Allowed

Bhim Lal Alias Bhim Sain and Another v. State Bank of India and Another

DRT16 Sept 2025SA/145/2024

Case brief

AI extract

What is this about?

This Tribunal quashed the SARFAESI proceedings initiated by the State Bank including the auction held on 05.03.2024. The sale was found invalid due to defects in the valuation report and defective service of the sale notice to the applicants. The application was allowed despite a pending settlement compromise.

What did the court decide?

Sale conducted on 05.03.2024 and all SARFAESI proceedings quashed; Respondent directed to return auction deposit with interest within 30 days.

Bhim Lal Alias Bhim Sain and Another versus State Bank of… — Banking and Recovery | 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.145/2024

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Date of Institution: 29.04.2024 Date of Decision: 16.09.2025

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Sh. Bhim Lal @ Bhim Sain S/o Sh. Bachna Ram, R/o House No.77, Jarnail Enclave, Phase-I, Zirakpur, SAS Nagar, Punjab-140603

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Sh. Himanshu Bharti S/o Sh. Bhim Sain Bharti, R/o House No.77, Jarnail Enclave, Phase-I, Zirakpur, SAS Nagar, Punjab-140603

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--Applicants

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Versus

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State Bank of India (erstwhile State Bank of Bikaner and Jaipur) Stress Asset Recovery Branch (SARB) at SCO-15, 2^nd Floor, Sector 7C, Madhya Marg, Chandigarh-160019 through its Authorised Officer

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Smt. Narinder Handa, (Auction Purchaser as disclosed by Mr. Akash Yadav, Case Officer), through Mr. Akash Yadav, Case Officer, State Bank of India, Stress Asset Recovery Branch (SARB), SCO-15, 2^nd Floor, Sector 7C, Madhya Marg, Chandigarh-160019 through its Authorised Officer

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	--Respond	ents
Argued by: Sh. Diwan Sharma, Advoc Sh. Rakesh Gupta,	ate for Applic Advocate	ants for
Respondent No.1
Sh. Vikas Sharma,	Advocate	for
Respondent No.2(throug	h VC)

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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 under Section 13(2) of the Act dated 12.02.2020 & 10.09.2021, sale notice dated 12.02.2024 and auction of the subject property conducted on 05.03.2024 as illegal, arbitrary and against the provisions of the Act, order dated 26.07.2022/02.08.2022 passed by Additional District Magistrate, Mohali, notice dated

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SA/145/2024

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BHIM LAL @ BHIM SAIN AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS

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05.08.2023 signed by Field Kanungo on 15.04.2024 pasted on the property of the applicants being illegal and arbitrary.

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(2) It was stated in the application that applicant No.1 being owner in possession of House No.77, Jarnail Enclave, Phase-I, Zirakpur, SAS Nagar had transferred the same in the name of his son i.e., applicant No.2 vide Registered Transfer Deed No.6478 dated 05.02.2016; that applicant No.2 was minor as on 05.02.2016, when the property was transferred in his favour; that on 27.02.2016, applicant No.1 submitted an application to State Bank of Bikaner and Jaipur, Branch Zirakpur for grant of Home Loan of Rs. 16,36,000/-; that applicant No.2 also signed on the said application at the asking of his father (applicant No.1); that loan of Rs.16,36,000/was sanctioned vide Arrangement Letter dated 09.03.2016; that the said amount of Rs.16,36,000/- was further bifurcated as (i) Home Loan-16 Lacs and (ii) Funding of Home Loan Insurance Cover (optional)36,000/-; that a letter of Consent and Agreement to Mortgage and another document i.e., Loan Agreement dated 09.03.2016 for Housing Loan was also signed by both the applicants for the above said loan; that on 09.03.2016, applicant No.2 was minor and was not competent to execute any Agreement; that accordingly, Loan Agreement and Agreement to Mortgage were void ab initio and not binding upon the rights of the applicant No.2; that thereafter, another loan of Rs.04 Lacs was sanctioned by the said Branch of SBBBJ vide letter dated 12.05.2016 being Arrangement Letter-SBBJ Grih Alankaar, the said Bank sanctioned a loan of Rs.04 Lacs repayable in 60 installments of Rs.7,624/- commencing from one month after disbursement of the loan; that a Loan cum Hypothecation Agreement dated 12.05.2016 was signed by both the applicants; that on 12.05.2016 applicant No.2 had not attained the age of 18 years and he was not competent to execute the said Agreement dated 12.05.2016; that the said Agreement is also void ab initio and not binding upon the rights of the applicant No.2; that applicants have been repaying the loan installments regularly and there was no default in any of the accounts; that on asking of the applicant No.1, applicant No.2, who was a college going student had signed an application on already printed performa in

