Allowed

Siva Kumar Narayanavanam v. Ikf Finance Limited

DRT12 Jan 2026SA/159/2024

Case brief

AI extract

What is this about?

In this Securitisation Application, the Tribunal addressed allegations of procedural irregularities in auction proceedings and deemed the application infructuous due to the non-maturing of the scheduled auction.

What did the court decide?

The Securitisation Application is allowed by setting aside the possession notice dated 02.06.2022 issued under Section 13(4) against the application schedule properties.

Siva Kumar Narayanavanam versus Ikf Finance Limited — Banking and Recovery | DRT (2026)

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iN THE DEBTS RECOVERY TRIBUNAL - II^{AT HYDERABAD}

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DATED THIS THE 12th^{DAY OF JANUARY,2026}

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PRESENT: SH. RAMESHWAR KOTHE,^B.COrn, L.LB. (Hons.), M.A. PRESIDING OFFICER

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Securitisation Application No.¹⁵⁹ oF 2024

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M/s Siva Kumar Narayanavanam, Rep by its Prop. K Siva Kumar, S/o Shanmugam, Aged: about^{55 Years,} Occ: Business, R/o: D.No.4-88, Diguva Gandla Street, Naraya navana^m, Tirupathi District-517581.

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K Siva Kumar, S/o Shanmugam, Aged: about 55 Years, Occ: Business, R/o: D.No.4-88, Diguva Gandla Street, Naraya nava nam, Tirupathi District-517581.

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Kallathuru Bharathi, Wo K Siva Kumar, Aged: about 50 Years, Occ: Business, R/o: D.No.4-88, Diguva Gandla Street, Narayanavanam, Tirupathi District-5 1758 1.

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. . .... . Applica nts

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Versus

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IKF Finance Limited, 40-l-t44, 3rd Floor, Corporate Centre, M.G Road/ Vijayawada-520010, Rep by its Authorized Officer.

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...... Respondent

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Counsel for the Applicants Counsel for Respondent

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Mr. G. Poornima Rao Mr. Siddharth Chitturi

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-:ORDER:.

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The present Securitisation Application is filed by the Applicant u/s.77 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("Act" hereinafter for short) to set aside all the measure initlated by the respondent under section 13(4) of the Act including sale notice dat 28.70.2024 tixing t-*rt

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Page 2 of 6

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SA No. 159/2024

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the auction on 79.71.2024 in respect of application schedule properties.

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The averments of the application, briefly, are that the Aapplicants availed a business loan facility from the Respondent in 2019 for an amount of Rs. 1,69,15,022/-, wherein Applicant No. 1 is the borrower and Applicant Nos. 2 and 3 are guarantors. The Applicants repaid approximately Rs.25 lakhs towards the said loan. Due to financial difficulties, business losses and the impact of the COVID-19 pandemic, the Applicants defaulted in payment of certain EMIs. Despite requests for time and settlement, the Respondent classified the account as Non-Performing Asset (NPA) and initiated recovery proceedings. The Respondent issued notices for sale of the secured assets without adhering to the mandatory procedure under Sections 13(2) and 13( ) of the Act read with Rules B and 9 of the Security Interest (Enforcement) Rules, 2002^("Rules" hereinafter for short). The sale notice was neither affixed at a conspicuous^place on the secured assets nor^published in two widely circulated^newspapers. Further, the mandatory 30-day^period between the^{notice underRule} 8(6) and the date of auction was^not observed,^{therebydenyingthe} Applicants their statutory right of^{redemption underSection 13(B) of} the SARFAESI Act. It is contended^{that the Authorized Officer failedto} obtain a valuation report from^{an approvedvaluer and fixed an} unreasonably low reserve^{price, with alleged malafide intent and} collusion with^{prospectivepurchasers. Only select properties were put} to auction, while others^{were sold withoutdisclosureto the} Applicants. Pursuant to^{interimorders of this Tribunal, the Applicants} deposited a sum of Rs. 55,83,630/-.^{Notwithstandingthese bona fide} efforts, the Respondent^{proceeded with the auction processand} issued a fresh sale notice dated^{28.LO.2024, schedulingthe auction} for 19.L|.2024, again in^{violation of the prescribedstatutorytimeline.} /X<\9<o\ // /".'Y' iw

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Page 3 of 5

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SA No. 159/2024

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The Applicants submit that the^{actions of the Respondentare} arbitrary, illegal and in^{contraventionof the SARFAESI Act and Rules} thereunder, as well as the^{principlesenunciated by the Hon'ble} Supreme Court in Mathew^{Varghesev. M. Amritha Kumar and other} binding^precedents. In the absence of^{efficacious alternativeremedy,} the Applicants have approached^{this Tribunal prayingfor setting aside} of the impugned notices and^{grant of consequential reliefs.}

