Allowed

Anantha Pvc Pipes Private Limited v. Union Bank of India

DRT30 Jan 2026SA/121/2023

Case brief

AI extract

What is this about?

This tribunal allowed an application under Section 77 of the SARFAESI Act, setting aside possession notices dated 15.07.2022 and 14.09.2022 due to procedural non-compliance regarding service and affixation of notices, holding that such defects made the notices legally unsustainable despite the account's NPA status.

What did the court decide?

Securitization Application allowed by setting aside possession notices dated 15.07.2022 and 14.09.2022.

Anantha Pvc Pipes Private Limited versus Union Bank of India — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY^TRIBUNAL -^{II AT HYDEMBAD}

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DATED THIS THE 3oth^{DAY OF JANUARY,2026}

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

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Securitlzation Application^{No. 121 OF 2023}

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Anantha PVC^{Pipes Pvt Ltd} Represented bY its^Director Mrs. S Sujala, Sy. No.²⁶ NH 44, Bangalore Road Hampapuram Village Rapthadu Mandal

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Ananthapur District -^{515 721}

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Mrs. S Sujala

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w/o Mr. Sajjala^SridharReddy Aged 46^years

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R/o H. No. 30-726 Bommalasatram

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Nandyal, Kurnool^District -^{518 501}

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Mrs. S Aravinda^Rani

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Wo^{Mr. Vemuri Suresh Kumar Shastri} Aged 44 Years,^{R/o H. No. 30-726,} Bommalasatram,^NandYal, Kurnool District -^{518 501}

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Mr. S Sreedhar^Reddy S/o Mr. S V^LakshmiReddy Aged 47^{years, R/o H. No. 30-726.} Bommalasatram,^Nandyal, Kurnool District -^{518 501}

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Mrs. S Parvathi

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Wo^{LateS Pedda Yerikal Reddy} Aged 68^{years, R/o H. No. 30-726,} Bommalasatram,^NandYal, Kurnool District -^{518 501}

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Mr. S V Lakshmi^Reddy

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S/o Mr. S^{Bali Reddy} Aged 74^{years, H. No. 30-726/D-4,} Bommalasatram,^NandYal, Kurnool District- 518⁵⁰¹ llw &, ,1-.$*\

.......Applicants.

PaEe2of9

sa No. 12u2023

Versus

The Authorized Officer Union Bank of India Nandya I Main Branch, 3-2g2 Byrmal Street, Nandyal Kurnool District, Andhra pradesh

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Union Bank of India, Represented by its Chief Manager Nandyal Main Branch, 3-282 Byrmal Street, Nandyal Kurnool District, Andhra pradesh

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.....Respondents

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Counsel for the Applicants : Mr.Abhay Singh

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Counsel for Respondent Bank : Mr. V. Sethu Madhava Rao

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.:ORDER:-

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The present Securitization Application is filed by the Applicants u/s.77 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (,.Act,, hereinafter for short) to declare the actions of the respondent bank against the application schedule properties including the auction notice dated 22.02.2023 fixing the auction on 28.03.2023, as non-est in law.

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The averments of the application, briefly, are that the applicant's no.1 is the owner of the Schedule A properties, applicants 2, 3 and 5 are joint owners of the Schedule E properties. The applicant no.2 is the owner of schedule C property, applicant no.4 being owner of Schedule B property, applicant no.S owner of Schedule F^property, applicant no.7 owner of Schedule D property and Sri. K Veera Reddy owner of Schedule G property. The applicants availed Open Cash Credit Facitity of Rs. 8,OO,OO,OOO/_ and Letter of Credit Facitity of Rs. 7,OO.OO,OOO/- on 04.03.2021 wiql vatidity up to /rXw--",.is,' (2/^{</sup> -reN,}

