Dismissed

Ms Maruthi Tubes Pvt. Ltd. v. State Bank of India

DRT29 Nov 2024SA/159/2022

Case brief

AI extract

What is this about?

In a securitization application filed by lenders against the State Bank of India, the DT Committee dismissed the petition challenging the bank's possession notice, notice prior to sale, and auction sale notice under the SARFAESI Act, finding no merit in the allegations of procedural non-compliance.

What did the court decide?

The securitization application was dismissed; no order as to costs.

Ms Maruthi Tubes Pvt. Ltd. versus State Bank of India — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL. I AT HYDERABAD

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DATED THIS THE 29III DAY OF NOVEMBER, 2C24

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No. 159,/2022

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i.M/s Maruthi Tubes P.Ltd., D.No.133, A-Block, AL Karim Trade Centre,

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Ranigunj, Secunderabad-500 003 Rep. by its Managing Director Sri ManchalaChandraiah

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ManchalaChandraiah, H.No.1-8- 158, Chandra complex,

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Bhongir, Nalgonda District.

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ManchalaNagesh Kumar, S / o ManchalaChandraiah, Presently residing at F.No.30l,

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Sai Shivam Apartments, West Marredpally, Secunderabad-500026.

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..Applicants

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Versus

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State Bank of India, Rep. by its Authorized Officer,

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Stressed Assets Management Branch-ll, 1"t floor, TSRTC Kachiguda Amenity Centre, Kachiguda, Hyderabad-soO 027 ..Resporudent Bank Counsel for the Applicants iuasa Reddy. Counsel for the Responde rShama ffi * * ondflflo}|ml -^.:.*. :! tT.g- " ^^+ij ;,1 .p.i.l# 1. This application is filed 7 of the SARFAESI Act, 2OO2, challenging the dt.19. I l.2O2O, Notice Prior to Sale dt.22.12.2O2I and also e Auction Sale Notice dt.02.06.2022 issued by the Respondent Bank fixing the date of

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sAtsgl22

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auction on 13.07.2022 in respect of the schedule property and also the proceedings initiated by the Bank for taking physical possession of the schedule property in pursuance of the possession notice dt.19.ll.2O2O and to declare the same as null and void.

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The averments made in the application, in brief, are that:

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The lstApplicant is a registered company and it availed cash Credit facility of Rs.S crores, LG facility of Rs.S crores and BG facility of Rs.S crores from the Respondent Bank. The Applicants executed necessary loan documents in favour of the Respondent Bank. The Applicants were regular in repayment of loan amounts but the Respondent bank issued demand notice dt.30.lL.2ol9 uls 13(2) of the SARFAESI Act, 2OO2 demanding the Applicants to pay a sum of Rs.l2,26,S2,4gl.go ps. within 60 days from the date of receipt of the said notice. Thereafter the Applicants paid a sum of Rs.8 cores and got releasedsome of the properties mortgaged with the Respondent Bank. During covid-l9, smt. M. Andalamma and Sri M. Raghavencra who were the guarantors to the credit facilities availed by the 1"t Applicant, died but without issuing fresh demand notice, the Respondent Bank issued possession notice dt.19. ll.2o2o against the remaining secured assets as well as against the legal heirs and original guarantors claiming a sum of Rs.7,40,1o,813.53ps. and the said possession notice was not published in daily newspapers nor affixed on the schedule property. The Respondent bank also liled o.A.175l2o2o on the file of this Tribunal for recovery of a sum of Rs.5,53,73,871.97 ps. Thereafter the Respondent lank issued Notice Prior to Sale dt.22.12.2O2L i of the schedule property and in qilh the said notice, ,..".%'{ry{f{Sd$":": "* ":, l.::toned. ;H rJ ^oo^l' .Iffi: : fu-WJ:: : : J;: ":ffi property. The Resptori..,,b["[t0[rUf i"iri#.aproceedings before physical sion of the schedule cJM, Nalgoanda *.1.. ifil

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)

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sA1.s9l22

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property u/s 14 of the SARFAESI Act, 2oo2. The demand notice, possession notice, prior to sale and sale notice are not in accordance with the provisions of SARFAESI Act, 2oo2 and Rules, made thereunder and the Respondent Bank has no clarity about the actual outstanding dues from the Applicants because in the demand notice and in the o.A. and in the possession notice and in sale notice, the Bank mentioned different amounts as due. Hence the SA.

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The Respondent Bank filed their Reply denying all the adverse allegations made in the SA. The contentions of the Respondent Bank in brief are that, the Applicants having availed the credit facilities from the Respondent Bank for the purpose of business, failed to repay the loan amount and so, the Respondent Bank initiated measures under the provisions of sARFAESI Act, 2oo2 and issued Demand notice u/s 13(2) of the SARFAESI Act,2oo2 on 30. tl.2olg demanding to repay the entire outstanding dues within 60 days from the date of receipt of said notice and the said notice was admittedly received by the Applicants. The guarantors Smt. Andalamma and Raghavendra Rao died subsequent to the issuance of said demand notice and sothe Bank issued possession notice to the legat heirs of the said deceased guarantors along with others after adjusting the amounts paid by the borrowers after receipt of the demand notice. In the Statement of Account, interest was not shown. possession Notice dt.19.11.2o2o was sent to the Applicants through Regd. post and published in two daily newspapers and copy of the said notice was affixed on the schedule property. Thereafter Notice prior to sale dt.22.12.2o21 was issued by the Respondent Bank giving all the details. Thus, the Respondent Bank has scrupulously followed the procedure prescribed and Rules made th the schedule dismiss the SA. i:t: i: t.li l-',I {';til;fjg

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Heard Ld. Counsel for the Applicants and Ld. Counsel for the Respondent Bank and perused the material brought on record.

