IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI (Special Original Jurisdiction)

THURSDAY, THE TWENTY FIFTH DAY OF APRIL TWO THOUSAND AND TWENTY FOUR

PRESENT THE HONOURABLE SRI JUSTICE A.V.SESHA SAI AND THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY

WRIT PETITION NO: 2480 OF 2019

Between:

Bezawada Sujamma @ Sujana Reddy, W/o. Mahesh Chandra Reddy, aged 58 years, Plot No. 27, Bezawada Obul Reddy Nagar, Dargamitta, Neliore, PIN 524004, Andhra Pradesh

...Petitioner

AND

• 1. The Regional Manager, Syndicate Bank, Nellore Region, Om Shanti Towers, Ritwik Enclave, A.K. Nagar, Nellore, Andhra Pradesh- 524004.
• 2. The Authorised Officer/Chief Manager, Syndicate Bank, SME Branch, Nellore, Om Shanti Towers, Ritwik Enclave, A.K. Nagar, Nellore, Andhra Pradesh- 524004
• 3. M/s. K.P.R. Constructions, (formerly known as Vellanti Associates), represented by its Managing Partner, Sri K. Pattabhi Rama Ready S/o. K. Ramachandra Reddy, agea about 84 years, Occ Business, Rio. Flat No. 302, Jagannath Enclave, Opp. Iskon Temple, Iskon city, Nellore.
• 4. Y. Srinivasa Rao C/o Syndicate Bank, Nellore Branch Om Shanti Towers, Ritwik Enclave, A.K. Nagar, Nellore, Andhra Pradesh-524004
• 5. Y Lakshmi C/o. Syndicate Bank, Nellore Branch Om Shanti Towers, Ritwik Enclave, A.K. Nagar, Nellore, Andhra Pradesh-524004
• 6. Y. V. Dinesh Kumar C/o. Syndicate Bank, Nellore Branch Om Shanti Towers, Ritwik Enclave, A.K. Nagar, Nellore, Andhra Pradesh- 524004
• 7. Y. Mounica C/o. Syndicate Bank, Nellore Branch Om Shanti Towers, Ritwik Enclave, A.K. Nagar, Nellore, Andhra Pradesh-524004
• 8. Y. V. Girish Kumar C/o. Syndicate Bank, Nellore Branch Om Shanti Towers, Ritwik Enclave, A.K. Nagar, Nellore, Andhra Pradesh-524004

9. Y. Sri Rekha C/o. Syndicate Bank, Nellore Branch Om Shanti Towers Ritwik Enclave, A.K. Nagar, Nellore, Andhra Pradesh-524004

Respondent No.4 to 9 impleaded as per Court Order dt: 25.04.2024 vide I.A. No. ² of ²⁰¹⁹ in WP ²⁴⁸⁰ of 2019.

...Respondents

Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue any writ or order or direction more particularly one nature of writ of certiorari and mandamus, by calling records, declaring the order dt. 13.02.2019 passed in S.A.No. 465 of 2018 passed by the Debts Recovery Tribunal at Visakhapatnam. contrary to the scheme of the SARFAESI Act 2002 in the as illegal, null, void, arbitrary, and rules made thereunder, violation of Article 14 and 300A of the Constitution same and the IS be set aside and consequently direct the DRT, at Visakhapatnam remand the SA No. 465 of 2018 for to a fresh adjudication by giving liberty to as per the provisions set aside the eauction sale dt.14.02.2019 without following the due process of law, contrary to the Act 2002 and rules made thereunder and initiated by the respondent No.1 and ² under SARFAESI Act illegal, void abinitio and unauthorized. the petitioners to prosecute the questions of facts contemplated under section 22 of the RDB Act and further declare the measures 2002 are

lA NO: ¹ OF 201Q

Petition under Section ¹⁵¹ CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings in furtherance to the E- Auction dt. 14.02.2019 conducted by the respondent No.1 and 2 third parties by suspending the operation of the in favour of unknown orders dt. 13.02.2019 passed in SA No. 465 of 2018 on the file the DRT, iat Visakhapatnam and pending disposal of the above writ petition.

