Allowed

Bandi Subramanyam And Another v. Icici Home Finance Co.Ltd

DRT28 Jul 2026SA/324/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the securitisation application, setting aside the possession notice, auction sale proceedings, and sale certificate. The tribunal found violations of the SARFAESI Act and Security Interest (Enforcement) Rules, 2002 regarding notice service dates, mandatory 30-day gaps, and EMD deposit timelines.

What did the court decide?

Sale proceedings and certificate set aside; 1st Respondent directed to refund bid amount; possession handed over to Applicants.

Bandi Subramanyam And Another versus Icici Home Finance Co.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 28TH^{DAY OF ]ULY,2026}

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PRESENT: SH. RAMESHWAR^{KOTHE,B.Com,L.LB' (Hons.), 14.A.} PRESIDING OFFICER

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Securitizatlon Application^No. 324^{OF 2023}

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Bandi Subramanyam,

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S/o. B. Chengalarayudu,

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Aged 38^years, Occ;^Business,

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Smt.Bandi Sumathi,

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W/o. Bandi Subramanyam,

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Aged 29^years, Occ; Housewife,

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Both R/o.H.No.2-25, Ganugapenta^Village, Peddaramapuram, Pakala^{Mandal, Chittoor Dist}

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Applicants

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Versus

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ICICI Home Finance^{Co. Ltd.,} Rep. by its Authorized Officer, Regd. office at ICICI^{Bank Tower,} Bandra Kurla ComPlex,^{Mumbai and} It's Branch Office at Door^{No.23-8-156/A,}

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1st Floor, R. R. Enclave,^{New Balaji Colony,} AIR Bypass Road,^{Tirupati-517502.}

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I. Swarna Kumari,

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Wo.^{I. Janardhan Reddy,}

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Aged 51^years, Occ;^Housewife, R/o.6-199, New Balaji Colony, M.R. Palli, TiruPati-517502

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..... Respondents

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Counsel for the Applicants^{: M/s.T. SridharReddy} Counsel for Respondent^{No.1 : Mr. M. Srinivas Reddy} Counsel for Respondent^{No.2 : Mr. M' ChittiBabu}

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-: o-R-EB:-

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The^present Securitization^{Application is filed by the Applicant} u/s.L7 ot the Securitisation^{and Reconstruction} rot^{FinancialAssets} ow*

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Page 2 of9

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sa No. 32412023

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and Enforcement of Security Interest Act, 2002^("Act" hereinafter^for short) to set aside all the measures initiated by the^{1st respondent} under the Act and to^quash the registered sale certificate^dated 12.06.2023, bearing document no. 3201/2023 in favour of^2nd respondent in respect of the SA Schedule Property.

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The averments of the application, briefly, are that Applicants, having availed a housing loan of Rs. L8,75,000/- from the 1st Respondent on 23.09.2019 by mortgaging the schedule^property, contend that they regularly serviced the loan even during the COVID19 pandemic, but the 1st Respondent illegally classifled the account as a NPA without issuing or serving the mandatory statutory notices or disclosing the outstanding dues despite repeated requests. They further submit that while they were in^possession of the^property and had developed the same by obtalning electricity connection and other amenities, third-party interference led them to institute O.S. No. 1010 of 2021 before the Principal Senior Civil ludge, Tirupati, wherein an interim injunction was^granted. According to the Applicants, they subsequently discovered through an Encumbrance Certificate that the 1't Respondent had sold the secured asset to the 2nd Respondent under a registered Sale Certificate dated 12.06.2023 without their knowledge. Challenging the SARFAESI proceedings, the Applicants contend that no demand notice under Section 13(2),^possession notice under Section 13(4), or sale notice under Rules 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002 (hereinafter "Rules" for short) were served or^published in accordance with law; that the^property was^grossly undervalued and sold without proper valuation, indicating collusion between the respondentsXnd that the

/)Y<.'l:\ z -l$,"

Page 3 of9

SA No. 32412023

account was never validly classified as^{NPA, Relying upon the} decisions in Mathew Varghese v. M.^{Amritha Kumar,K.T'} lJnnikrishnan v. UCO Bank, Ram Kishun v. State of U'P.,^{and the} judgment in w,P, No. 8362 ot 2018, the Applicants seek to set aside the sale certificate and all consequential^{SARFAESImeasures as being} illegal and contrary to the^provisions of the^{SARFAESIAct and the} Rules made thereunder.

