Allowed

Sri Telaganeedi Sivarampratap v. Union Bank of India

DRT4 Dec 2025SA/508/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the application filed by loan applicants against Union Bank of India. The court set aside possession notices dated 13.10.2023 for violating Section 13(3A) of the SARFAESI Act regarding the failure to issue a reply to objections and failure to affix notices as per Rule 8(2).

What did the court decide?

The possession notices dated 13.10.2023 issued in respect of all four loan accounts were set aside.

Sri Telaganeedi Sivarampratap versus Union Bank of India — Company and Corporate | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL^_ II AT HYDERABAD

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DATED THIS THE O4TH DAY OF DECEMBER, 2025

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

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SECURITISATION APPLICATION^{NO. 508 OF 2023}

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Between:

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Sri Telaganeedi slaramprata? S/o late Sri T. Narasaiah.

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Smt. Telaganeedi Sujana W/o T. Siva Ram Pratap.

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Both applicanLs are residents of D. No. 1-617, E2 Vivekananda Street Kadiri, Sri Satya Sai District Andhra Pradesh-515591.

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.......Applicants.

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And

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Union Bank of^India Kadiri Branch Bypass Road, Kadiri Sri Satya Sai District ( Previously Ana ntha Pu r Dist. ) Rep by its Authorised Officer.

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.....Respondent'

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Counsel for the Applicants^{: M/s. Indus Law Firm'} Counsel for Respondent^{: Mr. P. Balaji.}

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-:o_B_pl-B:-

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The Applicants filed the^{present Securitisation Applicationu/s'17} of the Securitization^{and Reconqt-ructlonof Financial Assetsand} K,+"

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sa 5o8/2O23 .

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Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act 2002,,) assailing NpA classification of home loan, demand notices dated 07.07.2023 and possession notices dated 13.10.2023 issued in the name of deceased borrower in respect of SA schedule property.

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The case of the applicants, in brief, is that 1st applicant,s father late Telaganeedi Narasaiah, availed Agricultural Term Loan oF Rs.27,50,000/- on 08.06.2013 for establishment of Horticutture Unit with the primary security of 32 acres of farm land and hypothecation of pump sets and other movable assets of the lvlango and Orange orchards grown on the said land. In addition to the above loan, applicants themselves availed two term loans of Rs.22,44,000/_ and Rs.36,16,OOO/_ offering the same properties as collateral security. The 2id applicant is the wife of 1st applicant. The 2"d applicant also availed a housing loan of Rs.8,00,000/- on 25.O2.2Ot6. Talaganeedi Narasaiah expired on 26.06.2Ot7. As the applicants are also associated in establishing the Horticulture Unit, applicants continued to pay the instalments of Agricultural Term Loan availed by late Telaganeedi Narasaiah. During Covid.19 pandemic in 2020, the entire orchard was perished due to non_availability of labour. Respondent bank issued demand notices u/s 13(2) of the SARFAESI Act, 2OO2 on 07.07.2023 in respect of the toan availed by deceased Telaganeedi Narasaiah as well as the term loans availed by the applicants. Respondent bank included the housing loan account of 2nd applicant which was otherwlse regular in payment of instalments. The term loan and home loan of 2nd applicant cannot be clubbed and proceeded on the same footing. The NpA classification is dispu\ej, by the appticants. /rfuz^t",-".* ((/

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sA 5OA/2023

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Applicants lssued replies to all the demand notices independently vide letters dated 26.07.2023 and 04.09.2023. In the reply notice dated 26.07.2023, applicants specifically requested the respondent to furnish copy of loan agreement and extract of account from 11.06.2023 to 26.07.2023. However, respondent bank has not responded to the same amounting^to violation Section 31(A) of the SARFAESI Act. In the^{reply notice} dated 04.09.2023, applicants not only informed about the death of borrower Telaganeedi Narasaiah but also sought explanation as to the enforcement of security interest over the^agricultural land. However, the respondent bank issued the^impugned possession notice dated 13.10.2023 to the deceased borrower without mentioning his legal heirs. The SA scheduled^{property is} used for keeping agricultural implements^needed for^{the farming} activities and it is the only house for^{the applicants and they will} be on road if SARFAESI^proceedings are initiated^againstit. Hence, the property is not liable for attachment or^{sale in terms} of^provisions of Section 60(1) of^{the Code} of^{Civil Procedureand} Section 31(g) of the SARFAESI Act.^{The respondent bank is not} having enforceable security over the SA schedule^{property under} Section 2(zc) of the SARFAESI Act.^{The impugnedpossession} notices have not been afixed at the^{conspicuousplace oF the} scheduled^property as^prescribed u/r^{8(1) and 8(2) of the Rules,} 2002.

