Allowed

Vajra Infracon v. Union Bank of India

DRT24 Oct 2025SA/45/2022

Case brief

AI extract

What is this about?

This T. Ord. allowed an application to quash possession and auction measures under S. 13(4). The court held violations of Rules 8(1) (affixture), 9(1) (notice gap), and 9(3) (bid deposit timing) vouched the sale.

What did the court decide?

Securitization Application allowed; possession notice dated 25.01.2022 and e-auction sale on 30.08.2022 quashed; applicant directed to refund bid amount with interest.

Vajra Infracon versus Union Bank of India — Banking and Recovery | DRT (2025)

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IN THE DEBTS^{RECOVERY TRIBUNAL - II AT HYDEMBAD}

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DATED THIS^{THE 24TH DAYOF OCTOBER,2025}

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

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Securitization^{Application No'45OF 2022}

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lvl/s Vajra^Infracon ReP bY^{its Managing Partner} Flat No.G- 1,^{Cheela Life SPace} Gayathri Nagar,^{Jeedimetla Village} Quthubulla Pur^14andal Hyderabad

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A. Venkata^{Sudheer Kumar} S/o A.V. Subba^Rao

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Age 42, Occ:^{PrivateService} Flat No.104,^{CheelaGurukulam Habitat} Gayathri^{Nagar, SuchitraClrcle} Hyderabad

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A. Praveen Kumar S/o A. Krlshna^{Moha n} Age : 39, Occ:^{Pvt service} Flat No.709, Oasis^Building Tower 2, Industrial^Area Dubai, Rep by GPA

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A. Ven kata Sudheer^Kumar

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.......Applica nts.

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Versus

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The Authorized Officer U nion Bank of India Chikkadpally Branch

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D. No.1-8-54 to 1-8-54^A Chikkadpally^{Ma in Road} H ydera ba d

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Vaku la Devi Vadlamudi

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H. No.5-62, Ranga Nagar Colony Quthbullapur Medchal lvlalkajgiri Dlst (R-2 impleaded vide order dt'13.12.2023^{in IA} 1332/2023)

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Counsel for the Applicants

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Counsel for l"t Respondent^{bank: Mr'V. Sethu Madhava Rao} 2nd respondent e,oarte@"4,^t$

Page 2 of9

SA No.4512022

.:ORDER:-

The Applicants filed the present Securitisation Application u/s 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2OO2 (hereinafter referred to as "the Act") to quash all the measures of the 1st respondent bank under Secs.13(2) and 13(4) of the Act against the apptication schedule property including the e-auction sale notice dated 11.08.2022 fixing auction on 30.08,2022.

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The case of the applicants, in brief, is that 1st applicant is an unregistered partnership firm, 2"d applicant is its Managing partner and owner of schedule-A property and the 3d applicant is guarantor and owner of schedule-B property. Though respondent sanctioned Rs.3 crores loan under MStvE loan, it disbursed only an amount of Rs.2.5 crores. Due to non-release of full amount, there was shortage for working capital and as a result applicants could not operate the unit and account became NPA. The demand notice dated 04.01.2020 is void for absence of requisite details such as NpA date, proper description of properties, principal and interest part of dues etc. Challenging the possession notice, applicants filed SA 734/2027. Respondent issued fresh possession notice dated 25.01.2022 without withdrawal of earlier possession notice and hence not maintainable. Branch l,lanager cannot invoke Securitization proceedings. While SA is pending, the respondent bank issued e-auction sale notice dated 77.08.2022 fixing auction on 30.08.2022. E-auction notice has not been served on applicant, affixed and published in leading newspapers as per Rules. Rule 9(1) notice was posted on 77.08.2022 and received on 19.08.2022 hence there is no gap of 15 days. Correct valuation has not been obtained and the reserve price fixed is very low compared to its own valuation obtained oR^qarlier occasions. /^t*t,.^.Y'

./^t*o

Page 3 of 9

sA No.4sl2022

The respondent bank failed to follow provisions under Sec.13(2), 13(4), 13(8) of the Act, 2002 and the Rules 8(1), 8(2), 8(s), 8(6), 8(7), 9(1) of the Security Interest (Enforcement) Rules, 2002 ("Rules" hereinafter).

