Dismissed

Lodhi Karthik v. Indostar Capital Finance Pvt. Ltd.

DRT21 Apr 2026SA/416/2023

Case brief

AI extract

What is this about?

Debt Recovery Tribunal dismissed an application filed under Section 17 of SARFAESI Act by tenants challenging possession proceedings. The court held applicants lacked locus standi as third parties with only oral tenancy rights, noting leases over one year require registered instruments.

What did the court decide?

Special Appeal No. 416/2023 dismissed; pending interlocutory applications disposed of. No order as to costs.

Lodhi Karthik versus Indostar Capital Finance Pvt. Ltd. — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERYTRIBUNAL.I AT HYDERABAD

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DATED THIS THE 2 1^ST DAY OF APRIL, 2026

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No.416/2023

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Lodi Karthik, S/o. Lodi Anjaiah, Age 30 years, Occ : Self Employed, Male, R/o. Flat No. 1, Third Floor, H.No. 1-3-183 I 40 I 46 I Al 1t I C, Opp. Sai Baba Temple, Sai Nagar Colony, New Bakaram, Bolakpur, Hyderabad, Telangana - 500 080.

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V. Shiva Kumar, S/o. V. Arjun Kumar, Age 43 years, Occ: Service, Male, R/o. Flat No.2, Third Floor, H.No. 1-3- 183 l40 l46l Al 1t lc, Opp. Sai Baba Temple, Sai Nagar Colony, New Bakaram, Bolakpur, Hyderabad, Telangana - 500 O80.

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Patan Kaleemullah Khan, S/o.Patan Bande Khan Habibullah Khan, Age 28 years, Occ : Self Employed, Male, R/o. Flat No. 3, Third Floor, H.No. 1-3-183 I 40 I 461 Al tt I c, Opp. Sai Baba Temple, Sai Nagar Colony, New Bakaram, Bolakpur, Hyderabad, Telangana - 500 080.

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Lavudya Prashant, S/o, L.Soma, iitT-,^ffi+:j1#7#*6'\H.No. 1-3-183 I 40 I 46 I Al 1 1/C * opp. Sai Baba Temple, Sai Nag+r Cdo4V4PH &[ New Bakaram, Bolakpur, l\ i - ^? licants Hyderabad, reran gana^_ .., *p_fum.#

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VERSUS

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Indo Star Capital Finance Limited, Rep. by its Managing Director, Reg. Office : One World Centre, 20fr Floor, Tower 2A, Jupital Milis Compound, Senapati Bapat Marg, Mumbai - 40 013. And Also - Indo Star Capital Finance Limited, Rep. by its Authorized Signatory, Branch oflice at H.No. 7-l-621 1276, 3.d Floor, NKS's Bharathi Complex, Above Canara Branch S.R. Nagar, Main Road, Sanjeev Reddy Nagar, Hyderabad - 5O0 O38

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Sri Raj Kumar Gurram, S/o. Late Laxminarayana, Age 5O years, Occ : Business, Male, Plot No. 28, Baghya Laxmi Nagar, Near Little Flower School, Padmashali Colony, Hyderabad, Telangana.

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Sri. Suresh Kumar Gurram, S/o. Late Laxminarayana, Age 53 years, Occ : Self EmPloYed,^Male, Flat No. 1, 2"d Floor, H.No. 1-3-183 I 40 I 461 Al rr lB, Opp. Sai Baba Temple, Sai^{Nagar Colony,} New Bakaram, Bolakpur, Hyderabad, Telangana - 500 080.

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Sri. Srishallam Gurram,

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S/o. Late Laxminarayana, Age 56 years, Occ : Self Employ

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H.No. 6-1-168/ 1, Mohan ReddY Westley Church, Padmarao^N Hyderabad Telangana. 5. Sri. Srinivas Gurram, S/o. Late LaxminaraYana, Age 43 years, Occ : Self H.No. 4-8-2 16lP/VN/48SP & 49,^fue*d"#

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Srinika Nilayam, Road No, 2, Vasanth Nagar, Hayatnagar, R.R. District, Telangana - 500 080.

