Dismissed

Ms Shastri Agarbatties Private Limited v. Tata Capital Limited

DRT6 Aug 2025SA/321/2024

Case brief

AI extract

What is this about?

This application under Section 17 of the SARFAESI Act sought to stay proceedings, quash NPA classification, and set aside possession orders against the applicants. The Tribunal examined allegations of irregular service of notice, lack of CERSAI registration, and invalid restructuring. The application was dismissed.

What did the court decide?

The application was not allowed. No order as to costs was passed.

Ms Shastri Agarbatties Private Limited versus Tata Capital… — Banking and Recovery | DRT (2025)

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Page 1 of 30 S.A. No. 321/2024

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PRESENTED ON : 16.11.2024 REGISTERED ON : 11.12.2024

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BEFORE THE PO, DEBTS RECOVERY TRIBUNAL, NAGPUR Delivered by Pankaj Kumar

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S.A. No. 321/2024

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1. M/s Shastri Agarbatties Private Limited

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: Applicants

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Having its office at Plot No. D097, MIDC Hingna, Nagpur – 441001, through its Director Mr. Kirit S/o Himmatbhai Chandrana

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2. Mr. Kirit S/o Himmatbhai Chandrana

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Aged about 60 Years, Occupation : Business

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3. Mrs. Bhavna Kirit Chandrana

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Aged about 59 Years, Occupation : Business

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4. Mr. Ankit S/o Kirit Chandrana

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Aged about 36 Years, Occupation : Business, All 2 to 4 are residents of F-302, Radha Palace Apartment, Abhyankar Road, Opp. Dhantoli Park, Dhantoli, Nagpur – 440012

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Versus

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Tata Capital Limited (Before Merger : Respondent Known As Tata Capital Financial Services Limited)

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Having corporate identity number U65990MH1991PLC069670, through its Authorized Officer, office at 12th Floor, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400013

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Page 2 of 30 S.A. No. 321/2024

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Learned Counsels for Applicants	Adv. Mohammad G. Qubbawala
	Adv. Guru N. Sharma
Learned Counsels for Respondent	Adv. M. Anil Kumar
	Adv. Neha Khadatkar

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JUDGMENT

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(Delivered on 6^th Day of August, 2025)

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1) This is an application filed by applicants under Section 17 of SARFAESI Act, 2002 praying therein as under :

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(a) To stay the effect and operation of the proceedings initiated by the respondent against applicants under the provisions of SARFAESI Act, 2002 till the pendency of present application.

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(b) To declare that the respondent has wrongly classified the loan account of applicants as Non-Performing Asset as on 31.08.2021 and as such, the subsequent demand notice dated 10.08.2023 is illegal and void ab initio.

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(c) To quash and set aside the symbolic possession notice dated 20.11.2023 and restore the symbolic possession of the suit property to applicants.

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(d) Set aside the orders dated 11.03.2024 passed in Cri. M.A. No. 259/2024 and 14.08.2024 passed in Cri. M.A. No. 3215/2024 by the Hon’ble Additional Chief Judicial Magistrate, Nagpur.

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(e) To declare that the respondent has no right and authority to take physical possession of the suit property in pursuance of

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orders dated 11.03.2024 passed in Cri. M.A. No. 259/2024 and 14.08.2024 passed in Cri. M.A. No. 3215/2024 by the Hon’ble Additional Chief Judicial Magistrate, Nagpur.

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(f) To restrain the respondent from taking physical possession of the property of the applicant till the pendency of the present application.

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(g) To restrain the respondent from taking any coercive action against applicants under Section 13(4) of SARFAESI Act, 2002 including but not limited to putting the property to auction or putting suit property for sale by any means as contemplated under the provisions of SARFAESI Act, 2002 and Rules framed thereunder.

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(h) To saddle the cost of proceeding upon the respondent.

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(i) Set aside all the actions under Section 13 of SARFAESI Act, 2002 initiated by respondent against applicants.

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(j) Any other order as may be deemed to be just and expedient in the present case.

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2) Brief facts of the case on which the applicants have challenged the action of respondent bank are as under :

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(a) The applicant no. 1 is the main borrower and applicant nos. 2 and 3 are the co-borrowers to the alleged financial facilities disbursed by the respondent company. The applicant no. 4 is neither the co-borrower nor the guarantor to the said facility. However, the respondent company has illegally initiated action

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against the applicant no. 4 under the provisions of SARFAESI Act, 2002.

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(b) It has been pointed out that Shastri Agarbatties Pvt. Limited had availed financial facility of Rs. 83,77,000/ - (Rupees Eighty Three Lakhs Seventy Seven Thousand only) from the respondent. The said loan amount of Rs. 83,77,000/ - was sanctioned vide Sanction letter dated 23.06.2018. The repayment was to commence from the immediate next month of the date of full and final disbursement of the loan facility. However, the respondent company deducted the first equated monthly installment of Rs. 1,18,978/- on 09.08.2018, prior to the disbursement of the entire loan facility, which was disbursed on 04.09.2018. Therefore, the respondent has illegally debited the first installment of Rs, 1,18,978/ - even without disbursing the loan facility to Shastri Agarbatties Pvt. Limited.

