Allowed

Ms Shravan Oil Industries v. State Bank of India

DRT19 May 2026SA/154/2025

Case brief

AI extract

What is this about?

The Tribunal examined whether the classification of the applicants' loan account as NPA on 30.04.2022 was valid. Finding the classification wrongful due to bank negligence in reversing a credit entry, it held all subsequent SARFAESI proceedings, possession, and the specific auction sale illegal and void.

What did the court decide?

Securitisation Application allowed. NPA classification and all subsequent proceedings quashed. Sale on 28.02.2025 quashed. 25% of bid amount refunded to purchaser with interest.

Ms Shravan Oil Industries versus State Bank of India — Banking and Recovery | DRT (2026)

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Presented on : 26.02.2025 Registered on : 27.02.2025 Decided on : 19.05.2026 Duration : Y M D 01-02-23

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IN THE DEBTS RECOVERY TRIBUNAL AT AURANGABAD (BEFORE DR. J.R. CHAUHAN, PRESIDING OFFICER)

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SECURITISATION APPLICATION NO.154 OF 2025

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M/s Shravan Oil Industries, A registered partnership firm, Address at : Gut No.239/6, Paithan Road, Shevgaon, District Ahmednagar – 414 502 Through its partner Mr. Shrenik Rajendra Bhandari

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Mr. Shrenik s/o Rajendra Bhandari, Age : 35 years, Occu. Business, R/o Bharde Galli, Shevgaon, District Ahmednagar – 414 502

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Mr. Pravin s/o Babasaheb Naik, Age : 44 years, Occu. Business, R/o GP Milkat No.506, CTS No.2202, Jain Galli, Shevgaon, District Ahmednagar – 414 502

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Mr. Babasaheb s/o Damodhar Naik, Age : 74 years, Occu. Business, GP Milkat No.506, CTS No.2202, Jain Galli, Shevgaon,

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Dist. Ahmednagar – 414 502 .. Applicants

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Versus

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State Bank of India,

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Address : M.I.D.C. Area (Ahmednagar), Post Box No.21, MIDC Area, Ahmednagar – 414 111, Through its Branch Manager

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State Bank of India, Address : SARB Branch, Town Hall CIDCO, Aurangabad – 431 003, Through its Authorized Officer …. Respondents

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APPEARANCE :

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Applicants : Mr. K.B. Deshpande, Advocate

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Respondents : Mr. S.R. Deshpande, Advocate

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CORAM: DR. J.R. CHAUHAN, PRESIDING OFFICER

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JUDGMENT

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(Pronounced on : 19.05.2026)

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The applicants have filed this Securitisation Application (S.A.) under Section 17 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”) with averments that applicant No.1 is a partnership firm and engaged in business of manufacturing of cotton seed oil and de-oiled cake from the cotton seeds and runs his business since 2013 under the name and style as “M/s Shravan Oil Industries”. Applicant No.1 is having its own running manufacturing plant at Gat No.239/6, Paithan Road, Shevgaon, District Ahmednagar and has distribution network through distributors at various destinations within the vicinity. The business of applicant No.1 is agro based business and depends on agriculture and mainly on yield of cotton. Applicant Nos.2 and 3 are the partners of applicant no.1 partnership firm, whereas applicant No.4 is the guarantor and mortgagor for the loan obtained by applicant No.1 partnership firm.

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It is stated in the application that the applicants are carrying on their said business presently through own financial arrangements by raising working capital from their customers, friends and relatives. The applicants were in need of finance for setting up their business and as such, had approached the respondent bank with a request to provide financial assistance by way of Cash Credit facilities and Term Loans. Accordingly, applicant No.1 was sanctioned following loan facilities for its business.

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Sr. No.	Type of Loan Facility	Loan Amount
1	Cash Credit	Rs.410.00 Lakh
2	Term Loan	Rs. 25.00 Lakh
3	GECL	Rs. 35.20 Lakh

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It is stated that after sanction of the Cash Credit facilities, the applicants have maintained the Cash Credit account as per terms and conditions of sanction letter and have paid substantial interest

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over the past years. As narrated above, the applicants are running

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the aforesaid business, which depends on the cotton yield in the agriculture farms of farmers from Ahmednagar, Aurangabad and Beed districts, which is a cotton belt of Maharashtra State. However, since 2015 to 2018, the region has been facing a shortfall of rains as a result of which there was drought situation, due to which the yield of cotton crop has totally damaged. The applicants have strongly faced the adverse conditions to sustain in the business. The business depends on monsoon rain factors, which are beyond the control of the applicants. The applicants’ business premises is situated in rural area.

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It is further stated that the manufacturing activities of the applicants got disturbed as a result of which the working capital cycle got disturbed. Thereafter the second wave of COVID-19 made things more difficult and the State Government issued its guidelines for closure of the business activities w.e.f. 15.04.2021 and the restrictions were released w.e.f. 14.06.2021. During the said period, the business activities of applicant No.1 were again

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completely closed down for obeying the guidelines of State Government. Under these circumstances, the financial condition of the applicants has further worsen. Even after relaxation for the business activities, the business did not reach the optimum levels. In spite of pandemic situations of COVID-19 and/or also adverse financial conditions, the applicants are having potential to run their business with great hope for better further business. The products of the applicants have got damaged in the market. However, due to lack of working capital, the factory could not be run. The plant and machinery is in running condition and the business is on hand but could not be tapped to its optimum.

