Partly allowed

Sri Chenna Veera Ginning Factory v. Karur Vysya Bank

DRT6 Aug 2025SA/195/2022

Case brief

AI extract

What is this about?

Application under SARFAESI Act filed to quash sale notice due to alleged procedural violations. Court found bank failed to prove compliance with notice provisions. Security application allowed in part; demand and possession notices set aside; bank permitted to initiate proceedings afresh. Quality assessed as thin due to abbreviated reasoning.

What did the court decide?

Demand notice dated 08.04.2021 and possession notice dated 15.02.2022 set aside. Application allowed partly as sale proceedings are infructuous. Bank allowed fresh proceedings upon compliance.

Sri Chenna Veera Ginning Factory versus Karur Vysya Bank — Insolvency and Bankruptcy | DRT (2025)

¶1

IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDEMBAD

¶2

DATED THIS THE SIXTH DAY OF AUGUST,²⁰²⁵

¶3

PRESENT: SH. RAMESHWAR^{KOTHE,B.Com,, L.LB'(Hons.), M'A.} PRESIDING OFFICER

¶4

SECURITISANON APPLICATION^{NO. 195 OF 2022}

¶5

Between:

¶6

M/s. Sri Chenna veera Ginning Factory Rep by its Proprietor Mr. K.G. Veeresh S/o K, Anandappa, Aged 48^years Occupation: Business, H. No. 15-338 Beerappa Nagar, Adoni, Kurnool Dist.^A.P.

¶7

.......Applicant.

¶8

And

¶9

Karur Vysya Bank D.No.6-8-1250 First Floor, Priya Towers NGO'S Colony, K.T. Road Near Annarao Circle Tirupati, Represented by Authorlsed OfRcer.

¶10

......Respondent.

¶11

Counsel for the Applicant : M/s. T. Sridhar Reddy Counsel for Respondent : Mr. Lanka Mr. Lanka Lanka Jagannadham.

¶12

: Mr. Lanka Mr. Lanka Lanka Jagannadham.

¶13

-:ORDER:-

¶14

The Applicant filed the^present Securitisation^Application u/s.17 of the Securitization and^{Reconstruction} of^Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act 2002") assailing sale notlce daled 29.07.2022^putting l\q Application schedule property for auction on ot.os.zozz. / /fu,oa9 '--.'^{qb" -}

¶15

sA, 19512022

¶16

The case of the applicant, in brief, is that respondent bank sanctioned credit facilities to him and he has been paying the amounts to the respondent regularly. However, respondent bank illegally initiated SARFAESI proceedings in respect of the SA schedule property. Applicant came to know of the impugned sale notice when some prospective purchasers visited the property on 22.Oa.2022. Applicant collected a copy of the sale notice dated 29.07 -2022 from those people. Respondent bank has not issued notice u/r 8(6). Respondent has not issued any notice at the time of classifying the account as NPA. Applicant requested the respondent bank to grant some time to settle the account. Despite request, respondent bank has not furnished statement of account. The respondent straight away proceeded with issuing the sale notice without complying the provisions of sections 13(2) and 13(a) of the SARFAESI Act and the Rutes thereunder. The description of property in demand notice and the sale notice is clearly different.

¶17

Respondent bank filed reply statement. The submissions of the respondent bank in brief, are applicant availed credit facilities to a tune of Rs.22,00,000/- on 04.0S.2017. tvlrs. Kavitha Kuruva, Wo K.G. Veeresh stood as guarantor to the loan. The SA schedule property was offered as a security for the loan. When the applicant failed to repay the loan amount for more than 90 days, the account was classified as NpA on 23-03.2027. Thereafter, respondent proceeded with demand notice dated 08.04.2021 for an amount of Rs.22,47,966.96ps as on 07.04.2021. The demand notice wqs returned un/W*o

¶18

sA. tgsl2022

¶19

served. Thereafter, demand notice was affixed on the secured asset and published in two dailies on 23.06.2021, followed by possession notice u/s 13(4) dated 15,02,2022. The possession notice was affixed on the secured asset and published in two newspapers on 19.05.2023. Respondent issued^pre-sale notice on 10.03.2022, followed by sale notice dated 29.07.2022. The sale notice was affixed on the secured asset and published in two newspapers. Respondent obtained valuation report for fixing the reserve price of the subject^property.

¶20

Both side counsel prayed that orders may be passed based on records. Perused the material brought on record.

¶21

Now the points that arise for adjudication are:-

¶22

l|'hether the Applicant made out any valid ground for quashing the securitisation proceedings against the schedule property under the provisions of Securitisation Act? ii) To what relieJ?

¶23

Point No. (i):

¶24

The auction sale proceedings challenged in the SA are reportedly not materialised. Hence, the allegations in respect of auction sale are not taken into consideration for the purpose of adjudication of the SA. Accordingly, the SA has become infructuous to that extent.

¶25

Applicant alleged violation of Section 13(2) in serving demand notice and section 13(4) and Rule 8(2)

¶26

UW;;.

¶27

sA. 19s/2022

¶28

possession notice. Respondent bank did not choose to place any material on record evidencing compliance of the provisions of Sections 13(2) and 13(4). Therefore, it is to be construed that the respondent bank has not complied the mandated procedure as laid under the SARFAESI Act and the Rules there under. Thus, the applicant has made out a valid ground to set aside the demand notice dated 0g.04.2021 and the possession notice dated 1-S.O2.2O2Z respectively. Accordingly, the SA deserves to be allowed partly as the sale proceedings have become infructuous. .

¶29

B. Point No.(ii):

¶30

In the result, the SA is ailowe, t(f," by setting aside the demand notice dated 08.04.2021 and the possession notice dated 15.02.2022. However, this order does not preclude the respondent bank from initiating securitisation measures afresh strictly in accordance with the provisions of the SARFAESI Act and the Rules thereunder.

¶31

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

¶32

Communicate a copy of this order to the parties concerned and upload in official Web^portal.

¶33

(Dictoted to the Steno, signed ond pronounced by me in the open court on this the 6n doyofAugust,2025).

¶34

(!./ /n lffi6.stt" (MMESHWAR KOTHE) PRESIDING OFFICER

Sri Chenna Veera Ginning Factory v. Karur Vysya Bank

Case brief

What is this about?

What did the court decide?

Sri Chenna Veera Ginning Factory v. Karur Vysya Bank

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

Similar cases

State Bank of India versus Vara Lakshmi

Abhilash Global Corporation Pvt. Ltd. versus Icici Bank Limited

Icici Bank Limited versus Adusumalli Surendra

Union Bank of India versus M/S. Sundaramoorthy Auto Care Centre

Hdfc Bank versus a Ashwin

Pegasus Assets Reconstruction Private Limited versus Syed Masthan Babula