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(c) That applicants have on several occasions given written representations to the respondent to reimburse the wrongly debited amount of Rs. 1,18,978/- along with interest. The respondent company have been denying the reimbursement of the said amount on the pretext that the first EMI debited on 09.08.2018 was as per terms of sanction and loan contract. However, the respondent did not provide the copies of documents on basis of which the respondent was entitled to claim the said right amount.

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(d) That, due to lockdown, the business of applicants suffered tremendously. However, applicants never defaulted in repayment of the monthly installments. The Reserve Bank of India and the Ministry of Finance had directed all the financial institutions to grant moratorium period to the loan account holders. Accordingly, Shastri Agarbatties Pvt. Limited also availed the said moratorium period for the months of April, May and August 2020. In pursuance of the policy laid down by RBI and Ministry of Finance, no loan account could be declared as Non-Performing Asset due to non-payment of installments or non serving of interest in the loan account by concerned borrowers during the moratorium period. It was further directed that the financial institution cannot charge interest on the loan account during the subsistence of the moratorium period.

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(e) That, as per the terms of sanction dated 23.06.2018, the loan facility was to be repaid in 120 months. Due to after effects of Covid – 19 pandemic, applicant became slightly irregular in repayment of the installments, whereupon, one of the representatives of the respondent company, namely Mr. Manish Shendre visited the office of Shastri Agarbatties Pvt. Limited in August 2021 and presented a false and rosy picture. He specifically agreed that applicants had been regular in payment of installments from August 2018 till May 2021. Therefore, he offered that Shastri Agarbatties Pvt. Limited should get its loan account restructured. He specifically informed that the loan account would be restructured, wherein, the principal due of

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Rs. 68,48,123/- would be repayable by applicants along with 10 percent interest per annum and further confirmed that repayment schedule and other details would be shared only when confirmation to restructure the loan account is given by applicant no. 2. The applicant no. 2, relying upon the offer given by Mr. Manish agreed to avail the restructuring facility. However, requested Mr. Manish to wait for one day so as to take appropriate advise from other co-borrowers, directors and financial advisors of the applicant company. However, Mr. Manish insisted that the said scheme is valid only for one day and the consent can be given on a click of a button and on call center of respondent company. Thereafter, Mr. Manish immediately took the cell phone of applicant no. 1 and made a call to someone and asked the applicant no. 2 to say yes to the questions asked by the person on the other line. The applicant no. 2 without even understanding the exact nature of the offer was trapped by Mr. Manish, the official of the respondent company.

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(f) Thereafter, on 30.08.2021 the applicant no. 2 received an email from one of the officials of the respondent company.

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(g) That on perusal of the aforesaid email it can be easily ascertained that the date and time of offer acceptance has been left blank, which makes it aptly clear that Shastri Agarbatties Pvt. Limited had never accepted the said proposal. Moreover, Shastri Agarbatties Pvt. Limited was strictly under impression that the loan facility would be restructured considering the

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balance principal outstanding as on May 2021 as per the terms of sanction letter dated 23.06.2018 and the earlier repayment schedule. In pursuance of the repayment schedule (in terms of earlier sanction dated 23.06.2018), the principal balance outstanding as on May 2021 was Rs. 68,48,123/ -. However, as per the terms of restructured sanction, the loan was rescheduled to Rs. 77,81,071/-. It has been specifically pointed out that applicants had paid the initial 35 installments along with interest. Therefore, it is clear that the respondent company has enhanced the principal amount of Rs. 68,48,123/ - to Rs. 77,81,071/illegally and without any concluded contract between applicants and respondent company.

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(h) It has been further submitted that the respondent company, without any prior intimation to Shastri Agarbatties Pvt. Limited and other co-borrowers, has revised the same and has shared the repayment schedule dated 05.08.2022. In the said schedule, the respondent company has unilaterally and with malafide intentions increased the tenure of the loan. In the earlier offer of restructure, the respondent company had specifically stated that the repayment shall be made in monthly installment amount of Rs. 1,19,000/- to be paid in 101 equated monthly installments. However, the company has thereafter unilaterally revised the entire loan account and as per the repayment scheduled dated 05.08.2022 issued by the company, the balance EMI was shown to be 133. This fraudulent act on the part of the company is in absolute contravention of the

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guidelines laid down by Reserve Bank of India from time to time.

