Disposed

Sai Balaji Function Hall v. State Bank of India

DRT12 Nov 2025SA/330/2023

Case brief

AI extract

What is this about?

This application under Section 17 of the SARFAESI Act challenged the bank's initiation of proceedings to take physical possession and auction schedule properties. The Tribunal held that no auction was conducted per the stay order and set aside the application, directing the bank to issue a fresh sale notice after complying with the Act.

What did the court decide?

The application is dismissed. The Respondent Bank is directed to proceed afresh for conducting auction by issuing a fresh sale notice duly following the SARFAESI Act and Rules.

Sai Balaji Function Hall versus State Bank of India — Company and Corporate | DRT (2025)

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IN THE DEBTS RECOVERYTRIBUNAL - 1 AT HYDERABAD DATED THIS THE I 2TH DAY OF NOVEMBER, 2025

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PRESENT: SRI GUMMADI GoPICHAND, PRESIDING oFFICER

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sA.No.33O/2C23

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M/s Sai Balaji Function Hall, !9n.^{tfits Proprietor Sri Bandarapu Ramesh,} S/o Chandraiah, R/o 2l-42, Viveknanda Nagar, Saroornagar, R.R. District-sOO 035..

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... Applicant

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Versus

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State Bank of India, The Authorized oflicer Stressed assets Recovery branch, 2"d floor, TSRTC Commuter Amenity Centre, Bus Terminal Complex, Koti, Hyderabad-5O0 095. ... Respondent Bank

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Counsel for the Applicant : Si G. DineshKumar Counsel for Respondent bank : Si C.Prabhakar Reserved on : 16 .10.2025 Pronounced on : 12.1 1.2025 Uploaded on :13.11.2025

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ORDER

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l. This Application is Iiled u/s.17 of the Securit ization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2oo2 (SARFAESI Act,2oo2l challenging the steps initiated by the Respondent for taking the schedule properties through advocate in Cr1.M.P.No.3O9/23 on the file of Ld.CMM, R.R. District Notice dt. 16.10.2023 issued by

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ilot/ 2t[5 <sup>* -s€.+E

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the Respondent bank for conducting auction of the schedule propert5r (Item-I) on 04.12.2023 and to declare the same as null and void.

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

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The Applicant availed Home loan from the Respondent Bank by creating mortgage against the schedule property-I and thereafter availed another FBTL loan and mortgaged Item Nos.rl & III schedule properties as securit5r for the repayment of the said loan. The Respondent declared the loan accounts of the Applicant as NpA and put Item No.I of the schedule property for auction. The Respondent bank without following the procedure laid down under the provisions of sARFAESI Act, 2002 and Rules made thereunder, approached, Ld.cMM, R.R. District for taking physical possession of Item Nos. II&III of schedure properties. The impugned possession notice dt.07. 06.2023 was not served on the Applicant and the said possession notice was not affixed on the schedule properties and the same was not pubrished in newspapers. The impugned sale notice was not affixed on the schedule property and it was not published in two leading newspapers. Hence the SA.

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The Respondent filed their Reply and Additional Reply denying all the adverse allegations made in the sA and contended that in view of the default committed by the Applicant in repaying the loan dues, the Respondent declared the roan accounts of the Appricant as NpA on L8.o2.2023- Thereafter, the Respondent issued demand notice dt.20.o2.2023 u/s r3(2) of the SARFAESI Act, 2002 and. the same was received by the Applicant. Thereafter, the Respondent issued possession notice dt.07.06.2}25 :uiSli(4) of the Act,2002 and the sarne was received by the Applicant and the sdid possession notice was published in two daily .-', x,, \ newspapers and also "rn".a'L;r,q schedure properties. Thereafter, the Respondent issued^.iidriou" sdi."..l'potices dt.2O.OZ.2023, 16.10.2023, 22.t2.2o23 fi.d2bd{N affitz.oi.nz+ but in pursuance of the said sare notices, no -auction was -' Ii ,. ^...'coqdi:itjd by the Bank. The Bank filed

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Cr1.M.P.No.309/23 before the Ld.CMM, R.R. District u/s 14 of the SARFAESI Act, 2OO2 for taking physical possession of Item Nos.II & III schedule properties through advocate commissioner and the Bank took physical possession of the Item No.I of the schedule property through advocate commissioner on 05.10.2023 but possession of the other two properties was not taken by the Respondent. Thus the bank has duly followed the procedure laid down under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder and there are no violations. Accordingly, the Respondent Bank prayed to dismiss the SA.

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Heard Ld. Counsel for the Applicant and Ld. Counsel for the Respondent Bank. Perused the material brought on record.

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Now the points that arise for consideration are

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wlrcther the Applicant has established ang ualid grounds for challenging tte Sale Notice dL16.10.2125 issued bg the Respondent

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for^{conducting auction} of^{the scledule property?}

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Whether the Applicant has established any ualid grounds for

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cLnllenging tlrc steps initiated bg the Respondent for taking phgsical possession of the schedule propertg-I through aduocate commissioner?

