Allowed

Sampangi Mallesh v. Aditya Birla Finance Ltd.

DRT25 Sept 2025SA/228/2025

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an application challenging enforcement proceedings under the SARFAESI Act, setting aside actions taken by the respondent, including the issue of notices and possession, due to procedural lapses, improper service of notices, and failure to comply with registration requirements.

What did the court decide?

The Securitization Application was allowed by setting aside all measures of the respondent, including the impugned possession notice and the action of taking physical possession of the property.

Sampangi Mallesh versus Aditya Birla Finance Ltd. — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL^{_ II AT HYDERABAD}

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DATED THIS THE 25TH^{DAYOF SEPTEMBER, 2025}

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

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Securitization Application^{No.228 OF 2025}

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Sampangi Mallesh, S/o^{Kumar Swamy} Aged about 45^years, Occ:Pvt.^Service

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Sampangi Renuka, Wo Sampangi^Mallesh Aged about 38^years, Occ: Housewife

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Both are resident of^{Plot No.21, West part} Road No.1, Vishaka Nagar Colony Almasguda, Ranga^{Reddy Dist.}

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....Applicants.

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Versus

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Aditya Birla Finance Ltd Having its registered office at Indian Rayon Compound,^Veraval Gujarat and its Branchy Office^at 407, 408 & 409 4th Floor, Ashoka My Home Chambers Begumpet, S.P. Road, Secunderabad Hyderabad Rep by its Authorized^{Representative} Mr.M Ramakrishna S/o^{M. NarayanaMurthy} Aged 41^years, R/o HYd.

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... Respondent

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Counsel for the ApPlicant Mr. L.K. Sharma Counsel for Respondent Mr.V. Santoosh

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-: o-R-ql-B:-

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The Applicants filed the^{present securitisation Applicationu/s} 17 of the Securitization and^{Reconstructionof Financial Assetsand} Enforcement of Security^{Interest Act, 2002 (hereinafter referredto as} "the Act") to declare the action of^{respondentagainst the petition} schedule property under Secs.13(2),^{13(3)."13(4)r/w Rule 8 of} ///'lttY><"'\c ( /r/ ':s"

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Page 2 ofs

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sA No.Z2gl2ozs

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Security Interest (Enforcement) Rules, 2OO2 (..Rules,, hereinafter) and Sec.14 of the Act, 2002 vide advocate commissioner notice dated L9.O4.2025 in Crl MP No.52/2025 on the fite of learned principal Senior Civil Judge at L.B. Nagar as iltegal void and arbitrary .

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The case of the applicants, in brief, is that they availed housing loan from the respondent and could not pay some instalment. The respondent did not consider the request to grant time to regularize the account. Aggrieved by the action of the respondent, the applicants filed SA No.111/2O22 and also filed Wp No.23954/2022 and deposited 15olo of claim amount as directed by the Hon,ble High Court and regularized the account. However, due to unavoidable circumstances, applicant could not pay instalments regularly. Without giving sufficient time, respondent invoked the measures under the Act. Respondent failed to serve demand notice and possession notice and publish the possession notice as per Rules. No opportunity is given under Sec.13(3A). The security.is not registered with Central Registry as per Sec.26-D of the Act. The respondent being registered under the Housing Finance Act cannot invoke Securitization proceedings. Hence the SA.

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Respondent filed reply statement along with documents denying the adverse averments of the application. The submissions, briefly, are that the demand notice dated 17.O5.ZO2l and possession notice dated 16.08.2021 were issued by following due procedure and there is no violation.^possession notice was duly published and affixed. Earlier SA No.111/2022 was dismissed for default. SA is liabte to be dismissed. /Mrnv -,/

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PaSe 3 of5

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sA No.228l202s

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Representative of learned counsel for applicants reported that orders may be passed based on records. Perused the written arguments filed for the respondent along with the material documents brought on record.

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The points for consideration are as follows : -

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i) Whether the applicant made out any valid ground to quash the action of the respondent under Sec.13(4) against the SA schedule property including taking physical possession, as prayed for?

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ii) To what relief?

