Dismissed

Ms St Daniel Christian Minority Educational Society v. Canara Bank

DRT20 Jul 2026SA/388/2025

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant's application to quash SARFAESI measures, holding that prior issues regarding mortgage validity and notice service were barred by res judicata as finally decided in earlier orders.

What did the court decide?

The Securitisation Application is dismissed; the stay granted vide order dated 16.09.2025 is vacated; interlocutory applications are closed.

Ms St Daniel Christian Minority Educational Society versus… — Company and Corporate | DRT (2026)

¶1

IN THE DEBTS RECOVERY TRIBUNAL - 1I AT HYDEMBAD

¶2

DATED THIS THE 2OTH DAY OF JULY, 2026

¶3

PRESENT: SH. RAMESHWAR KOTHE, B.COM, L.LB.^(HONS.), M.A, PRESIDING OFFICER

¶4

Securitization Application No. 388 OF 2025

¶5

M/S. St, DANIEL CHRISTIAN IVIINOR]TY EDUCATIONAL SOCIETY Rep. by its Chairman Mr. Adusumilli Murall Krishna Prasad, S/o. Mr. A. Poorna Chandra Rao, Aged 71 years, Occ: Chairman, G: lvlale, R/o. H. No. C. 102, Ravindra Nagar Colony, Habshiguda, Hyderabad - 500 007

¶6

...........Applicant

¶7

Versus

¶8

Canara Bank Asset Recovery 14anagement Branch, Hyderabad Circle Office, 10-3-163 & 10-3-163/A, Plot No.85, Beside Rail Nilayam, S.D. Road, Secunderabad - 500026

¶9

..... Respondent

¶10

Counsel for the Applicant : Mr.^{V. Ravinder} Counsel for Respondent^{: M/s. Alluri KrishnamRaiu}

¶11

-: Q-B-DEB:-

¶12

The present Securitization Application is filed by the^Applicant uls,77 of the Securitisation and^{Reconstruction} of^{FinancialAssets} and Enforcement of Security Interest Act,^{2002 ("Act" hereinafterfor} short) to set aside all the measures initiated by the^{respondentbank} under section 13(2) and 13(4) of the Act,^{includingRight of} Redemption under section 13(8) of the Act dated^22.08.2025.

¶13

The averments of the application, briefly, are that applicant^{is a} registered minority educational society '^{which had} availld^{a term loan} /^)tn!'-u1'$ U/^)s'

¶14

Paze 2 of 7

¶15

sA No. 388/2025

¶16

of 11.90 crores^{for establishingan engineering college and, owing to} a drastic decline^{in admissions after the introductionof the web} counseling system,^{suffered severe Rnancial difficulties despite} restructuring of the^{loan and making partialrepayments The} applicant asserts that^{the securededucationalinstitutionis a running} institution valued at over^{?20 croresand that the mortgage created} over the institution's^{properties is void under Section28 of the A P'} Education Act, 1982, for^{want of prior permission from the competent} authority.^{The applicantfurthercontends that one of the mortgaged} properties belonged to^late Smt.^{P Mary,whose legal heirs had not} joined in creating the mortgage, and that^{disputes relating to the said} property are pending before the^{Hon'ble High Courtin W P No 15166} of 2016. It is further^{allegedthat the respondent bank issued the} demand notice dated^{04.05.2013 under Section 13(2), the possession} notice dated 27.12.2013 and the^{impugnednotice dated 22.08.2025} against deceased borrowers,^{guarantors and unrelatedpersons} without issuing fresh^{notices to their legal heirs, contrary to the} mandatory^provisions of^{the Act and the Rules,relyinguponS'} Shaina Banu v. Indian^{Bank, The applicantalso contends that the} impugned notice dated^{22.08.2025, purportedly issuedunder section} 13(8) of the Act, is without statutory^{basis, as the respondentfailed} to issue a valid notice^{under Rule 8(6) after complyingwith Rule 8(5),} and that the notice does^{not disclosethe reserve price or the} proposed date and time of auction. The^{applicant further alleges non-} compliance with Rule 8^{regarding service and affixtureof the} possession notice, improper classification^{of the loan account as NPA,} non-consideration of^{paymentsmade by it, includlng ?11,50,000/-} paid on 30.09.2020, and arbitrary initiation of^{recovery proceedings.} On these^grounds, the^{applicant seeksto declare the mortgage and} all SARFAESI^{measures commencingfromthe demand notice dated} 04.05.2013 up to the^{impugned notice dated} a2.08.2025^{as illegal,} /W"t.f t/^''s'"

¶17

Page 3 of 7

¶18

sA No. 388/202s

¶19

arbitrary. null and void, and to set aside the entire SARFAESI proceedings in respect of the schedule properties.

