Dismissed

Sri Pyreddy Ananda Reddy v. State Bank of India

DRT25 Aug 2026SA/245/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a Securitization Application filed by borrowers challenging physical possession measures initiated by the State Bank of India. The Tribunal held that the borrowers failed to establish compliance infrictions regarding notice issuance or service under the SARFAESI Act.

What did the court decide?

The Securitization Application was dismissed; all SARFAESI measures initiated by the Respondent Bank were set aside by the Tribunal's rejection of the application.

Sri Pyreddy Ananda Reddy versus State Bank of India — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE 25TH DAY OF AUGUST, 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. 245 OF 2022

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(1) Sri. Pyreddy Ananda Reddy, S/o P. Anthony Reddy, aged about 74 years, Occ: Retd. Employee, R/o Flat No. 104, Sharath Apartment, Behind Old RTO Office, Madhavi Nagar, Kurnool - 518 002

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(2) Smt. P. Rajeshwari, W/o P. Ananda Reddy, Aged about 68 years, Occ: House wife, R/o Flat No. 104, Sharath Apartment, Behind Old RTO Office, Madhavi Nagar, Kurnool - 518 002 Applicants

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Versus State Bank of India, Rep. by its Authorized Officer, Budhwarpet Branch, Kurnool.

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.....Respondent

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Counsel for the Applicants : Sri. D. Raghavulu Counsel for Respondent : Sri. G. Prabhakar Sarma

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-:ORDER:-

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The present Securitization Application is filed by the Applicants u/s.t7 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2OO2^("Act" hereinafter for short) to set aside all measures initiated by the Respondent under section 13(4) of the Act, including the action taken for obtaining physical possession of the SA Schedule Properties pursuant to the notice dated 30.08.2022, issued in pursuance of the order^passed in Ow*

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Page 2 of 7

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SA No.245/2022

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Crl.M;P,No.190 of 2022 by the Hon'ble Chief ludicial Magistrate^cum Principal Assistant Sessions Judge, Kurnool.

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The averments of the application, in brief, are that^applicants had availed a Reverse Mortgage Loan facility from the^Respondent Bank for livelihood^purposes by creating mortgage over^schedule properties. The Applicants contend that, being a reverse mortgage facility, no repayment of instalments or^{the loan amountwas required} during their lifetime and that the^Bank's right^{to recover the dues} would arise only after their demise. It^{is allegedthat, contrary to the} terms of the loan, the Respondent^{Bank issued a demand notice} dated 24.03.2022 and initiated SARFAESI^{proceedingsduring their} lifetime, which, according to the Applicants, are^{illegal and contraryto} the nature of the facility. The^Applicants further^{contend that their} objections to the demand notice^{were not} duly^{considered or replied} to by the Bank in terms of Section^{13(3A) of the SARFAESIAct. They} also allege non-compliance with Section 13(4)^{of the Act and Rules} 8(1) and 8(2) of the Security Interest^{(Enforcement) Rules,} 2002,(hereinafter "Rules" for short) including^failure to^{properlyserve} and affix the^possession notice and^publish the^{same in two leading} newspapers, and further dispute the correctness of the^scheduleand boundaries of the secured asset. It^is also^{contendedthat the account} was not validly classified as NPA and that the Bank^proceeded mechanically and arbitrarily without considering the^{natureof the} reverse mortgage facility and the amounts already^{deposited towards} the loan account. The Applicants further allege^{that the Bankis} attempting to take coercive^{physical possession} of the^{secured asset} pursuant to the warrant in Crl.M.P.No.190 of 2022 on the file of the learned Chief ludicial Magistrate-cum-Prlncipal^{AssistantSessions} Judge, Kurnool, and apprehend that^{the properties maybe brought to} sale. Accordingly, the applicants^pray for^settingaside qe.S_ARFAESI measures initiated against the SA schedule^{propertiesfrffV#}

