Allowed

Hills Cattle Feeds v. Canara Bank

DRT2 Jul 2025SA/251/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal set aside a bank's SARFAESI proceedings due to procedural lapses including premature NPA classification, defective demand notices without proper break-up, flawed symbolic possession notices, insufficient property description in the sale notice, and valuation errors regarding an undivided share. The bank is directed to return auction proceeds and restore possession.

What did the court decide?

Set aside the demand notice, possession notices, and sale notice; return auction money with interest to the purchaser; restore physical possession of the property to the applicants.

Hills Cattle Feeds versus Canara Bank — Cheque Dishonour | DRT (2025)

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DEBTS RECOVERY TRIBUNAL — I, DELHI Jeevan Tara Building, 4th Floor, Parliament Street, New Delhi.

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PRESIDING OFFICER: Shri Govind Ballabh Sharma

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SA No.251 of 2024

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Hills Cattle Feeds I-2045, DSIIDC, arela, Dehi-110040

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Sh.Shasvat I 2045, Bock-I, DSIIDC, arela, Dehi-110040

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Applicants

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ersus Canara Bank I P-10-11, IInd Floor, ocal Shopping Complex Centre I pp. Maurya Enclave, Pitampura elhi-110034 Authorized Officer I anara Bank U P-10-11, IInd Floor,

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•cal Shopping Complex Centre pp. Maurya Enclave, Pitampura I elhi-110034

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Sh.Anil Kumar Gupta /o T-16, Khasra No.473, ain Road, Tukhmir Pur, Near Shiv Mandir orth East Delhi, Delhi-110094 Respondent

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ounsel: Sh.Pallav Saxena, for the applicant Sh. D.C.Tripathi for the Respondent Bank Ms Ridhima Goyal for the auction purchaser

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Date of Pronouncement: 02.07.2025.

A No. 251 of 2024

FINAL ORDER

This S.A. has been filed by the applicants on 06.05.2024

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gainst the respondent bank not to proceed further with emand notice dated 18.03.2024 and 27.05.2024 and restrain

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rom selling the residential property of entire ground floor ithout roof/terrace right along with reserved car parking at

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tilt floor of freehold property bearing Flat bearing No.135, ntire Ground Floor without roof rights/Terrace rights, Block B, erawal Nagar, Village Rajpur & Maikpur Chhawani, Delhi

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hereinafter referred as "Property in question").

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It has been submitted on behalf of applicants that the

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pplicant no.2 is owner and not a willful defaulter as mortgagor f property in question utilized the borrowed amount and was uccessfully running the account by repaying interest on time

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nd having good track record with the respondent bank. It has

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urther been submitted that due to unforeseen circumstances,

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he applicant could not adhere to repayment scheduling esulting alleged default and classification of account as NPA. t has further been submitted that defendant no.2 on behalf of

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11 efendant no.1 issued demand notice u/s 13 (2) of SARFAESI

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A ct 2002 dated 18.03.2014 demanding Rs.1,30,33,971.41 with urther interest and costs etc. stating that the account of pplicant had become NPA which was never received by any of

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he applicants and said notice is not a proper demand notice s per mandatory rules and laws. It has further been submitted hat respondent bank classified the account as NPA without rior intimation whereas it is mandatory for the bank to comply ith the instruction of RBI and as per judgement passed by on'ble Jharkhand High Court in the matter titled Stan ommodities Pvt.Ltd. Vs Punjab & Sind Bank AIR20093har14 nd give liberty to borrower to make his representation / file is objections to the intended declaration of NPA. It has further een submitted that the applicant has been unaware of the onspiracy being played by officials with vested interest of espondent bank wants to snatch the property under the garb II f securitization Act which caused extreme stress and wrongful sses to the applicant and said action were de-hors statutory II rovision as enshrined in Securitization code and prudential uidelines of RBI. It has further been submitted that espondent no.2 failed to provide proper back up along with upported statement of accounts of amount payable by pplicants as per demand notice which has been issued with ILI reat negligence and is bad in law liable to be set aside, ejected with cost as is against the principle of natural justice. urther, reliance is placed upon the judgement of Hon'ble High ourt of Gujarat in Letter Patent Appeal No.159 of 2020 and

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160 of 2020 in the matter of PNB Vs M/s Mithilanchal Industries Pvt.Ltd., which clearly states that while initiating any proceedings under SARFAESI, Act 2002 with respect of alleged outstanding to be recovered by the borrower must be transparent. It has further been submitted that respondent bank is using strong arm tactics against the applicant by disposing property in question by way of sale auction at an arbitrary price and suffer irreparable loss and injury. It has further been submitted that applicant requested several times for OTS settlement by explaining his problem by borrowing from friends and relatives. It has further been submitted that respondent bank affixed possession notice dated 27.05.2024 u/s 13(4) but not served by post as well. Further, respondent bank not taken symbolic possession and sale notice on the property in question without any knowledge not adhering mandated Rule 8 (1) & (2) of Security Interest (Enforcement) Rules 2002. It has further been submitted that respondent bank and its officials may dispossess the applicant and family due to backdrop of illegal actions and there is a strong urgency to admit the application granting relief in accordance with Section 17 (3) (a), (b) and (C) of Sarfaesi Act 2002. It has further been submitted that applicant never disowned his responsibility to repay legitimate dues and respondent bank

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as to act in legally permissible, transparent manner to sustain reditor-borrower relation which has been flouted. It has urther been submitted that respondent bank proceeded during ecuritization application, issued sale notice dated 19.11.2024 end with Rule 8 & 9 of Security Interest (Enforcement) Rules 002 to conduct e-auction on 09.12.2024 for a reserve price of s.249.00 lacs claiming Rs.1,42,36,491.19 as on 31.10.2024 lus further interest and expenses which was not served in ompliance of Rue 8 (6) of Security Interest (Enforcement) IP ules, 2002 mandating 30-day clear notice and disclosure of uction details. It has further been submitted that respondent ank illegally and in the overreach of judicial process issued ale Notice for Rs.249.00 lacs in favour of respondent no.3 on

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0 9.12.2024. It has further been submitted that respondent ank not complied with the provisions of Rule 8 (3) of Rules nd applicant is relying on the maxim "Sublato Fundamento adit Opus" meaning that if the foundation is removed, the tructure fails. In the matter of Mathew Varghese, the orrower's redemption rights is effectively foreclosed if sale otice is concealed or improperly served therefore respondent ank's clandestine approached violating letter and spirit of the arfaesi Act. It has further been submitted that Sale Notice ontained "the physical possession of which has been taken by

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he Authorized Officer of the Canara bank" which is violative as ill date possession of asset is with Applicant. It has further een submitted that respondent bank got the property ndervalued price with malafide interest in contravention of ule 8(5) of Security Interest (Enforcement) Rules 2002 and reed, sold off at low price indicating arbitrary valuation when pplicants remain prepared to pay all legitimate dues. It has urther been submitted that respondent bank not obtained aluation report from approved valuer and not shared with the pplicant and there is ambiguity cast upon valuation allegedly •one by respondent bank. It has further been submitted that espondent bank's repeated attempts to seize the property via ourt Receiver notices contravene Rule 8(6) and Rule 9(1) of ecurity Interest (Enforcement) Rules 2002 and these steps aken in undue haste, ignoring mandatory waiting periods and 0 rocedural checks meant for protection of applicants' equity of edemption. It has further been submitted that order of Ld.

