Dismissed

Yalamanchi Hemalatha v. State Bank of India

DRT13 Feb 2026SA/188/2022

Case brief

AI extract

What is this about?

A Securitization Application under the SARFAESI Act was filed by a wife and minor children to set aside the bank\'s possession notice and enforcement measures, claiming fraudulent transfers and pending civil suits. The Debts Recovery Tribunal held that the applicants were \'any person\' aggrieved under the Act, the bank followed due procedure, and the pending suits were not binding on the bank.

What did the court decide?

The Securitization Application was dismissed, and the existing SARFAESI measures against the property were upheld.

Yalamanchi Hemalatha versus State Bank of India — Company and Corporate | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE 13TH DAY OF FEBRUARY,²⁰²⁶

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

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PRESIDING OFFICER

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Securitization Application No. 188 ol 2022

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Smt. Yelamanchi Hemalatha, w/o. Yelamanchi Rama Rao, Aged 39 years, Occ: House Hold, R/o. H.No. 4-2-203/77, Bharathi Nagar, Bandlaguda lagir, Gandipet Revenue Mandal, R,R. District.

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Kum. Yelamanchi Rohitha, D/o. Y. Rama Rao, Aged about 17^yearc, Occ: Student.

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Kum. Yelamanchi Mahitha, D/o. Y. Rama Rao, Aged 12^years, Occ: Student, (Applicants 2 & 3 being minors Rep. by their Mother^and Natural Guardian i.e., Applicant^{No'1 above).}

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...... 'APPlicants.

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Versus

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The Authorized Omcer, State Bank of India Stressed Assets Recovery^Branch-2 H.No. 1-8-563/1, 1"t Floor Opp: Sandhya Theatre,^{RTC 'X' Roads} Chikkadpaly, Hyderabad2. The Branch Manager, State Bank of India, Moinabad Branch, Main^{Road, 6-34,} Abhishek Complex,^Moinabad -^ChilkurRoad, Moinabad, Telangana- 501504.

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Sri Yelamanchi Rama^Rao, S/o. Y. Bikshalu, Aqed about 44 vears, oZc: Pvt. Employee, /)gn -^Kr,o

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Page 2 of 10

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sA No. 188/2022

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R/o. Rane Engine Valves ltd., Sy. No. 177/20, Ajjinnaram village, lvloina bad Mandal, R.R. District. 4. Sri Madhava Reddy Govindu S/o. G. Govind Reddy, Aged about 32 years, Occ: Business, R/o. H.No.5-50/1, Kanakamamidi village, Moinabad mandal, R. R. District. 5. Sri M. Ma hender Reddy, s/o. M. Kista Reddy, Aged about 51 years, Occ: Agriculture, R/o. H.No. 1-53, Sriram Nagar, Moinabad Mandal, R.R. District. 6. Sri B. Narayan Reddy, S/o. B. Kasi Reddy, Aged about 60 years, Occ: Business, R/o. 2-69/3, Pedda Mangalaram village, lvloinabad Mandal, R.R. District. ... Respondents. Ld.Counsel for the Applicants : Mr. M.G.Ramesh Anand Representing M r.G.K. Deshpande/ Mr. T.V.K. Murthy Ld.Counsel for the Respondent No.1: Mr. C. Prabhakar Ld.Counsel for the Respondent No.3: Mr. B. Bal Reddy Ld.Counsel for the Respondent No.6: Mr. P. Madhusudan Reddy Respondent No.4 & : No representation

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-iORDER:-

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The present Securitization Application is filed by the Applicant u/s.17 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 initiated under section 13(2), 13(a) of the Act by the respondent bank including the proposed action in taking physical possession sion of the property tb(ouqh erceefty ohvsical

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5A No. 188/2022

possession notice dated 20.07.2022 under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002.

