Allowed

Parkash Thakur v. Union Bank of India and Another

DRT21 Apr 2025SA/13/2025

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal quashed a secured asset sale under SARFAESI, holding that the sale notice lacked proper service, failed to provide a 30-day notice period, omitted a mandatory fresh valuation report, and the security interest was not registered with CERSAI.

What did the court decide?

Securitization application allowed; SARFAESI proceedings quashed; Authorised Officer directed to return auction deposit with 4% interest.

Parkash Thakur versus Union Bank of India and Another — Company and Corporate | DRT (2025)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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PRESIDED OVER: SH. MRIDULESH KUMAR SINGH

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SECURITIZATION APPLICATION NO.13/2025

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Date of Institution: 20.01.2025

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Date of Decision: 21.04.2025

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Sh. Parkash Thakur S/o Sh. Inder Lal, R/o House No.19-D, Chirag Chandigarh Enclave, Kharar, District Mohali-140301

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--Applicant

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Versus

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Authorised Officer, Union Bank of India, Stressed Asset Management Branch, SCO 137-138, Sector 8- C, Chandigarh-160008

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Sh. Harvinder Singh S/o Sh. Buta Singh, R/o House No. F-219, Vishnu Garden, Tilak Nagar, West Delhi110018

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--Respondents

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Argued by: Sh. Rohit Sapra, Advocate for Applicants Sh. Sumit Sharma, Advocate for Respondent No.1 Respondent No. 2 already ex parte vide order dated 24.01.2025

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FINAL ORDER

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(1) This Securitization Application was filed under Section 17 (1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for brevity) for setting aside sale/auction dated 29.08.2024 as well as order dated 01.10.2024 passed under Section 14 of the Act be declared as null, illegal and void.

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(2) It was stated in the application that applicant has approached this Tribunal being aggrieved by the action/measures of the respondent No.1, whereby the immovable property of the applicant i.e., House No.20, comprising of three flats i.e., House No.20-A to 20-C, Chirag Chandigarh Enclave, Jandpur, Tehsil Kharar, District SAS Nagar

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SA/13/2025

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PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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(Mohali) has been sold/auctioned on 29.08.2024 to respondent No.2, the Auction Purchaser; that applicant also aggrieved by the action taken by respondent No.1 qua taking physical possession of the said property on 27.01.2025; that applicant became aware of this sale on 15.01.2025 when the recovery agent and Officials of respondent No.1 informed the tenant of the applicant that the property already stands sold in August, 2024; that applicant was completely shocked and taken aback by this revelation as the applicant did not received any notice from the respondent No.1 in this regard; that respondent No.1 vide sanction letter dated 11.08.2016 sanctioned a Housing Loan of Rs.32 Lacs to the applicant for purchase of under construction H.No.20 comprising of three flats i.e., House No.20-A to 20-C situated in Chirag Chandigarh Enclave, Jandpur, Tehsil Kharar, District Mohali; that to secure the aforesaid loan, Sh. Urvinder Singh stood as guarantor, besides applicant mortgaged the flats with respondent No.1; that the said loan of Rs.32 Lacs was repayable in 240 EMIs of Rs.30,037/- each along with interest @9.60% p.a.; that further at the time of sanction, respondent No.1 had assessed the value of the entire property i.e., House No.20-A to 20-C at Rs.40,27,500/-; that applicant purchased the flats with the intention of renting it out, using the rental income to assist in covering the EMI payments to the respondent No.1; that applicant has been regularly depositing the EMIs with some delay and has made considerable payment towards repayment of his Housing Loan of Rs.32 Lacs; that on 15.01.2025, few persons claiming themselves to be recovery agent and Officials of respondent No.1, pasted a notice dated 10.01.2025 issued by the Tehsildar-cumMagistrate, Kharar on the subject property and asked the tenant of the applicant to voluntarily surrender the physical possession of the property before 20.01.2025, failing which the physical possession will be taken on 27.01.2025 with the help of Police in pursuance to order dated 01.10.2024 passed under Section 14 of the Act; that the said persons also

