Allowed

Shaik Shafiulla v. Union Bank of India

DRT28 Apr 2025SA/113/2022

Case brief

AI extract

What is this about?

In this securitization application, the Debt Recovery Tribunal addressed an applicant's challenge to a bank's possession notice. While noting the NPA classification was valid, the Tribunal found a violation of statutory rules regarding the issuance of the possession notice due to lack of proof of proper service, allowing the application to set aside the specific notice.

What did the court decide?

The Securitization Application is allowed by setting aside the possession notice dated 19.08.2021 issued by the respondent bank under Sec.13(4) of the Act, 2002.

Shaik Shafiulla versus Union Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY^{TRiBUNAL.II AT HYDERABAD}

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DATED THIS THE^{2BTHDAY OF APRIL, 2025}

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PRESENT: SH. RAMESHWAR KOTHE,^{B'Com, L.LB. (Hons.),M A'} PRESIDING OFFICER

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Securitization Application^{No.113 OF 2022}

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Mr. Shaik Shafiulla S/o Noor Basha Aged about 36^years, Occ:Business R/o H.No.23l18-A, Kota Street Nandyal, Kurnool District.

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.......Applicant.

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Versus

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Union Bank of India Padmavathi Nagar Branch Nandyal, Kurnool District Rep by its Authorized Officer

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Counsel for the Applicant^{: Mr. G' DineshKumar}

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Counsel for Respondent Bank^{: Mr' V. Sethu MadhavaRao}

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-:ORDERT-

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The Applicant filed the^present Securitisation^{Applicationu/s 17} of the Securitization and^{Reconstruction} of^{FinancialAssets and} Enforcement of Security Interest Act,^{2002 (hereinafter referredto as} "the Act") to set aside all the measures of the respondent^{bank under} Sec.13(4) oF the Act including the^{sale notice dated 02.02.2022fixing} auction of the application schedule^{property on 24.02'2022.}

¶13

The averments of the application, briefly,^are that^{the applicant} availed housing loan of Rs.22.40^{lakhs on 05.11.2018 by mortgaging} the application schedute property. Due to financial^{crisis,Covid-19} pandemic and health issues of mother applicant committed defaultⁱⁿ payment otherwise he was regular in^payment. Without considering the facts and moratorium^period, bank^{declared the accountas NPA} and initiated SARFAESI^{proceedings. Without serving demandnotice,} 1{r.n.--.r,;tz -^{:'

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Page 2 of 4

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SA No.113lzOzz

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possession notice and notice prior to sale, bank issued the impugned sale notice. The respondent bank failed to follow sub-Rules (1), (2), (5) and (6) of Rule B of security Interest (Enforcement) Rules, 2oo2 (hereinafter "Rules" for brevity) hence this SA.

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The respondent bank filed reply statement arong with documents. The contents briefly, are that after availing home loan the applicant failed to pay instalments as per agreed terms and hence account became NPA and Securitization proceedings came to be initiated. The applicant evaded to receive demand notice and hence the same was published in 'Financial Express' and 'Eenbdu' newspapers on 21.05.202t. Thereafter possession notice dated 19.08.2021 was issued, affixed on secured asset and published in 'Financial Express' and 'sakshi' newspapers on 20.oB.2o2L After obtaining valuation report from its approved valuer, the respondent bank issued e-auction sale notice dated 31.0L.2022 fixing auction on 24.02.2022, sent the same by registered post on 31.01.2022 to applicant, affixed on secured asset and published in 'Financial Express' and 'sakshi' daily newspapers. However auction did not materialize for want of bidders and hence SA became infructuous. Further, the applicant failed to comply the conditional order dated 22.02.2022 passed by Hon'ble High Court in WP No.9592 of 2022 and as such he is not entitled to any relief as held by the Hon'ble supreme court in M/s Prestige Lights Ltd. vs. stafe Bank of India in Appeal (civil) No.3B27 of 2007 decided on 20.08.2007. sA is tiabte to be dismissed.

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Heard learned counsel appearing for the applicant and learned counsel for the respondent bank. Perused the material brought on record.

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Page 3 of4

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SA No.113/2022

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During the course of arguments, the learned counsel for the applicant and learned counsel for the respondent bank reiterated their version as in the application and the reply statement

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The points for consideration are as follows : -

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i) Whether the applicant made out any valid ground to quash the measures initiated by the respondent against the SA schedule property as prayed for?

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ii) To what relief?

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Point No.(i)l

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Admittedly, the applicant availed home loan facility against mortgage of application schedule property as security and failed to make payment as per agreed terms. Hence the action of the respondent bank in classifying the account as NpA and initiation of Securitization proceedings cannot be faulted.

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B. The auction on 24.02.2022 did not materialize for want of bidders and therefore, I deem it not necessary to consider the contentions on non-compliance of Rules 8(5) and 8(6) of 2002.

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The respondent bank filed material documents which prove that the demand notice sent to the applicant was acknowledged and returned in respect of co-applicant. However, the same was also served by way of paper publication. The demand notice contains the date of NPA as 03.02.2021. It is not the case of applicant that he raised objections, if any, under Sec.13(3A) of the Act, 2002.

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With regard to service of possession notice, the applicant repeatedly averred in the application that the possession notice under Sec.13(4) was not issued and served. In rebuttal, the respondent bank neither averred anything in the reply statement no5. did it file

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Page 4 of 4

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sA No.113/2022

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any^proof of^{sending/servingthe possessionnotice to the applicant'} In the absence of^{such proof,it is to be deemed that Rule B(1) was} partly followed by affixing the^{possession noticeand Rule B(2) by} publishing in two newspapers and^{accordingly it is to be held that} there is violation of^{Rule B(1). The applicant succeeded in making} out a valid^{ground to set aside the possessionnoticedated} 19.08.2021. SA deserves^{to be allowedaccordingly'}

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Point No.(ii):

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In the result,^{the Securitization Applicationis aliowed by setting} aside the^{possession notice dated 19.08.2021issued by the} respondent bank under^{Sec.13(4) of the Act, 2002.}

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However, this order does^{not preclude the respondentbank} from issuing fresh^{possession noticestrictlyin accordancewith law'} 13. Consequently, Interlocutory^{Applicationspending, if any, shall} stand closed. No order as to^costs.

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Communicate a copy of this^{orderto the partiesconcernedand} upload in the official^website.

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(Typed to my dictotion by the Ps, corrected, signed ond^{pronounced by me in the opencourt on this} the 28th doy of April,2025).

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','rtrrn,r,.r^,:l -/ - :-tr' \ "

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(RAMESHWAR KOTHE) PRESIDING OFFICER

Shaik Shafiulla v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Shaik Shafiulla v. Union Bank of India

Case brief

What is this about?

What did the court decide?

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