Allowed

Rachchpal Singh v. Central Bank of India

DRT27 Jun 2025SA/284/2024

Case brief

AI extract

What is this about?

The Tribunal held that the Securitization Application was allowed because the bank failed to prove service of the mandatory Section 13(2) demand notice via registered post with track consignment details, rendering subsequent proceedings illegal under the 2002 Act.

What did the court decide?

Securitization application allowed; proceedings under the Act quashed as illegal; applicant directed to deposit Rs. 15 Lacs within 15 days.

Rachchpal Singh versus Central Bank of India — Banking and Recovery | DRT (2025)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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PRESIDED OVER: SH. MRIDULESH KUMAR SINGH

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SECURITIZATION APPLICATION NO.284/2024

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Date of Institution: 02.08.2024 Date of Decision: 27.06.2025

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Sh. Rachpal Singh S/o Sh. Randhir Singh, R/o 1355/4 F near Ravidas Dharamshala, Haibowal, Ludhiana, Punjab

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--Applicant Versus

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Central Bank of India through its Authorised Officer, R/o Central Bank of India, Sarabha Nagar, Branch Ludhiana, Punjab

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--Respondent

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Argued by: Sh. Ashish Soi, Advocate for Applicant Sh. Ashutosh Bajpai, Advocate for Respondent

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FINAL ORDER

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(1) This Securitization Application was filed under Section 17 (1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’for brevity) to restrain the respondent from taking further physical possession of the property and to restrain the respondent from auctioning the secured asset of the applicant. (2) It was stated in the application that the account of applicant was classified as NPA on 30.09.2022; that demand notice under Section 13(2) of the Act dated 18.11.2022 was sent by respondent; that as per Rule 3 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ‘the Rules’ for brevity)the said notice was not served to co-borrower as well; that the said Rule clearly states that only when the secured creditor has a reason to believe that the borrower is avoiding the service of the notice, the service shall be effected by affixing a copy of the demand notice and also by publishing the contents of the demand notice in two leading newspapers; that publication and pasting of the notice both are mandatory and the step cannot be dispensed with in a causal manner; that thereafter, possession notice under Section 13(4) of the Act dated 05.08.2023 was served allegedly on the applicant; that

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SA/284/2024 RACHCHPAL SINGH VS. CENTRAL BANK OF INDIA

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details mentioned in the said notice are in total defiance to the Section 13 of the Act and Rules envisaged in the Security Interest (Enforcement) Rules, 2002; that respondent has moved an application under Section 14 of the Act dated 28.06.2024 for taking over the physical possession of the secured asset of the applicant; that the said application was not supported with the original affidavit of the Authorised Officer; that the infirmity lies with the fact that even the demand notice has only the initials of some Officer but his designation is not mentioned; that again in the affidavit attached along with the application filed under Section 14 of the Act is totally bad in the eyes of the law because it is not attested, neither there are signatures of the Notary Officer and was not verified by anyone; that this is not a minor irregularity but a patent illegality because in absence of the duly attested affidavit, the powers to grant possession under Section 14 of the Act do not come into play; that the intention of the respondent is pretty much clear that bank want to dispose off the loan by selling the house for a throw away price and it is for this reason that half-hearted approach has been shown while implementing the Section 14 of the Act, whichis nothing but an eye wash on the part of the Company.It was prayed that the said SA may kindly be allowed.

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(3) Reply filed by respondent.

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(4) It is stated in the reply thatthe loan account of the applicant was classified as NPA on 30.09.2022; that accordingly, notice under Section 13(2) of the Act dated 18.11.2022 was issued to applicant as per the provisions of the Act and copy of the receipts of the said notice along with postal receipts are attached as Annexure R2 (Colly) to the reply; that thereafter, notice of possession under Section 13(4) of the Act dated 05.08.2023 was issued to applicant and copy of the same is annexed as Annexure R4 (Colly) to the reply; that the said notice was also affixed at the site of the property and also published in the newspapers within prescribed period of 07days, copies of affixation and paper publication are annexed as Annexures R5 (Colly)&R6 to the reply; that thereafter, respondent approached the District Magistrate for getting order for physical possession, copy of the application is annexed as Annexure R7 to reply; that in the present matter Rs.22,99,778.59p as on 08.01.2025 is due and applicanthas not paid the amount since 24.08.2022, copy

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3 SA/284/2024 RACHCHPAL SINGH VS. CENTRAL BANK OF INDIA

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of statement of account is annexed as Annexure R8 to the reply; that application filed before District Magistrate was duly supported with affidavit and copy of the same is already annexed by the applicant with SA. Therefore, the present SA may kindly be dismissed. (5) No replication was filed by applicant to the reply filed by respondent.

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(6) I have heard arguments advanced by Sh. Ashish Soi and Sh. Ashutosh Bajpai, Advocates and gone through the record carefully.

