Dismissed

Mr Vedere Laxmi Vamsheedhar Reddy v. State Bank of India

DRT29 Jun 2026SA/48/2025

Case brief

AI extract

What is this about?

This application challenged the sale certificate issued after an auction of a secured property. The court examined whether the bank followed due process under the SARFAESI Act. Relying on Supreme Court precedents, the court held that mere procedural irregularities without fundamental errors or fraud do not invalidate a concluded sale.

What did the court decide?

The sale application SA. No. 48/25 was dismissed with no order as to costs.

Mr Vedere Laxmi Vamsheedhar Reddy versus State Bank of India — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT HYDERABAD

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DATED THIS THE 29TH DAY OF JUNE. 2026

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PRESENT: SRI GUMMADI GOPICHAND, PRESIDING OFFICER

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sA.No.48,/2025

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Mr.Vedere Laxmi Vamshedhar Reddy, S/o Vedere Laxmi Narayana Reddy, Occ:business, R/o H.No.2-40, Theegal village, Jagadevpur Mandal, Siddipet District-5023 1 1

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... Applicant

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Versus

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1 . State Bank of India,

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Rep. by its Authorized Officer Stressed Assets Recovery branch(SARB), TSRTC Commercial Complex, Bus Terminal Complex, Koti, Hyderabad-5OO 095

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Mr. Srimannarayana Guttikonda, S/o Guttikonda Narsaiah, Occ:employee, R/o H.No.24- 1- 12, Afzal nagar, Darga, R E Colony, Kazipet, Hnumkonda District-506004.

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. .. Respondents

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Counsel for tLe Applicant Counsel for tle Respondent No.7 Respondent No.2

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: Sri K. Kranthi Kumar Si P.V. Satg anaraana Exparte

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Reserued on Pronounced on Uploaded to the website on

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07.05.2026 29.06.2026 30.06.2026

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ORDER

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6*#*r, 1. fHis appt&lio., is /^{s. I 7 of the Securitization and Reconstructionof} Enforcement of Security Interest Act,2OO2 nging the auction conducted by the 1"t

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Respondent on 28.77.2024 in respect^{of the scheduleproperty and also} the consequent Sale Certificate^{dt.31.12.2024issued infavourof} Respondent No.2 and to declare the^{same as null and void.}

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The averments made by the Applicant^{in briefare as follows:}

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The Applicant along with his father^{as co-Applicantavailed Home loan of} Rs.52,82,000 l- from the lst Respondent Bank^{and the officials of the} Bank obtained their signatures on the blank^{documents.The lst} Respondent Bank claimed abnormal charges and^{excessive interest.} Subsequently the 1"t Respondent Bank^{classifiedthe loan accountof the} Applicant as NPA. Thereafter, without issuing^{demandnoticeand} possession notice, the oflicials of the Bank along^{with advocate} commissioner visited the schedule^{propertyin the monthof November,} 2023 arrd forcefully taken^{physical possessionof the schedule property} by vacating the Applicant and his family^{from the premisesand seized the} property without following the due process of law. Subsequently,^{in the} month of January, 2024, the Applicant^{approached the Bank for OTS and} deposited a sum of Rs.6,95,000/- in No^{lien account as per the} instructions of the Bank. Later^{when the Applicant visitedthe schedule} property, Respondent No.2 who is the auction^{purchaseris in possession} and informed that the schedule^{property was already sold in e auction} and the bank registered the sale certificate^{in his} favour.^Before conducting auction of the schedule^property, the^{1st RespondentBank} failed to obtain valuation of the schedule^{property and the reserve price} fixed was very low. The impugned sale notice was not^served on^the Applicant e was not published in two leading^{newspapers. The} 8(1X2)& 8(6) of Security Interest^{(Enforcement)} ,1} Rules,' 2002..' f.Ience .fr i. l-' ? I^{l':: jrTF} lst Respondent Bank file{r Reply denying all the adverse allegations made ii{lthe se and-cb{id ed that the Applicant availed Housing loan^of r$;msY

