Dismissed

M S Balaji Business Corporation v. State Bank of India

DRT13 Oct 2025SA/267/2022

Case brief

AI extract

What is this about?

The Debut Recovery Tribunal-Discussed the Securitization Appeal filed by a borrower challenging the bank's enforcement measures. The Court held that the bank complied with notification requirements and failed to find merits in the applicant's contention to set aside the proceedings, dismissing the application.

What did the court decide?

The present Securitization Application is dismissed; pending interlocutory applications are disposed of; no order as to costs.

M S Balaji Business Corporation versus State Bank… — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERYTRIBUNAL-I AT HYDERABAD

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DATED THIS THE I3TH DAY OF OCTOBER,2C25

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No.267 ./2c22

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Between:

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M/s. Balaji Business Corporation Office at: H.No.9- t- 1 10/3, Bhagath Nagar, Karimnagar, Karimnagar District,

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Rep. by its Managing partner: A. Balaji.

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) Akula Balaji S/o. Sri A. Narasaiah Aged about 49 years, MaIe

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Smt. Akula Shoba W/o. Sri Akula Balaji, Aged about 45 years, Male

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(The Applicants are residing at H.No.9-1-1 10/3, Bhagath Nagar, Karimnagar, Karimnagar District Applicants

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Versus

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State Bank of India SME Branch, Karimnagar Now at:

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Stressed Assets Recovery Branch 2"d Floor, TSRTC Commuter Amenity Centre, Bus Terminal Complex, Koti, Hyderabad Rep.by its Authorized Officer Respondent

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Counsel for the Applicants Counsel for the

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SA.No.267/2022

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.:ORDERi

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l. The Applicant fired the present Securitization Application under section L7 of the SARFAESI Act, challenging possession Notice dated O2.O9.2O22 and the Sale Notice dated 15.02.2023 issued by the Respondent Bank lixing auction of the apprication schedule property on 28.O3.2023.

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The averments made by the Applicants in the application, in brief, are as under:-

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The Applicants No. 1 is the partnership Firm engaged in pharma Distribution. In the course of its business, the Applicants availed Cash Credit facilities from the Respondent Bank. The Applicants were regular in repayment of the loan amounts and paid substantial amounts towards principle and interest. However, later on, due to the unfavourable market conditions and the affect of the COVID-l9, ttre Applicants ran into temporary liquidity crunch for the past several months, which forced the Applicants to delay in making payments to the Respondent Bank.

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ii) The Respondent Bank has issued Demand Notice dated 3O.O4.2O22 under section lS(2) of the SARFAESI Act, 2002, demanding the Applicants to pay an amount of Rs.3,56,g4,546/_ within 60 days. The Applicants, with a bonafide intention made several visits to the Respondent Bank for negotiations to regularize the amount but, Respondent Bank never shown any interest to regalarize the loan accounts. After initiating the proceedings under the SARFAESI Act, 2OO2, the Applicants have deposited an i-f..;$.t-!Z.oo^{Lakhs with the Respondent} Bank. The issued Possession Notice d.ated, 02.09.2022

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f the assets.

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rrt X+flfiIic&frts t does not fall within the purview of

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rming Asset (NpA) under the SARFAESI Act,

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the Demand Notice, the Respondent Bank

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SA.No.267/2022

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failed to provide details of sanctioned facilities, execution of documents, rate of interest allegedly charged, in the Demand Notice in compliance of section l3(3) of the SARFAES I Act, 2OO2. The Possession Notice d,ated, O2.O9.2022 was neither affixed at the conspicuous place of the schedule property nor published in two leading newspapers in the locality within time, as stipulated under Rule 8(1) and B(2) of the security interest (enforcement) Rules,2oO2. The schedule property was not offered as security to the Respondent Bank for the purpose of the facilities mentioned at Sl.No.(6) in the Demand Notice.

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iv) During the pendency of the S.A, the Respondent Bank issued Sale Notice dated 15.02.2023 fixing the auction of the schedule property on 28.03.2023. The Respondent Bank has failed to affix the said Sale Notice at the conspicuous place of the schedule property and has also failed to publish the said sale Notice under Rule 8(7) and 9(l) of the Rules, 2002 respectively. The authorized officer has issued both the notices under Rules g(6) and 9(1) of the Rules, 2002 on the same day, which is illegal in view of the amended provision of section l3(g) of the SARFAESI Act, 2OO2. The securit5r interest over the schedule property was not registered with the central Registry as contemplated under section 2o of the SARFAESI Act, 2002. The Respondent Bank has not obtained correct and fresh valuation in respect of the Schedule property from the approved valuer as contemplated under Rule g(S), prior to issuance of SaIe Notice under Rule g(6) of the Rules, 2OO2. Trre Respondent Bank has failed to provide full description including the extent of structure/ built up area and in the absence of the same th_e*irrlpugned sale notice is not proper and arbitrary. Hence, QA

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o. R6spondent eant fiti Repry statement and Additionar Reply

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ir,ly1l1ll"^:. ]rfff.s &fr?,frl!ffiS thelHverse allegations made in the application.

