Dismissed

D Sadanand and others v. Indian Bank

DRT21 Jul 2026SA/389/2024

Case brief

AI extract

What is this about?

The DRT held that third-party property vendors have no locus standi under the SARFAESI Act to challenge auction proceedings or declare mortgages void. Citing Central Bank of India v. Parbha Jain, the Tribunal ruled such title disputes fall within the jurisdiction of civil courts.

What did the court decide?

Application dismissed as there are no merits; interlocutory applications disposed of; no order as to costs.

D Sadanand and others versus Indian Bank — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL. I AT HYDERABAD

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DATED THIS THE 21ST DAY OF JULY, 2026

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No.389/2024

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Between :

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Sri D.Sadanand, S/o D. Yellaiah, aged 57^years, Occ:Govt. employee, R/o^H.No.1-36, Manikonda, CBIT^post, R.R. District.

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Sri D.Anand, S/o D. Yellaiah, Aged 47 years, Occ:agriculture, R/o H.No. 1-36, Maikonda, CBIT Post, R.R. District. Rep. by their Development^Agreement Cum GPA holder^{Padam Projects} Rep. by its Managing Partner Sri P.N. MurhtY, S/o^{P.Venkataiah,} Aged, 47 years, Occ:business, R/o H.No.6-2 -l12, 4h^floor, Afzal Commercial ComPlex, Lakdikapur, Hyderabad' Applicants

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VERSUS

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Indian Bank

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Rep. by its Authorized^Officer, Stressed assets Management^branch, Situated at 5-7-679,^{Surabhi Arcade,} Bank Street, Koti, Hyderabad-SOO^O01

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Mr.Ajay Damani, S/o Madho Das Damani,

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Aged 36 years, Occ:business, R/ o H.No.4-5-709, Kutbiguda^Masjid, Badichowki, Kachiguda, Hyderabad.

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The Joint Sub-Registrar, Gandipet, R.R. District Respondents Counsel for tLrc Applicants Si D. Ragharrulu Counsel for the Respondent No.1 Si R.V.Subbarao Respondents No.2 &3 Exparte Reserued on 08.07.2026 Pronounced on 2 1.07.2026 Uploaded on :21.O7.2026

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.ORDER:

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1 . This application is liled by the Applicants u/ s. r 7 of the sARFAESI Act, 2O02, challenging the e Auction Sale Notice d,t.2S.OT.2024 issued by the 1"t Respondent Bank against the schedule properties and arso to declare that the mortgage of the schedule properties as illegal and void.

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The averments made in the application, in brief, are that:

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The Applicants are neither borrowers nor guarantors but 3rd parties to the proceedings initiated by the 1st Respondent Bank against the SA schedule properties. The Applicants are the absolute owners of the land in sy.Nos. 135/A &13s/AA admeasuring Ac.0. 1g guntas situated at Manikonda Jagir village and Gram panchayat, Rajendra nagar Mandal, R.R. District having acquired the same by virtue of Regd.Gift Settlement Deed bearing Doc.No.405o/99 dt. 14.06.1999. Later the Applicants partitioned the said land by virtue of the Regd. partition Deed dt. 1O.1 1. ntly, the Applicants have appointed M / s Padam Proi the construction held as their GpA for d and executed Regd. Development .762212OO7. In pursuance of the said entary Agreement was entered into licants .a6d^':ltf eir GPA holder on 19.01.2009 and

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as per the said agreement, Flat Nos.G2 in ground floor, Flat No. 103 in 1.i floor and Flat No.302 in third floor along with some other flats fallen to the share of the Applicants. The 2nd Respondent herein agreed to purchase the said flats and requested the developer to execute the sale deeds by mentioning the cheques in the sale deeds as he is expecting the amounts shortly. Believing the same, the developer executed three different Regd. sale deeds bearing Doc.Nos.5733,5734 and 573512016 dt.O7.O9.2016 wherein the particulars of the advance dated cheques were mentioned in the said sale deeds. But the 2"d Respondent postponed the presentation of the cheques on one pretext or the other. Thereafter, Respondent No.2 executed a Memorandum of Understanding on 21.O2.2O17 and issued new cheques dt.22.O2.2OlT and also issued a cheque for Rs.27.60 lakhs towards the extra cost for extra fittings, car parking etc. But the 2"d Respondent failed to clear the cheques. While things stood thus, the Applicants noticed an Auction Notice published in The Hindu newspaper wherein the schedule properties are proposed for auction on 12.06.2079. The lst Respondent bank without proper verification of the documents, sanctioned loan bynvay of accepting the properties as security and when the borrower has committed default, the Bank has initiated proceedings under the SARFAEI Act, 2OO2 for recovery of the loan. The Applicants came to know that M/ s Kishna Enterprises have created mortgage of other properties other than the schedule proprieties. The Applicants filed OS.No.925/ 19 on the file of Hon'ble District Judge, RR. District and the same is pending adjudication. Thereafter, the Bank sold the schedule properties on 27.08.2024 in pursuance of the saie notice dt.25.O7.2024 without following due process of law. The bank failed to serve demand notie_o;j tice and also sale notice on the ':.' .. on notice and sale notice are not published in t#o daily Ld not affixed on the schedule properties.. Hende

