The Tribunal dismissed an application seeking to set aside a possession notice and demand notice issued by a bank under the SARFAESI Act, finding no procedural latches or lacunae in the bank's actions.
The application under section 17(1) of the SARFAESI Act is dismissed; no restraint on the bank's actions is granted.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
ORDER SHEET
DEBTS RECOVERY TRIBUNAL, SILIGURI
S.A. No. 153/2023
Ziaul Hoque Applicant Vs Bangiya Gramin Vikash Bank & Anr Defendants with date and Office action Date of Order with Signature dated Order signature of parties when necessary.
Item No. 28
26.02.2025
Judgment is passed in S.A/15312023 and a copy of the Judgment is kept on record.
let the judgment be uploaded on website of the Tribunal and the Registry is directed to serve/send copy of this judgment to the parties free of cost.
Record be consigned to the record room along with the judgment.
(RAKESH ~WARI) Presiding Officer DRT-Siliguri Debts Rti~overy t"riJu:rn! Sihgun ~ Prcc-1 Jin9 lY • •r
IN THE DEBTS RECOVERY TRIBUNAL, SILIGURI
S.A. No.153/2023
Ziaul Hoque, S/o Late Sk. Mostakim, residing at Village Chandpur, P.O. Mirjatpur, District -
Vs.
.................... Respondents
Counsel for the applicants
Counsel for the respondents
Mr. Biswajit Mal, Ms. Puja Ghosh
Mr. Rajneesh Tripathi
PRESIDING OFFICER: RAKESH PATI TIWARI
Date of Judgment - 26.02.2025
JUDGMENT
~ business upon securing the equitable mortgage of land and building and in the initial
~~1 ge though the storage of paddy business was running, for various extraneous ~ ' i,o,f'-9 - ~,uu ' :~ece~\ reasons suffered huge loss and in addition to that effect of demonetization and
Qe'o\ s,,g introduction of GST. Further, due to COVID-19 pandemic situation the business again faced huge loss. It has been pleaded by the applicant that though the applicant appraised the situation to the respondent No.1 and sought for help but the respondent No.1 did not extend any help. The applicant states that all of a sudden the respondent bank for the first time affixed one possession notice at the referred property on 20.09.2023 and took symbolic possession of the secured assets but the respondent bank never served the possession notice as per Rule 8(1) of The Security Interest
(Contd ... )
2 (Enforcement) Rules, 2002. Another plea of the applicant is that in the possession notice applicant is that the respondent bank has published the possession notice only in English newspaper namely "Financial Express" on 23.09.2023 but it has not been published in any vernacular language newspaper. It has been pleaded by the applicant that the demand notice dated 18.05.2023 under section 13(2) of the SARFAESI Act, 2002 in the possession notice has not been delivered to the applicant and there is no scope for taking action under section 13(4) without issuing the demand notice under section 13(2) of the SARFAESI Act. Next plea of the applicant is that it is a well settled principle of law that any action taken or to be taken under the SARFAESI Act has to be in connection with a non-performing asset and in the demand notice dated 18.05.2023 the bank has alleged that the loan account has been classified as NPA but the manner the instant notices have been issued by the bank in due haste and in a very casual manner without due application of mind to the matters of record and issues pertaining to \ alleged security and as such the notices are void are void void ab initio and deserve to be withdrawn. no name and designation of the Authorized Officer was mentioned. Further plea of the in which the NPA is classified was not proper and justified. According to the applicant ~ ~ In the facts and circumstances stated above, the applicant prays that the respondent
by the applicant in repayment of dues on the cash credit loan account, the account has The respondents have filed the written objection stating that consequent to the default been classified as NPA on 26.03.2018 in accordance with the guidelines issued by the Reserve Bank of India and thereafter as the applicant failed to discharge the outstanding liability despite repeated requests made to the applicant, the bank served upon the 13(2) notice dated 18.05.2023 requesting to discharge in full the liability to the bank within sixty days from the date of notice but the applicant failed to repay the outstanding amount and therefore the respondent bank served a notice dated 20.09.2023 under section 13(4) of the SARFAESI Act, 2002 and took over the possession of the secured asset. Further the submission that the applicant's business suffered loss due to rollout of GST, demonetization, pandemic etc. fall short on merits when it comes to the enforcement, the mandate of the SARFAESI Act, 2002 because
(Contd ... )
3 while enforcing a security interest, all that the bank is required to consider is the factum of default in repayment of secured debt or any installment thereof and the classification of the secured debt as Non Performing Asset and thereupon the bank is entitled to initiate the proceedings for enforcement of the security interest, to put it straight and the bank is not obliged to consider any other factor other than those stated in the plain language of the SARFAESI Act, 2002, the rules framed thereunder and the decision of the Constitutional Courts of the land, while it proceeds to enforce its secured debt. The further contention of the respondent bank is that it cannot be prejudiced for factors, even unpleasant ones that afflict the borrower, because the bank deals in public money Moreover, such factors are extraneous to the agreement that was entered into between the bank and borrower/guarantor. According to the respondent bank the applicant's business was hit due to lockdown etc. does not have a material bearing for proceeding under the SARFAESI Act, 2002 as the bank has already granted all the concessions/reliefs that were mandated by the Reserve Bank of India. Another contention of the respondent bank is that the possession notice has been issued by the Authorized Officer who is of the rank of Chief Manager as envisaged under Rule 2(a) of \ _ Security Interest (Enforcement) Rules, 2002 and therefore is authorized to issue such ~ notices. Moreover, a bare perusal of Appendix IV to the Security Interest (Enforcement) £i?,c~~ a\ ~ c;i/:fJ Al·\ (\Uules, 2002 makes it ample clear that the designation of the authorized officer is not '?\ e --o'-l e, J. oe'o$ e;,,).~, required to be mentioned in a possession notice under 13(4) of the SARFAESI Act and hence the notice was correctly issued by the officer who is authorized by law. As regards the publication of possession notice it has been stated by the respondent bank that the possession notice dated 20.09.2023 was also published in a vernacular daily, namely, "Uttar Banga" dated 23.09.2023 and therefore the bank has duly complied with Rule 8(1) of The Security Interest (Enforcement) Rules, 2002. The further contention of the respondent bank is that the possession notice has been duly served to the applicant and was also affixed at a conspicuous place of the secured asset and thus an effective delivery of the said possession notice was effected and the demand notice has also been duly served upon the applicant.
