Dismissed

Shankar Estate v. Mahaveer Co-Operative Bank Ltd.

DRT19 Feb 2026SA/169/2025

Case brief

AI extract

What is this about?

In this securitisation application under s. 17 of the SARFAESI Act, the Applicants challenged procedural irregularities in the Respondent Bank's notices, including the sale notice and valuation. The Court held that since the auction scheduled pursuant to the sale notice was not materialised, the grounds for challenge did not survive.

What did the court decide?

The Securitisation Application filed under s. 17 of the SARFAESI Act is dismissed. Interlocutory Applications pending stand closed. No order as to costs.

Shankar Estate versus Mahaveer Co-Operative Bank Ltd. — Banking and Recovery | DRT (2026)

¶1

IN THE DEBTS RECOVERY TRIBUNAL^_ II AT HYDERABAD

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DATED THIS THE 19TH DAY OF^{FEBRUARY, 2026}

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PRESENT: SH. RAMESHWAR KOTHE,^{B.COM.,L.LB. (HONS.), M.A.} PRESIDING OFFICER

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SECURITISATION APPLICATION^{NO. 169 OF 2025}

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M/s, Shankar Estates Pvt. Ltd. 6-2-953, 2nd Floor, Krishna^Plaza Kha irata bad, Hyderabad. Rep by Director Mr. D.S.P. Reddy.

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D.S.P. Reddy R/o 8-2-695/R/4 Paradise ShankevellY Road No.12, Baniara Hills Hyderabad,

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Ms. D.S.P. Sridevi wo^D.s.P.Reddy R/o 8-2-69s/R/4 Paradise ShankevellY Road No.12, Banjara^Hills Hyderabad. '. '. ',,AqPlicants'

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Versus

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Mahaveer Cooperative^{Urban BankLtd.} 7-l-5917, Opp: Indian^Bank

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Beside Plastic World Ameerpet, Hyderabad. Rep by its Authorised Officer.

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....,,Respondent.

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Counsel for the Appticants^{: Mr. G. Sanjeeva Reddy'}

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Counsel for Respondent^{: Mr' v. SethuMadhava Rao'}

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-:9-B-DI-B:-

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The Applicants^{filed the present Securitisation Applicationu/s'} 17 of the Securitization and^{Reconstruction of FinancialAssetsand} Enforcement of Security^{Interest Act, 2002} ^(hereinafter^{referred to} ffi4*t

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sA. 169/202s

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as 'SARFAESI Act 2002") assailing all the^{proceedingsinitiated} against the schedule^property lncluding the sale^{notice dated} 77 .03.2025 flxing the date of auction^{as 21.04.2025.}

¶18

The case of the applicants, in brlef, is applicant No.1 is the borrower and applicant No.2 is one of its Directors and applicant No.3 is the^{personal guarantor} to the loan availed from respondent bank. Applicant No.2 availed credit facilities from the^respondent bank to meet its business requirements.^The SA schedule^property belonging to applicant No.2 was mortgaged as a security for the credit availed from respondent bank. All of a sudden respondent bank issued notice u/s 13(2) of the SARFAESI Act, dated 09.05.2019 without classifying the loan account as NPA. Applicant No.2 submitted objections to the demand notice on 20.06.2079. Thereafter, respondent bank^proceeded with issuance of^possession notice dated 03.08.2019 u/s 13(4) and appointment of Advocate Commissioner uls 74 of the SARFAESI Act. Applicants challenged the respondent's actions u/s 14 of the SARFAESI Act vide S.4.443 of 2024. As per the conditional order passed by this Tribunal in lA.29t3/2024 applicants deposited Rs.10 lakh. During the pendency of the SA.443l2024, respondent proceeded further and issued Rule 8(6) notice dated 10.01.2025 and sale notice under Rule 9(1) dated 1,7.03.2025 putting the SA schedule property for auction sale. The notices dated 10.01.2025 and 77.03.2025 have not been affixed on the secured property. The reserve price is 50o/o less than the market value, hence respondent bank violated Rule 8(5) in obtaining latest valuation report u/r 8(5). Applicants dispute the liabitity of Rs.54,74,737/- claimed by the respondent in the counter to IA.2913 of 2024. Payments made by applicants from tinle. to time were not ///Y-.""tL t::./

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sa. 16912025

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reflected in the statement of account. Respondent^{charged excess} interest unilaterally. The sale notice was not issued as^{per the} procedure under law in Appendix-Iv-A. Hence the sale notice dated f7.03.2025 is illegal and arbitrary. NPA classification is^notin accordance with the RBI^guidelines as the applicant^{No.1 is an} MSME unit. Respondent is required to issue a caution^notice first before declaring the account as^{NPA.Respondentbank is not having} enforceable mortgage over the subject^{property.Respondenthas} not complied with the^provisions of Section 13(2) in serving^demand notice, Rules 8(2) ln serving/affixing and^publishing the^possession notice issued u/s 13(4). The sale notice has not been^{affixed on the} schedule property, hence violated Rule 8(7) of the^Rules.The properties shown in the possession notice are incorrect. In view of the aforesald facts, applicants^prayed for allowing the^{relief as} sought for in the SA.

