Dismissed

M S Dadabhai Industries v. State Bank of India

DRT6 May 2025SA/215/2022

Case brief

AI extract

What is this about?

A Debt Recovery Tribunal framed two questions regarding the validity of an e-auction sale notice and possession proceedings under the SARFAESI Act. Finding no violations in the bank's procedure, the court dismissed the application, holding the notices valid but directing the bank to issue fresh ones and take new steps.

What did the court decide?

The application is dismissed. The Respondent Bank is directed to issue a fresh sale notice and take fresh steps for taking physical possession of the schedule property.

M S Dadabhai Industries versus State Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL^- I AT HYDERABAD

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DATED THIS THE 6IH DAY OF MAY, 2C-25

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No.2 15/2022

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L.M ls Dadabhai Industries

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2.Shaik Fasiuddin Shaikh Dadamiya

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(deceased) through L.R.s

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2a) Nasreen Sultana

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W/o ShaikhFasiuddin,

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Aged 36 years, Occ:house wife, Rlo 2-2-83, Ranjal Base,

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Bodhan Dist., Nizamabad.

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2bl Ifra Fatima, D f o Shaikh Fasiuddin, Age: minor,U lg her mother(Applicant^No.2(a)

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2cl Nishath Fatima, D/o Shaikh^Fasuddin, Age: minor,U f g her mother(Applicant^No.2(a)

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2dl BushraBatool, D/o Shaikh Fasuddin, Age: minor,lJ lg her mother(Applicant^No.2(a)

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2e) ShaikhAbdullah, S/o Shaikh^Fasuddin, Age: minor,Ulg her mother(Applicant No.2(a)^{... Applicants}

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And

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State Bank of India, SARB-2, Chikkadapaily branch F{yderabad Rep.by its Chief Manager/AO 2. Sri SagirajuVenkataRavi S/o Rama Raju Sgiraju, ffi% * Occ:business, H.No .12-5.t No. 101, Opp.Bachpan School, Vij i c$o$yg[Y tlnl zffiL\Lr' Lallaguda, Hyderabad}? Counsel for the Appli G. Adriaru Kiran Raj Counsel for the 7"t ffit--.#i V. Raghu Si M.srikanthBanarji Counsel fo, )ttd Psspondent

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sA21.5/22

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.:ORDER:-

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l. This application is filed by the Applicants u/s.17 of the SARFAESI Act, 2OO2, challenging the e Auction Sale Notice dt.30.O7.2O22for conducting auction of the schedule property andalso the^proceedings initiated by the lstRespondent Bank for taking^{physical possession} of the schedule properry uls 14 of the SARFAESI Act, 2OO2 pursuant to the orders of District Magistrate, Nizamabad and to declare the same as illegal and void.

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The averments made in the application, in brief, are that:

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The 1"t Applicant availed loan from the 1st Respondent Bankwhereas 2"dRespondent stood as guarantor and created mortgage in^{respect of} the schedule property in security for repayment of loan^facilities availed by the l"t Applicant. Thereafter the Applicants^committed default in repaying the loan dues and the loan account was classified as NPA and the l"tRespondent issued demand notice dt.1¹ .06.2021 demanding for repayment of a sum of Rs.1,45,33,3481-^and subsequently, the l"tRespondent Bank also issued^{possession notice} dt.21.O8.2021. Thereafter, the Applicants made^{proposalfor OTSand} made some payment but could not pay the balance amount. Thereafter the l.tRespondent Bank issued AuctionSale^Notice dt.30.07.2022 proposingthe conduct auction of^{the schedule} property on 05.09.2022 and the said notice was received by^the Applicants. The said notice was neither^published in two^daily newspapers nor affixed on theschedule^{property. The} l"t^Respondent bank al ed before the District Magistrate, Nizamabad^for ion of the schedule property and the of the schedule ;,lf**':ffii:" ffi^{,, Ji T:} "^{:i:: : " :: i J "' ""::.: :} [i?o..,0^{6 g4p3p5l.tfrfii",."," has notrecorded his satisfaction}

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about the factual correctness of the assertions made by the lstRespondent bank in its affidavit. Hence the SA.

