Partly allowed

S Prabhaker Reddy v. State Bank of India

DRT24 Apr 2024SA/15/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal partly allowed an application challenging bank's securitisation measures. The applicant alleged violations of SARFAESI Act regarding notices, affixture, and publication. The tribunal quashed the Sale Notice due to lack of proof but dismissed pleas to set aside the Possession Notice.

What did the court decide?

Sale Notice dated 18.05.2022 was quashed; application to quash Possession Notice dated 18.11.2021 was dismissed.

S Prabhaker Reddy versus State Bank of India — Contract and Commercial Disputes | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE 24rH DAY OF APRIL, 2024

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

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SECURITISATION APPLICATION No. 15 OF 2022

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Between: S. Prabhaker Reddy S/o S. Laxma Reddy Aged about 42 years Occ: Business H. No.01-073/447 Venus Enclave, Road No.73 Near Thatva Global High School Gajularamaram Medchal Ma lkajgiri District Hyderabad-500 055.

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Applicant.

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Versus

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State Bank of India Rep by Authorised Officer RACPC, Secunderabad Administrative Office 3'd Floor, Patny Circle Secu nderabad-500003.

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. . ...Respondent.

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Counsel for the Applicant : Mr. Ch. Siva Reddy, Counsel for Respondent : Mr. M. Venkat Divakar.

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The Appllcant filed the^present Securitisation^{Application u/s.17} of the Securitization and Reconstruction of^{Financial Assetsand} Enforcement of Security Interest Act, 2002^{(hereinafterreferred} to as "SARFAESI Act 2002") assailing the^{measurestaken by the} Respondent Bank in issulng Notice under Section 13(4) of^the SARFAESI Acl,2OO2 dated 18.11.2021^{publishedin the Business} Standard on 23.11.2021 against the^{Application schedule} property, Advocate Commissioner Notice dated 07.06.2022 and Sale Notice dated 18.05.2022 fixlng the auction date^as 23.06.2022.

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The case of the applicant as^per the averments of^{securitisation} application, in brief, is that Applicant availed^{homeloan facilities} from the Respondent Bank against mortgage of the^same. Applicant deposited Rs.1,17,000/- after issuance of^alleged demand notlce dated 17.08.2021. The Respondent^{classified the} loan account as NPA contrary to the^{RBI guidelines.Applicant's} request for OTS has not been considered. The^{Respondenthas} not issued demand notice prior to issuance of^impugned possession notice. The possession notice has neither been affixed on the secured asset nor^published in two^leading newspapers including one in vernacular lan9uage.^Respondent Bank suppressed^pendency of SA in the Affidavit filed^{before the} Hon'ble Chief Metropolitan i\4agistrate at L.B. Nagar.^The valuation of the subject property has not been taken and^the property is undervalued. The Sale Notice has notbeen affixed on the property. The^pendency of SA is not mentlonedⁱⁿ the^Sale Y*'**

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Notice publication. The Sale Notice has not been published in two leading newspapers.

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The respondent bank filed reply statement. The averments in brief, are that Applicant and his wife S. Manjula have^jointly availed housing loan of Rs.42,22,OOO/- on 27.O2.2O2I. Applicant has not deposited the alleged amount of Rs.1,17,000/subsequent to Demand Notice dated 17.08.2027. The Applicant has not made any request for OTS. The Possession notice dated 18.11.2021 has been affixed on the secured asset besides publishing in The Business Standard, English Daily and Mana Telangana, Telugu Daily newspapers on 23.77.2027. Applicant and his wife received both the notices. The Demand Notice dated 17.08.2021 has been duly served on applicant's wife personally on 18.08.2021, who is none other than the coapplicant to the loan. Respondent Bank issued Notice prior to Sale u/r 8(6) dated 10.01.2022. Both the Applicant and his wife received rule 8(6) Notice, but failed to clear the outstanding dues. Hence, Respondent Bank issued Sale Notice dated 18.05.2022 fixing the auction date as 23.06.2022. In the meanwhile, The Advocate Commissioner appointed u/s 14, issued notice on 07.06.2022 for taking physical possession of the secured asset. The Writ Petition No. 25376/2022 challenging these notices, filed before the Hon'ble High Court has been disposed of at admission stage itself with dlrection the Petitioner (Applicant herein) to deposit 15Vo of the outstanding dues of Rs.68.03 lakhs. Applicant promptly complied the order by depositing Rs.10,21,000/- on 13.07.2022 to the credit of one of his loan accounts and an amount ot Rs.46,04,256/- is still due

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under this account. In addition, Applicant is liable to^pay Rs.36,03,146l- towards the said loan account besides Rs.5,10,568/- in Loan Account No.40038429132^and Rs.11,88,604/- in Loan Account No.40080805402 respectively.

