Allowed

Sumit Pavankumar Jain v. State Bank of India

DRT28 Oct 2025SA/588/2025

Case brief

AI extract

What is this about?

The Tribunal allowed the application holding that once the Car Loan and Home Loan accounts were regularized, the bank could not proceed further against the applicant for that account. The bank was directed to restore possession of the secured asset upon deposit of outstanding miscellaneous expenses and pending surakasha EMIs.

What did the court decide?

Restoration of possession of secured asset upon deposit of Rs.3,20,788/- comprising legal expenses and pending surakasha EMI.

Sumit Pavankumar Jain versus State Bank of India — Contract and Commercial Disputes | DRT (2025)

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Presented on: 22.08.2025 Registered on: 26.08.2025 Decided on: 28.10.2025 Duration: Y M D 00 02 07

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IN THE DEBTS RECOVERY TRIBUNAL AT AURANGABAD (Before Dr. J.R. Chauhan Presiding Officer) SECURITISATION APPLICATION No.588/2025

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Sumit Pavankumar Jain, Age : 25 years, Occu : Business, R/o. Flat No.201, Jaigopal Tower, Samarth Nagar, Aurangabad. Tq. & Dist. Aurangabad – 431001

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… Applicants

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Versus

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The Authorized Officer, State Bank of India, Having its Office at Stressed Assets Recovery Branch (SARB) at Plot No. 79, N-5, CIDCO, Aurangabad – 431003.

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The Branch Manager, State Bank of India, branch Office at : RACPC Aurangabad, Tq. & Dist. Aurangabad – 431003. … Respondents

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APPEARANCES

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For the Applicant For Respondent No.1 & 2

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Mr. Satyajeet R. Vakil - Advocate Mr. K.D. Pande – Advocate

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[SBJ] (SA No.588/2025) Page 1 of 17

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JUDGMENT (Delivered on 28^th October, 2025)

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This Securitization Application No.588/2025 has filed by the applicant under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred as the SARFAESI Act), against the respondents (hereinafter referred as the bank).

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The brief facts of this application are that the respondent bank sanctioned Car Loan facility of Rs.17,30,000/- (Rupees Seventeen Lacs Thirty Thousand Only) for purchase of KIA MOTORS SELTOS-2022 to the applicant vide Sanction Letter dated 13.01.2023 and the loan was repayable in 84 equal monthly installments of Rs.27,966/- (Rupees TwentySeven Thousand Nine Hundred and Sixty-Six only). The respondent bank has also sanctioned Housing Loan facility of Rs.61,00,000/- (Rupees Sixty-One Lacs only) and Surakasha Loan facility of Rs.1,11,000/- (Rupees One Lac Eleven Thousand only) vide Sanction letter dated 31.05.2023 which has to be repayable in 300 equal monthly installments. The respondent bank has allegedly obtained

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[SBJ] (SA No.588/2025) Page 2 of 17

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security by way of mortgage of immovable property and created charge over the suit property as detailed in Para No.5.6 of the Securitisation Application.

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It is further submitted that the applicant deposited the installments as per the schedule fixed upto the end of June 2024 but due to market recession / down fall, the business of the applicant came down and due to some unavoidable circumstances, he could not deposit further EMI regularly and ultimately, the loan was classified as Non-Performing Asset (NPA) by the bank on 28.09.2024 which is not correct and is against the norms issued by the Reserve Bank of India. Thereafter the bank has issued a Demand Notice under Section 13(2) of the SARFAESI Act on 30.09.2024 calling upon the applicant to pay an amount of Rs.78,40,596/(Rupees Seventy-Eight Lacs, Forty Thousand, Five Hundred and Ninety-Six only) within 60 days. The said Demand Notice was never received / served to the applicant. The impugned demand notice is not in consonance with the sanction letter and thoroughly incorrect and the same is liable to be quashed and set-aside. The bank has charged penal interest and debited the same which has been compounded.

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[SBJ] (SA No.588/2025) Page 3 of 17

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It is further averred that the bank has issued notice dated 21.12.2024 which was never served upon the applicant. The applicant has challenged this possession notice dated 21.04.2025 whereby possession has been taken by the Court Commissioner on 15.07.2025 and thereafter E-Auction Sale Notice dated 24.07.2025 by which the sale was scheduled on 29.08.2025 are totally illegal, wrong, arbitrary and contrary to law.

