Dismissed

Sri Nataraj S and Others v. Bank of Maharashtra

DRT31 Dec 2025SA/27/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal-II, Bangalore, dismissed a Securitization Application challenging the Bank of Maharashtra's possession notice. The Tribunal upheld the bank's compliance regarding security interest registration, newspaper publication, and notice affixture, and deemed service on the proprietor sufficient for a proprietary concern.

What did the court decide?

Securitization Application SA No.27 of 2024 stands dismissed; all pending IAs closed; no orders as to cost.

Sri Nataraj S and Others versus Bank of Maharashtra — Property and Title | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-II, BANGALORE

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Dated of 31^st day of December, 2025

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PRESENT: SHRI T. RAJESH Hon’ble Presiding Officer

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S.A.No.27 of 2024

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Nataraj.S., S/o.Shivanayya.

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Mrs.Rajini, W/o.S.Nataraj.

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Both are residing at: No.374, 10^th Cross, Mahalaxmi Layout, Bangalore – 560 086.

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And Also at: Door No.1-166A, Old Bangalore Road, Bhimanagara, Kollegal – 571 440.

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. . . Applicants.

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Versus

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The Authorised Officer, Bank of Maharashtra, Madhuvanahalli Branch, Kollegal Chamraja Nagara – 571 440.

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And Also: The Zonal Office, Bank of Maharashtra, 2^nd Floor, No.15, Police Station Road, Basavanagudi, Bengaluru – 560 004. . . . Respondent.

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SA No. 27/2024

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Ld. Counsels on record/appeared :-

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Counsel for Applicants :- Sri M.A.Rajendra. Counsel for Respondent :- Ms.Divya Purandar.

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: - O R D E R - :

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The Securitization Application, SA is filed under section 17 of the Securitization And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act; herein after been referred to as SARFAESI Act or the Act, as the case be challenging the measures leading to issuance of impugned possession notice dated 26.12.2023.

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The Applicants availed Agricultural Term Loan of Rs.1,00,00,000/- to meet their working capital. It is the case of the applicants that the applicants are regular in their repayments and later they could not service the loan account due to the loss incurred during COVID-19 disaster period as a result of which the loan account was classified as Non-Performing Asset on 15.10.2023. Subsequent to which Demand Notice dt.16.10.2023 and the impugned possession notice dt.26.12.2023 were issued. It is further case of the applicants that the respondent bank has failed to register the security interest created over the schedule property with the Central Registry, the respondent failed to publish the impugned possession notice in two leading newspapers, the

SA No. 27/2024

respondent failed to affix the impugned possession notice on the conspicuous part of the schedule property and the respondent merged compound and penal interest and other charges during the COVID-19 disaster period. The applicants also contended that they deposited Rs.4 lakhs to the loan account after classifying the account as Non Performing Asset to show their bonafide and to establish that they are not willful defaulter. The applicants further contended that even though the loan falls under the category of Agricultural and its allied activities the respondent had not charged rate of interest in accordance with the RBI Guidelines. The applicants also contended that the respondent failed to issue the demand notice to the concern M/s.Pratap Pradeep Rajini & Nataraj Farm when the loan was sanctioned to the concern to which the 1^st applicant was proprietor who has given guarantee/collateral security. In the grounds to the SA the applicants are reiterating the contentions as stated above.

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Apart from the above, the applicants contended that the respondent

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failed to get the documents executed on its renewal/enhancement/ rescheduling of loans from the mortgagors and guarantors. Hence the applicants prayed to set aside the impugned possession notice dt.26.12.2023 issued by the respondent. Along with SA, the Applicants

SA No. 27/2024

had produced the copy of impugned possession notice dt.26.12.2023; copy of sanction letter dt.29.06.2017; copy of demand notice dt.16.10.2023 and copy of bank challans.

