Dismissed

Mustafa Gold And Jewelers v. Shriram Finance Limited

DRT1 Jul 2026SA/211/2025

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application seeking to set aside SARFAESI measures initiated by a secured creditor. The court held that the NPA classification and enforcement actions complied with the Act and Rules, as proved by undisputed documentary evidence.

What did the court decide?

The present Securitisation Application fails and is hereby dismissed with consequential closure of pending interlocutory applications.

Mustafa Gold And Jewelers versus Shriram 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 1St DAY OF JULY, 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. 211 OF 2025

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Mustafa Gold and Jewelers By its proprietor K.M Imran Khan S/o K.M Abdul Hafeez Khan, Aged about 30 years, R/o D.No: 26-4-7785, RTC Colony,

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Hindupur, Anantapuramu District-AP 515201

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K.M Mehaboob,

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Wo^{K.M Abdul Hafeez Khan,} Aged about 58 years,

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R/o D.No. 26-4-7785, RTC Colony, Hindupur, Anantapuramu District-AP 515201

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K.M Abdul Hafeez Khan,

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S/o K.M Mustafa Ali Khan. Aged about 58 years,

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R/o D.No. 26-4-7785, RTC Colony, Hindupur, Anantapuramu District-AP 515201

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Y. Thavasil,

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S/o Y. Abdul Hafeez, Aged about 27 yearc, R/o: D.No 12-7-202, Prashanthi Na9ar, Hindupur, Anantapuram, District-AP- 515201 .......Applicants

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Versus

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Shriram Flnance, Limited

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Register office: Sri Towers, Plot No 144, South face, Industrlal estate, condi chennai: 600032 And Branch office at: Upstairs. Beside BST Petrol Bunk, Penukonda Road, Hindupur, Anantapur, AP-505201 ^^ Rep by its Authorized officer ... Respondent Mrlu

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Page 2 of 6

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SA No.21U2025

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Counsel for the Applicants Counsel for Respondent Company

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: Mr. V. Santosh : M/s. N. Raghuveer

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-:ORDER:-

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l. The present Securitisation Application is filed by the Applicant under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("Act" for short) to set aside the measures initiated by the respondent company under section 13(2) & 13(4) of the Act, including the vacate notice affixed on 10,05.2025 by advocate commissioner in pursuance to the Crl.M.P.No.1B of 2025 file of Chief Judicial Magistrate cum principal assistant sessions judge, Anantapur 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 that they availed a business loan facility from the respondent and duly executed the necessary loan and security documents. Respondent officials, however, obtained their signatures on several blank printed documents. The applicants state that they were regular in repayment and had paid substantial amounts towards principal and interest. The applicants contend that the respondent illegally classified the loan account as a NPA without complying with the RBI guidelines and consequently the respondent issued a demand notice under Section 13(2) of the Act. The applicants state that they learned of a Vacate Notice dated 10.05.2025, issued pursuant to orders passed in Crl.M.P,No.18 of 2025. They allege that the respondent proceeded under Section 14 of the SARFAESI Act without first issuing a mandatory possession notice under Section 13(4). The appl)r icants furthef "zfl#,I"aver that

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Page 3 of 6

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SA No.21U2025

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prior to the vacate notice, respondent's officials assured them that if they paid ?10,00,000 during the financial year, additional time would be granted for repayment. Acting on that assurance, the applicants paid ?10,00,000 on 25.03.2025 by cheque, which was honoured. Notwithstanding this payment, the respondent allegedly procured orders under Section 14 and caused the Advocate Commissioner to affix the vacate notice, thereby breaching the prescribed procedure under the SARFAESI Act and the Rules. The applicants contend that the SARFAESI measures initiated by the respondent are arbitrary, illegal and contrary to RBI guidelines as well as the provisions of the SARFAESI Act and the Security Interest (Enforcement) Rules, 2002 (hereinafter "Rules" for short). Hence, applicants' pray for allowance of the present SA.

