Dismissed

Ms Balaji Steels and Pipes and Others v. 464

DRT27 Aug 2026SA/9/2026

Case brief

AI extract

What is this about?

A securitisation application challenging the validity of auction sale proceedings under the SARFAESI Act. The Debts Recovery Tribunal held that the second sale notice validly served as a continuation following a thwarted first auction, satisfying the 15-day notice period. The order dismissed the application.

What did the court decide?

Application dismissed. Pending interim applications closed. Parties to bear respective costs.

Ms Balaji Steels and Pipes and Others versus 464 — Company and Corporate | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL-II, BANGALORE

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Dated this 27^th Day of August, 2026

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PRESENT: SHRI T. RAJESH

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Hon’ble Presiding Officer

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S.A. No. 09 of 2026

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BETWEEN:

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M/s. Balaji Steel and Pipes Registered office No.4, 16 & 17, Sy.No.68, Mylasandra, Uttarahalli, Kengeri, Bangalore – 560060

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Mr. P. Venugopal Naidu S/o. Late P.G. Kannaiah Naidu 2^nd Cross, 2^nd Main, Banashankari 2^nd Stage, Padmanabha Nagar, Bangalore-560070

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Mrs. P Subbamma W/o. P Venugopal Naidu 2^nd Cross, 2^nd Main, Banashankari 2^nd Stage, Padmanabha Nagar, Bangalore-560070

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. . . Applicant

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AND:

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The Authorized Officer PNB Housing Finance Ltd., 40, Jodh Towers, 3^rd Floor, 27^th Cross, 5^th Main Road, 4^th Block, Jayanagara, Bengaluru

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Mr. Srinivas M K

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Mr. M.S. Shreyas

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Both are residing at No.36, Flat No.302, 6^th Cross 14^th Main, Sai Residency, Padmanabhanagar, Bengaluru-560070 . . . Respondents

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Ld. Counsels on record / appeared :-

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Counsel for Applicant :- Sri. M.A. Rajendra Counsel for Respondent No.1 :- M/s. Fx & Co., Counsel for the Respondent No.2,3:- M/s. Law Minds

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2 SA/9/2026

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: - O R D E R - :

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This Securitisation Application is filed by the applicant with a prayer

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to set aside the entire auction proceedings held on 13.01.2026 based on the sale notice dated 20.12.2025 and also further measures taken by the respondent under the provisions of SARFAESI Act.

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The first application is the partnership firm consist of two partners who are the husband and wife and had availed credit facilities from the respondent bank. In respect of the facilities availed in the year 2014, the applicants contend that, they are only borrowed to pay fixed the rate of interest at 13.00% as agreed for the facility. The applicant further contends that, they were prompt in repayments, however, the respondent had issued the demand notice dated 18.10.2024 by classifying the account as NPA. The applicant further contends that the applicant firm had suffered heavy loss in their business due to Covid-19, following which the respondent bank had restructured the loan account by substitution of interest rate to 10.45%. It is the case of the applicant that, though the interest rate was revised and reduced, the bank continued to charge earlier higher rate of interest all through these periods. The applicant is also having a case that, despite the remittance to the tune of Rs.4,00,00,000/- the account is classified as NPA. Apart from putting forth the contention as to the levying of excessive interest, it is contended that, the bank has failed to follow the RBI mandates as to the restructuring in respect of the loan accounts of the applicant. The applicant further admits that, the bank had also issued a

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SA/9/2026

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possession notice and had also procured an Order under S.14 which came to be challenged before this Tribunal in SA.105/2025 and SA.116/2025 and the same stood disposed of by the order dated 17.10.2025. In respect of the disposed matters it is contended that, the orders are under challenge before Hon’ble High Court.

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The applicant further admits that, though the bank had issued a sale notice dated 04.11.2025, which came to be challenged by filing SA.446/2025 wherein an Interim Order was granted, directing payment of Rs.50,00,000/- and consequential to the compliance of the same, no sale go through. In respect of the impugned sale notice dated 20.12.2025, the applicant contends that, the same is issued without appropriating and adjusting the amount deposited by the applicant during the pendency of the proceedings including in compliance of the interim direction in SA.No.446/2025. The applicant is also having a case that, the respondent failed to issue/serve the statutory notice to all the parties and there is no registration of security interest with the Central Registry. The applicant is also challenging the sale notice contending that, there is no publication and affixture of sale notice as mandated under the statute. The applicant is also disputing the amount claimed to be due contends that the interest is calculated at exorbitant rate. Another contention taken by the applicant is that, after the disposal of the SA filed impugning the possession notice, the bank should have waited for the expiry of the appeal before proceeding further.

