Dismissed

Ms Sri Kanaka Durga Traders v. Uco Bank

DRT24 Aug 2026SA/347/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal dismissed a securitization application challenging auction measures under the SARFAESI Act, holding that applicants failed to prove lack of service or compliance with statutory notices.

What did the court decide?

Securitization Application dismissed; interlocutory applications pending, if any, closed.

What the court decided

Ms Sri Kanaka Durga Traders versus Uco Bank — Insolvency and Bankruptcy | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL - II AT HYDERABAD

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DATED THIS THE 24IH 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. 347 OF 2023

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M/s. Sri Kanaka Durga Timber Sales, Rep. by its Proprietor Mr. Cherlapally Sridhar, !1o^{Cn. Keshavulu, Aged about 45 years,} Plot No. 13, Sri Lakshmi Nagar Colony, Mansoorabad, LB Nagar, Ranga Reddy_50006g.

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Smt. Amrutham Rukmender S/o Laxminarayana, Aged about 40 years, Occ: Private Employee, R/o H. No. 5-6-398, Botluguda,

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Opp. Sarojini Eye Hospitat, Nalgonda-508001

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............Applicants

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Versus

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The UCO Bank Ltd., Bandlaguda Branch, GSI Complex, Bandlaguda, Nagole, Hyderabad, rep. by its Authorized Officer Under Act No. 54 of 2O02.

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The Micro Units Development & Refinance Agency Ltd (MUDRA Ltd), MSME Development Center, C-11, G-Block, Bandra Kurla Complex, Bandra E, Mumbai - 400051

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.....Respondents

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Counsel for the Applicants : M/s. Amancharla V. Gopala Rao Counsel for Respondent No.j : Smt. K. Nandini Counsel for Respondent No.2 : No pressed

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-:ORDER:-

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The present Securitization Application is filed by the Applicant

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u/s.17 of the Securitisiation and YN,W&|^" Financial Assets

Page 2 of⁶

sA No.^t4712023

I I I

and Enforcement^{of SecurityInterestAct, 2ooz ("Act" hereinafter for} short) to^{set aside atl the measuresinitiated by the respondent under} sectionl3(2)and13(4)oftheAct,includingthesalenoticedated lB.oT.2023fixingtheauctionon25,o}.2o23inrespectoftheSA Schedule^ProPerties.

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The^{avermentsof the Application, in brief, are that Applicant} No.1 availed^{credit facility which was intendedto be collateral-free'} but the^{Respondent Bank improperly obtained the residential property} of Applicant^{Nos.2 and 3 as security and thereaftersought to enforce} the same.^{They further allege that the Bank obtained signatureson} blankdocuments,improperlyadjustedtheCoVlD-retiefamount, failedtotakeintoaccountofguaranteeunderMUDRAloanand illegally^{classified the account as NPA on 27 '06'2020'The Appticants} challenge^{the Demand Noticedated 20'02'2021issued undersection} 13(2), the^{Possession Notice dated 24.08.2021 issued under Section} 13(4), and^{the E-auctionSale Notice dated 18.07 .2023 fixing the} auction on^{25.08 .2023, alleging incorrect description of the secured} properties, non-service^{and non-publication of statutorynotices'} failure to^{affix the notices, and non-compliance with Rules 8 and 9 of} the Security^{Interest(Enforcement) Rules, 2oo2 (hereinafter ..Rules,,} forshort).TheyfurthercontendthatnopropervaluationWas obtainedinaccordancewithRuleS(5),thereservepriceWaS arbitrarily^{fixed, requisite particulars of the property werenot} disclosed,^{and the secured asset was not registeredwith GERSAI as} required^{under section 26 of the SARFAESI Act. The Applicantsalso} disputethequantumclaimedbytheBankandcontendthat substantial^{payments were made towards the liability'Accordingly'} applicants^{pray for quashing of the measures initiatedby respondent} asainst^{the scheduleproperties'} (|W-r$$

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Page 3 of6

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sA No.3422023

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The Respondent Bank filed its reply and additional reply statements along with supporting documents. The averments thereof, in brief, are that the 1st Applicant had availed various credit facilities from time to time, including a Term Loan of Rs.10 Lakhs and Cash Credit facility initially sanctioned at Rs.30 Lakhs and subsequently enhanced to Rs.55 Lakhs, besides COVID-related facilities, all secured by the requisite guarantees and mortgages created by the Applicant Nos.2 and 3. It is contended that, despite the financial assistance and COVID-relief facilities extended by the Bank, the Cash Credit account remained irregular and was classified as NPA on 31.03.2021 in accordance with the applicable RBI norms. Thereafter, the Bank issued the Demand Notice dated 24.09.202L under Section 13(2) of the SARFAESI Act and the Possession Notice dated 14.02.2022 under Rule 8(1) and 8(2) of the Rules, which, according to the Bank, were duly served and published in the requisite newspapers. The Bank further states that, upon continued default, the E-auction Sale Notice dated 18.07.2023 was issued fixing the auction on 25.08.2023, after obtaining valuation reports from panel valuers, and denies any allegation of arbitrary fixation of the reserve price. As a preliminary objection, the Bank contends that the S.A, is barred by limitation under Section 17(1) of the SARFAESI Act, having been filed on 21.08.2023, i.e., 508 days after issuance of the Possession Notice dated 14.02.2022. lt is further submitted that, pursuant to the conditional order dated 22.08.2023 directing deposit of Rs.20,76,000,/- in three instalments, the Applicants deposited only the first instalment and defaulted in payment of the remaining two instalments. The Bank also points out that the Applicants had challenged the NPA classification before the Hon'ble High Court in W.P. No.26423 of 2023, which was dismissed on 23.09.2023, and thereafter a fresh E-auction Sale Notice dated 18.10.2023 was issiiird for recovery of the outstanding dues. The Bank denies the alleg'itioiis dw*

