Partly allowed

Smt Kandi Uma v. Canara Bank

DRT30 Oct 2025SA/255/2022

Case brief

AI extract

What is this about?

In a Securitization Application under SARB Act, 2002, the court held that an auction notice became infructuous. However, it allowed the application by setting aside a possession notice issued in non-compliance with Rule 8(2) of the Security Interest (Enforcement) Rules, 2002, while reserving the bank's right to issue a fresh notice.

What did the court decide?

Application allowed by setting aside the possession notice dated 20.10.2020 issued under sec.13(4) of the Act.

Smt Kandi Uma versus Canara Bank — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL - II^ATHYDERABAO

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DATED THIS THE 3OTH DAY OF OCTOBER, 2025

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PRESENT: SH. RAMESHWAR KOTHE, B.COM, L.LB.^{(HONS.),N4.A.} PRESIDING OFFICER

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Securitization Application No.255 OF 2022

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Smt. Kandi Uma D/o Veera Mallaiah Aged 46 years, Occ: Business Muvva Residency, Street No.18 Guatham Nagar, Malkajgiri Hyderabad, Telangana State 500015

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.......Applicant.

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Versus

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The Authorized Officer Canara Bank Gautham Nagar Branch Malkajgiri, Hyderabad 500047

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The Chief Manager Canara Bank

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Gautham Nagar Branch Malkajgiri, Hyderabad 500047

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....Respondent.

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Counsel for the Applicant : Mr, Narendra Kumar luturu

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Counsel for Responclent Bank : Mr.A.V.S.S. Prasad

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-:ORDER:-

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The Applicant filed the present Securitisation Application u/s 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Act") to declare the action of the respondent bank against the application schedule property as non est law and to set aside the e- auction sale notice dated 25.09.2022 fixin9 auction on 31.10.2022 in respect of sA schedule prcperq h(vrq

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Page 2 of4

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SA No.2s512022

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The case of the applicant,^{in brief,is that the applicantavailed} loan facitity from the^{2nd respondent bank against mortgageof} application schedule^{propertyDue to lockdownthe applicant suffered} financlal losses resulting^{classification of loan account as NPA'} Without considering the^{requestto close the accountunder OTS the} respondent bank issued^{impugned e-auctionsale noticewithout} serving mandatory^{Sec.13(2) and 13(4)noticesand failed to follow} Rules 8(1), 8(2), 8(5),^{8(6), 8(7) and 9(1) of the Security Interest} (Enforcement) Rules, 2002^{("Rules"for short).}

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The respondent bank^{1 and 2 ("respondent" hereinafter)flled} reply statement^{along with documents.The submissionsbriefly, are} that the appllcant^{availed housingfacility of Rs 7 lakhsand OD facility} of Rs.3 lakhs in^{the year201Oby creating security interest over the} schedule^{propertyand defaulted in repayment thereafter'The} account became^{NPA on 08.01.2020and Securitizationproceedings} have been initiated^{by way of serving demand noticedated} 03.02.2020 and^{possessionnotice dated 20} '10'2020,^{afflxing the} same on secured^{asset and publishing in 'ManaTelangana'and} 'Business Standard'^{Telugu and English newspapers respectivelyon} 2A.70.2020. After^{obtaining valuation from the approvedvaluer' the} respondent bank^{issued sale noticealong withredemptionnoticeThe} auction on 31.10.2022^{failedfor want of bidders'}

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Representative of^{learned counsel for applicant reported that} orders may be^{passed based on records Heard learned counsel for} the respondent^{bank.Perused the materialplaced on record'}

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During the^courseof arguments learned^{counselfor the} that after availing^{credit facilities the} respondent bank^contended same as^per agreed-^{terms and hence} applicant failed to^{repay the}

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Page 3 of4

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sA N0.255/2022

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account became NPA. The schedule property is the security interest against which Securitization proceedings have been initiated. The learned counsel while referring to the documents annexed to reply statement as proof of compliance of due procedure as prescribed in the Act, 2002 and Rules thereunder, sought for dismissal of the SA. He further stated that the impugned auction did not materialize for want of bidders.

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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 any of the measures of the respondent against the SA schedule propefty, as prayed for?

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ii) To what relief?

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Point No.(i):

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Reportedly the auction sale scheduled on 31.10.2022 failed for want of bidders. Hence SA has become infructuous with regard to auction sale and connected issues pertaining to compliance of Rule 8(5), 8(6), 8(7) and 9(1) of the Rutes, 2002.

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Admittedly the appticant availed credit facilities against mortgage of application schedule property as security and committed default. Hence NPA cannot be questioned. As per documents filed by the respondent bank, demand notice dated 03.02.2020 was served on the applicant. Possession notice dated 2O.lO.2OZO was sent by the registered post to the applicant and affixed on secured asset. However, the possession notice dated 2O.7O.ZO2O was published on 28.70.2O2O which is not in accordance with Rule 8(2) of the Rules, 2002. The non-compliance of Rule 8(2) of the Rules, 2OO2 vitiates the possession notice and accordingly 54 deserves to be allowed by setting aside the possession notice/,M,t.t9 !-./ 5a'"

Page 4 of 4

sA No.255/2022

Point No.(ii):

In the result, the^{Securitization Applicationis allowed by setting} aside the^{possession notice dated 20.Lo.2o2oissuedunder sec.13(4)} of the Act,^{2OO2by the respondent bank'}

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However,^{this order does not preclude the respondentbank} fromissuingpossessionnoticeafreshstrictlyinaccordanceWithlaw'

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Consequently,^{the InterlocutoryApplicationspending' if any'} shall stand closed'

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12.NoorderaStocosts.Communicateacopyofthisordertothe parties concerned and^{upload in the official website'}

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(Typed to my dictotion^{by the P5,corrected, signedandpronounced by me in the opencourt on this} the^{j|th ddyof October,2025).}

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Av,^'*' < >>'" f^l/ (RAlerEsHwAR KOTHE) PRESIDING^OFFICER

Smt Kandi Uma v. Canara Bank

Case brief

What is this about?

What did the court decide?

Smt Kandi Uma v. Canara 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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