Applicants challenged an auction of secured assets under SARFAESI Act, alleging valid service of auction notices was deficient as one legal heir was bypassed. Court examined whether non-service prejudiced the heir found present in proceedings with full knowledge.
Application to set aside auction is dismissed; auction stands confirmed.
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DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
SA /142/2024 M/s Bolt Gym and Spa & others Versus Bank of India & another
11.02.2026
Item No. Supplementary - 1
Argued by: Mr. Karan Dev Ray, Counsel for the Applicant. Mr. Vinish Singla, Counsel for the Respondent Bank. Mr. Viren Sibal, Counsel for the Auction Purchaser.
Order .
M/s Bolt Gym & Spa and others (Applicants) have filed
this Securitization Application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), against the Bank of India (BOI) and another (Respondents).
DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
closed. Since, the payment was not made to the Bank, on 31.03.2021, Bank of India declared the account NPA. On 03.05.2021, Bank issued a notice under Section 13(2) of the SARFAESI Act, 2002 asking the applicants to pay Rs. 1,81,87,538.91/- with interest w.e.f. 31.03.2021 with incidental charges. (Annexure A/9). Applicants have further alleged that the Gym business also suffered setback due to the Covid-19 Pandemic, as all Gyms were ordered to be closed from 15.03.2020 to 05.08.2020, 16.04.2021 to 09.06.2021 and 07.01.2022 to 28.01.2022. Applicants state that they have paid Rs. 5.50 lacs to the Bank. However, on 12.04.2022, Bank issued a notice under Section 13(4) of the SARFAESI Act, 2002 demanding a sum of Rs.1,81,87,538.91/- and stated that in case the payment is not made, the Bank would be free to enforce the security interest. Applicants state that the Gym business was an MSME project. Applicants are senior citizens. After the death of Sh. Ainesh Gupta, they are suffering harassment. They are residing at House No. 262, NAC, Shivalik Enclave, Mani Majra, U.T. Chandigarh which is their only residential house. As per their knowledge, the said loan was insured. Despite their best efforts, they could not locate the documents. They had filed CWP No.12358/2022, wherein Hon’ble High Court ordered that there shall be stay of all coercive action (Annexure A-14). The Bank ignored the order of High Court and the Applicants filed COCP No.3165/2023. Ultimately vide order dated 18.12.2023, CWP No.12358/2022 was dismissed. There were many meetings between the Applicants and the Bank. On 09.02.2024, they were surprised to find a notice affixed on their house under Section 14 of SARFAESI Act, 2002. Bank has also filed OA/734/2022.
DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
Applicants have alleged that the account was wrongly declared NPA against the RBI guidelines. The matter was not put before the designated committee. The default of the Applicants was temporary. The SARFAESI action has been taken by an officer who was never designated as Authorized Officer. The Bank has applied penal interest, which could not be done. No calculation was served upon them. The possession notice was not served upon them. The amount mentioned in the notice under Section 13(2) is not payable by them. The security interest in respect of the secured asset has not been registered with CERSAI. The notices issued by the Bank are illegal, null and void. Accordingly, it is stated that all the notices be set aside and the Bank be restrained from proceeding against the secured asset. The SA was filed on 26.02.2024. During the pendency of SA, Applicant 2 died on 26.11.2024.
DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
against the Applicants for Rs. Rs.1,81,87,538.91/-. The security interest has been properly registered. (Annexure A-38). It is stated that there is no merit in the SA and the same be dismissed.
DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
revoked the O.T.S. Counsel for the Applicants pointed that on 01.08.2025, Applicants had deposited Rs.38.44 lacs.
DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
(Enforcement) Rules, the Bank is under obligation to issue the auction notice to the borrower and guarantor. Mr. Abhyendra Kumar Gupta had guaranteed this loan and created a security interest in respect of the house in question as mentioned earlier. Mr. Abhyendra Kumar Gupta died on 26.11.2024. The auction in this case took place on 27.10.2025. The auction notice for the same was issued on 21.09.2025, i.e., after the death of Mr. Abhyendra Kumar Gupta. It has already been pointed out that on 04.04.2025, Ms. Anu had put in appearance before this Tribunal, along with her mother, Mrs. Neena Gupta, and had given an undertaking that they would make the payment. The order dated 04.04.2025 passed by this Tribunal reads as under:-
Counsel for the Respondent Bank states that earlier the Bank had entered into an OTS with the Applicant and it was agreed that the Applicant would pay Rs. 1 crore 85 lacs in full and final settlement of the amount due. Out of the above-mentioned sum of Rs. crore 85 lacs the Applicants have so far deposited Rs. 35 lacs. The last date of payment was 21.11.2024. Applicants state that late Sh. Abhyender Kumar Gupta was seriously ill and he died on 26.11.2024. On account of this, they could not make the payment. Applicants state that now they would make the payment of Rs. 1.50 crore within 1 month from today. In case, they fail to make the payment within 1 month from today, they would make the payment of Rs. 1.50 crore along with interest within another 1 month. They also agreed that in case, they fail to make the payment within 2 months from today, they would surrender the possession of the secured asset to the Bank. To come up on 05.05.2025.
DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
was allowed on that very day and the case was adjourned to 22.07.2025. On 04.04.2025, Applicants had also stated that, in case they failed to make the payment on 04.06.2025 they would surrender the possession to the Bank. On 10.09.2025, it was brought to the notice of this Tribunal by Mr. G.S. Anand, Counsel for the Respondent Bank, that on 01.08.2025, the Bank had made an attempt to take the possession of the secured asset. However, Mrs. Neena Gupta, the mother of Mr. Ainesh Gupta, had created a scene at the spot and stated that in case the possession of the secured asset is taken from her, she would commit suicide. Mr. G.S. Anand, Counsel for the Respondent Bank, also stated that on 01.08.2025, the Applicants deposited Rs.38.44 lacs. On 12.11.2025, Counsel for the Applicants stated that the Applicants were ready to deposit the whole of the sum due to the Bank. The Bank had fixed 14.11.2025 for taking the possession. Accordingly, on 13.11.2025, it was ordered that the Bank would not take the possession on 14.11.2025. On 13.11.2025, it was brought to the notice of this Tribunal that the Bank had issued the Sale Certificate and Mr. Dalip Kumar, son of Mr. Naresh Kumar, is the Auction Purchaser.
DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
was adjourned to 03.02.2025. On 03.02.2025, again nobody put in appearance on behalf of the Applicants and it was ordered by this Tribunal that the Bank of India would depute a responsible officer to the house of Mrs. Neena Gupta and ask her to appear before this Tribunal either in person or through VC on the next date of hearing. The case was adjourned to 17.10.2025. Thereafter, since the Presiding Officer was not having the charge of this Tribunal, the matter was not put up before the Court on 17.10.2025. By 24.10.2025, the charge of this Tribunal was again assigned to the Presiding Officer, then the matter was again taken up. The purpose of mentioning these facts is that after the death of Mr. Abhyendra Kumar Gupta, the Applicants were asked many a time to make the payment. On 04.04.2025, they had made a statement that they would pay Rs. 1.50 crore. However, they did not make the payment and ultimately, the Bank auctioned the property on 27.10.2025. Right from 04.04.2025 till 27.10.2025, Applicants did not come forward to make the payment. It was only after the auction they came forward to make the payment. The law is well settled that the right of the Applicants to redeem the property exists till the date the auction notice is published. In this case, the auction notice was published on 21.09.2025. It was also served upon Mrs. Neena Gupta and also affixed on the property. Ms. Anu is the daughter of Mrs. Neena Gupta and is residing with her. The purpose of serving the auction notice is that in case the Applicant has any objection he or she may approach the Tribunal. In the circumstances of this case, Ms. Anu had full knowledge of the proceedings. I am of the considered view that she has not been prejudiced on account of the non-serving of
DEBTS RECOVERY TRIBUNAL-II, CHANDIGARH
the auction notice upon her. The Hon’ble Supreme Court in Celir Vs Sumati Prasad, has also held that a confirmed auction should not be set aside lightly. Apart from the objection that this auction is liable to be set aside for want of notice to Ms. Anu, Applicants have not raised any other ground to set aside the auction. I am of the considered view that the Applicants have not been prejudiced by the non-serving of the notice to Ms. Anu.
Registrar is directed to send a copy of this order to all the parties, as per rule. File be consigned to record room after due compliance.
(A S Narang) Presiding Officer DRT-II, Chandigarh (Additional Charge)
Pronounced in open court Dated: 11.02.2026 HARSH
2 issues framed by the court
Whether the auction notice issued by the Bank was validly served on Ms. Anu, the legal heir of the deceased guarantor?
Whether the failure to serve the auction notice on one legal heir prejudices the rights of other heirs under the Security Interest (Enforcement) Rules?
Colour shows how this judgement treated each authority
Celir Vs Sumati PrasadReferred¶37
Celir Vs Sumati Prasad
2 provisions across 2 enactments
M/s Bolt Gym and Spa & others
Bank of India
A S Narang
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
