Dismissed

Sri Ch Naga Goverdhan v. Union Bank of India

DRT14 May 2026SA/493/2024

Case brief

AI extract

What is this about?

The Applicant sought to set aside recovery measures under the SARFAESI Act alleging procedural irregularities and defective notices. The Tribunal held the bank followed due statutory procedure and dismissed the application.

What did the court decide?

The Securitization Application was dismissed with no order as to costs.

What the court decided

Sri Ch Naga Goverdhan versus Union Bank of India — Contract and Commercial Disputes | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL _ II AT HYDERABAD DATED THIS THE 14TH DAY OF MAY, 2026

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PRESENT: SH. RAMESHIILS-QIH_E, B.Com, L.LB. (Hons.), M.A. PRESIDING OFFICER

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Securitization Application No. 493 OF 2024

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Mr. CH. Naga Govardhan S/o. CH. Gopi Mohan. Aged about 35 years, Occ: Business, R/o. H.No.9_g9, Thogata Street, Dharmavaram_ 515671

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.......Applicant

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Versus

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Union Bank of India Rep. by its Authorised Officer, Dharmavaram Branch, Situated at No.12-23, Sudharshan Complex, Dharmavaram, Sri Satya Sai District

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...... Respondents

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Counsel for the Appticant : Mr. Raghavulu Devalla Counsel for Respondent Bank : Ms. Sangeeta laiswal

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-:ORDER:-

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1' The present securitization Apprication is fired by the Appricants u/s.17 of the securitisation and Reconstruction of Financiar Assets and Enforcement of security Interest Act, 2002 ("Act" hereinafter for short) to set aside all the measures initiated by the Respondent Bank, including Physical Possession of the sA schedule property pursuant to advocate commissioner notice in pursuance of the warrant in Crl.M.P.No.12B of 2024 on the file of learned Chief Judicial Magistrate Cum Principal Assistant Sessions Judge, Ananthapuram and e-auction dated 13.12.2024 in pursuanc_e of sale notice dated 07.LL.2024 as iilesarand arbitrary. AYG"\

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Page^{2 oI5}

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SA No'^493/2024

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The^{case of applicant in brief is that the RespondentBank} sanctioned^{the term Ioan of Rs 17 Lakhs in the year 2019for business} development^{by securingthe facility withmortgage of the SA Schedule} Property'^{Due to severe business lossesarlsing out of the COVID-19} pandemicandtheconsequentlockdown,repaymentoftheloan became^{irregular, thoughsubstantial instalmentsweresubsequently} paid. Despite^{thesepaymentsand the repeated expressionsof} willingness^{to regularize,the RespondentBank allegedly proceeded} undertheSARFAESIAct,2oo2,Withoutfirstregularlzingtheloan account^{or furnishing authenticatedstatements of account'and} continued^{to initiate recovery actions even after accepting EMis and} other^{payments.The sale notice datedOT t12124 was never duly} served^{and he discoveredonly when bank officials visitedthe property'} and that^{the Bank thereafter refused to disclose the correct} outstanding^{dues, threatened immediatesale' and demandedfull} payment in a coercive^{and peremptorymanner' The Applicant} challenges^{the classification of the account as a NPA and contendsthat} the Bank adopted^{coercive and allegedly illegal measures with an} intenttosellthesecuredpropertyatagrosslyundervaluedprice. There are multiple^{proceduralviolations under the SARFAESIAct and} Rules, including^{non-service of notices under Section13(2) and 13(4)'} non-affixture^{and non-publicationof possession and sale notices in the} newspapers, and^{non-compliancewith the mandatoryrequirements} under Rules 8^{and 9 of the Security Interest(Enforcement)Rules'} 2OO2^{(hereinafter "Rules" for short). The Applicant further submits that} the e-auction notice^{is defective,the descriptionof the propertyls} unclear, and the^{reserve price of Rs.19,40,000/- has been arbitrarily} fixed far below the market^value of over^{Rs.40,00,000/-,without any} proper valuation report from approved valuers. Applicant emphasizes that, despite having^paid approximately Rs.^{15 Lakhstowards the} account, the Bank has failed to account for thesame. /w*^{By suppressing}

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Page 3 of 6

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SA No.493/2024

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the pendency of S.A. No. 493 of 2024 Respondent Bank obtained orders in Crl. M.P. No. 128 of 2024, and attempting to take physical possession through an Advocate Commissioner on the basis of allegedly defective and unsigned notices. Hence this SA to set aside all the measures.