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The lstRespondent Bank filedReply by denying all the adverse allegations made in the SA. It is contended that in view of the default committed by the Applicants in repaying the loan dues, the loan account was classified as NPA andthe 1"t Respondent Bank filed O.A.12412021 for recovery of outstanding dues and the said OA was allowed by this Tribunal on O1.O9.2022. Thereafter the 1"t Respondent Bank issued demand notice dt.11 .06.2021 u/s 13(2)of the SARFAESI Act, 2OO2 and the said notice was received by the Applicantsbut they did not comply with the said notice. Thereafter the 1st Respondent Bank issued possession notice dt.21.O8.2O21 and the said notice was served on the Applicantsand the said notice was affixed on the schedule property and also published in Mana Telangana and Telangana Today on22.O8.2O21. The OTS proposal was cancelled inview of the non-compliance of amount as proposed by the Applicants. The l"tRespondent bank approached DistrictMagistrate, Nizamabad for taking physical possession of the schedule property and the ld. District Magistrate issued proceedings dt.20.01.2022 and directed the Tahsildar, Bodhan for taking^physical possession of the schedule property. After issuing possession notice, the lstRespondent Bank issued notice u/r 8(6) of Security Interest (Enforcement) Rules, 2OO2 dt.14.09.2021 to the Applicants and the same was served on them. Thereafter the 1't Respondent Bank issued Auction Sale Notice dt.30.07.2022 by fixing auction of the schedule property on 05.09.2022 and the said sale notice was^{published in} Mana Telangana and Telangana Today daily newspapers^and it^was also affi he schedule property. Challenging the said sale notice, filed. The lstRespondent has followed the under the provisions of SARFAESI Act, 2OO2 in issuing the e Auction Sale Notice

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sA2L5l22

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dt.3o.07.2022 and there are no deviations. Hence there are no merits in the SA and the SA is liable to be dismissed.

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Heard Ld. Counsel for the Applicants and Ld. Counsel for lstRespondent. Though Sri SrikanthBanarji filed vakalat for Respondent No.2, not filed Reply and hence their right of filing reply was forfeited. Perused the material brought on record.

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Now, the points that arise for consideration are,

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Whether the Applicants haue establislted any ualid grounds for challenging the e Auction Sale Notice dt.30.07.2022 and also theproceedings initiated by the l'tRespondent Bank for taking phgsical possession of the schedule property pursuant to the orders of Ld.Distict Magistrate, Nbamabad?

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ii) To what relieJ?

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Point No.(il:-

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During the course of arguments, Ld. Counsel for the Applicants and Ld. Counsel for the l"tRespondent Bank reiterated their respective versions as stated supra.

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Originally, thepresent SA is filed by Dadabhai Industries represented by its sole proprietorShaikFasiuddin and one SagirajuVenkataRavindra Raju who is the guarantor to the l"t Applicant. Subsequent to filing of the SA, the said ShaikFasiuddin died by leaving his wife and children as legal heirs. So the Legal heirs are lm pplicants. The said SagirajuVenkataRavindra Raj espondent.

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e Applicants is that prior to issuance of 'flfif?ilff" Notice, the espondent Bank has not issued pre-sale 4

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notice and the said auction sale notice was not affixed on the schedule property and the said notice was also not published in daily newspapers. The further contention of the Applicants is that the Ld.District Magistrate, Nizamabad without considering the facts and circumstances of the case, issued proceedings for taking^physical possession of the secured asset.

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Per contra, the lstRespondent Bank contended that the Bank^has strictly followed the procedure contemplated under the^{provisions of} SARFAESI Act, 2OO2 and Rules made thereunder in^{issuing various} notices to the Applicants.

