Allowed

Balwant Singh and Others v. Punjab National Bank

DRT8 May 2025SA/152/2022

Case brief

AI extract

What is this about?

DRT Patna allowed an application to quash SARFAESI action, including an auction sale, held prima facie illegal due to lack of proof for service of demand and sale notices, and failure of the auction purchaser to deposit the required security money within the statutory timeframe.

What did the court decide?

The SARFAESI action against the applicants including the auction sale is quashed. The Respondent Bank is directed to return the amount deposited by the Auction Purchaser with 12% simple interest.

Balwant Singh and Others versus Punjab National Bank — Cheque Dishonour | DRT (2025)

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DRT.PATNA

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SA 1S2 of 2022 [J)

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DEBTS RECOVERY TRIBUNAL PATNA

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Presiding Officer :ShriKaushalendraYadav

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SA- 152 of 2022

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Balwant Singh, S/o - Late Hardeo Singh, R/o - Chaudhary Compound, Ram Bagh Road, Kanhauli, Ram Bagh, P.S. - Mithanpura, Distt. - Muzaffarpur {Bihar}.

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Smt. Girija Devi, W/o Late Hardeo Singh, R/o - Chaudhary Compound, Ram Bagh Road, Kanhauli, Ram Bagh, P.S. - Mithanpura, Distt. - Muzaffarpur {Bihar}.

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. Applicants

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Versus

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The General Manager, Punjab National Bank,Zonal Office, Patna.

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The Authorized Officer, Punjab National Bank, Divisional Office, Aghoria Bazar, P.O+ P.S.+ District - Muzaffarpur.

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The Branch Manager, Punjab National Bank, MDDM College Branch, Mithanpura, P.O- Ramna,P.S.- Mithanpura, District - Muzaffarpur {Bihar}.

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Bajrang LalAgarwal, S/o Not Known, R/o Rajju Sah Lane No.3, Near St. Xavier School, Ramna,Muzaffarpur - 842001.

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--respondents

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Present:

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Forthe Applicant : Sh.Sanjiv Kumar,Advocate Forthe respondents Bank : Sh.SachindraKr.Tiwari, Advocate Forthe respondent no. 4 : Sh.PunyatmaTiwary, Advocate

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Dated: 08.05.2025

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JUDGMENT

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Present application has been filed with a prayer to quash the entire SARFAESI action alongwith Possessionnotice aswell assaletaken place in the matter.

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During pendency of the SA,the applicant hasfiled IA 219/2023 to restrain the bank from taking physical possession of the property. Ld. Counsel for the auction purchaser also filed IA 644/2023 with the prayer to direct the bank to deliver the possessionof the property.

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The facts leading to the present application in nut-shell are that the applicants availed various loan facilities to the tune of Rs.29.74 lacs from the respondent bank. On default in repayment of the dues of the bank, y/f the

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DRT.PATNA

SA 152 of 2022 [J)

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applicants were declared as NPA on 31.03.2021. Subsequently, the bank initiated SARFAESIAction against the borrower and issued demand notice u/s 13(2) dated 14.06.2021 calling upon the applicant to make the payment of Rs.28,65,700/-. Further, the respondent bank took possession of the property by issuing possessionnotice dated 04.10.2021 u/s 13(4) of the SARFAESIAct. Thereafter, the respondent bank put the property on auction sale by issuing auction sale notice dated 13.05.2022 fixing the date of auction sale on 08.06.2022. Aggrieved from the auction sale notice this SAhasbeen filed by the applicant.

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It is submitted by the Id. Counsel for the applicant that without serving the Demand Notice u/s 13(2) of the Act, the respondent bank published the auction sale notice. Despite repeated requests, the statement of account has also not been provided to the applicants therefore, the applicants could not know regarding declaration of account as NPA. The PossessionNotice has also not been affixed on secured assets. It is learnt from the counter affidavit of respondent bank that the property has been auctioned on 13.01.2023 to the auction purchaser- Sri Bajrang Lal Agarwal in pursuant to sale notice dated 27.12.2022. The said sale notice as well as auction sale was challenged by the applicants by way of IA 69/2023 and IA 703/2024 respectively. The 30 day's sale notice has neither been served upon applicants nor published in two leading newspapers nor affixed on secured assets. Without obtaining the valuation of the property, property has been put on auction sale. The applicants have submitted its valuation report obtained from approved valuer of Andhra Bank which indicates the value of property is worth Rs.74,15,700/- while the respondent bank auction sold the property on throwaway price for Rs.44,52,000/-to the auction purchaser. The auction purchaser did not deposit the auction amount within stipulated time. Even EMD was deposited after the cut-off date which nullified the sale held on 13.01.2023.

