Allowed

Indian Bank v. United Phase Diagrams

DRT24 Aug 2026APPEAL/5/2025

Case brief

AI extract

What is this about?

In a recovery appeal, the DRT-II Hyderabad allowed the bank's challenge to a Recovery Officer's order that raised an attachment on property. The Tribunal held that an attachment before judgment survives decree, third-party purchasers with knowledge cannot override it, and the claim petitioners are dismissed.

What did the court decide?

Recovery Impugned order dated 17.09.2025 set aside; Claim Petition dismissed; attachment over property continued; stay order vacated.

Indian Bank versus United Phase Diagrams — Execution and Attachment | DRT (2026)

¶1

IN THE DEBTS RECOVERY TRIBUNAL-II AT HYDERABAD DATED THIS THE 24TH DAY OF AUGUST, 2026 PRESENT: sH. RAMESHWAR KOTHE, B.Com., L.LB. (Hons.), M.A.

¶2

PRESIDING OFFICER

¶3

Recovery Appeal No.5 of 2025

¶4

¶5

Claim Petition No,87 I 2025 tn RC No,2.97l2OL7 tn OA No.106/2014

¶6

Between:

¶7

Indian Bank Srinagar Colony Branch Hyderabad Represented by its Authorized Officer

¶8

......Appellant/Certifi cate Holder Bank

¶9

And

¶10

Nurull Hussain. S. S/o R. Sahab S,

¶11

Aged about 50^years

¶12

Occ: Business, Shashank^Homes

¶13

2nd Cross Road, Geetha^{Nagar Colony} Neredmet, Medchal- Malkajgiri^{Dist. 500056}

¶14

Sri. Muhammad Flroz Khan

¶15

S/o Yakhub Khan

¶16

Aged about 49^years

¶17

Occ: Business, H.No.2-3-643l1/A

¶18

Flat No.108, Tirumala Emerald Prem Nagar, Ali Caf6 Chowrastha Amberpet, Hyderabad⁵⁰⁰⁰¹³

¶19

.... Respondents/f hird^{PartyClaim Petitloners}

¶20

M/s United Phase^Diagrams R/o H.No.30-265/8/4411

¶21

Shashank Homes,^{2nd Cross Road} Geetha Nagar colony Hyderabad 500056 Rep by its Managing Partner Sri K. Rama Krishna /)91*r..1\ -'^/ '>>,:'"

¶22

2ofl0

¶23

RA No.5/2025 in CP No.87/2025 in RC No.297l2017 in OA No'106/2014

¶24

K. Ramakrishnan, S/o K. Leela^KoteswaraRao R/o H.No.30-265/8/441 l, Shashank^Homes 2nd Cross Road, Geetha Nagar ColonY Old Safilguda, Malkajgiri Circle,^{Hyderabad 500056}

¶25

K. Gnanashantisree, Wo^{K. Ramakrishna} R/o H.No.30-265/8/44/ l, Shashank^Homes 2nd Cross Road, Geetha Nagar ColonY Old Safilguda, Malkajgiri Circle,^{Hyderabad 500056}

¶26

Sangapu Ravindra, S/o S, Srinivas^Rao R/o H.No.8-039m Satellite Township Medhcal Road, Secunderabad

¶27

..., Respondents/Certificate Debtors

¶28

Ld. Counsel for Appellant Bank : Mr. Hemanth^{Kumar Vemuri} Ld. Counsel for 1't Respondent : Mr. M. G,^{Ramesh Anand} : Ex parte Respondents

¶29

:: ORDER ::

¶30

The present Recovery Appeal is filed under Section 30 of the Recovery of Debts and Bankruptcy Act, 1993, by the Certificate Holder Bank, questioning the order dated 17.09.2025 passed by the learned Recovery Officer-Il of this Tribunal in Claim Petition No.B7/2025, whereby the claim petition filed by Respondents 1 and 2 herein was allowed and the attachment over the subject property was ra ised.

¶31

The case of the Appellant Barrk, in brief, is that on account of the default committed by the Certificate Debtors, the Bank filed O.A. No,106/2014. Along with the O.A., the Bank filed LA. No.622/2014 seeking attachment before judgment of the subject property. The said application was allowed by this Tribunal vide order dated L2.02.2014, whereby the concerned defendant was restrained from transferring, alienating or creating any charge over the property without obtaining leave of the Tribunal. The O.A. was subsequently allowed in favour of -l[e Bank. and a Recovery //)ry.o*

