Allowed

Neetu Thakur and Another v. Union Bank of India and Another

DRT14 May 2025SA/392/2024

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal quashed the auction sale of mortgaged property initiated under the SARFAESI Act. The court held the notice was invalid due to defective service, failure to provide the statutory 30-day period, and lack of proof of registration of the security interest with CERSAI.

What did the court decide?

SARFAESI proceedings quashed; sale declared void; bank directed to refund auction deposit with 4% interest.

Neetu Thakur and Another versus Union Bank of India and Another — 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.392/2024

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Date of Institution: 30.09.2024

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Date of Decision: 14.05.2025

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Smt. Neetu Thakur W/o Sh. Parkash Thakur R/o House No.19-D, Chirag Chandigarh Enclave, Jandpur, Tehsil Kharar, District Mohali-140301, Punjab

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Sh. Parkash Thakur S/o Sh. Inder Lal R/o House No.19-D, Chirag Chandigarh Enclave, Kharar, District Mohali-140301

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--Applicants

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Versus

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Authorised Officer, Union Bank of India, Stressed Asset Management Branch, SCO 137-138, Sector 8- C, Chandigarh-160008

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Smt. Priyanka Anand W/o Sh. Anuj Madaan, Prem Nagar, Una (T), Basal Industrial Area, Himachal Pradesh-174303

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--Respondents

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Argued by: Sh. Rohit Sapra, Advocate for Applicants Sh. Akaant Kumar Mittal, Advocate for Respondent No.1 None for Respondent No.2

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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) for setting aside sale/auction dated 14.08.2024 be declared as null, illegal and void.

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(2) It was stated in the application that applicants have approached this Tribunal being aggrieved by the action/measures of the respondent No.1, whereby the immovable property of the applicant No.1 i.e., House No.19, comprising of four flats i.e., House No.19-A to 19D, Chirag Chandigarh Enclave, Jandpur, Tehsil Kharar, District SAS Nagar (Mohali) has been sold/auctioned on

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SA/392/2024

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NEETU THAKUR AND ANOTHER VS. UNION BANK OF INDIA AND ANOTHER

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14.08.2024 to respondent No.2, the Auction Purchaser; that applicants became aware of this sale on 20.09.2024 when few persons visited the property, instructing the applicants and the tenants in House No.19-a to 19-C to vacate the premises within 7-10 days, claiming to have purchased the property in the auction from the bank; that applicants were completely shocked and taken aback by this revelation as the applicants did not receive any notice from the respondent No.1 in this regard; that respondent No.1 vide sanction letter dated 22.02.2017 sanctioned a Housing Loan of Rs.90 Lacs to the applicant No.1, wherein Rs. 67.50 Lacs was sanctioned towards the purchase of House No.19, comprising of four flats mentioned above and the remaining Rs.22.50 Lacs was sanctioned for furnishing of the said four flats situated in Chirag Chandigarh Enclave, Jandpur, Tehsil Kharar, District Mohali; that to secure the aforesaid loan, applicant No.2 stood as guarantor, besides applicant No.1 mortgaged the flats with respondent No.1; that the said loan of Rs.90 Lacs was repayable in 240 EMIs of Rs.80,109/- each along with interest @8.85% p.a.; that further at the time of sanction, respondent No.1 had assessed the value of the entire property i.e., House No.19 at Rs.1,32,50,000/-; that applicant No.1 had purchased the flats with the intention of residing in one and renting out the remaining three, using the rental income to assist in covering the EMI payments to the respondent No.1; that applicants have been regularly depositing the EMIs and have paid Rs.48 Lacs (approximately) towards repayment of their Housing Loan of Rs.90 Lacs; that on 20.09.2024, few persons visited the property, instructing the applicants and the tenants in House No.19 to vacate the premises within 7-10 days, claiming to have purchased the property in the auction from the respondent No.1; that thereafter, applicants contacted the respondent No.1, who refused to share any information on the ground that the property has been sold and asked the applicants to search the website of ebkray for any information; that upon searching the said website, applicants found a 15 days sale notice dated 23.07.2024, whereby the respondent No.1 had put the property to e-auction on 14.08.2024; that perusal of the 15 days sale notice (Annexure A5) revealed that respondent No.1 claims to have issued and served a

