Dismissed

Kathyayani General Traders and Others v. Union Bank of India

DRT24 Sept 2024SA/518/2023

Case brief

AI extract

What is this about?

In a securitisation application, the court found the secured creditor failed to produce valuation reports or Rule 8(6) notices, constituting a flaw. However, as the scheduled auction did not materialise, the application became infructuous and was dismissed.

What did the court decide?

The Securitisation Application is dismissed as infructuous since the auction did not materialise. Pending interlocutory applications stand closed.

Kathyayani General Traders and Others versus Union Bank of India — Banking and Recovery | DRT (2024)

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IN THE^{DEBTSRECOVERYTRIBUNAL_ II} AT HYDERABAD

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DATED^{THIS THE 24TH DAY OF SEPTEMBER'2024}

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PRESENT:^{SH. RAMESHWARKOTHE' B'C9I'' L'LB' (Hons')' M'A'} PRESIDING^OFFICER

¶4

SECURITISATION^{APPLICATIONNo' 518 OF 2023}

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Between:

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M/s. KathYaYani^{GeneralTraders} 19-9-29/5^LaxmiPuram Tirucha^{nu ru Road, Chittoor} A.P. no.⁵¹⁷⁵⁰³ ReP bY^{ManagingPartner} o.' Siihanth^{(Legal Heir)'}

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D.^{Nishanth, S/o D' G' GaiendraBabu} Aoed about³⁷ Years,^{Occ: Business}

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u'. No. tg-g-29/5,^Laxmi?uram Tiruchanuru^{Road,Chittoor' A'P'517503'} 3. Smt.^{D.G. Raieshwari} W/o D.G.^{Gajndra Babu} Aged about⁵³ Years Occ: Housewife H. No. 19-513,^19'9-29/5 Laxm i Pu^{ra m, Ti rucha n u ru Road} . . . .^. . .APPlicants. Chittoor,^A.P.517503' And Union Bank^{of India} Tirupathi Branch (E-AB) (0sse1) # l- t- L2- 13, Main^Branch Beri Street, TiruPathi Tirupathi Dist. A.P.517501 Reo. bv its Authorised Officer. ..... .Respondent. /Nn"-

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sa.518/2023

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Counsel for the Applicants Mr. K. Kranthi Kumar. Counsel for the Respondent Mr. V. Raghu.

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-:ORDER:-

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The Applicants filed the present Securitisation Application u/s-77 of the Securitization Assets and Enrorcement .l'j":;J'::::,'""1 1;'lll (hereinafter referred to as ,,Sl 1s days sare notce dated J:iffiIffi?"':T::;i:; 15.12.2023 for sale of SA schedule property.

¶13

As per the averments in the SA, the case of the applicants in brief, is that 1st applicant is a partnership firm. Late D. Gajendra Babu and applicants are the partners of 1st applicant firm. During the life time of D. Gajendra Babu, 1st applicant Firm availed cash credit to an extent of Rs.4O lakhs from respondent bank vide sanction letter dated 12.01.2016. The said Gajendra Babu was not keeping well due to an accident and ill health between June 2O1g and August 2019. Thereafter, he expired on 25.08.2019. The respondent bank failed to adjust the insurance claim against the loan account. Applicants 2 and 3 could not concentrate on the business due to ill health. Applicants paid part payments and requested for reducing the OCC limit. Applicants request for providing copy of property documents to enable them to sell the property to close the loan account has not been responded positively. The applicants have not received subsidy from the Government. Applicants were not allowed to deposit-monies under OTS.

