Dismissed

Panyala Pushpalatha and Another v. Andhra Pradesh State Financial Services Corporation Limited

DRT2 Jun 2026SA/69/2025

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal, Hyderabad dismissed a standing application filed by borrowers and guarantors challenging the Respondent's possession proceedings. The Tribunal held that the Secured Creditor duly followed statutory procedures under Sections 13 and 14 of the SARFAESI Act, 2002 and the accompanying Rules, thereby rejecting the contention that the proceedings were illegal or void.

What did the court decide?

The standing application filed by Applicants challenging the proceedings for taking physical possession of the schedule properties was dismissed.

Panyala Pushpalatha and Another versus Andhra Pradesh State… — Banking and Recovery | DRT (2026)

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INTHE DEBTS RECOVERYTRIBUNAL- I AT HYDERABAD

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DATED THISTHE 2ND DAY OF JUNE, 2026

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PRESENT: SRI GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No.69./2025

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1.Mrs. Panyala Pushpalatha W/o P.Mallaiah, aged 70 years, Occ:business , Rlo 1O-I-6a ll, Ramnagar, Karimnagr-50500 1

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Mr.Bolneni Babu Rao S/o Venkata Ramana Rao, Aged 7 L years, Occ:business, R/o 10-5-15, Ramnagar, Karimnagar-505001.

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... Applicants

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Versus

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Andhra Pradesh State Financial Corporation Rep. by its Authorized Representative Karimnagar branch, 2-7 -37 3, Opp. Collectorate complex, Karimnagar-S0s 001..

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... Respondent

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Counsel for the Applicants : Si Kranthi Kumar Kadai Counsel for Respondent : Si R.Rajendra^prasad

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Reserued on :08.05.2026 Pronounced on :02.06.2026 Uploaded on :03.O6.2026

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ORDER

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This of the SARFAESI Act, 2002, by the Respondent for taking physical property through Advocate commissioner Ld.CJM, Karimnagar in Crl.M.P.No. 176 illegal and void.

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The averments made in the application, in brief,^{are that:}

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The Applicants are the borrowers and^{guarantors to the loan facilities} availed by M/s Compass Granites to a^{tune of Rs.94lakhs from the} Respondent and the Applicants herein created mortgage^againstthe schedule properties to secure the repayment of the said loan facilities. Thereafter, the Applicants requested the Respondent for OTS and the Respondent accepted the same for a sum of Rs. 170 lakhs and as^per the said OTS, the Applicants paid Rs.27 lakhs and Rs. 15 lakhs as down payment but due to financial crunch, the Applicants could not pay the balance OTS amount and in view of the same, the OTS was cancelled. Due to frnancial crunch and electricity problems, the Applicant's unit was closed and they could not pay some instalments. In the meanwhile, without serving demand notice and possession notice, the Respondent straightway proceeded for taking physical possession of schedule properties pursuant to the orders of Ld.CJM, Karimnagar and so, the said proceedings are not legal and valid. The impugned possession notice was not published in two daily newspapers and also not affixed on the schedule properties as contemplated u/r 8(1)&(2) of Security Interest (Enforcement) Rules, 2002. Hence the SA.

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The Respondent filed their Reply denying all the adverse allegations made in the SA and contended that the M/s Compass Granites, a partnership Iirm availed a loan of Rs.94.23 takhs and the Applicants herein created mortgage in respect of the schedule properties in security to the said loan facilities in favour of the Respondent. After availing the loan facilities, Applicants committed default in repayment of loan dues and so, the Respondent declared the loan account ofthe Applicants as NPA on 30.06.2013 as per the guideline of RBI. Accordingly, the Respondent issued dem4nd notice dt.07.01.2019 u/s 13(2) of the SARFAESI Act, was sent to the borrowers and Applicants ,^{the Respondentissued possession} .:.- - .i. iir and fi{sdlfll rfd!fte wiq;published in two daily newspapers and the same was also on the schedule properties. Thereafter, the

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Respondentproceededu/s14oftheSARFAESIAct,2002fortaking physical possession of^{the schedule propertiesthroughadvocate} commissioner.^{Thus the Respondent has duly followedthe procedure} and there are no^{violations. Accordingly, Respondent prayed to dismiss} the SA.

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Heard Ld. Counsel^{for the Applicants and l'd'Counselfor the} Respondent. Perused^{the material brought on record'}

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Now the^points that^{arise for considerationare} i. wlether the Applicants^{haue establishedang ualid grounds} for chaltenging th.e^{proceedingsinitiated bg the Respondent} for^taking phgsical possession of the schedule^{propertiesu/s14 of tle} SARFA,ESI Ac t, 2002 through^{aduocate commi.ssioner?}

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ii. To uthat relief ?