¶32

-l^{of l0}

¶33

RA No.52025 in CP No.87/2025 in RC No.297l2017 in OA No.106/2014

¶34

Certificate was issued. The Bank submits^{that the attachment} before^judgment dated 72.02.2014^{continuedto operate and there} was no requirement of obtaining a fresh attachment after^passingof the final order. During execution^{proceedings,Form-16 was} subsequently issued on 20.12.2023 and^{was served upon theSub-} Registrar, Malkajgiri, whereupon the^{property wasentered in the} prohibitory list. Thereafter, when the Bank^proceeded to^take possession and sell the property, Respondents l and 2 filed^the claim Petition seeking raising of the^{attachment.Accordingto the} Bank, the Recovery Officer failed to appreciate^{the continuing effect} of the earlier attachment before^{judgment and erroneously treated} the subsequent Form-16 as the operative attachment.^{The Bank} further contends that the^purchasers acquired the^{property during} the subsistence of the attachment and that they^{had knowledge of} the recovery^proceedings before^presenting the^{sale deed for} registratlon.

¶35

R-1/Claim Petitioner No.1 made appearance^{through his} counsel but failed to file counter in^spite of^{anumber of} opportunities. Accordingly right^was forfeited.^{R-2lclaim Petitioner} No.2 remained ex^parte to the^proceedings.

¶36

Heard learned counsel for the^{Appellant/CHBank and learned} counsel for the 1st Respondent/Clalm^{Petitioner.Perusedthe written} arguments filed for the^{Bank and the material broughton record.}

¶37

The learned counsel for the^{Appellant Bank contended that} the attachment before^judgment dated^{12.02.2014 continues to} subsist notwithstanding the subsequent^{decree and issuanceof the} Recovery Certificate. It is argued that^{under Order XXXVIII Rules 11} and 11-A CPC, an attachment^{beforejudgment continues after the} decree and no fresh^{attachmentis legallynecessary ln execution.}

¶38

4ofl0

¶39

RA No.5/2025 in CP No.87/2025 in RC No.297l2017 in OA No.l06/2014

¶40

Reliance was placed upon Muralikrishnan v. M, Shanthi^{& Ors',} MAN U/TN/s641/2023. Learned counsel further submitted^{that the} Form-16 dated 20.12.2023 was only a^{subsequent proceduralstep} taken during execution and could not have the effect^of extinguishing or nullifying the attachment already^{made on} 72.02.2074. It was further argued that the Claim^Petitioners presented the sale deed for registration on 29.17.2023, whereas the attachment before^judgmentwas already in force.^{Therefore,the} transaction was entered into during the subsistence^of the^restraint imposed by this Tribunal. The claim Petitioners, therefore,^cannot acquire a right superior to that of the Certificate^{Holder Bank,}

¶41

It was also contended that the Claim Petitioners^had knowledge of the recovery^proceedings and attachment^by 20.1O.2023, before^presentation of the sale deed on^29.11.2023. consequently, their plea of bona fide^purchase without^notice cannot be accePted.

¶42

As stated supra, no counter filed by the lone contesting lst Respondent/Claim Petitioner. In usual^procedure of law, the arguments over and above the^pleadings cannot be entertained.^In the case on hand, there were no^pleadings at all. However, in the interest of principles of natural^justice considered the arguments of the learned counsel appearing for Respondent No.1/Claim Petitioner. He contended that the Claim Petitioners are bona fide purchasers for valuable consideration. According to him, the sale deed was presented for registration on 29,LL.2023, whereas the Form-16 attachment was issued only on 20.12.2023. It was further submitted that the alleged attachment dated 72.02.2074 was not reflected in the registration records or Encumb.ance Certificate and that the Claim Petitioners had made due enquiries before purchasing the property. It was thFrefore contended that the fun<'lu

¶43

5 of10

¶44

"r.-yf^{i?l3i;?,"Jli;lffi il}

¶45

subsequent Form-16 dated 20.12.2023 could not^{retrospectively} invalidate a transaction already^presented for registration^on 29.LL.2023. He further submitted that the learned^{RecoveryOfficer} rightly allowed the claim of Respondents 1 and^2.

¶46

The following^points arise for consideration:

¶47

(i) Whether the attachment before iudgment dated 12.02.2014 continued to^{subsist after} adjudication of the O.A. and^{issuanceof the} Recovery Certificate?

¶48

(ii) Whether the sale transaction in^{favour of} Respondents 1 and 2 can^{prevail over such}

¶49

subsisting attach ment?

¶50

(iii) Whether the subsequent^Form-76dated 20.12.2023 nullifies or^{supersedes the earlier} attachment?

¶51

(iv) Whether the order of the^{learned Recovery} Officer dated 17.09.2025^{is sustainable?}

¶52

(v) To what Relief?

