Allowed

A.O.,State Bank of India & Ors. v. Shakeel Ahmed Ismail @ Kalghatgi &ors

DRAT4 Jun 2025REGULAR APPEAL/13/2019

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal allowed an appeal filed by a bank against an order quashing its auction proceedings. The Tribunal held that the bank complied with service requirements despite the notice being returned, as the borrower failed to prove any intimation of address change to the bank.

What did the court decide?

Set aside the order of DRT-I allowing SA 49/2015; dismiss SA 49/2015; allow the appeal RA (SA) 13/2019.

A.O.,State Bank of India & Ors. versus Shakeel Ahmed Ismail @… — Banking and Recovery | DRAT (2025)

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RA(SA) 13/2019

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 4^th day of June, 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN

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CHAIRPERSON

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RA (SA) 13/2019

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(Arising out of SA 49/2015 on the file of DRT-I, Bangalore)

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Between

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1. Authorised Officer

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State Bank of India Stressed Assets Management Branch, No.61, 4^th Floor, Residency Plaza Residency Road, Bangalore.

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2. Branch Manager State Bank of India Stressed Assets Recovery Branch No.3, Enkay Complex, 2nd Floor Keshwapur Circle, Hubli - 580 023.

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3. The Assistant General Manager, State Bank of India Retail Assets and Small & Medium Enterprises, City Credit Centre Zonal Office, T.S.Complex Solapur Road, Keshwapur Hubli -580 023.

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4. The Branch Manager, State Bank of India, Hirepeth Branch, Pendar Gali, Mysore Store Building, Hubli. …..Appellants

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And

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1. SHAKEEL AHMED ISMAIL @ KALGHATGI Prop. M/s. Shakeel Trade C/o. Smt. Banu Mulla R/ At Terrace Portion Opp. Sikho Bank, Kalammana Agasai Hubli.

RA(SA) 13/2019

Also at:

Prop. M/s. Shakeel Trade, C/o. M/s. New Janatha Mobileo Store, Veer Mansion Building, Kittur Chennamma Circle, Opp: Idga Maidan, Thagginamane Complex Hubli -580 029.

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2. Shantilal Choudhari, S/o. Gajaramji, Shree Ramachandra Plaza, Belagam Galli, Kalamman Agabi Circle, M.,V. Galli, Hubli -580 028.

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3. Umaram Chaoudari, No.62A, La Lakshmeshwar, (Hulageriban), Shirahatti Gadag -582 116.

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4. Savaram M. Chaudari S/o. Mulara M. Chaudari Opp. Vardhman Bank Mahaveer Galli Hubli

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5. Sathyanna Sugur S/o. Chandrayya No.335/2A, Arvind Nagar Hubli.

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6. Ratilal Purohit S/o. Bopaji Purohit No.54/1, Kamaripeth Mahaveer Galli, Hubli. …..Respondents

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Counsel for Appellants : M/s Ramalingam & Associates Counsel for 1^st Respondent : Mr. MA Rajendra Counsel for Respondents 2 to 6 : Mr. E.Tamizharasan

RA(SA) 13/2019

ORDER

This appeal is filed under Section 18 of the SARFAESI Act against the order passed by Learned Presiding Officer, DRT-I, Bangalore passed in SA 49/2015 dated 14.5.2018.

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First respondent filed SA No.49/2015 challenging the issuance of Notice under Section 13(4) and subsequent auction proceedings initiated by the appellant bank as illegal, invalid and quash / set aside the same. .After contest, SA was allowed by Learned Presiding Officer, DRT-I, Bangalore mainly on the ground that appellant bank has not complied Rule 8(6) of Security Interest (Enforcement) Rules, 2002 with regard to service of notice of sale on the first respondent. Aggrieved by the said order this appeal is filed.

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Learned Counsel for appellant submitted that it is not the first sale or for that matter, measures challenged by the first respondent. He challenged the earlier measures initiated for taking possession and sale of the secured asset. He filed SA 549/2010 challenging the possession notice and that was dismissed on 13.8.2010. Earlier sale notice was challenged in SA 307/2011 (IR No.1570/2011) and that was also dismissed. It is his further submission that absolutely there was no pleading with regard to the fact that sale notice was not served on the first respondent. Only an oral submission was made that first respondent had changed his address and that was intimated to the bank and despite that bank has not chosen to serve the notice on the new address. On the basis of this oral submission and without any supporting document to show as to whether the first respondent had intimated change of address through proper means to the bank, sale was set aside.

