Quashed

Ms Hasini Mordern Binny Rice Mill v. Andhra Pradesh State Financial Corporation

DRT14 May 2026SA/85/2023

Case brief

AI extract

What is this about?

In an application under Section 17 of the SARFAESI Act, the Tribunal quashed enforcement proceedings initiated by the Respondent Bank for taking physical possession of secured property. The Tribunal held that the Bank failed to serve statutory demand and possession notices and complied neither with newspaper publication nor affixation rules under Rule 8(1)(2), rendering the proceedings void.

What did the court decide?

The impugned possession notice and proceedings under Section 14 of the SARFAESI Act, 2002 were set aside, and the Respondent was allowed to proceed afresh with statutory notices.

Ms Hasini Mordern Binny Rice Mill versus Andhra Pradesh State… — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERYTRIBUNAL_ I AT HYDERABAD

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DATED THIS THE^'I 4TH DAY OF MAY, 2026

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PRESENT: SRI GUMMADI GOPICHAND, PRESIDING^OFFICER

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SA.No.85,/2023

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M/s Hasini Modern Binny Rice Mill Rep. by its Proprietor Smt.Pangothu Lalitha, W/o P.Hanumu, aged 33 years, Sitaued at Sy.No.65, Plot No.^1, IndutrialPark, Miryalguda, Nalgonda District-SO8 207.

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... Applicant

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Versus

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Andhra Pradesh State Financial Corporation Rep. by its Authorized officer Nalgonda branch, H.No.6-^{1 -99/ 7,} Boyawada, Ramagiri, Nalgonda-SO8 001.

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... Respondent

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Counsel for the Applicant Counsel for Respondent

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: Si D.Ragttanrulu : Si M. Hamsa Raj& Tann

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Reserued on Pronounced on Uploaded on

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:08.04.2O26 : 14.05.2026 : 18.05.2026

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ORDER

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This application is liled by the^{Applicant u/s. 17 of the SARFAESIAct,} ghallenging the proceedings initiated by the^{Respondentfor} [qal^{possessionof the schedule property throughAdvocate} t to the orders of Ld.CMM,^{Nalgonda in} consequent to the possession notice and^{to declare} and void. 't Br,otgu.ruh"

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in the application, in brief, are that:

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The Applicant availed Term loan of Rs.50^{lakhs in the year2014; Rs.38} lakhs in the year 2OI7 and an amount of^{Rs. 102 lakhs in tt,.e year 2Ol7} from the Respondent against the mortgage^{of schedulepropertyand the} total amount disbursed by the^Respondent is^{Rs.135'81 lakhs.The} Applicant was regularly^paying the loan dues^{but due to Coid-l9 and} loss in the business, could not^pay some^{instalments and so, the loan} account became NPA. The Respondent straightaway,^initiated proceedings u/s 14 of the SARFAESI Act, 2OO2 for taking^physical possession of the schedule property without serving^{demand notice and} possession notices to the Applicant and the^{impugned possession} notices dt.28.12.2O2O, 19.Ol.2O2l, 19.o2.2O2O^{werenot publishedin} two leading newspapers and^{also not affixed on the scheduleproperty.} Hence the SA.

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Respondent Iiled Reply denying all^{the adverse allegations made in the} SA and contended that in view^{of the defaultcommittedby the} Appticant, the loan account^{was classified as NPA. So, the Respondent} issued demand notice dt.26.11.2019^{and the said notice was served on} the Applicant. Thereafter, the^{Respondentissued possessionnotice} dt.lg.ol.2o2l u/s 13(a)^{of the SARFAESI Act, 2OO2 and the said notice} was served on the Applicant.^{The said notice was publishedin Namaste} Telangana and The Indian Express^{daily newspapersand the samewas} also affixed on the schedule^{property'Thereafter,the Respondent} proceeded u/s 14 of the SARFESI Act, 2oo2^{for taking physical} possession of the schedule^{property pursuantto the ordersof Ld.CMM,} through advoiate commissioner.^{Thus,the Respondent has} prescribed under the provisions of SARFAESI o"i,ffir. made thereunder in issuing^{possession notice and} proc#ding the secured asset u/s¹⁴ ofthe^{SARFAESI Act'2OO2} 1"fla hAS.3lEB" ,,* tions. Accordingly, Respondent^{prayed to dismiss} SA. s.Y --,t:..:.?/t

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Heard Ld. Counsel for the Applicant and Ld.Counsel for the Respondent. Perused the material brought on record.

