Dismissed

A K Chandrasekhar Reddy v. Shriram Finance Limited

DRT30 Jan 2026SA/146/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal held that Section 17 of the SARFAESI Act does not confer jurisdiction to set aside arbitral awards, adjudicate loan dues, or inquire into the legality of measures taken under the Act. Consequently, the application to set aside the award and restrain possession was dismissed as not maintainable.

What did the court decide?

The Securitization Application was dismissed consequentially closing pending interlocutory applications with no order as to costs.

A K Chandrasekhar Reddy versus Shriram Finance Limited — Company and Corporate | 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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Securitization Application^{No. 146 OF 2024}

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A.K. Chandra^{Sekhar Reddy} S/o Krishna Reddy,^{Aged 53} Years. Occ.: Business,^{R/o H. No' 4-54,} Kothasanabatla, Chandragirl, chittoor District.

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Present address:

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1-176, V.K.^{Nagar, P.N. Road (Bye pass),} Beside YSMYR Function^{Hall, CHANDMGIRI,} Tirupati AP - 517101

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Smt. A. Kalyani W/o Sri A.K. Chandra^{Sekhar Reddy} Aged 49^{years, Occ.:Business,} R/o H. No. 4-54,^{Kothasanabatla,} Chandragiri, Chlttoor^District.

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Gurramkonda^RajaReddy, S/o Venkatesh^{Reddy, aged 53} Years Occ.: Business,^{R/o H'No'134,} New Balaji ColonY,^TiruPathi, chittoor District.

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""^'Applicants'

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Versus

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Shriram Finance^Limited, Represented by^{Authorized Si9natory,} Registered Office:^{Sri Towers, Plot No.} 14lA, South Phase,^{IndustrialEstate,} Guindy, CHENNAI -^600032.

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Shriram Finance^Limited,

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Represented by^{Authorized Si9natory,} Admn. Office: 6th^Floor [Level^2] Building No. 02,^Aurum Q^Part, Gen4/L, fiC,^{Thane BelaPur Road,} Ghansoli,^{NAVI MUMBAI} -^{4007t0.,'r'1.} (/woru

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PaEe 2 of 7

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sA No. 14512024

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The Manager

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Shriram Finance Limited Branch-il K.T. Road, Beside South hdia Shopping Ma TIRUPATHI 517501

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The Advocate Commissioner In CRLMP No. 57 /2024 on the fite of The Chief Judicial Magistrate, Chittoor

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.....Respondents

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Counsel for the Applicants : Ms. G. Sudha

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Cou nsel for Respondents : M/s. N. Raghuveer

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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, 2OO2 (..Act,, hereinafter for short) to set aside the arbitral award for Rs. 39,31,691/- and set aside statutory notice dated Zg.O7.ZOZ3 issued under the Act, ZOO2, interest component, restrain physical possess of immovable properties pursuant to notice dated 09.03.2024 in Crl.Mp No.57 of 2024 on the file of learned Chief Judicial Magistrate, Chittoor.

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The averments of the application, briefly, are that the Applicants availed a loan of Rs. 25,OO,OOO/_ on 27.02.20t4 from the Respondent. The respondent refused to receive the total loan amount and insisted for payment under EMI scheme only, charged interest on interest and made the account NpA and initiated SARFAESI proceedings. A demand notice under Section 13(2) of the Act, ZOO2 was issued on 28.01.2023 claiming Rs. 1,14,43,736/_ as outstanding amount. The respondent company mis_utilized the blank cheques obtained as security. The respondent company having invoked arbitration clause before a Warangal arbitrator lacking territorial/pecuniary jurisdiction, obtained A\refd but withdrew the ffilrb

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Page 3 of 7

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sA No. 146/2024

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subsequent Execution^{Petitions.The resultant arbitral award directing} payment of Rs. 36,50,0161- with LOo/oll8o/o future^{interest is illegal} for want of^{jurisdiction,} evidence and^{fair computation.Execution} petitions before the Principal District Judge,^{Chittoor, were withdrawn} midstream, evidencing forum^{shopplng to harass the ApplicantThe} Respondent illegally initiated^{freshSARFAESImeasures in 2023-2024} including^possession notices and^{physicaldispossession attempts,} prompting the present sA.

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The respondent^{financialcompanyfiled reply statementalong} with documents. The averments^{thereof, briefly,are that the 5A with} a^prayer to set aside^{the Warrant is not maintainable.The appllcant} availed loan, defaulted^{in repayments, suffered arbitralaward in 2016} for Rs. 36,50,016/-,^{whichremained unchallengedunder Section34} of the Arbltration and Conciliatlon^{Act, 1996' The Respondent} voluntarily withdrew^prior arbitration^{and proceeded to invoke} SARFAESI enforcement.^{The Applicant chronically failed to settle dues} despite accrued interest^{per loan agreement,with ledger statements} evidencing defaults and^{non-remittanceof installments.All adverse} averments including false denial^{of demand notice under Section} 13(2) and speculative claims about^{inflateddues stand denied in toto.} The^present SA has been^filed to^{protract the recoveryproceedingsof} the respondent corporation^{based on false, frivolousand baseless} allegations and hence SA^{is liable to be dismissed.}

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Perused the written arguments filed^{by the learned counsel for} the applicants as^{well as learned counselfor the respondentfinancial} company, and also^{perusedthe materlal brought on record.}

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In her written arguments,^{learned counsel for applicantsin} reiteration of contents of the^{application contendedthat thoughthe} applicants were consistent^{in repayment,due to variousbuslness} reasons landed in financial^{crisis and henceqladebona fldeproposal} ,Av<^,.* t^{t/,/ z\e,\J</sup>}

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Page 4 of 7

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sANo. t4612O24

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to the respondent company to accept Rs. 25,00,000/_ towards foreclosure which was rejected by Respondents; insisting on EMI repayment, resulting in piecemeal payments, The NpA classification is attributable to Respondent. The Respondent coercivery obtained 66 blank cheques, invoked NI Act proceedings, arbitration proceedings illegally but withdrew execution petitions after obtaining Award for Rs.36,50,016/-. The applicants due an amount of Rs.45,62,500/_ at the most, and respondent cannot unduly enrich itself by demanding Rs. 1, 14,43,136/ - vide Sec. 13(2) notice. Accordingly, learned counsel sought for allowing the SA as prayed for.

