Dismissed

M S Sun Educational Institutions v. State Bank of India

DRT21 Sept 2022SA/128/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application under Section 14 of the SARFAESI Act challenging a bank's attempt to take possession. The court held that while the bank recalled the warrant due to pending litigation, the applicant's claims regarding lease validity belonged to the pending comprehensive sale application, leaving nothing to adjudicate here.

What did the court decide?

Application dismissed; pending interlocutory applications disposed of.

M S Sun Educational Institutions versus State Bank of India — Banking and Recovery | DRT (2022)

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IN THE DEBTS RECOVERYTRIBUNAL- IAT HYDERABAD

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DATED THIS THE 215T DAY OF SEPTEMBER,2022

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No.12A/2022

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M/s. Sun Educational Institutions,

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Rep. by its Principal of Sun Degree^College, Sri B. R. Ravi Kumar, S/o.^{B. RajeshwarRao,} Aged about 39 years, R/o. H.No.5-745, Bhavani Nagar Colony, Old^{Alwal,Secunderabad.}

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Applicant.

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Versus

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State Bank of India, Rep. by its Authorized^Officer, Stressed Assets^{ManagementBranch,} Koti, Hyderabad.

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Smt Sampatooru^Vaidehi, W/o. Sri K.C.^RameshKumar, Flat No. 102, Adarsh^{GrandResidency,} Near Raghava^{Hospital,RamalayamRoad,} Satyanarayanapuram,^{Chaitanyapuri,} Hyderabad -^{500 060'}

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Respondents.

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Counsel for the APPlicant^: Counsel for ResPondent^No-1: Counsel for ResPondent^No'2.'

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Si K. Kalgan Chakrauorthg Si Allui Kishnam^Raju. Si D. Raghauulu.

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.:ORDERi

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This application^{is filed by the Applicantsu/s'17 of the SARFAESI} -4p;:2QO2,^{to declare t}le action of the lst Respondent Bank u/s'14 of} VAfir*$iXeESI^{Act for taking phvsicalpossessionof the application} //f' 'f;d,1r.a"r3[tperty, including the action of the l"t^{RespondentBank in} ,'*& i""r-,l.rg 15^{daysmandatory notice to the Applicantfor vacating the} ' ;' i 1 $f,pfl8&ion schedule property^{as illegaland arbitrary and to set-aside}

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SA.No.128/2022

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The a'ierments made by the Applicant, in brief, are as follows:-

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The Applicant is an educational institulion and is running U.G. courses in the schedule property for the past 8 years. The Applicant took the schedule property on lease from Smt Paleti Krishna Sindhura on O 1.O5.20O8 and subsequently executed Lease Deeds from time to time and the last Lease Deed is 3O.O9.2O2O. The lst Respondent Bank has not issued any notices u/s. 13(2) and 13(4) of the SARFAESI Act, for selling the secured asset i.e., application schedule property by conducting e-auction. The 1"t Respondent Bank filed Crl.M.P., before Ld. Chief Metropolitan Magistrate, Hyderabad for appointment of Advocate Commissioner for taking physical possession of the application schedule property and the Advocate Commissioner in^pursuance of the Warrant, issued by the Ld. CMM, is trying to dispossess the Applicant from the schedule property. Hence the SA.

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The lst Respondent Bank hled Reply Statement denying all the adverse allegations made in the application. The contentions of^the Respondent Bank, in brief, are as under,-

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The application schedule property is mortgaged to the^1"t Respondent Bank and the recent Lease Deed^{relied upon by the} Applicant is dated O3.O9.2O2O, whereas the^DemandNotice issued by the 1"t Respondent Bank u/s. 13(2) of the^SARFAESI Act was on 22.06.2020 and thus the said^{Lease Deedis} subsequent to the Demand Notice and so,^{the said Lease Deedis} void. The application schedule^property was^mortgaged by^Smt Paleti Krishna Sindhura in favour of the 1"t Respondent^{Bank on}

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p-a.OS.ZOt 1 and thereafter she^{is not expectedto create lease for} . iqtgd of more than 3^years and thus the^{LeaseDeed relied} .rpo.r'by the Applicant is invalid. The application^schedule

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l1 SEP lp}.p.dirr" *ra in e-auction^{conductedby the 1"t Respondent} 28.07 .2021 and the 2"d Respondent became^the bidder in the said auction and Sale Certificate^was

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SA.No.128/2022

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also issued by the lst Respondent Bank in favour of 2"d Respondent. As the Applicant herein is in occupation of the application schedule property, only constructive possession was taken by the lst Respondent Bank.

