Dismissed

V Venkata Ramana v. Yes Bank

DRT15 Jul 2025SA/51/2022

Case brief

AI extract

What is this about?

In a secured application under SARFAESI Act, the Tribunal dismissed the applicant's challenge against the bank's possession notice and NPA classification. The court held that the bank complied with procedural mandates regarding notices and found no material irregularity in the enforcement proceedings despite claims of non-service of demand notice.

What did the court decide?

Securitisation Application dismissed with no order as to costs.

V Venkata Ramana versus Yes Bank — Execution and Attachment | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL _ II AT HYDERABAD

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DATED THIS THE FIFTEENTH DAY OF JULY, 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. 51 oF 2022

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Between:

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V. Venkata Ramana S/o Late V. Jagannadha Rao Aged about 64 years 14-1-/3BB/60 Laxminagar Colony Saidabad, Hyderabad.

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.......Appliaant.

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And YES Bank Limited 1-8-387, HUDA Lane Agravanshi Plaza 2nd Floor, S.P. Road Secuncrabad-500003. .....Respondent.

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Counsel for the Applicant : Mr. G. Dinesh Kumar. Counsel for Respondent : Mr. M. Srinivas Reddy.

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-:ORDER:-

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

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'27.0t.2022 issued by the respondent against the SA schedule property.- m-,

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sA st 12022

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The case of the applicant, in brief, is that applicant avalled drop line overdraft facility to a tune of Rs.3,36,87,61/- from the respondent bank. The respondent bank revised the facility to Rs.z,70,87,A61/-, RS.6O,OO,00O/- and then io Rs.56,00,000/respectively over a period without assigning any cogent reasons. Respondent bank informed that the applicant being a professional is entitled for subsidised rate of interest. Applicant paid the amount regularly to the respondent except during Pandemic period and maintained the dues within the sanctioned limits. But without keeping informed of any irregularity in the payment of dues, the respondent bank issued a notice dated 27.01.2022 said to be possession notice under the SARFAESI Act. The respondent has not served any demand notice under section 13(2) of the SARFAESI Act. Upon enquiry, respondent bank informed that a demand notice u/s 13(2) has been issued on 29.09.2021. Therefore, the alleged demand notice dated 29.09.2021 said to have been issued by the respondent bank is illegal under law. The possession notice dated 27.07.2022 has neither been affixed on the SA schedule property nor has it been published in two newspapers with one in vernacular language. The schedule property mentioned in the notices are lncorrect. The possession notice has not been issued by the authorised officer as described under the SARFAESI Act. The declaration of loan account as NPA is in violation of guidelines of RBI circular dated 12.77.2021. The respondent bank has failed to issue a caution notice before declaring the account as NpA. In view of the above position, the entire proceedings in issuing the possession notice dated 27.07.2022 are illegal and arbitrary.

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Y!ry'^-,^!6 '/^{-t9 "}

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sA s,.l2022

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The respondent bank filed reply statement. The submissions of the respondent bank in brief are the applicant executed a9reement agreeing to repay the credit facility along with contractual interest and created equitable mortgage by depositing title deeds of the SA schedule property in connection with availing drop-line-overdraft facility from the respondent bank. In terms of the overdraft facility availed by the applicant, the withdrawal limit will reduce every month/year on payment of every EMI and therefore, the allegation of arbitral revision of limits by respondent bank without cogent reasons is denied. It ts not correct that the respondent bank promised a subsidized rate of interest to the applicant's overdraft facility. The procedure contemplated under the Securitisation Act do not call for issuing any caution notice and the same is not mandatory. However, applicant was reminded of regularly to pay the irregular portion of amount due. However, applicant defaulted in paying the amount. After the NPA classification, applicant was persuaded to regularise the account. As the applicant was negligent, demand notice u/s L3(2) was issued on 29.09.2021. The said notice was sent to the applicant throuqh registered post to all the known addresses and the same was served on the applicant on 05.10.2021 vide postal acknowledgement card annexed to the reply statement. The possession notice issued u/s 13(4) of the SARFAESI Act dated 27.0L.2022 has been sent by registered post, published in Mana Telangana, Telugu daily and Economic Times English Daily, affixed on the secured asset, the proof of which is annexed to the reply statement. Hence, there is no illegality in the compliance of Sectlon 13(4) of the SARFAIES Act and Rules 8(1) and 8(2) of the Security Interest^{(Enforcement)} Rules, 2002. As on the date of claqsjfication^gf applicant's credit y nn !-,._,) L"l

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sA sLl2022

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facllity as NPA, both the interest and^principal were overdue for more than ninety days as the applicant was irregular in maintaining the financial discipline. The applicant's credit^facility was being secured by way of creation of equitable mortgage over the SA schedule^property, the respondent bank has a^right to enforce the said security interest to recover the outstanding amount against the defaulted credit facility.

