International Asset Reconstruction Company Pvt Ltd vs RECOVERY OFFICER II on 3 November 2025

JUDGEMENT

1. Appeal No.1 of 2025 in OA No.378 of 2013:- This appeal has been filed under section 30(1) of theRecovery of Debts and Bankruptcy Act, 1993 challenging the order of the Recovery Officer, DRT, Maduraidated 07.05.2024 in RC No. 502 of 2018 (OA No.378 of 2013).

2. The brief averments of the Application filed by the Appellant are as follows:- The Appellant has filed this appeal calling for the records of the 1st Respondent pertaining to the Technical Appraisal Report dated 30.09.2023 based on which the Sale Notice dated 26.02.2024 was issued in the recovery proceedings of Recovery Certificate bearing Number R.P.No. 502/2018 issued in OA No. 378/2013 and seeking for direction to quash the impugned order dated 07.05.2024 of the 1st Respondent with regard to the sale of the secured property mortgaged to the Petitioner situated at Madurai District and to direct the 1st Respondent to bring the secured property mortgaged to the Petitioner for sale as per the Valuation provided by the Petitioner dated 06.04.2024.

It is further submitted that the Appellant has instituted recovery proceedings against the Borrower and the Mortgagor before the Debts Recovery Tribunal at Madurai in OA No. 378/2013. The same was decreed on 12.12.2018 and the Recovery Certificate RC No. 502/2018 was issued on 29.12.2018. Accordingly, a Demand Notice was issued to the Borrower and the Mortgagor by the Respondent on 01.01.2019 demanding repayment of the decretal amount of Rs. 1,30,11,317.75p along with subsequent interests, till the date of realization. However, inspite of the demand, the debt remained unpaid. It is further submitted that even after the final order, Recovery Certificate and Demand Notice, the Borrower/Mortgagor failed to repay, hence the Respondent proceeded u/s.

25 and 28 of the RDDB & FI Act, 1993 to recover the said dues and issued an Order of Attachment on 24.06.2019.

It is further submitted that the Appellant filed an Application before the 1st Respondent, requesting him to bring the secured properties for sale and submitted a fresh Valuation Report also dated 17.08.2023 for a Fair Market value of Rs. 9,90,66,650/-. Subsequently, the Respondent issued the Sale Notice on 26.02.2024. In the said Sale Notice, the date of auction was fixed on 18.04.2024 for the reserve price of Rs. 36,00,00,000/-. It is further submitted that the said reserve price is totally unrealistic and much higher than the Fair Market Value of Rs. 9,90,66,650/- given in the Valuation Report dated 17.08.2023 submitted by the Petitioner. The Petitioner filed an Application before the Respondent on 07.03.2024 praying to withdraw the Sale Notice dated 26.02.2024 and to issue fresh Sale Notice for a reduced reserve price based on the Valuation Report submitted on 17.08.2023. The Petitioner also sought a copy of Valuation Report based on which the said Reserve price was fixed and the Respondent furnished a Technical Appraisal Report dated 30.09.2023, which was obtained by IDBI Bank, who is not even a party to the said Original Application and the DRC proceedings.

It is further submitted that the Appellant also met the Respondent in person on 12.03.2024 and explained the impracticability of bringing the property for auction at such an unrealistic reserve price and request the Respondent to not to publish the Sale Notice on the website of DRT, Madurai.Further, as instructed by the Respondent, the Applicant also filed a fresh valuation from an independent valuer on 06.04.2024 and submitted the same to the Respondent on 25.04.2024 for a Guideline Value of Rs. 14,10,76,000/-.The Appellant had also obtained a clarification from the valuer, who had furnished the earlier Valuation Report dated 17.08.2023 and his views on the Impugned Technical Appraisal Report dated 30.09.2023 and the same was filed before the Respondent on 07.05.2024. But, however, contrary to the assurance given by the Respondent, the said Sale Notice was published on the website of DRT, Madurai.

It is further submitted that this Appellant had taken all necessary steps under the provisions of the SARFAESI Act as detailed in the above paragraphs for the recovery of its dues from the Borrower/Mortgagor. However, the encumbrances marked on the properties interferes with the measures undertaken by the Appellant and the prospective bidders are reluctant to participate in the public auction of sale in view of the reflection of the said encumbrances in the Encumbrance Certificate. Thereby, the Appellant is unable to bring the secured properties for sale under SARFAESI Act. It is further submitted that given the above circumstances, the Respondent has obviously over stepped his jurisdiction and acted in excess of his judicial authority by calling for a Technical Appraisal Report from a third party, and his actions of publishing the sale notice dated 26.02.24 based on such a document is a blatant infringement of natural justice and against the interests of the Appellant and vide letter dated 07.05.24 issued to the Petitioner, the Respondent has neglected/refused to carry on his duties assigned to him under the Recovery of Debts and Bankruptcy Act, 1993, and is in violation of the legal right of the Petitioner to recover its outstanding dues from the Borrower/Mortgagor, bestowed under the said Act.