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M, Delhi order dated 17.12.2024 under Section 14 of

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ARFAESI Act 2002 was passed by concealed material facts specially non service of notice u/s 13 (2) as well as 13 (4) of arfaesi Act 2002 and omitting affixing notices, publishing

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hem in newspapers or waiting the prescribed periods. It has urther been submitted that respondent bank vide letter dated

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9.03.2025 stating the process of handing over the possession

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•f mortgaged property to defendant no.3. It has further been ubmitted that applicants fully prepared to settle the

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utstanding, not received any transparent valuation and not

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iven opportunity to redeem the mortgage in contravention of elevant rules. It has further been submitted that respondent

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sank conducted e-auction without genuine consideration of roposed settlement of applicant and pursued for physical ossession through Court Receiver who issued notices dated 2.01.2025 and 08.03.2025 scheduling forcible dispossession n 18.01.2025, 29.01.2025 and 15.03.2025. It has further een submitted that applicants apprehend that any day, roperty in question may be taken over which will cause

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i reparable harm and leaving them remediless, if this tribunal i tervene urgently. It has further been submitted that pplicants submitted proposal offering Rs.1,36,75,766.19 as on 1.09.2024 by depositing Rs.13.00 lacs as upfront amount and

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emaining amount in three consecutive installments which was ejected through Email dated 21.09.2024 without furnishing

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11 reak up outstanding and expenses etc. by respondent bank ill 16.12.2024. It has further been submitted that RBI has

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I sued various guidelines to banks emphasizing the need for 0 TS options in NPA accounts. It has further been submitted

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hat this Tribunal is fully competent u/s 17(7) read with Section 9 (25) of RDDBFI Act and RBI Circulars, direct the respondent ank to consider OTS proposal on merits holding equity and air play and also held in the matter of M/s Sardar Associates s PSB where Hon'ble Supreme Court clarified that OTS policy

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•r RBI guidelines cannot be brushed aside and DRT can indeed ntervene if bank refused to consider the proposal to be njustified or arbitrary. It has further been submitted that pplicants humbly beseech this Tribunal to safeguard pplicants rights of redemption and direct the bank to consider he settlement proposal on merits which will enable swift ecovery of its dues without protracted litigation and applicants

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• an retain their residential property after clearing their liability nd request to set aside sale certificate and other impugned ctions and maintain status quo otherwise applicants will suffer reparable injury and multiplicity of proceeding may arise. l‘ ccordingly, it has been prayed for setting aside the entire ctions of the respondent bank initiated under the SARFAESI ct, 2002 qua the property in question.

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I.A. No.611 of 2025 has also been filed by the applicants tating therein that the respondent bank auctioned the roperty in question for Rs.249.00 lacs to respondent no.3 by ay of issuing Sale Certificate dated 01.01.2025 and filed this

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pplication for illegal action of respondent no.1 and 2 for taking ver physical possession of secured asset on 15.03.2025. It has

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urther been submitted that during the hearing on 11.09.2024, pplicants informed this Tribunal that he is willing to settle the atter with respondent bank and the Tribunal ordered that "let

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he applicant may approach the respondent for settlement and espondent bank may consider the settlement proposal, if any, f the applicant as per law. Now, list this case on 08.10.2024

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II efore the Ld. Registrar for completion of pleadings. It has urther been submitted that applicants requested the espondent bank to settle the account for Rs.1,36,75,766.19,

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0 ut of which Rs.13.00 lacs as upfront amount and remaining mount in three consecutive installments which was rejected ide email dated 21.09.2024. It has further been submitted hat the applicants requested to provide competed break up of ccount and expenses etc., but respondent bank inform hrough whatsapp the total dues of Rs.1.47 crore as on 6.12.2024. It has further been submitted that applicant mediately transferred Rs.7.00 lacs on 16.12.2024 with

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tention to repay the dues of respondent bank pending

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ecision of bank and other transaction of Rs.4.90 lacs failed ue to invalid account but respondent bank rejected the same ith wrong proposition that "Offer of OTS was Rs.13.00 lacs Sd-

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nly" which is totally wrong and illegal. It has further been ubmitted that it is demonstratively clear that auction by espondent bank is fraudulent and farcial by conniving, onspiring by selling property for extremely low price not alued by fresh valuation of property in violation of judgement assed by Hon'ble High Court of Punjab & Haryana in the atter of M/s Skytone Electricals India Ltd. Vs Canara Bank in WP No.12301 of 2020. It has further been submitted that roperty in question is only residential property of applicant, is eady to pay entire dues of Rs.147.00 lacs and already eposited Rs.10.00 lac and now submitting photocopy of Two remand Drafts for Rs.45.00 lacs and Rs.92.50 lacs dated 6.01.2025 and 18.02.2025 with this application. It has further een submitted that respondents no.1 and 2 instead of onsidering the request, rejected the proposal with sole motive o help the property dealer being respondent no.3. It has urther been submitted that as per Hon'ble DRAT in the matter 0 f Ved Prakash Kshetrapal & Ors Vs Bank of India & Ors. held hat: "it is now well settled that before conducting auction of mortgaged roperty, which after being taken over from the mortgagor, becomes ublic property and in the words of Hon'ble Supreme Court a "Socialist roperty" (AIR 1985 SC 1147) the secured creditor has to get from an pproved valuer a valuation report of the property proposed to be uctioned in order to recover the public money by a bank or FI". It has

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urther been submitted that respondent bank was very well ware that the applicant is arranging money to clear the dues nstead sell the property to respondent no.3 in sheer collusion uring the pendency of SA before this Tribunal and in view of he above, applicants pray to quash the sale notice, auction ale qua the property in question and entire auction of secured sset including confirmation of sale and sale certificate issued n favour of respondent no.3 and entire action of respondent ank is illegal, nullis juris and void ab initio. Also restrain the ourt Receiver from taking over physical possession of secured sset.

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On the other hand, Ld. Counsel for Respondent No.1 and

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has vehemently opposed the submission of the appellant and

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ubmitted that Applicant no.1 had availed Working Capital

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acility of Rs.125.00 lacs for business of manufacturing of cattle eeds on 26.09.2022 and executed security documents through

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i s proprietor being applicant no.2 and secured by equitable ortgage of property in question created on 28.09.2022 along ith 25% undivided share in the land by depositing the

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egistered Gift Deed dated 06.09.2022 bearing Registration o.14620 Book I, Vol No.11102 Page no.162-172. It has further

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11 een submitted that applicant did not maintain financial iscipline and account became NPA on 31.10.2023 due to

A No. 251 of 2024

epeated irregularity and default in loan account. It has further een submitted that respondent bank issued demand notice /s 13 (2) on 01.11.2023 but dropped the proceedings after eposit of overdue amount by the applicants. It has further een submitted that applicants defaulted in maintaining inancial discipline and again account was declared NPA on 6.03.2024 as per RBI guidelines and applicants always given alse assurances to maintain financial discipline. It has further een submitted that the respondent bank issued demand otice u/s 13 (2) of SARFAESI Act on 18.03.2024 duly served s per tracking reports and postal receipts and symbolic ossession of property on 27.05.2024 u/s 13(4) duly published in two newspapers on 31.05.2024. It has further been ubmitted that Sale Notice of only 15 days as per proviso of ule 9 (1) dated 19.11.2024 is third sale notice has been righty . sued as two earlier sale notices dated 31.07.2024 and 3.09.2024 issued but no bids received. It has further been ubmitted that Rules 8 (1) and 8 (2) of Security Interest Enforcement) Rules have been complied in letter and spirit by espondent bank and proof is on record. In case of subsequent ale Notice, only 15 days notice is required under Rule 9 and II rior to this, two sale notices were issued. It has further been ubmitted that Respondent bank has already taken possession 01-

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•f property in question through Ld.Receiver against proper nventory/Panchnama. It has further been submitted that ortgaged property has already been sold to respondent no.3

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or Rs.250.00 lacs by Sale Notice dated 19.11.2024 for 15 days s per Rule 9(1) of Security Interest (Enforcement) Rules 2002 hich was third notice against reserve price of Rs.249.00 lacs

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n the basis of valuation report dated 29.062024 given by A.K.

