Partly allowed

Mamidi Bajanna Para Boiled Industries, Rep by its partner: Mamidi Gajanand Reddy S/o Late M Bajanna v. State Bank of India

DRT1 Sept 2025SA/212/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal disposed of a Securitization Application challenging a bank's sale notice for auction. The court held the sale notice was illegal for failure to issue a pre-sale notice under Rule 8(6) Rules 2002, stripping the mortgagor's redemption rights. However, it upheld the possession notice as valid.

What did the court decide?

Sale notice dated 10.05.2023 set aside; Bank directed to follow statutory procedure for auction.

Mamidi Bajanna Para Boiled Industries, Rep by its partner… — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERYTRIBUNAL- IAT HYDERABAD

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DATED THIS THE 1^ST DAY OF SEPTEMBER. 2025

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No.212,/2023,

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Mamidi Bajanna Para Boiled Industries Rep. by its partner Mamidi Gajanand Reddy, S/o Late M.Bajanna, Aged 57 years, Occ:business, R/o villa No.220, Avenue No.15, Splendid Aparna^palm Meadows, Kompally, Telangana-5000 1 4.

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. . . Applicant

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Versus

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1 .State Bank of India Stressed assets Recovery branch(SAMB-ll), 1st floor, D.No.3-4-101/A, lst floor CAC, TSRTC Bus Station, Kachiguda, Hyderabad.

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Rep. by its Authorized Officer

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State Bank of India, SME, Nizamabad branch, Nizamabad. Rep. by its Authorized oflicer

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... Respondents

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Counsel for the Applicant

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C ounsel for I?e s p ondents

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Ms. Pallaui Neha Si M.V.Janaki Ram

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:ORDER:

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'l'his Securitization applica by the Applicant u/s.t7 of the SARFAESI AcL,2OO2 on Notice dt. 15.04.2023 and Auction Sale Ng$fc dr.1 )oc by the Ilcsporrdcnr LJank lor conducting aucLipn o l--l Ln h a- schedule and to declare the samc r-rull and void. il ri B1 stP Aps

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SA.No.212/23

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2. The averments made in the application, in brief, are as under,-

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M/s MBR Exims^p.Ltd. availed credit facilities from the Respondent No.2 whereas the Applicant stood as guarantor and created mortgage in respect of the schedule property. The 1st Respondent bank published the Sale Notice dt. 1o.0s.2023 for conducting auction of the schedure property on 26.06.2023 without issuing any notice to the Applicant. on enquiry, the Applicant came to know that the Respondents classified the loan account of the borrower as NpA on 0g. 10.2022 and issued demand notice u/s 13(2) of the SARFAEST Act,2oo2 dt.2s.11.2022. Thereafter the 1st Respondent issued possession notice dt.ts.o4.2023 but without scrving the said noticc on the Applicant, the Respondent bank took symbolic possession of thc schedule property. Thereafter the Respondent Ba,k issued the impugned Sale Notice dt. r 0.05.2023 for conducting auction of the schedule property on 26.06.2023 but the said sale notice was not affixed on the schedule property. Before issuing the said sale notice, the Respondent Bank has not issued any notice u/r g(6) of Security Interest (Enforcement) Rures, 2oo2 for giving opportunity to the Applicant to redeem the schedule property. The schedule property is agricultural land and as such, exempted under Section 3l (i) of the SARFAESI Act,2OO2. Hence the SA.

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The Respondents filed their Reply denying all the adverse allegations made in the SA and the contentions ofthe Respondent Bank, in brief, are as under-

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M/s MBR Exims P.Ltd. availed loan facilities from the Respondent No.2 whereas the Applicant stood as guarantor and created mortgage in respect of the sched].r]q prgpexty":. As the borrower committed default in repaying the loan:#ues;.fhe fo'dq E\unt was declared as NpA and the .r' a:{\ '^{.; i} '$r \l Respondenr Balip$sued ffmana'$'h.A,.zs. rt.2022 u/s l3(2) of rhe SARI,'At.lST n.t.,;lilo:^ ,., iii, r,.,.-r*4'Etncl Appticanr. As some of the parr ncrs "r , r.,i appri.[J ,{83,,ffi n" ;; ;:;; noricc., there is proper :. .) "i,i: la I , .rt 2.:.;! -: :. .!i .1. . l. _. ' 1,,.;,"..;..-/ ''... tt , . ' "'a -' .^.--:"-'

