Dismissed

Sivanandhan G v. Pegasus Assets Reconstruction Pvt. Ltd.

DRT5 Aug 2026SA/733/2024

Case brief

AI extract

What is this about?

DRT-III Chennai dismissed a SARFAESI application impugning a Section 14 order. The court held the Secured Creditor validly issued demand and possession notices via publication and affixture. Relying on Supreme Court precedents, the court concluded Section 14 is ministerial, empowering the CJM to pass the order without adjudication, and the challenge fails.

What did the court decide?

The SARFAESI Application was dismissed. The Section 14 Order dated 05.06.2024 passed by the CJM was upheld as valid.

Sivanandhan G versus Pegasus Assets Reconstruction Pvt. Ltd. — Banking and Recovery | DRT (2026)

SA No.733/2024

05.08.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 05^th day of August, 2026

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Present: SMT. S.V. GOWRAMMA Presiding Officer

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SARFAESI APPLICATION No. 733 of 2024

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Mr. G. Sivanandhan, S/o. Gothandam, No.6, Karpagam Nagar Street, Kovilambakkam, Kancheepuram-600117

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Mrs. Anjali Devi, W/o. Sivanandhan, No.6, Karpagam Nagar Street, Kovilambakkam, Kancheepuram-600117

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Also at:

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No.6, Karpagam Nagar 1^st Street, Kovilambakkam, Kancheepuram-600117

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Mrs. Mohana Priya W/o. Stalin K No.6, Karpagam Nagar Street, Kovilambakkam, Kancheepuram-600117

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Also at:

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No.6, Karpagam Nagar 1^st Street, Kovilambakkam, Kancheepuram-600117

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Mr. Stalin K W/o. Kandasamy, No.6, Karpagam Nagar Street, Kovilambakkam, Kancheepuram-600117

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Also at:

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No.6, Karpagam Nagar 1^st Street, Kovilambakkam, Kancheepuram-600117

SA No.733/2024

05.08.2026

M/s. Dhandapani Medicals, Whose is proprietor rep by its Mr. G. Sivanandhan, No.2/707, Medavakkam Main Road, Kovilambakkam, Chennai 600129. ….Applicants

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-Vs-

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Pegasus Assets Reconstruction Private Limited, Acting as Trustee Pegasus Group Thirty Nine Trust-2 Having its Registered Office at, 507 Dalamal House, Nariman Point, Mumbai-400 021 and Corporate Office at 55-65, 5^th Floor, Free Press House, Nariman Point, Mumbai-400 021, and Branch Office at I-C, 1^st Floor, H.M.H. Plaza, New No.56(o) 105, G.N. Chetty Road. T. Nagar, Chennai-600017 Rep. by its Authorised Officer Mr. Sankar Balasubramanian, Vice President. ….Respondent

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Counsels on record / appeared:

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Counsel for Applicant : M/s. Srinivassan.J

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Counsel for respondent : M/s. V. Balasubramani, V. Vadivelan,

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L. Udayaraj Kumar, R. Kalaivani,

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K. Indhumathi, D. Baskar, B. Stalin Kanthimathi.

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ORDER ON SA 733/2024

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The present Securitization Application [SA] is filed on 03.10.2024 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].

SA No.733/2024

05.08.2026

The applicant has challenged the Sec.14 order dated 05.06.2024 in Crl.M.P. No.1485 of 2024 passed by Chief Judicial Magistrate, Chengalpat and the outstanding amount due as per Sec.14 order is Rs.1,11,83,063.67/-

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It is the case of the applicants that the 1^st Applicant availed a Term Loan of Rs.80 Lakhs from M/s. RBL Bank Limited for running a medical shop under the name and style of M/s. Dhandapani Medicals, for which he is the sole proprietor has mortgaged the schedule mentioned property. The Applicants agreed to repay the loan in 108 EMIs of Rs.1,15,904/-, at a floating interest rate of 10.75% p.a commencing from 05.09.2018.