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ovil & Associates. It has further been submitted that

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espondent bank has obtained latest valuation of property and ixed reserve price accordingly and decreased reserve price as

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here was no bid on earlier reserve price. It has further been

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ubmitted that Sale already completed and Sale Certificate has een registered in favour of Respondent no.3 on 04.01.2025

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nd as per Section 13 (8) of SARFAESI Act 2002 and mandate

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0 f Bafna Judgement of Hon'ble Supreme Court, applicant has

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right to settle with bank and cannot redeem the property as

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I•an account has already been closed and already requested

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r bank details for refund / transfer of surplus amount. It has

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rther been submitted that respondent bank given various

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pportunity to pay the dues and sent a letter of redemption

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ated 09.10.2024 giving 30 days' time to redeem the property ut applicants failed to do so, even one day time on 16.12.2024 ith the consent of auction purchaser but applicant did not pay

A No. 251 of 2024

he dues and paid only Rs.7.00 lacs has been paid. It has urther been submitted that applicants time and again hanging stand in IA no.3053/2024 acknowledging receipt of ale Notice dated 19.11.2024 moreover acknowledgement of

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eceipt of brother of applicant no.2 on sale notice. It has further ► een submitted that after approximately Rs.1.00 crore is lying ith respondent bank after deduction of legal expenses

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owards applicants and there is no dues outstanding in loan ccount. It has further been submitted that the applicant may pproach Auction Purchaser for any settlement as respondent

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► ank is not entitled. It has further been submitted that espondent no.2 & 3 also submitted that no remedy under ection 17(1) can be taken by the borrower unless he loses the ossession of secured assets. It is submitted that the orders

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I g assed by Ld. District Magistrate under Section 14 of Act annot be constructed as notice u/s 6 (1) and (2) of the Rules ke in the matter of Hindon Forge (Supra), the Hon'ble Apex ou rt.

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The Respondent No.3 in his reply under Section 17 (1)

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r ad with Section 19 of SARAFESI Act denied each and every

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reposterous representation and averments made by applicants and submits that applicants concealed material facts

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t also indulged into fabricating, concocting averments c/

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olding no water devoid of any merits. It has further been ubmitted that respondent no.3 is engaged in business of holesale and distributorship of edible oils and law abiding itizen of India was in search of residential premises and ontacted M/s Navodayan Proptech Pvt.td. having office at illage Bijwasan, Delhi (XpertARC) which offers wide range of eal estate service including bank auction properties, quidation properties and other distressed assets. It has urther been submitted that XpertARC apprised the respondent o.3 of one auctioned property in question and opening of e- uction on 09.12.2024 as well as inspection and exploration ith Auction Service Provider, Chief Manager of Respondent ank including it date of auction, reserve price, EMD, Nature

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• f Property, Type of Possession etc. It has further been ubmitted that XpertARC apprised the respondent no.3 that roperty has come for auction for third time and complied Rule (6) read with Rule 9 (1) proviso of Security Interest ( nforcement) Rues 2002, sale notice published for e-auction •n 9.12.2024 and also respondent bank filed application u/s 14 ith Ld.CMM, Delhi seeking possession of secured asset which as allowed on 17.12.2024 by appointing Court Receiver to t ke possession of property with 15 days' notice to applicants. I has further been submitted that respondent no.3 inclined to

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I D articipate in Bid and register his profile complied all andatory pre-requisites for buyer registration on the portal nd deposited EMD of Rs.24.90 lacs on 26.11.2024 in account 0 f PSB Alliance Pvt.Ltd., the Auction Purchaser and participated

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e-auction process. It has further been submitted that espondent no.3 was declared highest bidder vide email dated 9.12.2024 by Respondent Bank to called upon to deposit 25% f bid amount by 10.12.2024 and balance by 24.12.2024. It as further been submitted that respondent no.3 deposited the ull consideration amount by 20.12.2024 by arranging from istant relatives and acquaintances to purchase said property. has further been submitted that Respondent no.2 executed ale certificate on 01.01.2025 in the office of SR-VIA, itampura with an undertaking that said property is free from II encumbrances known to secured creditor. It has further een submitted that Court Receiver served notice dated 2.01.2025 for taking possession of property on 18.01.2025 ut could not take the possession. It has further been ubmitted that in the matter of Celir LLP V. Sumati Prasad afna and Ors. 024 INSC 978, Hon'ble Supreme Court of India eld that once an auction sale is confirmed and possession andover to purchaser, such sale achieves degree of finality nd can be set aside in limited circumstances like instance of

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raud, collusion or fundamental procedural irregularities and re procedural irregularities are deviation from rules are not rounds to set aside confirmed sale unless such errors are undamental in nature. It has further been submitted that sale 0 y way of public auction cannot be set aside unless illegality ommitted in holding the auction or vitiated by any fraud or ollusion. It has further been submitted that borrower has right f redemption of property on payment of dues but not fettered ith statutory limitation prescribed to it accordingly to Section 3 (8) of SARFAESI Act. It has further been submitted that pplicant was given ample opportunities to avail right on -demption but failed and have put up false story to prejudice e mind of this Tribunal to seek some unwarranted and illegal ains. Therefore, respondent no.3 prayed to dismiss the resent securitization application.

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Heard the rival contentions of both the parties and

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erused the records thoroughly.

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In the present matter, the borrower availed the loan

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cilities from the respondent bank against the mortgage of the

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11 roperty in question and there is default on the part of the

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ecuritization applicant in repaying the dues of the respondent

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•I ank. It has been argued on behalf of the respondent bank t at the Respondent Bank purportedly issued a Demand Notice

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under Section 13 (2) of the SARFAESI Act, 2002 dated 01.11.20231 however, after depositing the overdue amount and regularisation of the account the said demand notice had not been withdrawn by the Respondent Bank. It has further been argued that without withdrawing the earlier demand notice dated 01.11.2023, the Respondent Bank purportedly issued another Demand Notice dated 18.03.2024 under Section 13 (2) of the SARFAESI Act, calling upon the Applicants to pay the Outstanding Amount as claimed by the Respondent Bank. It has further been argued that the said Demand Notice dated 18.03.2024 is also not a proper Demand Notice as per Mandatory rules and laws and the said Demand Notice dated 1.8.03.2024 mentions the alleged balance outstanding amount ,s Rs.1,30,33,971.41 together with further interest and iHcidental expenses and costs from the Applicants which is arbitrary and highly exaggerated and the Respondent Bank has further failed to provide the break-up of balance outstanding amount as required by the law and there are no details whatsoever such as bifurcation of interest, principle, cost, v^{enal interest, charges and the instalments paid by the} pplicants as mentioned in the provisions contained in section 3(3) of the SARFAESI Act, 2002. It has further been argued that that reliance is placed upon the judgement of Hon'ble High

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ourt of Gujarat at Ahmedabad in Letter Patent Appeal no. 159 f 2020 & 160 of 2020 in the matter of Punjab National Bank s. M/s Mithilanchal Industries Pvt. Ltd and it is further stated hat the Respondent bank had claimed an amount of ID s.1,30,33,971.41 as on 16.03.2024, however, as per that tatement of account filed by the Respondent Bank there is not ntry of 16.03.2024 hence the claim amount mentioned in the 11 emand notice is not as per RBI Guidelines and rules. It has urther been argued that the account of the Applicant was eclared as NPA on 16.03.2024 as per Demand Notice dated 8.03.2024 issued by the Respondent Bank, however, as per

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he statement of Account filed by the Respondent Bank in its eply as ANNEXURE- R10 (COLLY) the Account of the Applicant as regular and not overdue till 30.12.2023 and the first dated I f default was 31.12.2023 as per the Respondent Bank and per

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e RBI guidelines the Respondent Bank has to declare the ccount NPA after 90 days from the dated of first default. owever, the Respondent Bank declared the Account NPA on 6.03.2024 which is 15 days prior to the actual date of NPA as er RBI guidelines. It has further been argued that the account as declared NPA on 16.03.2024 and after declaring the ccount as NPA the Respondent Bank has capitalised the penal terest after 16.03.2024 which is clearly showing in the Sc-

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.tatement of accounts filed by the Respondent Bank and oreover, the respondent bank has charged unnecessary nterest without any reasons which shows the malafide intent

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•f the Respondent Bank against the Applicant. It has further

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•een argued that the First Possession Notice dated 27.05.2024 as sent by the Respondent Bank in complete and total

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ontravention to the provisions of the SARFAESI Act, 2002 and he Respondent Bank is mandated to follow Rule 8 (1) & (2) of he Security Interest (Enforcement) Rules 2002 and the said ossession notice dated 27.04.2024 was published by the espondent Bank in the vernacular language on 31.05.2024 nd the newspaper name was "Jansatta", however, the espondent Bank claimed that date of the possession notice is 7.05.2024. It has further been argued that the Respondent ank in their Reply to the 2nd Amended SA has also filed the Ileged publication done in vernacular language at wherein !early the date of taking alleged physical possession has been entioned as 27.04.2024 which is incorrect and wrong and on

