Partly allowed

Bank of India v. Equitas Small Finance Bank Limited

DRT13 Feb 2026SA/76/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal held that the first respondent bank cannot extend SARFAESI measures to Schedule-B and Schedule-C properties purchased by third parties. The court found that the bank failed to prove these properties fall within the mortgaged Schedule-A property, rendering the enforcement action unsustainable against them.

What did the court decide?

The SARFAESI measures initiated by the first respondent insofar as they relate to Schedule-B and Schedule-C properties are set aside.

Bank of India versus Equitas Small Finance Bank Limited — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY^TRIBUNAL -^{II AT HYDERABAD}

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DATED THIS THE 13TH DAY OF^{FEBRUARY, 2026}

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PRESENT: SH. RAMESHWAR^{KOTHE, B.Com,L.LB.(Hons,), lvl.A.} PRESIDING OFFICER

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Securitization Application No.^{76 OF 2023}

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Bank of India Banjara Hills Branch, having^its office^at Ground Floor,^{Resham Bagh, Street No.4,} Banjara Hills, Hyderabad, Telangana 500034. Represented by its^{Authorized Officer} sri D. sita Rama Raju

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..'....Applicant'

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Versus

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Equitas Small Finance^{Bank Limited,} Having its office at Spencer^{Plaza,No. 769} Annasalai, Chennai-600002, Represented by its Authorized^Officer

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Cheryala Bhaskar Goud, S/o. C H Lakshmaiah, Age: Major, R/o. Plot^{No. 105/P,} Subhash Nagar,^{IDA leedimetla,} Near Chitaramma TemPle, Jeedimetla, Hyderabad-500055.

¶10

Cheryala Sony, Wo.CHBhaskarGoud. Age: Major, R/o. Plot^{No. 105/P,} Subhash Nagar, IDA leedimetla, Near Chitaramma^TemPle, Jeedimetla, Hyderabad-500055.

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Cheryala Rajesh^Goud, S/o. C. Laxmaiah^Goud, Aged: Major, Rlo.7-896/t/A, Subash Nagar, IDA Jeedimetla, Hvderabad- 500055.

0w"*

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SA No. 7612023

Cheryala Shiva La kshmi. W/o. C. Laxmaiah Goud, Aged: Major, R/o.7-896/7/A, Subash Naga r, IDA Jeedimetla, Hyderabad- 500055.

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Kapilavai Karthik Sharma. S/o. K. Anjeya Sharma, Aged: Major, R/o. 7-888, Subash Nagar, IDA Jeedimetla, Hyderabad- 500055.

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Kapilavai Tulasi. Wo.^Kapilavai Karthik Sharma Aged: Major, R/o. 7-888, Subash Nagar, IDA Jeedimetla, Hyderabad- 500055.

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...... Respond ents.

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Counsel for the Applicant : Mr. B. Ravindra Reddy Counsel for Respondent No.1 : Sri N. Sudharshan Counsel for Respondent No.2 to S: Ex-parte Counsel for Respondent No.6 & 7: Mr. T. Sridhar Reddy

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-:ORDER:.

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The present Securitization Application is filed by the Applicant u/s-77 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2OO2 (..Act,, hereinafter for short) to set aside all the measures of the respondent bank under section 13(2), 13(4) and 14 of the Act, 2OO2 by the 1.r respondent including proposed action for taking physical possession of the application schedule properties through advocate commissioner in pursuance of the warrant in Crl.M.p.No.336 ol 2O2Z on the file of learned Chief Metropolitan Magistrate, Medchal_N4atkajgiri, Hyderabad. 0Y.*"

