Applicants challenged a possession notice and auctions conducted by City Union Bank Limited under the SARFAESI Act, alleging procedural lapses and inflated liabilities. The Tribunal found the bank followed statutory procedures regarding publication, valuation, and auction rules, dismissing the challenge.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE DEBTS RECOVERY TRIBUNAL - I AT HYDERABAD
DATED THIS THE 1 2TH DAY OF JANUARY, 2026
PRESENT: GUMMADI GOPICHANDPRESIDING OFFICER
sA.NO.240/2025
SA.No.240/2025
2
Versus
SA,No.240/2025
4. Jangala Sunil Kumar S/o Rajeshwar Rao J,
Aged: Not Known, Occ: Not Known, R/o: 5-5-222 /B I 406l At, Elements Appartments, Pakaband a Bazar, Khammam-50700 1
Aged: Not Known, Occ: Not Known, R/o: 5-5-222 I B I 406 I At, Elements Appartments, Pakaband a Baoar, Khammam-50700 1
(Respondenfs Nos.2 to 7 are impleaded as per orders in 1.4.No.1572/ 2025)
counsel for the Applicants : sn J.prabhakar, Ld.. senior coursel forSi. T. Sridhar.
counsel for the Respondent No.1 : sn Ambadipudi satryanaryana, Ld. Senior Counsel for Smt. Ch. Lakshmi Chaga.
Counsel for Respo;nd,ent No,i.2",;:r..: , ; Sri V. Rauind"er. Counsel for ReRe spon d.ede nt No.3 : " , .,. . .- : Sn R. Ka.si Visu tanadham. Counsel fo r r Re.,Re,. $.'fondents'$ tnd ents'fi o. +a rr%i il%'r. Sn D. Raghauutu. * :ry {# 's \i Reserued o* 0s.01.2026. *ii pronouncetu)n 1 X JAl'| mn ; Il i2.01.2026. , ,,r rd-. r:{ ;i ,O""OrrKffi i-') # 13.01.2026. ""s/
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SA No'240/2025
11.O7.2025 and 13.1O.2025,includingthee-AuctionNotrce dt. 18.10.2025,issued by the 1't Respondent Bank fixing the auctlon of the schedulepropertieson 13. 1 1 .2025 and consequentialmeasures taken-out by the1"t RespondentBank.
SA.No.240/2025
iu) Thereafter, the lst Respondent Bank issued another Sale Notice dt. 18. 10.2025 for conducting auction of the schedule properties without following the procedure laid down under the SARFAESI Act and the Rules made thereunder. In the said Sale Notice, the 1st Respondent Bank has not considered the payments made by the Applicants and the amounts already realized by the I st Respondent Bank in the auction of some of the schedule properties. The Applicants paid an amount of Rs.3.05 crores under OTS but even then the 1"t Respondent Bank has hurriedly proceeded for auction of the schedule properties. In schedule property No.8, there are high vaiue silk sarees, readymade garments etc., in the Showroom called,sowbhagza Shopping Mall', consisting of G+4 floors with plinth area of 15,000 sft., designed with rich interiors, glass fixtures, sales cabins and centralized air conditioner with generator backup are fixed. The value of the said movable properties is worth of Rs.6.00 crores. In view of the negligent attitude of the l st Respondent Bank in seliing the said property, the said movables will not now fetch was another showroom in the name of Perumalla Textiles co4siSting of G+2 floors with plinth area of 5,0OO sft., situated in busy commeicial locality in Khammam, lrtted with centralized air conditioner with transformer and generator. Even though the movables,-/rn the said property costs around Rs.2.O0 crores, because of the negligent and hast5r attitude of the 1"t Respondent
6
sA'No'2ao'/2025
Bank officials, the saidmovables becameuseless and the scrap will not fetch more thanRs.SO.OO lakhs. Thus, the Applicants have sustained loss ofRs. 1.50crores.