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SA/13/2025

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PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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informed the tenant of the applicant that the property stands sold in August, 2024, which was conveyed by the tenant to the applicant; that thereafter, applicant contacted the known Official of the respondent No.1, who informed that one Sh. Harvinder Singh (respondent No.2) of Delhi has purchased the property; that applicant searched the website of various newspapers for the month of August, 2024 and finally came across the sale publication in the newspaper ‘Financial Express’ dated 10.08.2024 scheduling the auction on 29.08.2024; that applicant was not served any statutory notice, including the sale notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ‘the Rules’ for brevity); that perusal of the sale publication dated 10.08.2024 it revealed that respondent No.1 claims to have issued and served a demand notice dated 19.08.2020 and symbolic possession notice to the applicant, however no such demand notice as well as symbolic possession notice was served upon the applicant. It was prayed that in the above facts and circumstances the present SA may kindly be allowed.

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(3) Reply filed by respondent No.1

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(4) It is stated in the reply that this SA is wholly misconceived, not maintainable either in law or on facts and is liable to be dismissed at the outset; that applicant has suppressed material facts and approached this Tribunal with unclean hands; that applicant was served with all mandatory notices under the Act and has failed to disclose the same; that respondent No.1 followed all the due process as mandated under the Act including issuance of notices under Section 13(2) & 13(4) of the Act, publication of possession and sale notices, valuation by Government-approved valuer and obtaining physical possession through the District Magistrate under Section 14 of the Act; that applicant has not challenged the classification of the account as NPA nor denied the outstanding dues; that present application filed by applicant is only an attempt to stall lawful recovery proceedings; that applicant was

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SA/13/2025

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PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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aware of the auction well before January, 2025 and all the proceedings were conducted as per law; that respondent No.1 obtained an order under Section 14 of the Act from District Magistrate, SAS Nagar on 01.10.2024 (Annexure A5); that the notice issued by the Tehsildar-cum-Magistrate dated 10.01.2025 (Annexure A4) was in execution of said order; that no statutory provision has been violated; that it is admitted that a Housing Loan of Rs.32 Lacs was sanctioned on 11.08.2016 for purchase of (under construction) duplex House No.20, Chirag Enclave Near Mata Gujri Nagar, Mundi Kharar, Tehsil Kharar, District SAS Nagar, Mohali, Punjab measuring 122 sq. yards valued Rs. 35.93 Lacs as per EVR dated 30.07.2016; that Sh. Urvinder Singh S/o Sh. Narinder Singh R/o House No.20, New Generation Duplex, Dhakoli, Zirakpur, Punjab stood as the Guarantor; that the said loan was secured by equitable mortgage; that description of the property is admitted to the extent that the disbursement of the Housing Loan was sanctioned against the said property; that applicant was under a legal obligation to repay the loan, which he failed to do; that borrower’s intent does not override his obligation to repay the loan in accordance with the terms of the sanction letter and agreement; that default by applicant in repayment continued despite ample opportunity; that due to prolonged default, the respondent proceeded under the Act; that the allegation that no notice under Rule 8(6) of the Rules was served is denied in the strongest terms; that respondent No.1 complied strictly with the statutory mandate; that sale notice dated 10.08.2024 was issued under Rule 8(6) of the Rules after obtaining a valuation report and fixing a reserved price; that it was sent by registered post to the applicant last known address, delivered through affixation at the property site and also published in two leading newspapers-Financial Express (English) and Ajit (Punjabi) in compliance of Rule 8(6) & Rule 9(1) of the Rules; that applicant has neither produced any contrary evidence nor objected to the sale process at

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SA/13/2025 PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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any relevant time; that the plea of non-service is an afterthought and is devoid of substance, intended solely to delay the recovery proceedings lawfully initiated under the Act; that respondent No.2 emerged as the highest bidder through a transparent e-auction process; that sale was confirmed as well as sale certificate was issued only after full payment of the bid amount and in compliance of Rule 9(4) & 9(6) of the Rules; that applicant was served with sale notices and was aware of the auction proceedings but chose neither to participate nor raise any objection at the appropriate time; that silence of applicant and inaction at that stage bar him now from contesting the sale; that objections raised in this application are clearly afterthoughts aimed at derailing lawful recovery proceedings. Therefore, the present SA may kindly be dismissed.