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?:r4 ent Bank, in brief, are as under:_

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SA.No.267/2022

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i) The Applicants, after availing various loan facilities, committed default in making repayments to the Bank and as such the Bank has classified the loarr account as Non performing Asset (NpA) on o5.o4.2o22 as per the R.B.I Guidelines and thereafter issued Demand Notice dated 3O.O4.2O22 for the recovery of a sum of Rs.3,56,84,546/- as on 3O.O4.2O22. All the details as required under Section 13(3) of the SARFAESI Act, 2OO2 are furnished in the Demand Notice. As the Applicants failed to repay the entire dues even after receipt of Demand Notice, the Respondent Bank issued Possession Notice dated 02.09.2022 under Section l3(4) of the SARFAESI Act, 2oo2. The said possession Notice is served on the Applicants personally as well as by registered post. The said Possession Notice has been affixed on the schedule property and thereafter the said notice has been published in "Mana Telangana", "Telugu Daily', and in "Financial Express,, "English Daily'' dated O2.O9.2O22.

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ii) The Applicants have visited the Bank many times and at their request statement of accounts have been furnished to them. They have verilied all the statements of accounts but, they have not disputed the classilication of loan accounts as Non performing Assets (NPA) at any point of time. All the amounts paid by the Applicants have been duly credited to their loan accounts.

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iii) As there is no interim order of Stay, the Respondent Bank has rightly proceeded for the sale of the schedule property by issuing Sale Notice dated 15.02.2023 under Rule g(6) of the Rules, 2002 fixing date of auction on 2g.O3.2O23. The Sale Notice is also affixed schedule property. The Sale Notice is duly published in the ress", "English Daif and "Eenadu", "Telugu Daily', 2023 as per Rule 9(1) of the Rules, 2OO2. The

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- has obtained the valuation reports from their

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r-l rC I 3 06firdHsiled*#ruers for fixing the reserve price. The Respondent i$fstered the security interest with the Central Registry

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(i-L",#-,-.5 -r,:.r,:,:,ffi, n 20 of the SARFAEST Act, 2OO2. The Applicants have

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SA.No.267/2022

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failed to repay the outstanding dues and redeem the mortgage even after receipt of Demand Notice and possession Notice and therefore they cannot take shelter under Section 13(g) of the SARFAESI Act, 2OO2 and the rules made thereunder while enforcing the securit5r interest over the application schedule property and as such the present S.A is liable to be dismissed.

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Heard both the Ld. Counsels.

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Now, the points that arise for consideration are,-

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Whether the Applicants have made any valid grounds for setting aside the proceedings initiated by the Respondents under the SARFAESI Act against the application schedule properties?

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ii) To what relief?

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Potnt No.(l)r

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There is no dispute regarding availing of various credit facilities by the Applicants from the Respondent Bank. The Applicants have also admitted that, due io liquidity crunch they could not pay the loan instalments and their loan accounts were classilied as NpA by the Respondent Bank and the Respondent Bank has issued Demand Notice dt.3}.O4.2022 u/s.13(2) of the SARF.ARSI Act.

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Ld. Counsel for the Applicants contended that, the Respondent Bank has not mentioned the details of sanctioned facilities, execution of documents, rate of interest allegedly charged, in the Demand Notice in compliance of section l3(3) of the SARFAESI Act, 2OO2. In this regard Counsel for the Applicants has placed his reliance on a decision of .'ble High Court of Calcutta in W.P.No.78S3(W) of 2OOg _

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,<\ Ghosh & anr Vs. The Bank of Baroda,, decided on

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t* .o7.20 in the Honble High Court has held as under:-

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u * 13 qcTry

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ploin reoding of the oforesoid provisions it will oppeor from sub-

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Section 73 thot the notice to be issued by the secured creditor under of the Act sholl give detoils of the omount poyoble by the borrower

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SA.No.267/2022

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on the secured ossets intended to be enforced by the secured creditor in the event of non-poyment of secured debts by the borrower. IJnfortunotely while serving notice under Section 13(2) doted 0i.03.2006 no detoils of the omount poyabte by the borrower hos been supplied to the borrowers. Only o totol omount of Rs.3,16,824/- was demanded inclusive of interest up to 30.77.2005 (Annexure - B to the affidovit-in-opposition) which does not indicate the omount poid by instolments by the borrower in detoil showing progressive totol of debt and Uedit balance resulting therein the totol demond of Rs.3,16,824/-. This is o serious infirmity in issuing statutory notice under Section 13(2) of the SARFAESI Act, 2002 which vitiotes the entire procedure adopted for realisation of non-performing ossets by ouction sole of the mortgoged property,,.

