This court dismissed a Securitisation Application where the applicant challenged possession orders. The court held that post-demand deposits did not invalidate the NPA classification or the subsequent possession notices, especially as the bank had followed due procedure.
The Securitisation Application was dismissed; no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTS RECOVERY TRIBUNAL-II AT HYDERABAD
DATED THIS THE 26TH DAY OF SEPTEMBER, 2023
PRESENT: SH. RAMESHWAR KOTHE, B.Com, L.LB.(Hons.), M.A. PRESIDING OFFICER
SECURITISATION APPLICATION No.77 I 2023
Between:
| M/s. 3-21 Prod Andh Rep. Muth |
SriSatya Narayana Builders 5,Main Road,YMRColony dutur,KadapaDistrict ra Pradesh-516360 byitsManagingPartner yalaRamesh |
|
|---|---|---|
| S/o R/o Prodd |
Muthyala Manikyam 13/299-UP,Vedurla Bazar utur,Kadapa- 516360. |
.....Applicant, |
| Vers | us | |
| 1. | The State Bankof India SpecialisedS. M.E.Branch T.T.D. Road,hlandyala KurnooIDistrict-51 B5 0 1 Rep.byitsBranch Manager SpecialisedSSMEBranch Nandyala,KurnoolDistrict-51B501. |
|
| 2. | TheAuthorised Officer StateBankof India StressedAssetRecovery SpecialisedSSMEBranch Nandyala,KurnoolDistrict-518501. |
.....Respondents. |
| CounselfortheApplicant Mr. |
T. VijayKumar. | |
| CounselforRespondents Mr. |
G.Prabhakar Sarma. dW* |
sA No. 77/202j
.:ORDER:-
CW*
5A No. 77/2023
paid some amount aFter issuance of demand notice,the outstanding dues need to be revisedby issuing a fresh demand before resorting to issuance ofpossessionnotice.However,in the instant case, the respondent bankissued possession notice on 05.07.2022 without takinginto considerationthe amount of Rs.2.38 crores deposited in thepost demand issuance period. Thus, the possession notice is invalid andagainst the provisions of the SARFAESI Act. Thepossessionnotice has not been published in two leading newspapers. Applicant challengedthe possession notice 05.07.2022 before the Hon'ble HighCourt vide W.P.2034212022 wherein a stayhas been granted. The respondent bank besides filing counterin the W'P. withdrew the possession notice dated 05.07.2022 and issued afresh possession notice dated Lt.07.2022. The W.P'has been disposed off on 02.11.2022 directing theapplicantto approach this Hon'ble Tribunal. Now therespondentbank obtained warrant in Crl.M.P.25 and 282023 for taking physical possession of the SA scheduleproperty. Therespondentbank has not followed rules B(1) and B(2)in servingthe possession notice dated t7.07.2022 on the applicant,affixing on the secured asset andpublishing in twoleading newspapers. The respondent has not furnished statementof accountof the loan account. With these averments,applicant prayed for setting aside the action of respondentbank to take the physical possession of the scheduledproperties throughtwo different advocate commissionernotices dated 17.02.2023 in pursuance of orders in Crl.M.P.Nos. 25 and28 of2023 on the file of Chief ludicial Magistrate-cum-PrincipalAssistantSessions Judge, Kadapa respectivelY. /^w*
/^w*
4
5A No. 77/2023
3' The respondent bank fired repry statement. The submissions of the respondent bank as per the averments in the reply statement in brief, are though the applicant deposited sale proceeds of some of the shops for some time, it failed to do so subsequenuy, resulting in classification of loan account as NpA. Applicant deposited Rs.2 crores instead of Rs.5 crores as promised while obtaining permission for disposal of shops in the post demand notice period, necessitating possession notice dated 05.07.2022. This possession notice was not published at the request of applicant promising to deposit the outstanding dues' As the appricant did not keep its word, respondent bank issued fresh possession notice dated 11.07.2022. Both the possession notices were served on the applicant/others. The possession notice has been served on the applicant/others, affixed on the secured properties and published in Hindu, English Daily and Sakshi Telugu Daily on t4.07.2022. Time for deposit of instalments was extended from time to time at the request of the applicant. There is no illegality or irregularity in the steps taken by respondent bank for recovery of its outstanding dues from the applicant. The allegations and averments are invented for the purpose of filing present application to drag on the recovery proceedings. As per the last such arrangement letter dated 29.10.2021, applicant was to pay the last instalment by 01.06.2 022, but the applicant could not comply the commitment. The representations dated L6.05.2022 and 13.06.2022 are for setUement of dues but not objections to the demand notice dated 06.04. ZO2Z. Ofthe two properties challenged in the present SA, one property belongs to the applicant firm and the other one is a collateral securitv
OW_
sA No. 77/2023
belonging to one of thepartners/guarantors. In thelight of the judgment of Hon'ble High Court of Telangana at Hyderabad, applicant cannot challenge theproceedings againstthe collateral security property. There are no merits inthe application and it isprayed to dismiss the SA.