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It is further stated that the whole purpose of approaching the respondent bank was to see that the business of the applicant does not fall short of funds when needed. On one hand, the applicants are trying to overcome all the adverse financial crises and on the other hand, the respondent bank is withholding financial assistance in the form of reschedulement/restructuring of loans, providing funded

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interest term loans, passing on benefits concessions and all such other benefits, for which the applicants are entitled to. Initially the applicants were suffering from drought situation as was being faced by in the entire State of Maharashtra and the same was very severe in the Marathwada Region of the State. Followed by it, the business activities of applicant No.1 were completely required to be compulsorily closed due to the pandemic situations caused due to COVID-19 infection. This aspect theoretically is understood by the respondent bank but practically it is proceeding ahead for realizing the secured assets i.e. “the said properties” of the applicants. It is further stated that the respondent bank instead of appreciating the difficulties of the applicants started initiating measures for recovering its alleged dues by misusing the powers given to it under the SARFAESI Act, 2002. The various schemes of the Reserve Bank of India, under which the applicant No.1 firm is entitled to get benefits, ought to have been made applicable to the applicant No.1. However, instead of doing so and passing on remissions and

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benefits, the respondent is proceeding ahead to exercise its rights for enforcement of security interest by taking physical possession of the said properties and intends to put it to sale. The guidelines about providing GECL loan of 20% have also not been provided in the hands of the applicants for utilization and as such, the very purpose of the guidelines has become infructuous at the hands of the respondent bank. The intention of the RBI behind bringing such scheme/guidelines was not for making it convenient and suitable for the banks to recover its interest under the garb of providing GECL loan. It is further stated that the applicants have every reason to believe that the respondent bank is not acting fairly and that it is misusing the powers given to it by the said Act. It was expected of the respondent bank to stand by the applicant to face the odd situations. The applicants had every reason to believe that the alleged authorized officer and the concerned officers are acting with mala fides.

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Further it is stated that the account of the applicants has been wrongly classified as NPA. The respondent bank deserves to be put to strict proof regarding classification of the account as NPA on 30.04.2022 in the light of the circulars and guidelines of the Reserve Bank of India. The present applicant has filed complaint/representation against the respondent bank before Reserve Bank of India/Government of India, National Commission for Minorities. The said authority has served a report dated 06.05.2024 by the Research Officer, Government of India, National Commission for Minorities to the present applicant. Along with the said report dated 06.05.2024, the copies of reports have been received from Chief Vigilance Officer and Chief General Manager (SARG), Mumbai. It is stated that the respondent bank has issued report dated 18.04.2024 to Reserve Bank of India – Chief Vigilance Officer and Chief General Manager (SARG), Mumbai to the applicant and as per the said report, the present loan account has appeared standard as on 31.03.2022, however, immediately within

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30 days i.e. on 30.04.2022, the alleged authorized officer of the respondent bank classified the loan account as NPA. The alleged authorized officer of the respondent bank has classified it as NPA on 30.04.2022 without due procedure of law. It is stated that the alleged authorized officer of the respondent declared and classified the loan account as NPA on 30.04.2022 and on the basis of the NPA date 30.04.2022, the action under SARFAESI Act has been initiated by the alleged authorized officer. As such, the entire action under the SARFAESI Act is bad in law and deserves to be stalled immediately and quashed and set aside. Such practice of wrongly classifying the account as NPA and immediately adopting the draconian powers given to it under the SARFAEASI Act without following the statutory guidelines of the RBI is misuse of the powers. The applicant No.1 is victim of wrong accounting practices implemented by the respondent bank.

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It is further stated that the respondent bank, through its alleged authorized officer, has issued demand notice dated

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04.05.2022, allegedly to be under Section 13(2) of the SARFAESI

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Act to the applicants, contents of which are false and misleading for

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the following reasons:

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a) The outstanding amount mentioned in the alleged notice is incorrect, as the respondent bank has charged exorbitant interest and has capitalized expenses, charges, etc., which it cannot do so.

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b) The alleged demand notice is not as per the prescribed format given under the Securitization Act and the Rules thereunder. Moreover, the alleged notice does not disclose the contents which are mandatory to be mentioned in such notice.

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c) The said demand notice dated 04.05.2022 is not issued by competent person of the respondent bank i.e. a person duly authorized as a Authorized Officer as required under the said Act and the Rules made thereunder. The said Rules are mandatory.

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d) It is the case of the present applicant that the present loan amount is appeared standard on 31.03.2022 as per vigilance report dated 18.04.2024. The present loan account is, however, within 30 days, declared NPA on 30.04.2022 by the alleged authorized officer of the respondent bank. Therefore, the alleged authorized officer of the respondent bank has in

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initiated SARFAESI action, which is bad in law and deserves to be quashed and set aside. The applicant is challenging the classification of account as NPA. As per the Statement of Account also, the present loan account is regular and standard on 31.03.2022.

