the type set of papers filed by the bank relating to service of the alleged sale notice and postal acknowledgement card. The signature of the 2^nd applicant has been forged in the postal acknowledgment card. The alleged signature contained in the postal acknowledgement card is not the signature of the 2^nd applicant. As stated above, on the date of issuance of sale notice the 2^nd applicant was in Central Prison, Cuddlore, therefore, the alleged signature of the 2^nd applicant contained in the acknowledgement card filed by the bank is forged one. Taking advantages of the 2^nd applicant in the prison, the Respondent bank wontedly, deliberately issued the tender cum auction notice 25.09.2023 and conducted the sale on 16.10.2023, when the borrower cum owner of the property was in jail. As stated above, the alleged sale notice was not served to the 1^st and 2^nd applicant.

¶137

(b) The Reserve price fixed by the Authorized Officer is too low and does not reflect the correct market values and ‘B’ Schedule

¶138

property is an Agricultural Land which is exempted Under Section 31 (i) of SARFAESI Act .

¶139

The applicants submit that in the sale notice dated 25.09.2023, the respondent bank is fixed the reserve price for the mortgaged properties Schedule ‗A‘ and ‗B‘ much below the market value. The 2^nd applicant

¶140

¶141

has mortgaged two properties as mentioned in the sale notice. Schedule ‗A‘ property is a commercial property, to an extent of 88 cents along with super structure put up there on. The reserve price is fixed in the sale notice as Rs.60 Lakhs for Schedule ‗A‘ Property. The respondent bank has filed a valuation report dated 31.12.2021.The sale notice was issued on 25.09.2023. As per rule 8(5) of the security interest (Enforcement) Rules, 2002, before effecting the sale of the immovable property referred to in Sub Rule (i) of rule 9 the Authorised Officer shall obtained a valuation report from an approved valuer and in consultation with the Secured creditor fix the reserve price of the property. In this case, the respondent bank has failed to obtain the valuation report before issuing the sale notice. Based on the valuation report dated 31.12.2021, the respondent bank has issued the sale notice on 25.09.2023 without obtaining the fresh valuation report, the respondent bank issued the sale notice and illegally conducted the sale and thereby violated rule 8 (5) of the Security interest (Enforcement Rules) 2002, As per the bank valuation report dated 31.12.2021, the value fixed by the bank valuer for Schedule ‗A‘ property is Rs.61,62,360/- In the sale notice dated 25.09.2023 the Reserved price fixed by bank is only Rs.60 Lakhs. The applicants have filed two valuation report dated 17.11.2023 and 18.11.2023 obtained from the approved valuers. As per the said valuation report the approved valuer valued the ‗A‘ Schedule property for Rs.2,63,19,000/- and distress value

¶142

¶143

would be Rs.2,23,71,000/-. The present market value of ‗A‘ Schedule property is more than three crores. Therefore, the reserve price fixed by the bank is only Rs.60, Lakhs is very low. As stated above, the Respondent bank has failed to obtain a fresh valuation report before issuance of the sale notice dated 25.09.2023. The Sale Notice was issued based on the earlier valuation report dated 31.12.2021 and thereby violated Rule 8 (5) of the relevant rules. The reserve price fixed by the respondent bank has also very low.

¶144

As far as Schedule ‗B‘ Property is concerned it is an agricultural land. Total extent of the land is two acres 94 cents of Punja lands along with well therein including pathway and cart track rights, irrigation rights including the electrical service connection. As per the valuation report date 31.12.2021 filed by the respondent bank proves that the Schedule ‗ B‘ property is an agricultural lands. At page No.43 of the typed set of papers filed by the respondent bank the approved valuer has clearly mentioned the Schedule ‗B‘ property is an agricultural lands and in page No.45 also it is clearly mentioned that type of property is agricultural land. Respondent bank cannot invoke the SARFEASI Act as against the Agricultural lands. The bank valuer has fixed the market value of the property is Rs.81 Lakhs and forced sale value is Rs.69 Lakhs but respondent bank fixed the reserve price only for Rs.65 Lakhs. The Applicants have obtained a separate valuation report from two valuers dated 17.11.2023 and 18.11.202. The said valuers valued the

¶145

¶146

‗B‘ Schedule property for Rs.1,19,10,000/- and another valuer fixed the price for Rs.1,47,00,000/- Therefore, the upset price fixed by the bank in respect of Schedule ‗B‘ property is very low. On this ground alone the tender cum auction sale conducted by the respondent bank on 16.10.2023 is liable to be set aside.

