Allowed

Ms Singhal Filling Point v. Ms Andhra Pradesh Mahesh Cooperative Urban Bank Ltd.

DRT5 Jan 2026SA/72/2022

Case brief

AI extract

What is this about?

An application challenging an auction sale notice and the resulting sale of secured property. The Tribunal held that the bank failed to provide the required 15-day notice for the subsequent sale. The auction sale notice and the sale conducted on 18.10.2022 were set aside.

What did the court decide?

The auction sale notice dated 01.10.2022 fixing the auction on 18.10.2022, the auction conducted on 18.10.2022, and the sale certificate dated 21.10.2022 issued in favour of Respondent No.3 were set a

Ms Singhal Filling Point versus Ms Andhra Pradesh Mahesh… — Company and Corporate | DRT (2026)

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IN THE DEBTS RECOVERYTRIBUNAL.I AT HYDERABAD

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DATED THIS THE sTH DAY OF JENUARY, 2026

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PRESENT: GUMMADI GOPICHAND, PRESIDING OFFICER

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SA.No.72/2C22

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Between:

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M/s. Singhal filling point, A proprietorship firm, Represented by its proprietor, Sri Govind Prasad Agarwal,

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S/o. Sri Gopal Das Agarwal,

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Situated at D.No.4 -75 I 3, Alugunoor village, Thimmapur Mandal, Karimnagar District, TS-50500 1

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Amit Agarwal S/o. Sri Govind Prasad Agarwal, Aged 38 years, Occ: Business,

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R/o.D.no .4-751 3, Alugunoor Village, Thimmapur Mandal, Karimnagar Dist, Telangana-505001

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Suman Agarwal W/o. Sri Govind Prasad Agarwal, Aged 62 years, Occ: Business,

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R/ o.D.no .4-7 5 I 3, Alugunoor Viilage, Thimmapur Mandal, Karimnagar Dist, Telangana-5O5001

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...Applicants

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Versus

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The Authorised officer, M/s. Andhra Pradesh Mahesh Cooperative Urban Bank ltd D.No.8-2 -680 ll&,2, Road no.l2 Banj ara Hills, Hyd erabad-500034.

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M/s. Andhra Pradesh Mahesh Cooperative Urban Bank Ltd, D.No.8-2-6.q0/ t&,2, Road no.l2 Banjara Hills, Hyderabad-500034 Rep. by its Branch Manager, Kaririviagar'B i'anch.

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sA.No.72/2022

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Sri Govind Vyas S/o. Jagannadh^VYas, Aged about 52^{years, Occ: Business,} R/o.H.No .l-5-287 ,^{Kaman Road,} Karim Nagar, Telangana-50500¹

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The Sub-Registrar, Karimnagar Rural, ThimmaPur, Karimnagar District.

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Respondents

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Counsel for the Applicants Sri. D. Raghauulu Counselforthe^{RespondentNo.l & 2} Sri. M. Sriniuas Reddg Counsel for ttrc^{ResPondent No.S} Set-Exparte Counsel for^{tLrc ResPondent No.4} Reserued on 07.11.2025 Pronounced on 05.01.2026 tJploaded to Website^on 06.01.2026

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,:ORDER:-

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The Applicants filed^{the presentSecuritizationApplication under} section lT of the^{SARFAESI Act, challengingthe auction Sale Notice} dated 01.10.2022^{issued by the Respondent No.L&' 2 Bank fixing the} auction of the schedule^{propertiesonL8.lO.2O22tincludingthe} Possession Notice dated^{08,09.2021 and Demand Noticedated} o8.o4.202L.

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The averments^{made by the Applicants in the applicationin brief are} as under:-

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..,,.-^.-.i*,,..^{The Applicant No.1 which isthe proprietorshipconcern'} ted by Sri Govind^{PrasadAgarwal as its sole proprietor} loan of Rs.150 lakhs^{on07.O4.2018from the}

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Re ts No. I &' 2 Bank to^{run the fillingstationin the} .& if.

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0 5 .tp"ir ?{Hh-.}riia "tyt. oi M/s. Singhal filling station at^Aluganoor, trrirrr+ap,rr Mandal, Karimnagar^{District,Telangana.The} -ii{--.ri,l

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.,.,d$p-,!"Od"t"^{no.2 & 3 stood as guarantorsand offered their} 'q,'ffiperties . described^{in the application schedule propertiesas} "::;1

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SA.No.72/2O22

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security for the said loan facility. From March 2O2O, during COVID-19 Pandemic, the sales of petrol, diesel, lubricants etc., were affected and so the Applicant No.l could not maintain the loan account satisfactorily. The Respondents No.l &, 2 Bank classified the account as Non-Performing Asset (NPA) and issued Demand Notice u/sec.13(2) of the SARFAESI Act, demanding the Applicants to pay an amount of Rs.I,66,6I,559.92ps as on 31.03.2021 plus interest from Ol.O4.2O2l at the rate of l4Yo per annum. The Applicant No.l addressed a letter to the Respondents No.l & 2 Bank on 18.05.2021 to withdraw the Demand Notice and provide funded interest term loan by restructuring the limits as per the R.B.I guidelines. The Respondent No.I &,2 Bank vide reply dated 31.05.2021 refused to grant any relief to the Applicants on the ground that the operation of the retail outlet i.e., Petrol Bunk, was not stopped during the lockdown period.

