Dismissed

S Rajeswari v. Union Bank of India

DRT29 Jan 2026SA/672/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal held the applicant's Securitization Application challenging a Sale Notice filed under the SARFAESI Act as devoid of merit. The court found the bank validly followed statutory procedures regarding notices, publication, and affixture, dismissed the challenge to the auction scheduling, and upheld the validity of the sale measures initiated by the secured creditor.

What did the court decide?

The Securitization Application was dismissed; the Sale Notice dated 11.09.2024 scheduling the sale on 17.10.2024 was held valid; all interim orders vacated.

S Rajeswari versus Union Bank of India — Consumer Protection | DRT (2026)

SA No.672/2024

29.01.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 29^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. 672 of 2024

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Mrs. S. Rajeswari, W/o C. P. Sudharson, No.22, Suriyamman Koil Street, V.O.C. Nagar, Pammal, Chennai – 600 075.

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…Applicant

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-Vs-

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The Authorised Officer, Union Bank of India., Asset Recovery Branch, “Elconso Building, No.9, Casa Major Road, Egmore, Chennai – 600 008.

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…Defendant

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Counsels on record / appeared: Counsel for Applicant : Mr. G.V. Shridharan Counsel for Respondent : Mr. K. Radhakrishnamurthy

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ORDER ON SA 672 /2024

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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 challenged the Sale notice dated 11.09.2024 fixing the sale on 17.10.2024 and the outstanding amount due as per Sale notice is Rs.40,30,020.45/-

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3. Pleadings of the applicant:

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3.1 The applicant is the co-borrower was made to sign blank papers to the loan of Rs.45,00,000/- in the year 2018 and was regular in repayments without any default. The borrower has never allowed their account to become NPA.

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3.2 It is submitted that the respondent bank has not followed the RBI guidelines in classifying the loan account as NPA, has not issued the Section 13(2) Demand Notice and Section 13(4) Possession Notice to the applicant proceeded in issuing the Sale notice dated 28.10.2022 fixing the sale to be held on 18.11.2022 was challenged in SA No.464 of 2022 which came to be dismissed as infructuous.

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3.3 The respondent bank failed to comply with the Rule 8(6) in issuing the impugned sale notice and the applicant request for One time settlement was not accepted and the security interest is not registered before the Central Registry as mandated under the provisions of SARFAESI Act.

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3.4 Further the respondent bank has undervalued the property where the value of the property is Rs.1,00,00,000/- as it is located in the prime area is trying to sell the property at thrown out price. It is submitted that the respondent bank has not affixed any notice under SARFAESI in the schedule property.

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3.5 In the grounds it is contended that the classification of loan account as NPA is not in accordance with the RBI guidelines. The respondent bank has failed to issue Section 13(2) Demand Notice to the applicant as per Rule 3 of SIE Rules. Further the Sale notice dated 11.09.2024 issued by the respondent bank is without following jurisdiction and natural justice and has not complied with Rule 9(1) of SIE Rules and there is no 30 days clear notice to the Sale notice dated 11.09.2024.

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3.6 Further, the impugned sale notice dated 11.09.2024 is not affixed on the schedule property as per Rule 8(7) and not published in two Newspapers as per Rule 8(6) of the SIE Rules. The respondent bank has failed to obtain valuation report before issuing the Sale notice which is in violation of Rule 8(5) of SIE Rules.

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3.7 It is submitted that the impugned sale notice does not contain the encumbrances in the schedule property and there is no Terms and conditions as required under the Act. Therefore, the applicant prays to set aside the Sale Notice dated 11.09.2024 fixing the sale to be held on 17.10.2024.

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4. Objections of the respondent bank:

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4.1 The respondent bank filed a detailed counter inter alia contending that the allegations made by the applicant are false and present SA is to be dismissed in limine. It is submitted that the applicant has defaulted in the repayments and failed to pay the overdue interest which resulted in classification of the loan account as NPA on 31.03.2021.

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4.2 The respondent bank has issued Section 13(2) Demand Notice and Section 13(4) Possession Notice to the applicant, even in spite of receipt of the statutory notices, the applicant has failed to discharge their entire liabilities. The respondent bank has proceeded further and issued Sale notice dated 12.09.2022 fixing the sale to be held on 20.10.2022 and 2^nd sale notice dated 28.10.2022 fixing the sale to be held on 18.11.2022 which was challenged by the applicant in SA No.464 of 2022 which and came to be dismissed as Infructuous.

