Dismissed

Union Bank of India v. Injamuri Arun Vilasini

DRAT23 Jul 2025REGULAR APPEAL/6/2023

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed the bank's appeal against the DRT's order setting aside an asset auction. The Tribunal held that mandatory private notices to borrowers were not served or returned unserved as required. It ruled the bank complied with deposit requirements and the restructuring letter was not a valid statutory representation.

What did the court decide?

The appeal was dismissed with directions to confirm the impugned judgment and order allowing the Securitisation Application.

Union Bank of India versus Injamuri Arun Vilasini — Property and Title | DRAT (2025)

¶1

Reportable/Non-Reportable

¶2

Appeal No.06 of 2023 -DRAT-Kolkata

¶3

IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT

¶4

KOLKATA

¶5

HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA CHAIRPERSON

¶6

Appeal No. 06 of 2023

¶7

(Arising out of S.A. No. 269 of 2022 in DRT II, Hyderabad)

¶8

Union Bank of India, Gowliguda Branch Hyderabad 500020

¶9

.…Appellant

¶10

-Versus-

¶11

Injamuri Arun Vilasini, Flat No. 101, 1^st Floor, Balaji Homes Apts, 11-9-37/2A, Plot No. C-4, South Part, Saroor Nagar, Hyderabad 500035.

¶12

Kadaboina Ramulu Venkatram, H No. 12-1-1325/1 Shanti Nagar, North Lallguda, Tarnaka, Secunderabad 500017.

¶13

….Respondents

¶14

Counsel for Appellants Ms. Aparajita Rao, Counsel for Respondents Mr. Kalyanam Kalyan Chakravarthy JUDGMENT : 23^rd July, 2025 THE APPELLATE TRIBUNAL :

¶15

Instant Appeal has arisen against a judgment and order dated 6^th December, 2022 passed by Learned DRT-2 Hyderabad allowing S.A. No. 269 of 2022 (Injamuri Arun Vilasini versus Union Bank of India and others).

¶16

¶17

Appeal No. 06 of 2023-DRAT-Kolkata 2. As per pleadings of the parties, facts in brief are that Respondent herein namely Injamuri Arun Vilasini preferred a Securitisation Application under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the Act) with the assertions that she is the borrower of the Appellant Bank herein for an amount of Rs.19 lacs in the year 2010. The payment of instalment became irregular and the account was classified as NPA on 31.03.2019. Demand Notice under Section 13(2) of the SARFAESI Act was issued on 31.10.2019 which was served upon the borrower. Notice under Section 13(4) of the SARFAESI Act was issued on 08.03.2022 which was sent by registered post on 15.03.2022, affixed on the secured asset and was published on 12.03.2022 in Mana Telangana (Telugu) and Business Standard (English) daily newspapers. Notice was not served upon the Securitisation Applicant. Notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the Rules) was issued on 25.07.2022 and e-auction sale notice was issued on 28.07.2022 which were published in newspaper ‘Business Line’ and ‘Eenadu’ English and Telugu newspapers on 29.07.2022. Notice under Rule 8(6) of the Rules was also not served upon the Securitisation Applicant. Proper valuation report was not obtained and reserve price was fixed at low value. Single bidder appeared in e-auction and the secured assets were auctioned for an amount of

¶18

¶19

Appeal No. 06 of 2023-DRAT-Kolkata Rs.47,00,000/- on 30.08.2022. It is alleged that there is violation of Rule 9(3) and 9(4) of the Rules.

¶20

3. Reply submitted by the Appellant Bank stating that all the procedures and Rules framed under the Act were duly followed.

¶21

4. Learned DRT framed following two issues for

¶22

determination:

¶23

(i) Whether the applicant establishes valid grounds for quashing the auction sale held on 30.08.2022 pursuant to sale notice dated 28.07.2022 in respect of the SA schedule property?

¶24

(ii) To what relief?

¶25

5. In issue No. (i) Learned DRT recorded a finding that there is no illegality in the classification of account as NPA. However, Section 13(3A) of the Act was not complied with by the Bank. Further, Possession Notice was not duly served upon the Securitisation Applicant. There is violation of Rule 9(3) and 9(4) of the Rules. Accordingly, Learned DRT allowed the Securitisation Application setting aside the measures taken by the Bank under Section 13(4) of the SARFAESI Act including Auction held on 30^th August, 2022 pursuant to Sale Notice dated 28^th July, 2022.

¶26

6. Feeling aggrieved by the judgment, Appellant/ Secured Creditor preferred the Appeal.

¶27

7. Learned Counsel for the Appellant would submit that there is compliance of Rule 9(3) and 9(4) of the Rules as confirmation of the e-auction Sale was made on 01.09.2022 on which date 25% of the bid amount was deposited by the

¶28

¶29

Appeal No. 06 of 2023-DRAT-Kolkata auction purchaser. Thereafter, he sought for time by submitting a representation wherein time upto 31^st October, 2022 was allowed. These papers were filed as additional evidence in the Appeal.

¶30

8. It is further submitted that Notice under Section 13(4) of the Act, Rule 8(1) and 8(6) of the Rules were duly served upon the borrower. No representation under Section 13(3A) of the Act was received. Accordingly, there was no requirement of submitting any reply to the same.