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ii. The R.B.I vied its circular dated 1L.O2.2O20 provid-ed onetime restructuring of the existing loans and the Applicant No.1 approached the Respondents No. L &,2 Bank for restructuring of the loans but Respondent No.l & 2 Bank wilfully did not respond to the Applicant's request for onetime restructuring of the loan. Thereafter the R.B.I vide its circular dated 06.08.2020 extended the scheme permitted in terms of circular dated ll.O2.2O2O and existing loans to MSMEs classified as "standard" may be restructured without a downgrade in the asset classification. Thereafter, the R.B.I again issued circular dat_ed 07.O4.2O2L following the directions of the Hon'ble ,,nr{'ffiXffi3gr,^{i" the matter of small scaleManufactures} ,rl,''...i:.,=,s^{;"';$Hi";5#'tA--v.} of India & others, providing the relief of "nion f i 'o'^ri, r, e filnil/adjuS$t$e rriifi7adj"qbh. interest on interest charged through the {iX^{0 6"ff,$I"Zf,go".h$ the moratorium period form 01.03.2020 to} \.$ .q^{31.08.202aanf} ilredit^{the same to the loan account. Thereafter} \t',i'-,rr. n.nai$l/a another circular dated o4.o6.2a2t which X* that eligibility conditions for MSME accourrts

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sA.No.72/2022

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before considered for restructuring under the frame^{work, which} include sub-clause (iii) which states that the^{aggregateexposure} including non-fund based facility to the MSME borrowers should not exceed Rs.25 crores as on 31.03.2021. But the Respondents No. | & 2 Bank without following the aforesaid circulars issued by the R.B.I did not consider the restructuring of loan account of the Applicant No.1 and issued Demand^Notice u/sec.l3(2) of the SARFAESI Act, which is untenable in the^eye of law. Challenging the said action of the Respondents No.l &,2 Bank, the Applicants filed Writ Petition bearing W.P.No.1376l /2021 before the Hon'ble High Court of Telangana, wherein the Hon'ble High Court vide order dated 23.06.2021 in IA.No.ll2021 directed the Respondents No.1 & 2 Bank not to take coercive steps against the Applicants. However, upon filing counter affidavit along with vacate stay petition by the Respondent No. | & 2 Bank, the Honble High Court vide order dated 28.07.2021 dismissed the said Writ Petition by holding that the matter is at the stage of notice u/sec.13(2) of the SARFAESI Act, and as such the Writ Petition is not maintainable.

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The Respondents No.1 & 2 Bank without affixing, proper service of notice u/sec.13(4) of the SARFAESI Act, forcefully took physical possession of the properties on 08.09.2021. Thereafter the Respondents No.1 & 2Bank issued notice dated O1.11.2021 under rule 8(6) of the security interest (enforcement) Rules, 2OO2, for sale of the secured assets belonging to the Applicants the reserve price of property no.1 as Rs.2 ,24,87,85A f - 12,600l- in respect of property no.2. In fact, the ue of property no.1 is not less than Rs.6 crores s1m1l r property no.2 is not less than Rs.3 crores. 5 +fil[re0&" ,{lf""rondents No.1 & 2 Bank without obtaining proper ggl1si# the properties, has fixeC the reserve price of the :p@ff&q.Ht a very low price. The Applicants filecl iltr*b&Wfi812022 challenging the sale Notice dateci

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SA.No,72/2022

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01.11.2021 before the Hon'ble High Court, as DRT was not functioning in view of vacancy in the post of Presiding officer. The Hon'ble High court was pleased to dispose of the said writ Petition vide order dated 07.01 .2022 directing the Applicants to approach the DRT within 30 days and further directed that if 1,5o/o of the outstanding dues are paid by the Applicants within 4 weeks, the Respondent Bank shall not proceed with the Sale Notice dated 01.11.202I. However, as the Applicants were already in deep financial loss due to closer of their business in view of taking over physical possession by the Respondent Bank, the Applicants could not comply with the said conditional order of the Hon'ble High Court.

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The Respondents No.1 &, 2 Bank have issued another Sale Notice dated o4.o3.2o22 fixing the auction of the schedule property on 07.O4.2O22 without following due process of law by obtaining latest valuation report. The Respondents No.1 &, 2 Bank have failed to follow Rule 8(6), S(7) and 9(1) of the Rules 2OO2, while issuing the said Sale Notice. Thereafter the Respondent No. L &, 2 Bank issued another auction Sale Notice dated 01.10.2022 and, published the same in newspapers dated O2.1O.2O22 fixing the auction of the schedule properties on 18.1O.2022 which is illegal, null and void. Hence the S.A

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The Respondents No.1 & 2 Bank filed their Reply Statement and. Additional Reply Statement denying all the adverse allegations made in the application. The contentions of the Respondents No. I &, 2 Bank in bri under:-