IA NO: 1 OF 2022

Between:

• 1. The Regional Manager, Syndicate Bank, Nellore Region, Om Shanti Towers, Ritwik Enclave, A.K. Nagar, NELLORE, Andhra Pradesh-524004
• 2. The Authorised Officer/Chief Manager, Syndicate Bank, SME Branch, Nellore, Om Shanti Towers, Ritwik Enclave, A.K. Nagar, Nellore, Andhra Pradesh- 524004

...Petitioners/Respondents 1 & 2

AND

• 1. Bezawada Sujamma @ Sujana Reddy, W/o. Mahesh Chandra Reddy, aged 58 years, Plot No. 27, Bezawada Obul Reddy Nagar, Dargamitta, Neliore, PIN 524004, Andhra Pradesh
• 2. M/s. K.P.R. Constructions, (formerly known as Vellanti Associates), represented by its Managing Partner, Sri K. Pattabhi Rama Ready S/o. K. Ramachandra Reddy, agea about 84 years, Occ Business, Rio. Flat No. 302, Jagannath Enclave, Opp. Iskon Temple, Iskon city, Nellore.

...Respondents

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to vacate the interim order dated 27-02-2019 in W.P.No. 2480 of 2019 and dismiss the W.P.

$\widehat{\bullet}$

Counsel for the Petitioner: SRI C.V.MOHAN REDDY SR. COUNSEL FOR SRI RAMAKRISHNA PATIVADA

Counsel for the Respondents 1 & 2: SRI SREEDHAR VALIVETI

Counsel for the Respondent No.3: SRI KRISHNA DARAPU

Counsel for the Respondents 4 to 9: SRI C SUBODH

The Court made the following order:

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction)

[3478]

THURSDAY ,THE TWENTY FIFTH DAY OF APRIL TWO THOUSAND AND TWENTY FOUR

PRESENT

THE HONOURABLE SRI JUSTICE A V SESHA SAI THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY WRIT PETITION NO: 2480/2019

Between:

...PETITIONER Bezawada Sujamnna @ Sujana Reddy

AND

The Regional Manager and Others ...RESPONDENT(S)

Counsel for the Petitioner:

1. RAMAKRISHNA PATIVADA

Counsel for the Respondent(S):

• 1.SREEDHARVALIVETI
• 2.0 SUBODH
• 3.SREEDHARVALIVETI
• 4. KRISHNA DARAPU

The Court made the following:

ORDER:- (per Hon'ble Sri Justice A. V.Sesha Sai)

Heard Sri C.V.Mohan Reddy, learned Senior Counsel, representing Sri Rama Krishna Pativada, learned counsel for the petitioner on record; Sri Sreedhar Valiveti, learned counsel for Respondent Nos.1 & 2; Dr.A.M.Krishna, learned counsel for Respondent No.3; and Sri C.Subodh, learned counsel for Respondent Nos.4 to 9, apart from perusing the entire material available on record.

2. In the present Writ Petition, challenge is to the order dated 13.02.2019, passed by the Debts Recovery Tribunal (DRT), Visakhapatnam, dismissing S.A.No.465 of 2018 filed by the petitioner herein.

3. Assailing the steps taken by the Respondent-bank under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the Act'), the petitioner herein, by invoking the provisions of Section ¹⁷ of the Act, filed the said Securitization No.465 of 2018. The Tribunal, vide impugned order, dated Application 13.02.2019, dismissed the said application. Hence, the present Writ Petition.

4. Resisting the Writ Petition and denying the allegations and averments in the supporting affidavit, ^a counter affidavit has been filed by respondent Nos.1 &2.

5. The learned Senior Counsel Sri.C.V.Mohan Reddy, raises the following contentions for impugning the proceedings initiated by the respondents under the provisions of the Act. two

• i. Since the Respondent-institution failed to pass any orders on the objections raised by the 3^*^ Respondent/Principal Borrower mandated under Section 13(3-A) of the Act, entire proceedings initiated stood lapsed; , as
• ii. Non-service of notice to the petitioner and the principal borrower as Rule 8(6) of the SARFAESI Rules is fatal to the case of the Respondent-bank and on this ground also the entire proceedings are liable to be set aside. per

6. On the contrary, strongly resisting the Writ Petition, learned counsel for Respondent-bank contends that there is no error nor there exists any infirmity in the order of the Debts Recovery Tribunal and the proceedings initiated undej jbs Securitization Application, as such, no interference of this Court, under Article 226 of the Constitution of India, is warrant'^'^ the

It is further contended that neither the petitioner nor the respondentprincipal borrower submitted objections to the notices issued under Section 13(2) of the Act under Section 13(3-A) of the Act, as such, it is not open for the petitioner to raise any contention, touching the said provision of law. It is further submitted by the learned counsel that strictly adhering to the provisions of the Act and the Rules, the respondent-institutionproceeded with and conducted auction and the auction purchasers paid 25% of the amount, as such, the present Writ Petition is liable to be dismissed. 7.

