Hyderabad: The Telangana high court has cleared the way for Union Bank of India to take over and sell a property in Jubilee Hills belonging to Telugu film producer Bandla Ganesh Babu and his father. The property, a residential building located in a 500 sq yards area at Shaikpet, was earlier auctioned for over Rs 8.5 crore to recover unpaid debts.A division bench comprising Justice Moushumi Bhattacharya and Justice Gadi Praveen Kumar passed the order while overturning an earlier decision by the Debt Recovery Tribunal , which had cancelled the auction sale and ordered the bank to refund the buyer’s money with 6% interest.The case stems from a default by Sri Parameshwara Poultry Farm Pvt Ltd , a company promoted by Bandla Ganesh, his father and his brother. The film producer and his father stood as personal guarantors for the company’s loans, putting up their Jubilee Hills property as security.When the company failed to repay the debt, Union Bank invoked a central law meant for speedy recovery of bad loans to auction the property, fetching a winning bid of Rs 8. 5 cr (approx.)The guarantors initially challenged this sale before the Debt Recovery Tribunal, arguing that the bank could not sell their property because insolvency proceedings had already begun against their main company before a corporate tribunal.“A legal freeze, or moratorium, on recovering debts from the company automatically protected them as guarantors as well,” contended the producer’s family.Arguing for the bank, senior counsel BR Prasad pointed out that the tribunal had made a significant jurisdictional error. He argued that a legal freeze protecting a defaulting company does not automatically shield its personal guarantors.“For guarantors to get such protection, specific bankruptcy proceedings must be filed against them individually, which had not happened here,” Prasad claimed.Further, the auctioneer’s counsel Mayur Reddy argued that the auction money had already been credited as part of a one-time settlement deal, where Bandla Ganesh and the other guarantors had explicitly promised to withdraw all legal challenges — a critical fact the lower tribunal failed to consider.Taking note of these arguments, the high court ruled that the ongoing insolvency process against the main company had no bearing on the bank’s right to sell the personal properties of the guarantors.It set aside the lower tribunal’s order, and fully restored the bank’s auction proceedings.