SA.No.240/2025
Andhra Jyothi' and 'The New Indian Express, newspapers on 06.12.2024. Thereafter, the Applicants submitted their objections vide their reply dt.ll.l2.2O24 to the Demand Notice dt.2l.lo.2o24 and after receiving the said objections, the l.t Respondent Bank has sent a detailed reply dt.27 .72.2024 rejecting the objections raised by the Applicants.
i0 After issuance of the said Demand Notice, the Applicants have approached the l"t Respondent Bank for settling their loan accounts under OTS and the l"t Respondent Bank vide letter dt.27.12.2024 has conveyed its acceptance with certain terms and conditions but, the Applicants have not complied with the terms and conditions of the OTS sanction. Hence, OTS was cancelled by the l"t Respondent vide its letter dt.O2.Ol.2O2S. Thereafter, the Applicants have again submitted letter dt.08.01.2025 for reconsideration of OTS and they agreed to deposit a sum of Rs. 1.40 crores by 2O.O1.2025, Rs.1.65 crores by 31.O1.2025, Rs.4.0O crores by 28.O2.2025 and Rs.4.05 crores by 30.03.2025 with the lst Respondent Bank. The l"t Respondent Bank vide its letter dt. 13.01.2025 has conveyed its approval for the said OTS proposal and as per the terms and conditions of the said OTS, the 1st Respondent Bank was to release two properties situated at D.No.9-1-32 described as schedule,C, of the Demand Notice and property situated at D.No.4-5- 147 described as schedule U'of the Demand Notice on payment of Rs.140.00 lakhs on or before 22.O1 .2025, two more properties bearing H.No.10-41/A and D.No. 1O-4-21 described as schedules,L, &,H, of Demand Notice on payment of Rs.165.00 lakhs on or before and another property bearing Plot Nos. 15, 16 & 16/1 ;".:--;= {lOurtriUqg,}<sup>schedule 'M' of Demand Notice on paymentof ..:" ' Rs.4O0.O0 lakhs on or before 2a.O2.2O25 and remaining properties to be released on payment of balance OTS amount of IRS.+OS.OO1akhs on or before 28.03.2025. The Applicants have paid an amount .of Rs. 1.4O crores as on 18.01.2025 and got released properties described in schedules 'C', 'N'and U'and also ' paid an amount of Rs. 1 .65 crores as on O7.O2.2O25 and got
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SA.No 240/2025
released properties described in schedules'L' &'H'. But, subsequently, theApplicantshave failed toadhere to the remaining terms andconditions of the OTS and so the OTS stood cancelled.
Thereafter, the 1"t RespondentBank had issuedPossession Notice dt.19.04.2025,u/s.13(a)of the SARFAESIAct, and took symbolic possession ofthe scheduleproperties. The Possession Notice was sent to theApplicants by registered post and some of the Applicants refusedto receive the same and in respectof some other Applicants, the saidnotice got returned un-servedwith endorsements aS "Left".The Possession Noticewas affixed on the schedule properties andthereafter, publishedin AndhraJyothi' and.The New IndianExpress' newspapers on 24.04.2025. Thereafter, the lst RespondentBank obtainedvaluationof the schedule properties from theapproved Valuer on 22.04.2025- Subsequently, the1"t RespondentBank issued redemptionnotice on 22.04.2025, informing theApplicantsthat the sale of the schedule properties shalltake place after expiry of 30 days from the date on whichpublic notice ofsale is published in the newspapers, asper Rules 8(6)and 9(1) of the Rules,2OO2.Thle said notice was alsopublished in the newspapers.Thereafter, the 1"t Respondent Bank issued SaleNotice dt.02.06.2025 for conducting auction of the scheduleproperties on 11.07.2025. The said notice was sent to theApplicants and same was also pubtished in Andhra Jyothi' and 'The NewIndian Express' newspapers 6n 04.06.2025. In theauctionconductedon .2025, Respondent No.3 herein stoodas highest bidder in ,72,00,500/- and Rs.1,01,00,50O/-in respectof the propetiith described in schedules 'A' and 'D'respectively and 13 :ResporiS{'rt No.Z stood as highest bidder for Rs.2,30,01,1761-in respec_tr d tf,e property described inschedule 'I'of the Demand .,$_o11cer/t.21.1O.2O24.The 1"t ResponclentBank has issued sale '";11.HYui+1 iir"tio., letters dt.l1 -o7.2025 to Respondents No.2 and 3 Respondent Bank has also issued SaleCertificates intheir
13
?l.r {
,-oA-' ot
SA.No.240/2025
favour. However, Sub-Registrar, Khammam has refused to register the Sale Certificate issued in favour of Respondent No.3 in respect of properties described in schedules 'A' and,D, as the said properties are included in the prohibited list in view of the attachment orders obtained by third-party creditors of Applicants.
