Allowed

Ms Vidhyadham Educational Trust and others v. Punjab and Sind Bank

DRT24 Jul 2025SA/349/2023

Case brief

AI extract

What is this about?

Applicants challenged SARFAESI action regarding non-service of notices, improper publication in business newspapers instead of local newspapers, lack of valuation report, and alleged fraud. Tribunal found procedural lapses and vitiated the action by fraud and collusion, quashing the sale and ordering possession return and refund.

What did the court decide?

SA allowed; SARFAESI action and auction sale quashed; Bank ordered to refund auction deposit with 10% interest and hand over possession to applicants.

Ms Vidhyadham Educational Trust and others versus Punjab and… — Banking and Recovery | DRT (2025)

SA 349 of 2023 [J)

DRT,PATNA

DEBTSRECOVERYTRIBUNALPATNA

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PresidingOfficer:Shri Kaushalendra Yadav

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SA-349of 2023

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MIs Vidyadham Educational Trust, C/o - Vigyan Gurukul Govindpur, Bourahi, PS - Dhanarua, District - Patna registered office MIs Vidyadham Educational Trust, Ashok Nagar, Road No. - 10, Kankarbagh, Patna - 20. (Borrower).

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A10k Sinha @ Alok Kumar, S/o Late Bijay Kumar Sinha, Resident ofL-002, Aditya Mega City, Indrapuram Shipra Sun City, Ghaziabad, Uttar Pradesh, Pin Code - 202014. (Borrower).

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Smt. Priyanka, W/O Mr. Alok Kumar, Resident ofL-002, Aditya Mega City, Indrapuram Shipra Sun City, Ghaziabad, Uttar Pradesh, Pin Code - 202014. (Borrower).

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. Applicants

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Versus

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The Authorised Officer, Punjab and Sindh Bank, Fraser Road Branch, Patna - 800001.

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Mr. Ramesh Kumar, S/o Ram Nath Singh, Address - Near M.S. College, Motihari, East Champaran, Pin Code - 845401, Bihar.

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MIs V.N. Enterprises, 1stFloor, Shop No.3, Plot No. 10, Loha Mandi, B.S. Road, Industrial Area, Ghaziabad, U.P., Pin - -201001.

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--respondents

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Present:

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For the Applicant	: Sh.SachindraKr.Tiwari,Advocate
For the Respondent Bank	: Sh.BholaShankar,Advocate
For the Auction Purchaser (A)	: Sh.ArbindKr.Jha,Advocate
For the Auction Purchaser (B)	: Sh.UrnaShankarKumar,Advocate

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Dated: 24.07.2025

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JUDGMENT

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I. Present application has been filed with a prayer to quash entire SARFAESI action taken against the properties of applicant alongwith the possession notice as well as action of Physical Possession initiated by the respondent bank.

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DRT,PATNA

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SA 349 of 2023 [J]

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During pendency of the SA, IA 13112024filed by respondent bank with the prayer to vacate the interim relief granted to the applicant passed vide order dated 27.10.2023.

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The brief fact of the case is that the applicants availed Credit facilities of Rs.04 Crores and mortgaged the properties towards security of the credit facilities. Due to default in repayment of dues of the bank, the accounts were classified as NPA on 30.06.2018. In order to recover outstanding dues the respondent bank initiated SARFAESI Action against the borrower & guarantor by issuing Demand Notice dated 02.07.2018 U/S 13(2) of the act calling upon the borrower to make the payment of RsA,37,69,653AI. Thereafter, the respondent took possession of the property situated at Bihar by issuing Possession Notice dated 15.09.2018 U/S 13(4) of the SARFAESI Act. Further, another possession notice dated 18.08.2021 was issued by the bank against the immovable property situated at Uttar Pradesh. The respondent bank proceeded further and put all the properties on auction sale on 31.10.2023 by issuing auction sale notice dated 16.09.2023 for the properties situated at Bihar and by issuing another auction sale notice dated 21.09.2023 for the properties situated at Uttar Pradesh. Aggrieved from the sale notice present SA has been filed by the applicants.