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4.3 In fact, the respondent bank has issued another sale notice dated 31.08.2024 scheduling the sale to be held on 09.10.2024 which was withdrawn vide notice Ref.No.ARB:241/2024-25 dated 10.09.2024 and served to the applicant which is also published in two Newspapers. Further the respondent bank has issued impugned sale notice dated 11.09.2024 fixing the sale to be held on 17.10.2024, affixed on the conspicuous part of the property and also published in two Newspapers as mandated under the SARFAESI Act.

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4.4 At the request of applicant the respondent bank for sanction of Overdraft facility which was sanctioned on 10.08.2016 and FITL facility of RS.2,26,828/- after renewal of loan account on 26.09.2019. The credit limit of first loan was reduced to Rs.45 lakhs and one of the mortgaged properties was released on 30.10.2019 and the applicant has defaulted in the repayment which resulted in classification of loan account as NPA on 31.03.2021 and the applicant is educated person and running a business.

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4.5 Furthermore the respondent bank has issued Section 13(2) Demand Notice dated 30.04.2021 which is acknowledged by the applicant and also issued Section 13(4) Possession Notice dated 14.12.2021 which is also acknowledged by the applicant here in. The Possession Notice is also published in Tamil and English Newspapers on 18.12.2021 and issued Sale notices; 12.09.2022, 28.10.2022, 31.08.2024 fixing the sale to be held on 20.10.2022, 18.11.2022 and 09.10.2024 which were affixed on the conspicuous part of the property, published in two Newspapers. Further, the present Sale notice has clear 30 days’ notice given to the applicant, published in two Newspapers, affixed on conspicuous part of the property and fixing the sale to be held on 09.10.2024.

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4.6 The OTS proposal of the applicant was rejected by the appropriate authority as the outstanding amount due is more than the value of secured property, though the secured asset is also registered under CERSAI registration with ID No.200013512897. Further it is submitted that the respondent bank has obtained proper valuation report from the approved valuer and issued the 4^th Sale notice which has clear 30 days to the applicant herein.

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4.7 Therefore, the respondent bank as a secured creditor has duly followed all the provisions of the Act and the applicant has failed to prove prima facie of the case, hence the respondent bank prays to dismiss the present SA with exemplary costs.

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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 discernible from the records that the applicant has availed a loan of Rs.45,00,000/- in the year 2018 which is not disputed by the applicant herein. To secure the repayments schedule of the credit facilities, the applicant has mortgaged his property as security which is registered as Doc.No.5514 of 2016 dated 16.08.2016 at office of SRO, Pammal as evident from the MODT produced at Page No.1 to 7 of respondent’s counter and the charge is also regenerated in the Central Registry as per the CERSAI report produced at Page No.65 to 68 of respondent’s counter.

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5.2 Due to default in the repayments, the loan account of the applicant was classified as NPA on 31.03.2021 which is admitted by the applicant at Para “L” of the SA and disputed by the applicant here in that the loan account is not classified as NPA as per the RBI guidelines which does not sustain as the respondent bank has classified the loan account as NPA on 31.03.2021 as per the Section 2(o) of the Act, which reads as under:

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Section 2(o): Non-performing asset means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, [doubtful or loss asset,

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Further the applicant has not pointed out how the classification of the account as NPA is not as per RBI guidelines. A mere statement that the classification is not as Per RBI guidelines cannot sustain. In fact, it is

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internal mechanism of the bank to classify the account as NPA as per RBI guidelines.

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5.3 After classifying the loan accounts as NPA, the respondent bank has issued Section 13(2) Demand Notice dated 30.04.2021. On perusal of the Demand Notice produced by the respondent bank at Page No.8 clearly describes; the details of the borrower and guarantor, credit facilities availed by the borrower, total outstanding amount due to the loan account, description of the properties mortgaged. Further, the Demand notice was duly sent to borrower and guarantor which is served to the guarantor Mrs. S. Rajeshwari as per the Postal Tracking report produced at Page No.15 and returned unserved as per the unserved covers produced at Page No.10 to 14 of respondent’s counter.