¶53

Point Nos'(i) to^(iv):

¶54

g.ThematerialonrecordestablishesthatthisTribunal,inl.A. No.622/2014 in O'A.^{No'106/2014, passed an orderdated} 12,02.20L4 attaching^{the subject property before judgmentand} specifically^{restrainedthe concerneddefendantfrom transferring,} alienating or^{creatingany charge over the property without leaveof} the Tribunal.^{The O.A. was thereafter adjudicated in favour of the} Bank and a Recovery^{Certificate was issued'The crucialquestion is} whether the attachment^{ceased merely becausethe original} proceedings culminated in a^{decree' In my considered view' the} answer has to be^{in the negative. An attachmentbeforejudgment} does not lose^{its efficacv merelybecause tfiq suit/O'A'subsequently} ,/,&tlw-,-l\ t/ A^'- )/r(:/ '-.*"

¶55

6ofl0

¶56

RA No.5/2025 in CP No.872025 in RC No.2972017 in OA No.106/2014

¶57

culminates in a decree. The^{very purposeof Order XXXVIIIRules 11} and 11-A CPC is to^{preservethe attachmentand permit the decree-} holder to proceed against the attached^property in^execution without the necessity of treating the^property as though it^had never been attached. Therefore, once the^property stood^attached before^judgment on 72.02.2074 and the O.A. was^ultimately decreed in favour of the Bank, the attachment continued to^enure for the benefit of the decree-holder. The subsequent Recovery Certiflcate did not extinguish that attachment.

¶58

The Form-16 was issued during execution and served upon the Sub-Registrar for 9ivin9 effect to the recovery proceedings. It cannot be construed as creating the Bank's right over the property for the first time. At best, it was a further step to secure and communicate the property attachment during execution. Consequently, the argument that the sale deed preceded the Form16 by about three weeks does not assist the Claim Petitioners. The relevant date is not merely the date of Form-16, but the date on which the property was subjected to the original attachment before judgment, namely 72.02.20L4,

¶59

The Claim Petitioners admittedly presented the sale deed for registration on 29.77.2023. By that date, the order of attachment dated 12.02.2014 was already in existence and had not been vacated. More importantly, the material placed by the Bank shows that the Claim Petitioners had knowledge of the recovery proceedings/ attachment before presentation of the sale deed. The Bank specifically contended that the purchasers came to know about the proceedings by 20.f0.2023. Once there was a subsisting judicial restraint against alienation of the property without leave of

¶60

,fu,*+u l7 '>\ "

¶61

7ofl0

¶62

RA No.5/2025 in CP No.87/202S in RC No.297l2017 h OA No'106/2014

¶63

the Tribunal, the certificate debtors^{could not lawfully convey the} property so as to defeat the rights of the Certificate Holder Bank.

¶64

L2. A purchaser cannot obtain a better^{title than what the} transferor was capable of conveying in the^{circumstances of the} subsisting attachment. The subsequent^{purchaser's claim, therefore,} cannot override the^prior attachment in^{favourof the decree-holder.}

¶65

The Claim Petitioners seek^{protection on the ground that the} attachment was not reflected in the^{EncumbranceCertificate or} registration records. The said contention^{cannot defeat a judicial} attachment already^passed by a^{competentTribunal.An} Encumbrance Certlficate is a record of registered transactions/encumbrances^{and cannotbe treatedas an instrument} cancelling, superseding^{or overriding an orderof attachmentpassed} by a competent adjudicatory^{forum. Further,the plea of want of} notice becomes^{particularly weak when, cannotbe countenanced as} the^{purchasershad knowledgeof the recovery proceedingsbefore} the sale deed^was Presented^{for registration. Having proceeded with} the transaction despite^{such knowledge, the Claim Petitioners} cannot seek to^{placethe consequencesof the transactionupon the} Certificate Holder^Bank.

¶66

f4. The learned^{Recovery Offlcer overlooked the legal effect of the} attachment dated 12.02.2014.^{Even assuming that the second} attachment was^{necessitatedfor purposesof communicatingthe} attachment to the^{Sub-Registrarand enteringthe property in the} prohibitory list, such procedural act cannot^{confer upon the} purchasers a right which they did^{not otherwise possess Therefore,} the fact that the^{Form-16 was issued on 20.72.2023, subsequent to} the^presentation of^{the sale deed on 29r!11.2023, does not render} the earlier attachment ineffective. \iO** ,_/

¶67

8ofl0

¶68

RA No.5/2025 in CP No.87/2025 in RC No.2972017 in OA No.106/2014

¶69

The Appellant Bank has also raised a specific^objection regarding the maintainability of the Claim^{Petition on the groundof} delay. However, independent to the^question of delay,^{the Claim} Petition fails on merits because the alleged^{purchasers acquired} their interest after the subsisting attachment and^{cannot establish a} superior right against the Certificate^{HolderBank. SimilarlyBank's} objection regarding non-joinder of M/s^{Repco Bank/RepcoHome} Finance Ltd. In view of the finding already^{recorded regardingthe} subsisting attachment and the inabllity of the^{ClaimPetltloners to} establish a superior right, it is unnecessary to base the^decision solely upon the issue of non-joinder.