¶20

The Respondent Bank filed reply statement along with documents. The averments thereof, briefly, are that the present SA is not maintainable as the issues raised herein had already been adjudicated on merits in S.A. No.152 of 2O2O by the Debts Recovery Tribunal-I, Hyderabad, wherein the validity of the mortgage, the applicability of Section 28 of the A.p. Education Act. 1982, the service of demand and possession notices, and the requirement of issuing notices to the legal heirs of the deceased co-obligant were considered and decided in favour of the Bank by order dated 05.09.2025. It is contended that, the said order having attained finality, the present proceedings are barred by the principle of res judicata under Section 11 of the Code of Civil^procedure. The respondent further submits that the impugned notice dated 22.OB.ZO2S was duly issued to the concerned padies and. where service could not be effected, was published in Telugu and English newspapers in compliance with Rule 3(1) of the Security Interest (Enforcement) Rutes, 2002, thereby affording the borrowers an opportunity to redeem the secured assets by clearing the outstanding dues before issuance of the sale notice. It is further contended that the notice satisfies the requirements of Section 13(8) of the SARFAESI Act and Rule 8(6) of the Rules and that any incorrect reference to a statutory provision does not vitiate the proceedings. The respondent asserts that, following the dismissal of S.A. No.152 of 2020, there was no legal necessity to issue a fresh redemption notice, and the impugned notice was issued only by way of abundant caution after the earlier auction^proceedings had been stalled due to interim orders. The respondent contends that^the applicant's averment that w.P. No.15166 of 2016 is^pending adjudication is factually Incorrect, as the Hon'ble Higqcourt,^{by order} /^rr*_ 1-,.r_( L-p

¶21

Pa8e⁴ of7

¶22

SA No.^388/202s

¶23

dated^{18.08.2022,and disposedof the writ petition} while^granting available^under liberty to the^{petitioner to avail such remediesas are} law. Accordlngly,^{the Respondentprays for dismissal} of the SA^with costs.

¶24

Heard^{learned counsel} for the^{applicant and learned counselfor} material^{brought on record'} the resPondent.^{Perused the}

¶25

During the^{course of arguments' the learned counselfor the} Applicant^{reiteratedthe averments made in the SA and contended} that the Applicant,^{a registeredminorityeducationalsociety'had} availed^{a term loan for establlshingan engineering collegebut} subsequently^{suffered financial distressdue to a steepdeclinein} student admissions^{despite restructuringof the loan and making part} repayments.^{It was submittedthat the mortgage createdover the} educational^{institutionwasvoid for want of prior permission under} Section 28^{of the A.P, EducationAct, 1982' and that one of the} mortgaged^{properties belonged to a deceasedowner whose legal} heirs had neither^{joined in the mortgagenor been issuednotices} under the^{SARFAESIAct. The learned counselfurther contended that} the respondent^{bank had initiatedSARFAESI proceedings in violation} of the mandatory^{provisions of Sections13(2), 13(4) and 13(8) of the} SARFAESI Act,^{2oo2 and Rules 8(1), 8(2), 8(5) and 8(6) of the} Security Interest^{(Enforcement) Rules, 2002, by issuing notices to} deceased borrowers^{and unrelated persons,without servingtheir} legal heirs, and^{without complying with the statutory requirements} governing possession and sale of^{the securedassets' It was also} argued that the^{impugned noticedated 22.08'2025 was without} authority of law, as^{it neither followed a valid Rule 8(6) noticenor} disclosed the reserve^{price or the proposeddaili#ti:l'e of auction'}

.. // '/^'$)'!\ t-,/

Page 5 of7

SA No. 388/202s

Hence, learned counsel prays for interdicting the measures initiated by the respondent against the SA Schedule properties.

¶30

Per contra, learned counsel for the Respondent Bank denied the averments of the Applicant and placed reliance upon the material papers annexed to the reply statement. It is submitted that the Applicant' account was classified as NpA in accordance with RBI guldelines and that the Respondent Bank had strictly followed the due procedure prescribed under the SARFAESI Act, 2OO2 and the Rules framed thereunder. Accordingly, sought for dismissal of the S.A.

¶31

The points for consideration are as follows : -

¶32

i) Whether the Applicant made out any vatid ground to quash any of the measures initiated by the respondent against the SA schedule properties as prayed for?