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5.4 However, it is pertinent to note that the applicant has replied to the Demand Notice vide letter dated 23.06.2021 under Section 13(3A) which has been duly replied the respondent vide reply dated 06.07.2021. Hence, the contention as raised by the applicant that the respondent bank has failed to issue Section 13(2) Demand Notice and impaired the statutory right of Section 13(3A) of the SARFAESI Act fails.

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5.5 Even in spite of receipt of Demand Notice, the applicant has failed to liquidate their entire liabilities and the respondent bank has proceeded further and issued Section 13(4) Possession Notice dated 14.12.2021 under Rule 8(1) which is produced by the respondent bank at Page No.20 of their typed set. The Possession Notice is returned unserved as reflected from the

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postal return covers produced at Page No. 21 to 26 of their typed set and affixed on the conspicuous part of the property as per Rule 8(1) of SIE Rules which is reflected from the photograph of affixture produced at Page No.27 and also published in two Newspapers as per Rule 8(2), one in “Business Standard” (English) and “Dinakaran” (Tamil) both dated on 18.12.2021 which is evident from the paper publications produced at Page No.28 and 29 of respondent’s counter.

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5.6 The respondent bank as a secured creditor has proceeded further and issued following Sale Notices which did not materialize.

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i. Sale notice dated 12.09.2022 fixing the sale to be held on 20.10.2022

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ii. Sale notice dated 28.10.2022 fixing the sale to be held on 18.11.2022

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iii. Sale notice dated 31.08.2024 fixing the sale to be held on 09.10.2024

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Hence, the respondent bank has issued 4^th Sale notice dated 11.09.2024 fixing the sale to be held on 17.10.2024 which is impugned in the present SA.

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5.7 It is pertinent to note that the respondent bank has obtained a valuation report dated 18.07.2024 from an approved valuer before issuing the Sale notice dated 11.09.2024 as per Rule 8(5) which is evident from the valuation report produced at Page No.112 to 130 of respondent’s counter. The applicant Mrs. S. Rajeshwari and Mr. C.P. Sudharson has duly received the impugned sale notice as per the proof of delivery produced at Page No.107 and 108 of respondent’s counter, it is also duly published in English and Tamil Newspapers as per Rule 8(6) which is evident from the

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paper publications produced at Page No.109 and 110 of respondent’s counter and duly affixed on the conspicuous part of the property as per Rule 8(7) which reflects from the photograph of affixture produced at Page NO.111 of respondent’s counter.

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5.8 The contention as raised by the applicant that there is no clear 30 days’ notice issued to the applicant here in which does not sustain as the respondent bank has issued 4^th Sale notice dated 11.09.2024 fixing the sale to be held on 17.10.2024 which has more than 30 days for the applicant to redeem the property as per Rule 8(6) which reads as under:

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Rule 8(6):

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T he authorized officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5)

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Hence, the contention of the applicant that the respondent bank has failed to give clear 30 days’ notice fails.

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5.9 Further contention as raised by the applicant that the impugned sale notice dated 11.09.2024 is not affixed on the property does not sustain as the respondent bank has duly affixed the Sale notice on conspicuous part of the property as reflected from the photograph of affixture produced at Page No.111 of respondent’s counter. Hence the contention with regard to the affixture of sale notice fails.

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5.10 Additionally, the applicant contended that the respondent bank

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has undervalued the property does not sustain as the applicant has failed

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to produce any valuation report and the respondent bank has issued Valuation report dated 18.07.2024 as per Rule 8(5) before issuing the Sale notice dated 11.09.2024. Therefore, the contention with regard to the valuation of the property fails.

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5.11 On perusal of the Sale notice dated 11.09.2024 it is evident that the date of the auction to be held on 17.10.2024 and the total outstanding amount due Rs.40,30,020.45 as on 31.07.2024 with terms and conditions and the encumbrance known to the secured creditor on the property. Hence, the contentions of the applicant with regard to the Sale notice fails.

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5.12 It is pertinent to mention that the Applicant had lost their right of redemption as held by the Hon’ble Supreme Court in case titled “Celir LLP versus Bafna Motors (Mumbai) (P) Ltd.” considered the right

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of redemption under S.13[8] after the amendment has held that borrower's right of redemption of mortgage under the SARFAESI Act will get extinguished once the bank publishes an auction notice for the sale of the secured asset and further held that the failure on the part of the borrower in tendering the entire dues before the publication of the auction notice as per Section 13(8) of the SARFAESI Act.

