Dismissed

M/S Jagdambay Exports and Another v. Bank of Baroda and Others

DRT28 Mar 2025SA/139/2023

Case brief

AI extract

What is this about?

Application for setting aside Section 13 notices, Section 14 orders, and auction sale under SARFAESI dismissed. Tribunal held fresh notices superseded prior ones, bank had discretion to reject settlement, and sale without physical possession was lawful.

What did the court decide?

Securitization Application dismissed; request to set aside Section 13 notices, Section 14 orders, and auction sale denied.

M/S Jagdambay Exports and Another versus Bank of Baroda and Others — Property and Title | 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.139/2023

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Date of Institution: 14.07.2023 Date of Decision: 28.03.2025

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M/s Jagdambay Exports, Rahon Road, Bajra Road, Street of Ice Factory, Ludhiana through its proprietor Sh. Balvinder Kumar Sharma S/o Late. Sh. Gorakh Nath Sharma

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Tripurari Garments Pvt. Ltd. 2937, Ganesh Nagar, Link Road, Industrial Area-A, Ludhiana factory at Dyeing Complex Bahadur K. Road, through its Director Sh. Balvinder Kumar Sharma S/o Late. Sh. Gorakh Nath Sharma

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--Applicants

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Versus

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1. Bank of Baroda, Clock Tower, Ludhiana-141008 (Punjab) India through its Authorised Officer

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1. Authorised Officer, Bank of Baroda, ZO SARB, Sector-17, Chandigarh

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1. District Magistrate, Mini Secretariat, Ludhiana, Punjab, Ludhiana

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1. Auction Purchaser(s) jointly: i. Mr. Gagan Jain C/o Rajesh Jain, House No. 44B, Kitchlu Nagar, Ludhiana-141001

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ii. Mr. Rajesh Kumar Jain C/o Nirmal Kumar Jain, House No. 44B, Kitchlu Nagar, Ludhiana141001

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iii. Smt. Savita Jain C/o Rajesh Jain, House No.44B, Kitchlu Nagar, Ludhiana-141001 --Respondents

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Argued by: Sh. Atul Sharma, Advocate for Applicants Sh. C.S. Pasricha, Advocate for Respondent Nos.1 & 2

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2 SA/139/2023

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M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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Respondent No. 3 already ex parte vide order dated 12.12.2024 Sh. Yogesh Kumar, Advocate for Respondent No.4

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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 notices issued under Section 13(2) and 13(4) of the Act pertaining to applicants be set aside; order dated 06.07.2023 passed by respondent No.3 and auction dated 30.11.2022 be set aside being illegal, arbitrary and malafide and order dated 06.07.2023 be stayed.

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(2) It was stated in application that the present application was filed on behalf of M/s Jagdambay Exports applicant No.1 and Tripurari Garments Pvt. Ltd. applicant No.2 through their proprietor and director respectively Sh. Balvinder Kumar Sharma; that due to unavoidable circumstances, the applicants were not able to adhere to the terms and conditions of the loan agreement and both loan accounts were declared as NPA on 01.01.2019 and 31.12.2018; that after declaration of both the loan accounts as NPA, notices under Section 13(2) of the Act were issued to applicant No.1 on 13.03.2019 and to applicant No.2 on 01.01.2019; that in pursuance to the issuance of above said notices, applicant Nos. 1 & 2 filed their separate objections on 10.05.2019 and 01.03.2019; that the objections filed by applicants were rejected by the respondent Nos. 1 & 2 without mentioning any cogent reasons; that thereafter, respondent Nos. 1 & 2 issued notice under Section 13(4) of the Act dated 29.05.2019 to applicants; that after issuance of first notice under Section 13(2) of the Act and after rejection of objections, respondent Nos. 1 & 2 issued fresh notice under Section 13(2) of the Act dated 11.02.2020 to both the applicants; that thereafter, notices under Section 13(4) of the Act dated 20.06.2020 and 21.09.2021 to both the applicants; that respondent Nos. 1 & 2 issued two notices under Section 13(2) of

