M S K Rameshraj vs INDIAN OVERSEAS BANK on 4 November 2026

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

IA 1348/2026(Waiver) in A.IR:2499/2026

M S K Rameshraj& 2ors V/S Indian Overseas Bank & 3 ors 04/11/2026

Learned Counsel for both sides are present.

This appeal is filed against the interim order passed by the learned Presiding Officer, DRT-II, Chennai in IA1480/2025 in SA 507/2024.

SA 507/2024 has been filed to set aside the auction sale dated 29.07.2024 in pursuance of the sale notice dated 09.07.2024. This sale notice, according to the learned counsel for the petitioners, was challenged before the Hon’ble High Court of Madras in WP 21019/2024. While admitting the writ petition, the Hon’ble High Court, on 25.07.2024, observed that the Hon’ble High Court is not inclined to give any interim protection. However, petitioner was given liberty to avail the opportunity to settle to the respondent-Bank through OTS. This writ petition was dismissed on 25.06.2026 as withdrawn in view of the order passed in WP No. 11417/2026.

WP 11417/2026 has been filed by the petitioners seeking a Certiorarified Mandamus, to call for the records on the file of Chief Judicial Magistrate in Crl.M.P.No.3875/2025 dated 07.03.2026 and quash the same and consequently forbear the respondents from interfering with the peaceful possession and enjoyment of the properties described in detail. The said writ petition was disposed with certain observations. The observation was that the Tribunal has to dispose the SA 507/2024 within a period of three months from the date of receipt of a copy of the order.

After observing with regard to delaying tactics adopted by any of the petitioner, especially the petitioners herein, it was indicated that the DRT shall proceed and decide the matter.

Further, the DRT-III, Chennai was mandated to decide the issue as to whether the lands in question are agricultural or not apart from any other issue raised in the SARFAESI Application. Till the disposal of the SA 507/2024, the order passed under Section 14 of the SARFAESI Act, 2002 was ordered to be kept in abeyance. This order was passed on 23.03.2026.

Meanwhile, the petitioner filed SA 507/2024 for the relief as aforesaid, which was taken up for the first time on 08.08.2024. The learned counsel for the respondents sought time to file reply in the said application and therefore, the matter was adjourned to 22.08.2024 for filing reply and the Bank was directed to maintain status quo. SA 507/2024 is still pending. In the pending SA 507/2024, IA 1480/2025 is filed for amending the main securitization application for inclusion of pleadings, grounds and prayer as detailed in the application. This IA 1480/2024 came to be dismissed by the learned Presiding Officer, DRT-III, Chennai on 05.08.2026 and that is the cause for filing this appeal.

Learned counsel for the petitioners brought to the notice of this Tribunal that the reason given for dismissal recorded in para-17 of the order, which reads as follows:- “ the petitioners, by their conduct, have clearly waived their right to challenge the sale proceedings at the appropriate stage. The present S.A., instituted only after the sale held on 29.07.2024, is manifestly vitiated by delay and laches and is nothing but an afterthought. Having allowed the respondent Bank and the successful auction purchasers to alter their position on the basis of the concluded sale, the petitioners are estopped from questioning the sale at this belated stage. The challenge in the IA, therefore deserves to be rejected”.

It is the submission of the learned counsel for the petitioners that when the main issue raised in the securitization application are yet to be adjudicated, especially, (1) The issue of agricultural land, (2) The loan was sanctioned by NAPARD (3) The OA filed for recovery of the claim amount was dismissed for non-prosecution (4) the property worth about Rs.80 crores was sold for the amount of Rs.12 crores without proper valuation prior to the sale.

When these grounds are not adjudicated, the aforesaid observation made by the learned Presiding Officer amounts to pre judging the issue raised in the securitization application.

It is further submitted by the learned counsel for the petitioners that this appeal is filed only against order passed in the IA 1480/2024 and therefore, there is no need for making pre-deposit. No other ground is raised for waiver of pre-deposit.

Learned counsel for the respondents 1 & 2 submitted that the land in question is not an agricultural land. The loan was availed for the purpose of construction of industrial buildings i.e. to put up agricultural godown under the NAPARD scheme. Only a part construction was made and therefore NAPARD recalled the facility and the Bank has re-paid Rs.39,00,000/- paid as subsidy to the petitioners. Therefore, the claim raised by the petitioners that the properties are agricultural land is not correct. Petitioners filed writ petition before the Hon’ble High Court of Madras for registering a criminal complaint against the Bank officials by the CBI and that writ petition was dismissed. The civil suit in C.S.No. 282/2025 was also filed and the same is still pending. The petitioners also filed civil revision petition before the Hon’ble High Court in CRP No. 5358/2026 against the dismissal of the IA 1480/2025 in SA 507/2024 and later it was dismissed as withdrawn giving liberty to approach the Tribunal. There is also an observation for exclusion of the period spent in prosecuting these cases, under Section 14 of the Limitation Act. Pre-deposit is mandatory for entertaining this appeal.

