Dismissed

V Ramamoorthy v. City Union Bank Limited

DRT17 Jun 2026SA/545/2024

Case brief

AI extract

What is this about?

In an interlocutory application under the SARFAESI Act, the applicant sought to implead legal heirs of a deceased borrower and other guarantors as necessary parties. The Tribunal held that since the dispute concerned the legality of the bank's recovery measures between existing parties, the proposed respondents were neither necessary nor proper, and the application was liable to be dismissed.

What did the court decide?

The prayer to implead proposed respondents 2 to 5 as party respondents is dismissed.

V Ramamoorthy versus City Union Bank Limited — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 17^th day of June, 2026

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PRESENT: SHRI SHARANG DHAR UPADHYAY Presiding Officer

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IA No.657 of 2026 in SA No.545 of 2024

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V. Ramamoorthy S/o Veerasamy No.2/171, Mullur North Mullurpattikadu Village Orathanadu Taluk Thanjavur District – 614 901 … Petitioner / Applicant

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Versus

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The Authorised Officer City Union Bank Limited

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Credit Recovery and Management Department “Narayana” Administrative Office

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No.24-B, Gandhi Nagar, Kumbakonam – 612 001

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…1^st Respondent / 1^st Respondent

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M/s J.P.V. Traders No.1/19C, Main Road, Mullurpattikadu Post Orathanadu Taluk Thanjavur District – 614 901

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Mrs. B. Vasuki W/o Late V. Balasubramanian No.47, North Mullurpattikadu Post Orathanadu Taluk, Thanjavur District – 614 901

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Mrs. Jaya Gandhi D/o Late V. Balasubramanian No.47, North Mullurpattikadu Post Orathanadu Taluk, Thanjavur District – 614 901

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Also at KozhipannaiPothiyappan Main Road Mullurpattikadu Post, Orathanadu Taluk Thanjavur District – 614 901

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R. Duraiyarasan S/o Ramasamysenapathy South Mullur, Mullurpattikadu Village Orathanadu Taluk Thanjavur District – 614 901 …Proposed Respondents 2 to 5

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ORDER

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This Application is filed by the Petitioner / Applicant praying to implead the proposed Respondents 2 to 5 as party respondents in SA No.545 id of 2024.

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Averments in the application

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M/s J.P.V. Traders, Rep. by its Proprietor, Mr. V. Balasubramanian, the proposed 2^nd respondent / borrower approached the 1^st respondent bank for overdraft facility and considering the same the bank sanctioned a sum of Rs.2,00,00,000/- on 14.1.2020 and another loan Emergency Credit Line SCH for a sum of Rs.37,50,000/- on 20.08.2020. The proposed 3^rd respondent is the co-borrower. To secure the above said facilities, the petitioner and the proposed 5^th respondent stood as guarantors and all created equitable mortgage in respect of the properties more fully described in schedule to the application in favour of 1^st respondent as collateral security. The proposed 2^nd respondent was engaged in the business of coconut trading and its Proprietor Mr. V. Balasubramanian died on 3.6.2024.

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The said Late V. Balasubramanian is none other than the petitioner‟s brother and till his life time he has made considerable repayment. The 1^st respondent hastily issued the possession notice under Section 13(4)

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of the Act in the name of the legal heirs, the proposed respondents 3 and 4 herein and also in the petitioner‟s name and in the name of the proposed 5^th respondent immediately after the demise of petitioner‟s brother who is the borrower without even waiting for the mourning period and without giving any breathing time to normalize from the grief and to look into the affairs.

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The petitioner being the brother and a third party to the business was unable to look into its affairs in a short span. It is learnt from the possession notice which was affixed on the property on 3.10.2024 about the alleged outstanding amount and their intention to initiate proceedings under SARFAESI Act. Aggrieved by the same the petitioner filed the above SA.

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In IA No.1998 of 2024 in the above SA on 18.11.2024, this Tribunal passed conditional of deposit of Rs.48 lakhs in two installments and the same was remitted by the petitioner on 22.11.2024 and 20.12.2024 into the loan account.

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The petitioner being the blood brother of the deceased V. Balasubramanian and that the property I mentioned in „A‟ schedule of the notice which was offered by him as security is an ancestral one and having appurtenant land besides the said property including the construction of the house by his deceased brother out of the funds provided by the petitioner, wherein the petitioner resides with good

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intention not to put the other guarantor, the 5^th respondent herein who offered the property II mentioned in „A‟ schedule of the notice as security into a sorrow state due to the sudden demise of his brother and intended to settle the matter with the 1^st respondent bank and negotiated with them.

