Allowed

Ms Maiya Ji Cold Storage Pvt. Ltd. and Another v. Indian Bank

DRT28 Jan 2026SA/108/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an application to quash SARFAESI proceedings due to failures in serving notices and registering assets. The court found the bank violated notice provisions and took possession of unsecured items. Consequently, the Tribunal awarded the applicants notional compensation of Rs. 25 lakhs for the loss incurred.

What did the court decide?

Application allowed. Order disposal and compensation of Rs. 25 Lakhs.

Ms Maiya Ji Cold Storage Pvt. Ltd. and Another versus Indian… — Banking and Recovery | DRT (2026)

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DRT.PATNA

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SA 108 of 2022 [J]

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DEBTS RECOVERY TRIBUNAL PATN A

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Presiding Officer: Shri Kaushalendra Yadav

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SA- 108 of 2022

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M/s MaRa Ji Cold Storage Pvt. Ltd., through it-s Director at Vill. – Khoripakar, Post + P.S. Amnour Block, Amnour, District – Saran.

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Mr. Sunil Kumar Singh, S/o Birendra Kumar Singh, Director, Vill. – Pokhmpur, Post+P.S. – Parsa, Block Parsa, District – Saran.

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. . . . . . . . . . . . . . . . . . APPLICANTS

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Versus

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Authorized Officer, Indian Bank, Zonal Office, Muzaffarpur. Om Shanti Complex. C)pp. – Zila School. P.O. Ramna, Muzaffarpur.

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. . . . . . . . . . . . . . . . . . . . ...RESPONDENTS

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Presents;

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For the Applicant : Sh. Arbind Kumar Jha. Advocate For the Respondent : Sh. Sachindra Kumar Tiwari. Advocate

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Dated: 28.01.2026

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JUDGMENT

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The present application has been filed with a prayer to quash the entire SARFAESI Action including the possession notice dated 19.12.2020.

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During pendency of SA, the applicants have filed IA 351/2022 for compensation and cost.

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The brief facts of the case are that the applicants availed Term Loan facility to the tune of Rs.5 Crores and Cash Credit facility to the tune of Rs.1 Crore from the respondent bank. Due to default in repayment, the respondent bank classified the loan account as Non-Performing Asset (NPA) on 28.01.2020 and in order to recover its outstanding dues initiated proceedings under the SARFAESI Act by issuing a demand notice dated 30.01.2020 under Section 13(2). Thereafter, the respondent bank took symbolic possession of the property by issuing Possession Notice dated 19.12.2020. Further, the respondent bank put the secured asset on auction sale by )\

DRT.PATNA

SA 108 of 2022 [J]

issuing e-auction sale notice dated 11.03.2022 fixing the date of auction sale on 18.04.2022. Aggrieved by the e-auction sale notice, the applicants have filed the present Securitization Application (SA).

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It is submitted by the Id. Counsel for the applicant said that without serving the demand notice issued under section 13(2) of the SARFAESI Act, the respondent bank took symbolic possession of the property on 19.12.2020 but possession notice was not served to the applicant. Furthermore, the possession was taken on 19.12.2020 but the possession notice was dispatched on 24.12.2020 which is a violation of Rule 8(1) of the Act. No description of the building has been given in the possession notice. The possession was taken against those the property/secured asset which were not registered with the Central Registry.

¶24

It is further submitted that the physical possession of the unit i.e. cold storage was taken by the respondent bank on 18.08.2022 but no procedure was followed by the respondent bank while taking the physical possession of movable plant, machinery and goods lying in the unit i.e. Cold Storage is an ongoing concern. The cold storage is running and potatoes of several crores are kept by farmers but no step was taken under Sub-rule 4 of Rule 8 for preservation and protection and to insure potatoes which are perishable. After taking possession, a copy of inventory has to be given to the borrower but the same was not complied by the bank. However, the physical possession has been restored by the bank by the order of this Tribunal but in the meantime no steps were taken for preservation and protection of secured assets. Therefore. electric panel damage and liquid pump temperature of cold storage were not maintained which leads to germination of potato and potato seeds. The boundary wall of 125 feet got damaged. The respondent bank violated the section 15 of the SARFAESI Act as no management was appointed to run the ongoing cold storage and no person was appointed to take care of the property under Rule 8(3).

