Dismissed

C Jaichand v. State Bank of India

DRT19 Jan 2026SA/666/2022

Case brief

AI extract

What is this about?

The applicant challenged the sale of mortgaged property by the bank, alleging procedural violations of the SARFAESI Act and Security Interest Rules. The Tribunal found the bank had strictly complied with notice and publication requirements and dismissed the application.

What did the court decide?

The sale stands confirmed; the application for setting aside the sale is dismissed.

C Jaichand versus State Bank of India — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL – II AT CHENNAI

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Dated this 19^th day of January, 2025

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PRESENT: SHRI SHARANG DHAR UPADHYAY Presiding Officer

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SA No.666 of 2022

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C. Jaichand S/o Mr. Champalal No.43, Vadamathadhi Street Near Danish Mission School Tiruvannamalai – 606 601 …Applicant

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Versus

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The Authorized Officer State Bank of India Stressed Assets Recovery Branch Red Cross Building, II Floor No.32, Red Cross Road, Egmore Chennai – 600 008

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R. Aruna D/o Ramalingam Old No.8/11, New No.5/11 3^rd Street, Pergopuram Street Tiruvannamalai – 606 601 …Respondents

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Counsel on Record / Appeared

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Applicant by : Ld. Counsel M/s G. Sanjeevi 1^st Respondent by : Ld. Counsel M/s S. Ambalvannan 2^nd Respondent by: Ld. Counsel M/s R. Mubarak Basha

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FINAL ORDER

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This SA has been filed challenging the sale conducted on 09.09.2022 in

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pursuance of sale notice dated 01.08.2022 by the 1^st respondent bank in favour of 2^nd respondent.

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Facts of the case:

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The applicant had borrowed a sum of Rs.8,95,000/- from the 1^st respondent bank in the year 2019 and was further agreed a top-up loan of Rs.22,00,000/- in the year 2018. The 1^st respondent bank further granted Cash Credit Facility to the applicant’s Proprietorship firm M/s Jai Vijay Shree Jewellers and the applicant was also granted a FITL Loan. At the time of availing the loan the applicant had mortgaged the schedule mentioned property as collateral to secure the credit facilities availed by the applicant. It is stated that the applicant was regular in repayment till 18.10.2020, however due to COVID-19 pandemic, the default had occurred resulting in the 1^st respondent bank classifying the account as NPA on 18.10.2020.

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It is stated that the Reserve Bank of India and the Government of India had introduced a Scheme taking into consideration the difficulties faced by the general public in proceeding with their day to day life, the RBI granted moratorium to borrowers and the loan dues during the pandemic period i.e., March 2020 to August 2020 was to be carried forward to be paid after the original loan period is over. It is also stated that despite the request from the applicant said moratorium was not granted and the account was classified as NPA.

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It is stated that the attempt of the applicant for rescheduling of the loan was not considered by the 1^st Respondent in its proper perspective and

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the applicants were informed that as they are having enough security they would proceed against them.

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The applicant after coming to know of the steps taken by the 1^st respondent bank in issuing the sale notice, the applicant filed SA.No.390/2022. This Tribunal in the said SA while disposing of the same was pleased to pass an order directing the applicant to deposit an amount of Rs.1,50,000/- before 11 am on 09.09.2022; 10% of the amount after deducting Rs.1.5 lakhs to be deposited within one week from 09.09.2022; 25% after deductions to be deposited within four weeks thereafter; the entire balance amount to be deposited on or before 12.12.2022.

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The applicant in pursuance of the said the applicant went to the bank to deposit a sum of Rs.1,50,000/- before 11 am on 09.09.2022, the Branch Manager informed that since the file has been transferred to State Bank of India, Stressed Assets Recovery Branch, Egmore, Chennai the same be tendered at Chennai Office. Thereafter, after talking with the officials of the bank, the same was sent by post on 18.08.2022. The bank returned the demand draft of Rs.2 lakhs made by the applicant on 16.9.2022 stating that since the applicant has not complied with first part of the installment in time they have adjusted the said amount towards costs of litigation and returned the balance of Rs.2,00,000/- and further informed that the bank has already sold the property because of non-compliance of the orders of the Tribunal dated 08.09.2022 and

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further informed that it is going to take physical possession on 29.09.2022 on the strength of the orders passed by Ld. CJM, Tiruvannamalai in Crl. MP. No.1265/2022 dated 13.08.2022.