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It is submitted by the Ld. Counsel of applicant that without serving Demand Notice as well as Possession Notice, the respondent bank served a Sale Notice dated 18.09.2023 wherein the date of auction sale has been fixed as 15.09.2018. The Possession Notice was neither affixed on the secured assets nor published in two leading newspapers. In the said sale notice the description of the property has not been mentioned as per SARFAESI Act and Rules. Moreover, after obtaining the copy of publication of possession notice it has come to notice to the applicant that the Demand Notice was issued on 02.07.2018 as well as possession of the property was also taken on the same day i.e. 02.07.2018 vide possession notice dated 15.09.2018. Neither the possession notice dated 02.07.2018 nor dated 15.09.2018 was served upon applicants. Further, it appears that there are 03 sale notices that have been issued by the bank for auction of the same property which are dated 16.09.2023 published in the newspaper, dated 17.09.2023 received by the applicants and dated 18.09.2023 served to the applicant no.2 through e- mail. The sale notice was neither affixed on secured assets nor published in

SA349 of 2023 UJ

ORr. PATNA

two leading newspapers. The valuation of property has also not been properly made by the bank and put the properties on auction at a very meager pnce.

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It is further submitted that the respondent bank has annexed the postal receipts dated 04.07.2018 to prove the service of demand notice to the applicants but from perusal of said postal receipts it appears that the post was sent by the PNB instead of Punjab & Sind Bank. During pendency of this SA, the applicant came to know from the counter affidavit of bank that the properties have been auctioned by the bank on 31.10.2023 to Ramesh Kumar, S/o Ram Nath Singh and Mis V.N. Enterprises, Ghaziabad being successful bidder.

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On the contrary, ld. Counsel of the respondent bank submits that after availing the loan facilities the borrower failed and neglected to repay the amount due under facilities, hence, the account was classified as NPA on 30.06.2018. Subsequently, respondent bank initiated SARFAESI Action against the borrower & guarantor by issuing Demand Notice dated 02.07.2018 U/S 13(2) of the act and the same was sent to the applicant through post on 04.07.2018. Neither the dues amount was paid nor any representation filed by the applicants against demand notice. Hence, the respondent took possession of the property situated at Bihar by issuing Possession Notice dated 15.09.2018 U/S 13(4) of the SARFAESI Act and same was physically served upon the applicants as well as affixed on secured assets. The said possession notice was also published in Hindustan and Hindustan Times on 16.09.2018. Further, The respondent bank issued a separate possession notice dated 18.08.2021 for the immovable property situated at Uttar Pradesh. The same was also served physically to the applicants and affixed on secured assets. The same was also published on 19.08.2021 in Business Standard and on 20.08.2021 in the Hindi edition of the same newspaper. In the meantime, the applicants approached the bank for settlement under OTS. The settlement was reached between parties on 21.11.2022 for Rs.3.60 Crores which was to be paid within 60 days from the date of settlement but the borrowers failed to comply with the terms of settlement. Hence, the respondent bank proceeded further and put all the properties on auction sale fixing the date of auction sale as 31.10.2023 by issuing auction sale notice dated 16.09.2023 for the ~i/ situated at \J...(> -»

