Dismissed

Narala Raghavendra Reddy v. State Bank of India

DRT25 Aug 2026SA/399/2025

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed an application seeking to set aside SARFAESI proceedings, finding that the bank complied with Section 13(2) and 13(4) of the SARFAESI Act and Rules 3, 8(1), and 8(2) of the 2002 Rules. The Tribunal held that the applicant failed to establish grounds for interference.

What did the court decide?

The Securitisation Application is dismissed. The stay granted vide order dated 17.12.2025 in IA No. 3741 is vacated.

Narala Raghavendra Reddy versus State Bank of India — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY^{TRIBUNAL_ II AT HYDERABAD}

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DATED THIS THE 25TH DAY OF^{AUGUST, 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. 399^{OF 2025}

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Narala Rag havendra Reddy, S/o. Narala Nagireddy, Age: 49 Years, Occ: Business Prop: RV Reddy Timber Depot &^{Furniture Works} Flat No.301, Srinivasa Towers, Venkataramana Colony Kurnool Town & Dist. 518002 Applicant

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Versus

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state Bank of India l.4ain Bra nch Atmakur Nandyal Dlst And hra Pradesh-518422 Rep. by its Authorized Officer

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..... Respondent

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Counsel for the Applicant :^{Ms'D. Naga Sirisha} Counsel for Respondent :^{M/s. Hari Prasad Podila}

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-: Q-B-LE-B:-

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The^present Securitization^{Application is filed by the Applicant} vls.l7 of the Securitisation^{and Reconstructionof FinancialAssets} and Enforcement of^{SecurityInterest Act, 2002 ("Act" hereinafterfor} short) to set aside the^{demandnotice dated 02.04.2025under} section 13(2),^{possession notice dated17,06.2025under section} 13(4) of the Act and the^{action of takingphysicalpossessionof the} SA Schedule ProPerty.

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The averments of the application,^{in brief, are that applicant} had availed Cash Credit^{facilities of Rs.45,00,000/- fromthe} t?twt -a ., //./'{<,,n'\

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Page 2 of6

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SA No. 399/2025

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Respondent Bank in the year 2020 secured by the schedule property. The Applicant contends that, owing to the COVID-19 pandemic and consequent business downturn, he suffered financial difficulties, though he continued making payments towards the loan account and subsequently paid Rs.7,00,000/- towards the outstanding tiability. It is alleged that the Respondent Bank wrongly computed the outstanding amount at Rs.44i6,A28/- by levying excessive interest and charges and classified the account as NpA without following the applicable RBI norms or duly intimating the Applicant. The Applicant further alleges that the Demand Notice dated 02.04,2025 under Section 13(2) of the SARFAESI Act was not duly served upon the Applicants/cuarantors and that the impugned possession Notice dated 17.06.2025 under Section 13(4) was issued without affording adequate opportunity to clear the liability. It is further contended that the Respondent Bank failed to comply with Rule g of the Security Interest (Enforcement) Rules, 2002 (hereinafter^..Rules,, for short) by not duly affixing and publishing the possession Notice and also failed to furnish complete particulars of the statement of account, interest, penal interest, charges and capitalization thereof. Relying upon Central Bank of India v. Ravindra & Ors., (2002) 1 SCC 367 : AIR 2001 SC 3095, the Applicant contends that the Bank is required to maintain transparency in its accounts and furnish particulars of debit entries, including the rate and period for which interest has been charged. Accordingly, the Applicant prays for setting aside the SARFAESI measures initiated against the SA schedule property.

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The Respondent Bank filed its reply statement along with supporting documents. The averments thereof, in brief, are that the Applicant had availed the credit facility by creating an equitabte mortgage over the schedule property by deposit of the original tiue deeds and denies the allegation of regular repaymentr asserting that the Applicant himself has admitted the default in para V(2) of the ,, Iq9<ii,.)t , ,/^' 'v,'-