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The 1't respondent bank flled reply and additional^reply statements. The submissions, briefly, are that^due to^{non-submission} of documents loan of Rs.2.5 crores^was only^{released. It is the duty} of the applicants to arrange for working capital^{to get the unit} operative. The account became NPA on 31.12.2019^{and bank} mentioned the date of NPA, limit, rate of^{interest, outstanding} liability, description of^properties etc., in the^{demand noticedated} 04.01.2027 issued u/s 13(2) of the^{Act which was duly served. Since} they failed to make^payment within sixty^{days fromdemand notice,} bank issued^possession notice u/s 13(4) on^{18.03.2020, sent by} registered post, affixed on secured assets and also^{published in'Mana} Telangana' and 'The Hans India'^newspapers on^{22.03.2020in due} compliance of Rules 8(1) and 8(2) ol^{2002. The applicantsfiled SA} No.734/2027 and challenging the interim conditional^{order dated} 10.08.2021, they filed WP No.32470 of 2021^{which was dismissedon} L5.12.2021. The earlier^{possessionnotice was withdrawn and fresh} possession notice was issued on 25.07.20?2 which was duly^served on applicants,^published in'Business^{Standard'and'ManaTelangana'} newspapers on 29.07.2022 and affixed on^{securedasset.Valuation} report was obtained on 22.02.2022 from its approved^valuerand based on the same the authorized officer fixed the^{reserve price.} Challenging the CMM order for taking^{physicalpossession,e-auction} sale notice dated 26.02.2022, advocate commissioner^notice, applicants filed WP No.15908 of^{2022which was dismissedwith costs} of Rs.25,000/-. Mr.Sudheer^{Kumarhimself handed ov€r keys of the} /4".,,."., I 1 / -'/^.u...'> /_,/

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Page 4 of9

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SA No.4sl2022

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secured asset. Respondent bank issued e-auction sale^notice dated i.OA.2O22 fixing auction on 30.08.2022, sent the same by registered^post to applicants, got affixed on secured asset and also published in'Andhra Jyothi' and'Financial Express' newspapers on A.0A.2O22. A notice dated 29.08.2022 regarding^pendency of SA 45/2022 was also^published. The 2nd respondent Mrs.Vakuladevi Vadlamudi stood as successful bidder for item nos.1 and 2^properties at Rs.51 lakhs and 200 lakhs as against reserve^price of^Rs.50lakhs and Rs.151 lakhs respectively. The sale was confirmed by secured creditor on 06.09.2022 and auction^{purchaser paid} the^{purchaseprice} within the extended time limit as^per Rules. The applicants failed to comply the conditional orders^passed by Hon'ble High Court and thls Tribunal and hence not entitled to any relief as held by the Hon'ble Supreme Court in Prestiqe Liohts Limited vs. State Bank of India in Civil Apoeal No.3827 of 2007. The earlier auctions for the reasons attributable to the applicants hence there is no necessity to^provide 30 days notice for second sale as held by the Hon'ble Apex Court in S. Karthik and others vs. N. Subhash Jain and other^(Civil Aopeal No.5920-5923 of 2021 decided on 23.09.2021). A huge outstanding ol Rs.2,74,29,888.52 ps as on 30.06.021 is due from applicant, unless SA is dismissed the respondent bank would be subjected to grave hardship and inju ry.

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The 2nd respondent-auction^purchaser was set ex parte vide docket order dated 01.09.2025 as called absent and representation in spite of service of notice.

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Heard learned counsel for the applicants and learned counsel for the 1"t respondent bank. Perused the written arguments filed for the^{applicantsand the 1't respondentbank alongwith the material} brought on record. /ba. .o9 (t/// -1!t\

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Page 5 of9

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SA No.45/2022

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It is contended by the learned counsel for the applicants that the demand notice dated 04.07.2020 without proper particutars is void ab initio as held by Hon,ble Catcutta High Court in Madhu Sudan Ghosh & Anr. vs. The Bank of Baroda & Ors. in wp No,78a3(W) of 2O2O decided on BO,O7.2O|O and Hon,ble Gujarat High Court at Ahmedabad in M/s Abai Foods private Limited vs. The Authorized Officer, punjab National BanR in C/SCA/2676/2029 dated t2.O2.2O23. He further contended that the possession notice dated ZS.OI-2022 was published on the same day which means the possession notice was published even prior to taking symbolic possession. The possession notice was posted on 02.02.2022. Rule 8(6) notice was not served in viotation of Hon,bte Supreme Court judgements reported in 2Ot7 (Z) DRTC-I (SC) and 2018 (5) ALD 18O (DB). The 2nd auction sale notice was served on 79.O8.2022 hence there is violation of Rute 9(1) in keeping gap of 15 days.

