APHC010184772019 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) MONDAY, THE TWENTY FIRST DAY OF JULY TWO THOUSAND AND TWENTY FIVE PRESENT THE HON’BLE THE CHIEF JUSTICE SRI DHIRAJ SINGH THAKUR AND THE HON’BLE SRI JUSTICE RAVI CHEEMALAPATI WRIT PETITION NO: 7966 OF 2019 Between: State Bank of India, SARB, Balaji Nagar, Siripuram Junction, Administrative Unit, Visakhapatnam, Represented by its Chief Manager/Authorised Officer, Balia. Annaiah, S/o.Buchaiah, Aged about 55 years. / ...Petitioner AND 1. The Debt Recovery Tribunal, Visakhapatnam Represented by its Presiding Officer, Visakhapatnam. 2. Smt Devarasetty Anasuyamma Alias Chitti Anasuyamma, W/o.Bali Eeswarayya, Hindu, Aged about 56 Years, R/o.H.No.28/848C, N.G.O's Colony, Nandyal, Kurnool District. A.P. PIN-518501. 3. State Bank of India, Giddaluru Branch, Prakasam District.A.P. 4. Boilla Ramana Reddy, S/o.B.Rosi Reddy, Podili kondapalle Village, Giddaluru Mandal, Prakasam District. ...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 writ, order or direction more particularly one in the nature of writ of Certiorari or any Appropriate Writ by calling for the Records pertaining to Orders Passed by the Hon’ble DRT, Visakhapatnam, in S.A.No.92/2018, Dated 03-05-2019, and declare the same as contrary to Law, contrary to Rule 8(5) of Security Interest Rules,2002, is illegal. Contrary to Articles 14, 16, 19, 21 of Constitution, and against the principals of natural justice, contrary to Law, and consequently to Set aside the same. lA NO: 1 OF 2019 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 the operation of the Orders passed by the Honble DRT, Visakhapatnam in S.A.No.92/2018, Dated 03-05-2019. lA NO: 2 OF 2019 Between; Smt Devarasetty Anasuyamma Alias Chitti Anasuyamma, W/o.Bali Eeswarayya, Hindu, Aged about 56 Years, R/o.H.No.28/848C, N.G.O's Colony, Nandyal, Kurnool District. A.P. PIN-518501. ...Vacate Petitioner/Respondent No.2 AND 1. State Bank of India, SARB, Balaji Nagar, Siripuram Junction, Administrative Unit, Visakhapatnam, Represented by its Chief Manager/Authorised Officer, Balia. Annaiah, S/o.Buchaiah, Aged about 55 years. ...Respondent/Writ Petitioner State Bank of India, Giddaluru Branch, Prakasam District.A.P. Boilla Ramana Reddy, S/o.B.Rosi Reddy, Podili kondapalle Village, Giddaluru Mandal, Prakasam District. 2. 3. ...Respondents/ Respondents 3 & 4 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 26.06.2019 granted in I.A.No. 1 of 2019 in W.P.No. 7966 of 2019 and dismiss the main writ petition. Counsel for the Petitioner: SRI S SATYANARAYANA MOORTHY Counsel for the Respondent No.4: SRI ROSEDAR S.R.A Counsel for the Respondent Nos. 1 & 3: —- Counsel for the Respondent No.2: SRI AKULA SRI KRISHNA SAI BHARGAV REPRESENTING SRI P DURGA PRASAD The Court made the following order: APHC010184772019 IN THE HIGH COURT OF ANDHRA PRADESH Sr.No:-75 [3483] AT AMARAVATI WRIT PETITION NO: 7966 of 2019 State Bank of India ...Petitioner Vs. The Debt Recovery Tribunal and others ...Respondents ********** Advocate for Petitioner: Advocate(s) for Respondent(s); Mr. S Satyanarayana Moorthy Mr. Akula Sri Krishna Sai Bhargav representing Mr. P Durga Prasad for R.2 CORAM :THE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE RAVI CHEEMALAPATI : 21*^ July, 2025 DATE Per DHIRAJ SINGH THAKUR. CJ fOrah : The present petition has been filed challenging the order, dated 03.05.2019, passed by the Debts Recovery Tribunal, Visakhapatnam, in SA.No.92 of 2018. 2. The S.A was filed by Smt Devarasetty Anusuyamman - respondent No.2 herein challenging the proceedings initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [for short, ‘the SARFAESI Act’] in regard to her property which was secured as an asset on account of loan advanced in 2 HCJ & RC, J WP_7966 2019 favour of M/s. Viscous Milk Products. Respondent No.2 herein stood of the guarantors to the said loan. as one It appears that on account of default having been committed by the principal borrower, steps were taken by the petitioner - State Bank of India to sell the property by way of an auction. It appears that the first attempt to auction the property was made by the bank on 13.11.2016, which attempt however did not succeed. 3. Before putting the property to auction, the property was got valued by an approved valuer at Rs.71,00,000/- which was the valuation report prepared in the year 2015. It is not out of place here to mention that the property as reflected in the valuation report was stated to be one with a ground floor and two upper floors. It is also not out of place here to mention that in the schedule annexed to the mortgage deed which was executed in the year 2013, the property was described as G + 2 floors. Be that as it may, since the bank failed to auction the property on account of lack of appropriate bidders, yet another attempt was made on 22.12.2016. This auction was also conducted on the basis of the valuation report which was prepared as early as in the year 2015. HCJ & RC, J WP_7966_2019 4. It is not denied by counsel for the parties that as many as three attempts were made in the year 2017 which did not meet success. Finally, an auction was conducted on 24.01.2018 which went through for an amount of Rs.32,50,000/-. This auction proceeded on the basis of the valuation report, dated 16.05.2017, which determined the fair market value of the Rs.36,45,000/- and the forced/distress sale value property at at Rs.27,90,000/-. The property was finally sold for an amount of Rs.32,50,000/-. However, the valuation report had valued the property not on the basis of G + 2 floors but only on the basis of G + 1 floor. 