Dismissed

Ms Sree Vishwa Sai Cottons Pvt. Ltd. v. Union Bank of India

DRT29 Jul 2025SA/487/2024

Case brief

AI extract

What is this about?

This Debts Recovery Tribunal dismissed an application seeking to set aside a secured creditor's possession action and auction notices under the Sariah Act, 2002. The court found the bank compliant with statutory procedures and held the creation of a subsequent mortgage by the borrower as illegal.

What did the court decide?

The Securitization Application fails and is hereby dismissed; interlocutory applications stand closed.

Ms Sree Vishwa Sai Cottons Pvt. Ltd. versus Union… — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS^{RECOVERY TRIBUNAL - 1I AT HYDERABAD}

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DATED THIS^{THE29TH DAY OF JULY,2025}

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PRESENT: SH. RAMESHWAR^{KOTHE,B Com'L LB (Hons )' [4 A'} PRESIDING^OFFICER

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Securitization^{Application No'487OF 2024}

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M/s Sree Vishwa^{Sai Cottons Private Limited} Situated at^{SY.No.170, NeelurRoad} Neelur Vlllage,^{Pamidi, AnathaprrrDistrict} Rep. by its^Directors

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Mr. Hulebeed^{u Siddamurthy} S/o NarasapPa,^{Aged about48 Years} Occ:Business,^{R/o D. No' 15-418- 24} YMK Colony,^{Mahaveer Colony,Adoni} Kurnool District -^{518 301}

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Mr.Hutebeedu^Amarnath S/o Siddamurthy Aoed about²⁵ Years oic: Business,^{R/o D.No 15-418-24} YMK ColonY,^{Mahaveer Colony,Adoni} Kurnool District -^{518 301}

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.......APPlicant.

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Versus

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Union Bank^{of India} Rep. by^{its authorized officer} Pamidi Branch, Situated^at f-l-277 ,^{BCCRoad, Pamidi} AnanthaPur^District -⁵¹⁵⁷⁷⁵

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..-.Respondent.

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counsel for^{the Appticant : Mr' D' Raghavulu} Counsel for^{Respondent Bank : Mrs'Tarangini Pisipati}

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-:ORDER:-

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The^{Applicants filed the present Securitisation Applicationu/s} 17 of the^{Securitization and Reconstructionof Financial Assetsand} EnforcementofsecurityhterestAct,2002(hereinafterreferredtoas "the Act") to^{set aside all the oroceedings of the respondentbank} ?%.*

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Page 2 ofs

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SA No.Nll2024

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under the Act, ZOO2 including e_auction sale fixed on t3.72.2024 and proposed action of taking physical possession of applicauon schedule properties pursuant to warrant issued in Crl.Mp No.157 of ZO24 on the file of learned Chief Judicial Magistrate Cum principal Assistant Sessions Judge, Kurnool.

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The case of the applicants, in brief, is that they avaited term loan of Rs.6 crores and CGTMSE loan of Rs.2 crores against collateral security. They were regular in payment till 2023 but due to continuous drought and other reasons there was default. Without appreciating the situation, the respondent bank issued demand notice u/s 73(2) fot Rs.7,92,52,247.48 ps. The respondent bank failed to serve, affix and publish the possession notice as per Rules B(1) and 8(2) of the Security Interest (Enforcement) Rules, 2OO2 (hereinafter "Rules"). One Mr.pratap Reddy Shankham of M/s Cheswanth Cottons entered into rease agreement with the applicant on 74.70.2024 for one year who wi, pay the rease amount of Rs.g rakhs per month directly to the respondent bank thereby the loan amounts wi be repaid. Due to seizure of industry, the machinery therein is getting damaged. Without considering the substantial repayment and request to hand over management to the third party, the respondent bank proceeded to issue e-action sale notice dated 07.77.2024 fixing auction on 13.72.2024 and also obtained warrant in Crl.Mp No.157 of 2024 tor taking physical possession of property No.2. As per sec 13(4), the respondent bank shourd have agreed to hand over management of the industry to the person identified by the applicants. Hence this SA.

