Dismissed

Ms Harshika Motors v. State Bank of India

DRT23 Jul 2025SA/30/2025

Case brief

AI extract

What is this about?

Debts Recovery Tribunal dismissed a Securitization Application filed by M/s Harshika Motors against State Bank of India. The Tribunal held there was no merit in the plea that the account was wrongly declared NP or that RBI guidelines were violated, noting the Applicant admitted irregularity and failed to provide restructuring details, leading to dismissal.

What did the court decide?

The Securitization Application SA/30/2025 filed by M/s Harshika Motors is dismissed due to lack of merit.

Ms Harshika Motors versus State Bank of India — Contract and Commercial Disputes | DRT (2025)

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SA/30/2025

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DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH

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SA/30/2025 M/S HARSHIKA MOTORS AND ANOTHER Vs STATE BANK OF INDIA

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23.07.2025 ITEM NO. 35

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Argued by: Mr. Rohit Suri Advocate for the Applicants (SA) Mr. Vivek Verma Advocate for the Respondent Bank

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M/s Harshika Motors And Another (Applicants) have filed this Securitization Application under Section 17(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), against State Bank of India (Respondent Bank).

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Admittedly, on 27.09.2019, SBI had sanctioned an E-DFS facilities of Rs. 80 lacs and CC Limit of Rs. 10 lacs. It had also sanctioned a GECL of Rs. 17 lacs. On 31.10.2021, Bank declared the account NPA and on 26.04.2022, Bank issued the notice under Section 13(2) of the Act demanding Rs. 1,07,39,942/-. On 16.07.2022, Bank issued the notice under Section 13(4) of the Act. On 28.11.2024, Bank obtained an order from the District Magistrate for taking physical possession. On 10.01.2025, Applicant filed the present SA.

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The case of the Applicant as set up in the SA is that earlier it had filed CWP No.21564 of 2022 in the Hon’ble Punjab and Haryana High Court which was disposed of vide order dated 18.12.2023. The Hon’ble High Court relegated the Applicant to the remedy of this Tribunal. The Hon’ble High Court also granted him 20 days to file the SA. Applicant states that it is an MSME Unit. It is a dealer of Tractors since 2016. On 29.11.2021, Applicant made a representation for restructuring. On 03.12.2021, the Bank asked for some documents from the Applicant. Applicant responded to the same through WhatsApp to Branch Manager.

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SA/30/2025

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DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH

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On 31.01.2022, the Branch Manager informed him that the restructuring would be done within a week. He continued communicating with the Bank. However, on 31.10.2021, the Bank declared the account NPA and on 26.04.2022, it issued the notice under Section 13(2) of the Act. It is also stated that the Bank continued to charge the interest. Bank did not follow the guidelines of the RBI in respect of MSME units dated 17.03.2016. As per the RBI guidelines, the Bank was under obligation to place the matter before the Designated Committee for Corrective Action Plans (CAP). Thereafter, RBI issued Circulars dated 01.01.2019 and in March 2020. Accordingly, the declaration of the account as NPA on 31.10.2021 is invalid. On these facts, Applicant filed the present SA. It is stated that the account of the Applicant was wrongly declared NPA. There was no 90 days default. No opportunity was given as per RBI guidelines for rehabilitation and restructuring. Bank did not offer any OTS to the Applicant. The Bank also did not provide holding operation and also charged excessive interest as well as penal interest. Accordingly, it is stated that the SA be allowed and the action of the Bank be declared null and void .

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Bank in reply to the application, has denied the case of the Applicant. It is stated that the Applicant did not provide any concrete proposal. Before the declaration of the account as NPA, Applicant did not bring it to the notice of the Bank that it is an MSME Unit. The issue of OTS is out of the preview of the provisions of Section 17 of the Act. Bank has filed OA No.1225 of 2022 against the Applicant. Bank has also filed OA No.1224 of 2022 in the case of sister concern of the Applicant namely M/s Ishika Automobiles for the recovery of Rs.55,30,171.00. Presently, a sum of Rs.1,54,16,061.47 is due. It is stated that a CWP filed by the Applicant was dismissed by the Hon’ble High Court vide order dated 06.05.2024.

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SA/30/2025

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DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH

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Applicant did not approach this Tribunal within the time granted by the Hon’ble High Court. Applicant never submitted any proposal officially for restructuring. Accordingly, it is stated that there is no merit in the SA and the same be dismissed.

