Allowed

Davinder Pal Singh and Others v. Uco Bank

DRT19 Sept 2025SA/442/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal set aside notices under Sections 13(2) and 13(4) of the SARFAESI Act and quashed recovery proceedings initiated by a public sector bank against borrowers. The court held that the culpable default in producing track consignment records to prove service of the initial demand notice rendered the subsequent enforcement proceedings illegal.

What did the court decide?

Notice under Section 13(2) and 13(4) set aside; recovery proceedings quashed; fresh proceedings allowed to be initiated after compliance with law.

Davinder Pal Singh and Others versus Uco Bank — Banking and Recovery | DRT (2025)

¶1

DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

¶2

PRESIDED OVER: SH. MRIDULESH KUMAR SINGH

¶3

SECURITIZATION APPLICATION NO.442/2024

¶4

Date of Institution: 28.11.2024 Date of Decision: 19.09.2025

¶5

Sh. Davinder Pal Singh S/o Sh. Beant Singh, R/o House No.32, New Punjab Mata Nagar, Vishal Nagar, Jawaddi Taksal, Ludhiana, Punjab 141116

¶6

Sh. Pradeep Kumar S/o Sh. Davinder Pal Singh, R/o House No.32, New Punjab Mata Nagar, Vishal Nagar, Jawaddi Taksal, Ludhiana, Punjab 141116

¶7

Smt. Ravinder Kaur W/o Sh. Davinder Pal Singh, R/o House No.32, New Punjab Mata Nagar, Vishal Nagar, Jawaddi Taksal, Ludhiana, Punjab 141116

¶8

--Applicants

¶9

Versus

¶10

Authorised Officer, UCO Bank, having Branch Office at G.T. Road, Main Road, Near Vishkarma Chowk, Miller Ganj, Gill Road, Niran Kari Nagar, Miller Ganj, Ludhiana, Punjab 141003

¶11

2^nd Address:

¶12

Authorised Officer, UCO Bank, having Zonal Office at SCO No.55-56-57, Bank Square, Sector 17B, Chandigarh-160017

¶13

--Respondent

¶14

Argued by: Sh. Jiteshwar Malhi, Advocate for Applicant Sh. Ashok Kumar Verma, Advocate for Respondent

¶15

FINAL ORDER

¶16

(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 notice under Section 13(2) of the Act dated 05.08.2024 (Annexure A3), notice under Section 13(4) of the Act dated 16.10.2024 (Annexure A2) and quashing any other proceedings arising under

¶17

2 SA/442/2024 DAVINDER PAL SINGH AND OTHERS VS. UCO BANK

¶18

the Act related to the property in dispute and restore the possession to the applicant.

¶19

(2) It was stated in the application that applicants had availed a Term Loan of Rs. 75 Lacs on 13.01.2022 for purchase the House in which applicant Nos. 1 & 2 are the borrowers and applicant No.3 had mortgaged her property i.e., all part and parcel of immovable property/house cum Plot No.32 bearing MC No. B-28-891/P.M/32-P measuring 155 sq. yards situated at Village Jawaddi, Hadbast No.160, locality known as New Punjab Mata Nagar, Tehsil & District Ludhiana as per Sale Deed bearing vasika No. 202122/101/1/14941 dated 21.01.2022; that applicants were paying the loan installments without being any fault as there was no dispute with the bank being a long time customer from the past many years; that due to huge loss in the business, the account of the applicants became irregular and due to this reason, applicants could not pay the installments to the respondent on time; that thereafter, respondent has wrongly classified the account of applicants as NPA on 20.07.2024; that on 16.10.2024 the Official of the respondent came at the residential address of the applicants and pasted notice under Section 13(4) of the Act, which was not served upon applicants and applicant No.1 immediately approached the respondent to know that the actual fate and outstanding amount of the loan account but no one paid any heed towards the request of the applicants; that applicant No.1 again approached the respondent to get solution of the problem faced by applicants and applicant No.1 came to know that the respondent had also issued notice under Section 13(2) of the Act dated 05.08.2024, which was never served upon applicants; that on the basis of wrong declaration of account as NPA, respondent had issued demand notice under Section 13(2) of the Act; that after issuance of the unserved notices under Section 13(2) & 13(4) of the Act, applicants had again approached the respondent and disclosed their bad conditions due to huge loss in the business and requested the Officials of the respondents to give some breathing time to deposit the amount but the officials of the respondent had not adhered the request of the

¶20

3 SA/442/2024 DAVINDER PAL SINGH AND OTHERS VS. UCO BANK

¶21

applicants and refused to do so and ask to arrange the outstanding amount and pay the same in one stretch; that before classifying the account as NPA, no information or opportunity of representation was given by the respondent; that applicants are always ready and willing to repay the genuine dues of respondent; that applicants had bona-fide intention to repay the dues but respondent cannot recover the amount by illegal means from the applicants; that respondent had failed to follow any of the provisions of the Act and proceeded further without following the procedure or in contravention of procedure enumerated in the Act. Therefore, it was prayed that the present SA may kindly be allowed.