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(i) It has been submitted that respondent company has unilaterally made variation in the loan contract and agreements without taking any consent from the borrowers and guarantors and without entering into any agreements with applicants, therefore, there exists no security and mortgage in favour of respondent company. The respondent company has changed the effect of interest on the loan account from time to time without obtaining consent or approval from the borrowers. In the repayment schedule dated 05.08.2022 issued by the respondent company, the principal balance as on 09.10.2021 is shown to be Rs. 77,81,071/- and after the expiry of moratorium period of 5 months, wherein no interest is charged in the loan account, the principal balance due automatically escalates to Rs. 82,27,834/-. There is no written contract and agreement of security interest entered between respondent and Shastri Agarbatties Pvt. Limited and other co-borrowers and guarantor. (j) It has been stated that applicant no. 1 has lodged a police complaint against the official Mr. Manish Shendre of the respondent company and the same is still pending for investigation. Thereafter, the respondent company issued an illegal demand notice dated 10.08.2023 alleged to have been issued under Section 13(2) of SARFAESI Act, 2002 to applicants. The applicant no. 2 gave a representation under Section 13 (3-A) of SARFAESI Act, 2002 vide representation

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dated 10.10.2023. A copy of the demand notice dated 10.08.2023 and representation dated 10.10.2023 issued by applicant are annexed as Annexure No. 1 and 2 respectively. The respondent company through its alleged officer decided the representation vide reply letter dated 31.10.2023. In the said decision, the respondent company has not even given reasoning on the real issues raised by the applicant in his representation. Moreover, in the representation issued by applicant it was specifically pointed out that the date of classification of loan account of the applicant mentioned as 31.08.2021 is absolutely wrong and illegal as the respondent company is itself alleging that the loan account was restructured and an agreement to that effect was executed on 31.08.2021. Thus, the date of classification of loan account as NPA and the date of alleged agreement is same i.e. 31.08.2021. However, the authorized officer of respondent did not deny the said fact and has in fact again asserted that the date of classification of loan account is 31.08.2021. The copy of the reply of the respondent company dated 31.08.2023 is annexed herewith as Annexure No. 3 .

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(k) That the respondent company thereafter proceeded to take symbolic possession of the subject property on 20.11.2023. A copy of the symbolic possession notice dated 20.11.2023 is annexed herewith as Annexure No. 4. It has been submitted that the respondent company has not issued personal notice and issued newspaper publication within the prescribed period

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of seven days as have been stipulated under Rule 8 of Security Interest Enforcement Rules.

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(l) It has been submitted that respondent company has thereafter applied for assistance of Learned Chief Judicial Magistrate, Nagpur so as to seek assistance in taking physical possession of the subject property. The respondent company has filed a false affidavit before the Learned ACJM, Nagpur and on the strength of the said affidavit has obtained an order under Section 14 of SARFAESI Act, 2002. The said order has been passed by the Court of the Hon’ble 9^{t h} Joint Civil Judge Senior Division and ACJM, Nagpur in Cri. M.A. No. 259/2024 on 11.03.2024. A copy of the order dated 11.03.2024 is annexed herewith as Annexure No. 5. Thereafter, the respondent company obtained correction in the order dated 11.03.2024 on filing another application vide Cri. M.A. No. 3215/2024, the said application for correction of boundaries was allowed by the Court of the Hon’ble 9^{t h} Joint Civil Judge Senior Division and ACJM, Nagpur vide order dated 14.08.2024. A copy of the order dated 14.08.2024 is annexed herewith as Annexure No. 6.

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(m) It has been submitted that applicants have not executed any mortgage or security document in favour of respondent company so as to create any security interest with respect to the subject property. Moreover, the charge of respondent company is not registered with Central Registry under Section 26-D of the SARFAESI Act, 2002. The applicants have verified the online records of Central Registry on 15.11.2024. On

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generation of report of the central registry it is evidently clear that charge of the respondent is not registered with central registry and only charge of city union bank is shown to be registered way back in the year 2015. Therefore, the respondent company cannot invoke provisions of SARFAESI Act against the subject property. A copy of the report dated 15.11.2024 generated from the website of Central Registry (CERSAI) is annexed herewith as Annexure No. 7.

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(n) It has been submitted that applicants were not aware about the orders dated 11.03.2024 and 14.08.2024 passed by Learned ACJM, Nagpur. It was only when the officials of the respondent company visited the subject property on 13.11.2024, applicants became aware and got knowledge about the passing of the impugned orders.

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3) Brief grounds on which the applicants have challenged the action of respondent are as under :

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(a) It has been submitted that the loan account was wrongly classified as NPA as on 31.08.2021 and as such entire actions of respondent initiated under the provisions of SARFAESI Act are illegal and void ab initio.

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(b) That the respondent has not served the demand notice personally to each of the applicant and as such, there is violation of Section 13(2) of the SARFAESI Act, 2002 and Rules framed thereunder. It has been submitted that the respondent has not caused publication of notice in two leading newspapers

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as is required under Rule 8 of Security Interest Enforcement Rules.

