Dismissed

G Rekha Rani v. Union Bank of India

DRT28 Aug 2025SA/309/2023

Case brief

AI extract

What is this about?

Debt Recovery Tribunal dismissed an application challenging a bank's enforcement measures and auction sale under the SARFAESI Act. The court held that the bank followed due procedure, the applicant failed to rebut valuation claims or prove fraud, and the bonafide rights of the auction purchaser protected the confirmed sale.

What did the court decide?

The Securitization Application was dismissed; interim or interlocutory applications, if any, stand closed.

G Rekha Rani versus Union Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS^{RECOVERYTRIBUNAL- II} AT HYDERABAD

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DATED THIS^{THE 2BTH DAY OF AUGUST,2025}

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PRESENT: SH. RAMESHWAR^{KOTHE, B.com, L'LB'(Hons'),M'A'} PRESIDING OFFICER

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Securitization^{Application No.3O9 of 2023}

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G. Rekha Rani D/o T. Sugunakar^Rao Aged : 48^years, Occ:Business Gender Female R/o Plot No.162,^{Prashasan Nagar} Road No.72, lubilee^Hills Hyderabad

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......Applicant.

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Versus

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Union Bank of^India Rep. by its Authorized^Officer Asset RecoverY^Branch ltt Floor, Main^{Road, SR Nagar} Hyderabad

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M/s Sri Varma^{Water Tech Pvt Ltd} H.No.B-2-120 186/^{A, RoadNo. 14} Banjara Hills, HYderabad-34

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Sudhakar^Dharanaikota S/o D. Narsing^Rao Aged 64^years, Occ:Business R/o Plot No,148 Mahendra Hills,^MaredPallY Hyderabad

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. ....Respondents.

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Counsel for the Appticant : Mr.T' Vijay^Kumar Counsel for the^{lbt RespondentBank: Mr.N'V' Subba Raju} Ziiirtiit for 3'd Respondent^{: Mr.Aditya Kumarchoudhary} iii niiporaert : SA dismissed^{for default} ,fu^z^(.* A^d'u-

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sA No.309/2023

-:ORDER:-

The Appticant filed the present Application u/s.17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2OO2) assaiting all the measures of the 1st respondent bank under Sec.13(4) of the Act, including e-auction sale notice dated 06.0g.2024 fixing auction of application schedule property on Zg.OB.ZOZ4.

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The case of the applicant, in brief, is that she is the guarantor for the loan of Rs.9 crores sanctioned by the respondent bank under MSME scheme. Due to recession in market, Iiquidity crunch etc., the appticant suffered temporary problems. Without considering the request to enhance the limits so as to revive the operations, the respondent bank declared the account as NpA on 22.01.2019 and issued demand notice against RBI Circulars dated 07.02.2018 and 01.01.2019 pertaining to renewal/restructure of MSME accounts. Without considering the objections as per Sec.13(3A), respondent bank published the possession notice. The applicant stood as guarantor only for Rs.2 Crores. Respondent bank without considering the request to grant time to regularize the account by following RBI Circulars dated 11.02.2020 and 01.05.2020 and without serving notice u/s 73(4) took steps to take physical possession of the property. Without issuing Rule 8(6) redemption notice and separate notice under Rule 9(1) of the Security Interest (Enforcement) Rules, 2OO2 (,,Rules,, hereinafter), respondent bank published the sale notice dated 06.08.2024 fixing auction on 29.08.2024 on 'As is where is basis and as is what is basis, against the settled law, with reserve price far less than the market value. There is violation of Sub-rutes (1), (2), (5), Jq)., (7) of Rute 8 and Sub-rute (1) of Rule 9 of 2002. Hence rhis SA.^/Y\21,e9 " tU t\r"'