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The respondent bank filed reply statement along with documents. The submissions, briefly, are that after utilizing the loan

dWa'Y

Page 3 of5

SA N0'487/2024

amounts the^{applicantsfailed to repay and the account became NPA} on 31.07.2023^{as per RBI guidelines' The demandnotice dated} 10.08.2023^{was issued u/s 13(2) The respondentbank issued reply} to the objections^{u/s 13(3A) On failureto complythe demand within} 60 days,^{possessionnotice was issuedu/s 13(4) on 31 10'2023' sent} to the applicants^{besidesaffixing on secured assetsand publishingin} 'Eenadu' and^{'The Hans India' newspapers on 02'11'2023' A} corrigendum^{as to the date was also issued and published on} 03.11.2023'^{One MallikarjunaReddy demolishedthe gate by crashing} his car of the^{factorypossessionof which had been taken FIR was} registered^{for the said crime'}

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The applicant^{already filed SA No 5412024 assailing the action} of the respondent^{bank against propertyNo 1 and the SAwas} dismissed^{upholdingthe actionof the bank' Warrant was obtainedin} Crl.MP No'157/2024^{in respect of SA schedule propertyNo 2 The} applicants^{created illegal mortgageon 25'09 2023after receipt of} demand^{notice against Sec'13(13) of the Act' 2002'The alleged lease} has been^{created even after taking physicalpossession of the} property No'1^{which is illegal' The respondentbank flled OA} No.889/2023^{which was allowedvide order dated08'17'2024} confirming^{debt and mortgagerights'E-auction sale noticehas} become^{infructuousas there were no bidders' The discretionlieswith} the secured^{credltorto invoke provision u/s 13(4)(c) of the Act' 2002'} The SA is^{liable to be dismissed'}

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Heard learned^{counselfor the applicants and learnedcounsel} for the^{respondent bankPerused the material brought on record'}

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During the^{course of arguments' learned counselfor the} applicants^{and the learned counselfor the rcspon%W5.reiterated}

U/^-to''

Page 4 of5

sA No.4B7 l2oT4

their respective version as in the application and reply statement. Learned counsel for the respondent bank referred to the order passed in SA No.54l20224 and said that the issue of compliance of secs.13(2) and 13(4) have atready been decided and hence the same cannot be raised once again. She would submit that there were no bidders for the auction impugned herein. The respondent bank has already taken physicar possession of the property No.1 and obtained Warrant for the property No.2 as entiued u/s 14 of the Act, 2002.

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Now, the points for consideration are as follows : i) Whether the appticant made out any valid ground to ?ua1h .ary^{of the measuresinitiateA.Oy} iii respondent against the SA schedule property?

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ii) To what relief?

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A perusal of the order dated 08.10.2024 passed by this Tribunat in SA No.54l20224 clearly shows that the respondent bank has followed Secs.13(Z), 13(4) of the Act, 2OO2 and the Rutes B(1) and 8(2) of 2002.It was also observed in the order that SA had become infructuous as the physical possession of schedule-1 propefty had been taken over. Hence the same issues cannot be raised once again in this SA.

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As far as action of ft possession or the schedure-2 ;.'joff]: .:'[.i::,:il':Jffi] bank being secured creditor is entifled under Sec.14 of the Act, 2002 for taking such action and there is no illegality. Creation of mortgage is an admitted fact and it is also confirmed vide order dated 08'LL'2024 in oA No.889/2023 fired by the respondent bank herein.

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7flva'-^^.y9 /^/." ',J.r.',"^'

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Page^{5 of 5}

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sA No.487l2024

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The^{fact of iilegarcreationof mortgageand rease agreementin} respect of^{application schedule propertiesis not denied by the} applicants'^{They are answerablefor such illegal transfer' As rightly} pointed out^{by the learned counsel for the respondentbank'the} secured^{creditor is given the option under Sec'13(4) to choose} whether^{to take managementof the affairs of the borrower' appoint} any^{person for thatPurPose etc'}

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11.^{Reportedly there were no bids for the impugnedauction hence} the contentions^{pertaining to auctionsale notice need not be} considered.

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L2. In^{view of the above observations'I find that the applicant} failed to^{make out any valid ground to set asideany of the measures} of the^{respondent against the sA scheduleproperty.AccordingrysA is} liable to^{be dismissed'}

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Point No.(ii):

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In^{the result, the Securitization Applicationfails and is hereby} dismissed.

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dismissed. 14. Consequently,^{the InterlocutoryApplicationspending'if any'} shall stand^{closed. No orderas to costs'}

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Communicate^{a copy of this orderto the parties concerned and} upload^{in the official website'}

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(Typed to my^{dictotion by theP5, corrected'signed ond pronounced by me in the opencourt on this} the 2g'h^{do| of JulY, 2025)'}

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(RAMESHWAR^KOTH-E) PRESIDING^OFFICER

Ms Sree Vishwa Sai Cottons Pvt. Ltd. v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Ms Sree Vishwa Sai Cottons Pvt. Ltd. v. Union 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

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