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Rs.52.82 lakhs in the year 2Ol7 frorn the 1st Respondent and in view of the default committed by the Applicant in repaying the loan dues, the 1st Respondent Bank classified the loan account as NPA on 13.12.2021 and initiated proceedings under the provisions of SARFAESI Act, 2002. The bank issued demand notice dt. 10.05.2022 and the said notice was served on the Applicant and thereafter, the bank issued possession notice dt.12.O6.2O23 and the said notice was published in two daily newspapers and the said notice was also affixed on the schedule property and thereby followed Rule 8(1)(2) of Security Interest (Enforcement) Rules, 2OO2 and it is false that the Applicant submitted OTS proposal and deposited Rs.6,95,000/- in No Lien account. Thereafter, the Bank proceeded further and obtained warrant from the Hon'ble CJM for taking physical possession of the schedule property and also took physical possession by strictly following the procedure. The bank took inventory of movables lying in the schedule property through the advocate commissioner and the said advocate commissioner issued notice dt.06. 10.2023 to the Applicant to remove the movables from the schedule premises. The Applicant had also taken the household articles from the schedule property as per the Panchanama list. When there is no response from the Applicant, the Bank issued the impugned e Auction Sale Notice dt.O7 .11.2024 fixing the auction on 29.17.2024 in respect of the schedule property and before issuing the said sale notice, the bank obtained two valuation reports from the approved valuer of the Bank. The said sale notice was duly served on the Applicant and the same was also published in two leading newspapers. In pursuance of the said sale notice, the Bank conducted auction of the schedule property on 29.11 .2024 and Respondent No.2 herein was declared as successful bidder and sale certificate was issued on 13.12.2024 and the "J-. -"" registered on 31.72.2024 in favour of the Thus, the 1st Respondent Bank has duly followed the under the provisions of SARFAESI Act, 20O2 and in conducting auction of the schedule property. * sel prayed to dismiss the SA. '7 fgoS$p*nnia. -'l^a ,A ., -o-:Yr Wa..nP

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Heard Ld. Counsel for the Applicant and Ld. Counsel for the^1"t Respondent Bank whereas Respondent No.2 remained exparte.^{Perusedthe material} brought on record.

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Now the points that arise for consideration are

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ii. uhether the Applicant has established any ualid^grounds for challenging tle Sale Certificate dt.31.12.2024 registered bg the^lst Respondent Bank in fauour of Respondent No.2 -auction^purchaser in respect of the schedule property pursuant to the auction conducted on 29.1¹ .2024?

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iii. To what relief?

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Point lVo.(i):-

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During the course of arguments, Ld. Counsel for the Applicant and [d. Counsel for the 1st Respondent reiterated their^{respectiveversionsas} stated supra.

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7 . There is no dispute regarding the fact that the Applicant availed^home loan of Rs.52.82 lakhs from the lst Respondent bank and^{thereafter,the} Applicant committed default in repaying the loan dues. After classiftring the loan account of the Applicant as NPA, the Bank^{initiated action under} the of SARFAESI Act, 2OO2 and conducted auction of the d also issued sale certihcate dt. 13.12.2024 in favour -Respondent No.2 herein and challenging the

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#;; same, tti?i'Applicarlt Ii the present SA. -t.

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without issuing demand notice and and without following the^procedure

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contemplated under the provisions of SARFAESI Act,2OO2 and Rules made thereunder, the bank conducted auction of the schedule propert5r and also forcefully taken physical possession ofthe schedule propert5r and so, the impugned sale certilicate dt. 13.12.2024 is not legal and valid and liable to be set aside.

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But the l"t Respondent Bank contended that they have issued all the statutory notices to the Applicant under the provisions of SARFAESI Act,2OO2 and Rules made thereunder and also followed the procedure in conducting auction of the schedule property. Respondent No.2 herein participated in the auction on 29.11.2024 who became successful bidder and he paid the entire bid amount and so, sale certificate was issued in his favour and physicai possession of the property has also been taken by the Bank through advocate commissioner under inventory and panchnama by duly following the procedure .