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Respondent bank filed reply statement. The^{submisslonsof} the respondent bank, in brief are that the^{present SA is filed against} the subject^property. In fact the^{securitisation proceedings have} been initiated way back vide demand notice u/s^13(2)dated 09.05.2019, followed by^possession notice u/s^{13(4) dated} 03.08.2019. The objections to the demand^{notice have been duly} addressed vide reply dated 04.07.2019. Thereafter,^respondent initiated proceedings u/s 14 of the^{SARFAESI Act. One such} proceeding was challenged by applicants by filing SA.379 of²⁰¹⁹ before this Tribunal against warrant^{obtalnedin Cr.M.P.No.774 of} 2019 in respect of two other^{properties. TheSA.37912019endedin} dismissal vide order dated 14.08.2023.^{Applicants draggedthe} proceedinss in sA.37el201e from 201s ," rbw;,smissal^of

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sa, 16912025

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the SA.37912019, respondent bank again obtained^Warrantin Crl.M.P.No.120/2024 for^taking the^{physical possessionof the other} two properties and Advocate^{Commissioner issuednotice dated} 14.11.2024 for taking the^{physical possession} of^{those two other} properties. Applicants challenged the Advocate Commissioner notice dated 14.11.2024 by filing SA.443 of^{2024 before this Tribunal and} obtained a conditional order in^{IA subject to depositof Rs.10 lakh.} Applicants complied the conditional order.^{As regards NPA} classification, between the^period from 01.01.2016^{and 31.12.2016,} applicants^paid Rs.5,08,716l- against the due amount^of Rs.a,75,448/- i.e., Rs.79,9541- EMI for¹² months.^{Therefore,due} to default in^payment of EMIS for more than 90 days during^this period, the account was classified as NPA on 30.09.2016. The objections to the demand^notice were duly^{addressedvide reply} letter dated 04.07.2019 including clarification on the^rate of^interest applied to the loan account. The reserve^price of the SA^subject property has been fixed basing on the valuation report from the approved valuer dated 09.05.2024. Rule 8(6) notice and Rule 9(1) notices were sent by registered^post and the same were duly served on the applicants. Rule 9(1) notice was affixed on the secured asset and^published in Telugu Vartha and Indian Express dailies.^As there being no violation of the^provisions of the SARFAESI Act and the Rules there under, respondent bank^prayed for dismissal of the SA.

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Learned counsel appearing for the applicant^prayed that orders may be^passed basing on records. Heard learned counsel appearing for the respondent bank. Perused the written submissions flled by the applicants and the material^placed on ,".or|fu\r"\

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sa. L6912O25

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According to the applicants, they offered three^{propertles as a} security to the term loan of Rs.30,00,000/-^{availedfor business} purposes. The SA subject property is one of the^properties mortgaged by the applicants. Respondent bank^{invoked Section14} of the SARFAESI Act for the first time^{which was challengedby the} appllcant by filing SA.379 of 2019^{before the DRT-2, which was} dismissed on 14.08.2023.^{Respondentagain invoked Section14 of} the SARFAESI Act in respect of the^{physical possessionof Flat} bearing No.D-404 and Flat bearing No.D-405^{sltuated in Sri} Rajarajeswari Apartment^(lanapriya Flats),^{HUDA Complex,} Saroornagar, R.R. Dlstrict. Applicants^{challengedthesemeasures} by filing SA.443 of 2024 on the file of DRT-1.^{The SA is pending} adjudication. The^present SA is filed for the^{reasonof the notice} dated 10.01.2025 under Rules 6(2) and^Rule 8(6)^{of the Security} Interest^{(Enforcement)} Rules,²⁰⁰² being^{not in accordancewith the} Law and the sale notice dated 17.03.2025^{belng illegal and arbitrary} since the same ls not in accordance with^{AppendixIV-A of the} SARFAESI Act. The notices dated^{10.01.2025 and 17.03.2025 are} vitiated in view of^procedural irregularity^{in the issuanceof notices} under sections 13(2) and 13(4) of the^{SARFAESI Act. Respondent} has not proved that the notices issued under^{SARFAESIAct are in} compliance of the^procedure contemplated^{under the Act. The} respondent has not followed the^procedure contemplated^under Rules 8 and 9 of the SARFAESI^{Rules, 2002 in affixingthe notlces} dated 10.01.2025 and 17.03.2025 at the^{conspicuousplaceof} petition schedule property. Respondent has not obtalned^the correct and fresh valuation from the^{approved valuer as specified} under Rule 8(5) of the SARFAESI^{Rules, 2002. The reserve price is} very low than the existing market value of tly4roPertV.^{nate of}