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SA/139/2023

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M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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the Act and four notices under Section 13(4) of the Act without withdrawing the earlier notices; that respondent Nos. 1 & 2 filed application under Section 14 of the Act before respondent No.3 for taking physical possession of the mortgaged properties and the said application was dismissed by respondent No.3 vide order dated 27.08.2019 on the ground that respondent Nos. 1 & 2 has not mentioned any plausible reasons for rejection of the objections filed by applicants; that respondent Nos. 1 & 2 again filed another application under Section 14 of the Act before respondent No.3, which was again dismissed by respondent No.3 vide its order dated 14.01.2020 on the ground that respondent Nos. 1 & 2 has not filed proper and legal affidavit as the same was purchased from the stamp vendor in the name of M/s Jagdambay Exports and M/s Tripurari Garments Pvt. Ltd.; that respondent Nos. 1 & 2 filed another application under Section 14 of the Act dated 01.09.2020 and the same was disallowed by respondent No.3 vide order dated 17.12.2020 on the ground that the amounts demanded in the earlier notice under Section 13(2) of the Act dated 01.01.2019 issued to applicant No.2 was Rs.7,04,08,544.59p and in the subsequent demand notice dated 11.02.2020, the respondent bank has demanded Rs.6,31,38,033.01p whereas both the amounts in two notices have been calculated till the same date which is 31.12.2018 and similarly notices under Section 13(2) of the Act dated 13.03.2019 issued to applicant No.2 amount was Rs.10,48,34,587/- and in the subsequent demand notice dated 11.02.2020, the respondent bank demanded Rs.10,47,82,274/-; that after rejection of the above said application, respondent Nos. 1 & 2 filed another application under Section 14 of the Act dated 03.02.2023 and the same was disallowed/dismissed by the respondent No.3 vide order dated 24.03.2023; that respondent Nos. 1 & 2 challenged the order dated 17.12.2020 (Annexure A9) before Hon’ble High Court of Punjab and Haryana by filing CWP No. 5349/2021 and the order dated 14.01.2020 (Annexure A8) passed by respondent No.3 was challenged by filing CWP No. 5378/2021; that both the Writ Petitions were partially allowed by the Hon’ble High Court vide order dated

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4 SA/139/2023

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M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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10.05.2023 directing the respondent No.3 to pass a fresh order within a period of 04 weeks from the date of receipt of the certified copy of order; that when respondent Nos. 1 & 2 miserably failed to get orders from the District Magistrate (respondent No.3) on the applications filed under Section 14 of the Act, the respondent Nos. 1 & 2 thought a clever device for selling the mortgaged properties by way of issuing various publication sale notices dated 21.09.2021, 11.11.2022, 01.12.2022 on the basis of symbolic possession; that property measuring 1074.34 sq yards comprised in Khasra No.7//18,7//23 as per jamabandi for the year 2005-2006 situated at Taraf Karabara, Hadbast No. 161, Locality known as Dyeing Complex, Azad Nagar, Tehsil & District Ludhiana as per Sale Deed bearing wasika No. 190 dated 09.04.2012 standing in the name of Sh. Balwinder Kumar and Sh. Pawan Kumar Sons of Sh. Gorakh Nath Sharma has been sold in auction on 30.11.2022 as informed telephonically by the Officials of respondent Nos. 1 & 2; that respondent Nos. 1 & 2 has also filed OA No. 3079/2019 and OA No. 498/2019, which are still pending for its final adjudication in which RC has not been issued yet; that applicants telephonically as well as orally requested number of times to respondent Nos. 1 & 2 to provide the information regarding the name of bidder and issuance of sale certificate, if any, but the same was not provided to the applicants; that under the compelling circumstances the applicants filed an application dated 24.03.2023 under Right to Information Act for getting information regarding the name of the bidder and other information qua selling of the property but the same was also not provided by the respondent Nos. 1 & 2 reasons best known to them; that Sh. Pawan Kumar Sharma, who is the guarantor and mortgagor in the loan accounts of both the applicants has filed an application under Section 94 of the IBC, 2016 in DRT-III, Chandigarh vide diary no. 369 dated 10.01.2023, which is also pending before the Tribunal; that applicants have also submitted OTS proposal on 18.03.2023 and requested the respondent Nos. 1 & 2 to have OTS as per Bank’s policy offering Rs.09 Crores and deposited upfront amount to the tune

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SA/139/2023

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M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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of Rs. 90 Lacs (10%) in no lien account; that instead of accepting the OTS proposal, the same was rejected and upfront amount deposited by the applicants was returned; that action of the respondent Nos. 1 & 2 in issuance of notice under Section 13(2) & 13(4) of the Act as well as sale notices and order passed by respondent No.3 dated 12.07.2023 under Section 14 of the Act are illegal, arbitrary, malafide and against the provisions of the Rules. Therefore, it was prayed that the said SA may kindly be allowed.

