Dismissed

Vinayaka Cold Storage v. Karnataka Bank Limited

DRT27 Jul 2026SA/366/2025

Case brief

AI extract

What is this about?

In a Securitization Application under the SARFAESI Act, the court examined objections raised by borrowers against the bank's demand and possession notices. Finding sufficient proof of service, affixture, and newspaper publication, the court held that the bank strictly followed the statutory procedure. Consequently, the application was dismissed.

What did the court decide?

The Securitization Application seeking to set aside the demand notice and possession notice was dismissed.

Vinayaka Cold Storage versus Karnataka Bank Limited — Company and Corporate | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL^_ 1I AT HYDERABAD

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DATED THIS THE 27TH DAY OF JULY, 2026

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PRESENT: SH. RAI4ESHWAR KOTHE, B.Com, L.LB.^(HONS.), NI.A, PRESIDING OFFICER

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Securitization Application No. 366 OF 2025

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Vinayaka Cold Storage Gand hi Park Center Vatsavai Pentalavari Gudem, NTR District Andhra Pradesh-521402 Rep by its Partner:

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Gongal Reddy Bhaghya Lakshmi

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Gongal Reddy Bhaghya Lakshmi W/o. congal Reddy Raghunatha Reddy

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congal Reddy Raghunatha Reddy S/o. Srl La ksh mi Reddy

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(The Applicants are residing at 1/26, Alankhan Palli, Cudda^pa h, Andhra Pradesh)

..........Applicants

Versus

Karnataka Bank Ltd

Asset Recovery Management Branch 1st Floor, Plot No. 50, Srinagar Colony Road No.3, Banjarahills, Hydera bad-500073 Rep by its Authorized Officer

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.....Respondent

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Counsel for the Applicant : Mr. B. Srinivasa Reddy Counsel for Respondents : Mr. N. Rama^Rao

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-: O-B-D-E-B r-

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The^present Securitization Application is filed by the^Applicants u/s.17 of the Securltisation and Reconstruction of^{FinancialAssets} and Enforcement of Security Interest Act, 2002 C'Act"^hereinafter for short) to set aside all the measures initiated by lespondent^bank frffn-u

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Page 2 of⁵

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sA No. 365/2025

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the Act, including^the Possession under Sections^{13(2) & 13(a) of} notice dated^{23.06.2025in respect} of the SA Schedule^Properties.

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The averments of^{the apPlication,in brief,are that applicants} had availed credit^{facilities from the respondent bank' which were} sanctioned to^{the extent of Rs. 1,83,OO,OOO/-in the Year 2022 and} subsequently^{enhanced toRs.34,50,OOO/-, aftetexecutingthe} requisite loan^{documents,howeverthe bank officials obtained their} signatures on^{certain blank printed documents' Although they were} regular in repayment^{but the respondentbank issued a demand} notice dated 7!.02.2025^{under section13(2) of the SARFAESI Act} demanding^{Rs. 2,76,19,344/- by classifyingthe account as NPA'} which they disputed^{through obiectionsdated 05 04 2025The} respondent failed^{to properlyconsiderthe objectionsand issueda} reply dated 27.04.2025^{without furnishing the requested documents'} which is not only^{in violationof Section 13(3A)of the Act butalso} against the^{judgment of Hon'bleApex Courtin Mardia Chemicals Ltd'} v. union of India.^{The applicants further contend that thepossession} notice dated^{23.06.2025issuedunder Sectlon13(4) of the Act for an} amount of^{Rs- 2,25,94,733.97l-is illegal and contrary to the} SARFAESI^{Act and Rules, as the resPondentfailed to complywith the} requirements of^{Rules 8(1) and 8(2) of the Security Interest} (Enforcement) Rules, 2OO2^{(hereinafter "Rules" for short) regarding} affixture and^{publicationof notice.They further dispute the interest} charged,^{NPA classification, computationof dues, inclusion of the} overdraft facility^{along with the term loan despite absenceof security} interest, and^{contend that the security interest was not registered} with the Central^{Registry established under Section 20 of the Act' On} these^{grounds, the applicants seek settingaside of the demand notice} dated 11.02.2025,^{possessionnotice dated 23 06'2025 and all} consequential SARFAESI^{measuresinitiated by tqe-respondent bank'} /ft4i'''*

