Dismissed

Pushpa Trading v. State Bank of India

DRT14 Jul 2025SA/361/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's challenge against a possession notice issued under the SARFAESI Act by State Bank of India. The court held that the bank followed the prescribed procedure regarding affixing and publishing the notice and that the classification of the loan account as NPA was lawful. Consequently, the application was rejected.

What did the court decide?

Application dismissed; interlocutory applications disposed of; no order as to costs.

Pushpa Trading versus State Bank of India — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERYTRIBUNAL-I AT HYDERABAD

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DATED THIS THE I4TH DAY OF JUNE, 2025

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No.36l /20.23

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M/s.^pushpa Trading, I:p Pf^{its proprietorSri Ajay Damani,} S/o. Madhodas Damani, "i.i aS v.".", Gender: Male, Occ: Busine-ss,

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R/ o.3-2_Z 28, Rahmath Bagh, Chappal Bazar, Kachiguda, Hyderaia d-SOCi;i.

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Smt^pushpa Devi Damani,

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W/o. Madhodas Damani, aged 73 years, Gender: Female, Occ: Hous-ewife, " R / o.a -S -7 09, Kutbiguda, Badichowdi. Kachiguda, Hyderabad _ SOO O2T.^--'

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Applicants.

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Versus

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State Bank of India, Stressed Asset Recovery Branch, 2"a Floor. TSRTC Commuter Amenity_ Centre, Bus Terminal Complex, Kotil Hyderabad - 5OO O9S.

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Rep. by its Authorized Officer.

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Respondent.

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Counsel for the Appticants : Sri V. Rouinder. Counsel for lhe Respond.ent ; Smt Tarangini pisipati.

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-:ORDERi

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The present application is filed by the Applicants u / s.l7 of the Securitization and Reconstruction of pinancial Assets ald Enforcement of Interest Act, 2OO2, challenging the Possession Notice issued u/s. I3(a) of the SARFAESI Act, r/w. Rule 8(t) of the (Enforcement) Rules, 2O02, in respect of the application

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1 4'ffftffi "*

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SA.No.361/2023

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The averments made by the Applicants in the application, in brief, are that, the Applicant No' I has ava,ed cash credit limit of Rs.2.40 crores, GECL (Guaranteed Emergency credit Line) 10an of Rs.sg.oo lakhs, sLC (Standby Letter of Credit) loan of Rs.6O.OO lakhs and another GECL loan of Rs.3O.OO lakhs, thus totaling to Rs.3.gg crores from the Respondent Bank. Applicant No'2 stood as guarantor for the due repayment of the said credit facilities and has also mortgaged the apprication schedule property in favour of the Respondent Bank as security for the said credit facilities. Thereafter due to Covid-19 lockdown, the Applicants could not pay the original loan amount but' have paid interest towards the loan account. The Respondent Bank, without foll0wing the RBI guidelines issued during the covid-1g pandemic, classified the roan account as NpA on 03.01.2023. The Applicants received a notice d't'o7 'o1'2023 from SBI Kattedan Branch, wherein it is stated that the ioan account was classified as NpA on O3.Ol .2023 and the Bank, without waiting for the reply of the Applicants, issued Demand Notice dt'og '01'2023, wherein it is mentioned that the roan account of the Applicants became NpA on 2 different dates i.e., 03.O1.2O23 and 06.01.2023. Thereafter, the Applicants received another Demand Notice dt'27 '01'2023 from SBI Kattedan Branch, wherein it is stated that the Bank has withdrawn the earlier Demand Notice dt.og.01.2023 and it is further stated that the 10an account has been classified on 03.01.2023. The SBI Kattedan Branch has pubrished another Demand Notice dt.26.0 2.2023 in the newspapers, which was never served on ,the Applicants. The Applicants sent their objections dated 03.04.2023, to the Demand Ntocie dt.27.or.2o23 and to the published Demand Notice dt.26.02.2023 to SBI Kattedan Branch and the Bank issued reply dated 17.O4.2O23, without providing any information. Thereafter, the Applicants received another tice dt.30.06.2023 from the Respondent Bank, wherein it is {$. loan account was classified as NpA on O4.O1.2O23. So, the # B{i![ itself of mind. The said Demand Notice is totally vague

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SA-No.361/2023

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without any particulars of outstanding due amount i.e., principal and interest, rate of interest charged etc. The Applicants issued reply dt.08.09.2023 u/s. 13(3A) of the SARFAESI Act, to which the Respondent Bank sent its reply dt.16.O9.2023, without any explanation to the reply/ objections taken by the Applicants. Immediately thereafter, the Respondent Bank has issued the possession Notice dt.21.09.2023 u/s. 13(a) of the SARFAESI Act in respect of the application schedule property. The Respondent Bank has not alfixed the Possession Notice on the schedule property and has also not published the said notice in two newspapers, including one in vernacular language and thus violated the procedure laid down under the SARFAESI Act and the Rules made thereunder. Hence, the SA.

