Dismissed

Chintakuntla Sreenu v. State Bank of India

DRT12 Jan 2023SA/106/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed the applicant's petition challenging the auction of mortgaged property. The court held that the bank followed statutory procedures under the SARFAESI Act, all notices were duly served, and the sale was conducted without valid lapses, rejecting claims regarding valuation and notice timelines.

What did the court decide?

The security application filed under Section 17 of the SARFAESI Act was dismissed.

Chintakuntla Sreenu versus State Bank of India — Banking and Recovery | DRT (2023)

¶1

IN THE DEBTS RECOVERYTRIBUNAL - I AT HYDERABAD

¶2

DATED THIS THE 12TH DAY OF JANUARY ,2cl23

¶3

PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

¶4

sA.No.1c6/2c.22

¶5

Chintakuntla Sreenu, S/o. Somaiah, Aged 46 years, Occ: Govt. Service, !/o.^{Flat No.202,t1-2O-J6/2o2,} J. Ramarao Apartment, HUbA Complex, Saroornagar, Ranga Reddy District.

¶6

Applicant.

¶7

Versus

¶8

State Balrk of India, l.p.^{ty its Authorized Oflicer,} Thorrur - 20246, Main Road,

¶9

Thorn:r, Mahabubabad Dist.5o6 I 63.

¶10

Smt G. Venkata Lakshmamma, W/o. M. Mahaboob Baig, Aged major, H.No.t t_2O_S / 212, Sowmya Apartments, Wesi HUDA C-,omplex, Kothapet, Saroornagar, KV Ranga Reddy District 5000-60.

¶11

Respondents.

¶12

(Impleaded a.s per Ord.er d"t.22.2.22 In IA.Nos.TOS A 207 of 2022)

¶13

)r- '4;::': -- r :'-:
Si T. Sidhar
li$- '{ ag!-";"co$ foi No. I Sri G. Prabhakar Sarma.
fi * co4,td .for No.2 Si D. Raghauulu.
'
I/,* 12JAN
,(lr ? -:ORDERi
.!.

¶14

Si T. Sidhar Redd.g. Sri G. Prabhakar Sarma. Si D. Raghauulu.

¶15

This

¶16

This frled by the Applicant u/s.17 of the SARFAESI Act, 2OO2, auction of the application schedule property conducted by Bank on O9.O5.2O22, pursuant to the SaIe Notice dt.o7 .o4.2022 and the clonsequential sale certificate dt. 18.o5.2022, issued in favour of the 2"a Respondent is in violation of the SARFAESI Act and the Rules made thereunder and to set_aside the same.

¶17

The averments made in the application, in brief, are as under,_

¶18

SA. No.106/2022

¶19

The Applicant ava ed financial assistance from the r"t Respondent Bank by mortgaging the apprication schedule property as securigr and thereafter the Applicant was repaying the loan amount regularly without any default. However, thereafter the Applicant was on medical leave and he did not get salary for several months. While so, the Applicant came to know ffi1e11g[ some intending purchasers that the l"t Respondent Bank has contemplated sa-le of the schedule property on O9.O5.2O22 by issuing Sate Notice dt.O7 .4.2022.

¶20

ii) The l"t Respondent Baak without serving any notices on the Applicant i.e., Demand Notice u/s.13(2), possession Notice u/s.l3(4) and the SaIe Notice under Rule 8(6) of the SARFAESI Act and the Rules, made thereunder, has directry proceeded for t].e sale of t].e schedule property, which is illegal and arbitrary. The l"t Respondent Bank has also failed to aJlix the possession Notice and the Sa-le Notice on the schedule property arrd has also failed to publish the said notices in two daily newspapers. The l"t Respondent Bank, without waiting for expiry of 3O days from the issuance of Rule g(6) notice, has published the Sale Notice under Rule 9(1) simultaneously and thereby deprived the opportunity of the Applicant to redeem the mortgage. The lut Respondent Bank frxed the reserve price of the property as Rs.2O.OO lakhs whereas the property is worth of more than 45.00 lakhs, which clearly shows that the l"t Respondent Bank has not obtained proper valuation of the property. The 1"r Respondent Bank has illegally conducted the sale of the schedule property on O9.O5.2O22, pursuant Sale Notice dt.OZ.O4.2O22 and without obtaining EMD and 25% from the auction purchaser within the stipulated Sa-le Certificate dt.1g.05.2022 in favour of the 2"a purchaser. Hence the SA.

