Allowed

Kanniyappan N and Dharageswari K v. Dcb Bank Limited

DRT6 Jan 2026SA/561/2023

Case brief

AI extract

What is this about?

The Tribunal allowed the applicants' Securitization Application challenging a Section 13(4) Possession Notice. It set aside the notice because the Respondent Bank failed to produce a valid Section 13(2) Demand Notice, finding the dates mentioned in its documents contradictory and irregular.

What did the court decide?

The Section 13(4) Possession Notice dated 20.09.2023 is set aside. The Securitization Application is allowed. Any interim orders granted are vacated.

Kanniyappan N and Dharageswari K versus Dcb Bank Limited — Banking and Recovery | DRT (2026)

SA No.561/2023

06.01.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 06^th day of January, 2026

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Present: SMT. S.V. GOWRAMMA

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Presiding Officer

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SA No. 561 of 2023

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Mr. N. Kanniyappan S/o Nagooran Prince Village, Elaya Street, Tondiarpet, Chennai – 600 081.

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Also at:

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Flat No.304, 3^rd Floor, Tower D4, Old Door No.18, New Door No.8, Prince Village II, Elaiyamudali Street, Tondiarpet, Chennai – 600 081.

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Mrs. Dharageswari. K, W/o N. Kanniyappan, No.8D, 4^th Block, F304, Prince Village, Elaya Street, Tondiarpet, Chennai – 600 081.

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Also at:

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Flat No.304, 3^rd Floor, Tower D4, Old Door No.18, New Door No.8, Prince Village II, Elaiyamudali Street, Tondiarpet, Chennai – 600 081.

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…Applicants

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-Vs-

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The Authorised Officer, DCB Bank Ltd., First Floor, No.6, Rajaji Road, Nungambakkam, Chennai – 600 034.

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…Defendant

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Counsels on record / appeared:

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Counsel for Applicant : Mr. G. Bharadwaj Counsel for Respondent : Mr. R. Chandramohan

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06.01.2026

ORDER ON SA 561 /2023

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The present Securitization Application [SA] is filed under sub section [1] of S.17 of the Securitization and Reconstruction of Financial Asset and Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

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The applicant has filed the present SA challenging the Possession notice dated 20.09.2023 and the outstanding amount due as per Possession notice is Rs.64,19,259/-

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3. Pleadings of the applicant:

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3.1 The applicants are the borrowers who have availed a Housing loan of Rs.38,00,000/- and Home Loan of Rs.11,69,789/- by way of sanction letters dated 31.03.2019 and 24.05.2019 which has to be repaid in 240 EMIs at Rs.36,169/- and Rs.11,279/- respectively. The applicants have executed all the loan documents and also created mortgage by way of Memorandum of Deposit of Title Deeds in favor of the respondent bank.

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3.2 In fact, the applicants have paid 16 installments for a sum of Rs.8,00,000/- without any default and the respondent bank has classified the loan account as NPA on 14.05.2023 and issued a Demand Notice dated 05.05.2023 which is prior to the classification of loan account as NPA, calling upon the applicants to make a payment of Rs.64,19,259/- which is not received by the applicants herein.

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3.3 The respondent bank has classified the loan account as NPA by violating the provisions of the Act by issuing the Demand notice before classifying the loan account as NPA and also issued the Possession notice dated 20.09.2023 where it is mentioned that the Demand notice is dated 18.05.2023 which is not received by the applicants here in. Aggrieved by the impugned Section 13(4) Possession notice dated 20.09.2023, the present SA is filed.

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3.4 It is contended that the entire proceedings taken by the respondent bank is illegal and also demanded an amount of Rs.64,19,259/- is contrary to the statement of accounts to which the applicant is not liable to pay the alleged amount mentioned in the impugned Possession notice which the respondent bank is not liable to claim such an amount.

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3.5 The respondent bank has violated Rule 8(1) and the measures initiated as the Demand notice and Possession notice is not properly served. The bank has failed to publish the Possession notice in two leading newspapers and has not affixed the notice on the property. Further the respondent bank has not registered the secured asset under Section 26(D). Hence, they are not entitled to further measures, and on these grounds the applicants prays to set aside the Section 13(4) Possession Notice dated 20.09.2023.