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respect of SBI Home Top Up Loan seeking a loan of Rs.35 Lacs repayable in 180 months; that most of the columns of the said application including the date and place were still lying blanked; that vide letter dated 12.09.2018, a medium Term Loan of Rs.35 Lacs was sanctioned by the AGM, who directed the applicant No.2 to be called at concerned branch at his earlier convenience to execute the documents and get the disbursement as per schedule; that an Arrangement Letter (Home Top Up Loan) dated 13.09.2018 was issued by VIP Road, Zirakpur Branch of State Bank of India to applicant No.2, whereby applicant No.2 was intimated that a loan of Rs.35 Lacs was sanctioned on the application dated 24.08.2018 for personal loan under SBI Home Top Up Scheme on certain terms and conditions contained in the said Arrangement Letter; that repayment was to be made by way of equated installments of Rs.35,244/commencing from October, 2018; that as per term 8^th of the Arrangement Letter the loan was to be secured by extension of mortgage of the land and building/Flat situated at House No.77, Jarnail Enclave, Phase-I, Zirakpur, SAS Nagar, Mohali valued at Rs.71,06,590/-; that applicant No.2 never signed any document regarding extension of mortgage of the subject property; that applicant No.2 has also submitted an affidavit dated 13.09.2018 regarding his date of birth, which is dated 27.06.1998 and details regarding location of the property; that thereafter, an amount of Rs.35 Lacs was released under MC-SBI-Home Top Up NSAODAP-18, Account No.37944812100; that alleging default, respondent No.1 issued a notice dated 12.02.2020 under Section 13(2) of the Act addressed to the applicant No.1 for a sum of Rs.19,74,784/outstanding as on 11.02.2020, whereby it was intimated that the three loan accounts i.e., Home Loan of Rs.16 Lacs, Home Loan of Rs.04 Lacs and Suraksha Loan of Rs.36,000/- were classified as NPA as on 14.01.2020 in accordance with law; that thereafter, respondent No.1 issued possession notice dated 16.06.2020 addressed to applicant No.1 stating therein that Authorised Officer has taken the possession of the property described in the possession notice on 16.06.2020; that respondent No.1 was well aware of the factum that the subject property was owned by the applicant No.2 being a registered owner, yet the

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Authorised Officer did not issued any notice under Section 13(2) & 13(4) of the Act to applicant No.2; that therefore, the above said notices were liable to be quashed; that applicant No.1 made an application dated 11.12.2020 for withdrawal of the possession notice dated 16.06.2020 and representation for OTS for all the aforesaid Home Loan Accounts; that applicant No.1 offered Rs.18 Lacs for full and final settlement of all the three loan accounts and also paid Rs.03 Lacs by way of demand draft to be kept in No Lien Account and appropriate the same in the settled amount after approval of the proposal, otherwise the same will be returned to him; that further applicant No.1 promised to pay the balance amount of Rs.15 Lacs within 03 months; that on the same day dated 11.12.2020, applicant No.2 made representation for rescheduling of his SBI Home Top-UP NSAL OD Account and deposited demand draft dated 09.12.2020 of Rs.02 Lacs drawn on Bank of Baroda for crediting the same in the said accounts for liquidation of the overdues, if any, which was a precondition for rescheduling of the loan accounts; that as per the Guidelines of Reserve Bank of India dated 05.05.2021, respondent No.1 was under an obligation to reschedule the accounts of the applicants, but respondent No.1 rejected the applications of the applicants on evasive grounds and preferred to file an OA No.1647/2021 before this Tribunal on 21.08.2021; that respondent No.1 also issued notice dated 10.09.2021 under Section 13(2) of the Act in respect of aforesaid three loan account of applicant No.1 and Home Loan Top Up of applicant No.2 for sum of Rs.55,75,069/- outstanding as on 10.09.2021 in total four loan accounts and applicants were intimated that the operation and conduct of said facility assistance/credit facilities had become irregular and the debt was classified as NPA on 29.12.2018 in accordance with law consequent to the default committed by the borrowers in repayment of principle debt and interest thereof; that applicants were further advised to pay the abovesaid amount within 60 days from the date of receipt of the notice; that respondent No.1 proceeded further and exercising powers conferred on him under Section 13(4) of the Act and again took the symbolic possession of the property/residential House on 03.01.2022 in pursuance to demand notice dated 10.09.2021; that

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thereafter, applicants offered Rs.18 Lacs for full and final payment of all the three loan accounts and he also made a payment of Rs.03 Lacs by way of demand draft but he has not received any response from the respondent No.1 and he is not aware about the said amount of Rs.03 Lacs deposited by him as upfront money with the OTS application; that however, he requested to club all three accounts in one repayable in fresh EMIs for ten years and further requested to defer coercive action being taken under Section 13(4) of the Act; that applicant No.2 also made an representation for rescheduling of the SBI Home Top Up OD account dated 11.01.2022 and offered liquidate the overdue amount of Rs.2,48,072/- and further interest from 01.09.2021 to 31.03.2021 on or before 31.03.2022 and promised to pay the accrued interest and installments every month without any default and requested to recall the notice dated 03.01.2022 under Section 13(4) of the Act; that applicant No.1 received a reply dated 07.02.2022 to his application dated 11.01.2022 regarding rescheduling of his accounts, whereby applicant No.1 was intimated that since his accounts were a recalled asset, hence there was no such provision for rescheduling of his accounts; that it was further stated that since applicants had committed a default in repayment of EMIs, so there was no prejudice done to them and application dated 11.01.2022 was rejected; that similar letter dated 07.02.2022 addressed to applicant No.2, the application submitted by applicant No.2 regarding rescheduling of the Home Loan Account was also rejected on the same ground; that prayer of the applicants for settlement of the dues for Rs.18 Lacs remained unresponded and the amount of Rs.03 Lacs deposited as upfront amount with the OTS applicant was misappropriated by the respondent No.1; that rejection of the restructuring application by respondent No.1 was illegal and arbitrary and against the RBI Guidelines dated 05.05.2021; that respondent No.1 after rejecting the OTS application dated 11.01.2022 has also made a futile attempt to auction the properties of the applicant in pursuance to sale notice dated 21.06.2022; that joint application by both the applicants was submitted to respondent No.1 on 21.06.2022 for settlement of their all accounts and offered Rs.56 Lacs for full and final settlement of all the accounts and in order to show their