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The 1"t Respondent filed its^{reply statement along wlth} documents, which was adopted by^{RespondentNo.2. The averments} thereof, briefly, are that the Applicant^had availed a^loanin September 2019 by mortgaging^{the scheduleproperty but committed} persistent defaults in repayment. Consequently, the loan account^was classified as a NPA on 02.06.2022, and a demand^noticedated 07.06.2022 under Section 13(2) of the Act^{was issued for Rs.} 1A,73,777/-. As the Applicant neither^{discharged the liabllity nor} raised any objections under Section 13(3A), the^Respondent proceeded to issue a pre-possession intimation, followed by^a possession notice dated f7.09.2022 under Section 13(4), which^was duly served and^published in accordance^{withlaw. Thereafter, a sale} notice dated 07.70.2022 and an e-auction^{sale notice underRules I} and 9(1) of the Rules, 2OO2 were issued and^{published, fixing the} auction on 03.03.2023. Respondent^{No.2 emergedas thesuccessful} auction^purchaser for a sale^{considerationof Rs. 22,81,560/-, and} after adjustment of the outstanding^{dues, the surplus amountwas} refunded to the Applicant. The^{Respondentsdeny all allegations of} procedural irregularity and contend that every measure under^the SARFAESI Act and the^{Rules was undertakenin strictcompliancewith} the statutory^{provisions.Placing relianceupon Section 13(8) of the} SARFAESI Act and the decision of the^{Hon'ble SupreFg Court in Cellr}

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PaSe 4 of9

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SANo.?2412023

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LLP v. Bafna Motors^(Mumbai) Pvt. Ltd,, it is^contended that^the Applicant's right of redemption stood extinguished upon^{publication of} the auction notice, rendering the^{present SecuritisationApplication} devoid of merit. Accordingly, the^{Respondent prays for dismissalof} the sA.

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Heard learned counsel for the applicants and^{learned counsel} for the 1st respondent. The right of^{2nd respondentto advanceoral} arguments was forfeited vide^docket order dated^{70.07.2026, aflet} affdrding ample opportunities.^{Perusedthe written argumentsfiled by} the applicant and 1"t^respondent and also^{perused the material} brought on record.

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Learned counsel for the applicants contended that the^1't Respondent failed to adhere to the^{mandatoryprocedureprescribed} under the SARFAESI Act and the^Rules, 2002. It is^{allegedthat the} possession notice bears a date preceding the demand notice, rendering the^proceedings contrary to the statutory^scheme.The applicants further submit that the^possession notice^is dated^{prior to} the demand notice, that the Respondent failed to establish^due service of the^possession notice under Rule 8(1) or the sale notice under Rule 8(6) by^producing the requisite^{postal receipts} or^other proof of service. They also challenge the auction proceedings on the ground that the sale notice was neither duly served nor^published and affixed as mandated under the Rules and that the mandatory 30-day period contemplated under Rule 9(1) between the sale notice and the auction was not maintained. It is further contended that Respondent No.2 participated in an auction conducted in violation of the statutory requirements and failed to remit the earnest mone)A$leposit and sale //,M\rr ',/

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Page 5 ofg

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SA No. 324/2023

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consideration within the^{periodprescribedin the sale notice and as} per the Rules, while no material has been^placed on record^to establish valid acceptance of the^{service of statutorynoticesand} delayed payment. on these^{grounds, the learned counsel for the} applicants contends that the^{illegalauction sale vitlated the entire} sale^proceedings including sale certificate.^{Accordinglylearned} counsel sought to allow the SA by^{setting aside all the measures} including the auctlon sale and^{consequential steps.}

