Dismissed

Ms Csr Infratech India Pvt. Ltd. v. Union Bank of India

DRT20 Dec 2024SA/202/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application challenging a bank's auction sale notice under the SARFAESI Act, finding the bank complied with all notice and publication requirements and noting the auction did not materialize.

What did the court decide?

Application dismissed; auction sale notice set aside plea rejected; interlocutory applications disposed of; no order as to costs.

Ms Csr Infratech India Pvt. Ltd. versus Union Bank of India — Insolvency and Bankruptcy | DRT (2024)

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IN THE DEBTS RECOVERYTRIBUNAL- IAT HYDERABAD

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DATED THIS THE 2OTH DAY OF DECEMBER. 2024

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PRESENT: GUMMADI GoPICHAND, PRESIDING oFFICER

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SA.No.2O2 /2O2s

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1.M/s C.S.R. Infratech India pvt.Ltd.,

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Rep. by its Managing Director

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Sri ChallaSrinivasa Rao,

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Sri SairamSwarnalatha Estate,

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Yella reddyguda, Hyderabad-50O 073.

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Sri ChallaSrinivasa Rao, S/o Kondaiah, aged 61 years, Occ:business, Flat No.50 1, Sri Sainagar colony, Nizampet X Roads, Kukatpally, Hyderabad-5O0 085.

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Sri ChallaNageswara Rao, S/o Kondaiah, aged 57 years, Occ:business, Oguru village, Kandukur, Prakasam District.

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Smt. Challa Rama Thulasamma, W/o Srinivasa Rao, Aged 57 years, Occ:house wife,

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Oguru vilIage, Kandukur, prakasam Dist.

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Mrs. Challa Rama Devi, W/o nageswara Rao, Aged 54 years, Occ:house wife,

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Oguru village, Kandukur, prakasamDist

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Smt. Challalakshmamma, W/o M.Kondaiah, Aged 80 years, Occ:house wife,

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Oguru village, Kandukur, prakasamDist

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Sri MarripudiKondaiah, S/o Venkateswarlu, Aged 5O years, Occ:business,

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Oguru village, Kandukur, PrakasamDist

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Smt. M. Koteswaramma, W/o Kondaiah, Aged 46 years, Occ:house wife, Oguru village, Kandukur, PrakasamDist

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RK Township Promoters Pvt.Ltd., Rep. by its Managing director M. Kondaiah, Boyin Chambers, Yellareddyguda, Hyderabad. .... Applicants

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Versus

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Union Bank of Baroda Rep. by its Authorized oflicer Kandukur Branch-2, Prakasam Dist.

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.. Respondent bank

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Counsel for the Applicants SiT. SridharReddg Counselfor the Respondent Bank Si V. Sethumadhau a Rao

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:ORDER:

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This application is Iiled by the Applicants u/s. 17 of the SARFAESI Act, 2OO2, challenging the Sale Notice dt.09.O5.2O23 issued by the Respondent Bank for conducting auction on 14.06.2O23in respect of the schedule properties 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 l "qApplicant is a private rimited company whichavailed credit e Respondent Bank and Applicants No.3 to g stood 5.aS^{ESantdiBtg\ 9ft Applicantis a Corporatecuarantorfor the} l,Xr '^{loansnctiondH} ,^{\to the Applicant No.1. As the Applicant No.1} 'ir^," ' "It"U#2pfs^{in_L\business, could not repay some instalments.} i^{T[re l.tApplicaru} .S6-rested^{to settie the loan accountunder OTSby} ti. r)." ^ -r:^{r :'_, i} T: T;* i1"r"h.;i-i*:':;

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Rs.60,00,o47 l- to the Respondent Bank on 12.o4.2023 to show their bonaifides. on 09.os.2o23, the Respondent Bank issued sale Notice fixing auction of the schedule properties on 14.06.2023 and the Applicants came to know about the said sale notice when some intended purchasers visited the schedule properties for making enquiries. The reserve price fixed by the Respondent Bank in the said sale notice is very low compared to the actual market price. Before issuing the said sale notice, the Respondent bank did not issue 30 days prior notice for giving an opportunity to the Applicants to redeem the schedule properties. The impugned possession notice and sale notice were notaffixed on the schedule properties nor published in daily newspapers. Hence, the SA.

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The Respondent Bank filed their Reply Statement denying all the adverse allegations made in the sA. In the sA, the Applicants contendedthat thebranch of the Respondent Bank is situated at Kandukur in Prakasam District in Andhra pradesh and most of the properties are not situated within the territorial jurisdiction of this Tribunal and hence this Tribunal is not having jurisdiction to entertain the present SA. The Applicant No.1 filed wp.No. ls6g2l2023 before the Hon'ble High court for the State of Andhra pradesh but it could not secure any order in the said wp and the same is pending as on the date of filing of this SA. The orS proposal made by the Applicant No.1 was refused by the Respondent Bank as the amount offered by the Applicants is very meagre in comparison to the valuation of the collateral securities . The Respondent Bank issued a and notice dt.25.lr.2ot9 to the Applicants and as some 's/mortgagors evaded to receive the said notice, the published in two daily newspapers on Ol.l2.2olg. il^{Respondent Bankissued possession} ISIUII ITU LIUCnotice I^St$Bmozr Sia^{;;.same was published} in two leading elrg^{thereafter a corrigendum to the said possession} ished in newspapers on 28.0g.2o2r. chalrenging the on notice, the Managing Director of the Applicant No.1

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company filed SA 33312O2I before DRT, Visakhapatnam. Thereafter the Respondent bank issued fresh possession notice dt.r6.o2.2o22 and the said notice was published in two daily newspapers on 22.02.2022 and the said notice was also affixed on the schedule property. Thereafter on 21.O3.2O23, the Respondent bank issued notice u/r 8(6) of Security Interest (Enforcement) Rules, 2002 to the Applicants and then the Bank also issued Sale Notice dt.09.05.2o23 for conducting auction of the schedule properties on 14.06.2023. Thus, the Respondent Bank has followed the procedure prescribed under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder in issuing all the relevant notices and so, there are no merits in the SA. Accordingly, Respondent Bank prayed to dismiss the SA.

