Dismissed

Gaurav Lubricant Industries Private Limited v. Tamilnad Mercantile Bank Limited

DRT10 Sept 2025SA/293/2022

Case brief

AI extract

What is this about?

Debts Recovery Tribunal I at Hyderabad dismissed a special application challenging a possession notice and auction sale notice issued by the 1st Respondent Bank. The Tribunal found that while the possession notice was properly issued, no auction took place in pursuant to the sale notice, rendering the application infructuous.

What did the court decide?

Direction given to the Respondent Bank to follow due procedure for conducting auction of schedule properties.

Gaurav Lubricant Industries Private Limited versus Tamilnad… — Company and Corporate | DRT (2025)

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IN THE DEBTS RECOVERYTRIBUNAL _ I AT HYDERABAD DATEDTHISTHE IOTH DAYOFSEPTEMBER, 2C25

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PRESENT: SRI GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No.293,/2022

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M/s Gaurav Lubricant Industries P.Ltd., Administrative office at 615, Babukhan Estate, Basheerbagh, Hyderabad-SOO 001 Rep. by its Director Mr. Rajendra Prasad Agarwal.

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... Applicant

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Versus

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Tamilnadu Mercantile Bank Ltd., Rep. by its Authorized officer Hyderabad branch, 15-2-696, l"t floor, Siddiamber Bazar, Kishan Gunj, Hyderabad-SO0 012.

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Reserve Bank of India, Rep. by its Regional Director, 6- 1-56, Secretariat Road, Saifabad, Hyderabad-SOO 004.

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... Respondents

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Counsel for the Applicant Counsel for 1"t Respondent Respondent No.2

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: Sri G.K. Deshpande : Si K. Raghauendra Rao

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ORDER

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This Application is liled u/s.17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2OO2 (SARFAESI Act,2OO2l challenging the Possession Notice dt.2o.10.2022 i""".a,Jd1friTi*:REspondent and also the e Auction Sale Notice rffi#:Yffiffi;:'.* No.4 of schedule properties and to {[s^{1o ffP Nin} ")i t,*,.r - -."",{n

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The averments made by the Applicant in brief are as follows:

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The Applicant Company has been incorporated under the Companies Act, 2013 and is registered as a Small Enterprise with the Ministry of Micro, Small & Medium Enterprises. The Applicant company is engaged in the business of Extraction of Crude Petroleum and Natural Gas. The Applicant availed various credit facilities from the l"t Respondent and collateral security was offered and also personal guarantees of Mr.Niranjan Agarwal, Mrs.Uma Devi Agarwal, Mr.Krishna kumar Agarwal and Applicant were given. Subsequently, the Applicant requested the 1st Respondent for restructuring ofthe loan accounts and the 1st Respondent accepted the said proposal. But the Applicant has objected regarding the change oi interest and personal guarantee and additional collateral security to be given by M/s Platinum Distilleries P.Ltd. The 1"t Respondent declared the loan accounts of the Applicant as NPA as per the RBI guidelines and issued demand notice dt.07.09.2019 u/s 13(2) of the SARFAESI Act, 2OO2 to the Applicant company and the guarantors to discharge their liabilities. The Applicant issued a legal notice dt.06.09.2O19 questioning the classification of the loan accounts of the Applicant as NPA. To the said notice, the 1st Respondent issued reply notice dt.2o.O9.2Ol9 denying the allegations of the Applicant. Thereafter, the 1st Respondent issued possession notices dt.2o.lO.2022 for taking symbolic possession of the schedule properties. The said notices were not served on the Applicant and not affixed on the schedule properties and the said notices were also not published in two leading newspapers. Subsequently, the lst Respondent issued Auction Sale Notice dt. 15.1 L.2022 in respect of Item No.4 of schedule properties but the said notice was not served on the Applicant and it was neither aflixed on the schedule property nor published in two leading newspapers. No valuation report was obtained by the l"t Respondent from the approved valuer before putting the schedule property for auction. Hence the SA.

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Reply denying all the adverse allegations the Applicant after availing loan

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facilities from the 1"t Respondent Bank, committed default in repaying the loan dues and so, the loan accounts were classified as NPA by the 1"t Respondent on 31.07.2019. Restructuring of the loan accounts was not materialized as the Applicant did not agree for the terms and conditions of the sanction letter, there was stand-still for implementation of re-structure of credit facilities. Thereafter, the 1st Respondent issued demand notice dt.O7.O9.2019 u/s 13(2) of the SARFAESI Act,2o02 and the said notice was duly received by the Applicant. Thereafter, the lst Respondent issued possession notice dt.20. 1O.2022 u/s 13(a) of the SARFAESI Act,2OQ2 and the said notice was affixed on the schedule properties and it was published in The Hindu and Eenadu daily newspapers. Thereafter, the 1st Respondent issued Auction Sale Notice dt. 15. 1 | .2022 in respect of Item No.4 of schedule properties standing in the name of Rajendra Prasad Agarwal and the said notice was published in The Hindu and Eenadu daily newspapers and reserve price was fixed after obtaining valuation report from the panel valuers. Thus the lst Respondent has duly followed the procedure contemplated under the provisions of SARFAESI Act, 2002 and Rules made thereunder in issuing Auction Sale Notice dt. 15.1 7.2022 against Item No.4 of schedule properties. Accordingly, l"t Respondent prayed to dismiss the SA.