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ii. To uhat relief?

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Points IVo.lil&(iif :-

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During the Ld. Counsel for the Applicant and Ld. Bank reiterated their respective versions as

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12 NDU ?825

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The undisputed facts of the case are that the Applicant availed loan facilities from the Respondent Bank and created mortgage against the schedule properties and thereafter, the Applicant committed default in repaying the loan dues.

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The specilic contention of the Applicant is that without serving possession notice to the Applicant and without complying with Rule g(l)(2) of Security Interest (Enforcement) Rules, 2oo2, the Respondent Bank issued the impugned sale Notice dt.r6.ro.2o23 for conducting auction of the schedule property and also trying to take physicar possession of the schedule properties through advocate commissioner and so, the said proceedings initiated by the Respondent Bank are illegal and liable to be set aside.

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Per contra, Respondent contended that the Respondent 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 and the bank also followed the procedure contemplated under the provisions of SARFAESI Act,2oo2 and Rules made thereunder in initiating steps for taking physical possession of the schedule properties.

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During the course of arguments, Ld. counser for the Respondent submitted that in pursuance of the impugned sale notice dt. 16. 10.2023, no auction was conducted by the bank in view of the stay granted by this Tribunal. However,.the Respondent took physical possession of the Item No. 1 scheduie. DroDertv-. fi' :tr{:a-j{='J^{t_---:1= -r '-:.:} -.:':.'^i:^{:. .-} - sii--. .!, .! ,'"ri.. 7 " r " : ; -^{'" -'}^{"-''* i} ;^{-r '"ni.,.} "hi\iRit ':\ k p .I,li rtr \ ' $ :.}:' 'ir.tl"' '.ti by\i,the Respondent for taking physical 11. So far Asth. fTlfiOt"Z,fift,ed possesse{rjpl [f the ?:fi",i:'?ffi:i3'*:X::1::::::"::'"Yschedule property are concerned, the Respondent Bank enclosed nt material ddcuments along with the Reply filed by them

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.- . , 4

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to establish that the Bank scrupulously followed the procedure contemplated under the provisions of sARFAESI A ct, 2oo2and Rules made thereunder' As per the said documents, it is clear that the Respondent Bank issued demand notice dt.20.02.2o23 u/s 13(2) of the SARFAESI Act'2002 and the Applicant received the said notice as evidenced by his signature on the office copy of the said demand notice. After receipt of the said demand notice, the Applicant has not submitted any objections. when the Applicant failed to comply with the said notice, the Respondent Bank issued possession notice dt.07.o6.2023 and sent the same to the Applicant and the said notice was received by the Applicant as evidenced by his signature on the office copy ofthe said possession notice and the said notice was published in two daily newspapers as evidenced by the copies ofpaper publication filed by the bank and the said notice was afrrxed on the schedule properties as depicted in the photographs filed by the Bank. Thus the Respondent Bank has scrupulously followed the procedure prescribed under Rure g(r)(2) of security Interest (Enforcement) Rules' 2002 in issuing possession notice against the schedule properties.

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12' As per the provisions of Section 14 of sARFAESI Act, 2002, after issuance of possession notice u/s 13(a) of the Act, 2002, the secured 'ARFAESI creditor is at riberty to approach the concemed District Magistrate or chief Judicial Magistrate for taking physicat possession of the secured asset. In the instant case, after issuing demand notice and possession notice to the Applicant, the Respondent being secured creditor, approached Ld'cMM, R.R. District u/s 74 0f the sARFAESI Act, 2002 for appointment of advocate commissioner for taking physicar possession of the schedule properties. Ld.CMM, R.R. District after going through the record, appointed advocate commissioner. In fact, the Respondent took physicar possession gf;-!t* s.chedule property at Item No.I through advocate comr*issioner and thd has not taken physical possession of Item NosaII&lII scheflt e prr . So, the said proceedings initiated by the i:,-^{17 ttqri :tY';'} :1 ::: r', i .lii-_ .:. r4.1,^, ,

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Bank for taking physical possession of the schedule property_I through advocate commissioner are perfectly legal and valid.

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13' Even though the Respondent bank issued various sale notices incruding the impugned Sale Notice dt. 16.10.2023 for conducting auction of the schedule property-I, no auction was conducted by the bank in pursu€rnce of the said sale notices. So there is no need to decide t}le validity or otherwise of the impugned Sale Notice dt.16.1O.2023 issued by the bank in respect of the schedule property_I. These points are answered accordingly.

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Potnt No.(til)t

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In the result, sA g3o/ 2023 is dismissed as there are no merits. The Respondent Bank is directed to proceed afresh for conducting auction of the schedule properties by issuing fresh sale notice by duly following the provisions of SARFAESI Act,2oo2 and Rures made thereunder.

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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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Y:f ,"r|-r;";^r,":::.*1,!u^{n1n aa1c1ed, sisned and pronounced"bs me in the open}

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Sai Balaji Function Hall v. State Bank of India

Case brief

What is this about?

What did the court decide?

Sai Balaji Function Hall v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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