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Respondent bank filed reply statement.^{The submissions of the} respondent bank in brief, are that the^{applicants have not set} out any grounds as to the violation of^{provisionsof the} SARFAESI Act or the^{Rules, 2002 in theSARFAESIproceedings} except bringing out the facts of^{tllt.loan transactions.The} /fy",,

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sA so8/2023

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respondent denies of it being informed of the death of T. Narasaiah. It is also denied that the applicants were making payments regularly. Due to default in repayment the account was classified as NpA and also fited OA.g72/2023. Since the applicants admttted default, they cannot find fault in NpA classification and enforcement of security interest. Admittedly, applicants brought the death of T. Naasaiah only in their reply to the demand notice dated 07.O7.2023. The father-in_law of the applicant No.2 is not the owner of the secured asset. Applicant No.2 is the owner and mortgagor ofthe schedule property. The respondent has sent reply to the objections filed by the applicants. Applicants have not produced any documents to prove that agricultural equipments are stored in the said premises. Even if it is assumed the premises are used for keeping agricultural tools, the same cannot be a ground to stall the securitisation proceedings. Applicants defaulted in repayment and therefore, they are not entitled to any rellef. The respondent bank stricfly followed and complied with all the Rules at every stage of securitisation proceedings. The respondent bank filed all documents in support of compliance of provisions of the SARFAESI Act and the Rules, 2002.

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Heard learned counsel for the applicants and learned counsel for the respondent bank.^perused the material placed on record.

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Learned counsel appearing for the appllcants contends that the respondent bank has failed to issue reply to the objections to the demand notice. Hence the possession notice is vitiated for violation of section 13(34) of the SARFAESI Act. It is the further Pro,ert, contention of the learned couns "''^"' bw:Edure

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sA so8/2023

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is used for storing agricultural tools besides residential purposes of the applicants. Therefore, respondent bank cannot proceed against the same under the SARFAESI Act. The respondent bank is not^justified in clubbing the home loan account of 2nd applicant against the dues of her term loan account. With these contentlons learned counsel prayed for setting aside the impugned possession notice.

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Per contra, learned counsel for the respondent bank submits that the provisions of the SARFAESI Act and the Rules there under have been strictly complied with in the securitisation proceedings initiated for recovery of the dues. Learned counsel would further submit that the SA schedule^property being common for all the four loans and that the 2nd applicant being the mortgagor to all the four loan accounts, she is not entitled to^question the legality of possession notice issued in the name of the deceased borrower, who is nothing to do with the subject^property. According to the learned counsel, the 2nd applicant, even otherwise, is liable to^pay the dues against the term loan and housing loan availed in her individual capacity in addition to the dues outstanding against the term loan of 1st applicant. Learned counsel would further submit that creditor banks are entitled to proceed against the dues of all accounts standing in the name of a particular individual even if one loan account of said borrower becomes irreg ula r.

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Now the^points that arise for adjudication are: -

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LI/hether the Applicant made out any valid grourul for quashing the possession notice dated I 3. I 0.2023 issued under section l3(4) and

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sA so8/2023

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demand notice dated 07.07.2023 uls 13(2) of the Securitisation Act?

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ii) To what relieJ?