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Point IVo.(i):-

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During the course of arguments,^{Ld. Counsel for the Applicants and Ld'} Counsel for the Respondent^{reiteratedtheir respectiveversions as stated} supra.

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The undisputed facts of the^{case are that the M/s Compass Granites} availed credit facilities from the^{Respondent whereasthe Applicants} herein created mortgage against^{the schedule properties and thereafter,} committed default in repaying the^{loan dues and so, the Respondent} initiated proceedings under the SARFAESI^{Act,2OO2 for takingphysical} possession of the schedule properties.

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,R The specilic contention of the Applicants^{is that the Respondentwithout} serving any prior notices to the^{Applicantsand without followingRule} 8(1)&(2) of Rules, 20O2,^{straightaway, initiated proceedings for taking} of the schedule^properties through^advocate

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14 of the SARFAESI Act, 2OO2 and so,^{the said} the Respondent against the schedule^property

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null void. 02tur ?afi

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Per contra, Respondent contended^{that admittedly, Applicants created} mortgage against the^{schedule propertiesin security to the loan facilities} availed by M/ s Compass^{Granites. After availing the loan facilities,} borrowers/Applicants committed^{defaultin repaying the loandues as per} the terms of the loan agreement and^{so, the loan account was classifiedas} NPA as per the guidelines of RBI and the^{Respondentissued demand} notice and possession notice to the^Applicants by^{duly followingthe} procedure contemplated under the^{provisions of SARFAESIAct, 2002 and} Rules made thereunder and^also in taking^{physicalpossessionof the} schedule properties u/s 14 ofthe^{SARFAESI Act,2002.}

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To substantiate their contention, the^{Respondentfiled material documents} along with the Reply Iiled by them. As^{per the said documents,it is clear} that after classifying the loan account of the^{Applicantsas NPA,} Respondent issued demand notice dt.O7.Ol.2Ol9 u/s¹³⁽²⁾ of^the SARAFAESI Act, 2OO2 and the said notice^was served on^{the Applicants} as evidenced by the^postal acknowledgements^filed by^{the Respondent.} When the Applicants failed to comply with the said^{demand notice,} Respondent issued^possession notice dt.22.O5.2O 19 u/s^{13(a) of the Act,} 2OO2 aod the said notice was served on the^{Applicantsthrough Regd.} Post as evidenced by the postal acknowledgements filed by^the Respondent. The said possession notice was^{published in Telugu and} English daily newspapers as evidenced by the copies^{of paper publication} Iiled by the Respondent and the said notice was^{also affixed on the} schedule properties as depicted in the copies of^{photographs filed by the} Respondent. Thus, the Respondent has duly^{followedRule 8(1)&(2) of} Security Interest^{(Enforcement)} Rules, 2OO2^{in issuingpossession notice.}

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As per the provisions of Section 14 of SARFAESI^{Act, 2002, after issuance} of posqesSib?r'reetice u/s 13(a) of the SARFAESI^{Act,2OO2, the secured} h the concerned District Magistrate or Chief g physical possession of the secured assets. ' In the instant case. € ing demand notice and possession notice to a" Xoiri;ii{t3ii2[h. ent being secured creditor, approached 14 of the SARFAESI Act, 2OO2 by filing

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Crl.M.p.N o.176124^{for appointment of advocatecommissionerfor taking} physical possession of the^{scheduleproperties. Ld.CJM, Karimnagar after} considering the material^{on record, appointedadvocatecommissioner for} taking physical^{possession of the schedule properties and the said} advocate commissioner^{issued notice to the Applicantsto vacate the} schedule properties and the^{said notice was admittedlyserved on the} Applicants, so, the said^{proceedings are perfectly legal and valid.}

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So, considering all the^{circumstances,Iam of the opinion that the} Applicants are not entitled to^{any relief as there are no merits in the SA.} So, I see no ground warranting^{interference of this Tribunal with the} proceedings initiated by the Respondent^{for taking physical possession of} the schedule property uls¹⁴ of^{the SARFAESIAct,2002. Accordingly,this} point is answered in favour of the Respondent^{and against the Applicants.}

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Point No.(ii):-

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In the result, SA 69 125 is dismissed^{as there are no merits.}

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Consequently, the Interlocutory^{Applications, pendingif any, shall stand} disposed of. No order as to costs.

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Communicate a copy of this^{order to the partiesconcerned.}

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(Dctated to tlrc P.S, transcibed bg her, corrected,^{signed and pronounced bg me in the open} court onthis the 2"d dag of^{June, 2026)}

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sd/(G. GOPI CHAr{Dl PRESIDING OFFICER

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Panyala Pushpalatha and Another v. Andhra Pradesh State Financial Services Corporation Limited

Case brief

What is this about?

What did the court decide?

Panyala Pushpalatha and Another v. Andhra Pradesh State Financial Services Corporation Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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