Dismissed

M S Diya Metal Works v. State Bank of India

DRT30 May 2025SA/35/2023

Case brief

AI extract

What is this about?

In an application under Section 17 of the SARFAESI Act, the applicant challenged the validity of a bank's auction of mortgaged property. The court found the bank followed statutory procedures including demand, possession, and pre-sale notices, and dismissed the application.

What did the court decide?

The security application filed by the applicant challenging the auction is dismissed; interlocutory applications pending, if any, are disposed of.

M S Diya Metal Works versus State Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERYTRIBUNAL- IAT HYDERABAD

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DATED THISTHE 3OTH DAY OF MAY, 2025

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No.35,/2023

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M/s Diya Metal Works, Rep. by its Managing partner Shaik Mohammed Nasar S/o Shaik Abdul Rouf, Aged 51 years, Occ:business, G- 15/ 1, Husssain Sab Road, Rural Industrial Area, Alipur, Zaheerbad.

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..Applicant

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Versus

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State Bank of India, Rep. by its Authorized officer Highway Road branch, Zaheerabad, Sangareddy Dist.

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.. Respondent

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Counsel for the Applicant Counselfor the Respondent Bank

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Sn T.Vijag Kumar Si G. Prabhakar Sharma

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.:ORDER:-

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This application is filed by the Applicant u/s. 17 of the SARFAESI Act, 2OO2, challenging the auction conducted by the Respondent Bank on 19.O1.2023 in respect of the schedule property pursuant to the Sale Notice dt. 15.12.2022 and to declare the same as null and void.

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The av

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in the application, in brief, are that:

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ffitr of Rs.20 lakhs from the Respondent & the yeer20t4 ter, committed default in repaying ent Bank published the demand notice

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dr.30.10.202 1 u/s 13(2) of the SARFAESI Act,2002. Thereafter without issuing any possession notice, the Bank straightaway issued sale notice for conducting auction of the schedule property on 19 .O1 .2023. The impugned possession notice was not published in two leading newspapers nor affixed on the schedule property and no pre-sale notice u/r 8(6) of Security Interest (Enforcement) Rules, 2OO2 was issued to the Applicant before issuing the sale notice and hence the auction conducted by the Respondent bank on 19.01.2023 irr respect of the schedule property is liable to be set aside. Hence the SA.

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The Respondent Bank filed their Reply denying all the adverse allegations made by the Applicant and contended that the Applicant after availing loan from the Respondent, committed default in repaying the loan dues and so, the loan account was classified as NpA on 13.09 .2021 and the Respondent Bank issued demand notice dt.30.10.2021 u/s 13(2) of the SARFAESI Act,2002 and the said notice was acknowledged by the partners of the Applicant flrm. Thereafter, the Respondent issued possession notice dt.07.01.2022 and the said notice was published in Financial Express and Velugu daily newspapers and the said possession notice was also affixed on the schedule property.Thereafter, the Respondent Bank issued Notice Prior to Sale dt.25.02 .2022 ulr 8(6) of Securit5z Interest (Enforcement) Rules, 2002 and the said notice was received by the Applicant. Thereafter initially the Bank issued Sale Notice dt. O9.LO.2O22 fixing the date of auction on 1 1.1 1.2022 but no auction was conducted in pursuance of the said sale notice. Thereafter the Bank issued the impugned Sale notice dt.15.12.2o22 by fixing the date of auction on 19.01.?!A8f,an*:tbe said sale notice was published in two daily "gvftn'ariEf^dlarrfti affixed on the schedule property and the said ndti6'e was hfso tne Applicant. The aucrion purchaser paid ti l!' tr'-j $\ the entire bid a mount.iadd sale certificate was also issued in his r o.,.3iJ)^ilru.6[i1 or-.pr.ti .ii ""r,.aute property. Thereafter, physical 3^,+ 2

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possession of the schedule property was delivered to the auction purchaser, SriPrashanth Reddy. Accordingly, Respondent Bank prayed to dismiss the SA as there are no merits.

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

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Now, the points that arise for consideration are,-

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Whether the Applicant has established anA ualid grounds for challenging the auction conducted bg the Respondent Bank on 19.01.2023 in respect of the schedule property?

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ii) To what relieJ?