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3 SA/392/2024 NEETU THAKUR AND ANOTHER VS. UNION BANK OF INDIA AND ANOTHER

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demand notice dated 19.08.2020 and symbolic possession notice dated 25.04.2022 upon applicants; that no such demand notice and symbolic possession notice was served upon applicants, nor it was affixed on the property nor published in the newspaper. It was prayed that in the above facts and circumstances the present SA may kindly be allowed.

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(3) Reply filed by respondent No.1.

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(4) It is stated in the reply that the SA applicants have not come this Tribunal with clean hands; that repeated opportunities were given to them to deposit the outstanding amount but the applicant miserably failed to fulfil their own commitments; that respondent No.1 is a secured creditor, who advanced the loan facilities to the SA applicants and to secure the aforementioned loan facilities, applicants mortgaged House No.19, Chirag Chandigarh Enclave, Jandpur, Tehsil Kharar, District SAS Nagar (Mohali), owned by Smt. Neetu W/o Sh. Parkash Thakur vide Sale Deed No.9546 dated 22.02.2017; that when the borrower made defaults in the repayment of the monthly installments as a regular occurrence, respondent No.1 left with no other remedy but to invoke the provisions of the Act; that despite several opportunities having been granted to the applicants, they failed to pay outstanding amount; that consequently loan account of the applicants was classified as NPA by the respondent No.1 on 30.12.2017 and the applicants were served notice dated 19.08.2020 under Section 13(2) of the Act to discharge the liability within a period of 60 days from the date of the notice, however they failed to deposit/pay the outstanding amount, which was Rs.90,47,309.87p; that despite the demand notice, applicants did not pay the outstanding amount to the respondent No.1; that consequently, the action under Section 13(4) of the Act was initiated by the respondent No.1 to recover public money, defaulted upon by the SA applicants and accordingly, respondent No.1 issued notice under Section 13(4) of the Act and took symbolic possession of the secured asset on 25.04.2022; that the said notice was duly served as per the statutory mandate under the Act and Rules upon applicants; that thereafter, respondent No.1 has complied with all the mandatory requirements under the Act including service, publication and affixation of the sale notice dated 23.07.2024; that respondent

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4 SA/392/2024 NEETU THAKUR AND ANOTHER VS. UNION BANK OF INDIA AND ANOTHER

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No.1 has sold the mortgaged property to the respondent No.2 i.e., Auction Purchaser through e-auction held on 14.08.2024 and Sale Certificate dated 19.09.2024 under Rule 9(6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ‘the Rules’ for brevity) was issued to respondent No.2. It was prayed that the present SA may kindly be dismissed.

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(5) No reply filed by respondent No.2.

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(6) Replication by applicant was filed to the reply filed by respondent No.1, wherein the contents of SA were reiterated and that of the reply to the SA were denied.

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(7) I have heard arguments advanced by Sh. Rohit Sapra and Sh. Akaant Kumar Mittal, Advocates and gone through the record carefully. None has appeared on behalf of Respondent No.2 for arguments.

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(8) Sh. Rohit Sapra, Advocate further argued that applicants have challenged the auction sale dated 14.08.2024 in the SA. It was further argued that this SA was filed on 30.09.2024 with the Registry.

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(9) Per contra , Akaant Kumar Mittal, Advocate argued that this SA was filed beyond the permissible time limit of 45 days as the applicants have not challenged the sale notice dated 23.07.2024 and they have challenged the auction sale dated 14.08.2024, therefore this SA is barred by Limitation and liable to be dismissed.

