N GUNASEKARAN vs KOTAK MAHINDRA BANK LTD on 5 November 2026

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

IA 1471/2026 (Urgent) in IA 1472 (Waiver) in A.IR:2547/2026

N Gunasekaran & anr V/S Kotak Mahindra Bank 05/11/2026

Considering the reasons stated in the affidavit filed in support of the petition, this urgent petition is allowed. IA 1472/2026 (Waiver) This appeal is filed against the final order passed in MA No. 37 of 2026 in SA 1011/2025 by the learned Presiding Officer, DRT, Coimbatore on 04.07.2026. SA 1011/ 2025 has been filed to set aside the order passed under Section 14 of the SARFAESI Act by the learned Chief Judicial Magistrate, Namakkal, in Crl. M.P. No. 5015 of 2022, dated 06.06.2023, under Section 14 of the SARFAESI Act, and for other reliefs. It is further submitted by the learned counsel for the petitioners that, while the securitization application was pending, the petitioners entered into a compromise with the respondent-bank and filed an undertaking affidavit before the Tribunal. As per the undertaking given, an OTS settlement was reached with the bank for a sum of Rs. 3,27,00,000/-. Out of this amount, Rs. 1 crore has to be paid on or before 30.12.2025. The balance amount of Rs. 2.27 crores has to be paid on or before 31.01.2026. Further undertaking was given to voluntarily hand over physical possession of the secured asset to the respondent bank in the event of failure to make any of these payments, without insisting on any further notice or order from the Tribunal. The petitioners thus prayed for the DRT to pass orders on the basis of the undertaking affidavit. The learned Presiding Officer passed an order on 20.01.2026 recording the terms of the undertaking affidavit, and disposed of the SA1011/2025 in accordance with the undertaking given. The respondent was given liberty to proceed with the SARFAESI measures and actions from that stage it stands if the petitioners failed to honour their promises and commitments as undertaken by them. It is further submitted by the learned counsel for the petitioners that the terms of the OTS proposal were modified by the bank by issuing a letter dated 19.01.2026.

As per this letter, in para-4, the bank agreed to release Item No. 1 of Annexure I of the properties upon payment of Rs. 1 crore and to release Item No. 2 of Annexure I on payment of the entire dues within the timelines. It is his further submission that, in view of this change in terms with regard to release of Item No. 1, the bank has not released the property by executing the discharge receipt and registering with the Sub-Registrar’s Office. The discharge receipt was registered only after the filing of the MA 37/2026 on 11.02.2026. After passing of the order under Section 14 of the SARFAESI Act, the petitioners made the following payments: On 17.06.2025 : Rs.50,00,000/- On 01.11.2025 : Rs. 1 crore. On 30.12.2025 : Rs. 1 crore; and On27.07.2026 : Rs. 1 crore. Thus, the petitioners made payments totaling Rs. 3.50 crores. On waiver, learned counsel for the petitioners submitted that the appeal is filed against the interim order and, therefore, there is no requirement for making pre- deposit. In support of this submission, he 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}. Sunshine case, reported in 2025 SCC OnLine SC 1234. Learned counsel appearing for the respondent strongly opposed the claim made by learned counsel for the petitioners with regard to the non-registration of the discharge receipt. Even as per the order of the learned Presiding Officer, DRT, dated 20.01.2026, it is evident that the petitioners had received the title documents in respect of the vacant land on the previous date. The bank sent an email on 20.01.2026 enclosing a copy of the discharge receipt, and it was for the petitioners to take steps for its registration. This email was followed by another reminder e-mail on 21.01.2026. The petitioners had not taken any step to register the mortgage discharge receipt. Therefore, it is not correct for the petitioners to state that the bank failed to register the mortgage discharge receipt in time. The learned Presiding Officer elaborately discussed the matter in the order in MA filed seeking reopening of the securitization application and other reliefs. In paragraph 15, it was recorded that the respondent had not co-operated with the petitioners for execution of the mortgage discharge receipt is a ‘blatant lie’