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5A No. 7512023

The averments of the application, briefly,^{are that the applicant} is the third^{party (Bank).} Defendants^{4 and 5 availed housing loan of} Rs.34 lakhs from the applicant bank by mortgaging^{the schedule} property to the extent of 99 sq. yards morefully described^{ln SA} schedule-ts. They executed registered^{Memorandum of Deposit of} Title Deeds vide Doc.No.1077 ot 2020 and^{depositedoriginal title} Doc.No.1063 of 2020 dated 17.07.2020.^{The 4th respondentacquired} the^property by^{purchasevide above sale deedfrom one Mr.Ravindra} Babu. The applicant bank duly registered^{the charge over the} mortgaged^property with Central^{Registry of SecuritisationAsset} Reconstruction and Security Interest^{(CERSAI)on 26.01.2020.The} respondents 6 and 7 also avalled^{housing loan on of Rs.25 lakhs and} created an equitable mortgage against the^{SA Schedule-CProperty} on 17.01.2020 vide sale^{Deed Doc.No.1064 ol 2020 and registered} MoDT No.1O65 of 2020 dated 17.0!.2020 and^{the chargewas} registered under CERSAI on the^{same date. One Mr.Shaji Thomas} purchased the entire extent of 198 sq.^{yards property} from^Mr. Gollakunta Narsimha on^{29.11.1990, which he sold to Smt. Chilukoti} Uma Devi vide a registered^{sale deed dated 22.06.2000.} Subsequently, Smt.Uma Devl^{sold the propertyto Mr.M. Ravindra} Babu on 26,02.2008 and he^{later on obtained the building} construction^permission from Greater^{HyderabadMunicipal} Corporation on 25.10.2019.^{RavindraBabu sold the proPertyto} respondents 4, 6 and 7 in two^{equal parts. On 13.02.2023, the} applicant bank came to^{know through respondent no. 4 and 6 that1st} respondent was tryin9 to take^{physicalpossessionof the scheduleB} and C Property wlth the^{assistanceof the Advocate Commissioner} under the^guise of mortgage^{created by respondents2 and 3, they} defaulted ln repayment and^{Securitization proceedings have been} undertaken against the^{property describedin SA Schedule-A Property} through^{possessionnotice date 04.06.2022. It appearsthat Schedule}

(/N'aYL\

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SA No. 7612023

A Property includes Schedule B & C Property and for that reason the respondent no.1 is trying to take^{physicalpossession} of Schedule^B and C Property. The 1st respondent has no right whatsoever on the Schedule B and C^property mortgaged to the applicant bank and^is trying to SARFSESI measure against the said schedule^property in guise of taking possession of Schedule A Property. Hence this SA to set aside all the measures against the SA schedules B and C properties and to declare 1st respondent does not have any right to proceed against the same.

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Respondent No.2 to 7 are proforma parties and no relief sought against them. Summons served on respondents 2 to 5 and they were set ex-parte vide docket sheet dated 01.03.2023 as called absent and no representation.

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The respondent no.1 filed reply statement along with documents. The averments thereof, briefly, are that the respondent 2 and 3 approached the respondent bank for the housing loan and the same was sanctioned for Rs.32,25,000/- against the equitable mortgage of the SA A-schedule property to the extent of 178 sq. yards out of 198 sq. yards vide sale deed Doc.No.25352 dated 30.10.2019 and registered MoDT No.25353 dated 30.10.2019, and the charge was registered with CERSAI on 30.10.2019. The respondent no.2 purchased the subject property from Smt. G. Pochamma represented by GPA holder 14r. Jaligamma Mahender Goud under sale deed dated 30.10.2019. Smt. Pochamma and G. Narasimha had been reflected as Pattedars of land admeasuring Ac.5.5 Gts. in Sy.No.313/A and Ac.4.3 Gts. in Sy. No.314/A vide Adangals for the years 1985-86 to 1999-2000 issued by the Tehsildar of Quthbullapur l4andal. Subsequently, Smt. c. Pochamma obtained the Urban Lang Ceiling clearing dated 21.06.2019 from the Office of rhe collector, urban Land ceirins (wins)2ffiH130 admeasurins

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SA No. 7612023

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178 sq.^yards, out of 98 sq.^yards and later on she^{executed the} registered agreement of sale cum General^Power of Attorney of^the schedule property to Sri. Jaligamma Mahender Goud.^The encumbrance certificate was issued on^{19.10.2019 in respectof the} mortgage of the schedule^property; hence, Smt. G.^Pochammahad the absolute right over the said^{property. Therefore, the transfer of} the schedule^property to Respondents 2 and 3^{constitutes a valid sale} and transfer, and the same cannot be^{questioned.The respondent2} and 3 defaulted in repayment of the said loan due^{to which the} respondent bank declare their^loan account as^{NPA on 08.02.2022} and issued a demand notice dated 27.02.2022;^{and served to the} respondent on 01.03.2022 under section 13(2) of the Act,^{2002 for} an outstanding amount of Rs. 39,12,154/-.^{The respondent2 and 3} neither contested the notice nor cleared the said^{liabilitywithin 60} days of the said notice, the^respondent bank^{proceeded to issue} possession notice dated 04.06.2022 under section 13(4) of the Act, 2002. The same notice was duly served to the^{respondent, affixedon} the schedule^property and^{publishedin'FinanceExpress'EnglishDally} and 'Mana Telangana' Telugu Daily^newspaperson 08'06^{2022 within} 7 days of issuance of the said notice as^{per Rules} 8(1)^{and 8(2) of the} Security Interest (Enforcement) Rules, 2002. Subsequently^the respondent bank issued a notice under^{section14 of the Act, 2002as} per the order in Crl.M.P.No.336 of 2022 to take the^physical possession of the schedule property. The reply statement filed by^the respondent no. 6 and 7 during the^course of^{proceedingexcept for} reiterating the same averment made by the^{applicantbank in the SA} application, the respondent no. 6 filed^an I.A^{No. 3696 of 2024, the} same was allowed on 25.06.2025 and it enclosed the^{list of document} i.e.; ULC Clearance letter, building^permit letter,^{property tax receipt,} original electricity bill to^prove the applicant^{bank case The} respondent bank claims that^respondent \9.^{2 to 7 are closely related} ///)ry,'u