¶33

ii) To what relief?

¶34

Point No.(i ll

¶35

Upon perusal of the material available on record, it is evident that the present Securitisation Application is the third round of litigation, challenging the measures taken by the respondent bank under Sections 13(2), 13(4) and 13(8) of the SARFAESI Act, ZOO2. It is also evident from record that this Tribunal vide order dated 07.02.2020 in SA No.629/2017 upheld the comptiance of Rutes 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002.

¶36

It is further evident that, in s.A. No.152 of 2020, Ld. DRT-1, Hyderabad referred to the order dated 07.02.2020 passed by this Tribunal in S,A. No.629 of 2077 and categorically observed that the same issue of validity or otherwise of mortgage cannorx re-agitated

t,,///,/' "^'$)\

Page 6 of7

sA No' 388/202s

as the^order of DRT-II^{operated as Res-Judicata and dismissedthe SA} No.152 of 2O2O bY^{upholdingthe redemption notice dated} 27 .71.2020 as^{perfectlylegal and valid and binding on the Applicant'}

¶41

The^{applicanthas once again contendedthat the respondent} bank ought^{to have obtainedprior permission under Section 28 of the} A.P.EducationAct,lgs2beforeacceptlngthemortgageoverthe secured^{assets. However, the said issue also stands concluded by the} judgment of this^{Tribunal in S'A' No'629 of 2Ol7} '^{wherein it was} categorlcatty^{held that "It is the applicant-educational-societYwhich} availedloanfromrespondentbank,Theapplicant-educationalsociety utitised the^{loan amount for which it wasgranted and it has also} made certain^{payments' Havingutilized the loan amount' the} applicant^{is stoppedfrom pleading unenforceabiltyof the security for} want of^{sanction from the Governmentunderthe provisions of} Section^{28 of the A.P. EducationAct, 1982"'}

¶42

The applicant^{has also reiterated the contention that the} impugned^{notice was not issued to the legalheirs of deceased SmtP'} Vijaya. This^{issuetoo was considered and decided in the earlierS A'} No.62g/2O17,^{whereinit was held that the redemption noticeis} required to^{be issued only to the mortgagors who created the security} interest in^{favour of the bank'}

¶43

T2.Theaforesaidfindingshaveattainedfinalityand'therefore'the applicant is^{precluded from re-agitating the very same issues in the} present^{proceedingsunder the Doctrineof Res Judicata'}

¶44

Thus, the^{only surviving issue for considerationis the validity of} the notice^{lssuedunder Section 13(8) of the Act' In orderto establish} compliance^{with the statutoryreouirements,the r4.irpondentbank has} ffiilx

¶45

Page, of7

¶46

sA No. 388/202s

¶47

produced copies of the redemption^{notice, postalreceipts,track} report, returned^{covers and newspaperpublication,as proofof} service of the^{redemptionnotice. Exceptraisingvaque allegations'} the applicant^{has failed to demonstrateany non-compliancewith the} mandatory^provisions of^{the SARFAESI Act or the Rules, 2002' This} Tribunal finds no merit^{in the present SecuritisationApplication and} accordingly the^{same is liable to be dismissed'}

¶48

Point No.(ii):

¶49

In the result, the^{Securitisation Applicationfails and is hereby} dismissed.

¶50

Consequently,^{stay granted vide orderdated 16'09 2025in} IA.No.2616 of 2025 in the sA^{stands vacatedand Interlocutory} Applications^{pending,lf any, shall stand closed.}

¶51

No order as to^costs.

¶52

Communicate a^{copy of this orderto the parties concernedand} upload in the official^website.

¶53

(Iyped to my dictotion by the Steno., corrected,^{signed ondpronouncedby mein the opencourtonthis} the 2dh doy of July,^2026).

¶54

fi(1>tr.. ESHWAR KOTHE) PRESIDING OFFICER

Ms St Daniel Christian Minority Educational Society v. Canara Bank

Case brief

What is this about?

What did the court decide?

Ms St Daniel Christian Minority Educational Society v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

S Govindharajulu and Others versus Aptus Finance India Private Limited

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

D Vijay versus Tirupati urban cooperative bank Ltd.

J Balaji Alias Jonnalagadda Balaji versus Shriram Finance Limited

D Anjaiah versus Smfg India Home Finance Co. Ltd.

Hdfc Bank Limited. versus M/s. Phoenix Plastowares Pvt. Ltd.