(Contd ... )
The plea of the applicant is that in the possession notice no name and designation of the Authorized Officer was mentioned. On this plea the reply of the respondent bank is that the possession notice has been issued by the Authorized Officer who is of the rank of 4
Chief Manager as envisaged under Rule 2(a) of Security Interest (Enforcement) Rules, 2002 and therefore he is authorized to issue such notices.
Another plea of the applicant is that the loan account has been classified as NPA but the manner in which the NPA is classified was not proper and justified. Subsection (o) of section 2 of the SARFAESI Act defines the NPA as hereunder:- (o) "non-performing asset" means an asset or account of a borrower, which
has been classified by a bank or financial institution as sub-standard, 2 [ doubtful or loss asset,-
( a) in case such bank or financial institution is administered or regulated by any authority or body established, constituted or appointed by any law for the time being in force, in accordance with the
directions or guidelines relating to assets classifications issued by such authority or body;
~ (b) in any other case, in accordance with the directions or guidelines ~ ~ :~ of.~)\view of the prudential norms of the Reserve Bank of India "Non Performing Asset" is ec/i **Ne** :s ~e,~·i' such an asset which becomes non performing asset which becomes non performing non performing performing when it ceases to generate income for the ceases to generate income for the <)e \ relating to assets classifications issued by the Reserve Bank]; ~
bank and non performing asset is a loan or an advance where interest and/or installment of principal remain overdue for a period of more than 90 days. The borrower has defaulted in repayment of the loan amount as well as in servicing of interest and thus loan account of the borrower became irregular and finally as per the guidelines of Reserve Bank of India the respondent bank classified the loan account as Non Performing Asset (N.P.A.). Another plea of the applicants is that the respondent bank has published the possession notice only in English newspaper namely "Financial Express" on 23.09.2023 but it has not been published in any vernacular language newspaper but the submission of the respondent bank is that the possession notice dated 20.09.2023 was also published in a vernacular daily, namely, "Uttar Banga" dated 23.09.2023 and to substantiate this the respondent bank along with its written objection has filed a copy of vernacular language newspaper wherein the publication of possession notice has been made. Thus there is no force in this plea of the applicant. such an asset which becomes non performing asset which becomes non performing non performing performing when it ceases to generate income for the ceases to generate income for the
(Contd ... )
5 Another plea of the applicant is that the 13(2) notice was not served upon the applicant. In this regard the respondent bank has filed postal receipts and track consignment report from perusal of which it transpires that the 13(2) notice was sent to 9.
the applicant on 19.05.2023 and it has been delivered to the addressees 30.05.2023. Last plea of the applicant is that 13(4) possession notice has not been served as per rule 8(1) of the Rules, 2002. On this point submission of the respondent bank is that it was duly served. Applicant himself has indirectly admitted the service of possession notice because challenging the said possession notice dated 20.09.2023 instant S.A. has been filed on dated 01.11.2023 and copy of the possession notice has also been annexed with the S.A. by the applicant. On the point of 13(4) possession notice main grievance of the applicant is that it is not as per rule 8(1) of the Rules, 2002 but from perusal of the possession notice it transpires that all the details are there in the possession notice as per Appendix IV of the Rules. Rule 8(1) of the Rules prescribes that where the possession of immovable secured asset is to be taken the possession notice is to be prepared as nearly as possible in Appendix IV of the Rules. Possession notice of the instant case is as per the Appendix IV where name of the borrower with the dues amount and description of the property with boundary is mentioned and thus there is no any irregularity in possession notice rather the same is as per Rule 8(1) of 10. on
The judgment is signed and pronounced in the open Tribunal on 25th day of
February, 2025.
(RAKESH PATI TIWARI) Presiding Officer p-t;, ,o'.:>- .. ~~ DRT, Siliguri. Presiding Officer AP-I~~ fk-k~ 7 (_ ~; Debts Recovery Tribunal Siliguri
2 issues framed by the court
Whether the possession notice issued by the bank was valid despite the applicant's claims of procedural irregularities such as lack of proper service or publication.
Whether the classification of the loan account as a non-performing asset validly justified the enforcement of security interest proceedings.
4 provisions across 2 enactments
Ziaul Hoque
Bangiya Gramin Vikash Bank & Anr
RAKESH PATI TIWARI
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
