Dismissed

Karnataka Vikas Grameena Bank v. Smt Ashwagandha And Another

DRAT6 Nov 2025REGULAR APPEAL/143/2017

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal dismissed the Bank's appeal, confirming the DRT's order setting aside a sale certificate. The Court found violations of the Security Interest (Enforcement) Rules 2002, including improper service and publication of sale notice and lack of valuation report.

What did the court decide?

The appeal was dismissed and the order dated 16.5.2016 by the Presiding Officer, DRT, Karnataka at Bangalore, was confirmed.

Karnataka Vikas Grameena Bank versus Smt Ashwagandha And… — Banking and Recovery | DRAT (2025)

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 6^th day of November, 2025

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PRESENT: HON’BLE MR. JUSTICE G. CHANDRASEKHARAN

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CHAIRPERSON

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RA (SA) 143/2017 (Arising out of SA 343/2014 on the file of DRT, Karnataka at Bangalore)

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Between

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The Authorised Officer, Karnataka Vikas Grameena Bank, Goaves Branch, RPO Cross, Tilakwadi, Belgaum. …..Appellant

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And

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1. Smt. Ashwagandha, D/o Late Ashok Dattoba @ Dattatreya Nalawade, R/o. F. 302, Shrusti Apartments, M.G. Road,

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Tilakwadi, Belgaum, Rep. by GPA Holder & Husband Sri Chandadev @ Mahesh Kugaji, R/o F.302 Shrusti Apartments, M.G. Road, Tilakwadi, Belgaum.

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2. Sri Prabhakar M. Nalawade, R/o CTC No. 696, Narvekar Galli, Shahapur, Belgaum.

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…..Respondents

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Counsel for Appellant : Mr. P. Sreenivasulu Counsel for Respondents : Mr.T.R. Sundaram – R1 Mr.Harish Kumar – R2

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ORDER

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This appeal is filed against the order passed in SA 343/2014 by the learned Presiding Officer, DRT, Karnataka at Bengaluru on 16.05.2016.

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The aforesaid SA was filed by the first respondent herein

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to set aside the sale certificate dated 07.06.2014 registered on 12.06.2014 and issued by the appellant Bank in favour of the second respondent. After contest, the said SA was allowed. Aggrieved against the order of allowing the SA, this appeal is filed.

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It is submitted by the learned counsel for the appellant

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that learned Presiding Officer’s found that issuance of sale notice to respondent through post, affixture and publication of the same had not been done properly, there is no clear 30 days of publication of sale notice in newspapers from the date of publication till date of sale and that valuation certificate was not produced, thus, allowed the SA.

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Learned counsel for the appellant-Financial Institution

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submitted that on coming to know about the demise of the borrower - Ashok Dattoba @ Dattatreya Nalawade, the first respondent/his daughter is liable to pay the amount due as his legal heir. Inspite of

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several requests by the Bank, the first respondent has not repaid the loan amount, resulting in classification of the account as NPA on 08.12.2008. Thus, followed by issuance of demand notice and possession notice dated 23.03.2009, physical possession of the property was taken on 26.03.2011. One Mrs. Subathra and others filed OS 20/2011 on the file of Principal Senior Civil Judge, Belgaum against the first respondent and the appellant. The first respondent remained ex-parte. The appellant and the Subathra filed a joint memo in the suit agreeing that the Bank can recover the loan amount by the sale of the security asset. Thereafter, the Bank issued the impugned sale notice dated 06.11.2014. But the first respondent refused to receive the notice personally. The Bank published the sale notice in Kannada daily Prajavani and English Daily Deccan Herald on 06.04.2014. First respondent knew about the issuance of sale notice. Thereafter, valuation report was obtained and the property was sold. Without challenging the sale notice and sale, issuance of sale certificate alone cannot be challenged.

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He further submitted that sale cannot be challenged after a long time and pressed into service, the decision of the Hon’ble High Court of Madras in V. Thirumurugan – Vs. – Rajsriya Automobile Industries Pvt. Limited reported in (2012, 6, CTC

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488) for the preposition that a settled sale cannot be unsettled after a

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long period, especially, when nobody has made any allegation of fraud in conducting the sale.

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He also produced the decision of Hon’ble Supreme Court

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of India in Shakeena and Another – Vs. – Bank of India and others

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reported in (2021, 12, SCC 761) for the proposition that right of redemption should be exercised before it expires i.e. before registration of sale, prior to amendment and before issuance of publication of sale notice after amendment. Thus, he submits that the order of the learned Presiding Officer, is to be set aside.

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Learned counsel for the first respondent submitted that

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the first respondent was not the original borrower but her father was the borrower. Sale notice was served on the first respondent. There was no affixture of sale notice and publication of sale notice. That was the reason why, the first respondent was not aware of the sale and she came to know about the sale after registration of sale certificate. Therefore, the prayer was restricted to the challenge to issuance of sale certificate. Learned Presiding Officer, rightly found that the sale certificate was issued without properly following the procedure for the conduct of the sale. It is further submitted that the appellant has not produced the evidence in support of service of sale notice, affixture of sale notice and obtaining proper valuation etc. He prays for confirming the order of the learned Presiding Officer and for dismissal of this appeal.

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Considered the rival submissions and perused the

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records.

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From the facts elicited above and recorded, it is clearly

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evident that the appellant Bank said to have made every step to serve the impugned sale notice dated 06.04.2014 personally on the first respondent. But she refused to receive it. There is no indication about the affixture of sale notice. What is required under Rule 8(6) , 8(7) and 9 (1) of the Security Interest (Enforcement) Rules 2002, is that the authorized officer shall serve the notice to the borrower, affix and publish in two leading news papers, including one in Vernacular language having wide circulation in the locality. Rule 9 (1) of the Security Interest (Enforcement) Rules 2002 makes it all the more clear that no sale of schedule property in the first instance should take place before the expiry of 30 days from the date of which, public notice of sale is published in News papers or served to the borrower.

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Admittedly, the appellant Bank has not produced any

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proof evidencing service of sale notice to the first respondent and affixture either before the lower Tribunal or before this Tribunal. Therefore, it is patent that the notice required under Rule 8(6) of the Security Interest (Enforcement) Rules 2002 is not properly served on the first respondent. It is also recorded that service of sale notice on

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other borrowers viz., Mrs. Sudha, Smt. Ashwagandha and

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Ravishankar is also not established apart from not proving affixture of sale notice on the schedule property. The publication of sale notice was effected on 10.05.2014 fixing the sale on 29.05.2014, which shows that clear 30 days notice is not given from the date of publication for the sale of the property. When the first respondent denied proper valuation of the property, it appears that valuation report was not produced before the Tribunal. Thus, this Tribunal finds that the property was sold without following the basic and necessary mandatory provisions for serving of sale notice, affixing sale notice and justifying the upset price fixed by production of relevant documents.

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Though the SA is filed only to challenge the sale certificate issued, the grounds taken in the SARFAESI application shows that the first respondent had raised issuance of non service of sale notice and sale of the property without giving opportunity to the appellant to redeem the property.

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In the said circumstances, this Tribunal concurs with

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the finding of the learned Presiding Officer, DRT, Karnataka at Bangalore that the sale was held without following the mandatory provisions of the SARFAESI Act and therefore, the sale certificate issued in pursuance of the improper and illegal sale is liable to be set aside. Accordingly, the order dated 16.5.2016 passed by the learned

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Presiding Officer, DRT , Karnataka at Bangalore, is confirmed and the appeal is dismissed.

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In the result,

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