Allowed

Ms Vijay Kumar Bansal and Co. v. Hdfc Bank

DRT25 Jun 2025SA/197/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal considered a Securitization Application alleging illegal Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act proceedings, including incorrect NPA classification and flawed auction notices. The court upheld the NPA declaration but set aside the auction due to procedural defaults regarding notice service and newspaper circulation

What did the court decide?

The auction conducted on 18.03.2025 is set aside. The Bank must refund the sale consideration with interest and pay costs of Rs. 50,000 to the auction purchaser. The sale certificate is to be cancelle

Ms Vijay Kumar Bansal and Co. versus Hdfc Bank — Banking and Recovery | DRT (2025)

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SA No. 197 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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SA No. 197 of 2024

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M/s Vijay Kumar Bansal & Company and others

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Versus

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HDFC Bank and another

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Dated: 25.06.2025

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Item No. 08

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Argued by: Sh.RS Bhatia & Sh.Lovish Kukkar, Counsel for the Applicants.

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Sh.KPS Dhillon, Counsel for the Respondent Bank.

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Ms.Ravisha Mahajan, Counsel for the Auction Purchaser.

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M/s Vijay Kumar Bansal & Company and others (Applicants) have filed this Securitization Application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), against HDFC Bank and another (Respondents).

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Admittedly, Applicant No.1 is a proprietorship concern and Applicant No.2 is its proprietor. Vide loan agreement dated 04.05.2015, HDFC Bank had sanctioned a dropline overdraft facility of Rs. 1.32 crores to Applicant No.1. To secure the same, Applicant No. 2 and 3 had created security interest in respect of the following properties:-

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Property plot private No. 122 min, measuring 101 feet towards north and 109.9 feet towards south and east 30 feet and west 30 feet, total area 293 Sq. Meter, bearing Khasra No. 671 min, bounded as North: remaining portion, south: property of others East Road and West Property of others, situated in the area of Tung Bala Urban, Abadi Shastri Nagar, Tehsil and Distt Amritsar. Belonging to Vijay Kumar Bansal son of Mange Ram Bansal and Smt. Savitri Bansal W/o Vijay Kumar Bansal.

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Property plot private No. 122 min, measuring north around 98 feet and south 101 feet, breadth 10 feet, total area 111 Sq. Yards, bounded as North: Remaining Portion of land, South Property of Banwari Lal, East: Road, West: Property of Swedishi Wala, bearing Khasra No. 671 min, situated in the area of Tung Bala Urban, Abadi Shastri Nagar, Tehsil and Distt Amritsar. Belonging to Vijay Kumar Bansal son of Mange Ram Bansal.

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SA No. 197 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Applicants did not run the account as per the terms and conditions of the loan. On 29.11.2020, HDFC Bank declared the account of the Applicants NPA. On 17.12.2021, it issued the notice under Section 13(2) of the SARFAESI Act to the Applicants, demanding a sum of Rs. 83,95,645/- due as on 16.12.2021. Applicants did not make the repayment and on 25.03.2022, Bank issued the notice under Section 13(4) of the SARFAESI Act. On 13.07.2023, Bank obtained the order from DM under Section 14 of the SARFAESI Act and on 26.03.2024, it took the physical possession of the secured asset. HDFC Bank had also granted credit facility to M/s Bansal Wooltex, a sister concern of the Applicants and that account had also turned NPA. The immovable properties in respect of which the Applicants had created security interest in this case, were also the securities in the other loan account of M/s Bansal Wooltex.

¶19

On 26.04.2024, Applicants filed the present SA with the averments that their account was running properly. However, during Covid, they suffered immensely and could not realize their dues from sundry debtors, who were also facing the same difficulties. The default was purely temporary. It is stated that the account was regular as on 29.02.2020. They had duly intimated the Bank about the same. Instead of providing help to them, Bank declared the account NPA and issued the notice under Section 13(2) of the SARFAESI Act. Further, in the absence of restructuring/rehabilitation in terms of RBI guidelines, they were left with no other option but to seek settlement under OTS. On 23.09.2022, they had submitted an OTS for Rs. 81 lacs, in all the accounts. They had also identified buyer for the properties. They had requested the Bank to provide the NOC so that the OTS could be honoured. However, the Bank kept on lingering the NOC on one pretext or the other. It is stated that the Applicants were ready and willing to the settle the matter. It was stated that during this period, Smt. Savitri Bansal (Applicant No.3) had to undergo extensive medical treatment at Fortis Hospital, Amritsar and a sum of Rs. 25 lacs was spent on her treatment. However, they are still ready to settle the matter. It is stated that though the OTS was in vogue, the Bank invoked the measures under the SARFAESI Act. This is against the law. It is also stated that they had gone to the Bank and expressed their willingness to pay the OTS amount.