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Heard learned counsel appearing for the applicant and^the learned counsel appearing for the respondent bank. Perused^the written arguments filed by the applicant and respondent bank and the material^placed on record.

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Learned counsel for the applicant centred around his arguments over the classification of loan account as NPA citlng the^RBI guidelines to prove the illegallty of all subsequent measures. Learned Counsel placed much emphasis on the^judgement of the Hon'ble High Court of Punjab and Haryana in Amar Alloys Pvt. Limited vs. State Bank of India in support of his contention, wherein it was held that a notice was required to be issued to the borrower by the creditor bank before declaring its account as NPA under the provisions of the SARFAESI Act.

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Per contra, learned counsel for the respondent submits that there is no violation on the part of the respondent in classifying the loan account as NPA, or issuing demand notice u/s 13(2), possession notice u/s 13(4) oF affixture of possession notice u/r 8(1) and publication of the same in two newspapers u/r 8(2) of the Security Interest (Enforcement) Rules, 2002. The photostat copies of demand notice, possession notice and postal receipts/ acknowledgements are placed on record w{h the reply .lv-.$

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'^{y' -rgv}

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sA sr/2o22

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statement. Photograph evidencing affixture of possession notice and paper publication of possession notice has been annexed to the reply statement. As regards the NpA classification, learned counsel would submit that the said function is a computer system generated one and moreover the case of the applicant is not akin to the citation relied on by the applicant. Hence the contentions raised in the SA are baseless and invented for the purpose of filing the SA.

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Now the points that arise for adjudication are: -

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i) Wether the Applicant made out any valid ground for quashing the possession notice dated 27.01. 2022 issued under section 13(4) of Securitisation Act?

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To what relieJ? ii)

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Point No.(i)t

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The main emphasis of the applicant throughout the proceedings is that the respondent bank has not put him on notice before classification of his account as NPA. A quick perusal of the cited judgement reveals that the facts and circumstances of the citation and the facts and circumstances of the instant case are not similar. In the citation relied on by the applicant, while the stand of the creditor bank for classification of account as NpA was that the loan availed by the borrower was not used for the purpose for which it was sanctioned, the stand of the borrower therein was that the interest was being serviced without default. Whereas in the present case, applicant admitted default during Covid Pandemic, while the respondent classified the account as NPA for default in payment for SO ffi1lef,.BI guidelines are / //\z{ofi)+t l-v

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sa 5tl2o22

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unambiguous on NPA classification. In that view of the matter, I find that the law laid down in the cited case is not applicabte to the case on hand and no irregularity is found in classification of applicant's loan account as NpA. As regards other allegations, respondent bank placed sufficient material on record to prove compliance of provisions of Section 13(2) in serving demand notice and publication and affixture of possession notice as per the procedure prescribed u/r 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002, the authenticity of which has not been disputed.

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In view of the foregoing observations, I find no irregularity in the measures initiated by the respondent bank under the provisions of the SARFAESI Act and the Rules thereunder against the security interest for recovery of outstanding dues. Accordingly, the SA is devoid of any merit and is liable to be dismissed.

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Point No.(ii):

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In the result, the SA fails and is hereby dismissed.

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Consequently, Interlocutory Applications pending if any, shall stand closed. No order as to costs.

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Communicate a copy of this order to the parties concerned and upload in Web Stte.

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(Dictoted to the Steno, signed ond pronounced by me in the open couft on this the 15h doy oftuly,2025.)

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t7Y,'*' (RAMESHWAR KOTHE) PRESIDING OFFICER

V Venkata Ramana v. Yes Bank

Case brief

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V Venkata Ramana v. Yes Bank

Case brief

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