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(3) Reply filed by respondent Nos. 1 & 2.

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(4) It is stated in the reply that applicants have not approached this Tribunal with clean hands and has suppressed material facts from this Tribunal; that applicants have also preferred CWP No. 21115/2022 and CWP No.21119/2022, which were pending in the Hon’ble High Court; that the said factum has been concealed by the applicants and thus on the ground of concealment, the SA is liable to be dismissed; that no relief whatsoever had been granted even in the Writ Petitions preferred by the petitioners and the said Writ Petitions were withdrawn by the applicants vide order dated 26.07.2023; that in fact, applicants had concealed the factum of their Writ Petitions having been filed and also have still concealed that the guarantors namely Pawan Kumar Sharma and Subhash Rani guarantors/mortgagors in both the loan accounts have filed separate independent Writ Petitions before the Hon’ble High Court bearing CWP No. 29885/2022 and CWP No. 29838/2022 and both are pending before Hon’ble High Court and even no interim relief has been granted by the Hon’ble Court to the petitioners; that entire SA has been filed by applicants just to delay the process of recovery; that there is no resolution of the Company in favour of the signatory and there is no stamp/authorization of the Company in the Securitization Application; that measures under Section 14 of the Act are in continuation of the measures under Section 13(4) and the ADM passed the order under Section 14 of the Act in pursuance to the directions passed by the Hon’ble High Court in CWP No. 5349/2021 and CWP No. 5378/2021 filed by the respondent Nos. 1 & 2; that the defaults in payment

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6 SA/139/2023

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M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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has been deliberately committed by the applicants and no efforts have been made or even put forth in the SA depicting efforts made to regularize the loan accounts; that the series of litigation filed by the applicants either before District Magistrate, Ludhiana or even in the Hon’ble High Court of Punjab and Haryana clearly depicts that the applicants are only interested to derail the recovery process of the bank; that outstanding dues in the accounts are amounting and demand notices were issued for Rs.10,47,82,274/- in the account of M/s Jagdambay Exports (applicant No.1) and Rs.6,31,38,033.01p in the account of M/s Tripurari Garments (applicant No.2) with further interest w.e.f. 01.03.2019 and 01.01.2019 respectively; that with the issuance of fresh notices, the same had superseded the earlier notices and thus, it is incorrect to allege by the applicants that earlier notices were not withdrawn by the respondent Nos.1 & 2; that respondent Nos.1 & 2 only proceeding pursuant to the demand notice issued lastly and not on the basis of previous notices; that order dated 27.08.2019 passed by respondent No.3 was erroneous on fact of it as the District Magistrate could not have gone into any adjudicatory process and by doing so, has encroached upon his jurisdiction vested in DRT under Section 17 of the Act and Section 14 in particular is totally silent with regard to any adjudicatory powers vested in the District Magistrate whose role is merely confined to pass an order recording his satisfaction. However, contrary to the same, repeated objections filed by applicants under Section 13(3-A) of the Act were entertained leading to rejection of the applications filed by respondent Nos. 1 & 2; that finding returned by the District Magistrate vide its order dated 14.01.2020 vis-à-vis a stamp paper again depicts that the District Magistrate had gone beyond the jurisdiction vested in him under Section 14 of the Act. Repeatedly, the then District Magistrate entertained the frivolous objections filed by the applicants with the sole intention to delay the recovery process of the respondent Nos. 1 & 2; that the accounts of applicants were classified as NPA since December, 2018 and January, 2019 and no efforts have been made to regularize the loan accounts or to rectify the

