Allowed

Mrs Mamta Devi v. Indian Bank (Allahabad Bank)

DRT11 Jul 2025SA/120/2024

Case brief

AI extract

What is this about?

In this securitization application, the Debt Recovery Tribunal quashed SARFAESI action and e-auction sale initiated by a bank due to established procedural infirmities including failure to prove service of possession notice and lack of evidence regarding agricultural land use.

What did the court decide?

The SARFAESI action including the sale are set aside. The bank is directed to refund the amount deposited by the auction purchaser with 10% simple interest.

Mrs Mamta Devi versus Indian Bank (Allahabad Bank) — Banking and Recovery | DRT (2025)

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SA 120 of 2024 [J)

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DRT.PATNA

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DEBTSRECOVERYTRIBUNALPATNA

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Presiding Officer: Shri Kaushalendra Yadav

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SA- 120 of 2024

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I. Mrs. Mamta Devi, Wlo Amresh Kumar, Rio Ward No.-IO Chilra, Sonbharsa, District- Sitarnarhi.

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. Applicant

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Versus

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I. Authorized Officer Cum Chief Manager Indian Bank (Erstwhile Allahabad Bank) Zonal Office, Om Shanti Complex, Near Zila School Ramna Road, DistrictMuuzaffarpur Bihar 842002.

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Branch Manager, Indian Bank ( Erstwhile Allahabad Bank) Sonbarsa Branch ViII+PO- Sonbarsa, District SitarnarhiBihar.

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Shashi Kumar ChaudharyS/o KailashPrasad Chaudhary, Resident Of Koat Bazar, Ward No.- 16 Chakmahila,Sitamarhi,P.O;Sitamarhi,P.S- Durnra, District-Sitarnarhi (Auction Purchaser).

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MIS Amresh General Store, Prop. Sri Amresh Kumar S/o Sri MahendraMahto atWard No.2 RohuaKohbarwaSitarnarhi 843330,Bihar( Borrowing Firm)

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Sri Amresh Kumar S/O ShriMahendraMahto at Ward No.-2 Rohua Kohbarwa, Sitarnarhi 843330,Bihar( Proprietor).

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Jay Kumar S/o Rajendra Das at ViIIPO Sonbarsa Ward No 14 Sitamarhi 843330

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Ram Ekbal Mahto, S/O Late Ram Briksh Mahto at Viii Sonbarsa Ward No-9 Sitamarhi 843330(Guarantor).

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......•... Respondents

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Presents;

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For the Applicant : Sh. S.K. Srivastava, Advocate For the Respondent bank : Sh. B. K. Jha, Advocate For Respondent No.3 : Sh.Pranav Kumar Jha, Advocate

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Dated: 11.07.2025

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JUDGMENT

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I. The present application has been filed with a prayer to quash the entire SARFAESI action, including setting aside the e-auction sale notice dated 03.02.2024.

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During the pendency of this Securitization Application, the applicant has filed IA No. 226/2024 for condonation of delay, IA No. 666/2024 to amend the relief in SA by incorporating that the land in question is agricultural land, IA No. 667/2024 with the

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SA 120 of 2024 UJ

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DRT,PATNA

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prayer that the supplementary affidavit may be taken on record as part and parcel of the main SA, and IA No, 668/2024 against the action of physical possession initiated by the respondent Bank.

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The brief facts of the case are that MIs General Store, through its proprietor Mr. Amresh Kumar, availed a Cash Credit facility of ~20,00,000, FITL of ~3.20 lakhs, and GECLS facilities of ~6.00 lakhs during the COVID period. The applicant is a coborrower and mortgagor and mortgaged her property towards security of the said loan account. Due to default in repayment of the loan amount, the bank classified the account as NPA on 06.04.2023 and initiated action under the SARFAESI Act by issuing a demand notice dated 29.05.2023 under Section 13(2), followed by a possession notice dated 18.08.2023 under Section 13(4). Subsequently, the bank issued a sale notice dated 03.02.2024, fixing the e-auction date as 20.03.2024. Aggrieved by the sale, the applicant has filed this Securitization Application (SA).

