Dismissed

Jagdeep Singh and Another v. Tata Capital Finance Ltd.

DRT22 Jul 2025SA/71/2025

Case brief

AI extract

What is this about?

Applicants challenged notices for possession and classification of loan account as NPA as illegal and arbitrary. The court examined compliance with SARFAESI Act provisions, service of notices, and NPA classification rules. Finding no illegality, the application was dismissed.

What did the court decide?

The Securitization Application was dismissed; proceedings for enforcement were barred from being set aside.

Jagdeep Singh and Another versus Tata Capital… — Contract and Commercial Disputes | 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.71/2025

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Date of Institution: 27.02.2025 Date of Decision: 22.07.2025

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Sh. Jagdeep Singh s/o Sh. Rajinder Singh R/o H. No. 882, Street No. 09, Gurbax colony, Patiala

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Smt. Prabhjit Kaur w/o sh. Jagdeep Singh R/o H. No. 882, Street No. 09, Gurbax Colony, Patiala

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--Applicants Versus

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Authorized Officer, TATA Capital Finance Ltd., SCO No. 20, 2^nd Floor, Sector 26-A, Chandigarh

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----- Respondent

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Argued by: Sh. A.B.S Sidhu, Advocate for Applicants Sh. Vishawnathan Iyer, Advocate for Respondent (through VC)

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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) to set aside the notice under Section 13(2) of the Act dated 22.10.2024 ( Annexure A5 ), notice under Section 13(4) of the Act dated 07.01.2025 ( Annexure A7 ) and declaration of loan account as NPA being illegal.

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(2) It was stated in the application that applicants have availed the loan facility i.e., Housing Loan of Rs. 27,14,000/- from the respondent and the said loan facility was availed against mortgage of the immovable property i.e., plot bearing No.26A, measuring 87.83 sq yards situated at Village Tafazalpura, New Friends Colony Enclave, Tehsil and District Patiala; that applicants were regularly paying the installments however due to Covid 19 Pandemic, applicants were not able to earn any income thus, they failed to be regular in paying the installments; that respondent initiated action under the Act; that applicants approached to respondent bank number of times to settle the loan account under the OTS Policy but

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SA/71/2025

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JAGDEEP SINGH AND ANOTHER VS. TATA CAPITAL FINANCE LTD.

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respondent refused to entertain the applicants; that applicants were shocked to know about the notice under Section 13(2) of the Act dated 29.04.2022 issued by the respondent; that the said notice was not issued in accordance with the provisions of the Act; that the action of the respondent in declaring the account as NPA is wholly arbitrary and illegal; that the account as per the notice has been declared as NPA on 28.12.2020, which is against the order passed by Apex Court in Writ Petition No. 825/2020 titled as Gajendra Sharma Vs. UOI, wherein the Hon’ble Apex Court vide order dated 03.09.2020 has restrained the Banks/FIs all over India from declaring the Loan accounts of the borrowers as NPA and stay order was vacated only on 23.03.2021; that the respondent further issued the possession notice under Section 13(4) of the Act dated 15.09.2022 and the said notice was also not issued in accordance with the provisions of the Act; that it was never served upon the applicants through registered post, nor it was published in the newspapers including the vernacular within the time frame provided under the Act and further the same was not affixed/pasted as mandated under the law; that the copy of the same was obtained only when the applicants came to know about the order dated 13.05.2024 passed by the Additional District Magistrate, Patiala in pursuance to Writ Petition No. 11078/2024 filed by the respondent before the Hon’ble High Court; that thereafter, respondent filed an application before the District Magistrate, Patiala under Section 14 of the Act; the said application was filed on the basis of false affidavit submitted by the Authorized Officer; that District Magistrate, Patiala without giving an opportunity of hearing to the applicant as per the principles of natural justice, decided the application in the absence of the applicants vide order dated 22.09.2023; that applicant challenged the illegal action of the bank before the Hon’ble Tribunal by way of SA No. 191/2024 titled as Jagdeep Singh & Another Vs. Authorized Officer, TATA Capital Finance Ltd.; that the action of the Bank was illegal since the account has been wrongly declared as NPA; that the notice was issued to the respondent in the earlier SA No.191/2024 but respondent did not choose to appear despite service of the notice; that the Hon’ble Tribunal allowed the SA vide order dated 11.07.2024; that the respondent incomplete disregard of the order dated 11.07.2024 passed by the Hon’ble Tribunal issued fresh notice dated 22.10.2024 under Section 13(2)

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SA/71/2025

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JAGDEEP SINGH AND ANOTHER VS. TATA CAPITAL FINANCE LTD.

