H V Gopal vs The Bangalore Souhardha Central Cooperative Bank Limited on 10 November 2026

IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

IA 953/2026 (Waiver) in A.IR:1285/2026

H V Gopal & 3 ors V/S The Bangalore Souhardha Central Cooperative Bank Limited 10/11/2026

Learned Counsel for both sides are present.

This appeal is filed against final order dated 29.11.2024 passed in SA No.431 of 2024 by the Learned Presiding Officer, DRT-I, Karnataka at Bengaluru.

SA No.431 of 2024 has been filed to set aside the order dated 3.6.2019 passed by the Learned 24th Additional Chief Metropolitan Magistrate, Bengaluru in Crl. M.P. No.4 of 2019 in respect of the schedule immoveable property. On the dismissal of this appeal, the Petitioners/Appellants filed this appeal before the Tribunal.

Learned Counsel for Petitioners submitted that the demand notice in this case was issued on 11.9.2018 claiming a sum of Rs.27,26,617.56p as due from the Petitioners. In the demand notice, it is mentioned that the loan account has become non-performing asset (NPA) on 2.1.2003. In that case, the demand notice is clearly barred by limitation, for the reason that it was beyond the period of 12 years. He further submitted that Petitioners made several payments to the tune of Rs.12.00 lakhs. To prove the payments, copies of challans have been produced. Thus, on the ground of limitation, and on the ground of partial payment made towards loan due, Learned Counsel for Petitioners seeks for waiver of pre-deposit. No other ground is urged for waiver of pre-deposit.

Learned Counsel for Respondent Bank, in reply, submitted that Petitioners were granted an OTS on 29.5.2019 with the direction to pay Rs.13,50,000/-, on the time lines set out in the OTS offer. Petitioners had made only part payment and the OTS failed. It was communicated to the Petitioners on 31.8.2019. In that communication, it was very clearly stated that Petitioners are liable to pay Rs.22,87,621.85p, as on 31.8.2019. Petitioners were also communicated about the order passed under Section 14 of the SARFAESI Act, 2002. It is admitted in the grounds of appeal about issuance of demand notice dated 12.7.2005. It was also admitted that the Respondent Bank approached the Central Registrar under Multi-State Co-operative Societies Act, claiming Rs.5,44,871/- with interest @ 14.50% per annum, from 1.2.2009, till passing of arbitration award on 21.5.2011. Petitioners were directed to pay Rs.5,44,871/.

Since that was not paid, demand notice dated 11.9.2018 was issued claiming a sum of Rs.27,26,617.56p as due from the Petitioners, as on 31.8.2018. Therefore, the claim of the Petitioners that demand notice was issued beyond the period of limitation is not correct. Whatever the amount paid by the Petitioners has been apportioned towards the loan account. He further submitted that physical possession has been delivered to the auction purchaser on 2.6.2023.

Considered the rival submissions and perused the records.

The waiver application is canvassed primarily on the ground that the notice issued under Section 13(2) of the SARFAESI Act, 2002 is barred by limitation, in view of the fact that the demand notice was issued on 11.9.2018, when the account was classified as NPA way back on 2.1.2003.

It was clarified by the Learned Counsel for Respondent Bank by stating that the Respondent Bank and the Petitioners entered into an arbitration and the arbitration award was passed on 21.5.2011 for a sum of Rs.5,44,871/- due and payable as on 31.1.2009, with subsequent interest at 14.50% per annum. On the basis of this amount, the demand notice under Section 13(2) of the SARFAESI Act, 2002 was issued claiming a sum of Rs.27,26,617.56p. It is also informed that after the arbitration award, the Petitioners made a payment of Rs.12.00 lakhs. After considering all the payments made by the Petitioners, the current outstanding as on the date of filing this appeal is Rs.15,98,357.46p.

It is further informed by the Learned Counsel for Respondent Bank that the property is sold. With regard to taking physical possession of the secured asset, there are contradictory views expressed. Learned Counsel for Petitioners claim that the possession has not been taken but the Learned Counsel for Respondent Bank claim that the possession had been taken and delivered to the auction purchaser. Learned Counsel for the auction purchaser also affirms that he is in physical possession of the secured asset from 2023.

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.

At this juncture, Learned Counsel for Petitioners strongly contested the current outstanding as on the date of filing this appeal provided by the Respondent Bank at Rs.15,98,357.46p, the reason being that this was arrived at by charging compounded interest and not simple interest, as ordered in the arbitration award, and if pre-deposit is ordered on this amount, it would have an adverse impact on the quantum of pre-deposit that would be determined. Therefore, he sought time to file a calculation memo from his side regarding the current amount due as on the date of filing this appeal, by applying simple interest at 14.50%, as ordered in the arbitration award dated 21.5.2011.

Therefore, post the matter on 13.11.2026 for filing of calculation memo by the Petitioners. Sd/-

Chairperson