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(7) Sh. Ashish Soi, Advocate argued that notice under Section 13(2) of the Act was not served upon applicantas per the Rules.

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(8) Per contra , Sh. Ashutosh Bajpai, Advocate argued that notice under Section 13(2) of the Act dated 18.11.2022 was duly served upon applicant and other concerned as per Rules. It was further argued that copy of said notice along with receipts of registered postis annexed as Annexure R2 to the reply along with the proof of service.

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(9) It reveals from record that only receipts of registered posts were filed in respect of notice under Section 13(2) of the Act but no track consignment record filed by respondent to show that the noticein question which was allegedly sent by respondent was ever received by the applicant and concerned. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondent notice in question was sent in year 2022. Gone are the days when sending of registered post itself used to be enough for drawing the presumption of service against the addressee. There is hardly any scope for the same in view of the availability of the track consignment record. Track consignment record should have been produced to bring home the fact that the notice was duly served upon the applicant and concerned and that not being the position, this Tribunal refuses to draw presumption of service. There is no other type of personal service of the said notice upon the applicant and other concerned, which was either pleaded or proved.

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(10) In light of above factual position, it is established that notice under Section 13(2) of the Act was validly issued but not proved served upon all concerned in light of the Rules.

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4 SA/284/2024 RACHCHPAL SINGH VS. CENTRAL BANK OF INDIA

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(11) Sh. Ashish Soi, Advocate further argued that notice under Section 13(4) of the Act dated 05.08.2023 was received by applicant but details mentionedin the said notice are in total defiance to the Section 13 of the Act and Rules envisaged in the Security Interest (Enforcement) Rules, 2002.

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(12) Per contra , Sh. Ashutosh Bajpai, Advocate argued that notice under Section 13(4) of the Act dated 05.08.2023 was duly served upon the applicant and applicant himself mentioned in the SA that the said notice was received by applicant but no illegality or irregularity was disclosed by him.

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(13) It reveals from record that applicant himself pleaded in the SA that the notice under Section 13(4) of the Act dated 05.08.2023 was served upon applicant but the details mentioned in the said notice was not correct or total defiance of the Act. Sh. Ashish Soi, Advocate could not explained as to how the said notice was in defiance of the Act.

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(14) In light of above factual position and evidence on record, this Tribunal is of the considered opinion that the possession notice was prepared and served upon applicant as per Rules. Nothing is on record which can show that possession notice was defective according to Rules.

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(15) Sh. Ashish Soi, Advocate further argued thatapplication under Section 14 of the Act dated 28.06.2024 filed by respondent before Additional District Magistrate, Ludhiana is not supported by the affidavit of Authorised Officer. It was further argued that the said affidavit is neither attested nor signed by the Notary Officer as well as the said documents is also not verified. Therefore, the said application is filed half-heartedly and the same is nonest in the eyes of law.

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(16) Per contra , Sh. Ashutosh Bajpai, Advocate argued that respondent has moved an application under Section 14 of the Act dated 05.12.2023 (Annexure R7) and the same is supported by the affidavit and there is no illegality in it.

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(17) It reveals from record that application under Section 14 of the Act filed by respondent is annexed as Annexure R7 to the reply filed by respondent. It further reveals that the said application is duly supported with the affidavit of Sh. Alwar Singh, Chief Manager/Authorised Officer and the same is duly attested and signed by the Notary Officer as well as the Stamp of

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5 SA/284/2024 RACHCHPAL SINGH VS. CENTRAL BANK OF INDIA

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Notary Officer was also affixed on it. Therefore, there is no force in the argument of Sh. Ashish Soi, Advocate. (18) Sh. Ashutosh Bajpai, Advocate argued that after issuance of notice under Section 13(2) of the Act dated 18.11.2022, applicant has not deposited any amount in his loan account.

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(19) In the SARFAESI Act nowhere it is provided that applicant has any right not to deposit his outstanding dues.

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(20) No other point was argued/pressed.

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(21) From the above, it shows that when the foundation of the SARFAESI proceedings i.e., notice under Section 13(2) of the Act was not proved as served upon applicant and other concerned then building constructed on the said notice cannot be said as legal.

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(22) After the consideration of all facts and circumstances, the SA is liable to be allowed.

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(23) Accordingly, SA is allowed. Proceedings under the Act are illegal therefore, the same are quashed. It is made clear that respondentmay again initiate fresh SARFAESI proceedings according to law. (24) Considering the amount of outstanding upon applicant, it is also ordered that applicant shall deposit Rs.15 Lacs in his loan account within 15 days from today. Record be consigned to record room after due compliance. Date: 27.06.2025 Pronounced by me in the open Tribunal. (MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Rachchpal Singh v. Central Bank of India

Case brief

What is this about?

What did the court decide?

Rachchpal Singh v. Central Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

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