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(5) No reply filed by respondent No.2. (6) Replication by applicant was filed to the reply filed by respondent No.1, wherein the contents of SA were reiterated and that of the reply to the SA were denied.

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(7) I have heard arguments advanced by Sh. Rohit Sapra and Sh. Sumit Sharma, Advocates and gone through the record carefully. Respondent No.2 was already ex parte vide order dated 24.01.2025. None has appeared on behalf of respondent No.2 for arguments.

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(8) Sh. Rohit Sapra, Advocate argued that notice under Section 13(2) dated 19.08.2020 and notice under Section 13(4) dated 05.05.2022 of the Act were not served according to Rule 8 of the Rules. It was further argued that non-service of demand notice was extinguished the legal right of applicant as available to him under Section 13(3-A) of the Act.

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(9) Per contra , Sh. Sumit Sharma, Advocate argued that notice under Section 13(2) dated 19.08.2020 and notice under Section 13(4) dated 05.05.2022 of the Act were duly served upon applicant and the guarantor as per Rules. It was further argued that copies of said notices are annexed as Annexures R3 to R7 to the reply along with the

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SA/13/2025

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PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER proof of service. Copies of receipts of registered posts and publication in the newspapers are filed as Annexures R3 to R7. (10) It reveals from record that Sanction Letter of Housing Loan was filed as Annexure A1 and in the said letter there are one address of applicant as House No.901, Sector-80, SAS Nagar Mohali and the second address is House No.20, Chirag Enclave, Near Mata Gujri Nagar, Mundi Kharar, Tehsil Kharar, District SAS Nagar, Mohali.

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(11) It further reveals from record that notice under Section 13(2) of the Act Annexure R3 and notice under Section 13(4) of the Act Annexure R5 were issued only on one address of the applicant, which were not served upon applicant and respondent No.1 has not even tried to issue the said notices on the second address of the applicant as mentioned in the Sanction Letter. It further reveals from record that only receipts of registered posts were filed in respect of notices under Section 13(2) & 13(4) of the Act, which were issued on the one address of applicant and to Mr. Urvinder Singh (Guarantor) but no track consignment record filed by respondent No.1 to show that the notices in question, which were allegedly sent by respondent No.1 were ever received by the applicant and guarantor. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondent No.1 notices in question were sent in year, 2020. Gone are the days when sending of registered post itself used to be enough for drawing the presumption of service against the addressee. There is hardly any scope for the same in view of the availability of the track consignment record. Track consignment record should have been produced to bring home the fact that the notices were duly served upon the applicant and guarantor and that not being the position, this Tribunal refuses to draw presumption of service.

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(12) It is admitted by learned counsel for respondent No.1 that no tracking reports were annexed along with copy of receipts of registered posts.

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7 SA/13/2025

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PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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(13) Sh. Rohit Sapra, Advocate further argued that as per Rule 3 of the Rules, Authorised Officer of respondent No.1 has not chosen the service of demand notice by affixing a copy of the notice on the outer door or some other conspicuous part of the house or building of the applicant.

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(14) In light of above factual matrix, it is established that notices under Section 13(2) & 13(4) of the Act were issued but not proved served upon all concerned in light of the Rules.

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(15) Sh. Rohit Sapra, Advocate further argued that sale notice dated 06.08.2024 for the sale held on 29.08.2024 was not served upon applicant providing 30 days time as per Rule 8 (6) of the Rules. It was further argued that it is a well settled law that as per Rule 8(6) & 9(1) of the Rules, a clear 30 days individual notice to the borrower and also a public notice by way of publication in the newspaper is to be given. Therefore, sale conducted on 29.08.2024 is illegal.

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(16) Per contra , Sh. Sumit Sharma, Advocate argued that sale notice was duly served upon applicant providing 30 days period before the scheduled date of auction. It was further argued that sale notice was duly served through registered posts, through affixation as well as through publication in two widely circulated newspapers i.e., ‘Financial Express’ (English) & ‘Ajit’ (Vernacular) strictly in compliance of Rules. It was further argued that all the requisite information i.e., description of property, reserve price, auction date, time and terms and conditions were mentioned in the above said publications. It was further argued that copy of said notice is annexed to the reply along with the proof of service. Copies of receipts of registered posts and publication in the newspapers are filed as Annexures R8 to R10.