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Point No.(i):

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Admittedly the applicants availed home loan and defaulted in repayment. They challenged the Securitization proceedings by Rling SA No.111/2022 and thereafter WP No.23954 of 2022 and deposited 15% of claim amount as directed by the Hon'ble High Court and thereafter pald regular instalments and further defaulted. It is not denied by the respondent that applicants^paid 15o/o of claim amount and thereafter regularly paid the instalments. In that event, the account ought to have been declared NPA afresh consequent upon subsequent defaults. The earlier SA was dismissed for default and not on merits. subsequent to disposal of WP.

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A perusal of material documents filed by the respondent^would reveal that the demand notice 17.05.2021 addressed to the applicants was returned unserved with^postal remarks^as 'insufficaent address'. Respondent^{publishedthe demand notice but} not affixed at the address of the applicants as^per Rule 3 of^{the Rules,} 2002 which reads as hereunder:-

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(2) "(l)The of section service of 13 demand notice as or the Act sha^{referred to in} *^sub-section

ffi"rgr"n*

Page 4 of5

sA No,228l202s

[inctuding^{hand delivery][Insertedby NotificationNo. G'S'R.} 1046 (E), dated 3.11.2016^{(w.e.f. 20.9'2002).1or} transmitting at the^place where the^{borrower or his agent,} empowered to accept the notice or^{documentson behalf of} the borrower, actually and^{voluntarily resides or carrieson} business or^personally works^{for gain, by registeredpost with} acknowledgment due, addressed^{to the borroweror his agent} empowered to accept the service or by^{Speed Post or by} courier or by any other means^{of transmissionoF documents} like fax message or electronic^{mail service:}

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Provided that where authorized officer^{has reasonto believe} that the borrower or his agent^{is avoiding the serviceof the} notice or that for any other^{reason, the seNice cannotbe} made as aforesaid, the service shall^{be effectedby affixinga} copy of the demand notice^{on the outer door or someother} conspicuous part of the house or^building in^{which the} borrower or his agent ordinarily^{resides or carrieson business} or^personally works for^gain and also by^{publishingthe} contents of the demand notice in two^{leading newspapers,} one in vernacular language, having sufficient^{circulationin} that locality.

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Improper service of demand notice,^especially when it^was returned as 'Insufficient Address', the^respondent ought^{to have} strictly adhere to the^{procedure prescribedunderRule} 3.^{Such deficit} service not only deprived the right of applicants to^{raise objections} under Sec.13(34) but also in consequence^{thereof, shall vitiate all the} further proceedings.

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As regards service of the^possession notice dated 16.08.2021 is concerned, the postal receipts bearing Nos. RT243370255IN and RT243370370IN pertain to applicants l and 2 and the articles were returned to the sender i.e., respondent at its Guindy, Chennai address as per postal track reports^placed at^pages 30 to 32 of documents filed by the respondent itself. Hence it is also clear that the^possession notice was not served on the applicant. Further, in spite of specific averment, respondent bank neither filed proof of its registration as FI within the definition given in the SARFAESI Act nor

4ny--,.

Page 5 of 5

SANo.228l202S

did it file proof of registration of security interest with Central Registry as per Sec.26-D of the Act. Demand notice was issued from Secunderabad address whereas possession notice was issued from Chennai address. However, it is observed that the authorized officer who issued the Sec. 13(2) demand notice with ID No.HF34349O is not in the list of authorized persons as per of copy of Board Resolution as at^pages 9 to 12 of documents file by the respondent with reply statement.

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In view of the above observations, I find that there is a glaring non-compliance of Rule 3 and Rule 8(1) of the Rules of 2002 and accordingly SA deserves to be allowed by setting aside all the measures against the application schedule property including the possession notice impugned herein and action of taking physical possession.

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Point No.(ii):

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In the result, the Securitization Application is allowed by setting aside all the measures of respondent including the impugned possession notice and action of taking physical possession of the application schedule property.

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

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Communicate a copy of this order to the parties concerned and upload in the official website.

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(Typed to my dictotion by the PS, conected, signed ond pronounced by me in the open court on this the 25h doy of september, 2025).

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ffi**,

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ESHWAR KOTHE) PRESIDING OFFICER

Sampangi Mallesh v. Aditya Birla Finance Ltd.

Case brief

What is this about?

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Sampangi Mallesh v. Aditya Birla Finance Ltd.

Case brief

What is this about?

What did the court decide?

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Issues for consideration

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