Dismissed

Pawan Kumar and Another v. Sbfc Finance Private Limited

DRT22 Aug 2025SA/44/2022

Case brief

AI extract

What is this about?

The Securitization Arbitration Application, filed to set aside possession notices under the SARFAESI Act, was dismissed. The Tribunal held that it lacks authority to mediate loan settlements or treat rejection of an OTS proposal as illegal grounds to quash proceedings. It found no illegality in the NPA classification or the notice compliance based on the record. The application was accordingly dis

What did the court decide?

The Securitization Application No. 44/2022 was dismissed as there was no illegality or irregularity shown in the respondent's proceedings.

Pawan Kumar and Another versus Sbfc Finance Private Limited — 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.44/2022

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Date of Institution: 11.04.2022 Date of Decision: 22.08.2025

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Sh. Pawan Kumar S/o Sh. Chetan Sawroop, R/o House No. 189, Rama Street, Ward No.4, Area Sanatan Mandir, Doraha, Sanatan Mandir, District Ludhiana (Punjab) 141421

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Smt. Bimla Devi W/o Sh. Chetan Sawroop R/o House No.189, Rama Street, Ward No.4, Area Sanatan Mandir, Doraha, Sanatan Mandir, District Ludhiana (Punjab) 141421

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--Applicants

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Versus

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Authorised Officer, SBFC Finance Pvt. Ltd., Registered Office at Unit No.103, 1^st Floor, C & B Square, Sangam Complex, CTS Bo.95A, 127 Andheri Kurla Road, Village Chakala, Andheri (East) Mumbai (Maharashtra) 400059

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2^nd Address:

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SBFC Finance Pvt. Ltd., Office at Naptune Element, Plot No.F3 & F3-1, Road No.22, Wagle Industrial Estate, Kisan Nagar, Thane (West) (Maharashtra) 400604

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--Respondent

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Argued by: Sh. Vivek Verma, Advocate for Applicants Ms. Seema Pasricha, Advocate for Respondent

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FINAL ORDER

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(1) This Securitization Application was filed under Section 17 & 29 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for brevity) to set aside notice under Section 13(2) of the Act dated 27.04.2021 and Possession notice under Section 13(4) of the Act dated 23.02.2022 and all served/unserved notices issued under the Act. (2) It was stated in the application that applicant No.1 is a borrower of Term Loan Facility; that applicant

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SA/44/2022

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PAWAN KUMAR AND ANOTHER Vs. SBFC FINANCE PVT. LTD.

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No.1 is a son of applicant No.2 and applicant No.2 is the owner of the property in question against which respondent has initiated proceedings under the Act; that applicant No.2 duly mortgaged her only residential house with Reliance Home Finance Limited; that applicant No.1 had availed Home Loan of Rs.59,80,000/- from Reliance Home Finance Limited in December, 2017 and the said Term Loan was to be paid in monthly installment of Rs.83,223/-; that thereafter, Reliance Home Finance Ltd. was assigned to SBFC Finance Pvt. Ltd.; that the account was perfect as per Banking Norms and applicants were depositing the monthly installments as per the terms and conditions of the Term Loan; that applicants were repaying the dues of bank regularly however, as per the bank, the applicants failed to maintain the financial discipline as per the requirement of bank therefore, account of applicants was classified as NPA on 31.03.2021; that due to Covid-19 Pandemic the business of applicant No.1 was also affected and the applicants suffered huge losses due to heavy cash crunch therefore, the debtors failed to repay the amount; that applicants received notice dated 27.04.2021 under Section 13(2) of the Act issued by respondent to pay a sum of Rs. 63,73,577/within 60 days; that applicants duly responded to the notice issued by respondent on 31.08.2021 by setting forth its legitimate objections, contentions and representation under Section 13(3-A) of the Act; that purported Authorised Officer did not give reply to the objections filed by applicants rather Sh. Joyal Nadar from Legal Department decided the objections vide reply dated 23.09.2021 and rejected the same in a summary manner without assigning proper reasons; that respondent has failed to follow the settled provisions of law, as per law the reply is to be communicated within 15 days however, the same was not decided by Authorised Officer within time; that applicants also responded to the reply dated 23.09.2021 of respondent by reply dated 05.10.2021; that Sh. Joyal Nadar from Legal Department vide reply dated 16.10.2021 again rejected it in summary manner without assigning proper reasons and without dealing with those objections in proper manner; that applicants

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SA/44/2022

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PAWAN KUMAR AND ANOTHER Vs. SBFC FINANCE PVT. LTD.

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being bona fide borrower and in order to settle the account sent OTS offer Letter dated 21.10.2021 to respondent; that respondent without considering the OTS offer of the applicants and even without deciding the same, issued possession notice dated 23.02.2022, which was not served upon applicants as per Rules; that applicants again sent fresh OTS Offer Letter dated 23.02.2022 in order to settle the account forever for sum of Rs.42 Lacs to be paid by 30.06.2022; that applicants offered to pay Rs.07 Lacs and also balance sum of Rs.35 Lacs by selling the property with due permission from the respondent; that bare scrutiny of the notice under Section 13(2) of the Act would reflect that unwarranted amounts have been debited to account and exorbitant rate of interest has been charged with other expenses; that in view of the above submissions, respondent having no right to proceed against the applicants based on the notices served under Section 13(2) and 13(4) of the Act. It was prayed that the action taken by respondent against the applicants based on the said notices is illegal, null and void, not sustainable under law and as such is liable to be set aside/quashed.