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The 1^st respondent bank has classified the borrower’s loan account as NPA without issuing the demand notice and the possession notice. It is also stated that the bank did not serve or publish the impugned sale notice as mandated under Rule 8(6) of the Security Interest (Enforcement) Rules 2002.

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It is stated that if the 1^st respondent bank is allowed to proceed with auctioning the property, the rights of the applicant will be highly prejudiced. Therefore, aggrieved by the sale conducted on 09.09.2022 this SA is filed.

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Grounds of Appeal

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In the grounds of appeal, it is stated that:

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(i) The 1^st respondent bank has not issued the demand notice under Section 13(2) of the SARFAESI Act thereby depriving the right of the applicant under section 13(3A) of the Act.

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(ii) The sale notice dated 09.09.2022 has been issued without following the mandatory procedure under SARFAESI Act and the rules made thereunder.

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(iii) The 1^st respondent bank has failed to comply with Rule 8(5), 8(6) 8(7) and 9(1) of the Security Interest (Enforcement) Rules,2002.

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Along with the SA, the applicant had filed the copy of the sale notice dated 01.08.2022.

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Counter of the 1^st Respondent Bank

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Upon notice, the 1^st respondent bank filed its counter along with types set of documents. It is stated that the 1^st respondent bank denies the averments contained in the application and the SA is liable to be dismissed.

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It is stated that the applicant approached the 1^st respondent vide his application dated 11.10.2017 requesting for grant of home loan and the 1^st respondent considering the said request sanctioned a home loan of Rs.8,95,000/- on 07.11.2017, repayable in equated monthly installment of 19 years from December 2017.

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The applicant’s wife had approached the 1^st respondent bank requesting for grant of top-up loan vide application dated 23.11.2017 and the respondent considering the said request granted a sum of Rs.22,00,000/- on 21.12.2017 and the said loan was repayable in EMI of Rs.19,687/- per month commencing from January 2018.

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The applicant had executed a registered Memorandum of Deposit of Title Deeds dated 29.12.2017 registered as Document No.19/2018 on the file of Sub-Registrar, Tiruvannamalai, Joint II. Along with the said

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Memorandum the applicant deposited the original title deeds of the property mentioned in the Schedule of the SA in favour of the applicant.

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Again, at the request of the applicant vide application dated 16.05.2018 requesting loan under Pradhan Mantri Mudra Yojana on the capacity of Proprietor of “Jai Vijay Shree Jewellers”, the 1^st respondent sanctioned a loan of Rs.10,00,000/- to the applicant.

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Since the applicant defaulted in repayment, the loan account was classified as NPA on 18.10.2020 and a demand notice under section 13(2) of SARFAESI Act was issued on 31.07.2021 and the same was served on the applicant. It is stated that the applicant did not chose to invoke section 13(3) of the SARFAESI Act and raise objection to the demand notice. Therefore, the 1^st respondent issued the Possession Notice under Section 13(4) of the SARFAESI Act on 29.01.2022, the same was served, affixed on the secured asset and also published in newspapers dated 02.02.2022 viz., “Dinamani” and “The New India Express”.

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As the applicant did not come forward to clear the dues despite receiving the Possession Notice, the 1^st respondent bank issued sale notice dated 01.08.2022 and the same was served on the applicant, affixed on the mortgage property, published in newspapers “Dinamani” and “The New India Express” on 07.08.2022.

