Allowed

B Guru Prasad v. Union Bank of India

DRT9 Jun 2025SA/298/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the applicant's security enforcement application challenging an electronic auction. The court held that the auction was invalid because the bank failed to issue a mandatory notice under Rule 8(6) giving an opportunity to the mortgagor to redeem the secured asset before initiating the sale process.

What did the court decide?

The auction conducted on 29.12.2023 pursuant to the e-Auction Sale Notice dated 06.12.2023 is set aside. The bank is free to initiate fresh proceedings following the correct procedure.

B Guru Prasad versus Union Bank of India — Cheque Dishonour | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL " I AT HYDERABAD

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DATED THIS THE^gTH DAY OF JUNE, 2C25

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PRESENT: GUMMADI GoPICHAND, PRESIDING oFFICER

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SA.No.29A,/2C23

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Sri B.Guru Prasad, S/o late Naga Bhushan Rao, Aged 73 years, Occ:Retired employee, R/o Plot No.13, Road No.18, 5-3-60/ 1, Gouthaminagar, Vanasthalipuram, Hyderabad-sO0 070.

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...Applicant

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Versus

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Union Bank of India Rep. by its Authorized officer& Chief Manager Mahabubnagar branch II Opp. District Police headquarters Mahabubnagar-SO9OO1.

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2.M / s Vedanta Cosmeceuticals

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Rep. by BuidhirajuVinaya Ravi Teja,

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R/o Plot no.13, Road No.18, 5-3-60/ 1, Gouthaminagar

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Vanasthalipuram, Hyderabad-SoO O7O

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BuidhirajuVinaya Ravi Teja, S/o B.Guru Prasad,

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R/o Plot no.13, Road No.18, 5-3-60/ 1, Gouthaminagar,

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Vanasthalipuram, Hyderabad-SO0 O7O

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BuidhirajuVinookanth, S/o B.Guru Prasad,

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R/o Plot no.13, Road No.18, 5-3-60/ 1, Gouthaminagar,

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Vanasthalipuram, Hyderabad-sOO 070

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Smt. SuryakanthaRatna, W/o B.Guru Prasad,

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R/o Plot no.13, Road No.18,

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5-3-60/ 1, Gouthaminagar, Vanasthalipuram, Hyderabad-SoO O7O

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... Respondents

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Counsel for t.
Counsel
Re :gsl)tro.2 to tr
fi !.t
ti,q I 0 nn rmrb e ruil a6 :li+ll

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Sri G.Adrian Kiran Raj Sn ?.Sasi Kumar Exparte

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SA.No.298/202i

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:ORDER..

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This securitszation apprication is liled by the Applicant u/s.lr of the SARFAESI Act, 2oo2 challenging the e auction conducted by the l"t Respondent Bank in respect of the schedule propertyon 2g.r2.2o23 pursuant to the e Auction Sale Notice dt.O6.l2.2O23and to declare the same as null and void.

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

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The Respondehts No.3&4 availedloan from the lst Respondent Bank and the Applicant created mortgage in respect of ttre schedule property toward security for the said loan transaction. Thereafter, the lst Respondent bank classified the loan account as NpA and issued demand notice u/s 13(2) of the SARFAESI Act, 2oo2 and the Applicant submitted his objections to the said demand notice. Thereafter the 1st Respondent bank issued Sare notice dt.05.0g.2023 for conducting auction of the schedule property on 24.og.2o23 without giving sufficient time for redemption. The l"t Respondent did not issue 30 days pre-sale notice to the Applicant but in a hurried manner, fixed auction on 24.o8.2023 by issuing sale notice dt.05.0g.2023. The said sale notice was neit-her affixed on the schedule property nor published in two daily newspapers and it was also not served on all the parties. The Respondents No.3 to 5 are running day to day business of Respondent No.2 firm. The 1st Respondent bank has not issued demand notice and possession notice u/s 13(2) and 13(4) of the SARFAESI Act,2oo2 respectively. subsequently, the lst Respondent issued Sale notice dt.06.12.2023 for conducting auction of the schedule property on 29.L2.2o23and hence the auction conducted by the lst Respondent Bank on 29.L2.2o23 in respect of the schedule property is not valid and qi]d.^{as the same} was not conducted as per the -s.d 'q'','x. , ;:j i-* % -l34,fu.t-P

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SA.No.298/202j

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procedure laid down under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder. Hence the SA.