¶31

9. Per contra, Learned Counsel for the Respondents would submit that Notice under Section 13(4) as well as Rule 8(1) and 8(6) of the Rules were not served upon the Securitisation Applicants. Publication can only be made when the notice is returned back unserved but no envelope is filed to prove that the envelope containing the notices is returned undelivered. It is further submitted that the auction Sale was conducted on 30^th August, 2022 but 25% of the bid amount was not deposited as required under Rule 9(3) of the Rules. Accordingly, the same was against the law.

¶32

10. In Rakesh Birani (dead) through Legal Representatives versus Prem Narain Sehgal and another (2018) 5 SCC 543, Hon’ble Apex Court held that-

¶33

“9. Rule 9(3) makes it clear that on every sale of immovable property, the purchaser on the same day or not later than next working day, has to make a deposit of twenty-five per cent of the amount of the sale price, which is inclusive of earnest money deposited if any. Rule 9(4) makes it clear that balance amount of the purchase price payable shall be paid by the purchaser to the authorised officer on or before the

¶34

¶35

Appeal No. 06 of 2023-DRAT-Kolkata fifteenth day of "confirmation of sale of the immovable property" or such extended period as may be agreed upon in writing between the purchaser and the secured creditor. Thus, Rule 9(2) makes it clear that after confirmation by the secured creditor the amount has to be deposited. Rule 9(3) also makes it clear that period of fifteen days has to be computed from the date of confirmation.”

¶36

11. It was further held that the compliance required under Rule 9(3) 9(4) or 9(6) of the Rules can only be made after confirmation of sale by the Authorised Officer. In the present case, confirmation of sale was communicated to the auction purchaser on 01.09.2022. He deposited the 25% of the amount on the same day. Further, he made a request on 01.09.2022 for extension of time of two months for depositing the balance 75% amount which was replied by the Bank vide reference R.O. KOTI/47/2022-23 dated 01.09.2022 wherein the Authorised Officer extended the time for payment of the balance amount upto 31.10.2022. Undisputedly, the amount was deposited within the time extended by the Authorised Officer. Accordingly, there is no violation of Rule 9(3) and 9(4) of the Rules by the Auction Purchaser or the Bank.

¶37

12. As far as representation under Section 13(3A) of the Act by the borrower is concerned, a letter was sent by the borrower on 31.10.2019 to the Bank which is as under:

¶38

“Our housing loan became NPA and it is required Rs.6,66,000/- for upgrading the loan account, hence request you I will pay Rs.20,000/each from November,19 to Jan 20 hence kindly consider my case sympathetically.”

¶39

13. Bare perusal of the text would reveal that it was simply a request for restructuring the loan account and not a

¶40

¶41

Appeal No. 06 of 2023-DRAT-Kolkata representation under Section 13(3A)of the Act. Accordingly, there was no requirement of the secured creditor to reply the same under Section 13(3-A) of the Act. Accordingly, there is no violation made by the Secured Creditor for noncompliance of Section 13(3-A) of the Act.

¶42

14. As far as issue of service of notice is concerned, Sale Notice was issued on 25.07.2022 which was posted on 27.07.2022 but there is nothing on record to show that this notice was either served upon the borrower or received back undelivered. Rule 8(6) of the Rules provides as under:

¶43

Rules 8 (6) of the Security Interest (Enforcement) Rules, 2002 are as under :

¶44

“ 8. Sale of immoveable secured assets

¶45

( 6) The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5):”

¶46

15. Provision itself clearly states that 30 days notice for sale should be served upon the borrowers with a proviso that in case of sale by public auction, public notice in the form in Appendix IV-A should also be published through leading newspaper including one in vernacular language having wide circulation in the locality. These are the mandatory provisions. No doubt, notices were published in the two newspapers. One in English ‘Business Line’ dated 29.07.2022 and ‘Eenadu’ dated 29.07.2022 wherein the date for public auction was fixed for 30^th August, 2022. But the mandatory provision for service of the notice upon the borrower could not be established by the secured creditor. If the postal envelope was not served or returned

¶47

¶48

Appeal No. 06 of 2023-DRAT-Kolkata undelivered or unserved, the same should have been placed on record along with an affidavit to that effect. But even in the replies filed by the Bank not a single word is stated about the service of notice issued under Rule 8(6) of the Rules. Likewise, notice under Section 13(4) of the Act could also not be proved to be served upon the borrower by the secured creditor as required under Section 13(4) of the Act. Notice under Rule 8(1) of the Rules should have been served upon the borrower or if it was not served, should have been placed on record that the envelope containing the notice is received back undelivered or unserved due to one or the other reason then the same should be published as required under Rule 8(1) and 8(2) of the Rules. In the present case, the secured creditor failed to show the compliance of the Rules as aforesaid.

¶49

16. Valuation of the secured assets was made and a finding is recorded regarding compliance of Rule 9(5) which is under challenge by the borrower.

¶50

17. On the basis of the discussion made above, I am of the considered view that the Learned DRT has rightly arrived at a conclusion and allowed the Securitisation Application. There is no infirmity or illegality in the impugned order. Appeal lacks merit and is liable to be dismissed and is accordingly, dismissed.

¶51

ORDER

¶52

Appeal is dismissed. Impugned judgment and order dated 6^th December, 2022 passed by Learned DRT-2

¶53

¶54

Appeal No. 06 of 2023-DRAT-Kolkata Hyderabad in S.A. No. 269 of 2023 (Injamuri Arun Vilasini versus Union Bank of India and others) is confirmed.

¶55

No Order as to costs.

¶56

File be consigned to Record Room.

¶57