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SA No. 7612023

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to each other and in^{collusionwith the applicant bank to createa} sham document to avail^{loanfraudulently. The creationof equitable} mortgage in respect of schedule^{propertywas registeredon} 30.10.2019 with CERSAI^{while the applicantbankregistered the} same with CERSAI on 29.04.2022,^{which is on later dateof} respondent bank registration with Central^{Registry.Since the} respondent bank have first^{charge over the scheduleproperty; the} applicant bank has no right^over the^{said property and hence the SA} is liable to be dismissed.

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The respondents 6 and 7^{filed reply statement.The} submissions, in brief, are that^{respondents4 and 5 availedloanof} Rs.34 lakhs against mortgage of schedule-B^{property having} purchased the same vide registered sale deed No.1063/2020^dated f7.01.2020. Respondents 6^{and 7 availed homeloan of Rs.25 lakhs} on 30.12.2019 from applicant bank for^{purchase of C-schedule} property from Ravindra Babu vide sale deed No.1064/2020^dated 77.01.2020 and they created^{equitable mortgageover the same vide} MoDT No.1065/2020 dated 77.O7.2O20.^{Ravindra Babu purchased the} same from Smt.Chilukoti Uma^Devi vide sale^{deedDoc.No.2440of} 2oo8 dated 26.02.2008 and building^{permission proceedingsdated} 25.10.2019. Schedule-A^property does not exist at all^and respondents 2 and 3 created sham documents.^{Respondents 4, 6 and} 7 have absolute title and right over B and C schedule^properties. Subsequent to action of 1't respondent for taking^{physical possession,} respondents 4 and 6^gave a^police complaint on^{22.02.2023 with PS,} Pet Basheerbad but the complaint was closed without assigning^any reason. The SA is liable to be oismissed^glfr.rjo (:-,, \r-<sup>

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I ol !3

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SA No. 7612023

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Heard the learned counsel appearing for the applicant and the respondent nos.1, 6 and 7. Perused the written submissions along with the materlal brought on record.

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During the course of arguments, the learned counsel for the respondent bank reiterated the version as in the application that the A-Schedule property does not exist, thus the respondents 2 and 3 have no right or title over the same and attempt of 1't respondent to take physical possession is based on a non-existent or sham mortgage. The 1't respondent bank has no right to^proceed under the Act against B and C schedule properties as applicant has the mortgage rights. Respondents 4 and 5 created mortgage over B- schedule property whereas Respondents 6 and 7 created mortgage over C-schedule property. With these contentions learned counsel sought to set aside the action of the 1"t respondent.

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Per contra, learned counsel for the 1't respondent bank in reiteration of the contents of the reply statement submitted that respondents 2 and 3 availed housing loan against equitable mortgage over the A-schedule^{property,purchased} by respondent 2 from Smt. G. Pochamma^(via GPA holder Sri. laligamma^{Mahender Goud).The} title of G. Pochamma is traceable to a^judgment dated 07.04.1981ⁱⁿ OS No.2911981 by Additional Distrlct Munsif, Hyderabad. Plot^No.130 which is the subject matter of^present SA forms^part of the^lands allotted to G. Pochamma. Even as^{per page} No.241 of documents filed by the applicant bank for the layout of Sy.No.313 and 314, layout belongs to husband of G. Pochamma. ULC clearance letter dated 21.06.2019 and EC amply^prove that A-schedule^{property is} free from encumbrances prior to mortgage with 1't respondent. Upon default, account was classified NPA, followed by^Sec.13(2) demand notice, Sec.13^{(4) possession} gqice, and Sec.14^application //Ne,-.1\ ( (-/^'- \5r -

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sA No. 7612023

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for physical possession. The 1't respondent is holding valid charge over the^property. Since the respondent bank has duly followed the procedure and the charge created against the said property was prior to that of applicant, 1't respondent is entitled to^priority over charge. Even as per loan documents relied on by the applicant bank, the sanction letters are undated and do not speak about loan agreements hence it is mysterious as to how applicant sanctioned loan for purchase of plot no.130/part. Learned counsel asserted that respondents 2 and 3 derived the title from Smt.G. Pochamma with unbroken chaln of ownership since 1981.