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The lst Respondent Bank filed their Reply denying all the adverse allegations made in the SA and the contentions of the 1st Respondent Bank, in brief, are as under-

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Respondents No.3&4 are the children of Applicant whereas Respondent No.S is the wife of the Applicant. Respondents No3&4 availed loan facilities for running Respondent No.2 firm and the Applicant herein stood as guarantor and created mortgage in respect of the schedule property towards security for the said loan. In view of the non-payment of the loan dues by the Applicant and Respondents No.2 to 5, the loan account was classified as NpA and demand notice dt.o6.o7.2o22 was issued and the same was received bythe Applicant and others. Noobjections are received either from the Applicant or from the Respondents No.2 to 5. Thereafter, the 1st Respondent Bank also issued possession notice dt.18. LO.2022 under the provisions of Section 13(4) of the SARFAESI Act, 2oo2 and the said notice was served on the Applicant and others. Thereafter, the Bank issued 30 days sale notice and the sarne was also served on the Applicant. Thus the 1st Respondent bank has duly followed the procedure laid down under the provisions of SARFAESI Act, 2oo2 and Rules made thereunder. Accordingly, the 1st Respondent Bank prayed to dismiss the sA.

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Heard Ld. Counsel for the Applicant and ld. Counsel for the 1"t Respondent Bank whereas the Respondents No.2 to 5 are exparte.

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Now, the points that arise for consideration are,-

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qnA ualid grounds for 1"t Respondent Bank in

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B S J{iil Zfls

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SA.No.298/202j

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respect of the schedule propertg on 29.12.2023 pursuant to the Auction Sale Notice dt. 06. 1 2.2 02 3?

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iil To tuhat retieft

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Point No.(i):-

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During the course of arguments, Ld. Counsel for the Applicant and Ld. Counsel for the lstRespondent Bank reiterated their respective

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versions as stated supra.

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There is no dispute regarding the fact that theRespondents No.3&4 availed credit facilities from the 1st Respondent bank and the Applicant herein stood as guarantor by creating mortgage in respect of ttre schedule property and thereafter, they committed default in repayment of loan dues and so, the loan account was classified as NpA.

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originally, the present sA is filed challenging the Sale Notice dt.05.08.2023'issued by the lstRespondent bank wherein the auction was fixed on 24.08.2023 but however,no auction was conducted by the 1"t Respondent Bank in pursuance of the said sale notice. subsequently, the l"tRespondent Bank issued fresh Sale Notice dt.06.I2-2O23 fixing the date of auction on 29.12.2023 and conducted auction on the said date. But however inview of the stay granted bythis Tribunal, the lst Respondent bank is restrained from issuing conlirmation of sale and sale certificate. Asthe said auction was not confirmed in favour of the auctionpurchaser, the auction purchaser is not impleaded as party to the present SA.

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9.
The specilic contention of the Applicant is that the l"tRespondent bank
has no! followed, the procedure laid down under the provisions of
4
' "a. ;,;
.j . . ..,
...-.....,,..,'
,, - r' ,. :

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SA.No.298/2023

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SARFAESI Act,2002 and Rules made thereunder in issuing demand notice, possession notice and sale notice to the Applicant and so, the auction conducted by the lst Respondent Bank on 29.12.2023 in respect of the schedule property is liable to be set aside.

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Per contra, the l"t Respondent bank contended that the Bank has duly followed the prescribed procedure contemplated under the provisions of SARFAESI Act, 2oo2 and Rules made thereunder in issuing all the relevant notices to the Applicant and others and also in conducting auction of the schedule property on 29.L2.2o23 and So, the said auction is perfectly legal and valid.