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It is further stated that the respondent bank, through its authorised officer, has further commenced its action to be under Section 13(4) of the SARFAESI Act in furtherance to the alleged demand notice allegedly dated 04.05.2022 under the SARFAESI Act. Further it is stated that the respondent bank, through its alleged authorized officer, has allegedly taken symbolic possession of the said properties on 13.07.2022 as per notice dated 07.07.2022. The respondent bank has not followed the due procedure of law, more particularly as per the provisions of the SARFAESI Act while taking the possession on 13.07.2022 of the said properties of the applicants. Further the procedural irregularities committed by the alleged authorized officer of the respondent institution while

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initiating the action under the SARFAESI Act can be briefly stated as under:-

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a) To the best of knowledge of the applicants, no newspaper publication is made in two leading newspapers, as is required under Rule 8 sub-rule (2) of the SARFAESI Act. The respondent bank deserves to be put to strict proof regarding publication of possession notice.

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b) No possession notice as required under the SARFAESI Act is affixed at the conspicuous place of the said properties. Affixing such notice at site is mandatory. The respondent bank deserves to be called upon to place on record strict proof regarding compliance of the said Rule. It is the case of applicant No.4 that he is owner of the said house property CTS No.2114 and CTS No.2115 on which residential premises has been constructed by him. The said properties are not mortgaged with the respondent bank. However, the alleged possession notice allegedly dated 07.07.2022 has been affixed at the said properties of the applicant. The respondent bank seems to be under wrong impression about the very identification of the property which has led the respondent bank’s authorized officers to such affixation. Under the circumstances, the measures initiated by the respondents

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against the residential house property of the applicant No.4 is bad in law and the said defect is incurable. The possibility that the respondent may continue with the very mistake while proceeding further under Section 14 of the SARFAESI Act cannot be ruled out. In absence of compliance of the said Rule, the proposed sale is bad in law and deserves to be quashed and set aside.

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c) No panchanama and possession notice have been served upon the applicants. The list of inventory is wrongly prepared.

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d) The alleged authorized officer has allegedly visited the said properties on the very day i.e. on 13.07.2022 itself. The location of the said properties is at Gut No.239/6 village Sevgaon, Dist. Ahmednagar. It is the case of the applicants that the alleged authorized officer has not visited the sites and has prepared the possession notice while sitting in his own office. No possession notice is affixed at sites. The respondent bank be put to strict proof regarding affixing such notices at all the sites and drawing panchanama at the sites and delivery of such notices upon the applicants. No panchanama was prepared at afore-stated sites i.e. at the properties, so the question of delivery of panchanama did not arise at all. It is the submission of the applicants that the alleged authorized officer has never visited the said properties

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and has drawn the possession notices while sitting in the office of the bank or elsewhere other than the said properties sites. Such action needs to be quashed and set aside by this Tribunal in the interest of justice.

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It is further stated that the respondent bank had filed an application under Section 14 of the SARFAESI Act before the District Magistrate, Ahmednagar for taking physical possession of the secured assets i.e. the said properties. The respondent bank has not complied the statutory requirement under Section 14(1)(b)(i) of the SARFAESI Act as “the total claim of the bank as on the date of filing of the application” has not been stated by the respondent bank in its application and/or affidavit moved under Section 14 of the SARFAEASI Act. The authorized officer of the respondent bank in the proceeding under Section 14 of the SARFAESI Act does not comply the statutory requirement. The order obtained by the respondent bank is without compliance of the statutory requirements under Section 14 of the SARFAESI Act, which are mandatory in nature. In view of said non-compliances, the order

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passed by the learned District Magistrate is bad in law and deserves to be quashed and set aside.

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It is further submitted that the present applicants had filed S.A. Diary No.984/2024 against the SARFAESI action initiated by the respondent bank and had also challenged the order passed by the learned District Magistrate, Ahmednagar dated 14.03.2023 with delay condonation application. The said S.A. has been disposed off vide order dated 15.01.2024 without hearing on merits.

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It is further stated that the Tahsildar has taken actual physical possession of the said factory premises on 23.08.2023 without following due procedure of law. By doing so, the running factory has been closed down, which itself is not permissible under the SARFAESI Act. The Tahsildar or the DM and/or the authorized officer does not have any right and authority to close down running industrial unit. The Tahsildar, Shevgaon has handed over the physical possession of the said factory premises to the alleged authorized officer of the respondent bank vide possession receipt

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dated 23.08.2023. Since then, actual physical possession of the said factory premises is with the alleged authorized officer of the respondent bank.

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Further it is stated that the applicants have deposited an amount of Rs.61 lakh on 23.08.2023 in the loan account. However, after depositing partial amount of Rs.61 lakh in loan account, the authorized officer of the respondent bank and/or Tahsildar has taken actual possession of the said factory premises. The applicants have intention to arrive at settlement and to show their bonafide by depositing the said amount. The respondent bank has realized its mistakes about wrongly classifying the account as NPA and have invited the applicants for discussion/meeting. The applicants have attended the same. However, the respondent bank is hesitant to admit the mistake on record. The intentions of the applicants are cleared and they wish to settle the loan liability by running the factory and generating the funds from the business. The respondent

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bank has not followed the due procedure of law while taking the

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physical possession of the said factory premises on 23.08.2023. Further, it is stated that the procedural irregularities committed by the alleged authorized officer of the respondent bank while initiating the action under the SARFAESI Act can be briefly stated as under:

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a) No newspaper publication is made in two leading newspapers, as is required under Rule 8 sub-rule (2). The applicant has not come across any publication of physical possession notice in local newspapers in respect of the said factory premises.