vi) The l"t Respondent Bank proceeded u/s. 14 of the SARFAESI Act, ..{t.....,' by filing Cr1.M.P.Nos.85, 87, 88, 89, 90 and 9l of 2025 on the file .-1" . ' ..of Ld. CJM,Khammamfor taking physicalpossessionof Item : ".' Nos. 1 to3, 6, 8 and 9properties of Possession Notice. The 1-: Advocate Commissioner appointed by the Ld. CJM, Khammam, r -: , Ttli$ took physical possession of Item Nos.1, 3, 8 and 9 properties of Notice on O1.11.2025 and 1O.1 1.2025.
SA.No.240/2025
and spider websetc., as the same was under lock and closed since long time.The allegationof the Applicants that there is stock worth aroundRs.5.00 crores in the said property is not true and correct.The Applicants are indebted to several people and the Applicantsdue to fear from outsiders have closedthe Mallandwerenotoperatingit.Someoftheunsecuredcreditors of the Applicantshave also initiated insolvency proceedings by filing IP.No.29 12025against the Applicants' The l"t Respondent Bank has fixed thereserve price for conducting auction of the schedule propertiesbasing on the Valuation Reports obtained from the approvedValuer. The lst RespondentBank is yet to proceed with sale of 5 morepropertiesout of 9 properties'The 1"t Respondent Bankhas scrupulously followed the procedure laid down under the SARFAESIAct and the Rules made thereunder, while takingphysicalpossession and conductingauction of the scheduleproperties.So,thepresentSecuritizationisliabletobe dismissed.
-..Doc.No.8339 I 2025beforeJoint Sub-Registrar, Khammam(RO)' (i,i' ,r-.,.:'.
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SA.No.240/2O25
and after payment of entire sale consideration by him, the lst Respondent Bank has issued Sale certificates dt.22.og.2o2s in his favour and that he was also put into physical possession of the said properties.
ether the A ppli cants have established any valid grounds for properties described in schedules No.1, 3, 7 & 8 . ^, ..?ldisg,uanceof sale certificatesin favour of RespondentsNo & ili5' ..rd sale confirmation in favour of Respondents No.4 to T to 7 in respect of the said properties?
iii) To what relieP
SA.No.24o/2025
Points Nos.lil & lli)t
.'''.
.!'?. lt is of importonce to note from this provision thot in oll execution ,.,p,rocee:dings,the courthos to firstdecide whetherit is necessoryto bring the = ",9;'r,entye attoched property to sole or suchportion thereof osmoy seem necessory ' ' -".,to' satisfy the decree. lf the property is lorge ond the decree to be sotisfied is lt" smoll, the court must bring only such portion of the property, the proceeds of which would be sufficient tosdtisfythe cloim of the decree holder' lt is
SA.No.240/202s
immoteriol whether the property is one or severol,. Even if the property is one, if o seporote portion could be sold without violating ony provision of low onty such portion of the property should be sold. This, in our opinion, is not just o discretion, but on obligotion imposed on the court. Core must be token to ut only such portion of the property to sole the considerotion of which is sulficient to meet the cloim in the execution petition. The sole held without exomining this ospect ond not in conformity with this requirement would be illegol ond w ith outj u risd icti on. "
-.gJS3to the banknow to contend that since there was no approved
-l con5idered but,,entire alrd-.ifrX$qres. * .:i building is sold in auction including the fittings
SA.No.2a0/2025
14
reported in (1986) 1 SupremeCourt Cases133, wherein it is held that, if allegations ofmisuse of power vested inauthorities are uncontroverted, theyamount to colourable exerciseof the power vested and a fraudon the statute.