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SA 349 of 2023 UJ

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DRT,PATNA

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Bihar and by issuing another auction sale notice dated 21.09.2023 for the properties situated at Uttar Pradesh. The said sale notice was sent to the applicants alongwith letter dated 18.09.2023. Due totypographical error the date of auction has wrongly been typed as 15.09.2018 instead of 31.10.2023 in the covering letter of auction sale notice. However, copy of paper publication of auction sale notice was also sent to the applicants alongwith said letter wherein the date of auction sale was clearly mentioned as 31.10.2023. With regard to auction sale the information was given to the applicants through paper publication by publishing the auction sale notice on 17.09.2023 in Hindu and Dainik Bhaskar in respect of the properties situated at Bihar and with regard to properties situated at Uttar Pradesh the sale notice was published on 22.09.2023 in Finance Express and Jansatta, The properties were auctioned on 31.10.2023. Mr. Ramesh Kumar was declared successful bidder in respect of the property situated at Bihar and deposited 25% of bid amount within time. Mis V.N. Enterprises was declared as successful bidder in respect of one of the property situated at Uttar Pradesh and deposited 25% of the bid amount within time and the rest of 75% was also deposited on 16.11.2023 by Mis V.N. Enterprises. Accordingly, Sale Certificate in favour of Mis V.N. Enterprises was issued on 16.11.2023. It is also submitted that before putting the properties on auction sale, the respondent bank had obtained its valuation from 02 registered valuer of the bank.

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It is also submitted that one of the applicants has abused and threatened the Branch Manager of the respondent. In this regard the respondent bank has informed the concerned Police Station.

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It is submitted by the Id. Counsel of the auction purchasers that the auction purchaser Mis V.N. Enterprises through its proprietor Mr. Vishal Khandelwal bonafidely participated in the auction sale held on 31.10.2023 against the sale notice published on 22.09.2023 and was declared successful bidder with regard to one of the property situated at Uttar Pradesh with the bid of Rs.86,12,OOOI-. The auction purchaser deposited 25% of the bid amount immediately. Accordingly, the respondent bank issued a sale confirmation letter dated 31.10.2023. Further, the said auction purchaser deposited the remaining 75% amount on 16.11.2023. Thereafter, the respondent bank issued Sale Certificate on the same day i.e. on 30.12.2023 in favour of said

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SA 349 of 2023 [J)

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DRT,PATNA

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auction purchaser but till date possession of the property has not been delivered to the auction purchaser.

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It is submitted by the ld. Counsel of auction purchaser Ramesh Kumar that the properties were auction sold on 31.10.2023 and Mr. Ramesh Kumar was declared successful bidder in respect of the property situated at Bihar and deposited 25% of bid amount within time but so far as deposit of remaining 75% amount is concerned, nothing has been disclosed by the respondent Bank. Since there was an order dated 27.10.2023 passed by this Tribunal directing the Bank not to disturb the possession of the mortgaged assets and no confirmation of sale was issued by the Bank in favour of the auction purchaser, therefore, the auction purchaser did not deposit the rest amount.

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

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It is alleged that neither the Demand Notice nor the Possession Notice was served upon applicants. The Possession Notice was neither affixed on the secured assets nor published in two leading newspapers. The sale notice dated 18.09.2023 was served upon applicant mentioning date of auction sale as 15.09.2018 which is not possible. Apart from this the sale notice was neither affixed on secured assets nor published in two leading newspapers. The description of the property has also not been mentioned in the sale notice. 03 sale notices have been issued by the bank for auction of the same property which are dated 16.09.2023 published in the newspaper, dated 17.09.2023 received by the applicants and dated 18.09.2023 served to the applicant no.2 through e-mail. The valuation of property has also not been properly obtained by the bank and put the properties on auction at a very meager price. It is also alleged that the respondent bank has annexed the postal receipts dated 04.07.2018 to prove the service of demand notice but the same was sent by PNB not by the Punjab & Sind Bank.

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10.On perusal of records it appears that the Demand Notice dated 02.07.2018 was issued by the bank and the same was sent to the applicant through post on 04.07.2018. The copies of postal receipts are annexed with the counter affidavit as annexure - Ril, page 25. However, on perusal of said postal receipts it appears that the sender is PNB instead of Punjab & Sind BanklPSB. It might be a clerical mistake of postal department. No Tracking Report has been filed.

