Allowed

Time Media v. Pridhvi Asset Reconstruction and Securitisation Company Ltd.

DRT10 Mar 2025SA/151/2022

Case brief

AI extract

What is this about?

In this securitisation application under Section 17 of the SARFAESI Act, the Debt Recovery Tribunal held that the respondent bank violated the Security Interest (Enforcement) Rules, 2002 by issuing a possession notice not in the format prescribed under Appendix IV. The notice was quashed, and subsequent auction proceedings were deemed infructuous.

What did the court decide?

The possession notice dated 01.02.2016 was quashed. The Securitisation Application (SA) was allowed to that extent, rendering the e-auction infructuous. Pending interlocutory applications were dismiss

Time Media versus Pridhvi Asset Reconstruction and Securitisation… — Cheque Dishonour | DRT (2025)

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"ORIGINAL"

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDEMBAD

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DATED THIS THE TENTH DAY OF I{,qRCH, 2025

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PRESENT: SH. MMESHWAR KOTHE, B.Com., L.LB. (Hons.), M.A. PRESIDING OFFICER

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SECURITISATION APPLICATIoN No. 151 oF 2022

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Between:

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Time & Media
Represented by its proprietor
A.V. Siva Ram
S/o late A.V. Appa Rao
Aged 47 years
Plot No.11, Road No.9C
Sonali Coop. Society Bhavan Enclave
N ew Bowe n pa I ly - I I, Secu nd era bad.
2. Tourism and Travel Media -
Entertainment Pvt. Ltd .
Rep by its Managing Director
H. ilo. 8-2-608/1/4& s
TTTVChambers
Karama Enclave Road No,12
Banjara Hills, Hyderabad-34. .......Applicants.

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And

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l. The Authorised Officer
Pridhvi Asset Reconstruction and
Securitisation Company Ltd.
D. No. 1-55, Raja Prasadamu
4th Floor, Wing-I, lvlesjid Banda Road
Kondapur, Hyderabad-50O Og4.
2. Bank of Baroda
(Erstwhile Dena Bank)
Rep by its Authorised Officer/
Chief Manager, Bank Street
-i,\<br>...)-)"(

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sa ts1l2o22

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5-7-757/3, I - Ftoot Bank Street, Hyderabd- 195.

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., ,. Respondents,

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Counsel for the Applicants Counsel for the Respondents

Mr. Abhay Singh.

Mr. V. Raghu.

-:ORDERT-

The Applicants filed the present Securitisation Application u/s.17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2OO2 (hereinafter referred to aS "SARFAESI Act ZOOZ,,) assailing the E_auction notice dated 17.06.2022 for sale of SA schedule property through e_auction on 27 .07 .2022.

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The case of the applicants as per the averments of securitisation application, in briet is that 2nd applicant company, associated with Agrigold Group, availed term loan and working capital requirements from the 2,d respondent bank (erstwhile Dena Bank) in the year 2012. The SA schedule property belonging to 1st applicant - Director of Agrigold Group of Companies, has been mortgaged as a security to the loan availed by 2nd respondent. The 2nd respondent company had to defend various public litigation cases against it from 2013 onwards. These litigations have left a negative impact on the functioning of the 2nd applicant,s company resulting in huge losses which ultimately led to default in payment of loans to 2nd respondent bank. While negotiations for an OTS were under way, the 2nd respondent assigned the debt to 1* respondent company for an ' in/rln --' L\

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,t'-iot'

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sA t5t/2o22

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amount less than OTS proposal, The SA schedule property has been attached by the Government of Andhra Pradesh vide GO lvls. NO.23 dated 19.02.2018, Home (General-A) Department along with the properties of other concerns of 2nd applicant Company. Respondent has not complied with Section 13(2). Applicants were given a copy of demand notice recently. Rules 8(1), 8(2), 8(6), 8(7) and 9(1) of the Security Interest (Enforcement) Rules, 2002 have not been complied with by the respondent, The NPA classification is not correct. Respondent No.1 filed 0A.2664 of 2Ot7 (old No. 04.152212016) and the same was allowed exparte crystallising the dues. In view of the above stated facts and circumstances, the securitisation proceedings initiated by the respondents is illegal, void and ab initio.