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On the contrary, Ld.Counselof the respondent bank submits that due to default in repayment of the loan amount, the accounts of the applicants were classified as NPAon 31.03.2021 asper guidelines of the RBI. Havingseen the negligent attitude of the borrower/guarantor, the respondent bank issued Demand Notice dated 14.06.2021 u/s 13(2) of the Act and sent to the applicants on 16.06.2021 through post. The borrower/guarantor neither repaid the demanded amount nor raised any objection u/s 13(3-A) of the Act against Demand Notice. Therefore, the

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DRT,PATNA

SA 152 of 2022 IJ]

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respondent bank took possessionof the property 04.10.2021 by issuing Possession Notice u/s 13(4) of the Act. The said possession notice was affixed on secured assetsand also served to the applicants. The PossessionNotice was also published in Hindustan and Prabhat Khabaron OB.l0.2021. Thereafter, the respondent bank obtained the valuation of the property and put on auction sale 17.03.2022 by issuing sale notice dated 06.02.2022 but the property could not be auctioned on the date due to want of a bidder. Hence,the property was further put on auction sale OB.06.202 but again could not be auctioned due to want of a bidder. Lastly, the property was auctioned on 13.01.2023 against the auction sale notice dated 27.12.2022. The said sale notice was served upon applicants. (Regardingservice proof - Supplementary Affidavit & IA 69/2023). The said sale notice was also affixed on secured assetsand published in two leading newspapers on 2B.12.2022. The property was auctioned to auction purchaser - Bajrang Lal Agarwal being declared highest bidder. The auction purchaser deposlted the entire bid amount within the stipulated period as per Act. Accordingly, the respondent bank issued a SaleCertificate dated 01.02.2023 in favour of the auction purchaser.

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So far allegation regarding non supplying the statement of account is concerned, the applicants never approached the bank for receiving the statement of account.

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It is submitted by the Id. Counsel of auction purchaser that the respondent bank published sale notice dated 27.12.2022 to auction sale the property in question with the reserve price of Rs.44.32 lacs. Accordingly, the auction purchaser participated in the bid processto purchasethe property in question Rs.4,41,011as EMD on 12.01.2023. Being declared a successful bidder, the auction purchaser further deposited Rs.6.69 lacs on 17.01.2023 and the rest was deposited on 30.01.2023. Thereafter, the respondent bank issuedSaleCertificate on 01.02.2023 in favour of the auction purchaser but till date physical possessionof the property has not been handed over to the auction purchaser. Therefore, the respondent bank may be directed to hand over the physical possessionof the property as the auction purchaser has invested a huge amount.

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I have heard Ld.Counselfor the parties and gone through the record.

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B. It has been alleged that without serving the Demand Notice u/s 13(2) of the Act,

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the respondent bank issued auction sale notice. Despite repeated request, the

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DRT,PATNA

SA 152 of 2022 [J)

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statement of account has also not been provided to the applicants. The PossessionNotice has also not been affixed on secured asset. The 30 day's sale notice has neither been served upon applicants nor published in two leading newspapers nor affixed on secured assets. The respondent bank sold the property on throwaway price as the value of property for Rs.44,52,000/- while the value of the property is worth Rs.74,15,700/-. The auction purchaser neither deposited EMDamount nor rest amount within time.

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On perusal of records it appears that on default in repayment, the accounts were classified as NPA and in order to recover its outstanding the respondent bank initiated SARFAESIaction against borrower and guarantor by issuing Demand Notice dated 14.06.2021 u/s 13(2) of SARFAESIAct. The said Demand Notice was sent to the applicants through post on 16.06.2021. To prove the service of Demand Notice, the respondent bank annexed the copy of the postal receipt as annexure - A, page 14-15 with counter affidavit. Thereafter, the respondent bank issued notice dated 26.0B.2021 to the applicants calling upon them to deliver possessionof the property in question on or after 10.09.2021. The said notice was sent to the applicants through post on OB.09.2021(Sent Very delayed asthe notice was issued on 26.0B.2021 for 10.09.2021 and it was sent on OB.09.2021that too from post). The copy of postal receipt with counter affidavit as annexure -B, page lB. Further, the respondent bank issued PossessionNotice dated 04.10.2021 u/s 13(4) of the Act. The Possession Notice was affixed on secured assets and published in Hindustan and Prabhat Khabar on OB.10.2021. The copy of affixation and publications have been annexed with counter affidavit. The respondent bank failed to file any proof of service of Possessionnotice upon applicants; however, the applicants have not specifically denied the service of possession notice in its application but it has been alleged that directly the sale notice was published. Hence the burden lies upon the respondent to prove the service of possession notice also.