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///"/,;tt'" l-t'

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sa. 16912025

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interest charged to the loan account is excessive, exorbitant and against the^guidelines of RBI. The statement of account relied on by the respondent bank is based on miscalculation of interest, and various debit entrles without there being no condition or^provision in the loan documents. The rate of interest to be charged at 160lo^per annum but not at 1690 with monthly rests. However, applicants never agreed to pay 16010. On the contrary, applicants agreed to pay interest @12yo per annum. Once the loan account has been classified as NPA, the accrued interest should not be debited to the loan account or penal interest for that matter. Thus, the respondent bank has not followed the^principles of natural^justice. Respondent has not responded to the request of the applicants to provide statement of account to enable them to regularise the loan account by paying interest portion. In view of the SARFAESI measures adopted by the respondent suffer from serious lrregularity and illegality, the SA deserves to be allowed with costs in the interest of justice.

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Now the points that arise for adjudication are:-

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(i) Whether the Applicants made out any valid ground for setting aside the measures of the respondent bank including sale notice dated 17.03.2025 fixing the date of auction on 21.04.2025?

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(ii) To what relief?

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Point No. (il:

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As per the material brought on record, this is the 3'd round of litigation being pursued by the applicants. The first round of litigation being 5A.379/2079 fited against the advocate /// ,//M,,rtl' ( t/'

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sA, 169/ 2025

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commissioner notice dated^{78123.fl.2079.Applicantschallenged} the advocate commissioner^{noticefor the reason of issuanceof} demand notice without^{classification of loan accountas NPA and} violation of Rules 8(1) and 8(2)^{in amxing and publishing the} possession notice dated 03.08.2019. Applicants^{also contendedthat} respondent bank^ignored their^{dispute relating to rate of interest} raised in the objections to the^{demandnotice in its reply under} Section 13(3A) and^{proceeded with the issuance of possession} notice dated 03.08.2019.^{These issues were alreadydealt by this} Tribunal in its order dated^{14.08.2023 in SA.37912019 whereinno} violation of the^{procedurewas found.It was also held in the said} order in SA.37912019 that the^{agreed rate of interest was 16010 but} not !2o/o as averred by^{the applicants. The order in the} SA.37,/2O79^{was not challengedand accordingly lt attained finality'} Therefore, I do not^want to^{revisit the self-same issues once again} in this SA.

¶37

As regards the^{compliance of the interimconditionalorder} dated 26.71.2024 in^{SA.443 of 2024,lhe applicantsall throughthe} SA averments^{misrepresented and misguidedthis Tribunal as if the} same was^passed by this^{Tribunal, though it was rectified in the} written arguments filed on^{19.07.2026, to say that the SA 443 of} 2024 was filed before^{DRT-1, Hyderabadand the interim stay order} was^passed by DRT-1.^{White the present SA deals with one of the} mortgaged^properties, the^{applicantsdid not chooseto provideany} clue in its averments^{whetherthe subject properties of SA.443 of} 2024 and the^present SA^{are one and the same However,as per} the averments of the^{reply statement of the respondentbank, the} /'a)iy,.^ * 1i,/'s--

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sA. 169/2025

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properties under challenge in SA.443 of 2024 are different to that of the^property under challenge in the^present SA.

¶41

As regards the violations alleged with respect to the^sale notices dated 10.01.2025 and 17.03.2025, reportedly the auction sale scheduled on 21.04.2025^pursuant to sale notice dated 17.03.2025 was not materialised. Hence, the issues raised on this count need no consideration and nothing survives for adjudication. Accordingly, the SA in relation to the notice of sale u/r 8(6) and sale notice u/r 9(1) becomes infructuous.

¶42

In view of the foregoing observations, it is concluded that the applicant has failed to make out any valid^ground to interfere with the Securitisation measures taken by the respondent bank. Accordingly, the SA is tiable to be dismissed.

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Point No.(ii):

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In the result, the Securitization Application fails and is hereby dismissed.

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Consequently, Interlocutory Applications pending if any shall stand closed. No order as to costs. Communicate a copy of this order to the parties concerned and upload in official Web Site.

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(Typed to my dictotion by the Steno, corrected, signed ond pronounced by me in the open court on this the Tgth doy of February, 2026).

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Hfnd

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ESHWAR KOTHE) PRESIDING OFFICER

Shankar Estate v. Mahaveer Co-Operative Bank Ltd.

Case brief

What is this about?

What did the court decide?

Shankar Estate v. Mahaveer Co-Operative Bank Ltd.

Case brief

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