Dismissed

Sree Veerabhadreswara v. Karnataka Bank Limited

DRT7 Nov 2024SA/247/2022

Case brief

AI extract

What is this about?

The DRT dismissed the applicant's application to set aside auction measures and default notices. The court held that the applicants failed to substantiate claims regarding RBI guideline violations or alleged procedural breaches, as they did not file supporting documents.

What did the court decide?

The Securitization Application filed by the applicants is dismissed in toto.

Sree Veerabhadreswara versus Karnataka Bank Limited — Banking and Recovery | DRT (2024)

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IN THE DEBTS^{RECOVERYTRIBUNAL - II} AT HYDEMBAD

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DATED THIS^{THEOTTHDAYOF NOVEMBER,2OZ4}

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PRESENT: SH. MMESHWAR^{KOTHE,B.COM, L.LB.(HONS.), M.A.} PRESIDiNG OFFICER

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Securitization^{Application No.247 of 2022}

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M/s Sree Veerabhadreswara^{Commission Agents} New Mini Gowden^{No.12,APMC Market Yard Adoni} Adoni, Kurnool^{District, A.P' 518 301} Rep by its Partner^{Mr. Veera BhadrappaP'K' &} Mr. Yaggatti Shiva^Prasad

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Mr. Yaggatti Shiva^Prasad S/o Y. RachaPPa R/o H.No.2U230,^f4andlgiri Adoni, Kurnool^District A'P' 518301

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" ""A,Pticants'

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Versus

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Karnataka Bank^Ltd Asset Recovery^{ManagementBranch} Rep by its Authorized^Officer Plot No.50, Srinagar^Colony Road No.3, Banjara^Hills Hyderabad-s., 073

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""'Respondent'

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Counsel for^{the Appticants :} Sri v' Murali^Manohar Counsel for^{the Respondent:} Sri N'Rama^Rao

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-r Q-UEB:-

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The Applicants^{filed the present Applicationu/s 17 of the} Securitization and^{Reconstruction of FinancialAssetsand Enforcement} of Security^{Interest Act, 2002 (?*fl=jESI Act, Z0O2)to set aside all the} ,/,q.2..$v\ ul

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2ol5

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sA No.247 l2oiz

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measures of the respondent bank against the SA schedule properties including the auction sate notice dated 08.09.2022 fixing auction on 20.70.2022.

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The case of the Applicants, in brtef, is that 1st applicant is a MSIVIE unit being commission agents for sale oF cotton, groundnut, sunflower etc. The applicants availed overdraft limit of Rs.70 lakhs vide sanction letter dated 30.03.2016 and further enhanced to Rs.2.50 crores and to Rs.3 crores vide sanction letters dated 21.06.2018 and 26.09.2019 respectively. The 1st applicant advanced more than Rs.2 crores to farmers and due to outbreak of Covid-19, they sustained huge losses and failed to pay sale proceeds of produce. The respondent bank failed to extend emergency Covid loan as announced by the Central Government/Reserve Bank of India and classified the loan account as NPA on 31.03.2021 with effect from 29.09.2020 in violation of RBI guidelines and direction of Hon,ble Apex Court in Wp No.825/2020 and batch. Had the respondent bank sanctioned Credit Guarantee Limits, the account of applicants would have been standard/performing asset. As held by Hon'ble High Court ofTelangana in RKI Builders pvt Ltd vs. Union of India in WP No.35063 of 2022 that the violations of RBI Circulars and correctness of declaration of account as NpA should also be looked into by the DRT. The respondent bank failed to give the benefit of restructuring or implement Debt Restructuring Mechanism for the applicant's MSME unit as per RBI Circulars dated 17.03.2016, 24.07.2077, 77.02.2020, 06.08.2020 and 05.05.2021. Father of 2nd applicant died with Corona virus on 25.05.2021and a huge amount was spent for treatment of Corona for the family members. Exorbitant rate of interest is charged against RBI directives. The respondent bank failed to follow mandatory provisions under Sec.13(2) and Rules g(1), B(2), 8(5), 8(6), 8(7) and 9(1) of Security Interest (Enforcement) Rutes,

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/1w"...,^ /!'/'<o''"1

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sA No.247|2OZZ

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2002^{("Rules" hereinafter)Henceall the measuresof} the resPondent bank against^{the SA scheduleproperties are liable to be} set aside.