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ii) The Possession Notices were sent to the mortgagor/guarantors through Registered Post and the said notices were affixed on the schedule properties and were also published in "The Hans India" English Daily and "Andhra Jyothi" Telugu Daily newspapers. The e-Auction Sale Notice dt.19.O6.2O21 was also published in the newspapers. The mortgagor of the schedule property and others filed SA.No. 179 12021 before DRT-II, Hyderabad and obtained status-quo orders on 27.10.2021 in respect of the schedule properties. Due to communication gap between the Bank and its Counsel, the order was invited u/s. 14 of the SARFAESI Act from the Ld. CMM in respect of the mortgaged properties. After realizing the same, the l"t Respondent Bank has taken steps for recalling the Warrant issued by Ld. CMM in respect of the subject properties for which SA.No. 179/ 202 1 was liled.

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The 2"a Respondent filed her Reply-affidavit contending that she^is the bonalide purchaser of the schedule^property in the^e-auction conducted by the 1st Respondent Bank on^{28.07.2021and she paid} the entire bid amount and that the Lease Deeds^{relied upon by the} Applicant are created only for the^purpose of^{the present case'}

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Heard arguments.

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Zt "ff:ffi;:-;;"-- -,,^{re,ier in,hisSA?} {r ? 1 SEP ?rm Til q^- ii)^{ro what rqyff} \t'h'","rot$%9 \i9EgB-l)-'''..

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SA.No.128/2022

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Potnt No.lil:-

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The un-disputed facts of the case are that, one Smt Paleti Krishna Sindhura has mortgaged the schedule property in favour of the l"t Respondent Bank as security for the loan availed by M/s. Sindhura Paper Pvt. Ltd., and as the borrower and guarantors committed default in the repayment of the loan amount, the 1"t Respondent Bank initiated proceedings under the SARFAESI Act and in the said process it conducted the e-auction of the schedule property and 2"d Respondent became successful bidder of the schedule property. There is also no dispute regarding the fact that the borrower and guarantors relating to subject loan transaction filed SA.No.179/2021 before DRTII, Hyderabad and obtained status-quo order on 27.10.2021. When the status-quo order was in force, the l"t Respondent Bank obtained Warrant by filing necessary application before Ld. CMM for taking physical possession of the mortgaged properties through Advocate Commissioner.

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9, As of matter stands now, comprehensive SA filed by^borrowerand guarantors is pending before DRT-II, Hyderabad' As the^Commissioner Warrant was obtained for taking^{physical possession of the schedule} property after status-quo orders were obtained^{by the borrowerand} guarantors in the said SA, the l"t Respondent^{Bank tookstepsbefore} Ld. CMM for recalling of^{the CommissionerWarrant.As on today,} there is no threat to the^{Applicant hereinregardingdispossession} from the schedule ProPerty.

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So far as merits^{are concerned,the Applicant is relying on various} ilqd" q I$a* "."rted^by .^{the originalowner of the schedule property'} - ^--':^^-.^{.:-r^+a,r} iqsfifi#;St\f":^{Deed reried ,1o,, o, the A:elcan:} : "::::1 f t" o3.d&202o i?,"subsequent^{to the issuanceof DemandNotice} r\ i * )qt t+pqfrr2o, 'I7i.rs1z1^{of the SARFAESI Act, bv the l"t Respondent} '\o t errJf 'to tt. uo"rJir.. and guarantors to the loan transaction' In the '\4 :j! B "f" t""*,r.u0,1""^{smt iteka Vani is describedas Member of the} '{<.&;r_:}Z

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SA.No.128/2022

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Applicant Society. But, the present SA is not filed by Smt Meka Vani and same is filed by the Principal of Applicant Societ5r,s College. As comprehensive SA filed by the borrower and guarantors is pending before DRT-II, Hyderabad, the Applicant's claim that he is a tenant in the schedule property under the guise of Lease Deed, which on its very face is invalid, un-registered and under-stamped, his right to continue possession can be decided in the said SA. Insofar as the present SA is concerned, as Warrant obtained by the 1st Respondent Bank from the Ld. CMM, for taking physical possession of the schedule property, is recalled, there is nothing left to be adjudicated at present in the present case. So, the present SA filed by the Applicant is liable to be dismissed. So, this point is answered against the Applicant.

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Point No.lillt

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In the result, the present Securitization Application is dismissed. Consequently, the Interlocutory Applications, pending if any, shall stand disposed of. No order as to costs.

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1l. Communicate a copy of this order to the parties concerned.

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(Dictated to tlg Priu@te Secretary, trarscribed bg him, arrected, signed and^pronounced bg ne in^th.e open courl on this the 21d dag of September,^2022).

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sdl(G. GOPICHAND) Presidlng Officer

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i: t 1 sEP ?oz 3i
W*

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TRUE CCIiJ!' nr"rM DRI.I, flYD'ERABi,D-^\l{ 6lr/

M S Sun Educational Institutions v. State Bank of India

Case brief

What is this about?

What did the court decide?

M S Sun Educational Institutions v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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