N. AZEEZ RAHMAN vs PUNJAB NATIONAL BANK on 28 October 2026

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

IA 1299/2026(Waiver) in A.IR:2327/2026

Azeez Rahman V/S Punjab National Bank & 3 ors

28/10/2026

Learned Counsel for the Petitioner/Appellant and R1 Respondent Bank are present.

This appeal is filed against the order of the learned Presiding Officer, DRT- II, Chennai in NDN SA 1066/2026 on 22.07.2026.

Petitioner/appellant filed the aforesaid securitization application to set aside the sale proceedings, which ended into sale certificate dated 11.03.2026 and registration of the sale certificate on 30.06.2026 in document No.3488/2026 on the file of the SRO, Walaja, Ranipet District. The Registry of the DRT raised objections as follows:- “Challenging the sale certificate is not a cause of action under Section 13(4) – Clarify? SA filed with the delay of 69 days. Hence, COD petition along with fee has to be filed.”

In reply thereto, the learned counsel for the applicant has submitted as follows: “1. Challenging sale certificate is also a cause of action as per judgment of the Hon’ble High Court of Karnataka in WP No.9638 of 2024 dated 02.06.2026 reversing the finding of the Hon’ble DRAT Chennai as stated in Ground No.(U). Hence, SA challenging the sale certificate is maintainable (copy of citation enclosed)

2. There is no delay in filing the SA. Though sale certificate is dated 11.03.2026, the sale certificate is presented for registration on 11.03.2026, the registration was completed only on 30.06.2026 and the SA has been filed on 03.07.2026 itself which is in time. Hence, delay petition is not required.”

After hearing the learned counsel for the petitioner, the learned Presiding Officer upheld the objections of the Registry and not numbered the securitization application.

It is observed that issuance of sale certificate is a consequential measure and it will not constitute a cause of action under Section 13 (4) of the SARFAESI Act. Other ground is that the securitization application filed is barred by limitation.

It is informed by the learned counsel for R1 & R2 that the petitioner filed an application for condonation of delay in filing the securitization application and it is pending. Meanwhile, the appeal is filed against the aforesaid order.

Learned counsel for the petitioner submitted that the petitioner is a guarantor to the loan availed by the 4th respondent. He is not served with any of the notice issued under Section 13 (2) and 13 (4) of the SARFAESI Act. He came to know about the sale of the secured asset only after the auction purchaser tried to clean the secured asset. The property was grossly undervalued and sold. Petitioner paid the entire sale consideration of Rs.1,03,38,000/- towards pre-deposit. Thus, he seeks to entertain this appeal. No other ground is urged for waiver of pre-deposit.

Learned counsel for R1 & R2 submitted that petitioner has not even challenged the sale but challenged the registration of sale certificate on 30.06.2026. Therefore, the securitization application filed is beyond the period of limitation.

He further submitted that without considering the sale price, the amount due is Rs.6,51,00,000/-. Borrower has filed SA 255/2026 before the DRT-II, Delhi challenging the entire SARFAESI measures. Pre-deposit should be made on the current outstanding in view of the challenge in the securitization application is to the entire sale proceedings and the sale certificate.

Learned Counsel for R4, the auction purchaser, submitted that R4 is a bona fide auction purchaser. Except for handing over physical possession of the secured asset by the R1 Respondent Bank, other formalities had been complied and over. Pre-deposit is mandatory for entertaining this appeal.

Considered the rival submissions and perused the records.

It is seen from the prayer pleaded in the Securitization Application that Petitioner prayed to set aside the sale proceedings which culminated into the sale certificate dated 11.3.2026 and registered on 30.6.2026 bearing document No.3488 of 2026 on the file of SRO, Walaja, Ranipet District. The Securitization Application has been filed on 3.7.2026 i.e., after the registration of the sale certificate. It is the admitted position that Petitioner failed to challenge either the sale notice or the sale held. It is the case of the Petitioner that Petitioner is not served with notice issued under Section 13(2) and Section 13(4) of the SARFAESI Act, 2002 and he came to know about the sale only when the auction purchaser tried to clear the secured asset.

In the light of the submissions made above, filing of the Securitization Application after the registration of the sale certificate, the issue with regard to filing of the Securitization Application beyond the period of limitation, as required under the SARFAESI Act, 2002 is certainly a material issue. This issue, and the issues raised on other grounds, will be decided only in the main appeal. Pre-deposit is mandatory to entertain this appeal under Section 18(1) of the SARFAESI Act, 2002.

In view of the challenge to the entire sale proceeding and sale certificate registration, and that 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, this Tribunal directs the Petitioner to make a pre- deposit of 30% of Rs.6,51,00,000/- in two equal instalments within a period of four weeks from today, failing which this appeal would stand rejected.

30% of Rs.6,51,00,000/- comes to Rs.1,95,30,000/-. After deducting the pre- deposit made by the Petitioner to the tune of Rs.1,03,38,000/-, the balance pre-deposit to be made comes to Rs.91,92,000/-.

The balance pre-deposit of Rs.91,92,000/- is to be made in two equal instalments, the first instalment of Rs.45,96,000/- to be made on or before 11.11.2026, and the second instalment of Rs.45,96,000/- to be made on or before 25.11.2026.

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.

Post the matter on 27.11.2026 for compliance.

Sd/-

Chairperson