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t of the Applicants, the 2'd Respondent Bank has S (OD against other securities) credit facility limit I r-:.;. t '* - o T* T* R s.150s.lSOrIaWrs on Ol.O2.2OlB ro the Applicant No.1. The H 0 5 Amffits ,6Ip and 3 stood as guarantors for the said loan and 1i3. .a .--L:^^ i:n,r, -: '.i offered nrro-oA *r.^rllii^-,^Lr^ *rg##"vable arrci ...-.A :**, -.^i^,^ immovable propcrties as secr-r ^^^--,-:f,-. ci;ry for^r-.- -.1-.,'^{. ,,'} ,, the.-+gpayrnpnt of the said loan. The said loan facility v./as - r! '.' .-Pr'tr renewed.;:on 28.05.2019. The Applicants were irregular irr 'rllc ,..,.: .:^-

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SA.No.72/2022

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payment of interest right from the date of availing of credit facility and failed to operate the account through the Respondent Bank. The Applicants have miserably failed to service the interest, due to which the account of the lst Applicant has slipped into the category of Non-Performing Asset (NPA) in the month of December 2020, itself. The Applicants issued letters admitting the over dues in the loan account, informing the bank that due to non-receipt of receivables in time they could not pay accrued interest and they paid Rs.30 lakhs out of the total over dues and issued post-dated cheques for the balance overdue amount. But, the said cheques when presented returned un-realised due to insufficient funds. As the Applicants failed to fulfil their commitment and adhere to the terms and conditions of sanction, the Respondent Bank is left with no other option except to classify the loan account of the Applicants as Non-Performing Asset (NPA) on 30.03.2021 and issued Demand Notice dated O8.O4.2O2), u/sec. 13(2) of the SARFAESI Act, demanding the Applicants to pay entire outstanding amount of Rs. 1,66,6 1,559.92ps. The Applicants have acknowledged receipt of the said Demand Notice and submitted letter dated 18.04.2O2t making all false and frivioulus allegations against Respondent Bank. The Respondent bank has issued reply dated 31.05.2021 to the objections raised by the Applicants and informed that the scheme of rescheduling of loan is not acceptable to the Applicants.

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Applicants have prematurely filed W.P.No.I376/2021 the Deniand Notice dated O8.O4.2O21 issued by the Bank and to direct the Respondent Bank to e loan facilities as per the R.B.l circulars. The Court after hearing from both sides, came to an the Applicants loan account is not entitled for g or re classification and observed that Writ Petition tainable as prematurely filed and accordingly the Writ Petition vide order dated 2a.O7 .2021.

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SA.No.72/2022

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The Respondents No.1 & 2Bank issued notice dated^O8.O9.2O21 u/sec.13(4) of the SARFAESI Act, and has taken symbolic possession of the schedule properties by affixing the notice on the said properties. The Possession Notice is served on the Applicants and published in "Eenadu" and "Deccan Chronicle" newspapers dated O9.O9.2O21. Thereafter the Respondents No.1 & 2 Bank filed Cr1.M.P.No.63/2O2t on the lile of Chief Judicial Magistrate wherein Advocate Commissioner warrant dated 05.10.2021 was issued and the Advocate Commissioner took physical possession of the secured assets on 12.IO.2O21 by duly conducting panchanama and handed over the possession to the Respondents No.l & 2 Bank. Thereafter the Respondents No.l & 2 Bank obtained valuation report from the approved valuer and issued Sale Notice dated 01. 1 1 .2021 under Rule 8(6) of the Rules , 2OO2, and the said notice was served on the Applicants. The said Notice was also affixed on the schedule properties. Thereafter, the Respondent No.1 & 2 Bank issued auction notice dated 16.12.2021 under rule 9(1) of the Rules 2OO2 fixing the auction on 18.01 .2022. The said auction notice was served on the Applicants, affixed on the schedule property and also published in "Eenadu" and "Deccan Chronicle" newspapers. The Applicants filed W.P.No. L27812022 challenging the Sale Notice dated 01.11.202I issued by the Respondent Bank for sale of the schedule properties before the Honble High Court of Telangana. The Hon'ble High Court vide order dated 07.O1.2022 directed the Applicants to approach DRT within 30 days and further directed y.erto:pay^{15% of the total loan over dues within30 daysand in case} ,^{grantedliberty to the RespondentBank to} !*Ofoceed tlts- _ i il.. r,,,i/

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ts did not come forward to repay the loan pondent No.1 & 2 Bank issued rule 8(6) Notice dat 2 and the same is served on the Applicants and the schedule property. Thereafter, the Responden*'s

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sA.No.72/2022

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No.1 & 2 Bank issued Auction Notice^{datedO4.O3.2O22under} rule 9(1) and Rules 2002, fixing the auction^{of the schedule} properties on O7.O4.2O22. The said notice was^{served on the} Applicants, affixed on the schedule^{properties and publishedin} "Eenadu" and "Deccan^{Chronicle" newspapers.}

