Remanded

Asrec Ltd. v. K Vijayanada Reddy

DRAT11 Sept 2024REGULAR APPEAL/112/2019

Case brief

AI extract

What is this about?

The Debit Recovery Appellate Tribunal allowed appeals challenging a lower court order that set aside an auction sale of mortgaged property. The Tribunal found defects in valuation and lack of construction details in the sale notice, remanding the case to the Debt Recovery Tribunal for a fresh hearing after admitting a new valuation report.

What did the court decide?

Appeals allowed; DRT order set aside; matter remanded for fresh hearing considering new valuation report.

Asrec Ltd. versus K Vijayanada Reddy — Banking and Recovery | DRAT (2024)

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Reportable/Non-Reportable

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Appeal No. 112 of 2019 & Appeal No. 111 of 2019-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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THE HON'BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

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Appeal No. 112 of 2019

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(Arising out of S.A. 310 of 2012 in DRT-I, Hyderabad) With

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Appeal No. 111 of 2019

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(Arising out of S.A. 310 of 2012 in DRT-I, Hyderabad)

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Appeal No. 112 of 2019

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(Arising out of S.A. 310 of 2012 in DRT-I, Hyderabad)

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M/s. ASREC (India) Limited, a company registered under the provisions of the Companies Act, 1956, having its registered office at Solitaire Corporate Park, Building No.2, Unit No. 201-20A & 202-20B, Ground Floor, Andheri Ghatkopar Link Road, Chakala, Andheri (East), Mumbai – 400 093.

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… Appellant

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-Versus-

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K. Vijayananda Reddy, son of Venkat Reddy, residing at Plot No. 14, SBI Colony, Sikh Village, Secunderabad;

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Snighda Plastic Industries, represented by its Managing Partner, J. Arunakumari, W/o. JSRK Reddy, R/O. Sy. No.29, H. No. 2-1-158/18, Suraram Village, R.R. District.

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… Respondents

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M/s. Eesavyasa Technologies Private Limited, 79 SVCIE, Phase-III, Balanagar, Hyderabad – 500 037;

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Authorised Officer, State Bank of Hyderabad, Masab Tank Branch, Hyderabad.

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… Proforma Respondents

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Counsel for the Appellant

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… Mr. Debasish Karmakar Mr. Satyam Ojha

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Counsel for Respondents

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Mr. Nemani Srinivas

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With Appeal No. 111 of 2019

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(Arising out of S.A. 310 of 2012 in DRT-I, Hyderabad)

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M/s. Eesavyasa Technologies Private Limited, a company registered under the provisions of Companies Act, 1956, represemtIE by its Managing Director Mr. D. Prem Chakravarthy Plot No. 79, SVCIE, Kukatpally Village, Balanagar Mandal, Hyderabad – 500 037.

… Appellants

-Versus-

Appeal No. 112 of 2019 & Appeal No. 111 of 2019-DRAT-Kolkata

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1. Mr. K. Vijayananda Reddy, S/o Mr. K.Venkat Reddy, R/o B-11, TIE, Phase-II, Balanagar, Hyderabad-17. Also R/o Plot No. 14, SBI Colony, Bowinpally, Secunderabad-11;

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The Authorized Officer, State Bank of India (earlier SBH), Masab Tank Branch, Hyderabad;

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M/s Snighda Plastic Industries represented by its Managing Partner J. Arunakumari, W/o JSRK Reddy R/o Sy. No. 29, H. No. 2-159/18, Suraram Village, RR District;

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M/s ASREC (India) Limited, Represented by its Authorised Officer, Mr. Manjunatha Reddy, Solitiary Corporate Park, Andheri, Ghatkapore Link Road, Chakalat, Andheri East, Mumbai – 400 093.

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... Respondents

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Counsel for the Appellant … Mr. Nemani Srinivas Counsel for Respondent No. 4 … Mr. Debasish Karmakar Mr. Satyam Ojha JUDGMENT : 11^th September, 2024

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THE APPELLATE TRIBUNAL :

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Both these appeals have arisen against one common judgment and order passed by Learned DRT-I, Hyderabad in SARFAESI Application No. 310 of 2012 (K. Vijayananda Reddy -vs- Authorised Officer, State Bank of Hyderabad) on 20^th November, 2019, setting aside the sale, hence both the appeals are being disposed of by a common judgment.