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(c) It has been submitted that there is no valid security interest in favour of the respondent. The applicants have never executed any document of mortgage/charge in favour of the respondent company. The applicants have not agreed for restructure of loan as has been alleged by the respondent company.

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(d) That, the respondent has not filed affidavit as is required under Section 14 (1) of SARFAESI Act, 2002. Therefore, the orders dated 11.03.2024 and 14.08.2024 cannot be executed for taking physical possession of the subject property.

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(e) It has been submitted that the subject property has not been registered with Central Registry as is stipulated under Section 26-D of SARFAESI Act, 2002. That, the respondent has not decided the representation submitted by applicants U/s 13 (3 -A) of the Act within the prescribed period of 15 days. The respondent bank has failed to comply the Rule 8 of Security Enforcement Rules, 2002. Therefore, the action of taking symbolic possession and all the acts of the respondent being in contravention of SARFAESI Act and Rules made thereunder are liable to be quashed and set aside.

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(f) That the suit property does not fall under the definition of Security Interest. The subject property is a NIT leasehold property and as such, the mortgage could not have been created without obtaining consent and no objection from the Authorities of Nagpur Improvement Trust, Nagpur.

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(g) That the respondent has violated the provisions of SARFAESI Act, 2002 and the Rules made thereunder, specifically the provisions of Section 13(2) and Rule 3, 8 of the said Act and as such, the entire action taken by the respondent under the Act in untenable in the eyes of law.

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4) Respondent has filed reply alongwith documents as under :

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(a) It is submitted that it is an admitted fact that the respondent has initiated the proceedings under the Provisions of SARFAESI Act, 2002. However, on perusal of averments in the Application filed on record it is seen that no measures Invoked by the respondent are challenged except random allegations as such the Application is not tenable on this short ground. It is only intended to avoid payment and protract the matter. It is further submitted that the Application is nothing but suppression of material facts and the applicant has not approached the Tribunal with clean hand and on this ground itself the Application is liable to be dismissed.

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(b) It is an admitted fact that the Application under the provisions of Section 17 of the SARFAESI Act is only maintainable against the measures taken by the Secured creditor under the Act. It is submitted that the account is admittedly N.P.A. on 31.8.2021, the Demand Notice is issued on 10.8.2023, the Representation dated 10.10.2023 received subsequently is decided on 31.10.2023, the Symbolic Possession is issued on 20.11.2023 and the Order of the Hon'ble C.J.M. is passed on 11.3.2024, as

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such there are no anomalies in the action being initiated by the bank.

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(c) That the applicant has suppressed the fact that before taking coercive action against the applicants, a legal notice for recovery was issued by Advocate Shri R.L. Motwani on behalf of the respondent on 3.8.2022, which was replied by Qubbawala and Co. on 26.8.2022 wherein various averments were made in respect of restructuring which were uncalled and unwarranted. The said notice was replied on 7.10.2022 and it was brought to the notice of the counsel for the Applicant that his client has replied the mail dated 30.8.2021 and has accepted the restructuring. The copy of the Legal Notice dt. 3.8.2022, Reply dt. 26.8.2022 and the reply to the allegations on 7.10.2022 are filed as Annexure I to III respectively.

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(d) That it is an admitted fact that the limitation for entertaining the Application is 45 days and if the Application is not filed within the said period it cannot be entertained. It is submitted that the Applicant has admitted in the Application that the symbolic possession has been taken on 20.11.2023 and as such the limitation commences from the said date and the Application would be barred by limitation and solely on this ground the Application is liable to be dismissed.

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(e) That the issue of Restructuring which has attained finality is not a measure and cannot be raised in the Application as it is not a measure pursuant to SARFAESI Act.

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(f) That as regards Mr. Ankit Chandrana is concerned he is one of the co-borrowers and has signed the sanction letter and loan agreement as such he cannot be exonerated from the proceedings.

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(g) That the applicants have intentionally suppressed various facts and have made incorrect statements for unlawful gains, ignoring the fact that the account is N.P.A. on 31.8.2021 and since then nothing is paid. Needless to add that the present outstanding payable by the applicants is 95,35,180/- as on 29/11/2024 which is much more than the value of the secured assets and showing any leniency to the Applicant would obstruct the recovery of public money. Needless to add that the Applicants are continuing with the business, however there seems to be an intentional and wilful default in making the payment.

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(h) It is denied by the respondent that the action is initiated to harass the applicants. The action is lawful to recover the lawful dues which are overdue. The sanction of Rs. 83,77,000.00 on 23.6.2018 is matter of record, however it is denied that the first installment was debited without disbursing the loan .