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The Respondent Bank filed its Reply Statement degrying all the adverse allegations made in the application. The contentions of the Respondent Bank, in brief, are that, the Applicants after availing the financial facilities from the Respondent Bank, failed to repay the same as per the agreed terms and conditions, which resulted in the classification of the loan account as NPA on 04.O1.2023, as per the RBI guidelines. The Respondent Bank filed OA.No. 165/2023 on the file of this Tribunal and was was allowed on 18.01.2024. The notice dated 07.01.2023 and Demand Notice dt.09.01.2023, u/s. 13(2) of the SARFAESI Act, were issued by Respondent Kattedan Branch and in both the notices the date of NPA was mentioned as 03.01.2023 for SLC & GECL and 06.01.2023 for CC and GECL-Ext loans. Thereafter, the Respondent Kattedan Branch has issued another Demand Notice dt.27 .O1.2023 by withdrawing the earlier Demand Notice dt.09.01.2023. As per the procedure of the Bank, once the accounts are NPA, same are to be transferred to the Respondent Bank SARB Branch and accordingly the loan accounts of the sferred on 21.O2.2O23 and same was communicated to e letter dt.23.O2.2O23. Subsequently, it is found that due the date of NPA was wrongly mentioned as 03.01.2023

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SA.No.361/2023

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and 06'01'2023, whereas the actua-l NpA date is o4.01.2023. Since the Respondent Bank is the competent authority to initiate SARFAERSI proceedings and to rectify the clerical mistakes, which crept in the earlier notices, the Respondent Bank has issued fresh Demand Notice dated 30'06.2023 by withdrawing the earlier Demand Notice dt.27.0 r.2023. T,e Applicants admitted the receipt of the said Demand Notice dt.30.0 6.2023. The Applicants sent their objections dated 0g.09.2023, to the said Demand Notice dt.30.06.2o23 and the Respondent duly replied the same vide retter dt.16.o9.2023. Thereafter, the Respondent Bank issued possession Notice dt.21.o9.2023 and took symbolic possession of the apprication schedule property. The Applicants admitted the receipt of said possession Notice. The Respondent Bank affixed the possession Notice on the schedule property and also published the said notice in ,Mana Telangana, Telugu and 'The South India Times,English newspapers dated 23.09.2023. So, the Respondent Bank has duly followed the procedure laid down under the SARFAESI Act and the SA is liable to be dismissed.

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Heard both Counsels.

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Now, the points that arise for consideration are,-

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i) whether the Applicant has established any grounds for setting aside the proceedings initiated by the Respondent Bank under the SARFAESI Act against the application schedule property?

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ii) To what relieP

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a_..:-ri+;: rh$fliis no ,ith regarding the fact that the Applicants availed financial * schedule 'h Covid- 19 veat^{2o2o, there} was delav in repavment or the loan hm:ru,#' sfm?':

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SA-No.j61/2O23

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installments and however they paid interest regularly but, the Respondent Bank without following the RBI guidelines crassified the roan accounts of the Applicants as NpA. The Applicants admitted that there is delay in payment of loan installments in the year 2020 due to Covid_19 pandemic. Admittedly, the loan accounts of the Applicants were classified as NpA in the year 2023. lt is not the case of the Applicants after covid- 19 pandemic they paid the loan instarments reg,larry. So, it cannot be said that the Respondent Bank has classihed the loan accounts of the Applicants illegally without following the RBI g,iderines. As regards the contention of the Applicants that the Respondent Bank has mentioned different dates of classification of the loan accounts as NpA in its Notice dt.oz .or.2o23, Demand Notice dt.09.0r.2023, Demand Notice dt.27.0 7.2023 and Demand Notice dt.30.06.2023 is concerned, the Respondent Bank has clarified that due to clerical mistake, the dates of classification of the loan accounts was wrongly mentioned in the Notice dt.OT.Ol.2023, Demand Notice dt.09.01.2023 and Demand Notice dt.27.0 r.2023, which were issued by Respondent Kattedan Branch and after transfer of the loan accounts to Respondent Bank i.e., SARB, the said mistake was rectified ald a fresh Demand Notice dt.30. 06.2023 was issued by withdrawing the earlier Demand Notice and the actual date of classification of loan accounts of the Applicants as NPA is duly mentioned as 04.01.2023. The Respondent Bank by withdrawing all the earlier notices, issued fresh Demand Notice dt.30.06.2023 and proceeded further on the basis of the said Demand Notice dt.3o.06.2o23. So, I do not find any illegality or irregularity in the said action of the Respondent Bank. Admittedly, the Appricants after receipt of the said Demald Notice dt.3o.06.2023, sent their objections vide letter dt.08.09.2023, to which the Respondent Bank sent a detailed reply 023. So, there is a due compliance of Sec. 13(3A) of the by the Respondent Bank. Thereafter, the Respondent Bank Notice dt.21.09.2023 u/s. 13(4) of the SARFAESI Act, by the Applicants. The Applicants contended that m" Bank has not affixed the said notice on the schedule

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1r,ffif m"

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SA.No.361/2023

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property and has also not published the said notice in two newspapers, including one in vernacular language. The Respondent Bank fiIed its material documents along with its Reply Statement, wherein a copy of photograph depicting affixture of Possession Notice on the schedule property and copies of 'Mana Telangana' Telugu and 'The South India Times' English newspapers dt.23.O9.2O23, evidences the fact that the Possession Notice was affixed on the schedule property and thereafter published in two newspapers, including one in vernacular language in compliance of Rule 8(1) & 8(2) of the Security Interest (Enforcement) Rules, 2002.

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So, in view of the aforesaid facts and circumstances, I hold that the Respondent Bank has duly followed the procedure laid down under the SARFAESI Act, while issuing the Possession Notice u/s.13(a) of the SARFAESI Act. Accordingly, this point is answered against the Applicants and in favour of the Respondent Bank.

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Point No.(tl):-

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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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(Dictated to the Priuate Secretary, transcibed by her, corrected, signed and pronounced. by me in the open court on this the 14th daA of Julg, 2025).

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sd/(G. GOPTCHAND) PRESIDING OFFICER

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offi,i+itE*eYao'

Pushpa Trading v. State Bank of India

Case brief

What is this about?

What did the court decide?

Pushpa Trading v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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