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h support of his contentions Learned counsel relied on judgements of Hon'ble Supreme Court in:-

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(i) State Bank of India vs. Sood (7997) 7 SCC 727 holding that a prior registered mortgage has priority over su bseq uent mortgages;

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(ii) United Bank of India vs. Satyawati Tondon & Ors, 2O7O (8) SCC rr0 holding that SARFAESI proceedings must be conducted strictly in accordance with statutory provisions, and courts should not interfere unless substantial procedural violations are proven/'

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(iii) Canara Bank v. N,G. Subbaraya Setty & Anr, AIR zola SC 3395 emphasizing that fraudulent transactions or sham documents cannot confer valid title or mortgage rights,'

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(iv) B, Arvind Kumar vs. covernment of India & Ors,, 2OO7 AIR SCW 4O8O holding that clear title supported by judicial and revenue records prevails over unsubstantiated claims,'

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(v) Indiabu s Housing Finance Ltd, vs. M/s Deccan Chronicle Holdings Ltd and others, AIR OnLine 2OlA SC 618 affirming that a schedule bank with a valid charge can issue notices under Sec.13(2) of the SARFAESI Acti, $>-- I ''-\'!-

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sA No. 7512023

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(vi) Hon'ble Madras High Court in M. Lilly vs. District Collector^(w,A. No,367 of 2077 dated 77,7O.2O77, holding that^{parties approachingthe} court with misleading or fraudulent^documentsare not entitled to reliefi

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(vii) Hon'ble Bombay High Court in Bank of Baroda vs. Gopal Shriram Panda^(2027SCC OnlineBom 466; holding that a^{prior mortgagee's} rights under SARFAESI Act^{prevail over subsequent} claims.

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With the above submissions,^{learned counselfor 1't respondent} sought for dismissal of the SA.

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Now, the^points that^{arise for conslderation are:-}

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(i) Whether Schedule-A property, on which the^1't respondent claims mortgage rights,^{is provedto} be a distinct and^{identifiableproperty?}

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(ii) whether respondents 2 & 3 had valid title^{so as to} create an enforceable^{mortgagein favour of the} 1st resqondent?

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(iii\ whether the SARFAESI measures initiated^{by the} l't respondent against^{Schedule-B and Schedule-}

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C^properties are sustainable^{in law?}

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(iv) To what relieq

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Point Nos.^{(i). (ii)} &^(iii):

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The claim of the applicant^{bank, in substance, is that} respondents 4 & 5 and^{respondents6 & 7 are absolute owners of} Schedule-B and Schedule-C^{properties respectively, havingpurchased} the same under two separate^{registered sale deedsdated} 77.0L,2O20. The said^{purchasersavailed housing loansfrom the} applicant bank and^{createdeqlitable mortgage by deposit of title} fu**

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SA No. 7512023

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deeds towards security for^repayment, and the^{charges have duly} been registered with CERSAI. The^{applicant contends that the l't} respondent is attempting to take^{physlcalpossession} of^Schedule-B and Schedule-C^properties under the^guise of^enforcing a^mortgage allegedly created by respondents 2 & 3 over^{Schedule-A property,} which, according to the applicant, is non-existent and^sham.Hence, the SARFAESI measures of the 1st^{respondentinsofar as they affect} Schedule-B and Schedule-C^properties are illegal and^liable to^{be set} aside.

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The 1st respondent bank, on the other hand, claims that respondents 2 and 3 created an equitable mortgage over Schedule-A property in October, 2019 and that the charge has been registered earlier with CERSAI. It is their contention that Schedule-B and Schedule-C properties form^part of Schedule-A^property and therefore the applicant's mortgages are subsequent and inferior. It is further alleged that respondents 2 to 7 are acting in collusion with the applicant bank.

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14- Respondents 6 & 7 supported the applicant's case and categorically asserted that Schedule-A property does not exist, that respondents 2 & 3 never had title to Schedule-B and Schedule-C properties, and that the documents relied upon by the 1't respondent are sham and fabricated.