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4. Objections of the respondent bank:

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4.1 The respondent bank has filed a detailed counter inter alia denying each and every allegation as raised by the applicant in the present SA. The

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applicants have availed a takeover home loan for a sum of Rs.38,00,000/and Rs.11,69,789/- from Dewan Housing Finance Corporation to be repaid in 250 and 287 EMIs of Rs.48,111/- and Rs.15,392/- respectively with an interest of 9.8%.

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4.2 It is submitted that the respondent bank has issued Section 13(2) Demand Notice dated 05.05.2023 with a typographical error in mentioning the classification of account as NPA on 14.05.2023. The classification of the loan account as NPA is correct and the respondent bank has issued Demand notice dated 18.05.2023 which was served to the applicants on 24.05.2023 demanding a sum of Rs.64,19,259/-.

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4.3 The respondent bank has proceeded further and issued Section 13(4) Possession Notice dated 20.09.2023 against the mortgaged property which was sent to the applicant and the same is returned with an endorsement as “Addressee Left”. The Possession notice is also affixed on the property as evident from the photograph of affixture.

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4.4 The respondent bank has published the Possession notice in two Newspapers, one in “The Business Standard” (English) and another in “The Hindu” (Tamil). The outstanding due amount as on 14.05.2023 is Rs.64,19,259/- with interest calculated from 15.05.2023 and contractual rate and the statement of accounts from 31.03.2019 to 07.07.2025 and from 25.05.2019 to 07.07.2025 reflects the payments made by the applicants were duly accounted and adjusted to the loan account.

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4.5 The respondent bank has duly registered the security interest with the Central registry as per the Section 26(D) of the Act. Hence the applicants have failed to point out any infirmity against the measures taken by the respondent bank in issuing the Demand Notice dated 18.05.2023, Possession Notice dated 20.09.2023. Therefore, the respondent bank prays to dismiss the present SA.

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

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5.1 It is manifest from the records that the applicant does not dispute the availing of a home loan of Rs.38,00,000/- and Rs.11,69,789/- totally to Rs.49,85,000/- and mortgaged the property as collateral security towards the credit facilities. Due to continuous default in repayment the account is classified as NPA on 14.05.2023 as per RBI guidelines.

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5.2 Consequent to classification of account as NPA, the respondent has initiated measure under S.13 of the Act and issued the demand notice under S.13[2] on 15.05.2023, which is wrongly mentioned as 05.05.2023 which is impugned in the present SA.

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5.3 The applicants have raised a specific contention that the date of NPA is 14.05.2023 and the Demand notice is issued on 05.05.2023 which is prior to classification of account as NPA on 14.05.2023. The bank opposes the said contention contending that the Demand notice was wrongly dated as 05.05.2023 instead of 15.05.2023 and the loan account was classified as NPA on 14.05.2023 as is evident from the paper publication of Demand notice in “The Business Standard” and “The Hindu” on 22.06.2023.

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5.4 On perusal of the Demand notice which is produced by the applicants at Page No.17 of the SA, it is seen that the Demand notice is dated 05.05.2023 and date of NPA is mentioned as 14.05.2023. Evidently there is a typographical error in mentioning the date of demand notice as 05.05.2023 instead as 15.05.2023. In fact, the paper publication of demand notice mentions the date of NPA as 14.05.2023 and the publication clearly reflects the date of demand notice as 18.05.2023. Thus, it is clear that mentioning the date of Demand notice as 05.05.2023 is a typographical error which has crept in Section 13(2) Demand notice instead of mentioning the date as 15.05.2023 as submitted by respondent bank.

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5.5 Further the respondent bank has proceeded in issuing the Section 13(4) Possession notice dated 20.09.2023 wherein it is mentioned that the demand notice is dated 18.05.2023 which is yet again an error in mentioning the date of demand notice, further the applicant counsel takes this Tribunal to the para 7 of the counter filed by the respondent bank where it is submitted that the Demand Notice dated 18.05.2023 is issued.

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5.6 For better appreciation of facts, the Tribunal referred to the S.13[2] demand notice dated 05.05.2023 [wrongly mentioned instead of 15.05.2023] as submitted by bank, which is dispatched on 19.05.2023 as per the postal receipts and served to the applicants on 24.05.2023 as per the postal tracking report produced at 9 to 12. It is seen the Demand notice dated 18.05.2023 is dispatched on 19.05.2023 as per the postal receipt and served to the applicants on 24.05.2023 as per respondent’s

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submissions. However, the bank has not filed the S.13[2] demand notice dated 18.05.2023.

