Dismissed

Lily Realty Pvt. Ltd. v. J.C. Flowers Asset Reconstruction Private Limited

DRT3 Nov 2025SA/23/2025

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's special application filed under Section 17 of the SARFAESI Act. The court held the application was not maintainable as the impugned invitation for bid was not a measure under Section 13(4) of the Act. The Tribunal lacked power to adjudicate on the management of stressed assets or direct compliance with compromise settlements.

What did the court decide?

The special application seeking to quash the sale invitation for bid and directing the defendant to honor settlement terms was dismissed as not maintainable. Costs borne by the parties.

Lily Realty Pvt. Ltd. versus J.C. Flowers Asset… — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL –I AT CHENNAI

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Dated this 03^rd Day of November, 2025

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PRESENT: SHRI A.S.JAYACHANDRA Presiding Officer

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S.A. No.23 of 2025

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Lilly Realty Private Limited,

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A company registered under the provisions

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Of the companies Act, 1956

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Having its registered office at

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A – Shop -12, Floor – 1, Plot – 2, A- Block, Dattatraya

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Niwas, Gokhale Road (South), Potuguese

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Chruch, Dadar (West),

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Mumbai – 400 028.

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Also at 2^nd Foor, Dodda Mane Bldg: #19/1, Vittal Mallya Road, Bengaluru – 560 001.

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New registered address at: Raj SRA Co- op Housing Soc.Ltd., Shop No.7, Plot No.1091, Nagar Rachna No.4, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025.

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Mr. Asit Koticha

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Having address at 2031 /2032, Rameshwaram Apartment, 19^th floor, Palkhewadi, K D Marg, Prabhadevi, Mumbai – 400 028.

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Mrs. Kanan Koticha

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Having address at Rameshwaram Apartment, 19^th Floor, Palkhewadi, K D Marg, Prabhadevi, Mumbai – 400 028.

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Aahana Realty Pvt. Ltd.,

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Having registered office at A – Shop – 12, Floor – 1, Plot -2, A Block, Dattatraya Niwas, Gokhale Road (South), Portuguese Chruch, Dadar (West), Mumbai – 400 025.

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New registered address at: Raj SRA Co – op Housing Soc.LTd., Shop No.7, Plot No. 1091, Nagar Rachna No.4, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025.

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Swarit Realty Private. Ltd. Having registered office at A- Shop – 12, Floor – 1, Plot – 2, A Block, Dattatraya Niwas, Gokhale Road (South), Portuguese Church, Dadar (West), Mumbai – 400 025.

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New registered address at: Raj SRA Co – op Housing Soc.LTd., Shop No.7, Plot No. 1091, Nagar Rachna No.4, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025. . . . Applicants

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Versus

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JC Flowers Asset Reconstruction Private Limited,

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Acting in its capacity as trustee of JCF Yes Trust 2022 – 23/11 Having office at CG House,

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12^th Floor, Dr. Annie Besant Road, Worli,

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Mumbai – 400 030

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Represented by Krupali Naik . . . Respondent

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Applicant by Ld. Senior Counsel Shri E. Om Prakash, appears through VC a/w and Shri G.R. Hari, Adv.

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Defendants – Caveator by Ld. Senior Counsel Shri Srinath Sridevan a/w Ms. Abhitha Banu, Adv.

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This is a fresh matter. The Applicant – Borrower prays for setting aside sale invitation of bid issued under publication dated 17.10.2025 published in the Newspapers of issue dated 17.10.2025.

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It is also prayed that, the directions be issued to the defendant to comply and honor the settlement terms of compromise earlier reached between the parties.

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Heard the ld. counsel on either side.

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The application is filed under section 17 of the SARFAESI Act. The ld. Senior counsel appearing for the Applicant submits that earlier there was a settlement of compromise reached between the parties. It is also submitted that the defendant had filed TA no. 150/2022 for recovery of the dues pending before this Tribunal and the next date of hearing is 19.11.2025. The settlement is almost reached and the terms are to be worked out. It is also submitted by the ld. Senior Counsel that the anchor bid amount notified in the publication is Rs. 93 crores and the defendant is willing to stand by the said amount to be cleared.

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The ld. Senior Counsel appearing for the defendant submits that the SA is not maintainable. He vehemently submits that :-

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(a) That the publication which is now challenged is not at all a measure under section 13 of the SARFAESI Act.

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(b) Section 17 of the Act confers the power on the Tribunal to look into the legality, validity and correctness of the measures initiated by the Secured Creditors under Section 13(4) of the Act.

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(c) In the instant case, there is no such measure initiated by the defendant and therefore this tribunal cannot look into any of the gamut of events leading to the impugned publication.