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Heard Ld. Counsel for the Applicant and Ld. Counsel for the l"t Respondent Bank whereas notice not taken against Respondent No.2 and so, claim against 2.d Respondent was dismissed. Perused the material brought on record.

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Now the points that arise for consideration are

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ii. To what relief?

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Polnt trIo.(lf:-

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During the course of arguments, Ld. Counsel for the Applicant and Ld. Counsel for the 1"t Respondent Bank reiterated their respective versions as stated supra.

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There is no dispute regarding the fact that the Applicant availed various credit facilities from the lst Respondent and created mortgage in respect of the schedule properties to secure the said loan and thereafter, the Applicant committed default in repayment of loan dues. Subsequent to availment of loan facilities by the Applicant, there was a^proposal for restructure of the loan accounts but the same was not materialized for various reasons. There is also no dispute regarding the fact that the lst Respondent declared the loan accounts of the Applicant as NPA and issued demand notice dt.O7.O9.2Ol9 and the same was received by the Applicant and the Applicant submitted objections in response to the said demand notice and to the said objections, the lst Respondent issued reply.

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The specihc contention of the Applicant is that the impugned possession notice dt.20. lO.2022 issued by the 1st Respondent was neither affixed on the schedule properties nor published in two leading newspapers and so, the said notice is null and void. The further contention of the Applicant is that the l"t Respondent issued e Auction Sale Notice dt. 15. 11.2022 in respect of Item No.4 of schedule properties but the said notice was not published in two.Jeading newspapers and the same was not affixed on the reserve price fixed against the said property is very

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Igry and so, the Possession notice and Auction Sale notice are illegal ide.

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i"ij^'rtat,a6 o.

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Per contra, l"t Respondent bank contended that the Bank has scrupulously followed the procedure contemplated under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder in issuing all the statutory notices to the Applicant.

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In order to substantiate their contention, the 1"t Respondent filed relevant material documents along with the counter filed by them in the stay petition. As per the said documents, it is clear that the lst Respondent issued Possession Notice dt.2O.1O.2O22 and sent the said notice to the Applicant and others through Regd. Post. In fact, after receipt ofthe said possession notice, the Applicant issued interim objection dt.2g.Io.2022 and for the said interim objection, the I st Respondent issued reply dt. 14.1 1.2022. The said possession notice was published in English and Telugu daily newspapers as evidenced by the copies of paper publication filed by the lst Respondent and the said notice was also affixed on the schedule properties as depicted in the copies of photographs filed by the lst Respondent. Thus, the lst Respondent has scrupulously followed Rule 8(1)&(2) of Security Interest (Enforcement) Rules, 2OO2 in issuing possession notice to the Applicant. So far as the e Auction sale Notice dt. 15.11.2022 is concerned, the said notice was issued for conducting auction in respect of Item No.4 of schedule properties on 19.12.2022. But however, no auction was conducted by the lst Respondent Bank in pursuance ofthe said sale notice.

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So in the circumstances, the impugned e Auction Sale notice dt. 15.1 1.2022 becomes infructuous and nothing survives in the SA for adjr;dication as th;ie is no need to decide the validity or otherwise of the gned Sale Notice dt. 15. 1 I.2022. Hence, I am of the opinion that the claimed by the Ap$\Lant in the present SA becomes infructuous and sA?i6I lie&k1lqrbe Suffice if a direction is given to the lst

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Respondent Bank to scrupulously follow the^procedure contemplated under the provisions of SARFAESI Acl,2OO2 and RuleS made thereunder in taking fresh steps for conducting auction of the schedule^properties. This point is answered accordingly.

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Potnt No,(tl):-

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t2. In the result, SA 29312022 is dismissed as there are^{no merits.} Consequently, the Interlocutory Applications,^{pending 'if any, shall stand} disposed of. No order as to costs.

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'1 a

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Communicate a copy of this order to the^{partiesconcerned.}

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(Dictated to the P.S, transcibed bg lrcr, anected, signed and^{pronouncedby me in the open} court on this the 10th daA of September, 2025).

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sd/-

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(G. GOPI CHANDI PRESIDING OFFICER

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COPY
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Gaurav Lubricant Industries Private Limited v. Tamilnad Mercantile Bank Limited

Case brief

What is this about?

What did the court decide?

Gaurav Lubricant Industries Private Limited v. Tamilnad Mercantile Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

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