¶147

In support of the same the applicants relied upon the following judgments.

¶148

(i) Judgment of Hon’ble Telangana & Andhra PradeshHigh Court in M/s. Pochi Raju Industries Ltd., Vs. M/s. Punjab National Bank and other reported in 2018 (1) DRTC 904, wherein it is held as follows: ―No doubt the bank may have attempt time and again to sell the petitioner companies properties, but its failure in doing so does not justify its action in cutting short the due procedure and resorting to reiteration of an earlier reserve price, without lawful foundation to support the same‖ It was mandatory for the bank to secure a fresh valuation from an approved valuer in terms of Rule 8 (5) (i) of the Rule 2002 before issuing a fresh Sale Notice.

¶149

(ii) The judgment of Hon’ble Supreme Court of India in re.J. Rajiv Subramaniyan and Ors vs. Pandiyas and ors. 2014-SCC P651 , wherein it is held that It must be emphasized that generally proceedings under the SARFAESI Act, 2002 against the borrowers are initiated only when the borrower is in dire-straits. The provisions of the SARFAESI

¶150

¶151

Act., 2002 and the Rules, 2002 have been enacted to ensure that the secured asset is not sold for a song. It is expected that all the banks and financial institutions which resort to the extreme measures under the SARFAESI Act, 2002 for sale of the secured asset to ensure, that such sale of the asset provides maximum benefit to the borrower by the sale of such asset‖.

¶152

(iii) The judgment of Hon’ble Supreme Court of India, in re, Ram Kishun Vs.State of Uttar Pradesh, 2012 11 SCC page 411 held that ―Undoubtedly public money should be recovered and recovery should be made expeditiously. But it does not mean that financial institutions which are concerned only with the recovery of their loans may be permitted to behave like property dealers and be permitted further to dispose of the secured assets in an any unreasonable or arbitrary manner in flagrant violation of the statutory provisions‖ .

¶153

(iv) The judgment of Hon’ble Supreme Court of India in re, Lachman Dass, 2008 (I) (SCC p.125 held that, ―A right to hold property is a constitutional right as well as a human right. A person cannot be deprived of his property except in accordance with the provisions of the statute‖

¶154

(v) The judgment of Hon’ble Supreme Court of India reported in 2009 SCC 345 online in the case of Swastick Agencies and others (Vs) State Bank of India Bhuwaneswar and others held that

¶155

―Undoubtedly‘ public money should be recovered and recovery should be

¶156

¶157

made expeditiously at it does not mean that the financial institutions which are concerned only with the recovery of their bank, may be permitted to behave liable property dealers and be permitted further to dispose of the secured assets in any unreasonable of arbitrary manner in flagrant violation of statutory provisions‖

¶158

¶159

The Counter filed by the respondent bank is silent, when the auction purchasers paid 25% of the sale price, and when the sale was confirmed and when the Auction purchaser paid 75% of the balance amount and when the sale certificate issued. In this case, the counter is very silent about the payment of remaining 75% of the bid amount. As per Rule 9 (4) the balance such amount should be paid on or before 15^th day of confirmation of sale. Till date bank has not filed any documents to prove that when the purchaser has paid 25% and when they have paid 75% of the bid amount. The Auction purchasers have failed to pay the balance 75% of sale amount in time as per Rule 9 (4) It is for the bank has to prove by way of documents about the payments made by the Auction Purchasers. Hence the sale held on 16.10.2023 is liable to be set aside.

¶160

The applicants relied upon the following judgments in support of their contentions: -

¶161

¶162

(a) Judgment of Hon‘ble Supreme Court of India in Kerala financial Corporation Vs. Vincent Paul and Anr. Reported in 2011 (4) SCC 171 – Para 12(v) to (viii) and (xiii).

¶163

(b) Judgment of Hon‘ble Madhya Pradesh High Court in Anita Sadana Vs. Baljinder Kaur and Ors reported in 2014 AIR (MP) 125 Pr. 15 to 18;

¶164

(c) Judgment of Hon‘ble Supreme Court of India in Gajraj Jain Vs. State of Bihar and Others reported in 2004 (7) SCC 151 Pr.14;

¶165

(d) Judgment of Hon‘ble Kerala High Court in K.T. Unnikrishnan Vs.

