In Securitisation Application under Section 17 of the SARFAESI Act, the Debts Recovery Tribunal dismissed the appellant's challenge against the bank's auction notice. The Tribunal held the Application infructuous as the auction was cancelled.
The Securitisation Application was dismissed and pending interlocutory applications disposed of.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTS RECOVERY TRIBUNAL - I AT HYDERABAD
DATED THIS THE gTH DAY OF JULY, 2C24
PRESENT: GUMMADI GoPICHAND, PRESIDING OFFICER
sA.No.233/2C22
Mr. Nellore VijayaBhaskar Reddy, !/oN. Gopal Reddy, aged54 years, Occ:business, R/o H.No. 16-7_ 15g, Rammurthynagar, 2.d street, !t9neHouse pet, Nellore District, Nellore.
..Applicant
Versus
l.Union Bank of India,
Rep. by its Authorized, Officer, Stressed Assets Management branch, 3.d floor, Andhra Buildings, Sultan Bazar, Koti, Hydeiabad_SO0 09S.
2.Mls Vaishnavi Infra Tech Ltd., (Formerly TNR Infra projects Ltd.),
Rep. by its Managing Dlrector, ThamminediGangadhai Rao, Punjagutta, Hyderabad_SOO' Og2.
..Respondents.
Counsel for the Applicant
Counsel for the i", Resp, nd.ent Bank: 2"d Respondent
Sri Mukesh Sharma. Sn /f. V. Subbaraju Exparte
-:ORDER:.
- This application is Iiled by the Applicant u/s.17 of the SARFAESI Act, 2OO2, challenging the auction sale EdbV the l"t Respondentthe l"t Respondentl"t RespondentRespondent Bank in respect of the
EdbV the l"t Respondentthe l"t Respondentl"t RespondentRespondent 4.O8.2O22 and to
declare the same as illegal
sA23312022
The Applicant is a 3rd party and Respondent No.2 is the absolute owner and possessor of the schedule property and the Respondent No.2 company mortgaged the same to the l"tRespondent Bank. The Applicant entered into Agreement of Sale with the 2'd Respondent on 09.12.2o2o and paid Rs.40 lakhs as advance and remaining amount is agreed to paid at the time of registration after release of documents by clearing the mortgage. Respondent No.2 is making hectic efforts with the 1"t Respondent bank for a compromise settlement. All of a sudden, the lstRespondent Bank issued possession notice and then sale notice for conducting auction of the schedule property on 24.O8.2022. Hence the SA.
The 1"t Respondent Bank filed their Reply denying all the adverse allegations made in the sA. The contentions of the lstRespondent Bank in brief are that, loan account of the Respondent No.2 was classified as NpA as on 30.06.2016 and demand notice u/s 13(2) of the SARFAESI Act, 2oo2 was issued to the 2d Respondent on 29.11.2016 and the said notice was served on the 2rd Respondent and thereafter possession notice dt.2o.o4.2017 was issued to the 2nd Respondent and others and the said notice was affixed on the schedule property and also published in two daily newspapers. Thereafter sale notice dt.25.or.2o22 was issued and it was published in two daily newspapers. The alleged Agreement of sale dt.09.l2.2o2o is subsequent to the mortgage created by the 2"dRespondent in respect of the schedule property in favour of the lst Respondent Bank towards security to the credit facilities and also subsequent to the demand notice issued by the lst Respondent bank under the provisions of SARFAESI Act, 2oo2. The Applicant is having no right to file SA challengi initiatedby the 1st Respondent bank against thgl er the provisions of SARFAESI Act,2 OO2. TheA li is executed in the same does violation of section l3(1s) fr.:o*s{Bs|$f,M h1
sA23312022
not have any legal sanctity. Accordingly, thelstRespondent Bank prayed to dismiss the SA.
Heard Ld. counsel for the Applicant and Ld. counsel for the l"tRespondent Bank whereas 2nd respondent remained exparte. Perused the material brought on record.
ii) To what relieJ?
Point No.lil :-
During the course of arguments, Ld. counsel for the Applicant and Ld. counsel for the lstRespondent Bank reiterated their respective versions as stated supra.
- The Applicant is claiming that he entered into Agreement of sale dt.09. r2.2o2o with the 2d Respondent for purchase of schedule property for a consideration of Rs.2.g5 crores and paid an amount of RS.4o lakhs towards advance. Arong with the sA, the Applicant has filed copy of the said Agreement of sale dt.og. 12.2o2o. A perusar of the said agreement makes it clear that it was executed on 100 Rupees stamp paper and it is an unregistered document. Admittedly, the 2nd Respondent created mortgage in respect-or ,n. schedule property in favour of the 1"t k much prior to the said agreement of sale. In fagt;t$,,.,;nk issued demand after declaring the . After issuance of ::T;"::::: :, HJ, JilH}:}ffi HP, ; Respondent is not
sA 233/2022
expected to execute Agreement of sale in respect of the schedure property which is under mortgage. Mere agreement of sale does not create any right or title over the schedule property, at the best, it gives right to the Applicant to ciaim damages from the 2,dRespondent for executing such agreement of sale subsequent to the mortgage created in favour of the lsrrespondent Bank. The Applicant being a Jra party, is not entitled to contend that the lstRespondent Bank has not issued demand notice and possession notice to the Respondent NO.2. It is pertinent to note that Respondent No.2 firm is not contesting the SA and for the reasons best known to them, they remained exparte. Further, as per the contentions of the 1sr Respondent Bank, auctionwas conducted on 24.Og.2O22 against the schedule property but the bidder has cancelled the sale and so, the SA is infructuous. In view of the above, no cause of action survives in the SA as the auction of the schedule property, which was under challenge was cancelled.
B.
So, considering all the circumstances, I am of the opinion that there are no bonafides on the part of the Applicant in filing the present SA challenging the auction conducted by the 1"t Respondent bank on 24.O8.2022 in respect of the schedule propert5z and the Applicant is not entitled for any relief as there are no merits in the SA. Accordingly, this point is answered against the Appricant and in favour of the l"t Respondent Bank.
Point No.llil:-
copy of this order to the parties concerned.
'coftec'ted,signedondpronounced ba me in the open court on this the gh dov * sd/o I JUL zozl (c. coPrcHAND)coPrcHAND)
sd/(c. coPrcHAND)coPrcHAND) ,iPRESIDING OFFICER ,l;L'xt;J
2 issues framed by the court
Whether the applicant is entitled to challenge the auction conducted by the respondent bank?
What relief is available to the applicant?
1 provisions across 1 enactments
Nellore VijayaBhaskar Reddy
Union Bank of India
M/s Vaishnavi Infra Tech Ltd.
Gummadi Gopichand
As recorded by the court registry
2 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