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b) The action under Section 13(4) read with Section 14 of the SARFAESI Act is initiated by demanding unlawful amounts for which the respondent bank was not entitled to.

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c) The detailed list of inventory is not prepared at site as stipulated under the provisions of the SARFAEASI Act and the Rules thereunder, nor it is served upon the applicant. In the present case, the alleged authorized officer has miserably failed to prepare any list of any of the assets, details thereof, while taking possession of said properties.

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d) The list of inventory prepared does not disclose the true state of affairs and there are many items which are not stated therein. The applicants have enclosed separate list of valuable

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items which are taken in possession without any right and authority. The applicants are moving separate application for appointment of Court Commissioner for the purpose of physical verification of the factory premises and/or other purpose of preparation of correct list of inventories and to ascertain the facts and bring on record the facts.

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It is stated that the authorized officer is expected to scrupulously follow the mandatory Security Interest Enforcement Rules. These Rules do not excuse the authorized officer from preparing the list of inventory and serving and publishing the possession notice even if the possession is taken under Section 14 of the Act. It is further stated that the applicants are entitled for claiming compensation for the hardship and mental agony required to be faced due to the illegal action/measures initiated by the respondent bank against the applicants. It is further stated that upon perusal of the extract of account of loan, it would be seen that besides charging exorbitant interest, the respondent has debited various incidental charges to the loan account and has capitalized

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the same from time to time in the outstanding and charged future and penal interest on the compounded amount, which is held illegal

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by the Hon’ble Apex Court.

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It is further stated that the respondent No.1 bank and its concerned officers have decided to proceed against the applicants under the SARFAESI Act for recovery of its alleged outstanding amount by putting the said factory premises to sale and they have published an advertisement in English Daily Indian Express, Aurangabad Edition dated 28.01.2025, thereby inviting tenders from the prospective purchasers. The sale notice is not published in Marathi newspaper. The description of the said factory premises are incorrect and misleading. The valuation of the plant and machinery has been deliberately fixed at lower side. According to the applicants, when the list of plant and machinery itself is wrong, the question about its valuation done correctly arises. Thus, the authorized officer is acting with malafide by preparing wrong list of

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inventory. Putting the factory premises for sale has to be on higher

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possible value for the assets. However, instead thereof, the authorised officer is interested in disposing of the said property as

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per his wishes and whims. In spite of repeated requests by the applicants, the respondent No.1 bank has deliberately neglected to supply the valuation report of the said factory premises obtained by the bank from the valuer appointed by it for the said purpose. The said advertisement of sale does not state the outstanding debt amount as on date of sale notice.

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It is stated that the notice of sale has not been affixed at sites as per provisions of Rule 9(1) of the Security Interest (Enforcement) Rules, which is mandatory. In absence of compliance of said Rule, the proposed sale, which is being conducted in arbitrary manner, is bad in law and deserves to be quashed. It is stated that the respondent No.1 bank has also not complied with Rule 8(6) of the Security Interest (Enforcement) Rules by issuing and serving the notice. In view thereof also, the proposed sale is bad in law. The measures taken by the respondent

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bank are per se illegal and are without any right or authority. It is apprehended by the applicants that the valuation of the properties got done by the respondent No.1 bank is not carried out by a competent qualified valuer as required under the Act and the Rules thereunder. It is stated that the respondent bank has not registered with the Central Registry of Securitization and Security Interest of India, as such the very initiation of the measures under the SARFAESI Act are bad in law. The respondent bank cannot be allowed to proceed further in pursuance to the alleged demand notice, alleged possession measures and the sale notice and the sale notice published on 15.01.2023.

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With the above averments, the applicants have filed present S.A. with the prayers, in addition to other consequential prayers, that the respondent No.1 bank be restrained from taking further recourse to any of the measures under the SARFAESI Act, in respect of the said properties mentioned in para No.3 of the application; for holding that the loan wrongly classified as NPA and

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consequently, all the measures initiated by the respondent bank under Sections 13(2), 13(4) of the SARFAESI Act as bad in law and the same be quashed and set aside; it be held that the measures initiated by the respondent No.1 bank through its alleged authorized officer of putting the said factory premises of the applicants to sale under the SARFAESI Act, is illegal and bad in law and be quashed and set aside.