¶22

(3) Reply filed by respondent.

¶23

(4) It is stated in the reply that applicants have

¶24

not come to this Tribunal with clean hands and have concealed the true facts from this Tribunal only with the aim of grabbing the public money and cheating the respondent, so applicants are not entitled for any relief under any circumstances; that applicant No.1 Sh. Davinder Pal Singh, applicant No.2 Sh. Pardeep Singh are the principal borrowers and applicant No.3 is the mortgagor in the said Housing Loan; that all the applicants were jointly and severally liable to pay the dues of respondent; that on 24.12.2021, applicants approached respondent for grant of Term Loan under UCO Home Loan Scheme amounting to Rs. 75 Lacs for purchase of ready built house and respondent sanctioned the said credit facility to the applicants; that applicant No.3 agreed to mortgage the immovable property to be purchased i.e., House property measuring 155 sq. yards bearing House No. 32 MC No. B-28-891/PM/32-P situated at Village Jawaddi Hadbast No. 160, Abadi New Punjab Mata Nagar, Tehsil and District, Ludhiana as security against the said credit facility, therefore respondent had sanctioned the said facility to applicants; that applicant No.3 had acknowledged the deposit of Original Title Deed alongwith other relevant documents regarding her ownership over the said property with the respondent; that respondent had also created charge under CERSAI of the said property, which is annexed as Annexure

¶25

¶26

SA/442/2024 DAVINDER PAL SINGH AND OTHERS VS. UCO BANK

¶27

R37; that applicants failed to adhere the financial discipline of the respondent; that since the applicants had failed to repay the loan amount taken by them from the respondent and manipulated the things to their advantages in such a manner that their account was classified as NPA on 20.07.2024 as per the norms and guidelines laid down by Reserve Bank of India; that respondent had been repeatedly requesting the applicants to regularize the said account but all the efforts of the respondent proved to be in vain and as such an amount of Rs. 74,08,601/- was due as on 20.07.2024; that respondent was left with no other alternative but to serve a notice under Section 13(2) of the Act on 05.08.2024 (Annexure R1) upon the applicants; that since applicants again failed to repay the loan amount, thus as such continuing the proceedings already initiated under the Act, respondent served a notice under Section 13(4) of the Act on 16.10.2024 and has taken the symbolic possession of the mortgaged property in dispute duly mortgaged with the respondent in due course of law; that the said notice was duly received and signed by Smt. Ravinder Kaur i.e., applicant No.3, and the said notice was also pasted outside the mortgaged property and photographs of the same are annexed as Annexures R12 & R13; that said notice was also published in two leading newspapers i.e., Indian Express dated 20.10.2024 and Daily Chardikala dated 20.10.2024, which is annexed as Annexures R14 & R15; that since applicants again failed to repay the entire dues so as such respondent was left with no other alternative but to serve a notice under Section 13(8) of the Act on 18.11.2024 and the said notice along with postal receipts are annexed as Annexure R16 to R27; that since respondent has followed all the Rules and Regulations laid down under the provisions of the Act, as such the present application is liable to be dismissed; that in the present case neither the balance of convenience lies in favour of the applicants nor the applicants have a prima facie case nor the applicants are going to suffer an irreparable loss and injury; that respondent has also filed an OA No.1282/2024 for the recovery of its outstanding amount against the

¶28

5 SA/442/2024 DAVINDER PAL SINGH AND OTHERS VS. UCO BANK

¶29

applicants, which is pending before this Tribunal for an amount of RS. 76,97,246/-; that applicant had filed the present application just to waste the precious time of this Tribunal. Therefore, it was prayed that the present SA may kindly be dismissed.

¶30

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

¶31

(6) I have heard arguments advanced by Sh. Jiteshwar Malhi and Sh. Ashok Kumar Verma, Advocates and gone through the record carefully. (7) Sh. Jiteshwar Malhi, Advocate argued that loan account of applicants was wrongly classified as NPA by respondent on 20.07.2024 because there was no 90 days default in continuation as per RBI Circular. (8) Per contra , Sh. Ashok Kumar Verma, Advocate argued that the account of applicants was classified as NPA on 20.07.2024 in strict compliance of Rules and there is no illegality in it.

¶32

(9) Sh. Jiteshwar Malhi, 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.

¶33

(10) Sh. Jiteshwar Malhi, Advocate further argued that notice under Section 13(2) of the Act dated 05.08.2024 was not served upon applicants according to Rule 8 of the Security Interest (Enforcement) Rules, 2002.

¶34

(11) Per contra , Sh. Ashok Kumar Verma, Advocate argued that notice under Section 13(2) of the Act dated 05.08.2024 was duly served upon all the applicants as per Rules. It was further argued that copy of said notice is annexed as Annexure R1 to the reply. Copy of receipts of registered posts are also filed as Annexures R2 to R10 to the reply.

