Allowed

R Ramkumar v. State Bank of India

DRT16 Apr 2026SA/803/2024

Case brief

AI extract

What is this about?

In a SARFAESI application, the Debts Recovery Tribunal set aside a possession notice issued by a bank for exhausting statutory due process despite the applicant's business closure. The court quashed the notice due to material discrepancies in the property description found in the records, ruling that such lapses prevented compliance with mandatory legal provisions and negated the bank's statutory

What did the court decide?

Impugned Possession Notice dated 25.10.2024 set aside; expenditures for notices excluded from loan account.

R Ramkumar versus State Bank of India — Cheque Dishonour | DRT (2026)

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SA No.803/2024

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL AT MADURAI

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DATED THIS 16^th DAY OF APRIL, 2026

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PRESENT: SEEMA SINHA [PR. DISTRICT & SESSIONS JUDGE - Retd] PRESIDING OFFICER

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SA No. 803/2024

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R.Ramkumar, Plot No.15, Aswin Street, Duraisamy Nagar, Madakulam Village, Madurai District. …. Applicant

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The Authorized Officer, State Bank of India, Stressed Assets Recovery Branch, No.8, Dr.Ambedkar Road, Vinayaga Nagar Branch First Floor, Kanyakumari District. …. Defendant Bank

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Appearance of Advocates: Mr. M.Arunachalam ---- Counsel for the Applicant Mr. P.Pethu Rajesh ---- Counsel for the Defendant Bank

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This SARFAESI Application was heard in the presence of Counsels for the Applicant and the Defendant Bank and fixed for passing final order before me and upon hearing the arguments of the Counsels and having stood over for consideration till this day, this Tribunal delivered the following:

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SA No.803/2024

O R D E R

1 . This Application has been filed under Section 17 of the SARFAESI Act, 2002 by the Applicant praying that this Hon'ble Tribunal may be pleased to set aside the Possession Notice dated 25.10.2024 issued by the Defendant Bank under Section 13(4) of SARFAESI Act 2002.

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2 . The brief case of the Application filed by the Applicant is as follows:-

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(a) The Applicant has been running a Petrol Bunk. In order to develop the business, the Applicant approached the Defendant for availing a certain credit facility. The secured asset, more fully described in the schedule of property, belongs to the Applicant. After perusing all the records of the Applicant, the Defendant sanctioned a sum of Rs.50,50,000/- towards a mortgage loan to the Applicant on 22.02.2019. Further case of the Applicant is that the Defendant voluntarily changed the above said Mortgage Loan into EB-MSME-DROPLINE OD ABL No.38283146445 for Rs.46,50,000/- on 27.02.2019 and the Defendant voluntarily closed the said account on 29.03.2023. The Applicant further submits that the Defendant again voluntarily enhanced the loan amount for the said EB-MSME-DROPLINE OD ABL No.41793306712 to Rs.57,95,400/on 29.03.2023. The Applicant further submits that he has not executed any M.O.D.T. for EB-MSME-DROPLINE OD ABL No.38283146445 and EB-MSME-DROPLINE OD ABL No.41793306712 to the Defendant. The Applicant was servicing the principal and interest very promptly and regularly and has so far paid a sum of Rs.30,01,300/- approximately towards the loan account.

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(b) The Applicant submits that due to labour problems, heavy competition in the field, besides demonetization, introduction of

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SA No.803/2024

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G.S.T., and the Covid-19 pandemic followed by Omicron, the Applicant's business was affected and so the Applicant closed the business. The Applicant submits that, facts being so, all of a sudden, the Applicant was shocked and surprised to receive a demand notice dated 30.07.2024 under Section 13(2) of the SARFAESI Act, thereby calling upon the borrower specified therein to pay the entire amount specified in the said notice within 60 days from the date of receipt of the said notice. Immediately, the Applicant rushed to the Defendant and sought an explanation with regard to the said demand notice, but the Defendant was not in a position to explain as to why the said demand notice was issued to the Applicant.

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(c) The Applicant submits that with an intention to exert pressure on the Applicant, the Defendant issued a possession notice on 25.10.2024 itself, by and under which the Defendant stated that the borrower, having failed to repay the amount mentioned in the demand notice within the stipulated period from the date of receipt of the said notice, the Defendant had taken symbolic possession of the property described in the schedule by invoking the powers conferred under Section 13(4) of the SARFAESI Act.

