Allowed

Ms Varalakshmi Seed Processing Unit v. Bank of Baroda

DRT20 Mar 2025SA/132/2023

Case brief

AI extract

What is this about?

An applicant in a SARFAESI Act matter challenged a Sale Notice, alleging non-service of notices and lack of fresh valuation. The Debt Recovery Tribunal examined the bank's compliance with statutory rules regarding notice and valuation but found the respondent failed to produce documentary evidence to prove service or valuation. Consequently, the safeguard notice was set aside.

What did the court decide?

SA 132/2023 is allowed by setting aside the impugned Sale Notice dt. 11.03.2023 issued by the Respondent Bank.

Ms Varalakshmi Seed Processing Unit versus Bank of Baroda — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL. I AT HYDERABAD DATED THIS THE 2OTT1 DAY OF MARCH, 2C/25 PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No. 182/2OZB

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M/s Varalaxmi Seed processing plant I:p -9V^{its Proprietor EegaGatiuMallaiah,} S/o Narsaiah, agld 39 ye-ars, Occ:business, f/o.^{t O- I-36 I 18, Ramnagar,} Karimnagar-505501.

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... Applicant

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And

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Bank of Baroda Karimnagar branch, 2-6-111, Market Road, Opp. Municipal Office, Karimnagar-505501 Rep. by Authorized officer

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... Respondent Bank

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Counsel for the Applicant

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Counsel for the Respond.ent Bank

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Si T. Sidhar Reddg Sn G. Venkat Si Maithreya

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-: ORDER:

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1' This application is filed by the Applicant u/s. 17 ofthe sARFAESI Act, 2oo2, challenging the Sale Notice dt. 11.03.2023 fixing the date of auction on rs.o4.2o23in respect of the schedule property and to declare the same as illegal.

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2.E.rcsmadeintheapplication,inbrief,arethat:

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r,,t,

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-{II LD. I IIC i fl4pffiBffiea.,t $suea the impugned Sale cum Auction Notice '."-:, .sdt. 1 | .o3.2023 nducting auction of the schedule properties Vh,"*d

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sAt32/2023

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without obtaining fresh valuation and without serving 30 days prior sale notice and the reserve price fixed is very low. The Respondent bank also failed to serve the possession notice on the Applicant and the said notice was also not published in two leading newspapers nor affixed on the schedule property as prescribed under Rule g(1)&(2) of Security Interest (Enforcement) Rules, 2oo2. The impugned Sale Notice was not served on the Applicant nor published in two leading newspapers and without waiting for 30 days as prescribed under Section 13(8) of SARFAESI Act,2002, the Respondent bank fixed the date of auction onrs.o4.2023 which is illegal. Hence the SA.

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The RespondentBank filedReply in thc SA denying all the adversc allegations made in the SA. It is contended that the Applicant availed various credit facilities from the Respondent bank and in view of the default, the loan accounts were classified as NpA and the Respondent Bank issued demand notice u/s 13(2) of the SARFAESI Act, 2OO2 on 27.o4.2o2land thereafter issued Possession notices dt.04.og.2o2r & 06.08.2021 and the said notices were duly served on the Applicant and its proprietor. Thereafter, the Respondent Bank issued pre sale notice dt.21.o8.2021 and challenging the said notice, the Applicant approached the Hon'ble High court of Telangana by filing W. P. No. 2 247 1 I 2021 which was dismissed vide order dt.29.l2.2o22.Thereafter, the Respondent Bank issued Sale Notice dt. 1 1 .o3.2023 and the said notice is duly served on the Applicant and the Bank obtained fresh valuation report before fixing the reserve price. Hence there are no merits in the SA and the SA is liable to be dismissed.

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r the Applicant and Ld. Counsel for Respondent terial brought on record. 20 ilArlzffi

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sA 1,32/2023

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Now, the points that arise for consideration are,

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whether the Applicant has established. ana ualid ground.s for challenging the sale cum Auction notice dt. j1.03.2023 issued. by the Respondent bank for conducting auction of the sched.ule properTy?

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iil To what relieJ?

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Point No.(i):-

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During the course of arguments, Ld. Counsel for the Applicant and Ld. Counsel for the Respondent Bank reiterated their respective versions as stated supra.

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There is no dispute regarding the fact that the Applicant availed various credit faciiities from the Respondent Bank and created mortgage against the schedule properties and thereafter, the Applicant committed default in repayment of outstanding dues.

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But the specific contention of the Applicant is that the impugned demand notice dt.27.o4.2o2l and possession notices dt.04.0g.2021 & 06.08.2o21 are not served on the Applicant. The Respondent Bank also failed to serve pre sale notice and Sale Notice on the Applicant and also failed to obtain fresh valuation before fixing reserve price of the schedule property and the reserve price fixed is very low arket value of ,fr. properties.

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,;Ifi:l&-.h

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nt Bank though contended that they have followed thJ-con te.rroGt procedure laid down under the provisions or satrfrd$Bflfi 2ool d Rules made thereunder in issuing all the

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sA13212023

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relevant notices including the Sale Notice to the Applicant, not filed any material documents to prove their contention.

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10' It is pertinent to note that the Respondent Bank has failed to furnish relevant material documents for establishing that the impugned demand notice dt.27.o4.2021 and possession notices dt'04'08'2027 & 06.08.2021 are served on the Applicant and the said possession notices are affixed on the secured assets and published in two daily newspapers. The Respondent Bank contended that they have served Pre-sale notice and Auction Sale Notice on the Applicant but failed to prove the same by filing the material documents in support of their contention. The Respondent Bank is expected to duly follow Rule 8(6)&9(1) of Security Interest (Enforcement) Rule s, 2oo2 by issuing notice of 30 days for giving an opportunity to the Applicant to redeem the secured asset and thereafter publish the public notice of sale in newspapers for conducting auction of the schedule propert5r and before effecting sale of the schedule property, the authorized officer shall obtained valuation of the property from the approvedvaluer and fix the reserve price. But in the present case, the Respondent Bank failed to follow Rule 8(5) g(6)&9(1) of security Interest (Enforcement) Rules, 2oo2 in issuing the Sale Notice dt.11.o3.2o23 and SO, the impugned Sale Notice dt.11.03.2023 is liable to be set aside. Accordingly, this point is answered in favour of the Applicant and against the Respondent Bank.

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Point No.(it):-

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In the result, sA 1 3212023- is arlowedby setting aside the impugned t}d*],* 3'2023 issued by the Respondent Bank againsr the -,'-fiau"g.sffiowever,^{the Respo.,a..,t i";;;11.r,,,o} SA schedure property to recover their dues / gioceea &sn "[$\n. or SARFAESI Act, 2oo2 and Rures ::J.iHfii'ffi- : ?''lt.o'isions tril

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sA 13212023

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