It is further submitted that the Impugned action of the 1st Respondent obtaining the Technical Appraisal Report from a third party is without jurisdiction and authority of law. The Petitioner has complied with the directions of the Respondent and had filed fresh and independent Valuation Reports as and when required, inspite of that 1st Respondent chose to go for a Technical Appraisal Report obtained from a third party and relied solely on it for fixing such an unrealistically high reserve price for the schedule properties. It is therefore submitted that the interests of the Petitioner is adversely affected by such irrational and unjustified actions of the Respondent who had clearly overstepped his jurisdiction.

It is further prayed that this Hon'ble Tribunal may be pleased to allow this appeal calling for the records of the 1st Respondent culminating in the issuance of the Sale Notice dated 26.02.2024 on the basis of the Valuation Report dated 30.09.2023 is illegal and without any base and quash the same and consequently withdraw it from the website of DRT, Madurai consequently quash the impugned order dated 07.05.2024 issued to the Appellant and pass such further or other orders as this Hon'ble Tribunal may deem fit in the interest of justice.

Main Grounds:- i. The Impugned action of the 1st Respondent obtaining the Technical Appraisal Report from a third party is without jurisdiction and authority of law. The Petitioner has complied with the directions of the Respondent and had filed fresh and independent Valuation Reports as and when required, inspite of the 1st Respondent chose to go for a Technical Appraisal Report obtained from a third party and relied solely on it for fixing such an unrealistically high reserve price for the schedule properties. It is therefore submitted that the interests of the Petitioner is adversely affected by such irrational and unjustified actions of the Respondent who had clearly overstepped his jurisdiction.

ii. Though the Appellant had filed the Valuation Reports dated 17.08.23 and 06.04.24, as directed by the Respondent, as and when required by the Respondent, he had however totally disregarded the said valuations and chose to consider randomly the value given in the Impugned Technical Appraisal Report alone, while fixing the reserve price of the schedule property but instead he had solely depended on a random Technical Appraisal Report for fixing the reserve price. iii. The issuance of the Sale Notice dated 26.02.24 and uploading the same in the DRT's website for public information, by the Respondent is totally unlawful and unreasonable. Even the discussion and the request of the Appellant not to upload the Sale Notice was totally disregarded by the said action of the Respondent. iv. The issuance of the Impugned Sale Notice dated 26.02.24 itself is unlawful and a misuse of power by the Respondent because the reserve price mentioned therein has been fixed based on a random Technical Appraisal Report provided by a third party. v. By issuance of the letter dated 07.05.24 to the Appellant, the Respondent has neglected and refused to carry on his duties lawfully assigned to him under the Recovery of Debts and Bankruptcy Act, 1993.

Description of Properties

Item No. 1 (Belonging to 2nd Defendant)

Registration District, Thirumangalam Taluk, Thirali Village, land measuring 1 acre 33 cents in S.No. 180/4 corresponding to UDR S.No. 74/4

Item No. 2 (Belonging to 2nd Defendant)

i.

Triangle shaped Eastern 33 cents out of the total extent of 1 acre in S.No. 174/1 within the following boundaries On the North : Nil On the East : Land belonging to Thiagarajan On the South : Land belonging to Thiagarajan On the West : Land belonging to Nagavalli

ii.

1 acre in S.No. 174/1 which are divided into various house plots; out of

which a house site measuring 3934 Sq.ft (9 cents 10 Sq.ft) in Plot No. 232 within the following boundaries On the North : Plot no. 231 On the East : Plot no. 230 On the South : Land in S.No. 174/3 On the West : Rajapalayam North-South Road

iii.

1 acre in S.No. 174/1 which are divided into various house plots; out of which a house site measuring 2400 Sq.ft in Plot No. 231 within the following boundaries On the North : 20 feet Width East-West Common Pathway On the East : Plot no. 230 On the South : Plot no. 232 On the West : Rajapalayam North-South Road iv.