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7/.,*^

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sA.51a/2023

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Respondent^{bank issued possession notice u/s 13(4) of the} SARFAESI^{Act dated25 'o2'202o and published in newspapers} on 01.03.2020.^{No demand noticeu/s 13(2) of the SARFAESI} Act has^{been served beforeissuanceof possessionnotice} 25.02.2O2O.^{5A.1O2l2O2o filed by applicants challenging the} said^{possessionnotice ended in dismissalln the absenceof} any stay^{of the possessionnotice'respondentproceeded with} issuance of^{auction notice putting the propertyfor sale on} 25.0g.2O2O.^{The auction flxed on 25 '09 '2020 was not} materialised.^{Subsequently, respondent lssuedthe subject15} days notice^{of sale dated 17 '77 2023 fixing the date of auction} as 75.12.2023.^{The propertyhas not been valued as provided} u/r 8(5) of^{the Security Interest(Enforcement) Rules' 2002'} The respondent^{bank has not affixed the sale notice dated} 17j,72023 nor^{published in two leadingnewsPapersThe} respondent^{bank has not issued separate8(6) notice prior to} issuance of^{15 days sale noticedated17 '17 '2023'}

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Respondent^{bank filed a memo dated f9 '12'2023 intimating} that the applicants^{have not complied the conditionalorder} dated^{13.12 2023 passedin I A 3816 of 2023 'However'} there were no^{bidders for the auctionscheduledon} 15.12.2023.^{With the defaulton the part of the applicants'} respondent^{took out a fresh sale notice dated 1A 72 2023} fixing the auction^{on 71 07 2024'}

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Respondent bank^{filed reply statementin the SA} on fg.O2.2024.^{The submissions of the respondent bankas} per the averments^{in the reply statement, ln brief, are that} the subject sale notice^{was affixed} N*"^{on the secured asset} and

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sA.51a/2023

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pubrished in Teruqu and Engrish dairies. The auction schedured on 11.01.2024 was not materialised for want of bidders' since the appricants hai "r:;:;:,'::*JIr;:#'r:T1 order passed ,, "" 73.72.2023, applicants are not enti ed to any relief jn the SA.

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Learned counsel appearing for the applicants prayed that orders may be passed on ror the respon.*, r. : f:::';;";T:'::'":,T,'."il:: Perused the written arguments filed by the respondent bank and the material brought on record.

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6, I have gone through the material papers placed on record for the purpose of examining the contention of applicants over compliance of rules g(5) 8(6) of the Security Interest (Enforcement) Rules,2OO2 by the respondent bank. Though the applicants specifically raised the issue of valuation of the property and separate 8(6) notice, respondent bank has not placed on record the valuation report and the copy of rule 8(6) notice, if any taken oui for the purpose. Obtaining latest valuation of the property and issuance of 30 days clear notice prior to publication of auction sale notice are mandatory in nature and any flaw on this count makes the whole securitisation proceedings vitiated. In the absence of any material as to the comptiance of rutes 8(5) and 8(6), it is to be construed that the respondent bank has not complied the procedure prescribed in the Security Interest (Enforcement) Rules, 2002 in respect of valuation report and separate 30 days notice. Hence it is a blatant flaw on the part of the respondent bank. However, with the-auctions scheduled on

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K..itrt^

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sA. 518/2023

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L5.12.2023 and 11.01.2024^{were not materialised,hopefully} respondent bank shall ensure^{complianceof the relevant} provisions of the Act 2002 including rules 8(5) and 8(6)^{of the} Security Interest^{(Enforcement)} Rules,2002^{in its future} steps, if any. As regards the^{contentionof non-service of} demand notice, the same^{issuewas finalised in SA.102/2020.}

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There being no auction^pursuant to impugned^{sale notice, the} contentions relatable to the impugned sale^{notice are not} being examined as the very cause of auction^{raised in the SA} does not subsist. Accordingly, the SA becomes^infructuous.

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Point No.(ii):

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B. In the result, the SA fails and is hereby dismissed.

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Consequently, Interlocutory Applications^pending if any,^shall stand closed. No order as to costs.

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Communicate a copy of this order to the^{partiesconcerned} and upload in Web Portal.

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(Dictoted to the Steno, signed ond pronounced by me in the open court on this the 24'h doy of September, 2024).

¶32

ESHWAR KOTHE) PRESIDING OFFICER

Kathyayani General Traders and Others v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Kathyayani General Traders and Others v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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