Debts Recovery Tribunal dismissed a Securitization Application filed by a mortgagee challenging a bank auction. The Tribunal held the application was barred by limitation as it was filed years after the auction, failing the 45-day mandate.
The Securitization Application was dismissed as it was held to be barred by limitation.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTSRECOVERYTRIBUNAL'IAT HYDERABAD DATED THIS THE1 gTH DAY OF JUNE '2C.25
PRESENT: GUMMADIGOPICHAND, PRESIDING OFFICER
SA.No. 1A12O23
N.Keshava Reddy S/o N.Subba ReddY Aged 62years, R/o villa No.204, Aparna Count5r, NIiyapur, Hyderabad-5OOO49.
.... Applicant
Versus
8-7 -Le4 I t7 etgs I1 /sos,
Sanathnagar, P.V. Enclave Old BowenpallY, Secunderabad Rep. by Director.
..Respondents
Counsel for the Applicant Sri D.Raghatulu
Counsel for the l"t Re i G.Prabhakar Sharma Counsel for Resporude .Diruesh Kumar Counsel for Res * 1g Jtll.l 7fi25 \rI
-: ORDER:
a) The Applicant is Founder and Secretary of Respondent No.3 Educational Society. Respondent No.3 availed credit facilities from the 1st Respondent Bank for their business needs and the Applicant created mortgage in respect of the schedule property in favour of the 1"t Respondent Bank in security to the said loan facilities. In view of the default committed by the borrower, the lst Respondent bank initiated steps under the provisions of SARFAESI Act,2OO2. Though demand notice dt.04.06.2O16 was addressed to the Appticant but the said notice was not served on him. Thereafter, the lstRespondent bank issued possession notice dt.28.09.2o16 u/s 13(a) of the SARFAESI Act, 2OO2 bwt the said notice was also not served on him. Similarly, Notice Prior to Sale u/r 8(6) of Rules, 2OO2 was also not served on the Applicant. Subsequently, the 1"t Respondent Bank issued the Auction Sale Notice dt.16.12.2O16 and conducted auction of the schedule property on 25.01.2017 and also issued Sale certificate 18 in favour of the auction purchaser,2nd Respo inalcomplaint was registered against $e.S.ffi1v"r, Kurnool Districtand the iiested on$$09.2O15 by CCS Kurnool andhe was fept kil;oJrjao1:jtril. r w of the arrest of the Applicant, "t, N.Bhdlat[ .'"'o'tifri.t?,,irqlt""ry :.r. .. i r,-,. Reddy, ' son Oi .tl> ,,f-qf :; ---1: ,tSdappticantl, not inrorm the Appricant about was representing thethe
demand notice and consequential proceedings initiated by the lst Respondent bank against the schedule property by colluding with his wife's father due to family disputes, as such, the Applicant was kept in dark. Subsequently, the Applicant was released on conditional bail on 18.11.2019 but in view of the conditions, the Applicant could not move outside ol Anantapur and he had to attend the concerned police station every day and so, the Applicant could not know about the SARFAESI proceedings and he was not informed about the same even after his release as his son is in collusion with his wife,s father(father- in-law).
b) After the bail conditions were relaxed by the competent court on t6.12.2O2O, the Applicant came to know about the proceedings initiated by the 1st Respondent Bank under the SARFAESI Act, 2OO2, at the time of disposal of the Writ petirion No.1O42612019 dt.O9.03.2021 filed by the Respondent No.3. Thereafter, the Applicant obtained the details of the auction proceedings in respect of the schedule property and approached the Hon'ble High Court of by filing W.P.No.11347 /2021.
c) Demand notice was not served on one of the guarantors byname Smt.P.Venkatammawho passed away on 16.12.2O16. the officials of the 1st Respondent Bank got knowledge of the arrest of the Applicant, however, they did not take steps to serve on the Applicant and issued notice to the cient address.The schedule propertyadmeasuring situated in Kondapur was sold for a meagre price dent No.2 andso, the said collusive sale is liable ruFzfiff
ruFzfiff
26.04 .2021 , date of filing ofWrit petition). Thus there is delay in filing the present SA and so, the SA is liabie to be dismissed as barred by limitation. In fact, the lstRespondent Bank also liled l.A.l3a2l23 to reject the SA as the same is barred by limitation.
