Authority: High Court of Judicature at Madras
Order Date: 15 July 2026
Case Overview
- Petitioners: J. Guganathan and Dhanalakshmi, heirs of late R. Jaganathan, residing at 77 Saraswathi Street, Adambakkam, Chennai.
- Respondents: Orix Leasing and Financial Service India Ltd (financial institution) represented by D. Gopinath, and A. Murugan (second respondent).
- Property: Plot No.77, Saraswathi Street, Adambakkam, originally owned by late R. Jaganathan; sale deed dated 22 June 2017 executed in favour of A. Murugan as security for a loan.
- Loan: A. Murugan secured a commercial loan of Rs 1.72 crore from Orix by depositing the title deeds.
- Default: Upon default, Orix invoked SARFAESI Act, 2002 to take possession of the property.
- Civil suit: Petitioners filed a suit in Principal District Court, Chengalpattu seeking declaration of ownership and nullity of the sale deed on grounds of fraud.
- Debt Recovery Tribunal: Petitioners challenged SARFAESI measures before DRT‑III, Chennai (TSA No.497 of 2023); deposited Rs 60,00,000 under interim direction; DRT dismissed the application on 20 January 2026.
- Appeal to DRAT: Petitioners appealed to Debt Recovery Appellate Tribunal, Chennai; DRAT order dated 26 March 2026 directed a pre‑deposit of 25 % of the outstanding claim as condition to entertain the appeal.
- Petitioners argued they are third‑party victims, not borrowers or guarantors, and that the pre‑deposit is onerous given the earlier Rs 60 lakh deposit.
Final Outcome
- The writ petition (W.P. No.17015 of 2026) is dismissed; no costs awarded.
- The court held that the validity of the sale deed and alleged fraud must be decided by the civil court, not by a writ court, and that the statutory pre‑deposit under Section 18(1) of the SARFAESI Act remains applicable.
- The petitioners may file a separate application before the DRT to seek refund of the Rs 60,00,000 already deposited; such application will be considered on its merits.
- WMP No.18332 of 2026 permitting the petitioners to file a single writ petition is allowed; other connected interim applications are closed.
Topics: Court Order, SARFAESI Act, Debt Recovery