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v. While the bidders were ready to^{participate in the auctionon} o7.o4.2o22 the Applicants approached the^{Respondent Bank} through their letter dated O7.O4.2O22 to^{defer the auction and} paid Rs.70 lakhs on the same day, a sum of Rs.16^{lakhs on} 08.04.2022 and Rs.14 lakhs on 22.04.2022^{and thus paid a} total sum of Rs.1.00 crore to the Respondent^{Bank, which was} adjusted towards loan account of the Applicant^{No.l herein and} also to the loan account of the sister^{concern of the Applicants} i.e., M/s. Agarwal Organics. The Applicants^{have also promised} to pay the remaining outstanding dues^{within 4months.} However, as the Applicants were not coming^{forward to pay} outstanding dues, the Respondents^{No. L &' 2 Bankproceeded} further and issued Sale Notice dated 17.08.2022^{under rule 8(6)} and the said notice was served on the^{Applicants. Thereafterthe} Respondent Bank has issued auction Sale^{Notice dated} 01.10.2022 fixing the date of auction of^{the schedule properties} on 18. LO.2O22 by duly following the^{procedure laid down under} the Act and the Rules, 2OO2. In the auction^{conducted on} 18.10.2022, Mr. Govind Vyas, Respondent^{No.3 herein stood as} highest bidder for Rs.2,80,000/- and^{upon payment of entire bid} amount the Respondent No.1 & 2 Bank^{have issued and executed} Sale Certificate dated 21.L0.2O22 in^{favour of Respondentno.S} [$q' ,^{j d".qrt.*(no.4977} 12022^{registeredbefore S.R.O,} the SA may be dismissed. f f i t#;aqsai 4. the Reply Statement filed bY^the averments of the Applicants in brief . afe aS Unoef:- I n.i ..-'.il_t ., .. .

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sA.No.72/2022

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The Respondents No.l & 2^{Bank colludedwith the auction} purchaser and sold the^{properties for lesser value' As per the} valuation obtained by^{the Applicantsfrom the approvedvaluer of} the banks and financial institutions,^{the market value of the} property is Rs.3,99,78,4OO l-, reliable^{market' value ofthe} property is Rs.3,59,80,560/- and^{the distress sale value is} Rs.3,19,82,720/-. The^{RespondentsNo.1 & 2 Bank fixedthe} reserve^price of the^{property as Rs.2,24,87,850/ - and sold the} property for Rs.2,80,00,000/-.^{The Bank proceeded for the sale of} property basing on the valuation^{reports dated 13.09} '2021^, which is one^year old in^{fact, the Governmentof Telangana has} increased the valuation of the^{properties for the purpose of} registration in the^{month of February,2022. But the Respondent} No.l & 2 Prank did not obtain^{fresh valuation reports after} increment in tJle value of^{the propertiesby the Telangana} Government.

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0 5 .r4lt

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As per 8(6) notice dated^{07'08.2022, issued by the Respondent} No. 1 & 2 Bank, the auction^{was fixed on Ll'lO'2O22'The} Respondent No.1 & 2^{Bank, thereafter fixed auctionon} 18.10.2022 by^{publishingthe auction notice dated Ol'lO'2O22in} the newspapers on 02.10.2O22.The^{Respondents No'1 & 2 Bank} have not issued any^{notice for changein the date of auction'The} Respondents No.1 & 2^{Bank have also failed to issuerule8(6)} notice for conducting^{the sale of the propertieson l8'lO'2O22'} The auction notice which is^{published in newspapersdated} O2.1O.2O22 was sent^{to the Applicants on 03.10'2022and same} was served on the^{Applicantson 06.10.2022.Tl:,erc is only 12} gap between date of service^{of rule 9(1) notice on the} ts on 06. 10.2022 and the^{date of auctionwhich was} lA.tO.2O22. There is no^{clear 15 days noticeto the} as contemplated under^{rule 9(1) of the Rules 2002,} uch the Auction Notice^{datedOI.LO.2O22 is bad under} per the notice dated Ol.lO.2O22^{the outstanding amount} It,zs,zs,tss.36 and whereas^{the RespondentBank fixed the}

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SA.No.72/2022

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sale of two properties with a reserve^price of^{Rs.3,69,OO,45O1-.} There is no occasion to the bank to sell both^properties of^the Applicants for realization of the said debt and so there is^a violation of Rule 8(5), which according to any whole or^part of the property is to be sold for realisation of the debt. The description of the properties is also shown as limits to Gram Panchyat, Alugnoor, which is not correct because in the year 2019, the limits were notified in the Municipal Corporation of Karimnagar. So there are clear violations committed by the Respondent^{No.1 &} 2 Bank while issuing auction notice and conducting of auction of the schedule property.

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Respondent No.3 remained ex-parte. Respondent No.4 did not choose to appear before the Tribunal despite service of Notice.

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Ld. Counsel for the Applicants and Respondents No.1 & 2 Bank filed their respective Written Arguments..

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Now, the points that arise for consideration are,-

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i) Whether the Applicants have made out any valid^grounds for setting aside the proceedings initiated by the Respondents No.1 & 2 Ba:rrk under the SARFAESI Act against the application schedule property?