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(17) It reveals from record that sale notice Annexure R8 was issued only on one address of the applicant and respondent No.1 has not even tried to issue the said notice on the second address of the applicant as mentioned in the Sanction Letter. It

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SA/13/2025 PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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further reveals from record that only receipts of registered posts were filed in respect of sale notice, which was issued on the one address of applicant and to Mr. Urvinder Singh (Guarantor) but no track consignment record filed by respondent No.1 to show that the notice in question, which was allegedly sent by respondent No.1 was ever received by the applicant and guarantor. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondent No.1 notice in question was sent in year, 2024. Gone are the days when sending of registered post itself used to be enough for drawing the presumption of service against the addressee. There is hardly any scope for the same in view of the availability of the track consignment record. Track consignment record should have been produced to bring home the fact that the notice was duly served upon the applicant and guarantor and that not being the position, this Tribunal refuses to draw presumption of service.

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(18) It is admitted by learned counsel for respondent No.1 that no tracking reports were annexed along with copy of receipts of registered posts.

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(19) As per Rule 8 of the Rules, it is mandatory to serve sale notice by all three modes and the sale notice has to be served upon all borrower, guarantor and mortgagor. Perusal of record shows that the sale notice was not served personally upon the applicant as well as the guarantor. Therefore, the service of sale notice is defective in light of Rule 8 of the Rules and is liable to be set aside only on this ground alone. (20) Sale notice (Annexure R8) was issued on 06.08.2024 for the sale of secured asset on 29.08.2024. Admittedly, there is no clear 30 days time was there for the sale as per Rule 8 (6) & 9(1) of the Rules. It was not argued on behalf of respondent No.1 that this sale notice was issued for the subsequent sale rather it was argued that the sale notice was issued and served with clear 30 days time.

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SA/13/2025

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PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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(21) Sh. Rohit Sapra, Advocate further argued that the sale notice was published in the newspaper ‘Financial Express’, which is not widely circulated newspaper in and around Mohali, where applicant resides. It was further argued that he has filed copy of Annual Report of the year 2021-2022 of the Registrar of Newspapers for India as Annexure A9 along with the replication in which it was mentioned that the ‘Financial Express’ paper is published from Chandigarh and it has circulation figure of 11710 in comparison to the newspaper ‘Tribune’, which has a circulation figure of 44279, ‘Hindustan Times’ has a circulation figure of 57338 and ‘The Times of India’ has a circulation figure of 58923. It was further argued that above comparative figures of the circulation shows that the ‘Financial Express’ was not the leading newspaper having sufficient circulation in the locality concerned.

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(22) Per contra , Sh. Sumit Sharma, Advocate argued that the ‘Financial Express’ newspaper is also leading newspaper.

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(23) No cogent proof was placed on record by respondent No.1 in rebuttal to the Annexure A9. Therefore, in the considered opinion of this Tribunal it cannot be accepted that Financial Express newspaper is a sufficiently circulated newspaper in and around District Mohali and therefore, publication of sale notice was also defective in terms of Rule 8(6) of the Rules.

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(24) Sh. Rohit Sapra, Advocate further argued that respondent No.1 has not obtained a fresh valuation report before putting the property on sale as per Rule 8(5) of Rules. It was further argued that at the time of sanction of loan in August, 2016 the respondent No.1 had assessed the value of the property at Rs.40.27 Lacs and as per valuation report dated 19.01.2025 (obtained by applicant) (Annexure A7) of an approved valuer of various Banks, the market value of the property is Rs.70.25 Lacs. It was further argued that the reserve price of Rs.21,30,000/- has been fixed arbitrarily without application of mind.

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10 SA/13/2025 PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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(25) Per contra , Sh. Sumit Sharma, Advocate argued that the reserve price fixed was based on a valuation conducted by a qualified and Governmentapproved valuer, who considered various objective parameters including the location, type, condition and market trends of similar properties in the area. It was further argued that the valuer’s independent report was duly reviewed and formed the basis for determining the reserve price in full compliance of Rule 8(5) of the Rules.

