The Chennai bench of the Debts Recovery Appellate Tribunal (DRAT) has ruled in favor of Indian Bank, dismissing a Securitization Application (SA) due to a lack of evidence indicating illegality in the order passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002. The appellants, Mr. A. Subramaniyan, claimed they were neither borrowers nor guarantors and had purchased the property in question through registered sale deeds in 2003.
Indian Bank had initiated proceedings under the SARFAESI Act, filing a petition under Section 14 before the Chief Judicial Magistrate (CJM), Kollam. The CJM appointed an advocate commissioner to take physical possession of the property. The Presiding Officer dismissed the SA, leading to the filing of this appeal. The appellants’ counsel argued that they were bonafide purchasers of the property, and no security interest was created. In contrast, the respondent bank’s counsel opposed the appeal, stating that a security interest was created in respect of the property by Late Sundareswaran on behalf of M/s. N. Sundareswaran firm in 1969.
The bank’s counsel also argued that the appellants were not bonafide purchasers, as they had purchased the property during the subsistence of the mortgage. The DRAT bench, comprising Justice G. Chandrasekharan, viewed that the Presiding Officer, DRT-II, Ernakulam, had rightly dismissed the Securitisation Application. The tribunal found that the appellants had purchased the property subject to the mortgage, which was created in 1969, long before their purchase in 2003.
The tribunal also noted that there was no indication that the order passed under Section 14 was illegal or irregular. Therefore, the appeal in RA (SA) 77/2019 was dismissed as devoid of merits. The judgment was delivered on August 4, 2025, with Justice G. Chandrasekharan presiding over the case. The counsel for the appellant was M/s. Ashok B. Shenoy, and the counsel for the respondent was M/s. P. V. Muralidhar. The case highlights the importance of establishing the legitimacy of security interests and the rights of bonafide purchasers in cases involving the SARFAESI Act.