Allowed

Ms Noor Enterprises and others v. Bank of India

DRT14 May 2025SA/50/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application under Section 17 of the SARFAESI Act seeking to quash a bank's enforcement action. The Tribunal quashed the proceedings for lack of proof regarding compliance with mandatory procedural rules, including notice affixation, newspaper publication, and valuation. Pending IA applications were disposed of accordingly.

What did the court decide?

The SARFAESI action against the applicant is quashed, and all pending IA applications are disposed of accordingly.

Ms Noor Enterprises and others versus Bank of India — Contract and Commercial Disputes | DRT (2025)

DRT,PATNA

SA50of 2023IJ)

DEBTS RECOVERY TRIBUNAL PATNA

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Presiding Officer: Shri Kaushalendra Yadav

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SA- 50 of 2023

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M/s Noor Enterprises, represented through Md. Sarwar Ola, 5/0 Late Nurullah, Residentof M.S. Manzil, Kadirabad,Post- Lalbagh,District - Darbhanga,Bihar.

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.........Applicant

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Versus

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The Zonal Manager, Bank of India, Pankaj Market, Saraiyaganj, P.B. No. 17, Muzaffarpur, Bihar.

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The Chief Manager cum Authorized Officer, Bank of India, Basudeopur Branch, PassportOffice, Dilli More, Darbhanga, Bihar.

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The Branch Manager, Bank of India, Basudeopur Branch, Pasport Office, Dilli More, Darbhanga, Bihar.

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Mr. Shiv Kumar Yadav, R/o Village - Udhaba Dahtola, P.O.- Laukaha, P.S._ Laukaha,District - Madhubani - 847421.

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Most. Zeenat Ola, W/o LateMd. Nurullah (Guarantor/Mortgagor)

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Md. Haider Afroj, 5/0 Late Md. Nurullah (Guarantor).

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Both 5 & 6 are residents of M.S. Manzil, Kadirabad, Post - Lalbagh, District _ Darbhanga.

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--respondent

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Present:

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For the Applicant : Sh. Prashant Kumar,Advocate For the Respondent No.1 to 3/ Bank : Sh.Satya RanjanSinha,Advocate For the Respondent No.4 : Dr. Binay Kr. Singh,Advocate For the Respondent NO.5 & 6 : Sh.A.K.Sharan,Advocate

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Dated: 14.05.2025

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JUDGMENT

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Present application u/s 17 of SARFAESIAct has been filed with a prayer to quash entire SARFAESIaction taken against the properties of applicant alongwith the possessionnotice dated 23.01.2023.

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During pendency of SA, S. applicant filed IA 164/2023 with a prayer to stay the operation of Sale Notice dated 21.02.2023 and direct the bank to maintain the status quo. Further, IA 529/2023 was filed with a prayer to/the operation of =:

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DRT,PATNA

SA 50 of 2023 [J)

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Sale Notice dated 31.07.2023. IA 593/2023 was filed with a prayer to take leave to file Supplementary Affidavit in the matter. Further, the applicant filed IA 567/2023 with the prayer to de-reservethe casewhich was reserved for order vide order dated 05.09.2024.

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During the pendency of present SAthe respondent bank also filed IA 652/2023 for modification of order dated 16.09.2023passedin the matter.

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The brief fact of the caseis that the applicant availed various credit facilities to the tune of Rs.35.06 lacs from the respondent bank. On default in repayment of the dues of the bank, the account of the applicant was declared as NPAon 30.09.2022. Subsequently, the bank initiated SARFAESIAction against the borrower and issued demand notice u/s 13(2) dated 07.11.2022 calling upon the applicant to make the payment of Rs.34,67,222/- Thereafter, possession notice dated 23.01.2023 u/s 13(4) of the SARFAESIAct was issued. Aggrieved from the PossessionNotice, this SAhas been filed by the applicant.

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It is submitted by the Id. Counsel of applicants that the loan accounts were classified as NPA by the Respondent Bank during Covid 19 period ignoring the guidelines / directions issued by the Hon'ble Supreme Court as well asthe Hon'ble Patna High Court. The Demand Notice dated 07.11.2022 was served to the applicant. Against the demand notice, the applicant objected/represented vide his objection dated 14.12.2022 which was rejected by the Respondent Bank vide it's letter dated 29.12.2022 but the same was communicated to the Applicant through Registered Post on 03.01.2023 vide postal Tracking No. EF994229593IN". As such, it is decided / communicated by the Respondent Bankto the Applicant beyond the Statutory Period of 15 days in contravention of Section 13 (3-A) of the SARFAESI Act, 2002. Further, the Respondent Bank issued Possession Notice dated 23.01.2023 which was served to the applicant through post. But the Possession Notice has neither been affixed on secured assets nor published in two leading newspapers. Without obtaining the valuation of the property, the Respondent Bank in hush - hush manner proceeded with the e - auction of the secured assets by issuing e - auction sale notice dated 31.07.2023 fixing the date for e - e-auction of the Secured Assets on 31.08.2023. No clear cut 30 days sale notice has been served to the Applicant. The property was auctioned on 31.08.2023 to the auction purchaser but the auction purchaser did not deposit the auction amount within time. /~/

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DRT,PATNA

SA 50 of 2023 [J)

It is further submitted that the applicant has deposited Rs.18,95,800/- on different dates in and further ready to deposit the rest amount in compliance of order dated 16.09.2023.

