Dismissed

Kishan Rao Srelam v. Union Bank of India

DRT27 Oct 2025SA/145/2025

Case brief

AI extract

What is this about?

In a securitization application under Section 17 of the SARFAESI Act, a retired employee challenged the forfeiture of his 25% bid deposit toward an auction property. The Debts Recovery Tribunal rejected the claim, holding that the bank validly extended time under Rule 9(4) and that forfeiture was a statutory consequence of the applicant's default, with no exceptional circumstances established.

What did the court decide?

Application dismissed; letter forfeiting 25% bid amount dated 29.03.2025 upheld; no order as to costs.

Kishan Rao Srelam versus Union Bank of India — Company and Corporate | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL AT HYDERABAD

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DATED THIS THE 27TH DAY OF OCTOBER, 2025

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PRESENT: SH. RAI,4ESHWAR KOTHE, B.Com, L.LB.^(Hons.),M.A. PRESIDING OFFICER

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securitization Application No. 145 of²⁰²⁵

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Kishan Rao Srelam S/o Sathaiah Srelam Aged 64^years, Occ:Retd. Service R/o Flat No.1, Surya Residency Plot No.1020, Pragathi Nagar Bachupally, Medchal 14alkaigiri Dist.

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.....Applicant.

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Versus

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Union Bank of India Asset Recovery Branch^(ARB) #249/3RT, 7"t Floor, Main Road S.R. Nagar, Rep by Authorized Officer

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.....ResPondent.

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Counsel for the Applicant^{: M/sT. Sridhar Reddy} Counsel for Respondent :M/s^{sangeeta Jaiswal& Associates Advocates}

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-:0_BDE8:-

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The^present Securitization^{Appllcation is filed by the Applicant} u/s.L7 of the Securitisation and^{Reconstructionof FinancialAssets} and Enforcement of Security Interest^{Act, 2002 ("Act"for short) to} set aside the tetter dated 29.03.2025^{issuedby the respondentbank} forteiting an amount of Rs,39,62,750/-^{depositedby the applicant} towards 25olo of bid amount as^per sale^{confirmation letter dated} 06.12.2027 in respect of auction of^{application schedulepropertyon} 24.f2.2024 and consequently to^{refund the anlg}lntwith 24olo p.a.} interest. (%,,.'"*

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PaEe 2 ol7

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SA No.145/202s

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The case of the applicant, briefly, is that^pursuant to auction sale notice dated 06.12.2024, the applicant^{participatedin the} auction sale conducted by the respondent bank on 24.f2.2025ⁱⁿ respect of the application in schedule^property. He was declared as successful bidder at Rs.1,58,51,000/- and he^{paid Rs.39,62,7501-} being 25o/o of bid amount including the EMD. At his request the respondent bank extended time to pay balance bid amount till 22.O3.2025. The applicant approached Union Bank of India, Mettuguda Branch with an intentlon to avail loan along with his son, an NRI. Respondent bank failed to^provide documents sought by the Mettuguda Branch and also the GIC Housing Finance Ltd who sanctioned loan of Rs.1 crore. Vide letter dated 27.03.2025 respondent bank demanded the applicant lo^pay 75o/o of bid amount on or before 26-03-2025 else 250lo oF bid amount deposited by applicant shall be forfeited. The applicant came to know that the respondent bank conducted the auction without disclosing^pendency of SA No.423/2023 filed by the guarantor/mortgagor. The applicant is a retired employee and invested his retirement benefits and other savings. The action to forfeil 25o/o bid amount is illegal. Hence this SA.

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The respondent filed reply statement. The submissions shortly are that the respondent bank gave maximum period as allowed under Rule 9(4) of 2002 to pay the balance bid amount. The respondent bank provided available details to the UBI, Mettuguda Branch on 18.03.2025. The GIC sanctioned loan of Rs.1 crore to applicant vide sanction letter dated 04.03.2025. The respondent bank mentioned pendency of SA No.423l2023 in the terms and conditions of sale notice which is clearly visible on the website. After being satisfied with the legality of title documents he participated in the auction. Due to failure to pay balance bid amount by 26.03.2025, the respondent

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Page 3 of7

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SA No.145/202s

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bank vide letter dated 29.03.?025^{informedthe applicantabout} forfeiture of 25o/o of bid amount as^{per Rules. The respondentbank} has followed due^procedure of law and^{hence SA is liable to be} dismissed.

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Heard learned counsel for^{the applicant and learned counselfor} the respondent bank.^Perused the^{writtenargumentsfiled learned} counsel for applicant as well as^{respondent and also perused the} material documents brought on^record.

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During course of the arguments, learned^{counsel for the} applicant reiterated the version as^{in the application and further} contended that the respondent did not^{notify in the auctionsale} notice the pendency of SA No/23/2023^{filed bythe} guarantor/mortgagor wherein the applicant also filed^{IA for his} lmpleadment. The respondent bank^{was duty boundunder Rule} 8(7)(a) of the Rules of 2002 to^{disclose the encumbrances known to} it. The respondent bank cannot^{escapefrom the duty by simply} auctioning the^property on^{'as is where is basis' ignoringthe} mandatory^procedure of the^{Act. Further, the detailsas sought by the} UBI, Mettuguda Branch were not^{provided by the respondent bank.} The respondent bank illegally demanded^{payment of 75o/o of bid} amount and forfeited the 25yo bld^{amount. The applicant is a retired} person and he invested his retirement benefits under lhe^bonafide trust that the auction was being^{conductedby a nationalized bank} and would^get loan to^pay the^{balancebid amount.However, the} respondent bank failed to discharge its duty^{as per the provisions of} the Act and illegally forfeited the^25olo of bid amount.^Withthese contentions, learned counsel sought to set aside^{the letterdated} 29.03.2025 and order refund of^{Rs.39,62,7501-} Xether with interest -aai:'t' @240lo^p.a. thereon. /// t-y