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bonafide a cheque of Rs.5.60 Lacs being 10% of the offered amount with further undertaking to deposit another sum of Rs.11.40 Lacs within one month of the approval and the balance amount of Rs.39 Lacs within six months shall be deposited; that on 18.10.2022 both the applicants were called in the Office of the respondent No.1 and they requested to allow them to deposit Rs.2.20 Lacs more as they have already deposited Rs.3.20 Lacs earlier so as to make 10% of the offered amount of Rs.54 Lacs for full and final settlement of the accounts; that applicants were informed by Sh. Sanjeev Verma/Chief Manager that higher authorities have already approved the OTS for Rs.54 Lacs for full and final settlement of the all the accounts and the last date of payment of the entire OTS amount was 07.11.2022; that since the OTS approval never informed to both the applicants, so they jointly made application dated 19.10.2022 and requested to allow them to deposit Rs.5.80 Lacs more in the account and give them the OTS approval letter so that they may arrange funds for making payment of the entire approved amount before 31.03.2023; that applicants deposited the amount of Rs.5.80 Lacs in the loan accounts and requested to provide the alleged OTS letter dated 19.10.2022; that vide letter dated 21.10.2022 respondent No.1 advised the applicants to deposit the balance amount of Rs.45 Lacs by 07.11.2022 in terms of OTS approval letter dated 19.10.2022; that the matter was settled and the compromise settlement was accepted vide compromise acceptance letter dated 13.12.2022, whereby the applicants had to pay Rs.54 Lacs in total; that consequent of the aforesaid settlement, the applicants and respondent No.1 made a joint application i.e., IA No.21/2023 in OA No.1647/2021 alongwith affidavits of applicants and affidavit of Sh. Sanjeev Prakash Verma, Chief Manager, State Bank of India in support of application for recording settlement and passing a consent base Recovery Certificate in terms of the compromise acceptance letter dated 13.12.2022 for Rs.54 Lacs is still pending; that by ignoring the abovesaid facts, respondent No.1 issued e-auction sale notice dated 13.06.2023 for the sale of the immovable assets/residential house of the applicants, whereby auction of the secured asset was fixed on 11.07.2023 at a reserve price of Rs.53,20,600/-; that applicants were

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ready and willing to pay the balance settled amount of Rs.40 Lacs, therefore they approached the respondent No.1 and submitted an application dated 29.06.2023 for revival of the compromise settlement and offered to deposit Rs.15 Lacs upfront and balance amount within 03 months; that respondent No.1 did not pay any heed to the request of the applicants and the AGM of respondent No.1 had rejected the said application dated 29.06.2023 vide its letter dated 01.07.2023; that respondent No.1 was more interested to sell the property and less interested in settling the matter; that both the applicants submitted an application dated 29.01.2024 and requested the bank to give them 10 days-time to pay the dues of the respondent No.1 in three installments; that respondent No.1 ignored the said application dated 29.01.2024 for giving 10 days-time and issued sale notice dated 03.02.2024 fixing the date of sale as 23.02.2024 wrongly at a reserve price of Rs.77,40,000/- and EMDs were invited upto 22.02.2024; that vide letter dated 05.02.2024 written by Field Kanungo, Zirakpur to the SHO Police Station, Zirakpur, the physical possession of the property in compliance of order dated 02.08.2022 passed by District Magistrate, Mohali to provide Police Force on the spot on 15.03.2024 for delivery of the possession of the subject property; that since the sale notice dated 03.02.2024 was defective, hence respondent No.1 again issued fresh sale notice dated 12.02.2024 for sale of the subject property on 05.03.2024 at a reserve price of Rs.77,44,000/- and cancelled the previous sale notice dated 03.02.2024; that being aggrieved with the illegal and arbitrary action of the respondent No.1, applicants had filed TSA No.03/2024 for setting aside the notice issued under Section 13(2) of the Act dated 10.09.2021, possession notice under Section 13(4) of the Act dated 22.12.2023, sale notice dated 12.02.2024, Tehsildar notice dated 05.02.2024 and order of the District Magistrate dated 02.08.2022 and any further actions taken by respondent No.1 under the provisions of the Act; that the said TSA came to be heard on 15.03.2024 before this Tribunal and notices were issued to respondents; that on 03.04.2024 a property dealer came to the house of the applicants and informed the applicants that the house of the applicants has been sold by State Bank of India through e-auction held on

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05.03.2024 and the Auction Purchaser wants to further sell the property at a price of Rs.01 Crore; that applicants immediately submitted an application dated 03.04.2024 before the Case Officer seeking information whether the subject property has been sold or not, if sold, then providing of the details of auction proceedings, details of the auction purchaser and other bidders, etc. and also Sale Certificate, if any, issued to the said auction purchaser; that in response, applicants received an email letter dated 03.04.2024 from Sh. Akash Yadav, Case Officer, SBI SARC Branch, Chandigarh, whereby the applicants were apprised that detail requested by the applicants have to be retrieved from the auction agency, therefore, they have forwarded the desired data needed to be reverted back to the applicants; that thereafter on 12.04.2024, applicants again visited the Office of Sh. Akash Yadav, Case Officer, SBI, SARB for getting the information and he was provided with the name of the auction purchaser i.e., Smt. Narinder Handa, Adhar Number and Mobile Number only; that other details required by the applicants have not yet been supplied; that on the other hand, Field Kanungo has pasted a notice on the property for taking physical possession on 30.04.2024; that therefore, applicants sought the advice of the counsel and as advised by the counsel, applicants had withdrawn the TSA No.3/2024 with liberty to file a fresh SA taking all the pleas of the TSA and also to challenge a sale held on 05.03.2024, which came to the knowledge of the applicants only on 03.04.2024; that action of the respondent No.1 taken under the provisions of the Act including sale of the subject property conducted on 05.03.2024 was illegal, arbitrary and against the provisions of the Act. Therefore, it was prayed that the same is liable to be set aside and 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 not maintainable and liable to be dismissed; that admittedly demand notice under Section 13(2) of the Act dated 10.09.2021 was issued after withdrawing the earlier demand notice and the same was duly served upon applicants; that it is not in dispute that applicant along with his son has taken two loans in the form of Housing Loan of Rs.16 Lacs, which was followed by Suraksha Loan