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With great difficulty the petitioner remitted Rs.48 lakhs and also offered to settle the account by paying Rs.1,20,00,000/- in addition to the aforesaid sum and also requested the 1^st respondent to release the property documents pertaining to Property III mentioned in the A schedule of the notice belonging to the petitioner which was offered by him as security considering the payment of Rs.48 lakhs so that the same can be sold. The 1^st respondent asked the petitioner to give a letter to that effect and the petitioner sent a letter dated 31.7.2025 to 1^st respondent bank requesting them to release the documents pertaining to Property III mentioned in the A schedule of the possession notice with a view to sell the same for settling the loan account as per the negotiations with them towards full and final settlement.

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The petitioner filed a memo dated 8.12.2025 before this Tribunal as the 1^st respondent suggested to get orders for issuance of sale certificate in petitioner‟s favour and for delivering the documents to him while discharging the loan account. The petitioner was informed by the 1^st respondent by letter dated 11.12.2025 that they have rejected the petitioner‟s proposal without assigning any reason.

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The petitioner is a third party to the loan account except the brotherhood relationship with the borrower. The petitioner has nothing to do with the business of the proposed 2^nd respondent and the petitioner never enjoyed any portion of the borrowal amount or from the business carried on by his later brother. In order to save his name and the ancestral property besides not to drive the 1^st respondent and another guarantor, the proposed 5^th respondent.

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Without considering the proposal of the petitioner in humanitarian grounds the 1^st respondent bank has simply rejected the settlement proposal. The legal heirs of the deceased borrower are not taking any steps in this regard and by their conduct the family will lose the ancestral properties and the third party guarantors will be put to peril. When the petitioner is making efforts to settle the loan account, the respondent bank has taken the drastic step of issuing the impugned notice. The amount claimed in the possession notice has no legs to stand and the 1^st respondent arrived at the said amount by accumulating the penal interest and other overhead charges giving goby to the guidelines of RBI.

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The legal heirs of the petitioner‟s deceased brother Mr. V. Balasubramanian, the proposed respondents 3 and 4 herein failed to take any steps in protecting the guarantors and simply they are keeping silent by allowing the 1^st respondent to take drastic steps in selling the

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properties through auction sale which will deprive the interest and legitimate rights of the guarantors over the properties.

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In these circumstances, it is not right on the part of the 1^st respondent to reject the petitioner‟s settlement proposal without assigning any reasons and to sell the properties in auction sale and directing the petitioner to participate in the auction sale is illegal and unlawful.

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The proposed respondents 2 and 3 being legal heirs of the deceased V. Balasubramanian simply keeping silent and are not co-operating with the petitioner and thereby allowing the properties to be sold in auction which will deprive the interest in the Schedule A properties mentioned in the possession and also the 5^th respondent.

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For proper disposal of the case the proposed respondents 2 to 5 are very much necessary and proper and unless they are impleaded as parties in the above SA, the 1^st respondent bank be directed to consider and accept the settlement proposal and to release the documents of title of Property II mentioned in the A schedule of the possession notice to the petitioner and to issue sale certificate in respect of Property-I in the A schedule in favour of the petitioner and direct the 1^st respondent to deliver the documents of properties mentioned in the A schedule of the possession notice in favour of the petitioner and upon settlement direct the 1^st respondent to deliver the documents of title pertaining to

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the Property-I & II in the A schedule of the possession notice. Hence this well reasoned order in favour of the bank.

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Counter by 1^st Respondent

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The 1^st respondent filed counter in the main SA and the same is served on the applicant. It is stated therein that respondent has rightly classified the loan account as NPA on 9.6.2024. The Late V. Balasubramanian died on 12.7.2024 and the respondent issued demand notice demanding a sum of Rs.2,29,55,057/- to the guarantors and the legal heirs of the deceased V. Balasubramanian. The legal heirs of the deceased borrower refused to receive the same and was published in newspapers. No objections was raised under Section 13(3A) by the guarantors and the legal heirs. Hence possession notice was issued on 3.10.2024 which was duly served on the applicant herein and published in newspaper. It is stated that the 1^st respondent has scrupulously complied the provisions of the SARFAESI Act and the Rules made thereunder while initiating action under the Act.

