Dismissed

Smt K Aruna and another v. Bank of Baroda

DRT8 Jul 2025SA/438/2023

Case brief

AI extract

What is this about?

In this Securitisation Application, the applicants challenged a Rule 8(6) notice and possession notice issued by Bank of Baroda, citing valuation discrepancies. The court held the challenge devoid of merit as the sale notice based on the valuation had not been issued, and-setting aside the possession notice was unnecessary. The application was dismissed.

What did the court decide?

The Securitisation Application was dismissed; pending interlocutory applications stand closed.

Smt K Aruna and another versus Bank of Baroda — Company and Corporate | DRT (2025)

¶1

IN THE DEBTS RECOVERY TRIBUNAL^_ II AT HYDERABAD

¶2

DATED THIS THE EIGHTH DAY OF JULY, 2025

¶3

PRESENT: SH. RAMESHWAR KOTHE, B.Com., L.LB. (Hons.), M.A. PRESIDING OFFICER

¶4

SECURITISATION APPLICATION No.438 OF 2023

¶5

Mrs. K. Aruna, W/o K. Saibaba Age: 65 years, 22-8-1 52/14 Upadhyaya Nagar Karkambadi Road Akka ra m pa ll i, Tiru pati.

¶6

Mr. K. Saibaba S/o K. Venkataswamy Aqe: 65 years, 22-8-152/1A Upadhyaya Nagar Ka rka m bad i Road, Akka ra m pa ll i Tirupati.

¶7

.......Applicants.

¶8

Versus

¶9

Bank of Ba roda TP Area Branch, D. No.66 Krishna Arcade, Nehru Street Opp: Pratap Theatre Tirupati, Ch ittoor Dist. Andhra Pradesh - 517 501 Rep by its Authorised Officer.

¶10

......Respondent.

¶11

Counsel for the Applicants : Mr. G. Srinivas. : Mr. Trivikram Chitturu. Counsel for Respondent

¶12

-:ORDER:-

¶13

The Applicant filed the present Securitisation Application u/s.17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act 2002") assailing

¶14

sA.438/2023

¶15

Rule 8(6) notice dated 15.09.2023 and the possession notice dated 12.09.2023 issued by the respondent bank against the Application schedule property.

¶16

The case of the applicant as per the SA averments, in brief, is applicants and their son run a partnership firm under the name and style of M/s. SAtvlK Hospitality restaurant in Tirupathi. The partnership firm availed a loan of Rs.1,50,00,000/- on 25.03.2019 from the respondent bank. Applicants stood as guarantors to the loan. The loan is secured by mortgage of SA schedule property. Despite Covid.19 Pandemic, applicants paid loan instalments. Respondent bank classified the loan account as NpA on 29.06,2022, followed by demand notice dated 30.06.2022, possession notice dated 03.09.2022. After receipt of possession notice, applicants deposited Rs.13,4O,OOO/- to get the loan account upgraded. Subsequenuy, respondent bank issued fresh demand notice dated 03.04.2023 and possession notice dated 01.06.2023. Appticant challenged the same by filing SA.302 of 2023, whtch ended in dismissat following withdrawal of possession notice by the respondent bank. Respondent bank issued a possession notice once again on 72.09.2023, followed notice u/r 8(6) on 15.09.2023, which are under challenge in the present SA. Applicants are senior citizens and residing in the SA schedule property. putting the property for sale under the Securitisation proceedings, would put them to heavy loss, mental agony and physical torture. Applicants request for an OTS has been rejected. Respondent bank has not carried the vatuation ,.rq"f:^rjo::ny as per

¶17

sA.43al2O23

¶18

the provisions u/r 8(5) of the Security Interest^{(Enforcement)} Rules, 2002. Thus, respondent bank has^{not followedthelaw} laid down in the decisions of^punjab and^{Haryana High Court} reported in AIR 2008^P & H^{148,Hon',bleSupremecourt in} swastik Agency & others vs. state^{Bank of India (AIR 2009} Orissa 147, Navalkha &^{Sonsvs. Ramanya Das (AIR 1970SC} 2037), ). Rajiv Suibramanyan^{vs. Pandiyasdealingwith} transparent valuation of a^{securedasset. Further,in Mardia} Chemicals case, the^{Hon'bleSupreme Court held that secured} creditor has to take high degree^{of caution in exercising any of} the rights under the Act and^{anynegligentor fraudulentacts} of the secured creditors^{cannotbe said to be bonafide act. As} per the valuation carried out by the^{applicantsvaluer/ the} value of the^{propertycomesto Rs.6 crores.}