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By placing his reliance on the aforesaid judgment, Ld. Counsel for the Applicants contended that, the Demand Notice dt.30.04.2022, issued by the Respondent Bank u/s.13(2) of the SARFAESI Act, is tiable to be set-aside and consequently all further proceedings taken out by the Respondent Bank against the application schedule property are also liable to be set-aside.

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8' Per contra, Ld. Counsel for the Respondent Bank contended that, al1 the details as required under sub-section 3 of Sec.13, including the outstanding amounts account-wise payable by the borrower-guarantors and the details of documents executed by them etc., are all mentioned in the Demand Notice issued u/s.13(2) of the SARFAESI Act and so there is no infirmity in the said Demand Notice dt.3o. o4.2o22. Ld. Counsel for the Respondent Bank further contended that, the Applicants, after issuance of Demand Notice, visited the Respondent Bank several times and at their request, the Respondent Bank has provided them the statements of accounts and after going through the same they never objected the outstanding dues payable by them.

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through the Demand Notice dt.30.04.2022, a copy of which by the Respondent Bank along with its Reply Statement. t Bank has provided the details of loan and securit5r ted by the borrower-guarantors, account-wise 1 3 &["?ffii"J.ilr.. and in" total debt payable by the borrowerApplicants in their application have themselves stated of the said Demand Notice, they visited the Bank several times and negotiated for regularization of the

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SA,No,267/2022

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loan accounts and that they have also paid a sum of Rs.32.00 lakhs into the loan account. Nothing prevented the Applicants to obtain the statement of account even after their visiting the Respondent Bank. If the Applicants had any dispute with regard to the Demand Notice dt.3O.O4.2O22 issued by the Bank, they were always at libert5r to issue their objections as contemplated u/s. 13(3,{) of the SARFAESI Act, to which they are entitled to, and admittedly, they have not raised any objections to the said Demand Notice. In view of the above, the contentions of the Applicants with regard to the legality of the Demand Notice, do not hold any water and same are hereby rejected. The aforesaid^judgment relied upon by the Applicants is not applicable to the facts and circumstances of the case at hand.

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The Respondent Bank, in order to substantiate its contention that it has duly followed the procedure under the SARFAESI Act and the Rules made thereunder, has Iiled material documents along with its Reply Statement.

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As per the copy of the Possession Notice dt.O2.O9.2O22, issued by the Respondent Bank u/s. 13(4) of the SARFAESI Act, it is very clear that the Applicants have received and acknowledged the receipt of the said Possession Notice by the Applicants on 02.09.2022 itself. The Respondent Bank has also filed copies of postal acknowledgements in respect of service of Possession Notice by Registered Post too. The Respondent Bank has also filed copies of photographs taken at the time of affixture of Possession Notice on the secured asset. The Respondent Bank has also filed copies of publication of Possession Notice in^,Mana Telangana'and 'Financial Express' newspapers dt.O7.O9.2022. So, it is that the Respondent Bank has duly followed Rule S(1) & 8(2)

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'fr, ty Interest (Enforcement) Rules, 2002, while issuing

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Notice dt.O2.09.2022 u/s. 13(4) of the SARFAESI Act.

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(r As dt.15.O2.2O23, issued by the Respondent

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\t%. Bank urr-dCr Rule 8(6) of the Rules, 2OO2 is concerned, the Respondent .__-- .ev.idencing service of the said notice on the Applicants. The Respondent

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SA.No.267/2022

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Bank in its counter-affidavit filed in the stay petition, has filed copies of photographs taken at the time of affixture of the sale Notice on the secured asset in compliance of Rule 8(7) of the Rules , 2Oo2. Further, the Respondent Bank has also filed Valuation Reports obtained by it from its empanelled valuers for fixing the Reserve price of the schedule property. The Respondent Bank has also filed copies of publication of the sale Notice, as required under Rule 9(1), in two newspapers, fixing the date of auction of the schedule property on 2g.o3.2o2g. The Respondent Bank has also filed a copy of registration of the secured assets with GERSAI as required u/s.20 of the SARFAESI Act.

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13' Admittedly, no sale took place on 28.03 .2023 pursuant to SaIe Notice dt.15.02.2023 and as such it is of no importance to delve into the issue whether the said Sale Notice issued by the Respondent Bank is legally validly or not.

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14' In view of the above, I do not find any merits in the present SA filed by the Applicants and same is liable to be dismissed. Accordingly, this point is answered against the Applicants and in favour of the Respondent Bank.

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Point No.liil:-

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In the result, the present Securitization Application is dismissed. consequently, the Interlocutory Applications, pending if dfly, shall stand disposed of. No order as to costs.

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communicate a copy of this order to the parties concerned.

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tronscribed by her, corrected, signed ond pronounced by me in the open court on this the 73h doy of

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M S Balaji Business Corporation v. State Bank of India

Case brief

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M S Balaji Business Corporation v. State Bank of India

Case brief

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