¶25

The authorized officer has exceeded its jurisdiction as he has taken the possession of farmer’s potatoes and eggs over which no security interest was created and no 13(2) proceeding was initiated. The authorized office may proceed against immovable secured assets, hypothecated assets which are part of 13(2) notice and registered with Central Registry. The authorized officer may be directed to pay cost/compensation/loss incurred from the date of possession till date of delivery of possession to the borrower of unsecured assets.

¶26

On contrary. learned counsel for the respondent bank submits that due to default in repayment of the loan amount, the account was classified as a Non-Performing Asset (NPA) on 28.01.2020, and accordingly. a demand notice dated 30.01.2020 under

a„,

DRT.PATNA

SA 108 of 2022 [J]

Section 13(2) of the SARFAESI Act was issued and the same was sent to the borrower/mortgagor on 30.01.2020. No objection was filed against demand notice; hence the bank proceeded further and issued a possession notice dated 19.12.2020 under Section 13(4) and took symbolic possession of the property by affixing it on the Main gate of building/immovable property. The possession notice was also sent to the borrower/guarantor/mortgagor on 14.01.2021. Thereafter. possession notice was published in “Dainik Bhaskar” and “The Times of India ”, on 25.12.2020. Thereafter, respondent bank got valuation of the property from its valuer on 29.12.2021. Further, the property was put on auction sale on 18.04.2022 in pursuance of auction sale notice dated 11.03.2022 but the auction sale could not be conducted on the date fixed due to want of bidder. Subsequently, respondent bank took the physical possession of the property on 18.08.2022 with the help of district Administration and inventory was made of the movable goods which were not in the bank's charge. However. the physical possession of the property was restored back to the applicant in compliance with an order dated 24.08.2022 passed by this Tribunal.

¶32

It is further submitted by the Id. Counsel of respondent bank that at the time of taking physical possession of the property. the potatoes were lying in the abandoned area of the premises and counting of such potatoes was not possible to any ordinary prudent person. No stocks of potato as well as seeds were lying in the premises in any bag. Neither cartoon of Eggs found with the help of officials of S. applicants which is apparently visible in the video recorded at the time taking physical possession. The applicant was informed by the respondent bank vide letter dated 10.08.2022 that the bank is going to take physical possession of the property on 18.08.2022 and also requested to remove the uncharged articles from the premises but applicants did not remove the same and remain absent at the time of taking physical possession however, the inventory was prepared and copy of the same was handed over to the staff of applicants. The Manager/Supervision of the applicant was appointed by the bank for taking care of the cold storage under section 15 of SARFAESI Act. No damage was caused as the physical possession was restored within 6 days and the cold storage was functioning with the help of Manager of SARFAESI Applicants appointed by the Bank. The security interest has been created over the property in question.

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1 have heard learned counsels of both parties and gone through the records.

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It is alleged that neither demand notice nor the possession notice was served upon the applicant. The possession was taken on 19.12.2020 but the possession notice was dispatched on 24.12.2020 which is a violation of Rule 8(1) of the Act. No q \

j/1

DRT.PATNA

SA 108 of 2022 [J]

description of the building has been given in the possession notice. The possession was taken against those the property/secured asset which were not registered with the Central Registry.

¶39

On perusal of records it appears that demand notice was issued on 30.01.2020 under section 13(2) of the SARFAESI Act against the borrower and guarantors and the same was sent to the borrower and guarantors including the applicants through post on 31.01.2020. To prove the service of demand notice, the respondent bank annexed the postal receipt with the counter affidavit as annexure – A, page 19 but no tracking report has been filed to prove the delivery of demand notice as it is specifically alleged that no demand notice was served upon the applicants. It gives rise to the inference that best evidence has been purposely withheld by the respondent. The adverse inference goes against the respondent in this respect.

