Dismissed

C Pazhaniraja v. Tamilnad Mercantile Bank Limited

DRT2 Apr 2026SA/933/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed an application challenging a Section 14 order for taking possession of secured assets under the SARFAESI Act. The court observed that the applicant had waived objections to the Section 13(4) possession notice by failing to challenge it within the 45-day limitation period, thus barring further contentions.

What did the court decide?

The Securitization Application challenging the Section 14 order was dismissed; no further relief granted.

C Pazhaniraja versus Tamilnad Mercantile Bank Limited — Company and Corporate | DRT (2026)

SA No.933/2024

02.04.2026

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

¶5

Dated this the 02^nd day of April, 2026

¶6

Present: SMT. S.V. GOWRAMMA Presiding Officer

¶7

SARFAESI APPLICATION No. 933 of 2024

¶8

Mr.C.Pazhaniraja, Son of Chanemougassoundarame, No.87, Kaliamman Koil Street, Main Road, Melakasakudi, Karaikal-609603 ….Applicant -Vs-

¶9

The Authorised Officer Tamilnad Mercantile Bank Ltd, Karaikal Branch, No.149, Maj Appartment, Bharathiyar Salai, Karaikal- 609602 ….Respondent

¶10

Counsels on record / appeared:

¶11

Counsel for Applicant : M/s. G. Sanjeevi Counsel for respondent : M/s. S. Vignesh

¶12

ORDER ON SA 933/2024

¶13

The present Securitization Application [SA] is filed on 26.12.2024 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].

¶14

The applicant has challenged the Sec.14 order dated 28.11.2024 in Crl.M.P. No.279 of 2024 passed by Chief Judicial Magistrate, Karaikal and the outstanding amount due as per Sec.14 order is Rs.18,64,382.42/-

SA No.933/2024

02.04.2026

Pleadings of the applicant:

¶19

The Applicant is the borrower availed the loan facility of Rs.20,00,000/- from the respondent in the years 2016. The applicant was making remittance of the dues as contemplated under loan agreement promptly on due date without any delay as per schedule payment as provided in the agreement.

¶20

3.1 The applicant created equitable mortgage in respect of the property and had also executed necessary security documents in favour of the respondent for loan.

¶21

3.2 The borrower never allowed their loan account to become a NPA and has been remitting the payment's well in advance. There was no default for the statutory period so as to classify the account as NPA. The Applicant submits that borrowers customer has stopped their payment and then the loan account of become unpaid for some dues. The applicant were also made to sign many blank papers contents of which are not known to the applicant and the same are not binding on the applicants.

¶22

3.3 It is submitted that the applicant as per Section 2(o) of the SARFAESI Act, it is mandatory on the part of the respondent to classify the loan account as an NPA in accordance with the direction relating to RBI guidelines.

¶23

3.4 Though the property is a primary security to the loan availed by the applicant the loan account of the applicant is not an NPA and the respondent does not have any authority to enforce their security interest over the

SA No.933/2024

02.04.2026

property. The classification made by the respondent is incorrect false and violative of the guidelines prescribed by the RBI. The respondent has issued demand notice and Possession Notice, both notices were not served to Applicant.

¶28

3.5 The applicant had approached the respondent for settlement, which is not accepted and the respondent had used back door method to evict the lawful possession of the property from the Applicant through the order Hon'ble CJM at Karaikal.

¶29

3.6 On 20.12.2024, the Advocate Commissioner issued notice dated "Nil" informed about the order dated 28.11.2024. The applicant verified the order dated 28.11.2024 passed in Crl.M.P.No.279 of 2024 passed by Hon’ble CJM Karaikal.

¶30

3.7 It is submitted that the Possession Notice not served and without compliance of the statutory requirements the respondent ought not to have invoked the provisions of the Act and cannot proceed under the Act. The respondent without giving a reasonable opportunity to clear the loan dues, has hurriedly taken steps to proceed against the secured asset.

¶31

3.8 Being aggrieved by the extreme measures taken by the bank in obtaining order from the Hon'ble CJM where he is only empowered to take physical Possession of the property after taking inventory if necessary with the assistance of the police. The order has been misused by the respondent without the knowledge of the CJM and tried to throw out the Applicant.

SA No.933/2024

02.04.2026

3.9 It is submitted that without issuing proper demand notice and Possession Notice which is not published in the leading Newspapers and without compliance of the statutory requirements the respondent ought not to have invoked the provisions of the Act. Further, there is no affirmation of Point No (ix) of Sec.14 of the SARFAESI Act in affidavit filed by the Authorized Officer of the Secured Creditor.