ORT. PATNA

SA 349 of 2023 [J)

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II. Subsequently, the respondent took possession of the property situated at Bihar by issuing Possession Notice dated 15.09.2018 but the respondent bank failed to file proof of its service upon applicants; however, in this regard the respondent bank stated that the possession notice was physically served upon the applicants. On perusal of copy of said possession notice annexed with counter affidavit as annexure - Rl2, page 26 indicated that there is signature of one Sunil Kr. Singh but the respondent bank failed to disclose the status of said Sunil Kr. Singh in the matter. The possession notice was affixed on secured assets and also published in 'Hindustan' and 'Hindustan Times' on 16.09.2018.

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12.So far as possession of the property situated at Uttar Pradesh is concerned, the respondent bank annexed the copy of possession notice which is not clearly visible, as annexure - Rl4, page 31 which indicates that the said possession notice was issued with the description of property "Part of Plot of land pertaining to khasra no.466, measuring 4048.176 square meters out of total plot of land measuring 14080 sq. mtrs. situated at village hindaipur, pargana dasna, tehsil- dhaulana Hapur U.P., owned by R.K. singha & co. but the respondent bank herein again failed to disclose the status of r.k. singha & co. in the loan account. The proof of affixation also does not indicate that whether it was affixed on property situated at Bihar or on the property situated at Uttar Pradesh. The copy of its publication filed with the counter affidavit indicates that it was published on 19.08.2021 in Business Standard and on 20.08.2021 in the Hindi edition of Business Standard.

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13.The demand notice indicates that there is another property situated as Ghaziabad, Uttar Pradesh bearing sale deed no. 3590 dated 26.02.2016 was mortgaged with the bank but the respondent bank failed to file any copy of possession notice issued against the property situated at Ghaziabad. The respondent bank also failed to file any proof of service of possession notice issued with regard to property situated at Uttar Pradesh as well as its affixation and its publication.

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14.The respondent bank put all the properties on auction sale fixing the date of auction sale as 31.10.2023 by issuing auction sale notice dated 16.09.2023 for the properties situated at Bihar and by issuing another auction sale notice dated 21.09.2023 for the properties situated at Uttar Pradesh. The said sale notices were sent to the applicants as admitted in its application. The sale

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;:_ ~IA/

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DRT. PATNA

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SA 349 of 2023 UJ

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notice was published on 17.09.2023 in Hindu and Dainik Bhaskar in respect of the properties situated at Bihar but from perusal of said publication it appears that the complete description of the properties has not been mentioned in its publication. Neither the area of the property has been disclosed nor have the boundaries been mentioned to fetch the maximum price of property. The respondent bank also failed to file proof of affixation of sale notice on the secured assets. So far as properties situated at Uttar Pradesh are concerned, the sale notice was published on 22.09.2023 in 'Financial Express' and 'Jansatta' but again respondent bank failed to file proof of its affixation. Moreover, two properties of Uttar Pradesh were put .on auction sale but the possession notice indicates that the possession was taken against the property situated at Hapur only.

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15.As stated by the respondent bank the properties were auctioned on 31.10.2023 declaring Mr. Ramesh Kumar as successful bidder in respect of the property situated at Bihar but respondent did not disclose details of payment made by Ramesh Kumar against auction purchase. Merely stated that 25% of the bid amount was deposited within time however, Ld. Counsel of the auction purchaser Ramesh Kumar has stated in its counter affidavit that since there was an order dated 27.10.2023 passed by this Tribunal directing the Bank not to disturb the possession of the mortgaged assets and no confirmation of sale was issued by the Bank in favour of auction purchaser, therefore, the auction purchaser did not deposit the rest amount.

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16.Mls V.N. Enterprises was declared as successful bidder in respect of one of the properties situated at Uttar Pradesh and stated that he has deposited 25% of the bid amount within time and the rest amount of75% was also deposited on 16.11.2023but no documents have been filed to substantiate his argument. On perusal of record it appears that the Sale Certificate was issued in favour of Mis V.N. Enterprises on 30.12.2023.