In view of the petitioners’ non-compliance with the OTS amount, the bank is entitled to claim the amount based on the original demand made in the application filed under Section 14 of the SARFAESI Act. After giving credit for all payments made by the petitioners, including the sum of Rs. 3.50 crores, the current outstanding amount is Rs. 3,21,86,450. Considered the rival submissions and perused the records. There is no dispute with regard to the filing of the undertaking affidavit by the petitioners and the disposal of the securitization application on the basis of that undertaking affidavit. It is also not in dispute that, by letter dated 19.01.2026, the bank agreed to release one of the properties. The order dated 20.01.2026 of the learned Presiding Officer shows the release of the documents relating to a property by the bank. The learned Presiding Officer made an observation in paragraph 15 of the impugned order as follows: “ The factual and legal position being as afore, the Tribunal proceeds to hold that the reasons alluded by the petitioners seeking for reopening of an already disposed SA in pursuance of a consensus final order smacks of malafides since their allegation as to the officials of the respondent-Bank not co-operating with the petitioners by not coming forward for execution and registration of mortgage discharge receipt in respect of the vacant land at Tiruchencode, which was got released on 19.01.2026, was demonstrated to be a ‘blatant lie’ in view of the 3-mail communications dated 20.01.2026 and 21.01.2026 sent by respondent-Bank to the petitioners’ official e- mail ID requesting them to extend co-operation in the matter in executing and registering mortgage discharge receipt by sharing draft discharge receipt and KYC documents of its officials. The factum of receipt of such e-mails dated 20.01.2026 and 21.01.2026 have been conveniently suppressed and concealed before this Tribunal in the affidavit accompanying MA No. 37 of 2026 as also in the affidavit filed before the Hon’ble High Court of Judicature of Madras in C.R.P.No. 1088 of 2026 by canvassing a false case and contention as if the respondent Bank officials never came forward for execution and registration of the mortgage discharge receipt till they executed it on 10.02.2026”. This observation makes it clear that the claim of the learned counsel for the petitioners that the bank had not cooperated with the petitioners in registering the mortgage discharge receipt is a blatant lie. It is stated that this e-mail communication was suppressed by the petitioners before the Tribunal. Even before this Appellate Tribunal, the e-mail dated 20.01.2026 and 21.01.2026 had not been filed. The securitization application was disposed of only on the basis of the undertaking affidavit given by the petitioners. Therefore, the very maintainability of the application filed for reopening the securitization application and for other reliefs, following the petitioners’ failure to pay the balance OTS amount of Rs. 2.27 crores, is questionable.

Be that as it may, the issues raised on the merits of the order and the due amount involved in this appeal will be considered in the main appeal. Pre-deposit is mandatory for entertaining the appeal. 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. With regard to the submission of learned counsel for the petitioners that there is no need to make a pre-deposit in view of the challenge to the order passed in the IA, in 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 Hon’ble Supreme Court of India, observed as follows:-

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 Judicature at Bombay for consideration.

Here, in this case, there is determination of debt involved in SARFAESI proceedings. Only after determination of debt due, notice under Section 13 (2) of the SARFAESI Act was issued. In the case before hand, OTS settlement was reached for an amount of Rs.3,27,00,000/-. Only part amount was paid. Without paying the balance amount to satisfy the OTS settlement, this appeal is filed. On the basis of the undertaking affidavit, SA got disposed. Therefore, as already indicated, the very maintainability of re-open application is questionable. If these sorts of application are entertained, the litigant would file applications one after another 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 appeals. Therefore, pre-deposit is mandatory in this case even if this appeal is filed against the order passed in MA 37/2026. As per the submissions of the learned counsel for the respondent-Bank, the current due at the time of filing this appeal after giving credit to the payments made comes to Rs.3,21,86,442/-.

Therefore, this Tribunal, for entertaining this appeal, directs the petitioners to make pre-deposit of 25% of Rs.3,21,86,442/- Taking into consideration all these factors into account, this Tribunal, for entertaining this appeal, directs the petitioners to make pre-deposit of 25% of Rs.3,21,86,442/- i.e .80,46,610.50p. in two equal instalments within a period of four weeks from today. First instalment of Rs.40,23,305.25p. shall be deposited on or before 19.11.2026 and the second instalment of Rs.40,23,305.25p. shall be deposited on or before 03.12.2026, failing which, this appeal would stand rejected.

The said pre-deposit should be paid 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 07.12.2026 for reporting compliance.

Sd/-

Chairperson