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of the Act; that the said notice has been issued claiming the declaration of the account as NPA on 09.03.2022 for a claim of Rs.47,04,198/-; that the applicants submitted objections under Section 13(3-A) of the Act dated 18.12.2024 in response to the aforesaid notice dated 22.10.2024 issued by the respondent under Section 13(2) of the Act; that the respondent instead of complying with provisions of the said Act, illegally proceeded under the Act by issuing possession notice dated 07.01.2025; that said notice has not been issued through an Authorized Officer as defined under the Act; that a bare perusal of the notice dated 22.10.2024 under Section 13(2) of the Act reflects that no name/designation etc. of the Authorized Officer has been mentioned in the said notice; that the notice nowhere speaks about the appointment of the Authorized Officer by the Board of Directors of the Company for issuance/singing the said notice; that the account has been stated to be declared as NPA on 09.03.2022 in the notice dated 22.10.2024, whereas as per the earlier notice the account was stated to be declared as NPA on 28.12.2020; that thus, the respondent is acting in a highly arbitrary manner; that respondent itself does not have clarity with regard to the declaration of the account as NPA; that no explanation has been given by the Bank with regard to changing of date of declaration of account as NPA; that thus, it is arbitrary and against the RBI Guidelines; that the applicant also disputed the amount as mentioned in the notices as no details whatsoever with respect to chargeable rate of interest or chart of rate of interest has been provided by the respondent in the notice; that the respondent has refused to provide the copy of statement of accounts to the applicants despite repeated requests; that the possession notice under Section 13(4) of the Act dated 07.01.2025 has not been served in accordance with Rule 8 of the Security Interest (Enforcement) Rule, 2002 (hereinafter referred to as ‘the Rules’); that the said notice was never served upon applicants as per the Rules, neither it was affixed on the conspicuous place of the property nor it was published in the newspaper; that property in question has been given on lease to one Sh. Gurpreet Singh S/o Sh. Ram Singh vide Lease dated 03.01.2020 and has filed a suit for permanent injunction against the applicants before the Civil Court at Patiala bearing CS No.2318/2023 and the Ld. Civil Court, Patiala vide order dated 08.12.2023 has granted ad interim injunction in his favour; that

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SA/71/2025

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JAGDEEP SINGH AND ANOTHER VS. TATA CAPITAL FINANCE LTD.

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respondent has filed a Writ Petition before Hon’ble High Court of Punjab and Haryana bearing CWP No.11078/2024 for implementation of the order dated 22.09.2023 passed under Section 14 of the Act; that the said CWP is duly supported with an attested affidavit of the Authorised Officer and respondent had stated in the said Writ Petition also that the accounts were declared as NPA on 28.12.2020 and now the respondent at its own has changed the date of NPA to 09.03.2022; that respondent has failed to comply with the mandatory provisions as contained in Chapter IV of the Act with regard to registration of Charge with the Central Registry constituted under Section 21 of the Act; that in the absence of registration of charge with the Central Registry, there is bar for the respondent for exercising right conferred for enforcement of securities under Chapter IV of the Act in view of Section 26(D) of the Act. Therefore, it was prayed that the SA may kindly be allowed.

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(3) Reply filed by respondent.

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(4) It was stated in the reply that at the outset, the respondent denies each and every statement made by the applicants in the present SA; that applicants have not approached the Tribunal with clean hands; that the borrowers have no bona fide intention to repay the loan amount; that Sh. Jagdeep Singh (applicant No.1) along with Smt. Prabhjit Kaur (applicant No.2) had approached the respondent for availing Home Loan Facility, wherein on 22.04.2017, respondent had sanctioned the Home Loan to applicants to the tune of Rs.27,14,000/-; that to secure the above said loan, applicants had mortgaged the property bearing Plot No.26 A, Tafijalpura, New Friend Enclave, Patiala; that it was agreed by the applicants herein that they shall repay the loan amount as per the terms and conditions of the Loan Agreement dated 08.06.2017; that during the period of Covid 19 Pandemic, applicants had requested for availing moratorium facility, which was accepted by the respondent and considering the request made by applicants, respondent had restructured the loan account and subsequently had generated new Loan Account bearing No.TCHHL0349000100073161; that after restructuring the loan account, applicants were to repay an amount of Rs.26,345/- in 396 equated monthly installments at floating rate of interest @14.80%; that even after availing the moratorium facility from April 2020 to August 2020, applicants failed to repay the loan amount