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SA.No.212/23

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service of demand notice on the Applicant which is a partnership firm. Thereafter, the Respondent bank issued possession notice dt.lS.04.2O2g under Section 13(4) of the SARFAESI Act, 2oO2 and the said possession notice was published in two daily newspapers and affixed on the schedule property. Thereafter, the Bank issued Sale Notice dt.10.05.2023 to the borrower and the Applicant who is mortgagor and the said notice was published in two leading newspapers and the same was affixed on the schedule property. The schedule property is a commercial property and not an agricultural property as contended by the Appticant. Accordingly, the Respondent Bank prayed to dismiss the SA.

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Heard Ld. counsel for the Applicant and Ld. counsel for the Respondents.

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Now, the points that arise for consideration are,-

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il wrcther the Applicant hc.s established. ana ualid ground.s for challenging the^possession Notice dt.1s.04.2023 issued. by the Respondent Bank?

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ii) wheth.er the Applicant has estabrished ana ualid ground.s for chailenging the sale Notice dt.10.os.2023 issued by the Respond"ent Bank for conducting auction of tLrc schedule properiy ?

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iii) To what relief

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Points No.(i):&(ii)-

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During the course of Ld. Counsel for the Applicants and Ld.

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Counsel fol,the I?espbnd6" la] iterated their respective versions as stated #o#.

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SA.No.212/23

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There is no dispute regarding the fact that M/s MBR Exims p.Ltd availed loan from the 2"d Respondent whereas the Applicant stood as guarantor and created mortgage in respect of the schedule property. Thereafter, the borrower committed default in repayment of loan dues and so, the Respondent Bank initiated proceedings under the provisions of SARFAESI Act,2OO2.

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The specific contention of the Applicant is that the Respondent bank has not followed the contemplate procedure prescribed under the provisions of SARFAESI Act, 2oo2 and Rules made thereunder in issuing the statutory notices to the Applicant. The bank straightaway issued the impugned sale notice without issuing pre-sale notice for giving an opportunity to the Applicant to redeem the secured asset and so, the said sale notice is not legal and liable to be set aside.

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Per contra, Respondent bank contended that the Bank has duly followed the prescribed procedure contemplated under the provisions of SARFAESI Act, 2oo2 and Rules made thereunder in issuing all the relevant notices to the Applicant.

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In order to establish their contention, the Bank enclosed relevant material documents along with the Reply filed by them. As per the said material documents, it is clear that the Respondent bank issued demand notice dt.25.11.2o22 to the borrower and the Applicant which is a partnership firm. The said notice was sent through Regd.post and some of the partners of the Applicant firm received the said notice. In fact, the said notice was published in Telugu and English daily newspapers and the sa iidl{btkd*@q..also affixed on the schedule property. So, there is . *{.a:;i::!\sl^{.:;'ifii-:(- ---'---.}

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"1fd:'.q,gt,^{deiifsgq',xoticeon the Applicant. Thereafter,the bank} i$,.6#Fd^{posseHbnnor,!Sq*,r s.04 .2o2t\ and the same was received by the} fiffi:H.tp,fl'ffiiJiJli::.;::i,,ffiil J:::,::J::

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sA.No.212/2j

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depicted in the copies of photographs frled by the bank and the said notice was published in Telugu and English daily newspapers as evidenced by the copies of paper publication filed by the Bank. Thus the Respondent bank has dulv followed the procedure as contemplated under Rule 8( 1)&2) of Security Intercst (Dnforcement) Rules, 2OO2 in issuing possession notice to the Applicant.

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Another contention of the Applicant is that the schedule property is agricultural property and so, it is exempted under Section 3 l (i) of the SARFAESI Act,2OO2 and accordingly, the bank cannot proceed against the said property. But the Bank contended that the schedule property is commercial property and so, it is not exempted under the provisions of SARPAESI Act,2OO2. lt is pertinent to note that in the Schedule of the properties enclosed to the SA, the Applicant clearly stated that the schedule property is commercial building bearing Sy.No.gg5 admeasuring 3569.50 sq.yds. situated at Jannepally Road, Khanapur village, Nizamabad District. So, the contention of the Applicant that thb schedule property is agricultural property is not tenable.

