Allowed

Shankar Sahani v. Punjab National Bank

DRT6 Jan 2025SA/248/2023

Case brief

AI extract

What is this about?

The DRT allowed the application filed by borrowers to quash SARFAESI action initiated by Punjab National Bank. The court found the action vitiated due to failure to prove service of notices on the guarantor applicant, despite proper service on the primary borrower.

What did the court decide?

The SARFAESI action taken against the applicants is quashed.

Shankar Sahani versus Punjab National Bank — Contract and Commercial Disputes | DRT (2025)

SA 248 of 2023 UJ

DRT,PATNA

DEBTSRECOVERYTRIBUNALPATNA

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PresidingOfficer:ShriKaushaLendraYadav

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SA- 248of 2023

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Shankar Sahani, Son of Sri ChuLhaiSahani (Borrower).

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Chulhai Sahani, Son of Late Churawan Sahani (Guarantor),

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Both are residents of village - Suga Pipra, Police Station - Patahi, District - East Champaran.

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. Applicants

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Versus

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The Authorised Officer, Punjab National Bank, Motihari Branch, Main Road,Motihari, District - East Champaran.

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The Punjab National Bank, through Branch Manager, Main Road, Motihari, District - East Champaran.

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--respondents

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Present:

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Forthe AppLicant : Sh.SatishNarayanSinha,Advocate Forthe RespondentBank : Sh.Arvind Kumar,Advocate

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Dated:06.01.2025

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JUDGMENT

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Present appLication has been filed with a prayer to quash entire SARFAESIaction taken against the properties of applicant alongwith the possession notice as issued by the respondent bank.

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During pendency of the SA. the applicant filed an IA 483/2023 to condone the deLayin filing of present application. IA 489/2023 filed by the applicant with the prayer to restrain the bank from taking Physical possession of the property. IA 01/2024has been filed by the applicant for direction to the bank to not take the physical possession of the property.

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DRT,PATNA

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SA 248 of 2023 [J)

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The brief fact of the case is that the applicants availed Credit facilities to the tune of RS.9.50lakhs from the respondent bank and mortgaged the property towards security of the loan. Due to default in repayment of dues of the bank, the accounts were classified as NPA on 10.05.2021.Subsequently, the respondent bank initiated SARFAESI action against the borrower by issuing Demand Notice dated 28.06.2021u/s 13(2)of the act calling upon the borrower to make the payment of RS.10,52,423.32. Thereafter, the respondent took possession of the property by issuing Possession Notice dated 01.10.2021u/s 13(4) of the SARFAESIAct. Further, the respondent bank approached the District Magistrate u/s 14of the act for physical possession of the property. Accordingly, the District Magistrate passed an order dated 22.05.2023in this regard. Aggrieved from the order of District Magistrate, present SA has been filed by the applicant.

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It is submitted by the Ld. Counsel of applicant that the respondent bank violating the guidelines of RBI as well as order of Hon'ble Apex Court declared the account as NPA on 10.05.2021as Hon'ble Apex had directed no to declare the account as NPA from 01.03.2020to 31.08.2021due to ongoing pandemic Covid-19. Neither the demand notice nor the possession notice issued in the matter was served upon the applicants. The applicants are also unaware regarding publication of possession notice. The applicants came to know from the order of District Magistrate the respondent has initiated SARFAESIaction against the applicants..

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Onthe contrary, it is submitted by the ld. Counsel of respondent bank that the present applicant is barred by limitation and filed after delay of 667 days. It is further submitted that after availing the loan facilities the borrower failed to repay the outstanding amount, the account was classified as NPA. In order to recover outstanding dues

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DRT,PATNA

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SA 248 of 2023IJI

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the respondent bank initiated SARFAESIAction against the borrower & guarantors by issuing Demand Notice and served upon the applicants but the applicants failed to repay the dues of the bank. Hence, the respondent took possession of the property by issuing Possession Notice dated 13.07.2023u/s 13(4) of the SARFAESIAct. The said possession notice was served upon applicants through post and also affixed on secured asset. The possession notice was also published in two newspapers.

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I have heard Ld. Counsel for the parties and gone through the record.

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It has been alleged that despite the direction of Hon'ble Apex Court regarding not to declare the account as NPA, the respondent bank declared the account as NPA on 10.05.2021.It is further alleged that neither the demand notice nor the possession notice was served upon applicants.

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On perusal of records it appears that the Demand Notice was issued on 28.06.2021indicating the date of NPA as 10.05.2021. The said demand notice was sent to the applicant no.l on 09.07.2021as appears from the copy of postal receipt annexed with counter affidavit as annexure - A, page 13. But the respondent bank failed to file service report of demand notice upon the applicant no.2. The respondent bank also did not disclose the status of applicant no.2 either in its Demand Notice or in the counter affidavit whereas the applicant in its application specifically mentioned that the applicant no. 2 is guarantor in the matter. Further, the respondent bank issued Possession Notice dated 01.10.2023.The said possession notice was received by the applicant no.l putting the signature on the copy of inventory dated 01.10.2021.The copy of said inventory has been filed by the bank with a counter affidavit as annexure - B, page 18. But the respondent bank failed to file proof of service of possession notice upon applicant no.2 despite indicating in the possession notice that

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SA 248 of 2023 U)

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ORT, PATNA

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Chulhai Sahani is guarantor in the loan account in question. The possession notice was affixed on secured assets and also got published in Hindustan Times and Hindustan on 02.10.2021.

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In view of the above discussion the service of demand notice and possession notice on applicant No.2 could not be proved, the SARFAESIAction in question is vitiated.

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So far as the issue raised regarding declaration of account as NPA violating the direction of Hon'ble Apex Court is concerned, it is not disputed that the Supreme Court in Small Scale Industrial Manufactures Association Vs. Union of India (UO!)& Ors Writ petition No 476/2020 granted Moratorium during Pandemic period from March 2020 upto 31.08.2020.Thereafter the interim order stood vacated as the aforementioned writ for the extension of moratorium was dismissed on 23.03.2021.As such the NPA Date 10.05.21is not covered under that period.

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11. In view of the above discussion, the present application succeeds.

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ORDER

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The application SA 248 of 2023, is allowed. The SARFAESIAction in question against the applicants is quashed. No orders for c~ £

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JO\ [KaushalendraYadav]

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Presiding Officer Debts Recovery Tribunal, Patna

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Judgment signed, sealed, dated and pronounced in the open ~ on this 06 TH Day of January, 2025.

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in the open ~ /
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[KaushalendraYadav]

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Presiding Officer

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Debts Recovery Tribunal, Patna

Shankar Sahani v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

Shankar Sahani v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

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