Dismissed

Velagapudi Steels Limited v. Canara Bank (Syndicate Bank)

DRT12 Aug 2025SA/129/2022

Case brief

AI extract

What is this about?

In an application under Section 17 of the SARFAESI Act, 2002, the applicants challenged the validity of a possession and sale notice issued by the bank, alleging procedural lapses. The Debt Recovery Tribunal held that the bank followed statutory procedures; however, since no auction was conducted, the sale notice was infructuous. The application was dismissed to proceed afresh.

What did the court decide?

The application was dismissed and the bank was directed to proceed afresh for conducting the sale by issuing a fresh sale notice.

Velagapudi Steels Limited versus Canara Bank (Syndicate Bank) — Specific Performance | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL - I AT HYDERABAD

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DATED THIS THE 7TH DAY OF AUGUST. 2025

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No. 129/2C22

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t.Mls Velagapudi Steels Ltd.,

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Rep. by its Authonzed person Mr.V.G.K. Prasad, Regd. Office : D.No. 13-8/ 1, Done Atukur, Nidamanuru(pO) Vijayawada, Krishna Dist._5 2l IO4.

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Sri V.G.K. prasad, S/o Seetaramaiah, R/o D.No.13-8/ 1, Done Atukur, Nidamanuru (pO) Vijayawada, Krishna Dist._S 2l lO4

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Smt.V.Padmaja, W/o V.G.K.prasad, R/o D.No.t3-B/1, Done Atukur, Nidamanuru (pO) Vijayawada, Krishna Dist._5 2 t lO4 4.'Sri V.Syamala Rao, S/o Seetaramaiah, R/o D.No.10-164, Done Atukur viilage, Nidamanuru (pO) Vijayawada, Krishna Dist._5 2t lO4

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Smt.B.Shobha Devi, W/o Sri VEnkata Rao, R/o D.No.10-164, Done Atukur village, Nidamanuru (pO) Vijayawada, Krishna Dist. _5 2 t lO4 ... Applicants And 1. Canara Bank, .-.:Ir:r--"^{11' :i[} ,,,],,:Ii<.Nizam Sl-rai Road Branch, /t'a*-''"^.' .,,.'..:;^{-' :' .,ri:;i\} . (,.-f, 'J'{ i _^{5-3- 1062, Veerji Towers,} ',"h Osmangunj, ,*s' t,*i Near Old Begum Bazar p.S, Hyderabad-sOO 001 1 ? /.UD^jfri:5 Rep.by its Authorized, Officer

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Reserve Bank of India, Saifabad, Hyderabad-S00 004.

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.... Respondents Counsel for the Applicants : Sn V.SethuMadhaua Rao Counsel for the T"tRespond.ent : Sri A.V.S.S.Prasad. Respondent NO.2

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-:ORDER:.

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This application is filed by the Applicants u/s.17 of the sARFAESI Act, 2oo2, challenging the Possession Notice dt.18. ll.2021 and Sale Notice dt.03.01.2022 issued by the lst Respondent Bank in respect of the schedule properties and to declare the same as illegal and void.

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The averments made in the application, in brief, are that:

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The l"tApplicant availed loan from the lstRespondent Bank and the Applicants created mortgage in respect of the schedure properties. Due to power cuts imposed by the Electricity Department, the Applicants sustained huge loss and couldnot repay the roan dues and so,the lstRespondentclassified theloan account as NpA and issued demand notice dt,22.or.2o2r. Thereafter there was a proposal for ors and in pursuance of the same, the Appricants paid substantial amounts. Butthe r"t Respondent bank has not released the properties as agreed by them. The 1"t Respondent bank issued Possession Notice dt.1g. ll.2021 u/s 13(4) of the SARFAESI Act, 2oo2 in respect of the schedule properties but the said possession notice was not published in two leading newspapers and not affixed on the schedule propertie". Ibg[g,a$..r, the 1"t Respondent issued sale Notice dt.03.01.2022 fi ry:/cg&s:L\c{lqg. io.^{of the scheduleproperty} on os.o2.2o22 btf'&XrOu;i ; ari . ;" I ;:,:' ": : :, ##ffi: : ffi, T:ffi :: o',[" #l Tff [,]':: obtain ,.rrJt,i* schedule properties which tH^{*fl"1t fflfrgffict} consists vvrrDr-Ls of ,, qiii;. ,y|.r5. !l items 'J-gms .. and sS o, tlhe,,,pfrid^{sale notice issued by the} l"tRespondent,Banlt.iq f ',^..j. illega1,araa,qa.il1t ..^'-,. ::'. ro be set aside. Hence tne se. t . '.'^' j' '..r'." ,t-'.-"' ).- -., -'r'^. .t.

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The lstRespondent bank filed Reply by denying a[ the adverse allegations made in the sA. It is contended that the Applicants having availed loan from the 1st Respondent bank, committed defaurt in repaying the loan dues and so, the loan account was classified as NPA and the lstRespondent Bank issued demand notice u/s 13(2) of the Act, 2oo2 dt.2r.or.2o21 and the said notice was received by the Applicants. Thereafter, the bank issued possession notice dt'18'll'2021 and the said notice was received by the Applicants and the same was published in English and Telugu daily newspapers and also affixed on the schedule properties.Thereafter, the Bank issued Pre-sale notice dt.23. rr.2o2r ulr g(6) of Rules, 2oo2 by giving 30 daystime to the Applicants and the said notice was received by the Applicants on 25.17.2021. Thereafter, the Bank issued sale Notice dt'03'ol'2022 for conducting auction of the schedule propertiesbut however, auction was not conducted in pursuance of the said sale notice and so, the said sare notice is infructuous and accordingly, SA is liable to be dismissed.