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(i) The necessary concessions were given which were applicable during the Covid Period as directed by the R.B.I., MSME and Ministry of Finance. It is denied that interest cannot be charged during the said period. The interest charged has to be accrued to the account and it was not recoverable during the said period. The sanction is matter of record. The allegations

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against Mr. Manish Shendre are denied. Infact he had not assisted the Applicants to restructure the account, by this time, the amount would have been recovered and paid by disposing off the assets. It is denied that the restructuring was required to be done on the principal amount. The principle due includes interest as on the said date and it was much more than Rs. 68,48,123.00 and the said amount is illusive. It is denied that the restructuring was out of coercion and fraud as alleged and by way of misrepresentation. The mail dated 30.8.2021 was only sent after discussions with the applicants and even the processing fees was waived as a special case as the Applicant assured of timely payments. It is submitted that the Date and time of offer of acceptance has to be left open as the mail was sent by the respondent to the Applicant and this was required to be filled in by him, however instead he sent a reply mail as aforesaid and accepted the compromise.

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(j) It is denied that the applicant never accepted the proposal. The calculations are incorrect as there is no intention to repay the interest. The account was restructured at Rs. 77,81,071.00 which was the outstanding as on the said date including interest. The repayment schedule itself is given in the restructuring offer and as such it is not unilateral as the said was accepted by the Applicants. There is only a nominal increase in the amount as per the policy change of interest etc. The variation is not unilateral. The company has done nothing unilateral and if the same was not acceptable, the account was

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N.P.A. on the said date and the payment in entirety ought to have been done. The restructuring was option and even if the same is withdrawn today, the amount would increase and as such any way, it is the borrower who has to pay the amount.

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(k) The lodging of the police complaint is not known nor is filed on record. The complaint if any has rightly been discarded. The notice dt. 10.8.2023 is matter of record and it is served on all the Applicants. However the averments that it is illegal is denied. The representation dt. 10.10.2023 was received on 18.10.2023 and was beyond 60 days, however the same has been considered and rejected on 31.10.2023. It is submitted that the N.P.A. date was 31.8.2021 on the date which restructuring was done. Had the account been restructured and the amount paid as per the restructuring the account would have come into Normal status, however as the amounts were not paid, the account continued to be N.P.A. as such the said status continues and there is no irregularities in the same. The symbolic notice is duly affixed, and published. The copies are filed on record as such the said averments are baseless. The orders of the Hon'ble Judicial Magistrate are also matter of record and the affidavit filed is perfectly legal. All other contentions are specifically denied

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(l) The respondents are filing the copy of mortgage, Notice of Intimation with mortgage deed and CERSAI and as such the averments are not sustainable on record. The CERSAI as verified by the Applicant appears to be an old one and rather it

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shows that the Applicant hereto has played fraud by not providing the NOC of the bank before taking loan. The prior notice is placed on record though not required which is replied also but suppressed. The Applicant is blowing hot and cold. In the application for condonation of delay, the Applicant admits that the officials of the respondent have informed about the orders which is contended in para 7 of the application i.e. M.A. No. 188/2024. Thus, the Applicant version cannot be said to be reliable and it appears that the Applicant is only trying to kill time. All other allegations are specifically denied.

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(m) It is denied that the account is wrongly classified as N.P.A. The demand notice is placed on record and there is no denial and as such the said ground is not taken. The respondent has filed the paper publications of symbolic possession as such the said ground also does not survive. The mortgage, NO I and CERSAI are filed as such the ground that the property is not secured asset also does not survive. The order of the Hon'ble C.J.M. is perfectly legal and the affidavit is filed as per law, without which even the application is not accepted. In view of the aforesaid none of the grounds raised are applicable in the facts of the case.

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(n) The relief as sought is specifically denied. The account is properly classified as N.P.A., the orders dated 11.3.2024 and 14.8.2024 are perfectly legal. There is no irregularity in taking symbolic possession on 20.11.2023 and as such the reliefs as sought for cannot be granted. The entire record is placed on

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record to demonstrate the action of the bank and in view of the admissions no case is made out and none of the reliefs are available. All other reliefs sought are not available and as such the proceedings are liable to be rejected.

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(o) The interim relief cannot be granted in view of the subsequent facts which are suppressed and there is no inclination to pay the dues. It is submitted that the Applicant has admitted the dues of Rs. 68,48,123.00 as on May 2021, though the same is incorrect, however in view of the admission, in the event the Hon'ble Tribunal comes to the conclusion that stay is required to be granted, the applicant be directed to deposit an amount of atleast Rs. 80,00,000.00 in view of the said admission in view of the law laid down by the Hon'ble Bombay High Court in the case of Asrec vs. Fastgrowth and the relevant para reads as under:-

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32. Thus, before injuncting the Petitioner from proceeding as per law to recover the dues, the Tribunal was obliged to consider the implications of the arguments advanced by the Respondents on the final outcome of the application and whether it merited an unconditional interim order and in what manner equities could have been balanced. The DRT should have seen that having not seriously disputed the principal liability, the Respondents are taking technical objections. Against the backdrop of these facts, such a pedantic and indifferent approach by the DRT in injuncting the Petitioner from taking any action was

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not warranted. No deposit was ordered. Even the option of correcting the sub-delegation was ignored. This approach is not commensurate with the underlying legislative policy emphasized by the Hon'ble Supreme Court in the case of Satyawati Tandon.