13.per contra, Ld. SeniorCounsel appearing for the 1"t RespondentBank argued that the 1"tRespondent Bank has scrupulously followedthe procedure laid down under theSARFAESIAct and the Rules made thereunder whileissuing the DemandNotice, PossessionNoticeand the Sale Notices to theApplicants and that the auction of some of the schedule propertiesconducted by the lst RespondentBank is perfectly valid and that the Applicantsare not entitled to claim any relief. Ld. Counsel further arguedthat, in some of the schedule propertiesthere are structures, which arenot having properapprovedplan from the local authority and so un-authorizedconstructionsare not taken into consideration for obtainingfair marketvalue as same can be demolished by the authoritiesat any time. IIe further argued that, even though separate loansare taken by the Applicants, the schedule properties are mortgaged for securingthe loans and there is nothing wrong in issuing commonDemand Notice to the Applicant. Ld. Counsel for the 1st RespondentBank also contended that, even though the 1st RespondentBank proposed auction of all the schedule properties, the auction is materialized only inrespectof someof the properties and the amount realized so far isless than the liability of the Applicants and so the ratiolaid down in "Ambati Narasagga'case (cited supra) does not apply to the facts andcircumstancesof the present case. Ld. Counsel further contended that,even though two properties were pqrchased by Respondent No.3herein in the auction ffiRqon11.o7.2o25,registrationwasnotdoneinrespectofone .eqVheslid is covereo. t', o.o.libition ot 1t", :" ll'* r# 'rope:ty //.t$" i'aitachmEht ;Su,.eriqaers' obtained by some of the creditors of theApplicants ;i .H I : 'iiI l,,1 il,;,ftf-rn:r d so the.sAle '_$. consideration I of the samewas not considered in the I',"'', ''subsequent Shle l$otices. Ld. Senior Counsel argued that, auction sale ."-...pnducted on two occasions only and the thirdattempt of the 1't ',... ., ; ,. ":,1ii,:-,':-$Uspondent Bank to conductthe auction of the properties could not -,. -"'.,-..-i'
SA.No.240/2025
materialize and the third Sale Notice issued by the lst Respondent Bank became in fructuous. He further argued that, all the Sale Notices issued by the lst Respondent Bank are affixed on the schedule properties and published in Andhra Jyothi' Telugu and 'The New Indian Express' English daily newspapers, which are having sufficient circulation in the locality where the schedule properties are situated. Even though the The New Indian Express' newspaper is published from Hyderabad, it is having sufficient circulation in Khammam, where the schedule properties are situated. Ld. Senior Counsel further argued that, when once auction of the propert5z is confirmed in favour of the auction-purchaser, it cannot be set-aside unless there is fraud or collusion committed by the secured creditor. In support of his submissions, Ld. Senior Counsel has placed his reliance on a decision of the Hon'ble Apex Court tnnCellr LLP Vs. BaJna Motors hrt. Ltd.o, reported tn 2024 (2) SCC I, wherein in paragraphs 88, 91 and 92, it is held as under:-
"Once, however, the sole is confirmed by the outhority, certoin rights occrue in fovourof the ouction purchoser ondtheserights connot be extinguished except in exceptionol coses such os froud.
The sole pursuont to the public ouction con be set oside in on eventuolity where it is found on the bosis ol the moteriol on record thot the property hod been sold owoy ot o throw owoy price ond/ or on o wholly inadequote considerotion becouse froud ond/or collusion ond/or ofter ony moteriol irregulority ond/or illegolity is found in conducting/holding public ouction. After the public ouction is held ond the highest bid is received and the property is sold in public ouction in favour of the highest bidder, such o sole connot be set oside on the bosis of some offer mode by third porties.