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A careful examination of the material placed on record reveals that the title to the property-in-dispute emanates out of Compromise Decree vide orders dated 07.04.1981 in IA No.203/81 in O.S.No.29 of 1981 on the file of learned Munsiff Magistrate East, Hyderabad. As per the said order, the 1st vendors ln series of respondents 2 & 3 as well as respondents 4 & 5 and 6 & 7, are the plaintiff's therein viz., Aw"*

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SA No. 7612023

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Gollakunt Narsimha and Gollakunta^{Pochiah as well as lst defendant} Gollakunta Pochamma^{got thelr sharesin the ancestralproperty'} Goltakunta Narsimha and^{GollakuntaPochiah got a shareof Ac'6'21} guntas in S.No.313 and Ac.8.8^guntas in^{S'No.314.The1"t vendor in} series of respondents^{4 & 5 and 6 & 7 viz., GollakuntaPochamma got} her share of Ac.5 in^{S.No.313and Ac.3 in S.No.314' Thoughthe} order says their^{respective share of landsare marked in'Red'colour} in respect of Gollakunta^{Pochammaand in'BIue'colour in respect of} Gollakunta Narsimha^{and Gollakunta Pochiahin the site plan} attached. However, the^{crucial site plan referred to in the} compromise decree^{ls not availableon record. In the absenceof this} plan, there is no material to^{conclusively establishthe exact physical} demarcation of the^{respectiveshares; whether Schedule-Band} Schedule-C^{properties fall within the share allotted to Gollakunta} Pochamma or within^{the share allottedto Gollakunta Narsimhaand} Gollakunta^{Pochlah;and whetherSchedule-A property, as described} by the 1st respondent^{bank, correspondsto any clearly ldentifiable} portion of the property allotted^{under the decreeThus, while the} compromise decree^{establishes the origin of title and divisionof} shares among the^{predecessors-in-lnterestof the parties,the} absence of the^{annexed site plan createsambigultyregardingthe} identity and boundaries^{of the respectiveportions This lacuna} assumes significance^{in light of the rival claimsthat Schedule-B and} Schedule-C^{propertiesare independent parcels lawfullypurchased by} respondents 4 &^{5 and 6 & 7; and Schedule-Apropertyallegedly} encompasses Schedule-B^{and Schedule-Cproperties'}

¶75

The^pivotal issue^{ls whether Schedule-B and Schedule-C} properties form part of Schedule-A^{property' In the absenceof clear} and convincing^{materlal demonstratingthat Schedule-Band} Schedule-C are^{integral parts of Schedule-A, the 1st respondent} Af;ro,rv

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SA No. 7612023

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cannot extend its SARFAESI measures to properties standing in the names of third-party purchasers. No material is placed to prima facie establish that respondents 2 & 3 had valid title over Schedule-B and Schedule-C properties so as to create a mortgage binding upon respondents 4 to 7 ot the applicant bank.

¶79

The contention of the 1st respondent regarding priority based on earlier CERSAI registration cannot be accepted in isolation. CERSAI registration does not cure defects in title, nor does it validate a mortgage created by a person without established ownership over the secured asset. The judgment in lndiabulls Housing Finance Ltd. v. Deccan Chronicle Holdings Ltd. aftirms banks with valid charges may invoke s.13 (2) SARFAESI measures; in Canara Bank v. N.G. Subbaraya Setty holds fraudulent documents confer no mortgage rights; and Bank of Baroda v. Gopal Shriram pa,da upholds prior mortgages' precedence over subsequent claims. In the present case, either of the parties could establish respective titles, as observed supra. Hence judgments relied by the 1.t respondent are not of help in the circumstances of the case.

¶80

Accordingly, the action of the 1"t respondent in seeking to take physical possession of Schedule-B and Schedule-C properties under the guise of enforcing mortgage over Schedule-A property is unsustainable and cannot be permitted. The SARFAESI measures initiated by the 1st respondent, insofar as they relate to Schedute-B and Schedule-C properties, are liable to be set aside.

¶81

Point No.(iv):

¶82

In the result, the SARFAESI measures initiated by the 1st respondent, insofar as they relate to Schedule_B and Sched ule-C properties, are hereby set asiOeQ$tS

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sA No.7612023

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However, it is open to the l't^{respondent to proceedin} accordance with law against^{the secured asset strictly to the extent of} property validly mortgaged to it and^{properly identifiableas such.}

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

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No order as to costs.

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Communicate a copy of this^{orderto the partiesconcernedand} upload in the official website.

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(Typed to my dictation by the Ps, corrected, signed ond^{pronouncedby mein the opencourt on this the} 13th doy of Februory, 2026).

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frryu'*r (RAMESHWAR KOTHE) PRESIDING OFFICER

Bank of India v. Equitas Small Finance Bank Limited

Case brief

What is this about?

What did the court decide?

Bank of India v. Equitas Small Finance Bank Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

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