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of Rs.36,000/- and Top Up Home Loan of Rs.04 Lacs and the second Top Up Loan of Rs.35 Lacs was also taken; that erroneously, in the first demand notice dated 12.02.2020, Term Loan of Rs.35 Lacs was not added and consequently, the same was withdrawn and comprehensive demand notice was served upon the applicants on 10.09.2021 to pay a sum of Rs.55,75,069/, which is annexed as Annexure A25; that since there was no dispute of facts, no objections were raised by applicants under Section 13(3-A) of the Act; that thereafter, possession notice was served upon the applicants under Section 13(4) of the Act on 03.01.2022 in accordance with law, which was annexed as Annexure A26; that applicants have come to this Tribunal with unclean hands; that a specific stand taken by applicants that on the date of mortgage created, applicant No.2 was minor; that this is factually incorrect as applicants themselves had placed on record the copy of the Housing Loan Application, which is Annexure A1 in which date of birth of Himanshu S/o Bhim Lal was 27.06.1997; that in support thereof that application, applicants have given their Aadhar Cards, which is Annexure R; that as alleged by applicants in the present SA that date of birth of the applicant No.2 is 27.06.1998 and for that matter they are also relying upon the Application Form submitted by them in support of date of birth certificate but they have not placed on record any document; that their own application, which was supported by the Aadhar Card as far as date of birth of applicant No.2 is concerned, the date of birth has to be taken as 27.06.1997 and on the date of grant of loan, applicant No.2 was major; that since there was a misstatement of facts, which is contrary to their own documents submitted to the bank, the present SA is liable to be dismissed; that moreover, as per the statutory provisions, even if, it is believed that the applicant No.2 was minor then he had the right to disown the mortgage within the stipulated period after attaining majority; that if the date of birth is taken as 27.06.1998, the applicant No.2 become major in the year 2016 and he had the right to disown the mortgage up to the year 2019; that till date applicant No.2 has never disowned his own mortgage and as of today he cannot disown the mortgage lawfully created by him especially when he is the beneficiary of the financial facilities

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granted by the bank; that all the notices were duly served upon the applicants in accordance with law, which is apparent from their own admission in their communication dated 21.06.2022 (Annexure A32) in which applicants have duly admitted the receipt of the demand notice as well as possession notice; that by way of said communication, applicants also admitted their liability and offered One Time Settlement of Rs.56 Lacs; that since the settlement was declined by the bank, applicants made another application for settlement dated 19.04.2022 (Annexure A33) and offered Rs.54 Lacs, which did not find favour to the competent authority and the same was declined; that vide communication dated 03.07.2023 (Annexure A41), applicants again made offer of OTS and in the said communication they have also admitted their knowledge of the order dated 26.07.2022 passed by District Magistrate; that in spite of the fact that applicants were aware of the demand notice, possession notice and orders passed by District Magistrate, no effort was made by the applicants to assail those proceedings at any stage and as such, the action of the respondent No.1 till the stage of Section 14 of the Act attained finality and cannot be assailed in the present SA; that in fact, compromise was sanctioned by the competent authority (Annexure A36) in which applicants were required to pay the dues as per the time schedule mentioned the said sanction; that applicants accepted the sanction and in furtherance thereof filed their respective affidavits before this Tribunal, which are at page No.172 to 175 accepting their liability; that applicants failed to adhered to the schedule given in the settlement and the settlement was failed because of the fault of the applicants; that property in question was put to sale through e-auction on 05.03.2024 and sale notice was served upon the applicants as per Rules (hereinafter referred to as ‘the Rules’) on 12.02.2024 (Annexure A47); that respondent No.2 had purchased the property in question through the above said auction; that sale notice was duly published in the two leading newspapers (Annexures R1 & R2) and was also affixed on the spot (Annexure R3); that in spite of the notice having been served on 13.02.2024 upon applicants, TSA No.3/2024 was filed by applicants only when the sale had actually taken place; that vide order dated 15.03.2024 this Tribunal had declined the interim

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relief; that thereafter, the above said TSA was withdrawn on 25.04.2024 by moving IA No.653/2024; that applicants were permitted to withdraw the TSA vide order dated 25.04.2024 however no liberty with regard to limitation was granted to applicants; that the present SA was filed on 29.04.2024, which is beyond 45 days from the sale notice dated 05.03.2024; that no application for condonation of delay was filed to condone the delay by applicants, therefore the present SA is liable to be dismissed being barred by limitation. It was further submitted that all the proceedings were initiated by respondent No.1 as per the provisions of Act. Therefore, it was prayed that the present SA may kindly be dismissed.

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(5) Reply filed by respondent No.2.