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(d) The Applicant submits that the symbolic possession of the property described in the schedule allegedly taken by the Defendant is illegal and a blatant violation of the provisions under the SARFAESI Act and the Rules framed thereunder, and the said action, including the possession notice dated 25.10.2024, is liable to be set aside. The Defendant has not affixed the possession notice on a conspicuous part of the property, which is a mandatory provision of the Rules framed under the SARFAESI Act. The Defendant has also failed to publish the said possession notice in two leading newspapers

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SA No.803/2024

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having wide circulation in the area where the property is situated, and this is a mandatory requirement under the SARFAESI Act and the Rules framed thereunder.

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(e) The Applicant submits that the possession notice issued by the Defendant is untenable in law and unsustainable, since the mode and procedure for taking possession of the property as prescribed in Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 has not been followed by the Defendant. The Applicant further submits that a plethora of judgments delivered by the Apex Court and various High Courts make it abundantly clear that while invoking the statutory provisions of the SARFAESI Act, the statutory authority has to invoke the same only in the form and manner prescribed in the Act and not in violation thereof. In brief, the Defendant has not even followed the mandatory procedure of affixing the possession notice on a conspicuous part of the property as prescribed in the Act.

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(f) The Applicant submits that as per the possession notice dated 25.10.2024, the Defendant claims a sum of Rs.72,82,263/- is due from the Applicant as on 23.10.2024. The Applicant further submits that the SARFAESI action initiated by the Defendant under Sections 13(2) and 13(4) suffers from several severe irregularities and illegalities and is liable to be set aside for the reasons mentioned above. The Defendant has failed to observe the procedure while issuing notices under the SARFAESI Act. The Defendant has acted in an arbitrary, capricious, and mala fide manner with an intention to pressurize and coerce the Applicant. Hence, this SARFAESI Application is preferred on the following grounds.

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SA No.803/2024

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i. The action of the Defendant Bank is against the principles of natural justice.

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ii. The action of the Defendant Bank is arbitrary in nature and it has not followed the provisions of the SARFAESI Act and the Rules framed thereunder. The act of the Defendant is illegal and therefore the alleged Possession Notice is liable to be set aside as illegal.

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iii. The Defendant has not furnished the statement of account to the Applicant, either orally or otherwise, to enable the Applicant to satisfy the liability due to the Defendant.

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iv. The Defendant Bank has not properly accounted for the various payments made by the Applicant.

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v. The interest charged by the Defendant Bank is not in accordance with the RBI guidelines.

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vi. The Periodic rates of interest, which change with variations in the prime lending rate from time to time, are not stated in the 13(2) notice and the 13(4) notice.

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vii. The Applicant did not execute any M.O.D.T. for EB-MSME DROPLINE OD ABL No.41793306712 in favour of the Defendant in respect of the properties described in the schedule of properties. Hence, the Defendant cannot invoke SARFAESI measures.

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viii. The Defendant has not stated whether the compounding effect of penal interest has been segregated from the claim before it was made.

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ix. The Defendant Bank has not made paper publication of the notices issued under Sections 13(2) and 13(4) of the SARFAESI Act.

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SA No.803/2024

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x. The act of the Defendant contravenes the provisions of the SARFAESI Act.

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xi. The Defendant did not give any proper Demand Notice and Possession Notice as contemplated under the SARFAESI Act.

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xii. The Defendant is proceeding against the Applicant contrary to the object of the SARFAESI Act.

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xiii. The classification of the Applicant's account as NPA itself is invalid, incorrect, and improper. No break-up details have been provided with regard to the principal amount and interest due on the alleged date of NPA.

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xiv. The Defendant failed to affix the 13(4) notice on the outer door of the secured asset as contemplated under the SARFAESI Act and Rules.

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xv. The Defendant has failed to give the correct description of the property for the secured asset in the Possession Notice dated 25.10.2024.

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xvi. The Defendant has failed to state the correct outstanding amount in the Possession Notice dated 25.10.2024.

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DESCRIPTION OF PROPERTY

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All that piece and parcel of land and building situated at Madurai District, Madurai south Registration District, Madurai Joint No. IV SubRegistration District, No.27, Madakulam village, Palaganatham Hamlet in Patta No.20, in R.S. No.266/5, the land to an extent of 1.28 Acres, which are converted into various house sites and named the layout as "M/s. Duraisamy Nagar" and out of which the vacant house site measuring east

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SA No.803/2024

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west on the North 36' and on the south 36' and north south on the west 56' and on the east 61' totally measuring 2115 Sq. ft or 196.50 Sq.mtrs. or 4.85 Cents, in which there is a pucca terraced house thereon with Ground floor built up plinth area 1053 Sq.ft or 98 Sq. mtrs and 1^st floor built up plinth area 730 Sq.ft or 68 Sq. mtrs. bearing Plot No.15, at Ashwin Street, Duraisamy Nagar, Madurai-625003, in Ward No.76, ZoneI, with old house tax assessment No. 115-361783 and New house tax assessment No. 115-076-03690 and EB SC Nos. 05-048-007-2967 and 3380, then within the limit of Madakulam town panchayat, now within the limit of Madurai Municipal Corporation, which is situated within the following four boundaries:

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North by: 23' width East-West common road maintained by Madurai Municipal Corporation.