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Heard Ld. counsel for the Applicants and Ld. counsel for lstRespondent. whereas notice not taken against Respondent No.2 and hence claim against Respondent No.2 is dismissed. perused the material brought on record.

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Now, the points that arise for consideration are,_

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i)
whether the Applicants haue estabrished. any uatid ground"s for
challenging the impugned" possession Notice dt.ig.l1.2021 and
Sale Notice dt.O3.01r@Zj::ued bg the j"t Respond"ent against
the schedule
rL[es?
''";
,/i' " ''1'^ ;l'" ',.i .'1', i.)i)
ii) ro what r gir#-gi,r;h i; ,' )
*
ii,l" 1 rrlr206
Point No.(i):- hr,

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During the course of arguments, Ld. Counsel for the Applicants and

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Ld' counsel for the lstRespondent reiterated their respective versions as stated supra.

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7 ' There is no dispute regarding the fact that the Applicants availed loan from the 1st Respondent by creating mortgage against the schedure properties and thereafter committed default in repayment of loan dues. so, the 1st Respondent bank issued demand notice, possession notice and sale notice against the schedule properties.

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8' The specific contention of the Appricants is that the impugned Possession Notice dt.1g.r1.2o21 was not affixed on the schedule properties and it was not published in two leading newspapers and similarly, sale Notice dt.o3.0t.o22 is not regar and valid as clear thirty days time was not given from the date of service of the said notice.

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Per contra, the 1st Respondent bank contended that the Bank has strictly followed the procedure in issuing all the statutory notices to the Applicants but however no auction was conducted by the bank in pursuance of the impugned Sale Notice dt.03.0 1.2022 and so, the said Sale Notice is infructuous.

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10' In order to establish that they have followed the procedure mandated under the provisions of SARFAESI Act, 2oo2 and Rules made thereunder in issuing the relevant notices to the Applicants, the lst Respondent ry';'.!,}$qs:$-,.,,1,nt^{relevant material documentsarong}

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with the R per the said documents, it is clear

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that the red demand notice dt.2l.Ot.2O2l

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u/s 13(?/ df and the said notice was sent to

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theAppli ii}ffhrfr?toT:3 d the said notice was received by

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the Applicants as evidenced by the postal acknowledgments. Thereafter the l"tRespondent Bank issued possession notice dt.18.11.2021 and the said notice was sent to the Applicants through Regd. Post and the same was received by the Applicants as evidenced by the postal acknowledgements filed by the lst Respondent. The said possession notice was affixed on the schedule properties as depicted in the photographs filed by the Bank and the same was also published in Telugu and Engiish claily newspapers as evidenced by the copies of paper publication filed by the Bank. Thus the l"t Respondent bank scrupulously followed Rule 8(1)&(2) of Security Interest (Enforcement) Rules, 2oo2 in issuing possession Notice dt.1g. lt.2o21 to the Applicants

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After issuing the possession notice, the 1st Respondent Bank issued Redemption Notice u/s 13(8) of SARFAESI Act, 2oo2 by giving 30 days time to the Applicants for redeerning the secured assets and the said notice was received by the Applicants as evidenced by the postal acknowledgements fiIed by the lst Respondent. After issuing the presale Notice, the 1st Respondent Bank obtain.ed valuation report from the approved valuer as evidenced by the copies of valuation report filed by the Bank. Thereafter, the 1"t Respondent bank issued Auction Sale Notice dt.03.1o.2o22 and admittedly, the Applicants received the said notice but however, no auction was conducted by the bank in pursuance of the said sale notice. So, the said sale notice becomes infructuous and nothing survives in the SA for adjudication ancl lhere is no need to decide the validity or otherwise of the impugned Sale Notice dt.03.01.2022. Suffice, if a direction is given to the 1"Rtl[#,,:$!r!_""u to proceed afresh for conducting sale of the ' schy/trryWfie{t{B--.\g;uing fresh sale notice by duly fotlowing the ffEb;";ffinrxryN:, 2oo2 and Rules macle thereunder.

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J , 12 ttln,rtfi
rrr.

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Point No.(ii):-

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So considering all the circumstances, I hold that there are no merits in the SA.

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In the result, SA l2gl22 is dismissed.

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Consequently, the Interlocutory Applications, pending if any, shall

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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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(Dctated to the P's transcibed by her, corrected., signed and. pronounced bg me in the open court on this the vh day ofAugust,2025).

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sdl(c. coPr CHANDI PRESIDING OF'FICER

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fJ 1 lzmc 2 tl,8 m2t[5
.%,W

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TRUE COPY
o,,,.tMhry
ORT.', HYDERABAD.

Velagapudi Steels Limited v. Canara Bank (Syndicate Bank)

Case brief

What is this about?

What did the court decide?

Velagapudi Steels Limited v. Canara Bank (Syndicate Bank)

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

Coram

Case details

All orders in this case

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