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Mr. Rohit Suri counsel for the Applicant had argued that the account of the Applicant was not NPA. There was no 90 days default. Applicant is an MSME unit. As per the RBI guidelines dated 17.03.2016, the Bank could not declare the account NPA without referring the matter to the MSME Committee for Corrective Plan. In this connection, Mr. Suri drew my attention on the judgment of the Hon’ble Supreme Court in ‘Pro Knits Vs The Board of Directors of Canara Bank and Others’ arising out of SLP No.3801 of 2024 decided on 01.08.2024 case. Mr. Suri also submitted that the Applicant had been responding to the letters of the Bank but the Bank did not take any action in the matter. Accordingly, the SARFAESI action be set-aside. Mr. Suri submitted that the possession of the secured asset is fixed up for tomorrow.

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Per contra , Mr. Vivek Verma counsel for the Bank has argued that the Applicant was granted E-DFS facilities. However, the Applicant was not conducting his business through the Bank. Applicant did not deposit the sale consideration in the account. Applicant had committed default in the repayment of the loan. Accordingly, the account was declared NPA. Applicant had filed Writ Petition in the Hon’ble High Court which was dismissed on 06.05.2024. Applicant did not file the Securitization Application till 21.12.2024. Accordingly, the SA is time-barred. Mr. Verma submitted that since the notice under Section 13(4) of the Act was duly served upon the Applicant in 2022, the limitation would start from that date and not from the date of the order under Section 14. Drawing my attention

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SA/30/2025

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DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH

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to the number of letters exchanged between the parties, Mr. Verma submitted that the Applicant had not been making the payment of the amount due. Regarding the contention in respect of the MSME and the judgment of the Hon’ble Supreme Court in ‘Pro Knits’ case. Mr. Verma submitted that the Applicant never raised this plea earlier and at this stage, he cannot be allowed to raise this plea .

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I have considered the rival contentions.

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It is admitted on the record that SBI had sanctioned the credit facilities to the Applicants in the year 2019. To secure the same, Applicants had created security interest in respect of the ‘Commercial building measuring 05M-160 sq. yards being 6/303 share of 15K-03M, comprised in Khewat No.181, Khatauni No.259, Khasra No.61//14/2, 15/1, 17/2, 18/1/2 measuring North 49’-00, South 50’-00, East 40’-06, West 30’-00 area 193 sq. yards, situated at Mauja Jagadhri, masuma Abadi Teli Majra sale deeds No.6206 & 6207 dated 28.08.2015 with Tatima deed No.4785 dated 14/08/2018. The property has been allotted property ID No. 171C1U575A in MC Yamunanagar now’. The Bank declared the account NPA on 31.10.2019. Bank has produced on the record number of letters which were exchanged between the parties. On 05.12.2019, the Bank had written to the Applicants to provide the audited balance sheet and other documents (Annexure A-3). On 27.07.2021, the bank informed the Applicant that’s their account is inactive for more than 80 days. Again on 02.08.2021, Bank wrote to the Applicant to regularize the account. On 16.10.2021, the Applicant wrote a letter admitting that his account is irregular. He also wrote that he is not interested in restructuring. Applicant stated that he would regularize his account by 22.10.2021. On 19.10.2021, the Bank again wrote to him that his account is irregular for the last 77 days. On

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SA/30/2025

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DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH

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11.01.2021, the Bank wrote to the Applicant to regularize his account. On 08.11.2021, Applicant again promised to regularize the account. Vide letter dated 29.11.2021, Applicant admitted that his account is NPA. On 03.12.2021, the Bank asked the Applicant to provide the information mentioned in its letter. On 24.01.2022, Bank again asked him to provide the information for restructuring. On 01.02.2022, Applicant had again issued a reminder. On 21.02.2022, Bank again asked the Applicant to provide information for restructuring. However, there was no communication from the Applicant. I am of the considered view that there is no merit in the present SA and the same is hereby dismissed.

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A copy of this Final Order be furnished to all the parties free of cost.

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Pronounced in the open Tribunal (A.S. Narang) Dated: 23.07.2025 Presiding Officer RBY DRT-2, Chandigarh (Additional Charge)

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Ms Harshika Motors v. State Bank of India

Case brief

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Ms Harshika Motors v. State Bank of India

Case brief

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