5. The D.R.T by virtue of the order impugned had set aside the auction conducted by the bank on the ground that the valuation report obtained much earlier than the date of conduct of auction and to be a fresh determination of the valuation of the subjecting the said property to auction. was that there had property in question before It is against this order that the present writ petition has been filed by the bank. 6. Learned counsel for the petitioner bank would urge that there was no requirement as per law to obtain another valuation the property to auction inasmuch circulars issued by the bank based report before subjecting as according to the internal instructions and upon the RBI guidelines, while earlier the valuation report ought to have been less than six months old based upon which the reserve price would be fixed whereas as per the revised V ' 4 HCJ & RC, J WP 7966 2019 instructions, the valuation report should be less than one year old for sale of the properties under the SARFAESI Act. 7. We feel, however, persuaded by the argument of learned counsel for respondent No.2 herein that the auction cannot be permitted to succeed firstly for the reason that the valuation was obtained at Rs.36,45,000/- which was the market value only on the basis of the property with G + 1 floor whereas in fact on spot the property was G + 2 floors. The argument of the counsel for the bank that the second floor was not taken into consideration by the valuer while valuing the property on account of the fact that the second floor was unauthorized is an argument which we cannot accept because there is no material placed on record to suggest that in fact it was so. Moreover, the advertisement notice published by the bank notifying the property for sale by auction also reflects the same as G + 2 floors. Even after the auction was completed, the sale letter executed in favour of the auction purchaser does reflect that the property which was sold in his favour was G + 2 floors. 8. In our opinion, therefore, the Bank did not fairly evaluate the property with a view to get the maximum price for the same. The mere fact that in the past certain attempts made by the bank had failed in disposing of 5 HCJ & RC, J WP 7966 2019 the property through auction would not be a circumstance which could justify the very basis for fixing the valuation of the property in the first instance. 9. Apart from the above, a Division Bench of the combined High Court of Andhra Pradesh in Pochiraju Industries Ltd., V. Punjab National Bank, New Delhi [2018 (2) ALD 543] has clearly held that the reserve price fixed in the e-auction based on an earlier valuation report could not have been sustained and that it was mandatory for the bank to secure a fresh valuation from the approved valuer in terms of Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 before issuing a fresh sale notice after the earlier notice had come to naught. In that case, the reserve price of Rs. 17,25,00,000/- was fixed in the impugned e-auction sale notice, dated 01.07.2017 based on an earlier valuation report, dated 01.02.2017 which held not legally sustainable. was For purposes of reference, paragraph No.32 is reproduced hereunder: No doubt, the bank may have attempted time and again to sell the petitioner company's properties, but its failure in doing so does not justify its action in cutting short the due procedure and resorting to reiteration of an earlier reserve price, without lawful foundation to support the same. The reserve price of Rs.n,25,00,000/- in the impugned e- auction sale notice, dated 1.7.2017, based on either the earlier valuation report dated 1.2.2017 or the internal valuation report dated 27.6.2017, therefore, cannot be sustained. It was mandatory for the bank to secure a fresh valuation from an approved valuer in terms of Rule 8(5) of the Rules of 2002 before issuing a fresh sale notice, after the earlier sale notice, dated 14.3.2017 came to naught. 24.7.2017, on the strength of this invalid reserve price in the e-auction sale notice dated 1.7.2017, cannot also be sustained." ■32. In consequence, the auction sale held on 10. Apart from this, we have noticed that in the valuation report, dated 10.06.2015, the property with G + 2 floors was valued at Rs.71,00,000/-. 6 HCJ & RC, J WP 7966 2019 It defies logic as to how when value of the property in the rest of the world appreciates, this particular property would depreciate to less than half its price only on the basis of the valuation determined at G + 1 floor. Be that as it may, we are of the opinion that apart from the view expressed by the D.R.T, the auction and sale conducted by the petitioner bank even otherwise cannot be sustained in law. 11. 12. The Writ Petition is found to be without merit is accordingly dismissed. Notwithstanding the above, nothing would prevent the bank from conducting a fresh auction in regard to the subject property after getting the same valued properly in accordance with the Rules. No order as to costs. Miscellaneous applications pending, if any, shall stand closed. Sd/- KJ. RAJA BABU ASSISTANT REGISTRAR //TRUE COPY// SECTION OFFICER To, 1. One CC to Sri S Satyanarayana Moorthy, Advocate [OPUC] 2. One CC to Sri Rosedar S.R.A, Advocate [OPUC] 3. One CC to Sri P Durga Prasad, Advocate [OPUC] 4. Two CD Copies TF HIGH COURT DATED:21/07/2025 I 0 s AU6 20?5 i Current Section , ORDER WP NO. 7966 OF 2019 Co. DISMISSING THE W.P., WITHOUT COSTS