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Submissions put forth by the parties

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The applicant submits that he is the third party to the loan transaction and being brother of the deceased V. Balasubramanian, the proprietor of the proposed 2^nd respondent he had approached the 1^st respondent bank for settling the dues as his property was also a security. It is submitted that the petitioner with great difficulty complied with the

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conditional order of deposit of Rs.48 lakhs in the above SA. The petitioner also offered to settle the dues, however, the 1^st respondent bank rejected the same. It is also submitted that the proposed respondents 3 and 4 are not taking any steps to clear the dues and hence the proposed respondents 2 to 5 are necessary parties for proper disposal of the SA.

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On the other hand, the Ld. Counsel for the 1^st respondent bank submits that the SA was filed in the year 2024 challenging the impugned notice issued by the respondent bank. The statutory notices are issued including the legal heirs of the deceased Mr. V. Balasubramanian and hence the applicant was aware of the fact that they are not co-operating with the petitioner for settlement of the loan account even at the time of filing SA, but he chose not to include them as party respondents then and now after a lapse of two years has now come with the application for impleading them as party respondents is only a tactic to delay the proceedings. The application is not maintainable and hence be liable to be dismissed.

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Point for consideration

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Upon hearing the parties and after perusing the documents, the point that arises for consideration is:

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“Whether the prayer of the petitioner is liable to be allowed?”

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Discussion on Points for consideration

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Admittedly, the Securitisation Application in SA No.545 of 2024 was filed challenging the measures initiated by the 1st respondent bank under Section 13(4) of the SARFAESI Act. The records disclose that the demand notice under Section 13(2) as well as the possession notice under Section 13(4) were issued not only to the guarantors but also to the legal heirs of the deceased borrower Late V. Balasubramanian. Therefore, the applicant was fully aware of the existence and identity of the legal heirs of the deceased borrower even at the time of filing the Securitisation Application.

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It is the contention of the applicant that the proposed respondents 2 to 5 are necessary and proper parties for effective adjudication of the dispute and that the legal heirs of the deceased borrower have not taken any steps to discharge the liability due to the bank. However, the relief sought in the main Securitisation Application is directed against the measures taken by the secured creditor under the provisions of the SARFAESI Act. The legality and validity of the action initiated by the secured creditor can be effectively adjudicated upon between the existing parties to the proceedings.

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The applicant has not demonstrated as to how the presence of the proposed respondents 2 to 5 is indispensable for deciding the issues arising in the Securitisation Application. Mere allegation that the legal

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heirs are not cooperating with the applicant or that they have failed to take steps for settlement of the loan account would not render them necessary parties to the proceedings. The dispute regarding settlement of dues or inter se rights among the borrower, legal heirs and guarantors falls outside the scope of adjudication in the present Securitisation Application. Further, no court can compel any party to settle the dues as it is their own choice as to whether settle or clear the outstanding dues.

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It is also pertinent to note that the applicant seeks various consequential directions against the 1st respondent bank, including acceptance of a settlement proposal, release of title deeds, issuance of sale certificate and delivery of documents. Such reliefs cannot be granted merely by impleading additional parties. Settlement of the loan account is essentially a matter within the commercial discretion of the secured creditor and no borrower or guarantor can compel the bank to accept a particular settlement proposal unless there exists a statutory or contractual obligation

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Further, the present application has been filed after considerable delay. The applicant has not furnished any satisfactory explanation as to why the proposed parties were not impleaded at the time of institution of the Securitisation Application when the relevant facts were admittedly within his knowledge. The contention of the respondent bank that the present application is intended to prolong the proceedings merits acceptance.

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The settled principle of law is that a party can be impleaded only when such party is either a necessary party, in whose absence no effective order can be passed, or a proper party whose presence is required for complete and effective adjudication of the dispute. In the facts and circumstances of the present case, this Tribunal is of the considered view that the proposed respondents 2 to 5 are neither necessary nor proper parties for adjudication of the challenge made to the SARFAESI measures initiated by the 1st respondent bank.

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Therefore, this Tribunal finds no merit in the present application. Hence the following:

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ORDER

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In the result, the Interlocutory Application filed by the applicant/petitioner seeking to implead the proposed respondents 2 to 5 as party respondents in SA No.545 of 2024 is dismissed. No order as to costs.

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Sd/- (SHARANG DHAR UPADHYAY) PRESIDING OFFICER DRT-II CHENNAI

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(Dictated to PS, who typed in the system directly, corrected, signed and pronounced by me in Open Court, on this 17^th day of June, 2026)

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V Ramamoorthy v. City Union Bank Limited

Case brief

What is this about?

What did the court decide?

V Ramamoorthy v. City Union Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

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