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Page 4 of 6

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sA No. 34712023

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regarding non-registration of^{the securityinterest with CERSAI and} improper description of the^{secured propertyand asserts thatall} statutory requirements^{were duly compliedwith. Accordingly,the} Respondent^prays for dismissal^{of the SA'}

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Learned counsel for the^{applicants reportedthat orders may be} passed based on records. Heard^{learned counsel for the respondent'} Perused the material brought^{on record.}

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Learned Counsel for^{the RespondentBank denied the} averments of the Applicants^{and submitted that the e-auction} scheduled on 25.08.2023^{could not be conducted for wantof bidders} and, therefore, the SA^{has become infructuous to that extent'} Learned counsel further^{reliedupon the documentsfiled along with} the reply statement and^{submitted that the Respondenthas duly} complied with the^{provisions of the SARFAESI Act and the Rules} framed thereunder. Accordingly,^{Learned Counsel prayed for} dismissal of the SA.

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

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i) Whether Applicants^{made out any validground to quash} any of the measures^{initiatedby the respondentagainst} the SA schedule^{propertyas prayed for?}

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ii) To what relief?

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Point No.(i)l

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During the course of^{proceedings it was reportedthat the} auction scheduled on^{25.08.2023 pursuant to sale notice dated} 18.07.2023 was not^{successful due to want of} Qidders'^Undersuch /W-.^

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Page 5 of 6

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SA No.3472023

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circumstances, the contention of non-compliance of Rule 8(5), 8(6) 8(7) & 9(1) of the Rules pertaining to the impugned auction need no consideration and SA has become infructuous to that extent.

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It is the applicants' contention that the credit facility was covered under the MUDRA/credit guarantee scheme and, therefore, the Respondent Bank ought to have invoked the guarantee instead of proceeding against the secured assets, However, the Applicants have not placed on record any material to establish that the said guarantee cover, stated to be available up to Rs.10 Lakhs, discharged their liability in respect of the other credit facilities availed by them or operated as a bar against enforcement of the secured assets. As is evident from the record, the Applicant No.1 had availed various credit facilities from the Respondent Bank, which were secured by the securities created in respect of the SA Schedule Properties. Mere availability of MUDRA/credit guarantee cover in respect of one facility cannot, by itself, preclude the Respondent Bank from enforcing the secured assets for recovery of the amounts due under the secured credit facilities. Accordingly, this contention does not constitute a valid ground to interfere with the measures taken by the Respondent Bank under the SARFAESI Act.

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The other contentions of the Applicants are non-compliance of section 13(2) & 13(4) of the Act read with Rules 3, B(1) & B(2) of the Rules, 2002. The Respondent Bank relied on copies of documents annexed with the reply statement. Pages 16 to 18 of the material paper annexed to the reply statement are the Photostat coiies oi postal receipts proving service of demand notice. Similarly, Pages 19 to 22 are the Photostat copies of possession notice dated 24.0i8.2021 being served via registered post, photographs as proof of affixture on

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Page 5 of 6

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SA No' 34712023

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(vernacular language)^{newspapers on 28.08.202t. In view of} sufficient^{proof place on record, I find no infractionof section13(2) &} 13(4) of the Act and^{Rules3, B(1) & 8(2) of the Rules, 2002- As a} secured creditor the^{respondentbank initiated the SARFESI} proceedings, which cannot^{be categorized as illegal or arbitrary'}

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In view of^{aboveobservation,it is concludedthat the Applicants} failed to establish^{any ground to interdict the measuresinitiated} Respondent Bank^{under the Act read with Rules,2002 against the SA} schedule^{property and accordinglythe 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^{Applicationfails and is hereby} dismissed.

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t2. ConsequentlY, Interlocutory Applications^{pending, if any, shall} stand closed.

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No order as^{to costs.}

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t4. Communicate^{a copy of this orderto the partiesconcernedand} upload in the official^website.

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(Typed to my dictotion by the^{steno,corrected, signedond pronouncedbyme in the open court on this} the24th doyof August,2026).

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M 1nk(rsHWAR^KorHE) PRESIDING^OFFICER

Ms Sri Kanaka Durga Traders v. Uco Bank

Case brief

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What the court decided

Ms Sri Kanaka Durga Traders v. Uco Bank

Case brief

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