Dismissed

Mekala Surukasi Yadav Alias Gurukasi Yadav v. Shriram Finance Limited

DRT29 May 2026SA/198/2025

Case brief

AI extract

What is this about?

In a securitization application under Section 17 of the SARFAESI Act, the applicant (a guarantor) challenged the respondent's actions including the sale notice and auction. The court found the applicant lacked locus standi due to non-joinder of the borrower and mortgagor but examined merits. Finding procedural compliance and lack of valid grounds despite low reserve price allegations, the applicat

What did the court decide?

Securitization Application dismissed. Interlocutory Applications pending, if any, shall stand closed.

Mekala Surukasi Yadav Alias Gurukasi Yadav versus Shriram… — Service and Employment | DRT (2026)

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

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DATED THIS THE 29TH DAY OF^{MAY, 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.^{198 OF 2025}

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Mekala Surukasi Yadav (Gurukasi Yadav as per Aadhaar Card) S/o. M. Gurappa, D. No.l / 229, Bollavaram, Proddatur, Kadapa^(Dist.)

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.....'.Applicant

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Versus

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Shriram Finance Limited Kadapa Branch, ReP. bY^its Authorised Officer/ Head, Door No.42l107, First Floor, Obul Reddy ComPlex, Absara Circle,^J aYa naga^r Colony, Kadapa^{District-516002}

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Shri Ram Finance Limited, Registered Office at:^Sri Tower, Plot No. 14A, South Phase, Industrial^{Estate Gundy,} Chennai- 600032 ""^Respondents

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Kanena Hranan Ren nv lrq : Mr. C. Sreedhar Counsel for the Applicant Counsel for Respondent^{Company: Mr. M. Indrasen}

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-:reEB:-

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The^present Securitization^{Applicationis flled by the Applicant} u/s.17 of the securitisation^{and Reconstruction of FinancialAssets and} E n f qr66m g4+aqE .s fi f1tt$f , lf [gStE t95n &9,0^{2 (" Act " h e rei n a ft e r f o r s h o rt )} to set aside all measures^{initiated by} lh.e ,Respondent^Company, 4W'"

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PaBe 2 of 6

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SA No. 198/2025

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including the sale notice dated 29.03.2025 fixing the auction on 08.05.2025 in respect of the SA Schedule Property.

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The facts of the case as averred by the applicant in the SA, in brief, are that the Applicant availed a term loan of Rs.1 Crore in the year 2023. Regular repayment had been made until the account fell into default due to business losses and prevailing economic difficulties. He approached the Respondent Company seeking a suitable settlement or restructuring of the loan, but the Respondent never responded to the objections raised by the Applicant nor intimated any feasible mode or scheme through which the Applicant could liquidate the outstanding liability. The Applicant avers that the Respondent Company has been charging an exorbitant rate of interest, which is alleged to be contrary .to^{law and beyond the permissiblelimits prescribed underthe relevant} regulatory framework. The Applicant further alleges that the reserve price of the secured asset has been fixed at Rs.2,88,00,000/-, whereas the actual market value of the property is in excess of Rs.6,00,00,000/and the Government approved market value is Rs.5,80,33,360/-, thereby indicating that the reserve price has been deliberately undervalued. The Applicant further alleges collusion between the Respondent Company and the builder/related parties in relation to the fixation of such reserve price and the proposed auction of the property. In the circumstances, the Applicant prays that the impugned measures initiated under the SARFAESI Act be set aside, and that the present Securitization Application be allowed in his favour.

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The sum and substance of the reply statement and additional reply of the Respondent Company, in brief, is that the Applicant is not the borrower, as claimed by him in the SA and IA, but only a guarantor In the said transaction. It is averred that the loan of Rs. 1 Crore was availed in the year 2023 by shri Kiran Kumar Reddy pathakota and not

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owu

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Page 3 of 6

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by the Applicant. The Respondent further^{avers that the said borrower} secured the loan by deposit of title deeds^{of the ScheduleProperty,and} that his mother stood as an additional^{guarantor for the said facility. It} is further stated that the borrower^{furnishedthree guarantors, namely:} (i) his mother, (ii) his brother, and (iii) the Applicant,^{who is described} as an "outsider" having no beneficial^{interestin the secured asset and} having mortgaged no^property in^{connection with the said loan. The} Respondent Company submits that^{in these circumstances the Applicant} lacks /ocus standi to^question the SARFAESI^{related measures takenin} respect of the secured asset and,^{therefore,has no standing to maintain} the present Securitization^{Application.The Respondentfurther avers} that, in the event of delay in^{paymentof installments, the terms of the} loan agreement entitle the^lender to^{chargeinterest at the rate of 360/o} per annum on the overdue instalments, and that^{such charging of} interest is in accordance with the^{contractual stipulationsand the} applicable law. It is stated that,^{on accountof sustaineddefaults,the} borrower's account was classified^{as a NPA on 09.12.2023, and, in view} of continued non-payment,^{the Respondentissued a demand notice} dated 26.03.2024 under Section^{13(2) of the Act. The Respondent} further avers that the borrower and^{the guarantors, including the} Applicant, failed to repay^{the outstanding dues withinthe statutory} period of 60 days from the date of the demand^{notice. In consequence,} the Respondent issued a^{possessionnotice dated18.06.2024 under} Section 13(4) of the^{Act, took physicalpossessionof the Schedule} Property, and thereafter^{put the propertyto e-auctionon 08'05'2024'} The Respondent submits^{that it has strictly complied with Rule 8(1) and} 8(2) of the security^{Interest (Enforcement) Rules, 2002(hereinafter} '.the Rules,,) in respect of the fixation^{of reserve price and the conduct} of the auction. The^{Respondent also relies upon the judgmentof the} Andhra Pradesh High^{Court in 1996(4) ALD 1035 dated 07'02'1996,in} which it was held that^{a party to a document cinnot escape liability} /tW<,1 / / /<'^q$>'l-Y