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The sum and substance of the reply statement of the Respondent Company, in brief, is that the applicants have approached the Tribunal with suppression and misrepresentation of material facts and are therefore not entitled to any equitable relief. The applicants voluntarily availed the loan facility and executed all loan and security documents after being fully informed of the terms and conditions, which were made available in the Telugu language. The respondent specifically denies the allegation that signatures were obtained on blank printed documents without proper explanation. The respondent states that the applicants committed persistent defaults in repayment despite repeated reminders and notices. The respondent contends that classification of the account as a NPA was affected strictly in accordance with applicable RBI guidelines, With regard to the SARFAESI proceedings, the respondent avers that all statutory requirements under Sections 13(2) and 13(4) of the Act were complied with prior to taking possession measures. The respondent further states that the purported payment of ?10,00,000 by the applicants did not satisfy the outstanding liability or the demands raised under the statutory notices. The respondent,Also submits that / Auxtt, . 1/6.,\

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Page 4 of 6

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sA No. 21112025

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the market value of the^{secured asset is not determinativeof NPA} classification, which depends on^{repayment defaultsas per RBI norms'} The respondent further states that^{the application under Section 14 of} the SARFAESI Act was examined^{by the competent Magistrate, whowas} satisfied with statutory^{complianceand accordinglypassedorders} appointing an Advocate Commissioner^{for taking possessionof the} secured asset. The respondent^{deniesthe applicants'averment that no} opportunity for settlement^{was afforded;it assertsthat the applicants} never approached the respondent^{for settlement,restructuringor} closure of the loan account.^{The respondent further avers that the} applicants failed to comply^{with conditional deposit orders passedin I.A.} No. L35712025 and I.A. No. 1605/2025.^{With thesecontentions,} respondent^prays for dismissal^{of the SA.}

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Learned Counsel for the^{Applicants reportedthat order may be} passed based on record. Learned Counsel for the^{RespondentCompany} reported no oral arguments.^{Perused the written argument filed by the} Respondent and also^{perused the material brought on record'}

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Learned counsel for the Respondent^{Company denied the} averments of the Applicants and^{placed reliance upon the material} papers annexed with the reply statement. It is submitted^{that the} random payment of Rs. 10^{Lakhs was not sufficientto satisfythe} outstanding dues and that^{the Applicants'account was classified as NPA} in accordance with RBI^{guidelines.The Respondent Companyhad} strictly followed the due^{procedure prescribed under the SARFAESIAct,} 2002 and the Rules framed^{thereunder. Applicants never approached} for the settlement or closure of the^{account. Accordingly, sought for} dismissal of the S.A.

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ffi*

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

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Page 5 of 6

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SA No. 21112025

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i) Whether the Applicants made out any valid ground to quash any of the measures initiated by the respondent against the SA schedule property as prayed for?

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ii) To what relief?

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Point No.(i):

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Admittedly, applicants availed Business Loan Facility against mortgage of schedule property as securlty and failed to make payment as per repayment schedule. Hence the action of the Respondent Company in classification of account as NPA and initiating the SARFESI proceedings cannot be termed as illegal or irregular as averred by the applicant.

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The respondent company filed material documents along with reply statement as proof of compliance of due procedure of law. A perusal of the same would confirm service of demand notice. Similarly the Respondent Company has filed the Photostat copies of postal acknowledgement, paper publication of the possession notice in English and Vernacular language, photograph of affixture of the possession notice at the conspicuous part of the secured asset. The documents placed on record by the Respondent Company remain undisputed. In view of sufficient proof place on record, I find no infraction of section 13(2) & 13( ) ofthe Act and Rules 3, 8(1) & 8(2) ofthe Rules, 2002. As a secured creditor the Respondent Company initiated action under SARFESI Act for taking physical possession of the secured asset, which cannot be categorized as illegal or arbitrary.

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In the view of above observations, I hold that the applicants failed to make out valid ground to set aside the measure i[itiated by the

ffi"*

Page 6 of 6

SA No. 2LLl2O2s

Respondent Company under^{the SARFESI Act} Schedule Property.

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against the aPPlication

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Point No.(ii):

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In the result, the^{securitisation applicationfails and is hereby} dismissed.

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Consequently, Interlocutory^{Applicationspending, if dhY, shall} stand closed. No order^{as to costs.}

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t2. Communicate a^{copy of this order to the partiesconcerned and} upload in the official^website.

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(Typed to my dictotion by the^pS, corrected,^{signedond pronounced by me in theopen court on this the 1't} doy of July, 2026).

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/1w** 1nA+'GSTIWAR^KOTHE) PRESIDING OFFICER

Mustafa Gold And Jewelers v. Shriram Finance Limited

Case brief

What is this about?

What did the court decide?

Mustafa Gold And Jewelers v. Shriram 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

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