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The lstRespondent Bank along with their Reply, filed material documents to substantiate that they followed the procedure laid down under the provisions of SARFAESI Act and Rules, 2oo2 in issuing the mandatory notices and in conducting auction of the schedule property. As per the said documents, it is clear that on 06.o7.2022, the l"t Respondent Bank issued demand notice u/s 13(2) of the Act, 2oo2 to the Applicant and others and the said notice was received by the Applicant as evidenced by the postal acknowledgments filed by the Bank. Though the Applicant contended that he submitted objections in response to the said demand notice issued by the bank u/s 13(2) of the Act, 2oo2, no material documents are filed by the Applicant as on which date, he submitted his objections and service of said objections to the Bank and so, the contention of the Applicant that the Bank has not given any response to the objections submitted by him is not tenable. Thereafter, the 1st Respondent Bank issued possession notice dt.18.1o.2o22 to the Applicant and the said notice was se}:l;tlllgugh Regd. Post and the same was duly served on the ssion notice was also published in Telugu and pers as evidenced by the copies of paper publicati k and the said possession notice was affixed

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:4j' rt tl I iuti 206

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SA.No.298/2023

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on the schedule property as depicted in the photographs filed by the Bank. Thereafter the 1"t Respondent Bank issued sale notice 24.02.2023 for conducting auction on 3 r.os.2o23 but however no auction was conducted in pursuance of the said sare notice. subsequently, the 1st Respondent Bank issued fresh sare notice dt.05.08.2023 for conducting auction of the schedule property on 24.08.2023 "ld the said notice was served on the Appricant as evidenced by the postal acknowledgements and the said notice was also aflixed on the schedule property as depicted in the photographs filed by the Bank and it was pubrished in two daily newspapers as evidenced by the copies of paper pubrication filed by the Bank. However the proposed auction was not conducted by the Bank in pursuance of the said sale notice. Thereafter thel"t Respondent Bank issued fresh sale notice dt.o6. L2.2o2s for conducting auction on 29.12.2023. The said sale notice was sent to the Applicant and others as evidenced by the postal receipts and the same was also affixed on the schedule property as depicted in the copies of photographs filed by the Bank and the said notice was also published in two daily newspapers on 7o.r2.2o23 as evidenced by the copies of paper publication filed by the Bank.

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12' As per the provisions of Rule 8(6) of Security Interest (Enforcement) Rules, 2oo2, there is an obligation on the part of the secured creditor to issue notice u/r g(6) of security Interest (Enforcement) Rules , 2oo2 by grving an opportunity to the borrower/mortgagor to redeem the secured asset within thirty days from the date of issuance of said notice' If the borrower fails to redeem the secured asset within 30 days from the date of receipt of the said notice, the Respondent Bank will be at liberty to proceed with the auction of the secured asset by issuing separgte':sEil€ notice. Thus the moment, the sale notice is published in . -,':..j" .. r-' ' ,.- t 9;"^{cuilv,,ljffiiqp:is,the borrower will} loose his valuabre right of 'l/'4g;^ott"*i,,".^{tha;rp.ri,.llication} has to be made in the newspapers f"g"Ti:g^{thd auctioffirfoosed} to be conducted by the secured creditor B^{0g lur?t?S *il} d- - ?;l 3E ' ;li ': "q;'i'-^i" .r.^{':"r,- .t ! i'..'} ,'':..,. ,. :i,f^t-'.,.. . -,{. :-"- 5\l.,rr-,e.4,f:.f^.if;. "^{).-1;,! r"., :.i'} ).^:i t^{i,t.: '..-1-_'t} .' ;.-..'.-

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SA.No.298/2023

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only afterthe expiry of 30 days time given to the borrower to redeem the secured asset.