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(6) It is stated in the reply that respondent No.2 Smt. Narinder Handa along with her husband Sh. Kharaiti Lal Handa has been living in rented place at Flat No.E1/17, 1^st Floor, Savitri Green, VIP Road, Zirakpur, SAS Nagar, Mohali; that in order to have a house in their own name respondent No.2 being interested in purchasing the property in question contacted the Bank and also deposited EMD amount with bank in accordance with terms and conditions of the e-auction notice; that respondent No.2 has participated in the auction held on 05.03.2024 and purchased the property in question from her hard earned money for an amount of Rs.77.66 Lacs; that Sale Certificate dated 15.04.2024 has been issued by respondent No.1 to respondent No.2 after the deposit of the remaining sale consideration amount; that reserve price of the property is only a benchmark, it is actually the market price of the property, which decides its actual sale value; that it is also to be taken into consideration that the earlier sales for the property in question were failed; that present Securitization Application is misconceived and a result of concealment and suppression of the material facts and circumstances, which were very much in knowledge of the applicants; that applicants while filing the SA have failed to inform this Tribunal that they have executed two agreements to sell the property in question without the prior permission of the respondent No.1 and it is a settled principals of law, one who seek equity must show equity; that the present SA has been filed by applicants with an oblique

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motive in order to frustrate and defeat the legal right of respondent No.2 especially when sale has already been complete and Sale Certificate has already been issued in favour of respondent No.2; that accordingly, no cause of action has arisen in favour of the applicants to file the present Securitization Application; that respondent No.2 had approached the respondent No.1 to provide the physical possession of the property; that however no physical possession has been delivered to respondent No.2 till date.

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(7) Replication to the replies filed by respondent No.1 as well as respondent No.2, wherein the contents of SA were reiterated and that of the replies to the SA were denied.

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(8) I have heard arguments advanced by Sh. Diwan Sharma, Sh. Rakesh Gupta and Sh. Vikas Sharma, Advocates and gone through the record carefully.

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(9) Sh. Diwan Sharma, Advocate argued that applicant No.2 Sh. Himanshu Bharti, who is the owner of the property in question was a minor as on 09.03.2016, when the alleged Agreement to Mortgage and Loan Agreement dated 09.03.2016 had been executed by him, therefore he was not competent to execute the said Loan Agreement as well as Agreement to Mortgage. It was further argued that it is a settled law that any Agreement executed by a minor is void ab intio .

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(10) Per contra , Sh. Rakesh Gupta, Advocate argued that it is incorrect to say that applicant No.2 was minor at the time of execution of Loan Agreement. It was further argued that applicants themselves had placed on record the copy of the Housing Loan Application, which is Annexure A1 in which date of birth of Sh. Himanshu Bharti S/o Sh. Bhim Lal was 27.06.1997. It was further argued that in support of that application, applicants have given their Aadhar Cards, which is Annexure R4. It was further argued that as alleged by applicants in the present SA that date of birth of the applicant No.2 is 27.06.1998 and for that matter they are also relying upon the Application Form submitted by them in support of date of birth certificate but they have not placed on record any document. It was further argued that their own application, which was supported by the Aadhar Card as far as date of birth of applicant No.2 is concerned, the

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date of birth has to be taken as 27.06.1997 and on the date of grant of loan, applicant No.2 was major.

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(11) Copy of Matriculation Certificate showing the date of birth of Sh. Himanshu Bharti is on record as Annexure A4 in which date of birth was mentioned as 27.06.1998. This document was issued on 20.05.2014 i.e., prior to sanction of loan in question. It is settled law that in absence of any other reliable evidence regarding date of birth, Certificate of Matriculation Examination should be relied upon for the purposes of date of birth. There are two documents before this Tribunal regarding date of birth of applicant No.2 with contrary dates. In catena of judgments passed by Hon’ble Supreme Court of India and Hon’ble High Courts that Certificate of Matriculation Examination should be relied upon while considering the dispute of date of birth. Therefore, in the considered opinion of this Tribunal, date of birth 27.06.1998 mentioned in Annexure A4, High School Certificate is reliable.

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(12) Accordingly, it is clear that at the time of mortgage of the property in question by applicant No.2, he was minor.

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(13) Sh. Diwan Sharma, Advocate further argued that there was no valid mortgage in the subject property, therefore there was no question of extension of mortgage of the security for the other loan of Rs.35 Lacs availed by applicant No.2/owner of the subject property. Therefore, the entire action taken by the respondent No.1 under the Act is illegal and arbitrary.

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(14) Per contra , Sh. Rakesh Gupta, Advocate argued that extending the charge on the mortgage property while taking the other loan of Rs.35 Lacs is concerned, the Additional Loan was given as a Top Up Loan in the same account and in view of the statutory provisions of the Guarantee Agreement, the extension of the mortgage for the additional facility is also automatic. (15) In the considered opinion of this Tribunal when the original mortgage agreement was not legal then the extension of alleged mortgage would be automatically void.

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(16) Sh. Diwan Sharma, Advocate further argued that respondent No.1 had issued notice under Section 13(2) of the Act dated 12.02.2020 in which date of NPA was mentioned as 14.01.2020. It was further argued that

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respondent No.1 had again issued notice under Section 13(2) of the Act dated 10.09.2021 in which date of NPA was mentioned as 29.12.2018. Therefore, there is a gross ambiguity in the dates of classification of the accounts as NPA.

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(17) Per contra , Sh. Rakesh Gupta, Advocate argued that there is a discrepancy in the first demand notice under Section 13(2) of the Act, therefore second/fresh demand notice was issued by respondent No.1. It was further argued that a typing error in mentioning the date of NPA in the second demand notice cannot have any bearing in the facts of the present case. (18) There is no bar in issuing successive notices under Section 13(2) of the Act. If first notice was found defective either by the bank itself or by the pointing out of borrower/mortgagor, then second notice under Section 13(2) of the Act with correct facts may be issued. It was admitted by Sh. Rakesh Gupta, Advocate that there was a typing error in the date of NPA. Error of typing in this most important aspect and basis of Securitization proceedings cannot be accepted. There was no bar to issue again fresh notice under Section 13(2) of the Act mentioning correct date of NPA. Therefore, mentioning of incorrect date in the notice under Section 13(2) of the Act amounts illegality in the said notice.