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(p) It is submitted by the respondent that the applicant is a willful and chronic defaulter, who have misused the funds of the public and does not deserve any sympathy. The action under the SARFAESI Act and Reconstruction of Financial Assets And Enforcement of Interest Security, 2002 is complete. The applicants have failed to redeem the property under Section 13(8) of the Act the applicant is put to notice that once the auction is initiated, the said right is extinguished and the further recourse shall follow. That it is brought to the notice of the applicants that the opponents in view of the Merger orders of the NCLT is now known as Tata Capital Limited and as such the proceedings as filed and framed are not tenable.

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(q) In view of the aforesaid facts and circumstances, the Application being devoid of substance, and the interim application being meritless the same deserves to be dismissed with compensatory costs.

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5) Applicants have filed Written Notes of Arguments as under :

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(a) It has been submitted that the subject property is a leasehold plot allotted by Nagpur Improvement Trust (NIT). As per the

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lease terms, no mortgage can be created without prior No Objection Certificate from NIT. The respondent has not registered any charge on the Central Registry (CERSAI) as mandated under Section 26-D of the SARFAESI Act. CERSAI records dated 15.11.2024 shows that no registration in favour of the respondent.

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(b) The applicant no. 4 is neither a co-borrower nor a guarantor. No contract or acknowledgment of liability exists. H is inclusion is an abuse of process and is only meant to coerce the other applicants.

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(c) The respondent debited the first EMI of Rs. 1,18,978/ - on 09.08.2018, even before full disbursement of the loan (04.09.2018). This premature deduction is contrary to law. The respondent claims that the loan account was restructured on 31.08.2021 and simultaneously classified as Non -Performing Asset (NPA) on the same date. This is not legally permissible. After restructuring, applicants were granted moratorium of 6 months and regular EMIs were paid for 6-7 months thereafter. The RBI circular relied upon by the respondent has no application in the facts of this case. The account was not in default post-restructuring. Hence, the classification as NPA is arbitrary and illegal.

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(d) The alleged restructuring was fraudulently obtained by misrepresentation from the respondent’s official. No written agreement was executed. Principal due as on May 2021 was Rs. 68,48,123/-, but under the restructuring, the same was

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unilaterally enhanced to Rs. 77,81,071/-. Later, EMIs were increased from 101 to 133 months unilaterally.

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(e) The possession notice dated 20.11.2023 was affixed on the backside of the premises only. No personal notice was served and no newspaper publication was made within 7 days as required by Rule 8(1) and (2) of the Security Interest (Enforcement) Rules, 2002.

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(f) The Learned CJM passed an order U/s 14 on 11.03.2024 in Cri. M.A. No. 259/2024. Later on, an application filed by respondent (Cri. M.A. No. 3215/2024), the boundaries were modified by an order dated 14.08.2024. The Learned CJM, after passing the first order, became functus officio. He had no power to review, recall or modify the said order. It has been submitted that courts exercising powers under Section 14 do not have inherent or review jurisdiction once the original order is passed.

¶117

(g) The applicant had submitted a detailed representation dated 10.10.2023 under Section 13(3A) of the SARFAESI Act, 2002. However, the respondent failed to decide the representation within the statutory period of 15 days. The alleged reply dated 31.10.2023 was issued beyond the prescribed timeframe. It is well settled that non-compliance of Section 13 (3A) of the Act, both in timeline and substance, vitiates the entire SARFAESI action. The respondent’s action is thus rendered legally unsustainable.

¶118

6) Respondent has filed Written Notes of Arguments as under :

¶119

Page 23 of 30 S.A. No. 321/2024

¶120

(a) The dispute is raised over the debit of the first installment of Rs. 1,18,978.00 on 09.08.2018. The averments of covid are made, that the account could not be declared as N.P.A. That Mr. Manish Shendre presented a false and rosy picture regarding restructuring wherein the principle due of Rs. 68,48,123.00 would be payable alongwith 10% interest. The mail dated 30.8.2021 is disputed. It is disputed that there is no acceptance of restructuring. Police Complaint is lodged etc. The Order of the ACJM 11.3.2024 is challenged .