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To substantiate their contentions, the lstRespondent^{Bank filed} material documents along with the Reply^{filed by them.As per the} said documents, it is clear that in view of the^{default committed by} the Applicants, the 1"t Respondent Bank^{filed o.A.l24l2021on the} file of this Tribunal and the same was^{allowed by this Tribunalon} O1.O9.2O22. There is no dispute^{regarding the fact that the lst} Respondent Bank issued demand notice dt.l^{1 .06.2021 and the} Applicants received the said notice. There is^{also no dispute regarding} the fact that the Applicants received the^{possession notice} dt.21.O8.2021 issued by the^{1"t RespondentBank and the said notice} was published in two daily newspapers and^{also affixed on the} schedule property as prescribed under^{Rule 8(1X2)of Security Interest} (Enforcement) Rules, 2OO2. As per the^{documentsfiled by the} Respondent, it is clear that on14.O9.2022, the^{lstRespondent bank} issued pre-sale notice u/r 8(6) of^{Security Interest (Enforcement)} Rules, 2OO2 for giving an opportunity^{to theApplicants and 2nd} redeem the schedule property.^{Thereafter the lst} Re6'Usffit W5 lso issued Sale Notice dt.30.07.2022^for 'Cu,1ihr.tiffi".ti& he schedule property on 05.09.2022.^{As per} j.' +L^ filthe docuniilnts ,.1 ^^,,-#-+-^file e Bank, it is very clear that the^saidsale il ooti"B r$"SUrilffinea; ana Telangana and Telangana^{Today daily}

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5
:

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sA21.5122

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newspapers and the said notice was also affixed on the schedule property as depicted in the photographs filed by the lst Respondent.

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As per the provisions of Section 14 of SARFAESI Act, 2OO2, the

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secured creditor is at liberty to approach the concerned District Magistrate or Chief Judicial Magistrate for appointment of advocate commissioner for taking physical possession of the secured asset. Accordingly, thel"tRespondent approached Ld.District Magistrate, Nizamabad and the Ld.District Magistrate after going through the record, issued proceedings directing the concerned Tehsildar to take physical possession of the schedule property and for handing over the same to the lst Respondent bank.

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t2. So, considering all the circumstances, I am of the opinion that the e Auction Sale Notice dt.30.07.2022 issued by the 1"t Respondent Bank is perfectly legal and valid and similarly, the proceedings initiated by the l"tRespondent before the Ld. District Magistrate, Nizamabad u/s 14 of the Act for taking physical possession of the schedule property are quite legal and strictly in accordance with the provisions of SARFAESI Act, 2OO2 and there are no violations. Accordingly, this point is answered in favour of the Respondent and against the Applicants.

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During the course of arguments, Ld. Counsel for the 1't Respondent Bank filed a memo stating that pursuant to the impugned Auction Sale Notice dt.30.07.2022, no auction was conducted by the Bank and physical possession of the schedule property was also not taken pursuant to the orders of District Magistrate, Nizamabad. So, in the circu m of the opinion that the relief claimed by the A sent SA becomes infructuous and nothing ves in dication.

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0 6 ilrYzm

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rr1 , -tO {S.6;!H'1._.U

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Point No.(tll:-

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In the result, SA 21512022 is dismissed. The lst Respondent Bank is directed to proceed afresh by issuing fresh sale notice against the schedule property and by taking fresh steps for taking physical possession of the schedule property under the provisions of SARFAESI Act,2OO2 and Rules made thereunder.

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consequently, the Interlocutory Applications, pending if any, shall stand disposed of. No order as to costs.

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Communicate a copy of this order to the parties concerned.

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(Dctated to the P.S transcribed bg her, corrected, signed and pronounced. by me in the open court on thb the 6th dag of Mas, 2025).

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sd/ - (c. coPr CHANDI PRESIDING OFFICER

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#1#;,'f i'i*r

M S Dadabhai Industries v. State Bank of India

Case brief

What is this about?

What did the court decide?

M S Dadabhai Industries 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

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