Allowed

Shrusti Educational Academy v. Idbi Bank

DRT18 Aug 2025SA/233/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal set aside the bank's possession proceedings u/s 14 of the SARFAESI Act and the pre-sale notice due to violation of statutory procedure. The bank proceeded to take possession without first serving the mandatory possession notice u/s 13(4) to the debtor.

What did the court decide?

Proceedings u/s 14 set aside; measures initiated by the bank quashed; bank directed to redeliver possession within 15 days.

Shrusti Educational Academy versus Idbi Bank — Banking and Recovery | DRT (2025)

¶1

IN THE DEBTS^{RECOVERYTRIBUNAL'I AT HYDERABAD} DATED THIS^{THE 1 8TH DAYOF AUGUST,2025}

¶2

PRESENT:^{GUMMADI GoPICHAND,PRESIDINGoFFICER}

¶3

sA.No.233/2C-23

¶4

ShrushtiEducational^AcademY, Rep. by its^ProPrietor M r. ChittimallaNagaraj^u, S/o Ch.paPa^{Rao, aged 54} Years, R/o H.No.5-9-^{164, Sikhwadi,} Kishanpura, ...Applicant Hanumkonda,^Warangal

¶5

Versus

¶6

IDBI Bank^Ltd. Rep.by its Authortzed^officer Ground floor,^{Sri TirumalaMall,} Municipal No.5-9-130,^{Main Road,} Sikhwadi, KishanPura, ... Respondent^Bank Hanamkonda,^Warangal Sn T. Sidhar^ReddY Counsel for the the^APPlicant Counsel for^{ResPondentbank} Sri V.SureshBabu

¶7

Counsel for the the^APPlicant Counsel for^{ResPondentbank}

¶8

.'ORD.ER:

¶9

This securitization^{applicationis filed by the Applicant u/s'17 of the} SARFAESI Act,20O2^{challengingthePossession Noticedt. 20 -06. 2O23and} alsothe steps^{initiated by the Respondentfor taking physical possession} of the schedule^{property throughadvocatecommissionerand also the} Qdt.ZO.06.2023^{u/r 8(6) of Security Interest(Enforcement) Rules'} ,d^{by the Bank and to declare the same as null and void.} d * '* . - . 2. IFhe aVernftn\S 1n n pl Ca[lO , rn^{L,r'Isrir.rsia-Lur(rt-} --' * ' - ffi. "v"rhN" .. d.\ made 'rⁱⁿ r '^th^e ,.-^ap r.^-^p^licatio !r^^^{n, in} D^^^^-ztaat^brief^{**,**are as} Etanlz^und'e^r, Lrr^- - I^, 1 t^{glqppri"tJ'lavailed loan from the Respondent Bank by creating} ,A * mortgage $,;respect^{of the scheduleproperty and thereafterdueto} Appricant courd not^{pay some instalments rhe} @dffi$Pi,r. ?'

¶10

SA.No.233/23^'

¶11

¶12

Respondent initiated^{proceedingsunder the provisions of SARFAESI} Act,2oo2u/s14oftheSARFAESIAct,2oo2andtookphysical possession of the^{schedule propertythroughadvocatecommissioneron} 20.06.2023 basing^{on thewarrant issued on30 '06 '2022in} Crl.M.P.No.46 12022^{on the fileofLd'CJM, Hanumakonda'Demand} notice dt.03.^{OI.2O22 issued by the Respondentisnot valid and} possession notice^{dt'20.0 6.2023 was not served on the Applicantand it} was neither^{publishedintwo ieadingnewspapersnor affixed on the} schedule^{property. Without issuingpossessionnoticeu/ s 13(4)of the} Act, the Respondentstraightaway,^{initiated proceedingsbefore the} Ld.CJM, Hanumkonda^{u/s 14 of the SARFAESIAct' 2002 for taking} physical possession^{of theschedule property' Thereafter'the} Respondent^{issuedSale Notice dt.26.06.2123u/r8(6) of Security} Interest^{(Enforcement)Rules, 2OO2artd' the said notice was also not} served on^{the Applicant and the said notice is hlso not vatid and legall} Hence the^SA.