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Learned counsel for the^{1st Respondent,deniedthe averments} made by the Applicant, and^{placed relianceon the documentsplaced} on record with the reply statement^{and IA No.2853/2025.He} asserted that the demand notice dated^{07.06.2022with all requisite} details was served vide^{postalreceiptsand track reports placedon} record. Since no^payment was^{made, possessionnoticeunder} Sec.13(4) of the Act was^{issuedon 75.09.2022,sent the same by} registered^post to the^{Applicants and published in Englishand Telugu} newspapers on 17.09.2022^{besidesaffixture on the property.The} Respondent complied with^{Sections 13(2) and 13(4) of the Act, 2002} and Rule 8(1) and 8(2). A^{notice of 30 days was issuedon} 07.70.2022. Valuation report^{was obtained on 26.11.2022. Learned} counsel further submitted that^{the sale notice was publishedon} 02.02.2023 fixing auction on^{03.03.2023.The 2nd respondentwas} declared as successful^{bidder in the auction and a sale certificate was} issued on 27.03.2023 after^{receivingentirepurchase price According} to learned counsel, the^{1't respondent has followed the Rules8(5),} 8(6) & 9( 1) and accordingly^{he soughtfor dismissal of the SA'}

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

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Page 5 of9

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SA No. 32412023

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i) Whether the applicants made out any valid ground to quash the measures initiated by the l't respondent against the SA schedule property including the auction sale conducted on 03.03.2023 and consequential sale ceftificate. as^prayed for?

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ii) To what relieQ

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Point No.(i):

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Admittedly the applicants availed loan of Rs.18.75 lakhs from the 1st Respondent against mortgage of the SA schedule property vide sanction letter dated 23.09.20L9. Although applicants stated that they were regularly servicing the loan, the statement of account placed on record reflects multiple entries pertaining to cheque bouncing. Hence, the action of the 1st respondent in classifying the account as NPA and initiating Securitization measures cannot be faulted.

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The contentions of the Applicants include that the possession notice is pre-dated to that of demand notice and the notices have not been served on them. The 1"t Respondent filed material documents along with its reply statement and I.A. No.2853 of 2025 as proof of compliance of due procedure. Pages 1 to 15 of the material papers annexed to I.A. No.2853/2025 comprise photocopies of postal receipts and tracking reports evidencing service of the demand notice. Pages 76 lo 22 contain photographs evidencing affixture of the possession notice on the secured asset and publication thereof in English and Telugu (vernacular) newspapers on 17.O9.2022. However, upon scrutiny of the record, this Tribunal finds that the 1st Respondent has failed to produce the postal recgiqE or any proof of (,ff6.,*

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Page 7 of9

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SA No' 32412023

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dispatch of the^possession notice to^{establish compliancewith Rule} 8(1) of the Rules. 2002. It is^{also evidentfrom the record that the} possession notice is dated 15.09.2020, although 1"t^respondent claims to have issued the same on 15.09.2022^{whereas,the demand} notice is dated 07.06.2022. So, there is a^{mistake apparent on the} face of record. In the above circumstances, the^{possession notice is} liable to be set aside for non-compliance^{of Rule8(1).}

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The other contention of the Applicants^is that^{no separatesale} notice has been issued and no 3O days^{gap was maintainedfrom the} date of^publication to the date of^{auction sale. The 1"t respondent} produced a sale notice dated 07.10.2022 which does not comprlse the^proposed date of auction, dues to^{be clearedetc. It is not averred} anywhere by the 1st respondent that^{it issued the auction sale notice} with all such details before^publication. In fact,^{1"t respondent admits} vide^para 6 of the reply statement that^{pre-sale noticewas issued to} the borrower and the same was^{publishedin 2 leading newspapers.} However, record confirms that the auction^{sale notice whichwas} published and the pre-sale notice are not one and the same.^{The pre-} sale notice was issued on 07.10.2022 even^{prior to obtaining} valuation report on 26,fi.2022. The^{1't respondent ought to have} lssued auction sale notice after obtaining^{valuationreport for the} purpose of arriving to the reserve^price, and with a^{proposed date of} auction. In the absence of^{mandatorydetails, the pre-sale notice} cannot be treated as the exact auction^{sale notice pertainingto} auction conducted on 03.03.2023.^{The procequreadopted by the 1't} Respondent is highly irregular ,,-/,, fp6+t