¶35

(12) It reveals from record that only receipts of registered posts were filed in respect of notice under Section 13(2) of the Act but no track consignment

¶36

6 SA/442/2024 DAVINDER PAL SINGH AND OTHERS VS. UCO BANK

¶37

record filed by respondent to show that the notice in question which was allegedly sent by respondent was ever received by the applicants and concerned. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondent 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 that the notice was duly served upon the applicants and concerned and that not being the position, this Tribunal refuses to draw presumption of service. There is no other type of personal service of the said notice upon the applicants and other concerned, which was either pleaded or proved.

¶38

(13) In light of above factual position, it is established that notice under Section 13(2) of the Act was issued but not proved served upon all concerned in light of the Security Interest (Enforcement) Rules 2002. (14) Sh. Jiteshwar Malhi, Advocate further argued that notice under Section 13(4) of the Act dated 16.10.2024 was not served upon applicants according to Rule 8 of the Security Interest (Enforcement) Rules, 2002.

¶39

(15) Per contra , Sh. Ashok Kumar Verma, Advocate argued that notice under Section 13(4) of the Act dated 16.10.2024 was issued and served strictly in accordance with law. It was further argued that copy of said notice is annexed as Annexure R11. It was further argued that the said notice was duly received and signed by Smt. Ravinder Kaur applicant No.3. It was further argued that the said notice was duly pasted on the secured asset and proof of the same is annexed as Annexures R12 & R13. It was further argued that said notice was published in the ‘Indian Express’ and ‘Daily Chardikala’ (Vernacular) newspapers on 20.10.2024, which are annexed as Annexures R14 & R15.

¶40

(16) Copy of notice under Section 13(4) of the Act dated 16.10.2024 is annexed as Annexure R11, which was duly signed by Smt. Ravinder Kaur (applicant No.3) on 16.10.2024. It reveals from the Memo of

¶41

7 SA/442/2024 DAVINDER PAL SINGH AND OTHERS VS. UCO BANK

¶42

Parties that all the three applicants were resides at the same address and also of the one and the same family. Therefore, it is incorrect to say that the said notice was not received/served upon applicants.

¶43

(17) In light of above factual position and evidences on record, this Tribunal is of the considered opinion that the possession notice was prepared and served upon applicants as per Rules. Nothing is on record which can show that possession notice was defective or not served according to Rules.

¶44

(18) Sh. Jiteshwar Malhi, Advocate further argued that notice under Section 13(2) of the Act is not in accordance with law and in the said notice, details of secured assets intended to be enforce by the secured creditor in the event of non-payment of secured debts by the borrowers should be mentioned as provided in Section 13(3) of the Act.

¶45

(19) Per contra , Sh. Ashok Kumar Verma, Advocate submitted that the said notice was issued strictly in accordance with law.

¶46

(20) In the said notice the details of secured assets was not mentioned in compliance of Section 13(3) of the Act.

¶47

(21) Sh. Jiteshwar Malhi, Advocate further argued that respondent had never created its charge against the property in question with CERSAI.

¶48

(22) Per contra , Sh. Ashok Kumar Verma, Advocate argued that respondent had duly created its charge against the property in question with CERSAI and copy of CERSAI Certificate is annexed as Annexure R37 to the reply.

¶49

(23) Perusal of CERSAI Report (Annexure R37), it shows that the said report was of 03 pages as mentioned in the bottom of pages but only 02 pages were filed before this Tribunal. This fact is not mentioned in the CERSAI report that when the registration with the Central Registry was done by respondent.

¶50

(24) In light of above, it cannot be said that the secured asset was registered with the Central Registry before initiation of SARFAESI proceedings.

¶51

(25) As per Section 26-D of the Act , it is mandatory that no secured creditor shall be entitled to

¶52

8 SA/442/2024 DAVINDER PAL SINGH AND OTHERS VS. UCO BANK

¶53

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.

¶54

(26) No other point was argued/pressed. (27) From the above, it 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 notice cannot be said as legal.

¶55

(28) After the consideration of all facts and circumstances, the SA is liable to be allowed.

¶56

(29) Accordingly, SA is allowed . Proceedings under the Act are illegal therefore, the same are quashed. It is made clear that respondents may again initiate fresh SARFAESI proceedings according to law from the stage of notice under Section 13(2) of the Act. Record be consigned to record room after due compliance.

¶57

Date: 19.09.2025

¶58

Pronounced by me in the open Tribunal.

¶59

(MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Davinder Pal Singh and Others v. Uco Bank

Case brief

What is this about?

What did the court decide?

Davinder Pal Singh and Others v. Uco Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

State Bank of India versus Sh. Jagdev Singh

Punjab Gramin Bank versus Sh. Pal Singh and Another

Kotak Mahindra Bank Limited versus Sh. Manpreet Singh and Others

Punjab Gramin Bank versus Smt. Rajwant Kaur and Another

Indian Bank versus Sh. Mandeep

Punjab Gramin Bank versus Late Sh. Santokh Singh Thr Lrs