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his ground alone, the action initiated under Section 13(4) of he SARFAESI Act, 2002 is wrong and liable to be set aside. It as further been argued that the Respondent Bank has issued Possession Notice dt 15.03.2025 which was published on

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9.03.2025, however, the said notice was not served to the

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pplicant and no proof of service has been filed by the espondent Bank in their Reply and hence there is a clear iolation of Rule 8(1) of the Security Interest (Enforcement) ules, 2002. It has further been argued that the Respondent ank after taking illegal possession under Section 13 (4) of the

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•ARFAESI Act, 2002, again on 19.11.2024, the Respondent tank issued a Sale Notice under Section 13 (4) of the SARFAESI ct, 2002 read with Rules 8 & 9 of the Security Interest Enforcement) Rules, 2002, wherein it was stated that the ubject Property would be sold in an e-auction on 09.12.2024 a reserve price of Rs.2,49,00,000/- and the Bank claimed an

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utstanding of Rs.1,42,36,491.19 as of 31.10.2024, plus

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urther interest, charges, and expenses. It has further been rgued that the alleged Sale Notice dated 19.11.2024

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scheduling e-auction for 09.12.2024) was not served in ompliance with Rule 8(6) of the SARFAESI Rules, which andates at least 30 days' clear notice and disclosure of

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uction details and the Applicants learned of the sale only post oc, negating their statutory right to redeem or object prior to

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he auction. It has further been argued that the Respondent ank issued the First sale notice on 31.07.2024 and Second ale notice on 23.09.2024 and both the sale were failed due to o bid in the auction. It is further stated that the Respondent

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ank has not issued any Notice under Rule 8(6) of the ARFAESI Rules. However, when the Respondent Bank onducted the auction on 11.10.2024 as per Sale Notice dated 9.09.2024 and the Respondent Bank had issued notice dt 9.10.2024 under section 13 (8) of the SARFAESI Act, 2002 hich means that the Respondent Bank had to issue 30 days ale Notice and at the very outset it is pertinent to note that he present Sale Notice dated 19.11.2024 issued by the espondent Bank is the very first Sale Notice issued in the •resent alleged Loan Account and the same is completely verse to Rule 8 & 9 of the Security Interest (Enforcement) ules, 2002 and on mere perusal of the above reproduced ules, it is clear that in the event of a first sale being onducted, the FI/ARC/Bank are mandated to give a 30 days' otice prior to conducting the Sale, however, in the present aptioned SA, the Respondent Bank has not complied with the aid rules and Reliance in this regard is also placed on the udgement of Celli. LLP vs. Bafna Motors (Mumbai) Pvt. Ltd. & rs passed by the Hon' ble Supreme Court of India in Cild ppeal Nos. 5542 — 5543 of 2023 wherein it has been ategorically held that Banks and Financial Institutions are andated to provide a clear intimation of 30 days before suing the Sale Notice, however, the same has not be complied

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ith by the Respondent Bank and in case of Mathew Varghese

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s. M. Amritha Kumar (2014) 5 SCC 610 further highlights that he Borrower's redemption right is effectively foreclosed if the ale notice is concealed or improperly served, as in the present stance and the Respondent Bank's clandestine approach

¶168

iolates both the letter and spirit of the SARFAESI Act. It has

¶169

urther been argued that the Respondent Bank in the present ale Notice dated 19.11.2024 has sold off the Subject Property t a greatly undervalued rate despite being well aware that the ctual valuation of the property is much higher and is much igher than the alleged outstanding and the Respondent Bank

¶170

I well aware that the Subject Properties are worth much more eing prime real estate properties and therefore, the valuation

¶171

•f is quite low and not as per the prevailing rates and taking i to consideration the value of the adjoining plots and the

¶172

•onduct of the Respondent Bank is in deliberate contravention Rule 8 (5) of the Security Interest ((Enforcement) Rules,

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002 and reliance is placed on the judgement of Ram Kishun s State of UP. & Ors, (2012) 11 SCC 511 and as per the

¶174

unction letter dated 26.09.2022 the value of the property was entioned for Rs. 3.25 Cr, however, as per the present

¶175

aluation report filed by the respondent bank the value of the

¶176

•roperty is very less which shows the clear malafide intention sd—

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S No. 251 of 2024

¶179

f the respondent bank. It has further been argued that there i. mis-description of the property in question in the impugned ale notice dated 19.11.2024. It has further been argued that i the sanction letter the Area of the Property mentioned as 70.99 square meters and while conducting the valuation of

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•he property the area for the property is mentioned as 1840 quare feet or 170.99 square meters, however, as per the sale

¶181

eed of the property registered by the Auction Purchaser imself the total area to consider the valuation of the property

¶182

i. 213.754 square meters and it is clear that the valuation of the Floor done by the Valuer on a lesser area just to reduce the

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rice of the property and this shows the malafide intent and t e collusion between the Bank and the Auction Purchaser to

¶184

t ke away the property at throw away prices. It has further een argued that the valuer himself stated that the valuation

¶185

•f the property was conducted from the outside/ externally

¶186

nly and during the valuation the valuer had not considered

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t e internal area of the floor and has not estimated the cost of

¶188

t e internal floor and hence it is clear that the valuation report as prepared in a casual, mechanical, and arbitrary manner ithout due diligence, solely to give an illusion of compliance ith the statutory requirements under the SARFAESI Act and

¶189

such a report, which grossly undervalues the property and is

¶190

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S No. 251 of 2024

¶192

II ased on an incomplete and flawed assessment, appears to ave been deliberately orchestrated to mislead the Tribunal nd to lend artificial legitimacy to a pre-determined ndervalued sale. It has further been argued that while btaining the order dated 17.12.2024 from the Ld. OM passed i furtherance of an Application filed under Section 14 of the ARFAESI Act, 2002, the Respondent Bank deliberately and ith malafide intent did not disclose pertinent facts especially ith regards to deliberate non — service of the Notice issued nder Section 13(2) of the SARFAESI Act, 2002 as well as eliberate non-service of the Notice issued under Section 13(4) f the SARFAESI Act, 2002. It has further been argued that as er the Reply filed by the Respondent No. 3 i.e. Auction urchaser himself stated that one Real Estate dealer namely /s Navodayam Proptech Pvt Ltd (XpertARC) which is a private I mited company apprised the Auction Purchaser for Auctioning t e Subject Property and all compliances in relation to •articipation of the auction as well as all the compliances r lated to Bank was done by the third party which is not .ccepted in law and is in total contraventions with SARFAESI ct & Rules. It has further been argued that the Auction mount/EMD is not deposited by the Auction Purchaser namely nil Kumar Gupta, instead it has been deposited by a Third

¶193

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S No. 251 of 2024

¶195

11 arty and without verifying the same the bank issued the sale ertificate to the auction purchaser, which shows the malafide tention between the respondent bank and the auction urchaser as this type of transactions are called as benami ransactions. It has further been argued that the Applicants aye, from the outset, repeatedly approached the Respondent ank with a view to settle the dues and on or around 1.09.2024, a detailed proposal was furnished, offering to epay Rs.1,36,75,766.19/-, partially upfront and the remainder short-term instalments and despite these earnest attempts, he Bank summarily rejected the Applicants' proposal without urnishing a proper breakup of the dues or affording an pportunity to improve the offer in a fair negotiation process nd the Applicant was always ready to deposited the amount II • the Respondent bank and even the Applicant had already eposited on 29.04.2025 and 01.05.2025 the whole S utstanding Amount of Rs.1.40 crores as per the undertaking

¶196

iven by the Applicant before this Tribunal, however, due to e negligence of the Respondent Bank the Applicant could not eposited the amount within the stipulated time. Accordingly, has been prayed for allowing the present securitization pplication.

