Dismissed

J Surender v. Union Bank of India

DRT1 Jun 2026SA/451/2024

Case brief

AI extract

What is this about?

In an application under Section 17 of SARFAESI Act challenging a sale notice for auction of mortgaged property, the Debts Recovery Tribunal held that the applicant, as a third party with an unregistered agreement of sale, lacked locus-standi to question the bank's enforcement action post-mortgage creation and demand notices. Application dismissed.

What did the court decide?

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

J Surender versus Union Bank of India — Cheque Dishonour | DRT (2026)

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IN THE DEBTS RECOVERYTRIBUNAL.I AT HYDERABAD

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DATED THIS THE 1 ST DAY OF JUNE. 2026

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No.4s1,/2c24

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Jalala Surender, S/o Mr.Jalala Narsaiah, Aged 51 years, H.No.2-52l l, Lingampet Mandalam, Nallamadugu, NLambaad- SO3 124

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..Applicant

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Versus

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l.Union Bank of India , Rep. by its Authorized Oflicer,

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Stressed Asset Management branch, 3.d floor, Andhra Bank building, Sultan Bazar, Koti, HyderabaalSOO OSS.

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M/s Ramakrishna Electronics, f!T_o9l^{division, H.No.S1} I^{9Z t} /^A, SBI Colony, Kurnool, A.p._S1g bO1.

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Ramakrishna Teletronics p.Ltd., Rep. by its Managing Director H.No.5t/971lA,

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SBI Colony, Kurnool, A.p._Sf g OO1.

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Also at: Flat No.601, 601A, Pavani Estates, Khairatabad, Hyderabad-S0O O04.

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O Y.:Y Ravi Kumar, S/o V. Ananta Krishna, Aged 48 years, H.No.St/921/A, SBI Colony, Kurnool, e.p._SiS 0Of .

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Mr.V.Raghavendra, S/o V. Ananta Krishna, Aged 48 years, H.No.S1 SBI Colony, K

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..Respondents.

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Counsel Counsel

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Sri Ablng Singh Si V.Settw Madhaua Rao Exparte

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Reserued on Pronounced on Uploaded on

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:06.05.2026 :01.O6.2O26 :01.06.2026

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.:ORDER:-

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This application is filed by the Appricant u/s. 17 of the sARFAESI Act, 2002, challenging the impugned SaIe Notice dt.os.rr.2024 issued by the lst Respondent for conducting auction of the schedule property on 29.1t.2O24 and to declare the same as illegal and void.

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

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The Applicant herein is neither a borrower nor a guarantor to the proceedings initiated by the l"t Respondent against the schedule property but he is a 3'd part5r. Respondents No.2&3 are the principal borrowers whereas Respondents No.4 &S are the owners of the application schedule property and also the guarantors for the loan facilities availed by the RespondentsNo.2&3 from the rst Respondent. The Applicant was informed that one time settlement sanction retter would be issued by the l"t Respondent on deposit of amount of Rs.7.50 crores being the 1O% of total settlement amount and so, the Applicant was interested in purchasing the application schedule property which was one of the properties offered as collateral securities by the borrowers of the l"t Respondent. Terms of the sale were finalized between the parties and an agreement of sale dt.2g.12.2023 was executed between the Applicant and the Respondents No.4&5 herein and the total consideration was Rs.24,7S,00,000/_ and an amount of Rs.7.50 crores was paid by the Applicant herein as advance amount by I".4Sr.,e"gment of Saie to the Respondents No. 4&5 in part j."of tfo.i-"4S..ement of sale and the said amount was in turn the lslhChrondent by the Respondents No.2 to 5. The total "fl"tJ[ffnlfiled 29.O4.2024 was Rs. 13,96,00,000/_ on different occasions and theiCafter the Applicant also remitted Rs.4 crores, ,:.'!, 2 "lj';' .,..^{r l'} . .,,:, .. I .. . .;),..,

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totalling to Rs. 17,96,0O,000/- and is awaiting for the conlirmation from the lst Respondent for release of the original title deeds and issuance of NOC for the registration of the sale deed. In the meanwhile, the lst Respondent issued the impugned Sale Notice dt.05. 1 1.2024 fixing the date of auction of the schedule property ot 29.11.2024, however, the Bank did not mention the amounts received from the Applicant. The Respondent No. 1 is still holding the amount of Rs. 17,96,00,000/towards total sale consideration of Rs.24,75,00,00O/- for which, the Applicant agreed to purchase the application schedule property and so, the action of the l"t Respondent is highly illegal and arbitrary. Hence the SA.

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J-

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The l"t Respondent Bank filed their Reply denying alt the adverse allegations made in the SA. The contentions of the l"t Respondent Bank in brief are that the admittedly, the Applicant is fully aware that the SA schedule property is under the mortgage with the lst Respondent and he is also aware of the SARFAESI proceedings initiated by the lst Respondent against Respondents No.2 to 5. However he has not approached the Bank for issuing NOC for purchase of the said property. The alleged Agreement of sale dt.28.12.2023 is a fabricated agreement with anti-date in order to prevent the Bank from brining the properties for sale. The present SA is Iiled by the Applicant at the behest of the Respondents No.2 to 5. At the request ofthe Respondents No.2 &3, the l"t Respondent approved the OTS subject to payment of entire OTS amount of Rs.75.25 crores on or before 31.03.2024 and the Respondents No.2 &3 failed to pay the said amount within the stipulated time and as such, the OTS was cancelled and the Bank also communicated the same to Respondents No.2&3 vide their letter dt.OL.O4.2O24. The Respon-dent Bank has not given any type of assurance to the Respondents No.2 to 4 to sell the SA schedule t and the bank never requested the Applicant Respondents No.2&3 or to obtain demand Urban Bank Ltd. 0 1^JUNzmfi