¶20

On these facts, Applicants filed the present SA and alleged that the account was wrongly declared NPA. Their account was standard on 29.02.2020. The Bank did not provide any relief to them, though they were eligible under the Covid relief package announced by the Government. On 01.03.2020, when the moratorium came into being in pursuance to the RBI circular dated 27.03.2020; 17.04.2020 and 23.05.2020, the account of the Applicants was standard. As per RBI circulars, it was directed that no account would be declared NPA till

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SA No. 197 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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31.08.2020. Further, their account was declared NPA wrongly as there was no 90 days default. RBI circulars are binding on the Bank. They were not served any notice for default. Even the notice under Section 13(2) was not served upon them. There was only temporary deficiency. As per Clause 4.2.5 of the Master Circular, dated 01.04.2023, the account could be upgraded. The Bank was bound by the RBI circulars as they have the force of law. Further, as per RBI circular dated 06.08.2020, in respect of Micro Small and Medium Enterprises, the account could be restructured. Further, there was no CERSAI registration in respect of the secured assets. The demand notice was in violation of the SARFAESI Act. The Bank also violated Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002. On the basis of the illegal notice, the Bank is trying to sell the property at a throwaway price. Further, the Bank also committed violation of RBI Circular dated 17.03.2016. Applicants alleged that they have the right of redemption. On these facts, Applicants prayed that the notice issued under Section 13(2) be set aside; Bank be directed to place of the record the service of possession notice; Bank be restrained from taking over the possession; Bank be directed to accept the OTS and the Bank be directed to maintain status quo regarding the secured assets.

¶24

This deserves to be mentioned that during the pendency of the present SA, on 04.02.2025, Bank issued the sale notice, fixing up the auction for 18.03.2025. On 21.03.2025, an application was moved for impleading the legal heirs of Savitri Bansal (Applicant No.3) who had died. On that day, Mr.Dhillon, counsel for the Respondent Bank apprised this Tribunal that the Bank has sold the property on 18.03.2025 and the proposed bidder has deposited 25% of the sale consideration and Bank has confirmed the bid. Mr.Dhillon undertook to supply the particulars of the auction purchaser to Mr.Bhatia, who requested for adjournment to file application for impleading the auction purchaser and for filing amended SA. On 29.03.2025, Mr.Bhatia, counsel for the Applicants submitted that he had filed three applications i.e. one for preponement; another for impleading the auction purchaser and the third for the amendment of SA. The case was adjourned to 02.04.2025. On 02.04.2025, all the three applications were allowed. Amended SA was taken on record. A copy of the same was supplied to counsel for the Bank as well as to the counsel for the auction purchaser. Vide order dated 02.04.2025, Bank was also restrained from issuing the sale certificate.

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By way of amendment, Applicants alleged that the notices under Rule 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002 were not served upon them. On 26.03.2024, Respondent had taken the physical possession of the property. The Bank sent the notices at the same address, which was never served upon them. As per the report of the Postal Authorities, the notice was delivered.

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SA No. 197 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Since, Applicants were not residing at the address, the notice was actually not received by them. Further, as per the Bank, the notice was served on Savitri Bansal, who had already expired. Accordingly, any service to the deceased person is nullity. Further, redemption notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 was not issued. Further, the auction notice was published in ‘Rozana Spokesman’, which has no circulation in the area, where the property is situated. The market value of the property is more than Rs.5 crores. However, the Bank had fixed the reserve price at Rs. 2,74,10,900/-. While fixing the reserve price, Bank did not comply Rule (5) of the Security Interest (Enforcement) Rules, 2002. There was no consultation with the secured creditor regarding fixing the reserve price. Bank was in connivance with the single bidder. The Bank has sold the property at a throwaway price. Further, the bidder did not deposit the sale consideration within time. Further, the account was wrongly classified NPA on 29.11.2020. The Hon’ble Supreme Court had already held that no account would be declared NPA till 23.03.2021. Further, in the auction notice, the name of the proprietor of the firm was not mentioned. Accordingly, the action of the Bank in selling the property is illegal.