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lb On the other hand, it has been argued on behalf of the

¶200

espondent bank that the Respondent Bank has properly taken

¶201

411. ction under SARFAESI Act,2002 against the secured assets wned by the Applicant No.2 by following the due process of w under the mandate of SERFAESI Act,2002 and the pplicant has miserably failed to show any discrepancies in the roceeding initiated by the Respondent Bank under the andate of SARFAESI Act,2002 and the allegations are totally Ise, vague and devoid of substance as such present

¶202

ecuritization Application is liable to be dismissed. It has rther been argued that the Notices u/s 13 (2) and 13 (4) of

¶203

t e SARFAESI Act, 2002 were duly served upon the Applicants nd they did not give any representation to the Notice U/S 13

¶204

( ) of the SARFAESI Act,2002 dated 18.03.2024, issued by the espondent Bank and the present SA is nothing but an eye ash and to gain time as the Applicant No.2 has always given

¶205

f Ise assurances to pay the outstanding dues but did not pay nything to the Bank. It has further been argued that after

¶206

• enial of interim protection to Applicants by this Tribunal, the espondent Bank has taken physical possession of the ortgaged property bearing Entire ground floor(without

¶207

r•of/terrace right) alongwith reserved Car Parking at stilt floor arked as A, free hold built up property bearing Municipal

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5 No. 251 of 2024

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o.B-135, Built on Plot No.135, Block-B, in the plan of the Dera

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small Khan Co-operative House Building Limited presently at erawal Nagar,Village Rajpur & Malikpur Chhawani, Delhi10009 admeasuring 268.22 sq.yds through Ld. Receiver

¶212

against proper Inventory/Panchnama. It has further been rgued that the mortgaged property has already been sold to uction Purchaser namely Mr. Anil Kumar Gupta in Auction held n 09.12.2024 for an amount of Rs.2,50,00,000/-by way of ale Notice dated 19.11.2024 against Reserve Price of s.2,49,00,000/-fixed on the basis of the Valuation Report ated 29.06.2024 given by A.K Govil & Associates and the Sale otice dated 19.11.2024 alongwith postal receipts and ublication thereof are annexed with reply to amended SA as nnexure-R3.Colly and it is worthwhile to note that there are cknowledgement of receipt of sale notice dated 19.11.2024

¶213

•y brother of Applicant Mr.Yatharth on 22.11.24 at page 71 of eply. It has further been argued that it is pertinent to note

¶214

t at Sale Notice dated 19.11.2024 is third Sale Notice and arlier Two Sale Notices dated 31.07.2024 and 23.09.2024 had !so been issued but same could not be concluded due to want

¶215

•f Bids and as such the third Sale Notice dated 19.11.2024 has seen rightly issued because for subsequent Sale Notice, there requirement of only 15 days' notice as per proviso of Rule 9

¶216

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S No. 251 of 2024

¶218

of the Security Interest (Enforcement) Rules ,2002. It has urther been argued that it is pertinent to mention here that in

¶219

•he present case, Sale has already been completed and the ale Certificate has also been registered in favour of Auction urchaser on 04.01.2025 before Sub Registrar-VIA, Pitampura, elhi / vide Registration No.2025/15/I/284, Book No-I, Vol 0.14569, pages 143-156 dated 04.01.2025 and therefore, as

¶220

11 er section 13 (8) of the SARFAESI Act,2002 and mandate of afna Judgment delivered by the Hon'ble Supreme Court, the pplicant has no right to settle with the Bank and even they

¶221

cannot Redeem the mortgaged property as the Loan account as already been closed through Sale Consideration of ortgaged property and for the Surplus account the

¶222

espondent has already requested vide letter dated 1.12.2024 to provide account details so that the same may be

¶223

r-funded to the Applicants and the sole purpose of the mendment in Section 13 (8) of the SARFAESI Act,2002 is only promote the purchasers to come forward for purchasing the

¶224

roperty in Auction under SARFAESI Act,2002 and protect their i terest once they came forward for purchasing the property d accordingly, the Borrower should not be given any

¶225

I verage after issuance of Sale Notice and the Respondent

¶226

•ank has sent a Letter of Redemption dated 09.10.2024 to the 5d-

¶227

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S No. 251 of 2024

¶229

pplicants and thereby gave 30 days time to redeem the ortgaged property but they have miserably failed to redeem nd even the Bank has given one day time to the Applicant 0.2 on 16.12.2024 with the consent of Auction Purchaser to edeem the property but he did not pay the dues and only Rs.7 I khs has been paid. It has further been argued that the

¶230

pplicants are changing stand time and again as in the pplication bearing IA.3053/2024 filed by the Applicant and I sted on 09.12.2024, they have acknowledged the Receipt of •he Sale Notice dated 19.11.2024 in para no.3, page 3 of the aid Application and moreover, there are acknowledgement of -ceipt of the brother of the Applicant No.2 namely on the Sale otice dated 19.11.2024. It has further been argued that there no dues outstanding in the Loan account bearing 0.125002773379 and a surplus amount of about Rs 1.00 rore is lying with the Respondent Bank to be refunded on the r ceipt of account details after deducting Legal expenses and s such nothing is left and the Respondent Bank is not entitled f•r any settlement after closure of loan account and the pplicant may approach the Auction Purchase for any settlement. It has further been argued that the Applicant No.1 t rough its Proprietor Sh. Shasvat, Applicant No.2, herein had .vailed Working Capital facility of Rs.125 lakhs from the

¶231

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S No. 251 of 2024

¶233

espondent Bank to augment its business of Manufacturing of attle Feeds vide Sanction letter dated 26.09.2022 an in order o secure the aforesaid credit facility availed of by the orrower, the Applicant No.2 namely Sh. Shasvat had created quitable mortgage by depositing with the Respondent Bank •he Title Deeds of the mortgaged property standing in his name

¶234

d duly registered as Gift Deed dated 06.09.2022 bearing egistration no.14620,Book-I, Vol No.11102, page no.162-172, gistered on 06.09.2022 before Sub Registrar-VIA, Delhi and t ereafter the Borrower/Applicant did not maintain financial iscipline with the Respondent Bank, therefore, the loan .ccount had become irregular and he did not regularize the •ame even after repeated reminders given by the Respondent rank resultantly the loan accounts of the Applicant fell into •ategory of N.P.A on 31.10.2023. It has further been argued t at after the declaration of the loan account as NPA, the

¶235

pplicant Bank had proceeded under SARFAESI Act,2002 and sued Demand Notice u/s 13(2) of the SARFAESI Act,2002 sated 01.11.2023 to the Applicants but the Respondent Bank • ropped the proceeding under SARFAESI Act after deposit of •verdue amount by the Borrower and on the assurance of the pplicant to maintain financial discipline and not to default in f ture. It has further been argued that the applicant No.2 did

¶236

¶237

S No. 251 of 2024

¶238

ot adhere to his commitment/assurance and again defaulted maintaining financial discipline with the Respondent Bank as

¶239

0 er the terms of Sanctions letter as well as loan documents and herefore, his loan account again fell into category of Non erforming Asset and the Applicant Bank again declared the

¶240

I• an account as N.P.A on 16.03.2024 as per Directives of the eserve Bank of India and internal Guidelines of Applicant Bank nd the Respondent Bank again proceeded under SARFAESI ct,2002 and issued Demand Notice u/s 13 (2) of the SARFAESI ct,2002 dated 18.032024 and further proceeding has already een discussed and described herein above. It has further been rgued that the Applicant No.2 was in regular touch with the espondent Bank and he was being regularly updated about

¶241

tatus of his accounts and also formally intimated before

¶242

eclaration of account as NPA and he always gave false . ssurances to regularize the loan account, but the Applicants ere not serious in settling the account and they used to give

¶243

false assurances to settle the account with their malafide i tention to gain time only and even on 21.09.2024, they have ot accompanied the proposal with upfront amount. It has

¶244

f rther been argued that on 16.12.2024 i.e. after sale of the

¶245

•roperty, with the consent of Auction Purchaser, the espondent Bank had given one day time to the Applicants to

¶246

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S No. 251 of 2024

¶248

11 eposit the entire dues of Rs.1.47 Crores against which the A, pplicants only deposited Rs.7.00 Lakhs and the Bank has btained the Latest Valuation of the mortgaged property and xed the reserve price accordingly and the Respondent Bank as decreased the reserve price in the third/latest sale notice s there was no bid on the earlier reserve price mentioned in rior to Sale Notices. It has further been argued that the pplicants were never ready to pay the entire dues of the Bank .s Applicant No.2 had always given only false assurances and t e Respondent Bank has duly uploaded the Terms and ondition of the Sale Notice on the prescribed Website i.e "baanknet.com" and all the relevant rules including Rules 8(1) .nd 8 (2),8 (5),8 (6),9 (1) of the Security Interest ( nforcement) Rules 2002 have been complied by the espondent Bank in it's letter and spirit and proof of the same on record and the Respondent Bank has decreased the r serve price in the third/latest sale notice as there was no bid • n the earlier reserve price mentioned in prior to Sale Notices nd the Respondent Bank has complied the said rules and •btained the Proper Valuation from it's Empanelled Valuer hich is annexed with the Reply to the Amended SA. ccordingly, it has been prayed for dismissal of this SA.