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ii) To what relief.2

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Point No.(i):-

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did not dispute availing of loan by them from the &, 2 Bank by creating security interest over the properties belonging to Applicants no.2 & 3. The

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045 admitted that they could not maintain the loan pplicant satisfactorily, however, due to reduction of

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products during the COVID Pandamic. It is the Applicants that the Respondents No.1 & 2 Bank has

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follow the R.B.I circulars dated LL.O2.2O2O, 06.08.2020,

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!,A,No,72/2022

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O7.O4.2O21 a$d 04.06.2021 for restructuring of the loan of the lst Applicant even though the 1st Applicant is entitled for the same. The action of the Respondents No. I & 2 Bank in not following the said circulars issued by the R.B.I, classiffing the loan account of Applicant No. 1 as Non-Performing Asset (NPA) and issuance of Demand Notice dated 08.04.2021 u/sec.13(2) of the SARFAESI Act, is bad under law. The Applicants further contended that they have issued reply dated 18.12.2021 to withdraw the Demand Notice and restructure the loan account of the Applicant No. 1, but, the Respondents No. 1 & 2 Bank did not consider the same.

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It is a matter of record that the Applicants herein filed W.P.No.13761 l2O2l challenging the Demand Notice dated O8.O4.2O21 and also the action of the Respondents No.l & 2 Bank in classifying the loan account of Applicant No.1 as Non-Performing Asset (NPA). The said Writ Petition has ended in dismissal vide order of the Hon'ble High Court dated 28.07.2021. The Respondents No.1 & 2 Bank have filed the copy of the said order dated 28.07.2021 along with its reply statement and I have perused the said order. In the said Writ Petition the Applicants have taken similar contention that they are entitled for restructuring of their loan account as per the aforesaid circulars issued by the R.B.I and that t1le Respondents No. I & 2 Bank without considering the said aspect has issued Demand Notice u/sec. 13(2) of the SARFAESI Act, by classifying the loan account as Non-Performing Asset (NPA). The Hon'ble High Court in its order dated 28.07.2021 has observed that the Applicant have taken aforesaid stand as an afterthought. The relevant paragraph in the order dated 28.07.2021 is extracted below:

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it is to be seen that though the learned Senior the petitioners are entitled for restrucfuing of theA haue not made euen a single for^{restructuring of their loan accountsbefore} notice. In fact petitioners, themselues 12.02.2021 for closing of tlrcir accounts and time for pagment of due amount. F'urttrcr, the

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SA.No.72/2022

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cheques issued bg the petitioners to the respondent Bank also bounced. These aspects u)ere not disputed bg the petitioners. Euen in tLrc replg dt.18.05.2021, the petitioners haue not relied on ang of the ciranlars of the RBI stating that tlrcg are eligible under the said circutars for restructuring of their loan accounts. Ontg as an afierthought tlrc petitioners haue raised seueral fssues before this Court. The Judgments relied on bg ttrc learned Senior Counsel for the petitioners are under different context".

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In view of the above I find no merits in the contentions of the Applicants that the Respondents No.1 & 2 Bank have failed to consider the R.B.I circulars for restructuring of the loan account of Applicant No.1. I do not find any illegality in the action of the Respondents No.1 & 2 Bank in classifying the loan account as Non-Performing Asset and in issuing Demand Notice dated O8.O4.2O2L ulsec.LS(2) of the SARFAESI Act. After receipt of Demand Notice dated 08.04.2021, the Applicants have sent a reply dated 18.05.2021. The Respondents No.l & 2 Bank have sent a reply dated 31.05.2021 to the said letter of the Applicants by rejecting various allegations raised by the Applicants to the Demand Notice.

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1 1. As the Applicants failed to pay the outstanding dues as demanded in the Demand Notice, the Respondents No.1 & 2 Bank have issued Possession Notice dated 08.09.2021 by taking symbolic possession of the application schedule properties. The Respondents No.l & 2 Bank in the material documents filed along with their reply statement has annexed copies of postal receipts and posta-l acknowledgment cards from which it is very clear that the Possession Notice dated O8.O9.2021 was du&h#e.9eived by the Applicants. The Respondents No.I &, 2 Bank *^'-.""r.-t{ [$rdi filg$,rues of^photographs depicting affixture of Possession

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{,*fiir." "p,:,.Fr;'ffir"^{properties. The RespondentsNo. t e 2 Bank}

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i1^{*hav_e alsd{iled coffi{\of publication of PossessionNoticein "Eenadu"} iiry^{,"0,6lp,y6,,o} " newspapers dated 09.09.2021. From the said \r, 5' b t f.^;1^{, d**p}^{cuments,it is vfiylplear} that^the Respondents No.1 & 2 Bank have ': duiy f"Ugry-q$E$S;ff1) and ^^{-: l,} 3" 8(2) of the Security Interest (Entbrci:;!,:-::-i'l +:^-{ ,/1/

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Rules, 2oo2, while issuing Possession Notice dated o8.o9.2o2r u/sec.13(4) of the SARFAESI Act.