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t2. The other contention of the Applicant is that without issuing any pre_ sale notice u/r 8(6) of security Interest (Enforcement) Ruies, 2oo2, tine bank straightaway issued the impugned sale Notice dt. 1O.os.2023 for conducting auction of the schedure property and so, the said sale notice is illegal. After issuing possession notice, the Respondent Bank is expected to issue noticc u / r ti(6) of Security Interest (Enforcement) Rules, 2OO2 by giving thirty days timc to thc borrowcr/ mortgagor for redeeming the sche dule-_.p_ropertJ,- tllr paying thc entirc outstanding dues. In the instant .a93,r{ti,e.5espdlpe\t bank issucd Sale Notice dt. 1O.05.2023 u/r ixing date of auction ot 26.06.2023. It is ,'} pertinent ton notit'that tf,? \U sale notice is published in daily ;;.-; 26. BP^{o" per the} iT:IEd#^{provisions of Section t 3(8)oT SARFAESI} {t"-.:,.^{' -*} -.^{il: .! *'.-} ) i-:', :."^'-' ..."..',;( 5 .:I-' . . ,^-.--r'

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SA,No.212/2i

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Act, 2OO2, the borrower/mortgagor is having right to redeem the mortgaged property by paying the entire dues to the secured creditor before the date of publication of notice for public auction. So, when the moment, the sale notice is published by the secured creditor in the newspapers, the borrower/mortgagor looses his right to redeem the mortgaged property. In the instant case, the sale notice u/r 8(6) of Rules, 2OO2 is issued on 10.05 .2023 whereas the publication in newspapers is made on 16.05.2023. So in view of the publication of the sale notice by the Respondent bank on 16.05.2023 in newspapers, the Applicant lost his valuable right to redeem the schedule property. So, the impugned Sale Notice dt. 1O.O5.2O23 fixing auction of the schedule property on 26.06.2023 without giving clear thirty days time to the Applicant to redeem the secured asset is bad in law and it was issued in violation of Rule 8(6) of Security Interest (Enforcement) Rules, 2OO2. So, this point is answered accordingly.

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Perr&ns*[tul

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In the result, SA 21212023 is partly allowed by setting aside the

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impugned Sale Notice dt.1O.O5.2023 issued by the Respondent Bank for conducting auction of the schedule property on 26.06.2023 whereas the impugned possession notice dt.15.04.2023 is concerned, it is valid and legal and binding on the Applicant as the Bank has duly followed Rule 8(1)&(2) of Security Interest (Enforcement) Rules, 2OO2 in taking symbolic possession of the schedule property. The ftespondent Bank is directed to strictly follow the procedure contemplated under the provisions ol$..$,$FAESI Act,2OO2 and Rules made thereunder in taking O.*rSr,9ff:,&, gcRdtrp,ting auclion of thc schedule property.

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Applications, pending if any, shau stand d#;';-.,,dfln.^;htory il,$"".,^{f $Efl"Z,6S."fl1"o","} \S^- \u5'^'t-* *#^f;' 6 .f;PtiNgdffi/1"' 'o.W

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SA.No.212/23

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Communicatc a copy of this Order to the parties concerned.

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(Dictated to the l'.5., transcribed bg her, corrected, signed and^pronounced by me in the open court on th{s the 1.' clay of September, 2025).

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sdl(G. GOPICHANDI PRESIDING OFFICER

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BlsEP2us
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TRUE CGFY ^
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71;q. t s

Mamidi Bajanna Para Boiled Industries, Rep by its partner: Mamidi Gajanand Reddy S/o Late M Bajanna v. State Bank of India

Case brief

What is this about?

What did the court decide?

Mamidi Bajanna Para Boiled Industries, Rep by its partner: Mamidi Gajanand Reddy S/o Late M Bajanna v. State 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

All orders in this case

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