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SA/71/2025

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JAGDEEP SINGH AND ANOTHER VS. TATA CAPITAL FINANCE LTD.

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as per terms and conditions of the Loan Agreement, therefore respondent was constrained to classify the loan account as Non-Performing Asset and the same was classified as NPA on 09.03.2022; that thereafter, respondent has issued notice under Section 13(2) of the Act dated 29.04.2022 through the Authorised Officer calling upon the applicants to pay an outstanding amount of Rs.31,96,462/- due as on 29.04.2022 within 60 days; that thereafter, respondent had issued notice under Section 13(4) of the Act; that applicants have failed to repay the loan amount, respondent moved an application under Section 14 of the Act for taking physical possession of the mortgaged property, wherein the Magistrate concerned was pleased to pass an order dated 22.09.2023 appointing a Court receiver and directing the receiver to handover the mortgaged property to the respondent; that respondents filed a Civil Writ Petition bearing No.11078/2024 for taking possession wherein the Hon’ble High Court was pleased to pass an order directing respondent No.1 therein i.e., District Magistrate-cumDeputy Commissioner to take necessary steps in accordance with law on or before 30.07.2024; that due to technical reason the respondent recalled the said notice 29.04.2022 and issued a fresh notice dated 22.10.2024 under Section 13(2) of the Act; that thus withdrawing the previous proceedings and calling upon the applicants to pay the amount due and payable of Rs.47,04,198/- within 60 days from the date of receipt of the fresh demand notice; that the said notice was delivered to the applicants and the same was duly published by the respondent in the leading newspapers i.e., in English and Punjabi on 29.10.2024 and the same was also pasted on the mortgaged property; that it is also be noted that when an old notice dated 29.04.2022 has been withdrawn, the said notice became infructuous and contents of the same cannot be relied upon; that even after receiving the demand notice, applicants failed to adhere to the terms and conditions and failed to repay the amount mentioned in the demand notice; that applicants have alleged to have sent the objections to notice under Section 13(2) of the Act dated 22.10.2024 served upon respondent but the same was never properly delivered to the respondent; that therefore, respondent was constrained to issue possession notice and accordingly, notice under Section 13(4) of the Act dated 07.01.2025 was issued by respondent for taking

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SA/71/2025

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JAGDEEP SINGH AND ANOTHER VS. TATA CAPITAL FINANCE LTD.

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symbolic possession; that the said possession notice was duly affixed on the mortgaged property and was also published in the newspapers i.e., in English and Punjabi; that thereafter, respondent had filed an application under Section 14 of the Act before District Magistrate praying for taking physical possession of the mortgaged property; that Magistrate concerned was pleased to pass an order dated 07.03.2025 directing the Naib Tehsildar to handover the possession of the mortgaged property within 60 days and to send over the report of the action taken; that District Magistrate directed to take physical possession on 25.04.2025; that aggrieved by the order passed by the District Magistrate dated 07.03.2025, applicants filed the present Securitization Application for barring the respondent to take possession of the mortgaged property; that applicants have failed to reply to either of the notices sent by respondent herein and also failed to adhere by repayment schedule as agreed between the parties; that as on 22.04.2025 an amount of Rs.51,04,610/- was due and payable against the loan amount availed by the applicants; that as applicants have alleged that they had approached respondent for One Time Settlement, whereby respondent refused to entertain the OTS Proposal; that respondent can never be bound to accept or entertain the OTS Proposal, even if, it is to be admitted that OTS had to be considered, the applicants had failed to made any such proposal and also failed to place on record any document indicating the proposal made to respondent; that applicants with a malafide intention, created a third party right by leasing the said mortgaged property to one Sh. Gurpreet Singh in the year 2020 i.e., 03 years after mortgaging the property; that respondent had no knowledge regarding such lease being executed between the parties and even so, such transaction is not binding on the secured creditor. It was further submitted that applicants have failed to raise any valid ground for establishing any illegality/irregularity in the proceedings initiated by respondent under the Act. Therefore, the present Securitization Application is liable to be dismissed. (5) No replication was filed by applicants to the reply filed by respondent.

