Dismissed

Brahma Teja Paper Products v. Union Bank of India

DRT7 Mar 2024SA/7/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed a Section 13(4) application filed by borrowers to set aside the bank's possession notice. The court held the service of the notice was valid and no valid ground was made out to quash the bank's action due to default and failure to prove prejudice from delayed reply.

What did the court decide?

Securitization Application fails and is dismissed. Consequently, interlocutory applications, if any, are also disposed of.

Brahma Teja Paper Products versus Union Bank of India — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL-II AT HYDERABAD

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DATED THIS THE OTTH DAY OF MARCH, 2024

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

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securitization Application No.07 oF 2022

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M/s Brahma Teja Paper Products Prop. Smt Parchuri Janaki W/o P Sridhar, Aged about 48 years Occ:Business Situated at H No.11-9- 130/3/C Road No.34, Laxml Nagar, Kothapet Hyderabad

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Sri P Sridhar, S/o P. Krishna f4urthy Aged about 50 years Occ:Business Situated at H No. 11-9- 130/3/C Road No.3A, Laxmi Nagar, Kothapet H ydera ba d

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Versus

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M/s Union Bank of India Rep. by its Authorized Officer H.No.9-24, Plot No.63, Hl4T Nagar Nacharam, Hyderabad

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.......Respondent.

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Counsel for the Applicants Counsel for Respondent Bank

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:Sri D. Raghavulu

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:Sri V. Sethu Madhava Rao

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-: 9'-BqE-B:-

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The Applicants filed the^present Securitisation^{Application u/s.17} of the Securitization and^{Reconstruction of FinancialAssetsand} Enforcement of Security Interest Act,^{2002 (hereinafter"the Act" for} short) to set aside the^proceedings of^rne rcsponzi\qxwsuanr

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2ofG

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SA No.0712022

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issued under Sec.13(4)^{of the} to^{possessionnoticedated 24.71.2021} Act against^{the SA schedule properties.}

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The case of the applicants^{as per avermentsof the application,} in brief, is that the^{respondent bank sanctionedOCC facilityand three} term loans to the lst^{applicant and one term loan to the 2"d applicant} against the mortgage^{of SA scheduleproperty. Due to Covid-1g} pandemic, there were some overdue^{instalments and as a result} accounts became^{NPA, In 2019, the applicantspaid a sum of} Rs.518.80 lakhs^{by selling other properties and factory and machinery} which was acknowledged by^{respbndentbank on 27.03'2019Apart} from said^{payment,the applicants also repaid Rs.7.83 crores Despite} such repayment, the^{respondentdid not considerthe request of} respondent bank to^{regularizethe account and initiatedrecovery} process by lssuing demand notice dated^{79.04.7027 and 06 05.2021'} The reply to the objections^{dated16.06-2021 was givenon} 27,70.2021 hence there is violation of^{Sec.13(34).Thereafter} respondent bank issued a single^{possessionnoticedated 24.LL.2027} though two separate demand^{notices were issued in respect of loans} of applicants 1 and 2. The^{possessionnotice was not served on} applicants and affixed on secured asset.^{Therewas no positive} response to OTS^proposals submitted by the^{applicants. Some third} parties filed OS Nos.138/2019 and 1578/2077 against the^property which are pending adjudication.

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The respondent bank filed reply statement stating, inter^alia, that credit facilities were availed from erstwhile Andhra^Bank, Nacharam now amalgamated with Union Bank of India^from 01.04.2020 and transferred to its ARM Branch. Due to^default committed in repayment, the loan account of applicants^{was classified}

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/\w"o-'^^ ll/ --t.,**^'