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). The 1st Respondent hled their Reply denying all the adverse allegations made in the SA and contended that the Applicants herein are the 3'd parties to the proceedings initiated by the 1st Respondent against the borrower/ guarantor/ mortgagors. The Applicants are the vendors of the Respondent No.2 in respect of Item Nos.2&3 schedule^properties. The Applicants executed and registered three sale deeds r.e.^5733116, 5734 116 and 5735/16 in respect of Flat No.3O2,^{F.No.G-2 and} F.No. 103. The l't Respondent Bank is concerned with^{the two sale} deeds in respect of F.No.G2 and F.No.302 and^it is^{denied that advance} dated cheques were mentioned in the said sale^{deeds.By observing the} sale deeds, it is clear that cheques^{were issued on 03.09.2016 and sale} deeds were executed and registered on^{07.O9.2016i.e. after four days} of issuing cheques. Respondent^{No.2 created mortgageofthe properties} by deposit of document of title^on O2.Ol.2Ol7^{and Memorandum of} Deposit of title deeds dt.06.01.2o17^{was registered as document} NO.64O/ 17 and the representation^{said to have been given by the} Applicants is subsequent to the^{mortgage createdby the Respondent} No.2 in favour of the Bank.^{The allegedMemorandumof Understanding} d,t.2l .O2.2O17 was a fabricated and^{fake document created by the} Applicants and Respondent No.2 in^{collusion with each other and} basing on the said fabricated^{document,the ApplicantsfiledOS.925/19} on the Iile of Hon'ble District Judge,^{R.R.District and the so, the same} is not maintainable in law.^{The Applicants being 3rd parties to the} proceedings between the bank and the borrower,^{the question of serving} demand notice and other notices^{under the SARFAESIAct does not} arise. The Bank has served al1^{the notices to the borrower,guarantor} and mortgagor. As such, the^{Applicants are not entitled for any relief.} dent prayed to dismiss the SA.

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ts and Ld. Counsel for the l't ndents. .2 &3 remained exparte.

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eration are

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uhether the Applicants are hauing loct Ls-standi to challenge the proceedings initiated bg the 1"t Respondent under the prouisions of SARIIIESIAcI, 2002 in respect of the schedule properties?

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lL. To uhat relief?

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Point llo.(if :-

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During the course of arguments, Ld. Counsel for the Applicants and Ld. Counsel for the lst Respondent reiterated their respective versions as stated supra.

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Even as per the contention of the Applicants, they are neither borrowers nor mortgagors/ guarantors to the proceedings initiated by the 1st Respondent against the schedule properties but they are the vendors of Respondent No.2 and the 2"d Respondent failed to clear the cheques as mentioned in the sale deeds in respect of the schedule properties and later he availed loan from the lst Respondent and created mortgage against the schedule properties by deposit of title deeds. In view of the default committed by the borrower, the lst Respondent proceeded further and issued e Auction Sale Notice dt.25.O7.2024 and also conduced auction of the schedule properties without issuing any notices to the Applicants and without following the due procedure.

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The Applicants are challenging the impugned e Auction Sale^Notice dr.25.O7 .2024 issued by the 1st Respondeni for conducting auction of the schedule propertieg"lf'tontefi'd'ir-,€ that the 1"t Respondent^{has no right to} proceed againsy/6et8h€.dgle' ffip{e s since the 2"d Respondent, vendor oi the Applic/igpfias noqcleared eques mentioned in the sale deeds and the ban* #as 4.ot^folqwe-dJhe dbedure as contemplated under the ,."",.,"."^.t,q.Ir3, fll, ry&? ,.iu.i;Lrr." madethereunder.whereas the 1"t Respo[6iq.4$ubmitted thft*{fify have duly followed the^procedure irl,,

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in issuing all the statutory notices to the borrower/^guarantor/ mortgagor and also in conducting auction of the schedule^{propertieson 21.08.2024.} Respondent No.2 availed loan facilities from the^1st Respondent^{and created} mortgage in favour of the l't Respondent by deposit of title deeds^{in respect} of the schedule properties in security to the credit facilities availed^{by him.} To substantiate their contentions, the 1st Respondent filed^material documents along with the Reply. The 1"t Respondent argued that^the Applicants have no right or title over the schedule^properties as^they executed Regd. sale deeds in favour of the 2"d Respondent before^the concerned SRO as admitted by them and the endorsement before^{the Sub-} Registrar in the regd. sale deed is that the vendor received the entire^sale consideration by pre-dated cheques but not post-dated cheques, assuch, the Applicants are not entitled to challenge the^proceedings initiated by the 1"t Respondent against the schedule properties on the basis^of Memorandum of Understanding dt.21.02.2017 allegedly executed by the Respondent No.2 in favour of the Applicants which is a fabricated document and the same does not give any rights to the Applicants to claim the schedule properties and to stall the proceedings initiated by the 1$ Respondent against the schedule properties for recovery of dues from the 2"d Respondent.