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page 3 of5

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SA No. 366/2025

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The Respondent Bank filed reply statement along with documents. The averments thereof, briefly, are that due to persistent default in repayment the Applicants' account was classified as NPA on 26.L0.2024 in accordance with RBI guidelines, pursuant to which a Demand Notice dated 11.02.2025 under Sections 13(2) of the SARFAESI Act was lssued demanding payment of Rs,2,L6,79,3441-, The said notice was duly served upon the Applicant and guarantors, and the objections raised by the Applicant were considered and replied to by the Bank vide communication dated 21,03.2025 thereby duly complied Sec.13(3A). As the Applicants failed to regularise the account or discharge the dues, the Respondent proceeded under Section 13(4) of the Act and issued a Possession Notice dated 23.06.2025, which was duly served and published in newspapers. It is further submitted that the secured properties were validly mortgaged for the credit facilities availed by the Applicant and the security interest was duly created and registered. Thereafter, an e- auction sale notices dated 24.09.2025 was issued and published in newspapers in accordance with law. Hence, the Respondent contends that the SARFAESI proceedings were initiated strictly as per the statutory provisions and prays for dismissal of the SA as devoid of merits.

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The right of the applicants advancing arguments was forfeited on 06.07.2026, after affording ample opportunity. Heard learned counsel for the respondent bank. Perused the material brought on record.

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Learned counsel for the Respondent Bank, denied the averments made by the Applicants, and placed reliance on the documents annexed to the reply statement. It was contended that the loan account was rightly classified as a NPA ilx:lrdance with

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/ I l, .--,1t$ 1..,,,

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Page 4 of5

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SA No' 356/202s

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the RBI^{guidelinesand that procedureas prescribedunder Sections} 13(2), 13(3A)^{and 13(4) of the SARFAESIAct' 2002 read withRules} 8(1) and 8(2)^{of the Rules, 2002 have been strictly followed'} Accordingly,^{learned counsel prayedfor dismissal of the SA'}

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

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il whether the^{appticants madeout any validground. to} " i'iiii-iri ir {i" measures^{initiated bv the} -^respondent liZinsi ti. se^{s'nedute propertiesas praved for?}

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ii) To what^relieP

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Point No.(i^):

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To refute^{the averments made in the application' the} Respondent^{Bank filed material documentsalong withreply} statement^{as proof of complianceof due procedure of lawPages 5 to} 16 of the^{materialpapers are the Photostat copies of postal receipts} and track report^{provingserviceof demand notice'Likewise'Pages} l7 lo 23^{of the material papeBfiled separately containthe} photocopies of the^{reply issued by the Respondent Bank to the} objections^{ralsed by the Applicantundersection 13(34)of the Act'} Vide reply^{dated21.O4.?OZ5 the respondentclearly explainedto the} Applicants the^{circumstances leadingto classification of account as} NPA on 26.10.2O24^{and initiation of Securitizationmeasures'} Slmilarly,^{Pages 24 to 31 are the Photostat copiesof postal receipts/} acknowledgements^{in respectof PossessionNoticedated23 '06'2025 '} photographs as^{proof of affixtureof the same on secured assetsand} publication of the^{samein Englishand Telugu (vernacularlanguage)} newspapers^{on 24.06.2025} '^{In view of sufflcientproofplacedon} record, I find^{no infraction of section13(2), 13(34) and 13(4) of the} Act and Rules^{3, 8(1) & 8(2) of the Rules, 2OO2' As a securedcreditor} ,/ t'.- -' ,/ '^'g:ttrt

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Page 5 of 5

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SA No.366/2025

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the Respondent Bank initiated the SARFESI proceedings, which cannot be categorized as illegal or arbitrary.

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In view of the above observations, it is concluded that the Applicants have failed to establish any valid ground to interdict the measures initiated by the Respondent Bank under the provisions of the Act against the SA schedule properties, Accordingly, the SA is liable to be dismissed.

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Point No.(ii):

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