¶166

The Authorised Officer, UCO Bank, Ernakulam and Others reported in 2018 1 KLJ 796 Pr. 9 to 11;

¶167

(e) Judgment of the Hon‘ble Supreme court of India in Mathew Varghese Vs. M. Amritha Kumar & Ors reported on 2014(2) Scale Pr.40.

¶168

(f) Judgment of Hon‘ble Supreme Court in J. Rajiv Subramaniyan and Another Vs. Pandiyas and Others reported in (2014) 5 SCC 651 Pr.18.

¶169

(g) Judgment of Hon‘ble Supreme Court in Vasu P. Shetty Vs. Hotel

¶170

Vandana Palace and Others reported in (2014) 5 SCC 660.

¶171

Second set of judgments relied upon by the applicant

¶172

¶173

(a) Judgment of Hon‘ble A.P High Court in M/s Venshiv Pharma Chem (P) Ltd., and Another Vs. State Bank of India, Stressed Assets Recovery Branch, Koti, Hyderabad & Ors dated 6.4.2018.

¶174

(b) Judgment of Hon‘ble A.P. High Court in M/s Pochiraju Industries Vs. Punjab National Bank and others – AIR 2019 Hyderabad 61;

¶175

(c) Judgment of Hon‘ble DRAT Chennai in N.R. Imayavaramban Vs. The Branch Manager, State Bank of India, Coimbatore dated 12.6.2025

¶176

(d) Judgment of Hon‘ble Supreme Court in State Bank of India, represented by its Chief Manager Vs. M/s Venshiv Pharma Chem (P) Ltd., & Ors dated 21.4.2023;

¶177

(e) Order of DRT-II Kolkata in SA No.237 of 2017 dated 28.2.2020 – V. Raman Vs. State Bank of India, South Andaman & Ors.

¶178

(f) Hon‘ble Calcutta High Court in Central Bank of India & Anr. Vs. Maya Sarkar & Ors dated 23.10.2024;

¶179

(g) Hon‘ble Supreme Court in Mathew Varghese Vs. M. Amritha Kumar and Others – (2014) 5 SCC 610;

¶180

(h) Hon‘ble Supreme Court in Ram Kishun and Others Vsl. State of Uttar Pradesh and Others – (2012) 11 SCC 511;

¶181

(i) Hon‘ble Supreme Court in Authorised Officer, Indian Overseas Bank and Another Vs. Ashok Saw Mill – (2009) 8 SCC 266;

¶182

¶183

(j) Hon‘ble High Court of Himachal Pradesh in Parwati Devi and

¶184

Another Vs. State Bank of Patiala and Others – AIR 2018 HP 114.

¶185

Submissions by 1^st Respondent and judgments relied upon

¶186

The 1^st Respondent advanced arguments and relied upon the following judgments: -

¶187

(a) Judgment of Hon‘ble High Court of Kerala in Praveena Ravi Kumar Vs. State Election Commission & Ors and M. Rajendran Vs. State Election Commission and Ors. Reported in 2024 (2) KHC 184;

¶188

(b) Judgment of Hon‘ble Supreme Court in Madan and Co Vs. Wazir Jaivir Chand reported in (1989) 1 SCC 264.

¶189

(c) Judgment of Hon‘ble High Court of Rajasthan in Commissioner of Income Tax Vs. Uttam Chand Nahar reported in Manu/RH/0238/2006.

¶190

(d) Judgment of Hon‘ble High Court of Kerala in Latha Chandy Vs. Commissioner of Income Tax reported in (2003) 127 Taxman 226 (Ker)

¶191

(e) Judgment of Hon‘ble High Court of Allahabad in Sunitha Nishad and Ors. Vs. Debt Recovery Appellate Tribunal and Ors reported in 2025 (170) ALR 179;

¶192

(f) Judgment of Hon‘ble High Court of Madras in P. Glory Kamalam Vs. L.T. Rajasekaran dated 29.04.2011.