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Thereafter, respondent bank obtained valuation of the property on 29.12.2021 from its approved valuer. The copy of valuation report has been annexed with supplementary affidavit which indicates that the Market value of the property is Rs.61.55lacswhile the DistressSaleValue is Rs.46,16,250/- and as per Circle Rate its value is Rs.49.B2lacs. Accordingly, property was put on auction sale several times but for the wants of the bidder, property could nO~7d.

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DRT,PATNA

SA 152 of 2022 [J)

However, lastly the property was auctioned on 13.01.2023 against the sale notice dated 27.12.2022. Despite specific allegations of applicants, the respondent bank failed to file the proof of service of sale notice upon applicants, its affixation on secured assets as well as publication in two newspapers. The respondent bank merely filed a copy of sale notice dated 27.12.2021 with the supplementary affidavit as well as with the reply of IA 69/2023 but neither the copy of affixation nor the copy of publication has been filed with the counter affidavit/supplementary counter affidavit. Apart from this the respondent bank did not disclose the name of newspapers and its date of publication in its counter affidavit/supplementary counter affidavit.

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The respondent bank also failed to file the details of payment made by auction purchaser against the auction sale. However, the auction purchaser brought the details of payment made against sale by way of IA 644/2023 enclosing the statement of account which indicates that the auction purchaser presented a cheque of Rs.4,44,011.80on 11.01.2023to transfer the same through RTGSto the MSTCltd. towards EMD of the auction sale in question but the same was could not be credited in the account of MSTCltd due to some technical error therefore, the auction purchaser deposited the EMD on 12.01.2023. Further, the auction purchaser deposited Rs.6.69 lacs on 17.01.2023 towards 25% of the auction amount including EMD and the rest 75% of the auction amount was deposited 30.01.2023.

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12.Sub-rule (3), (4) and (5) of Rule 9, which are relevant, are extracted below:

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"(3) On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty five per cent. of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorized officer conducting the sale and in default of such deposit, the property shall be sold again.

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(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months. (5) In default of payment within the period mentioned in sub-rule (4), the deposit ",,"1 be forfeited to the : A7 shall be

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DRT,PATNA

SA 152 of 2022 [J)

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resold and the defaulting purchaser shall forfeit all claim to the property or to any part ofthe sum for which it may be subsequently sold."

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It is clear on a plain reading of the aforesaid provisions that twenty five percent of the amount of sale price inclusive of earnest money is to be deposited by the auction purchaser as soon as his bid is declared to be successfulbut herein the auction was conducted on 13.01.2023 and the auction purchaser had deposited the 25% amount on 17.01.2023 Le. after expiry stipulated period asthe •

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auction purchaser was required to deposit the said amount by 16.01.2023 being 14.01.2023 and 15.01.2023 Saturday & Sunday. Further, the balance amount of purchase price has to be deposited within fifteen days but herein same was also not deposited in prescribed time. However, the said period could be extended as may be agreed upon in writing between the purchaser and the secured creditor but none of the parties has submitted any evidence regarding agreement between the parties for extension of time limit prescribed under the statute.

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In view of the above discussion, the Present S.A. Succeeds. The entire SARFAESIaction in question including sale are liable to be quashed.

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ORDER

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The application (SA 152 of 2022) filed by Balwant Singh & another under Section 17 of the SARFAESIAct is allowed. The SARFAESIaction in question against the applicants including auction sale is quashed. The Respondent Bankwill return the amount deposited by the Auction Purchaser,with 12%simple interest. All pending lAs.stand disposed accordingly.

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[KaushalendraYadav] Presiding Officer

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Debts RecoveryTribunal, Patna

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DayofJudgmentMay, 2025.signed, sealed, dated and pronounced in the open court on this '7:.i: OSTH/" /

.f-.. oEl<\

[KaushalendraYadav]

Presiding Officer

Debts RecoveryTribunal, Patna

Balwant Singh and Others v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

Balwant Singh and Others v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Cases cited

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