1 acre in S.No. 174/1 which are divided into various house plots; out of which a house site measuring 2400 Sq.ft in Plot No. 227 within the following boundaries On the North : Plot no. 226 On the East : Plot no. 229 On the South : 20 feet Width East-West Common Pathway On the West : Rajapalayam North-South Road

Item No. 3 (Belonging to 2nd Defendant)

1. Madurai District, Madurai South Registration District, Thirumangalam Sub middle 5 ½ cents out of the total extent of 15 acres 3 cents in S.No. 180/5corresponding to UDR S.No. 74/5 within the following boundaries On the North : Property belonging to Thiagarajan On the East : Property belonging to Thiagarajan On the South : Property belonging to Thiagarajan On the West : Property belonging to Thiagarajan

2. Madurai District, Madurai South Registration District, Thirumangalam Sub Registration District, Thirumangalam Taluk, Thirali Village, land measuring 13 acres 40 cents out of the total extent of 15 acres 3 cents in S.No. 180/5 corresponding to UDR S.No. 74/5 within the following boundaries On the North : Land in S.Nos. 180/4 & 180/5 On the East : Land in S.No. 179 On the South : Land in S.No. 176 On the West : Land in S.No. 174/8

Item No. 4 (Belonging to 2nd Defendant)

Eastern 1 acre 51 cents forming the eastern part of the total extent of 6 acres 61 cents in S.No. 176/3D within the following boundaries On the North : Land belonging to Thiagarajan On the East : Land belonging to Krishnakonar & others On the South : Land belonging to Rajendran On the West : Land belonging to Rangasamy

Item No. 5 (Belonging to 2nd Defendant)

i.

Eastern 5 acres 10 cents forming the eastern part of the total extent of 9 acres 44 cents in S.No. 176/3 corresponding to UDR S.No.70/3D within the following boundaries On the North : Land belonging to Shanmugakilavan & others On the East : Land belonging to Pokkatti Alagarsamy & others On the South : Land belonging to Kondamma Naidu & others On the West : Land belonging to Gopal Teacher

ii.

69 cents in RS.No. 176/3A corresponding to UDR S.No.70/3A within the following boundaries On the North : Land belonging to Gopal Naidu On the East : Land belonging to Narayanasamy Naidu On the South : Car Track On the West : Land belonging to Kondamma Naidu

Item No.6 (Belonging to 2nd Defendant)

i.

25 cents in RS.No. 176/1 corresponding to UDR S.No.70/1 within the following boundaries ii.

middle 1 acre 53 cents out of the total extent of 9 acres 45 cents in S.No. 176/3 corresponding to UDR S.No.70/3C within the following boundaries On the North : Item No. 1 of Schedule of Property On the East : Land belonging to Narayanasamy &Alagar Naicker On the South : Land belonging to Narayanasamy Naidu On the West : Land belonging to Mill Narayanan

Item No. 7 (Belonging to 2nd Defendant)

North-Eastern 1 acre 32 cents out of the total extent of 7 acres 15 cents in old S.No. 174/3 corresponding to New S.No.174/3A corresponding to UDR S.No. 68/3A2 within the following boundaries On the North : Land sold by Gautammal & Singhvi On the East : Land belonging to Nagavalli & others On the South : Land belonging to Ramasamy & Lakshmi Ammal On the West : Land sold by Guatammal & Singhvi

Item No. 8 (Belonging to 2nd Defendant)

Registration District, Thirumangalam Taluk, Thirali Village, land measuring 1 acre 20 cents in S.No. 174/4 corresponding to UDR S.No. 68/4 within the following boundaries On the North : Land belonging to Thiagarajan On the East : Land belonging to Thiagarajan On the South : Land belonging to Rengasamy &Gopal Teacher On the West : Land belonging to Kondaiysamy & Purambooku Odai Item No.9 (Belonging to 2nd Defendant)

i.

Eastern 3 acres 92 cents out of North-Eastern 5 acres 23 cents in the total extent of 7 acres 15 cents in old S.No. 394/3A corresponding to R.S.No.174/3 which was subdivided as S.No.174/3A corresponding to UDR S.No. 68/3A within the following boundaries On the North : Rajapalayam Main Road On the East : Land belonging to Periaramasamy & others On the South : Odai On the West : Land belonging to Uma Rani

ii.