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Heard learned appearing for both the^{parties. Perused the} written arguments filed by the respondent and the^material brought on record.

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Now the points that arise for adjudication are: -

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Whether the Applicant made out any valid ground for quashing the the medsures initiated by respondent bank against the SA schedule property under the provisions of Securitisation Act? i, To what reliefl

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Point No.(i):

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Applicant filed the^present SA for violation of Section 13(2) of SARFAESI Act in serving Demand Notice and Rules 8(1) and B(2) of Security Interest (Enforcement) Rules, 2002. Thereafter, Applicant amended the pleadings^pursuant to Advocate Commissioner Notice dated 07.06.2022 and Sale Notice dated 20.05.2022. The grievances raised by the Applicant in the SA are service of Demand Notice and Possession Notice on him, affixture and publication of possession notice, obtaining valuation of^property, affixture and^publication of sale notice. In response, respondent bank filed Photostat copy of demand 7fi21,.tu

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(:/ '>^'-

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notice acknowledging receipt of demand notice by Applicant's Wife S. Manjula, who is none other than the Co-applicant to the loan, vide page Nos.7 & 8 of the material papers along with the Reply Statement. Respondent Bank filed photographs evidencing affixture of Possession Notice dated 18.11.2021 on the secured asset vide^pages 10 to 13 of the material papers filed along with the Reply Statement. Postal Acknowledgement Cards at Page Nos. 14 to 17 are annexed to the Reply Statement evldencing service of Possession notice both to the Appllcant and coBorTower his wife. Respondent Bank placed on record materlal papers at pages 18 and 19 evidencing publication of Possession Notice dated 18.11.2011 in Business Standard, English Daily and lYana Telangana, Telugu Daily. Hence there is no violation of Sectlon 13(2) of SARFAESI Act and Rules 8(1) and 8(2) of the Security Interest^{(Enforcement)} Rules,2002 by the Respondent Bank.

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Applicant filed lA.43O/2022 seeking amendments to the^prayers in the SA. One such prayer pertalns to Sale Notice dated 20.05.2022 fixing the auction date as 23.06.2022. Respondent counsel reported no counter and no objection to the IA.430/ 2022. A perusal of documents pertaining to auction sale fixed on 23.06.2022 filed with the amendment petition is a letter from Respondent Bank dated 20.05.2022, addressed to the Applicant intimating the auction date in pursuance of Rule 8(6) Notice dated 10.01.2022. It is mentioned in the letter dated 20.05.2022 that the Bank fixed the date of auction on 23.06.2022 and e-auction notices have been published in Mana Telamgana, Telugu Daily and Business Standard English Daily

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newspapers. Though it was mentioned in the letter dated 20.o5.2022, copies of publications have been enclosed, no such material is found. Since the counsel appearing on behalf of Respondent Bank having reported no objection to the IA.430/ 2022, lhe contents/documents filed along with it are to be taken on their face value. Against this background, in^para 17 of reply statement, Respondent Bank averred that it issued Sale Notice dated 18.05.2022 by fixing the auction on 23.06.2022. However, the Respondent Bank has not^placed any material on record to prove issuance/service of Sale Notice dated 18.05.2022, affixture on secured asset or^publication in lvlana Telangana, Telugu Daily and Business Standard, English Daily. Both the parties did not choose to place on record the outcome of the auction sale, if any, held on 23.06.2022^pursuant to Sale Notice dated 1a.05.2022.

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In the light of the above discussion, I find that the applicant made out a valid ground to^quash the alleged Sale Notice dated 78.05.2022 issued by the respondent bank, but failed to make out any valid ground to set aside Possession Notice dated 18.11.2021 and accordingly, the SA is liable to be^partly allowed.

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Point No.(ii):

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In the result, SA is partly allowed by^quashing the Sale Notice dated 18.05.2022 issued by the Respondent Bank. However, this order does not^preclude the Respondent from issuing Sale Notice afresh strictly in accordance with the law. /XV-'.rv. / Ll '>'t''

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Consequently, Interlocutory Applications pending if any, shall stand closed. No order as to costs.

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Communicate a copy of this order to the parties concerned and upload in Web Portal.

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(Dictoted doYofAPrit'2024)' to the Steno, signed ond pronounced by me in the open court on this the 24th

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owg (RAMESHWAR KOTHE) PRESIDING OFFICER

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S Prabhaker Reddy v. State Bank of India

Case brief

What is this about?

What did the court decide?

S Prabhaker Reddy v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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