M/s Kasuals Clothing vs UNION BANK OF INDIA on 5 November 2026

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

IA 1194/2026 (Waiver) in A.IR:1954/2026

M/s Kausals Clothings & 2 ors V/S Union Bank of India & anr 05/11/2026

Learned Counsel for both sides are present.

AIR 1954/2026 is filed for setting aside the order dated 18.06.2026 passed in by the learned Presiding Officer, DRT-II, Chennai, SA 381/2024. SA 381/2024 is filed seeking to quash the e-auction sale conducted on 12.06.2024 and declare the e-auction sale as invalid, arbitrary and against certain principles of Law.

AIR 1958/2026 is filed to set aside the order dated 18.06.2026 passed by the learned Presiding Officer, DRT-II, Chennai in SA 410/2024. This SA 410/2024 is filed to set aside the e-auction sale notice dated 14.05.2024 fixing the e-auction sale on 12.06.2024 as null and void.

AIR 1963/2026 is filed to set aside the order dated 18.06.2026 passed in SA 235/2025 by the learned Presiding Officer, DRT-II, Chennai. This SA 235/2025 is filed to set aside order dated 13.02.2024 passed by the learned Chief Judicial Magistrate, Egmore, Chennai as illegal, invalid, arbitrary and against certain principles of Law.

It is submitted by the learned counsel for the petitioners/appellants that these proceedings arose out of single demand notice dated 25.08.2024 issued under Section 13 (2) of the SARFAESI Act. On the dismissal of all the three securitization applications, these appeals have been filed.

Continuing his submission, Learned Counsel for the Petitioners submitted that the amount claimed in the sale notice is incorrect for the reason that there is discrepancy in the statement of accounts. The property worth about Rs. 3.00 crores was valued at Rs. 1.75 crores at market value, realisable value at Rs. 1.57 crores and the distress value at Rs. 1.4 crores.

It amounts to gross undervaluation of the property. The sale notice was not affixed on the secured asset. Both in the demand notice and sale notice, the description of property is wrongly given and the description does not conform to the description given in mortgage document. There is collusion between the Bank and the auction purchaser and the Petitioners were deliberately not informed about the details of the auction purchaser and the price for which the property was sold in his favour. Only during the pendency of the Securitisation Application, these details were given. The Section 14 application was filed prior to issuing the sale notice. However, in the application, the conduct of sale was suppressed, thereby the amount realised through the sale and the actual loan due was wrongly given. Petitioners have already made a pre-deposit of Rs. 27,40,000/-. Since these proceedings arose out of a common demand notice in respect of a single loan, he prays that the amount already deposited would satisfy the requirement of 50% of pre-deposit of the amount due as claimed in Section 13(2) notice at Rs.54,79,739/-. No other ground is urged in support of waiver of pre-deposit.

Learned Counsel for the Respondent strongly objected to the claim of the Learned Counsel for the Petitioners with regard to the alleged violations in issuance of sale notice, conduct of sale and obtaining the orders under Section 14 of the SARFAESI Act. A correct account statement was produced before the DRT-II, Chennai, and therefore, the amount claimed in the sale notice is correct. Property was valued in accordance with the guidelines. Previous ten sale attempts had failed and only on the eleventh sale attempt, the sale was concluded. Therefore, there was a necessity to reduce the reserve price in the subsequent sale notices. Affixture of sale notice was proved by producing proof of affixture before DRT-II, Chennai. With regard to the alleged misdescription/wrong description of the boundary, details with survey number, extent, and other details were given. With the passage of time, the four boundaries bound to differ/change. Taking this into account, the correct four boundaries were given. The collusion between the Bank and the auction purchaser now argued is not pleaded in the SARFAESI application.

Since Section 14 application was filed prior to issuance of sale notice, there was no occasion to inform about the sale of the property. The property was sold for Rs.1.26 crores and the balance amount is available with the Bank. The Securitisation Applications have been filed only after issuance of the sale certificate.

Considered the rival submissions and perused the records.

Admittedly, the Securitization Applications concerned in these appeals had been filed on a single loan transaction and a common demand notice issued to the Petitioners. The issues raised by the Learned Counsel for the Petitioners on the merits of the appeal, like

i) The amount claimed as due in the sale notice is not correct;

ii) Undervaluation;

iii) Affixture not done;

iv) Description of property is not correct;

v) Collusion between the auction purchaser and the Bank;

vi) Suppression of sale in the Section 14 application, will be considered in the main appeal.

Pre-deposit is mandatory to entertain this appeal as per Section 18(1) (check) 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.

Petitioner had challenged the sale notice and the sale along with orders passed under Section 14 of the SARFAESI Act. Admittedly, the property has been sold in favour of the auction purchaser for Rs. 1.26 crores thereby creating third-party interest.

Since the proceedings arose out of a single loan transaction and common demand notice, there is no requirement for making pre-deposit in every case as per the decision of the Hon'ble High Court of Karnataka at Bengaluru in WP No. 1059 of 2025 in re, G. Corp Lotus Mall Private Limited Vs. Axis Bank Limited & Ors. Common pre-deposit is enough to entertain these appeals.

In the said circumstances, this Tribunal directs the Petitioners to make a pre-deposit of 30% of Rs. 1.26 crores minus the pre-deposit already made at Rs. 27,40,000/-, which comes to Rs.10,40,000/- in two equal instalments within a period of four weeks from today, failing which this appeal would stand rejected.

30% of Rs.1,26,00,000/- comes to Rs.37,80,000/-. After deducting the pre- deposit already made to the tune of Rs.27,40,000/-, the balance pre-deposit to be made comes to Rs.10,40,000/- out of which, the first instalment of Rs.5,20,000/- is to be made on or before 19.11.2026, and the second instalment of Rs.5,20,000/- is to be made on or before 3.12.2026.

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 7.12.2026 for compliance.

Sd/-

Chairperson