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RA(SA) 13/2019

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In continuation of his submission, Learned counsel for appellant bank brought to my notice the impugned sale notice dated 12.12.2014 fixing the sale on 29.1.2015. The address of first respondent has been clearly given in the sale notice. This notice was returned without receipt by the first respondent. It was returned to the appellant with an endorsement “left, not known”. Sale was intimated through publication in one vernacular newspaper and Times of India dated 22.12.2012 . The sale notice was affixed in the secured asset. Copies of photograph of affixture are also produced. Thus, it is submitted by Learned Counsel for appellant that bank has scrupulously followed whatever measures required under the SARFAESI Act to be followed in the matter of sale.

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Learned Counsel further submitted that demand notice was taken to the same address that was given in the sale notice. Demand notice dated 6.11.2009 was received by the first respondent. First respondent also sent reply dated 4.12.2009 to the demand notice, wherein the same address noted in the sale notice is typed. Appellant bank had also sent a reply to the reply sent by the first respondent on 10.12.2009 to the same address. It is further submitted that possession notice dated 17.2.2010 was also issued to the same address.

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After receiving the possession notice, first respondent filed SA No.549/2010. After contest, this SA was dismissed. Thus, it is proved beyond doubt that sale notice was served to the correct address. Without receiving the sale notice and made it possible to return it as ‘left, not known”, it is not open to the first respondent to claim that he changed the address, intimated change of address to the appellant bank, without filing any proof. In the said circumstances, setting aside the sale is not correct and legal.

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RA(SA) 13/2019

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Thus contending, Learned Counsel for appellant bank prayed for setting aside the order of Learned Presiding Officer, DRI-I, Bangalore dated 14.5.2018 passed in SA 49/2015 and allow the appeal.

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Learned Counsel for R1 submitted that the sale was held subsequent to taking possession of the property. The appellant bank knows very well that first respondent was no more residing in the property mortgaged. First respondent has also sought information under Right to Information Act from the bank, giving his new address. No reply was sent by the bank to the information sought. When the bank knows about the change of address of first respondent, sending the notice to the old address and proceeding further with the sale is not legal.

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Learned Counsel for respondents 2 to 6, Auction Purchasers, adopted the submission of the Learned Counsel for the appellant bank and submitted that they are the bona fide purchasers and thus, sale must be protected.

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I have considered the rival submissions and perused the records.

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The primary issue involved in this appeal is whether the sale notice was served, as required under SARFAESI Act and rules. It is the contention of the Learned Counsel for appellant bank that the sale notice was taken to the address given in the loan documents, but that was returned as “left, not known”. First respondent has not intimated the change of address, if any, to the bank, either orally or by written communication. The records produced in the form of typed set show that sale notice was returned as “left, not known”. Copies of paper publication and photo showing affixture of sale notice had also been produced. Any change of address by the borrower should be intimated to the bank by a written communication with a request

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RA(SA) 13/2019

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to send further communications to the new address. But there is no proof filed to show that first respondent had taken any of these steps.

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With regard to the submission of Learned Counsel for first respondent that first respondent sought certain information under Right to Information Act from the bank, giving his new address and did not receive any response, there is no evidence filed in support of this claim, like the copy of the application filed seeking information, acknowledgement for receiving this application, etc. In the said circumstances, the claim of the Learned Counsel for first respondent that the bank knew about the change of address through the application sent for seeking information under Right to Information Act cannot be accepted.

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It is also the submission of first respondent that sale took place after taking physical possession of the property. Even in this case, it is the duty of the borrower, i.e., first respondent to inform the bank about his new residential address. Obviously, that was not done. If it is claimed to have been done, there is no evidence produced in support of the intimation served on the bank with regard to the change of address. Appellant bank has established proper service of sale notice and consequent conduct of sale.

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In the said circumstances, this Tribunal finds that the order allowing the SA on the ground that sale notice was not properly served is not correct and is liable to be set aside.

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In this view of the matter, the order dated 14.05.2018 passed in SA 49/2015 by the Learned Presiding Officer, DRT-I, Bangalore, is hereby set aside.

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RA(SA) 13/2019

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In the result , this appeal RA (SA) 13/2019 is allowed and SA No.49/2015 is dismissed. Parties are directed to bear their own costs.

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Pending IAs, if any, stand closed.

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[Dictated to Stenographers (SN and DD) transcribed by them, corrected, signed and pronounced by me in open court, this 4^th June, 2025]

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Sd/- (JUSTICE G. CHANDRASEKHARAN) CHAIRPERSON

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A.O.,State Bank of India & Ors. v. Shakeel Ahmed Ismail @ Kalghatgi &ors

Case brief

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A.O.,State Bank of India & Ors. v. Shakeel Ahmed Ismail @ Kalghatgi &ors

Case brief

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