Allowed

City Union Bank Limited v. M/S. Rajendra Paper Corporation

DRT13 Oct 2025OA/334/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal heard an application seeking to set aside SARFAESI Act proceedings initiated by a housing finance company. The court held that the respondents failed to prove service of Demand and Possession Notices or their affixation as required by the Act and Rules. Consequently, the petition was allowed, setting aside all measures taken against the mortgaged properties.

What did the court decide?

The preferences sought are allowed and all measures initiated by the Respondents in respect of the application schedule properties are set aside.

City Union Bank Limited versus M/S. Rajendra Paper… — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERYTRIBUNAL.IAT HYDERABAD

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DATED THIS THE I3TH DAY OF OCTOBER, 2025

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No.334,/20.23

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Erukala Chandra Shekar Goud, Gender: Male, S/o. Ramachan draiah, Aged about 68 years, Occ: Business, /o_.^{16-2-724, A.63, APAU Colony,} GaddiaDilsukhnagar, Hyderabad--C6.

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Smt.E. Satyavathi, W/o. E. Chandra Shekar Goud, Aged about 6O years, Occ: Housewife, R/o. 16-2-724, A.63, APAU Colony, GaddiaDilsukhnagar, Hyderabad_36.

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Applicants.

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Versus

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The Authorized Olficer, ICICI HFC, 1"t Ftoor, Office ).6-tt_2O /7 /A, Opposite TV Tower, Malakpet, Hyderabad.

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The Chief Manager, ICICI HFC, t"t Floor, Office t6-tt-2O/7 /A, Opposite TV Tower, Malakpet, Hyderabad.

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Respondents.

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Counsel for the Applicant SiAbhag Singh-

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Counsel for the Respondents Si Vblmu Grouer.

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Reserued on 12.O9.2025 Pronounced on 13.10.2025 Uploaded to Website on 13.10.2025

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-:ORDERi

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The present 2002,

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nlo$"ofi1ffi$

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the Applicants u/s.17 of the Securit2ation and and Enforcement of Security Interest Act, to take physical possession of the Advocate Commissioner appointed in

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SA-No.334/2O23

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Crl.M.P.No.1O77 /2O2A, by the Ld. XI Addl. Chief Metropolitan Magtstrate vide orders dt.21.O4 .2023, wlnich were extended. on 01 .Og.2023.

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The averments made by the Applicants in the application, in brief, are that, the Applicant No.2, who is trre absorute owner of the application schedure property, along with Applicant No.1 availed Mortgage Loan from the Respondents and were paying the loan instalments regularly. However, subsequently, due to pandemic situation, there was a severe affect in the repa5,nnent capacity of the Applicants and hence there were certain irregurarities in adhering to the financial commitments of the Applicants. The application schedule property (property No.2) is under the occupation of the tenants and there were some disputes between the Applicants and the tenants, due to which repajrment of EMIs was delayed. The tenant in application schedule property (property No.l) had approached the DRT{I by frling SA.No.245/2023 and obtained certain orders. The Respondents had hast y approached the Ld. XI Addl. cMM, Secunderabad by filing crl.M.P.No.1o77 12023 and obtained orders of appointment of Advocate commissioner dt.21.o4.2o23, which were extended on o1.08.2023, for taking physical possession of the application schedule properLies. The Respondents did not follow t},e guidelines while classifying the roan account as NpA. The Respondents have not complied with sec.13(2) of the sARFAESI Act r/w. Rule 3 of the Security Interest (Enforcement) Rules, 2o02. The Respondents have not served t}le Possession Notice on the Applicants and have also failed to ajfix ttre said notice as contemplated under Rule g(1) of the security Interest (Enforcement) Rules, 20o2. The Respondents have failed to disclose the fact of occupation of the schedule properties by the tenants in the alrrdavit frled before the Ld. CMM. Hence, the SA.

