Dismissed

Mr R Lokeshwaran S O Mr Ramulu v. Equitas Small Finance Bank Limited

DRT6 Apr 2026SA/560/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed the Securitization Application filed by borrowers challenging the bank's issuance of Section 13(2) Demand Notice and Section 13(4) Possession Notice under the SARFAESI Act, finding the bank's non-compliance unjustified.

What did the court decide?

SA dismissed upholding the validity of the Section 13(2) Demand Notice and Section 13(4) Possession Notice.

Mr R Lokeshwaran S O Mr Ramulu versus Equitas Small Finance… — Company and Corporate | DRT (2026)

SA No.560/2022

06.04.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

¶5

Dated this the 06^th day of April, 2026

¶6

Present: SMT. S.V. GOWRAMMA Presiding Officer

¶7

SA No. 560 of 2022

¶8

Mr. R. Lokeshwaran, S/o. Mr. Ramulu, No.99A, Ramar Koil Street, Ankiyapillai, Ambur, Parasanapalli, Chinnakarumbur, Vellore – 635 811.

¶9

Mrs. P. Sathya, W/o. Lokeshwaran, No.99A, Ramar Koil Street, Ankiyapillai, Ambur, Parasanapalli, Chinnakarumbur, Vellore – 635 811.

¶10

…Applicants

¶11

-Vs-

¶12

The Authorised Officer, Equitas Small Finance Bank Limited, 4^th Floor, Phase II, Spencer Plaza, No.769, Mount Road, Anna Salai, Chennai – 600 002.

¶13

…Respondent

¶14

Counsels on record / appeared:

¶15

Counsel for Applicant : Ms. C. Balasundar Counsel for Respondent : Mr. K.V.P. Deepak Raj

¶16

ORDER ON SA 560 /2022

¶17

The present Securitization Application [SA] is filed under sub section [1] of S.17 of the Securitization and Reconstruction of Financial Asset and

¶18

Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging

SA No.560/2022

06.04.2026

the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

¶23

The applicant has challenged the Section 13(4) Possession Notice dated 17.11.2022 and the total outstanding amount due as per Possession Notice is Rs.15,45,543/-.

¶24

3. Pleadings of the applicant:

¶25

3.1 The applicants availed a loan of Rs.14,00,000/- in the month of June 2018, executed Memorandum of Deposit of Title Deeds towards the property situated at S.No.171/14, Parsanapalli Village, Ambur Taluk, Vellore District as security towards the loan which has to be repaid from July 2018 to 2028. Due to Covid-19 pandemic, applicant defaulted in the repayment of EMI and the respondent bank has issued Section 13(2) Demand Notice on 25.08.2022 to discharge the liabilities within the period of 60 days. After the receipt of the Demand Notice, the applicants have approached the respondent bank, who directed to pay the balance EMI amount.

¶26

3.2 As the 1^st applicant has lost his job was not able to pay the EMI to the respondent bank from the month of July 2022, the applicants are ready and willing to settle the loan account if the respondent bank reschedule the loan account. The respondent has failed to consider the payments made by the applicants of Rs.8,00,000/- and demanded a huge sum of Rs.15,45,543/- as on 20.08.2022, failed to produce the statement of accounts.

SA No.560/2022

06.04.2026

3.3 The respondent bank has issued Section 13(4) Possession Notice dated 17.11.2022 under Rule 8(1) without considering the representation made by the applicants to the Demand Notice. Further the respondent bank has claimed a higher amount in the Possession Notice dated 17.11.2022 and the schedule property is Natham property. In the grounds it is contended that the Possession Notice dated 17.11.2022 issued by the respondent bank to applicants is illegal and arbitrary and the bank has not considered the requests made by the applicants to reschedule the loan account.

¶31

3.4 The respondent has failed to consider the Covid-19 pandemic situation and also charged the higher interest without furnishing the statement of accounts. The applicants have raised their objections under Section 13(3A) which was not considered by the respondent bank. On these grounds the applicants prays for dismissal of the present SA.

¶32

4. Objections of the respondent bank:

¶33

4.1 The respondent bank has filed a detailed counter inter alia contending that the applicants have availed loan against property of Rs.14,00,000/and also executed loan agreement No. SEAMBUR0172622 dated 30.04.2018, to secured the repayments of the credit facilities availed, the applicants have executed Memorandum of Deposit of Title Deeds and registered before the respective SRO.

