Dismissed

Sun Shine Steel Industries v. Indian Bank

DRT29 Jul 2025SA/521/2023

Case brief

AI extract

What is this about?

Applicants challenged a sale notice under the SARFAESI Act claiming violation of procedural provisions. The Tribunal found the bank complied with demand and possession notice requirements.

What did the court decide?

The Securitisation Application was dismissed. The interim conditional stay stands vacated.

What the court decided

Sun Shine Steel Industries versus Indian Bank — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL _ II AT HYDERABAD

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DATED THIS THE TWENTYNINETH 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. 521 oF 2023

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Between:

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Sun Shine Steel Industry Diguva Poonepalli Village Eguva Poonepalli^post Penumur Mandal Chittoor Dist. 517 127 Rep by its Proprietrix R. Latha.

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SmL R. Latha, W/o R. Bhupati Aged: Major, Occ: Business Diguva Poonepa I I i Vi I lage Eguva Poonepalli^post Penumur Mandal Chittoor Dist. 517 127. .......Appticants.

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And

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Indian Bank Diguvamagham branch Tavanampalle Mandal Chittoor District-s17 129 Rep by its Authorised Officer.

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General Manager District Industries Centre Chittoor. ......Respondent. Counsel for the Applicants : Mr. G. Dinesh Kumar. Counsel for Respondent No.1 : Mr. V. Sethu Madhava Rao. Respondent No.2: Dismissed fordefault. aa /AW',''

......Respondent.

sa. s2l12023

-: O-B-D-EB:-

The Applicants filed the^{present Securitisation Applicationu/s.} 17 of the Securitization^{and Reconstructionof Financlal Assets} and Enforcement of^{SecurityInterestAct, 2002(hereinafter} referred to as "SARFAESI^{Act 2002")assailingthe sale notice} dated 13.11.2023 fixing^{the date of auction as 18.72.2023} issued by the respondent^{bank in respect of the Application} schedule ProPerty.

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The case of the applicants,^{in brief, is l"t applicant, a MSME} Unit, is a^proprietary concern^{and 2"d applicantis its} Proprietor. Applicants availed^{a term loan and OCCfacilities} from the 1"t respondent^{bank for settingup a SteelSheets} Unit in the land allotted by^{APIIC in the year 2019' Applicants} were allowed a moratorium Period^{of two years for repayment} of the loans. Due to^{Covid.19 Pandemic, there was a delay in} completion of the^{project. Applicant has been making the} repayment and the^{respondent bankreceived subsidy from} Central Government allowed to^{womenentrepreneurs.} Respondent bank has not extended^{any beneRts during} Covid.19 Pandemic as^{per RBI guidelines,or the entitlements} meant for MSME units. Despite^{therebeingsufficient funds in} the accounts, respondent bank^{classified applicants'loan} account as NPA in violation of^{RBI guidelines. The respondent} bank violated Sections 13(2),^{13(4)Rules8(1), 8(2). 8(5) and} 8(6). The secured interest is unenforceable.^{The propertyis} worth more than the value assessed by^{the respondent.} flwp''b l,-.-

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sA,521/2lJ23

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Respondent bank No.1 filed reply statement. The submissions of the respondent bank in brief are; applicants availed a term loan of Rs.125 lahs and OCC of Rs.25 lakhs. The alteged investment subsidy incentive of Rs.g4,4Z,2g7 /_ has not been received by the respondent bank as the applicants have not reached their turn. Applicant was sanctioned Rs.20 takhs under GECLS, Rs.2.99 lakhs under FITL and Rs,1O lakhs under GECLS add-on-limit under the RBI guidetines affected by Covid.19^pandemic units. The applicants loan account was classified as NpA on 30.04.2023 stricuy as per the RBI guidelines for default in repayment, followed by demand notice under the SARFAESI Act dated 19.07.2023. The said notice was sent by registered post on 20,07.2023, proof of which is annexed to the reply statement. As the applicants failed to clear the dues within 60 days, respondent bank proceeded with Section 13(4) possession notice dated 04.10.2023. The possession notice was sent by registered post. affixed on secured asset and published in two newspapers, proof of which annexed with the reply statement. Respondent bank issued notice of sale dated 13.11.2023 fixing the date of auction as IB.t2.ZOZ3. The notice of sale was sent by registered post. amxed on secured asset and published in two newspapers on 15.11.2023. Thus, respondent duly complied with Rules 8(6), 8(7) and 9(1) of the Security Interest (Enforcement) Rules, 2002. Applicants complied with the conditional order passed by this Tribunal dated 74.f2.?023 in IA.3929/2023.In view of the conditionat order and subsequent compliance by the applicants, the auction scheduled on 18.12.2023 pursuant to the impug8ed notice of OY'*'

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sA.s2Ll2023

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sale dated t3.tL.2023^{was not conductedby the respondent} bank. Hence the^{SA became infructuous'}

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SA against^{respondent No.2 was dismissed as no notice was} taken against^him.

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Right of applicants^{to advancearguments was forfeited vide} docket order^{dated 29.0L.2025'Heard learnedcounselfor} the 1't respondent^{bank. Perused the material broughton} record.

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Now the^{pointsthat arise for adjudicationare:-}

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i) Wether the^{APPlicantsmadeout} anY valid^{ground.forquashingthe} sale notice dated^{I3 l l'2023 issued} under the Provisions^of Securitisalion^Acl?

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ii) To what reliefl

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Point No.^(i):

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As stated supra,^{respondent banksubmitted that consequent} to compliance of^{conditionalinterim order in IA'3939 of 2023,} respondent bank has^{not proceededwith the auctionsale} proceedings scheduled on 18.12.2023.^{Accordingly,the SA to} this extent became^{infructuousand the contentions relatingto} sale^proceedings are not^{taken into considerationfor the} purpose of adjudication of the SA.

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B. In response to the applicants^{contentionsover violationof} Sections 13(2) and 13(4)^{of the SARFAESIAct, and Rules B(1)} and 8(2) of Security Interest^{(Enforcement) Rules, 2002,} '){Ylr'}e i'v

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sA.52tl2o23

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respondent bank placed on record photostat copies of each of demand notice dated 19.07.2023, postal registration receipts and^postal track reports, possession notice dated 05.10.2023, publication in two newspapers and affixture on secured assets vide material papers at pages 1 to 18 annexed to the reply statement. These documents have not been disputed by the applicants. Therefore, respondent bank has placed sufficient material as to compliance of provisions of sections 13(2) and 13(4) of SARFAESI Act and Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules. 2002. In that view of the matter, I do not find any violation in the compliance of the relevant sections of the SARFAESI Act and the Rules by the respondent bank. Accordingly, I hold that there is no merit in the contentions of the applicants in respect of violation of the provisions of sections 13(2) and 13(4) of the SARFAESI Act and Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002.

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In vlew of the foregoing observations, applicants failed to make out any valid ground to interdict the securitisation proceedings initiated by the respondent bank against the SA schedule property. Accordingly, the SA is devoid of any merit and liable to be dismissed.

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Point No.(ii):

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