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SA No.O1 12022

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as NPA on 31.03.2021 followed by SARFAESI proceedings. Since the applicants evaded receiving demand notice, the same was affixed at the address of mortgagor besides publication in English and Telugu newspapers on 22.05.2027.Issuing reply to objections within 15 days is not mandatory and it can be issued before taking further action. After issuing reply to objections only bank proceeded with possession notice. The possession notice was sent by registered post on 26.17.202t, served on proprietor oF 1st applicant, affixed on secured asset on 24.77.2021 and published 'Andhra Jyothi' and 'Hans India, daily newspapers on 27.17.2027. In view of stay granted by Hon'ble High Court in WP No.22352/2022, neither physical possession in pursuance of Crl MP 791/2022 was not taken nor sale scheduled on 29.04.2022 materialized. As the applicant failed to comply Hon'ble High Court's order, respondent bank issued fresh e-auction notice dated 02.07.2022 and obtained orders in Crl^ylP No.248/2O22 fot taking physical possession. However, in the light of judgement of Hon'ble Supreme Court in Prestige Lights vs. State Bank of India (2007) 8 SCC 449, the applicant ls not entitled to any relief due to failure to comply conditional order granted by Hon'ble High Court. The applicant even failed to pay OTS approved for Rs.3.30 crores. Hence the SA is liable to be dismissed with exemplary costs.

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Heard the learned counsel for the applicants and learned counsel for the respondent bank. Perused the material docu ments brought on record.

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During course of arguments,^{learned counsel for applicantsand} learned counsel for respondent^{bank advanced theirarguments in} simllar lines of averments^{made ln the applicationand reply} statement respectivelY. dw,"

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sA No'07/2022

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It is^{noticed that though respondentbank submitted that} consequent to^{failure of applicantto comply conditionalorder passed} by the^{Hon',ble High court in wP No.22352of 2022a fresh auction} notice was^{issuedand also obtained ordersin Crl M P, the applicants} did not^{chooseto amend the SA pleadingsaccordinglyTherefore'} these two^{measuresare deemed to be unchallenged'}

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Now, the^points that^{arise for consideration are;-}

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(i) Whether the applicants^{made out any valid groundto} set aside the^{possessionnoticedated 24'11'2021} issued under Sec.13(4)^{of the Act againsttheSA}

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schedule Pro\ertY?

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(ii) To what relieP

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Point No.( i):-

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The applicants admit of^{availing oCC facility and term loans} against mortgage over^{SA scheduleproperties.They also admit of} committing default^{in rePaYment.}

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The contention of applicants^{is that the respondent bankissued} reply on 21.10.2021 for the^{objections dated15,06.2021receivedon} 17.06.2027, which was not within 15 days^{as contemplatedunder} Sec.13(3A) of the Act. Firstly, the applicants^placed on^{record letters} dated 15.06.2021 addressed to the bank.^They do not^{appearto be} referring to demand notice dated 19.04.2021 or objections thereto. The subject caption of said letters is only request to^grant some more time for repayment. Even assuming that there were objections to the demand notice.as could be noticed from reply letter dated 27.10.2027 placed on record by the respondent bank, the applicants failed to

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ry^

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SA No.O7 12022

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explain the prejudice caused to them due to delayed reply. In fact, vide letters dated 17.09.2021 i.e., after issuing the objections to the demand notice, the applicants while accepting the liability at around Rs.8 crores, requested the bank to settle the loan amount with the sale proceeds and waive off the remaining balance and relieve them from all the liabilities under OTS. They also sold other properties and pald around Rs.5.18 crores towards the loan liability and put a request to bank to accept OTS offer of Rs.280 lakhs by sale of properties. In such circumstances, the contention of applicants does not deserve acceptance.

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The respondent bank placed on record proof of service of the possession notice dated 24,77.?021 on the applicants by registered post vide postal acknowledgement card dated 26.11.2021, affixture of the same on secured assets and its publication in English and Telugu newspapers on 27.11.2021. Thus, there is no violation of Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002.

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In view of the aforesaid observation, I find that the applicants failed to make out any valid ground to set aside the^possession notice dated 24.11.2021 issued by the respondent bank under^{Sec.13(4) of} the Act against the SA schedule^properties and accordingly the^{SA is} liable to be dismissed.

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&!nlLNelGiI:

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In the result. the Securitization^{Application fails and is hereby} dismissed. O#",

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SA No.07l2022

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13, Consequently,^{the InterlocutoryApplicationspending if any'} shall also stand disposed^of.

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No order as to^costs.

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l5.Communicateacopyofthisordertothepartiesconcernedand upload in the^{Web Portal'}

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(Typed to my dictotion by the^{PS, corrected, signed ond pronounced by me in the open} court on this the^{Oy'hdoyof Morch, 2024).}

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{t<"u

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AR KOTHE) PRESIDING OFFICER

Brahma Teja Paper Products v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Brahma Teja Paper Products v. Union 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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Case details

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