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Page 3 of 9

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sA No. 12U2023

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03.09.2021 from^{erstwhlle Andhra Bank (Now union Bank of India)} against the mortgage^{of applicatlonscheduleproperties.Aftermaking} substantial repayment, there^{was overdue of instalments due to} death of Late Sri. S.P.Y^{Reddy and covid pandemic.Due to which the} respondent bank classlfied the^{loan accountas NPA on 01.03.2022} and issued a demand^{notice dated 02.03.2022 under section13(2) of} the Act. The applicants^{contestedby filling a reply undersection} 13(34) of the Act. Subsequently,^{sale notice dated 22.02,2023was} issued against the schedule^{property and the same was publishedin} the newspaper on^{24.02.2023 therebyfixing the date of auction on} 2A.03-2023. Respondent bank^{failed to consider repaymentof Rs} 27,57,7361- after the^{loan accountwas classifiedas NPA.The very} NPA classification was against^{RBI guidelines as the credit facilitywas} within the limit as on the date^{loan accountwas classifiedas NPA'} The schedule^{propertles have been undervaluedtherebyrespondent} bank violated Rule 8(5)^{of the SecurityInterest (Enforcement)Rules/} 2OO2^("Rules" hereinafter^{for short).Hence thisSA to set aside all the} measures against the^{sA scheduleproperty.}

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The respondent^{bank filed replystatement along with} documents. The averments^{thereof,briefly, are that defaultin} repayment of credit^{facilitiesthe loan account was declared as NPAon} 01.03.2022 and the^{Securitizationproceedingshad to be initiated} against the application^{scheduleproperties. The applicants contention} regarding wrongful^{classificationof accountas NPAwas rejectedas} applicants failed to^{regutarisethe accountwithin 90 days fromlast} due date of^{payment;henceNPAclasslfication was done in adherence} to the RBI norms.^{Subsequently demand noticeswere issued on} 02.O3,2022^{which were served on applicantsthrough registered post'} As no^{payment was made, respondent bankissued possession notice} dated 15.07.2022 against^{scheduleC to G properties, and} subsequently a separate^{possessionnoticedAled 14 09'2022 against} /,4Y'""r*A

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Page 4 of9

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sA No. 12u2023

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schedule A and B properties was served on the applicants by

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registered post, published in Hans India (English) and Sakshi (Telugu) newspapers as per Rutes 8(1) and B(2) of Rutes. The respondent got the valuation report on Lg.OL.2023 and issued the auction notice dated 22.02.2023; fixing the auction on 2g.03.2023. The said auction notice was sent by the registered post and published in Hans India English Newspaper and Sakshi Telugu Newspaper on 24.02.2023. Chalenging the said auction the appticants filed SA in this Hon'ble court for stay in the auction and for compliance the applicants was order to deposit Rs. 3,30,00,000/_ in three instalments. The applicants complied with the first instalment but failed to comply with the second and third instalment, due to which applicants filed an LA. No.1064 of 2023 seeking extension of time for payment. Despite granting the time the applicants failed to do so, thereby respondent bank issued sale notice dated 29.04.2023 fixing the auction on 26.05.2023. The said sale notice was sent by registered post and same was published in the Hindu and Sakshj Newspaper on 30.04.2023. The auction scheduled on 26.05.2023 was not conducted as such the cause of action does not survive and accordingly SA becomes infructuous. Hence the SA is liable to be dismissed.

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Hea.d the learned counsel for the applicants and respondent bank. Perused the written arguments and the material brought on record.

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Learned counsel for the applicants reiterated the contents of the application and submitted that the outstanding in the Open Cash Credit and Letter of Credit Facility accounts were well within limits as on the date of classification of accounts as NpA on 01.03.2022. The respondent bank has violated Sec.13(34) by non_responding to the reply issued by the applicants ()n 24.06.2022 "^d effir;fln"r.