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3.1 The 2^nd Applicant is the wife of the 1^st applicant, guarantor and the owner of the schedule mentioned property, has created equitably mortgaged by deposit of title deeds vide Sale Deed No. 1512/1995 dated 27.03.1995. The 3rd to 5th Applicants are the co-applicants and personal guarantors in respect of the said loan.

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3.2 After the COVID-19 pandemic, the 1st applicant was unable to run his medical shop due to the lockdown and Government Orders issued in connection with the pandemic. Consequently, the applicant was deprived of income from his business and was also severely affected by COVID-19. Due to continuous treatment for Alzheimer's and Parkinson's disease, and with the 1st applicant's consent, the 2nd applicant, being the wife of the 1st applicant, obtained his thumb impression in the Vakalat and, along with the co-applicants, jointly filed this application.

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05.08.2026

3.3 Due to the 1st applicant’s health issues, he was unable to continue his business, resulting in severe financial loss. Consequently, he was also unable to regularly pay certain EMIs to the secured creditor bank.

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3.4 The Secured Creditor Bank classified the 1st applicant’s loan account as NPA on 09.07.2021. Subsequently, the Bank issued U/s.13(2) Demand Notice dated 15.06.2023, calling upon the applicants to pay the outstanding amount of Rs.1,11,83,063.67 in a single payment. However, the Demand Notice was not served on the guarantors and other co-applicants.

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3.5 Thereafter, the Secured Creditor has assigned the borrower’s dues along with underlying Security Interest in favor of M/s. Pegasus Assets Reconstruction Pvt. Ltd. vide Assignment Agreement dated 25.01.2022. Subsequently, M/s. Pegasus Assets Reconstruction Pvt. Ltd. has stepped into the shoes of RBL Bank in respect of the financial assets, along with the underlying the security interests, guarantees, and pledges, in respect of the financial assistance availed by the borrowers.

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3.6 The respondent institution has taken symbolic possession of the schedule-mentioned property U/s.13(4) dated 04.01.2024 under the Act, and affixed the 2nd Possession Notice dated 04.01.2024 on the property without serving the possession notice to any of the applicants/guarantors, and the notice was not published in accordance to law.

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3.7 The 4th applicant has challenged the 1^st Possession Notice dated 03.06.2022, issued by the respondent institution for the recovery of a sum of Rs.74,33,263.10p before this Tribunal, in T.S.A. No. 152 of 2023. During

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05.08.2026

the adjudication, the respondent institution filed a memo stating that they could not trace the documents evidencing the action by them while initiating SARFAESI measures. Accordingly, the respondent was permitted to withdraw the proceedings, and the Tribunal allowed the S.A., setting aside the Possession Notice dated 03.06.2022, and directed restoration of possession to the mortgagor.

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3.8 The respondent institution filed an application before the Ld. CJM, Chengalpattu, U/s.14 of the Act, seeking assistance in taking possession of the secured asset by appointing an Advocate Commissioner to take possession of the schedule mentioned immovable property and hand over the same to the Authorized Officer of the respondent institution. The Ld. CJM, Chengalpattu, failed to appreciate whether the measures initiated by the respondent has been property followed in accordance with law. The Ld. CJM passed an order in Crl.M.P. No. 1485 of 2024 dated 05.06.2024 based on the documents produced by the respondent.

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3.9 There are the following grounds raised by the applicant from among the other grounds, the applicant contends that the Ld. CJM, Chengalpat failed to verify the whether the conditions precedent for the bank’s exercise of powers u/s.13(4) of the Act. It is further contended that the Ld. CJM, passed the order without issuing any notice or conducting any enquiry. One these grounds, the applicant prays to set aside the Sec.14 order passed by Hon’ble CJM, Chengalpat dated 05.06.2024.