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As the Applicants did not pay the outstanding dues even after issuance of Possession Notice, the Respondents No. 1 &, 2 Bank have approached Ld. chief Judicial Magistrate at Karimnagar, by filing Cr1.M.P.No.63/2021 u/sec.14 of the SARFAESI Act, wherein Advocate Commissioner was appointed for taking physical possession of the application schedule properties. The Advocate Commissioner took physical possession of the application schedule properties by conducting panchanama on 12.10.2021, a copy of which is filed by the Respondents No.l e,2 Bank in the material documents.

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The Respondents No.1 & 2 Bank obtained valuation reports in respect of application schedule properties form their approved engineer on 21.10.2021 and the said valuation reports are filed by the Respondents No.1 & 2 Bank in their material documents. Thereafter the Respondents No.L &,2 Bank have issued Sale Notice dated 01.11 .2O2I under Rule 8(6) of the Rules 2OO2. As per the postal receipts and copies of postal acknowledgment cards fiIed by the Respondents No.l & 2 Bank, said rule 8(6) notice is duly served on the Applicants. The Respondents No.l &, 2 Bank have also filed copies of photographs depicting affixture of rule 8(6) notice on the schedule properties. Thereafter the Respondents No.l & 2 Bank have issued auction Sale Notice dated 16.12.2021 under Rule 9(1) of the Rules, 2oo2, and published the same in newspapers dated 17.12.2021 fixing the auction of the application schedule property on 18.01.2022. The Applicants filed w.P.No.1278l2022 challenging the rule s(6) notice dated 1 issued by the Respondents No.l &, 2 Bank where in the rt vide order dated 07 .O1.2022 directed the Applicant within 30 days and further directed the Applicants to ,ffilry""Lft * pay:if5% of tstanding dues and in case on non-compliance, 0d.#il$F ffierty*t$ the Respondent Bank to proceed further. The Applicants ift^{comRly with the said orders of the Hon'bleHigh} ndents No.1 & 2 Bank have issued 2"d Sale \lotice

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dated O8.O2.2O22 under rule 8(6). As per the copies of postal receipt and postal acknowledgments filed by the Respondents No. L &' 2 Bank the said rule 8(6) notice is duly senred on the Applicants. The Respondents No.l & 2 Bank have also filed copies of photographs depicting affixture of Sale Notice on the schedule properties. The Respondents No.l & 2 Bank issued auction Sale Notice dated 04.O3.2022 under Rule 9(1) of the Rules, 2OO2, and published the same in the newspapers dated O5.O3.2O22 fixing the auction of the application schedule properties on O7.O4.222. However, the auction scheduled on 07.O4.2O22 was deferred as the Applicants paid 7O lakhs on the same day, a sum of Rs.16 lakhs on 08.04 .2022 and Rs.14 lakhs on 22.04.2022 and promised to pay the remaining outstanding dues within four months. However, the Applicants failed to pay the outstanding dues as promised.

¶86

The Respondents No.l & 2 Bank have issued 3rd Sale Notice dated 17.08.2022 under rule 8(6) of the Rules 2OO2. The copies of postal receipts including return postal covers and postal acknowledgments cards filed by the Respondents No.1 & 2 Bank in their material documents prove the service of rule 8(6) notice on the Applicants. The copies of photographs filed by the Respondents No.l & 2 Bank also prove the affixture of Rule 8(6) notice on the schedule properties. Thereafter the Respondents No. | &, 2 Bank have issued auction Sale Notice dated 01.10.2022 and published the same in the newspapers dated O2.1O.2O22, under rule 9(1) of the Rules 2OO2, fixing the auction of the schedule properties on L8.1O.2O22. It is also clear from the postal receipts, returned postal covers and postal acknowledgment cards and also the copies of photographs filed by the Respondents No.1 & 2 Bank,in:rtheir,,rnaterial documents that the said auction Sale Notice ,,tt' i-p"r.vqa .r5<sup>on the Applicants and affixed on .':' _^{the schedule properties.} n ,^"iuctioql ri'' t,, .*, conduc\€4'qp : "^{.+. ..,} t8^{. 1O} .2022, application schedule^property : wa s q so ld'ld i fav i r i fav ou r r.f uf rtirfkr. Govind V vy as i.e. ,. Respondent No.3 herein an $*tJilg @P,so,Edloool- and thereafter registered the sale was issued in his favour.