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Point No.(i):

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B. The reliefs sought for in the SA are:

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a) Declare the proceedings of the respondent bank in declaring the home loan account as NpA on 30.06.2023;

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b) Declare the proceedings of the Respondent Bank on all the Term Loans under the provisions of SARFAESI Act including Notice dt. 07.07.2023 issued under Section I^j(2)of the SARFAESI Act as illegal and set aside the same;

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c) Declare the proceedings of the Respondent Bank on the Home Loan under the provisions of SARFAES Act Notice dt. 007.07.2023 issued under Section l3(2) of the SARFAESI Act as illegal and set-aside the same;

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d) Declare the Possession Notices dated 13.10.2023 issued in the name of the deceased borrower without mentioning the details of the legal heirs even after a proper communication of the Borrower's expiry wos provided to the Respondent Bank vide Reply Notice dated 04.09.2023 under provisions of Sec l3(3A) under Section l3(4) of the SARFAESI Act as illegal and set-aside the same;

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e) Declare that the Schedule Property js not a secured asset and cannot be enforced under the SARFAESI Act;

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J) To declare that the Respondent cannot enforce any security since the property was given as collateral and cannot be enforceable for Agricultural loan,.

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s) On granting the reliefs sought above, to award adequate compensation to the applicants for such wrongful and arbitrary act os this Hon'ble Tribunal may deem fit and proper qs per the

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provisions of Section 19 of the SARFAESI Act or Ow

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sA so8/2023

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alternatively grant necessary leave to maintain s eparate application for compensation ;

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h) To award costs of this Application;

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il To grant any other relief or reliefs as this Honourable Tribunal deems fit and necessary in the interest and to which the Applicants are found entitled.

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In the present case, 2nd applicant is the mortgagor of the^SA schedule property for the loans availed by her^{husband, father-} in-law and her own loan accounts. Due to default in^repayment of term loan accounts, respondent bank initiated^{securitisation} proceedings in respect of all loans including that of 2nd applicant. It is the specific contention of the applicants that^{they have} raised objections to the demand notice vide replies^dated 26.07.2023 and 04.09 .2023. Applicants^placed on^record photostat copies of these two letters along with^postal registration receipts. The respondent bank^{in its reply statement} averred that it had sent a reply to the objections^{filed by the} applicants, but it did not choose to^{place on record either a copy} of said communication or its service thereof,^if any.^{Hence, it} can be safely concluded that the respondent bank^{has not} followed the^procedure as^prescribed under Section^{13(3A) of} the SARFAESI Act. The other^grievance of the^{applicants is that} the respondent bank has not affixed the^{possessionon the} secured asset as^prescribed under^Rule B(1) of^{the Security} Interest (Enforcement) Rules, 2002.^{Respondent bank has not} placed any material evidencing compliance of Rule B(2)ⁱⁿ affixing the impugned^{possession notice on the secured asset.} Therefore, there is a clear violation of^{Rule 8(2) of the Security} ffi**

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sA 508/2023

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Interest (Enforcement) Rules, 2OO2 on the part of the respondent bank.

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The other contention of the applicants is that the SA schedute property is used for the purpose of storing the agricultural tools required for the farming activities of the Mango and Orange Orchards and hence the said property falls under the definition of u/s 31(i) of ihe SARFAESI Act. As per the Appraisat Report for term loan for Mango Orchards available at page 45 of the SA, the land is situated at Gajulavaripa lli, Chamalagondi Village, Gandlapendta Mandal of Anantapur District. Whereas the SA schedule property is situated at Vivekananda Street, Kadri, Erstwhile Anantapur District. As per the material paper at page 36 of the SA, the SA schedule property consists of two floors apart from ground floor admeasuring 17g.g6 square meters. Therefore, it is not acceptable that the SA schedule property falls within the meaning of Section 31(i) of the SARFAESI Act or is situated in the vicinity of the agricultural land.

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In view of the foregoing observations, the applicants have made out a valid ground to set aside the possession notices dated 73.70.2023 issued in respect of all the four loan accounts for the reason of violation of Section 13(3A) of the SARFAESI Act, 2002. Accordingly, the possession notices dated 13.10.2023 issued in respect of all the loan accounts are liable to be set aside.

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Point No.(ii):

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