V VIJAYA KUMAR AND V AARTHI vs KARNATAKA BANK LIMITED on 2 November 2026

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

IA 1635/2026 (Urgent) in IA 1636/2026 (Waiver) In A.IR:3051/2026

V Vijay kumar & anr V/S Karnataka Bank ltd 02/11/2026

Learned Counsel for both sides are present.

This application is filed for hearing the waiver application IA 1636 of 2026 on an urgent basis.

The other side has no serious objection to this urgent application.

Therefore, urgent application IA 1635 of 2026 is allowed.

IA 1639/2026 (Waiver) in AIR 3038/2026 & IA 1636/2026 (Waiver) in AIR 3051/2026

IA 1638 of 2026 (Urgent) in AIR 3038 of 2026 is allowed.

IA 1635 of 2026 (Urgent) in AIR 3051 of 2026 is allowed.

Learned Counsel for both sides are present.

Both these appeals are filed against the order dated 7.10.2026 passed by the Learned Presiding Officer, DRT-II, Chennai in SA No. 407 of 2023 & SA No.274 of 2024.

SA No. 407 of 2023 has been filed to set aside the sale held on 17.8.2023, pursuant to the e-auction sale notice dated 1.7.2023. Learned Counsel for Petitioners/Appellants submitted that SA No.407 of 2023, challenging the sale, was filed on the grounds that –

i) Demand notice issued under Section 13(2) of the SARFAESI Act, 2002 was not served; ii) Possession notice issued under Section 13(4) of the SARFAESI Act, 2002 was not served;

iii) Property was grossly under-valued and sold; and

iv) The auction purchaser has not paid the balance 75% of the sale consideration within 15 days time. There is no proof filed to show the extension of time for paying the balance sale consideration within a period of 90 days. No record of request from the auction purchaser and the response of the Bank to such a request, if any, is submitted, or produced. The auction purchaser paid the last payment only on the 89 th day of sale.

On these grounds, the Securitization Application is filed for challenging the sale held.

He further submitted that AIR (SA) 3051 of 2026 has been filed to set aside the order dated 7.10.2026 passed by the Learned Presiding Officer, DRT-II, Chennai in SA No.274 of 2024 filed for setting aside the order 14.2.2024 passed by the Learned Chier Metropolitan Magistrate, Egmore, Chennai under Section 14 of the SARFAESI Act, 2002 in Crl.M.P.No.26424 of 2023 and the Learned Advocate Commissioner’s warrant dated 13.5.2024. The grounds taken in this Securitization Application are that without verifying the service of demand notice and possession notice, and without proper application of mind, the Learned Chief Metropolitan Magistrate, Egmore, Chennai allowed the application.

Both the Securitization Applications had been dismissed and, therefore, these appeals are filed. On these grounds, the Petitioners seeks waiver of pre-deposit. No other ground is urged in support of waiver of pre-deposit.

In response, Learned Counsel for R1 Respondent Bank submitted that demand notice was hand delivered to the Petitioners, though it was mistakenly referred in the application that the demand notice was not served. Subsequently, an application was filed for receiving the demand notice and it was allowed. Petitioners have not informed the change of address when possession notice was taken. Possession notice was taken through post to the address given in the loan document and that was returned with the endorsement “building demolished.” Possession notice was affixed on the secured asset and published. Therefore, the submission of the Learned Counsel for Petitioners that demand notice and possession notice had not been served is not true.

It is further submitted that after issuance of sale notice, the Petitioners have not chosen to challenge the sale notice but only challenged the sale, after it was successfully concluded in favour of R2, the auction purchaser. The sale was successful only in the third sale attempt. Petitioners have not challenged the possession notice or any of the earlier sale notices. They have been watching from the side-lines and objected after the completion of the sale by challenging the sale measures. Pre-deposit is mandatory for entertaining this appeal.

Learned Counsel for R2, auction purchaser, submitted that on the basis of a written request made by R2, the time for paying the balance 75% of the sale consideration was extended, and the entire sale consideration was paid within the time stipulated. Learned Counsel for the R1 Respondent Bank also endorses this submission. Pre-deposit is mandatory for entertaining this appeal.

Considered the rival submissions and perused the records.

It is seen from the submissions of the Learned Counsel appearing for the parties that the claim of the Learned Counsel for Petitioners with regard to non-service of demand notice and possession notice is seriously disputed by the R1 Respondent Bank. R1 Respondent Bank claim that the demand notice and possession notice had been served in accordance with law. Along with this issue, the issue of alleged under-valuation, and non-payment of 75% of the balance sale consideration within time by R2, the auction purchaser, will be considered in the main appeal.

Pre-deposit is mandatory for entertaining this appeal under 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.

It is seen from the sale notice that it was issued claiming a sum of Rs.3,48,15,618.64p as on 30.6.2023. The reserve price was fixed at Rs.5,50,00,000/-. It is informed that the property was sold for Rs.5,50,25,000/-. With the sale of the property, over and above the debt due, it is submitted by the Learned Counsel for the R1 Respondent Bank that the loan due is satisfied. There is surplus amount available with the R1 Respondent Bank.

Learned Counsel for the Petitioners submits that as per the orders of the Tribunal, they have made a payment of Rs.50.00 lakhs.

Taking these facts into account, and that the property is sold in the third sale attempt, and that third-party interest is created, this Tribunal directs the Petitioner to deposit 30% of Rs.5,50,25,000/-, minus Rs.50.00 lakhs already paid, as pre-deposit in two equal instalments within a period of four weeks from today, failing which this appeal would stand rejected.

30% of Rs.5,50,25,000/- comes to Rs. 1,65,07,500/-. After deducting Rs.50.00 lakhs already paid, the pre-deposit to be made comes to Rs.1,15,07,500/-, out of which the first instalment of Rs.57,53,750/- is to be made on or before 16.11.2026 and the second instalment of Rs.57,53,750/- is to be made on or before 30.11.2026.

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.

On deposit of first instalment, R1 Respondent Bank is directed not to take physical possession of the secured asset till next hearing.

Post the matter on 2.12.2026 for compliance.

Sd/-

Chairperson