¶121

(b) That the following details enumerated in the para would demonstrate that the respondent has complied with all the measures as required under the Securitisation Act :

¶122

23.6.2018.	Loan of Rs. 83,77,000.00 sanctioned	Payable in 180 installments of Rs. 1,18,978.00.
28.6.2018	Loan Agreement executed	By all appellants
29.8.2018	Mortgage created and notice of intimation submitted	With Sub-Registrar-5. By the borrowers themselves
16.8.2018	Record created with CERSAI	In compliance of provisions of Sec. 23
31.8.2021	Account was declared as N.P.A.	However on the request of
		the appellant was
		restructured
31.8.2021	The account was restructured at	This was payable in 163
	the outstanding amount of Rs.	equated monthly
	77,81,071.00	installments of Rs.

¶123

Page 24 of 30 S.A. No. 321/2024

¶124

		1,19,000.00. The copy of emails are filed
10.8.2023	Notice u/s. 13(2) of the Act.	Admitted in appeal and was issued as no steps were taken to regularize the account by making payments thereafter
15.9.2023	Notices also published in newspapers	Filed on record
10.10.2023	Representation made under Section 13(3-A) of the Act.	Belated representation which was received on 18.10.2023 and should have not even been acted upon being beyond 60 days.
31.10.2023	Representation decided and rejected.	Giving all cogents reasons and grounds
20.11.2023	Symbolic Possession taken by the F.I.	Notices are sent by post, affixed on the premises with
		Panchnama, Inventory being Nil and published in two newspapers. Collectively filed
11.3.2024. 14.8.2024	Order passed by the Hon’ble C.J.M. The order is corrected -	Admitted and placed on record. - Do -

¶125

Page 25 of 30 S.A. No. 321/2024

¶126

(c) It is an admitted fact that the Appeal under the provisions of Section 17 of the SARFAESI Act is only maintainable against the measures taken by the Secured creditor under the Act. It is submitted that the account is admittedly N.P.A. on 31.8.2021, the Demand Notice is issued on 10.8.2024, the Representation dated 10.10.2023 received subsequently is decided on 31.10.2023, the Symbolic Possession is issued on 20.11.2023 and the Order of the Hon’ble C.J.M. is passed on 11.3.2024, as such there are no anomalies in the action being initiated by the bank.

¶127

(d) That as regards Mr. Ankit is concerned he is one of the coborrowers and has signed the sanction letter and loan agreement as such he cannot be exonerated from the proceedings.

¶128

(e) The respondent mentioned about circular which has evidenced that there is no improvement or continuity in making the payment as such the same could not be said to regularized. In view of the aforesaid circular the date of N.P.A. is retained as it is and the account never came to be regularized for want of payment. That however on the representations made sufficient time has been granted and the notice under Section 13(2) of the Act has been sent on 10.8.2023. That as no payment was forthcoming after restructuring and the account never got regularized, the date of N.P.A. is continued as it is as the

¶129

Page 26 of 30 S.A. No. 321/2024

¶130

account never got the Status of Regularised as per R.B.I. norms.

¶131

(f) That though the applicant has not raised any ground regarding the N.O.C. from the competent Authority, there is no requirement of any NOC as Section 22-A of the Registration Act, Bombay/Maharashtra Amendment stands deleted and NIT has issued a circular in 2016 that no such NOC shall be required for creating third party right including mortgage of the properties. The copy of the Circular is filed vide Diary No. 609/2025 on 10.2.2025.

¶132

In view of the aforesaid facts and circumstances, there is no prima facie case made out by the appellant and the S.A. deserves to be dismissed,

¶133

7) The Ld. Counsel for applicants has relied upon the judgment passed by the Hon’ble Punjab and Haryana High Court reported in 2022 (2) R.C.R. (Civil) 510 dated 11.03.2022 & judgment passed by Hon’ble Debts Recovery Appellate Tribunal, At Mumbai in I.A. No. 720/2024 (WoD) in Misc. Appeal on Diary No. 2137/2024 dated 13.12.2024 in support of their contention. 8) The Ld. Counsel for respondent has also relied upon the judgment passed by the Hon’ble Supreme Court in Civil Appeal No. 689 of 2021 in Kotak Mahindra Bank Limited V/s. A. Balakrishnan & Anr. dated 30.05.2022 and 2022 AIR (SC) 4739 dated 22.09.2022 & 2024 LawSuit (MP) 324 dated 22.05.2024. 9) I have heard Ld. Counsel for both sides at length.

¶134

Page 27 of 30 S.A. No. 321/2024

¶135

10) The main contention of applicants is that proper demand notice U/s 13 (2) of the SARFAESI Act dated 10.08.20 23 has never been served to them. Although, it has been admitted that the same has been affixed on the backyard, which has been denied by the Ld. Counsel for the respondent, who has submitted that the same was communicated through RPAD and paper publication dated 15.09.2023 as per Annexure VI on record, which carries annexure mentioning therein the details of outstanding amount.