¶21

filed its Reply Statement denying all the adverse

¶22

application. The contentions of the l"t Respondent

¶23

follows:-

¶24

t availed Housing Loan of Rs.I2,5O,0OO/_ and Suraksha Loan of Rs.6O,0OO/- after executing the necessar5r loarr documents on o2.o3.2o13 for purchasing schedule property and to secure the said

¶25

SA. Na 106/2022

¶26

loan, the Applicant created. mortgage over the schedule property in favour of the lut Respondent Bank. After availing tJ.e aforesaid loan, the Applicant paid few loan insta-lments and trereafter committed defaurt in the repa5rment of the loan instalments. So, the loan account of the Applicant was classified as NpA as per the RBI guidelines.

¶27

ii) The 1"t Respondent Bank invoked the measures under the SARFAESI Act, to recover t}re outstanding dues from the Applicant by issuing Demaad Notice dt.19.06 .2O2O u/s.73(2), calling upon tJre Applicant to pay the outstanding dues of Rs. r4,s7,g66/- with future interest and costs and t}le Applicant received the said notice but failed to pay the demanded amount. So, the l"t Respondent Bank issued possession Notice dt.24.09.2O2O arrd sarDe was received by the Applicant. The Possession Notice was published in Hans India and Eenadu daily newspapers on 3O.O9.2O2O and the said notice was also affixed on the schedule property. Thereafter, the l"t Respondent Bank Iiled Crl.M.P.No.3/2O2t u/s.t4 of the SARFAESI Act, before the Ld. Chief Judicial Magistrate, Wararrgal, and took physical possession of the schedule property through Advocate Commissioner on O4.O2.2O22. As the Applicant did not come forward. to pay the outstanding dues, the l"t Respondent Bank issued Notice prior to sale dt.10.02.2022 under Rure 8(6) of the Rules, 2OO2, and. the said notice was served on the Applicarrt.

¶28

iii) The '"t Respondent Bank issued Sale Notice dt.OZ.O4.2O22, frxing the sale of the schedule property on O9.O5.2O22 and the said notice was """1^{.."the Applicant, affixed on the} schedule property and p!lishe4 India and Eenadu daily newspap ers on OS.O4.2O22. the said Sale Notice dt.OZ.O4.2O22, frled by moved IA.No.4 59 /2022 for stay of the sale of the f 2 "d$Hfifl3p-r,{g, wherein this rribunal vide order dt.o6.os.2o22 ;. :T:':^llitTyftav^{on conditionof depositing Rs.l.50 lakhsby} 2.]$f.1;0?:?92f-{n'{4urther^{sumof Rs.1.5otakhs on or before 02.06.2022,} T:-the 1st Respondent Bank. In the said order, it was a-lso that if the Applicant faited to comply with any of the said conditions, the stay granted stands vacated and the rst Respondent Barrk shatl be at liberty to proceed further in accordance with law. As

¶29

SA, N0.106/2022

¶30

the Applicant failed to comply with the said conditional order, the l"t Respondent Bank conducted the sale of the schedule property on o9.os.2o22, wherein the 2'a Respondent became successfur bidder for Rs.23,15,OOO/-.

¶31

ir) The 2"a Respondent deposited Rs.2,OO,00O/, being l0% of the bid amount on 22.O4.2O22; Rs.4,00,0O0/ towards balance 25% of the bid amount on IO.OS.2O22 and balance Z So/o of the bid amount i.e., Rs.17,15,0O0/- on lZ.OS.2O22. After receipt of entire sa.le consideration, the l"t Respondent Bank on 20.06.2O22 issued Certificate of Sale and same was registered as Doc.No.329 Z /2022 in favour of the 2"a Respondent.