¶60

(19) Sh. Diwan Sharma, Advocate further argued that before classifying the accounts as NPA allegedly on 29.12.2018 as per notice under Section 13(2) of the Act dated 10.09.2021 or on 14.01.2020 as per alleged notice under Section 13(2) of the Act dated 12.02.2020, respondent No.1 had never issued any prior notice to applicants. It was further argued that classification of loan accounts as NPA on 29.12.2018 or 14.01.2020 cannot be said to be justified.

¶61

(20) Per contra , Sh. Rakesh Gupta, Advocate argued that there is no requirement under any law to issue advance notice to borrowers and guarantors regarding the classification of account as NPA. (21) Sh. Diwan Sharma, Advocate has placed reliance upon the judgment passed by Hon’ble Jharkhand High Court in the matter M/s Stan Commodities Pvt. Ltd. Vs. Punjab and Sind Bank, 2009 AIR JHAR 14 in which Hon’ble High Court has observed as under:

¶62

15 SA/145/2024 BHIM LAL @ BHIM SAIN AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS

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“ 28. In view of the provisions of the guidelines of the RBI, the petitioner was entitled to be informed and any doubt or dispute was to be settled between the creditor and the borrower through any specific internal channel within one month from the date on which the account would have been classified as NPA. Even if there was no internal channel to settle such dispute/doubt, the petitioner was entitled to be informed and to get an opportunity to explain or represent against the intended classification of his account as NPA.

¶64

29. The provision of the guidelines providing for some specific internal channel for settling the doubt in asset classification is akin to the requirement of the principals of natural justice, which according to the Supreme Court in Smt. Menka Gandhi Vs. Union of India (AIR 1978 SC 597), must be read and followed even if, the provision is silent to that regard. The respondent been a Public Sector Bank are expected to follow the just, fair/prescribed procedure to meet the requirement of law and Article 14 of the Constitution of India.”

¶65

(22) Sh. Diwan Sharma, Advocate further placed reliance upon the judgment passed by the Division Bench of Hon’ble High Court of Punjab and Haryana at Chandigarh in CWP No.6306/2007 titled as Bhupinder Singh Vs. State Bank of Patiala and Others, wherein it was observed as under:

¶66

“It is only when the account of the borrower became sub-standard, doubtful or total loss, then the account of a borrower becomes classifiable as NonPerforming Asset and it is only then the Act came into operation. Clause (o) of sub-section (1) of section 2 of the Act defines Non-Performing Asset which means an asset or account of a borrower which has been classified by the Bank as sub-standard, doubtful or loss asset. In the instant case the respondent bank in spite of the direction, has not placed on record the account of the borrower where the same was classified by the Manager of the respondent bank as sub-standard, doubtful or loss asset. Merely, on the basis of the aforesaid list, in our opinion it cannot be held that the account of the petitioner was declared as NPA legally.”

¶67

(23) Admittedly, applicants were not informed before classifying their account as NPA and no opportunity of settlement of the controversy/doubts regarding classification of the assets were given. Therefore, the accounts of NPA classification cannot be said to be justified.

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16 SA/145/2024 BHIM LAL @ BHIM SAIN AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS

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(24) Sh. Diwan Sharma, Advocate further placed reliance upon the judgment passed by Hon’ble High Court of Madras in the matter of Signal Apparels Vs. Canara Bank, 2011(2) Banking Cases 124 , and argued that approach and conduct of the respondent No.1 was in violation of the law laid down by the Hon’ble High Court of Madras.

¶70

(25) In the said case it was observed as under:

¶71

The decision of the secured creditor should not be arbitrary, since such decision would necessarily lead to drastic consequences, especially when the borrower has no right to question the notice under Section 13(2) except a right to make representation or objection. While considering an asset of a borrower to be declared as Non-Performing Asset, a secured creditor should act judicially supported by materials and there must be transparency in arriving at such decision. In that since the Bank must strictly follow the decisions and guidelines relating to the Asset Classification issued by the Reserve Bank of India from time to time.

¶72

(26) Sh. Diwan Sharma, Advocate further argued that notice under Section 13(2) of the Act dated 10.09.2021 was not served upon all borrowers and guarantors individually as per the provisions of the Act.

¶73

(27) Per contra , Sh. Rakesh Gupta, Advocate argued that notice under Section 13(2) of the Act dated 10.09.2021 was duly served upon applicants as per Rules. It was further argued that Annexure A32 is a copy of letter addressed by applicants to respondent No.1 shows that applicants themselves mentioned in the said letter dated 21.06.2022 regarding the demand notice dated 10.09.2021.

¶74

(28) Therefore, it cannot be said that notice dated 10.09.2021 under Section 13(2) of the Act was not received by applicants.

¶75

(29) Sh. Diwan Sharma, Advocate further argued that notice under Section 13(4) of the Act dated 03.01.2022 was neither served upon applicants through registered post nor affixed on the conspicuous part of the secured asset as well as it was not published in two newspapers one in vernacular language having sufficient circulation in the locality as per Rules.