¶193

¶194

(g) Judgment of Hon‘ble Supreme Court in Harcharan Singh Vs. Shivrani and Ors. Reported in (1981) 2 SCC 535;

¶195

(h) Judgment of Hon‘ble High Court of Madras in D. Ravichandran

¶196

Vs. The Manager, Indian Overseas Bank, Idigarai Branch and Ors – Manu/TN/0772/2006;

¶197

(i) Judgment of Hon‘ble Supreme Court in K. Sreedhar Vs. Raus Constructions Pvt. Ltd., and Ors. – AIR 2023 SC 306;

¶198

(j) Judgment of Hon‘ble Supreme Court in Indian Bank and Ors. Vs. K. Pappireddiyar and Ors. – AIR 2018 SC 3540;

¶199

(k) Judgment of Hon‘ble Supreme Court in ITC Limited Vs. Blue Coast Hotels Ltd., and Ors. – AIR 2018 SC 3063;

¶200

(l) Judgment of Hon‘ble High Court of Madras in K.P. Moutheeswaran & Anr. Vs. The District collector, Erode and Ors. Dated 13.09.2019.

¶201

(m) Judgment of Hon‘ble Karnataka High Court in Soumya Engineering and Ors. Vs. The Chief Manager, Indian Bank and Ors. Reported in 2022 KHC 7560 DB;

¶202

(n) Judgment of Hon‘ble Supreme Court in Pegasus Assets Reconstruction Vs. Haryana Concast Limited and Ors. – AIR 2016 SC 494;

¶203

¶204

(o) Judgment of Hon‘ble Madras High Court in A.U. Natarajan and Anr. Vs. Indian Bank – AIR 1981 Mad 151;

¶205

(p) Judgment of Hon‘ble Supreme Court in Anil Kumar Srivastava Vs. State of U.P. and Ors. – AIR 2004 SC 4299;

¶206

(q) Judgment of Hon‘ble Supreme Court in Celir LLP Vs. Sumati Prasad Bafna and Ors – (2025) 1 MLJ 193;

¶207

(r) Order of Hon‘ble NCLAT, New Delhi in Paresh Rastogi Vs. M/s Omkara Assets Reconstruction Pvt. Ltd., & Anor. Dated 18.3.2025;

¶208

(s) Judgment of Hon‘ble High Court of Orissa in Swastik Agency Vs. State Bank of India and Ors – AIR 2009 Ori 147;

¶209

Written Submissions of Respondents 3 to 6

¶210

The Respondents 3 to 6 are bona fide auction purchasers who participated in the public auction conducted under the provisions of the SARFAESI Act, 2002, and acquired the secured asset lawfully upon full compliance with all statutory conditions. The Applicant/Borrowers, having defaulted on their repayment obligations, has now filed this Application challenging the sale proceedings, and is seeking to cancel the validly issued Sale Certificate dated 8^th November 2023, which has also been duly registered as Doc.No. 2476 of 2023, before the office of the Sub-RegistrarNagalur Village, (― Sale Certificate ‖) which is wholly impermissible in law.

¶211

¶212

The secured creditor ( 1^st Respondent ) issued the possession notice on U/s. 13(2) of the SARFAESI on 03.09.2021 and subsequently the Possession Notice U/s. 13(4) on 11.11.2021 and thereafter after a good long period of about 1 year and 10 months , issued the Sale Auction Notice on 25.09.2023 for conducting the sale on 16.10.2023, and it is the understanding of these answering Respondent that the 1^st Respondent Bank was in full compliance with Rule 8(6) and Rule 9(1) of the Security Interest (Enforcement) Rules, 2002. The answering respondents strongly believe that the sale was conducted in accordance with the said Rules prescribed under the Security Interest (Enforcement) Rules, 2002, with publication in Tamil and English dailies, ensuring transparency and compliance as confirmed by the 1^st Respondent in its Counter filed before this Hon‘ble Tribunal in this matter.

¶213

The 3^rd to 6^th Respondents jointly along with the 2^nd Respondent submitted the highest bids, which was duly accepted. The full sale consideration was duly paid by various Demand Drafts/ RTGS, and the sale was confirmed and the details for which have been duly captured in the Registered Sale Deed/ Sale Certificate. A valid sale certificate dated 08.11.2023bearing Doc. No. 2476/2023, registered before the SRONagalur]was issued under Rule 9(6) by the 1^st Respondent Bank.