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The averments of the application, briefly, are that the applicant no.1 is wife of the respondent no.3 and applicant nos. 2 and 3 being minors represented by the applicant no.1 as their mother and natural guardian. Respondent Nos.4 to 6 are third parties who later obtained documents relating to the disputed schedule^{property;Respondent} Nos.4 and 5 are friends/associates of Respondent No.3 and are described as influential^persons, while Respondent No.6 is^a subsequent^purchaser clalming title and^possesslon. The^applicants plead that Rs.1,50,000/- was paid as initial dowry to Respondent No.3, who, instead of purchasing a plot in Applicant No.1's name as assured, bought Plot No.17⁽²⁰⁰ sq.^yards) under Sale^Deed No.6182/2001 ln his own name, citing loan convenience. After their marriage, they allegedly resided on and enjoyed the^property together; with Rs.2,00,000/- and Rs.13,00,000/- from her^parents and loans, Applicant No.1 claims to have funded construction^of ground floor (2006) and two upper floors (2017), let out^portions to tenants, received rent and remained in^{physicalpossession with} Applicants 2 and 3. Applicant No.1 alleges Respondent^No.3 became addicted to alcohol, brought Respondents 4-6^{and othershome,one} associate misbehaved with her, and that Respondent^{No.3, bearinga} grudge, executed a sham collusive Agreement of Sale-cum-GPA daled 27.12.2018 in favour of Respondents 4-5 and a sale^deed dated 29.05.2019 in favour of Respondent No.6, despite^{her settled} possession and his alleged benami status. She has filed O.S. Nos.18/2019, 84/2079 and 18/2020 seeking injunction^and declaration of the impugned GPA and sale deed as^{null and void, and} has lodged complaints with^police, Gram Panchayat and^electricity authorities to^prevent transfer of connections.^She further^contends Respondent No.6 filed O.S. No.29512020 for recovery of^possession

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Page 4 of 10

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SA No. 188/2022

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on the strength of the 2019 sale deed without impleading^{her, forcing} her to seek impleadment, and complaints of ongoing attempts by police and respondents to dispossess and harass her despite her claimed lawful^possession, As events^progressed/ she received a demand notice daled 12.07.2022 from the respondent bank calling upon her to hand over^possession; she asserts having no knowledge of any loan sanctioned on the^property, and^points to a^possession notlce dated 72.O7.2022 followed by another "physical^possession" notice dated 20.07 -2022 stating that the earlier notice stood cancelled. The applicant relies on^y/shal N. Kalsaria v. Bank of India, where the Supreme Court held that once a valid tenancy is created, a tenant can be evicted only by following due process under the applicable Rent Control law, and not arbitrarily by invoking SARFAESI provisions. On that basis, the applicant contends that SARFAESI action cannot be used to bypass^procedural safeguards under the CPC where civil proceedings are already pending. Hence this SA to set aside all the measures against the SA schedule property.

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The respondent nos.4 and 5 have not filed reply statement despite number of adjournments. Hence their right to file reply statement was forfeited vide docket order dated 19.07.2023.

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The respondent no.1 and 2 filed reply statement in the SA. The averments thereof, briefly, are that the applicant Las no locus standi as only borrower, mortgagors and guarantors are entitle to question the SARFESI proceeding initiated by the respondent bank. The applicants have no privity of contract with the loan transactions between Respondent no.2 and Respondent No.6. Respondent No.6 is availed CCSME loan of Rs.49,95,000/-, CCECL loan of Rs.4,45,000/and GECL loan of Rs.9,96,000/- from Respondent No.2, for which he created an equitable mortgage on 01.01.2020 by deposit of sale deed No.5891/2019 dated 29.05.2019 over the apptication schedule

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SA No. 188/2022

property. On default, the account was transferred to Respondent No.1, who filed OA No.177/2022 before^{DRT-I, Hyderabad for} Rs.7L,44,566/-, which was decreed in^favour of^{the bank. The bank} states it issued demand notice daled^{O2.O5.2022under Section 13(2)} of the SARFAESI Act for Rs.70,89,755/- by^{registered post,by} affixture on the^property, and by^{publicationin Mana Telangana and} Business Standard on 18.05.2022;^{thereafterpossessionnotice dated} 12.07.2022 under Section 13(4), served by^{registered post, affixture} under Rule 8(1) and^publication on^{27.07.2022under Rule 8(2),} followed by Rule 8(6) notice dated^{27.07.2022 granting30 days for} redemption. The bank further avers it is^{not a party to OS} Nos.18/2019, l8/2O20 and 295/2020, and^{that those suits are not} binding on it. Since the^{respondent no.1 and 2 followedthe provision} meticulously; the SA is liable to be dismissed.