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Polnt No.lil t

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There is no dispute regarding the fact that the Applicant availed loan from the Respondentbank andcreated mortgage inrespect of the schedule property as security for the loan facilities and thereafter the Applicant committed default in repaying the loan dues. The Applicant is not disputing the fact that the Respondent issued demand notice dt.30. 10.2021 u/s 13(2) of the SARFAEI Act, 2002.

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But the specific contention of the Applicant is that without issuing possession notice u/s 13(a) of the SARFAESI Act, 2OO2, tlre Respondent bank straightaway issued sale notice and conducted auction of the schedule property on 79.01.2023 and so, the said auction is not valid and liable to be set aside.

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bank contended that the Bank has duly ntemplated under the provisions of

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f$f pact;aOAfi and"Rules made rhereunder in issuing all the t and also in conducting auction of the 3

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schedule property and so, the said auction is perfectly legal and valid.

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The Respondent bank in order to substantiate their contentions, enclosed relevant material documents along with the Reply filed by them. As per the material documents filed by the Respondent Bank, it is clear that the Respondent bank issued demand notice dt.30.10.202 I to the Applicant u/s 13(2) of the SARFAEST Act,2OO2 demanding to pay the entire outstanding dues and admittedly, the Applicant received the said notice. But it is not the case of the Applicant that subsequent to the receipt of the said notice, the Applicant paid any amounts to the Respondent Bank. So in view of the non-compliance of the said demand notice, the Respondent Bank issued possession notice d,t.O7.Ol.2022 to the Applicant and the said notice was received by the applicant as evidenced by the signatures of the partners of the Applicant firm on the office copy of the said notice. The said notice was affixed on the schedule property as depicted in the photographs liled by the Bank and the said notice was published in two daily newspapers as evidenced by the copies of paper publication filed by the Bank. Thus, the Respondent Bank has followed Rule 8(1)&(2) of Security Interesr (Enforcement) Ruies, 2002 in taking possession of the secured asset. Thereafter, the Respondent bank issued Notice of Intended Sale dt.25.02 .2022 :ulr 8(5&)(6) of Security Interest (Enforcement) Rules, 2OO2 for giving an opportunity to the Applicant to redeem the secured asset and the said notice was received by the Applicant as evidenced by the signature of the Applicant on the office copy of the said notice. Before issuing the Auction Notice, the Bank obtained valuation report from the approved valuer and fixed reserve price of the schedule property. Thereafter, the Respondent-Bank issued the impugned Sale Notice

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hi S admittedly received by the Applicant. The said /ffiffiFH ed in Nava Telangana and Business Standard ,/l^{#*"n.n#asevil} ,d^{by the copies of paperpublication filed by} !^{,roti". was also} affixed on the schedule I ii.]n.^frnu?"6dh" )-sl..j I 4 *"//

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property as depicted in the photographs filed by the Bank. Thus, it is clear that the Respondent bank has scrupulously followed the procedure as contemplated under the provisions of SARFAESI Act, 2OO2 and Rules made thereunder in issuing the possession notice and pre-sale notice and auction sale notice to the Applicant.

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When the present SA is filed challenging the auction conducted by the Respondent Bank on 19 .O1.2O23 in respect of the schedule property in pursuance of the Sale Notice dt. 15.12.2022, the Applicant is expected to implead the auction purchaser as Respondent in the SA but for the reasons best known to the Applicant, the Applicant has not impleaded the auction purchaser as Respondent in the SA. So, considering all the circumstances and the material evidence filed by the Bank, I hold that the auction conducted by the Respondent Bank on 19.O1.2023 in respect of the schedule property pursuant to the Sale Notice dt.15.12.2o22 is perfectly legal and valid and it is strictly in accordance with the procedure laid down under the provisions of SARFAESI Act,2OO2 and Rules made thereunder. So, I see no ground warranting the interference of this Tribunal with the impugned auction conducted by the Respondent Bank in respect of the schedule property. This point is answered accordingly.

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Polnt No.lll)t

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In the result, the present Securitization Application is dismissed. 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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blj her, cotected, signed. and pronounced. by me in the open courl on this the 3Gh

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. (G. GOPTCHANDI
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M S Diya Metal Works v. State Bank of India

Case brief

What is this about?

What did the court decide?

M S Diya Metal Works v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

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