¶40

Further. Possession Notice was issued by the bank on 19.12.2020 and the possession notice was sent to the applicant through post on 14.01.2021. To prove the delivery of possession notice, the respondent bank annexed the copy of postal receipt dated 14.01.2021 with the counter affidavit as annexure-B, page 24 which indicates that the possession notice was sent much after the date of possession taken. Apart from this no tracking report has been filed to prove the delivery of possession notice as it is also specifically alleged that no possession notice was served upon the applicants. It also gives rise to the inference that best evidence has been purposely withheld by the respondent. The adverse inference goes against the respondent in this respect. However, the annexure-B, page 25-28 shows that the possession notice was affixed on the secured asset. So far as publication of possession notice is concerned, the respondent bank in its counter affidavit stated that the possession notice was published in “Dainik Bhaskar” and “The Times of India” , on 25.12.2020 but the evidence which has been filed in this regard with the counter affidavit as annexure – C, page 29-30 neither shows the name of newspapers nor the date of its publication. The respondent bank also failed to file any proof with regard to registration of secured assets with Central Registry under section 26-D as alleged by the applicants.

¶41

It is also alleged that the physical possession of the unit i.e. cold storage was taken by the respondent bank on 18.08.2022 but no step was taken under Sub-rule 4 of Rule 8 for preservation and protection and to insure potatoes which are perishable. The physical possession has been restored by the bank by the order of this Tribunal with the damaged electric panel and liquid pump temperature of cold storage were not maintained which leads to germination of potato and potato seeds. The boundary wall of 125 feet got damaged. No management was appointed to run the ongoing cold storage under section 15 of the SARFAESI Act. The authorized officer may be

Q4 \ \

DRT.PATNA

SA 108 of 2022 [J]

directed to pay cost/compensation/loss incurred from the date of possession till date of delivery of possession to the borrower of unsecured assets..

¶47

On perusal of the record, the respondent has failed to prove the service of notice under Section 13(2) & 13 (4) of the SARFAESI Act. Consequently the measures are vitiated under the Law. As an application has been moved for compensation wherein the damage of Rs 1,95,70,700 has been alleged due to physical possession has been wrongly taken by the Authorized Officer. But at the same time it is also relevant to mention here that the applicant has not filed any technical report to prove such damage as alleged in para 12 of the IA. No vouchers for payment against repair/ replacement have also not been filed. It has also not been proved what efforts have been made by the applicant to reduce the damage, how much amount had been received or could have been received from the scrap or the degraded potatoes. As such it lacks the cogent evidence to determine the amount of compensation. As the respondent has also not filed any rebuttal evidence, the notional compensation of Rs.25 Lakh is determined to be paid by the respondent Bank.

¶48

In view of the above discussion, the present SA succeeds and deserves to be allowed accordingly.

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ORDER

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The application SA 108 of 2022 filed by M/s Maiya Ji Cold Storage Pvt. Ltd, & Another is allowed with costs and compensation ofRs25 Lakhs to be credited by the respondent in the account of the applicant within 30 days. V}Y

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30 days. days. V}Y a\ \d {\

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[KaushalendraYadav]

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Presiding Officer

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Debts Recovery Tribunal, Patna

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Judgment signed, sealed, dated and pronounced in the open court on this 28TH January, 2026.

Day of

[KaushalendraYadav]

Presiding Officer

Debts Recovery Tribunal, Patna

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Ms Maiya Ji Cold Storage Pvt. Ltd. and Another v. Indian Bank

Case brief

What is this about?

What did the court decide?

Ms Maiya Ji Cold Storage Pvt. Ltd. and Another v. Indian Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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