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5.7 The contention of the respondent bank that the Demand Notice dated is 05.05.2023 is produced by the applicant at Page No.17 to 19 and respondent bank at Page No.5 to 7, clearly reflects that the Demand notice is dated 05.05.2023 and the contention of the bank that it is wrongly dated instead of 15.05.2023 would not support the case of the respondent bank.

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5.8 It is evident from the Possession notice dated 20.09.2023 issued by the respondent bank that the Demand notice is dated as 18.05.2023 and the respondent bank has produced the postal receipt for having sent the Demand notice produced at Page No.8 which reflects that it was dispatched on 19.05.2023. The case of the respondent bank is that the Demand notice is issued on 18.05.2023 supported by postal tracking report produced at Page No.9 to 12 of respondent’s counter. Further the Demand notice is published in two Newspapers, one in “Business Standard” (English) and another in “The Hindu” (Tamil) both dated on 22.06.2023, it is seen that the date of Demand notice is 18.05.2023. However, respondent failed to produce affixture of Demand Notice as mandated under Rule 3(1), which is reproduced below:

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“Rule 3(1):

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The service of demand notice as referred to in sub-section (2) of section 13 of the Act shall be made by delivering [including hand delivery] or transmitting at the place where the borrower or his agent, empowered to accept the notice or documents on behalf of the

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borrower, actually and voluntarily resides or carries on business or personally works for gain, by registered post with acknowledgment due, addressed to the borrower or his agent empowered to accept the service or by Speed Post or by courier or by any other means of transmission of documents like fax message or electronic mail service:

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Provided: that where authorized officer has reason to believe that the borrower or his agent is avoiding the service of the notice or that for any other reason, the service cannot be made as aforesaid, the service shall be effected by affixing a copy of the demand notice on the outer door or some other conspicuous part of the house or building in which the borrower or his agent ordinarily resides or carries on business or personally works for gain and also by publishing the contents of the demand notice in two leading newspapers, one in vernacular language, having sufficient circulation in that locality.”

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5.9 The respondent bank failed to clarify as to why the demand notice was published, when the respondent bank claims that the demand notice is served to applicants on 24.05.2023 as per para 6 of the counter.

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5.10 It is manifest from the records that the respondent bank has classified the loan account as NPA on 14.05.2023 and have issued the Section 13(2) Demand notice on 18.05.2023 as per the respondent bank’s own documents. However, the respondent bank contends that the Demand notice dated 05.05.2023 instead of 15.05.2023 and the Demand notice is dated as 18.05.2023 in the Section 13(4) Possession Notice dated 20.09.2023 and its paper publication would not support the case of the respondent bank. It is also not the case of the respondent bank that they

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have issued the Section 13(2) Demand notice dated 18.05.2023 and admittedly the Demand notice being relied upon by the applicant and respondent bank is dated 05.05.2023.

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5.11 As there is an ambiguity in the issuance of the Section 13(2) Demand notice dated 05.05.2023 instead of 15.05.2023 would not sustain. The respondent bank even did not file copy of the Demand notice dated 18.05.2023, which they are heavily relying in the Possession Notice dated 20.09.2023 and its paper publications in two Newspapers, one in “Business Standard” (English) and “The Hindu” (Tamil) both dated on 21.09.2023.

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5.12 Hence, it is only to be concluded that the respondent bank has not served the Section 13(2) Demand notice as required under the Act, as the date of Demand notice and mentioning of the Demand notice is an irregularity in the measures initiated by the respondent bank. It is pertinent to note that the initiation of the measures commences from the classification of the loan account as NPA and the issuance of the statutory notices as per the Act.

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5.13 In the instant matter, the respondent bank is silent where there is a Demand notice dated 18.05.2023 and the contention that there is a typographical error in mentioning the Demand notice dated 18.05.2023 is not justified nor supported by any documents. As the measure initiated by under Section 13 commences from the classification of the loan account as NPA and the issuance of the Demand notice, the respondent bank has failed to establish the due compliance of the measures under the Act, even though

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the measures can be challenged under Section 17 from the Section 13(4) Possession notice dated 20.09.2023 within a period of 45 days.