¶32

v) The 1"t Respondent Bank has served all the statutory notices on the Applicant arld there is clear 30 days gap between flre notice issued under Rule 8(6) on 1O.O2.2O22 ard the Sale Notice published under Rule 9(l) on Og.O4.2O22 and also clear 3o days gap between publication of SaIe Notice in the newspapers and tlle date of sale. So, there are no violations committed by the lst Respondent Bank in proceeding under the SARFAESI Act against the schedule propert5r and the present SA is devoid of merits and same is liable to be dismissed.

¶33

4' The 2"a Respondent in her Reply statement averred that she deposited 10% amount i.e., Rs.2,0O,000/_ towards EMD for participating in the e_auction sale of the application schedule property conducted by the r"r Respondent Ba,,k on o9.os.2o22 and upon becoming successful bidder in the said auction, she deposited 15% amount totalling to 2S%o bid,amount on the very next day of auction and thereafter paid barance 7 so/o ofthe bid amount on ,:o:,o:?:,y.ll"n^{is vrithin 15} days, and that upon payment of entire bid ,,"ff,,H,:?'S",:,i,,J""!,;,i,2):.:;,ffi;:T.;:::.:,il: ,,^* ,"1. 1".:n".Pafrdlflrrchaser^{of the schedule property.} a^{12 JAil} 2m

¶34

Counsel appearing for the Applicaat frled his Written

¶35

points that arise for consideration are,_

¶36

SA.No.106/2022

¶37

Whether the Applicant has established any ground for setting aside the auction of the application schedule property conducted by the l"t Respondent Bank on O}.OS.2O22, pursuant to the Sale Notice dt.O7.O4.2O22, and the consequential Sale Certifrcat e dt.2O.O6.2O22, issued in favour of the 2"a Respondent?

¶38

ii) To what relief)

¶39

Point No.lil:-

¶40

Admittedly, there is no d.ispute with regard to availing facilities by the Applicant from the 1"t Respondent Bank by creating security 'nancial interest over the application schedule property in favour ofthe lut Respondent Baak. It is the contention of the Applicant that, the l"t Respondent Bank has failed to serve Demand Notice u/s.I3(2), possession Notice u/s.13(4) and the Sale Notice under RuIe 8(6) of the sARFAESI Act and the Rures made t ereunder. It is a-lso the contention of the Applicant that the l"t Respondent Bank has failed to affix the possession Notice and Sa.le Notice on the application schedule property and publish the said notices in two leading newspapers.

¶41

The l"t Respondent Bank in support of its contentions that it has duly followed tlre procedure under the SARFAESI Act and the Rules, 2OO2, filed, material documents. The lst Respondent Bank filed a copy of the Demand Notice dt.19.O6.2O2O, addressed to the Applicant caling upon him to pay the outstanding dues of l4,sz,g66l- within 60 days and the endorsement on the said notice makes it clear that the Appricant received the said notice. As the Applicant did not come forward to pay the outstanding dues within the stipulated time, the lst Respondent Bank issued possession Notice

¶42

dt.24.O9.2O2O and as , per the endorsement on the copy of the said

¶43

Possess^r.oX {g;!ice and postal receipt frled by the I"t Respondent makes clear that"lld',{q\t received the said notice. As evidenced from the copies of publications frled by the lst Respondent Bank, phot69aphs $*"p"n"r the Notice dt.24.09.2020 was affixed on the schedule e.^{l*"dfitv ffidpubilshedin HansIndia and Eenadu newspaperson} o o s E A _ JU^{3o os} . u9 .2 0 2 0 . Jhdtrsefter, the l"t Respondent Bank obtained orders of %ts*0,"--,1":a+p.Odriocate rate uom^Com m ri s sioner sioner for taking physicat possession of the WB-W from Ld. Chief Judicial Magistrate, Warangal in

¶44

¶45

SA,No,106/2022

¶46

Crl.M.P.No.3/2O21, and as per copy of Panchanama frled by the l.t Respondent Bank, physical possession of the schedule property was taken 04.o2.2022.