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Now the points that arise for consideration are

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i. uhether tle Applicant ho,s established ang ualid^grounds for challenging the proceedings initiated bg the Respondent for talcing phgsical possession of the sch.edule proper! u/ s 14 of the SARFAESI Act, 2002 through aduocate commissioner?

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ii. To what relief?

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Polnt No.lil-

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During the course of arguments, Ld. Counsel^{for the Applicant and Ld.} Counsel for the Respondent reiterated their respective^{versions as stated} supra.

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7 . There is no dispute regarding the fact that the^{Applicantavailedvarious} credit facilities from the Respondent^{by creating mortgage in respect of} the schedule^property and thereafter^{committed defaultin repayingthe} loan dues and the loan account was declared^{as NPA.}

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The specifrc contention of the Applicant is that^{the Respondent without} serving demand notice and^possession notice^{tothe Applicant,} straightaway initiated^{proceedings for taking physicalpossessionof the} through advocate commissioner u/s 14 of^the without following due process of law and so, the^said by the Respondent against the schedule^{property are}

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E, I u rrrl{ l $,h."r** t contended that they have duly^followedthe ted under the provisions of SARFAESI^{Act,2OO2 and}

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Rules made thereunder in issuing statutory notices to the Applicant and also in initiating proceedings for taking physical possession ofthe schedule property u/s 14 of the SARFAESI Act, 2002.

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Though, the Respondent contended that they have duly issued demand notice and possession to the Applicant, no material documents are filed by the Respondent to prove the same. When the Applicant is denying the service of demand notice and possession notice, the Respondent is expected to file relevant material documents to establish that the said statutory notices are duly served on the Applicant and the possession notice is afllxed on the schedule propert5r and the sarne was published in two daily newspapers. In the absence of such material proof, it is obvious that the said notices are not served by the Respondent to the Applicant and the Respondent has not complied with Rule 8(1)(2) of Security Interest (Enforcement) Rules, 2OO2 wl:ile taking measures u/s 13(a) of the Act for taking possession of the secured asset. So, in view of the above, it is clear that the Respondent failed to serve demand notice and possession notice and the impugned possession notice was neither^published in newspapers nor affixed on the schedule property and thus the Respondent failed to comply with Rule 8(l)(2) of Security Interest (Enforcement) Rules, 2002. So, the proceedings initiated by Respondent for taking^{physicalpossession} of the schedule property/s 14 of the Act are not legal and valid and liable to be set aside.. So, in view of the non-compiiance of Section 13(2),¹³⁽⁴⁾ of the Act & Rule 8(1)&(2) of Security Interest^{(Enforcement)} Rules, 2002, the impugned proceedings initiated by the Respondent for taking^physical perty u/s 14 of the SARFAESI Act,2OO2 are void and liable

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t*
&rN
* f#+fiffi} *
r<br>t-tl
fr";15123 is allowed by quashing the impugned Possession
issued bv the Respondent against the schedule
4
"\il#;;';ii;;;;

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property and also the impugned proceedings initiated by the Respondent u/s 14 of the SARFAESI Act,2002 for taking^{physicalpossession of the} schedule property. However, the Respondent is at^{libertyto proceed afresh} by duty issuing all the statutory notices against^{the SA schedule property} to recover their dues by duly following the^{provisions of SARFAESI Act,} 2OO2 ar,d Rules thereunder.

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

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

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(Dictated to the P.S, transcibed by her, conected, signed^{and pronounced by me in the open} court on this the 141h^dag of^{MoA, 2026)}

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sd/_ lG.^{GOPI CHANDI} PRESIDING OFFICER

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fiffiW* Arsfne6trar

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DAf-I,^HYDSgNBAD.

Ms Hasini Mordern Binny Rice Mill v. Andhra Pradesh State Financial Corporation

Case brief

What is this about?

What did the court decide?

Ms Hasini Mordern Binny Rice Mill v. Andhra Pradesh State Financial Corporation

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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