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5.14 Admittedly the Section 13(4) commences from the issuance of the Demand notice and the contention raised by the applicants herein is not countered by the respondent bank with the supporting documents. On the contrary, the Section 13(2) Demand notice dated 18.05.2023 is not produced before this Tribunal and the postal receipts, Postal tracking report are issued evidencing the date of issuance of Demand notice as 18.05.2023. However, the respondent bank is heavily relying on the Demand notice dated 15.05.2023 and has taken a stand that the date is wrongly mentioned as 05.05.2023. However, even taking into consideration the respondent bank’s submission regarding the date of Demand Notice as 15.05.2023, the publication of Demand Notice in newspapers contains the date of Demand Notice as ‘18.05.2023’ and not ’15.05.2023’. Further, the Possession Notice dated 20.09.2023 impugned in this SA also mentions the date of Demand Notice as ’18.05.2023’, which notice is neither produced by the respondent bank nor any plausible clarification given by the bank in their counter or during submissions.

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5.15 It is settled legal position that a Demand Notice is the mandatory legal basis for issuing a Possession Notice under the SARFAESI Act, 2002. The possession notice cannot be issued unless a formal demand notice in accordance to law has first been served and the borrower has failed to comply within the specified time period. A wrong date in a demand notice issued under Section 13(2) can be a significant legal flaw, potentially

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invalidating subsequent actions like possession or sale, as it affects the mandatory 60-day cure period for the borrower. The demand notice is a precondition for the possession notice.

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5.16 The documents submitted by the respondent bank are contradicting their own submissions in the counter. For the foregoing reasons, the applicants have established the irregularity in the measures initiated by the respondent bank and the respondent bank failed to produce the correct Demand notice before this Tribunal. The Tribunal comes to the inevitable conclusion that Section 13(4) Possession Notice dated 20.09.2023 is set aside as there is not proper Demand notice served to the applicant as required under law.

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Accordingly setting aside the Section 13(4) Possession notice dated 20.09.2023 and the present SA is allowed. 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/-

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

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

SA No.561/2023

06.01.2026

ANNEXURES

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl. No.	Description of Documents	Document No.
1.	Application filed under Section 17(1) of the Act dated 18.10.2023	A-1
2.	Loan Sanction Letter (Home Loan) dated 31.03.2019	A-2
3.	Loan Sanction Letter (DCB Home Loan) dated 24.05.2019	A-3
4.	Demand Notice U/s 13(2) of the Act dated 05.05.2023	A-4
5.	Impugned Possession Notice dated 20.09.2023	A-5
6.	Vakalath dated 18.10.2023	A-6

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

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Sl. No.	Description of Documents	Document No.
1.	Demand notice issued under Section 13(2) of the SARFAESI Act dated 05.05.2023	R-1
2.	Postal Acknowledgement card dated 19.05.2023	R-2
3.	Newspaper publication in the Business Standard (English) and The Hindu (Tamil Daily) dated 22.06.2023	R-3
4.	Possession Notice and Affixture photos dated 20.09.2023	R-4
5.	Postal Acknowledgement card dated 20.09.2023	R-5
6.	Newspaper publication in the Business Standard (English) and The Hindu (Tamil) dated 21.09.2023	R-6
7.	CERSAI Registration	R-7
8.	Statement of Accounts	R-8

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SCHEDULE OF PROPERTY

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Flat measuring 970 sq.ft., bearing Flat No.304 in the Third Floor of Block No.D-4 (as per CMDA Plan, Block No.3) along with one covered car park in the building known as ‘Prince Village – II’ together with an undivided 500 sq.ft., of share in the Land measuring 22057.69 sq.mtrs. i.e., 2,37,341 sq.ft. now comprised in R.S.No.3882, 3883/1 and 3946/8, Block No.94,

SA No.561/2023

06.01.2026

Tondiarpet Village, bearing Old Door No.18, thereafter Door No.113, now bearing Door No.8, IllaiyaMudali Street, Tondiarpet, Chennai – 600 081, i.e., after exclusion of open space reservation area and for road widening and the entire land bounded on:

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North by: R.S.No.3873 owned by M/s. Metal Box

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South by: R.S.No.3884 and Gemini Godown

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East by: IllaiyaMudali Street,

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West by: Railway Line,

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Situated within the Sub – Registration District of Royapuram and Registration District of North Chennai.

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

Kanniyappan N and Dharageswari K v. Dcb Bank Limited

Case brief

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Kanniyappan N and Dharageswari K v. Dcb Bank Limited

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