Thus, whot is discernible from obove is thot it is the duty of the courts to zeolously protect the sonctity of ony duction conducted. The courts ought to be loth in interfering with ouctions, otherwise it would t'rustrote the very object ond purpose behind ouctions ond deter public confidence ond porticipotion in
his reliance on a judgment of the NO.146O4 oJ 2024 (arlslng out
of SLP^{fl No:3644O of 2014) - "Rajend.ra Kumar Barjatga and anr. Vs. U.P. Aaas Eaann Vikrrs Parishad & Ors.u, wherein it is held that, un-authorized constructions should be demolished.
SA.No.2a0/2025
t6. The undisputed factsof the case are that, the Applicantsavailed various credit facilitiesfrom the 1"t Respondent Bank by creating security interest overthe applicationschedule properties in favour of the 1.t RespondentBank.There is also no disputeregardingthe fact that the Applicantscommitteddefault in repaying the loan amount and so, the loan accountsof the Applicantscame to be classifiedas NPA by the lst RespondentBank. The l"t RespondentBank issued Demand Notice dt.2l.1o.2o24 byclaiming anamountof Rs.12,15,57,884/-as on 14. 1O.2O24. The said noticewas sent to the Applicants and alsopublished inthe newspapers by the 1st Respondent Bank. Afterreceipt of the said Demand Notice, the Applicants submitted theirobjectionsand to the said objections,the l"t Respondent Bank sentits reply by overruling the said objections. It is also not in disputethat, after issuanceof Demand Notice,the Applicants made aproposal for settlement of the dues under OTS and the OTS was acceptedby the 1st RespondentBank but, the Applicants did not comply with theterms and conditions of the OTS and the OTS stood cancelled. Again,there was another proposal made by the Applicants for settlement ofthe dues and as per the terms and conditionS of OTS, theApplicantson one occasion,paidRs.1.40 crores and consequentlygot releasedschedules 'C', 'N'& U'properties #4f='.i.,'.of the Demand Notice and i n another occasion paid anamount of . ,dt-.,'':""ir''::'i', --' f'-,',t'","' -r-r"ruRns.ir65 O.T"\d \ ,..i 1ri, .<sup>crores Notice.and However,got released schedules thereafter, the Applicants have failed 'L' & 'H' properties of theto afti eetnply! with further conditions of the OTS and so the OTS was t cancellEd by the lst RespondentBank.
lT. After expiry of 6O daysas mentionedin the Demand Notice, in view of '+.* ;,;.,....*:: ho.r-payment of the entire outstanding dues, the 1st Respondent Bank
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SA.No.240/2025
has issued Possession Notice dt.lg.O4.2O2S, u/s. 13(4) of the SARFAESI Act, and some of the Applicants received the said notice. The Possession Notice was affixed on the schedule properties as depicted from the copies of photographs filed by the 1sr Respondent Bank. The said Possession Notice dt.19.O4.2025 was also published by the 1st Respondent Bank in Andhra Jyothi' Telugu and,The New Indian Express' English newspapers dated 24.O4.2025 as evidenced from the copies of newspapers publications frled by the 1st Respondent Bank. So, the Possession Notice dt.l9.O4.2O2S, issued by the 1"t Respondent Bank u/s. 13(4) of the SARFAESI Act, in respect of the schedule properties, is perfectly legal and valid as the lst Respondent Bank has duly complied with Rule 8(1) & (2) of the Rules, 2002. So, in view of issuance of proper Possession Notice to the Applicants, the lst Respondent Bank is also entitled to invoke Sec.14 of the SARFAESI Act, seeking aid of the CJM for taking physical possession of the schedule properties and the 1sr Respondent Bank has approached Ld. CJM, Khammam and got appointed Advocate Commissioner, who took physical possession of some of the properties.