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(6) I have heard arguments advanced by Sh. A.B.S. Sidhu and Sh. Vishavnathan Iyer, Advocates and gone through the record carefully.

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SA/71/2025

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JAGDEEP SINGH AND ANOTHER VS. TATA CAPITAL FINANCE LTD.

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(7) It was argued by Sh. A.B.S. Sidhu, Advocate that respondent has wrongly classified the account of applicants as NPA on 09.03.2022 because there was no 90 days default in continuation as per RBI Circular.

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(8) Per contra , Sh. Vishavnathan Iyer, Advocate argued that the account of applicants was classified as NPA in strict compliance of Rules and there is no illegality in it. (9) Sh. A.B.S. Sidhu, 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. (10) Sh. A.B.S. Sidhu, Advocate further argued that applicants had received notice under Section 13(2) of the Act dated 22.10.2024 and applicants have moved representation under Section 13(3-A) of the Act dated 18.12.2024 to the above said demand notice but respondent has not replied to their representation as per Rules.

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(11) Per contra , Sh. Vishavnathan Iyer, Advocate argued that applicants have alleged to have sent the objections to notice under Section 13(2) of the Act dated 22.10.2024 served upon respondent but the same was never properly delivered to the respondent. Therefore, respondent was unable to file reply to the said representation moved by applicants.

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(12) Copy of representation moved by applicants under Section 13(3-A) of the Act dated 18.12.2024 is annexed along with SA as Annexure A6. Perusal of the same, it reveals that only receipt of registered post is annexed along with objections but no tracking report was filed to show that the said representation was served upon respondent or not. Therefore, it is incorrect to say that respondent has not replied to the representation moved by applicants in absence of the proof of service of representation upon respondent. (13) Sh. A.B.S. Sidhu, Advocate further argued that notice under Section 13(4) of the Act dated 07.01.2025 was not served upon applicant as per the Rules. (14) Per contra , Sh. Vishavnathan Iyer, Advocate argued that notice under Section 13(4) of the Act dated

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SA/71/2025

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JAGDEEP SINGH AND ANOTHER VS. TATA CAPITAL FINANCE LTD.

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07.01.2025 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 R10 & R11(Colly) to the reply.

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(15) 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 safely presumed that the notice under Section 13(4) of the Act were also received by applicants.

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(16) Sh. A.B.S. Sidhu, 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.

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(17) 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. (18) 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 total outstanding amount. Since Banks/FIs accepts the OTS proposals at very low amount in comparison to the total outstanding, this ailment is growing on day by day. (19) 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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(20) 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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(21) Sh. A.B.S. Sidhu, Advocate further argued that respondent had never created its charge against the property in question with CERSAI.

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(22) Per contra , Sh. Vishavnathan Iyer, Advocate argued that respondent had duly created its charge against the property in question with CERSAI and copies of CERSAI Certificates are annexed as Annexure R14 to the reply. (23) In the considered opinion of this Tribunal, as per CERSAI Certificates, the secured asset is duly registered with Central Registry as per Rules. (24) No other point was argued/pressed.

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SA/71/2025

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JAGDEEP SINGH AND ANOTHER VS. TATA CAPITAL FINANCE LTD.

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(25) After the consideration of all the facts, circumstances as well as arguments advanced by the learned counsel for the parties, it appears that no illegality or irregularity was shown in the SARFAESI proceedings initiated by respondent.

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(26) Accordingly, this SA is liable to be dismissed. SA is dismissed. Any other IA pending stands disposed of accordingly. Record be consigned to record room after due compliance.

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Date: 22.07.2025

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Pronounced by me in the open Tribunal.

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(MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Jagdeep Singh and Another v. Tata Capital Finance Ltd.

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Jagdeep Singh and Another v. Tata Capital Finance Ltd.

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