¶87

SA.No.72/2022

¶88

It is the contention of the Ld. Counsel appearing for the Applicants that Respondents No.l &, 2 Bank have fixed the reserve price of application schedule no.1 property as Rs.2,24,87,85O1- and for application schedule property no.2 as Rs.1,44,12,600/- basing on the valuation report dated 21.10.2021 which is nearly one year old. The Government of Telangana in the month of February 2022 vide G.O.Ms.No.9, dated 29.01.2022 has increased the valuation of the properties. But, the Respondents No. t e, 2 Bank without obtaining fresh valuation of the properties, proceeded for the sale of the application schedule properties on 18.1O.2O22, basing on the valuation report dated 21.1O.2O21 which is bad under law. Further the Alugnoor village where the application schedule property no.l property situated is merged in Karimnagar Municipal Corporation vide G.O.Ms.No.76, dated 23.05.2020 issued by the Government of Telangana. The valuation taken by the Respondents No.1 & 2 Bank in respect of the application schedule no.1 property by considering the Gram Panchayat limits is illegal. Ld. Counsel for the Applicants further contended that in the 8(6) notice dated O7.O8.2O22 issued by the Respondents No. t &, 2 Bank, the date of auction of the schedule properties is mentioned as 11 .LO.2O22, and the Respondents No.1 & 2 Bank issued auction Sale Notice dated 01.10.2022 under rule 9(1) of the Rules 2OO2, fixing the date of auction of the schedule properties on 18.10.2022, T}:re Respondents No. | &, 2 Bank have not served any notice under rule 8(6) for conducting the auction of the properties on 18.1O.2022. The Ld. Counsel further contended that the auction Sale Notice dated 01.10.2022'under rule 9(1) of the rules 2OO2, was despatched by the Respondents No.l &,2 Bank on 03.1O.2O22 and the said notice was received by the Applicants on 06.10.2022. Ld. Counsel contends that there is only 12 days gap between date of service of rule 9[1) notice on 06.10.2022 and the date of fixing of auction on ffi"a" such there is clear violation of rr.le 9(1) of the Rulds tes 15 days'notice to the borrowers for conducting assets. Ld. Counsel therefore contends that the ted 01.LO.2O22 published by the Respondents "0"$r,Irglpffivoti& newspapers dated O2.1O.2O22, frxing the dated of 2 and the auction of the application sctreduie

¶89

SA.No.72/2022

¶90

property conducted by the Respondents No.l & 2 Bank are liable to be set aside.

¶91

Per-contra Ld. Counsel for the Respondents No.1 & 2 Bank contended that the Respondent Bank obtained report form the approved valuer on 2l.l0.2o2l and based on the said valuation report fixed the reserve price of the application schedule no.1 propert5r as Rs.2,24,87,850/- and attempted the sale of properties on two occasions i.e., on 18.01.2022 and 07 .O4.2O22 but, the auction was not successful for want of bidders. In the third attempt, the Respondents No. 1 & 2 Bank successfully sold application schedule property no.1 on L8.1O.2022 for Rs.2,80,O0,000/-. The Respondent Bank obtained recent market value certificate dated 01.07.2025 form the S.R.O, Karimnagar, wherein the properties market value is shown as Rs.91,94,3721- and so the sale consideration received by the Respondent Bank i.e., Rs.2,80,00,000/is nearly three times more than the aforesaid recent market value of the S.R.O and as such the Applicants allegation that the property is undervalued is false and baseless. Ld. Counsel further contended that the Respondents No.l & 2 Bank, for the third time, issued rule 8(6) notice dated 17.O8.2O22 and the Applicants have personally acknowiedged the said notices. Thereafter the Respondents No.1 & 2 Bank have issued the auction Sale Notice dated 01.1O.2022 under rule 9(1) fixing the auction on 18.10.2022, and the said auction Sale Notice has been duly served on the Applicants. Ld. Counsel contends that the Respondent Bank has maintained 30 days (45 days) in between rule 8(6) notice dated 17.08.2022 and rule 9(1) notice dated Ol.lO.2O22 which is published in the newspapers on 02.1O.2022 fixing the auction on lB.lO.2022. Ld. Counsel also contended that there is clear gap of 15 Respondent Bank from the date of publication dated 02.10.2O22 and the date of On payment of entire bid amount of 2,800t,99fl/,flff Respondent herein, the Respondent Bank and regis e Sale Certificate on 21.10.2022 in favour . Ld. Counsel therefore contended that the followed all the provisions and rules of^+-he

¶92

¶93

SA.No.72/2022

¶94

SARFAESI Act, without any deviation and so prays that the present S.A may be dismissed.

¶95

L7. I have considered the rival submissions. Indeed, the Respondents No.1 &, 2 Bank fixed the reserve price of the application schedule no.l property as Rs.2,24.,87,85O1- basing on the valuation report dated 16.L2.2O21 and sold the property in auction on L8.1O.2O22 for Rs.2,80,00,000/-. The Respondents No.l & 2 Bank ought to have obtained fresh valuation before proceeding for the auction of the property on 18.1O.2O22. However, the Respondents No.1 & 2 Bank filed a copy of the market value certificate dated O1.O7.2O25 obtained by them form the S.R.O, Karimnagar Rural, according to which the value of the application schedule no.1 property is Rs.91,94,3721-. So as per the recent market value certificate dated Ol.O7 .2025 the value of the subject property is Rs.91,94,3721- only. Whereas the Respondents No.1 & 2 Bank sold the property in the auction on L8.7O.2O22 for Rs.2,80,00,000/- which is threefold increase in the value specified in the market value certificate dated OL.O7.2O25. Therefore it cannot be said that the property is sold for a lesser value and I do not find any merits in the contention of the Ld. Counsel for the Applicants that the Respondents No.1 & 2 Bank colluded with the Respondent no.3 auction purchaser and sold the property for a lesser value.