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East by: Plot No.14.

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South by: The site in R.S.267.

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West by: 30' width North-South common road maintained by Madurai Municipal Corporation.

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The Applicant has submitted the following List of documents in support of his claim in the SA, which are as follows:

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S.No.	Date	Description of Documents
1.	22.02.2019	M.O.D. in favour of Defendant
2.	04.10.2024	Statement of Accounts
3.	04.10.2024	Statement of Accounts
4.	30.07.2024	13(2)Notice
5.	25.10.2024	13(4)Notice

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3 . On the other hand, the counsel for the Defendant Bank appeared before this Hon’ble Tribunal and filed a Vakalatnama, Written Statement, and a typed set of papers, wherein it was submitted that the Applicant is running a BPCL Petrol Bunk. For the purpose of developing his business, the Applicant availed a Dropline Overdraft Credit Facility from State

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SA No.803/2024

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Bank of India, SME Branch, Madurai, to the tune of Rs.65,00,000/- and the same came to be sanctioned on 29.03.2023.

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(a) It is submitted that, as security for the credit facilities availed, the Applicant mortgaged the schedule-mentioned property in the SARFAESI Application in favour of the Defendant Bank by executing a Registered Memorandum of Deposit of Title Deeds.

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(b) It is submitted that the Applicant remained a chronic defaulter in repaying the facility availed with accrued interest from State Bank of India, SME Branch, Madurai, despite several reminders. Since the Applicant failed to clear the outstanding dues despite receipt of several communications, the accounts as specified above maintained by the Applicant became Non-Performing Assets on 29.07.2024. In the meantime, the loan account was migrated from State Bank of India, SME Branch, Madurai, to the Defendant Bank for the purpose of administration and recovery.

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(c) It is submitted that, pursuant to the declaration of the loan account as a Non-Performing Asset, the Defendant Bank issued a statutory demand notice under Section 13(2) of the SARFAESI Act on 30.07.2024, calling upon the Applicant to repay a sum of Rs.70,06,469/- as on 29.07.2024 towards the outstanding amount in the said loan account and to discharge his liability within 60 days from the date of the statutory demand notice, together with further interest and costs from 29.07.2024. The said demand notice was sent to the Applicant/Borrower on 31.07.2024, and the same was served on 01.08.2024.

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(d) It is submitted that, following the demand notice, the possession notice under Section 13(4) of the SARFAESI Act read with Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 was

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SA No.803/2024

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issued by the Defendant Bank on 25.10.2024, mentioning the total outstanding due as Rs.72,82,263/- as on 23.10.2024, and the same was received by the Applicant/Borrower on 25.10.2024. Paper publication of the said possession notice was made in Tamil in Hindu Tamil Thisai and in English in The Hindu on 26.10.2024, as per the Act. The said possession notice was pasted on the mortgaged property on 25.10.2024 by the Authorized Officer of the Defendant Bank. By virtue of the issuance of the said possession notice and consequent paper publication, the symbolic possession of the schedule-mentioned property now vests with the Defendant Bank.

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(e) It is submitted that the Applicant, despite having knowledge of the said statutory notices and being fully aware of the consequences of non-compliance with the demand in the said statutory notices, failed to discharge his liability within the statutory period.

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(f) It is submitted that following are the reply to the Grounds raised in the SARFAESI Application

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i) The action of the defendant bank is statutory in terms of SARFAESI Act.

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ii) The Defendant Bank acted as per the mandates of the SARFAESI Act, and there is no violation in the enforcement of the secured assets by the defendant bank.

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iii) No request was made by the Applicant for furnishing the statement of account. If any request is made, the Defendant Bank will furnish the statement of account as per the prevailing practice. The applicant has not substantiated his pleadings. No

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SA No.803/2024

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date or reference number of communication is mentioned in the SA by the borrower as to when exactly the statement of accounts was claimed or sought from the bank.

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iv) The Applicant should specifically point out which payments made by him were not properly entered.

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v) RBI guideline in respect of interest relied by the Applicant what not specifically mentioned enabling the Defendant to make their defense

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vi) & viii) The requirements to be stated in the notices issued under Section 13(2) and 13(4) of the SARFAESI Act was properly stated.