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¶250

S No. 251 of 2024

¶251

It has also been argued on behalf of the Respondent No.3 Auction Purchaser) the Applicants have raised a frivolous and isconceived objection alleging that the Bank failed to provide breakup of the outstanding dues in the Demand Notice issued nder Section 13(2) of the SARFAESI Act, 2002, thereby endering the proceedings illegal and this contention is wholly ntenable and contrary to the record. It has further been rgued that the Demand Notice dated 18.03.2024, issued nder Section 13 (2) of the SARFAESI Act, 2002 meticulously complies with the requirements prescribed under Section 13(3)

¶252

• f the SARFAESI Act, 2002 which mandates that the notice hall give details of the amount payable by the borrower and t e secured assets intended to be enforced by the secured

¶253

•reditor in the event of non-payment of secured debts by the

¶254

•orrower and therefore, the objection raised by the Applicant misleading, factually and legally incorrect and untenable, and deliberate attempt to derail a procedurally sound action taken

¶255

•y the Secured Creditor strictly in accordance with law. It has f rther been argued that the Applicants have raised a frivolous and misconceived objection alleging that Respondent Nos.1 and 2 failed to serve the Demand Notice under Section 13 (2)

¶256

•f the SARFAESI Act, 2002, thereby rendering the proceedings it egal and this contention is wholly untenable, contrary to the

¶257

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S No. 251 of 2024

¶259

aterial on record, and deserves to be rejected at the very utset. It has further been argued that the Demand Notice 11 ated 18.03.2024, issued under Section 13 (2) of the SARFAESI

¶260

ct, 2002, was duly served upon the Applicants in strict compliance with the Act and the Security Interest Enforcement) Rules, 2002, particularly Rule 3(1), which • overns the mode of service of such notice and the postal ceipts along with the tracking reports clearly establish that t e said Demand Notice was duly delivered to and successfully erved upon the Applicants on 19.03.2024 and therefore, the •bjection raised by the Applicant regarding non-service of the otice is factually incorrect, legally baseless, and a clear .ttempt to mislead this Tribunal. It has further been argued t at the Applicants have raised a frivolous and misconceived • bjection alleging that Respondent Nos. 1 and 2 failed to serve t e Possession Notice under Section 13 (4) of the SARFAESI

¶261

ct, 2002, thereby rendering the proceedings illegal and this c• ntention is wholly untenable, contrary to the material on record, and liable to be rejected at the very outset and the

¶262

ossession Notice dated 27.05.2024, issued under Section 13(4) of the SARFAESI Act, 2002, was duly served upon the pplicants in strict compliance with the provisions of the Act

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and the postal receipts and their corresponding tracking

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S No. 251 of 2024

eports clearly establish that the said Possession Notice was 11 uly and successfully delivered to the Applicants on 29.05.2024 t has further been argued that in accordance with Rule 8, the •aid notice was duly affixed outside the main entrance of the •ecured asset, and photographic evidence of such affixture • rms part of the record. It has further been argued that in rther compliance with Rule 8, the Possession Notice was also ublished in two newspapers—one in English and one in a ernacular language—with sufficient circulation in the area here the property is located. It has further been argued that t e baseless objection raised by Applicants regarding an .Ileged typographical discrepancy in the vernacular publication ( ansatta), wherein the date at the bottom reads 27.04.2025 i stead of 27.05.2024 and it is respectfully submitted that the s id discrepancy is immaterial and does not vitiate the • roceedings, as the main body of the published notice in nsatta correctly reflects the date as 27.05.2024, which c• rresponds with the actual Possession Notice and f rthermore, the parallel publication in the English newspaper Pages 61 of the Reply filed by Respondent Nos. 1 and 2, hibited as Exhibit RW 1/4 (OSR)] correctly and consistently entions the date as 27.05.2024 and it is settled law that minor c erical or typographical errors, which do not affect the cW-

¶268

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S No. 251 of 2024

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ubstance or intent of the notice, cannot render statutory roceedings invalid, especially when the Applicants were fully •ware of the symbolic possession and when service, affixation, nd publication were all duly effected in accordance with the tatutory mandate. It has further been argued that the pplicants have raised a frivolous and misconceived objection Ileging that Respondent Nos. 1 and 2 failed to serve the Sales otice Dated 19.11.2024, thereby rendering the proceedings i legal and this contention is wholly untenable, contrary to the aterial on record, and deserves to be rejected at the very utset. It is respectfully submitted that the Sales Notice dated 9.11.2024, issued under the provision of the SARFAESI Act, 002, was duly served upon the Applicants in strict compliance ith the Act. It has further been argued that the Sale Notice sated 19.11.2024 encompassing detailed terms and conditions •f the Sale, was duly received by hand by family member of t e Applicant namely Yatharh on 22.11.2024 thereby clearly :stablishing that the said Sale Notice Dated 19.11.2024 was I wfully delivered to and served upon the Applicants _[@Pages 1 of the Reply filed by Respondent Nos. 1 and 2, exhibited as xhibit RW 1/9A (05R) land the said sales notice was also sent rough speed post and was also published in two leading ewspapers. It has further been argued that the said sales

S No. 251 of 2024

otice dated 19.11.2024 was a third sale notice and the first ales notice was issued on 31.07.2024 for conduct of E-Auction n 11.09.2024 with reserve price of Rs.2,76,00,000/- and no id was received and Second sales notice was issued on 3.09.2024 for conduct of E-Auction on 11.10.2024 with

¶275

eserve price of Rs.2,49,00,000/ which also remain nsuccessful on account of no bid received and the factum of eing secured asset put in E-Auction was well within knowledge f Applicants as evincible from Orders dated 11.09.2024, 8.10.2024 and 11.12.2024 passed by this Tribunal and

¶276

t erefore, the objection raised by the Applicant regarding non•ervice of the sales notice dated 19.11.2024 is factually i correct, legally baseless, and a clear attempt to mislead this ribunal, however, in the present case, the auction conducted 09.12.2024 was the third auction, following two earlier

¶277

f iled auctions conducted pursuant to sale notices dated 1.07.2024 and 23.09.2024, respectively and both prior uctions failed due to the absence of eligible bidders and

¶278

t erefore, the present sale falls squarely within the ambit of t e second proviso to Rule 9 (1) of the Security Interest ( nforcement) Rules, 2002 and accordingly, since the auction sated 09.12.2024 was a subsequent sale, the requirement of 30 days' notice was no longer applicable and a 15-day notice

¶279

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¶281

uffices under law, and the same was duly complied with by he Respondent Bank and thus, the reliance placed by the

¶282

A pplicants on the Celir LLP judgment is misplaced and applicable to the facts of the present matter and the objection

¶283

aised is not only without factual or legal basis but is also an pparent attempt to mislead the Tribunal by selectively citing n unrelated precedent. Hence, the said objection is devoid of erit, contrary to the applicable legal provisions, and liable to

¶284

e outrightly rejected. It has further been argued that the pplicants have raised a frivolous and misconceived objection Ileging that the declaration of their loan account as a Nonerforming Asset (NPA) by Respondent Nos. 1 and 2 on 6.03.2024 is illegal and contrary to the guidelines issued by

¶285

t e Reserve Bank of India (RBI), which mandate a minimum of

¶286

•0 days of non-performance before classifying an account as PA, thereby rendering entire process allegedly sham and

¶287

illegal and the classification of the loan account as NPA on 6.03.2024 is in strict compliance with the applicable RBI aster Circular, which mandates that an account becomes NPA interest or instalment of principal remains overdue for a