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Page 4 of 7

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SA No.145/2025

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Per contra, the learned counsel for the respondent while reiterating the contents of the reply statement would affirm that the respondent bank mentioned the^pendency of SA in the terms and conditions of the auction sale notice and even in the sale confirmation letter dated 26.L2.2024 it has been categorically mentioned that sale confirmation shall be subject to outcome of the SA No.42312023.The respondent bank^provided the details to the Mettuguda Branch of UBI immediately on receipt of requisition on 18.03.2025. GIC Housing Finance sanctioned loan of Rs.1 crore and showing the sanction letter of GIC, applicant sought extension of time twice. Considering the request, the respondent bank extended maximum time as^permissible under Rule 9(4) of the Rules of 2002. After three months of e-auction sale, the applicant for the first time came up with the^plea of nondisclosure of^pendency of SA. Learned counsel also contended that Rule 9(4) of the Rules, 2002 permits only ninety days time which had already been given to the applicant, as the respondent is a nationalized bank and recovery involves public money, private interest cannot be protected based on sympathy, that inability of auction^purchaser to get the loan sanctioned cannot be a^ground to leave 25o/o un-forfeited, and that no circumstances have been established by the applicant for non-payment of balance bid amount despite maximum time allowed to him. In support of her contentions learned counsel relied upon the^judgements of Hon'ble Supreme Court in Authorized Officer, Central Bank of India vs. Shanmugavelu, 2024 INSC 80, (ii) Authorized Officer. State Bank of India vs. C. Nataraian, (2023) 5 SCR 1067; (iii) Hon'ble Allahabad Hiqh Court in Anil Pathak and Anothervs. State of U.P. and 4 others. 2025:AHC:9933-DB and (iv) Nishant Kumar vs. State of UP and 2 others.2024:AHC:49114-DB. and sought for dismissal of the SA.

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Now, the point that arises for determinat'on is;-

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Page 5 of7

sA No.145/2025

i) Whether the applicant has made out any valid ground to order refund of Rs.39,62,750/-^paid by him towards 25o/o of the bid amount which has been foieited by respondent bank vide letter dated 29.03.2025, as prayed for?

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ii) To what relieP

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I have^given due consideration to the contentions advanced by the learned counsel for both parties. As^per material brought on record, the respondent bank in its^publication of e-auction sale notice advised the prospective bidders to visit the offlcial website^for detailed terms and conditions of auction sale before submitting their bids. The respondent bank^placed on record the full version of the e- auction sale notice dated 06,12.2024 with detailed terms^and conditions. Under col.28 of the terms and conditions, the^pendency of SA No.423/2023 has been mentioned. Hence the contention on nondisclosure of^pendency of SA in e-auction sale notice does not deserve acceptance.

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Even assuming that the applicant missed to observe the pendency of SA, in the sale confirmation letter daled 26.12.2024 lhe respondent bank categorically informed the applicant that the sale confirmation would be subject to the outcome of SA No.423l2023. Having personally received the letter, the applicant did not raise any objection to non-disclosure of^pendency of SA and instead,^he requested for extension of time for^payment of 75Vo sale consideration. The Rule 9(4) framed under the SARFAESI^{Act, 2002} stipulated that time can be^granted for^payment of^balance consideration for not more than ninety days from the date^of confirmation subject to written communication. Vide letters^dated !9.02.2025, 10.03.2025 and 21.03.2025^{respondentbank extended} time till 26.03.2025 that is, to the extent of^{permissible limit under}

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/2fu,,r_,,^g !/ "'1':u

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Page 6 of 7

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SA No.145/2025

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Rule 9(4) of the Security Interest (Enforcement) Rules, 2002. No doubt, the respondent bank has exercised its discretion in extending the time within the purview of Rule 9(4) of the Rules, 2002.

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The other contention of the applicant is that the respondent bank failed to produce requisite details to Union Bank of India, Mettuguda Branch with regard to his pending loan application. This contention falls to ground since the respondent bank instantly furnished details on 18.03.2025. However, as held in the case of Nishant Kumar Guora), the applicant was aware of his financial capacity at the time of participating in the e-auction. Hence his contention on non-furnishing of details to his proposed financier bank has no force and in fact, is far from truth. The applicant as coapplicant got sanction in-principle for Rs.1 crore from GIC Housing Finance Ltd, The reason for not utilizing the same is not explained nor is it relevant for forfeiture.

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The applicant vide his letter dated 27.03.2025 again sought for extension of time to pay 75o/o of bid amount in view of pendency of SA. The respondent bank promptly issued reply and intimated the applicant the possible action of forfeiture of 25o/o bid amount if amount is not paid by 26.03.2025. As no balance purchase price was received, respondent bank vide letter dated 29.03.2025 forfeited the 25o/o of bid amount deposited by the applicant within the power vested under Rule 9(5) of the Rules, 2002.

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L2. In the light of the judgements of Hon'ble Apex Court in Shanmugavelu and C. Nataraian's cases (supra), forfeiture is a statutory consequence of default and more particularly no exceptional circumstances could be explained which led to failure in depositing the batance purchase price despite his best "n""flffig

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Page 7 of 7

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sA No.145/2025

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In view of the above observations, I^{find that the applicant} failed to make out any valid^ground to^{set aside the letter dated} 29.03.2025 whereby 25o/o of bid amount of^{Rs.39,62,750l-has been} forfeited by the respondent bank.^{Accordingly,SA is liable to be} dismissed.

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Point No.(ii):

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