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The respondents have filed their Written Statement (Exhibit7) and contested the S.A. on the grounds that the S.A. is not maintainable and tenable. The applicants have approached this Tribunal by suppressing important facts and documents and on this ground, the S.A. for the reliefs claimed needs to be rejected. The contentions of the applicants that business of applicant No.1 depends on agriculture and mainly on the yield of cotton are denied. It is true that the applicants were in need of finance for setting up business and hence, approached respondent bank for providing Cash Credit loan facility and Term Loan. It is admitted by the

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answering respondents that the applicant No.1 was sanctioned Cash Credit Loan facility of Rs.410.00 Lakh, Term Loan facility of Rs.25.00 Lakh and GECL loan facility of Rs.35.20 Lakh. It is stated that the applicants, however, failed to keep their promises of repayment as per the repayment schedule along with interest and expenses. The respondent bank is, therefore, constrained to initiate securitization action against the applicants. It is denied by the respondent bank that the applicants have paid substantial interest to the bank. It is further denied that the business of the applicant is depending on monsoon rains. Further contentions in the application that from 2015 to 2018, the region was facing shortfall of rains and due to it, there was draught like situation is false. It is also denied that yield of cotton was damaged due to lesser rains in 2015 to 2018. It is stated that the applicants have not placed on record the guidelines of closure of business activities from 15.04.2021 to 14.06.2021, issued by the State Government. It is submitted by the answering respondents that various sectors were permitted to

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regularly work and they were advised to take precautions. The applicants have falsely stated that due to COVID-19, the applicants have suffered and the business activities were required to be closed.

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It is further stated that it is false that the respondent bank is withholding the financial assistance. In respect of the contentions that re-schedulement and re-constructing was not provided, the applicants have not placed on record their application therefor. The applicants have also not stated the day, month and year when they approached respondent bank for re-schedulement/re-structuring and despite of the same, the bank has withheld it. It is denied by the respondent bank that the respondent has not practically considered that the business activity of applicant No.1 was compulsorily closed due to COVID-19. It is stated that the respondent has started the securitization action after the defaults were committed in repayment and serving of interest. The applicants are aware of all aspects and despite it, only with intention to create obstacles in the securitization action initiated by the respondent bank, present

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Securitisation Application has been filed by suppressing various facts. The contention of the applicants that the respondent bank is misusing the powers given under Securitization Act, 2002, is absolutely false. It is stated that the respondent bank would not have initiated any legal action if the applicants would have repaid the Cash Credit Loan facility, Term Loan facility and GECL Loan facility as per the repayment schedule agreed between the applicant and respondent bank. The applicants, as per demand notice dated 04.05.2022, were provided time period of 60 days as per provisions of Section 13(2) of the SARFAESI Act to repay the dues of respondent bank . Even if, as per demand notice dated 04.05.2022 the applicants would have repaid the dues of respondent bank, the further securitization action would have been avoided. On this background, the contention of the applicants that the respondent has not appreciated the difficulties and has misused the powers under the SARFAESI Act is specifically denied. It is specifically denied that the benefits of R.B.I. Schemes are not provided to the

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applicants. The applicants should have mentioned the date, circular number and specifications of R.B.I. Scheme, of which benefits are not provided as well, should have filed it on record to point out that the applicants are eligible for the benefits of R.B.I. Schemes and had applied to the respondent bank to provide those and despite it,

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the respondent bank has refused to provide the benefits to the applicants. The contention of the applicants that respondent bank is intending to put the secured assets on auction sale is misleading statement, overlooking the earlier auction sale and more particularly dated 19.08.2023 by which the factory land building at Shevgaon, Dist. Ahilyanagar was put to sale and was subject matter of earlier S.A. Diary No.984/2023 which is produced on record. It is stated that right from 2023, the secured assets are put to sale and despite it, the contentions are made that respondent is trying to put the secured assets for sale. It is totally false to state that the guidelines of providing GECL loan are not complied with. The contention that the very purpose of guidelines has become infructuous. The

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applicants are raising all these aspects for the first time in the second round of litigation. Those are raised only to create obstacles and hurdles in the securitization action of the respondent bank.

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It is further denied by the respondent bank that it is not acting fairly and is misusing its powers under the Securitization Act. It is denied by the answering respondents that respondent bank did not stand with the applicants. The respondent bank initially sanctioned Term Loan of Rs.45.00 lakh on 10.01.2013. Thereupon, on 29.12.2014, Cash Credit Loan facility of Rs.20.00 lakh was sanctioned and on 20.10.2015, it was enhanced to Rs.40.00 lakh and then, on 29.03.2017 to Rs.75.00 lakh. Thereupon, from time to time, further sanctions/renewals were provided to the applicants and lastly on 30.10.2021, it was made Rs.2.50 crores as is clear from page 56 of the main Securitisation Application i.e. Section 14 Application filed by the respondent before learned District Magistrate, Ahilyanagar (earlier Ahmednagar). These all sanctions, enhancements/renewals would reflect that the respondents have

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provided all assistance to the applicants and have stood by the applicants in the business. Despite this, false allegations are made by the applicants against the respondents. It is specifically denied that the applicants have reasons to believe that the Authorized Officer and concerned officers are acting malafidely. It is stated that the applicants applied for providing various loan facilities, its renewals, enjoyed all the loan facilities and failed to repay the availed loan facilities. The respondent bank initiated legal action only after failure of the applicants to pay the dues of the respondent bank. The applicants have not contended that, to the demand notice dated 04.05.2022, they have raised all these objections as per the provisions of Section 13(3-A) of the SARFAESI Act, which are now contended for the first time. The applicants’ all contentions are false and made out with ulterior motive to pressurize the concerned officials.