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In the instant case, the 1st Respondent bank issued the impugned e Auction Sale Notice dt.24.O2.2O23 by lixing the date of auction on 31.O3.2O23 in respect of the schedule property and the said sale notice was published.in newspapers on 2g.o2.2o23. so, the moment, the sale notice was published in newspapers, the Applicant and the others lost their right of redemption of the schedule propert5r and. so, the said sale notice dt-24.02.2023 is not in conformity with the procedure laid down under the provisions of SARFAESI Act, 2oo2 and Rules made thereunder. Subsequently, the Bank issued sale notices dt.05.0g.2O23 and 06.12-2023 by giving less than one month time for conducting auction from the date of issuance of the said notices. But the contention of the l"t Respondent bank is that the said sale notices are subsequent sale notices and So, fifteen days time is sufficient for conducting sale.

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Admittedly before issuing the impugned the sale notice dt.o6. 12.2023, the l"tRespondent bank has not issued any prior notice u/r g(6) of Rules, 2oo2 for giving an opportunity to the Applicant and others to redeem the secured asset and without issuing such mandatory notice, the Respondent Bank has straightaway issued e Auction sale Notice dt.06.12.2023 and published the said notice in newspapers on lO'L2.2O23. Thereby, the Applicant and others have lost their valuable right to redeem the secured asset.

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The effect of non-issuance of redemption notice by the secured creditor is decided by the Hon'ble Debts Recoaery Appellate Tribunal, Kolkata;in a recent Judgement in Union Bank of India vs.DilshadDlahiin Misc.Appeq.l No.o4/2o2o wherein in para NO.31, it-i

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of the Borrou.ter is a sacros anct ight as prouided

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amended prouisions of Section 13 (B) of the Act bring

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0 I JUfl 2825

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rapun )amouog aql q alqDpDaD uotlduapar o11u6!r a14t aJaqmou mDj^'(t) 6 aryd ot ostnord sD lpm sD (g) B atnd {o suosmo:id aqJ ol 'a1os luanbasqns {o asoc ut uana^,rac![{O pasuol,7nv aq1 uodn 1uY, u! s? 4 'fi1}utptoccy Dc![!O paslroUtnv aqt frq pamopo{ aq o] (g) g arua to suorsmotd 'a!os Tuanbasqns rlo asrc aqr u! uana ]D11? suDaut y 'sfiop gt ol pafDlrro s? a1os Tuanbasqns ut pouad aqt nq papuauD ?ou sl O) B alng fi.11ouo4ualut tng^.arnlDls$a1 aqy fiq papuautD aq ol anDU osln pqom (g) g aruU rapun papnotd pouad 7oq1 ,atn1o1s$a1 aq1 {o.uor1ua1ut a1U uaaq I poH 'b) g aUA rapun papnotd a)qou lo pouad atq paTDUtl) )auuDut ou ut (t) O aruA lo osmotd sn;; .sfiop St ot papDlrnc q (f) 6^{apd rapun pannbat} sn 'sfrop 69 {o poyad aq1 'a70s luanbasqns lo asoc u? lD1ll suDaut lI 'aps Tuanbasqns fiuo n{ tamouog aql o7 sfi.np gL uDlt? ssal tou uo a1os to acqou qs1qnd puo n1[{o ,auas .1.ioqs nc{lg pasuolqnv aq1^'uto6o papnpuoc aq ot parmbat st a1os^,s1to{ B aUA lo (g alru_qns frq pa{nads spoUplu aqt to auo fi.q fr.yadotd alqnanolulat {o aps atq * tDUt^saptaord fi1duts (f) A atny ot paqrDnv osnud.sa/ny aqt{o (t) A atn1 Dpun acnoN aps aU? lo uotTou1qnd uodn fiTalorpauu? pa?Dutu, ral puDls plnom uo4duapat {o ltldlt qcns^,7cy aqt lo (d gt uoqcas lo Tuatupuatao lsod^ououars mau aqt q^.pouad sfiop gg {o futdxa o1 nyd patqs4qnd aq louuDJ (f) A atny rapun a)qou o^,acuanbasuoc uI .uot1dtuapat lo ?1161.r^{s?q astrraxa} o? tu?q alqDua o1 b) B alnd )apun pouad ar7ou sfiop gg rDalc D ramouog aql q prot{D ol punoq s rolpar) parrnas ,pV aql lo (S) gt uoqcas {o TuaupuauD a14t {t uena ,anlataq1 .{oataql G) g atny )apun alqDrDnD suot\do aqt lo auo o? asJnocal 6ut401lassD palnJas alqDnoutlltl aqt lo a1os tot sdop gg to ac4ou D ramoiloq aq1 uodn auas fiTuossacau ?snu n?tpan parncas at-q lo nc$g pa4roqnv aHl^,tapunataql puD autDs aqJ utDuar oJ sanuqun ilqs salny aUt {o (9) g a1ny pq1 alou ol 7uoc7[tu6ts st 1t 'tanamoH ')asD'qcJnd uo\Jnv aqt lo tnoao! ut TassD parncas aqt lo n{suot7 to alr.S atlt lo uo4a1dutoc 1?t tou puD salnd aql to^(il 6^{apd rapun a)nou} aqt {o uot\ocqqnd lo alop aqr il?r fi\uo a\qopono aq plnom puD papDync fr.TpcrlsDjp spuals atut\at fuo1n1o1s. Tuasatd aU? rapun iamouoq aql ol alqDpDnD uorydtuapat {o 1116!r aql ,1ca!{a uI 'salnd. aqt {o (t) A apA rapun uoncnD c4qnd n! ac4ou aqt lo uot1ocqqnd {o^{app fuan aql} uo rapunatally paq*n\uuxa^.spuzJs TassD parrrcas aql uaapal ol Jamoiloq aW {o ?7.16y aql sD^.tpnus-Dut ,a6uot4c lDclpDr D ut

