POOVAI AMMAN AGENCY, S SELVARAJ, S CHELLAMMAL, S KARTHIKEYAN AND S PRAKASH vs CITY UNION BANK LIMITED on 15 September 2026

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

IA 1205/2026 (Waiver) in A.IR:1767/2026

M/S Poovai Amman Agency V/S City Union Bank Ltd 15/09/2026

Learned Counsel for both sides are present.

This appeal is filed against the final order passed in SA No. 531 of 2023 by the Learned Presiding Officer, DRT-II, Chennai on 21.5.2026.

The above Securitization Application has been filed to set aside the e-auction sale held on 16.10.2023 in pursuance of the sale notice dated 25.9.2023 in respect of the schedule properties.

Learned Counsel for the Petitioners submitted that the sale notice dated 25.09.2023 for the sale fixed on 16.10.2023 was not served on the second appellant. Without serving the sale notice on the appellants 1 & 2, the respondent-Bank proceeded to hold the sale in favour of the auction purchasers.

It is further submitted that there was no valuation report obtained immediately prior to the sale. Valuation report obtained on 31.12.2021 was used for fixing the reserve price. It is well settled principle of Law that valuation should be obtained immediately prior to the date of sale. It is stated there are two schedule of properties viz., schedule ‘A’ and schedule ‘B’. ‘A’ schedule property is the shopping complex and ‘B’ schedule property is the agricultural land. Even in the valuation report of the respondent-Bank, ‘B’ schedule property is mentioned as an agricultural land and it is used only for agricultural purpose. Therefore, violating Section 31(i) of the SARFAESI Act, measures had been taken against the ‘B’ schedule property. Petitioner obtained valuation report for both the properties and there is huge difference in value between the valuation report obtained by the respondent-Bank and the valuation report obtained by the petitioner. ‘A’ schedule property was valued at Rs.60 lakhs and the said property was sold for Rs.60,10,000/-. ‘B’ schedule property was valued at Rs.65 lakhs and it was sold for Rs.65,10,000/-. On the other hand, two valuation reports obtained for both the properties by the petitioners/appellants show that one valuation report valued the ‘A’ schedule property at Rs.2,63,19,000/- and the another valuation report valued the ‘A’ schedule property at Rs.2,23,71,000/-. ‘B’ schedule property was valued at Rs.1,19,10,000/- and another valuation report gives the value at Rs.1,47,00,000/-. Thus, he submitted that the valuation was not properly done, reserve price was not properly fixed and the properties were sold for lesser amount. Despite raising all these grounds, learned Presiding Officer, has not considered the grounds and dismissed the securitization application. In the said back ground, this appeal is filed.

On these grounds, the Learned Counsel for the Petitioners submits that Petitioner is entitled for reduction of pre-deposit from 50% to 25%, since they have already made a pre-deposit of Rs.44.00 lakhs.

In response, Learned Counsel for R1 Bank submitted that Petitioners made payment of only Rs.5.00 lakhs after the receipt of demand notice. Earlier four sale attempts had failed and it is the fifth sale attempt that ended in success. Pre-deposit is mandatory for entertaining the appeal. Simply by depositing alleged 25% of the pre- deposit, which won’t be equal to the 25% of the amount due on the date of filing this appeal i.e., Rs.3,02,00,000/-, Petitioners cannot seek any interim order or stay order. Petitioners have to make out a ground for reduction of pre-deposit from 50% to 25% and only then a case can be made out for interim protection. That is not there in this case. The 25% of the amount due comes to around Rs.75.00 lakhs but only a deposit of Rs.44.00 lakhs was made. Sale is over and sale certificates have been issued to both the auction purchasers and registered. In fact, one of the auction purchasers had dealt with the property by plotting it out and selling it to third-party buyers.

Learned Counsel for R2 seeks time to file counter. Since already time is granted, this Tribunal is not inclined to grant any further time.

Learned Counsel for R3 to R6, the other auction purchaser, submits that he is the purchaser of B Schedule property measuring 2.94 acres and this land is situated in two survey numbers i.e., Survey No. 186/6 to the extent of 1 acre and Survey No. 195/7A1 to the extent of 1.94 acres. The auction purchaser obtained DTCP approval and plotted out this land and sold a major portion of the land, except for five plots. Those parties are proper and necessary parties. Thus, he opposes this application and submits that pre-deposit is mandatory.

Considered the rival submissions and perused the records.

Admittedly, the sale is over and there are successful bidders who have been granted sale certificates, which are also registered. In fact, one of the auction purchasers i.e., R3 to R6, had dealt with the property and sold a major portion, except for five plots. As per the submission of the Learned Counsel for the R1 Bank, the amount due, without considering the sale price, is Rs.3,02,00,000/-.

Pre-deposit is mandatory for entertaining this appeal, as per Section 18(1) of the SARFAESI Act, 2002. The debt due is inclusive of interest as per the definition of debt under Section 2(1)(ha) of the SARFAESI Act, 2002, read with Section 2(g) of the RDB Act 1993, which had been settled by the Hon’ble Supreme Court of India in re, M/s. Sidha Neelkanth Paper Industries Private Limited & Another Vs. Prudent ARC Limited & Others (Civil Appeal No. 8969 of 2022, decided on 05.01.2023) reported in 2023 SCC Online SC 12.

In view of the fact that the sale was executed only on the fifth attempt, and only a paltry sum of Rs.5.00 lakhs was paid towards the debt due from the date of issuance of demand notice, and in view of the third-party interest created, and subsequent sale of a major portion of the property purchased by R3 to R6, this Tribunal directs the Petitioner to make a pre-deposit of 40% of Rs.3,02,00,000/-, which comes to Rs.1,20,80,000/- in two equal instalments within a period of four weeks from today, failing which this appeal would stand rejected.

The first instalment of Rs.60,40,000/- to be made on or before 29.9.2026, and the second instalment of Rs.60,40,000/- to be made on or before 13.10.2026.

The said pre-deposit should be made in the form of Demand Draft in favour of Registrar, DRAT, Chennai, payable at Chennai. In case pre-deposit is made within the stipulated period, Registrar shall invest the same in a Nationalized Bank for a reasonable period and renew it periodically, till further orders are passed.

On compliance of the first instalment, any portion of the property involved in this appeal remaining unsold is to be kept intact till next hearing.

In view of the submission of the Learned Counsel for R3 to R6 that most of the property had been sold in plots, he is directed to supply the information of buyers to the Learned Counsel for the Petitioners for them to implead the subsequent buyers from R3 to R6 as parties to this appeal, since they are proper and necessary parties for the appropriate and effective adjudication of this appeal.

Post the matter on 15.10.2026 for reporting compliance.

Sd/-

Chairperson