Dismissed

Ms St Jobs Christian Minority Educational Society v. Canara Bank

DRT28 Jul 2026SA/389/2025

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed the applicant society's application challenging SARFAESI measures taken by the respondent bank. The court held that issues regarding mortgage validity and procedural notices were res judicata based on previous orders. The Court found no infirmity in the impugned Redemption Notice.

What the court decided

AI extract

Ms St Jobs Christian Minority Educational Society versus… — Banking and Recovery | DRT (2026)

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

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DATED THIS THE 28TH 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. 389^{OF 2025}

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M/s. St. JOBS CHRISTIAN^MINORITY EDUCATIONAL SOCIETY Rep. by its Chairman Mr. Adusumilli Murali Krishna^Prasad, S/o. Mr. A. Poorna Chandra^Rao, Aged 71^years, Occ: Chalrman,^{G: lvlale,} R/o. H. No. C. 102, Ravindra Nagar Colony, Habshiguda, Hyderabad - 500 007

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Applicant

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Versus

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Canara Bank Asset Recovery Management^Branch, Hyderabad Circle Omce, 10-3-163 & 10-3-163/A, Plot^{No. 85,} Beside Rail Nilayam, S.D.^Road, Secunderabad^- 500026

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....Respondent

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

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-: OIL.DEB:-

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The^present Securitization^{Applicationis filed by the Appllcant} uls.77 of the Securitisation and^{Reconstructionof FinancialAssets} and Enforcement of Security^{Interest Act, 2002 ("Act" hereinafter for} short) to set aside all the^{measuresinitiated by the respondentbank} under section 13(2) and^{13(4) of the Act, includingRedemption} notice dated 22.0a.2025^{issued under section} 13(8)^{of the Act.}

Orye*

Page 2 of 7

SA No. 389/2025

The averments of the application, briefly, are that applicant is a registered minority educational society which had availed a term loan of {1.90 crores for establishing an engineering college and, owing to a drastic decline in admissions after the introduction of the web counseling system, suffered severe financial difflculties despite restructuring of the loan and making partial repayments. The applicant asseds that the secured educational institution is a running institution valued at over {20 crores and that the mortgage created over the institution's properties is void under Section 28 of the A.P. Education Act, 1982, for want of prior permission from the competent authority. The applicant further contends 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 Court in W.P. No.15166 of 2016. It is further alleged that the respondent bank issued the demand notice dated 04.05.2013 under Section 13(2), the possession notice dated 27.12.20t3 and the impugned notice dated 22.08.2025 against deceased borrowers, guarantors and unrelated persons without issuing fresh notices to their legal heirs, contrary to the mandatory provisions of the Act and the Rules, relying upon S. Shaina Banu v. Indian Bank. The applicant also contends that the impugned notice dated 22,08.2025, purportedly issued under Section 13(8) of the Act, is without statutory basis, as the respondent failed to issue a valid notice under Rule 8(6) after complying with Rule 8(5), and that the notice does not disclose the reserve price or the proposed date and time of auction. The applicant further alleges noncompliance with Rule 8 regarding service and affixture of the possession notice, improper classification of the loan account as NpA, non-consideration of payments made by it, including ?11,50,000/paid on 30.09.2020, and arbitrary initiation of recovery proceedings. On these grounds, the applicant seeks to declare the mortgage and

/-''/fu*^ys-v

Pate 3 of7

5A No' 389/202s

all SARFAESI measures commencing from the^{demand notice dated} 04.05.2013 up to the impugned notice dated^{22.08.20?5as illegal,} arbitrary, null and void, and to set aside the entire^SARFAESI proceedings in respect of the schedule^properties.

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The Respondent Bank filed reply statement^{along with} documents. The averments thereof, briefly,^{are that the presentSA is} not maintainable as the issues raised herein had already^been adjudicated on merits in S.A.^No.151 of^{2020 bY the DebtsRecovery} Tribunal-I, Hyderabad, wherein the validity of the^mortqage,the applicability of section 28 of the^{A.P. EducationAct, 1982, the service} of demand and^possession notices, and the^{requirementof issuing} notices to the legal heirs of the deceased^{co-obligant wereconsidered} and decided in favour of the^Bank by order dated^{05.08.2025.It is} contended that, the said order^having attained^{finality, the present} proceedinqs are barred by the principle of res judicata under Section 11 of the Code of Civil Procedure. The^{respondentfurthersubmits} that the impugned notice dated 22.08.2025^{was duly issued to the} concerned parties and, where service could^{not be effected,was} pubtished in Telugu and English newspapers in compliance with^Rule 3(1) of the Security Interest^{(Enforcement)Rules,2002, (hereinafter} "Rules" for short) 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 theSARFAESI 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.151 of 2020, there was no} legal necessity to issue a fresh^{redemption notice, and the impugned} notice was issued only by^way of^{abundantcaution after the earlier} auction^proceedings had been^{stalleddue t9?.interim orders.The}

//)tt9"-{'r.')\ ,-y

page 4 of7

sA No.389/2025

respondent contends that the applicant's averment that W.P. No.15166 of 2016 is pending adjudication is factually incorrect, as the Hon'ble High Court, by order dated 78,08.2022, and disposed of the writ petition while granting liberty to the petitioner to avail such remedies as are available under law. Accordingly, the Respondent prays for dismissal of the SA with costs.

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Heard learned counsel for the applicant and learned counsel for the respondent. Perused the material brought on record.