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Page 5 of9

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sA No. 121/2023

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In spite of specific contention on^{violation of Rule 8(1),the} respondent bank has not filed^{acknowledgements as proof of service} and filed only one^{photographas proofof affixturewhereasthere are} six properties. There is^{continuous cause of action pursuantto} possession notlce dated 05.O7.2022 and^{hence applicants are entitled} to challenge the^previous actions^{of the bank in the light of} judgement dated 01.09.2008 of Hon'ble Madras High couft^{in The} Authorized Officer, Indian^{Overseas Bank and Another vs. M/s Ashok} Saw Mill, which was^{challengedin SLP (C) No.27399 of 2008 and} Hon'ble Supreme Court^{dlsmissedthe Appeal.Learned counselalso} relied on^judgement ol^{Hon'ble Gujarat High Court in AdityaBirla} Finance Ltd. vs. Mangesh^{ChampaklalGandhi & Ors; and Hon'ble} DRAT, Kolkata in State^Bank of^{India vs' SubhashDutta (2017(2)} DRTC 737) in support of^{his contentlonon continuouscause of action} and right to challenge^{all the measuresprior to sale notice.He further} contended that the^{applicantshereln have not waived their rights} either by conduct or^{otherwiseto challenge the measures and hence} rightfully entitled to^{challenge all the measures. Learnedcounsel} relied on^judgement ol^{Hon'bleApex Court in VasuP Shetty vs' Hotel} vandana Palace & Ors'^{AIR 2014 SDC 1947 wilh specific reference to} paragraphs 47 and 42, to support^{his contention With these} submissions, he sought to^{allow the SA as prayedfor.}

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Learned counsel for the^{respondentbank while relyingon the} documents annexed to^{the replystatement as proof of complianceof} due^procedure, further^{submittedthat the account became NPA on} 0L.03.2022 due to^{irregular payments, non-service of even interest in} OCC account, continuous^{failure in arrangingfunds to honourthe} devolved L.C. llability,^{lnsufficient turnover, non-availability of stocks} to cover the drawing^{limits etc., as per prudential normsof RBI} followed by SARFAESI^{action by issuing demandnotlcedated} tflW<*tt (j/',r'-

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page 6 of9

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sA No. t2tlZO2Z

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02.03.2022 which was duly served on applicants. As no payment was made, respondent bank issued possession notice dated lS.O7.2OZZ in respect of item Nos.C to G properties, duly published the same rn 'Business Standard' and 'Sakshi,, English and Telugu newspapers respectively on 20.07.2022, and also got affixed on the secured assets. Separate possession notice in respect of item Nos.A and B properties was issued on 14,09.2022, published in ,Hans India, and 'Sakshi' newspapers on 17.09.2022 besides amxture on concerned secured assets, thereby respondent bank complied Rules 8(1) and 8(2) of Rules, 2002. He further argued that the challenge against possession notice is time-barred and hence not maintainable. The respondent bank obtained valuation reports from the approved valuer basing on which reserve prices were fixed. However auction did not take place due to compliance of the conditional order passed by the Tribunal. Learned counsel sought for dismissal of the SA as devoid of merits, together with exemplary costs.

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The points for consideration are as follows : -

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i) Whether the applicants made out any valid ground to declare the SARFAESI action of the respondent bank aqainst the SA schedule properties as non est in law, as prayed for?

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ii) To what reliep

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Point No.(i);

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Admittedly, the applicants avaited Open Cash Credit and Letter of Credit Facility against mortgage of schedule property as security and failed to make payment as per repayment schedule.

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Reportedly the impugned auction did not take place. Therefore, the SA has become infructuous insofar as the imp1Ened sale notice and its related grievances are concerned. O%^*

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Page 7 of9

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sA No. 12u2023

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The objection of the^{respondent bank regardingthe} maintalnability of the^{present Securitisation Appllcationcannotbe} sustained in view of the^{settled law in Ihe Authorized Officer, Indian} Overseas Bank^& Anr.^{vs. M/s'Ashok Saw Mill (supra), whereinit was} held that every step under^{Section 13(4) is a separate measure,} borrower can^{challengeall previous actionswhen challenginga later} measure, cause of^{actionis continuous until sale is concluded' This} judgment finally settled the issue after^{dismissalof SLP' In the} present case, the^possession notice^{constitutes a measure under} Section 13(4)^{giving rise to continuous cause of actionAccordingly,} the^present SA^{is held to be maintainable.}

