Dismissed

Pochampally Sudhakar Reddy and another v. Union Bank of India

DRT29 Jul 2026SA/238/2023

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed an application challenging enforcement measures under the SARFAESI Act. The Tribunal held that the bank's security interest arose before the applicants purchased the property. Title disputes are sub judice in civil suits. No procedural violation was established against the lender.

What did the court decide?

The present Securitization Application fails and is dismissed; consequent interlocutory applications disposed.

Pochampally Sudhakar Reddy and another versus Union Bank of… — Company and Corporate | DRT (2026)

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IN THE DEATS RECOVERY TRIBUNAL-II AT HYDERABAD

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DATED THIS THE 29TH 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.238 OF 2023

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Pochampally Sudharkar Reddy S/o P. Narsi Reddy Aged 37 years, Occ;Business R/ o H.No.7 -66/27, Thurupugudem Choutappal Mandal, Mandolla Guder Nalgonda, TS

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C. Nagaraju S/o Eswaraiah

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Aged 47^years, Occ: Business R/o H.No. 12-54, Fathenagar Hyderabad

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.......Applica nts.

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Versus

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Union Bank of India JNTU Campus Branch- 10341 JNTU, Kukatpally,^{H yderabad - 500085} Rep by its Authroized Officer

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Vodeghar Narsingh S/o V. Krishna Rao

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Aged about 42^yearc, R/o^PlotNo.344 Sai Colony, Beeramguda,^{R'C. Puram} Hyderabad 502032

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.......ResPondent.

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Counsel for the Applicants Counsel for Respondent Bank 2nd Respondent

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:M/s S.R. Sanieev Kumar :Ms.K. Srilatha

:Ex parte O%n*"

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SA No.238/2023 -

-:q_B-gEB:-

The Applicants filed the present Securitisation Application u/s.17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act. 2002^(hereinafter "the Act" for short) to declare the proceedings initiated by the 1"t respondent bank against the SA schedule properties pursuant to possession notice dated 13.04.2023 under sec.13(4) of the Act as illegal, void, arbitrary and in violation of the Act, 2002 and consequently to set aside all the measures.

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The case of the applicants as per averments of the application, in brief, is that they are absolute owners of the schedule-B property by virtue of sale deed Doc. No.3878/2021 dated 24.11.2021 and have been in peaceful possession of the said property. Their vendor Smt. Minati Mandal purchased the same under regd. Sale deed Doc. No.952l2002 , dated 27.02,2002. The tifle emanated from^yedla Balraj and family members. Yedla Balraj sold the property to^p. Kala Sudhakar in the year 1986, he sold the same to S. Veda in the year 1989, S. Veda sold it to Shika Roy in the year 1996 who in turn sotd to Minati Mandal in the year 2002.

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On receipt of summons in OS No.25l2023 from the Court of Principal Senior Civil Judge, Kukatpally, Applicants came to know that 2nd respondent flled suit against applicants and others seeking declaration of title, possession etc. In the civil suit, the 2nd respondent bank is claiming that schedule-A property is situated in plot no.131. The petitioner also filed OS No.2O7 /2023 and aftatus quo order has been passed. Q{;,*

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SA No.238/2023

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The 1st respondent bank sanctioned^{the toan to the2nd} respondent without verifying^{the title, physical possession and even} without visiting the schedule^{property. Now, they are tryingto} dispossess the Applicant^{in the guise of enforcementof mortgage} under the^provisions of^{the Act pursuant to possessionnoticedated} 73.04.2023. The alleged^{possessionnotice has never been servedon} the Applicants being^{holders of possesslonof the property The lst} respondent bank is acting^{in collusionwith the 2nd respondent The} Applicants have right, title^{and interest over the schedule proPerty} hence this SA.

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The l't respondent^{bank filed reply statementThe submissions,} inter-alia, are that^{2nd respondenthad purchased the schedule-A} property from one G. Swarupa^{vide sale deed Doc'No 3303 of 2027} daled 17.09.2021^{for a valldconsideration of Rs 110 crores' For} purchase of the same, he^{avaited a loan of Rs 1 croresfrom} respondent bank.^{Vendor (K. Srinivas) of G swarupapurchased the} same from the^{legal heirs of YedlaBalaraj in the year 2006 through a} valid sale deed^{Doc.No.5158 of 2006' The Applicants admittedly} purchased the schedule-B^{property in the November,2021whereas} 2nd respondent^{purchasedthe same in September,2021'Therefore} 2nd respondent^{possesses a prlor title to that of ApplicantsEven} otherwise, the^{extent of propertyof 2nd respondent is 218 square} yards whereas it ls 216^{squareyards being claimed by the Applicants'} They are itlegally^{claiming the propertyof 2nd respondent without} having any right,^{title or interest. The status quo order was passedex} parte in os No.2O7 /2023^{without serving any noticeon the 1"t} respondent bank^{and the said ex parte order had been set aside and} the OS is^{pending adjudication. The 2"d resPondegg.has beenin} possession of schedule-A^{propertysince lts purchasq} /Yt'tt

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SA No.238/2023

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The account of 2nd respondent was classified as NPA and therefore Securitization measures have been initiated against the security interest created by the 2nd respondent. The measures taken by the 1"t respondent bank are legal and hence the SA is liable to be dismissed.