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2. The facts in brief, as per the pleading of the parties, are that Respondent No. 2, Singdha Plastic Industries , was sanctioned financial assistance by the Secured Creditor, State Bank of Hyderabad, in the form of Working Capital limit of Rs.200.00 lac and Inland Letters of Credit limit of Rs.100.00 lac. SARFAESI Applicant, namely K. Vijayananda Reddy, Respondent No. 1, stood as guarantor and mortgagor. There was default in payment, accordingly, O.A. 36 of 2012 was filed by the Secured Creditor wherein interim orders were passed appointing Commissioner for preparation of inventory, etc. Due to default and irregular payments, loan account

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Appeal No. 112 of 2019 & Appeal No. 111 of 2019-DRAT-Kolkata was classified as N.P.A. Notice, under Section 13 (2) of the SARFAESI Act, 2002, was issued on 17.1.2012 followed by Possession Notice dated 26.6.2012.

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3. SARFAESI Application was filed by the SARFAESI Applicant challenging the Possession Notice. Pending SARFAESI Application, loan account was assigned to M/s. ASREC (India) Limited, Appellant herein. Sale Notice dated 21.7.2016 was issued fixing the date of auction on 22.8.2016 wherein M/s. Eesavyasa Technologies Private Limited was declared as the highest bidder for an amount of Rs.1,61,11,000.00. Sale certificate was accordingly registered on 1.9.2016 on payment of the bid amount. Auction sale was challenged on the ground of under-valuation along with other grounds.

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4. After considering the submission made by the Learned Counsel for the parties, Learned DRT arrived at a finding that the Secured Creditor has rightly invoked the provisions of the SARFAESI Act. Further, Possession Notice dated 26.6.2012 was duly served and publication was also duly made in two newspapers. Assignment was made in accordance with law. However, Learned DRT arrived at a finding that the valuation of the property was not made in accordance with law. Details of the construction on the property were not mentioned in the Sale Notice. Accordingly, the property was sold for under-valuation.

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5. I have heard the Learned Counsel for the Secured Creditor as well as the Purchaser. Despite service of notice, SARFAESI Applicant is not represented in the appeal.

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6. At the very outset, Learned Counsel for Appellant would submit that the Learned DRT has placed reliance upon two valuation reports of L. Kishore Chand as well as G. Ashok Kumar & Associates which were filed by the Learned DRT. Further, pending appeal, an application, under Order 41 Rule 27 C.P.C., was filed annexing valuation report of Das Mohd Areef dated 7.7.2016. It is prayed that

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Appeal No. 112 of 2019 & Appeal No. 111 of 2019-DRAT-Kolkata the same be taken on record as it could not be filed before the Learned DRT due to inadvertence.

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7. Perusal of the three reports would show that the distress value of the property was Rs.160.00 lac in the valuation report of L. Kishore Chand dated 30^th June, 2016 while in the report of G. Ashok Kumar & Associates dated 4.9.2014 it was Rs.143.68 lac wherein the constructions were indicated while in Das Mohd Areef report dated 7^th July, 2016 it was Rs.157.22. Reserve price was fixed at Rs.1,16,00,000.00 and the property was sold at Rs.1,61,11,000.00.

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8. As far as the report dated 7^th July, 2016 of Das Mohd Areef is concerned, the relevant report should have been filed by the Secured Creditor before the Learned DRT. Main issues are regarding not mentioning of construction of the flats on the property in question and as to whether the valuation of the property was made in accordance with law or not?

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9. Application filed under Section 41 Rule 27 C.P.C. annexing the valuation report of Das Mohd Areef is taken on record as additional evidence.

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10. It would be appropriate in the end of justice that the matter be remanded to DRT for deciding the matter afresh after taking into consideration the valuation report of Das Mohd Areef dated 7.7.2016 and after giving opportunity of hearing to the parties. Accordingly, the appeal deserved to be allowed.

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O R D E R

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Both the appeals, Appeal No. 112 0f 2019 and Appeal No. 111 of 2019, are allowed. Judgment and order dated 20^th November, 2019 passed by Learned DRT-I, Hyderabad in SARFAESI Application No. 310 of 2012 (K. Vijayananda Reddy -vsAuthorised Officer, State Bank of Hyderabad) is set aside. Learned DRT is directed to decide the matter afresh after taking into consideration the valuation report of Das Mohd Areef dated 7.7.2016 and after giving opportunity of hearing to the parties in accordance

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Appeal No. 112 of 2019 & Appeal No. 111 of 2019-DRAT-Kolkata with law. Parties are directed to appear before Learned DRT on 4^th October, 2024 for hearing. Since SARFAESI Application is pending since 2012, Learned DRT is expected to decide the matter expeditiously as early as possible as per its own roster.

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No order as to costs.

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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Copy of this judgment be placed in the records of Appeal No. 111 of 2019.

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File be consigned to Record room.

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Order pronounced in open Court.

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(Anil Kumar Srivastava,J) Chairperson

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Dated: 11^th September, 2024 13 & 14/ac

Asrec Ltd. v. K Vijayanada Reddy

Case brief

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Asrec Ltd. v. K Vijayanada Reddy

Case brief

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