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The respondent no.3 also^{filed reply statement.The} submlssions, briefly, are that^{Applicant No.1 has no subsisting right} over the schedule^{property.He alone obtaineda loan for purchaseof} the plot, cleared it from his salary, later on^{took anotherloan for} construction, and due to^{financial difficultieshe was constralned to} sell the^property to discharge^{his liabilities'Respondent No.3 denies} receipt of funds from her^parents either^{for purchase of land or} construction. He denies lack of^income or any^{promise to purchase} the property in Applicant No.1's^{name. While not disputing the} marriage, denies that the couple^{jointly enjoyed the schedule} property. He emphatically denies being a drunkard or that Respondents 4 to 6 are^{his friends, asserting instead that they are} bona fide^{purchasers;AGPAdated 27.12.2078 was executed for valid} consideratlon with Applicant No.1's^{knowledge, and no fraudis} alleged to have occurred.^{RespondentNo.3 furthercontendsthat} Appllcant No.1 has no right to^{collect rents from tenants and disputes} her claim of utilizing such rents for^{household expensesor qducation}

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5A No. 188/2022

of Applicants 2 and 3, asserting that, post-transfer, attornment of tenancy stands in favour of the purchasers. He denies absconding, alleging that he was compelled to leave as Applicant No.1 lodged a false criminal complaint and is^preventing his access to Applicants 2 and 3, and rejects any allegation of collusion with Respondents 4 to 6 regarding sale consideration of the schedule property. Respondent no.3 seeks for dismissal of the SA.

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Respondent No.6 filed separate reply in SA denying any friendship with Respondents 3-5; avers Respondent No.3 executed registered AGPA dated 27.12.2078 in favour of Respondents 4-5, who subsequently transferred to respondent no.6 on 03.05.2019; declares purchasing schedule property for valuable consideration, mortgaging it to Respondent No.2 as owner, and obtaining loan thereon. Further avers filing suit u/s 6 Specific Relief Act against Respondents 3-5 for possession recovery; asserts Respondents 4-5 delivered possession concurrent with sale deed executlon. Applicant No.1's /ocus standi in OS No.18/2020 (no interim orders); asserts full ownership rights via registered sale deed Doc. No.5891/2019 from AGPA holders (Respondents 4-5) of Respondent No.3, with vacant possession delivery, municipal mutation, and electricity connection transfer; mortgaged property to Respondent No.2 bank following due procedure for loan (leading to OA No.17712022 post-default). Denies suppressing facts, collusion, or fraud; puts applicants to strict proof of^{possession/allegations;} prays dismissal of application with costs.

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The right of arguments for respondent nos.3 and 6 was forfeited on 09.09.2025 for no representation despite affording ample opportunity.

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sA No. 188/2022

Heard the learned counsel appearing for the^{applicantsand} learned counsel for respondent nos.1 and 2.^{Perusedthe written} arguments filed by the respondent nos.1 & 2 and^{the material} brought on record.

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During the course of arguments learned counsel^{for the} applicant reiterated the version as in the^{application with regard to} claim over the^property, illegal transfer of the^same by^{her husband} and pending civil suit. He further contended that^{the civil courts have} exclusive^jurisdiction to deal with the dispute^{and not the DRT in an} application under sec.17 of^{the SARFAESI Act, 2002.In supportof his} contention, learned counsel relied on^{judgementsof (i) Hon'ble} Bombay High Court^(Nagpur Bench)^{in Authorized Officer, StateBank} of India vs. Shri Sagar and^{others in} Civil^{Revision Application No.33} of 2o1O and Appeal against Order^{No.38 of 2010, decidedon} 11.02.2011 and⁽ⁱⁱ⁾ Hon'ble^{Andhra Pradesh HighCourtln Rajanala} Kusuma Kumari vs. The State of^{Telanganarep. bY its Principal} Secretary, Industries and Commerce^{Department in WP No.22510of} 2016 decided on 23.03.2018.^{The very purpose of filingoS} No.18/2020 is to cancel the agreement of^{sale-cum-GPAand sale} deed dated 29.05.2019 as^{null and void.Learnedcounsel referred to} the order dated 03.02.2023 in IA^{No.13/2020 in os No.18/2020on} the file of learned II Additional Senior^{Civil Judge, RangaReddy} District at L.B. Nagar whereby^{4th respondent (6threspondentherein)} has been restrained from interfering^{into the peaceful possession and} enjoyment of the^{petitioner(applicantherein)over the petition} schedule property till disposal of the^{suit. With the above} submissions, learned counsel sought to^{set aside the SARFAESI} measures against the SA schedule^prope*v, f\n r-tl"