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The respondent^{bank filed reply statement denying the adverse} averments^{of application lt is stated inter alia' that due to default} committed^{by applicantsin repayment the accountwas classified as} NPA on 31.03.2021^{with effect from29 09'2020as per RBI guidelines} as to the^{lncomeRecognitionand Prudential Accounting Norms The} applicants^{never approachedthe respondentbank For any of the} benefits^{as claimed in the applicationWheneverapplicant approached} the bank,^{they extended full co-operationin orderto run theirbusiness} smoothly'^{The respondent bank never violated the guidelinesissuedby} the Government^{of hdia, Reserve Bank India or the directions of} Hon'ble^{Apex Court. The interest has been charged at contractualrate} The demand^{notice dated 09 09'2021 under Sec'13(2) issued and the} same was^{received by applicant on 20'09 2021' As there was no} payment,^{possessionnotice under Sec 13(4) was issued on 08 03 2022'} thesamewasservedonapplicants'publishedln'Prajasakthi'and 'Indian Express'Telugu^{and English newspaperson 13 03 2022 besides} affixture on^{secured assets The SA is liable to be dismissedwith} exemplary^costs.

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Learned counsel^{for applicants reported orders may be passed on} merits'Heardlearnedcounselappearingfortherespondentbankand perused the material^{documentsfiled by the parties'}

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Heard learned^{counsel for the respondentand perusedthe} material brought^{on record'}

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During the course^{of arguments, the learned counsel for the} respondent bank^{reiteratedthe version as in the reply statement While}

U/^{-^*}

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SA No.24712022

relying on the documents filed along with reply statement as proof of compliance of relevant Rules under the SARFAESI Act, learned counsel sought for dismissal of the SA with costs.

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Now, the points that arise for consideration are:_

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i) Whether the Applicants have made out any valid

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grounds for grant of reliefs as prayed for in the p resent Secu ritiza tio n Ap p t ica t io n ?

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ii) To what relief?

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Point No,(il:-

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It is an admitted fact that the applicants availed extended credjt facility to a tune of Rs.3 crores from the respondent bank and committed default for reasons whatsoever. Hence classification of loan account as NpA cannot be questioned. There are averments in the application about non_extension of benefits such as Credit Guarantee Limits, debt restructuring etc. Having averred so, the applicants have not chosen to place on record any statement of account or judgement or circurar or guiderines and rerevant correspondence thereof with the respondent bank for extending benefits as per entitlement so as to substantiate their pleas. Under such circumstances, none of the aforesaid averments cane be accepted.

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With regard to averments on non-compliance of provisions of the Act and Rules, the respondent bank filed documents along with reply statement evidencing service of demand notice dated 09.09.2021 vide pages 4 to 14. In the absence of any objections or reply to the demand notice, the appricants cannot be permitted to contend that interest rate charged is excessive. The possession notice dated 0g.03.2022 was served, published and affixed on secured as_sets vide documents placed

Y.,,r-\

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sANo.247l2O22

at pages Ls to 27 annexed to reply statement. In view of the sufficient proof, I find no infraction of provisions under Secs.13(2), 13(4) of the Act, 2002 and Rules 8(1) and g(2) of 2002 by the respondent bank, It was reported on L4.03.2024 that the auction scheduled on 20.10.2022 was not successful and therefore, none of the averments pertaining to auction sale notice dated 08,09.2022 need consideration.

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In view of the observations, I find that the applicant failed to make out any valid ground to set aside any of the measures taken by the respondent against the sA schedule properties under the provisions of the Act, 2002 and Rules framed thereunder and accordingly this application is liable to be dismissed.

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Point No.(iil:-

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11' In the result, the present securitization Application fails and is hereby dismissed.

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Consequently, the Interlocutory Applications, pending if any, shall stand closed. No order as to costs. communicate a copy of this order to the parties concerned and upload in the official website.

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(Typed to my dictation by the pS, corrected, signed and pronounced by me in the open court on this the oVh day of November, 2024),

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6fu*,t (RAMESHWAR KOTHE) PRESIDING OFFICER

Sree Veerabhadreswara v. Karnataka Bank Limited

Case brief

What is this about?

What did the court decide?

Sree Veerabhadreswara v. Karnataka Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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