Allowed

Ms Asher Constructions Rep by its Prop Solomon Adriel Sunder Raj v. Canara Bank

DRT3 Aug 2026SA/325/2025

Case brief

AI extract

What is this about?

An applicant challenged a possession notice under the SARFAESI Act for failure to prove mandatory service. The Tribunal held the bank failed to establish service of the demand and possession notices due to lack of documentary proofs like postal receipts. The notices and proceedings were set aside.

What did the court decide?

The Demand Notice dated 27.03.2025 and the Possession Notice dated 03.07.2025 and consequential proceedings were set aside.

Ms Asher Constructions Rep by its Prop Solomon… — 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 3RD 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. 325^{OF 2025}

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M/s Asher Constructions, Rep. by its Prop. Mr. Solomon^{Adriel SunderRaj,} S/o Solomon Oliver^{(Late), R/o 1L-904,} Aravind Nagar, AnanthaPuramu, 1st Cross, AnanthaPur^District, Andhra Pradesh^- 515001.

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2, Smt. Rita C Solomon, W/o Oliver Solomon^(Late), Aged about 73 Years,^{Gender: Female,} Occ: House Wife,^{R/q: H.no.1l-904,} Aravind Nagar,^{AnanthaPuramu,} 1st Cross, AnanthaPur^District, Andhra Pradesh^- 515001

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.....Applicants

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Versus

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Canara Bank, Rep. by it's authorized^officer, AnanthaPur Branch^{- RO,} Situated at Srinivasa^Nagar, Ananthapur District, Andhra Pradesh^{- 515 001}

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.....Responcient

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Counsel for the^APPlicants Counsel for^ResPondent

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: M/s, Raghavulu^Devalla : Sri. P. Sai Chandrasekhar

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-:ORDER:-

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The^{present securitizationApplication is filed by the Applicants} uls.77 of the^{Securitisationand Reconstructionof FinancialAssets} and Enforcement^{of Security Interet orr,} for (y,rffiffi'Jrereinafter

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Page 2 of 5

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SA No. 3251202s

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short) to set aside all the measures initiated by the respondent bank under the Act including the possession notice dated 03.07.2025 against the SA Schedule Properties.

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The averments of the application, in brief, are that Applicant No.1 is engaged in the business of construction and had been availing various credit facilities from the respondent bank since 20L5, which were secured by mortgage of the schedule properties. The applicants contend that they had been regularly servicing the loan accounts, but owing to financial difficulties arising from business losses and the serious illness of the wife of Applicant No.1, the accounts slipped into default. It is alleged that despite requests for regularisation, the respondent bank illegally classified the loan accounts as NpA in violation of the RBI guidelines and initiated measures under the SARFAESI Act. The applicants further contend that neither the demand notice under Section 13(2) of the SARFAESI Act nor the impugned Possession Notice dated 03.07.202s was served upon them and that the respondent bank failed to comply with the mandatory requirements relating to service, affixture and publication of the possession notice under the provisions of the section 13(4) of the Act read with Rule B(1) & B(2) of the security Interest (Enforcement) Rules, 2002 (hereinafter "Rules" for short). It is further alleged that the respondent bank failed to give due credit to the substantial amounts deposited by the applicants towards the loan accounts and that the value of the secured assets is far in excess of the outstanding dues. on these grounds, the Applicants seeks setting aside of the SARFAESI measures initiated against the S.A. Schedule Property.

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The Respondent Bank filed its reply statement along with supporting documents. The averments thereof, in brief, are that lffivtrb

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Page 3 of 5

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SA No.32sl202s

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applicants had availed various credit facilities and committed default in repayment of the outstanding dues, resulting in the loan account being classified as a NPA on 25.O3.2025. Consequently, a Demand Notice dated 27.O3.2025 under Section 13(2) of the Act was issued, which was duly served upon the applicants through registered post. The respondent further contends that upon failure of the applicants to discharge the liability, a Possession Notice dated 03.07.2025 under Section 13( ) of the Act was issued, duly served upon the applicants, affixed on the secured asset, and published in two newspapers in compliance with the provisions of the Act and the Rules, 2002. It is further contended that the present SA is devoid of merits, has been filed only to protract and obstruct the recovery proceedings, and is liable to be dismissed with costs.

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Heard both learned counsel for the applicants and learned counsel for the respondent. Perused the written arguments filed by the respondent and also^perused the material brought on record.

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During the course of arguments, learned counsel for the applicants reiterated the averments made in the Securitisation Application and contended that the respondent bank failed to serve the Demand Notice under Section 13(2) and the Possession Notice under Section 13(4) of the SARFAESI Act. It was further contended that the respondent bank failed to comply with the mandatory requirements of Rule B(1) and Rule B(2) of the Rules,2002, inasmuch as the^possession notice was neither affixed on the secured asset nor published in two leading newspapers as^prescribed. It was, therefore, submitted that the measures initiated by the respondent bank are vitiated for non-compliance with the mandatory^provisions of the Act and the Rules framed thereunder, aD4 consequently liable to be set aside. ffi*tX

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SA No.325l202s

Learned counsel for the Respondent^{Bank deniedthe averments} of the applicants and^{places relianceupon the materialpapers} annexed with the reply statement.^{It is submittedthat the Applicant's} account was classified as^{NPA in accordancewith RBI guidelinesand} that the Respondent Bank^{had strictly followedthe due procedure} prescribed under the SARFAESI Act,^{2002 and the Rules framed} thereunder. The learned^{counsel further submitsthat this Tribunal,} while granting interim^{protection,had directedthe applicantsto} deposit specified amounts^{as a condition precedent, with a stipulation} that failure to comply would^{result in automatic vacation of the} interim order. Though the applicants^{made partialcompliancewith} the conditional order, it is contended^{that no further paymentshave} been made thereafter and^{substantialdues continue to remain} outstanding. Accordingly,^{sought for dismissalof the S.A.}

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

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i) Whether the Applicant^{made out any valid groundto} quashing of the possession notice dated 03.07.2025^under section 13(4) of the Act in^{respect of the sA schedule} ProPertY?

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ii) To what relief?

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Point No.(i):

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B. The respondent bank^{has placed certaindocumentson record} along with its reply statement^{in supportof its plea that it has} complied with the due^{procedure prescribed under the SARFAESIAct} and the Rules, 2002. However,^{upon perusalof the material available} on record, it is observed that the^{respondent has failed to produce} any cogent evidence, such aS^{postal receipts, acknowledgements,} tracking reports or any other documentary ffi$^{proof, to establish due}

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Page 5 of 5

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SA No.32sl2025

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service of the Demand Notice dated 27.03.2025^{issuedunderSection} 13(2) of the SARFAESI Act and the^{Possession Noticedated} 03.07.2025 issued under Section¹³⁽⁴⁾ of^{the Act. In the absence of} any such material, this Tribunal is^constrained to^{hold that the} respondent has failed to establish compliance with the^mandatory requirements prescribed under Rule 3 and Rule B(1) of the^Rules, 2002, Consequently, the Demand Notice dated^{27.03.2025 and the} Possession Notice dated 03.07.2025 are^liable to be set^{aside, and} the^present SA deserves to be allowed.

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Point No.(ii):

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In the result, the Securitisation Application is allowed by^setting aside the demand notice dated 27.03.2025 under^{section13(2) of the} Act and possession notice dated 03.07.2025 under^{section13(4) of} the Act, 2002 and consequential^{proceedings,if any.}

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