Dismissed

Shri Anujkumar Shriniwas Saraswat v. the Chikhli Urban Co-Op Bank Ltd.

DRT11 Jun 2025SA/165/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal, Aurangabad dismissed a Securitisation Application challenging a sale notice issued for agricultural land. The Court held the application was not maintainable as the bank sold the property as a non-banking asset independently under Section 17 of the SARFAESI Act provisions, after acquiring absolute ownership through auction, not under the Act's recovery provisions.

What did the court decide?

The Securitisation Application was dismissed with no order as to costs.

Shri Anujkumar Shriniwas Saraswat versus the… — Contract and Commercial Disputes | DRT (2025)

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Presented on: 31.05.2023 Registered on: 02.06.2023 Decided on: 11.06.2025 Duration: Y M D 02 00 11

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IN THE DEBTS RECOVERY TRIBUNAL AT AURANGABAD (Before Dr. J.R. Chauhan Presiding Officer)

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SECURITISATION APPLICATION No.165/2023

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Shri Anujkumar Shriniwas Saraswat Through its Prop. Shri Anujkumar Shriniwas Saraswat, Age – 50 Years, Occu – Business, R/o – Shri. Bunglow Station Road Jalna Pin - 431302.

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(The applicant No.1 is the GPA holder of the Applicant No.2)

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Dr. Shriniwas Bansilal Saraswat, Age – 80 Years, Occu – Business, R/o – Shri. Bunglow Station Road … Applicants

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Jalna Pin - 431302.

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Versus

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The Chikhali Urban Co-Operative Bank Ltd Branch at Jalna Mama Chowk Crystal Complex Tq and Dist Jalna Pin – 431302 Through its Branch Manager.

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The Chikhali Urban Co-Operative Bank Ltd Chikhali Head Office Dr. Shamprasad Mukharji Marg At Post Chikhali Tq – Chikhali Dist – Buldhana 443201 Through its

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[SBJ] (SA No.165/2023) Page 1 of 18

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Authorised Officer.

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Kailash Radhakrushna Kshirsagar Age – Major, Occu – Business “Radhakrushna” in front of Sindhi Panchyat Deoulgaon Raja Road … Respondents

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Jalna 431302

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APPEARANCES

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For the Applicants Mr. Satyajeet R. Vakil - Advocate For Respondent Nos.1 and 2 Mr. K.J. Suryawanshi – Advocate For Respondent No.3 None

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JUDGMENT (Delivered on 11^th June, 2025)

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This Securitization Application No.165/2023 has filed by the applicants against the respondent Nos.1 to 3. This Securitisation Application is filed by the applicants to challenge the sale notice dated 13.05.2023 issued by the respondent Nos.1 and 2 in putting the properties of the applicant for sale .

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Brief facts of the application are as under :

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The applicant No.1 is dealing in the business of real estate and is a proprietary concern / Firm. For running the said business the applicant has obtained Cash Credit facility of Rs.2.70 Crores (Rupees Two Crores Seventy Lacs Only) and thereafter the same was extended to the tune of

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Rs.1.30 Crores (Rupees One Crore Thirty Lacs only) from the respondent bank. Total Cash Credit was sanctioned by the respondent bank to the extent of Rs.4.00 Crores (Rupees Four Crores only).

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It is submitted by the applicants that after availment of credit facility, the applicant has repaid considerable amount but due to recession in the market in the business of real estate, the account of the applicant was classified as NPA and hence the respondent bank has initiated action under the provisions of the SARFAESI Act against the applicant. It is further submitted that the respondent bank committed various breach of contract and charged excessive rate of interest and also not provided any document to the applicant. The entire action of the bank is in violation of the provisions of the Securitisation Act and Rules framed thereunder.

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It is further submitted by the applicants that the respondent bank published the auction notice dated 19.01.2022 thereby showing the outstanding of Rs.7,77,12,510/- as on 01.01.2022 and put the property of the applicant for auction keeping reserve price of the property Gut No.358/1 admeasuring 2 H 13 R as Rs.8,66,00,000/- (Rupees Eight

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Crores Sixty-Six Lacs only). The respondent bank itself participated in the auction and transferred the said property in its name for an amount of Rs.12,70,00,000/- (Rupees Twelve Crores Seventy Lacs only) and accordingly issued the sale certificate to that effect. The respondent bank has categorically admitted and mentioned that they have taken the possession of the property bearing Gut No.358/1 admeasuring 2 H 13 R under the provisions of Securitisation Act on 18.02.2020 and on the other hand, on 12.05.2020 the respondent bank shown the said property as mortgaged in respect of another loan of Rs.3.80 Crores (Rupees Three Crores Eighty Lacs only) for the construction of Hospital, thus from the record it appears that the respondent bank mortgaged the property which is already in their possession. The respondent bank has not made a single letter communication to the applicant regarding the surplus amount though it has transferred the property i.e. agricultural land in its name under the Securitisation Act for Rs.12.70 Crores as against the loan of Rs.7,77,12,510/-. It is mandatory on the part of the respondent bank to inform the applicant regarding the surplus amount.

