Dismissed

Satyam Malhotra v. Central Bank of India and Another

DRT28 Aug 2025SA/55/2023

Case brief

AI extract

What is this about?

In this securitization application, the applicant sought to set aside Section 13(2) and 13(4) notices under the SARFAESI Act, alleging premature classification as NPA and service irregularities. The Tribunal dismissed the application, holding the notices valid and noting that the applicant concealed material facts and failed to comply with a High Court order.

What did the court decide?

Securization Application No.55/2023 dismissed; no relief granted to the applicant.

Satyam Malhotra versus Central 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.55/2023

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Date of Institution: 06.03.2023

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Date of Decision: 28.08.2025

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Sh. Satyam Malhotra S/o Sh. Ram Kumar, R/o House No.216, Street No.4, Mohar Singh Nagar, Ludhiana, Punjab-141008

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--Applicant

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Versus

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Authorised Officer, Central Bank of India, Regional Office, K.P. Complex, Near Hotel Park Plaza, Ferozepur Road, Ludhiana-141001

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Central Bank of India, Regional Office, K.P. Complex, Near Hotel Park Plaza, Ferozepur Road, Ludhiana141001, through its Authorised Officer

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--Respondents

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Argued by: Sh. Atul Sharma, Advocate for Applicant Sh. C.S. Pasricha, Advocate for Respondents

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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 notice under Section 13(2) of the Act dated 27.10.2022 and notice under Section 13(4) of the Act dated 04.02.2023 being illegal, arbitrary and against the provisions of the Act.

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(2) It was stated in the application that applicant is aggrieved by the premature actions of the respondents as the respondents have proceeded for the imposition of the provisions of the Act; that applicant had availed financial assistances from respondents i.e., Cent Mortgage Business Loan of Rs.21.50 Lacs, CGECL (Term Loan) of Rs.6.30 Lacs and FITL MSME Loan of Rs.2.40 Lacs; that terms of such sanctions of the first major loan were granted on 28.04.2015; that to secure the above said financial facilities, property in the name of the father was mortgaged by the father of the applicant Sh. Ram Kumar i.e., property bearing M.C. No. B-V-1030, measuring 130 Sq. yards situated at Purana Bazar (Kucha Milkha Singh),

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SA/55/2023

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SATYAM MALHOTRA VS. CENTRAL BANK OF INDIA AND ANOTHER

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Ahluwalia Chowk, Ludhiana as per Gift Deed bearing vasika No.5169 dated 18.06.2004 as per Sale Deed bearing vasika No.372 dated 14.04.1979 and as per Will bearing vasika No.377 dated 15.07.2003 owned by Sh. Ram Kumar S/o Sh. Shori Lal, R/o Mohar Singh Nagar, Ludhiana; that unfortunately father of the applicant expired on 08.09.2021 during the Pandemic Period; that due to uncalled for demise of the borrower the working of the Firm came to a standstill and all this uncured during the low economic tenure of the Covid-19 Pandemic; that without granting any fair opportunity of revival the bank not only declared the account of the applicant as NPA on 29.09.2021 but also proceeded and issued notice under Section 13(2) of the Act dated 27.10.2022; that no prior notice was issued regarding classification of account as NPA by respondents; that since the applicant was only seeking some breathing time and wanted appropriate opportunity of hearing, therefore he had requested to the bank to consider the case of applicant in terms of the Guidelines of the Reserve Bank of India but without actually replying to the specific aspects as submitted before it, the bank rejected the oral representations of the applicant in the present account as in the connected account in writing too; that it was purely on account of the bonafide reason and beyond the control of the applicants that they were not able to do business on account of varied & confused state of business in the financial year & lately due to the advent of COVID-19 Pandemic; that since the applicant was not able to do business and therefore, he was not able to repay back; that without giving opportunity and without appreciating the representations of the applicant, whereby it was brought to the attention of the respondents that applicant’s loan account is just out of order and can be adjusted by depositing the overdrawn amounts, respondents initiated the process for the possession of the properties as such; that action of the respondents while proceeding under the Act is premature and illegal therefore, the present SA may kindly be allowed. (3) Reply filed by respondents.

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(4) It is stated in the reply that applicant has not approached this Tribunal with clean hands and has suppressed material facts; that property charged in this account is also security in the loan account of M/s R.K. Knitwears, which was the proprietorship concern of Sh.

