Allowed

Atla Chandra Mohan Reddy v. Union Bank of India (Andhra Bank)

DRT14 Nov 2023SA/146/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal allowed a securitisation application setting aside a possession notice. The court found non-compliance with Rule 8(1) of the Security Interest Enforcement Rules, 2002, as proof of service of the possession notice on the borrower was not placed on record despite specific objections.

What did the court decide?

The Securitisation Application was allowed, setting aside the possession notice dated 19.01.2023 issued under Section 13(4) of the Act, 2002.

Atla Chandra Mohan Reddy versus Union Bank of India (Andhra… — Banking and Recovery | DRT (2023)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE 14th DAY OF NOVEMBER, 2023

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PRESENT: SH. RAMESHWAR KOTHE, B.Com., L,LB. (Hons.), M.A. PRESIDING OFFICER

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SECURITISATION APPLICATION NO.146 OF 2023

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Between

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Atla Chandra Mohan Reddy S/o Atla l,4oulali Reddy Male, Aged 60 years, Occ:Business H.No.5-8-2, Pathru Street Allagadda-518543 Kurnool District

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And

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.......Applicant.

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Union Bank of India Rep. by its Authorized Officer Asset Recovery Branch Allagadda - 518 543 Kurnool District

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....Respondents.

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Counsel for the Applicant : Sri K.R. Sunil Kumar Counsel for respondent bank : Sri V. Sethu Madhava Rao

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-:o_B_qEB:-

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The Applicant filed the present Securitisation Application uls.U of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "Act") to declare the sale notice dated 22.02.2023 fixing auction in respect of SA schedule property on 28.03.2023 as null and void and set aside the same including all measures under the Act. q(*e

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Page 2 of⁵

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sA No.146/2023

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The case of^{the applicant, in brief, is that he is the borrower} cum^{guarantorof the working capital facility availedfrom} respondent bank^{by creating equitable mortgageover application} schedule^{property.Thoughhad paid monthly instalmentsregularly} till 2020, due^{to fluctuation in business there was default' Higher} rate of interest^{is charged.Without considering requests to give} time to^{regularizethe account,the respondentbanklnitiated} recovery^{steps under the Act The demand notice'possessionnotice} and sale^{notice have not been served on applicantThe mandatory} Rule 8(6) of^{the SecurityInterest(Enforcement) Rules'2002("the} Rules" hereinafter^{for short) notice providing30 days' time prior to} sale has not^{been servedand no separate noticesunder Rule 8(6)} and 9(1)^{havebeenissued, as against the judgementof the Hon'ble} Supreme^{Court in MathewVarghesevs' M Amritha Kumar[(2014)5 scc} 6101. fhe^{sale out not to be put on 'As is Where is Basis" and "As is} What is Basis".^{The property'sworth is Rs'60 lakhs whereas reserve} price has been kept at^{Rs.49.59lakhs Hence this SA to set aside all} the measures.

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The respondent^{bank flled reply statement alonqwith} documents.^{The averments,interalia, that the loan account became} NPA on31.03.2022^{due to default in repaymentof oD facilityas per} sanction terms and^{hence SARFAESImeasures have been initiated} agalnst the^{mortgaged property. The demand notice was personally} served on applicant.^{The possessionnoticewas sentby post, affixed} on secured asset and^{published in'sakshi'and'BusinessStandard'} Telugu and English^{newspapers on 25.01.2023. Valuationreport had} been obtained from^{approvedvaluerbeforefixing reserve priceThe} auction notice dated^{21.02.2023fixingauctlonin respectof secured} asset on 28,03.2023^was sent to^{applicant'sad.dressby poston}

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X^{r",),,.^,} t 1 ,,/ ""'at*^u

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Page 3 of5

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SA No.146/2023

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23.02.2023, affixed on secured asset besides its publication on 24.02.2023 in 'Sakshi' and 'The Hans India' Telugu and English newspapers. In compliance of conditional stay order dated 27.03.2023^passed by thls Tribunal in IA No.869/2023 filed by the applicant, the auction was not conducted on scheduled date. The respondent bank has complied all statutory^provisions and therefore SA may be dismissed.

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Heard learned counsel appearing for the applicant. The learned counsel for respondent requested to treat the reply statement as his arguments.

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During the course of arguments, learned counsel for applicant reiterated the version as in application and prayed to allow the SA by setting aside all the measures inltiated against the applicatlon schedule property.

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The points that arise for consideration are;

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(i) whether the applicant has made out any valid ground to set aside the measures initiated by the respondent bank against the application schedule^property under the Act and Rules of 2002?

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(ii) To what relief?

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Point No.(il:-

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Admittedly, the applicant availed credit^facilityfrom respondent, created equitable mortgage over^{the application} schedule property as a security for the^{said loan and committed} default due to fluctuation in^{businessand resultant loss. The} respondent bank reported that auctlon did^{not take place on} 28.03.2023 in view of interim conditional^stay order^{passedby this} Tribunal and therefore, it is not^{necessaryto consider contentions}

K"s

Page 4 ofs

SA No.14612023

about conduct of auction^pursuant to^{sale notice dated 22.02.2023} including service of Rule 8(6) notice,^{undervaluationetc. Except} copy of sale notice, no single^scrap of^{paper has been filed by the} applicant showing that he took up the issue of^{excessinterest} charged to loan account. However, the said issue is^not entertainable before this Tribunal.

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The respondent bank^placed material along^{with its reply} statement evidencing service of demand notice, affixture^and publicatlon of possession notice. However, proof of service of possession notice on the applicant is not placed on record though there is specific objection from the applicant.^{Except statingthat the} possession notice has been sent by post, the respondent bank has not place the^postal receipt or acknowledgement. In the absence of such^proof, it is to be construed that there is non-compliance of^Rule 8(1) in causing service of^possession notice on borrower.^Under such circumstances, I find that the applicant made out valid^ground to set aside the^possession notice dated 79.07.2023 issued under Sec.13(4) of the Act, 2002. Accordingly, the SA deserves to be allowed.

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Point No.(iD:-

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In the result, the SA is allowed setting aside the possession notice dated 19.01.2023 issued under Sec.13(4) of the Act, 2002.

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However, this order does not preclude the respondent bank in issuing possession notice afresh in respect of the secured asset for recovery of secured debt strictly in accordanceL/ith law.

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Page 5 of 5

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sA No.146/2023

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Consequenfly, Interlocutory Applications pending, iF any, shall stand closed.

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L2. No order as to costs.

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Communicate a copy of this order to the parties concerned.

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(Typed to my dictotion by the pS, corrected, signed ond pronounced by me in the open court on this the 14th day of November, 2023). dx"

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(B{MESHWAR KOTHE) PRESIDING OFFICER

Atla Chandra Mohan Reddy v. Union Bank of India (Andhra Bank)

Case brief

What is this about?

What did the court decide?

Atla Chandra Mohan Reddy v. Union Bank of India (Andhra Bank)

Case brief

What is this about?

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What the court decided

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