¶37

On the contrary, Ld. Counselfor the respondent bank submits that the applicant failed to repay the dues of the bank as well as interest on a monthly basis. Therefore, the account was classified as NPA. Thereafter, the respondent bank initiated SARFAESIAction against the borrower and issued demand notice u/s 13(2) dated 07.11.2022 and same was served to the applicant as also admitted in its S. application. Against the demand notice, the applicant had submitted its representation dated 14.12.2022 which was duly replied by the bank vide letter dated 29.12.2022 and same was served to the applicant through post as also admitted in its application. Thereafter, the bank proceeded further and issued possessionnotice dated 23.01.2023 u/s 13(4) of the Act which was served to the applicant as also admitted in its application. The possession notice was also affixed on the conspicuous part of the mortgaged property. Thereafter, the possession notice was published in two newspapers on 26.01.2023. Thereafter, property has been put on auction sale by Issuing auction sale notice dated 31.07.2023 for the auction sale of the property on 31.08.2023. The sale notice was served upon the applicant through post on 03.08.2023 as also admitted by the applicant in its supplementary affidavit. The sale notice was published on 01.08.2023 in Hindustan and Hindustan Times. The property was auctioned on 31.08.2023 to the highest bidder Sh. Shiv Kumar Yadav for an amount of Rs.55,49,000/-. The auction purchaser deposited Rs.8,32,350/- on 01.09.2023 towards 25% of the auction amount. Further deposited the rest 75% amount by 14.09.2023. In compliance with the order dated 24.03.2023, the respondent bank did not confirm the auction sale.

¶38

Ld. Counsel of the auction purchasers submitted that the auction purchaser bonafidely participated in the auction sale held on 31.08.2023. The auction purchaser had deposited Rs.5,54,000/- as EMD. Further, Rs. 8,33,250/- on 01.09.2023 as 25% of the auction price and the rest 75% was deposited by 14.09.2023. The auction purchaser has invested huge amounts but till date neither the sale certificate has been issued nor has physical possession of the property been delivered to the auction purchaser.

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It is submitted by the Id. Counsel of respondent no. 5 &?at neither demand j '.'-'. ~~ __

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¶41

DRT,PATNA

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SA 50 of 2023 [II

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notice nor possessionnotice or sale notice was served upon respondent no. 5 & 6. The auction purchaser has also not deposited the 25% auction amount within time.

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I have heard Ld.Counselfor the applicant and gone through the record.

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It has been alleged that the applicant had represented vide his objection dated 14.12.2022 against demand notice, which was replied by the Respondent Bank beyond the Statutory Period of 15 days. It is also alleged that the Possession Notice was neither affixed on secured assets nor published in two leading newspapers. Without obtaining the valuation of the secured asset, it has been put on auction sale by issuing e - auction sale notice dated 31.07.2023 fixing the date for e - auction of the SecuredAssets on 31.08.2023. No clear cut 30 days sale notice has been served to the Applicant. The property was auctioned on 31.08.2023 to the auction purchaser but the auction purchaser did not deposit the auction amount within time.

¶46

On perusal of records it appears that the bank issued a demand notice dated 07.11.2022 and the same was served to the applicant as admitted in its S. application. Against the said demand notice the applicant made a representation/objection dated nil with the bank which was replied/disposed of by the respondent bank vide letter dated 29.12.2022 and communicated to the applicant as admitted by the applicant in its application. Sofar as receipt of reply on 03.01.2023 against the representation is concerned, the applicant failed to file any proof/tracking report in this regard.

¶47

Further, the respondent bank issued a possessionnotice dated 23.01.2023 which was served to the applicant as admitted by the applicant in its application. But compliance of affixation and publication of the notice has been denied even then the respondent bank failed to file any proof of affixation as well as publication of Possessionnotice.

¶48

Despite the allegation of applicant in its supplementary affidavit dated 11.09.2023, the respondent bank also failed to file proof of valuation obtained from approved valuer prior to putting the property on auction sale. The property was put on auction sale by issuingan auction sale notice dated 31.07.2023 for the auction sale of the property on 31.08.2023. The sale notice was served upon the applicant through post on 02.08.2023 as also admitted by the applicant in para 3

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DRT,PATNA

SA 50 of 2023 [J)

¶53

of its IA bearing Dy. 584/2024 filed in the matter. The sale notice was also published in Hindustan and Hindustan Times dated 01.08.2023 as evident from the annexure - 1, page 10-13 of the counter affidavit of IA 529/2023 filed by respondent bank.

¶54

So far as affixation of sale notice on the secured asset is concerned it has neither been disputed by the applicant nor hasproof been filed by the bank in this regard.

¶55

16.The property was auctioned on 31.08.2022 to the highest bidder Sh. Shiv Kumar Yadavfor an amount of Rs.55,49,000/-. The applicant has also raised the question regarding payment of sale consideration by the auction purchaser. But it is not disputed that the confirmation of sale was stayed. As such the payment was not required against the bid amount without confirmation. So the aforementioned question has no relevance at this point of time.

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In view of the above discussion, considering no proof of compliance of Rule 8(1),(2) &(5) of the Security Interest (Enforcement) Rules 2002, the present SA succeeds.

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ORDER

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The application under Section 17 of the SARFAESIAct filed by Mis Noor Enterprises, represented through Md. Sarwar Ola is allowed. The SARFAESIAction in question against the applicant is quashed. No order for costs. All pending lAs will stand disposed accordingly.

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A copy of this Judgment be sent to the parties as well as be also uploaded 0/ ~ the e-DRTportal.

j~ ,",'

[KaushalendraYadav)

Presiding Officer

Debts RecoveryTribunal, Patna

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Judgment signed, sealed, dated and pronounced in the open court on this 14TH ~ Dayof May, 2025.

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~ .,( f}. \ _...\0. .

[KaushalendraYadav)

Presiding Officer

Debts RecoveryTribunal, Patna

Ms Noor Enterprises and others v. Bank of India

Case brief

What is this about?

What did the court decide?

Ms Noor Enterprises and others v. Bank of India

Case brief

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