¶19

Respondent bank filed^{reply statement. The relevant} submissions of the^{reply statementare, applicant filed present} SA challenging^{Rule 8(6) notice. The allegations relating to} earlier valuation are^{false' The valuation report of the} applicants is^{quite exaggerated. Applicants are at libertyto} identify^{purchasers matchingwiththeir valuation.Considering} applicants conditions,^{respondentbank waited nearly eight} months in taking the^physical Possession^{of the secured asset} through Advocate^{Commissioner on humanitariangrounds'} Despite impugned notice,^{applicantsfailed to redeemthe} property within 30 days of the^{issuance of Rule 8(6) notice'} The OTS^{proposalsubmitted by applicants is not acceptableas} per banklng regulations.^{Thereis no violation of any of the} provisions of the SARFAESI^{Act and the R!les there under in} '/ lnnq- 5'ot'' - . r-^-

¶20

sA,43al2l23

¶21

¶22

the securitisation measures taken by the respondent bank. With these submissions, respondent bank prayed for dismissal of the SA.

¶23

Appticants filed Rejoinder on 23.07.2024. While reiteraring the pleadings advanced in the reply statement, applicants submitted that they have complied the conditional order passed by this Tribunal on 18.10.2023 in IA.324912023 in the SA by depositing Rs.12,OO,0OO/_ against the outstanding dues of Rs.42,00,OOO/-. Hence, a lenient view shall be taken against the applicants.

¶24

Heard learned counsel appearing for the applicants and learned counsel appearing for the respondent bank. Perused the material brought on record.

¶25

Learned counsel appearing for the applicants would submit that the valuation of the property has not been carried out strictly in terms of Rule g(5) of the Security Interest (Enforcement) Rules, 2002. Respondent bank obtained valuations report on 19.09.2023 working out the market vatue at Rs.3,80,00,000/-. Whereas the market value as per the Applicants Valuer report dated 10.07.2023 is Rs.6,0O,1O,O0O/_ Therefore, respondent has not followed fair banking practices and reasonable and tran sparent practice in obtaining the varuation ofthe property.

¶26

Per contra, learned counsel for the respondent would submit that the apprehension of applicants over the reliability of the varuation carried out by the respondent bank-and the reserve ffi.,,.,

¶27

sA.43Al2023

¶28

price fixed in the valuation report is^premature to^{discuss at} this point of time. The impugned^{Rule 8(6) notice has been} issued to^put the applicants^{on notice for redemption of the} secured asset. The issue^{of valuationand reserve price cannot} be made as a subject^{matter of the present SA. As regardsthe} possession notice dated t2.09.2023, applicants^{have not} pointed out any flaw or infirmity in the^issuance of^the possession notice. Therefore, nothing remains for^adjudication in the^present SA. Hence, the^{SA is devoidof any merit and} nothing remains for adjudication'

¶29

B. Now the^points that arise^{for adjudicationare:-}

¶30

Ilhether the Applicants made^out any valid ground for^quashingthe Rule 8161 notice and Possession notice dated 12.09.2023. securitisation proceedings against the schedule property under^lhe provisions of Securitisation Act?

¶31

ii) To what relieJ?

¶32

Point No. (i)t

¶33

In this SA, applicants challenged^{Rule 8(6) notice dated} 15.09.2023 and the^{possession notice dated 12.09'2023'The} grounds urged in the SA are accuracy and^{reasonablenessin} valuation of secured asset. Applicants^{cited various} judgements on this aspect. The pleadings relating to the valuation reports, reserve^price are^{extraneousto the present} SA for the reason that the respondent^{has not issued any sale} notice taking into account the valuation^{dated19'09.2023.} Besides, since the SA is decided^no\1 -i.e.,^2025,the ,M^.g

¶34

V oao,"

¶35

sA.43Al2O23

¶36

respondent bank has to obtain a fresh valuation as and when auction sale proceedings are contemplated on a future date. As regards the prayer to set aside the possession notice dated 72.09.2023, in view of applicants categorical admission of receipt of possession notice vide para 14 of the SA averments, no infirmity or flaw can be attributed to the respondent bank. Hence the question of setting aside the Possession notice does not arise.

¶37