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SA/9/2026

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In the grounds to the SA, the applicant is reiterating the contention as to the alleged non-registration of the security interest with the Central Registry and also alleging the levying of excessive interest rate. The classification of account as NPA is also challenged, contending that the same is not in accordance with the RBI guidelines. So claimed the remittance to the tune of Rs.4,00,00,000/- is also reiterated in the ground. Along with the SA, the applicant has produced the following documents:

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(i) The copy of the Auction Sale Notice dated 20.12.2025 – A1

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(ii) The copy of the sanction letter – A2 and A3

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(iii) The copy of the loans sanction agreement dated 30.08.2014 & 26.09.2014 – A4 and A5

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(iv) The copy of the loans statements – A6 and A7

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The respondent had filed their objection contending is as follows: The respondent denying the contentions taken by the applicant. it is contended that, the respondent had sanctioned loans to the tune of Rs.6,67,50,000/and Rs.90,00,000/- vide the sanction letter dated 30.08.2014 which stood secured against the mortgage of schedule properties. It is also stated that, during Covid-19 the applicant approaches the respondent and the accounts were restructured following which a supplementary loan agreement is executed by the applicants. It is also stated that, despite restructuring and rescheduling of the loan the repayments were defaulted resulting the accounts being classified as NPA on 14.10.2024 and issuance of demand notice dated 18.10.2024. The respondent contends that, the demand

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SA/9/2026

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notice is duly served and has no payment is forthcoming, the possession notice dated 31.12.2024 is issued. It is also stated that, the possession notice is duly published in two dailies namely Business Standard and Hosa Digantha.

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The respondent further submits that, act of issuance of possession notice is challenged by the applicant in SA.105/2024 which came to be dismissed on 17.05.2025, S.14 order obtained by the respondent is also challenged unsuccessfully in SA.116/2025. In respect of the contention of the applicant as to the non-registration with the Central Registry, it is contended that, in view of the orders passed in SA.105/2025 and SA.116/2025, the same has attained finality and the applicant is estopped from putting forth contention as to the legality of measures for want of registration with the Central Registry.

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The respondent further submits that, the Authorised Officer had procured the valuation of the secured asset and issued the sale notice fixing the reserve price. The sale notice was issued on 04.11.2025 fixing the E- auction on 16.12.2025 which came to be challenged in the SA.446/2025. After the sale could not go through in respect of the first sale notice, the respondent had issued the sale notice dated 20.12.2025 fixing the e- auction of 13.01.2026. it is contended that, the sale notice is affixed and published as required under the statute. The respondent is having a further case that, in response to the sale proclamation the successful bidders came forward with KYC documents and had offered their highest bid for

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SA/9/2026

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Rs.2,39,69,000/- to purchase the schedule property and had already paid 25% of sale consideration of Rs.60,16,900/- and submitted a request for extension of time for the payment of 75% and secured creditor had accepted the said request. The remaining 75% of the sale consideration had been deposited on 28.01.2026 and 30.01.2026 and the sale certificate was issued on 02.02.2026. In respect of the other pleadings in the SA, it is stated that, there is no merit any of this contention and the SA is to be dismissed. Apart from the above, the respondent had given parawise denial of the contentions taken by the applicant. Along with the objections, the respondent No.1 produced the following documents:

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(i) Copy of the petition, statement of objections and the order dated 17.10.2025 in SA.No.105/2025

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(ii) Copies of the petitioner, statement of objection and the order dated 17.10.2025 in SA.No.116/2025

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(iii) Copy of the valuation report dated 28.10.2025

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(iv) Copy of the daily order in SA No.446/2025

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(v) Copies of the sale notice dated 20.12.2025, postal receipts and delivery status

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(vi) Copy of the photographs for having affixed the sale notice dated 20.12.2025

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(vii) Copies of the paper publications dated 24.12.2025 for having published the sale notice dated 20.12.2025 in Hosa Diganta and Business Standard newspapers

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SA/9/2026

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(viii) Copies of the Bid forms

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(ix) Copies of the e-auction proceedings

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(x) Copy of the sale confirmation dated 13.01.2026

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(xi) Copies of the request letter and reply dated 23.01.2026

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(xii) Copy of the sale certificate

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(xiii) Copy of the charge registered in Central Registry

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Respondent Nos. 2 and 3 have filed their objections, contending that they participated in the auction conducted by the first respondent Bank and that the sale was confirmed in their favour for a sum of Rs.2,39,69,000/-. Respondent Nos. 2 and 3 have denied all the contentions raised by the applicant and have reiterated the contents taken by the first respondent Bank in its objections.

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Heard the submissions of Ld. Counsels for the respective parties and perused the available records.