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SA/55/2023

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SATYAM MALHOTRA VS. CENTRAL BANK OF INDIA AND ANOTHER

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Ram Kumar, who is none other than father of applicant; that property is common to secure the credit facilities granted in both the loan accounts (Annexure R1); that total recoverable dues against the said security as per notice under Section 13(2) of the Act in both the loan accounts is Rs.1,05,57,952/(i.e., 73,45,663 + 31,12,289); that parties in both the account are apparently common rather of same family and thus the applicant has concealed the said factum before this Tribunal as applicant has not disclosed the said fact that the property is also security in the another loan account for which a writ petition bearing CWP No.20234/2022 titled as Suman Malhotra Vs. Authorised Officer Central Bank of India had been preferred by Smt. Suman Malhotra relating to the loan account of M/s R.K. Sachin Knitwears; that the above said CWP is pending before Hon’ble High Court of Punjab and Haryana; that even in the CWP, Hon’ble High Court had directed the applicant to execute the requisite documents, however applicant failed to comply with the said order, which fact has also been noted in order dated 17.04.2023 passed in the above said CWP; that copy of order dated 08.09.2022 and 17.04.2023 passed in CWP No.20234/2022 are annexed as Annexures R2 & R3; that applicant is only interested in Forum Hunting that too without repaying the dues of the respondents; that the above said writ petition before the Hon’ble High Court has been preferred by the mother of the present applicant whereas the SA has been preferred by the son that too without revealing the true and correct facts before this Tribunal; that documents have not been executed in terms of the order of the Hon’ble High Court, which were ordered to be executed within one week from 08.09.2022; that in fact, respondents had also written a letter dated 12.01.2023 to execute the documents in favour of respondents, however neither the applicant nor other legal heir came forward to execute the documents despite the request of the respondents; that during the period of COVID, respondents provided the relief packages however despite availing the same, the financial discipline of the account was not adhered to, which led to declaration of account as NPA on 29.09.2022; that father of the applicant i.e., the borrower died on 08.09.2021, whereas the account had been classified as NPA on 29.09.2022, which itself suggest that respondents extended their cooperation so that the applicant may

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SA/55/2023

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SATYAM MALHOTRA VS. CENTRAL BANK OF INDIA AND ANOTHER

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adhere to the financial norms of the bank; that however despite providing adequate time and opportunity, the applicant failed to regularize the account or execute the documents; that in fact the plea taken by the applicant that the business suffered owing to the death of his father and also due to COVID-19 Pandemic is falsified from the objections dated 04.07.2022 submitted to the demand notice issued by the bank in the account of M/s R.K. Sachin Knitwears; that there is a categoric assertion in the said objection that the Unit is running, Firm had turnover of over Rs.04 Crores, after demise of the father of the applicant, all the legal heirs and the family members, guarantors/mortgagors got increase the sales; that all this suggest that the applicant is only trying to twist the issues to mislead this Tribunal; that applicant cannot play hide and seek game before the Tribunal by concealing the material facts; that it is also incorrect to allege that the applicants are jointly and severally aggrieved of the action of the bank; that in fact the SA has been filed by one applicant namely, Sh. Satyam Malhotra and there is no other in the Memo of Parties, which negates the contention that the applicants are jointly and severally aggrieved; that no ground of whatsoever nature is made out in the entire SA and thus applicant is not entitled to grant any relief. Therefore, it was prayed that the present SA may kindly be dismissed. (5) Replication filed by applicant to the reply filed by respondents, wherein the contents of SA were reiterated and that of the reply to the SA were denied. (6) I have heard arguments advanced by Sh. Atul Sharma and Sh. C.S. Pasricha, Advocates and gone through the record carefully.

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(7) Sh. Atul Sharma, Advocate argued that respondents have wrongly classified the account of applicant as NPA on 29.09.2021 because there was no 90 days default in continuation as per RBI Circular.

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(8) Per contra , Sh. C.S. Pasricha, Advocate argued that the account of applicant was classified as NPA in strict compliance of Rules and there is no illegality in it. (9) Sh. Atul Sharma, 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

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SA/55/2023

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SATYAM MALHOTRA VS. CENTRAL BANK OF INDIA AND ANOTHER

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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. Atul Sharma, Advocate further argued that respondents have not issued any prior notice regarding classification of account as NPA therefore, the SARFAESI proceedings are illegal.

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(11) Per contra , Sh. C.S. Pasricha, Advocate argued that there is no requirement under any law to issue advance notice to borrowers and guarantors regarding the classification of account as NPA.