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(10) Admittedly, this SA was filed challenging the auction sale dated 14.08.2024. Admittedly, this SA was filed on 30.09.2024 within 45 days from the date of auction. Therefore, there is no force in the argument of Sh. Akaant Kumar Mittal, Advocate that this SA is barred by Limitation.

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(11) Sh. Rohit Sapra, Advocate argued that notice under Section 13(2) dated 19.08.2020 and notice under Section 13(4) dated 25.04.2022 of the Act were not served according to Rule 8 of the Rules. It was further argued that non-service of demand notice was extinguished the legal right of applicant as available to him under Section 13(3-A) of the Act.

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(12) Per contra , Sh. Akaant Kumar Mittal, Advocate argued that notice under Section 13(2) dated 19.08.2020 and notice under Section 13(4) dated 25.04.2022 of the Act were duly served upon applicant and the guarantor as per Rules. It was further argued that copies of said

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5 SA/392/2024 NEETU THAKUR AND ANOTHER VS. UNION BANK OF INDIA AND ANOTHER

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notices are annexed to the reply along with the proof of service. Copies of receipts of registered posts and publication in the newspapers are filed as Annexures R1 (Colly), R3 to R5.

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(13) It reveals from record that Sanction Letter of Housing Loan was filed as Annexure A1 and in the said letter there are one address of applicants as House No.901, Sector-80, SAS Nagar Mohali and the second address is House No.19, GF, FF, SF, Third Floor, Chirag Chandigarh Enclave II, Kharar, Punjab.

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(14) It further reveals from record that notice under Section 13(2) of the Act Annexure R1 (Colly) and notice under Section 13(4) of the Act Annexure R3 were issued only on one address of the applicants, which were not served upon applicants and respondent No.1 has not even tried to issue the said notices on the second address of the applicants as mentioned in the Sanction Letter. It further reveals from record that only receipts of registered posts were filed in respect of notices under Section 13(2) & 13(4) of the Act, which were issued on the one address of applicants but no track consignment record filed by respondent No.1 to show that the notices in question, which were allegedly sent by respondent No.1 were ever received by the applicants. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondent No.1 notices in question were sent in year, 2020. 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 notices were duly served upon the applicants and that not being the position, this Tribunal refuses to draw presumption of service.

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(15) It is admitted by learned counsel for respondent No.1 that no tracking reports were annexed along with copy of receipts of registered posts.

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(16) Sh. Rohit Sapra, Advocate further argued that as per Rule 3 of the Rules, Authorised Officer of respondent No.1 has not chosen the service of demand notice by affixing a copy of the notice on the outer door or some other conspicuous part of the house or building of the applicants.

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6 SA/392/2024 NEETU THAKUR AND ANOTHER VS. UNION BANK OF INDIA AND ANOTHER

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(17) In light of above factual matrix, it is established that notices under Section 13(2) & 13(4) of the Act were issued but not proved served upon all concerned in light of the Rules. (18) Sh. Rohit Sapra, Advocate further argued that sale notice dated 23.07.2024 for the sale held on 14.08.2024 was not served upon applicants providing 30 days time as per Rule 8 (6) of the Rules. It was further argued that it is a well settled law that as per Rule 8(6) & 9(1) of the Rules, a clear 30 days individual notice to the borrower and also a public notice by way of publication in the newspaper is to be given. Therefore, sale conducted on 14.08.2024 is illegal.

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(19) Per contra , Sh. Akaant Kumar Mittal, Advocate argued that sale notice was duly served upon applicants providing 30 days period before the scheduled date of auction. It was further argued that sale notice was duly served through registered posts, through affixation as well as through publication in two widely circulated newspapers i.e., ‘Business Standard’ (English) & ‘Rozana Spoksman’ (Vernacular) strictly in compliance of Rules. It was further argued that copy of said notice is annexed to the reply along with the proof of service. Copies of receipts of registered posts and publication in the newspapers are filed as Annexures R6 (Colly) to R8. (20) It reveals from record that sale notice Annexure R6 dated 23.07.2024 was issued only on one address of the applicants and respondent No.1 has not even tried to issue the said notice on the second address of the applicants as mentioned in the Sanction Letter. It further reveals from record that only receipts of registered posts were filed in respect of sale notice, which was issued on the one address of applicants but no track consignment record filed by respondent No.1 to show that the notice in question, which was allegedly sent by respondent No.1 was ever received by the applicants. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondent No.1 notice in question was sent in year, 2024. 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