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Challenging the sale notice dated 01.08.2022, the applicant filed SA. No.390/2022 and the same came to be disposed on 08.09.2022 with directions to the applicant for paying the dues. In view of the noncompliance of the said order, the 1^st respondent bank sold the property in public auction on 09.09.2022 for a sum of Rs.59.27 Lakhs and the sale certificate was also issued on 26.09.2022 in favour of the 2^nd respondent after appropriating the amount to the loan account.

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Subsequently the 1^st respondent had filed an application under Section 14 before the Ld. CJM, Tiruvannamalai and obtained an order dated 30.08.2022 vide Crl. MP. No.1268/2022 and the same was also executed on 29.09.2022 and the possession has been taken by the bank under due possession law and the same has also been handed over to the purchaser and was also registered on 25.10.2022 as Document No.13509/2022 before SRO, Tiruvannamalai, Joint SubDistrict II.

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The applicant is a Proprietor of jewellery shop name “Jai Vijay Shree Jewellers” and his wife Mrs. M. Hemamalini are taking care of the business and both the applicant are earning well. Despite receiving huge turnover, they have failed to repay the loan.

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It is stated that the demand notice, possession notice and sale notice were issued and duly served on the applicant and the 1^st respondent

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has complied with Rule 8 of the Security Interest (Enforcement) Rules 2002 and Section 26B and 26D of the SARFAESI Act.

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It is stated that the applicant has duly complied with the provisions of the SARFAESI Act and the Rules made thereunder in bringing the property to sale and prays that the application be dismissed with cost.

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The 1^st respondent bank had filed the following documents: -

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S. No.	Date	Description of Documents
1	11.10.2017	Home Loan Application submitted by the 1^st applicant
2	07.11.2017	Sanction Letter
3	07.11.2017	Arrangement Letter.
4	07.11.2017	Loan Agreement
5	23.11.2017	Application for Home top Up Loan
6	21.12.2017	Sanction Letter
7	05.01.2018	Arrangement Letter
8	05.01.2018	Loan Agreement
9	09.11.2009	Sale Deed
10	29.12.2017	Memorandum of Deposit of Title Deeds
11	16.05.2018	Loan Application for Pradhan Mantri Mudra Yojana
12	29.07.2019	Sanction Confirmation
13	05.08.2019	Letter of Arrangement
14	05.08.2019	Arrangement of Loan cum Hypothecation
15	05.08.2019	Guarantee Agreement
16	31.07.2021	Demand Notice issued under Section 13(2) of SARFAESI Act along with Acknowledgment Cards
17	29.01.2022	Possession Notice issued under Section 13(4) of the SARFAESI Act r/w Rule 8(1) with Acknowledgment Cards and Photo
18	02.02.2022	Paper publication in respect of possession notice in Dinamani Tamil Daily and The New Indian Express
19	01.08.2022	Sale Notice under SARFAESI Act and Tule 8(6) issued by the Bank along with Acknowledgment Cards and Photo.

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20	07.08.2022	Paper Publication in respect of Sale Notice in Dinamani Tamil Daily and the New Indian Express
21	08.09.2022	Order in S.A.390 of 2022 (Dy.No.886 of 2022)
22	09.09.2022	Sale Confirmation
23	13.09.2022	Letter issued by the first defendant to the applicant
24	21.09.2022	Letter issued by the first defendant to the applicant
25		Closer of Loan Account
26	26.09.2022	Sale Certificate
27	29.09.2022	Photographs and Panchanama regarding execution of warrant in Crl.M.P.No.1268 of 2022
28	29.09.2022	Possession handover Letter issued by the first defendant to the subsequent purchaser
29	25.10.2022	Sale Certificate in favour of Smt. R.Aruna registered as Document No.13509 of 2022 on the file of SRO Tiruvannamalai Joint Sub District II.
30		CERSAI Report
31	14.07.2022	Valuation Report

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Counter filed by the 2^nd Respondent

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The 2^nd respondent entered appearance through Counsel and filed her counter. It is stated that the SA is not maintainable either in law or on facts and the same is liable to be dismissed. It is also stated that right of redemption provided to the applicant under the Act has already lapsed.