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Page 3 of 7

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SA No. 24512022

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The Respondent Bank filed its reply statement along with supporting documents. The averments thereof, in brief, are that under the Arrangement Letter and Loan Agreement dated 13.02.2010, the Bank is entitled to recover the outstanding dues not only upon the demise of the Applicants but also upon occurrence of specified events, including cessation of residence in the mortgaged properties, where the outstanding dues exceed 90o/o of the market value of the secured asset, or upon breach of the loan terms. It is contended that the outstanding dues of Rs.46,18,161/- exceeded 90o/o of the secured asset's value of Rs.39.69 Lakhs and that the Applicants were not residing in the mortgaged properties, thereby entitling the Bank to initiate recovery proceedings. Despite repeated assurances by the Applicants to clear the overdue amounts, the dues remained unpaid and the loan account was classified as NPA on 23.03.2022. Thereafter, the Bank issued the demand notice dated 24.03.2022 under Section 13(2) of the SARFAESI Act for Rs.46,18,161/- with further interest and costs, which was duly served upon the Applicants. The Applicants submitted their reply dated 24.05.2022, to which the Bank furnished its response dated 27.05.2022. Subsequently, the Bank issued the possession notice dated 03.06.2022, which, according to the Bank, was duly served upon the Applicants, affixed on the secured asset and^published iri Hans India and Andhra Jyothi on 07.06.2022.It is further stated that, upon continued default, the Bank initiated^proceedings under Section 14 by filing Crl.M.P.No.19O of 2022 before the learned Chief Judicial Magistrate-cum-Principal Assistant Sessions Judge, Kurnool,^pursuant to which an Advocate Commissioner was appointed and warrant was issued on 30.08.2022. The Bank contends that the challenge to the said order is not maintainable in view of Section 14(3) of the SARFAESI Act and that the present S.A. is^otherwise barred by '; fi$r*u,",1,:

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Page 4 of 7

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SA No.245/2022

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limitation. Accordingly, contending that all mandatory provisions of the SARFAESI Act and the Rules framed thereunder have been duly complied with, the Respondent prays for dismissal of the SA.

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Heard learned counsel for the applicants and learned counsel for the respondent. Perused the material brought on record.

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Learned Counsel for the Applicants reiterated the averments made in the application and submits that, the Applicants had availed a Reverse Mortgage Loan facility from the Respondent Bank by mortgaging the Schedule Properties and contend that, under the nature and terms of such facility, no repayment was required during their lifetime and the Bank's right to recover the dues would arise only thereafter. The counsel therefore contends that the demand notice dated 24.03.2022 and the subsequent SARFAESI proceedings initiated during their lifetime are illegal and contrary to the terms of the facility. It is further contended that the Bank failed to duly consider their objections under Section 13(3A) of the SARFAESI Act and did not comply with the provisions of Section 13(4) and Rules B(1) and B(2) of the Rules, 2002, including the requirements relating to service, affixture and publication of the possession notice. Accordingly, the Applicants seek setting aside of the SARFAESI measures initiated against the Schedule Properties.

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Learned Counsel for the Respondent Bank, in its written arguments, reiterated the contents of the reply statement, denied the averments made in the SA and placed reliance upon the documents filed along with the reply. The learned counsel contends that under the Arrangement Letter and Loan Agreement dated 13.02.2010, the Bank was entitled to recover the outstanding dues not only upon the specified dem se of the Appricants but arso "ro" .rffiC

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Page 5 of 7

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SANo.24512022

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events, including cessation of residence in the mortgaged properties, the dues exceeding 90o/o of the market value of the secured asset, or breach of the loan terms. It is contended that the outstanding dues of Rs.46,18,161/- exceeded 90o/o of the secured asset's value and that the Applicants were not residing in the mortgaged properties, thereby entitling the Bank to initiate recovery proceedings. The loan account was classified as NPA on 23.03.2022, followed by issuance of demand notice dated 24.03.2022 under Section 13(2) of the SARFAESI Act, to which the Applicants submitted their objections and the Bank furnished its reply. Thereafter, possession notice dated 03.06.2022 was issued, served, affixed and published, followed by proceedings under Section 14 of the Act in Crl.M.P.No.190 of 2022. Accordingly, Learned Counsel prayed for dismissal of the SA.