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The Learned Chief Judicial Magistrate vide order dated 21.04.2025 has directed the Court Commissioner to take possession but infact in this matter Court Commissioner has not issued notice to the applicant and without issuing notice, he cannot take possession illegally. The respondent bank has taken possession illegally and put the sale in a throw away price without following due process of law. The respondent bank charged excess and exorbitant rate of interest in violation of the RBI directives. The reasons given by the learned Addl. Chief Judicial Magistrate, Aurangabad in impugned order dated 21.04.2025 are not legal, proper and the order is against the law. No publication was got done in two leading newspaper having sufficient circulation in the locality as is required under Rule 8 Sub-rule 2 of the

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[SBJ] (SA No.588/2025) Page 4 of 17

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SARFAESI Act. The learned Chief Judicial Magistrate has not considered the facts that Notices under Section 13(2) and 13(4) of the SARFAESI Act have not been served upon the applicant as the applicant resides separately from respondent No.3 and on this ground the order dated 21.04.2025 is liable to be quashed and set-aside. The respondent bank has not complied with the SARFAESI Rules. The approach of the respondent bank is illegal and the bank has made up mind to further sale away the property on throw away price by misusing the provisions of the SARFAESI Act. The applicant has further prayed for seeking relief that the measures adopted by the respondent bank under Section 13(2), 13(4) of the SARFAESI Act and Order of the learned Addl. Chief Judicial Magistrate Aurangabad dated 21.04.2025 passed under Section 14 of the SARFAESI Act and physical possession has been taken by the Court Commissioner on 15.07.2025 are illegal and the same are liable to be set aside and prayed for allowing the present Securitisation Application.

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The respondent Nos.1 and 2 (bank) filed its Reply / Say Exhibit-5 alleging therein that the measures taken by the respondent bank are in accordance with the law, provisions

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[SBJ] (SA No.588/2025) Page 5 of 17

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of the SARFAESI Act and Rules framed thereunder as well as agreement between the parties. The applicant could not deposit substantial amount with the bank from time to time and as such classification of the account as NPA was made on 28.09.2024. The applicant himself admitted that due to unavoidable circumstances, he could not deposit the money regularly in the loan account and hence, classification of loan account as NPA is as per the guidelines of the Reserve Bank of India.

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It is further alleged that thereafter the bank issued notice dated 30.09.2024 under section 13(2) of the SARFAESI Act calling upon the applicant to pay Rs.78,40,596/- (Rupees Seventy-Eight Lacs, Forty Thousand, Five Hundred and Ninety-Six only) within 60 days, failing to which the bank would proceed to take possession of the secured asset which was mortgaged to the bank. The notice sent to the applicant was returned with remarks “Unclaimed” as the Postman made three attempts to serve the notice to the applicant however due to door locked, the same could not be handed over. The demand notice was got published in two daily newspaper i.e. Indian Express and Loksatta dated 18.10.2024 as a substituted service. Inspite of service of

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[SBJ] (SA No.588/2025) Page 6 of 17

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notice, the applicant failed to comply with the same and therefore, the respondent bank proceeded with further action after expiry of statutory period.

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It is further submitted that the applicant failed to comply the notice under section 13(2) of the SARFAESI Act with the statutory period and therefore the respondent bank constrained to take symbolic possession of the secured asset through their Authorised Officer on 21.12.2024 and the same was duly published in two leading newspaper i.e. Divya Marathi and Indian express on 25.12.2024. The applicant was not in contact with the bank since the account came to be classified as NPA and further he has not filed any document on record in support of the contention as alleged in the application. The respondent bank has to take action of recovery against the applicant. The respondent bank thereafter filed application under Section 14 of the SARFAESI Act before the Chief Judicial Magistrate, Aurangabad and Hon’ble Chief Judicial Magistrate, Aurangabad has rightly passed order dated 21.04.2025 under Section 14 of the SARFAESI Act and the Court Commissioner was directed to take physical possession of the secured asset and the physical possession of the secured

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[SBJ] (SA No.588/2025) Page 7 of 17

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asset was taken on 15.07.2025 by the Court Commissioner as per order dated 21.04.2025. The respondent bank thereafter issued E-Auction Notice dated 24.07.2025 whereby the sale for secured asset was scheduled on 29.08.2025. The bank has fixed the reserve price of the residential flat of the applicant as Rs.81,38,000/- (Rupees Eighty-One Lacs, Thirty-Eight Thousand only). A huge amount of Rs.64,85,694/(Rupees Sixty-Four Lacs Eighty-Five Thousand, Six Hundred and Ninety-Four only) including all loan account and expenses is outstanding against the applicant. More-so, the right of the applicant to redeem the mortgaged property is extinguished as soon as the sale notice was issued by the respondent bank as per the provisions of the SARFAESI Act. The respondent bank denied other allegations of the Securitisation Application and took legal objection that the application is barred by limitation and prayed for dismissal of the Securitisation Application with costs.

