Assignee bound by assignor's admission and unassailed High Court finding that secured agricultural assets are exempt from SARFAESI enforcement.

JUDGMENT : 25th March, 2026

THE APPELLATE TRIBUNAL :

Instant Appeal has been preferred against an order dated 11% April, 2025 passed by Learned DRT - II Hyderabad allowing the Securitisation Application filed by the Respondents.

2. Facts of the matter, in brief, are that the Respondent is an Education Society represented by its President B Chenna Krishna Reddy which availed a term loan of Rs. 5 crore on 11.01.2010 by mortgaging the agricultural properties and Rs.1.50 crore on 21.12.2010 from Bank of Baroda for establishing engineering colleges and schools. Loan account became irregular and was classified as NPA. Demand Notice under Section 13(2) of the SARFAESI Act, 2002 was issued by the Bank of Baroda on 30% November 2012. Despite making certain payments, secured creditor initiated the action for taking physical possession. A challenge to the same was made before the Hon’ble Andhra Pradesh High Court in W.P. No. 697 of 2014 vide Crl. Miscellaneous Petition No. 647 of 2013 which were decided by the Hon’ble Andhra Pradesh High Court holding that the properties are agricultural properties. A liberty was also granted by the Hon’ble High Court to the Bank to produce relevant documents before the Chief Metropolitan Magistrate to show that the secured assets is not agricultural land. This order of the Hon’ble High Court was not challenged.

3. O.A. No. 26 of 2017 (Old No. 178 of 2013) was filed by the Bank of Baroda stating that the mortgaged properties are agricultural properties. Bank of Baroda vide letter dated 01.10.2019 informed the Respondents Securitisation Applicants that the account has been assigned to M/s Maximus ARC Limited Appellant herein for a consideration of Rs. 5.04 crore. Fresh possession Notice was issued on 06.02.2020 received by the S.A. Applicant on 08.02.2020 wherein the provisions of Rules 8(1) of the Security Interest (Enforcement) Rules, 2002 were not followed. Valuation Report was not obtained and Sale Notice was issued on 08.08.2024 without mentioning the pendency of S.A. Secured assets are agricultural properties exempted under Section 31(i) of the SARFAESI Act, 2002 from enforcement under the SARFAESI Act, 2002.

4. Appellant Secured Creditor herein stated that the Respondents are the borrowers. Nature of the land and use for on the date of creation of security interest has to be looked into. Lands were converted for non agricultural purpose vide RDO order dated 29.12.2008. Hon’ble High Court has given the liberty to file evidence before the Ld. CMM. Financial Institution stepped into the shoes of Bank of Baroda. Fresh notice was issued by the Appellant on 06.02.2020. Erroneous description of the land by original lender does not alter the nature of the land wherein schools and colleges are being run. Issuance of the subsequent Possession Notice implies the withdrawal of earlier notice. Notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 was issued and served upon the Respondents herein.

5. Learned DRT arrived at a finding that the Hon’ble High Court has held that the secured asset is an agricultural land. Further, there is an admission in the O.A. about the nature of land being agricultural land. Accordingly, SARFAESI proceedings against the secured assets have been initiated without jurisdiction.

6. Feeling aggrieved by the impugned order, Appellants secured creditor preferred the Appeal.

7. I have heard the Learned Counsel for the parties and perused the records.

8. Learned Counsel for the Appellant would submit that the impugned order suffers from material illegality. Financial assistance was sanctioned for running the school and colleges. Property