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It is stated that it is false that the loan account of applicants is wrongly classified as NPA. The applicants along with earlier S.A.

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Diary No.984/2023, had filed the statement of loan accounts from page Nos.23 to 53. However, along with present S.A., purposefully they have not filed it, though they are possessing the Statement of Loan Account. This shows that the applicants are withholding important and basic document when they are contending that the loan account is wrongly classified as NPA. It is stated that the applicant’ loan account became NPA on 30.04.2022 as per the demand notice dated 04.05.2022, which is filed at page Nos.46 to 50 of the S.A. It is stated that the applicants paid an amunt of Rs.1.00 lakh in December, 2021 towards interest, instead of Rs.3,62,098.00 debited on 31.12.2021 towars regular interest and Rs.12,883.00 towards O.D. penal interest. The applicants did not pay interest of January, 2022 of Rs.3,62,254/- and O.D. penal interest of Rs.1017/’- of February 2022 of Rs.3,31,892/- and O.D. penal interest of Rs.2,418/- and of March 2022 of Rs.3,70,115/- and O.D. penal interest of Rs.1,27,941/-. The Statutory Auditor, therefore, rightly has classified the Loan Account as N.P.A. The

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applicants should have pointed out that they have regularly repaid the dues as well have paid the interest and in support of it, should have produced on record the supporting documents and then, should have contended that the date of NPA is wrong. It is stated that filing of complaint by the applicants before R.B.I., Government of India, National Commission for Minorities would reflect that the applicants are harassing the respondent bank and its officials and are trying to pressurize them. The applicants should have repaid the entire dues and avoided all these false and baseless complaints. The applicants have not placed on record all/entire documents and have referred only to the report of Chief Vigilance Officer and Chief General Manager (SARG), Mumbai. The reliance on one of the documents/peacemeal papers is not permissible. Entire documents should have been placed to point as to on which aspect and in which circumstances, this reply is issued. The applicants at the same point of time should have pointed out their prompt repayment.

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It is further stated in the written statement that the applicants are relying upon wrong entry dated 31.03.2022 of Rs.15.00 lakh, which was reversed on 04.04.2022. The applicants should have pointed out that they have paid full interest of December, 2021 and interest of January, February and March, 2022 and thereupon, the Loan Account is classified as NPA. The reliance of the applicants on wrong entry is misplaced. It is denied in toto that the loan account appeared standard on 31.03.2022 and within one month, it was classified as NPA. It is also denied that without due procedure of law, the loan account is classified as NPA. It is also false that the entire action under Securitisation Act is bad in law as it is based on the NPA date 30.04.2022.

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Further it is stated that the contention that the securitization action without following statutory guidelines of R.B.I. is misuse of powers, is denied. All the guidelines of R.B.I. are followed by the respondent bank. It is specifically denied that the applicant is victim of wrong accounting. It is stated that the date of NPA as

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30.04.2022 was known to the applicants since day one. In that probability, the remedy provided to the applicants was raising objections/submitting representations as per the provisions of Section 13 (3-A) of the SARFAESI Act to the demand notice dated 04.05.2022, which was issued as per Section 13(2) of the SARFAESI Act. It is stated that the applicants have, in para No.4 of the S.A., referred to part of demand notice, the date of N.P.A. In this probability, non-raising of objections as per Section 13(3-A) of the SARFAESI Act does not reflect that the applicants are aware that they have not paid the interest as aforesaid and therefore, the loan account is rightly classified as NPA. Further, the applicants have also not raised objections after receipt of notice dated 07.07.2022 i.e. short notice produced at page Nos.52 to 54 of S.A. by which it was intimated that the demand notice dated 04.05.2022 is not complied and therefore, possession is scheduled on 13.07.2022. The applicants are now contending that securitization action is bad in law and it deserves to be quashed and set aside.

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The applicants have forgotten and conveniently overlooked the provisions of Section 17 of the SARFAESI Act, which provides 45 days’ limitation for challenging the section 13(4) measures. It is stated that the entire securitization action is as per legal provisions and applicable Rules. The applicants had filed S.A. Diary No. 984/2023 before this Tribunal. The order passed therein is produced at page No.76. The applicants have not raised all these points, grounds, which are raised now. These were available on the date of filing first Securitization Application as the demand notice is dated 04.05.2022. Notice for taking possession is dated 07.07.2022 and symbolic possession notice is dated 8.08.2022. The proceedings under Section 14 of the SARFAESI Act were filed on 26.12.2022 and the order was passed by the learned Additional District Magistrate, Ahmednagar on 14.03.2023. Thereupon, secured assets were put to auction sale on 19.08.2023. All these aspects were challenged by the applicants by filing S.A. Diary No.984/2023. The applicants cannot now raise new grounds and raise new pleas

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which are not permissible. All the contentions and grounds are, therefore, liable to be rejected.