SA No.733/2024

05.08.2026

The respondent bank has filed a detailed counter, inter alia, contending that the applicants availed a loan of Rs.80 Lakhs from RBL Bank (the Original Lender/Assignor), which was sanctioned and disbursed under Loan Agreement dated 30.07.2018 in Loan A/c.No.809001731476 against the secured property. The applicants agreed to repay the loan in 108 equated monthly instalments of Rs.1,15,905/-. As security for the loan, the applicants deposited the title deed dated 08.08.2017, registered as Doc.No.6277 of 2017 in the office of the Sub-Registrar, Pallavaram.

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4.1 It is submitted that RBL bank had assigned the financial assets and debts due of the applicants, together with the underlying securities, in favor of the Respondent vide Deed of Assignment dated 25.01.2022 relating to the loan were assigned in favour of the respondent.

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4.2 As the Applicant failed to adhere to the terms of the loan agreement and defaulted in payments of monthly installments the respondent had classified the Applicant accounts as NPA on 09.07.2021 in accordance with section 2(o) of the SARFAESI Act.

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4.3 The respondent issued statutory Notice under Section 13(2) of the Act on 15.06.2023 calling upon the Applicant to discharge their liabilities in full within 60 days from the date of receipt of the said notice. The demand notice was not served hence, the notice was also published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 22.06.2023.

SA No.733/2024

05.08.2026

4.4 It is submitted that the respondent issued possession notice dated 04.01.2024 for a total outstanding amount of Rs.1,06,38,307.83/- together with further interest and charges thereon. The Possession Notice was also published in two newspapers one in “The New Indian Express” (English) and one in “Dinamani” (Tamil) both dated 06.01.2024, and was also affixed on the property.

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4.5 It is further submitted that despite service of the said notice, the applicant had continued default and failed to pay the outstanding dues. Therefore, the respondent filed an application U/s.14 of the Act, before the Hon’ble CJM Court, Chengalpattu in Crl.M.P. No. 1485 of 2024 and the Court vide order dated 05.06.2024 appointed an Advocate Commissioner to take physical possession of the mortgaged property.

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4.6 The Respondent bank denies all the averments made in the present SA and also followed all the measures as required under the Act. Hence, the respondent bank prays for dismissal of the SA.

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

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It is manifest from the records that the applicants availed a loan of Rs.80 Lakhs from RBL Bank (the Original Lender/Assignor), which was sanctioned and disbursed under Loan Agreement dated 30.07.2018 in Loan A/c.No.809001731476 against the secured property. The applicants agreed to repay the loan in 108 EMI’s of Rs.1,15,905/- per month and also relevant documents in favor of respondent institution.

SA No.733/2024

05.08.2026

5.1 The Applicant had created equitable mortgage by way of Memorandum of Deposit of Title Deeds on 08.08.2017 registered as Document No.6277 of 2017, in the office of the Sub Registrar, Pallavaram which is produced at Pg.53-81 of counter.

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5.2 Admittedly, the applicants defaulted in the repayment, the respondent as secured creditor has initiated measures under the SARFAESI Act after classifying the account as NPA on 09.07.2021 in accordance with RBI guidelines. In the meanwhile, the original lender, RBL Bank, had assigned the borrower’s debt, along with the underlying securities, to Mr. Pegasus Assets Reconstruction Pvt Ltd., vide Assignment Agreement dated 25.01.2022.

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5.3 The respondent institution had issued the Sec.13(2) Demand Notice dated 15.06.2023 claiming an amount of Rs.96,70,042.86/- due as on 12.06.2023 along with other charges. The Demand Notice was sent by RPAD returned with the postal endorsement “Left” as evidenced at Pages.86–93 of the counter. The demand notice is also published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 22.06.2023 and affixture of demand notice is produced at Pg.96. Thus, the service of demand notice is complete as contemplated under the Act and Rules made thereunder.