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The respondent filed reply statement. The averments in the reply statement, in brief, are that the pleas against demand notice and possession notice are barred by limitation, and that the respondent bank strictly followed the provisions of the SARFAESI Act and the Rules there under in serving demand notice, possession notice, rules 8(6) and 9(1) notices as prescribed under the Act. The loan account has been classified as NPA strictly as per RBI norms. As the applicants failed to conduct the loan account as per the terms of the agreement, the account was classified as NPA on 01.12.2023, followed by demand notice u/s 13(2) dated 19.10.2015, and possession notice u/s 13(4) dated 01.02.2016. Despite receipt of demand notice, applicants failed to clear the demand. The possession notice has been affixed on the s,-cured asset besides publishing I\ttn--- .^c, -r.L^\-

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sA Lstl2o22

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in two newspapers besides registered post service, Respondent is taking steps to get the property released from the attachment. This respondent is bound by the order in 0A.7522/2076. The auction proceedings scheduled on 27.O7.2022 could not materialise for want of bidders and hence the SA became infructuous.

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Heard learned counsel appearing for the parties and perused the written arguments filed by both parties and the material placed on record,

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Learned counsel appearing for the applicant, while relterating the averments in the SA, would contend that the cause of action being continuous in nature from the date of issuance of possession notice and the auction notice, applicant is entifled to challenge the possession notice dated 22.06.2076. Learned counsel relied on the judgement of the Madras High Court in The Authorised Officer, Indian Overseas Bank and Another versus The Ashok Saw t4ill decided on 0.09.2008, with specific emphasis on paras 6, B, 9 and 1O in support of his contention. It is the further contention of the learned counsel that the possession notice placed on record by the respondent bank is not in consonance with the Appendix IV of the Rules. Therefore, the entire process is a serious violation of Rule 8(1) and Rule 8(2) of the Security Interest (Enforcement) Rules, ZOO2. Learned counsel would further contended respondent is not entitled to proceed against a property attached by the Government of Andhra pradesh.^-lnrtl.;1!

sA t5t/2022

Per contra, learned counsel appearing for the respondent submits that the respondent strictly followed the procedure as laid down under the provisions of the SARFAESI Act and the Rules there under in the securitisation measures taken by it for recovery of outstanding dues. Respondent placed on record all the relevant material proving the compliance of the procedure as laid down in the Act and the Rules along with list of documents filed on L3.O2.2O23. Learned counsel would further submit that the claim against the defendants would be strictly restricted to the decree passed in the OA.1522 of 2016. As regards the invocation of mortgage rights, the respondent made it amply clear in the auction notice dated Z7.O7.2OZZ that the sale of secured asset is subject to approval of the Special Court at Eluru. The scope of the SA is limited to the extent of considering the measures taken under the SARFAESI Act. Learned counsel relies on the judgement of Hon,ble High Court of Andhra pradesh at Amaravati in Canara Bank, Kukatpally & Others vs. State of AP and Others in W.P. No.21029 of ZO|T dated 18.06.2024 - 2024 (5) ALD 646 (AP) wherein the petitioner Bank has been permitted to proceed against mortgaged prcperties by quashing the G.O, Ms.No.13 Home (General) dated t7.O2.2Ot6 in respect of the subject properties shown in Annexure-I under the Andhra Pradesh Protection of Depositors of Financial Establishments Act, t999 (t7/r999).

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Now the points that arise for adjudication are: -

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Wether the Applicant mqde out any valid ground for quashing the possession notice issued by the respondent agaiwt the SA schedule

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sA tstl2022

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property under the provisions of Secuitisation Act?

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i, To whot relief

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Point No.(i):

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B. The very contentions of the applicants for filing the present SA are:- (a) violation of provisions of the SARFAESI Act and the Rules in issuing possession notice; (b) relevancy of demand notice in the post OA. 2664/2017 decree and (c) right of respondent to proceed against subject property attached by the Government of Andhra Pradesh.

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o Respondent submitted that the time for challenging the possession notice has been barred by limitation. However, respondent failed to produce any material in support of its contention. Per contra, learned counsel for the applicants relied on the^judgment of Madras High Court in the Authorised Officer, Indian Overceos Bank vs. The Ashok Saw Miil decided on 01.09.2008.

