Allowed

Y Srinvasa Reddy v. Srinivasa Reddy

DRT24 Jul 2025SA/111/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal quashed a possession notice under the SARFAESI Act issued by a financial institution, holding that the mandatory compliance of Section 13(3A) was violated due to the non-reply to the applicant's objections regarding the demand notice. The respondent is allowed to issue the notice afresh.

What did the court decide?

Securitisation Application allowed; possession notice dated 27.01.2023 set aside; respondent permitted to issue notice afresh.

Y Srinvasa Reddy versus Srinivasa Reddy — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS^{RECOVERYTRIBUNAL- II} AT HYDEMBAD

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DATED THIS^{THE TWENTYFOURTH DAY OF JULY,2025}

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

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SECURITISATIoN^{APPLICATION No' 111 OF 2023}

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Between:

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Sri Y. Srinivas^ReddY S/o Y. Bali^Reddv Aged: 50^years Occ: Business,^{H. O.1-229} Ganesh Nagar,^TadiPatri Ana nthapu r Dist. 51^{541 1'}

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.......Applicant.

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And

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Sriram Finance^Limited Surya Towers, C.B. Road Tadipatri. Rep by its^- Authorised Officer. .....Respondent.

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Counsel for the Applicant : Mr. S. Maruti Rao. Counsel for Respondent : Mr. M. Indrasen.

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-:g-B-D-EB:-

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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") assaiting possession notice dated 27,Ot,2O23 issued by the respondent agai[st the SA schedule property. ,/ryon

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sA 111,/2023

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The case of the applicant, in brief, is he is the borrower. He availed a loan of Rs.25 lakhs from the respondent to meet his business requirements. The loan was to be repayable in monthly instalments of Rs.1,02,659/- each. The loan is secured by way of mortgage of SA schedule property. Applicant has been paying the EMIS regularly. Applicant has repaid nearly Rs.22,32,683/-. Due to Covid pandemic situation, adverse business operations coupled with personal reasons, applicant could not pay some instalments. Applicant,s request for OTS neither considered nor rejected. Respondent increased rate of interest contrary to RBI guidelines. During the pendency of OTS proposal, respondent issued demand notice dated 26.09.2022 which was received on L9.L0.2022. Applicant raised objections to the demand notice. Respondent has not given reply to the objections and instead proceeded with possession notice dated 27.07.2023, The possession notice has neither been affixed on the secured asset nor published in two newspapers. Therefore, the possession notice dated 27.07.2023 is false, frivolous and baseless. The omcer issuing notices is not authorised to do so. The notice does not provide informatlon on rate of interest/ penal interest charged from time to time, capitalisation of interest/penal interest due dates of^{instalments.The Arbitral} Tribunal^passed award for an amount of^{Rs'25,15,973l-which is} under challenge before^{the Chief Judge.}

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The respondent filed reply statement.^{The submissionsof the} respondent, ln brief are; the^{avermentsof applicantthat he} could not^{pay EMIs} on^{accountof adverse business operations} due to Covid.19^{Pandemic is not correct.An amountof} Rs.16,86,493l- was already^{due from} ^t-he^{applicant as on} /2Qk)<)>Y

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((/.t""

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sAlLLl2023

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08.06.2019 and accordingly^{the account became NPA on} 08.06.2019. On^{the date of issuanceof demand notice u/s} 13(2), the outstanding^{dues stood at Rs.31,19,726/-' fhe} demand notice^{was receivedby the wife of applicant, who is a} guarantor. Photostat copies of^{demand notice as well as the} acknowledgements of^{respondentare filed with the reply} statement. Where after,^{respondent issued possessionnotice} u/s 13( ) on 27.0L.2023.^{The possession notice was also} received by the wife of^{the applicant'The possession notice was} published in Telugu and English^{newspapers.The other} objections raised by the^{applicant are false and are therefore,} denied.

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Both side counsels reported^{no oral arguments.Perused the} written arguments filed by^{the respondentand the material} placed on record.

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Now the^points that arise^{for adjudicationare:} -

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l(hether the Applicant made out any valid ground for quashing^the possession notice dated 27.01.2023 issued under section 13(4) of Securitisation Act?

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i, To what reliefl

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Point No.(i),

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Applicant filed the^present SA challenging the^{possession notice} dated 27.01.2023. It is the contention of the^{applicant that} respondent proceeded issued^possession notice dated 27.01.2023 under Section 13(3A) without^giving reply to^his obiections to the demand notice. Arrordi"wljgplgn,,^n"

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sa tLLl2023

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received the demand notice dated 26.0g.2022 on 16.10.2022 at his end. Applicant placed photocopy of each of his objections to the demand notice dated 16.720.2022, postal registration receipts and acknowledgements of respondent vide material papers from pages 13 to 17 annexed to the SA. However, the respondent did not choose to give any specific reply on this issue both in the reply statement as well as the written arguments. Hence, it is to be construed that the respondent has not given any reply to the objections to the demand notice and thus violated the mandatory requirement of compliance of Section 13(3A) of the SARFAESI Act. Therefore, all further proceedings under the SARFAESI Act are vitiated. Further, it is noticed that the respondent has not filed any proof of aFfixture of possession u/r 8(1) of the Security Interest (Enforcement) Rules, 2002. In view of the foregoing facts and circumstances, the SA deserves to be allowed by setting aside the possession notice dated 27.0L.2023 issued by the respondent u/s 13(4) of the SARFAESI Act.

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Point No.(ii):

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In the result, the SA is allowed by quashing the possession notice dated 27.0t,2O23 issued by the respondent. However, this order does not preclude the respondent Company from issuing possession notice u/s 13(4) afresh stricuy in accordance with the provisions of the SARFAESI Act and the Rules, 2OO2 there under.

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Consequently. Interlocutory Applicatjelns penC_ing - if any, shall stand closed. No order as to costs. ffil-'l

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sA 111/2023

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Communicate a copy of this^{order to the parties concerned and} upload in Web Site.

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(Dictoted to the Steno, signed ond^pronounced by^me in^{the opencoufton this the24h} doy ol Juty, 202s.)

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, ,7finry,...rgrq '/'.-*tl

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( RAiVI.ESHWAR KOTHE) PRESIDING OFFICER

Y Srinvasa Reddy v. Srinivasa Reddy

Case brief

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Y Srinvasa Reddy v. Srinivasa Reddy

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