Allowed

Smt P Ratna Priya and another v. State Bank of India

DRT1 Jul 2026SA/426/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the application setting aside a possession notice issued under Section 13(4) of the SARFAESI Act. The Tribunal held the bank failed to prove service of the notice under Rule 8(1), despite documentary evidence of publication and affixture.

What did the court decide?

Setting aside the possession notice dated 30.07.2024 issued under Section 13(4) of the Act.

Smt P Ratna Priya and another versus State Bank of India — Execution and Attachment | DRT (2026)

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

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DATED THIS THE O1ST^{DAY OF JULY,2026}

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

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Securitization Application^{No.426OF 2024}

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Smt. P. Ratna Priya,^{W/o.P. Ram Subash} Aged 50^{years, Occ; Business}

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Poreddy Ram Subash,^{S/o. P. SudhakarReddy} Aged 55^{years, Occ; Business}

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Both R/o.H.No. 12-lL-!457 /^I Plot No. A/21l2,^Boudhanagar .Applicants Warasiguda, Secunderabad

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Versus

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State Bank of^India, SME Branch^(16443), Dilsukhnagar,^{Plot - 54-55,} Near PVT^{Market, Kothapet,} Hvderabad-035, Aep. OY its^{Authorlzed Officer}

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......ResPondent

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: M/s. T. Sridhar^ReddY counsel for the^A1|licants : Mr. M. P.^SanjaY Counsel^{for Res7ondent}

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-:ORDER:-

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l.ThepresentSecuritizationApplicationisfiledbytheApplicants uls.l7 ot^{the Securitisationand Reconstructionof FinancialAssets} andEnforcementofSecuritylnterestAct,2002C.Act"hereinafterfor short) to^{set aside all the measuresinitiatedby the Respondent Bank} undertheAct,includingtheactionoftakingphysicalpossessionof the SA Schedule^{Property pursuantto advocate commissionernotice} dated 03.10.2024^{in crl.M'P'No3104 ol 2024on the file oTfftnedx} Additional^{Chief ludiclal Magistratecourt, Secunderab"d '} Uy'Wj'\

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Page 2 of5

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5A No. 42612024

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The averments of the application, briefly, are that the Applicants availed various credit facilities from respondent and created mortgage in favour df respondent bank agajnst the SA Schedule properties. They had been regularly servicing the loan accounts without any willful default. They became aware of SARFAESI proceedings on 07.10.2024 when persons claiming to be the bank,s recovery agents, accompanied by an Advocate commissioner, visited the schedule property seeking possession pursuant to orders in Cri.lvl.P. No. 3704/2024, At that time the applicants were served with a copy of the Advocate Commissioner,s notice dated 03.10.2024 and an undated possession notice. Applicants allege that no demand notice under Section 13(2) dated 01.04.2024 was ever served, and no possession notice under Section 13(4) was served, affixed on the secured asset, or published in newspapers as required under Rule g. They further contend that the possession notice did not bear any date and that the respondent failed to register the security interest and alleged liabitity with CERSAI which disentifles the respondent from enforcing the security interest. Relying on Mardia Chemicals Ltd. v. union of India, they submit that secured creditors must act fairry and reasonably in enforcing security interests. Applicants also relie upon Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd. and Sravan Dall Milt v. Central Bank of India to emphasize that strict compliance with SARFAESI procedure is mandatory. With these contentions applicants pray for dismissal of the SARFESI measures initiated by the respondent bank.

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The Respondent Bank filed reply statement along with documents. The averments thereof, briefly, are applicants have deliberately misrepresented material facts and have not approached the Tribunal with clean hand!. Wnile admitting that various credit facilities were sanctioned to the applicants for business purposes and ,^zQiqz+ /va.,r'

PaBe 3 of5

SA No. 42512024

that the schedule^property and other^{properties were mortgaged as} security, the bank denies that the^{loan accountswereregularly} maintalned. It asserts that the applicants^{committed persistent} defaults, resulting in classification of^{the loan account as a NPA on} 29.03.2024. Subsequently, a demand^{notice under Section13(2)and} a^possession notice dated 30.07.2024^{was issuedunder Section 13(4)} of the Act on 31.03.2024. The bank^{further states that physical} possession proceedings were initiated through an^Advocate Commissioner^pursuant to^{orders passed in Crl.M.P.No. 3104 of 2024} by the XIV Additional Chief^{Judicial MagistrateCourt, Secunderabad;} on 07.f0.2024 the^{Advocate Commissioner, accompanied by bank} officials, visited the^{securedasset, served copies of the court order} and vacate notice, and at^{the applicants'requestgrantedfifteen days'} time to vacate the^{premises. Accordingly, the RespondentBank prays} for dismissal of the S.A.

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

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During the course of^{arguments learned counsel for the} applicant reiterated the^{contentof its application and wouldsubmit} that they never defaulted in^{repaymentof the loan hence the} classification of account^{as NPA is bad in eye of law. Learnedcounsel} further alleges non service of^{demand noticeand possession notice} and vlolation of the^Rule 8^{as possessionnotice was neither affixed} over the secured assets^{nor was published in two leadingnewspaper'} Counsel also challenges^{the validity of the advocatecommissioner} notice on the^ground of non^{complianceof the prerequisite} compliance ln the Act,^{2002,hence counselprays forlguashingof the} advocate commissioner^{notice dated 03.70.2024. /ffi*u}

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PaBe 4 of5

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5A No.42612024

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Per contra, learned counsel for the Respondent Bank denied the averments of the Applicants and placed reliance upon the material papers annexed to the reply statement. It is submitted that the Applicants' 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 dismissal of the S.A.

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The points for consideration are as follows : -

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i) Whether the Applicants made out any valid ground for quashing the action of the Respondent Bank from taking the physical possession of the SA schedule property through Advocate Commissioner appointed under the provision of the Section 14 of the SARFESI Act?

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ii) To what relieQ

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Point No.(i):

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The respondent bank filed material documents along with reply statement as proof of compliance of due procedure of law. A perusal of the same would confirm that the demand notice was personally served. Similarly the respondent bank has filed the photostat copies of paper publication of the possession notice in English and Vernacular language and photograph of affixture of the notice at the conspicuous part of the secured asset. Though asserted to have sent the possession notice by registered post, the respondent bank has not placed any proof. It is mandatory under Rule B(1) the Rules, 2002 to cause service of the possession notice on the borrower. In the absence of proof, it is deemed that respondent bank failed to follow Rule 8(1) of 2002. Accordingly the SA deserves to be allowed by setting aside the possession notice dated ZO.OI.ZOZ4.O>- , " ". ", . -uzz2.dr__. 01.L\

Patesofs

sA No. 42512024

Point No.(ii):

h the result, the Securitisation^{Applicationis allowed by setting} aside the^possession notice dated^{30.07.2024issuedunder Sec.13(4)} of the Act, 2OO2 by the^{respondent bank againstthe SA schedule} property.

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However, this order does not^{preclude the respondentbank} from issuing^possession notice^{afresh, strictly in accordancewithlaw.}

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Consequently, Interlocutory^{Applications pending, if any, shall} stand closed. No order as to^{costs. Communicate a copy of this order} to the^parties concerned and^{upload ln the offlcial website.}

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llype(!^{tomydictotion by the ,teno,conected,signed ondpronouncedby mein theopen coutt onthis} the o1't day of ruly,2026).

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ffi.1sr'\ L/;''o"-(RAMESHWAR KOTHE) PRESIDING OFFICER

Smt P Ratna Priya and another v. State Bank of India

Case brief

What is this about?

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Smt P Ratna Priya and another v. State Bank of India

Case brief

What is this about?

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