Dismissed

Ms Sai Srinivasa Mechanical Works Rep by Vemula Srinivasa Rao v. Union Bank of India (Corporation Bank)

DRT16 Sept 2025SA/335/2023

Case brief

AI extract

What is this about?

Applicant challenged possession and e-auction sale notices under the SARFAESI Act, claiming procedural defaults. Tribunal held notices were validly served. Auction notice became infructuous due to a stay. Application dismissed; bank ordered to issue fresh sale notice after complying with statutory procedures.

What did the court decide?

Application dismissed; Respondent Bank directed to proceed afresh for auction by issuing a fresh sale notice following SARFAESI Act provisions.

Ms Sai Srinivasa Mechanical Works Rep by Vemula Srinivasa Rao… — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERYTRIBUNAL _ 1 AT HYDERABAD DATEDTHISTHE I6TH DAYOFSEPTEMBER,2O2S

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PRESENT: SRI GUMMADI GOPICHAND, PRESIDING oFFICER

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sA.No.335,/2c23

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M/s Sai Srinivasa Mechanical Works, Rep. by its Prop. Sri Vemula Srinivasa Rao, S/o Vemula Kannaiah, aged 47 years, Situated at Sy.No.S 126, Gudibanda Road, Kodad Town & Mandal Suryapet District-SO8 206

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... Applicant

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Versus

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Union Bank of India Rep. by its Authorized officer Kodad branch, D.No. 1-2618, r-26 / 8 / A, Aleti Kasaiah Venktaravamma Complex, Suryapet Road, Kodad, Suryapet District-SO8 206.206.

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Suryapet District-SO8 206.206. ... Respondent Bank Counsel for the Applicant : Sri D.Ragharrulu CoUnselfor Respondent bank ; Sn M. V.S. Prasad

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ORDER

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This Application is filed u/s. l7 of the securitization and Reconstruction of Financial Assets and Enforcement of Securitlr Interest Act, 2OO2 (SARFAESI Act,2oo2) challenging the possession Notice dt.25.0g.2023 and also the e Auction Sale Notice dt. 13.10.2023 issued by the Respondent Bank for conducting auction of the schedule property on 16. 1 1.2023 and to declare the same as

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The averments made as follows: I.

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The Applicant is involved in the business of power Track, Tractor dearers and service centre and availed various credit facilities from the Respondent Bank for development of business by creating mortgage in respect of the schedule properties. Due to Covid-19, the Applicant could not pay some instalments and the Respondent bank declared the loan accounts of the Applicant as NPA without following the RBI guidelines. The bank initialry issued demand notice dt.30.01.2023 and possession notice dt.2g.o4.2023 but suppressing the same, the Bank again issued demand notice dt.17.o5.2o23 and possession notice d,t.2s.oa.2o23 without cancelling or withdrawing the earrier notices. The said possession notice was not served and not published in newspapers and the same was not afhxed on the schedule properties. The impugned e Auction sale Notice dt. 13.10.2023 was not served on the Applicant and also not affixed on the schedule property. Before issuing the impugned sale notice, the Bank has not issued Rule 8(6) notice for giving an opportunity to the Applicant to redeem the secured assets. The Respondent bank has not obtained valuation from the approved valuer for fixing the reserve price against the schedule property. Hence the SA.

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The Respondent Bank filed their Reply denying all the adverse aregations made in the SA and contended that the Appricant availed various credit facilities from the Bank by creating mortgage against the schedule properties to secure the said l0ans and thereafter committed defaurt in repaying the loan dues and so, the loan accounts were classified as NpA on 27.01.2023 as per the RBI guidelines. The Respondent Bank issued demand notice dt.17.O5.2O23 to the Applicant and others and the said notice was personally served on the Applicant and the bank also published the same in two daily newspapers and also affxed on the schedule properties. As t failed to comply with the said demand notice, notice dt.25.Oa.2O23 u/s 13(a) of the Act and sent$r Applicant through Regd. post and the said . on the schedule properties and it was 2

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published in two leading newspapers. The Applicant is aware of the demand notice and possession notice issued by the Bank and challenging the said possession notice dt.25.o g.2023, sA 269 / 23was filed. Thereafter, the Bank issued e Auction sale Notice dt. 13.10.2023 for conducting auction of the schedule properties and chalrenging the said sale notice, the Applicant fiedr.A.2623l23 seeking stay of all further proceedings and this Tribunal granted interim stay. Accordingly, Respondent Bank prayed to dismiss the SA.

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A Heard Ld. counsel for the Applicant and Ld. counsel for the Respondent Bank. Pemsed the material brought on record.

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Now the points that arise for consideration are

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i. u.thether tle Applicant has establisled ang ualid. ground.s for challenging the^possessio n Notice dt.25.0g.2o23 and e Auction Sale Notice dt.13.10.2023 issued bg tle Respond.ent against the sclrcdule properties?

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ii. To ruhat relief ?

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Po{nt JVo.(i}:-

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During the course of arguments, Ld. Counsel for the Applicant and Ld.

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Counsel for the Respondent Bank reiterated their respective versions as

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stated supra.

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The undisputed facts of the case are that the Applicant availed various

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credit Bank by creating mortgage against

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the committed default in repaying the

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loan d ; * I E srp 17( :ll w,,*45r?i', "{;exP'r

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The specific contention of the Applicant is that without serving demand notice and possession notice, the Respondent Bank straightaway issued the impugned sale notice dt. 13.10.2023 and the Bank also failed to follow Rule 8(6) & 9(1) of security Interest (Enforcement) Rules, 2002 and so, the said sale notice is illegal and liable to be set aside.

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Per contra, Respondent bank contended that the Bank has scrupurousry followed the procedure contemplated under the provisions of SARFAESI Act' 2oo2 and Rules made thereunder in issuing a]l the statutory notices to the Applicant.

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In order to substantiate their contention, the Respondent Bank filed relevant material documents along with the Reply filed by them. As per the said documents, it is clear that the Respondent Bank issued demand notice dt. 17.05.2023 u/s 13(2) of the SARFAESI Act,2O02 and sent the said notice to the Applicant and others through Regd. post and.the said notice was also published in two reading newspapers and also affixed on the schedule properties. Thus there is valid service of demand notice on the Applicant. when the Appricant failed to comply with the said notice, the Respondent Bank issued possession notice d,t.2s.og.2o23 and sent the same to the Applicant through Regd. post as evidenced by postal receipts filed by the Bank. The said possession notice was published in English and Telugu daily newspapers as evidenced by the copies of paper publication filed by the Bank and the same was also affixed on the schedule properties as depicted in the copies of photographs l ed by the Bank' In fact, the Applicant arso fired copy of the said notice along with the SA !]:_9 !f them. Thus the Bank has scrupulously followed Rule 8(1 Interest (Enforcement) rules, 2002 in issuing )^{ofthe SARFAESI} Act,2OO2 to the Applicant.

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16StP2ffi

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so far as the impugned e Auction sale Notice dt. 13.10.2023 is concerned, the Bank filed memo stating that no auction was conducted by the Respondent Bank in pursuance of the said sale notice in view of the stay granted by this Tribunal and so, the said sale notice becomes infructuous and hence there is no need to decide the validity or otherwise of the said sale notice dt.r3.10.2023 issued by the Respondent Bank. This point is

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' answered accordingly.

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Potnt No.(tl)r

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In the result, SA 335/ 23 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 Rules made thereunder.

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