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On the point of limitation, the leamed counsel for the applicant submits that the sale notice dated 03.02.2024 issued by the Bank was served upon the applicant on 06.02.2024. Accordingly, the applicant contacted respondent Bank and the Branch Manager of the respondent Bank assured the applicant that on deposit of overdue amount the sale notice will be nullified. Relying on statement of Branch Manager, the applicant deposited ~5,44,500/- by 20.03.2024 but the account remained inoperative and the property has been put on action sale and further the property has been auctioned. Owing to the false assurances given by bank officials, there was a delay of 13 days in filing the present Securitization Application. Same may be condoned as the delay is not deliberate and intentional.

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The learned counsel for the applicant further submits that due to COVID-19, the business suffered, leading to irregular repayment. Despite this the borrower managed to deposit a substantial amount but the bank deliberately declared the loan account as NPA on 06.04.2023. The applicant further contends that the demand notice dated 29.05.2023 was served only to the applicant and not to other guarantors or the borrower. Additionally, the possession notice dated 18.08.2023 was neither served upon any guarantor or borrower, including the applicant, nor published in the newspaper or affixed on the secured asset. The Sale Notice 03.02.2024 was served upon applicant vide which it is Cameto the notice of applicant that the reserve price of the property has been fixed for Rs.13,89320/- while the market value of the property is approx. Rs.60 lacs. The sale notice published in the newspaper is not in accordance with Appendix-IVA. The property has been auctioned by the bank but the auction purchaser has not paid the entire consideration amount within time. The ~/

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.J:. '' \

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SA 120 of 2024 [J)

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DRT,PATNA

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applicant further claims that the mortgaged property is agricultural land therefore, SARFAESI action cannot be initiated in the matter.

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The learned counsel for the respondent bank submitted that due to default in repayment of the loan amount, the account in question was classified as a NonPerforming Asset on 06.04.2023, and a demand notice dated 29.05.2023 under Section 13(2) of the SARFAESI Act was issued and duly served. It is further submitted that a possession notice under Section 13(4) was issued on 18.08.2023and it was served, affixed and published in the newspapers. Subsequently, Valuation of property was obtained from approved valuer of the Bank and property has been put on auction sale by issuing e-auction notice dated 03.02.2024 fixing the auction date as 20.03.2024. The said sale notice was affixed to the secured asset, published in two leading newspapers, and duly served to the applicant. Accordingly, the property was auctioned on 20.03.2024 to the highest bidder, Mr. Shashi Bhushan Pd. Yadav. On deposit of the entire auction amount, a sale certificate was issued on 15.04.2024 in favour of the auction purchaser. The respondent bank further submits that the mortgaged property is non-agricultural land.

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The learned counsel for the auction purchaser submits that through publication of sale notice in Hindustan Times, the auction purchaser became aware of the e-auction notice dated 03.02.2024. Accordingly, participated in the auction sale held on 20.03.2024 and further declared as the successful bidder being highest bidder offering the highest bid amount of ~42,49,320/-. After depositing the entire bid amount, the authorized officer of the bank issued a sale certificate on 15.04.2024.

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Despite the service of notice, Respondent Nos. 4 to 7 have neither appeared before the Hon'ble Tribunal, either in person or through counsel, nor have they filed any counter affidavit.

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I have heard learned counsels of both parties and gone through the records.