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To substantiate their contention, the 1st Respondent Bank filed material documents along with the Reply hled by them. As^per the said documents, it is clear that the bank issued demand notice dt. 10.05.2022 u/s 13(2) of the SARFAESI Act,2OO2 and the said notice was served on the^Applicant as evidenced by the postai acknowledgements filed by the^Bank. Thereafter, the bank issued possession notice dt.12.06.2o23 and the said notice was published in two daily newspapers and the same was affixed on the schedule propert5r as depicted in the copies of^{photographsl-rled by} the bank. Thereafter, the Bank^proceeded u/s 14 of the^SARFAESI Act,2OO2 for taking physical possession of the schedule^{property pursuant} orders of Ld.CJM, Hanamkonda and the said advocate issued vacate notice to the Applicant to handover the n and thereafter, took physical possession of the duly following the procedure under inventory and ,^{the Bank issued E Auction Sale Notice} the said notice was^published in two daily newspapers

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as evidenced by the^{copies of paperpublicationfiled by the Bank and the} said notice was also affixed^{on the schedule property as depictedin the} copies of photographs Iiled^{by the Bank. Before issuing the sale notice,} the Bank obtained valuation reports^{dt.26.1).2024 from the approved} valuer of the Bank and fixed the reserve^{price in respect of the schedule} property. So, the contention of the Applicant that the^{1"t Respondent} Bank has not followed^{procedure prescribedunder the provisions of} SARFAESI Act,2OO2 and Rules made thereunder^{in conductingauction of} the schedule property is not tenable. In the auction^{conductedby the 1st} Respondent Bank on 29.11.2024 in respect of the^{schedule property,} Respondent No.2 herein became the successful bidder for a^sale consideration of Rs.65,34,000/- and he^paid the entire^bid amount^and a sale certific ate dt.13.12.2024 was issued and the same^{was registered} in his favour on 31.12.2024.

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In a recent^judgement of the Apex Court in Celir LLP Vs. Mr.Sumati Prasad Bafna in Contempt Petition (C) NOS.158-159 12024 in Civil Appeal Nos.5542-554312023, the Honble Supreme Court held as follows:

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218:^.Ang sale by auction or otlrcr public^procurement methods once alreody confirmed or concluded ought not to be set aside or interfered uith lightlg except on grounds thot go the core of such sale process, such as either being collusiue, fraudulent or uitiated bg inadequate picing or underbidding. Mere irregulaitg or deuiation from a rule uthich does not haue ang fundamental procedural error does not take autog the foundation of authoitg for proceeding. In such cases, courts in partianlar should be refrain entertaining ong ground for challenging on either could haue been taken earlier before the sale and confirmed or uhere no substantial injury Lns 2gJU account of such irregtlaity "

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So, considering all the circumstances, I hold that the Applicant has miserably failed to establish any valid ground for challenging the auction conducted by the Respondent Bank on 29.11.2024 in respect of the schedule property and also the sale certificate dt.13.12.2024 issued in favour of the auction purchaser and so, there are no merits in the SA. Accordingly, this point is answered in favour of the 1"t Respondent Bank and against the Applicant.

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Point No.(il)r

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In the result, SA 48/25 is dismissed as there are no merits. Consequently, the Interlocutory Applications, pending if any, shall stand disposed of. No order as to costs.

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Communicate a copy of this order to the parties concerned.

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(Dictated to the P.S, transcibed bg her, corrected, signed and pronounced bg me in the open court on this the 29th daA of June, 2026).

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sd/(G. GOPr CHANDI PRESIDING OFFICER

Mr Vedere Laxmi Vamsheedhar Reddy v. State Bank of India

Case brief

What is this about?

What did the court decide?

Mr Vedere Laxmi Vamsheedhar Reddy v. State Bank of India

Case brief

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