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SA No'309/2023

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The 1't respondent^{bank filed replystatement denyingthe} adverseavermentsofapplicationThesubmissions'briefly'arethat consequent to^{defaultsthe accountof the borrower was classifiedas} NPA on 30.11.2019^{as per RBI norms and Securitizationproceedinqs} were initiated'^{The demand notice u/s 13(2) dated 03'12'2019 and} possession notice u/s^{13(4) dated 19'01'2023 were duly served on} borrowers/guarantors,^{the possesslonnotice was affixed on secured} asset and^{publishedon 25.01.2023Ample opportunity was given to} repay the^{amountfrom 2019 to 2023consideringthat the unit being} MSME but^{they failed to avail the sameDisbursement of loan wouldbe} based on eligibility.^{Rate of interest was chargedas per contractual} agreement and^{borrower need not be notifiedabout changeif such} express agreement^{exists.30 days notice was first issued on} !7.02.2023^{and thereafteron 25 '06 2024 which was duly served'The} auction^{sale was successfullyconducted pursuantto auction sale notice} dated 06.08.2024^{and sale certificate was also issuedon 25'09 '2024 in} favouroftheauctionpurchaser-3.drespondent'Hisrightsareprotected andunlessseriousflawinconductingtheauction|sprovedauction cannotbesetasideaSpercatenaofjudgements.Theapplicantfailedto comply the^{conditional order passedby the Tribunaland hence she is} not entitled to^{any relief. Valuation was obtained before conducting the} auctionsale.Therespondentbankfolloweddueprocedureasprescribed under the^{provisionsof the Act and Rulesthereunder'5A is liable to be} dismissed.

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The applicant^{failed to take noticeon 2nd respondentdesplte} severalinstructions.AccordinglySAwasdismissedagainst2nd respondent^{vide docket order dated76'07'2025'}

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The 3d respondent-auction^{purchaser filed reply amdavit stating'} inter-atia, that^{consequentto failure of the appllcant failed to comply} the conditional^{orderpassed by} '^{the Trlbungtrespondent bank} (-/ /,$v;.06*'r>

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sA No.309/2023

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proceeded to issue another auction sare notice and the Tiibunar rejected to grant stay furtherance to fresh auction sare notice with specific observation that appricant faired to compry the conditionar order. The 3.d respondent participated in the auction sare conducted by the bank on 29.08.2024 pursuant to auction sale notice dated 06.08. 2024, emerged as successful bidder at Rs.2,33,26,000/_, sale was confirmed in his favour after payment of 2so/o of bid amount, paid 75o/o of bid amount within prescribed time whereafter sare certificate was executed in his favour on 16.10.2024. The bonafide interests of auction purchaser are protected as held by Hon'bre supreme court., once tire reached finarity by virtue of confirmation, registration of sare certificate on payment of stamp duty and registration fee as per appricabre Acts. The apprication is liable to be dismissed.

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6' Heard rearned counser for the appricant and rearned counser for the 3'd respondent. Learned counsel for the 1rr respondent bank reported no orar arguments but submitted written arguments instead. Perused written arguments fired on beharf of the appricant as we, as the l't respondent and arso perused the materiar record brought on record.

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7' Learned counser in reiteration of the contents of the apprication contended that without waiting for expiry of 30 days, the auction sare notice was pubrished fixing auction on 2g.0g.2024. No separate Rure 8(6) notice was given providing 30 days time to redeem the prpperty as per judgements of Hon,ble High Court in M/s Venshiv pharma Chem (p)

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The applicant has been Ow"*

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SA No'309/2023

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deprivedtoredeemtheproperty.Conductingtheauctionon.'ASIS WHERE IS AND^{AS IS WHAT IS,, is also againSt settled law. Pendencyof} litigation is mandatory^{as per judgement of Hon'ble High Courtreported} in 2016^{(1) ALT 167 (D.8.) whichthe respondent failed to do' RuleB(7)} was also not^{followedas per judgementof Hon'ble SupremeCourt in} . The 1st respondentbankfailedtoobtainfreshvaluation.Theworthofthe property is more than Rs.5^{crores whereasreserye price fixed is Rs'2'13} crores. The 1st^{respondent bank failed to file proof of serviceof} possession notice and^{prior to sale notice, affixture of sale notice' The} possessionnoticeandSalenoticewerenotpublishedintwonewspapers aSperRules.ThedetailsofdebtWerenotmentionedintheauction notice. Learned^{counselprayed to allow the sA as the 1tt respondent} bank failed to^{followthe due procedureof law'}

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B, As^per written^{argumentsfiled by the learned counsel for the 1't} respondent bank^{while reiterating the submissionsmade in the reply} Statementfurthercontendedthattheapplicantspecificallyadmittedof availing credit^{facilities,providing guaranteeand defaultin payment'} Hence the 1't^{respondent bank initiated SARFAESI actionto recover the} legitimate dues after^{providingample opportunity to clear the dues'} Having agreed^{in express terms the applicantor the borrower need not} beputonnoticeeverytimeinterestratechangesasheldbytheHon'ble Supreme Courtⁱⁿ Supreme Court^{2122. The l't respondent bank was entitledu/s 13(4) of} theAct,totakerecoursetooneormoreofthemeasuresmentioned therein once the^{borrower failed to discharge the liability in full within} the^period specified^{in Sec.13(2). The due amount is the publicmoney} and the same cannot^{be blocked by frivolouslitigation' The case of} applicant is based^{on falsehood, suppressionof material facts and in} %*"