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The applicants further submitted that the respondent bank suddenly has issued sale notice on 13.05.2023 under the caption of sale of non-banking assets purchased by the bank and in the said sale notice, the subject matter of the property of the applicant is put for auction and the sale was scheduled on 03.06.2023 and the reserve price was shown as Rs.13.50 Crores.

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It is further submitted by the applicants that as on the date, the nature of the property is agricultural and therefore this is violation of Section 31(i) of the Act as the provisions of the Securitisation Act and the action under the Securitisation Act is not applicable to the agricultural land and as such the action of the respondent bank is not legal and proper and required to be quashed and set aside. The respondent bank by violating the provisions of the Act and Rules got transferred the said property in its name and the said action is not legal and proper and on the sole ground the impugned action is required to be set aside.

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It is further submitted by the applicants that the respondent has taken the possession of the subject suit property on 18.02.2020 when the account of the applicant was classified as NPA and on 12.05.2020 the respondent bank sanctioned

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[SBJ] (SA No.165/2023) Page 5 of 18

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the another loan of Rs.3.80 Crores under the caption of construction of hospital by executing the mortgage deed of the very same property, thus it appears that the respondent bank has not followed the proper banking procedure and granted the loan against the property, which is already in their possession and hence on the sole ground the entire action of the respondent bank is required to be quashed and set aside.

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The applicants further submitted that admittedly the respondent bank disbursed only the initial loan facility i.e. Rs.2.70 Crores as Cash Credit facility. However, thereafter so as to adjust the accumulated interest in the said loan account and in the another loan account the respondent bank shown the sanctioned loan of Rs.5.00 Crores and Rs.3.80 Crores. Though the subsequent loans were sanctioned and shown to have been disbursed, however the applicants were not allowed to utilize the said sanctioned loan and the respondent bank has adjusted the sanctioned loan amount regarding the repayment of overdue interest in other loan accounts. Thus the said transactions are nothing but paper transactions, hence the respondent bank has no authority in law to proceed under the Securitisation Act.

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The action taken by the respondent bank is bad in law and in violation of the principles of natural justice. The procedure which was adopted by the respondent bank in exercising the provisions of the Securitisation Act is unknown to the said Act.

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The applicants have filed this SA challenging the sale on the Grounds mentioned in this SA at Paragraph No. (I) to (XVII).

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The applicant has filed the present Securitisation Application and thereby prayed for allowing this SA for setting aside the sale notice issued by the respondent bank dated 13.05.2023 and for direction that it may be further declared that the respondent bank has no authority in law to proceed under the Securitisation Act against the applicants as such the subject matter of the property is an agricultural land and the provisions of the Securitisation Act cannot be invoked against the agricultural land and any other suitable and equitable relief which this Tribunal may deems fit and proper in the facts and circumstances of the case.

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The respondents No.1 and 2 bank appeared after issuance of

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the notice of the Securitization Application and filed their say marked Exh.10. No reference of respondent No.3, as well as allegations against him have been made in the entire Securitisation Application and he is a formal party and hence he was not required to be summoned in this case. More-so, no relief alleged to have been sought against the respondent No.3.

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The respondent No.1 and 2 filed their say / reply vide Exhibit-10. The respondent No.1 and 2 submitted that the Securitisation Application filed by the applicants challenging the auction sale notice dated 13-05-2023 issued by the respondent No.1 Manager of Chikhali Urban Cooperative Bank is not maintainable because the said sale notice is not issued under the provisions of the Securitisation Act, 2002. The applicants had filed IA for stay to the auction sale notice dated 13.05.2023 issued by the respondent bank. This Tribunal on 03.06.2023 passed an order that the respondent bank cannot be permitted to deal with the non-banking assets till further order. The said order was challenged before the Learned DRAT Mumbai in Appeal No.125/2023 which was allowed by order dated 06.05.2024 and this Tribunal was directed to decide the

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Securitisation Application on merits as expeditiously as possible. While deciding appeal the Hon’ble DRAT Mumbai observed that prima facie the Securitisation Application is not maintainable since the action under challenge is not under SARFAESI Act, 2002. It is also observed by the Hon’ble DRAT Mumbai that the respondent bank is absolute owner of the property, which is purchased in auction as non-banking assets and said auction is not challenged by the applicants. As the applicants have not paid amount of installments as per agreement and hence, their account categorized as NPA and as such respondents constrained to issue demand notice under Section 13(2) on 12.04.2018 and the said notice was duly served upon the applicants.

