Court emphasized procedural compliance in classification of accounts and serving notices to all relevant parties.

The Appellate Tribunal Instant appeal has arisen against the judgement and order dated 20.08.2022 passed by the learned DRT- Visakhapatnam in S.A. No. 373 of 2021 (M/s. Biomed (I) Health Care Pvt. Ltd. Vs. The AO, Encore Asset Reconstruction Co. Ltd. & Ors.) whereby learned DRT allowed the securitization application filed by the respondents herein.

2. As per pleadings of the parties, facts of the matter are that respondent herein M/s Biomed (I) Health Care Pvt. Ltd. filed the securitization application challenging the E-auction sale notice dated 18.09.2021 and the E-auction conducted on 27.10.2021. Respondent is a company engaged in the business of pharmaceuticals. Financial assistance was sought from the respondent bank, which was sanctioned by the secured creditor against collateral security of the property of Mr. Desari Subhash Chandra Bose and Mr. Kolluru Ramesh. Mr. Kolluru Ramesh was inducted as Director in the respondent company on 28.02.2012 and he voluntarily resigned on 30.12.2016, which was duly intimated to the bank as well as Registrar of Companies.

3. Account of the securitization applicant was classified as NPA on 31.12.2016, which was not in accordance with RBI guidelines and relevant rules. Demand notice dated 09.01.2017 was issued by registered post on 11.01.2017 which was received by the securitization applicant on 12.10.2017. But the same was not received by the guarantor, namely Mr. Desari Subhash Chandra Bose, who died on 02.06.2021. Representation against the demand notice was made, which was replied without any reasoning. Account was classified NPA against the RBI guidelines.

4. Possession notice was issued by the bank which was not served upon the guarantors. Sale notice dated 18.09.2021 was issued fixing the auction date on 27.10.2021. Sale notice was not served upon the guarantors. One of the guarantors namely, Desari Subhash Chandra Bose died on 02.06.2021, but the sale notice was not served upon his legal representatives, despite the fact that intimation of death was given to the secured creditor.

Sale notice dated 18.09.2021 was not enforceable upon a dead person.

5. Valuation of the property fixed was under-valued. Accordingly, securitization application was filed challenging the sale notice dated 18.09.2021 and e-auction conducted on

27.10.2021.

6. Reply was filed by the bank stating that factum of availing financial assistance from the secured creditor by the securitization applicant is not in dispute. There was default in repayment and account was classified NPA on 31.12.2016. Demand notice dated 09.01.2017 was sent by registered post on 11.01.2017 which was received on 12.01.2017. In the representation dated 03.03.2017 against the demand notice, borrowers themselves have requested for withdrawal of the demand notice dated 09.01.2017. Account was classified NPA as per RBI guidelines. Representation made by the securitization applicant was duly replied on 14.03.2017. Possession notice was issued on 09.05.2017 which was affixed on a conspicuous part of the secured asset and also published in two newspapers. Assignment of account was duly notified to the securitization applicant vide letter dated 09.04.2018. Legal notice dated 22.08.2018 was also issued against the borrower and guarantors which was not replied. Sale notice dated 18.09.2021 was sent to the borrower and guarantors which was also published in the newspapers as per law. Intimation of death of the guarantor, Desari Subhash Chandra Bose, was never g