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In a recent^judgement, Hon'ble Supreme Court ln Centro,l Bank of Indla & others Vs.Smt.Prrrbha Jain & others in Cttttl Appeal

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No.1a76/2O16 has held in Para Nos. 14 to 18 which is as follows:

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From Section 17, it is clear that it is onlg the Tibunal that has the^jurisdiction to determine u-thetler "any of the measures referred to in sub-section (4) of 13 taken by the secared creditor" are in Rules thereunder.

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praged for 3 reliefs:

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a) a sale deed executed bg Sumer Das PrajapotL

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relief is to a mortgage deed exeanted by ,',*'"fr 'Bank.

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c) The third relief is for being handouer the possession of the suit property.

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So far as the first and second reliefs are concerned, they are not in relation to any measures taken by the seanred creditor under Section 13(4) of the SARFAESI Act. Rather, they are reliefs in relatioru to the actions taken pior to the seanred creditor stepping into picture and well prior to the secured creditor inuoking the prouisions o/ SARFA E SI Act.

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Therefore, the Tribunal utould haue no juisdiction under Section 17 of the SARFAES/ Act to grant the declarations sought in tlrc first and second reliefs.

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Fur-ther, the SAR.PA.ESI Act is enacted essentiq.llg to prouide a speedg mechanism for recouery of debts bg banks and financial institutions. The SARFAESf Act ha.s not been enacted for prouiding mechanism for adjudicating upon the aaliditg of docutnents or to determine the questions of title tinallg.^{The DRT does not haae jurisdictionto grant q.} declaration utith respect to the mortgage deed or the sale deed as sought bg the Plaintiff. The^jurisdiction to declare a sale deed or a mortgage deed being illegal is aested utith the ciuil court under Section 9 of the Code of Ciuil Procedure. Therefore, the ciuil court ho.s the^jurisdiction to Jinollg adjudicate upon the first tuto reliefs.

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So, in view of the above circumstances and the decision of the Hon'ble Apex Court in Central Bank of India supra, I am of the opinion that the Applicants, being 3'd j, - -.. i ties, are not entitled to challenge the proceedings i![ espondent in respect of the schedule propertie " fr{s, ir," 6r4l,i;ie$kARFAESI Act,2oo2. This Tribunal is not."ry[S"t to d[I$?d. tn.'rhr]\iv of the title of the Respondent No.2 i.r rdsflbct { {re,f-Srrg$ffi1. nrb$prties and the Applicants have to approach irc,"opetent civil courI'li, rrrdeclaration of the title of any i:':,. ^i. ., :i;, j/

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"i.'^, '!ii^.':/. ,it-'.ia;.,.,,, ti1r.r,,, " -- .r,,gr;.

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particular property. So without getting any declaration of the alleged title in respect of the schedule properties, the Applicants cannot challenge the proceedings initiated by the l.t Respondent in respect of the schedule properties under the provisions of SARFASI Act, 2002 and Rules made thereunder.

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So, considering all the circumstances, I am of the opinion that the Applicants are not entitled to any relief as they have no locus-standi to challenge the proceedings initiated by the 1"t Respondent in respect of the schedule properties under the provisions of SARFAESI Act,2OO2 and Rules made thereunder. So, I see no ground warranting interference of this Tribunal with the proceedings initiated by the 1st Respondent for conducting auction ofthe schedule properties pursuant to the e Auction Sale Notice dt.25.O7.2024 under the provisions of the SARFAESI Act,2OO2. Accordingly, this point is answered in favour of the 1st Respondent and against the Applicants.

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Potnt No.(ti)t

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In the result, SA 389 /2024 is dismissed as there are no merits.

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Consequently, the Interlocutory Applications, pending if any, shall stand disposed of. No order as to costs.

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Communicate a copy of this order to the parties concerned.

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5.''
(Dictated to the P.S and pronounced bg me in the open court onthb the 21! daA
of JuIg, 2026).
rii",
h,
21 lN.)tzE I sd/-
lG. GOPTCHANDI
PRESIDING OFFICER

D Sadanand and others v. Indian Bank

Case brief

What is this about?

What did the court decide?

D Sadanand and others v. Indian Bank

Case brief

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