¶29

Bank, in reply, has denied the case of the Applicants. It is stated that all the notices were duly served upon the Applicants. Bank had rightly declared the account NPA. It had issued the notice under Section 13(2) on 17.12.2021, demanding a sum of Rs. 83,95,645/-. Since, the payment was not made, Bank had issued the possession notice on 25.03.2022 and taken the physical possession of the property on 26.03.2024. On 04.02.2025, it had issued the sale notice, fixing the auction for 18.03.2025. The property was sold for Rs. 2,75,10,900/-. Accordingly, it is stated that the SA be dismissed.

¶30

The auction purchaser, in reply, has alleged that Applicants have no legal right as the Bank has sold the property on 18.03.2025. Further, Applicants have not challenged the sale confirmation letter dated 19.03.2025. Applicants have also not challenged the sale notice and the auction. Applicants did not file any objection to the auction notice as well as to the sale confirmation letter dated 19.03.2025. It is stated that the auction purchaser was the highest bidder who had given the highest bid of Rs.2,75,10,900/-. Auction purchaser had deposited 25% of the sale consideration on 19.03.2025 and the remaining 75% by various transactions, in favour of the Bank. The auction purchaser had also deposited TDS of Rs. 2,75,109/-. Accordingly, it is stated that there is no merit in the present SA and the same be dismissed.

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SA No. 197 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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I have heard Mr.RS Bhatia, counsel for the Applicants; Mr.KPS Dhillon, counsel for the Respondent Bank and Ms.Ravisha Mahajan, counsel for the auction purchaser.

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Mr.Bhatia has also filed written submissions. Mr.Bhatia submitted that the Bank had wrongly declared the account NPA on 29.11.2020. Hon’ble the Supreme Court in Small Scale Industrial Manufacturers Association versus Union of India had ordered that no account would be declared NPA from 03.09.2020 till 23.03.02021. Accordingly, the action of the Bank in declaring the account NPA on 29.11.2020 was illegal. Since, the account was declared NPA wrongly, any further proceedings taken by the Bank were also illegal. Further, the Bank did not issue any redemption notice to the borrowers. The Hon’ble Supreme Court in Mathew Verghese versus M. Amritha Kumar (2014) 5 SCC 610 has held that before effecting the sale, borrowers must be specifically informed about their right to redeem the property and given time to do the same. Mr.Bhatia submitted that the Bank did not serve any auction notice to the borrowers. The Bank had taken the possession on 26.03.2024. The auction notice dated 04.02.2025 was served at the address of the secured asset. Mr.Bhatia submitted that when the Bank had already taken the possession of the secured asset on 26.03.2024, the question of the sale notice being served at the property which had already been taken over, did not arise. Further, one of the mortgagers, namely Savitri Bansal had already expired on 04.12.2024. Applicants had informed the Bank on 10.02.2025 that Savitri Bansal had died. Accordingly, no notice was served on Savitri Bansal. Further, the auction notice issued to a dead person would be invalid. Mr.Bhatia submitted that the Bank has annexed postal receipt and track report of the service of auction notice which states that the notice was duly served on Savitri Bansal. It was argued that the Bank did not mention in the auction notice that the SA was pending before the Tribunal. In this connection, counsel also placed reliance on the judgment of Hon’ble Punjab and Haryana High Court in Lovegeet Dhuria versus State Bank of India and others. Mr.Bhatia submitted that in the auction notice it was not mentioned as to what would be the incremental bid amount. Mr. Bhatia, submitted that Bank has mentioned different rates of interest in the notices. Bank has mentioned interest @ 10.80% per annum in the demand notice; 18% per annum in the possession notice and 24% per annum auction notice. Further, in the auction notice, it was categorically mentioned that no payment would be accepted by cheque. However, the auction purchaser in reply has mentioned that he had deposited the money by cheque. Mr.Bhatia further submitted that the Bank had published the auction notice in ‘Indian Express’ and ‘Rozana Spokesman’, which have no circulation in the area where the secured asset is situated. Winding up his arguments, Mr.Bhatia submitted that the auction be set aside.

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SA No. 197 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Per contra , Mr.Dhillon, counsel for the Respondent Bank has argued that the Bank had conducted the auction properly. All the notices were duly served upon the Applicants. The auction notice was duly served upon the legal heirs. The estate of the deceased was represented by her LRs. Accordingly, there is no merit in the present SA and the same be dismissed.