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Per contra, learned counsel for the Respondent Corporation reiterated the contents of the repry statement and submitted that the SA is not maintainable; as Section 17 jurisdiction is confined to statutory compliance of Section 13(4) measures, excluding adjudication of roan carcurations, arbitrar award, NI Act or execution proceedings. The doctrine of election is inapplicable as sARFAESI constitutes independent remedy. The Applicant,s suppression of defaults, non-challenge of prior proceedings and unclean hands disentitle equitable relief. Vague allegations of coercion, blank cheques and forum shopping stand denied. The conditionar deposit of Rs'34,33,000/- pursuant to interim order neither effects setflement, discharge, waiver nor reduces contractual dues. With these contentions, learned counsel sought for dismissal of the SA.

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The points for consideration are as follows : _

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i) Whether the appticants made out any vatid ground to quash the m.easure initiated by the isponaeit corporation against the SA schedule properties as prayed for?

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'fu4^.t\ y '/yrl'\J<sup>'

ii) To what retief?

PaBe 5 of7

sA No. 145/2024

Point No.(i):

The admitted facts are that^{that the applicants availed a loan of} Rs.25,OO,0oo/- from the^{Respondent on 21.022014, created} mortgage over SA^{schedule propertiesand committed defaultsin} repayment due to^{financialcrisis arose out business reasons-The} respondent invoked arbitration^{proceedings and obtained an arbitral} award ln the^{year 2016 for a sum of Rs'36,50,016/-with future} lnterest. It is also an admitted^{fact that the said arbitralaward was} never challenged by the applicants.^{However, theresPondent} company withdrew^{the Execution Petltions.}

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The Applicants basically^{contend that the respondentrefused} foreclosure, charged compound lnterest,^{misused blank cheques,} invoked arbitration without^{jurisdiction,indulged in forumshopping,} and illegally classified the^{loan account as NPA, thereby inflatingthe} outstanding dues to Rs.|,14,43,736/-.^{On these grounds, the} Applicants seek to set aside the arbitral award^{and SARFAESI} measures.

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The Respondent contends that the^{SA is not maintainable; that} the scope of Section 17 is llmited to examining^{the legalityof} measures taken under Section 13(4); that disputes^{relatingto arbitral} award, loan computation,^{interest, or alleged coercionare beyondthe} jurisdiction of this Tribunal; and that the Applicants are chronic defaulters attempting to delay lawful^recovery.

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It is well settled that the^jurisdiction of^{the Tribunalunder} Section 17 is not appellate or adjudicatory in^{respect of contractual} disputes, arbitral awards, or computation of^{dues ln the} Present case, the applicants seek to^{set asidean arbitral awardand question} its^{jurisdiction,} legality, and computation.^{Such relief is impermissible} under Section 17 of the Act. The remedies^{underarbitration,} Vfu-*ux,t\ 5u (-/

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PaBe 6 of7

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SA No. 74612024

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execution, and SARFAESI are independent and the doctrine of election has no application to SARFAESI proceedings. Withdrawal of execution petitions in no way bars the statutory enforcement of security interest under the provisions of the Act. The allegations regarding misuse of blank cheques, coercion, inflated dues, or entitlement to foreclosure involve disputed questions of fact and contractual adjudication, which cannot be gone into under Section 17 proceedings. similarty, as per sec.14(3) of the SARFAESI Act, 2oo2 any action taken by the learned CMM in implementing Sec.14 cannot be called in question before any Court or Authority. Hence the prayer to restrain the advocate commissioner to take physical possession of secured assets in Crl.Mp No.S7 /2024 is beyond the scope of Sec.17 application.

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As regards compliance with SARFAESI provisions, the Respondent issued demand notice under Section 13(2), followed by possession notice and approached the learned Chief tudicial Magistrate under Section 14 for assistance in taking possession. No material is placed on record to establish violation of statutory procedure or denial of opportunity under Section 13(3A). The interim deposit made by the applicants pursuant to orders of this Tribunal does not amount to setuement, discharge, or waiver of contractual dues and does not affect the respondent,s statutory right to proceed under the Act.

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It appears the present SA is filed as an attempt to reopen concluded issues and seek reliefs beyond the statutory scope of Section 17. The Applicants have failed to establish any illegality, irregularity, or non-compliance in the measures taken by the Respondent under the SARFAESI Act. Accordingly SA is liabte to be dismissed. (f,tr*

Page 7 of 7

SA No. 14612024

Point No.(ii):

t4. In the result, the Securitization^{Applicationfails and is hereby} dismissed.

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

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No order as^{to costs.}

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L7. Communicate^{a copy of this order to the partiesconcernedand} upload in the official^website'

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(Typed to my dictotion by the^PS, corrected,^{signed ondpronouncedby mein the open coutton thisthe} 3f day ol Jonuory,^2025)'

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/ffi,s,a ESHWAR KOTHE) PRESIDING OFFICER

A K Chandrasekhar Reddy v. Shriram Finance Limited

Case brief

What is this about?

What did the court decide?

A K Chandrasekhar Reddy v. Shriram Finance Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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