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Page 8 of 10

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SA No. 188/2022

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The learned counsel for the respondent bank also reiterated the version in the reply statement that the applicants being third parties are not entitled to question the legality of SARFAESI measures. The 6th respondent created moftgage over SA schedule property as security for repayment of CCSME, CCECL and GECL loans, defaulted in repayment and OA No.l77/2020 came to be filed for recovery of Rs.7t,44,566/- which was decreed in favour of the bank. Also respondent bank initiated Securitization measures by issuing demand notice and possession notice. He further stated that the respondent no.6 himself admitted of availing loan and mortgaging the property in favour of the respondent bank. As the respondent bank is not a party to civil suits orders passed therein are not binding on respondent bank. On the pretext of pending suits, applicants cannot seek any relief. The applicants have no locus standi and hence SA is liable to be dismissed.

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The points for consideration are as follows : -

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i) Whether the present SA is maintainable u/s 17 of the SARFAESI Act, 2OO2?

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ii) Whether the measures taken by the respondent bank under Sections 13(2) and 13(4) of the SARFAESI Act are in accordance with law?

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iii)Whether pendency of civil suits and interim injunction restrain the secured creditor from proceeding under the SARFAESI Act?

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iv)To what extent?

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Point No.(i):-

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With regard to contention of respondent bank as to maintainability of the application, Section 17 of the SARFAESI Act permits "any person (including borrower),, aggrieved by measures under Section 13(4) to approach the Tribunal. Since the applicant claims possession and independent right in the secured asset, she

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SA No. 188/2022

comes undeT the category of 'any^person' aggrieved^{and hence SA is} mainta ina ble.

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Point No.^(ii):-

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Respondent No.6 is the registered owner undeT Sale^Deed dated 29.05.2019. He created equitable mortgage in favour^of Respondent No.2 Bank on 01.01.2020. Demand notice under Section 13(2) dated 02.05.2022 was issued for the outstanding dues. Possession notice dated L2.07.2022 under Section 13(4) was^issued and published in newspapers in compliance with Rule 8. O.A. No.777 /2022 was decreed in favour of the Bank. Upon default committed by the borrower-respondent No.6, respondent Bank being secured creditor, has initiated Securitization measures based on a registered title deed deposited by the 6th respondent. Disputes on title, alleged benami transaction, contribution of funds, or fraud cannot be conclusively determined in^proceedings under Section 17. The measures are found to be lawful.

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Point No,^(iii):-

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The applicants rely upon pending civil suits and interim injunction granted in O.S. No.18/2020. The bar under Section 34 of the SARFAESI Act limits civil court jurisdiction in matters within the domain of the Tribunal. The reliance placed upon Vishal N. Kalsaria v. Bank of India is misplaced. h the said decision, the Hon'ble Supreme Court protected a statutory tenant under Rent Control legislation. In the present case, the applicant is not claiming tenancy protected under any Rent Act, but claimlng ownership/equitable rights which are subject matter in the civil sult. However, it is observed that the interim injunction order passed by the learned Civil Court against 6th respondent was in the year 2023. The latest status of the civil suit is

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sA No. 188/2022

not made known to this Tribunal. In the absence of the same, it cannot be assumed that the registered Sale Deed dated 29.05.2019 has been set aside by the competent court and the lawful remedy available to the secured creditor cannot be curtailed. Admittedly, the respondent Bank is not a party to the civil suit.

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In the light of above discussion, it is held that the applicants failed to make out any valid ground to quash the measures of the respondent bank against the application schedule property. Accordingly SA is liable to be dismissed,

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Point No.(iv):

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

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L7. Consequently, Interlocutory Applications pending, if any, shall stand closed. 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 PS, corrected, signed ond pronounced by me in the open court on this the Tjth doy of Februory, 2026).

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Ow*o (RAii-ESHWAR KOTHE) PRESIDING OFFICER

Yalamanchi Hemalatha v. State Bank of India

Case brief

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Yalamanchi Hemalatha v. State Bank of India

Case brief

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