Allowed

T Suresh v. South Indian Bank

DRT24 Sept 2024SA/8/2023

Case brief

AI extract

What is this about?

The Tribunal allowed the applicant's application to set aside the bank's action to take possession of secured property. The court held that invoking the SARFAESI Act during the subsistence of valid status quo orders in a pending civil suit makes such proceedings invalid and unenforceable, though the bank may initiate fresh proceedings later.

What did the court decide?

Set aside the securitisation proceedings and the bank's action to take possession under the SARFAESI Act. Closed interlocutory applications. No order as to costs.

T Suresh versus South Indian Bank — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE 24TH DAY OF SEPTEMBER,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. B OF 2023}

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Between:

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Sri T. Suresh, S/o^NarsingRao Aged: 53^years, Occ:^EmPloYee H. No 8-2-269/19/41/A Indira Nagar, Baniara^Hills " " "'APPlicant' uyderabid-500078.

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And

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1.	M/s. SouthIndian^BankLtd. Rep.bYits Chief^Manager RegionaIOffice,^HYderabad 157/6,First^{Floor,CHAIComPlex} StaffRoad,^{GunrockEnclave} SikhVillage,^DiamondPoint Secunderabad-500^009.
2.	M/s. Star^EnterPrises PartnershiP^Firm RePbYits^Partners IIFloor,MIG^No.101 Phase-7,KPHB^ColonY KukatPallY Hyderabad-^500085'
3.	Mr.Duttuluri^BalaPullaiah Agedabout⁴⁵Years Occ:Business,^MIGNo'102 FtatNo.307,^ArushPride RoadNo,7,^{KPHB ColonY} KukatPa^IlY,^{HYdera bad-B5'}

?frx**

sA a / 2023

Sri T. Lakshmi Narayana S/o Late T. Ramchander & Late Laxmi Bai Aged about 57 years Occ: Employee H. No. 8-3-833/K/s Srinagar Colony Yellareddyguda Hyderabad-500073. .....Respondents. Counsel for the Applicant : Mr. D. Rajasekhar. Counsel for the l't Respondent : Mr. K.P. Saradhi. Respondents 2 to4 : Exparte.

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.....Respondents.

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-:ORDER:-

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The Applicant filed the present Securitisation Application u/s.17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act 2002,) for setting aside the action of respondent bank from taktng possession of SA schedule property pursuant to Advocate Commissioner notice dated 20.12.2022 appointed in Crl.M.p.No.121S of 2022 on the file of the learned III Addl. Chief Metropolitan Magistrate at Hyderabad and Possession Notice dated Og.t2.2)2l.

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The case of the applicant as per the averments of the SA, in brief, is that the wife of applicant filed a partition suit against her brothers in respect of schedule A to D properties bearing No. OS. 742/2075 before the iII Additionat Chief Judge, City Civil Court at Hyderabad and for granting 1/gth share in the schedute properties. The SA schedule property is the^Schedule_A property OY**

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sA a / 2023

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in OS.14212015. Initially, a "Status Quo" was^passed by the learned III Additional Chief Judge, City Civil Court on 23.03.2015 and thereafter the same was made absolute on 25.03.2019ⁱⁿ 1A.446/2075 in O5.142/20f5. After the expiry of his^wife, applicant got himself impleaded being the^{sole legal heir. The} 1't respondent bank has initiated securitisation^proceedings against the SA schedule^property i.e.,^{OS A-Schedule property} for recovery of loan^granted to^{2nd respondent represented by} respondents 3 and 4. The action of^{1't respondentbankin} issuing^possession notice u/s^{13(4) dated 08.12'2021 and} thereafter obtaining warrant u/s^{14 of the SARFAESI Act for} taking the^{physical possession} of^{the suit property during the} pendency ot OS.f42l2175 and subsistence of status^{quo orders} dated 23.03.2015 and^{25.03.2019is invalid and unenforceable.}

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The 1't respondent^{bank filed replystatement, the avermentsof} which in brief, are that the^{rights claimingby the wife of the} applicant in the^{property and seeking partition of the OS subject} properties is not binding for the^{purpose of enforceabilityof} mortgage rights of the^{SA securedproperty.The propertywas} mortgaged in favour of^{the 1'! respondentbank in the year} 2018. The 4th^{respondenthas rights over the propertyand} therefore the orders^{passed in Cd.M.P.l2fSl2022for taking} physical possession of the SA schedule^{property are perfectand} the respondent bank^{can take the physicalpossessionof the} secured asset.^{The rights and possession of the 4th respondent,} creation of security^{lnterestin favourof the respondentbank} have not been^{properly represented before the Hon'ble Court'} Therefore, a fraud^{has been played on the Court' lulere} pendency. of a suit cannot confer any^{rights^over the subject} ,Mu+tY (i/

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sA 8/2023

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property and in the same vein mere pendency of a suit will not take away the rights of 4th respondent unless the rights are determined in the 05142/2015. It is denied that the subject property of OS and that of the SA are one and the same. Therefore, the respondent bank can take physical possession of the subject property to recover its dues from the 4th respondent.

