Dismissed

Ms Sri Kanaka Durga Timber Depot v. Uco Bank

DRT24 Aug 2026SA/349/2023

Case brief

AI extract

What is this about?

In a securitization application challenging enforcement measures under the SARFAESI Act, including a sale notice and auction, the presiding officer held that the auction scheduled for August 25, 2023, was infructuous due to lack of bidders, rendering the application liable to be dismissed to that extent.

What did the court decide?

The Securitisation Application was dismissed and Interlocutory Applications pending stood closed.

Ms Sri Kanaka Durga Timber Depot versus Uco Bank — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL^_ II AT HYDEMBAD

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DATED THIS THE 24TH 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 Apptication No. 349 OF 2023

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M/s. Sri Kanaka Durga Timber Sales, Rep. by its Proprietor Mr. Cherlapally Sridhar, S/o Ch. Keshavulu, Aged about 45^years, Plot No. 13, Sri Lakshmi Nagar Colony, Mansoorabad, LB Nagar, Ranga Reddy-500068.

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Smt. Sirandas Dhanalakshmi @ Kavitha, W/o Late Sirandas Venkateswarlu,

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Aged about 55 years, Occ: Housewife, Flat No. 106, Survey No.279, Sai Nagar Colony, Bagh Hayathnagar Village, Ranga Reddy-500070

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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 2002.

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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 .....Respondents

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Counsel for the Applicants : M/s. Amancharta^{V. Gopala Rao} Counsel for Respondent No,1 : Smt.^{K, Nandini} Counsel for Respondent No.2 : Not^pressed

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-:ORDER:-

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The present Securitization Application is filed by the^Applicant uls.L7 of the Securitisation and Reconstruction of^{FinancialAssets} and Enforcement of Securrrt tn "r* ("Act" hereinafter for

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Page 2 of 5

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sA No' 34912023

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short) to set aside all the^{measuresinitiated by the respondent under} iection 13(2) and 13(4)^{of the Act, including the sale notice dated} 18:O7.2023 fixing the^{auctionon 25.08.2023 in respect of the SA} Schedule Property.

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2, The averments of 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} blank documents, improperly^{adjusted the COVID-reliefamount,} failed to take into account^{of guarantee under MUDRAloan and} illegally classified the account^{as NPA on 31.03.2021. The Applicants} challenge the Demand^{Notice dated 24.09.2021 issued underSection} t3(Z), the^{possessionNotice dated t4.02.2022issued under Section} 13(4), and the E-auction Sale^{Notice dated 18.07.2023fixing 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, 2002 (hereinafter "Rules"} for short). They further contend^{that no proper valuation was} obtained in accordance^{with Rule B(5), the reserveprice was} arbitrarily fixed, requisite^{particularsof the property werenot} disclosed, and the secured^{asset was not registeredwith CERSAI as} required under Section 26 of^{the SARFAESI Act. The Applicantsalso} dispute the^{quantum claimedby the Bank and contendthat} substantial^{payments were made towardsthe liabitity.Accordingly,} applicants^pray for^{quashing of the measures initiatedby respondent} against the schedule ProPe ,rr"tffirSo\

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Page3of6 'ii',: ,:'''

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SA No. 34912023

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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 1't 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 3L.03.202t 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 t4.02.2022 under Rule B(1) and B(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 l7(t) of the SARFAESI Act, having been fiied on 21.08.2023, i.€., 508 days after issuance of the PossessionlNoti." dated L4.02.2022. It is further submitted that, pursuant to the conditional order dated 22.08.2023 directing deposit of Rs.20,76 ,OOO/- 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.Og.ZOi':) anO thereafter a fresh E-auction Sale Notice dated 18.10.2023 waf issued for recovery of the outstanding dues. The Bank

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^f&'t,x'a,esations

Page 4 of 5

sA No. 34912023

regarding non-registration of the^{securityinterest with CERSAI and} improper description of the^{securedpropertyand asserts that all} 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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5: Learned Counsel for the Respondent^{Bank denied the} averments of the Applicants^{and submitted that the e-auction} scheduled on 25.08.2023 could^not be^{conducted for want of bidders} and, therefore, the SA has^{become infructuous to that extent.} Learned Counsel further relied^{upon 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 Appticants made out^{any valid ground to quash} any of the measures initiated^{by the respondentagainst} the SA schedule^{propertyas prayed for?}

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ii) To what relief?

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Point No.(i):

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During the course of^proceedings it^was reported that the auction scheduled on 25.08.2023^pursuantto sale notice dated w6t

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Page 5 of6

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SA No. 34912023

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18.07.2023 was not successful due to want of bidders. Under such circumstances, the contention of non-compliance of Rule B(5), 8(6) B(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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B. 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 secur€d credit facilities. Accordingly, this contention does not constitute a valid ground to interfere with the measures taken by the Respondeht 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 doci.rments annexed with the reply statement. Pages 18 to 21 of the material paper annexed to the reply statement are the Photostat .opi s postal receipts, track reports and publication of the same in Engtish and Telugu (vernacular language) newspapers proving service of demand notice. Simitarly, Pages 22 to 27 arele Photoptat copies of

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Page 6 of 5

SA No. ?4912023

possession notice dated L4.02.2022 being served via registered post, photographs as proof of affixture on secured assets and publication of the same in English and Telugu (vernacular language) newspapers on 19.02.2022. In view of sufficient proof place on record, I find no infraction of section 13(2) & 13(4) of the Act and Rules 3, B(1) & 8(2) of the^'Rules, 2002. As a secured creditor the respondent bank initiated the SARFESI proceedings, which cannot be categorized as illegal:or arbitrary.

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In view of above observation, it is concluded that the Applicants railed to establish any ground to interdict the measures initiated Respondent Bank under the Act read with Rules, 2OO2 against the SA schedule property and accordingly the SA is liable to be dismissed.

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Point, Nq.(ii):

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11.'^,In the result, the Securitisation Application fails and is hereby disrnissed.

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Consequently, Interlocutory Applications pending, if any, shall stand closed.

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No order as to costs.

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L4. Communicate a copy of this order to the parties concerned and upload in the official website.

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I t:i i ,'): i l.

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(typed:to my dictotion by the steno, corrected, signed ond pronounced by me in the open court on this the 24'h doy of August,2026).

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H6>oL ESHWAR KOTHE) PRESIDING OFFICER

Ms Sri Kanaka Durga Timber Depot v. Uco Bank

Case brief

What is this about?

What did the court decide?

Ms Sri Kanaka Durga Timber Depot v. Uco Bank

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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