¶288

•eriod of more than 90 days. It has further been argued that i the present case, the Statement of Loan Account [Wages 42 of the Reply filed by Respondent Nos. 1 and 2, exhibited

¶289

¶290

S • No. 251 of 2024

¶291

s Exhibit RW 1/20], clearly establishes that the Applicants ailed to maintain the required financial discipline and as per he Account statement dated 30.11.2023, the sanctioned limit f X1.25 Crore was not maintained, and a penalty was imposed 0 n the same date due to the account exceeding the sanctioned I mit and from that date onwards, Applicant failed to took corrective action and the irregularity continued beyond 90 days nd culminated in the declaration of the account as NPA on

¶292

6.03.2024, which is fully consistent with RBI's prescribed •lassification norms and furthermore, the Notice issued xplicitly reflects that Applicant Account is irregular since 1.12.2022 and hence, the classification of the account as NPA based on a factual and regulatory foundation, and no

¶293

• rocedural or legal infirmity can be attributed to the same. It as further been argued that under Section 194-IA of the I come Tax Act, where the sale consideration of an immovable

¶294

roperty exceeds X50 lakhs, the purchaser is statutorily • bligated to deduct 1% of the consideration as TDS and

¶295

•eposit the same with the Central Government. The said TDS deducted on behalf of the seller and its credit is reflected in t e seller's PAN and the contention of the Applicants that the auction purchaser or the Bank acted improperly by treating the sale price as inclusive of TDS is without merit, contrary to

¶296

¶297

S No. 251 of 2024

¶298

tatutory provisions, and deserves to be outrightly rejected. It as further been argued that the Applicants who were never 0 bliged the financial discipline and further they have the right o pay the outstanding amount before the publication of the ale notice dated 19.11.2024 but deliberately did not pay any eed to that which is contrary to the permissible laws and it is ertinent to highlight that Applicant was declared NPA earlier Iso on 31.10.2023 and accordingly Demand Notice under Sec 3(2) was issued on 01.11.2023 and since inception, Applicant tention was nefarious and malevolent and had no bonafide tention to maintain the financial Discipline. It has further een argued that on multiple occasions, Applicants were ranted opportunity to redeem the secured asset, as evincible om the Notice for exercising right of redemption issued by espondent Bank on 09.10.2024 Wages 133 of the Reply led by Respondent Nos. 1 and 2, exhibited as Exhibit RW1/18 05R)] and furthermore, as per Order dated 11.09.2024 assed by this Tribunal, Applicants expressed their willingness

¶299

settle the matter with Respondent Bank and accordingly

¶300

pportunity was granted by this Tribunal and even in fact upon pportunity being granted by this Tribunal vide order dated 1.09.2024, Applicants sent a letter dated 21.09.2024 to espondent no.1, thereby acknowledging his outstanding

¶301

5'd-

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No. 251 of 2024

¶304

liability to the tune of Rs.1,36,65,766/- and offering the 0 ayment of merely upfront amount of Rs.13,00,000/- i.e. 10% f outstanding amount and residual amount to be paid in next hree months Wages 57 of the Amended SA filed by pplicants on 05.05.2025, vide IA No. 1019/2025] and it is aterial to state that said OTS proposal was rejected by espondent no. 1/Bank vide its Email dated 21.09.2024, with emark of offer being require substantial improvement. That ven pursuant to effect of sale on 09.12.2024, Respondent ank with concurrence and consent of Auction Purchaser, ranted opportunity to Applicants to redeem Mortgage on 6.12.2024. That despite opportunity being granted Applicants esolately failed to settle the dues and only payment of mere mount of Rs. 7,00,000/- out of total outstanding overdue of s . 1,47,00,000/-, was made and even payment of s.4,90,000/- was failed [@iPages 64-65 of the Amended SA /ed by Applicants on 05.05.2025, vide IA No. 1019/2025]. hat it is most respectfully submitted that the Applicants did of put any material fact which transpires that the proceedings t ken by the Respondent Bank is illegal. Rather Applicant was • iven adequate time and opportunity, moreover the applicant as the knowledge of every action taken by the Respondent ank, hence the contention of the Applicants that that physical

¶305

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$A No. 251 of 2024

¶307

possession taken by the Respondent bank is in direct violation of Rules 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002 is without merit, contrary to statutory provisions, contrary to the documentary evidence on record, and deserves to be outrightly rejected. It has further been argued that the reserve price was fixed after obtaining independent valuation from an empanelled valuer prior to the auction and valuation report is self-explanatory and contents thereof may be read as part and parcel of present submissions and if contention of Applicant pertaining to alleged undervaluation is accepted, then Applicants were either bound to challenge earlier two auctions or could have redeemed the property or could have bought a buyer to Bank to pay its dues, which is none of the case in present matter and therefore, in accordance with SARFAESI Rules, the Bank was well within its rights to reasonably revise the reserve price, in line of Valuation report, in the third auction to facilitate recovery and the entire auction process was conducted in a transparent and lawful manner, with due service of notices under Sections 13(2) and 13(4) of the SARFAESI Act and the allegation of undervaluation is baseless and appears to be an afterthought intended solely to delay the lawful recovery proceedings initiated by the Bank and in the given facts and circumstances and upon submission

5d -

SA No. 251 of 2024

made by the Respondent no.3, the SA filed by the applicants is !lable to be dismissed. Accordingly, it has been prayed for

¶312

dismissal of this SA.

¶313

Apparently, the applicant has raised the objection that the respondent bank has illegally declared the account as NPA 9n 16.03.2024 as there was not continuance default of 90 days, whereas it has been argued on behalf of the respondent bank that the account was declared as NPA on 16.03.2024 as per the guidelines of RBI. On perusal of the records as well as statement of account (annexed at page no.141 to 143), it appears that the respondent bank has granted the limit of Rs.1.25 crores to the applicant and the account was within limit On 11.12.2023 as there was closing balance of 1.s.1,24,98,204.41 on the said date. Thereafter, the respondent liank on 31.12.2023 debit the interest amount of 1:s.1,45,910.00 and there was closing balance of Fs.1,26,44,114.41 on the said day meaning thereby the said loan facility was overdrawn by Rs.1,26,114.41 and accordingly the account was irregular from 31.12.2023 and if the 90 days

¶314

re counted from 31.12.2023 the same would have been completed on 30.03.2024, but without completing the 90 days the respondent bank has declared the account as NPA on 16.03.2024, which is bad in law and also against the Section 2

¶315

¶316

SA No. 251 of 2024

¶317

(o) of the SARFAESI Act and the same is reproduced herein

¶318

below:

¶319

ection 2 (o):

¶320

" non- performing asset" means an asset or account of a borrower, which has been classified by a bank or financial institution as substandard, doubtful or loss asset, in accordance with the directions or under guidelines relating to asset classification issued by the Reserve Bank;

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Further, it has been argued on behalf of the securitization applicant that demand notice dated 18.03.2024 issued by the respondent bank under section 13 (2) is bad in law because the respondent bank has issued the said demand notice without withdrawing the earlier demand notice dated 01.11.2023 under section 13 (2) and even the respondent bank Ilias failed to give the break-up of total outstanding in the said demand notices. However, it has been argued on behalf of the rpspondent bank that the respondent bank has initially issued tie aforesaid demand notice dated 01.11.2023 and since the overdue amount was deposited by the applicant, therefore, the lccount was regularized but thereafter the applicant again clommitted default and accordingly the respondent bank has isued fresh demand notice dated 18.03.2024 under section 13 q) of the SARFAESI Act, 2002. On perusal of the records, it is observed that the respondent bank has initially issued the remand notice dated 01.11.2023 under section 13 (2) of the

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ARFAESI Act, 2002 and thereafter as per the respondent bank the account was upgraded and after that the borrower again defaulted in repayment and accordingly the respondent bank has issued fresh demand notice dated 18.03.2024, but while issuing the fresh demand notice the respondent bank was required to withdraw the earlier demand notice dated Q1.11.2023 meaning thereby the earlier demand notice is still ih existence, which is bad in law. Further, on perusal of the records as well as aforesaid demand notices dated 01.11.2023 and 18.03.2024 it appears that the respondent bank has failed to give the break-up (showing interest, expenses etc. separately) of total outstanding in the said demand notices, which is also bad in law and also against the judgement of Hon'ble High Court of Gujarat in the matter of PNB vs Irithilanchal Industries (MANU/GJ/1069/2020).