It is also the submission of the learned counsel that notice under Section ⁸ (6) of the Actwas also issued to the principalborrower and the petitioner and the track record of the postal department would disclose the same. 8.

The Parliament,with an intention to regulate the Securitization and Reconstruction of Financial Assets and Enforcement of Security Debt based on security interest for the matters connected therewith or incidental thereto, enacted the SARFAESI Act, 2002, and in exercise of the powers conferred by sub-section (1) and clause (b) of sub-section (2) of Section 38 read with sub sections (4), (10) and (12) of Section ¹³ of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Central Government framed the Rules called The Security Interest (Enforcement) Rules, 2002,' for effective enforcement and implementation of the provisions of the legislation.Section 13 of the Act deals with the enforcement of Security interest. Sub-section (2) enables the creditor to initiate proceedings by issuing a demand notice, calling upon the defaulter/debtor to pay the amounts.Sub-section (3-A) of Section 13 of the Act empowers/facilitates the debtor/borrower to raise objections to the notice issued under Section 13(2) of the Act. 9.

Though, it is stated by the petitioner that, despite objections by the principal borrower to the notice under Section 13(2) of the Act, the arid failed to pass 10. respondent-bank authorities did not respond to the ⁵ corner

3

any orders, learned counsel for the respondents ¹ & 2 emphaticallysubmits that the postal track records would reveal that the response, said to have been sent by way of ^a legal notice, does not pertain to the present notice under Section 13(2) of the Act.

On the other hand, learned Senior Counsel, representing the petitioner, strongly resisting the said contention, submits that the objections weresubmitted by the principal borrower and it is further submitted by the learned Senior Counsel that in view of the provisions of Section 128 of the Indian Contract Act, 1872, the petitioner herein is also entitled for protection under Section 13(3-A) of the SARFAESI Act, 2002. 11.

Yet another contention raised by the learned Senior Counsel is that, no notice under Section 8(6) of the Act was served either on the petitioner or on the principal borrower and the same is fatal to the case of the respondentbank. 12.

Learned counsel for the repsondents submits that the postal track records would also reveal service of notice but,while disputing the same, the learned Senior Counsel for the petitioner submits that no evidence was made available before the Tribunal to satisfy the said plea advanced on behalf of the respondent-bank. It is also not in controversythat the Securitization Application filed by the principal borrower/respondent No.3 herein,wde S.A.No.98 of 2019, is pending consideration before the Debts Recovery Tribunal, Visakhapatnam. Therefore, in order to have a quietus for all the issues and the disputed aspects set out supra, this Court deems it appropriate to remit the matter to the Debts Recovery Tribunal, Visakhapatnam, for adjudication of the issues along with S.A.No.98 of 2019 filed by the principalborrower. 13.

For the aforesaid reasons, the Writ Petition is allowed and the order dated 13.02.2019 passed by the Debts Recovery Tribunal, Visakhaptnam, in S.A.No.465 of 2018 stands, set aside and the DRT shall take up the adjudication of the present S.A. along with S.A.No.98/2019 filed by the respondent No.3 herein. 14.

4

V

Having regard to the fact that the issue is pending for considerable 15. length of time, this Court deems it appropriate to request the Debts Recovery Tribunal to expedite the hearing of the present Securitization Application and S.A.No.98 of 2019. There shall be no order as to costs.

Miscellaneous petitions, if any, pending in this case, shall stand closed.

//TRUE COPY//

SD/- S.SRINIVASA PRASAD ASSISTANT REGISTRAR

To,

• SECTION OFFICER 1. The Regional Manager, Syndicate Bank, Nellore Region, Um Snanti
• Towers, Ritwik Enclave, A.K. Nagar, NELLORE, Andhra Pradesh-524004.
• 2. The Authorised Officer/Chief Manager, Syndicate Bank, SME Branch, Nellore, Om Shanti Towers, Ritwik Enclave, A.K. Nagar, NELLORE, Andhra Pradesh- 524004
• 3. One CC to Sri Ramakrishna Pativada, Advocate [OPUC]
• 4. One CC to Sri C Subodh, Advocate [OPUC]
• 5. One CC to Sri Sreedhar Valiveti, Advocate [OPUC]
• 6. One CC to Sri Krishna Darapu, Advocate [OPUC]
• 7. Two CD Copies

RAM

HIGH COURT

V

DATED:25/04/2024

ORDER

\

ALLOWING THE WP WITHOUT COSTS