¶136

11) The other contentions of the applicants have been made that applicant no. 4 is neither borrower nor guarantor of the loan transaction and the demand notice has been issued against him also only to harass the other applicants. The same has been denied by the Ld. Counsel for respondent, who has drawn attention of this Tribunal towards the Loan Agreement Sanction Letter dated 23.06.2018, which bears the signature of applicant no. 4 also, being the co-borrower of the loan transaction as per Annexures 1 to 3 on record.

¶137

12) It has been also argued that the respondent company is not registered U/s 26-D of SARFAESI Act under CERSAI as per Annexure 7. The same has been opposed by the Ld. Counsel for respondent, who has submitted that the mortgaged property is registered under CERSAI with the respondent bank as per document Annexure IV on record.

¶138

13) The applicants have submitted that the first EMI of Rs. 1,18,978/was deducted on 09.08.2018 prior to the

¶139

Page 28 of 30 S.A. No. 321/2024

¶140

disbursement of the entire loan facility on 04.09.2018. The same has been denied by the Ld. Counsel for respondent, who has submitted that the loan was sanctioned on 23.06.2018 and part of sanction amount was released in favor of the applicants prior to 09.08.2018 and accordingly, the EMI started on 09.08.2018 as per terms of loan agreement at Annexure I & II. 14) The Ld. Counsel for applicants has drawn attention of this Tribunal towards the representation filed U/s 13 (3-A) of the SARFAESI Act dated 10.10.2023, which has been disposed of by the respondent beyond limitation period on 31.10.2023. The same has been opposed by the Ld. Counsel for respondent, who has submitted that the aforementioned representation was received by respondent on 18.10.2023 and the same has b een rejected within 15 days as per mandate of the Act.

¶141

15) The Ld. Counsel for the applicants has submitted that the subsequent order passed by the 9^{t h} Joint Civil Judge Senior Division and ACJM, Nagpur dated 14.08.2024 in connection with Cri. M.A. No. 3215/2024 cannot be acted upon after passing of similar order by the Ld. Court on 11.03.2024 passed in connection with Cri. M.A. No. 259/2024, in view of Section 14 of SARFAESI Act. In support of his contention, he has relied upon the judgment passed by the Hon’ble Punjab and Haryana High Court reported in 2022 (2) R.C.R. (Civil) 510 dated 11.03.2022. The same has been opposed by the Ld. Counsel for respondent, who has submitted that the subsequent order has been passed by the Ld. Court, which is permissible U/s 362 of

¶142

Page 29 of 30 S.A. No. 321/2024

¶143

CrPC (equivalent to Section 403 of BNSS, 2023), as only necessary modification has been assigned with regard to the boundary of the secured asset. In support of his contention, he has relied upon the judgment passed by Madhya Prade sh High Court (Indore Bench) DB reported in 2024 (4) MPLJ 408 dated 22.05.2024.

¶144

16) The Ld. Counsel for applicants has argued that the loan account has been wrongly restructured on 31.08.2021 without their valid consent. The same has been denied by the Ld. Couunsel for respondent, who has submitted that the loan was restructured as per email received by the respondent on 28.11.2024 as per Annexure V on record. As such, it cannot be said that the loan account has been restructured without the consent of the applicants.

¶145

17) The Ld. Counsel for applicants has submitted that he paid regular EMI after moratorium period staring from March, 2022 and thereafter. As such, the NPA dated 31.08.2021 mentioned in the demand notice dated 10.08.2023 cannot be said to be a valid notice. The same has been opposed by the Ld. Counsel for respondent, who has submitted that the applicants have not paid regular EMI since July, 2022. As such, the asset has been properly classified as NPA on 31.08.2021 as per RBI guidelines dated 01.07.2011 bearing no. RBI/2011-12/48UBD.BPD. (PCB) MC No. 3/09.14.000/2011-12.

¶146

18) The Ld. Counsel for the applicants has submitted that the property in question is of NIT and it has been mortgaged

¶147

Page 30 of 30 S.A. No. 321/2024

¶148

without obtaining NOC from NIT. The same has been opposed by the Ld. Counsel for respondent that there is no requirement of any NOC U/s 22-A of the Registration Act as the same has been deleted and a circular in this regard has been issued by NIT in the year 2016 itself. As such, it cannot be said that the property in question has not been properly mortgaged with the respondent.

¶149

19) Accordingly, considering the submissions of both sides and material placed on record, I do not find any merit in the present application. As such, I pass the following order :-

¶150

ORDER

¶151

S.A. No. 321/2024 is not allowed.

¶152

No order as to costs.

¶153

	(Pankaj Kumar)
Nagpur	Presiding Officer
	Debts Recovery Tribunal
Dated : 06.08.2025	Nagpur.

Ms Shastri Agarbatties Private Limited v. Tata Capital Limited

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Ms Shastri Agarbatties Private Limited v. Tata Capital Limited

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