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(12) In the considered opinion of this Tribunal, there was no legal necessity to issue advance notice to applicant before classification of his accounts as NPA. Therefore, there is no force in the above argument of Sh. Atul Sharma, Advocate.

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(13) Sh. Atul Sharma, Advocate further argued that respondents had issued notice under Section 13(4) of the Act dated 04.02.2023, which is premature and liable to be set aside.

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(14) Per contra , Sh. C.S. Pasricha, Advocate argued that notice under Section 13(4) of the Act was validly issued as per Rules and it was not premature. It was further argued that before issuance of notice under Section 13(4) of the Act, notice under Section 13(2) of the Act dated 27.10.2022 was validly issued and served upon applicant as per the provisions of the Act and Rules. (15) In light of above argument of Sh. C.S. Pasricha, Advocate it is incorrect to say that notice under Section 13(4) of the Act dated 04.02.2023 issued by respondents is premature. It reveals from record that notice under Section 13(4) of the Act dated 04.02.2023 was issued after classification of loan account as NPA on 29.09.2021 and post issuance of notice under Section 13(2) of the Act dated 27.10.2022. Therefore, there is no force in the above argument of Sh. Atul Sharma, Advocate.

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(16) Sh. Atul Sharma, Advocate further argued that notice under Section 13(4) of the Act dated 04.02.2023 was not served upon applicant as per Rules.

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(17) Per contra , Sh. C.S. Pasricha, Advocate argued that applicant has not made any averment in the pleadings of SA regarding service/non-service of notices.

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6 SA/55/2023

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SATYAM MALHOTRA VS. CENTRAL BANK OF INDIA AND ANOTHER

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(18) It reveals from record that facts regarding this argument were not mentioned in the pleadings of the SA. Therefore, applicant is not free to raise this argument at this stage.

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(19) Sh. C.S. Pasricha, Advocate argued that property charged in this account is also security in the loan account of M/s R.K. Knitwears, which was the proprietorship concern of Sh. Ram Kumar, who was father of applicant. It was further argued that property is common to secure the credit facilities granted in both the loan accounts (Annexure R1). It was further argued that applicant has kept concealed the said factum before this Tribunal. It was further argued that in the another loan account CWP No.20234/2022 was filed by applicant before Hon’ble High Court of Punjab and Haryana in which Hon’ble Court had directed the applicant to execute the requisite documents, however the applicant failed to comply with the orders of Hon’ble High Court and the said fact has also been noted in order dated 17.04.2023 passed by Hon’ble High Court (Annexure R2). It was further argued that applicant is a chronic defaulter and he has failed to comply with the orders passed by Hon’ble High Court. Therefore, applicant is not entitled to get any relief from this Tribunal.

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(20) Per contra , Sh. Atul Sharma, Advocate argued that it is admitted fact that CWP No.20234/2022 was filed by applicant before Hon’ble High Court of Punjab and Haryana and the said fact was not disclosed in the present SA.

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(21) It revels from record that applicant has concealed the factum regarding mortgaged property as the same was mortgaged in two loan accounts. It further reveals from record that applicant has failed to comply with the orders passed by Hon’ble High Court as mentioned in the order dated 17.04.2023 (Annexure R3). Orders of Hon’ble Superior Courts must be complied with in letter and spirit at the earliest, even if no time limit was provided in the order. Applicant himself admitted that he has failed to comply with the orders passed by Hon’ble Court in time.

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(22) No reason whatsoever was disclosed by Sh. Atul Sharma, Advocate as to why applicant has not complied with the orders of Hon’ble High Court. It is settled law that if any party comes before any Tribunal or Court with unclean hands then the said party is not

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SA/55/2023

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SATYAM MALHOTRA VS. CENTRAL BANK OF INDIA AND ANOTHER

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entitled for any relief. All the above facts shows that applicant is not depositing his loan outstanding knowingly and willingly and only running here and there just to avoid the return of loan. This SA was filed by applicant just to create hurdles in recovery of huge public money. (23) After considering all the facts and circumstances and perusing the record available before this Tribunal, it appears that there is no illegality or irregularity in the proceedings initiated under the Act. (24) No other point was argued or pressed. (25) After the consideration of all facts and circumstances, there is no case made out in favour of applicant and this SA deserves to be dismissed. SA is dismissed.

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Record be consigned to record room after due compliance. Date: 28.08.2025. Pronounced by me in the open Tribunal. (MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Satyam Malhotra v. Central Bank of India and Another

Case brief

What is this about?

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Satyam Malhotra v. Central Bank of India and Another

Case brief

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