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Page 3 of6

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sA No.399/2025

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Application. The Respondent^{further denles any erroneous} computation of the^{outstandingliability of Rs.44,36,828/-or levyof} excessive interest and^{states that the loan accountwas classifiedas} NPA on 29.03.2025^{in accordancewith the applicableRBI Guidelines'} It ls contended that the^{Demand Noticedated 02 04'2025under} Section 13(2) of the^{SARFAESIAct was duly servedupon the} Applicant/Guarantors through^{registered post and, uponfailure to} discharge the liability, the^{PossessionNoticedated 17.06'2025 was} issued under Section^{13(4), duly served, affixed on the secured asset} and^published in^{Eenadu (Telugu) and The Hans India (English)on} 23.06.2025, with supporting^{postal and photographicproof placedon} record. The Respondent,^{therefore,denies the allegationsof non-} service, non-affixture,^{non-publicatlon or violation of Rule 8 of the} Rules, 2002, and^{contendsthat the ApPlicant has approached the} Tribunal with unclean^{hands by making incorrectand contradictory} averments. It is further^{submittedthat the Respondent obtained an} order dated 10.11.2025 under^{Section14 of the SARFAESIAct in} Crl. M.P. No.519/2025 from^{the CJM-cum-PrincipalAssistantSessions} Judge, Kurnool, for taklng^{physicalpossessionof the securedasset,} which, accordinq to the^{Respondent,has not beenspeciflcally} challenged by the Applicant.^{On these grounds,the Respondent} contends that all statutory^{and procedural requirementswereduly} complied with, that the^{Applicatlon is devoid of merit and cause of} action, and accordingly^{seeks dismissal of the S'A' ln liminewith} exemplary costs.

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Both learned counsel for^the applicant and^{learned counsel for} the respondent reported^{no oral} arguments. Perused^{the written} arguments flled by the^applicant, respondent and also^perusedthe material brought on^record. $.'rt$

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Page 4 of6

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sA No. 399/2025

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Learned counsel for the Applicant reiterated the contentions raised in the S.A. and submitted that the Respondent Bank had failed to duly issue and serve the Demand Notice under Section 13(2) and the Possession Notice under Section 13(4) of the SARFAESI Act. It was further contended that the Respondent Bank had failed to compty with the mandatory requirements prescribed under Rules g(1) and 8(2) of the) Rules, 2002, in relation to the issuance, publication and affixture of the^possession Notice. Learned counsel also challenged the classification of the loan account as NpA and, on the aforesaid grounds, prayed that the measures initiated by the Respondent Bank against the S.A. Schedule property be set aside.

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Learned Counsel for the Respondent Bank, in hjs written arguments/ reiterated the contents of the reply statement, denied the averments made in the SA and placed reliance upon the documents filed along with the reply. It is submitted that the loan account was duly classified as NpA in accordance with the applicable RBI guidelines and that the Respondent Bank had stricUy complied with the procedure prescribed under the SARFAESI Act and the Rutes, 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 Applicant made out any valid ground to quash any of the measures initiated'by tn" iipora"il against the SA schedule property as prayed for?

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ii) To what relief?

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Point No.(i):

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Admittedly. applicant availed Cash Credit facilities against mortgage of schedule property and failed to make payment as per repayment schedule. Hence the action of the Respondent Bank in

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Pate 5 of6

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sA No. 399/202s

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classification oF account as NPA and initiating the SARFESI proceedings cannot be termed as illegal or irregular as contended by the applicant.

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The Respondent Bank filed material^{documentsas proofof} compliance of due^procedure of^{law.Pages 16 to 20 of the material} paper annexed with the reply statement are the Photostat^{copies of} postal acknowledgement proving service of demand^{notice.Similarly} the Respondent has filed the^{photostatcopies of postal receipts,} postal acknowledgement as a^proof of service of^{possession notice} dated 77.06.2025, copies of^{paper publication of the possession} notlce in English and Vernacular^{languageand photographof affixture} of the notice are also^placed on^{record. In view of sulficientproof} place on record, I flnd no infraction of section 13(2) & 13(4)^{of the} Act read with Rules 3, 8(1) & 8(2) of the^{Rules, 2002. As a secured} creditor the Respondent Bank initlated the^{SARFESI proceedings,} which cannot be categorized as illegal^{or arbitrary.}

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In view of the foregoing^{observations,this Tribunalfinds that} the Applicant has failed to establish^{any groundwarranting} interference with the measures initiated by^{the RespondentBank} under the SARFAESI Act, 2002,^{including the actionfor taking} physical possession of the SA Schedule Property. Accordingly,^{the SA} is liable to be dismissed.

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Point No.(ii):

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In the result, the Securitisation^{Appllcationfails and is hereby} dismissed. fiw'Y,'-|"

fiw'Y,'-|" U '$""

Page 6 of 6

SA No.399/202s

t2. Consequently, stay granted vide order dated L7.L2.2025 in IA.No.3741 of 2025 in the sA stands vacated and Interrocutory Applications pending, if any, shall stand closed.

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No order as to costs.

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L4. Communicate a copy of this order to the parties concerned and upload in the official website.

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(Typed-to my dictotion by the steno, corrected. signed dnd pronounced by me in the open couft on this the 25n doy of August, 2026).

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//w*u (*frMESHWAR KoTHE) PRESIDING OFFICER

Narala Raghavendra Reddy v. State Bank of India

Case brief

What is this about?

What did the court decide?

Narala Raghavendra Reddy v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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