" preperfies.. The first Auction Notice was issued by the 1st Respondent ti ;
Baqk on 0."06.2025 for conducting auction of the schedule properties on LI,QJ-.2O25, wherein, Respondent No.2 became successful bidder in respect of Property No.7 of application schedule, which consists of 2 properties under Items No.l & 2 of Property No.7 of application :,,
.schedules, fsi a bid amount of Rs.2,30,01,116/- and after payment of
, eirtire bid amount by Respondent No.2, the lst Respondent Bank has
SA.No.240/2025
fo
issued and registeredthe Sale Certificate in his favour before the concerned SRO.The reserveprice for the said property was fixed by the 1st RespondentBank basingon the valuation report given by the approved Valuer,a copy of whichis filed by the lst RespondentBank in its material documents.
.-:.'i on the Applicants to furnish approvedplan sanctionedby the : :, ;,'' l,MunicipallLocal authorities. So, in the absence of non-submission of approved plan in respect ofsome of the structuresinthe said
lfi;iproperiies inProperty No.1 ofapplicationschedules, bythe Applicants, the said un-authorrzedstructures are liable tobe demolished. So, the contentionof the Applicants that the reserveprice
-l ,i
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SA.N?.240/2025
fixed in respect of Property No.1 of the application schedules is not according to market value, cannot be taken into consideration.
" plJJ.l,fgail'.Et}#; apptication schedules was sold in favour of
f n..porrt$d.r," Noifrit.o 7 for a sale consideration OF Rs.6, lO,OO,ggglarid.:the 'Said-Sale, Notice was sent to the Applicants, aflixed on the pchedule properties and published in Andhra Jyothi'Telugu and 'The New Indian Express'English newspapers. The Respondents No.4 to 7
. have paid 25oh of the bid amount on the same date of auction and they couid not pay balance sale consideration in view of pendency of the present SA.
sA.No.240/2025
I
SA.No.240/2025
application schedule properties are perfectly legal and valid and the lst Respondent Bank has duly followed the procedure laid down under the SARFAESI Act and the Rules, 2OO2, while proceeding against the application schedule properties. So, the Applicants are not entitled to claim any relief and the present Securitization Application filed by them is liable to be dismissed.
Point No.(tl):-
(Dictated to the Priuate Secretary, transcribed bg her, corrected, signed and pronounced bg me in the open court on '. - this the 12h day of January, 2026).
sd/-
(G. GOPICHAND)
PRESIDING OFFICER
)
-4
,6r',
3 issues framed by the court
Whether Applicants established valid grounds to challenge the Possession Notice issued by the Bank under Section 13(4) of the SARFAESI Act.
Whether Applicants established valid grounds to challenge the issuance of sale certificates and sale confirmations in respect of the scheduled properties.
Whether the Applicants are entitled to any relief in their Securitization Application challenging the auctions and possession.
Colour shows how this judgement treated each authority
Ambati Narashagga Vs. M. Subba Rao and AnotherReferred¶95
Ambati Narashagga Vs. M. Subba Rao and Another, 1989 Supp (2) Supreme Court Cases 693
Rafia Subramanian and Another Vs. Pandiars and ors.Referred¶99
Rafia Subramanian and Another Vs. Pandiars and ors., 2014 (2) Supreme Court Cases 651
Ram Kishun and ors., Vs. State of Uttar Pradesh and ors.Referred¶99
Ram Kishun and ors., Vs. State of Uttar Pradesh and ors., 2012 (11) Supreme Court Cases 511
Express Newspapers Pvt. Ltd and ors., Vs. Union of India and ors.Referred¶106
Express Newspapers Pvt. Ltd and ors., Vs. Union of India and ors., (1986) 1 Supreme Court Cases 133
Celler LLP Vs. Bajna Motors Pvt. Ltd.Referred¶111
Celler LLP Vs. Bajna Motors Pvt. Ltd.
Rajendra Kumar Barjatya and anr. Vs. U.P. Avas Vikas Parishad & Ors.Referred¶116
Rajendra Kumar Barjatya and anr. Vs. U.P. Avas Vikas Parishad & Ors.
2 provisions across 2 enactments
Perumalla Associates Rep by its Partner Perumalla Srinivas Rao
Perumalla Anil Kumar
City Union Bank Limited
Gummaadi Gopichand
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
