Dismissed

Sapatla Mahesh v. Vastu Housing Finance Corporation Ltd.

DRT8 Jul 2026SA/270/2025

Case brief

AI extract

What is this about?

The Tribunal dismissed the applicant's application seeking to quash SARFAESI recovery measures and physical possession of secured property. It held that the respondent bank followed statutory due process in classifying the account as NPA and initiating enforcement proceedings.

What the court decided

AI extract

Sapatla Mahesh versus Vastu Housing Finance Corporation Ltd. — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE BTH 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. 270 OF 2025

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Mr. Sapatla Mahesh, S/o. Pushpa Raju, Aged about 27years, Gender: Male, Occ: Business, R/o H. No.D.No.B/tO3/A, Ward No. B, Asst No. 1382, Vanipenta Grama Harijanawada, Vanipeta Panchayathi, Mydukuru, YSR Kadapa District, A.P - 516173

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...........Applicant

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Versus

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VASTU HOUSING FINANCE CORPORATION LTD. Rep. by its authorized officer Situated on 1st Floor, No.40/37-L-2-8, SMR Square, Beside LIC Office, River View Colony, Near Mourya Inn Hotel, Kurnool, Andhra Pradesh - 518004

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..... Respondent

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Counsel for the Applicant : Mr. Rajesh Kanala Counsel for Respondent : Mr. N. Rama Rao

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-:@-B:-

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The present Securitization Application is filed by the Applicant u/s.L7 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("Act" hereinafter for short) to set aside all the measures initiated by the respondent corporation under section 13(4) of the Act, including the action of taking physical possession of the SA Schedule property via advocate commissioner notice dated 03.06.2025 in Crl.M.P.No.10O of 2025 ffi*

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Page 2 of 5

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SA No. 27O1202s

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dated 27.05.2025 on the file of Hon'ble Judicial Magistrate Cum^Prl. Asst. Sessions Judge, Kadapa.

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The averments of the application, in brief, are that the Respondent Bank sanctioned a housing loan of Rs. 6,00,000/-^{to the} Applicant in the year 2022 by creating security over the^S.A. Schedule Property. The Applicant submits that he was^regularin repayment of the loan; however, the Respondent Bank^initiated recovery proceedings by issuing an Advocate Commissioner's^notice for taking physical^possession of the secured asset. It is contended that the possession notice was issued without complying with the mandatory provisions of Rule B(1) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the "Rules"). The Applicant further alleges that the loan account was wrongly classified as a NPA despite having^paid more than Rs.^1,65,000/- towards the loan dues. On these'grounds, the Applicant seeks to set aside the SARFAESI measures initiated against the S.A. Schedule Property.

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The Respondent Bank filed its counter in IA and adopted the same as a reply statement along with supporting documents. The averments thereof, in brief, are that Respondent admits sanction of the loan facility in the year 2021 by creating security over the S.A. Schedule Property. It is submitted that, upon the Applicant committing default in repayment, the loan account was classified as NPA on 05.12.2023, thereafter a demand notice dated 18.12.2023 under Section 13(2) of the SARFAESI Act was issued. As the Applicant failed to discharge the outstanding dues within the statutory period, the Respondent issued a possession notice dated t2.09.2024 under Section 13(4) of the Act, which was duly affixed on the : secured asset and published in Hans India^ and Vishal Andhra fiy,*

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page 3 of 5

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SANo.27O(2O2S

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newspapers on 16.09.2024. Thereafter, the Respondent obtained an order under Section 14 of the Act in Crl.M.p. No.100 of 2025 dated 27.05.2025 on the file of the Hon,ble Judicial Magistrate_cum_ Principal Assistant Sessions Judge, Kadapa, Or.rruni,o-;;;.; Advocate commissioner issued notice dated 03.06.2025 for taking physical possession of the secured asset. ffre nesponae"; "r;;: that a' measures were taken in strict compriance with the provisions of the SARFAESI Act and the Rules framed thereunder and, therefore, prays for dismissal of the SA.

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The right of applicant to advance arguments was forfeited on L9.06.2026 after affording ample opportunity. Heard learned counsel for the respondent bank. perused the material brought on record.

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5' Learned counser for the Respondent Bank denied the averments of the Applicant and places reliance upon the material papers annexed with the counter fired in IA.No.1722 0f 2025.It is submitted that the Applicant's account was crassified as NpA in accordance with RBI guiderines and that the Respondent Bank had stricfly foilowed the due procedure prescribed under the SARFAESI Act, 2002 and the Rules framed thereunder. Accordingry, sought for dismissar of the S.A.

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The points for consideration are as follows : _

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i) Whether the Appticant made out any valid ground to quash any of the measures initiated^'by the rZspondent against the SA schedule property as prayed for?

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ii) To what relief?

N",,*

Page 4 of 5

Point No.(i)i

SA No. zTDllozs

7 ' Admittedry, appricant availed housing roan facirity against mortgage oF schedure property as security and failed to make payment as per repayment schedure. Hence the action of the Respondent Bank in ctassification of account as NpA and initiating the SARFESI proceedings cannot be termed as iregar or irregurar as contended by the applicant.

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B. The Respondent Bank fired materiar documents arong with counter fired in IA.No. L722 0f 2025 as proof of compriance of due procedure of law. pages 13 to L7 of the material paper filed separatery are the photostat copies of postar receipts and acknowredgment proving service of demand notice. simirarry, pages 31 to 38 are the photostat copies of postar receipt of possession Notice dated L2.0g.2024, photographs as proof of affixture on secured assets and pubrication of the same in Engrish and Terugu (vernacurar ranguage) newspapers on 16.09. 2024. The documents praced on record by the Respondent Bank remain undisputed. In view ;';il;'::T:T:ff:i;,"]'"'d,^{r rind no inrraction} orsection 13(2) secured cred*or the *"r0"';;:',, ::j;, "J,:::;r,li"rrj^r#:; proceedings, which cannot be catego rizedas iregar or arbitrary.

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In view of above observation, it is conclr faileo to estabrish any ground to set aside ,n,'o"o that the applicant physical possession by the respondent bank 3 measure under the from Act, taking2oo2 ;:ilHJe sA schedule propertv and accordinsrv the SA is riabre o be

SA No. 2tO/2O2s

Page 5 of 5

Point No.(ii):