Allowed

Pasula Chandrashekar v. Union Bank of India

DRT9 Jul 2025SA/148/2023

Case brief

AI extract

What is this about?

In this securitisation application under Section 17 of the SARFAESI Act, 2002, the recovery tribunal set aside an auction of mortgaged property conducted by the Union Bank of India. The court held the bank failed to prove it served mandatory demand and possession notices under Section 13(2) and Rules 8(1)(2) before issuing the sale notice.

What did the court decide?

The impugned auction notice dated 23.02.2023 was quashed. The respondent bank was directed to refund the bid deposit along with 60% p.a. interest to the purchaser.

Pasula Chandrashekar versus Union Bank of India — Contract and Commercial Disputes | DRT (2025)

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IN TI {T1 DtrBTS RECOVERY TRIBUNAL^.-- 1 AT HYDERABAD I)n ttrl) I-l llSJ'l-lI^qttr DAYOFJUL"Y.2A25

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PRESENT: SRI GUMMADI GOPICHAND, PRESIDING oFFICER

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sA.No. 14A/2C^23

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Sri Pasula Chandrasekhar, S/o PasulaPapaiah, R/o II.No.i-3-125, Old l3azar, Opp. Srinivasa Talkies, I{arrimnagar 505 O0l ..

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.... Applicant

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Versus 'l . Union Ilank of India. Vavilalapally branch, II.No.3- I -l)89, 90, 97 , 'T'ukaram Oomplcx, ,\tnitt:rjkar Road, Vavilalapalily, Karimnagar. 2. The Authorized Officer, Union lSank of India. Vavilalapally branch, It No.3 I I]89, 90,91 , i' ri lii,rrrllr.r Ottrlpicx, An.rbcclkar Road, Vavilalapallly, Karimnagar ... Respondcnts Cormsel for tLrc Applicant : Ms.Ch.l,akshmi Chaya C o rn'tsel for R e spond"e nts : Sri I).['raueen Kurnar

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ORDER

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'l'hc Applicant".fflcd thc prcscnl Sccuritisation Application u/s.17 ol ipcr; ritizal.ion and Rcconstruction ol Finar-rcial Asscts and ,^{-;'[')rr lilfr} of Sccurity lrrLcrcst Act, 2OO2 (SnRFnllSI Acl., 2OO2) ":1-t';$ lr.ir'-hallc l.he auction conduc--tccl bv tht-- llcspondcnt Ilank in ,f schcduir: prolrcrt'on 28.O:.'2O2:\ pursuanl. to l.hc JUf'(rtfs'cr

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sA 148/23

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/\itt'tiott Srtlt'Noti<:c'clt.23.O)-.'2O)-3ancl to sct asidr: thr: samc as illcgal lrnc1 rroid.

¶11

'l'hc avcrmcnts madc in thc application, in brief, are that, the \111llit'arnt avtrilcd loan faciljlics lrom t.hc Responclcnt Ilank against tlrc nlorlg;lQc of sr:hcdulc propcrtv. I)ue to Covid 19 pandcmic and lock down, thc Applicant coulcl not pay some instalments ancl so, the loan account of thc Applicant has been classified as NI)A. But the Rcspondcnt llank without scrving demand notice ancl possession 1i{)tl( ( t)rr tht' Applir:ant, straighLarw'af issucd Auctton Salc No1icc r11..1.']., t) 2 .2O.2.1 lor conrlltcting aur:tior-r <lt- l.hc schccluli; propcrty orr 28.O:1.2O2:. Thc said Auction Noticc waspublish<--d in Thc IIindu nc\'spapcr on 2,6.o2.'2023 but no noticc was scrvcd on thc Applicanl. and on cnquiry, thc Applicant. camc to know that thc Respondent lliirrk hits condt.tctcd ar.rctiolr o1'l.hc schcdulc pr<tpcrty <>n 28.O3.2023. 'l'hc Rcspondcrrt bank has not tbllowcd ltule 8(l)&(2) of Sccurity Irrtcrcst (l')nforccmcnt) Ilules, 2OO2 while issuing thc possession noticc. Thc Rcspondcnt bank has not obtained valuation report and lhC rt'sc'n'r' ltric:t- lixcd bt' Ltrc bank against thc sctrcdulc properly is ,L ,,rurrrlirlj' lort' ;ttrrl llrt' birnl< hi-rs rrot iolloil,cd Ilr-rlc. U(6)&g(l) of Sccuril.v InLcrcsl (linf<rrccmcnL)Rulcs, 2OO2 in issuing thc salc noticc. 'I'hc impugrrt:d salc noti<)c was nol affixed on thc schcdulc propcrty. llcncc thc SA.

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¶13

1'hc Rcspondenl- llank filed counter and adopted the same as Reply in sA by filing a memo. It is contended by the Respondent bank thatthe Applicant availed housing loan from the Respondent bank and in vicw of thc default committed by the Applicant in repayment of loan he. loan acr:ounl was classificd as NpA ancl dcmand notice

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.11. was issucd by thc bank u/s l3(2) of thc SARFAESI oo2. fter, thc Rcspondcnt tlank issucd posscssion notice 0^{9 ,1,!ltre} Pq5zoz^lk nd thc said noticc was published in two leading thc said nol.icc was also affixcd on the schedule

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sA 1_48/23

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pi-opcr-l... Ttrcrcaftcr thc barrk issued Auction Salc Notice 26.O2.2023 and thus l-he llank has duly tolk>wed the proccdure laid dolr,n undcr thc provisions of SAlll'AI,lSI Act, 2oo2 and Rulcs made I h c'rc r-t n cl er r.