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Further it is stated by the answering respondents that contention of the applicants that as Annexure A-3 the applicants are producing representations/objections dated 27.05.2022 raised to the demand notice dated 04.05.2022 is incorrect. Annexure A-3 at page No.51 is the email dated 27.06.2022 sent by S.B.I. MIDC Branch, Ahmednagar to applicant No.1 It is false that it is representation/objection to the Demand Notice dated 04.05.2022 raised by the applicants. The applicants along with the first S.A. at page Nos.105 to 109 have filed the demand notice dated 04.05.2022, but have not filed on record the alleged representation which now they are contending. Thus, it is false that representation was made to the demand notice. It is further stated that the contention that the respondent has charged exorbitant interest and has capitalized the expenses and charges due to which incorrect amount is claimed in the demand notice, is false. It is submitted

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that the interest is charged as is applicable from time to time to the

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Loan Account and the amount claimed in the demand notice is correct and it is payable by the applicants to the respondent bank. It is false to state that the demand notice is not as per prescribed format and demand notice did not disclose mandatory aspects. The applicants should have specified as to which mandatory aspects are not mentioned in the demand notice. This contention of the applicants being vague is denied by the answering respondent.

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It is further stated that the contention is false to state that the demand notice is not issued by the competent person and duly authorized person, on page No.47 of the Securitisation Application, the second page of demand notice dated 04.05.2022 can be seen. On page No.47, there is signature of Authorized Officer and official seal of bank is affixed. Similarly, on page No.50 of the S.A., similar official seal and signature of Authorized Officer can be seen.

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Further it is stated that the contents of para No.5.9 are false that the Loan Account appeared standard on 31.03.2022 and thereupon, within 30 days, it is declared as NPA on 30.04.2022. The respondent has pointed out that instead of Rs.3,62,098.00 debited on 31.12.2021 towards regular interest and Rs.12,883.00 towards O.D. Penal Interest, the applicants have paid only Rs.1,00,000/-. The applicants did not pay interest of January, 2022 of Rs.3,62,254/- and O.D. penal interest of Rs.2,418/- and of March, 2022 of Rs.3,70,115/- and O.D. Penal Interest of Rs.2,37,941/-. The Statutory Auditor, therefore, rightly has classified the Loan Account as NPA. The applicants should have pointed out that the applicants have paid full interest of December, 2021 to March, 2022 and should have produced receipts of repayment on record. The vigilance report is based upon incorrect entry which was reversed on 04.04.2022. the contention that the securitisation action is bad in law, is denied. It is submitted by the answering respondent that once the said demand notice was

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challenged in the first S.A. filed by the applicants before this Tribunal and it is rejected, the applicants cannot again and again raise same issue before the same Court.

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It is stated that it is true that the respondent bank issued short notice dated 07.07.2022 to the applicants intimating demand notice dated 04.05.2022 is not complied by them and therefore, symbolic possession of secured assets will be taken. It is stated that the respondent has taken symbolic possession on 08.08.2022. Thereupon it published Possession Notice in two newspapers, affixed possession notice and served it on the applicants. The applicants have, at page No.5 of the first S.A., admitted all these aspects. The answering respondents have filed the possession notice dated 08.08.2022 published in two newspapers. It is further stated that the possession notice is dated 08.08.2022. The present S.A. is filed on 24.02.2025 i.e. beyond 45 days from 08.08.2022. Therefore, it is not open for the applicants to say anything about the symbolic possession notice dated 08.08.2022. In para 4 of the

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Limitation, the applicants have specifically stated that the S.A. challenging sale notice dated 28.01.2025 by which sale is scheduled on 28.02.2025 is in limitation. Thus, for challenging the symbolic possession notice dated 08.08.2022, there is no delay condonation application filed. It is further stated that the symbolic possession notice dated 08.08.2022 is published in two daily newspapers. The contents of para No.5.11-b of the S.A. are false. The possession notice is affixed on the property and photographs of affixing are produced on record. The contents of para 5.11 sub-para 1 on page No.13 of the S.A. are false. It is stated that the applicants have not produced any documents on record in support of their contentions about the CTS No.2114 and 2115 as well the possession is taken on 08.08.2022, whereas the applicants are contending that the possession notice is dated 07.07.2022. In the first S.A., all these aspects are not raised. The applicants, therefore, cannot raise it in this second S.A. It is false that there is no compliance of Rules and therefore, the sale notice is bad. It is stated that all Rules are

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complied by the respondent. It is stated that the contents of para No.5.11-c are not tenable. It is stated that the possession notice is served on the applicants and therefore, in para No.5.6 of the first S.A., the applicants have mentioned it and have filed relevant documents as Exhibit-C. It is stated that it is false that on 13.07.2022, the Authorized Officer did not visit the property Gut No.239/6 of Shevgaon, Dist. Ahilyanagar and without visiting, has prepared the possession notice while sitting in his own office. The possession is not taken on 13.07.2022. Symbolic possession is taken on 08.08.2022. Therefore, all contentions about non-visit, preparation of papers by sitting in own office and regarding panchanama, etc. are false and hence denied. There is no question of quashing the possession notice dated 13.07.2022 as symbolic possession is taken on 08.08.2022.

