Dismissed

M/s. Kavadapu and Associates v. Unity Small Finance Bank Limited

DRT17 Jul 2026SA/381/2025

Case brief

AI extract

What is this about?

In a securitization application, the applicants sought to set aside physical possession of schedule property initiated by a Secured Creditor. The Presiding Officer rejected the claim, finding sufficient proof of compliance with the SARFAESI Act and Rules regarding notices and publications, and dismissed the application.

What did the court decide?

Securitization Application dismissed; interlocutory applications pending stood closed; no order as to costs.

M/s. Kavadapu and Associates versus Unity Small Finance Bank… — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL^_ II^{AT HYDERABAD}

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DATED THIS THE 17TH DAY OF JULY,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. 381^{OF 2025}

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M/s. Kavadapu and Associates, Rep by its Proprietor, K. Kiran Kumar Reddy, Having office at^{Flat No.8103,} B Block, Delta Season ComPlex, Road No.11, Banjara Hllls, Hyderabad, Telangana^State-500034

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K. Kiran Kumar^Reddy, S/o. K. Rami Reddy, Agedi 42^years, Occ:^Business, R/o. Flat No.8.404, 4th^Floor, Shanti Bagh APartments, Begumpet, Hyderabad, Telangana State-500016

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..''. .....Applicants

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Versus

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M/s. Unity Small^{Finance Bank Limited,} Rep by its Authorized^Officer, Havlng Corporate Office at^{sth Floor,} Centrum House,^{CSTRoad, Vidyanagari} Marg, Kalina,^{Mumbai. Maharashtra} Sta6-4OOO98

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.....ResPondent

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Counsel for the Applicants^{: Mr' A' Visveshwer Rao} Counsel for Respondent^{: Mr. G' Adrian Kiran Rai}

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-:Q-B-q.EB:-

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The^present Securitization^{Application is filed by the Applicants} u/s.17 of the Securitisation^{and Reconstructionof FinancialAssets} and Enforcement of^{SecurityInterest Act, 2002 ("Act" hereinafterfor}

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SA No. 381/2025

short) to set aside the action of taking physical possession of the SA schedure^property via vacate notice dated 23.0g.2025 in pursuance to crt.M.p.No.41312025 issued by the Hon,bte senior civil Judge cum Additional Chief Judicial Magistrate, Medchat-Malkajgiri District at Kukatpatty.

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The averments of the application, briefly, are that Applicant No.2, being the proprietor of Applicant No.1 firm and the absolute owner of the S.A. schedute property, had availed an MSME/Term Loan of 12,00,00,000/- from the Respondent Bank on 13.07.2022 by creating an equitable mortgage over the secured asset. The Applicants contend that the loan account was initially serviced regularly; however, owing to the serious health condition of Applicant No.2, coupled with financial losses in business, the loan account became irregular. It is further averred that the Respondent Bank issued a demand notice dated 03.01.2025 under Section 13(2) of the SARFAESI Act, but Applicant No.2, due to his medical condition, coutd not submit objections under section 13(3A) of the Act. Thereafter, the Respondent initiated proceedings under Section 14 of the SARFAESI Act in Crt.M.p.No.413 of 2025, pursuant to which the Advocate Commissioner issued a vacate notice dated 23.0g.2025 for taking physicar possession of the secured asset. The Appricants contend that the Respondent Bank failed to comply with the mandatory provisions of Sections 13(4) and 14 of the SARFAESI Act read with Rures 8(1) and g(2) of the security Interest (Enforcement) Rules, 2002, (hereinafter "Rules,, for short) inasmuch as no possession notice was duly served, affixed on the secured asset, or published in two leading newspapers, and that the statutory notices were not served upon all the borrowers and guarantors. Hence, applicants pray for setting aside the measures initiated by the respondent against the SA Schedute croperty 1fu6,*