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This respondent is the auction purchaser in the e-auction held on 09.09.2022 and was declared as a successful bidder for a sum of Rs.59,27,000/-. The sale certificate was issued in favour of this respondent on 26.09.2022 and the same was registered as Document No.13509/2022 on 25.10.2022. It is stated that after the purchase of

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the property, this respondent has made improvement and additional constructions in schedule property by investing a sum of Rs.15,00,000/-

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There was no irregularity or procedural violation as alleged in SA, the 1^st respondent bank has followed the procedures as laid down under the SARFAESI Act and the Rules made thereunder. Therefore, the SA is not maintainable and is liable to be dismissed.

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Heard the Ld. Counsel appearing on behalf of the applicant and the 1^st respondent bank and the auction purchaser.

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Point for Consideration

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After hearing the parties and perusing the documents, this Tribunal is of the view that the only point for consideration is:

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“Whether the sale held on 09.09.2022 in favour of the 2^nd respondent is liable to be set aside?”

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Answer to the Point for Consideration

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The first ground that is raised is that the 1^st Respondent failed to issued the demand notice under Section 13(2) of the SARFAESI Act thereby depriving the applicant’s right under Section 13(3-A) of the Act. The 1^st respondent bank in the documents filed along with its counter at Pages 87 to 92 has filed the copy of the demand notice and the postal acknowledgements. A perusal of the same reveals that the demand

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notice is duly served on the applicants and hence this ground of the

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applicant fails.

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The second of the applicant is that the sale notice dated 1.8.2022 fixing the sale on 9.9.2022 is against the principles of natural justice and has been issued without jurisdiction. In this connection the 1^st respondent in its counter has clearly stated that the notice has been issued after strictly complying with the provisions of the SARFAESI Act and the Rules made thereunder. The 1^st respondent has also produced documents to prove that the demand notice under Section 13(2) has been issued and duly served on the applicant (Pages 87 to 92); the possession was issued by the 1^st respondent on 29.01.2022, duly served on the applicants, affixed on the secured asset, published in “Dinamani dated 2.2.2022 and “The New Indian Express” dated 2.2.2022 (Pages 93 to 104) and thereafter issued the sale notice dated 1.8.2022. It is also seen from the postal acknowledgements at Pages 107 to 111 that the sale notice dated 1.8.2022 has been served on the applicants. At Page Nos. 111 the bank has produced the affixture of the sale notice, at Page Nos.112 and 113 the bank has produced the proof of publication of

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the sale notice in “Dinamani” and “The New Indian Express”. From these documents it is clear that the bank has followed the provisions of the SARFAESI Act and the Rules made thereunder before bringing the

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property to sale. Therefore, this ground raised by the applicants also fails.

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The other ground raised by the applicant is that the 1^st Respondent has failed to comply with Rule 8(5), 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002. As regards non-compliance of Rule 8(5) of the Rules is concerned it is seen that the Authorised Officer has obtained a valuation report from the approved valuer and the valuation report is placed at Pages 256 to 177 of the typed set of papers filed by the bank. As regards, the grounds raised by the applicants with regard to non-compliance of Rule 8(6) and 9(1) of the Rules, it is to be stated that the sale notice dated 1.8.2022 has been served on the applicant. The sale notice is dated 1.8.2022 and the same was served on the applicant on 3.8.2022 and the e-auction sale is fixed on 9.9.2022, thus it is clear that the 1^st respondent bank has given clear mandatory 30 days notice to the borrowers / mortgagors before the sale and hence these grounds raised by the applicants also fail.