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Respondent Bank filed reply statement. The submissions of the Respondent Bank, in brief, are that the SA is not maintainable either in law or on facts and is liable to be dismissed at the threshold. The Respondent Bank clarified that the loan sanctioned was not for business purposes, but a housing loan of Rs. 17 Lakhs granted on 03.07.20L9, and secured by mortgage of the SA Schedule^property. The Respondent Bank further submitted that it had extended sufficient opportunities to the Applicant for repayment, particularly in view of the national lockdown, and that the loan account statements duly reflect the repayment history. It was asserted that all actions were taken strictly in accordance with the procedure prescribed under the SARFAESI Act,2002. Upon default, the Bank issued a demand notice under Section 13(2) on 05.01.2024, which was duly served and also published in newspapers. Subsequently, a possession notice under Section 13(4) dated 02.09.2024 was issued, served upon the Applicant, affixed on the secured asset, and published in newspapers as per the statutory requirements. Further, pursuant to an order passed by the learned Magistrate, physical possession of the secured asset was taken on 08.01.2025 through an Advocate Commissioner, and a^panchnama along with^photographs was duly^prepared and preserved. The Bank also stated that the auction scheduled on 13.L2.2024 failed due to want of bidders. The^{Respondent accordingly} prays for dismissal of the Securitization Application and liberty^to continue with the recovery measures. ,Ay-rr* (^/,'/ 'tu'Y '

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Page 4 of 5

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sA No.493/2024

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The right of APPlicant to advance arguments^{was forfeitedon} 08.04.2026 after^affording ample opportunity.^{Heard the learned} counsel for the ResPondent Bank. Perused the material brought^on record.

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Learned Counsel for the Respondent^{Bank while reiteratingthe} contents of the reply statement,^{further submitted that on account of} default account became^NPA as^{per RBI guidelines,recovery} proceedings have been initiated by issuing demand^{notice and} possession notice which have been duly served, and the^possession notice having been affixed on the^{securedproperty and publishedin} accordance with the^Rules 8(1) and^{B(2) of 2002. Learnedcounsel} further stated that the impugned auction did^{not take place and} physical possession of the secured asset has already been^taken through advocate commissioner vide^{proceedings inCrl.MP} No.l2B/2O24. Learned counsel would assert that the^{respondentbank} has strictly followed the due^procedure as laid down in the^{Act and} Rules of 2002 and accordingly she sought to dismiss the SA^with exemplary costs.

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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 the respondent 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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At the very outset, it is observed that the applicant availed housing loan, but he wrongly portrayed in para-2 of the application, as if he availed term loan for business purpose and tried to take

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Page 5 ofG

SA No. 493/2024

advantage of business losses on account of Covid-19 pandemic and lockdown for default in repayment. The applicant has not come up with clean hands and hence the SA is liable to be dismissed on this ground alone. However, since the Respondent Bank brought certain material on record to prove that it followed due procedure of law, I deem it appropriate to dispose of the case on merits.

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Reportedly, the impugned auction scheduled on t3.tZ.ZO24 pursuant to sale notice dated 07.77.2024 was not successful for want of bidders. Under such circumstances/ the contention of noncompliance of Rule 8(5), 8(6) 8(7) & 9(1) of the Rules pertaining to the impugned auction need no consideration and SA has become infructuous to that extent.

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The other contention of the applicant is non-compliance of section 13(2) & 13(4) of the Act and Rules 3, 8(1) & 8(2) of the Rules, 2002. Learned counsel for the Respondent Bank relied on copies of documents annexed with the reply statement. Pages 1 to 7 of the material paper annexed to the reply statement are the Photostat copies of returned postal covers with postal remarks "Left without instructions" and paper publication of the same in English and Telugu (vernacular language) newspapers on 20.07.2024 proving service of demand notice. Slmilarly, Pages 9 to 16 are the Photostat copies of possession notice dated 02.09.2024 being sent by registered post, photographs as proof of affixture on secured asset and publication of the same in English and Telugu (vernacular language) newspapers on 04.09.2024. The Respondent Bank has also filed Panchnama^{for taking} physical possession of the SA Schedule Property at page 17. The documents placed on record by the respondent bank^remain undisputed. In view of sufficient^proofplace on record, I^{find no} infraction of section 13(2) & 13(4) of the^{ActaryC-Rules3, 8(1)& 8(2)} (/%$*

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Page 6 of 6

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SA No' 493/2024

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of the Rules,^{2002.As a securedcreditorthe} respondent bank initiated the SARFESI^{proceedings,which cannot be} categorized as illegal^or a rbitra ry.

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In view of above^{observations,it is concludedthat the applicant} failed to establish any^{valid ground to set aside the measures of the} Respondent Bank taken^{by the Respondent Bank against the SA} schedule^property under^{the provisions of the Act, 2002and Rules} thereunder, and accordingly^{the SA is liable to be dismissed.}

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Point No.(ii):

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t,\t,,",,$,,1\9,,I9,i!lLt,r,J,!s,,99,9y,'ill,sJ"t19,ll,,APBli.'.?tigl,.fPil,: ,,?I9..,1:, ,l],eIsPY dismissed.

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L2. Consequently, Interlocutory^{Applicationspending, if any,shall} stand closed.

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13, No order as to costs.

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