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7 SA/392/2024 NEETU THAKUR AND ANOTHER VS. UNION BANK OF INDIA AND ANOTHER

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that the notice was duly served upon the applicants and that not being the position, this Tribunal refuses to draw presumption of service.

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(21) It is admitted by learned counsel for respondent No.1 that no tracking reports were annexed along with copy of receipts of registered posts. (22) As per Rule 8 of the Rules, it is mandatory to serve sale notice by all three modes and the sale notice has to be served upon all borrower, guarantor and mortgagor. Perusal of record shows that the sale notice was not served personally upon the applicants. Therefore, the service of sale notice is defective in light of Rule 8 of the Rules and is liable to be set aside only on this ground alone.

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(23) Sale notice (Annexure R6 (Colly)) was issued on 23.07.2024 for the sale of secured asset on 14.08.2024. Admittedly, there is no clear 30 days time was there for the sale as per Rule 8 (6) & 9(1) of the Rules. It was not argued on behalf of respondent No.1 that this sale notice was issued for the subsequent sale rather it was argued that the sale notice was issued and served with clear 30 days time.

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(24) Sh. Rohit Sapra, Advocate further argued that the sale notice was published in the newspaper ‘Business Standard, which is not widely circulated newspaper in and around Mohali, where applicants resides. It was further argued that he has filed copy of Annual Report of the year 2021-2022 of the Registrar of Newspapers for India as Annexure A7 along with the replication in which it was mentioned that the ‘Business Standard’ paper is published from Chandigarh and it has circulation figure of 1555 in comparison to the newspaper ‘Tribune’, which has a circulation figure of 44279, ‘Hindustan Times’, which has a circulation figure of 43788 and ‘The Times of India’, which has a circulation figure of 58923. It was further argued that above comparative figures of the circulation shows that the ‘Business Standard’ was not the leading newspaper having sufficient circulation in the locality concerned.

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(25) Per contra , Sh. Akaant Kumar Mittal, Advocate argued that the ‘Business Standard’ newspaper is also leading newspaper.

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(26) No cogent proof was placed on record by respondent No.1 in rebuttal to the Annexure A7.

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8 SA/392/2024 NEETU THAKUR AND ANOTHER VS. UNION BANK OF INDIA AND ANOTHER

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Therefore, in the considered opinion of this Tribunal it cannot be accepted that ‘Business Standard’ newspaper is a sufficiently circulated newspaper in and around District Mohali and therefore, publication of sale notice was also defective in terms of Rule 8(6) of the Rules.

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(27) Sh. Rohit Sapra, Advocate further argued that respondent No.1 has not obtained a fresh valuation report before putting the property on sale as per Rule 8(5) of Rules. It was further argued that at the time of sanction of loan in August, 2017 the respondent No.1 had assessed the value of the property at Rs.132.50 Lacs and as per valuation report dated 27.09.2024 (obtained by applicants) (Annexure A6) of an approved valuer of various Banks, the market value of the property is Rs.163.58 Lacs. It was further argued that the reserve price of Rs.80 Lacs has been fixed arbitrarily without application of mind.

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(28) Per contra , Sh. Akaant Kuamr Mittal, Advocate argued that the reserve price was fixed after obtaining the valuation report dated 29.01.2024 by the approved valuer, which is annexed as Annexure R10 along with IA No.2048/2024.

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(29) Valuation report dated 29.01.2024 Annexure R10 is annexed by the respondent No.1 along with IA No. 2048/2024. This valuation report was obtained on 29.01.2024 whereas the sale was conducted on 14.08.2024, therefore this valuation report cannot be said in accordance with the Rules.