¶76

(30) Per contra , Sh. Rakesh Gupta, Advocate argued that notice under Section 13(4) of the Act dated

¶77

17 SA/145/2024 BHIM LAL @ BHIM SAIN AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS

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03.01.2022 was duly served upon applicants as per Rules. It was further argued that Annexure A32 is a copy of letter addressed by applicants to respondent No.1 shows that applicants themselves mentioned in the said letter dated 21.06.2022 that symbolic possession of the house was taken on 03.01.2022.

¶79

(31) Above facts shows only that symbolic possession of the secured asset was taken on 03.01.2022 but respondent No.1 has to prove that the symbolic possession was taken after complying with all relevant Rules.

¶80

(32) Respondent No.1 has not filed copy of notice under Section 13(4) of the Act dated 03.01.2022 as well as receipts of registered post along with tracking reports, copies of two newspapers and proof of pasting. Therefore, it is not proved that notice under Section 13(4) of the Act was duly served as per Rules.

¶81

(33) Sh. Diwan Sharma, Advocate further argued that sale notice dated 12.02.2024 for the sale held on 05.03.2024 was not served upon applicants 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 are to be given. Therefore, sale conducted on 05.03.2024 is illegal.

¶82

(34) Per contra , Sh. Rakesh Gupta, Advocate argued that sale notice was duly served upon applicants providing 15 days period before the scheduled date of auction because the property could be sold only after third 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 strictly in compliance of Rules. 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 R1 to R3.

¶83

(35) Respondent No.1 has not filed copy of sale notice dated 12.02.2024 as well as receipts of registered post along with tracking reports.

¶84

(36) Though publication of notice in two newspaper was stated to be published by respondent No.1 but Annexure R1 is a cutting of paper of Vernacular language,

¶85

18 SA/145/2024 BHIM LAL @ BHIM SAIN AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS

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Daily Charhdikala, Patiala and name and date of publication in other newspaper, which is a copy Annexure R2 not mentioned to ensure that in which newspaper the said notice was published and on which date it was published. Vernacular newspaper was of Patiala and applicants are residing at Zirakpur, SAS Nagar. Therefore, it cannot be said that the service of sale notice through publication was done as per Rules.

¶87

(37) Though photograph of pasting was filed as Annexure R3 but from the said photograph it is not proved that what paper was affixed and where it was affixed. No person is showing in the photograph affixing the photograph. The photograph is quite blur. Therefore, it cannot be said that the service of sale notice through pasting was done as per Rules.

¶88

(38) 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 borrowers, guarantors and mortgagor. Perusal of record shows that the sale notice was not served personally or through publication or through pasting upon the applicants. 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.

¶89

(39) In light of above factual matrix, it is established that sale notice was issued but not proved served upon all concerned in light of the Rules.

¶90

(40) Sh. Diwan Sharma, 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 the Rules. It was further argued that since the valuation has not been got from an approved valuer before issuing a fresh sale notice dated 12.02.2024, after the earlier sale notices dated 21.06.2022 & 13.06.2023 had came to naught, hence the sale conducted on 05.03.2024 on strength of the said invalid reserve price of Rs.77.40 Lacs fixed by Authorised Officer without the concurrence of the secured creditor is liable to be set aside.

¶91

(41) Per contra , Sh. Rakesh Gupta, Advocate argued that property was put to sale on two earlier occasions with the same reserve price but there was no bidders. It was further argued that the reserve price was

¶92

19 SA/145/2024 BHIM LAL @ BHIM SAIN AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS

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fixed after obtaining the fresh valuation report by the approved valuer.

¶94

(42) No Valuation report was filed by respondent No.1 to show as to when the valuation report was obtained in terms of Rules and what was the valuation of the secured asset as per the said report but after completion of hearing of arguments and fixing next date for orders, the IA No. 1147/2025 was filed on 21.07.2025 for taking the said valuation report Annexure R6 on record. This is not a fair practice on the part of respondent No.1 for moving any application along with the documents after completion of hearing in the matter. However, this document is taken on record. Valuation Report (Annexure R6) has not been signed by the Branch Manager of respondent No.1 and the said columns are still blank at page No. 11 of this IA. Except it, it is not mentioned in the valuation report that valuation report was prepared by the Valuer after inspection of the property because the said column in the report on page No.11 is also left blank.

¶95

(43) In light of above, this valuation report is not a Valuation Report in the eyes of law. Therefore, it is inferred that the said sale was not conducted in accordance with law.

¶96

(44) Sh. Diwan Sharma, Advocate further argued that secured creditor has not registered the mortgaged property with the Central Registry in compliance of mandatory provision under Section 26-D of the Act.

¶97

(45) Per contra , Sh. Rakesh Gupta, Advocate argued that respondent had duly created its charge against the property in question with Central Registry. (46) Perusal of record shows that no CERSAI Certificate was filed by respondent No.1 to prove the contention till the time of arguments but after completion of hearing of arguments and fixing next date for orders, the IA No. 1147/2025 was filed on 21.07.2025 for taking the said CERSAI Report Annexure R7 on record. This is not a fair practice on the part of respondent No.1 for moving any application along with the documents after completion of hearing in the matter. However, this document is taken on record.

¶98

(47) In light of above, there is no substance in the argument of Sh. Diwan Sharma, Advocate because the Certificate of CERSAI was filed by the respondent No.1,

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20 SA/145/2024 BHIM LAL @ BHIM SAIN AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS

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which shows that the secured asset was duly registered with the Central Registry as per Section 26-D of the Act. (48) Sh. Vikas Sharma, Advocate appeared through Video Conferencing and argued that respondent No.2 has purchased the property in question in the auction dated 05.03.2024, which was conducted lawfully.