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The corrigendum was published one day before the auction which is against the Rules. He further contended that the valuation report is more than six months old which is against the judgement of Hon'ble High Court for the State of Telangana and the State of Andhra Pradesh in Pochiraju Industries Ltd., Tamitnadu vs. Puniah National Banlg New Delhi & Others, 2078 (t) D.R.T.C, 9O4 (T&A.P.). No valuation report was obtained before fixing the auction and the property was sold at throw away price. The auction was conducted on 30.08.2022 whereas the auction purchaser deposited 25olo bid amount on 06.09.2022 which is against Rule 9(3). 7 5o/o of bid amount was also not paid within 15 days as per Rule 9(4). With these contentions, learned counsel prayed to set aside all the measures including the e-auction sale conducted on 30.08.2022 and f} ><^..t y' /r:,'\

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Page^{6 of9}

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sA No'4s/2022

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consequential^{sale confirmationand sale certificateissued in favourof} 2nd resPondent.

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Learned^{counsel for the lst respondent bankwhile referring to} thematerialdocumentsbroughtonrecordwouldsubmitthatthe ,"rpond"nt^{bank followeddue procedure prescribedunder the} provisionsoftheAct.Demandnoticewasserved,possessionnotice Wassenttotheapplicantsbyregisteredpost,itwasaffixedon secured asset^{and published in 'Mana Telangana' and 'Business} Standard'^{newspaperson 29 '01'2022'Vatuationwas obtainedfrom} approved^{valuer vide report dated 22'02'2022and reserve prices} were fixed^{accordingly and there is no violation of Rule8(5)'Rule} 8(6)^{notice was issued on 11 08 2022, sent the same by registered} post. The e-auction^{sale notice dated11 08 2022 was issued'} publishedin'FinancialExpress'and'AndhraJyothi'newspaperson 14.0a.2o22^{and affixed' AIso acorrigendumwas lssuedon} ZI.O8.ZO22^{informingabout pendency of SA 45/2027' rhe 2"d} respondentStoodassuccessfulbldderfortheschedUleproperties. The secured^{creditor confirmedthe sale on 06 09'2022and the 2nd} respondent^{paid 25o/o of bid amounton 06'09'2022and on same day} requested the^{bank to extend time for paymentof balancebid} amount and^{considerlngthe requestthe respondentbank extended} time till 02.12.2022.^{Accordingly,the auction purchaser paid entire} sale consideration^{within timelinespermissibleunder the Act' 2002'}

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Learned counsel further^{submitted that the applicantsfailed to} comply the^{conditional ordersof either Hon'ble High Court or this} Tribunal and therefore^{not entitledto any relief' He reliedupon the} judgement of Hon'ble Apex Court in^{M/s Prestige Lights Ltd vs'} State Bank of^{India in Civil APpeal No.3827 ol 2OO7 decided on} 2O.O8,2OO7, with^{specific referenceto para 21 of tlfjudgement'} ,7w97".9 /'t>'o

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Page 7 of9

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SA No.4512022

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With these contentions, learned counsel sought for dismissal of the SA as devoid of merits.

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10, Now, the points that arise for consideration are:-

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(i) Whether the applicants have made out any valid ground to set aside the measures of the lst respondent bank under Sec.13(4) of the Act, 2002 includinq e-auction sale held on 30.08.2025 and consequential measures?

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(ii) To what relief?

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Point No.(i):-

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The contentions on non-compliance of sec.13(2) and 13(3) have already been dealt with in eartier SA No.134/2021. The possession notice impugned herein has been issued afresh by the 1st respondent in respect of SA schedule properties. The contention of the applicants is that the possession notice was not served on them nor was it affixed as per relevant Rules and the publication of possession notice was carried out on the same day of issuance which is not in accordance with law. It is observed from the material placed on record that the possession notice was sent by registered post on 02.02,2022 to applicants and got published on 25.0t.2O22. However, 1't respondent bank flled proof of affixture in respect of only one property and no proof has been filed in respect of the other property. Even if the submission of the 1st respondent bank that the 2nd applicant himself handed over^property is concerned, there is another property belonging to the 3'd applicant. Affixture of possession notice on the secured assets is mandatory under Rule 8(1) of the Rules of 2002 which 1st respondent bank failed to follow. Hence there is a deviation of Rule 8(1) of the Rules of 2002.