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Now, the points that arise for consideration are,

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whether the Applicantshaue established ana ualid ground. to challenge the Possesslon ruotice dt.19.11.2020, Notice prior to Sale dt.22.12.2021 and also e Auction Sale Notice dt.02.06.2022 issued by the Respondent Bank against the schedule propertg?

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it) whether the Applicants haue established. ana ualid round. for challenging the proceedings initiated by the Respond"ent Bank before cJM, Nalgonda for taking phgsicar posse.sslon of the schedule propertg?

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iiil To uthat relief

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Potnt No.(i) &(iil :-

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During the course of arguments, Ld. Counsel for the Applicants and Ld. Counsel for the Respondent Bank reiterated their respective versions as stated supra.

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7 . There is no dispute regarding the fact that the l stApplicant which is a registered company availed credit facilities from the Respondent bank and as the Applicants committed default in repayment of outstanding dues, the Respondent Bank declared the loan accounts as NPA and initiated measures under the provisions of SARFAESI Act,[email protected],11,2o19totheApplicants regarding the fact that ..1 others. 1ffi0r,.

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subseque ", .il,i*?;m" ";T*Nmand^{notice,two guarantors} Smt.Andalarrlmarand Ragliavendra nEp\laiea. There is also no dispute

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regarding thJifatt ,,) trrftgpd$u.3ffi[., ""s.i[ { dt.1e. tr.2o2owas issued to the LRs of th,e:gpid.deceased gu along with others. The fact w

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sA 1.s9122

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that the Applicants received Notice Prior to Sale dt.22.12.2021 and e Auction Sale Notice dt.02.06.2022 issued by the Respondent Bank is not in dispute.

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The specific contention of the Applicants is that possession notice dt.19.ll.2o2o was not affixed on the schedule property nor published in two newspapers and that the Notice Prior to Sale and e Auction Sale Notices issued by the Bank are in violation of the procedure laid down under the provisions of SARFAESI Act,2002 and Rules made thereunder and the Respondent bank without issuing proper possession notice, is not entitled to initiate steps for taking physical possession of the schedule property.

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The Respondent Bank in order to establish that the Bank has followed the procedure laid down under the SARFAESI Act, 2oo2 and Rules made thereunder in issuing demand notice, possession notice, notice prior to sale and auction sale notice, filed necessary material documents along with the Reply filed by them.

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As per the said documents, it is clear that the Respondent Bank

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issued Demand notice dt.30. tl.2olg u/s 13(2) of the SARFAESI Act to the borrowers and guarantors and the said notice was received by them as evidenced by the postal acknowledgments filed by the bank. In the said demand notice, the bank claimed a sum of Rs.12,26,52,491.90 ps. Subsequent to the receipt of the said notice, the Applicants paid certain amounts to the Respondent bank Thereafter, the Respondent Bank issued possession Notice

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dt. 19. 1 I .2O2o under rity Interest (Enforcement) Rules, 2OO2 for n of the schedule property and the said n Applicants. As per the

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material docume ,htfflm."o.[, Bank, it is clear that the said notice was Telugu ish daily newspapers on 25.11.2O2O ,ef,the d Notice Prior to Sale

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dt.22.12.2021 and admittedly the Applicants received the said notice and the said notice was issued by the Bank for giving an opportunity to the Applicants to redeem the secured asset within 30 days from the date of receipt of the said notice but the Applicants have not taken any steps for redeeming the schedule property. So, the Respondent bank issued e Auction Sale Notice dt.02.06.2022 fixing the date of auction on 13.07.2022 in respect of the schedule property and the said notice was also published in two daily newspapers.

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The Respondent bank has Iiled copy of order dt.13.12.2023 passed in O.A.17512O2O. As per the said order, it is clear that the O.A. filed by the Respondent Bank herein against the Applicants and others for recovery of Rs.5,53,73,871.97 ps. was decreed and so, the Respondent Bank is entitled to recover only the amount awarded in the said O.A.

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t2. The Applicants have failed to establish as to how the proceedings initiated by the Respondent bank before CJM, Nalgonda for taking physical possession .of the schedule property are illegal and not in accordance with law. After filing of this SA, the Applicants obtained stay of the proposed auction to be conducted by the Respondent bank against the schedule property in pursuance of the e Auction Sale Notice dt.02,06.2022 and so there is no need to decide the validity or otherwise of the said Sale Notice since auction was not conducted by the bank. So far as possession notice and notice prior to sale are concerned, the Respondent Bank has scrupulouslyfollowed the procedure laid down under the provisions of SARFAESI Act,2002 and Rules made thereunder in issuing the said notices are perfec l/.*\ 13. {ny * :.k ?^{q unt,7!T7l} trt I ! 14. tly legal and valid nts.

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sA 159/22

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So, considering all the circumstances, I am of the opinion that there are no merits in the SA. If the Respondent Bank intends to conduct sale in respect of the schedule property, the Bank has to initiate fresh measures under the provisions of SARFAESI Act, 2OO2 as the e Auction Sale Notice dt.02.06.2022 becomes infructuous. These pointsareanswered accordingly.

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Point No.(iil:-

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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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t7. Communicate a copy of this order to the parties concerned.

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(Dictated. to the P.S, transcribed by her, corrected, signed and pronounced bg me in the open court on this the 2gh dag of Nouember, 2024).

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sd/_ (G. GOPTCHANDI PRESIDING OFFICER

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rf,uE coPY lu* ' "!l'-i1,1:gl!Iil"^{\ l,r )-</sup>}

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Ms Maruthi Tubes Pvt. Ltd. v. State Bank of India

Case brief

What is this about?

What did the court decide?

Ms Maruthi Tubes Pvt. Ltd. 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

Statutes considered

Parties & counsel

Coram

Case details

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