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Further, the applicant has also raised the objection that Ole symbolic possession notices dated 27.05.2024 and 15.03.2025 issued by the respondent bank under section 13 (4) of the SARFAESI Act, 2002 is also bad in law, however, it Ilas been argued on behalf of the respondent bank that the respondent bank has issued the symbolic possession under section 13 (4) of the SARFAESI Act, 2002 as per the Security IOterest (Enforcement) Rules, 2002. On perusal of the records,

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it appears that the respondent bank has initially issued the Symbolic possession notice dated 27.05.2024 under section 13 (4) and as per the proof of service the same was served upon the applicants through postal, affixation and by publication, but the said symbolic possession notice published in the newspaper on 31.05.2024 (Hindi edition) was of 27.04.2024, which is bad in law. Further, on perusal of the records it also appears that Ofter the issuance of the aforesaid symbolic possession notice dated 27.05.2024/27.04.2024 under section 13 (4) the despondent bank has also issued another symbolic possession Oated 15.03.2025 (appendix IV) under section 13(4) (annexed Ot page no.64 of the reply of the respondent bank) wherein it -ias been clearly stated at para no.2 that the respondent bank 'ias taken the possession of the property in question with the help of the court receiver as per the order dated 17.12.2024 passed by the Ld. CMM, but this Tribunal has failed to u^{nderstand that when the respondent bank has taken the} ()ossession of the property in question with the help of the court receiver as per the order dated 17.12.2024 passed by the !Jct. CMM, then how the respondent bank can issued another Symbolic possession notice dated 15.03.2025, that too, when he respondent bank has already issued the symbolic p^{ossession notice dated 27.05.2024/27.04.2024 under section}

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1.3 (4) and such action of the respondent bank is also bad in aw and highly deprecated by this Tribunal.

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The securitization applicant has also raised the objection

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that the auction sale notice dated 19.11.2024 is bad in law because there is mis-description of the property in question in qle sale notice dated 19.11.2024 and the respondent bank has auctioned the property in question at throw away price. On he other hand, it has been argued on behalf of the respondent

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hank that the respondent bank has auctioned the property in 9uestion as per the SARFAEI Act, 2002 and Security Interest (Enforcement) Rules, 2002. On perusal of the records, it Oppears that in the demand notice dated 18.03.2024 under section 13 (2) and symbolic possession notices 7.05.2024/27.04.2024 and 15.03.2025 the description of the

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Oroperty in question is mentioned as "residential property of entire ground floor without roof/terrace rights, along with reserved car/vehicle parking at stilt floor marked as 'A' of freehold built up property bearing Municipal no.B-135, built on plot no.135, in Block — B, area measuring 268.22 sq.yds. i.e. 224.26 sq.mtrs situated in the plan of the Dera Ismail Khan Cooperative House Building Ltd., presently at Derawal Nagar, Village Rajpur & Malikpur Chhawani, Delhi 110009, and 25% DS in the above freehold land (i.e. 56.065 sq.mtrs. out of

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5d—

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24.26 sq.mtrs.)", whereas in the sale notice dated 19.11.2024 the description of the property in question is mentioned as "Flat Gearing no.135, entire ground floor (without roof/terrace rights) in Block-B, situated at Derawal Nagar Village Rajpur and

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Chhawani Delhi-110009" and thus respondent bank has failed to give the complete details [including the area of property and the 25% undivided share (i.e. 56.065 sq.mtrs. out Of 224.26 sq.mtrs.) in the sale deed dated 19.11.2024 and Occordingly the said sale notice dated 19.11.2024 is bad in law end against the Rules 8 (7) of the Security Interest Enforcement) Rules, 2002, which is reproduced herein below.

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Rule 8 (7):

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The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5): Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include,—

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(a) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

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I.4. Further, when the complete description of the property in question is not given in the said sale notice dated 19.11.2024 hen how the respondent bank has given the complete details f the property in question in the sale certificate dated 0.12.2024, which also creates some doubts, that too, when

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he sole auction purchaser has approached the respondent

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b^{ank through a private agency (M/s Novodayan Proptech Pvt.} !..td. Letter dated 01.12.2024 annexed at page no.48 of the reply of the bank). Further, as per the sanction letter dated 61.09.2022 the value of the property in question was Rs.3.25

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g^{ores, but the respondent bank has auctioned the property in} question at Rs.2.50 crores, but this Tribunal has failed to ynderstand that when the valuation of the property in question was valued at Rs.3.25 crores in the year 2022 by the respondent bank itself, then how the respondent bank can suction the property in question in December, 2024 at the lessor amount of Rs.2.50 crores, that too, when the valuer has rot assessed the value of the 25% undivided share (i.e. 56.065 ,q.mtrs. out of 224.26 sq.mtrs.) in the said land, which is clear cut violation of Rule 8 (5) of the Security Interest Enforcement) Rules, 2002 and the same reproduced herein

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below.

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Rule 8 (5):

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Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorized officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods:-

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(a)by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or.

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Further, the respondent bank has also failed to give the

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etails of encumbrance about the pendency of the present

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ecuritization application (filed on 05.06.2024) while issuing he sale notice dated 19.11.2024 qua the property in question lind accordingly the said sale notice dated 19.11.2024 is bad in law and against the Rules 8 (7) of the Security Interest Enforcement) Rules, 2002, which is reproduced herein below.

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Rule 8 (7):

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j) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

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1^{.6. Further, the Hon'ble Supreme Court of India in the} judgment of Rajiv Subramaniyam reported in [2014] 5 SCC age 651 and referred para 14 of the judgment has held as nder:

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„,As noticed above, this Court in Mathew Varghees case also examined Rules 8 and 9 of the Rules, 2002. On a detailed analysis of Rules 8 and 9(1), it has been held that any sale effected without complying with the same would be unconstitutional and, therefore, null and void."

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In view of the above facts and circumstances and SARFAESI Act and Rules, this Tribunal is of the view that the respondent bank has not followed the mandatory procedures as laid down under the SARFAESI Act and Rules, while olleclaring the account as NPA and initiating the measures under the SARFAESI Act and as per Security Interest (Enforcement) ules, 2002, therefore, the SARFAESI Application is liable to be !lowed and the demand notice dated 18.03.2024 under

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ection 13 (2), symbolic possession notices dated 7.05.2024/27.04.2024 and 15.03.2025 under Section 13 (4) f the SARFAESI Act, sale notice dated 19.11.2024 and all the ubsequent actions of the respondent bank are liable to be set Oside and quashed. Further, since the auction purchaser has invested the hard money by depositing the auction amount pith the respondent bank and such money has been retained 1py the respondent bank since month of December, 2024, herefore, it would be appropriate to direct the respondent ank to return the auction money alongwith interest @ FDR from the date of deposit till the date of release of the payment Ond the respondent bank shall also restore back the physical p^{ossession of the property in question to the securitization} Epplicants immediately.

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(ORDER)

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The SARFAESI Application filed by the applicants is !lowed and the demand notice dated 18.03.2024 under ection 13 (2), symbolic possession notices dated 7.05.2024/27.04.2024 and 15.03.2025 under Section 13 (4) f the SARFAESI Act, sale notice dated 19.11.2024 and all the ubsequent actions of the respondent bank are hereby set side and quashed. However, the respondent bank is free to take afresh action under the SARFAESI Act in accordance with law. The respondent bank is hereby directed to return the ,uction money, so deposited by the auction purchaser, to the luction purchaser within 30 days from today alongwith interest

SP No. 251 of 2024

FDR from the date of deposit till the date of release of the payment and the respondent bank shall also restore back the physical possession of the property in question to the lecuritization applicants immediately. The present order be

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6ploaded immediately on the website of this Tribunal.

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Final Order signed, sealed, dated and pronounced in the pen court on this 2nd July, 2025.

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ictated & Corrected by me.

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� 5 r-+ (GOVIND BALLABH\SH RMA) PRESIDING OFFICER, DRT-I, Delhi

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