Partly allowed

Bommak Prem Kumar v. Union Bank of India

DRT30 Apr 2025SA/263/2023

Case brief

AI extract

What is this about?

In a securitisation application challenging auction proceedings, the debtor alleged the bank failed to properly affix the possession notice at the secured asset as mandated by law. The Tribunal held that this procedural defect vitiated subsequent measures.

What did the court decide?

Securitisation Application allowed; possession notice dated 23.02.2022 set aside; all subsequent measures rendered invalid.

Bommak Prem Kumar versus Union Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDEMBAD

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DATED THIS THE THIRTIETH DAY OF APRIL. 2025

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PRESENT: SH. MMESHWAR KOTHE. B.Co:..r., L.LB. (Hons.), M.A. PRESIDING OFFICEP

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SECURMSATION APPLICATION NO, 263 OF 2023

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Between:

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Bommak^prem Kumar S /o Rajatingam Age: 50 years, Occ: Business H. No. 1-9/10 Bommak Brothers Colony Near Ambedkar Statue Boduppal, Hyderabad-g2.

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2, Bommak Sujatha Wo^Bommak Prem Kumar Age: Major, Occ: Business H. No. 1-9/10 Bommak Brothers Colony Near Ambedkar Statue Boduppa l, Hydera bad-92. ....Applicants.

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And

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Union Bank of India Asset Recovery Branch 249/3RT 1st Ftoor Main Road, S,R. Nagar Hyderabad-500038. .....Respondent.

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Counsel for the Applicants : Mr. A. Kiran Raj. Counsel for the Respondent : Mr. Srinivasa Rao Chakrala. fu.t*se

sA 26312023

-: o3-8EB:-

The Applicants filed the^present Securitisation Application^u/s.17 of the Securitization and Reconstruction of^{FinancialAssets and} Enforcement of Security Interest Act, 2002^{(hereinafterreferred} to as "SARFAESI Act 2002") assailing the^Rule 8(6)^{Notice dated} 22.05.2023 issued by the respondent bank fixing the date^of auction as 27.06.2023.

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The case of the applicants as^per the averments in the SA,ⁱⁿ brief, is that applicants availed over draft facility of^Rs.1.80 crores on 24.03.2017 against the security of SA^schedule properw. Respondent bank classified the loan account as NPA and issued notice u/s 13(2) of the SARFAESI Act.^Applicants raised objections to the demand notice to which respondent^had not passed or communicated any order. Applicants committed default in repayment of loan due to loss in^hotel business^during Covid.19 Pandemic. Respondent has not agreed^for reschedulement of the loan account. Applicants deposited a total amount of Rs.175 lakhs on various occasions in the^post demand notice. These^payments are reflected in the statement of account. When the applicants approached for an OTS^{in June,} respondent informed about the sale^proceedings under Rule 8(6) dated 22.05.2013. The notice of sale dated 22.05.2013^{has not} been affixed on the secured asset nor served on all the^parties. Applicants deposited an upfront payment of Rs.50 lakhs on 19.07.2022 and the respondent bank orally agreed for the repayment schedule proposed in the letter dated L9.O7.2022. The respondent bank has not followed the due^procedure while classiFying the loan account as NPA. nor issued demand notice )^t'ro- -r9 r>/| ....(\ " '

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sA 263/ 2023

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u/s 13(2) nor the possession notice u/s 13(4) of the SARFAESI Act read with Section 13(8) and Rutes S(1), B(2) and 8(7) of the Security Interest (Enforcement) Rules, 2OOZ.

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Respondent company filed reply statement. The submissions in the reply statement in brief, are that the allegations levelled against the respondent bank are baseless and contrary to the factual position. Though applicants averred in the SA that they have raised objections to the demand notice u/s 13(2), they failed to place on record proof of the same. Similarly, applicants pleaded to have approached the respondent for OTS, they have not placed any proof on record in support of their contention. While giving break-up of payments made between 79,07,2022 and 23.05.2023. applicants are sitent about the default in payment between 24.03.2017 and tg.O7.ZO2Z. Respondent denied the allegation of non-issuance of possession notice u/s 13(4) and placed on record photostat copy of possession notice published in Namasthe Telangana and Times of India on 27.02,2022. The impugned notice of sale has been duly served on the applicants and published in two newspapers on 27.05.2023 in Eenadu and Business Standard dailies. The respondent obtained two valuation reports for different engineers. Hence, respondent bank prayed for dismissal of the SA.

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Right of arguments of applicants forfeited vide docket order dated 08.04.2025. Heard the learned counsel appearing for the respondent bank. perused the material placed on recorda

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/29\i^ -<.,9>^' (:v' '/-A'\''

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sA263l2oz3

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While reiterating learned^{counsel for the the pleadings respondent taken bank in the prayed replyfor} dismissal statement,^of the SA^{in the interest of justice'}

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Now the^{points that arise for adjudicationare: -}

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'' ;t Whether the^{APPlicantsmadeoul} on, valid^ground for^quashingthe ,itic, ittied^{hY lhe resPondent} under^{rule 8(6) of the SecuritY} Interest^{(Enforcement)Rules'20-02} against^{the SA schedule} ProPertY?

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ii) Reliet?

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Point No.(i)t

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Reportedly^{the sale proceedings pursuantto notice prior to sale} dated 22.05'2023^{did not materialise'Hence' nothingsurvives} for consideration^{on the grievances relating to the impugned} notice^{prior to sale dated 22'05'2023'}

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Since the^{applicants admitted of receiptof demand noticeu/s} 13(2) of the^{SARFAESIAct and subsequent objectionsto the} same, this^{issue needs no consideration' The other contention} relating to^{non-compliance of Rules 8(1) and 8(2) of the Security} Interest^{(Enforcement) Rules, 2002 is concerned'thoughthe} respondent^{bank placed material evidencing publication of} possessionnoticeintwonewspapers,thepleadingsare completely^{silent as to complianceof provisionof Rule 8(1) both} in serving^{the possessionnotice on the borrowers and affixture} of the same^{at the conspicuousplace of the securedasset'} Affixture of^{possessionnotice is a mandatoryrequirement under} Rule 8(1) of^{Security Interest(Enforcement)Rules' 2002'Non-}

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ff.r*'e L/

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sA 263 / 2023

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compliance of Rule 8(1) makes further proceedings vitiated. Even the possession notice annexed to the reply statement at page 12 of the material paper is incomplete. Therefore, applicants have made out a valid ground for setting aside the possession notice dated 23.02.2022.

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In view of the foregoing discussion, the SA deserves to be allowed setting aside the possession notice dated Z3.OZ.ZOZ2 making all subsequent measures as invalid.

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Point No.(ii):

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In the result, the SA is allowed by setting aside the possession notice dated 23.02.2023. However, this order does not preclude the respondent bank to issue possession notice afresh stricHy in accordance with the provisions of the SARFAESI Act and the Rules there under.

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

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LZ. Communicate a copy of this order to the parfles concerned and upload in official Web^portal.

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(Dictoted to the Steno, signed and prcnounced by fie in the open coutt on thk the 3d doyolAprit,2o2st.

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Ay*,f; / l,/ '! (RfiqESHWAR KOTHE) PRESIDING OFFICER

Bommak Prem Kumar v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Bommak Prem Kumar v. Union Bank of India

Case brief

What is this about?

What did the court decide?

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