Allowed

Chavasuresh Babu v. Union Bank of India

DRT19 Feb 2025SA/32/2023

Case brief

AI extract

What is this about?

DRT-II Hyderabad allowed the applicant's Securitisation Application. The bank failed to adjust substantial repayments in the outstanding amount and did not strictly follow statutory rules for serving the possession notice, as required under the SARFAESI Act and Rules, 2002.

What did the court decide?

Securitization Application allowed by quashing all measures of the respondent bank against the Schedule Asset property.

Chavasuresh Babu versus Union Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE 19TH DAY OF FEBRUARY, 2025

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PRESENT: SH. RAMESHWAR KOTHE, B,Com, L.LB.^{(Hons.), 14.A.} PRESIDING OFFICER

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Securitization Application No.32 OF 2023

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Chava Suresh Babu

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S/o Chava Venkata Rao

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Aged about 50 years, Occ:Business R/o H.No.7-1-621 / 1,3, 4lB

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SR Nagar, Hyderabad

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Chava Uma Rani

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W/o Chava Suresh Babu Aged about 48 years Occ:Housewife R/o H.No.1 -7-627/13, 4/B SR Nagar, Hydera bad

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.......Applica nts.

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Versus

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Un ion Bank of India Gunrock Enclave^Branch Gunrock Enclave, Secundera^bad Rep by its Authorized^Officer

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....ResPondent.

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Counsel for the Applicant^{: Mr' K. BuchiBabu} Counsel for Respondent^{: Ms' TaranginiPisipati}

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-:9-B-0-E-B :-

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The Applicant filed the^{present Securitisation Applicationu/s 17} of the Securitization and^{Reconstruction of FinancialAssets and} Enforcement of Security^{Interest Act, 2002 (hereinafter referredto as} "the Act") to set aside all the measures of the^{respondentbank} including taking^{physical possessionof the SA scheduleproperty} pursuant to advocate commissioner notice dated^{11.01.2023vide Crl} '1\^^'.') - (IF

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Page 2 of 5

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SA No.32l2023

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MP No.125O of 2022 on the file of^{learned Chief Metropolitan} Magistrate, Hyderabad.

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The case of the applicant, in^brief,is that^{the applicantavailed} various loan facilities from^{the respondent bank by executing relevant} documents and mortgaging application^{scheduleproperty as security.} Without considering the substantial^{repaymentof aboutRs.1crore} despite Covid situation,^{respondentbank classifled the loan account} as NPA. Respondent^bank did^{not extend time to close OD account.} Without serving Sec.13(2)^{demandnotice and Sec.13(4)possession} notice, respondent bank is^proceeding to take^{physicalpossession of} the property. The respondent bank^{also failed to follow Rules 8(1)} and 8(2) of the Security Interest^{(Enforcement)Rules,2002 ("Rules"} hereinafter) in serving, affixing and^publishing the^{possesslon notice.} Hence this SA to set aside the measures.

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The respondent bank fled reply statement along with documents. It is stated, inter alia, that as the applicants failed to adhere to the terms and conditions of loan sanction, the account became NPA on 28.04.2022 as per RBI guidelines followed by Securitization proceedings. The demand notice dated Q4.05.2022 u/s 13(2) was sent to applicant since returned unserved published in newspapers. Thereafter possession notice dated 15.10.2022 was issued, affixed and published in English and Telugu newspapers. The respondent bank is entitled to take physical possession of the secured asset u/s 14 and accordingly filed Crl MP No.1250 ol 2022 before learned CMlvl. The amount recoverable is public money and SA is filed only in abuse of process of law and hence liable to be dismissed.

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.fuwa-, ^r-'z //./^.i<1--' | _,,

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Page 3 of 5

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sA No.32l2023

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Learned counsel for applicants reported that^{orders maybe} passed basing on records. Heard learned counsel for the^respondent bank and^perused the material record.

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Durlng the course of arguments, learned counsel for^respondent bank reiterated the version as in reply^{statement that due to default} committed by the applicant in repayment,^{loan account becameNPA} as^per RBI^guidelines followed by measures under the^SARFAESIAct. Though^promised vide letter dated 07.11.2020^{to repay the entire} loan amount by end of that month, the applicants^{failed to do so. The} respondent bank has followed the due^procedure of^{law while} initiating Securitization^proceedings. With these^{submissionslearned} counsel sought for dismissal of the SA.

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The points for consideration are as follows : -

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i) Whether the applicant made out any valid^{ground to} quash the measures initiated by the respondent against the SA schedule property?

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ii) To what relief?

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Point No.(i):

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Availment of loan facility and default is not under^dispute. Creation of mortgage in respect of SA schedule^{propertyis an} admitted fact. However, the issue raised by the applicants^is that^the substantial amounts deposited with the respondent bank have^not been properly accounted for. A^perusal of^{proceedings reveal that} vide order dated 01.02.2023 in IA No.208/2023, this Tribunal^passed stay of all further^{proceedingspursuant} to advocate^commissioner notice dated 11,01.2023 on the^ground that there was^parity in^the outstanding amount shown in the- -possession notice despite ff,K"*

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Page 4 of 5

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SA No.3212023

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substantial amount^paid by the borrower.^{The respondent bank} remained ex parte despite service of^notice in IA.^Be that^{as it may.} In spite of specific observation in the IA order dated^01.02.2023, even after making appearance and filing^{replystatement,there is no} explanation from the respondent bank as to why the^substantial payments made by the applicants were not adjusted in the outstanding amount shown in the^{possession notice dated} ts.t0.2022.

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Apart from the above, it is noticed that the returned coversⁱⁿ respect of demand notice are filed only in respect of^{2nd applicant} which was returned with^postal remarks as^{'insufficientaddress'.} Neither the^proof of sending or serving the^{possessionnotice is filed} nor the returned covers are filed. Hence it is to be^{construed that} Rules 3 and 8(1) of the Rules, 2002 have not been^followed by^the respondent bank. Under such circumstances, I conclude that SA deserves to be allowed by setting aside the all the^{measuresinitiated} by the respondent bank against the SA^{schedule propertyunderthe} provisions of the Act, 2002.

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Point No.(ii):

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In the result, the Securitization Application is allowed by quashing all the measures of the respondent bank against the SA schedule^property under the^provisions of the Act, 2002.

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However, this order does not^preclude the respondent bank from initiating measures afresh against the SA schedule^property strictty in accordance witna*fu>9

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page 5 of 5

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SA No.3212023No.3212023

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ConsequenUy, SA No.3212023No.3212023 stand closed. Interlocutory Applications pend ing, if anyt shall

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No order as to costs.

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13, Communi uproad in rhe "":::: ffiil":r this order to rhe parries concerned and

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(.Typed to my dictotion the le'h ,ri;;;;;i::;,'r':;:;

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corrected, stsned ond pronounced by me in the open court on this

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(Ra "_T5;s,xtlfP#l?

Chavasuresh Babu v. Union Bank of India

Case brief

What is this about?

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Chavasuresh Babu v. Union Bank of India

Case brief

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