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SA/139/2023

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M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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defaults committed in the accounts; that by repeated orders of rejecting the applications filed by respondent Nos.1 & 2 under Section 14 of the Act does not make any case in favour of applicants; that moreover, the orders passed by District Magistrate were direct in the teeth of the orders passed by the Hon’ble Apex Court and also by Hon’ble High Courts wherein it was laid down that the District Magistrate cannot enter into any adjudicatory process as the jurisdiction lies with Debts Recovery Tribunals and infact, there is an admission that the properties are secured assets; that infact, on numerous occasions the Hon’ble High Court noted the erroneous conduct of the District Magistrates, who repeatedly entered into adjudicatory process giving a complete go bye to the mandatory provisions of the Act; that the applicants were duly represented before the Hon’ble High Court however, no objection whatsoever was ever raised; that the present SA has been preferred against the order dated 12.07.2023 and not the one cited by the applicants, which has been passed on a freshly submitted application under Section 14 of the Act and there is no illegality and irregularity in the said order; that respondent Nos. 1 & 2 being a secured creditor is competent to sell the property; that the accounts of applicants were classified as NPA since December 2018 and January 2019 and even after lapse of nearly over 03 years, the applicants are alleging that the property has been sold hurriedly by the respondent Nos. 1 & 2; that pendency of OA or non-issuance of RC in the OAs are not of much substance vis-à-vis the action taken by respondent Nos. 1 & 2 under SARFAESI Act is concerned, as the Banks/FIs can simultaneously proceed under the both enactments; that it is incorrect that the respondent Nos. 1 & 2 had sold the property hurriedly infact, the applicants had challenged the sale notice before the Hon’ble High Court but no relief was granted by the Hon’ble Court; that the property has been rightly sold by the bank and despite being aware of the sale notice/sale no Securitization Application was filed challenging the same; that regarding the OTS proposal, the proposal having been found much less than the outstanding and also the recoverable dues in the accounts, was rightly rejected; that applicants

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8 SA/139/2023 M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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themselves are averring the value of the security to be more then how the bank could have accepted the offer of Rs.09 Crores against the demand notices amounts of Rs.10,47,82,274/- and Rs.6,31,38,033.01p with further interest w.e.f. 01.03.2019 and 01.01.2019 respectively; that it is incorrect to allege that the notices under Section 13(2), 13(4) of the Act as well as sale notice and order under Section 14 of the Act are illegal in any manner. Therefore, the present SA may kindly be dismissed.

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(5) Respondent No.4 has not filed any separate reply to SA. (6) Replication filed by applicants to the reply filed by respondent Nos. 1 & 2, 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. Atul Sharma, Sh. C.S. Pasricha and Sh. Yogesh Kumar, Advocates and gone through the record carefully. (8) Sh. Atul Sharma, Advocate argued that loan accounts of applicants were wrongly classified as NPA on 01.01.2019 and 31.12.2018 because there was no 90 days default in continuation as per RBI Circular.

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(9) Per contra , Sh. C.S. Pasricha, Advocate argued that the accounts of applicants were classified as NPA in strict compliance of Rules and there is no illegality in it.

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(10) Sh. Atul Sharma, Advocate could not explained as to how loan accounts were wrongly classified as NPA. There is nothing on record, which can show that loan accounts can be classified as NPA only after continuous default of 90 days. In the considered opinion of this Tribunal, if borrower defaults in payment of three installments on due dates and whenever there is default of total 90 days then secured creditor is entitled to classify the loan account as NPA, if there is no legal impediment.

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(11) Sh. Atul Sharma, Advocate further argued as well as mentioned in the synopsis and list of events filed vide diary no. 2998 dated 27.02.2025 that applicants are MSME Units and their accounts were classified as NPA without proper consideration by the bank violating guidelines issued by Reserve Bank of India and Hon’ble Supreme Court of India.

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9 SA/139/2023

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M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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(12) Per contra , Sh. C.S. Pasricha, Advocate argued that this argument of applicants cannot be entertained as the same was beyond the scope of pleadings.

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(13) There is a force in the above argument of Sh. C.S. Pasricha, Advocate. This contention was neither pleaded in the pleadings nor any such Certificate was placed on record that applicants are MSME Units. Therefore, the argument advanced by Sh. Atul Sharma, Advocate is of no avail.

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(14) Sh. Atul Sharma, Advocate further argued that respondent Nos. 1 & 2 has issued notice under Section 13(2) of the Act again and again without withdrawing the previous notices.

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(15) Per contra , Sh. C.S. Pasricha, Advocate argued that with the issuance of fresh notice, earlier notices stands superseded and thus, it is incorrect to allege by the applicants that earlier notices were not withdrawn by the respondent Nos.1 & 2. It was further argued that respondent Nos.1 & 2 only proceeding pursuant to the demand notice issued lastly and not on the basis of previous notices.