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r. i it iri'ti l.tl. (lounscl lor lhc Applicanl.and Ld.counst:l lbr thc Rcspondcnt bank and peruscd thc mal.erial brought on rccord.

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Nou, thc points l.hat arise for considerat_ion are

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wlrcllrcr the Applicant has establisheri ana ualid grounds for chaLlenqing tle auction conducted by the Respondent bank on 28.03.2023 in respect of the schedule property?

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ii) 'l'ct it;hal relief?

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Point No (i)

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b. 'l'hcrc' is r-ro disputc rcgarding thc fact that the Applicant availed loan lacilitir:s from 1hc ltesponde nt Ilank and created mortgage in respect ol thc schedule property and thereafter committed default in rcpaymcnt of loan ducs.

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, ii'. s;rt t'if ii irot-ttcntion ol thc Applicanl is that thc llcspondcnt bank lrirs not issued dt:mancl rroticc and posscssion nolicc and straightaway issucd thc impugncd auction noticc and prior to is-suins thc said salc noticc, no prc sale notice was issucd for giving ity to thc Applicanl. to redeem the secured asset and so, nducted by thc llespondent Bank in respect of the is liable to be dismissed.

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sA 1,48/23

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8 Whcn rhC Applir:ant is contcnding that hc has nol rc<:civcd dcmancl ' ''iii'r'ittrrl llrissclssion^noticc erncl prc salc noticc, thc burclcn lics cln t}-rc llcspondcnt bank to csl.ablish that the bank has duly served the said noticcs to thc Appricant by following thc procedure as contcmplatcd undcr l.hc provisions ol SAIRI.L\IISI Act, 2oo2 ancl Rules r-nadc t hcrcundcr. Ilut ttrr:Rcspondcnt Ilank who invgked the Sr\l<1"'\l'iSI Procccclings against f.irc schcdulc propcrty, failcd to justify lhcir action by filing relevant matcrial documents to prove that they havc strir:tlt' follorvcd thc provisions clf SARI,'AllSI Acl. and Rules I'ramcd 1'Irt:t't't.tndcr u'hjlc procccdingfor salc <>f thc sccurcd assct. The i'lL Si.rotrclt'tli llets trol cvinr;c'cl irnv inl.r:rcst and failccl l, fllc matcrial tlot'tlIrrotlLs to disprovc- tht: allcgations of thc Applicant. In thc absence of any matcrial eviclencc to show that the Responclent has duly c<>mplicd rn'ilh thc mandatcd provisions of SARFAIiSI Act ancl Rules, 2002urh ilc procccding against thc sccurcd assctfor conducting ir r. r('tion ol' t hc s<'hcdulc propcrt-r, pursuanL to l.hc si_rlc Notice c11.23.O'.2.2023, it can bc assumcd ttral. thc bank has not issued the mandatory noticcs r,o l.hc Applicanr. and without issuing such troLiccs, thc Rcspondcnt bank is nol cntitlcd l.o conduct aucti<>n of the sclrr.rlrrlt' pr-o1.rr:r.tr'. ,Acr:orclineh,.. thc Applicant has made a casc for '1i'r'>iriirq lirt lllt'iis[.] res irtrtiirtrrcl b.y'thc Rcsponcicnt firr auction of thc schcdulc properly ,n 2g.o3.2023 and as such, thcsaid impugned auction is liable l.o bc set asidc.

¶26

Point No.(ii):

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9;."...11,1he.- rcsult, sA 148123 is allowed. Accordingly, the impugned . ::,^, :.^{i 'oUC$P;1q9;} i,,,-r Sa lc Noticc d1.23.O2.2O23 is hcreby quashed. -r.i" 'r,.;" ;,.,,^"'"V ffi, '.&:{ )lls('(luL.I t-hc RcspondcnL Ilank is directcd Lo rcfuncl thebid 0^{InmeWl1i$,Hthe auction purchaser towards the sale consideration} \ r^{60/o p.a.} "':r,. from the date of deposit t,l the w_ffiffi.:",

¶28

sA 1,48/23

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darr: of rcpavmcnt, vvithin onc monlh from the dal.c of rcccipt of this orclCr-.'l'lrc I?t'sponclcnr. Ilank is at ribcrtv t<> procccd afrcsh with the rrur.ri.. ot' thc schedr-ilr: propcrt-v stricr.ly in accordancc with the provisions .f SARITAIaSI Act,2oo2 a,d Rules made thcrcundcr.

¶30

r0. l'hc Inrcrl.curtolv Applications, pt.--nding if any, shall sl.and disposed of. Ntt o|clt.r aS Lo cosl.s.

¶31

I t. communicar-e a copy of this order to the parties concerned.

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tl)rcttrtt'cl lo llte l)t'ittqle Secre-lctrt1, lrartscnbecl by her, corrected-, siqrrccj ctnd- prortounced. bg rttt irt the opetr courl ort tltis the gtt,dctA of Jutg, lOZSt.

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sd/(c. coPrcHANDl PRESIDING OFFICER

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OgJUL?ffi

Pasula Chandrashekar v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Pasula Chandrashekar v. Union Bank of India

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

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