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PaBe 8 of9

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sA No. 324/2023

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As regards contention of not maintaining the mandatory 30days^gap, it is evident from the newspaper^publication that the sale notice was published on 02.02.2023 in English newspaper and in Telugu (vernacular language) on 03.03.2023. Record does not speak that the impugned auction sale was a subsequent one hence it is to be treated that the^proposed auction was on the first occasion. Hence the mandatory minimum notice^period of 30 clear days contemplated under Rule 9(1) was required to be maintained from the date of publication. Even if counting from 02.02.2023, the requisite 30 days gap is not maintained between the date of publication and the date of auction sale. Thus. there is a clear violation of Rule 9(1).

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The applicants have also specifically contended that the auction purchaser failed to deposit EMD before the date of auction, and the bid amount within timelines^prescribed under the Rules, 2002. As reflected in Schedule-Il of the sale certificate dated 21.03.2023 issued by the 1't respondent in favour of 2nd respondent, EMD was deposited on 06.03.2023 i.e., much after the date of auction on 03.03.2023. It is a blatant error committed by the Authorized Officer in accepting the EMD against the terms of auction sale notice. Similarly, 25olo of the bid amount was deposited on 06.03.2023 which ought to have been deposited on the date of auction or maximum the next working day as per Rule 9(3). Despite the specific contentions raised by the Applicants, the respondents failed to ofFer any explanation.

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In view of the above discussion, it is concluded that the 1st Respondent failed to comply with Rule 8(1),8(5),8(6) and 9(1) and the 2nd Respondent failed to comply with the terms of auction in Ow"

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Page 9 of 9

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sA No.32412023

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depositing EMD and Rules 9(3) and 9(4) of the Rules,^2002. Accordingly, the Securitisation Application deserves to be allowed by setting aside the^possession notice dated 15.09.2020/15.09.2022, entire sale proceedings dated 03.03.2023^pursuant to auction sale notice dated 02.02.2023, and the sale certificate dated 21. 03.2023 / L2.06.2023 bea ri n g Docu ment No.32O U 2023. App^{I ica nts} shall also be entitled for repossession of the schedule^property.

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Point No.(ii):

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t4. In the result, the Securitisation Application is allowed by^setting aside the^possession notice dated 15.09.2020/L5.O9.2022,^{entire sale} proceedings dated 03.03.2023 pursuant to auction sale notice dated 02.02.2023, and the sale certificate dated^{2L.03.20231L2.06.2023} bearing Document No.3201/2023.

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Consequently, 1't Respondent is directed to^{refund the bid} amount with accrued interest, if any,^{from the respective dates of} deposits till the date of final^payment.

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16, The 1't Respondent is directed to^{take back the possessionof} the SA Schedule Property and hand^{over to the Applicants.}

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L7. Consequently, Interlocutory^{Applications pending,if any, shall} stand closed. No order as to^{costs. Communicate a copy of this order} to the^parties concerned and upload^{in the officialwebsite.}

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(Typed to my dictotion by the iteno., corrected, signed ond^{pronouncedby me in the opencouft on this} the 28th doy of Juty,2026).

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B-r.:l:r

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ESHWAR KOTHE) PRESIDING OFFICER

Bandi Subramanyam And Another v. Icici Home Finance Co.Ltd

Case brief

What is this about?

What did the court decide?

Bandi Subramanyam And Another v. Icici Home Finance Co.Ltd

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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