¶214

Subsequent to the issuance of the Sale Certificate/ Registered Deed [ Doc. No. 2476/ 2023 ] the auction purchasers pertaining to the Sy. No.195/7A1, have developed the said parcel of property and also sub-divided the said land parcel and formed a layout. Furthermore, for the purpose of

¶215

¶216

obtaining the approval, a Gift Deed dated 27.03.2025 [Document No. 715/2025, SRO Nagalur] was executed by the auction purchaser in favour of the Local Panchayat, towards gifting of the Road and other common areas.

¶217

The answering Auction Purchasers respectfully deem it pertinent to appraise this Hon‘ble Tribunal that the Department of Town and Country Planning (― DTCP ‖) has granted approval for the said parcel of land vide Approval No. LO19GVZ1, dated 09.04.2025. Furthermore, the Tamil Nadu Real Estate Regulatory Authority (― TNRERA ‖) has also granted its registration and approval for the development project titled ― Sri Pachaiyamman Nagar ‖, vide Registration No. TNRERA/PLI/5401/2025.Copies of the aforementioned approvals are enclosed herewith. These approvals not only reflect substantial progress in terms of development but also clearly evidence the creation of third-party rights and interests over the said subject property, thereby reinforcing the bona fide nature and finality of the auction sale in favour of the answering Respondents.

¶218

There is no gross irregularity in the sale. The Appellants/Applicants have raised template-based, generic allegations, which are entirely unsubstantiated and unsupported by any cogent material. The pleadings are replete with stereotyped and boilerplate averments, devoid of any particularised facts or evidence. Such run-of-the-mill aspersions appear to have been made as an afterthought and are liable to be rejected at the threshold.

¶219

¶220

The Appellants have alleged that one of the auctioned properties is classified as agricultural land. However, they have not produced a single document showing the nature of cultivation, past or present. There is no evidence whatsoever not even a self-declaration indicating any agricultural use or character of the land. In fact, the photographs annexed to their own valuation reports unequivocally establish that the land is not agricultural in nature. Moreover, the fact that the DTCP and the TNRERA have granted layout and project approvals for development over the said parcel further demolishes the claim of agricultural usage. These approvals could not and would not have been granted had the land retained any agricultural character under applicable laws. Moreover, the answering Respondents rely upon K. Sreedhar Vs. Raus Constructions Pvt. Ltd. and Ors. [MANU/SC/0011/2023], which in turn also relies upon: ITC Limited v. Blue Coast Hotels Limited and Ors . reported in MANU/SC/0263/2018: (2018) 15 SCC 99 ( Para 36 ) and Indian Bank and Anr. v. K. Pappireddiyar and Anr. reported in MANU/SC/0766/2018:(2018) 18 SCC 252 ( Paras 7 & 8 ).

¶221

40. Allegation regarding failure to obtain a Valuation Report

¶222

The allegation that the 1^st Respondent Bank failed to obtain a valuation report is factually incorrect and misleading. The answering Respondents understand that the 1^st Respondent has duly obtained a valuation report from an approved valuer, in accordance with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002. In fact, even the valuation reports furnished by the Appellants themselves clearly demonstrate that the guideline values of the

¶223

¶224

mortgaged properties are consistent with—if not lower than—the upset price(s) fixed by the Authorised Officer. These are reflected inter alia at Page Nos. 33 & 37, 54, 58, 66-72 onwards of the Appellants‘ own Typed Set of Documents. Furthermore, the Applicants have failedto substantiate any transaction that has transpired in and around the adjacent properties ( Ref. Item No. 19(3) in Pg. No. 54 of the Appellants’ own Typed Set of Documents ), hence the claim that the Properties has been sold at a very low price is not maintainable. It is a well-settled principle of law that courts must exercise great caution before interfering with confirmed auction sales under the SARFAESI Act. In Sanjay Sharma vs. Kotak Mahindra Bank Ltd. & Ors. and V.S. Palanivel vs. P. Sriram , the Hon‘ble Supreme Court has held that unless there are serious flaws in the conduct of the auction—such as fraud, collusion, or grave irregularities that go to the root of the auction process— courts ought not to interfere with or set aside such sales. The rationale behind this is the cascading " domino effect " such orders would have on the sanctity and finality of auction processes undertaken by financial institutions. The answering Respondents have already established above the cascading domino effect. The Hon‘ble Supreme Court of India has reiterated that once an auction sale is confirmed, the same ought not to be lightly set aside, as it would undermine the integrity of the auction process and erode the confidence of bona fide auction purchasers. The Applicants‘ bald allegations regarding valuation and service of notice are vague, unsubstantiated, and devoid of merit. As clearly brought out in the Counter filed by the 1^st Respondent, the

