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2026 Supreme(Online)(Mad) 26039
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. Suresh Kumar, N. Senthilkumar, JJ
R.Dakshinamoorthy – Appellant
Versus
The Authorised Officer Tamil Nadu Mercantile Bank Ltd. – Respondent
WP No.9503 of 2026 | WMP No.10244 of 2026 | R.A (SA) No.111 of 2017 | S.A.No.165 of 2008 | W.P.No.13104 of 2014
For the Petitioner(s): Ms.U.Ramya, for Mr.R.Bharath Kumar
For the Respondent(s): -
DRT cannot direct redemption of property by paying arbitrary reduced amount against actual bank dues under SARFAESI Act.
Headnote:The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), particularly Sections 13(2) and 13(4), governs enforcement actions by banks against defaulting borrowers. Borrower obtained loan of Rs.4,00,000/-, received demand notice under Section 13(2) and possession notice under Section 13(4); challenged before Debt Recovery Tribunal (DRT) in S.A.No.165/2008, where DRT directed deposit of Rs.2,00,000/- for account closure and redemption. DRT lacked authority to mandate such reduced payment against due amount of Rs.11,41,814.40/-. High Court upheld DRAT's setting aside of DRT order as per SARFAESI principles. Primary issue: Whether DRT could direct redemption upon payment of Rs.2,00,000/- against higher dues while challenging possession notice. Ratio: DRT has no power under SARFAESI to substitute bank's dues with arbitrary lower amount for redemption; such direction contravenes statutory framework and recovery rights. Writ petition dismissed; impugned DRAT order upheld.
| Table of Content |
|---|
| 1. challenges drat order quashing drt direction on sarfaesi notices. (Para 1 , 2) |
| 2. drt erroneously directed rs.2 lakhs payment against rs.11 lakhs dues. (Para 3 , 4 , 5) |
| 3. drt lacks power for reduced redemption; writ dismissed. (Para 7) |
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 24-03-2026 CORAM THE HON'BLE MR JUSTICE R. SURESH KUMAR AND THE HON'BLE MR.JUSTICE N.SENTHILKUMAR WP No.9503 of 2026 and WMP No.10244 of 2026 R.Dakshinamoorthy, S/o. Ramasamy, Prop. M/s. Sithi Vinayaga Cotton Mills, Kuppanachettiyar Street, Tirupur 641 601 ..Petitioner(s)
Vs The Authorised Officer Tamil Nadu Mercantile Bank Ltd., No. 233- 236 Palladam Road, Kamarajar Road, Tirupur 641 601 ..Respondent(s)
Writ Petition filed under Article 226 of Constitution of India for issuance of writ of certiorari to call for the records relating to the impugned order dated 06.11.2025 passed in R.A (SA) No.111 of 2017 on the file of the Debt Recovery Appellate Tribunal, Chennai and quash the same.
For Petitioner(s): Ms.U.Ramya, for Mr.R.Bharath Kumar For Respondent(s): -
ORDER
(Order of the Court was made by N.Senthilkumar J.)
The Writ Petition has been filed to call for the records relating to the impugned order dated 06.11.2025 passed in R.A (SA) No.111 of 2017 on the file of the Debt Recovery Appellate Tribunal, Chennai and to quash the same.
2.In view of the order that is going to be passed in this Writ Petition at the admission stage, notice to the respondent is dispensed with.
3.The petitioner was issued with a demand notice dated 11.12.2004 under Section 13(2) of the SARFAESI Act and possession notice dated 18.12.2005 under Section 13(4) of the SARFAESI Act. The same was challenged by the petitioner before the Debt Recovery Tribunal in S.A.No.165 of 2008. The Tribunal directed the petitioner to deposit a sum of Rs.2,00,000/- within a period of 60 days from the date of that order to bring his account to a close and in order to redeem his property from the bank. That order was challenged by the respondent bank, in W.P.No.13104 of 2014, where this Court directed the bank to approach the Debt Recovery Appellate Tribunal and therefore, the respondent filed an appeal which is now under challenge.
4.The case of the petitioner is that he obtained a loan for a sum of Rs.4,00,000/-, in connection to which the bank issued a demand notice dated 11.12.2004 under Section 13(2) of the SARFAESI Act and possession notice dated 18.12.2005 under Section 13(4) of the SARFAESI Act. Thereafter, auction was scheduled to be held on 15.12.2008 and the same was published in a Tamil daily on 29.11.2008. According to the writ petitioner, a proposal was given by him for OTS along with his willingness to deposit a sum of Rs.2,00,000/- and the same was filed in I.A.No.943 of 2012 before the Debt Recovery Tribunal. Though the Debt Recovery Tribunal dismissed the interim application and the main application, a direction was given by the Debt Recovery Tribunal to the petitioner to deposit a sum of Rs.2,00,000/- to bring the account of the petitioner to a close. It is the case of the respondent bank before the Appellate Tribunal that as on 31.12.2012, the amount due is Rs.11,41,814.40, therefore order of the Debt Recovery Tribunal, requiring the bank to close the loan for redeeming the property on receiving Rs.2 lakhs is totally illegal.
5.The Appellate Tribunal has taken note of the fact that the total amount due is Rs.11,41,814.40 and an order has been passed by the Tribunal directing the petitioner to pay only a sum of Rs.2,00,000/- within a period of 60 days, for closing the loan. The appellate tribunal observed that the said order is totally an illegal order, and it is against the basic principles of SARFAESI Act and set aside the order passed by the Debt Recovery Tribunal. Hence the Appeal. 6.The learned counsel for the petitioner submitted that there is no infirmity in the order passed by the Debt Recovery Tribunal which has directed the writ petitioner to pay a sum of Rs.2