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Page 3 of 5

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SA No.381/2025

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The Respondent Bank^{filed reply statementalong with} documents. The averments thereof,^{briefly, are that the Appllcants} have suppressed material facts, approached^{this Tribunal with} unclean hands, and^filed the^{present SA only to protract the recovery} proceedings. It is averred that Applicant No.2, as^{proprietor of} Applicant No.1 firm, had availed an^{MSIYE/TermLoan of} <2,00,OO,O0O/- by creating an^{equitable mortgage over the S.A} schedule property and that, contrary^{to the Applicants'assertions,} they committed^persistent defaults^{in repayment The Respondent} further contends that,^{uponclassificationof the loan account as a} NPA in accordance with the^{RBI guidelines, it duly issued the demand} notice dated 03.01.2025 under section^{13(2) of the SARFAESIAct,} followed by the^{possession notice} dated^{24.04.2025 under Section} 13(4), which was duly served,^{affixedon the securedasset and} published in two newspapers in compliance with^Rules 8(1)^{and 8(2)} of the Rules, 2002. It^{is furtheraverredthat, after complyingwith the} statutory requirements, the^{Respondentinltiatedproceedings under} section 14 of the SARFAESI^{Act in Crl.M.P.No.473of 2025, pursuant} to which the Advocate Commissioner^{issued the vacation notice dated} 23.08.2025 for taking^{physical possessionof the secured asset.} Having complied^{prescribed provision of the Act and Rules hereunder,} the Respondent^{praysfor dismissal of the SA with exemplarycosts.}

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Despite affording sufficient^{opportunities,the Applicantsfailed} to advance oral arguments.^{Accordingly,by order dated 08.07.2026,} the right of the Applicants to^{address oral arguments was forfeited.} Counsel for the respondent reported^{no oral arguments but filed} written arguments. Perused the written^{argumentsfiled by the} respondent and also^{perusedthe material brought on ,"rorafiV,11,\}

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page 4 of 5

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SA No. 38U202s

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5' Learned counser for the Respondent Bank denied the averments made by the Applicants, reiterated the contents of the reply statement, and placed reliance on the documents annexed thereto. It was contended that the roan accounts were righry crassified as NpA in accordance with the RBI guidelines and that all measures under Sections 13(2), 13(34), 13(4) and 14 of the SARFAESI Act, 2OO2 were initiated after strict compriance with the provisions of the Act and the Rules, 2002. 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 the appticants made out any vatid ground for quashing the action of-the Respondeit-aan* roituiing iil physical possession of the SA scneiite property through Ad voca te Co m.m i ss i o n e r u p p o i n te a- ii i e r t n e p rov i s iii,o.f the Section 14 of the SenfESt ec?-^-

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ii) To what retief?

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Point No.(i):

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Admittedly, appricants avaired MSME/Term Loan facility against mortgage of schedule property and failed to make payment as per repayment schedure. Hence the action of the Respondent Bank in classification of account as NpA and initiating the SARFESI proceedings cannot be termed as iregar or irregurar as contended by the applicants.

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B. The Respondent Bank filed material documents along with reply statement as proof of compliance of due procedure of law. pages 1 to 17 of the material paper filed separately are the photostat copies of .postal receipts and publication of the same in English and Telugu (vernacular language) newspapers on 23.07.2025 proving service of

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sA No.381/2025

demand notice. Similarly,^{Pages 18 to 26 are the Photostatcopiesof} postal receipt of Possession Notice^{dated24,04.2025being the proof} of sending^{possession notice by registered post, photographsas proof} of affixture on secured^{assets and publicationof the same in English} and Telugu^{(vernacularlanguage) newspapers on 27'04'2025'In} view of sufficient^{proofplaced 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 RespondentBank initiatedthe 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^{establishany valid ground to interdict the} measures initiated by the^{Respondent Bankunder the provisionsof} the Act against the SA^{scheduleproperty. Accordingly, the SA is liable} to be dismissed.

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Point No.(ii):

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