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Applicants main contention in respect of the possession notice is that the said notice is not in the true spirit of the format prescribed under Appendix-Iv of the Security Interest (Enforcement) Rules, 2002. As per Appendix IV, the secured creditor shall clearly use the following language while issuing the possession notice:

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"The borrower having failed to repay the amount, notice is hereby given to tlre borrower and the public in general that the undersigned has taken possession of the property described herein below in exercise of powers, conferred on him under sub-section (4) of section t3 of Act ?x.fread

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sA r5r/2022

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with_rule^g of the Security- Interest @nforcement) Rules, 2002, on this the ......day of ...... of the y;ar . ::.- - '

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However, the contents of relevant paragraph of the copy of possession notice dated 2Z.OL.ZOL6 placed at page 13 of the material paper read as under: _

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,,you are r:lu,ested to handover possession of the prowties aforesaid secured and -immovable assets ,ho;". property and/or^-;;;, Movableall securities charged to tlv Bank at in" pUo, date and

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Date: 0l/02/2016, Time: 4.00 pm. ....,,

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It is evident from the preceding paragraph, the intent of the Act and the Rures for that purpose, does not match with the Appendix-IV in letter and spirit. Therefore, there is an infraction of the laid down procedure under the SARFAESI Act and the Security Interest (Enforcement) Rules, 2002 on the part of the respondent bank in issuing the possession notice,

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As regards the relevancy of demand notice or the requirement of issuance of fresh demand notice in the light of decree in OA.t664/ZOt7 (Old No.LS22/2OL6), the respondent has categoricaly stated both in its repry statement as weil as the written arguments that the respondent would abide by the decree in its entirety. It is no where made it mandatory to reissuance of all the notices prior to decree in an OA. It is only expected that further notices reflect the outstanding amount on the lines of the decree in OA.1664/2017. Hence the applicant,s demand for a fresh demand notice in the post OA.L664/2OL7 decree has no force in the given circumstances AWg 'J^(6'

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sA L5l12022

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As regards^{the respondent'sentitlementto enforcethe security} interest^{created in its favourin view of the attachment order} notified^{by the Governmentof Andhra Pradesh'the respondent} has made^{it clear that it is in the firm beliefthat the subject} property has^{been acquiredby the mortqagorfrom out of his} funds but^{not out of the crime proceedsof Agrigold Group of} Companies.^{However,this imbrogliois nothingto do $Jith the} securitisation^{proceedingssince the respondentclarified of its} taking up^{the matter with the concerned court of law'} Accordingly,^{applicants contentionthat respondent is not entitled} to enforce^{the security interestdoesnot deserve accePtance'}

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ln the^{light of the above discusslon'I hold that the respondent} bank has^{violated the provisionsof the Security Interest} (Enforcement)^{Rules,2OO2 in issuing thepossesslonnoticeas} provided under^{Appendlx-Ivof the Rules both in letter and spirit'} Hence, the^{possessionnoticedated 22'01-'2016 is liableto be} quashed. As already^{stated supra' since the auctionscheduled} on 27 .o7.2022^{pursuantto sale notice dated17 06 2022'the SA} to that extent^{becomes infructuous' Accordingly' applicants} contentions^{over violationof Rules 8(6)' 8(7)and 9(1)are not} considered

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Point No.(iil:-

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In the result,^{SA is allowed by quashingthe possession notlce} dated 77,06.2022.^{However,this order does not precludethe} respondent in issuing^{possession notice afresh strictlyin} accordance with the^{provisionsof the SARFAESIAct and the} Rules, 2oo2 thereunder' -7) i:"r-q

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sA tst/2022

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Consequently, the Interlocutory Applications, pending if any, shall stand dismissed. No order as to costs.

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Communicate a copy of this order to the parties concerned and upload on Web Portal

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(Dictoted to the Steno, signed ond pronounced by me in the open court on this the llth doy of Morch, 2025)

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(RAMESHWAR KOTHE) PRESIDING OFFICER

Time Media v. Pridhvi Asset Reconstruction and Securitisation Company Ltd.

Case brief

What is this about?

What did the court decide?

Time Media v. Pridhvi Asset Reconstruction and Securitisation Company Ltd.

Case brief

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What did the court decide?

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