P Mahendran vs Swasthikhas Jewellers on 29 October 2026

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

IA 1434/2026 (Urgent) & IA 1435/2026 (Stay) in R.A(S.A):169/2026

P Mahendran V/S Swasthikhas Jewellers & 5 ors 29/10/2026

Considering the reasons stated in the affidavit filed in support of the application, this application in IA 1434/2026 (Urgent) is allowed. IA 1435/2026 (Stay) Learned counsel for the appellant, learned counsel for R6 are present. M/s. Aarthi, learned counsel offers to file vakalath for R1, R3 to R5. This appeal is filed against the final order dated 11.08.2026 passed by the learned Presiding Officer, DRT, Madurai in SA 371/2020. Learned counsel for the petitioner submitted that the aforesaid securitization application has been filed to set aside the sale certificate registered as Doc.No.971/Book No.1 of 2020 dated 04.11.2020 entered into between the first defendant and second defendant, and declare the same as void, invalid, illegal, arbitrary and against the basic principles of natural justice. The measures taken under the SARFAESI Act after issuance of demand notice like, possession notice earlier sale notices and the sale held, the order passed under Section 14 of the SARFAESI Act had not been challenged by the respondents 1 and 3 to 6. Issuance of sale certificate is only a consequential and administrative action after completion of sale and that cannot be challenged. The learned Presiding Officer, DRT, Madurai entertained the securitization application and recorded the finding that “legality and validity of the sale certificate necessarily depend upon the legality of the antecedent measures taken by the secured creditor. Thus, while examining the validity of the sale certificate, Tribunal is competent to examine as to whether the demand notice, possession notice, sale notice and the sale proceedings were carried out in accordance with the procedures contemplated under the SARFAESI Act and the Security Interest (Enforcement) Rules 2002”. The primary objection raised by the petitioner/appellant was rejected. While setting aside the sale certificate, learned Presiding Officer gave liberty to the respondent to take fresh action by strictly following the SARFAESI Act and Rules meaning thereby the entire SARFAESI proceedings has been set aside. It is impermissible under law.

It is further submitted that physical possession had been taken by the financial institution and delivered to the auction purchaser i.e. the appellant. advantage of the impugned order, the borrowers may try to take physical possession and the financial institution may also issue fresh sale notice and thus, he seeks Stay of further proceedings. Learned counsel for R1 and R3 to R5 submitted that the respondents are in possession of the secured asset and they are not trying to alienate the secured asset and seeks time to file counter. Learned counsel for R6 submitted that R6 is ready to comply with the order of the Tribunal and notice was sent to the auction purchaser along with demand drafts for refund of the amount with interest. In the light of the submissions made by the learned counsel appearing for the parties, this Tribunal finds that there is arguable points involved in the appeal on the merits and demerits of the order passed by the learned Presiding Officer, DRT, Madurai setting aside the sale certificate and the SARFAESI measures. Therefore, this Tribunal directs the parties to maintain Status Quo as on today till the disposal of the Stay application. Post the matter on 22.12.2026. Respondents are directed to file Vakalath and Counter by then.

Sd/-

Chairperson