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5.4 In spite of service of demand notice, the applicant neither raised any objection to the demand made under S.13[3A] nor liquidated the entire liability within 60 days, the respondent issued the Sec.13(4) Possession

SA No.733/2024

05.08.2026

Notice on 04.01.2024. The possession notice sent to applicants was returned with the endorsement “No such person” as evidenced at Pages.101-108. The possession notice is also published in two newspapers one in English “The New Indian Express” and another one in Tamil “Dinamani” both dated 06.01.2024 and affixture of possession notice is produced at Pg.111 of respondent bank’s typed set. Thus, the service of possession notice is complete as contemplated under the Act and Rules made thereunder.

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5.5 The respondent institution has produced the copies of the S.13(2) demand notice and S.13(4) possession notice and its acknowledgement cards for due compliance of the measures taken.

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5.6 The respondent institution have established the due compliance of the procedures as prescribed under the Act and Rules made thereunder. As the applicants failed to repay the entire outstanding amount the bank has approached the Special Judge/CJM, Chengalpat in u/s 14 of the SARFAESI Act. The Hon’ble CJM after perusal of the application and the loan documents produced by the respondent bank allowed the S.14 application on 05.06.2024.

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5.7 It is evident that the Ld. Magistrate on examination of the pleadings in the S.14 and after due consideration of the application, affidavit in support of compliance of procedures along with documents Order is passed considering the due compliance of the provisions of the S. 14 [i-ix].

SA No.733/2024

05.08.2026

5.8 It is an execution Order issued where no adjudication is required application supported by the documents, have passed an order dated 05.06.2024 directing the Advocate Commissioner to take the possession of the property. Though the applicant has filed the present SA impugning the Sec.14 order dated 05.06.2024 passed by Ld. CJM, Chengalpat has not pointed out any illegality in the measures taken by the respondent herein.

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5.9 On the other hand, it is seen that the statutory notices, the Demand Notice dated 15.06.2023 and Possession Notice dated 04.01.2024 are issued to the applicants in accordance to law, applicants have waived right to raise any contention with regard to Sec.13(4) Possession Notice within the period of 45 days. Hence any contentions to Sec.13(4) Notice is barred by limitation.

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5.10 Now considering the challenge to S.14 Order, it is appropriate to mention the declaration of the Hon’ble Supreme Court and various Hon’ble High Courts in various judgments has held that the power of Designated Court under Section 14 SARFAESI Act, 2002 is ministerial and nonadjudicatory in nature and the process to be followed under Section 14 does not involve any element of quasi-judicial function nor it requires any application of mind.

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5.11 The Supreme Court in the judgment of Authorized Officer, Indian Bank v D Visalakshi and other, has held that a Chief Judicial Magistrate is equally competent to deal with the application moved by the secured creditor under Section 14 of the SARFAESI Act. Hence, the Sec.14 dated

SA No.733/2024

05.08.2026

05.06.2024 in Crl.M.P. No.1485/2024 passed by the Hon’ble Special Judge/CJM, Chengalpat is a valid Order.

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5.12 Additionally, Section 14(3) of the SARFAESI Act statuses that no action taken by the Chief Judicial Magistrate or District Magistrate (or any officer authorized by them) under S.14 can be challenged in court or before any other authority. This provision ensures that the authority of these officials in enforcing security interests is final and not subject to further review.

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5.13 On examination of pleadings and documents produced by respective parties, the Tribunal comes to conclusion that the respondent bank as secured creditor has initiated measures under the Act after classifying the account as NPA.

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5.14 Consequent to classification of account as NPA has issued S.13[2] Demand Notice followed by Possession Notice and have complied all the procedures as contemplated under the Act and the Rules with supporting documents. Thus it is held that the Demand Notice u/s S.13[2] dated 15.06.2023 and S.13[4] Possession Notice dated 04.01.2024 are held as valid notices issued under the Act.