Middle-Southern 1 acre 92 cents out of the total extent of 7 acres 15 cents in old S.No. 394/3A corresponding to R.S.No.174/3 which was subdivided as S.No.174/3B corresponding to UDR S.No. 68/3B within the following boundaries On the North : Item No. 1 of Schedule property On the East : Land belonging to Pokkatti & others On the South : Land belonging to Muthusamy & others On the West : Item No. 1 of the Schedule property

Item No.10 (Belonging to 2nd Defendant)

North-Western 1 acre 43 cents out of the total extent of 15 acres 3 cents in S.No. 180/5 corresponding to UDR S.No. 74/5 within the following boundaries On the North : Land belonging to S.Nos. 180/4, 181/9 & 181/10 On the East : Land belonging to S.Nos. 179 On the South : Land belonging to S.Nos. 174/4 & 176 On the West : Land belonging to S.No. 174/8 Note: In total extent of land 67 cents is deducted for widening of road, which comes under Thirali Bit-2 in S.No. 174/3A & 174/1 presently UDRS No. 68/3A1 & 68/1A by Authorized Officer and Special D.R.O.(L.A.) office vide their letter judgement No. 35, Na.Ka.:A1/176/2021 dated 15.06.2022.

List of Documents

S.No. Date Documents

-- Letter of Authority

-- Valuation Opinion

30.09.23 Technical Appraisal Report

17.08.23 Valuation Report

06.04.24 Valuation Report

-- Affidavit filed by the Applicant

-- Affidavit filed by the Applicant

-- Affidavit filed by the Applicant

26.02.24 E-Auction Notice

07.05.24 Notice issued by Recovery Officer – II

3. On the other hand, Counsel for the Respondent No. 3 appeared before this Tribunal and filed Vakalat & Counter and submitted that the present appeal is devoid of merit, misconceived in law and facts, and is liable to be dismissed in limine. Further it is stated that the issuance of Sale Notice dated 26.02.24 and the subsequent communication dated 07.05.24 by the Recovery Officer-II, DRT, Madurai were carried out well within the statutory powers conferred upon the said authority under the Recovery of Debts and Bankruptcy Act, 1993. The Recovery Officer exercised his discretion lawfully, guided by a neutral Valuation Report and prevailing legal standards. There is no arbitrariness or illegality in the said proceedings as alleged by the Appellant.

It is further submitted that the Appellant’s grievance against the Technical Appraisal Report dated 30.09.23 prepared by Cube Engineers is wholly unfounded. The Recovery Officer acting in an impartial capacity, relied upon an independent and professionally prepared Valuation Report to determine a fair reserve price for the auction of the secured property. The Appellant’s attempt to discredit this report solely because it was not procured by them demonstrates their desire to control the valuation process for self-serving motives. The Recovery Officer is under no obligation to accept valuations provided by interested parties, especially when those valuations grossly undervalue the asset in question.

It is further submitted that the Appellant’s repeated reliance on their own Valuation Reports dated 17.08.23 and 06.04.24 must be viewed with suspicion. Both reports were prepared by valuers engaged by the Appellant, who has a direct financial interest in minimizing the reserve price for the subject property. The Valuation figure of Rs. 9-11 crores proposed by the Appellant is less than one-tenth of the actual market value of the property, which is situated on the NH-208 corrider with high commercial and developmental potential. The land prices were skyrocketed after announcement of AIIMS hospital which is about 10 kms away from the property. The land measures over 33 acres in a prime industrial zone enhances its value considerably further the property is located in the National High ways.

It is further submitted that the Appellant has systematically adopted a practice of misrepresenting figures by showing inflated outstanding dues. For instance, recoveries made in June 2015, October 2015, November 2015 and December 2015 amounting to more than Rs. 2.21 Crores (decree amount itself being Rs. 2.40 Crores), Rs. 0.05 Crores in March 2016 and Rs. 2.72 Crores in July 2021 have not been properly accounted for.

It is further submitted that the subject property is located in a fully developed industrial zone near Thirumangalam, Madurai. The statements made in the technical objection filed by the Appellant are intentionally misleading and crafted to lower the perceived market value of the land. The entire appeal has been crafted to defraud Respondent No. 3 and

facilitate the acquisition of a valuable property at an unjust and grossly undervalued price. The interest of Respondent No. 3, whose land stands as security, have been systematically undermined. Grounds for dismissal: a. The appeal has been filed with the sole motive of acquiring the secured property at a significantly undervalued price by manipulating the reserve price fixing process. This is a blatant abuse of legal process. b. The Recovery Officer acted within jurisdiction and followed proper procedure by obtaining an independent Technical Appraisal Report from a qualified and neutral valuer, Cube Engineers. c. The Appellant’s Valuation Reports are unreliable and were submitted by interested parties. The figures quoted therein are not reflective of market trends and are intended to deceive the Tribunal. d. The Appellant has suppressed crucial facts such as recoveries made, assignment of debt, ED attachment, and the pendency of proceedings before other fora, including NCLT and PMLA Appellate Tribunal.