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In so far as the grounds with regard to valuation of the property is concerned, The Hon'ble Supreme Court in Pegasus Assets Vs. Haryana Concast; Manu/SC/1489/2015 , the valuation and fixation of reserve price is discussed and has held thus:

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“32. On considering the submissions of parties, we find that the sale confirmed in favour of M/s. Venus Realcon for Rs.32 crores does not require any interference particularly at the instance of Petitioner-Vinod Rajaliwala. There was no illegality or irregularity established against the conduct of auction and once it is found that the offer of Rs.32 crores was a fair offer in a competitive bid conducted fairly and the offer has been accepted and the sale confirmed, it would not be proper for this court to undermine the value of such auction sale conducted not only by the secured creditor but also by the Official Liquidator who was permitted to be associated with the whole process of finding out of valuation as well as the conduct of sale. M/s. Venus Realcon has rightly placed reliance upon the judgments of this court in the case of ValjiKhimji& Co. vs. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. 2008(9) SCC 299 and Vedica Procon Private Limited vs. Balleshwar Greens P. Ltd., 2015(8) SCALE 713. In ValjiKhimji, the law was enunciated in Paragraph 28 in the following words:

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“If it is held that every confirmed sale can be set aside the result would be that no auction-sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount. It could have been a different matter if the auction had been held without adequate publicity in wellknown newspapers having wide circulation, but where the auction-sale was done after wide publicity, then setting aside the sale after its confirmation will create huge problems. When an auction- sale is advertised in well-known newspapers having wide circulation, all eligible persons can come and bid for the same, and they are themselves to be blamed if they do not come forward to bid at the time of the auction. They cannot ordinarily later on be allowed after the bidding (or confirmation) is over to offer a higher price. Of course, the situation may be different if an auction-sale is finalized, say for Rs.1 crore, and subsequently somebody turns up offering Rs.10 crores. In this situation it is possible to infer that there was some fraud because if somebody subsequently offers Rs.10 crores, then an inference can be drawn that an attempt had been made to acquire that property/asset at a grossly inadequate price. This situation itself may indicate fraud or some collusion. However, if the price offered after the auction is over which is only a little over the auction price, that cannot by itself suggest that any fraud has been done.”

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33. In Vedica Procon’s case (supra) the aforesaid view was noticed and after considering many judgments in Paragraph 39,

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the Court approved the view taken in Navalkha and Sons vs. Sri Ramanya Das &Ors., 1969 (3) SCC 537 that there is a discretion in the Company Court either to accept or reject the highest bid before an order of confirmation of sale is made. However, once the Company Court is satisfied that the price is adequate, the subsequent higher offer cannot be a ground for refusing confirmation. The price of immoveable property keeps on varying depending upon the market conditions and availability of a buyer. Such fluctuations may attract fresh higher offers but normally such offers cannot be made the basis for reopening the confirmed sale which was otherwise valid. In the present case, we are satisfied that the sale made in favour of M/s. Venus Realcon does not require any interference. There is no good reason why the full price paid by Venus Realcon should be ordered to be refunded with interest etc. and possession which was delivered to Venus Realcon at the time of sale should be disturbed after passage of so much time. In such circumstances, while granting leave in SLP(C) Nos.117-118, the consequent Civil Appeals are hereby dismissed but without any order as to costs. The money deposited in this case by the intervener M/s. Himalayan Infra Projects Private Limited should be refunded to it forthwith along with interest accrued thereupon. ”

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Further the observation of the Hon’ble Supreme Court in Pegasus (supra) assumes significance especially when the sale is concluded and the sale certificate is issued. The Hon'ble Supreme Court in clear terms directs that whenever there is no irregularity in conducting the sale and when the sale certificate is issued, such transactions should not be interfered.

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The other ground is that the secured asset is not registered with CERSAI. The respondent bank in their typed set of papers at Pages 153 to 155 has enclosed the CERSAI report, which reveals that the security has been created on 10.04.2019. Therefore this ground also fails.

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In view of the above, the Tribunal is of the considered opinion that there

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are no merits in the contentions of the applicants and the SA is not maintainable. Hence the following:

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ORDER

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SA No.666 of 2022 stands dismissed. All the other pending IAs thus stand disposed of. Parties to bear their own costs. A copy of this order be communicated to the parties concerned.

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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 19^th day of January, 2026)

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C Jaichand v. State Bank of India

Case brief

What is this about?

What did the court decide?

C Jaichand v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

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Case details

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