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Heard Ld. counsel for the Applicants and Ld. counsel for Respondent Bank and also 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. ang ualid- ground for challenging tlrce AuctionSale Noticed.t.O9.OS.2O23 issued bg the Respondent Bank in respect of the schedule properties?

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iil To tuhat relief?

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Point No.lil:-

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course of arguments, Ld. Counsel for the Applicants and r the Respondent Bank reiterated their respective

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,6r supra.

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7 ?SdE0i&[. regarding the fact that the Applicanr No.1 credit facilities from the Respondent Bank

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.^r_i er Applicants stood as guarantors and created

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mortgage against schedule properties and thereafter, the Applicant No.lcommitted default. The specilic contention of the Applicants is that the Respondent Bank has not issued pre-sale notice and without issuing pre-sale notice, straightaway issued Auction Sale Notice and the said notice is also not affixed on the schedule property and not published in two leading newspapers and so, the said notice is not legal and liable to be set aside.. Per contra, the Respondent Bank contended that the Bank has scrupulously followed the procedure laid down under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder in issuing demand notice, possession notice, presale notice and sale notice in respect of the schedule properties.

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In support of their contentions, the Respondent Bank filed relevant material documents along with the Reply filed by them. As per the material documents {iled by the Respondent Bank, it is clear that the Respondent Bank issued fresh possession notice dt.22.O2.2022 and admittedly, the said notice was received by the Applicants. The said possessionnotice was published in two daily newspapers on 22.02.2022 as evidenced from the copies of paper publication filed by the Respondent Bank and the copy of the said notice was affixed on the schedule property as depicted in the photographs filed by the Respondent Bank and so the Bank has duly complied with Rule 8(1)(2) of Security Interest (enforcement) Rules, 2OO2 in taking possession of the schedule properties. Before fixing auction, the Bank issued Pre Sale Notice dt.21.O3.2O23 u/r 8(6) of Security Interest (Enforcement) Rules, 2OO2 by giving an opportunity to the Applicantsto redeem the schedule properties within 30 days from the of receipt of the said notice and the said notice was sent to the s through Regd. Post and it was received by the applicants by the copies of postal acknowledgements filed by the Bank. So, the contention of the Applicants that t Bank has not issued pre-sale notice before issuing the is not tenable. As the Applicants failed to take steps to

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redeem the schedule properties, the Respondent Bank issued Auction Sale Notice dt.09.05.2023. As per the documents filed by the Respondent Bank, it is clear that the said sale notice was published in two daily newspapers,Eenadu and rhe Hindu on 13.05.2023 and the said sale notice was also affixed on the schedule properties as depicted in the photographs filed by the Respondent Bank and thus the bank has complied with Rule 8(6)(7) & 9(1) of Security Interest (Enforcement) Rules, 2OO2.

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As per the documents filed by the Respondent Bank, it is clear that the 1"t Applicant filed SA 29412018 on the file od DRT, Visakhapatnam challenging the various notices issued by the Respondent Bank and the said SA was disposed vide order dt.27.11.2018 with a direction to the Applicant No.1 herein to discharge the entire liability due to the Respondent Bank within two and half months from the date of the said order and in case of failure to pay the said amount, liberty is given to the Respondent bank to proceed in accordance with law. Admittedly, the Applicants have not paid any amounts subsequent to the said order, so the Respondent Bank has taken steps for conducting auction of the schedule properties by issuing relevant mandatory notices to the Applicants by following the procedure laid down under the provisions of SARFAESI Act,2OO2 and Rules made thereunder.

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Even though, the Applicants have taken a plea that the valuation mentioned in the sale notice in respect of the schedule properties is lng^{to the marketvalue but no material is placedby the} establishing that the market value of the schedule -{* ,' ,;t1{; ch more than the value fixed by the Respondent .i ? [IBBE$ 2C2r part of the schedule properties is situated within of this Tribunal.The Applicants are challenging the

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common sale notice issued by the Respondent Bank in respect of the properties situated within the jurisdiction of this Tribunal whereas some other properties are not situated within the territorial jurisdiction of this Tribunal. As part of the cause of action has arisen within the jurisdiction of this Tribunal as contemplated under section 17(1)(a) of SARFAESI Act, 2oo2, this Tribunal is having jurisdiction to entertain the present SA. So, the contention of the Applicants that this Tribunal is not having territorial jurisdiction to decide the present SA is not tenable.

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It is pertinent to note that in pursuance of the e Auction Sale Notice dt.09.05.2023 which is in challenge in the present SA, the proposed auction of the schedule properties was not materiaiized. so the relief claimed by the Applicants in the present SA becomes infructuous.

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1. So, considering all the circumstances, I hold that theApplicants failed to establish any valid ground for challenging the possession notice, pre sale notice and sale notice issued by the Respondent Bank against the schedule properties and So, there are no merits in the SA. Accordingly, this point is answered in favour of the Respondent Bank and against the Applicants.

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Polnt No.lli):-

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t4. 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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Communicate a copy of this order to the parties concerned.

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b! her, cotected, sigted and pronounced bA tue in the open court on this the 2Oh dag

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sd/-

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(G. coPr CHANDI

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PRESIDING OFFICER

Ms Csr Infratech India Pvt. Ltd. v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Ms Csr Infratech India Pvt. Ltd. v. Union 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

All orders in this case

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