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(26) In the reply to SA, no valuation report or no proof of obtaining valuation was placed on record. In the absence of any proof, it cannot be said that valuation was even obtained by respondent No.1. In absence of any documentary proof regarding valuation of the property, this Tribunal has no other option to accept the contentions of applicant as true and without any valuation report the sale conducted by the respondent No.1 is in violation of Rule 8(5) of the Rules.

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(27) Sh. Rohit Sapra, Advocate further argued that secured creditor has not registered the mortgaged property with the Central Registry in compliance of mandatory provision under Section 26D of the Act. It was further argued that alleged CERSAI Certificate annexed by respondent No.1 at page No.36 to the reply was not a CERSAI Certificate, it is only a copy of ‘Addition of Security Interest Challan’.

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(28) Per contra , Sh. Sumit Sharma, Advocate argued that respondent No.1 had duly created its charge against the property in question with CERSAI and copy of CERSAI Certificate is annexed at page No.36 to the reply.

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(29) Perusal of the document filed by respondent No.1 as CERSAI Certificate, it appears that complete details of mortgaged property as well as name and address of borrower etc. are not mentioned in it, which were required for the CERSAI Registration. Therefore, this document/Challan cannot be presumed or assumed as CERSAI Certificate.

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11 SA/13/2025 PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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(30) As per Section 26-D of the Act, it is mandatory that no secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter-III unless the security interest created in its favour by the borrower has been registered with the Central Registry.

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(31) In absence of CERSAI Certificate or any equivalent with complete details of CERSAI, it appears that secured asset was not registered under Section 26-D of the Act by respondent No.1, which is pre-requisite for initiating of SARFAESI proceedings. Therefore, on this ground also SARFASEI proceedings are liable to be quashed.

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(32) Sh. Rohit Sapra, Advocate further argued that copy of Sale Certificate (Annexure R12) was filed by respondent No.1, which is prepared with false facts. It was further argued that in the said Sale Certificate dated 19.09.2024 it was mentioned that possession of the scheduled property was handed over to the Auction Bidder but the physical possession of the scheduled property is with applicant as on date.

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(33) Sh. Sumit Sharma, Advocate has not argued/replied on this point. (34) Sh. Rohit Sapra, Advocate further argued that respondent No.2 has not paid balance 75% of purchase price to the Authorised Officer within the prescribed period of 15 days. Though Sh. Sumit Sharma, Advocate argued that the amount was deposited within the stipulated period but details of deposits are neither mentioned in the reply nor any documentary proof was filed nor disclosed during the course of arguments. Therefore, only on the basis of vague reply it cannot be presumed that the rest 75% amount was deposited within stipulated period as per law.

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(35) No other point/argument was pressed or advanced by any party.

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(36) This Tribunal has considered all facts, evidence available on record as well as arguments advanced by the learned counsel for parties. It is clear that sale notice dated 06.08.2024 was not

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12 SA/13/2025 PARKASH THAKUR VS. UNION BANK OF INDIA AND ANOTHER

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served upon all concerned by all three modes as required under the law. Sale notice was not issued and served providing 30 days clear time. Therefore, the sale notice and auction process as well as sale is liable to be quashed.

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(37) From the above facts, it also shows that when the foundation of the SARFAESI proceedings i.e., notice under Section 13(2) of the Act was not proved as served upon applicant and guarantor then building constructed on the said base (notice) cannot be said as legal.

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(38) Non-registration of CERSAI is a crucial illegality in the SARFAESI proceedings. It is not proved that the secured asset was registered with the Central Registry. (39) After considering the above facts and circumstances as well as evidence on record, present SA is liable to be allowed. (40) SA is allowed. SARFAESI proceedings initiated by the respondent No.1 is quashed. Respondent No.1 is directed to return the amount deposited by the Auction Purchaser immediately with interest at the rate of 4% from the date of deposit till the date of actual payment. It is made clear that respondent No.1 may again initiate fresh SARFAESI proceedings according to law. Record be consigned to record room after due compliance. Date: 21.04.2025 Pronounced by me in the open Tribunal. (MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Parkash Thakur v. Union Bank of India and Another

Case brief

What is this about?

What did the court decide?

Parkash Thakur v. Union Bank of India and Another

Case brief

What is this about?

What did the court decide?

What the court decided

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