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17.The respondent bank also did not file the copy of valuation report as it was specifically alleged that the property has been auctioned and sold for a very meager amount.

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18.To sum up, it is proved that, the present application the respondent did not file any tracking report to establish service of demand notice to the applicants and accordingly the doubt regarding the fact that the sender is PNB instead of

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DRT,PATNA

SA 349 of 2023 (JJ

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Punjab & Sind BanklPSB could have been ruled out. The respondent bank failed to file proof of its service of possession notice dated 15.09.2018 with respect to property situated in Bihar. As no explanation has been given for the signatures of one Sunil Kr. Singh and the respondent bank failed to disclose the status of said Sunil Kr. Singh in the matter. Possession notice regarding property of dhaulana Hapur U.P. is said to be owned by R.K. singha & co. but the respondent bank herein again failed to disclose the status of R..K. Singha & co. in the loan account. The proof of affixation also does not indicate whether it was affixed on property situated at Bihar or on the property situated at Uttar Pradesh. It has been shown that such notice was published on 19.08.2021 in Business Standard and on 20.08.2021 in the Hindi edition of Business Standard. The Business standard can not be a newspaper having circulation in the area where the property is situated. The legislature intended to let the fact of publication of such notices be brought into notice of the general public of the locality. The business standard may be popular in the business community and forms a section of the society but it cannot be presumed among the common people at large. These circumstances show that the SARFAESI Action is vitiated by fraud.

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19.No possession notice, its service, affixation and publication could be filed regarding property situated as Ghaziabad, Uttar Pradesh bearing sale deed no. 3590 dated 26.02.2016 was mortgaged with the bank. It is a fundamental breach of the legal requirements for SARFAESI Action.

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The sale notice, for the properties situated at Uttar Pradesh is said to have been published on 22.09.2023 in 'Financial Express' and 'Jansatta' but again respondent bank failed to file proof of its affixation. It is again noteworthy that Financial Express is a Business Newspaper and that cannot be considered/presumed popular among the general public of the locality. This further adds to the act of fraud.

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21.The Bank did not file the copy of the valuation report despite the fact it was specifically alleged that the property has been auctioned and sold for a very meager amount. Also the Bank has pretended that due to an order not to disturb the possession of the mortgaged assets, no confirmation of sale was issued by the Bank in favour of the auction purchaser, therefore, the auction purchaser did not deposit the rest amount. This lame excuse appears to have been taken to provide additional time for payment to the purchaser under

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•

SA 349 of 2023 IJJ

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DRT,PATNA

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collusion.

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In view of the above discussion, SARFAESI action including Sale in question is vitiated by fundamental breach of the law, fraud collusion and inadequate sale proceeds due to undervaluation. Accordingly, Present SA succeeds with costs.

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ORDER

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The application SA 349 of 2023, is allowed with costs. The SARFAESI Action in question against applicants, including auction sale is hereby 9uashed. The respondent Bank shall refund the amount deposited by the auction purchaser with 10% simple interest, subject to the condition that if the possession has been handed over, the auction purchaser will hand over the vacant possession of the mortgaged property within one month from the date when the amount for refund is tendered by the respondent Bank. Otherwise the purchaser will not be entitled for the interests. The respondent Bank will hand over the possession of the property if taken, to the applicant. The respondent Bank will not be entitled to charge any amount except the contractual interest for the questioned SARFAESI Action. . ~ ?M) -1":>

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[KaushalendraYadav]

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Presiding Officer

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Debts Recovery Tribunal, Patna

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Judgment signed, sealed, dated and pronounced in the open court on this

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ew-J
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24THDay of July, 2025.

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[KaushalendraYadav]

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Presiding Officer

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.Debts Recovery Tribunal, Patna

Ms Vidhyadham Educational Trust and others v. Punjab and Sind Bank

Case brief

What is this about?

What did the court decide?

Ms Vidhyadham Educational Trust and others v. Punjab and Sind Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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