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I have heard the learned counsel for the parties and gone through the material available on record thoroughly and carefully. My findings are as under:-

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[SBJ] (SA No.588/2025) Page 8 of 17

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FINDINGS

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Before proceeding further, it is necessary to make reference of certain admitted facts that the applicant raised three loans from the respondent bank namely Housing Loan of Rs.61,00,00,000/-, Surakasha Loan facility of Rs.1,11,000/on 31.05.2023 and Car Loan facility of Rs.17,30,000/- on 13.01.2023. It is also admitted by the applicant that the he paid the installments as per schedule upto the end of 2024 but due to market recession / down fall, his business came down and due to unavoidable circumstances, he could not deposit Equal Monthly Installment regularly.

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When the applicant failed to deposit Equal Monthly Installment regularly and ultimately the loan account was classified as Non-Performing Asset (NPA) by the respondent bank on 28.09.2024. Thereafter, the respondent bank issued demand notice under section 13(2) of the SARFAESI Act on 30.09.2024 for demand of Rs.78,40,596/(Rupees Seventy-Eight Lacs, Forty Thousand, Five Hundred and Ninety-Six only) to be paid within 60 days and on failure of compliance of this demand notice, thereafter the symbolic possession of the secured asset was taken on 21.12.2024. The demand notice was published in two daily

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[SBJ] (SA No.588/2025) Page 9 of 17

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newspapers on 18.10.2024 and even symbolic possession publication was made in two leading newspapers on 25.12.2024. Thereafter, the respondent bank obtained order dated 21.04.2025 from Additional Chief Judicial Magistrate, Aurangabad for taking physical possession and physical possession of the secured asset was taken by the bank on 15.07.2025 through Court Commissioner appointed by the Additional Chief Judicial Magistrate, Aurangabad.

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The respondent bank thereafter issued Auction Notice dated 24.07.2025 whereby the sale of the secured asset was scheduled on 29.08.2025 as well as 04.09.2025. The present applicant filed Interlocutory Application No.1966/2025 for seeking stay of sale scheduled for 29.08.2025. This Tribunal, vide Order dated 03.09.2025 disposed of this Interlocutory Application No.1966/2025, whereby the respondent bank was directed to defer the sale fixed for 04.09.2025. However, the applicant / borrower was directed to adjust Car Loan account by 04.09.2025 before 4.00 P.M. and further directed to regularize the Home Loan Account within one month and thereafter pay equal monthly installment regularly. In view of this order, the applicant borrower adjusted Car Loan Account by paying Rs.16,33,973/- and

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[SBJ] (SA No.588/2025) Page 10 of 17

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account was closed on 08.09.2025. The applicant in adjusting Car Loan Account with three days delay, has specifically mentioned reasons by filing Compliance Pursis Diary No.7311/2025 that on 05.09.2025 was Holiday on the occasion of Eid and on 07.09.2025 being Sunday and therefore, direction was completed on 08.09.2025. Admitted fact that the applicant / borrower had adjusted the Car Loan account on 08.09.2025 and same was closed.

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The applicant / borrower has also regularized Housing Loan account as well as Suraksha Loan Account but the respondent bank filed Pursis vide Diary No.8298/2025 that Rs.5,25,394/- is pending and overdue amount in the Home Loan Account of the applicant inclusive of charges and expenses. On perusal of the details submitted by the bank vide this Pursis, as on 13.10.2025, there was no overdue amount pertaining to Home Loan Account. Only EMI pending pertaining to Surakasha Loan was Rs.8252/-. The applicant has disputed the legal expenses worth Rs.1,62,960/- as well as amount of three advance EMIs being Rs.1,44,606/- (Rupees One Lac, Forty-Four Thousand, Six Hundred and Six only) on the ground that the respondent bank cannot charge the legal expenses and

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[SBJ] (SA No.588/2025) Page 11 of 17

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three advance EMIs and reliance was placed on Judgment Sunil Kumar & another Vs. Punjab Nation Bank & others 2018 SCC OnLine (P&H High Court) 1610 (DB) .

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As per perusal of the details of the pending and overdue amount claimed by the respondent bank, the demand of advance three EMIs for Rs.1,44,606/- (Rupees One Lac, Forty-Four Thousand, Six Hundred and Six only) is not sustainable when the applicant / borrower is paying EMI regularly regarding Home Loan. The applicant / borrower is liable to pay EMI regularly in future failing to which the respondent bank is at liberty to proceed further against the applicant / borrower as per law.