¶36

3.10 Though the particular point comprises of all the sections of the Act, the District Magistrate / Chief Metropolitan Magistrate should ensure the following points which are mandatory for the secured creditors to comply with.

¶37

3.11 It is contended that the applicant has no information or knowledge regarding the measures initiated by the respondent under Sec.14. The applicant had approached the Ld. CJM, Karaikal for verify the case records in the above proceeding and eventually ascertaining and contents of the information are true.

¶38

3.12 Aggrieved, the applicant had approached the Hon’ble Tribunal invoking its jurisdiction Under Section 17 of the Act, Challenging the Sec.14 order passed by the Ld. Magistrate.

¶39

3.13 In the grounds, it is contended that the Demand notice and Possession Notice not properly served to the Applicant. The Ld. Magistrate has proceeded to pass the Order under challenge almost mechanically and has failed to apply to the records and facts of the case.

SA No.933/2024

02.04.2026

3.14 The respondent did not issued 13(2) notice, the respondent impaired the statutory rights vested with the applicant under Section 13(3-A) of the Act. The respondent willfully suffocated the right of the applicant under Section 13(3-A), the alleged Possession notice issued by the respondent is prima facie bad in law and void abinitio.

¶44

3.15 The respondent would not fall within the definition of the term secured creditor as per Sec.2(1) (zd) (i) of the Act. The respondent is highhanded, malafide and vindictive. The Ld. Magistrate failed appreciate that the secured asset is not registered before the Central Registry. The respondent not registered with CERSAI.

¶45

3.16 Further, the Ld. Magistrate as well as the respondent has failed to note that the loan accounts are not loss accounts or deteriorating accounts and the same are capable of generating funds. The respondent ought to have given an opportunity to the applicant to revive. The declaration of NPA is made contrary to RBI Regulations. Further, the Ld. Magistrate ought to have appreciated that the Defendant ought not have resorted to the measures under the SARFAESI Act as the Applicant is repaying the EMIs and account is performing even as per the Books of the Defendant.

¶46

3.17 The Ld. Magistrate failed to note that he Defendant bank has failed to satisfy the statutory requirements prescribed under the SARFAESI Act and the relevant rules framed thereunder. The Ld. Magistrate ought to have seen that the entire proceeding is contrary to provisions of Section 13 of the SARFAESI Act.

SA No.933/2024

02.04.2026

3.18 It is reiterated that the respondent has not issued the Possession Notice as per Section 13 (4) of the SARFASESI Act. The Ld. Magistrate ought not to have upheld the valid of the measures initiated by the respondent in the absence of the other side.

¶51

3.19 The respondent is duty bound to satisfy this Hon’ble Tribunal with relevant records to show that they had security interest over the property and had complied with formalities and procedure laid down under the Act, to enforce the subject matter of security interest otherwise the impugned notices have to be set aside.

¶52

3.20 The bank has failed to satisfy the statutory requirements prescribed under the various provision of the Act and the relevant rules framed there under. Hence the demand and possession notices and the Ld. Magistrate has failed to examine that bank has followed the statutory mandatory procedure prescribed under Rule 8 of the SI Rules and there is no averment regarding the compliance of the procedure under Rule 8(1) of the SI Rules.

¶53

3.21 On these grounds the applicant prays to set aside the Sec.14 order dated 28.11.2024 in Crl.M.P. No.279 of 2024 passed by the Hon’ble CJM, Karaikal.

¶54

Objections of the respondent bank:

¶55

It is the case of the bank that the Applicant has availed OD facility to the limit of Rs.7 Lakhs for business purpose in the year 2016, and the said OD facility limit was subsequently enhanced to Rs.12 Lakhs upon execution of the necessary loan documents. However, the applicant having availed

SA No.933/2024

02.04.2026

the term loan upon signing the loan sanction letter, loan agreement and necessary loan documents being well aware of the contents cannot plead ignorance at the later point of time to cover up his default.

¶60

4.1 It is pertaining to that the Term Loan availed by the applicant in the year 2016, for a sum of Rs.20 Lakhs vide Loan account No. 147700950100066, The Applicant has extended the property more fully described in the schedule to the S.A. as security for repayment towards the loan facility and executed memorandum of deposit of title deeds pertaining to the property. The security interest was created in favour of the respondent bank by the Applicant is also registered with the Central Registry on 31.03.2016 under section 26D of SARFAESI Act.

¶61

4.2 In fact that the Borrower was irregular in making repayment towards the loan account and in view of non-payment as per the terms and conditions of the loan agreement, hence the Loan account was declared as NPA on 29.10.2021 in accordance with RBI guidelines.