b) Respondent No.3 represented by its Secretary-cum ,li-'--1n -.-C$qlspondentN.KeshavReddy, the Applicant hereinavailed facilities from the 1"r Respondenr bank. The lz'di'b"{ftNredit IX t$eppfitil,\beingthe absolute owner of the scheduteproperry, / 1g JUN ,filftedtnfttgaSe in respectof the schedule properryas security I r' uu'r Lli" tr,.$f" avaited by the respondent No.3. Thereafrer,the i=, Ni''i. yffi/""d Respondent No.3 committed default in repaying \1:,.: i rYD@'q,$,ffidues and so, the loanaccounts were classified as NPA the lst Respondent bank filed O.A.Nos.3O7 I t6 & 308/2016 against the Applicant and Respondent No.3 society respectively
before this Tribunal. Thereafter, The lst Respondent bank issued demand notice dI.O4.06.2016 u/s 13(2) of the SARFAESI Act,2OO2 calling upon the Applicant and others to repay the entire outstanding dues and the said notice was served on the Respondent No.3 and others. Notice issued to the Applicant was unserved and so, the lstRespondentbankpublished the said demand notice in Times of India, Hindu(English), Eeandu and Sakshi(Telugu) daily newspapers on 21.O7.2016 and the same was also affixed at the address of the Applicant. Thereafter, thelst Respondent Bank issued Possession notice dt.28.O9.2016 and the said notice was served on the Respondent No.3 society and others but unserved on the Applicant and the said notice was published in daily newspapers and also affixed on the schedule property. Thereafter the 1st Respondent bank issued Notice prior to saie u/ r 8(6) of Security Interest (Enforcement) Rules, 2002 on 24.10.2016 and the same was served on the Respondent No.3 and notice addressed to the Applicant was returned unserved. Thereafter, the lst Respondent bank issued e Auction Sale Notice dt.l6.l2.2ol6 for conducting auction of the schedule property on 25.O1.2017 and the said sale notice was served on the Respondent No.3 and it was published in The Times of India, The New Indian Express, Eenadu and Sakshi daily newspapers on 18.12.2016 and the same was affixed on the schedule property. In the auction conducted on .2017, Respondent No.2 became successful bidder and it tire bid amount and sale certificate was issued and registered in favour of the auction purchaser. Ju$r?&[porl[io., ,r7" 17 or the sARFAEST Act,2oo2has to be riled withiql lffJ and Section 5 of the Limitation act is not e1' ,!!' ,1, :r/s41.4 Uto theapplication filed u/s 17of the SARFAESI Act. e present SA is liable to be dismissed as barred by limitation.
d) The 1st Respondent Bank initially issued demandnotice dt.04.06.2o16 calling upon the Applicant andothers including one guarantor Smt. PullaguraVenkatamma and afterissuance of the said notice, it came to the notice of the bank thatthe said guarantorSmt.P.Venkatamma died, as such, the1"t Respondent Bank issued another demand notice dt.06.07.2016 to the legai heirs of the deceased guarantor Smt.P.Venkatamma and the said notice is issued in continuation of demand notice dt.O4.O6.2Ol6 and so, only one legal demand notice is issued to the concerned parties. Even though the lst Respondent Bank has sent letter dt.29.06.2o16 to the prison authorities of PS, Kurnool seeking permission of the Applicant for sale of the schedule property under private treaty, the 1"t Respondent bank.has not received any approval of the Applicant and so; the 1"t Respondent continued the proceedings and published the sale notice in newspapers and sold the schedule property in pubic auction conducted on 25.01.2O17. Thus, the 1st Respondent Bank has followed the procedure prescribed under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder in issuing all the relevant notices to the Applicant and others and also in conducting auction of the schedule property and there is no illegality or irregularit5r committed by the Bank. Accordingly, 1st Respondent Bank prayed to dismiss the SA.
No.2 ll1ed their Reply contending that Respondent No.2 is bidder for an amount of R. 12,00,00,O00/- in the auction coq$\cted by the l"t Respondent bank in respect of the 1g {UHJffi. p.q#.rv on 25.01.2017 andthe company paid the entire {l bid amo-on f:bf Rs.12 crores and sale certificate was issued in favour ". ^xlif.'( n\449%.ilylespondent on 27.04.2018 and the same was also riS1ffi and the auction purchaser is in peaceful possession and
enjoyment of the schedule property. The lst Respondent bank has strictiy followed the procedure contemplate under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder in issuing relevant notices to the Appiicant and others and in conducting auction of the schedule propert5r.
Whether by the Applicant is barred by rimitaty{fu*& To whffttrelieft 1g JUl'l 2S6 8. During the Ld. Counsel for the Applicant submitted that /,-2015 onwards, the Applicant was in jail and so, he was not aware of the proceedings initiated by the lstRespondent bankunder the provisions of SARFAESI Act, 2002 in respect of the schedule property and he came to know about the sale proceedings only after disposal of. the writ petition liled by the
Respondent No.3herein against theordersof this Tribunal in SA 98 l2ol7 . After coming to know aboutthe auctionproceedings in respect of the scheduleproperfy, theApplicantfiled WritPetition No.11347 12021 before the Hon'ble HighCourt of Telangana at Hyderabad against the Respondentsherein challenging the auction conducted by the l"tRespondent Bank inrespectof the scheduie property on 25.01.2O17. But the said writpetitionwas disposed of by the Hon'lcle High Court on 12.72.2022 witha liberty to the Applicant to fi1e application u/s 17 of the SARFASIAct withinfour weeks from the date of disposal of the said writpetition.So, the present SA filed by the Applicant is within the time.