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It is alleged that the demand notice was not served to all the borrower and guarantors in the matter. The possession notice was neither served upon any guarantor or borrower, including the applicant, nor published in the newspaper or affixed on the secured asset. The property has been auctioned at a very low price while the market value of the property is much more than the reserve price. The sale notice published in the newspaper is not in accordance with Appendix-IVA. The auction purchaser has not paid the entire consideration amount within time. The mortgaged property is agricultural land.,

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II. Upon perusal of the record, it appears that the applicant has received the demand

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SA 120 of 2024 IJ]

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DRT,PATNA

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notice, as evident from the photocopy of the same annexed by the respondent bank at page 13 as Annexure Rll of the counter affidavit, which bears the signature of Mamta Kumari, i.e., the applicant. However, with regard to the allegation concerning the possession notice, although the said notice was issued on 18.08.2023, the respondent bank has failed to file any proof of service, affixation, or publication of the same. The bank has merely annexed copies of the alleged publication of the possession notice as Annexures Rl3 and Rl4 at pages 17 and 18 of the counter affidavit. Neither the copies ~f the publication nor the contents of the counter affidavit disclose the date of publication or the name of the newspaper in which the notice was allegedly published, despite the applicant's specific allegation that the possession notice was neither served, affixed, nor published.

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Further, the valuation of the property was obtained by the Bank from its approved valuer vide valuation report dated 14.10.2023 annexed with counter affidavit which indicates the market value of the property is worth Rs.17,36,650/-, ForcedlDistress Sale Value is Rs.15,62,9851-and Rs. Realizable Value of property is Rs.13,89,320/-. The property was put on auction sale by issuing e-auction sale notice dated 03.02.2024 fixing the date of auction sale as 20.03.2024. The said sale notice was sent to the applicant through post on 05.02.2024 and the same was served to the applicant on 06.02.2024 as also admitted by the applicant in its application. The sale notice was affixed on secured assets and also got published in Hindustan and Hindustan Times on 07.02.2024 as appear from the annexure - Rl7, Rl8 and Rl10, page 30-31 & 33 of counter affidavit. So far, the allegation of applicant regarding publication of sale notice in Dainik Bhaskar is concerned, the applicant failed to file any proof which may indicate that the sale notice was published in Dainik Bhasker instead of Hindustan.

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The property was auction sold on 20.03.2024 to the auction purchaser but neither the respondent bank nor the auction purchaser has provided any specific proof regarding the details of payment made against auction amount, except for the sale certificate annexed as Annexure Rl9 at page 32 of the counter affidavit whereas there is specific allegation of the applicant that the auction amount was not paid by the auction purchaser.

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So far allegation regarding agricultural land is concerned, it is found that the applicant has merely filed a letter dated 11.09.2024, issued by the Anchal Adhikari, as Annexure Al at page 8 of the rejoinder affidavit. However, as held by the Hon'ble Supreme Court in K. Sreedhar vs. Mis RAUS Constructions Pvt. Ltd. &Ors. the exemption under Section 31(i) of the SARFAESI Act is applicable only where the

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SA 120 of 2024 1Jl

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DRT.PATNA

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property is actually put to use for agricultural purposes, and not merely on the basis of revenue records or classification in official documents. In the present case, no substantive evidence has been brought on record by the applicant to demonstrate that agricultural activity was being carried out on the secured asset. Therefore, the applicant's reliance on the said letter is insufficient, and the burden to prove the actual use of the land for agricultural purposes remains unfulfilled.

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In view of the above discussion, the service of Possession Notice and other compliance regarding it could not be proved. Despite specific objection, the respondents have not filed the details of payment of sale consideration as required under the law. These infirmities vitiate the SARFAESI Action and the Sale under challenge.

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ORDER

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The application SA 120 of 2024 filed by Mrs. Mamta Devi W/o Amresh Kumar, is allowed. The SARFAESI Action including Sale in question are set aside. The respondent Bank is directed to refund the amount deposited by the auction purchaser with 10% simple interest within one month. No order for costs.

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[KaushalendraYadav 1

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Presiding Officer

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Debts Recovery Tribunal, Patna

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Judgment signed, sealed, dated and pronounced in the open court on this 11THDay of July, 2025.

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[KaushalendraYadav1

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