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Despite service of notice,4th respondent remained exparte. Hence he was set exparte vide docket order dated 20.07.2023. Whereas, respondents 2 and 3 were served notice through paper publication. They were cailed absent and set exparte vide docket order dated 06.04.2023 for non-representation.

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Heard learned counsel appearing for the applicant. Learned counsel appearing for the 1't respondent bank reported no oral arguments. Perused the written arguments filed by the 1't respondent bank and the material placed on record.

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6' Learned counser appearing for the appricant contends that a competent court has issued two status quo orders against the suit subject matter which inter aria appricabre to sA schedure property. The applicant informed the 1't respondent about the pendency of ris before the competent court on 26.05.2022 vide legal notice dated 26.05.2022. Thereafter, 1't respondent bank was impleaded in os. r42/20r5 vide IA.No, t7L7 of 2022 dated 16.06.2022. The possession notice dated 08.12.2021 and the advocate commissioner notice dated 20.12.2022 issued under the SARFAESI Act and the Rures there under are subsequent to status quo orders dated 23.03.2015 and 25.03.2019 and subsistence of suit before a competent court, Therefore, the OWno

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sA 8/2023

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securitisation proceedings initiated by against the s the 1't respondent bank schedule Property 6;'s proceeded *,,o vitiated and cannot be of law. With these **lhli*n1",1,,';J:: for sefting aside the roceedings against the SA 7. Now the points that arise for adjudication subject property. are: **

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are: **

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{lf , !; ; ;: ff "::;, g. ;, ; ; i2 i ; ; '*,lil;::: : :i,',1, { L u n by r he , * ilrf !1, ::;o oy;,,,,11,, *, ; ;; Point No.e):^provisions "r^{s-r{ri,"rrri"irTiir'"}

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B. Admittedly, the mortgage over the SA been created in favour";;r"'.:^j:",sA schedule property has I ffi : i rf { I$ {} h:i;n*l g1|[ competent court of law inir absorure in the year rorrl'u'll;;",T"r:::;:::;T#;,:;:." possession notice u/s 13(4) on 08.L2.2027 and advocate commissioner issued notice on 20. 12.2022. Therefore, there is no ambiguity that the possession notice and the advocate commissioner notice are issued during the operation of status quo order passed by a competent court of raw. It is not the case of the respondent bank that it has not been impreaded in the proceedings of oS.142/2015 pending before the court of III Learned Additional chief Judge, city civil court, Hyderabad. In such a situation, the action of 1't respondent bank to invoke the provisions of the SARFAESI Act against subjeclproperty during

O'ryoo

sA^{8/ 2023}

the^{operation of status quo order in OS'L42l2Ol5 cannotbe} termed^{u' uutiO unO tn"'"fo'" tnl'ame is liable to be set aside'} Accordingry'^{il't"liis to be allowed to that extent'}

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point No.(ii): .,e the action^{of l't} and^,akns '[he

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1. ::,I1jlli";.ll^{: i::I,:: ::,:::::11'::,."} physicalpo'*"ionoftheSAschedulepropertypursuantto warrant^{obtained in Crl'M'plrtro'rzr512022 on the file of the} learned^{IIlAdditiona' tnt"'Metropolitan Magistrateat} Hyderabad.However,thisorderdoes;;;precludethel't respondent^{from initiating the securitisation proceedings afresh} subjecttooutcomeoftheo,.,o,,,0l5forrecoveryofitsdues.

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l0.Consequently'InterlocutoryApplicationspendingifOllY'shallstand^{closed'No order as to costs'} .^{.?p,y of this order to the parties concerned of this order to the parties concerned this order to the parties concerned order to the parties concerned to the parties concerned the parties concerned parties concerned concerned} -^-^arl^AI1(andand

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.^{.?p,y of this order to the parties concerned of this order to the parties concerned this order to the parties concerned order to the parties concerned to the parties concerned the parties concerned parties concerned concerned} -^-^arl^AI1(andand

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11 .^:"_,..," #hL1^[ ii&f, : 'i, ; zl:,,,!liiond pronou"'o^o' ffi i'";w:,!,':, ;:: :i;:;;1)ii:"'iliiu-' ///Wg KOTH

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KOTH^E) ESHWAR OFFICER PRESIDING

T Suresh v. South Indian Bank

Case brief

What is this about?

What did the court decide?

T Suresh v. South Indian Bank

Case brief

What is this about?

What did the court decide?

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