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M/s. Sai Raja Steel Traders, Plot No. 1, Bhavana Rushi Housing Society, Dhammaiguda Hyderabad Telangana - 500 062.

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M/s. Srinivasa Agencies, r-3-t83l40l46lAllt, Sai Nagar Colony, Gandhi nagar, Secunderabad, Near Temple, Hyderabad Telangana - 500 080.

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M/s. Raj a Steel Syndicate, 3-3-269 Opp. Idea Show room, Near Ring Road, L.B Nagar, Saroornagar, R.R. District, Telangana - 500 074.

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Encore Asset Reconstruction Company Private Limited, Caddie Commercial Towers, Regus Business Centre, 5tr, Floor, Aerocity (Dial), New Delhi - 11O O37.

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And also at - Encore Asset Reconstruction Company Private^Limited, 5tt' Floor, Plot No. 137, Sector - 44, Gurugram - 122 OO2. And also at - Encore Asset Reconstruction Company Private Limited, 101, Executive Zone, Shakthi Tower 1, Ground Floor,766, Mount Road Chennai - 600 002. (Respondent No.9 i order in I.A. No. 32 of Respondents Counsel for the s Chauan & Associafes Counsel for C. Visutanath Respondents No

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Reserued on : 12.03.2O26 Pronounced on : 21.04.2026 Uploaded on :21.O4.2O26

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:ORDER:-

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This application is filed by the Applicants u/s.17 of the SARFAESI Act, 2OO2, ch.allerging the steps initiated by the Respondent No.9 (earlier 1st Respondent) for taking physical possession of the portion of the schedule C property through Advocate commissioner pursuant to the orders of Ld.X ACMM, Secunderabad in Crl.M.P.No.2l44 123 and to declare the same 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 to the^loan facilities sanctioned by the Respondent No.1 to^{Respondents No.2to 8} herein. The Applicants are the bonafide tenants of^{the portion of the} schedule properties (C schedule^property) since^{2O16 before the} creation of the alleged mortgage dt.^{19.01.2018 infavour of the} Respondent No.1. The Applicant No.1 is a tenant^{and in occupation of} 3 BHK potion in third floor for a monthly^Rent of^Rs'2O,000/-, Applicant No.2 is a tenant and in occupation of^31BHK flat in^third floor on a monthly rent of Rs.9,530/-;^{Applicant No.3 is a tenant and} in occupation of 1 BHK flat at third floor on a^{monthlyrent of} Rs.10,000/-; Applicant No.4 is a tenant and^{in occupationof 1 BHK in} third floor on monthly rent of Rs. 10,000/-^{from RespondentNo.2 more} fully described in C schedule^property under^{oral tenancy. Originally,} Respondents No.2 to 5 being the owners and^{possessorsofthe schedule} B property ing 324.80 sq.yds., demolished two floor building 1n the ed Ground plus 4 upper floors building wl,#'6r't-r'o& r;hN r, in furtherance to the transfer of^the floor of the of house property was flffi,:,::w;:Tp$ t$:o ,a^(.s6ffit ru.t Thereafter, Applicants No.1 to 4 from Respondent No.2 on monthly^rest.

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ffi,-*

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The Applicants are paying monthly rents to Respondent No.2 without any default since last 8 years. Suddenly, some of the officials of l"t Respondent along with advocate commissioner visited the schedule property and affixed Vacate Notice dt.03.1L.2O23 pursuant to the orders of Ld.X ACMM, Secunderabad and directed to the Applicants to vacate the C schedule property and informed that Respondents No.2 to 5 mortgaged the B schedule property in security to the loan facilities availed by them from the l"t Respondent. The B schedule property mortgaged by the Respondents No.2 to 5 and now the C schedule property, which, the Respondent No.l is proceeding u/s 14 of the SARFAESI Act,2002 are not tallying with each other and so the said proceedings are not legal. Hence the SA.