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The respondent filed their statement of objection denying all the contentions of the applicants in total, except what is specifically admitted in their objections. The respondent had contended that the present SA is filed only for dragging the recovery process and also, they simultaneously approached the Hon’ble High Court of Karnataka in WP No.8164/2024 wherein the filing of present petition is suppressed. The respondent further contended that the classification of loan account as NPA is legal. The respondent also denied the contention of the applicants to the effect that the security interest is not registered in Central Registry. It is also contended that they have published the impugned possession notice in two leading newspapers. It is also the case of the respondent that the applicants are not entitled to any specialized treatment in so far as the applicability of lesser rate of interest because the respondent has charged the rate of interest as agreed upon and also the applicants are doing only commercial activity even though categorized as an agricultural activity for limited purpose

SA No. 27/2024

of extending the benefits of the loan facility. The contention regarding proprietary concern is concerned, the respondent contended that the same is identified either in the name of the proprietor or in the name of the firm and hence service of notice to any one is sufficient service. Hence, the respondent prayed for dismissing the SA.

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Along with objection, the respondent had produced the following documents:

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i) Sanction letter dt.29.06.2017.

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ii) Demand Notice dt.16.10.2023 along with postal receipts and acknowledgement.

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iii) Possession Notice dt.26.12.2023.

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iv) Paper publication in Samyukta Karnataka dt.30.12.2023. v) Paper publication in Indian Express dt.30.12.2023. vi) Statement of Account.

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In addition to the above, the respondent also filed Extract of CERSAI ID and copies of photographs of affixture of possession notice.

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Heard the Ld. counsel for both sides.

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The only issue that arises for consideration is as to the legality of measures initiated and continued leading to the impugned possession notice.

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The applicants are having no dispute as to the availment of the credit facility and are also admitting the defaults occurred in the account,

SA No. 27/2024

though the same is attributed due to COVID-19 disaster. The statement of account produced by the respondent proves that the applicants have defaulted in repayment of loan and the loan account is duly classified as NPA in accordance with the guidelines.

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The main contention taken by the applicants is that there is no valid security interest as the security interest has not been registered with Central Registry. This contention is successfully countered by the respondent by production of Extract of CERSAI filed as additional documents. In view of the same, the contention of the applicants in this regard is not sustainable.

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The next contention of the applicants is as to the failure in publication of possession notice in leading newspapers and affixture of the same on the schedule property. This contention of the applicants did not hold water since the respondent had produced copies of two paper publications dt.30.12.2023 one in vernacular and other in English along with their objection. Even though the Ld. Counsel for the applicants contends that the publication is not proper as the very same possession notice served on the borrowers is to be published and the respondent had published a different notice, this Tribunal cannot concur with the applicants on this as what matter is the contents of the notice and the

SA No. 27/2024

notice as published by the respondent none of the particulars are missing. The respondent has also filed a copy of photograph showing the affixture of possession notice along with their typed set of additional documents. Hence the said contention is rejected.

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The next contention of the applicants is that no demand notice was served on the borrower concern. This contention is to be viewed in respect of the fact that it is trait law that a proprietary concern has no distinct entity other than that of its proprietor.

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The compliance as to Rules 8(1) and 8(2) of Security Interest (Enforcement) Rules is produced by the respondent as to affixture and publication of the possession notice along with the objection. In view of the above, this Tribunal is satisfied that there is due compliance of Rules 8(1) and 8(2).

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No other contention is taken by the applicants either at the time of hearing or on the pleadings.

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In view of the discussion as held above and finding arrived therein, this Tribunal is of the considered opinion as the measures initiated and continued by the respondent leading to the impugned possession notice

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are in accordance with statute and the SA is liable to be dismissed.

SA No. 27/2024

16. In the result

i) SA No.27 of 2024 stands dismissed.

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ii) All pending IAs stands closed.

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iii) In the facts and circumstances of the case, there is no orders as

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to cost.

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Issue copies in accordance with rule 16 of the Debt Recovery Tribunal

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(procedure) rule.

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( Dictated to PS, transcribed by him, corrected, signed and pronounced by me in the Open Court, this 31^st day of December, 2025 )

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Sd./- (T. RAJESH) PRESIDING OFFICER

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Sri Nataraj S and Others v. Bank of Maharashtra

Case brief

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Sri Nataraj S and Others v. Bank of Maharashtra

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