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It is further submitted by the respondent No.1 and 2 that the applicant had filed IA No.1096/2024 seeking stay to the sale notice dated 03.07.2024 which was rejected by order dated 19.05.2024 with observations that the applicant has not challenged the public auction of suit property conducted on 08.02.2022 in which the defendant bank has purchased the same therefore the defendant bank prima facie became owner of suit property as a non-banking assets and entitled

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to sale the same independently and not under provision of SARFAESI Act, 2002, therefore the application filed by the applicant is not maintainable and he is not entitled for relief as claimed.

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It is further submitted by the respondent Nos.1 and 2 that the respondent bank has purchased the property in auction on 08.02.2022 and the said sale is not challenged by the applicants. The sale certificate was issued and registered in the name of the bank vide Day Book No.1879/2022 dated 28.03.2022. The property was mutated in the name of the bank in revenue record by sanctioning Mutation Entry No.17746 and the name of the bank was recorded in revenue record as owner. The said sale certificate, its registration and mutation entry not challenged by the applicant. The applicants are not concern with the subject property. Thereafter the respondent bank has sold the said property in the month of January 2025 to Kuber Mega Structure Jalna for Rs.13.51 Crores. The sale deed is registered on 27.03.2025 and possession has been handed over to the purchaser. At present the property is in ownership and possession of the purchaser.

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[SBJ] (SA No.165/2023) Page 10 of 18

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It is further submitted by the respondents that by filing the IA No.475/2025 the applicants sought direction to the respondent bank to provide all documents pertaining to auction sale conducted on 18.07.2024. The bank has not finalized the auction sale on 19.07.2024 and it is finalized in the month of January 2025. The applicants have no right to call the documents of sale conducted by the respondent bank as it was the sale of the property of the bank itself. Thereafter the applicant filed IA No.849/2025 for restoration of possession which cannot be granted in law. The applicants are no more concern with the property from the month of February 2022 and said property is purchased by the bank in the month of February 2022, which is not challenged by the applicants.

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The respondent bank further submitted that the applicants have not raised a single objection since last 15 months in respect of the procedure adopted by the respondent bank and accepted the entire action including the purchase of property for Rs.12.70 Crore and adjustment of said amount in their loan account. The applicants are already enjoying the amount of Rs.12.70 Crores from the month of March2022. If they are having grievance in respect of sale of

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property, they should have objected the auction sale notice dated 19.01.2022 and the sale conducted on 08.02.2022. There is no substance in the application and as such the same is liable to be dismissed with heavy costs.

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The applicants have filed Notes of arguments at Exhibit-11.

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I have heard learned counsel for the parties and gone through the written submissions Exhibit-11 submitted by the applicants and have also gone through the material available on record.

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It is worthwhile to mention here that the respondent bank has further sold away the suit property in the Month of January-2025 to Kuber Mega Structure, Jalna for Rs.13.51 Crores. The sale deed has also been registered in favour of subsequent vendee on 27.03.2025 and the possession has also been handed over to the purchaser and now the property in question is in ownership and possession of the purchaser namely Kuber Mega Structure, Jalna.

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The respondent bank had purchased the suit property on 08.02.2022 as a non-banking asset for Rs.12.70 Crores.

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After purchasing the suit property in open auction, now the respondent bank is selling non-banking asset by issuing sale notice dated 13.05.2023 which has been challenged by the applicants by filing the present Securitisation Application. This Securitisation Application of the applicants challenging the auction sale notice dated 13.05.2023 issued by the respondent No.1 bank is not maintainable because the said sale notice is not issued under the provisions of SARFAESI Act, 2002.

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It may be noted here that the subject property was a secured asset belonging to the applicants and the present applicants / borrowers defaulted in payment of debt to the bank and the bank had proceeded further against the property under the provisions of the SARFAESI Act, 2002. No challenge whatsoever was made by the applicants against the SARFAESI measures initiated by the bank and ultimately the property was put on sale in public auction after fixing the reserve price of Rs.8.66 Crores. Since there was no other outsider bidder participating, then bank through its branch purchased the property for a sum of Rs.12.70 Crores and became absolute owner of the property. The borrower even did not challenge that sale and now it has got finality. The

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respondent bank being absolute owner put the property on sale to raise funds vide impugned Sale Notice dated 13.05.2023 and this auction sale was not under the provisions of SARFAESI Act for recovery of any debt as the suit property was no longer a secured asset of the borrowers / applicants.