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(3) Reply filed by respondent.

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(4) It was stated in the reply that the present Securitization Application filed by applicants is prima facie not maintainable as per the averments of the applicants themselves; that applicants have not come this Tribunal with clean hands; that applicants admitted the factum of creation of equitable mortgage of their property against the credit facility availed from the respondent; that applicants did not adhere to payment schedule of monthly installments rather they delayed payments in respect of their liability of monthly installments and the repayment has been made after repeated reminders and requests by respondent; that it is incorrect to say that loan account of applicants was perfect; that applicants themselves admitted that they failed to make the payments as per the schedule, therefore loan account of applicants had been declared as NPA on 31.03.2021 in accordance with the directives, Guidelines relating to Assets Classifications issued by the Reserve Bank of India from time to time

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SA/44/2022

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PAWAN KUMAR AND ANOTHER Vs. SBFC FINANCE PVT. LTD.

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read with the provisions of the Act; that since applicants failed to make payment throughout in the year of 2021, therefore notice dated 27.04.2021 under Section 13(2) of the Act was sent to the applicants as per the Act and Rules; that the vague and misconceived objections have been raised by applicants just to buy the time to delay the process; that the objections to notice dated 27.04.2021 has been filed on behalf of applicants after the lapse of prescribed time limit i.e., 60 days from the date of receipt of said demand notice under the provisions of Act; that respondent has duly replied to the objections as per law and the same has been sent through registered post to applicants within time on 23.09.2021; that again Authorised Officer of respondent has duly replied the objections dated 05.10.2021 vide reply dated 16.10.2021; that applicants have sent OTS proposal just to prolong the repayment of loan amount, however applicants did not even follow to their OTS schedule too; that applicants had neither made any substantial efforts to regularize the repayment, which shows that it was not a bonafide offer; that thereafter, respondent issued possession notice dated 23.02.2022 under Section 13(4) of the Act; that the said notice was sent to all the borrowers including applicants through registered post on 28.02.2022; that the said notice was also published in the newspapers on 28.02.2022 and duly affixed on the collateral property; that OTS Offer Letter dated 15.03.2022 made by applicants afresh was rejected and duly conveyed the same to applicants telephonically while stating valid reason that OTS offered by applicants failed to justify the foreclosure amount of loan; that the charges and interest are levied as per the terms and conditions of Loan Agreement as well as Sanction Letter; that applicants were well aware of the terms and conditions on which the loan have been sanctioned; that no cause of action arose in favour of applicants to file the present SA. Therefore, it was prayed that the present SA may kindly be dismissed.

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(5) No replication was filed by applicants to the reply filed by respondent.

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5 SA/44/2022

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PAWAN KUMAR AND ANOTHER Vs. SBFC FINANCE PVT. LTD.

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(6) I have heard arguments advanced by Sh. Vivek Verma and Ms. Seema Pasricha, Advocates and gone through the record carefully.

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(7) Sh. Vivek Verma, Advocate argued that respondent has wrongly classified the account of applicants as NPA on 31.03.2021 because there was no 90 days default in continuation as per RBI Circular. (8) Per contra , Ms. Seema Pasricha, Advocate argued that the account of applicants was classified as NPA in strict compliance of Rules and there is no illegality in it.

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(9) Sh. Vivek Verma, Advocate could not explained as to how loan account was wrongly classified as NPA. There is nothing on record, which can show that loan accounts can be classified as NPA only after continuous default of 90 days. In the considered opinion of this Tribunal, if borrower defaults in payment of three installments on due dates and whenever there is default of total 90 days then secured creditor is entitled to classify the loan account as NPA, if there is no legal impediment.

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(10) Sh. Vivek Verma, Advocate further argued that after receiving notice under Section 13(2) of the Act dated 27.04.2021, applicants have sent representation under Section 13(3-A) of the Act to respondent on 31.08.2021 and respondent had replied to the said objections vide reply dated 23.09.2021 but beyond the stipulated period i.e., within 15 days. Thereafter, again applicants have filed objections to the reply dated 23.09.2021 sent by respondent on 05.10.2021 and respondent had replied to objections dated 16.10.2021 in a summary manner without assigning proper reasons and without dealing with those objections in proper manner.

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(11) Per Contra , Ms. Seema Pasricha, Advocate argued that applicants have raised certain objections vide representation under Section 13(3-A) of the Act dated 31.08.2021 against the demand notice dated 27.04.2021, which was duly taken into consideration by the respondent and was duly replied to the objections vide reply dated 23.09.2021 (Annexure R3)(Colly) within stipulated period. It was further argued that respondent has also replied to the objections dated

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6 SA/44/2022

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PAWAN KUMAR AND ANOTHER Vs. SBFC FINANCE PVT. LTD.