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5.15 It is seen from the records that both Demand Notice and Possession Notice have been issued by the Secured Creditor to the addresses of the borrowers/co-borrowers/guarantors, which all got returned as “Left”. Whereas the SA Paper Book, contains the same address as in the Demand Notice and Possession Notice, which gives to prove that applicants are

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05.08.2026

residing in the very same address and evading notices deliberately and has now taken a contention that the notices are not served in accordance to

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law. The SA thus lacks bonafides and merits. Further, the applicants have also not complied with the interim order of this Tribunal.

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5.16 For the foregoing reasons, the present SA fails and accordingly SA stands 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/-

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

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( Dictated to Steno (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 05^th day of August, 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	Documents No.
1.	Copy of the RBL Bank Loan Sanction letter dated 28.07.2018	A-1
2.	Affixture of the 2^ndPossession Notice dated 04.01.2024	A-2
3.	Copy of the Doctors Medical Certificate dated 03.11.2023	A-3
4.	Copy of the Order passed by the Hon’ble DRT-III, Chennai in T.S.A. No.152 of 2023 dated 09.06.2023	A-4
5.	Impugned order dated 05.06.2024 passed by the Ld. SJ/CJM Chengalpat in Crl.M.P.No.1485/2024 dated 05.06.2024	A-5

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LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

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Sl.	Description of Documents	Documents
No.		No.
1.	Copy of Sanction Letter dated 28.07.2017	R-1
2.	Copy of Loan Agreement dated 30.07.2018	R-2

SA No.733/2024

05.08.2026

3.	Copy of Memorandum of Deposit of Title Deed dated 08.08.2018	R-3
4.	Copy of 13(2) notice along with Postal Receipts and Acknowledge cards dated 15.06.2023	R-4
5.	Copy of 13(2) Paper Publication in English- The New Indian Express dated 22.06.2023	R-5
6.	Copy of 13(2) Paper Publication in Tamil- Dinamani dated 22.06.2023	R-6
7.	Copy of 13(2) Photo Affixture	R-7
8.	Copy of 13(4) notice along with Postal Receipts and Acknowledgement Cards dated 04.01.2024	R-8
9.	Copy of 13(4) Paper publication in English- The New Indian Express dated 06.01.2024	R-9
10.	Copy of 13(4) Paper Publication in Tamil- Dinamani dated 06.01.2024	R-10
11.	Copy of 13(4) Photo Affixture	R-11
12.	Copy of order passed vide Crl.M.P. No.1485 of 2024 by the Hon’ble Special Judge/ Chief Judicial Magistrate Chengalpat dated 05.06.2024	R-12
13.	Copy of Statement of Accounts.	R-13
14.	Copy of Board Resolution.	R-14

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SCHEDULE OF PROPERTY

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Item No.1

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All that piece and parcel of the property bearing Plot No.6, 6A, 2^nd Cross Street, Karpagam Nagar 1^st Street, Kovilambakkam, Chennai – 600 129, Kovilambakkam, Village Tambaram Taluk, Kancheepuram District, comprised in Old S.No. 166/3A & 166/2B, Patta 607 as per patta New Subdivision No.166/3A 1B, measuring an extent of 1006 sq.ft. + 1012 sq.ft., in all totally measuring 2018 sq.ft., together with building thereon with amenities and the land bounded on the:-

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For 1012 Sq.ft North by : 20 Feet Road, Kalaignar Road, South by : Plot No.1, East by : Portion settled on Mohanapriya Stalin, West by : vacant Land For 1006 Sq.ft North by : 20 Feet Road, Kalaignar Road,

SA No.733/2024

05.08.2026

South by : Plot No.1, East by : Plot No.5, West by : Remaining portion of property belongs to Mrs. Anjali Devi, For Total Extent of 2018 Sq.ft. Boundaries: North by : 20 Feet Road, South by : Plot No.1, East by : Plot No.5, West by : vacant Land Measuring

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East to West on the Northern Side 34 feet

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East to West on the Southern Side 35 feet

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North to South on the Eastern Side 56 feet

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North to South on the Western Side 61 feet

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Situated within the Sub-Registration District of Pallavaram and Registration District of Chennai South.

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Sd/-