¶96

Now coming to the Sale Notice, the Respondents No.l & 2 Bank filed a copy of the 8(6) Notice dated 17.08.2022 along with its Additional Reply Statement. As per the said rule 8(6) Notice dated 17.08.2022 the date fixed by the Respondents No. t & 2 Bank for the sale of schedule properties is Ll.lO.2O22. Ttre said rule 8(6) Notice is served on the Applicant .er, the Respondents No.l &, 2 Bank issued auction S under rule 9(1) of the rules, 2002, fixing the ule properties on 18.1O.2022. The said rule blished in the newspapers on O2.1O.2O22. ts No.l &, 2 Bank have not chosen to on Il.lO.2O22 as per the proviso tr"r

¶97

SA.No.72/2022

¶98

rule 9(1) of the security interest (enforcement) rules 2OO2, when sale of the immovable propertJr in the first attempt fails, the authorized. oflicer of the secured creditor shall serve, affix and publish notice of sale of not less than 15 days to the borrower, for any subsequent sale. For better presentation, rule 9(1) and its proviso is extracted below:

¶99

" 9. Tlme of sale, issues of sale certificate qnd, detiuery of possession, etc.- (1) No sale of immouable propertg und.er these rules, in first instance shall take place before the expiry of thirtg d.ags from^{the date on} which the pubtic notice of sale is published. in newspapers as referred to in ttrc prouiso to sub-rule (6) of rule B or notice of sale has been serued to the borrower:

¶100

Prouided furtlrcr that if sale of immouable propertg bg ang one of the methods specified bg sub-rule (s) of the ntle B fails and. sale is reEtired to be conducted again, the authorised. officer shall sen)e, affix and publish notice of sale of not less than fifieen d.ags to the borrouter, for ang subsequent sale."

¶101

L9. As can be seen from the above proviso, it is suffice for the Respondent Bank to issue 15 days notice of sale to the Applicants herein, affix the said notice of the schedule properties and publish the said notice in the newspapers. Indeed the Respondents no.l & 2 bank have issued auction Sale Notice dated ot.Lo.2o22 fixing the auction of the application schedule properties on 18.10.2022 and, published the said notice in the newspapers dated O2.7O.2O22. Tlne Respondents No. I &,2 Bank have also affixed the said notice on the schedule properties on 03,10.2022 as evidenced from the copies of photographs filed by the Res .1^{& 2 Bank- at page nos. 46} to 4g of the additional spondents No.l & 2 Bank have also filed copies copies of postal returned covers and postal gcknowledg nos. 49 to 55 of the additional reply g"t"t0tJttJmb &[ trr#$ni.* of postal receipts, the said auction sate Tir,# [.te,:f,,:^{dated o!;*o.frVf,was despatched to the Applicants on} YY^'!',+\a ' s3,+e - 88?k,.#3ff-i;*tr, copies of postat acknowledgments, the said r li.i\t-? _.,::i:,. . ,t. auttlor HS:Fg+Aated^{o1 .1O.2O22\Mas seryed. on Sri. Govind prasad} Agarwal, pfoprietor of the Applicant no.l concern on o6.lo.2az2

¶102

¶103

SA,No.72/2022

¶104

similarly, the said auction Sale Notice dated 01.10.2022 is served on Applicants no.2 and 3 on 06. ro.2o22. so, it is clear that there is only 12 days gap between the date of service of auction sale Notice to the Applicants on 06.10.2022 and.the date of auction on 1g. Lo.2022.There is no clear 15 days notice to the Applicants for the sale of schedule properties as contemprated under the proviso to rure 9(1) of the security Interest (Enforcement) Rules, 2oo2. In view of the said violation of rule 9(1), the auction Sale Notice dated 01.10.2022 which is served on the Applicants on 06.70.2022 for the sale of the schedule properties on 18.1O-2O22, is bad under law and same is liable to be setaside' The auction of application schedule property no.l conducted on L8'lo'2o22 and the consequential Sale Certificate dated 21.Lo.2o22, issued in favour of Respondent no.3, are also liable to be set-aside. Accordingly, this point is answered in favour of the Applicants and against the Respondents No.1 & 2 Bank.

¶105

Point No.liil:-

¶106

20' In the result, the present securitization Application is allowed by setting aside the auction Sale Notice dated 01.10.2022 issued by the Respondents No.1 & 2 Bank, fixing the auction sale of the schedule properties on 18.10.2022 and the auction sale of the application schedule no.l property conducted on 18.10.2022 including the Sale certificate dated 2l.1'o.2o22 issued in favour of the 3rd Respondent auction purchaser. However, the Respondents No.l & 2 Bank is at liberty to proceed for the-sale of the secured assets in accordance with its legitimate dues from the Applicants. Consequently, nt, plications, pending if any, shall stand disposed of. of this order to the parties concerned.

¶107

her, corrected, signed ond pronounced by me in the open court on this the day oJ 5k

¶108

sd/(c. coPrcHANDl PRESIDING OFF'ICER

Ms Singhal Filling Point v. Ms Andhra Pradesh Mahesh Cooperative Urban Bank Ltd.

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Ms Singhal Filling Point v. Ms Andhra Pradesh Mahesh Cooperative Urban Bank Ltd.

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