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The respondent filed reply statement^{in the SA. The} submissions, in brief, are that the Applicant^{availed a loan of Rs'1} Crore pursuant to a loan agreement dated t2.02.20t9,^collaterally secured by immovable properties including application^schedule properties, evidenced by deposit of title deeds vide registered Memorandum of Deposit of Title Deeds dated 19.03.2019.^Having availed the loan, the Applicant defaulted in repayment,^consequent whereto the Respondent classified the account as NPA and issued a demand notice under Section 13(2) of the Act, 2002^dated 07.03.2022, which was received by the Applicant on 12.03.2022. On failure to liquidate the dues, the Respondent issued Sec.13(4) possession notice dated 02.06.2022, received by applicants on 06.06.2022 and published on 04.06.2022. Thereafter sale notices were issued on three times. In the second auction sale, 2 out of 5 properties could be sold. In respect of the remaining properties, a further sale notice was issued on 11.03,2024, against which the Applicants have instituted the present Securitization Application. The Respondent denies the Applicants' bald and unsubstantiated averments regarding financial distress attributable to business losses or COVID-19 moratorium (noting that only Rs. 25 lakhs were paid towards EMIs, which stands fully adjusted). The Respondent asserts strict compliance with SARFAESI Act timelines, including that no fresh 30-day notice was required following the initial sale notice. This is fortified by a favourabre arbitrar award in ,.r. *o.ffiffirdirecting

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Page 4 of 6

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SA No. 159/2024

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repayment. The Applicants failed to challenge the^prior sale of^two plots despite notice, rendering the Securitization Application liable to be dismissed at the threshold with imposition of^punitive costs.

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Learned counsel for applicant reported that orders may be passed based on records. Heard the learned counsel for the respondent. Perused the written arguments filed by the applicants as well as respondent and also material brought on record.

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Learned counsel for the applicants submitted the^written arguments in reiteration of the contents of^{the application and sought} to allow the SA by setting aside all the^{measures of the respondent} against the application schedule^properties.

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During the course of arguments, the^{learned counselfor the} Respondent while reiterating the^{averments in the reply, contended} that the Applicants availed^{a loan of Rs' 1 Crore from the Respondent} on L2.02.2019, secured by^{mortgageof immovable propertiesof five} plots situated in Puttur Municipality, Tirupati, vide^{MemorandumNo.} 95812019 dated 19.03.2019.^{The accountwas classifiedas NPA upon} default, following^{whichthe issued notice under Section 13(2)dated} 07.03.2022,^{possession notice under Section 13(4) dated 02.06.2022} (published 04.06.2022), and three sale^{noticesunder Rule 8(6) i.e.,} dated 31.01.2023; 24.08.2023^{(Plots 1B and 42 sold);and} L1.03.2024^(for Plots^{LA, 44 and 12). Reserveprice was fixed by} obtaining latest valuation^{report.They denied the Applicants'} unsubstantiated claims of^{financial distress(Rs' 25 lakhs paid stands} fully adjusted) and affirmed^{compliancewith SARFAESI procedure,} relied upon the Arbltral Award^{(No. 92/2020),noted the unchallenged} prior sale, and prayed for dismissal of the^{Application with costs.}

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futts,r-t// / _./ .\t^t.t /t / '}' (_/

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Page 5 of 5

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SA No. 159/2024

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The points for consideration are as follows : -

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i) Whether the applicant made out any valid^ground to quash the notices issued by the respondent against the SA schedule properties including auction^proceedings dated 28.03.2024, as prayed for?

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ii) To what relief?

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Point No.(i):

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B. Admittedly, the applicants availed credit facilities, created mortgage on immovable properties as security for repayment and defaulted in repayment. Hence there is no illegality or irregularity in proceeding against the secured assets.

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As per records, the respondent issued sale notices and two out of five immovable properties, were sold which are not under challenge. The impugned auction sale dated 28.03.2024 did not materialize as reported by learned counsel for respondent on 06.11.2025^yra video conference, Hence SA became infructuous as far as auction sale is concerned.

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As far as contentions on non-compliance of Sec.13(2) and 13(4) are concerned, the respondent filed sufficient proof as to service of demand notice and possession notice and publication of possession notice. However, proof of affixture of possession notice has not been filed as required under Rule B(1) of the Rules, 2002. This vitiates the possession notice. Accordingly SA deserves to be allowed by setting aside the possession notic1fur,*

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sA No. 159/2024

Point No.(ii):

In the result, SA No.159 of 2024 is allowed by setting aside the possession notice dated 02.06.2022 issued by the respondent under Sec.13(4) against the application schedule^properties.

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Consequently, the Interlocutory Applications pending if any shall stand closed,

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No order as to costs.

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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 Steno, corrected, siqned ond pronounced by me in the open court on this the 72th day of .)anuary, 2026).

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(RAMESHWAR KOTHE) PRESIDING OFFICER

Siva Kumar Narayanavanam v. Ikf Finance Limited

Case brief

What is this about?

What did the court decide?

Siva Kumar Narayanavanam v. Ikf 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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