Considered the rival submissions and perused the records.

Admittedly, SA No. 507 of 2024 has been filed to set aside the auction sale held on 29.7.2024 in pursuance of the sale notice dated 9.7.2024. While filing this SA, the Petitioner initiated two writ petitions before the Hon'ble High Court of Judicature at Madras in WP No. 21019 of 2024 and WP No. 11417 of 2026.

In SA No. 507 of 2024, the Petitioner filed IA No. 1480 of 2025 for amending the securitisation prayer for the inclusion of the prayer to set aside the sale certificate. The grounds raised by the Learned Counsel for the Petitioner with regard to the claim that the land concerned is an agricultural land and, therefore, SARFAESI proceedings cannot be initiated, along with the other grounds raised, will be considered in the main appeal. Similarly, the dismissal of the amendment application and the merits of the order assailed in this appeal will also be considered in the main appeal.

One of the submissions of the Learned Counsel for the Petitioner is that since the appeal is filed against an order passed in an interlocutory application, no pre-deposit is required. In this regard, Learned Counsel for Petitioners relied on the decision of the Hon’ble Supreme Court of India dated 17.4.2025 in re, M/s. Sunshine Builders and Developers Vs. HDFC Bank Limited through the Branch Manager & Ors in Civil Appeal No. 5290 of 2025 {Special Leave Petition (Civil) No.10875 of 2025}. The relevant portion of the order is extracted below:

“15. We are of the view, of course prima facie that the expression ‘any order’ should be given some meaningful interpretation. Should any and every order that may be passed by DRT, if sought to be challenged, be made subject to pre- deposit?

16. One can understand that if any final order is passed by the DRT, determining the liability of the borrower or any other liability of any person, and an appeal is preferred under Section 18 of the SARFAESI Act to the appellate tribunal, the provision of pre-deposit would come into play. However, what would be the position if an order like the one passed in the present litigation, i.e., declining to implead the auction purchaser in the pending proceedings before DRT is concerned?

17. We are of the view that we should remand the matter to the High Court for the purpose of reconsidering the aforesaid aspects of the matter.

18. The impugned order passed by the High Court is set aside. The matter is remitted to the High Court. The High Court shall rehear the Writ Petition No.3929/2024 and decide it afresh in accordance with law.”

There is an observation that pre-deposit is required under Section 18 of the SARFAESI Act in case any appeal is filed against the final order passed by the DRT. There is a question arose as to whether pre-deposit is required in every order passed by the Tribunal, especially, in an application filed to set aside the order declining to impleaded the auction purchaser. This question was not answered by the Hon’ble Supreme Court of India, but the matter was remitted to the Hon’ble High Court of Judicature at Bombay for consideration.

If these sorts of application are entertained, the litigant would file one after other applications under known provisions, or without provisions, for stalling the SARFAESI proceedings and the recovery process. The concept of pre- deposit is introduced in the RDB Act and SARFAESI Act only to discourage the litigants from filing unnecessary and unwanted applications and appeals.

In the case before hand, issuance of sale certificate is only a consequential measure on completion of sale. The amount due in the SARFAESI proceedings had already been determined and only thereafter possession notice under Section 13(4) of the SARFAESI Act was issued, followed by other SARFAESI measures, including sale of the property. Therefore, the submission of the Learned Counsel for the Petitioner that there is no determination of amount involved in the amendment application and no pre- deposit is required to be made cannot be accepted.

As per the sale notice dated 9.7.2024, the amount demanded as due was Rs.33,81,27,008 as on 30.6.2024. Despite directions to the Respondent Bank to inform this Tribunal as to the due as on the date of filing of the appeal without considering the sale price, no such information is furnished. Therefore, this Tribunal proceeds to determine the pre-deposit on the basis of the amount due as claimed in the sale notice.

Pre-deposit is mandatory for entertaining this appeal under Section 18(1) of the SARFAESI Act.

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 the case before hand, two properties had been sold to two different auction purchasers, and thus, third-party interest is created. It appears that the Petitioner has not paid any amount towards loan due after the issuance of demand notice or possession notice or sale notice. Taking all these factors into consideration, this Tribunal directs the Petitioner to make a pre- deposit of 30% of Rs. 33,81,27,008 in two equal instalments within a period of four weeks from today, failing which this appeal would be rejected.

30% of Rs.33,81,27,008/- comes to Rs.10,14,38,102.40p, rounded off to Rs.10,14,38,102/-, out of which the first instalment of Rs.5,07,19,051/- to be made on or before 18.11.2026, and the second instalment of Rs.5,07,19,051/- to be made on or before 2.12.2026.

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 4.12.2026 for compliance.

Sd/-

Chairperson