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05.10.2021 filed by applicants afresh vide reply dated 16.10.2021 (Annexure R4) (Colly). It was further argued that applicants themselves had filed objections to the notice dated 27.04.2021 beyond stipulated period i.e., after 60 days as per law. Therefore, it is incorrect to say that respondent has filed reply beyond stipulated period.

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(12) It reveals from record that applicants have moved representation under Section 13(3-A) of the Act dated 31.08.2021 to the notice under Section 13(2) of the Act dated 27.04.2021 after about 120 days, which is Annexure A2 to the SA. It further reveals from record that respondent, replied to the above representation on 23.09.2021 and copy of this reply was filed by respondent as Annexure R3 (Colly). Fact of receiving reply to representation under Section 13(3-A) of the Act was also mentioned in the SA. It further reveals from record that representation under Section 13(3-A) of the Act (Annexure A2) was prepared on 31.08.2021 but the same was posted on 07.09.2021, which shows that the representation was sent on 07.09.2021. Though no track record was filed by applicants but it can be presumed that the said registered post was received within 2-3 days and thereafter, the reply to said representation (Annexure A3) was prepared on 23.09.2021. Therefore, it is incorrect to say that respondent have not replied to representation under Section 13(3-A) of the Act within the limit provided under the Act.

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(13) It further reveals from record that applicants again moved objections to the reply filed by respondent dated 23.09.2021 on 05.10.2021, which is Annexure A4 to the SA. It further reveals from record that respondent, replied to the above representation on 16.10.2021 and copy of this reply was filed by respondent as Annexure R4 (Colly). Fact of receiving reply to these objections was also mentioned in the SA. (14) It further reveals from record that the replies to representations under Section 13(3-A) of the Act covered all objections in respect of demand notice were replied. In fact, applicants are themselves are on fault for non-filing/raised the objections to demand notice at the earliest after receiving the said notice. Therefore, it

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SA/44/2022

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PAWAN KUMAR AND ANOTHER Vs. SBFC FINANCE PVT. LTD.

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is incorrect to say that respondent has not filed the reply to representation of applicants within stipulated period.

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(15) Sh. Vivek Verma, Advocate further argued that notice under Section 13(4) of the Act dated 23.02.2022 was not served upon applicants as per Rules.

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(16) Per contra , Ms. Seema Pasricha, Advocate argued that notice under Section 13(4) of the Act dated 23.02.2022 was duly served upon applicants and other concerned as per Rules. It was further argued that copy of said notice along with receipts of registered post is annexed as Annexures R5 & R6 to the reply. It was further argued that the said notice was also published in the two leading newspapers and was also affixed on the conspicuous place of the property as per Rules, which are Annexure R7 (Colly) & R8 to the reply.

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(17) It reveals from record that notice under Section 13(4) of the Act was issued and sent on the same address as was mentioned in the notice under Section 13(2) of the Act. It was admitted fact that notice under Section 13(2) of the Act was served upon applicants then it may be safely presumed that the notice under Section 13(4) of the Act was also received by applicants. It further reveals from record that the said notice was also affixed on the conspicuous part of the secured asset (Annexure R8) and the same was also duly published in the two leading newspapers (Annexure R7) (Colly). This shows that the possession notice was served on the persons concerned as per the Rules.

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(18) Sh. Vivek Verma, Advocate further argued that applicants are ready to settle the matter with respondent but despite of readiness of applicants, respondent is not ready for the settlement/OTS. (19) Settlement of any loan account under OTS or otherwise is the sole prerogative of secured creditor i.e., Bank/FI. Any borrower has no right to compel the secured creditor to settle the loan account under OTS or otherwise.

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(20) During my day-to-day work in the Tribunal, it has came in the knowledge that every second borrower wants for settlement under OTS and not for deposit of

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SA/44/2022

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PAWAN KUMAR AND ANOTHER Vs. SBFC FINANCE PVT. LTD.

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total outstanding amount. Since Banks/FIs accepts the OTS proposals at very low amount in comparison to the total outstanding, this ailment is growing very high on day by day.

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(21) As per established law this Tribunal has no authority for mediation regarding settlement of loan account between borrower and bank/FI.

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(22) In the Act nowhere, it is provided that on the ground of non-settlement of loan under OTS by secured creditor this Tribunal can set aside the SARFAESI proceedings. In fact, it is settled law that any borrower cannot claim as a right that OTS proposal submitted by him/her/it must be accepted by the Bank/FI.

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(23) No other point was argued/pressed.

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(24) After the consideration of all facts and circumstances as well as evidence on record, there is no illegality or irregularity shown in the proceedings initiated by respondent under the Act and no case is made out in favour of applicants and this SA deserves to be dismissed.

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(25) Accordingly, SA is dismissed.

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Record be consigned to record room after due compliance.

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Date: 22.08.2025

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Pronounced by me in the open Tribunal.

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(MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Pawan Kumar and Another v. Sbfc Finance Private Limited

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Pawan Kumar and Another v. Sbfc Finance Private Limited

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