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L2, With reqard to contention on valuation report, the^1$ respondent bank obtained valuation report from its approved^valuer on 2l/22.02.2022 and the auction notice was issued on^77.08.2022

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/Avr^,, . ^cn //,/ 1-xn-

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Page 8 of9

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sA No'45/2022

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fixing auction^{on 30.08.2022hence it cannot be said that valuation} report is^{very old.E-auction sate notice was publishedon 74'0a 2022} and affixed^{on secured asset. The Rule 8(6) notice of sale dated} 17.08.2022^{was sent to applicantsby registered post on 17'08'2022} and received^{by them on 19 08 2022' Whereas'the auction was} scheduled on^{30.08.2022.According to proviso to Rule 9(1) of the} Rules, 2OO2;^{PROVIDED FURTHERthat if sale of immovable} property by any of^{the methodsspecifiedby sub-rule (5) of} rule 8 fails and^{sale is requiredio be conducted again' the} authorized^{officer shall serve, affix and publish notice of sale} of not less^{than fifteen days to the borrower'for any} subsequent sale.^{In the present case,even if the date of posting} the sale notice^{i.e', 77.08.2022 is concerned, there is no gap of} fifteen^{(15) days as contemplatedin the Proviso to Rule 9(1) of the} Rules, 2002. Thus,^{there is infractionof Rule 9(1) of the Rules'}

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Further, there^{is another contention aboutnon-compliance of} Rules 9(3) and 9(4)^{of Rutes,2002 in payment of bid amount As} admitted by the^{1't respondent bank, the sale was confirmedby the} secured creditor^{on 06.09.2022.The auction sale was heldon} 3O.Oa.2022.^Rule 9(3)^{of the Rules, 2002 mandates deposit the250lo} of the bid amount^{immediately,i.e., on the same day or not later} than next working^{day. Rule 9(2) only says, the sale shall be} confirmed in favour of^{the purchaserwho has offered the highest sale} price in his bid to the authorized officer and^{shall be subject to} confirmation by the secured creditor.^{The authorizedofficeris not} vested with^power to exceed the^{mandate given underRule 9(3) of} the Rules, 2002. Hence the^{payment of 25olo of the bid amount is not} in accordance with Rule 9(3) of^{2002.Once Rule9(3)is not followed,} it is immaterial to examine if the balance^{purchaseprice waspaid} .Anr*,. -<n /l '/.'^'r\ ' _/

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page 9 of 9

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SANo.45/2O22

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according to Rule 9(4). Non_compliance of Rute 9(3) of Rules, 2002 vitiates the sare conducted on 30.08.20 22 and consequentiar sare conflrmation and sale certiFicate issued in favour of the 2nd respondent, if any.

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L4. In view of the observations, it is concluded that the applicants have made out varid grounds to set aside the possession notice dated 25.0L.2022 and e-auction sale conducted on 30.0g.2022 in respect of the application schedure properties, sare confirmation and the sare certificate issued in favour of the 2nd respondent. Accordingly SA deserves to be allowed.

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Point No.(ii):

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In the result, the Securitization Application is allowed by quashing the possession notice dated 25.01.2022 and e-auction sale conducted on 30,08.2022 in respect of the application schedule properties and consequential sale confirmation and the sale certificate issued in favour of the 2nd respondent.

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As a consequence, the 1't respondent bank is directed to refund the entire bid amount deposited by the 2nd respondent together with interest @60lo p.a. simple from the date of respective dates of deposit till payment.

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L7. Consequently, the Interlocutory Applications pending, if any, shall stand closed. No order as to costs. Communicate a copy of this order to the parties concerned and upload in the official website.

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(Typed to my dictation by the PS, corrected, signed ond pronounced by me in the open court on this the 24th doy of October,2025).

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\c"n,

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PRESIDING OFFICER

Vajra Infracon v. Union Bank of India

Case brief

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Vajra Infracon v. Union Bank of India

Case brief

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