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J. The Respondents filed their Repry Statement denying ar1 the adverse alegations made in the apprication. The contentions of the Respondents, in brief, are that, the Respondents had advanced a loan as long back as in August, 2019 and the Applicants had committed gross default in payment terms, The Respondents the account of the Applicants as NpA on 04.12.2022 and issued 26.12.2022, calling upon the Applicants to pay $".2, Applicants managed to return the Demand Notice and as such blished the Demand Notice in two leading newspapers * 1 J 1tT Zffi

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sA.No.334/2023

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i.e., "The city Hans' and 'Andhra prabha'under the caption of public Notice dt'1o.01'2023. The Respondents issued Notice dt.20.o3.2023 u/s.13(4) of the SARFAESI Act and published the same in two leading newspapers. The Possession Notice dt.17.03-2023 was issued and the possession of portion of the property was ta_ken and pending SA, the Applicants have removed the possession by break-opening the locks. There are no grounds made out to set-aside the eviction notice dt.2o.05.2o23, issued by the Advocate commissioner in Crl.M.P.No. 1O77 12023 and the SA is liabte to be d.ismissed.

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Heard both sides.

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Now, the points that arise for consideration ar:e,-

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whether the Applicants have made any valid grounds for setting aside the proceedings initiated by the Respondents under the SARFAESI Act against the application schedule properties?

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ii) To what reliefl

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Polnt No.l :-

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There is no dispute regarding the fact that the Applicants have availed Mortgage Loan from the Respondents by creating security interest over the application schedule properties and thereafter committed default in repalment of the loan amount. It is the contention of the Applicants that the Respondents have not followed Sec.13(2) r/w. RuIe 3 of the SARFAESI Act and the security Interest (Enforcement) Rules, 2002 and that the Respondents have also not served Possession Notice on the Applicants and affixed the said notice on the secured. assets as contemplated under Rule 8(1) of the Rules, 20o2. Even though the Respondents in their Reply statement have contended that, the Apptcants have managed to return the Demand Notice sent to them u/s.13(2) of the SARFAESI Act and so, they published the said notice in two newspapers, proof of Demand Notice has not been frled by the Respondents. The Statement, at one place, stated that they have issued

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ft,^notices s.13(4) of the SARFAESI Act and also published in two

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another place stated that they have issued possession

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?r^{Nfilcedt I'l'.+rg:2o2.Fil} complying with the requirements. The Respondents :."1 .,, .4" ,ij: , ..4'^r'< .r

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SA.No-334/2023

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have neither fired copies of the said possession Notice(s) nor proof of service of the said notices on the Applicants nor filed copies of publication of the said Possession Notice(s)' so, the Respondents have failed to prove the compliance of Sec'13(2) r/w' Rure 3 of the .ARFAESI Act and the Rures, 2002 and a-lso Sec.13(4) r/w. Rule 8(1) & (2) of the Rules, 2O02. Under such circumstance, it has to be held that, the Applicants have made out valid grounds for setting aside the measures taken out by the Respondents under the sARFAESI Act and the Rules made thereunder against the application schedule properties. So, the present SA is liable to be aflowed. Accordingly, this point is arswered in favour of the Applicants and against the Respondents.

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Point No.li r

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7 ' In the result, the present SA is allowed by setting aside all the measures initiated by the Respondents in respect of the application schedule properties. Consequently, the Interlocutory Applications, pend.ing if any, shall stand disposed of. No order as to costs.

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Communicate a copy of this order to the parties concerned.

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(Dktoted to the Ptiwte secretory, tonscribed by her, coffected, stgned ond pronounced by me in the open coutt on thb the 736 ddy ol october,

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sd/(c. coPrcHANDl PR"ESIDING OFFICER

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City Union Bank Limited v. M/S. Rajendra Paper Corporation

Case brief

What is this about?

What did the court decide?

City Union Bank Limited v. M/S. Rajendra Paper Corporation

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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Case details

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