¶101

(49) Per contra , Sh. Diwan Sharma, Advocate argued that the auction sale dated 05.03.2024 was not conducted lawfully.

¶102

(50) In the considered opinion of this Tribunal as discussed above, the sale dated 05.03.2024 was not valid and lawful.

¶103

(51) Sh. Diwan Sharma, Advocate further argued that property of applicants was sold out illegally and without disclosing or serving notices upon applicants with the connivance of Auction Purchaser Smt. Narinder Handa. It was further argued that different addresses of Auction Purchaser were mentioned in the Sale Certificate dated 15.04.2024 as well as in the reply to SA filed by respondent No.2 on 10.07.2024.

¶104

(52) Per contra , Sh. Vikas Sharma, Advocate argued that there was no connivance between the both respondents and the property was purchased by respondent No.2 in good faith.

¶105

(53) It is correct that in the Sale Certificate dated 15.04.2024 address of Smt. Narinder Handa W/o Sh. Kharaiti Lal Handa was mentioned as R/o House No. 651, Sector 11-B, Chandigarh and in the reply, it was mentioned that Auction Purchaser has been living in rented place at Flat No. E1/17, First Floor, Savitri Green, VIP Road, Zirakpur, SAS Nagar, Mohali. Sh. Vikas Sharma, Advocate has not disclosed the fact how a different address of Auction Purchaser mentioned in the Sale Certificate though she was residing at that time on different place. This fact shows that respondent No.2 has not come with clean hands.

¶106

(54) Sh. Diwan Sharma, Advocate further argued that applicants and respondent No.1 of this SA had filed IA No. 21/2023 jointly in OA No.1647/2021 for disposal of the OA passing consent decree and the same is still pending but on the other hand respondent No.1 had sold out the property in violation of the said IA.

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21 SA/145/2024 BHIM LAL @ BHIM SAIN AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS

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(55) Per contra , Sh. Rakesh Gupta, Advocate has not denied that the said IA was not filed or the same is not pending.

¶109

(56) In light of above, if an application was filed jointly to pass consent decree in a OA then before proceeding further under the SARFAESI proceeding it was the liability of respondent No.1 to press it for early disposal.

¶110

(57) Sh. Rakesh Gupta, Advocate argued that the present SA is barred by limitation because sale notice was issued on 12.02.2024 but this SA was filed beyond 45 days of the said sale notice.

¶111

(58) Per contra , Sh. Diwan Sharma, Advocate argued that he has challenged the sale conducted on 05.03.2024 and also the earlier actions initiated under the Act by respondent No.1, therefore this SA was not beyond limitation period of 45 days.

¶112

(59) Admittedly, sale was conducted on 05.03.2024 and this SA was filed on 29.03.2024. It is admitted fact that the limitation was to be calculated from the last action initiated under the SARFAESI proceedings. It is discussed above that sale notice was not served according to Rules. This SA was filed within 45 days from the sale dated 05.03.2024. Therefore, there is no substance of Sh. Rakesh Gupta, Advocate as argued above.

¶113

(60) Sh. Vikas Sharma, Advocate argued that since sale certificate has already been issued therefore, no cause of action survives to file this SA.

¶114

(61) Per contra , Sh. Diwan Sharma, Advocate argued that as per law he can challenge the sale even after the sale is conducted by the respondent No.1. (62) In the considered opinion of this Tribunal, there is no force in the argument of Sh. Vikas Sharma, Advocate and legally there was a cause of action to file this SA.

¶115

(63) Sh. Diwan Sharma, Advocate further argued that a right to hold the property is a Constitution Right as well as the Human Right and a person cannot be deprived of this property except in accordance with the provisions of a statute. It was further argued that in the present case respondent No.1 has sold out property of the applicants without following the provisions of law. Reliance was placed in the matters of Laxman Das Vs.

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22 SA/145/2024 BHIM LAL @ BHIM SAIN AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS

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Jagat Ram (2007) 10 SCC 448 and Narmada Bachao Andolan Vs. State of M.P. (2011) 7 SCC 639 . Ram Krishan and Others Vs. State of Uttar Pradesh, 2012 (11) SCC 511 decided by Hon’ble Supreme Court of India and it was held that undoubtedly, public money should be recovered and recovery should be made expeditiously but it does not mean that the Financial Institutions, which are concerned only with the recovery of their loans, may be permitted to behave like property dealers and be permitted further to dispose of the secured assets in any unreasonable or arbitrary manner in flagrant violation of the statutory provision.

¶118

(64) After considering the above facts and circumstances as well as evidence on record, present SA is liable to be allowed.

¶119

(65) SA is allowed. All SARFAESI proceedings including the sale conducted on 05.03.2024 initiated by the respondent No.1 is hereby quashed. Respondent No.1 is directed to return the amount deposited by the Auction Purchaser within 30 days with interest at the rate of 4% from the date of deposit till the date of actual payment. It is made clear that if, respondent No.1 will not repay the total amount deposited by Auction Purchaser within 30 days then he will pay the said amount along with the interest @6.00 % for the total period. It is also made clear that respondent No.1 may again initiate fresh SARFAESI proceedings according to law. Any other IA pending stands disposed of accordingly. Record be consigned to record room after due compliance.

¶120

Date: 16.09.2025 Pronounced by me in the open Tribunal. (MRIDULESHKUMARSINGH)

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Presiding Officer, DRT-III, Chandigarh

Bhim Lal Alias Bhim Sain and Another v. State Bank of India and Another

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Bhim Lal Alias Bhim Sain and Another v. State Bank of India and Another

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