¶225

¶226

valuation report was duly obtained by the Bank from an approved valuer prior to issuance of the Sale Notice, in compliance with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002.Further, from the very same counter and corresponding typed set, it is evident that the Sale Notice was duly published in widely circulated newspapers and also served in accordance with the statutory requirements. The Applicants have failed to demonstrate any procedural lapse or prejudice caused on account of the auction process. The allegations raised in the Appeal are therefore frivolous, illusory, and appear to be mere template-based objections aimed solely at frustrating a lawful sale rather than addressing any genuine legal infirmity. The Applicant was aware of the proceedings as in the 13(4) Notice was issued ot them way back in 11.11.2021, and they conveniently chose not to challenge them promptly. Acquiescence and waiver clearly apply.

¶227

The Respondents 3 to 6 are bonafide purchasers for value. The auction was public, transparent, and competitive. Respondents had no prior dealings or connection with either the Bank or the Borrower. It is a well established fact that: 'Once the sale is confirmed and the sale certificate is issued, the rights of the auction purchaser attain finality. ' Similarly it was held that: 'A bona fide purchaser in an auction conducted in accordance with law acquires good title, and such title cannot be disturbed without valid grounds.' . The Appellants have failed to make out any genuine case and is only adopting to delaying tactics thereby causing grave prejudice and irreparable hardship to the 3^rd to 6^th Respondents.

¶228

¶229

The SA is devoid of merits and is liable to dismissed with costs. The

¶230

sale be confirmed in favour of the Respondents 2 to 6.

¶231

Documents filed by Respondents 3 to 6

¶232

The Respondents 3 to 6 filed the following documents: -

¶233

(a) Sale Certificate dated 08.03.2023 (Doc. No.2476/2023, SRO,

¶234

Nagalur).

¶235

(b) Town and Country Planning Development (Road Pattern) dated 24.03.2025.

¶236

(c) Gift deed by S. Thakshnamoorthi, Mr. C. Manoharan, K. Thilagamani, Mrs. R. Kalpana in favour of Nagalur Village Panchayat Doc. No.715/2025 dated 27.03.2025 (Translated version filed in additional typed set).

¶237

(d) Town and Country Planning (Planning Permission with receipt) dated 29.03.2025

¶238

(e) Layout application and sketch dated 09.04.2025

¶239

(f) Tamil Nadu Real Estate Regulatory Authority Registration Certificate of Project dated 03.07.2025.

¶240

(g) Photographs of lands after formation of layouts dated 18.07.2025

¶241

¶242

Points for consideration

¶243

Having heard the Ld. Counsel for the Applicants, Ld. Counsel for 1^st Respondent and Ld. Counsel for Respondents 2 to 6 / auction purchaser and having gone through the pleadings, documents and judgments relied upon by the respective parties, the following points that arise for consideration are as follows: -

¶244

(i) Whether the Respondent Bank complied with the mandatory requirements contemplated under Sections 13(2) and 13(4) of the SARFAESI Act and Rules 3, 8 and 9 of the Security Interest (Enforcement) Rules, 2002?

¶245

(ii) Whether the Applicants have established that the sale notice dated 25.09.2023 was not served on Applicants 1 and 2 and whether such alleged non-service vitiates the auction sale held on 16.10.2023?

¶246

(iii) Whether the Applicants have established that the reserve price fixed by the Respondent Bank was arbitrary, inadequate or fixed without obtaining a proper valuation report as contemplated under Rule 8(5) of the Rules?

¶247

(iv) Whether Schedule ‗B‘ property is an agricultural land exempted under Section 31(i) of the SARFAESI Act?

¶248

(v) Whether the auction purchasers failed to comply with Rule 9(4) of the Rules in respect of payment of sale consideration?

¶249

¶250

(vi) Whether the auction sale conducted on 16.10.2023 and the consequential sale certificate dated 08.11.2023 are liable to be set aside?

¶251

(vii) To what relief are the parties entitled?