¶62

4.3 The respondent bank issued notice u/s. 13(2) demand notice dated 05.01.2022, under the SARFAESI Act, calling upon the borrower to repay the entire outstanding being Rs.18,64,382.42/- as on 31.12.2021. The demand notice was served on the Applicant on 12.01.2022. The Applicant did not raise any objection to the demand notice u/s. 13 (3-A) thus confirming his liability towards the loan account.

¶63

4.4 In spite of the service of demand notice, the Applicant has failed to repay the loan within the stipulated timeline. Therefore, the respondent

SA No.933/2024

02.04.2026

bank took Symbolic possession of the property by issuing a u/s 13(4) Possession Notice dated 24.08.2022 under the SARFAESI Act, claiming a sum of Rs.19,80,708.42/- as on 31.07.2022. The possession notice was received and acknowledged by the applicant on 26.08.2022, and possession notice was duly affixed in conspicuous part of the property and was also published in two newspapers one in English “The Hindu” and another one in Tamil “Dinakaran” both dated 28.08.2022 as per the Rules contemplated under SIE Rules. The said measure of the defendant was not challenged within the time line as stipulated under the Act.

¶68

4.5 In view of continuing default, the bank initiated its recovery action by filing an application u/s.14 of SARFAESI Act before the Ld. CJM, Karaikal in Crl.M.P.No.279/2024 and obtained an order dated 28.11.2024 for taking physical possession of the property.

¶69

4.6 The Tribunal on 30.12.2024 directed to deposit 10% of the amount within one week; and equal sum to be deposited within 30 days. It is submitted that the applicant has paid a sum of Rs.4 Lakhs only on 06.01.2024 towards the OD credit facility A/c.No.147700050900274 by RTGS and a further sum of Rs.4 Lakhs on 30.01.2024 only the OD A/c.No.147700050900274 by RTGS.

¶70

4.7 The respondent has given due credit to the payments made by the applicant towards the respective loan account as on 10.03.2025, there is still an outstanding amount of Rs.26,90,115.52/- towards the Term Loan

SA No.933/2024

02.04.2026

and a sum of Rs.9,92,994.10/- towards the O.D Account due and payable by the Borrower.

¶75

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

¶76

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

¶77

It is manifest from the records that the applicant as borrower availed Term Loan facility of Rs.20 Lakhs vide A/c.No.147700950100066 in the year 2016. To secure the credit facilities availed, applicant has executed the Memorandum of Deposit of Title Deeds Pertaining to the property. The equitable mortgage is registered before the central registry dated 31.03.2016, and the respondent bank had filed CERSAI report duly evidencing registration of the security interest with the central registry which is produced at Pg.7-9 of counter.

¶78

5.1 In fact the applicant does not dispute the availing of the facilities and the mortgage of the property including the default in the repayment. Due to continuous default in the repayment, the loan account of the applicant was classified as NPA on 29.10.2021 in accordance with RBI guidelines.

¶79

5.2 The respondent had issued the Sec.13(2) Demand Notice dated 05.01.2022 claiming an amount of Rs.18,64,382.42/- due as on 31.12.2021 along with other charges. The respondent have sent the demand notice by RPAD which the applicant have received the Demand

SA No.933/2024

02.04.2026

Notice as per the Acknowledgement card produced at Pg.13 of counter. In spite of receipt of Sec.13(2) demand notice as the borrower and the guarantor did not liquated the liability, hence the respondent bank has proceeded further under the Act.

¶84

5.3 The respondent issued the Sec.13(4) possession notice on 24.08.2022 and the notice sent through Registered Post with Acknowledgment, which the applicant have received as per the Acknowledgement Cards produced at pg.18 and 19, and affixture of possession notice produced at pg.16 and 17 evidences due service of possession notice and possession notice is also published in two newspapers one in Tamil “Dinakaran” and another one in English “The Hindu” both dated 28.08.2022.

¶85

5.4 It is an admitted fact that applicant has not challenged the Sec.13(4) Possession Notice dated 24.08.2022 within the period of 45 days as required under section 17(1) of the SARFAESI Act. It seen that the respondent 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.

¶86

5.5 As the applicants failed to repay the entire outstanding amount the bank has proceeded and approached the CJM, Karaikal 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 respondent have allowed the S.14 application on 28.11.2024.

SA No.933/2024

02.04.2026

5.6 Thus it is evident that the Ld. Magistrate on examination of the pleadings in the S.14 application which is supported by the documents, have passed an order dated 28.11.2024 directing the Advocate Commissioner to take the possession of the property. Though the applicant have filed the present SA impugning the Sec.14 order dated 28.11.2024 passed by Ld. CJM, Karaikal has not pointed out any illegality in the measures taken by the respondent herein.

¶91

5.7 On the other hand, though the statutory notices, the Demand Notice dated 05.01.2022 and Possession Notice dated 24.08.2022 are issued to the applicant in accordance to law, applicant 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.