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The respondent bank has raised demand of legal expenses worth Rs.1,62,960/- (Rupees One Lac, Sixty-Two Thousand, Nine Hundred and Sixty only). In the Judgment of Sunil Kumar and another case (supra) , it was found by the Hon’ble High Court that legal expenses of Rs.58,354/- are not legally payable as no justification has been put-forth by the respondent bank for the said charges. The respondent bank has specifically claimed legal charges separately from other charges and hence, the respondent bank is entitled to claim legal charges / expenses.

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[SBJ] (SA No.588/2025) Page 12 of 17

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In the present case, the bank has claimed that the Home Loan Account of the applicant cannot be regularized as it was declared Non-Performing Asset on 28.09.2024. This plea of the respondent bank is not sustainable reason being that after up-gradation of the loan account classified as Non-Performing Asset, thereafter account cannot be continued as NPA. Even, Master Circular of the Reserve Bank of India dated 01.07.2014 say that if arrears of interest and principal are paid by the borrower in case of the loan accounts classified as NPA, the accounts should no longer be treated as Non-Performing and may be classified as standard account. In the present case, even from the Pursis claiming overdue amount, there is no EMI pertaining to Home Loan is pending as the applicant / borrower has paid the same and therefore, the account of the applicant has been up-graded and reliance can be placed on Judgment M/s. Oswal Spinning & Weaving Mills Ltd. Vs. Reserve Bank of India and others, 2016 SCC OnLine (P&H High Court) 1851 (DB ) and M/s. Sravan Dall Mill P. Limited Vs. Central Bank of India and another 2009 SCC OnLine AP 573 . Hence, the respondent is entitled only to claim legal expenses of Rs.1,62,960/- (Rupees One Lac, Sixty-Two

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[SBJ] (SA No.588/2025) Page 13 of 17

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Thousand, Nine Hundred and Sixty only), Miscellaneous Expenses Rs.2,09,576/- (Rupees Two Lacs, Nine Thousand, Five Hundred and Seventy-Six only) and loan EMI pending pertaining to Suraksha Loan of Rs.8,252/- (Rupees Eight Thousand, Two Hundred and Fifty-Two only) total Rs.3,20,788/- (Rupees Three Lacs, Twenty Thousand, Seven Hundred and Eighty-Eight only).

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It was also argued on behalf of the respondent bank that the applicant / borrower remain absconded and even the vehicle was not traceable and the applicant / borrower has further created third party interest over the security asset and the account of the applicant cannot be regularized. It was also submitted that the applicant / borrower has also not made compliance of the order of this Tribunal dated 03.09.2025 whereby he had to adjust the loan account by 04.09.2025 whereas he got adjusted the same on 08.09.2025. As already discussed, the applicant / borrower has closed the Car Loan Account on 08.09.2025 with a delay of three days which has been duly explained by the applicant / borrower in his compliance Pursis. Further, no EMI pending to Home Loan is due as the applicant / borrower has regularized the Home Loan Account and even

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[SBJ] (SA No.588/2025) Page 14 of 17

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otherwise the tenure of the Home Loan Account is still there and that can be regularized by the applicant / borrower on payment of overdue amount alongwith other miscellaneous expenses charged by the bank. Further no evidence has been produced by the bank that the applicant has created third party interest over the secured asset. Therefore, the respondent bank now cannot proceed further against the applicant / borrower as the account has been regularized and even the respondent bank is liable to restore the possession of the secured asset immediately on deposit of Rs.3,20,788/- (Rupees Three Lacs, Twenty Thousand, Seven Hundred and Eighty-Eight only) as claimed by the respondent bank

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The learned counsel for the respondent bank argued that the vehicle of the applicant / borrower was not traceable and he was absconding and regarding which enquiry is also pending and now the account cannot be regularized, even if he has closed the Car Loan Account.

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When the entire Car Loan Account has been adjusted by the applicant / borrower, thereafter, there is no loss of any kind to the bank and all proceedings pertaining to this account have lost relevancy. More-so, even the applicant / borrower

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[SBJ] (SA No.588/2025) Page 15 of 17

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is ready to pay other expenses of the bank incurred on the proceedings conducted against the applicant / borrower.

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In view of above observations, I pass the following order.

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ORDER

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(A) Securitisation Application No.588/2025 is hereby allowed to the extent that the respondent bank now cannot proceed further against the applicant / borrower as the Home Loan Account has been regularized / upgraded.

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(B) The respondent bank is hereby directed to restore the possession of the secured asset to the applicant immediately on receipt of Rs.3,20,788/(Rupees Three Lacs, Twenty Thousand, Seven Hundred and Eighty-Eight only). However, the respondent bank is at liberty to proceed further as per law against the applicant / borrower, if any default in payment of Equal Monthly Installment is made by the applicant / borrower.

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present judgment.

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