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they availed housing loan of Rs.23 lakhs in 2021 against mortgage of SA schedule property. They were under impression that EMI is only Rs.23.500/- whereas respondent fixed at Rs.30,631/beyond applicants'capacity. Without considering request to reduce it to Rs.23,500/- and give time for payment, respondent initiated action to take physical possession of schedule property. possession notice dated 22.07.2022 has been created and never served or affixed on property or published as per Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002 ('.Rules,, in short).

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The respondent company flled reply statement along with list of documents. The submissions. briefly, are that EMI of Rs.30,631/- has been fixed for 15 years, as per his capacity in terms of CIBIL score and other income documents. Applicant signed the document in agreement of all terms and conditions. As the borrower failed to pay instalments for three consecutive months, account became NpA. The demand notice and possession notice issued under Secs.13(2) and 13(4) of the Act were served on the Applicant, besides publishing and affixture of possession notice in due compliance of Rules g(1) and 8(2). After obtaining orders in in Crl.Mp No,46t/2025 on the fite of learned Principal Assistant Sessions Judge Cum Chief Judicial Magistrate, Kurnool, the advocate commissioner appointed therein was threatened by the Applicant therefore advocate cOotmissioner had ,/flY< - , ,, ..,..1r.,k

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sA No.238/2023

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to approach concerned^Police for^{asslstance. The SA is liable to be} dismissed as devoid of merits.

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Heard arguments of learned counsel for the^{Applicantsas well} as learned counsel^for the 1"t respondent bank.^{Perused the material} brought on record.

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Learned counsel for the^{ApPlicantscontendedthat the} Applicants are bona fide^{purchasersfor valuable considerationand} absolute owners of the^{schedule-Bproperty by virtue of registered} Sale Deed bearing^{Doc.No3878/2021dated 24.17.2021Itwas} submitted that the^{Applicantshave been in peacefulpossessionand} enjoyment of the^{propertyever since its purchase. It was further} argued that the^{Applicants derivedvalid title through an unbroken} chain of registered^{conveyances commencingfrom Yedla Balrajand} his family members. The^{title passed from YedlaBalraj to P Kala} Sudhakar, thereafter to^{S. Veda, then to Shika Roy, subsequentlyto} Smt. Minati Mandal, and^{flnally to the Applicants.Therefore, the} Applicants^possess a^{valid and marketabletitle over the schedule-B} property. The learned counsel^{submitted that the Applicants came to} know about the^{proceedingsinitiatedby the respondent Bank only} upon receipt of^{summonsin O.S. No 25 of 2023} '^{According to the} learned counsel, the^{dispute raised by the2nd respondent pertains to} title and identity of^{the property, which is alreadythe subject matter} of^pending civll suits,^{namely O.S. No.25 of 2023 and O'S' No'207of} 2023. It was argued^{that such disputed questions of title cannot be} resolved by resorting to^{measures underthe SARFAESIAct'}

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It was further^{contended that the 1"t respondent Bank failed} to conduct^proper due^{dlligence before sanctioningth&nousing loan} to !fr;t''\

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sA No.238/2023

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the 2nd respondent. The Bank allegedly did not verify the title deeds, physical possession by visiting the property at the time of accepting it as security. Having failed to exercise the required diligence, the Bank cannot now seek to dispossess the Applicants under the guise of enforcing the mortgage.

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The learned counsel also argued that the possession notice dated 13.04.2023 issued under Section 13(4) of the SARFAESI Act was never served upon the Applicants, though they were in possession of the property. Such non-service of notice amounts to violation of the mandatory procedure prescribed under the Act and the Rules. It was further submitted that the Applicants are strangers to the loan transaction between the respondents and cannot be deprived of their property. The Bank's action in proceeding against the Applicants' property was stated to be arbitrary, illegal, and contrary to the provisions of the SARFAESI Act. Accordingly, learned counsel prayed that the possession notice and all consequential measures initiated by the respondent Bank be declared illegal and set aside.

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Per contra, the learned counsel appearing for the lst respondent Bank contended that the 2nd respondent had purchased the schedule-A property under a registered Sale Deed bearing Doc.No.3303 0f 2021 dated t7.09.202t for valuabte consideration and had availed a housing loan of Rs.1,00,00.000/- from the respondent Bank by creating a valid equitable mortgage over the property. It was submitted that the vendor of the 2nd respondent had acquired title under a registered Sale Deed bearing Doc.No.5158 of 2006 executed by the legal heirs of late Yedla Balraj. Thus, the Bank accepted the property as security after verifying the tiue documerils produced by / /1AY<1.J<sup>-rl r\rt! I

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TollO

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sA No.238l2023

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the borrower. The tearned counsel argued^{that the Applicants} purchased their property only on 24.11.2021, whereas the^2nd respondent had^purchased the^property earlier^{on L7.09.2021.} Consequently, the 2nd respondent^has a^prior title^{and interest, and} the Applicants cannot claim any^{superiorright over the secured asset.}