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(16) There is substance in the argument advanced by Sh. C.S. Pasricha, Advocate. Issuance of subsequent notice under Section 13(2) of the Act means the withdrawal/cancellation of earlier notice under Section 13(2) of the Act.

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(17) Sh. Atul Sharma, Advocate further argued that applicants were ready to settle the accounts under One Time Settlement Scheme and submitted the OTS proposal of Rs. 9 Crores as well as Rs.90 Lacs was deposited as upfront amount but respondent Nos. 1 & 2 have rejected their OTS proposal and refunded the upfront amount.

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(18) Per contra , Sh. C.S. Pasricha, Advocate argued that since OTS proposal was on the very lower side in comparison to the outstanding dues, authorities of respondent Nos. 1 & 2 have not found it worth acceptance and the same was rejected.

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(19) As per established law this Tribunal has no authority for mediation regarding settlement of loan accounts between borrower and bank/FI. It was sole discretion of the respondent Nos. 1 & 2 to accept or reject the OTS proposal submitted by applicants and by

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10 SA/139/2023

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M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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rejecting the OTS proposal and continue with the SARFAESI proceedings there was no illegality committed by respondent Nos. 1 & 2. In fact, it is settled law that any borrower cannot claim as a right that OTS proposal submitted by him/her/it must be accepted by the Bank/FI.

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(20) Sh. C.S. Pasricha, Advocate argued that after passing of order dated 19.08.2023 by this Tribunal, applicants have not deposited even a single penny in their loan accounts. It was further argued that the SA was filed with malafide intention and concealing the material facts.

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(21) In the Act nowhere it is provided that applicants have any right not to deposit their outstanding dues. In the present SA last demand notices amounting to Rs.10,47,82,274/and Rs.6,31,38,033.01p with further interest w.e.f. 01.03.2019 and 01.01.2019 were issued to applicant No.1 and applicant No.2 respectively.

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(22) Applicants have not mentioned that they and other concerned had filed several CWPs before the Hon’ble High Court of Punjab and Haryana. It is reflected from the record that without withdrawal of the CWPs pending before Hon’ble High Court of Punjab and Haryana this SA was filed before this Tribunal on 14.07.2023. This conduct of applicants was not proper. (23) Sh. Atul Sharma, Advocate further argued that respondent Nos. 1 & 2 have filed several applications under Section 14 of the SARFAESI Act before the District Magistrate concerned in succession and lastly without obtaining the order from the District Magistrate concerned the property was put on sale.

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(24) Per contra , Sh. C.S. Pasricha, Advocate argued that there is no bar in the Act or Rules regarding the filing of number of applications in succession before the District Magistrate concerned. It was further argued that there is no bar to sold out the property (secured asset) without taking the physical possession of the same.

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(25) In the considered opinion of this Tribunal, the argument submitted by Sh. C.S. Pasricha, Advocate has due force.

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11 SA/139/2023

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M/S JAGDAMBAY EX PORTS AND ANOTHER VS. BANK OF BARODA AND OTHERS

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(26) Though Sh. C.S. Pasricha, Advocate has argued that the sale conducted by the respondent Nos. 1 & 2 was strictly in accordance with law after following the relevant provisions. Since no arguments were advanced by Sh. Atul Sharma, Advocate regarding the sale therefore, I am of the opinion that there is no need to discuss the validity of sale.

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(27) Sh. Yogesh Kumar, Advocate argued that he has purchased the property by depositing the total consideration amount without receiving any fruits of auction sale.

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(28) No other point was argued/pressed.

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(29) There is no illegality in the proceedings initiated under the Act. Admittedly, applicants have not paid their dues and filed this SA just to avoid the repayment of dues and for harassment of respondent Nos. 1 & 2 Bank.

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(30) After the consideration of all facts and circumstances, there is no case made out in favour of applicants and this SA deserves to be dismissed.

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(31) SA is dismissed. Any other IA pending stands disposed of accordingly.

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Record be consigned to record room after due compliance.

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Date: 28.03.2025

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Pronounced by me in the open Tribunal.

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(MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

M/S Jagdambay Exports and Another v. Bank of Baroda and Others

Case brief

What is this about?

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M/S Jagdambay Exports and Another v. Bank of Baroda and Others

Case brief

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