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The only issue that arises for consideration is whether the sale notice issued by the respondent Bank and the sale conducted pursuant thereto are legal and valid?

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Even though, the applicant had raised serious contention regarding the validity of security interest and non-registration of security interest with the Central Registry, this Tribunal is not going into the said issue and as the legality of the measures leading to the issuance of S.13(4) notice and procurement of S.14 order had already been gone into and found to be proper by this Tribunal in SA.No.105/2025 and

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SA/9/2026

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SA.No.116/2025 respectively. Having suffered an order in their challenge as to the validity of measures leading to the S.13(4) notice and S.14 order, the applicant cannot be heard to contend that, the measures are liable to be set aside for want of proper security interest and registration with the Central Registry. Even otherwise, the respondent had produced the proof as to the registration of security interest with Central Registry as Annexure-R19. This Tribunal cannot reopen this said issue as the legality of the measures were gone into and affirmed in favour of the secured creditor by the Orders in the above SAs.

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The next contention put forth by the applicant is that, in the impugned sale notice dated 20.12.2025, the respondent had mentioned that, the same is a notice of “30 days’ notice”. Based on the said statement in the impugned sale notice, it is the case of the applicant that, since no sale take place in pursuant to the first sale notice, the second attempted sale notice is to be construed as the first sale notice which mandates another clear 30 days. This Tribunal had gone into impugned sale notice, wherein it is clearly stated that, the bank is providing the borrower a notice of “30 days sale of secured asset”. Even though, the bank had stated that, they are issuing a 30 days’ notice, the same is to be viewed in the premises that, it is the admitted case of both parties that, an earlier sale notice came to be issued by the bank, which is dated 4.11.2025 which came to be challenged by the applicant in

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SA/9/2026

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SA.446/2025. That being the case, it is evident that there is no force in the contention of the applicant that the impugned notice is to be construed as first sale notice mandating clear 30 days’ notice. Even though, a statement is made in the sale notice that, the same is “30 days’ notice”, the same will not be taken as a ground to hold that the impugned sale notice is not valid for the simple reason that, the date of auction and time of auction is clearly mentioned in the said notice as 13.01.2026 between 2.00 p.m. and 3.00 p.m. Hence, it is evident that the bank was not intended to issue 30 days’ notice and notice issued is clear 15 days which satisfy the mandates of issuance of second sale notice. In view of the above, this Tribunal is of the view that, contention of the applicant that there is no clear 30 days’ notice is to be discarded.

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The next contention of the applicant is about the publication and the issuance of sale notice. The respondent had produced the proof of issuance of sale notice in the address of the applicant and also as to the publication of the same in two daily newspapers i.e. Business Express and Hosa Digantha and also as to the proof of affixture of the sale notice. In respect of the publication the applicant contends that, the newspaper Hosa Digantha is not wide circulation in the locality and had produced the tabular form, which according to the applicant evidences the circulation of Hosa Digantha, this Tribunal is not enticed by the said contention of the applicant as. What are mandates under the statute is the publication of the sale notice in two newspapers

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SA/9/2026

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including one vernacular language having wide circulation in the locality. Even going by the document produced by the applicant it is seen that, the said newspaper, vernacular one is having circulation of 4,600 in Bangalore Rural and 28,400 in Bangalore City. Taking note of the above, even the circulation of 4,600 in a Rural area cannot be terms as a circulation of a lower rate as in rural area even 4,600 can be counted as wide circulation. It is also to be noted that the property is situated in Bangalore Urban area as the same is within a GBA area as Bangalore South is included in GBA area.

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In respect of the affixture of the sale notice also, the respondent had produced the proof photograph evidencing the affixture of the same, which the respondent claims that the affixture in the premises. Though the respondent had subsequently produced a document which evidences that the newspaper that figures the affixtures the only dated 26.12.2025, the same is not a reason to discard the photograph as the affixture is made on 26.12.2025 is a proper affixture 15 days clear days.

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In respect of the service of the sale notice the respondent though had produced the proof as to the service of the same, as the track report of the sale notice is produced wherein it is clear that, the sale notice is served only on 30.12.2024. Now the question arises whether the service of the said sale notice satisfy the mandate of clear 15 days is to looked into. In this regard, it is to be noted that in Karthik

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SA/9/2026

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S. and Others v. N. Subhash Chand Jain and Others, AIR 2021 SC , the Hon’ble Supreme Court held that if the first sale attempt was thwarted due to the intervention of the borrower, when the 2^nd sale notice is to

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be treated as the first continuation on the basis of the above and any proof as to the substantial injury the contentions of the applicant as to

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want of 15 days clear cannot accepted.

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