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vii) The existing credit facilities availed through Working Capital (ABL Hypn) to the tune of Rs.48 lakhs and Guaranteed Emergency Credit Line 1.0 Extension to the tune of Rs.15 lakhs (both the accounts) were closed from the proceeds of the new credit facility, ABL-Dropline OD, as per the request of the customer. The said request was placed before the Regional Credit Committee, and the same was approved, and the customer has executed the loan documents for the same. The existing MODT executed on 22.02.2019 and 06.12.2021 for a sum of Rs.50,50,000/- and Rs.65,50,000/- covered the proposed loan of Rs.65.00 lakhs.

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ix) Since the notice issued under Section 13(2) of the SARFAESI Act was served on the Applicant, paper publication for the same is not required. Paper publication of the possession notice issued under Section 13(4) of the SARFAESI Act was properly made in Tamil in Hindu Tamil Thisai and in English in The

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SA No.803/2024

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Hindu on 26.10.2024, and the same is enclosed in the typed set of papers.

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x) There is no contravention of the SARFAESI Act by the defendant, as alleged by the applicant. All due diligence has been appropriately taken as per the Act.

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xi) The issuance of the Demand notice and possession notice was properly done, and the same was received by the Applicant. A copy of the same is enclosed in the typed set of papers.

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xii) The entire proceedings of the Defendant are in compliance with the SARFAESI Act and the Security Interest (Enforcement) Rules.

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xiii) The classification of the Applicant's account as NPA has been done as per the RBI Master guidelines on Classification of NPA. Break up of Principal and interest due is not required to be mentioned in the Demand Notice or in the Possession Notice as per the SARFAESI Act.

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xiv) A photograph showing the affixture of the possession notice is enclosed in the typed set of papers.

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xv) The detailed description of all secured assets has been mentioned in the demand notice and possession notice.

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xvi) The possession notice was issued on 23.10.2024, mentioning the outstanding due as on 23.10.2024 as Rs.72,82,263/-.

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SA No.803/2024

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(g) Therefore, it is prayed that this Hon'ble Tribunal may be pleased to dismiss the above SARFAESI Application with cost and thus render justice.

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TYPED SET OF DOCUMENTS FILED BY THE DEFENDANT BANK

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S.No.	Date	Particulars
1	22.02.2019	Memorandum of Deposit of Title Deeds.
2	06.12.2021	Memorandum of Confirmation of the Extension of the ExistingEquitable Mortgage.
3	29.03.2023	Resolution of the Regional Credit Committee.
4	29.03.2023	Letter of Arrangement for the Credit Facilities availed.
5	30.07.2024	Demand Notice under Section 13(2) of the SARFAESI Act with delivery proof.
6	25.10.2024	Possession Notice under Section 13(4) of SARFAESI Act with Rule - 8 (1) of the Security Interest (Enforcement Rule, 2002) along with Acknowledgment Card.
7	25.10.2024	Photograph showing affixture of the Possession Notice.
8	26.10.2025	Paper Publication in Tamil and Times of English DailyforPossession Notice.
9	****	CERSAI Registration Proof

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MEMO FILED BY THE DEFENDANT BANK ALONG WITH ORIGINAL DOCUMENTS

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S.No	Particulars
1	Demand Notice dated 30.07.2024 issued to R Ramkumar (Borrower) with copy of the Postal Receipt and Postal Trackingdownloaded from India Post website
2	Possession Notice dated 25.10.2024 sent to R Rajkumar alongwith Acknowledgment card
3	Colour Photograph dated 25.10.2025 showing the affixture of the Possession Notice in the Mortgaged Premise
4	Possession Notice Published in Tamil Daily News Paper HINDU TAMIlDHISAI
5	Possession Notice Published in English Daily News Paper THE HINDU on 28.03.2023.

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SA No.803/2024

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4. ON THE BASIS OF ABOVE PLEADINGS THE POINT WHICH ARISES FOR CONSIDERATION IS:WHETHER THE APPLICANT IS ENTITLED TO GET THE RELIEFS AS PRAYED FOR?