¶252

Discussions and Findings on the points for consideration

¶253

Point Nos.1 & 2

¶254

The principal contention of the Applicants is that the Respondent Bank failed to serve the demand notice, possession notice and sale notice upon all the Applicants, particularly Applicants 1 and 2, and therefore the entire proceedings stand vitiated.

¶255

The Applicants specifically contended that the 2^nd Applicant was lodged in Central Prison, Cuddalore from 05.09.2023 to 10.01.2024 in connection with proceedings under Section 138 of the Negotiable Instruments Act and therefore he could not have received the sale notice dated 25.09.2023. According to the Applicants, the signature found in the postal acknowledgment card is forged and consequently Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 stands violated.

¶256

Per contra, the Respondent Bank submitted that all statutory notices were duly served upon the Applicants and produced postal acknowledgements, proof of affixture and newspaper publications in support of its contention. The Respondent Bank further contended that the Applicants

¶257

¶258

never challenged the demand notice dated 03.09.2021 nor the possession notice dated 11.11.2021 at the relevant point of time and therefore cannot now question the proceedings after the sale has been concluded.

¶259

The records disclose that the Respondent Bank issued demand notice under Section 13(2) on 03.09.2021 and possession notice under Section 13(4) on 11.11.2021. The Bank has filed postal acknowledgements, proof of affixture and publication in English and vernacular newspapers. The Applicants have not produced any material to show that the notices were not served upon Applicants 3 to 5.

¶260

In so far as the sale notice dated 25.09.2023 is concerned, the specific case of the Applicants is that the 2nd Applicant was in prison and therefore service upon him is doubtful. However, except making a bald allegation of forgery, no steps have been taken by the Applicants to establish the same in the manner known to law. No expert opinion has been obtained nor any independent proceedings initiated alleging fabrication of acknowledgment

¶261

Further, the materials available on record disclose that even prior to the sale, the Applicants were fully aware of the SARFAESI proceedings initiated by the Respondent Bank. The Applicants themselves issued legal notices dated 10.10.2023 and 05.12.2023, thereby evidencing knowledge of the auction proceedings.

¶262

¶263

The Hon‘ble Supreme Court in Madan and Co. Vs. Wazir Jaivir Chand held that once notice is properly addressed, prepaid and posted, presumption of service arises. Similar view has been taken in Harcharan Singh Vs. Shivrani.

¶264

The Applicants have also not established any prejudice caused due to the alleged non-service. The Hon‘ble Supreme Court in Celir LLP Vs. Sumati Prasad Bafna reiterated that technical objections without proof of substantial prejudice cannot invalidate a concluded auction sale.

¶265

The records further reveal that possession notice and sale notice were published in two newspapers including vernacular newspaper and affixed on the property. Hence substantial compliance with Rules 8 and 9 of the Rules stands established.

¶266

Accordingly, this Tribunal is unable to accept the contention that the SARFAESI proceedings are vitiated on account of non-service of notices. Hence Point Nos.1 and 2 are answered against the Applicants.

¶267

Point No.3

¶268

The next contention of the Applicants is that the reserve price fixed by the Respondent Bank is shockingly low and that no fresh valuation report was obtained before issuance of sale notice dated 25.09.2023.

¶269

The Applicants relied upon the judgments in M/s Pochiraju Industries Ltd. Vs. Punjab National Bank, J. Rajiv Subramaniyan Vs. Pandiyas and

¶270

¶271

Mathew Varghese Vs. M. Amritha Kumar to contend that fresh valuation is mandatory and secured assets should not be sold for a throwaway price.

¶272

The Respondent Bank, on the other hand, submitted that valuation reports were obtained from approved valuers on 31.12.2021 and reserve prices were fixed in consultation with the secured creditor in compliance with Rule 8(5). It is further contended that repeated earlier sale attempts failed and therefore fixation of reserve price cannot be termed arbitrary.

¶273

On perusal of the records, it is seen that valuation reports dated 31.12.2021 were obtained by the Bank from approved valuers. The sale notice dated 25.09.2023 was issued subsequently. It is true that there is a time gap between valuation and sale notice. However, mere lapse of time by itself would not automatically invalidate the sale unless material prejudice or gross undervaluation is established.

¶274

The Applicants have filed private valuation reports obtained subsequent to the sale indicating higher valuation. However, such private valuation reports obtained at the instance of the Applicants after the auction cannot automatically discredit the valuation obtained by the Bank.