¶92

5.8 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 non- adjudicatory 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.

¶93

5.9 The Supreme Court in the judgment of Authorized Officer, Indian Bank v D Visalakshi and other, h as 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

SA No.933/2024

02.04.2026

dated 28.11.2024 in Crl.M.P. No.279/2024 passed by Ld. CJM, Karaikal is a valid Order.

¶98

5.10 Additionally, Section 14(3) of the SARFAESI Act statuses that no action taken by the Chief Metropolitan 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.

¶99

5.11 T hus, the Sec.14 order passed by the Ld. Section 14 order dated 28.11.2024 in Crl.M.P. No.279/2024 passed by Ld. CJM, Karaikal is after due consideration of the application, affidavit in support of compliance of procedures along with documents is an execution Order issued where no adjudication is required. The Order is passed considering the due compliance of the provisions of the S. 14 [i-ix].

¶100

5.12 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.

¶101

5.13 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

SA No.933/2024

02.04.2026

05.01.2022 and S.13[4] Possession Notice dated 24.08.2022 are held as

¶106

valid notices issued under the Act.

¶107

5.14 For the foregoing reasons, the present SA is dismissed. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this

¶108

final order. No order as to cost. Sd/-

¶109

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

¶110

( Dictated to Steno (Suriya), transcribed by him, corrected, signed and pronounced by me on this the 02^nd day of April, 2026)

¶111

ANNEXURES

¶112

LIST OF DOCUMENTS PRODUCED BY THE APPLICANT

¶113

Sl.	Description of Documents	Documents
No.		No.
1.	Copy of Demand Notice dated 05.01.2022.	A-1
2.	Notice issued by the Advocate Commissioner with Postal Cover.	A-2
3.	Copy of Impugned order passed by Hon’ble CJM in Crl.M.P.No.279 of 2024 dated 28.11.2024.	A-3

¶114

LIST OF DOCUMENTS PRODUCED BY THE RESPONDNET

¶115

Sl.	Description of Documents	Documents
No.		No.
1.	CERSAI Registration Report dated 31.03.2016.	R-1
2.	Demand Notice issued U/s.13(2) of SARFAESI Act dated 05.01.2022.	R-2
3.	Acknowledgement Card of Demand Notice sent to the applicant dated 12.01.2022.	R-3
4.	Possession Notice issued U/s.13(4) of SARFAESI Act dated 24.08.2022.	R-4
5.	Affixture photograph of possession notice dated 24.08.2022.	R-5
6.	Acknowledgement Card of Possession notice sent to the applicant dated 26.08.2022.	R-6
7.	Newspaper publication pertaining to the possession notice (English & Tamil) dated 28.08.2022.	R-7
8.	Petition filed by the respondent bank under section 14(1) of SARFAESI Act in	R-8

SA No.933/2024

02.04.2026

	Crl.M.P.279/2024 before the Ld. CJM, Karaikal dated 11.09.2024.
9.	Affidavit filed by the respondent bank in Crl.M.P.no.279/2024 before the Ld. CJM, Karaikal dated 11.09.2024.	R-9
10.	Power of Attorney of the Authorized Officer dated 18.02.2003.	R-10

¶120

SCHEDULE

¶121

As per the demand Notice

¶122

Land to the extent of 6424 sq.ft and house building constructed at R.S.No.110/56A. Patta No.32(N). No.15, Melakasakudi Kaliamman Koil Street, Melakasakudi village, Nedungadu commune. Karaikal standing in the name of C.Pazhaniraja

¶123

As per the Advocate Commissioner Notice

¶124

All the piece and parcel of land and residential building thereon at Paducheery Registration District, Thirunallar Sub-Registration District, 15, Melakasakudy Village, Kaliamman Koil Street, R.S.No.110/56A, Patta No.32(N) to an extent of 05 A 97 Ca with RCC Building". Originally belonged to C. Pazhaniraja, S/o Chanemouga Soundaram as per Mortgage Deed No. 7485 of 2016 dated 30th March 2016.

¶125

Sd/-

¶126

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

C Pazhaniraja v. Tamilnad Mercantile Bank Limited

Case brief

What is this about?

What did the court decide?

C Pazhaniraja v. Tamilnad Mercantile Bank Limited

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

Coram

Case details

Similar cases

Arc versus Ssgm Industries Pvt. Ltd.

Canara Bank versus R

State Bank of India versus Thirupathi Balaji Tiles Rep By Mrs N Selvi And Two Others

Charles Rajakumar versus State Bank of India

D v K Rathinamma versus Indian Overseas Bank

Vijaya Babu versus Union Bank of India