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5 . Having heard the parties and after going through the entire documents available on the records, this Tribunal finds that there is no dispute between the parties with regard to the availment of loan facilities by creating equitable mortgage on his property. In this case, the Applicant is the borrower of the loan account availed from the Defendant Bank for business purposes by mortgaging the property mentioned in the schedule. The Applicant contends that the borrower faced Labour problems, Demonetization, Introduction of GST, Covid-19 pandemic followed by Omicron and suffered losses in his business. In response, the Defendant Bank submitted that the Applicant obtained a credit facility for a sum of Rs.65,00,000/- (Rupees Sixty Five Lakhs only). Since the borrower failed to repay the interest on the loan as agreed, and despite being given sufficient opportunities, failed to regularize the loan account, the loan account was classified as a Non‑Performing Asset (NPA) on 29.07.2024 in accordance with applicable norms.

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Thereafter, the Defendant Bank issued the Demand Notice under Section 13(2) of the SARFAESI Act on 30.07.2024 to the borrower through registered post. I also perused the documents filed by the Defendant Bank. The Bank has submitted the original copy of the Demand Notice and a xerox copy of the track consignment details, which are attached at pages 1 to 4 of the Memo of Original Documents filed by the Bank. However, I find that the signature of the Authorized Officer who issued the Demand Notice is inconsistent with the Demand Notice enclosed by the Applicant in his S.A., which is attached at pages 43 to 46. Moreover, the Defendant Bank has not produced the original acknowledgment (AD) cards despite directions.

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SA No.803/2024

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Further, I find that the Defendant Bank has filed the original copy of the Possession Notice dated 25.10.2024 issued under Section 13(4) of the SARFAESI Act for a sum of Rs.72,82,263/- (Rupees Seventy-Two Lakh Eighty-Two Thousand Two Hundred and Sixty-Three only) , along with the acknowledgment (AD) cards as proof of service upon the Applicant ( pages 7 to 9 of the Memo of Original Documents filed by the Bank) . I also find that the Bank has produced the original copies of the paper publication of the Possession Notice in two newspapers, one in English and another in Tamil (pages 21 to 52 of the said Memo) . Further, the Bank has filed original photographs at pages 12 to 20 of the Memo of Original Documents as evidence of having affixed the Possession Notice on a conspicuous part of the property. The Applicant contends that the Defendant Bank has failed to provide the correct description of the secured asset in the Possession Notice dated 25.10.2024. On the other hand, the Defendant, in its written statement, has stated that the detailed description of the secured asset has been mentioned in the Demand Notice as well as in the Possession Notice. However, upon perusal of the records, I find that there exists a material discrepancy in the description of the schedule-mentioned property as reflected in the Memorandum of Title Deeds (MOTD), when compared with the Demand Notice and the Possession Notice, which goes to the root of the matter and creates serious doubt as to the identity of the secured asset. Accordingly, in view of such material discrepancy, the action of the Defendant Bank cannot be said to be in compliance with the mandatory provisions of the SARFAESI Act and the Rules framed thereunder in issuing the Possession Notice to the Applicant.

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I also find that during the pendency of the case, this Tribunal has granted a conditional stay order dated 10.12.2024 for a sum of Rs.25,50,000/- (Rupees Twenty Five Lakh Fifty Thousand Only) to be paid in Two installments by the Applicant, the Applicant has also complied with the conditional order and proved his bona-fide.

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SA No.803/2024

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The Applicant is no doubt being defaulter is liable to repay the loan amount to the Defendant Bank and the Bank has been given ample power to recover the outstanding loan amount from the borrower by invoking the SARFAESI Act and without the intervention of any Court. But, it shall not allow the Bank to take possession of the property without following the due process of law strictly, because property is the constitutional right of an individual and hence, Bank cannot take possession of the property without following the mandatory provisions of Act & Rules. In view of the above facts and circumstances of the case, I find that the Defendant Bank has not followed the due procedures for recovery of the loan amount under SARFAESI Act. As such, I find merit in the above SARFAESI Application. Therefore, this Tribunal holds that the Applicant is entitled to get the reliefs as prayed for in SA No. 803/2024.

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In the result,

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SA No. 803/2024 is allowed. The Impugned Possession Notice dated 25.10.2024 is hereby set aside.

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All the expenditures incurred in issuance of Demand Notice dated 30.07.2024 and the Impugned Possession Notice dated 25.10.2024 shall not be included in the loan account of the Applicant.

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The Defendant Bank is at liberty to initiate fresh action against the Applicant as per the SARFAESI Acts & Rules.

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Consequently, all pending IAs (if any) are also disposed of. No costs.

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Dictated to MTS (KK), taken down, transcribed, typed by him, corrected and pronounced by me in the Open Court in this the 16^th April, 2026.

Sd/- (SEEMA SINHA)

PRESIDING OFFICER

Upload on 29.04.2026

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R Ramkumar v. State Bank of India

Case brief

What is this about?

What did the court decide?

R Ramkumar v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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