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It was further contended that the^property of^{the 2nd} respondent measures 218 square^{yards,whereasthe Applicants claim} only 216 square^yards. According to the^{Bank, the Applicantsare} attempting to encroach upon and^{lay claim over the property} belonging to the 2nd respondent without any^{lawfulright or title. The} learned counsel further asserted^{the action of the 1't respondentbank} that the account of the 2nd respondent^was rightly^{classifiedas NPA} and, thereafter, the Bank initiated^proceedings strictly^{in accordance} with the^provisions of the SARFAESI^{Act. The measures taken under} Sections 13(2) and 13(4) are^legal, valid,^{and in conformitywith the} statutory requirements. It^was also^{argued that the ex parte order} obtalned by the Applicants in O.S.^No.207 of^{2023 had subsequently} been set aside, and the^{suit is} still^{pendingadjudication. Therefore,no} reliance can be^placed upon the^{said interim order to challenge the} statutory^proceedings initiated^{by the securedcreditor.}

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The learned counsel finally submitted^{that the present} Securitization Application^{is devoid} of^{merit, that the Applicantshave} no enforceable right over the^{securedasset, and that the Bank has} lawfully exercised its statutory rights^{under the SARFAESI Act'} Accordingly, the Securitization Application^{is liableto be dismissed'} /A'tt<tt. , &r'a-.o$

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SA No.238/2023

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Now, the points that arise for consideration are;-

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(i) Whether the applicants have made out any valid ground to set aside the measures of the 1't respondent bank against the SA schedule^property on the^grounds of valid right, title, interest and^possession, as^prayed for?

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(ii) To what relieP

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Point No.(i)r-

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Admittedly the Applicants are third parties to the loan transaction between the 1st respondent bank and the 2nd respondent and Securitization measures initiated by the 1st respondent bank in respect of security interest created by the 2nd respondent due to default in. repayment.

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The applicants' principal grievance concerns competing title and identity of the property, which involves disputed questions of fact requiring examination of rival title deeds and evidence. Such issues are more appropriately adjudicated by the competent civil court and not in proceedings under Section 17. The parties have already instituted civil suits for declaration of title, possession, and identity of the property. Those issues ate sub judice before the competent civil court. So, the question that remains for examination before this Tribunal is whether the mortgage in favour of the 1st respondent bank has been declared invalid by a competent court, as on the date of adjudication of the SA. Although it is claimed that a status quo order was passed. said order is not made available on record. In the absence of proot this Tribunal cannot assume that suqh an order has been in force against the Bank. OK,X

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sA No.23812023

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A^perusal of the material^placed on^{record confirmsthat the} borrower-2nd respondent^purchased the^property on^{17.09.2021 and} created an equitable mortgage in favour of the^{Bank while availing the} housing loan. The applicants purchased their^property only^on 24.fL.2021. Prima facie, the Bank's security interest arose^{prior to} the applicants'^purchase. Unless the earlier^{conveyance is declared} invalid by a competent civil court, the Tribunal cannot^{ignore the} Bank's security interest.

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As pointed out by the learned counsel for the^{1st respondent} bank and also as^per records, the^{extent of propertybeing claimed by} the Applicants is 216 square^yards(SA schedule-B)^{whereas extent of} borrower's^property is 218 square^{yards(SA schedule-A).Applicants} claim that they have been in^possession of the^{property and 1st} respondent bank also claims that 2nd respondent^{has beenin} possession of the property ever since purchase from Smt.Gandham Swarupa. These facts^give a scope to understand that^{scheduleA and} schedule B^properties are not one and the^same.

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The applicants alleged non-service of^{the possessionnotice' The} Bank asserted compliance with the statutory^{procedure, and the} applicants failed to establish any^{procedural illegality warranting} interference. However, the Applicants^{admittedlyare the third parties} hence there was no requirement for the bank^{to servepossession} notice on them.

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As on this date, the applicants^{could not establishany} enforceable right. The applicants have^{not demonstratedthat the} secured asset^proceeded against by the^{Bank is free fromthe} mortgage created by the borrower^or that^{the Bankrqledcontrary to} //Y/ ^ t\ (J/{tys"-

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SA No.238/2023

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law. Consequently, no ground exists to interfere with the measures taken under the SARFAESI Act.

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In the light of above discussion, it is concluded that the applicants failed to establish any valid^ground for setting aside the possession notice or the consequential measures taken by the secured creditor in respect of its secured asset.

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Point No.(ii):

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

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Consequently, the Interlocutory Appllcations pending if any, shall also stand disposed of.

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No order as to costs.

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Communicate a copy of this order to the parties concerned and upload on the orficial website.

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(fyped to my dictotion by the Steno, corrected, signed ond pronounced by me in the open couft on this the 2gth doy ofJuly,2O26).

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(RAMESHWAR KOTHE) PRESIDING OFFICER

Pochampally Sudhakar Reddy and another v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Pochampally Sudhakar Reddy and another v. Union Bank of India

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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