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(30) Sh. Rohit Sapra, Advocate further argued that secured creditor has not registered the mortgaged property with the Central Registry in compliance of mandatory provision under Section 26-D of the Act. It was further argued that alleged CERSAI Certificate annexed by respondent No.1 as Annexure R9 along with IA No.2048/2024 was not a CERSAI Certificate, it is only a copy of ‘Addition of Security Interest Challan’.

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(31) Per contra , Sh. Akaant Kumar Mittal, Advocate argued that respondent No.1 had duly created its charge against the property in question with CERSAI and copy of CERSAI Certificate is annexed as Annexure R9 along with IA No.2048/2024.

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(32) Perusal of the document filed by respondent No.1 as CERSAI Certificate, it appears that complete details of mortgaged property as well as name and

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address of borrower etc. are not mentioned in it, which were required for the CERSAI Registration. Therefore, this document/Challan cannot be presumed or assumed as CERSAI Certificate.

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(33) As per Section 26-D of the Act, it is mandatory that no secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter-III unless the security interest created in its favour by the borrower has been registered with the Central Registry.

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(34) In absence of CERSAI Certificate or any equivalent with complete details of CERSAI, it appears that secured asset was not registered under Section 26-D of the Act by respondent No.1, which is pre-requisite for initiating of SARFAESI proceedings. Therefore, on this ground also SARFASEI proceedings are liable to be quashed.

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(35) Sh. Rohit Sapra, Advocate further argued that copy of Sale Certificate dated 19.09.2024 was filed along with the reply to SA as Annexure R9 by respondent No.1, which was prepared with false facts. It was further argued that in the said Sale Certificate dated 19.09.2024 it was mentioned that possession of the property in question was handed over to the Auction Bidder but the physical possession of the property in question is with applicant as on date.

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(36) Sh. Akaant Kumar Mittal, Advocate has not argued/replied on this point.

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(37) Sh. Rohit Sapra, Advocate further argued that respondent No.2 has not paid balance 75% of purchase price to the Authorised Officer within the prescribed period of 15 days. Though Sh. Akaant Kumar Mittal, Advocate argued that the amount was deposited within the stipulated period but details of deposits are neither mentioned in the reply nor any documentary proof was filed nor disclosed during the course of arguments. Therefore, only on the basis of vague reply it cannot be presumed that the rest 75% amount was deposited within stipulated period as per law.

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(38) No other point/argument was pressed or advanced by any party.

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(39) This Tribunal has considered all facts and evidence available on record as well as arguments advanced by the learned counsel for parties. It is clear

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10 SA/392/2024 NEETU THAKUR AND ANOTHER VS. UNION BANK OF INDIA AND ANOTHER

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that sale notice dated 23.07.2024 was not served upon all concerned by all three modes as required under the law. Sale notice was not issued and served providing 30 days clear time. Therefore, the sale notice and auction process as well as sale is liable to be quashed.

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(40) From the above facts, it also 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 applicants then building constructed on the said base (notice) cannot be said as legal.

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(41) Non-registration of CERSAI is a crucial illegality in the SARFAESI proceedings. It is not proved that the secured asset was registered with the Central Registry. (42) After considering the above facts and circumstances as well as evidence on record, present SA is liable to be allowed.

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(43) SA is allowed. SARFAESI proceedings initiated by the respondent No.1 is quashed. Respondent No.1 is directed to return the amount deposited by the Auction Purchaser immediately with interest at the rate of 4% from the date of deposit till the date of actual payment. It is made clear that respondent No.1 may again initiate fresh SARFAESI proceedings according to law. Record be consigned to record room after due compliance. Date: 14.05.2025 Pronounced by me in the open Tribunal. (MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Neetu Thakur and Another v. Union Bank of India and Another

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What is this about?

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Neetu Thakur and Another v. Union Bank of India and Another

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