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Ms.Ravisha Mahajan, counsel for the auction purchaser submitted that the auction purchaser had deposited the whole of the sale consideration in time. Accordingly, there is no merit in the present SA and the same be dismissed.

¶39

I have considered the rival contentions.

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The first and foremost question which arises for consideration is, ‘whether the Applicants can be allowed to argue that the Bank had declared their account NPA wrongly?’. In fact, the precise contention of the counsel for the Applicants is that the Hon’ble Supreme Court vide order dated 03.09.2020 had ordered that the account which was standard on 29.02.2020, would not be declared NPA till 23.03.2021. The account of the Applicants was regular as on 29.02.2020 and it was wrongly declared NPA on 29.11.2020. However, I am of the considered view that there is no force in the contention of Mr.Bhatia, counsel for the Applicants. The Bank had issued the notice under Section 13(4) to the Applicants on 25.03.2022. Applicants have not denied the service of notice under Section 13(4). Applicants did not challenge the notice under Section 13(4) by filing the SA within 45 days. Since, Applicants did not challenge the notice under Section 13(4), I am of the considered view that they are estopped from raising this contention later on.

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The other contention of the Applicants is that Savitri Bansal had died on 04.12.2024 and the auction notice was not served upon her legal heirs. Applicants had duly intimated the Bank on 10.02.2025 that Savitri Bansal had died on 04.12.2024. In these circumstances, the auction notice dated 04.02.2025 was not served upon the legal heirs of Savitri Bansal and that is fatal to the case of the Bank. It is admitted on the record that auction notice was not served upon the legal heirs of Savitri Bansal. I am of the considered view that this was fatal. Further, the Bank had taken the possession on 26.03.2024. As per the Bank, it had served the auction notice on the secured asset. Admittedly, Applicants were not residing at the secured asset on 04.02.2025. In these circumstances, the question of the service of auction notice on them did not arise. That apart, the Bank had put up the property for auction by publishing the sale notice in ‘Indian Express’ and ‘Rozana Spokesman’. Admittedly, the secured assets are situated at Amritsar. I am of the considered view that it cannot be said that ‘Rozana Spokesman’ is a newspaper which has wide circulation in Amritsar.

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SA No. 197 of 2024

¶43

DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Further, I am of the considered view that there is no force in the contention of Mr.Bhatia, that the Bank had not issued the redemption notice to the Applicants. Bank in the notice under Section 13(4), dated 25.03.2022 had clearly mentioned that the Applicants have the right to redeem the property under Section 13(8) of the SARFAESI Act. In these circumstances, the Applicants cannot be heard to say that they were not served with any redemption notice. Admittedly, the Bank issued the sale notice on 04.02.2025, fixing the auction for 18.03.2025. The contention is thus misconceived and the same is hereby rejected.

¶45

In view of the above, I am of the considered view that the Bank did not follow proper procedure in conducting the auction. Accordingly, the auction conducted on 18.03.2025 is here by set aside. The Bank is directed to refund the total sale consideration deposited by the auction purchaser with interest @ 8% per annum from the date of deposit, till the payment. Bank is also burdened with costs of Rs. 50,000/-, which shall be payable to the auction purchaser. In case, Bank has handed over the original title-deed to the auction purchaser, the auction purchaser would return the same to the Bank. The Bank would cancel the sale certificate. In case the Bank has delivered the possession to the auction purchaser, the later would restore the same to the Bank, on the Bank refunding the sale consideration with interest and cost to the auction purchaser.

¶46

At the time of arguments, it was argued by Mr.Bhatia, counsel for the Applicants that Applicants are ready to redeem the property. Since, I have set aside the auction, Applicants may well deposit the whole of the sum due to the Bank. In view of the above, the present SA is allowed . All the pending IAs, if any, are also disposed of, accordingly.

¶47

Registrar is directed to send a copy of this order to all the parties, as per rule. Thereafter, file be consigned to record room after due compliance.

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Pronounced in open court Manoj/25.06.2025

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(A S Narang) Presiding Officer DRT-I, Chandigarh

Ms Vijay Kumar Bansal and Co. v. Hdfc Bank

Case brief

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Ms Vijay Kumar Bansal and Co. v. Hdfc Bank

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