¶34

4.2 Further the applicants have failed to comply with the terms and conditions of the loan agreement and defaulted in the repayment of

SA No.560/2022

06.04.2026

monthly instalments which is not disputed by the applicants herein. Though the applicants have paid only 49 Instalments out of 60 Instalments, the respondent bank has classified the loan account as NPA as per the Section 2(o) of the Act and as per the RBI guidelines.

¶39

4.3 The respondent bank has issued the Section 13(2) Demand Notice dated 25.08.2022 to the applicants, demanding an amount of Rs.15,45,543/- as on 20.08.2022. The applicants have failed to make any representation nor settled the outstanding liability within the period of 60 days. Further the respondent has issued the Section 13(4) Possession Notice dated 17.11.2022 which was returned with an endorsement unclaimed. The Possession notice is affixed on the mortgaged property and also published in two Newspapers; One in “The New Indian Express” (English) on 05.06.2021 (SIC 20.11.2022) and other in “Dinamani” (Tamil) on 20.11.2022. Therefore, the respondent bank has followed all the Rules and Acts made there under in issuing the Section 13(4) Possession Notice dated 17.11.2022.

¶40

4.4 It is submitted that the respondent bank has duly given credits to the payments made by the applicants which also reflected in the statement of accounts produced by the respondent bank. Further the respondent bank has charged interest and charges as per the terms and conditions of the loan agreement, though the applicants ought to have pay 105 installments to the respondent bank and failed to liquidate the entire liability.

SA No.560/2022

06.04.2026

4.5 The respondent bank has sanctioned credit facilities to the applicants in the year 2018 and the applicants were irregular in repayment which resulted in classification of the loan account as NPA on 08.08.2022, in spite of receipt of Demand Notice the applicants have made only a payment of Rs.3,09,000/- towards the loan account. It is submitted that the OTS proposal given by the applicants is inadmissible and applicants have filed the present SA without any basis. Therefore, the respondent bank prays for dismissal of the present SA.

¶45

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

¶46

5.1 It is discernible from the records that the applicants are the borrowers who have availed the credit facilities of Rs.14,00,000/-, to secure the repayments the applicants have created an equitable mortgage by way

¶47

of Memorandum of Deposit of Title Deeds for the property situated at S.No.171/14, Parsanapalli Village, Ambur Taluk, Vellore District. The availing of credit facilities, creation of equitable mortgage is not disputed by the applicants herein.

¶48

5.2 Due to default in the repayments, the respondent bank has classified the loan account as NPA on 08.08.2022. After classifying the loan account as NPA, the respondent bank has proceeded further and issued Section 13(2) Demand Notice dated 25.08.2022 calling upon the applicants to clear the entire outstanding amount due towards the loan account. In the Section 13(2) Demand Notice which is produced by the applicants at

SA No.560/2022

06.04.2026

Page No.21 of the applicants’ SA clearly reflects the details of the applicants, date of classification of the loan account as NPA under Section 2(o) of Act, amount due in the loan account. It is seen that the mortgaged property is also clearly described in the Demand Notice.

¶53

5.3 Further, the respondent bank has also intimated the applicants to discharge the liability within the period of 60 days from the date of receipt of notice failing which the respondent would take measures under Section 13(4) of the SARFAESI Act. It is also an admitted fact that the applicants have received the Section 13(2) Demand Notice dated 25.08.2022.

¶54

5.4 The applicants have raised a specific contention that the respondent bank has failed to consider the representation made by the applicants under Section 13(3A) of SARFAESI Act, which is not sustainable as the applicants have failed to produce the copy of Section 13(3A) objections, its postal receipts for having sent which is received by the respondent bank. In fact, even after the receipt of the Section 13(2) Demand Notice dated 25.08.2022, the applicants have failed to raise any objections to the demand made nor discharged their entire liability within 60 days as required under Section 13(2) of SARFAESI Act.

¶55

5.5 Thus, the respondent bank has proceeded further and issued Section 13(4) Possession Notice dated 17.11.2022 which was served to the applicants herein as per the postal tracking reports produced at Page No.7 to 10 of respondent’s counter. The Possession Notice was duly published in two Newspapers; One in “The New Indian Express” (English) dated

SA No.560/2022

06.04.2026

05.06.2021 (SIC 20.11.2022) and another in “Dinamani” (Tamil) dated 20.11.2022, the Possession Notice is also affixed on the conspicuous place of the schedule property. The paper publications and affixture of Possession Notice is evident from Page No.11 to 17 of respondent’s counter.