section 17(1) of the SARFABSI Act, 2002 is ertracted. for ready reference:
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7.uln aleut thereoJ, the Wrtt petition ls dlsposed oJ, granting libertg to the petltloner to aaall the remedg provlded und.er SectionT 7 of the SARFAESI Act, 2OO2. Houever, ln the eaent of
petitloner aoalling the sald remed.g, the lnterim protectlon granted by thts court on 27.04.2021 shall contlnue for a period oJ srxt6) ueeks from the date of recetpt of copg of this order. The Trlbunal is requested. to conslder to exclude the period qrent before thls Court from the date of filtng of thls utrlt i.e., 26.04.2021 ttll tod.ag and for the fufiher period. oJ touard.s conputatlon oJ perlod. of llmitation to
petltioner to auail the remedg provided under
7t* the SARFAESf Act, 2OO2, Since the issue pertains
1 I JrSr to the gear 2078, ue request the THbunal to
csstgn of hearing and. dispose oJ the matter preferablg, utithln a period ol four (4) months.,'
1,1,
Section 14 of the Limitation Act, 1968 is extracted below for ready reference:
7 4.Exclusion of tine of prosecuting bona fide in Court uithin jurisd.lction:
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(2) In contr utlng the pertod of limltatlon for ang qPpllca:tlon the time durlng uthlch, tle appllcant has been prosecutlng utlth due diligence another cltll proceeding, uhether ln a Court of first lnstance or of appeal or reulsion o,ga:inst the same partg Jor the so'me relief shall be excluded, uhere such proceeding is prosecuted in goodfaithtn a Court uhlch, fromdeJectof Jurisdlction or other cause of a like nature, is unable to entertain it.
(3) Notwithstanding angthing contained ln Rule 7, Order XKIII oJ the Code of Ciuil Procedure, 7908, the proulsions of sub-sectlon (1) shall applg tn relatTon to a fresh suit instldtted on perrnlsslon granted bg the Court under Rule 7 of that order, uhere such perrnlssion ds granted on the ground that the Jlrst sult must fail bg reason of a d.efect in the Jurisdictlon of the Court or other cause o;f a like nature.
- But the Hon'ble High Court has clarified to the effect that oniy the spent in prosecuting the writ petition i.e. from 26.04.2021 to shall be excluded and a further period of four weeks also ded in computing the limitation. The words used,,in puting tion" clearly indicates that the Applicant herein has
tg11$lql25 "nrt{}tr." uls tz of rhe sARFAEST Act,20o2 within the
period of ion and further, the period spent in prosecuting the
13
said writ petition and furtherperiod of fourweeksonly shall be excluded in computing the limitation.
Applicant herein filed the said application for relaxing the conditions imposed in crl.M.p.No.6676/2019 and by order dt.16. 12.2o2o, the Hon'ble High Court was pleased to allow the said application by relaxing the conditions imposed on 18. 11.2O19. In the said order, it is mentioned that on O5.O3.2O2O, the Hon'ble High Court partially relaxed certainconditionswhich are imposed at the time of granting bail to the Applicant. So as per the said order, it is clear that on 16-12.2020, all the conditions imposed at the time of granting bail to the Applicant are totally relaxed. But immediately thereafter, he has not filed any application for challenging the auction conducted by the 1st Respondent bank in respect of the schedule properry on 25.01.2017. Whereas he filed writ petition before the Hon,ble High Court of Telangana on 26.04.2021. So, all these circumstances clearly indicate that the Applicant was not diligent enough in taking appropriate steps for challenging the auction conducted by the lst respondent Bank in respect of the schedule propert5r. So, the present SA filed by the Appricant is hopelessly barred by limitation.
Point No.(iil:-
(Dictated to the P.S transcribed bg her, corrected, signed and pronounced bg me in the open court on thi"s the 1gh d.ay ofJune,2O25).
sd/(G. GOPI CHAND) PRESIDING OFFICER
TRUF-COPY
a
)t,+
1.6
2 issues framed by the court
Whether the Securitization Application filed under Section 17 of the SARFAESI Act is barred by limitation.
Whether the period spent prosecuting a writ petition before the High Court can be excluded for computing limitation under Section 17 of the SARFAESI Act.
2 provisions across 2 enactments
N. Keshava Reddy
State Bank of India, Stressed Assets Management Branch-II
Aishwarya Builders & Developers
M/s Keshava Educational Society
Gummadi Gopichand
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