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7. The points for consideration are as follows : -

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Whether the Applicants made out any valid ground for

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quashing the action of the Respondent for taking the physical possession of the SA schedule properties through Advocate Commissioner appointed under the provision of the Section 14 of the SARFESI Act?

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ii) To what relief?

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Point No.(i):

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B. The contention of the Applicants that, being a Reverse Mortgage Loan, the outstanding dues were not repayable during their lifetime and that the Bank could initiate recovery proceedings onry upon their demise, cannot be accepted as an absolute proposltion. The rights and obligations of the parties are governed .by the Arrangement Letter and Loan Agreement dated 13.02.2010, which provide for recovery of the outstanding dues upon the occurrence of

fr$t"u

Page 5 of 7

SA No. 24s12022

specified events, including cessation of residence in the mortgaged properties, the outstanding dues exceedinS 90o/o of the value of the secured asset, or breach of the terms and conditions of the facility. Therefore, the mere fact that the Applicants were alive when the SARFAESI proceedings were initiated would not, by itself, invalidate such proceedings arising out of the contractual conditions. In the present case, the Respondent has specifically pleaded the occurrence of such conditions. Hence, the contention that the Bank had no right to initiate recovery proceedings during the lifetime of the Applicants is not sustainable.

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As regards the other contentions of the Applicants relating to non-compliance with Sections 13(2) and 13(4) of the SARFAESI^Act, the Respondent Bank has relied upon the copies of^{the relevant} documents annexed to its Reply Statement to^{substantiatedue} compliance with the statutory^{requirements.Pages37 to 39 of the} material^papers annexed to the^{Reply Statementcontain photocopies} of the demand notice bearing^{the personal acknowledgements of the} Applicants, evidencing^{serviceof the said notice.Likewise,Pages 40} to 43 of the material^{papers containphotocopiesof the objections} raised by the Applicants^{to the demand notice, the Respondent} Bank,s reply thereto,^{along with the postal receipts evidencing service} of the said reply^{upon the Applicants.Similarty,Pages 44 to 49 are} the Photostat copies of^{possession notice dated 03.06.2022 being} served via registered^{post, photographsas proof of affixtureon} secur:ed ,,,1 l assets and^{publication of the same in Englishand Telugu} (vernacular language) newspapers^{on 07.06.2022.Inview of} sufficient^{proof place on record, I find no infraction of section t3(2),} 13(3A) & 13(4) of the^{Act read with Rules3, B(1) &B(2) of the Rules,} 2002. As a secured^{creditor the Respondent Bank initiatedthe}

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PageT of7

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SA No.24512022

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SARFESI proceedings, which cannot be categorized as illegal or arbitrary.

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In view of the foregoing observations, this Tribunal finds that the Applicant has failed to establish any ground warranting interference with the measures initiated by the Respondent Bank under the SARFAESI Act, 2002, including the action for taking physical possession of the sA Schedule properties. Accordingly, the SA is liable to be dismissed.

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Point No.(ii):

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1 1 . In the resu lt, the Securitisation Application fails and is hereby dismissed. t2. Consequently, Interlocutory Applications pending, if any, shall stand closed.

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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 in the official website.

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,:l:;:,:rrilr;;r;,::i,yr;!; steno, corrected, sisned and pronounced by me in the open court on this

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PRESIDING OFFICER

Sri Pyreddy Ananda Reddy v. State Bank of India

Case brief

What is this about?

What did the court decide?

Sri Pyreddy Ananda Reddy v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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