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During the course of arguments, the learned counsel for the Applicant reiterated the averments made in the SA and contended that the Applicant, a registered minority educational society, had availed a term loan for establishing an engineering college but subsequently suffered financial distress due to a steep decline in student admissions despite restructuring of the loan and making part repayments. It was submitted that the mortgage created over the educational institution was void for want of prior permission under Section 28 of the A.P. Education Act, 1982, and that one of the mortgaged properties belonged to a deceased owner whose legal heirs had neither joined in the mortgage nor been issued notices under the SARFAESI Act. The learned counsel further contended that the respondent bank had initiated SARFAESI proceedings in violation of the mandatory provisions of Sections l3(2), L3(4) and 13(8) of the SARFAESI Act, 2002 and Rules 8( 1), 8(2), 8(5) and 8(6) of the Rules, 2002, by issuing notices to deceased borrowers and unrelated persons, without serving their legal heirs, and without complying with the statutory requirements governing possession and sale of the secured assets. It was also argued that the impugned notice dated 22.0A.2025 was without authority of law, as it neither fo owed a valid Rule 8(6) notice nor disclosed the reserve price or the proposed date

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Page 5 of 7

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SA No. 389/2025

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and time of auction. Hence,^{learned counsel prays for interdictingthe} measures initiated by the respondent against^{the SA Schedule} Properties.

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Per contra, learned counsel^{for the Respondent Bank deniedthe} averments of the Applicant and^{placed relianceupon the material} papers annexed to the reply statement. It is submitted that^the Applicant' account was classified as^{NPA in accordance with RBI} guidelines and that the Respondent Bank had strictly followed^{the due} procedure prescribed under the SARFAESI Act, 2002 and the^Rules framed thereunder. Accordingly, sought for^{dismissalof the S.A.}

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

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i) whether the Applicant made out any^{valid ground to} quash any of the measures inltiated by the respondent against the SA schedule^{propertiesas prayed for?}

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ii) To what relief?

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Point No.(i):

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Upon^perusal of the material^{available on record, it is evident} that the present SA is another round^{of lltigation initiated by the} Applicant challenging the^measures taken^{by the RespondentBank} under Sections 13(2), 13(4) and^{13(8) of the SARFAESI Act, 2002'} Earlier Applicant filed S.A.^No.151 of^{2020 before learned DRT-I,} Hyderabad challenging the^{pre-sale notice dated 27.11.2020on the} grounds of non-compliance of statutory^{provlsions. Said SA} No.151/2020 was dismissed vide order dated^{05.08.2025 upholding} the validity of servlce of the demand^{notice issuedunderSection} 13(2) and the^possession notice^issued under^{Section13(4) of the} Act. Vide para 11 of the said order,^{learned DRT-1 gave a clear}

i.rri\

Page 6 of7

SA No. 389/2025

finding that Applicant being the absolute owner of the schedule property has an obligation to redeem the mortgage and that nonissuing of notice to the LRs of Late P. Mary who was co-obligant was not fatal to the case of the respondent bank and accordingly upheld the validity of pre-sale notice. Said finding squarely applies to the present proceedings as the Application is based on the very same grounds. Schedule properties are in the name of Applicant Society and its Chairman Mr.Adusumilli Murali Krishna^prasad. Similarly, it is found that redemption notice dated 22.08.2025 has not been issued to Late P. Mary alone, but it has been issued to the property owners also so as to redeem the mortgage. Mere mentioning of a deceased party would not vitiate the entire notice. If irrelevant parties have been arrayed in the notice, it is open for them to represent to the respondent bank to delete their names.

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The Applicant has also contended that the Respondent Bank ought to have obtained prior permission under Section 28 of the A.p. Education Act, 1982 before accepting the mortgage over the SA schedule properties. However, the said issue has also attained finality by virtue of the order dated 07.02.2020 passed by this Tribunal in S.A. No.629 of 2017 which was filed by none other than Mrs.p. Mary, Chairman of St.Danel Christian Minority Educational Society, who was co-obligant in the subject loan account of this SA. The finding of order dated 07.02.2020 is that the appticant educationat society utilised the loan amount for which it was granted and it has also made certain payments. Having utilised the loan amount, the applicant is stopped from pleading unenforceability of the security for want of sanction from the Government under the provisions of the Section 2g of the A.P. Education Act, 1982. Said finding also squarely applies to the present SA. Therefore, the applicant is e<lopped from reopening the said issue in the present proceedings.

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?age 7 of 7

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SA No.389/2025

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10, Though a challenge to^proceedings under Section^13(8)maybe maintainable on grounds such as incorrect computation of^the outstanding dues, failure to duly serve the statutory^notices, undervaluation of the secured assets or material^procedural irregularities in the sale^process, the Applicant^{has failed} to^{place any} cogent material or evidence on record to substantiate any^such infirmity. Hence, I hold that the impugned Redemption^{Notice dated} 22.08.2025 issued by the respondent bank under Section 13(8)^of the Act, 2002 is legal, valid and in conformity with the^provisionsof the Act and the Rules framed thereunder, and^{is binding upon all the} concerned parties. Consequently, the^present Securitisation Application is liable to be dismissed as devoid of^merit.

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Point No.(ii):

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In the result, the Securitisation Application fails and is^hereby dismissed.

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t2. Consequently, stay^granted vide order dated^16.09.2025in IA.No.261B of 2025 in the SA stands vacated and^{Interlocutory} Applications^pending, if any, shall stand closed.

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No order as to costs.

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t4. Communicate a copy of this order to the^{parties concerned and} upload in the official website.

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(fyped to my dictotion by the Steno., corrected, signed and^pronounced by ryrlryl4e^{oryncourton this} the2dh doyofruty.2o26).

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//7\ryJi,/!l:{otU q#,'#Hat[P,:?'-'

Ms St Jobs Christian Minority Educational Society v. Canara Bank

Case brief

What is this about?

What the court decided

Ms St Jobs Christian Minority Educational Society v. Canara Bank

Case brief

What is this about?

What the court decided

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