¶47

¶48

The lst Respondent Bank in its material documents fired a copy of Notice prior to Sa-le dt' 10'o2'2022, issued under Rule 8(6) of the Security Interest (Enforcement) Rules, 20o2, addressed to the Applicant intimating him about the sale of the schedule property after expiry of 3O days. The lst Respondent Bank has also filed a copy of the postal receipt and postal track report in support of its contention that the said notice was served on the Applicant. Ld. counser for the Applicant contended that as per the address in the said Notice prior to sale dt.10.02.2022 and the postal track record, the pin Code is mentioned as 5OO036, which belongs to Ma-lakpet location and not the Applicant's l0cation where he resides and so it cannot be said that the said Notice prior to sale is delivered and served to the Appricant. Indeed the pin Code is mentioned as 5OOO36 in the said notice and the postal track report. Admittedly, except the pin Code, the entire address of the Applicant is mentioned correctly. Merely because the pin Code is wrongly mentioned, it cannot be said that the said Notice prior to sale is not delivered to the Applicant' It is crearly mentioned in the said postal track report that ,Item Delivery Confrrmed,. So, in my opinion the said Notice prior to sale dt.7O.O2.2O22, is duly served on tJ:e Applicaat.

¶49

The l"t Respondent Barrk has fired a copy of the sale Notice dt.oz.o4.2o22, frxing the auction sale of t,.e schedule properry on og.o5.2022 and the said notice was served on the Applicant. The l"t Respondent Bank has also filed copies of photographs showing affixture of SaIe Notice on the schedule also publication of Sale Notice dt.O7.04 .2022 in Hans India and $sRalers^{dt.Og.O4.2O22.It is the contention of the Ld.} Counsel ,'i^W 1'S"^{ert'dh\atthe said Sare Noticedt.or.o4.2o22wasreceived by the} ri * Applicant on t 1tr'zozz and so there is no gap of clear 30 days from the i l" 1 &'{tilrffii"" "i,+L said notice till the date of auction and onry 29 days gap 'i#1'9.*. was s'en'^tg$i/receding paragraph it is held that the Notice prior to sare '.1 . ' . -{.i}gt,1q t k4f[Uffi:jY::]"i .".o1:1:t' rhe ru'l Respondent Bank Notice prior to sale dt.1O.O2.2O22, issued the SaIe Notice ,^fixing the auction of the schedule property on O9.O5.2O22. So, it cannot be said that 30 days clear gap has not been given by the lst

¶50

SA.No.106/2022

¶51

Respondent Bank from the notice of sare to the Applicant till the date of auction.

¶52

The next contention raised by the Ld. Counsel for t1le Applicant is that, as per the terms and conditions of the Sale Notice dt.07.04.2o22, issued by the l"t Respondent Bank fixing the auction of the schedule property, the last date for depositing EMD amount of Rs.2,oO,ooo /- was 07.os.2o22 but, the lut Respondent Bank accepted the said EMD amount from the 2,a Respondent on the date of auction i.e., O9.O5.2O22 and same is beyond the last date.^per contra, Ld. counsel for tre l"t Respondent Bank contended that the 2"d Respondent submitted a Cheque dt.27.O4.2O22 for Rs'2'00,ooo/- for issuance of Demand Draft towards EMD arrd the said Cheque was encashed and Demand Draft was issued on OI.OS.2O22 and the said amount was credited to the l"r Respondent,s Suspense Account No.37608220OO4, which was opened for the purpose of auction. Ld. Counsel for the r"t Respondent Ba,,k has invited the attention of this Tribunar to a copy of Cheque dt.22.O4.2O22 and copy of statement of suspense account filed by the l"t Respondent Bank in its material documents. Ld. counsel for the l"t Respondent Bank submitted that there is no bar in accepting cheques towards auction amounts and in this regard he placed his reliance on a decision of the Honble High Court of Delhi in Wp(C) 10164 & CM Appl'31351/2021 and wp(c) rlo8o/2021, decided on 07.06.2022. At this juncture, Ld. Counsel for the Applicant argued that the said judgment is in respect of depositing of balance 1570 arnount through cheque after auction but not in depositing the EMD amount through Cheque. I have perused the aforesaid decision of the Hon,ble High Court of Delhi, wherein one of the issues involved is whether the 15% deposit of sale price amount was to be paid by DD/RTGS/NEFI only as in the said case, the Bank received the 15%