¶60

5.6 Further contention as raised by the applicants is that the respondent bank has; failed to consider the payments made and the outstanding due amount is not correct, failed to furnish the statement of accounts, which were not sustainable as the respondent bank has produced the statement of accounts for the loan account at Page No.18 to 30 of respondent’s counter and it clearly evidences the due payments made by the applicants herein. Though the respondent bank has clearly stated the rate of interest applied to the loan account i.e., Rate of Interest @15.00%, Penalty Interest @36.00% and balance Instalments to be paid is 105. Therefore, the contentions raised by the applicants with regard to the total outstanding amount and statement of accounts fails.

¶61

5.7 On perusal of the records it is seen that the respondent bank as a secured creditor has classified the loan accounts as NPA on 08.08.2022 and proceeded to issue Demand Notice 25.08.2022 which is admittedly received by the applicant. In spite of receipt of Section 13(2) Demand notice, the applicant failed to raise any objection to the demand made nor liquidated the entire liability within the period of 60 days. Further, the applicant has raised an objection that the respondent bank has failed to consider the reply sent by the applicants under Section 13(3A) which is not supported by any documents and hence same fails.

SA No.560/2022

06.04.2026

5.8 The respondent bank has proceeded further in issuing the Section 13(4) Possession notice dated 17.11.2022 which is duly served to the applicants herein as per the acknowledgement cards produced by the respondent, affixed on the conspicuous part of the property as per Rule 8(1), published in two Newspapers as per Rule 8(2) of SIE Rules. Thus, the respondent bank has established the due compliance of procedures in initiating the measure under the Act.

¶66

5.9 For the forgoing reasons, the present SA is only to be dismissed upholding the Section 13(2) Demand notice dated 25.08.2022 and Section 13(4) possession notice dated 17.11.2022 as valid notices.

¶67

Resultantly the present SA dismissed. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

¶68

Sd/-

¶69

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

¶70

(Dictated to Steno (Mogesh), transcribed by him, corrected, signed and pronounced by me on this the 06^th day of April, 2026)

¶71

ANNEXURES

¶72

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

¶73

Sl.	Description of Documents	Document
No.		No.
1.	Application dated 19.12.2022	A-1
2.	Loan Sanction Letter dated 18.08.2021	A-2

SA No.560/2022

06.04.2026

3.	Demand Notice dated 25.08.2022	A-3
4.	Possession Notice dated 17.11.2022	A-4
5.	Vakalat dated 19.12.2022	A-5

¶78

LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

¶79

Sl. No.	Description of Documents	Document No.
1.	Demand Notice dated 25.08.2022	R-1
2.	Acknowledgement cards	R-2
3.	Possession Notice dated 17.11.2022	R-3
4.	Postal Tracking	R-4
5.	Affixture of Possession Notice	R-5
6.	Paper publication of Possession Notice	R-6
7.	Statement of accounts & Foreclosure Letter	R-7

¶80

SCHEDULE OF PROPERTY

¶81

All that piece and parcel of land situated at Parsanapalli Village, Ambur Sub-Registrar Office, Ambur Taluk, Vellore Registration District Natham S.No.123/Part for this New Survey No.171/14 the land measured of 220 sq.mtr, Ramar Kovil Street the boundaries are detailed hereunder:

¶82

North: Ramar Kovil street lies on S.No.123/30 and Parvathi House South: Subramani Plot lies on S.No.171/6

¶83

East: S.No.171/15 Parvathi House and S.No.171/16 Passage way West: Maniyakar Passage way in the S.No.171/13

¶84

Measurement 1: East to West on Both sides 30ft and North to South on Both sides 34ft totally 1020 sq.ft.,

¶85

Measurement 2: East to West on Northern side 41 ½ ft on Southern side 42 ft and North to South on Eastern totally 2251 ½ Sq.ft., (220 sq.mtr).

¶86

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

Mr R Lokeshwaran S O Mr Ramulu v. Equitas Small Finance Bank Limited

Case brief

What is this about?

What did the court decide?

Mr R Lokeshwaran S O Mr Ramulu v. Equitas Small Finance 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

Similar cases

Charles Rajakumar versus State Bank of India

D v K Rathinamma versus Indian Overseas Bank

Vijaya Babu versus Union Bank of India

The South Indian Bank Ltd. versus L v Traders

Punjab and Sind Bank versus Rupesh Parsmal

Bank of India versus Dilli Ganesh