¶13

The Respondent^{Bank filedtheir Reply denying allthe adverse} ailegations^{made in the SA and the contentions of the Respondent} Bank, in brief,^{are as under-}

¶14

The Applicant^{having availedloan from the Respondent'committed} default in^{repaying the loan dues and so, the loan accountwas declared} as NPA on^{26.05.2022and the Respondent issued demand notice} dt.O3.Ol.2O22^{and also possession notice dt'05'03'2122 and the said} possession notice^{was published in two daily newspapers' Thereafter'} the Respondent^{initiatedproceedingsu/s14 of the SARFAESIAct'} 2Oo2 by fi1ing^{Cr1.M.P.No'46} I^{22 before the Ld'CJM' Hanumakonda for} appointment^{of advocate commissioner for taking physicalpossession of} the schedule^{property and the advocate commissioner appointed by the} ,^{took physicalpossession of the schedule property'The} notice dt.20.0^{6.2023was published in newspapersand also} Nthe^{schedule property.Thus, the Respondent Bankhas duly} 1 0 tS^{Xp*t{t5tprocedure laid down under the provisionsof SARFAESI}

¶15

sa.No.233/23

¶16

Act, 2OO2 and^{Rules made thereunder. Accordingly, Respondent} Bankprayed to^{dismiss the SA'}

¶17

Heard Ld. Counsel for^{the Applicant and ld'Counselfor the} Respondent.

¶18

Now, the^points that^{arisefor considerationare,-}

¶19

i) Wetller the Applicant^{has establishedang ualid groundsfor} challenging the^{PossessionNotices dt'05'03'2022&} 20.06.2023and also^{ttesteps initiated bg the Respondentfor} taking phgsical^{possession of the schedule propertgu/ s 14 of tte} SARFllESlAct'^{2002 ?}

¶20

ii) Whether the Applicant^{has established any ualid grounds for} challenging the^{impugnedNotice dL26'06'2023u/r 8(6) of Seatritg} Interest (Enforcement)^{Rules, 2002 issuedbg tlrc bank againstthe}

¶21

schedule ProPertg?

¶22

iil To what relief?

¶23

Potnts No.ft)&(ill:'

¶24

During the course^{of arguments,Ld' Counsel for the Applicant and Ld'} Counsel for the^{RespondentBank reiterated their respectiveversions} as stated suPra.

¶25

ThereisnodisputeregardingthefactthatApplicantavailedloanfrom the Respondent^{bank and created mortgagein respect of the schedule} property and thereafter,^{committed defaultin repaymentof loan dues} and so, the loan^{accountwas classi{iedas NPA and the Respondent} Bank initiated^{proceedings under the provisions of SARFAESI Act'} 2002.

¶26

B. ThespecificcontentionoftheApplicantisthattheBankwithout serving^{possessionnotice u/s13(4) of the SARFAESIAct, 2002'} lraightaway^{initiated proceedings u/s 14 of the Act, 2002 for taking} possession of the schedule^{property throughadvocate} er as per the^{orders of Ld.C.JM,Hanumakonda andthe} ioner appointed by the^{Ld.CJM forciblytaken}

¶27

- ssion of the secured^{asset on 26.06.2023and the bank} I I rugnm"'

¶28

td issued paisession^{notice dt.2o.06.2O2gafter initiating proceedingsu/s}

¶29

S'A.No.233/23

¶30

14 of the Act,^{2OO2 and the same was served on the Applicanton} 26.06.2023. The^{further contentionof theApplicantisthat} theRespondent^{Bank also issued Pre-Sale Notice dt.26.o6.2o23u/r 8(6)} of Rules, 2oo2^{and so, the said notice is also not legal and liable to be} set aside.

¶31

Per contra, the^{Respondentbank contended that the Bank has duly} followed the^{prescribedprocedurecontemplated under the provisions} of SARFAESI^{Act, 2OO2 and Rules made thereunderin issuing all the} relevant notices^{to the Applicant and also in taking physical possession} ofthesecuredassetu/s14oftheSARFAESIAct,2oo2.