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where it is held as

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"Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set-aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive,

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fraudulent or vitiated by inadequate pricing or underbidding. Mere irregularity or deviation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding."

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The court further held "In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity."

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5.13 For the foregoing reasons, the applicant is the borrower even after receipt of the statutory notices has failed to liquidate the entire liabilities and failed to point out any illegality in the measures taken by the respondent bank. Therefore, the issuance of the Section 13(2) Demand Notice dated 30.04.2021 and Section 13(4) Possession Notice dated 14.12.2021 are held as statutory notices and the issuance of Sale notice dated 11.09.2024 and scheduling the sale to be held on 17.10.2024 are held as valid measures initiated by the respondent bank under the provisions of the SARFAESI Act and Rules made there under.

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5.14 Though the applicant has challenged the Sale notice dated 11.09.2024 has failed to point out any illegalities or irregularities in the measures initiated by the respondent bank. Hence, the respondent bank as

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a secured creditor has initiated measures under the SARFAESI Act and the

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present SA is only to be dismissed.

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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.

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Sd/(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 29^th day of January, 2026)

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ANNEXURES

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LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

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Sl. No.	Description of Documents	Document No.
1.	Memorandum of SA dated 30.09.2024	A-1
2.	1^stSale notice fixing the sale on 09.10.2024 dated 31.08.2024	A-2
3.	2^ndSale notice fixing the sale on 17.10.2024 dated 11.09.2024	A-3
4.	Vakalath dated 30.09.2024	A-4

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDENTS

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Sl.	Description of Documents	Document
No.		No.
1.	MODT by applicant dated 16.08.2016	R-1
2.	13(2) demand notice with ack. Cards/return covers dated 30.04.2021	R-2
3.	Reply letter by applicant dated 23.06.2021	R-3

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4.	Reply u/s 13(3A) to the objections by respondent dated 06.07.2021	R-4
5.	13(4) Possession notice with ack. Cards/return covers dated 14.12.2021	R-5
6.	Photo affixture dated 14.12.2021	R-6
7.	Publication in Business standard (English) dated 18.12.2021	R-7
8.	Publication in Dinakaran (Tamil) dated 18.12.2021	R-8
9.	Sale notice with ack. Cards/return covers dated 28.10.2022	R-9
10.	Publication in New Indian Express (English) dated 01.11.2022	R-10
11.	Publication in Dinamani (Tamil) dated 01.11.2022	R-11
12.	Valuation report dated 30.08.2022	R-12
13.	CERSAI dated 16.09.2016	R-13
14.	Memo filed by the respondent dated 25.09.2023	R-14
15.	Sale notice with ack. Cards/return covers and paper publications dated 12.09.2022	R-15
16.	Sale notice with ack. Cards/return covers dated 31.08.2024	R-16
17.	Paper publication (English)	R-17
18.	Paper Publication (Tamil)	R-18
19.	Cancellation of sale in sale notice dated 31.08.2024 with ack. Cards/return covers and paper publications dated 10.09.2024	R-19
20.	Sale notice with ack. Cards/ return covers dated 11.09.2024	R-20
21.	Paper publication (English) dated 11.09.2024	R-21
22.	Paper publication (Tamil) dated 11.09.2024	R-22
23.	Photo affixture	R-23
24.	Valuation report dated 18.07.2024	R-24
25.	Statement of accounts	R-25

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SCHEDULE OF PROPERTY

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All the piece and parcel of land and building bearing Plot No.7, VOC Nagar, (Sri Baba Nagar), Pammal, Chennai – 600 075, with a build up area of 1403 sq.ft. comprised in survey No.132/6, and as per patta surey No.132/27, 132/28 situated in Pammal Village, Tambaram Taluk, sub division approval bearing No.2/07-08 dated 11.04.2007 by pammal

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municipality representing CMDA and measuring an extent of 1180 sq.ft., or thereabouts and bounded on North by 20ft Road, East by Plot No.6 and 6A, West by Plot No.8, South by Plot No.7A

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Measuring to

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On the Northern side by – 40’ 6’’

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On the Southern side by – 40’

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On the Eastern side by – 31’

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On the Western side by – 28’

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In all admeasuring to 1180 sq.ft., (109.7 sq.mts) situated within the registration district of south Chennai and Sub registration District of Pammal.