¶275

The Hon‘ble Supreme Court in Ram Kishun Vs. State of Uttar Pradesh and J. Rajiv Subramaniyan Vs. Pandiyas emphasized that secured assets should not be sold in an arbitrary manner and the secured creditor must endeavor to obtain maximum possible price.

¶276

¶277

At the same time, it is equally well settled that adequacy of price alone is not a ground to set aside a sale unless fraud or material irregularity causing substantial injury is established.

¶278

In the present case, the Applicants have not produced any contemporaneous sale deeds of adjacent properties as on the relevant period to conclusively establish that the reserve price was grossly inadequate. The auction purchasers have also placed on record subsequent DTCP and TNRERA approvals and development activities carried out after purchase.

¶279

Further, the records disclose that several earlier auction attempts had failed. Therefore, the fixation of reserve price by the Bank cannot be said to be arbitrary or actuated by mala fides.

¶280

Accordingly, this Tribunal holds that the Applicants have failed to establish any material irregularity in fixation of reserve price warranting interference with the auction sale. Point No.3 is answered against the Applicants.

¶281

Point No.4

¶282

The Applicants contended that Schedule ‗B‘ property is agricultural land and therefore exempted from the purview of the SARFAESI Act under Section 31(i).

¶283

Reliance was placed on the valuation report describing the property as agricultural land.

¶284

¶285

The Respondent Bank as well as the auction purchasers contended that

¶286

the property was never used for agricultural purposes and the loan itself was not an agricultural loan. They further relied upon the judgments of the Hon‘ble Supreme Court in ITC Limited Vs. Blue Coast Hotels Ltd., Indian Bank Vs. K. Pappireddiyar and K. Sreedhar Vs. Raus Constructions Pvt. Ltd..

¶287

The Hon‘ble Supreme Court in the aforesaid judgments held that mere classification of land as agricultural in revenue records is not conclusive and the actual use and purpose of the land are relevant considerations.

¶288

In the present case, except relying upon description in valuation reports, the Applicants have not produced any adangal, chitta, cultivation records, crop receipts, electricity consumption records for agricultural operations or any evidence to establish actual agricultural activities in the subject property.

¶289

On the contrary, the auction purchasers have produced DTCP approval, TNRERA registration and documents showing formation of layouts in the property. The photographs filed also do not indicate any agricultural activity.

¶290

Further, the loan was admittedly availed for business purposes and not for agricultural operations.

¶291

Hence this Tribunal is of the considered view that the Applicants have failed to establish that Schedule ‗B‘ property is exempted agricultural land under Section 31(i) of the SARFAESI Act. Point No.4 is answered against the Applicants.

¶292

¶293

Point No.5

¶294

The Applicants contended that the auction purchasers failed to deposit the balance 75% sale consideration within the time prescribed under Rule 9(4) of the Rules. However, except raising such plea, no material has been produced by the Applicants to substantiate the same.

¶295

On the contrary, the auction purchasers specifically stated that the entire sale consideration was paid through Demand Drafts/RTGS and thereafter sale certificate dated 08.11.2023 came to be issued and registered as Document No.2476 of 2023 before SRO, Nagalur.

¶296

The sale certificate itself evidences completion of sale formalities. In the absence of any contra evidence, this Tribunal cannot presume violation of Rule 9(4). Hence Point No.5 is answered against the Applicants.

¶297

Point No.6

¶298

The law relating to interference in concluded auction sales is well settled. The Hon‘ble Supreme Court in Authorised Officer, Indian Overseas Bank Vs. Ashok Saw Mill, Celir LLP Vs. Sumati Prasad Bafna and several other judgments held that a concluded sale in favour of bona fide auction purchasers should not be lightly interfered with unless fraud or substantial illegality is clearly established.

¶299

In the present case, the sale has attained finality. Sale certificate has been issued and registered. Third party rights have also been created. DTCP approval and TNRERA registration have been obtained and layouts formed.

¶300

¶301

The Applicants, despite having knowledge of SARFAESI proceedings from 2021 onwards, did not discharge the dues nor challenge the proceedings at the appropriate stage. The challenge has been mounted only after confirmation of sale.

¶302

This Tribunal finds no material irregularity or illegality of such magnitude warranting interference with the concluded auction sale. Accordingly, Point No.6 is answered against the Applicants.

¶303