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(d) It is submitted that the defendant herein is an ARC registered under sec.3 of the SARFAESI Act and the defendant is willing and expressed its intention to further assign the debt in Securitization Companies or Reconstruction Companies ( SC/RC) as per the guidelines of the Reserve Bank of India dated 24.09.2021 which deals with the transfer/assignment of the stressed assets.

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(e) It is also pointed out that the defendant is mandated to follow the Rule No. 54, 55 and 56 which prescribes mandatorily the Swiss Challenge Method to be adopted.

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In the light of the submission made by ld. senior counsel and after perusal of the pleadings and relief, the only point that arises for determination in the present SA is “ Whether the Applicant can maintain the present petition u/s 17 of the SARFAESI Act for the reliefs sought for in the SA?.

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Section 17 of the SARFAESI Act reads as under:-

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17. [Application against measures to recover secured debts.]

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(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, [may make an application along with such fee, as may be prescribed,] [Substituted by the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004 (30 of 2004), Section 10, for "may prefer an appeal" (w.r.e.f. 21.6.2002).] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken:

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[Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.]

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[Explanation. For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.]

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(1A)[ An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction-

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(a)the cause of action, wholly or in part, arises;

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(b)where the secured asset is located; o

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r(c)the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being.]

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(2)[ The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of

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security are in accordance with the provisions of this Act and the rules made there under.

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(3)[ If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made there under, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may, by order,-

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(a)declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditor as invalid; and

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(b)restore the possession of secured assets or management of secured assets to the borrower or such other aggrieved person, who has made an application under subsection (1), as the case may be; and

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(c)pass such other direction as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.]

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(4)If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made there under, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt.

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(4A)[ Where-

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(i)any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy,-

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(a)has expired or stood determined; or

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(b)is contrary to section 65A of the Transfer of Property Act, 1882; or

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(c)is contrary to terms of mortgage; or

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(d)is created after the issuance of notice of default and demand by the Bank under sub-section (2) of section 13 of the Act; and

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(ii)the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act.]

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(5)Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:

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Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub-section (1).

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(6)If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any party to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.

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(7)Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made there under.

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From the above reading, the powers of the Tribunal to be exercised under section 17 is to adjudicate upon the Applicants or anybody aggrieved under the measures initiated by the secured creditors under 13 of the SARFAES Act. Complaining about the non-compliance of the provisions of the Act and the Rules by the secured creditors. This Tribunal also looks into the legality, validity and correctness of such measures flowing under section 13(4) of the SARFAESI Act and nothing else. The powers are not conferred on this Tribunal under section 17 of the Act to look into the working, management and affairs of the secured creditors having

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stressed assets and their wisdom in handling, managing, transferring or assigning of such stressed assets.

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The management of stressed assets cannot be equated with the measures flowing under section 13 (4) of the SARFAESI Act. The scheme formulated and mandated by the Reserve Bank of India dated 24.09.2021 styled as Master Direction – Reserve Bank of India (Transfer of Loan Exposures Directions, 2021)- concerns only the stressed assets as pointed out by the Ld. Senior counsel at sub-rule 54 to 56. The ldSenior Counsel also relied on Central Bank of India Vs. Prabha Jain of t he Hon’ble Supreme Court reported in 2025 (4) SCC 38 in which at para 42, the position of the law is clearly spelt out where it is guided that the powers under section 17 of the act is limited to the validity of the measures under sub-section 4 of section 13. It is held therein that the DRT is not permitted to examine the validity of the earlier sale deed whereafter, the mortgage was executed in favour of the Bank. The ld. senior counsel emphasizes that the Tribunal cannot look into the activities of the ARCs or the lenders which do not fall under Section13(4) of the SARFAESI Act.

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As far as the submissions of Ld. Senior Counsel for the Applicant that they are ready to clear debt provided the time be granted and at the same value of the anchor bid amount notified in the publication, this Tribunal lacks powers to issue such directions under Section 17 (3) of the Act. The applicant has to work out his remedies including the compromise elsewhere. The same may be entertained by the parties at their wisdom in accordance with the Banking norms and policies outside the Tribunal. Suffice to say that, the present SA cannot be entertained nor maintained under section 17 of the SARFAESI Act. Hence the following:

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ORDER

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SA 23 of 2025 filed by the Applicant stands dismissed as not-maintainable. Parties to bear their own costs. All the pending IAs also stands closed. Copy of this order be communicated to the parties concerned.

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Sd/- (A.S.JAYACHANDRA) PRESIDING OFFICER

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DRT-I, CHENNAI

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(Dictated to Assistant who typed in the system, corrected, signed and pronounced in open court on this 03^rd Day of November, 2025)

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Lily Realty Pvt. Ltd. v. J.C. Flowers Asset Reconstruction Private Limited

Case brief

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Lily Realty Pvt. Ltd. v. J.C. Flowers Asset Reconstruction Private Limited

Case brief

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