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sA No.309/2023

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abuse of process of raw and hence apprication is riabre to be dismissed. Learned counsel reried upon judgement of Hon,ble supreme court in United Bank of India ,r. satva*ati rondon & ors. 2010 (B) scc 110. The physical possession of the property was taken on 04.07.2024 through the advocate commissioner appointed in Crl.Mp No.429/2024. 30 days pre-sale notice was served on appricant on 25.06.2024 arong with others. 15 days auction sare notice was issued on 06.0g,2024 pursuant to which the auction sale was successfully conducted on 25.09.2024 in favour of the 3'd respondent herein. After receiving the entire sale consideration within time frame, l.t respondent executed sale certificate on t6.L0.2024. Learned counsel would further contended that the rights of the auction purchaser should be protected under law. The confirmed sale cannot be set aside merely based on irregularities except on the grounds of fraud, collusion, inadequate pricing, underbidding or grave irregurarities that go to the root of auction. Learned counsel relied upon the judgments of the Hon,ble supreme court in the matter of GELIR LLp vs. Ms. sumati prasad Bafna and others 2024 INS' 978 Janak Rai vs. Gurdital sinoh 1967 AIR 608 and V.S. Palanivel vs. p. Sriram. 2024 INSC 659 in support of his contentions. According to him, the 1st respondent followed the due procedure and hence SA is liable to be dismissed.

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Learned counser for the 3'd respondent-auction purchaser submitted that the 3'd respondentis a bonafide purchaser in the auction sale conducted by the 1st respondent bank, he paid entire sare consideration as per Rules upon which a sale certificate got to be registered by paying proper stamp duty and registration fee. The applicant failed to comply with the conditional order passed by the Tribunal whereupon the 1st respondent bank proceeded with further proceedings as per liberty granted. In fact, the ''"zw;1,:ot incrined

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sA No.309/2023

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tograntstayinfurtherproceedingswithcategoricallyobservationsthat applicantfailedtocomplynon-complianceofconditionalorderWithout explaining any^{reason except blaming the bank of not following due} procedure,salehadbeenconcludedandthird-partyinteresthadbeen created, After^{this order, the ltt respondent conductedthe auction on} 29,08,2024,^{Learned counselrelied upon the judgement of Hon,ble} Supreme Courtⁱⁿ

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came to be referred; to support^{his argument that once sale had been confirmed} the title to the^{auctioned property vests with the purchasereven} without necessity^{to registration of sale certificate and that lhe bonafide} rights of the^{auction purchaser are to be protected from undue} challenges,^{safeguardthe integrityof the auction process'Learned} counselwouldalsocontendthattheapplicantcannotbeallowedto abuse the^{process of law withoutclearing the dues in spite of ample} opportunity^{given by the bank and in fact, she defaultedin repaying the} public money. With these^{contentions,learned counsel sought for} dismissal of^{the SA'}

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Now,^{the points that arise for consideration are:-}

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i) Whether the^{appticant made-out any validground to set} asidethemeaslJresoftheT'trespondentBankagainstthe apptication^{schedule property includingthe auction.-.sale} hetdon2g.0S.2o24.andconsequentialsalecertificate dated 16.10.2024^{in favour of the 3'd Respondent?}

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ii) To what relieft

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M!_Nali),-

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Admittedly,^{the applicantis the guarantor to the credit facility of} Rs.9 crores availed^{by the 2nd respondent-borrowercqmpany- and} M*e

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sA N0.309/2023

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default in repayment due to various factors. Though appticant,s property had been brought under Securitization proceedings due to default of the company, curiousry, the appricant did not choose to take notice on the borrower company and accordingly SA came to be dismissed against 2nd respondent-borrower company. The time gap given by the 1st respondent bank between 2019 and 2023 in continuing the Securitization proceedings would clearly denote the opportunity given to the borrower or the appricant to crear the dues and redeem the mortgage. Having clearly admitted of default in repayment of huge amount, which is public money, the applicant cannot be permitted to take shelter of RBI Circulars pertaining to classification of NpA of l.4SME accounts. The 1st respondent bank affirmed that considering the company being MSME, sufficient time had been given. Under such factual circumstances and admissions, I do not find merit in the contention of the applicant that the account had been classified as NpA without following RBI Circulars.