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aJaqmou i'.;i ' !{ ol 1uY, u!

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EZ0Z/86Z.oN.VS

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SA.No.298/2023

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section 13 (B) of the Act in case of a subsequent sare. Accordinglg, I am of the considered uiew that euen in case of subsequent sale, Authorised. olficer is required to lssue 30 days notice under Rule B (6) and. thereafter 15 dags notice under Prouiso attached to Rule 9 Gf .

¶70

In view of the decision stated supra, the impugned auction conducted by the 1st Respondent Bank on 29.12.2023 in respect of the schedule property without giving any notice to redeem the secured asset u/s 13(8) of SARFAESI Act, 2oo2 is liable to be set aside. Even if the 1st Respondent Bank has followed the other procedure laid down under the SARFAESI Act, 2oo2 and Rules made thereunder, the very noncompliance of Rule 8(6) of Rules, 2oo2 is fatal for the case of the lst Respondent Bank.

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so, in view of the above decisionand facts and circumstances of the case, I hold'that the auction conducted by the 1"t Respondent Bank on 29.L2.2o23 in respect of the schedule property pursuant to the impugned e Auction sale Notice dt.06. r2.2o23 is not in accordance with the provisions of SARFAEST Act,2oo2 and Rules made thereunder and as such, the said auction is liable to be set aside. Accordingly, this point is answered in favour of the Applicant and against the 1"t Respondent Bank.

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Point No (iil

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In the result, sA29812023 is allowed by setting aside the impugned auction conducted by the 1"t Respondent Bank in respect of the sghqd3le property on 29.L2.2O23 pursuant to the e Auction Sale Notice

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...^{i:.". ."} .-i- .'

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." . dt.06,12:2023. The l"t Respondent Bank is at liberty to initiate fresh t

..i

'^{' .'ir}

SA.No.298/2023

scrupulously following the procedure in accordance \ rith the provisions of SARFAESI Act, 2oo2 and Rules made ttrereunder.

¶80

consequently, the Interlocutory Applications, pending if any, 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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(Dictated to the P.5., transcribed bg her, corrected, signed and" pronounced. by me in the open court on this the 9th ddA of June, 2025).

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sd/(G. GOPTCHAND) PRESIDING OFFICER

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,]:,
q .!;:''i

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B Guru Prasad v. Union Bank of India

Case brief

What is this about?

What did the court decide?

B Guru Prasad v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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