¶70

The Recovery Officer is required to execute the^Recovery certificate in accordance with the orders of the Tribunal and the applicable statutory^procedure. In the^present case, the attachment dated 12.02.2074 was an order^passed by the adjudicating Tribunal itself. The Recovery Officer could not, while adjudicating a subsequent third-party claim, treat the said attachment as having ceased merely because a subsequent Form-16 was issued in the course of execution. The order of the Recovery Officer, therefore, cannot be sustained.

¶71

In a nut shell, the findings of this Tribunal are that (a) the subject property was attached before^judgment on 72.O2.2O74i (b) the attachment was accompanied by a specific restraint against transfer, alienation or creation of charge without leave of the Tribunal; (c) the O.A. was subsequently decreed in favour of the Bank and a Recovery Certificate was issued; (d) the attachment before^judgment continued notwithstanding the decree and issuance of the Recovery Certificate; (e) the subsequent Form-16 dated 20.72.2023 did not create a fresh substantive right in favour of the

¶72

n'y/#:{ i^{. .} ):,.''

¶73

9 ofl0

¶74

.H,T.lf #3i;?,"Jlifl',',',1?ii

¶75

Bank but was a step taken^{in executionand communicationof the} existing attachment;^(f) the^{Claim Petitioners' sale transaction was} entered into/presented for^{registration duringthe subsistenceof the} earlier attachment;^{(g) the plea of bona fide purchase without} notice cannot be accepted,^{particularlyin view of the material} indicating knowledge of the^{recoveryproceedings before} presentation of the sale deed;^{and (h) the subsequent transaction} cannot defeat the^{prior rights of the Certificate Holder Bank arising} from the subsisting^{attachment.Accordlngly,the order dated} 77.0g,2025^{passedby the thenlearned RecoveryOfficer-Ilin Claim} Petitlon No.8712025^{is found to be unsustalnableand liable to be} set aside.

¶76

Before^{parting with the matter, this Tribunal is constrained to} observe that the^{manner in which the thenlearned RecoveryOfficer} dealt with the^{Claim Petition reflectsa serious failureto appreciate} the legal effect of^{the attachment before judgmentdated} 72.02.2014 and the^{subsequentdecree passed in favourof the} Certificate^{Holder Bank. Greater care and adherenceto the orders} of the adjudicating^{Tribunalare expectedwhile dealing with third-} party claims which have the^{potential to affect the rights of a} Certificate^{Holder.The Registryshall place a copy of this order} before the learned^{Recovery Officers.}

¶77

Point No.(v):

¶78

In the result,^{the Recovery Appeal No 5 of 2025 is allowed'} The order dated 17.09.2025^{passed by the Recovery Officer-Il'} DRT-II, Hyderabad^{in Claim Petition No BTl2025is hereby set aside'} Claim Petition^{No.8712025filed by Respondents1 and 2 is} dismissed. eY",

¶79

l0 of 10

¶80

RA No.5/2025 in CP No.87/2025 in RC No.297l2017 in OA No.1062014

¶81

20, Consequently, the stay order dated 28.10.2025^passed in this Appeal stands vacated. The attachment over the subject^property dated 12.02.2014 shall continue to remain operative for the purpose of execution of RC No.29712017 arising out of OA No.106/2014.

¶82

The learned Recovery Officer is directed to proceed with the recovery proceedings in accordance with law, subject to the rights of any^prior secured creditor.

¶83

No costs in the circumstances of the case.

¶84

23, Communicate a copy of this order to the parties concerned and the learned Recovery Omcers and also upload on the official website.

¶85

(Typed to my dictation by the Steno, corrected, sitned and pronounced by me in the open court on this the 24rh day ofAugust, 2026) .

¶86

Ko"u ESHWAR KOTHE) PRESIDING OFFICER

Indian Bank v. United Phase Diagrams

Case brief

What is this about?

What did the court decide?

Indian Bank v. United Phase Diagrams

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

The Axis Bank Ltd. versus Mrs. Bonasi Rajitha

Bank of Maharashtra versus Mr. Gulli Stephen

M/s. Icici Bank Limited. versus Swarna Sunil Kumar

Canara Bank versus Gowtham Polymers

Uco Bank versus M/s. Sri Venkateshwara Pharma.

Mr Krishna Datta Sastry Addepalli versus Axis Bank