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Even lf borrower^{did not challenge 13(2)notice,or earliersteps} they are entitled to^{challengepossessionnoticeand all prior} measures unless the^{bank proves express waiver of rights,written} consent or conduct^{amountlngto estoppels,as held by the Hon'ble} Apex Court in^{Vasu P. Shetty case (supra)' In the instant case'} respondent bank could^{not estabtish such conduct of the applicants} amounting to^{waiver.Hence the obiection as to waiverraised by the} respondent bank^{is also not sustainable.}

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The^{primarycontentionof the applicantsis that the account} was illegally^{classified as NPAthough the account was in order' A} perusal of the date-wise^{pendencyof devolvedL cas tabulatedin} the reply statement^{would reveal that the appllcantfailed to arrange} funds to honour the^{devolved L.C' liability continuouslyfor more than} the prescribed time^{limlts. The paymentsmade after NPA} classification do not^{render the NPA classificatloninvalid, as claimed} by the applicants.^{The status of the accountshouldbe standardas on} the date of^{classification.However, assessmentof financlal health'} drawing^power, stock^{position,and LC devolvement falls withinthe} commercial discretion^{of the bank and the -Tribunal cannot sit in} 2b.-",.* (J,'-1,9',"',

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Page 8 of9

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SA No. 12112023

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appeal over such decisions except for proven illegality or malafides. Hence the contention that NPA classification was illegal does not deserve accepta nce.

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The other contention of the applicants is non_compliance of provisions of sections 13(2) and 13(4) of SARFAESI Act and Rules 8(1), 8(2) of the Security Interest (Enforcement) Rutes, 2002. To controvert these allegations, the respondent bank filed documents along with reply statement. A perusal of the documents would reveal that demand notice was served on applicant through registered post vide postal receipts and track reports. Admittedly the respondent bank issued two possession notices, one is dated 15.07.2022 in respect of five immovable properties (SA schedule C to c) and another is dated 14.09.2022 in respect of two properties (SA schedule A and B). The possession notice dated 75.O7.2022 has been sent by registered post as per postal receipts placed at pages 13 to 15, published in English and Telugu newspapers on 20.07.2022 whereas, no proof of affixture of this possession notice on the secured assets is not found. As regards the other possession notice dated 74.09.2022, the same was pubtished on 77.09.2022 and affixed on two properties, no proof of sending or serving the same on applicants is placed on record. Hence it is to be construed that respondent bank has not followed mandatory Rule g(1) of the Rutes, 2002 in serving the possession notice dated 74.0g.2022 and affixing the possession notice dated 75.07.2022 on the secured assets.

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74, In view of the above observations, it is held that the applicants made out valid ground to set aside the possession notices dated 75.07.2022 and t4.09,2022. Accordingty, SA deser[CF to be a owed. Oy*',

Page 9 of 9

SA No' 12112023

Point No.(ii):

In the result, the^{securitization Applicationis allowed by setting} aside the^{possessionnotices dated 15.07.2022 and L4'09'2022} issued under Sec.13(4) of^{the Act, 2002 againstthe SA schedule} properties.

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ConsequentlY, Interlocutory Applications^{pending,if any, shall} stand closed.

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t7. No order as to costs.

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1g. communicate^{a copy of this order to the parties concerned and} upload in the official^website.

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(Typed to my dictotion by the PS, corrected,^{signedond pronouncedby me in the opencourt on this the} 3dh doy of lonuory,2026).

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lv}tc ESHWAR KOTHE) PRESIDING OFFICER

Anantha Pvc Pipes Private Limited v. Union Bank of India

Case brief

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Anantha Pvc Pipes Private Limited v. Union Bank of India

Case brief

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