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In view of the default committed by the Respondents No.2 to 5, the l"t Respondent Bank issued demand notices dt.Ol.OZ.2OlZ, O}.OZ.2OlZ, O3.O8.2OL7 & 03.08.2017 u/s 13(2) of the SARFAESI Act, 2OO2 arld. thereafter issued possession notice dt.03.05.2019 by duly following the procedure.. Thereafter, the lst Respondent issued the impugned sale notice dt.O5.1 1.2024 for conducting auction of the schedule property and the said notice was sent to the borrowers/mortgagors and the said notice was also published in two daily newspapers and also affixed on the schedule property. The Applicant herein is a 3.d part5r and the alleged Agreement of Sale dt.28.12.2}23 entered into by the Applicant with the Respondents No.4&5 is subsequent to the mortgage created by the Respondents No.4&5 in respect ofthe schedule property in favour of the 1"t Respondent Bank towards securit5r to the credit facilities availed by Respondents No.2&3 and also subsequent to the demand notices issued by the lst Respondent bank under the provisions of SARFAESI Act,2OO2. The Applicant being 3rd party, has no locus-standi to question the action of the l"t Respondent in initiating SARFAESI proceedings against the schedule property. Accordingly, the lst Respondent Bank prayed to dismiss the SA.

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Heard Ld. Counsel for the Applicant and Ld. Counsel for the lst Respondent Bank whereas Respondents No.2 to 5 remained exparte. Perused the material brought on record.

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Now, the points that arise for consideration are,-

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Whether the Applicant has any loals-standi to challenge the bg the 7"t Respondent bank against the the prouisions o/ SARFAESI Act, 2002

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Sale Notice dt.05.11.2024 issued bg the

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01Jl!ilEs

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Polnt No.lll t

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

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The Applicant is claiming that he entered into Agreement of Sale dt.28.12.2o23 with the Respondents No.4&5 for purchase of schedule property for a sale consideration of Rs.24,75,OO,000/- and paid an amount of Rs. 17,956,00,000/- towards advance. Admittedly, Respondents No.4&5 created mortgage in respect of the schedule property in favour of the lst Respondent Bank in security to the loan facilities availed by Respondents No.2&3 much prior to the said agreement of sale and the Applicant herein is also aware of the said fact as admitted by him. In fact, the l"t Respondent Bank issued demand notices u/s 13(2) of the Act to the Respondents No.2 to 5 after declaring the loan account as NPA, way back in the year 2OL7. After issuance of demand notices by the l"t Respondent Bank, Respondents No.4&5 are not expected to enter into any transaction in respect of the schedule property which is under mortgage without the consent of the secured creditor. Mere agreement of sale does not create any right or title over the schedule property, at the best, it gives right to the Applicant to claim damages from the Respondents No.4&5 for executing such agreement of sale subsequent to the mortgage created in favour of the l"t Respondent Bank. Further, there is no privity of contract in between the Applicant and the 1"t Respondent and the amounts allegedly paid by the Applicant are in favour of Respondents No.4&5. It is pertinent to note that Respondents No.2 to 5 who are borrowers/mortgagors are not contesting the SA an&for the reasons best known to them, they

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agreement of sale is an unregistered agreement -'"{};;" in evidence and will not create any right in The alleged Agreement of sale is executed in

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, -i"r*iJr{i' of the SARFAESI Act, 2OO2 and hence the legal sanctity and the Applicant has no locus-

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standi to challenge the proceedings initiated by the lst Respondent under the provisions of SARAFAESI Act, 2OO2 by virtue of the said Agreement of Sale dt.28.12.2o23.

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Section 13(13) of SARFESI Act, 2002 which reads as follows:

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"13(13): No bortouter shall, afi.er receipt of notice referred to in subsection (2), transfer by utag of sale, lease or otherwise (other than in tLe ordinary course of his business/ ang of his seanred assets referred to in tte notice, u.tithout pior turitten consent of tLe seanred creditor."

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Section 17 of the Registration Act, 1908 reads as follows:

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"No doanment required by Section 17 or bg ang of the proubions of the Transfer of Propertg Act, 1882 to be registered shall be receiued as euidence of ang transaction effecting such propertg or confirming such potuer unless it has been registered'.

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1 1. So, considering all the circumstances, I am of the opinion that the Applicant has no locus-standi to file the present SA challenging the impug:ned sale notice dt.05.1 1.2024 issued by the lst Respondent Bank for conducting auction of the secured asset and so, the present SA is devoid of merits. Accordingly, this point is answered against the Applicant and in favour ofthe 1st Respondent Bank.

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Point No.(iilt

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t2. In the result, the present Securitization Application is dismissed. Consequently, the Interlocutory Applications, pending if any, shall stand disposed of. No order as to costs.

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13.---Communicate a copy of this order to the parties concerned.

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;i ffi of ruftM2q. 4,1k,% liJ^ot,tur'ztrz6 '.rii <sup>l-C .'-.4

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bA her, conecte4 signed and pronounced by tue tn the open court ot this the lst d@g

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sdl(G. GOPTCHANDI PRESIDING OFFICER ry"wnRr-r, rtrrEnas.{,

J Surender v. Union Bank of India

Case brief

What is this about?

What did the court decide?

J Surender v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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