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Page 4 of 6

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SA No. 198/202s^'

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merely on the ground that it had not read the document before signing it. The Respondent further submits that the e-auction scheduled for 08.05.2025 did not attract any bidders and therefore proved unsuccessful. In view of the above, the Respondent Company prays that the present SA be dismissed with costs.

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The Learned Counsel for the Applicant Reported that order may be passed based on records whereas the Learned Counsel for the Respondent Company reported no oral arguments but filed written arguments. Perused the written arguments filed by the Learned Counsel for the Respondent Company and also perused the material brought on record.

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Learned counsel for the Respondent Company vide his written arguments, reiterated the contents of the reply statement and further submitted that the Applicant is not the borrower but one Kiran Kumar Reddy Pathakota availed the loan facility. The Applicant is only one of the guarantors out of three guarantors, and hence SA is iable to be dismissed on the ground of lack of locus standi. The SA is also bad for non-joinder of necessary parties i.e., original borrower and other guarantors including the mortgagor who is none other than mother of the borrower. Due to default in payment, account became NpA on 09.72.2023 followed by SARFAESI action by issuing demand notice under Sec.13(2) and possession notice under Sec.13(4) of the Act. Learned counsel stated that the scheduled e-auction on 09.05.2025 did not materialize for want of bidders. While placing reliance upon the material papers filed along with list of documents dated 30.07.2025 learned counsel submitted that the Respondent Company has stricHy followed the due procedure prescribed under the Act,2OO2 and the Rules thereunder, and accordingty sought for dismissal of the Sl.dV\

['zf^sv'-"

Page 5 of 6

sA No. 198/2025

The^points for consideration^{are as follows :} -

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i) Whether the Appticant made^{out any valid ground to} quashing any of the measures initiated by^{the Respondent} Company against the SA^{ScheduleProperty includingthe} auction sale scheduled on^{08.05.2025 pursuantto the Sale} Notice dated 29.03.2025, as^{prayed for?}

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ii) To what relieP

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Point No.(i):

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It is not disputed that^{the Applicantis one of the guarantors' The} mortgagor of the subject^{propertyis mother of the main borrower and} not the Applicant. Borrower and^{other guarantors/mortgagorare not} parties to the sA. At the threshold, the sA^{is liable to be dismissed on} the^grounds of lack of^{locus standi of the Applicant and non-joinder of} necessary^parties. However, since^{the RespondentCompany filed} material documents as^{proof of compliance of due procedureof law, I} deem it appropriate^{to consider the sameand dispose of the SA on} merits.

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As reported by the^{RespondentCompany, the auction sale} scheduled for 08.05.2025^{pursuantto the sale notice dated 29.03.2025} did not materialize for^{want of bidders. Hence contentionson non-} compliance with Rules^{B(5), 8(6), 8(7) and 9(1) of the Rules pertaining} to the impugned auction^{need no consideration and SA has become} infructuous to that extent'

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Material record shows that^{the Applicant stood as guarantor for} the loan availed by one^{Kiran Kumar Reddy Pathakota, necessary} agreements and security^{documents were executedas evidentfrom} pages 1 to 20 of material documents^{filed by the Respondent Company} along with List of Documents^{dated 30.07.2025. Admittedly there was} default in^{payment loan instalmentson accountoir2pr.lsinesslossesand} ,//lY.otu LYF

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Page 6 of 6

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Sa No. LSA|ZOZS'

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economic problems. Hence, classification of account as NPA cannot be questioned. Pages 21 to 29 of the List of Documents are the material papers which clearly establish service of demand notice under Sec.13(2) of the Act, 2002. Similarly, pages 30 to 36 thereof prove that Sec.13(4) possession notice was sent by registered post, affixed on secured asset and published in English and Telugu (vernacular language) newspapers. The documents placed on record by the Respondent Company remain undisputed. In view of sufficient proof placed on record, I find no infraction of section 13(2) & 13(a) of the Act and Rules 3, B(1) & B(2) of the Rules,2002. As a secured creditor, the Respondent Company initiated the SARFESI proceedings which cannot be categorized as illegal or a rbitra ry.

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In the view of above observations, I hold that the applicant failed to make out valid ground to set aside any of the measures initiated by the Respondent Company under the SARFESI Act against the application Schedule Property.

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Point No.(ii):

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In the result, the securitisation application fails and is hereby d ism issed .

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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 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 2grH doy of Moy,2026).

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Kq.lrrU

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ESHWAR KOTHE) PRESIDING OFFICER

Mekala Surukasi Yadav Alias Gurukasi Yadav v. Shriram Finance Limited

Case brief

What is this about?

What did the court decide?

Mekala Surukasi Yadav Alias Gurukasi Yadav v. Shriram Finance Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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