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Respondent No.9 filed their Reply denying all the adverse allegations made in the SA and contended that the Applicants herein are 3'd parties to the proceedings initiated by the 1.t Respondent and they do not have any right, title or interest over the schedule property and in collusion with Respondents No.2 to 5, they liled the present SA. Originally, Respondent No.2 as borrower and Respondents No.3 to 8 as coborrowers availed SME LAP loan from the 1st Respondent and Respondents No.2 to 5 created mortgage in respect of the Item No.l,ll,lll&IV of the property i.e. all that portion of house bearing Municipal No.l-3-l83l40l46lAl11&12 consisting of ground & lst floors situated at New Bakaram, Hyderabad. Thereafter, Respondents No.2 to 8 committed default in repaying the loan dues and the loan account was classified as NPA by the 1sr Respondent on 08.05.2023. So, the l"t Respondent issued demand notice and possession notice to the Respond-ents No.2 to 8 by duly following the^procedure and the s 14 of the SARFAESI Act, 2OO2 for taking pt)rsidfr{ schedule property. During the pendency of tHg ffi, pany assigned the debt in favour of the T.$""+"f^{Wfl UdfiReg*.} ssignment Agreement dt.24.O4.2024. The who are 3'd ,^{claimingas tenants of RespondentsNo.2}

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to 5, have no right to challenge the proceedings initiated by the 1"t Respondent against the schedule property as the Applicants have no valid tenancy. Accordingly, Respondent No.9 prayed to dismiss the SA.

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Heard Ld.Counsel for the Applicants and Ld. Counsel for the

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Respondent No.9 and perused the material brought on record.

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Now the points that arise for consideration are

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i. whetLer the Applicants are hauing loctts-standi to challenge the proceedings initiated bg the Respondent No.9 under the prouisions of SARMESIAcI, 2002 in respect of the schedule propertg?

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ii. To what relief?

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Point IVo.(if :-

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During the course of arguments, Ld. Counsel for the Applicants and Ld. Counsel for the Respondent No.9 reiterated their respective versions as stated supra.

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Even as per the version of the Applicants, they are neither borrowers nor mortgagors to the proceedings initiated by the 1"t Respondent, now Respondent No.9 against the schedule property but they are only tenants under oral tenancy from Respondents No.2 to 5 and there is no rental agreement. The alleged tenancy claimed by the Applicants is not supported by any documentary evidence except rental receipts and^by the C d challenging the proceedings initiated by the Res property mortgaged by Respondents No.2 to 5i Scurity e loan es availed by Respondents No.2 to 8 from all the subsequent transactions in respect

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f^*"u,**t

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of the schedule property shall be subject to the mortgage created in favour of the secured creditor.

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Further, the Applicants are alleging that Schedule C property i.e. part of the mortgaged property was let out under oral tenancy.

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Under Section 1O7 of the Transfer of Propertg Act, 7882, a lease of immouoble properag from gear to gear, or for a tenn exceeding one Uear,^{or resenting gearlgrent, co;n be created onlg bg a registered} instntment.

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Ld. counsel for the Respondent No.9 in this conruection,^placed his reliance on the decision of Hon'ble Apex Court in Harshad Gouardhan Sondagar^u. International Assets Reconstruction Company Ltd.& Ors. utherein it is^held that tenancy for a term exceeding one Aear must be euidenced^{bA a} registered instrument in the absence thereof, suchtenancg cannot^{be legallg} recognized under tLLe SARFAESI Act.

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So, considering all the circumstances, I am of^{the opinion that the} Applicants being 3rd parties who are neither owners^{nor mortgagors of the} schedule property, are not entitled to challenge^{the proceedings initiated} by the Respondent No.9 (substituted in^{place of 1"t Respondent)in respect} of the schedule C property which is^{part of the mortgaged propertyunder} the provisions of SARFAESI Act, 2OO2, by^{virtueof the oral tenancyfrom} Respondents No.2 to 5 herein. Accordingly,^{the Applicants have no locus-} standi to challenge the^proceedings initiated^{by the RespondentNo.9 under} the provisions of SARFAESI Act, 2OO2 in^{respectof the schedule property.} So, I see no ground warranting interference^{of this Tribunal with the steps} initiated by ndent No.9 for taking physical^possession of^the schedu the SARFAESI Act, 2OO2. Accordingly,^this of the Respondent No.9 and against the