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Now the present applicant / borrowers have filed the present Securitisation Application No.165/2023 challenging the sale being conducted by the bank as absolute owner of the suit property. An application under Section 17 of the SARFAESI Act, 2002 can only be filed for challenging any SARFAESI measures taken by the secured creditor / bank. Therefore, the respondent bank has sold away the suit property in auction sale independently and not under the provisions of the SARFAESI Act, 2002 and the applicants have no right to challenge the sale being conducted vide notice dated 13.05.2023 and this Securitisation Application is not maintainable.

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It may be noted here that the present applicants had filed Interlocutory Application for stay of auction sale notice dated 13.05.2023 issued by the respondent bank. My learned predecessor vide order dated 03.06.2023 held that

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the respondent bank cannot be permitted to deal with the non-banking asset till further orders. The said order was challenged before the Hon’ble Debts Recovery Appellate Tribunal, Mumbai in Appeal No.125/2023 which was allowed by the order dated 06.05.2024 and this Tribunal was directed to decide the Securitisation Application No.165/2023 as expeditiously as possible. The Hon’ble Debts Recovery Appellate Tribunal, Mumbai prima-facie observed that the Securitisation Application is not maintainable since the auction under challenge is not under SARFAESI Act, 2002.

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The learned counsel for the applicants argued that the subject property was agricultural land and that cannot be purchased by the respondent bank under SARFAESI proceedings as per Section 31 of the SARFAESI Act and in support of his arguments reliance was placed on Judgment; Indian Bank and Another Vs. K. Pappireddiyar and Another, 2018 (18) Supreme Court Cases, 252.

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The learned counsel for the applicants during the course of arguments has also produced some photographs that the property has been shown as agricultural land. The preposition of law as laid down by the Hon’ble Supreme

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Court in above referred Judgment is not disputed as SARFAESI Act, 2002 is not applicable in case of agricultural land. This plea of the applicants is not maintainable at this stage reason being that the respondent bank purchased the suit property and has become owner of suit property as a non-banking asset. This was purchased in auction on 08.02.2022 and said sale was not challenged by the applicants. The sale certificate was issued and registered in the name of the bank vide Day Book No.1879/022 dated 28.03.2022. The property was mutated in the name of the bank in revenue record vide Mutation Entry No.17746 and name of the bank has been incorporated in the revenue record as owner. Mere photographs itself do not prove the nature of the land as it has to be established by the applicants that the photographs are pertaining to the same suit property. More-so, this plea regarding agricultural land raised by the applicants is not sustainable at this stage.

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The applicants have demanded the documents pertaining to auction proceedings conducted by the bank independently whereby they have already sold the said property in the month of January-2025 to Kuber Mega Structure, Jalna. The applicants have no right to call the documents of sale

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conducted by the respondent bank as it was a sale of property of the bank’s property itself and therefore even Interlocutory Application No.475/2025 moved by the applicants for seeking this relief is not maintainable. The present applicants have also filed another Interlocutory Application No.849/2025 for restoration of possession and same is apparently not maintainable as after auction sale, the respondent bank became absolute owner of the suit property as a non-banking asset. Being absolute owner in possession, the respondent bank has further sold away the suit property in the month of January-2025 to Kuber Mega Structure, Jalna for Rs.13.51 Crores and the sale deed has been registered in favour of the subsequent vendee and possession has also been handed over to the purchaser and now the purchaser is owner in possession of the said property. Therefore, even the claim of the applicants for restoration of possession is manifestly not sustainable and the present Securitisation Application No.165/2023 is liable to be dismissed.

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In view of above findings, I pass the following order. ORDER

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(A) Securitisation Application No.165/2023 is hereby

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dismissed with no order as to costs.

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(B) Accordingly, all other Interlocutory Applications, if any pending shall stands disposed of in terms of the present judgment.

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Pronounced in open Sd/Court. (Dr. J.R. Chauhan) Date : 11.06.2025. Presiding Officer Debts Recovery Tribunal, Aurangabad

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[SBJ] (SA No.165/2023) Page 18 of 18

Shri Anujkumar Shriniwas Saraswat v. the Chikhli Urban Co-Op Bank Ltd.

Case brief

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Shri Anujkumar Shriniwas Saraswat v. the Chikhli Urban Co-Op Bank Ltd.

Case brief

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What did the court decide?

What the court decided

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