¶53

by Cheque issued by the auction purchaser. The Hon,ble High there was no mandatory requirement to make payment of by way of DD/RTGS/NEFT only and the controversy is hyper technical which if entertained will only prevent from recovering its long outstanding dues. The issue 1 2 ftl^Yflf"o regarclrng pE t of EMD amount through Cheque did not come before tl_re "J1-4,- Hon'ble Court. When tJ:e Honble Delhi High Court opined that ';;\oo,*6q 7o sale price can be made by way of a Cheque, in my opinion t case, there is no wrong in accepting the Cheque submitted by

¶54

SA. No.106/2022

¶55

the 2"d Respondent towards lO% EMD amount i.e., Rs.2,OO,000/- by the l"t Respondent Bank. F\rther, a perusal of statement of account of the 2"a Respondent with SBI, Osmania General Hospital, Hyderabad, filed by the lst Respondent Bank, ma_kes clear that there is suflicient balance i.e., Rs.2,41,366.62 before issuance of Cheque dt.27 .O4.2O22 by the !,a Respondent. so, no couusion can be attributed between tJre lst Respondent Barrk and the 2"d Respondent. Admittedly, the 2,a Respondent deposited balance amount 15% (excluding 1O%o EMD amount) of Rs.4,0O,000/_ on the next day of auction i.e., 1O.OS.2022 by way of Demaad Draft, which is also evident from the statement of account filed by the l"t Respondent Ba,k, wherein the said amount was given credit on ro.o5.2022 and also from the statement of account of the 2na Respondent, wherein the said amount was debited on 70 'o5 '2022' A perusal of the said statements of accounts further reveal that the 2"a Respondent has deposited the balance 75% bidamount ot 78.05.2022, which is within 15 days. So, I do not find any lapses either on the part of the l"t Respondent Bank or on the part of 2'd Respondent in receipt/payment of sale price. After receipt of entire sale consideration, the l"t Respondent Bank issued Sale Certificate dt.2O.O6.2O22, which is registered as Doc.No.329Z /2022 in favour of the 2"a Respondent.

¶56

12' so' considering all the circumstances, I hold that I hold that the Appricant has failed to establish any valid ground for setting aside the sale of the schedule property and also the sa-re certificate issued in favour of the 2,a Respondent. Accordingly, this point is answered in favour of the ls Respondent Bank and against the Applicant.

¶57

Polnt No.lil)t

¶58

¶59

of. No order as to costs.

¶60

Securitization Application is dismissed. Applications, pending if arry, shall stand

¶61

copy of this order to the parties concerned..

¶62

bV hin coftected, signed and. pronounced. by me in the open court on this

¶63

o I⁽ UnIr^(lr(r, .:, Itr'trffffi:ffi'ffis 9. n tr-f, sdlTRUE COPY 1'"9}>.rrrrr*1:.14''? (G. GOPICHAND) PRESIDING OFFICEi iQry: n.*S#f,'v DRT.I, HYDERABAD.

Chintakuntla Sreenu v. State Bank of India

Case brief

What is this about?

What did the court decide?

Chintakuntla Sreenu v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Bank of Baroda versus Ms Shivam Confectionery

Smt Ranjana Devi versus the Kangra Central Cooperative Bank Limited

Bhavna Patial versus the Kangra Central Cooperative Bank Limited

Ms Goenka Jewellers versus Uco Bank

Ravi Ganpatrao Pokley versus Ncml Finance Private Ltd.

Ms Tejaswi Steel Rolling Mills versus State Bank of India