AW*
SA No. 77/2023
were withheld on the assurance that applicant would clear the dues. However, appricant deposited onry a part of the totar agreed amount. Hence, possession notice was issued on 05'07 '2022. Again pubrication of possession notice was deferred on the assurance given by applicant for discharging the liability, However, applicant failed once again to deposit the amount as agreed. Therefore, respondent bank issued another possession notice dated 11.07.2022, which has been duly sent by registered post and published in two leading newspaper. Applicant did not clear the dues despite giving assurance to that effect under letter dated I1.07.2022. Applications u/s 14 were moved only in the month of February, 2023. There was enough time before the applicant in case it intended to clear the dues prior to application u/s t4 of the SARFAESI Act. With these submissions, learned counsel prayed for dismissal of SA.
Llhethe.r -theApplicantmqde out any valid ground for quoshing the measures inilioted by the. respondent company u s 11 of the Securitisation Act against the ,\A schedule property?
i, To what relieJ?
Point No. (i):
B. Admittedly there is no dispute on availment of loan from respondent bank and default in repayment thereafter. Applicant made deposits in different spells after obtaining
permission for disposal of property from the complex Mn*
SA No. 77/2023
constructed from out of the loan availed from respondent bank. It is the plea of the respondent that applicant stopped depositing the funds realised from sale of some portions of the complex in the loan account, necessitating it to pursue the recovery proceedings. Applicant's contention that the demand notice issued on 06.04.2021 becomes invalid after deposit of some amounts into the loan account. A perusal of the possession notices dated 05.07.2022 and LL.07.2022 reveal that the payment of Rs.2,3B,BO,OOO/- has been specifically shown. A loan account once declared as NPA continues to be so, unless declared as standard account by the secured creditor. Therefore, no violation of any particular rule can be attributed against the respondent. It is the case of the respondent bank that despite affording enough time by issuing no objection for disposal of shops in the commercial complex, applicant has not deposited the amounts realised from such sales. Respondent bank placed on record material evidencing service of possession notice through registeredpost, its affixture and publication in newspapers. It is not the case of appllcant that the addresses shown in the demand notice orthe possession notices are incorrect. Under such circumstances, applicant failed to make out any validground to interdictthe action of respondent bank from takingphysical possessionof the secured assets through the advocate commissioners appointed in Crl.M.P.Nos.25 and 28 of2023 respectively. Accordingly, the sA is liable to be dismiss"o Awn
5A No. 77/2023
Point No.(ii):
.FfIL1"1ffi[T8IEF'
2 issues framed by the court
Whether deposits made after the demand notice could invalidate the proceedings initiated under Section 13 of the SARFAESI Act.
Whether there were valid grounds to quash measures initiated under Section 14 of the SARFAESI Act for possession of secured assets.
3 provisions across 1 enactments
M/s. Sri Satya Narayana Builders
The State Bank of India
Rameshwar Koth
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