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L2. The 1"t respondent bank filed material documents demonstrating due service of demand notice and possession notice, affixture on secured asset and publication of possession notice in English and Telugu newspapers on 25.07.2023 vide postal receipts/acknowledgements, photographs and publication copies placed at pages 16 to 33 of documents annexed to reply statement filed on 07.03.2025. considering the sufficient proof, I find no infraction in ro[owing procedure under Secs.13(2), 13(4) read with Rutes 8(1) and 8(2) of the Rules,2002.

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13' Whenever the 1't respondent bank issued e-auction sare notices the applicant laid challenge on the same, starting with e-auction scheduled on 27.07.2023 till the fresh auction which was successfully conducted. Prior to that she did not choose to challenge the possession ,/9'M, - .c" (/'./.9lo1;'

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sA No.3o9/2023

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notice. However, as observed^{supra, the due procedure was followedby} the 1st respondent^{withregardto possession notice.}

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The 1't respondent bank^{issued Rule 8(6) notice of 30 days on} 77.02.2023 followed by auction sale^{notice dated 07.07.2023fixing} auction on 27.07.2023,^{dated 11'09.2023 fixing auctionon 13.10.2023} and also took action to^{take physical possession.Without complying the} conditional order, the^{applicant again approached this Tribunalfor stay} which was rejected for^{not demonstratin gany bonafidesThe 1st} respondent bank again issued^{Rule 8(6) notice dated25.06.2024,} served the same on applicant^{vide postaltrack reports at page-50and} also on others, besides^{publication of the same. It is not the case of the} applicant that she^{ever approachedthe bank for redemption by clearing} the outstanding dues.^{Having received all the notices, applicant falsely} clalmed that she^{had not been servedwithstatutory notices' Comingto} the impugned auction, the^{1st respondent bank issued the e-auction sale} notice of 15 days on 06.08.2024^{being subsequent sale, fixing auction} on 29.08.2024 of the^{application schedule property,sent by registered} post to the applicant and others,^{published the same in Englishand} Telugu newspapers on^{11.08.2024and affixed on secured asset No} violation of Rule 8(5), 8(6),^{8(7)and 9(1) of Rules, 2002 is proved'}

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There is a contention^{on undervaluation.The valuationreport} obtained by the bank^{is dated04'09.2023and the auction was held on} 29.08.2024. The^{said valuation report cannotbe said to be obsolete'} However, the applicant^{has not producedany approvedvaluation report} on her behalf in^{supportof her statementthat the property is worth} Rs.5 crores and in contradiction^{of the valuation report of the 1't} respondent bank. It is^{observedthat the reserveprice was fixed at}

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sA N0.309/2023

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and the price fetched was more than Rs.233 lakhs. Hence the contention remained unsubstantiated.

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The 3'd respondent emerged as successful bidder for Rs.2,33,26,000/- against reserve price of Rs.2,14,00,000/_, deposited the entire sale consideration within the prescribed period, whereupon the sale certificate dated 16.10.2024 was executed in his favour. In the light of the judgement of Hon'ble supreme court in GELIR LLp v. sumati Prasad Bafna(suora). a sale that is confirmed cannot be set aside merely based on irregularities except when the concerned matter is based on fraud, collusion, inadequate pricing, underbidding etc. In the instant case, the applicant failed to establish any fraud, coilusion, irregularity or ilregarity in the procedure adopted by the bank so as to set aside the measures including the e-auction held on 29.08.2024. Accordingly SA is liable to be dismissed.

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Point No.(iil:-

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t7. In the result, the present Securitization Application fails and is hereby dismissed.

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Consequently, the Interlocutory Applications, pending if any, shall stand closed. No order as to costs. communicate a copy of this order to the parties concerned and upload in the offlcial website.

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(Typed to my dictati.gn by the. pS, c.orl.:cl:g, signed and pronounced by me in the open court on this the 29th day of August, 2025).

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Ow*" (*AftEsHwAR KorHE) PRESIDING OFFICER

G Rekha Rani v. Union Bank of India

Case brief

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G Rekha Rani v. Union Bank of India

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