¶32

¶33

The Respondent^{bank inorder tosubstantiate their contention'} enclosed relevant^{material documentsalong with the Reply filed by} them. As^{per the said documents, it is clear that on 03'01 '2022' t]rle} Respondent Bank^{issued demand notice u/s 13(2) of the SARFAESI} Act, 2OO2 and^{the said notice is received by the Applicant as evidenced.} by the postal^{acknowledgementsfiled by the Bank. The Respondent} bank also^{filed copy of the possessionnotice dt'os'o3'2022 issued by} the Bank but^{no material is placedby the Bank for establishingthatthe} said possession^{notice is served on the Applicant' The said possession} notice dt.05.03.2022^{was published indailynewspapers as evidenced} bythecopiesofpaperpublicationfiledbytheRespondentBank. However, no^{material is placed by the bank for establishingthat the} said notice^{is affixed on the schedule property'However,it is pertinent} to note that^{without serving possessionnotice u/s 13(4) of the Act,} 2OO2 to the^{Applicant, the Respondentbank fited Crl'M'P'No'46/ 22 ]uls} 14 0f the SARFAESI^{Act, 2002 before the Ld.cJM' Hanumakondafor} appointment^{of. advocate commissioner and thesaid advocate} LssionerappointedbytheLd.CJM,Hanumakondahadtaken ,..: ssession of^{the scheduleproperty from the Applicant'So' the} ,;.,,i Respondentintakingphysicalpossessionofthesecured X.gl* "En\o^{of the SARFAESI Act, 2oo2 throughadvocatd} 1 8 tU8riffi""ioJ"i is in viotation^{of the provisions of sARFAESI Act,2oo2} made thereunder^{and so, the said steps initiatedby the Bank}

,"#"
,#,

$1.

Sl;;ry

SA.No.233/23

without serving possession notice to the Applicant are^{not tenable and} so, the said proceedings are liable to be set aside.

¶40

¶41

In the instant case, the Respondent bank issued Notice dt.26.O6.2O23 u/r 8(6) of Rules, 2002 without serving^possession notice on^the Applicant and so, the said impugned notice dt.26.O6.2O23 is^{also not} valid and liable to be set aside. The Respondent Bank^canproceed further only basing on thepossession notice dt.2O.O6.2O23 which^is admittedly served on the Applicant and^published in^{daily newspapers} and also affixed on the schedule^property as^prescribed under^Rule 8(1)&(2) of Security Interest^{(Enforcement)Rules, 2002. So this point is} answered accordingly.

¶42

t2. So, in view of the above facts and circumstances^{of the case, it is clear} that the Respondent Bank w'ithout serving^{possessionnotice u/s13(4)} of the SARFAESI Act, 2OO2, in a^{hurried manner, initiated proceedings} u/s 14 of the SARFAESI Act,20O2^{and took physical possession of the} schedule property through advocate^{commissionerand also issuedthe} impugned Pre-Sale Notice dt.26.06.2023 u/r^{8(6) of Rules,20O2.}

¶43

¶44

So, in the circumstances, I am of the^{opinion that that the proceedings} initiated by the Respondent bank u/s^{14 of the SARPAESIAct, 2OO2for} taking physical^{possessionof the schedule propertythrough advocate} commissioner pursuant to the orders^{of Ld.CJM, Hanumakondaare not} tenable as the same are^initiated without^{serving possessionnoticeto} the Applicant and so, the said^{proceedings are liable to be set aside'}

¶45

Point No.liiil

¶46

In the result, SA 233 /2[23is allowed by^{quashingthemeasures} initiated by thg Respondent for taking^{physical ,, possession of the} e properties through advocate^{commissioner u/ s14 of the} 1 Act, 2OO2 pursuant to the orders^{of Ld.CJM, Hanamakonda} e impugned Notice of Sale^u/ r^{8(6) of SecurityInterest} brcefieht) Rules, 2OO2^{dt.26.06.2023 issued by the Respondent.} the Respondent is herebv directed^{to redeliverthe} t I tm#di"&, r slltfpossepgiqi of the schedule^properties to^{the Applicantwithinfifteen}

¶47

W,ffi#

¶48

5,A.No.233/23

¶49

days from the date^{of receipt of this order whichwas takenpossession} by the Advocate Commissioner^{on 20.06'2023 pursuant to the orders of} Ld.CJM, Hanumakonda in^{Crl.M'P.No.46122.The Respondent is at} liberty to proceedfurther^{against the scheduleproperties by strictly} following the procedure^{contemplatedunder the provisionsof} SARFAESI Act,2OO2^{and Rules made thereunder'}

¶50

Consequently, the^{Interlocutory Applications, pending if any, shall} stand disposed of.^{No order as to costs'}

¶51

Communicate a copy^{of this Order to the partiesconcerned'}

¶52

(DictotedtotlrcP.S.,tronscibedbgher,conecte4signedandpronouncedbgmein ih. op"n court on this^{the 18thdaA of Augus|2025)'.}

¶53

sd/-
(G. GOPICHAND)
PRESIDING OFFICER

¶54

&1r

¶55

oir-r, nwEneaao

¶56

Shrusti Educational Academy v. Idbi Bank

Case brief

What is this about?

What did the court decide?

Shrusti Educational Academy v. Idbi Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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