4. Having heard the parties and after going through the record, I find that the Applicant has challenged theletter dated 07.05.2024 issued by the Recovery Officer-II in RC No. 502/2018 and also requested to quash the Sale Notice dated 26.02.2024 on the basis of Valuation Report dated 30.09.2023 and withdraw it from the website of DRT, Madurai and also requested to direct the Respondent to issue a fresh Sale Notice based on the Valuation Reports submitted by the Appellant on 17.08.2023 and 06.04.2024.

On the other hand, the 3rd Respondent in this Appeal has vehemently opposed the contention of the Applicant. I have gone through the Sale Notice dated 26.02.2024 issued by the Recovery Officer of this Tribunal as well as Report of the Technical Appraisal dated 30.09.23 prepared by Cube Engineers and I find that the Fair Market value of the property given in both the Valuation Reports are totally contradictory to each other of the Valuation Reports filed by the Applicants and the Recovery Officer of this Tribunal.

I also find that the Reserve Price of the Schedule Properties was fixed as Rs. 36,00,00,000/- (Rupees Thirty Six Crores only) in the Impugned Sale Notice dated 26.02.2024 (Page nos. 77 to 81 of Applicant’s main Appeal). But as per the Valuation Reports dated 17.08.2023& 06.04.24 (Page nos. 30 to 46 of Applicant’s main Appeal), the Fair Market Value is of Rs. 9,90,66,650/- (Rupees Nine Crores Ninety Lakhs Sixty-Six Thousand Six Hundred and Fifty only) & Rs. 11,45,30,000/- (Rupees Eleven Crores Forty-Five Lakhs and Thirty Thousand only) Respectively. And as per the Technical Appraisal Report dated 30.09.2023 (Vol.III of RC No. 502/2018 in OA No.378/13), Fair Market Value of the Property is Rs. 35,87,25,360/- (Rupees Thirty-Five Crore Eighty-Seven Lakhs Twenty-Five Thousand Three Hundred and Sixty only).

I also find that the e-auction Sale Notice dated 26.02.2024 (page nos. 77 to 81 of Applicant’s main Appeal) the outstanding amount was mentioned as Rs. 5,86,89,252/- (Rupees Five Crore Eighty Six Lakhs Eighty Nine Thousand Two Hundred and Fifty Two only). However, the Recovery Officer has brough for auction of the entire properties for an upset price of Rs. 36,00,00,000/- (Rupees Thirty-Six Crores only). In the Schedule of Properties, I find that10 items are brought for sale which are more properties than necessary to satisfy a debt or otherwise taking action beyond the scope of the court's order, which leads to excess execution. Excess execution is an unlawful action that oversteps the legal mandate of the court's judgment and warrants correction by the judicial system. It is not necessary to sell the entire properties for a sum of Rs. 36,00,00,000/- for satisfying a lesser amount of Rs. 5,86,89,252/-. Hence, the Sale Notice dated 26.02.2024 issued by the Recovery Officer, Debts Recovery Tribunal, Madurai suffers with excess execution cannot be sustained under the Law. I also find that Sale did not held for want of bidders in respect of the Impugned Sale Notice dated 26.02.2024 and hence, the Sale Notice becomes automatically ineffective. Hence, the question of quashing the Sale Notice does not arise.

I also find that the Applicant has requested this Tribunal to give a direction to issue a fresh Sale Notice based on the Valuation Reports submitted by the Appellant on 17.08.2023 and 06.04.2024, which cannot be considered since the Valuation Reports filed by the Appellant is already outdated. And, if a fresh Sale Notice has to be issued, a fresh Valuation Report has to be obtained from the Government approved Valuer. Further, the communication letter dated 07.05.2024 (page no. 82 of Applicant’s main Appeal) issued by the Recovery Officer-II is simply a formal letter, wherein the Recovery Officer has suggested the Applicant that if they are not satisfied with the reserve price given in the Impugned Sale Notice dated 26.02.2024, the Applicant may sell the properties under SARFAESI Act under intimation to this Tribunal.

In view of the above facts and circumstances of the case, the Recovery Officer is directed to issue a fresh Sale Notice as per the SARFAESI Act & Rules andon the basis of fresh Valuation Report which is to be obtained from the Tamil Nadu Government approved Valuer. Accordingly, this Appeal No. 1 of 2025stands disposed of with above observation. No costs. Dictated to PA (DK), taken down, transcribed, typed by her, corrected and pronounced by me in the Open Court in this the 03rd November, 2025.

sd/- (SEEMA SINHA) PRESIDING OFFICER

Uploaded on 12.11.2025