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It is further stated that it is true that the respondent bank filed an application under Section 14 of the SARFAESI Act before the learned District Magistrate, then Ahmednagar for physical

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possession of secured assets. There is compliance of Section 14(1)(b)(i) of the SARFAESI Act. The respondent has complied all the aspects and therefore, the learned District Magistrate has passed order on 14.03.2023. The said order was subject matter of first Securitisation Application, which admittedly is rejected. The applicants, after rejection of first S.A. on 15.01.2024 and they have not preferred any appeal before the Hon’ble DRAT, Mumbai. Therefore, the applicants cannot challenge Section 14 proceedings now after a lapse of 45 days from the date of order of District Magistrate, Ahmednagar dated 14.03.2023. It is further denied that the order of District Magistrate, Ahmednagar is without compliance of provisions and the approach is reckless and contentions regarding approach of respondent bank are denied in toto. Further contention of the applicants that the order dated 14.03.2023 is bad in law, is denied in toto.

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It is false and hence denied that the first S.A. is disposed of without hearing on merits. The applicants failed to make out a case

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before this Tribunal though para No.6-b of reliefs sought, it was specifically prayed that the demand notice dated 04.05.2022 be quashed and set aside. By prayer clause 6-c of reliefs sought, it was prayed that the order dated 14.03.2023 passed by the District Magistrate, Ahmednagar be quashed and set aside. Thus, when a relief is sought and not granted by the Court, then it amounts to rejection of said prayer. The contention of the applicant, therefore is false that on merits, S.A. is not decided. It is further stated that it is false that the Tahsildar has taken actual and physical possession of the factory premises on 23.08.2023 without following procedure of law. It is a matter of record that the order was passed by the learned Additional District Magistrate, Ahmednagar on 14.03.2023, physical possession was taken on 23.08.2023 and the first S.A. Diary No.984/2023, which was filed in September, 2023, was dismissed on 15.01.2024. The applicants in first S.A. had specifically challenged Section 14 order dated 14.03.2023 by prayer clause C. The applicants by prayer clause E, had also prayed for

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injunction against the order dated 14.03.2023 passed under Section 14 of the SARFAESI Act. The Tribunal was pleased to dismiss the

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S.A. On this background, the applicants have no locus standi to again and again raise same issues before the same Court. In para No.4 of Limitation of this S.A., the applicants have specifically pleaded that present S.A. is within limitation from the date of Sale Notice published on 28.01.2025. Thus, challenge is only to the Sale Notice dated 28.01.2025. On this background, all the contentions are totally irrelevant and untenable and the applicants have no locus to raise those. The contentions that it was a running factory and it cannot be closed, are denied. If the applicants were running business and earning from it, then they should have repaid the dues as per the Agreements. Furthermore, after receipt of demand notice dated 04.05.2022, the applicants should have paid dues. Thereupon, after receipt of short notice dated 07.07.2022 filed at page Nos.52 to 54, they should have paid dues and even after taking symbolic possession on 08.08.2022, the dues should have been

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paid. Their own conduct and approach do not support their own contentions.

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It is further stated that a note is written at the end of possession receipt which reflects that after completion of possession of factory building at Gut No.239/6 of Shevgaon, Dist. Ahilyanagar (then Ahmednagar), Rs.61.00 lakh were deposited and cheque was issued of remaining amount to defer the possession of another property i.e. house property. The contention of the applicants that they have intention to settle loan account is false as the applicants have not filed any OTS application on record with this S.A. bearing acknowledgment of respondent bank. It is further stated that under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002, the notice of possession was published in the newspaper at the time of taking symbolic possession. Hence, once paper publication is given for symbolic possession, it is not necessary to publish the notice again while taking physical possession. It is stated that it is false that for demanding unlawful

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amount, the securitization action is initiated by the respondent bank. The applicants have not pointed out as to which entries in the Statement of Loan Account are incorrect, as along with the first S.A., the loan account statements are produced on record. The applicants have not filed their own calculations of loan accounts.

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Further it is stated that the inventory and panchanama were prepared by the Tahsildar, a Government official, at the time of taking physical possession of secured assets as per order of the District Magistrate. In the inventory, only items related to the trade were mentioned. Both the partners of the firm were present during possession of factory and inventory was prepared with their consultation. The bank has put up applicants’ secured assets on sale through auction. It is false to state that the list of inventory does not disclose true state of affairs. It is denied that the goodwill of the applicants is spoiled. The applicants ought to have been diligent after demand notice dated 04.05.2022 and avoided all future actions. It is clear that the physical possession is taken on

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23.08.2023, which reflects that the applicants had around 15

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months to repay the dues and redeem the properties, which the applicants failed. The challenge is only to sale notice dated 28.01.2025 and not to the physical possession or orders passed by

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the learned Additional District Magistrate, Ahmednagar dated 14.03.2023.

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Further it is stated that it is false that exorbitant interest is charged by the respondent bank. Applicable interest from time to time is applied to the loan account. The expenses incurred and permissible as per internal agreements between the parties are debited. The applicants should have paid it. The loan accounts maintained by the respondent are correct. It is stated that it is false that the respondent bank and its officers have made up their mind to

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proceed under SARFAESI Act against the applicants and accordingly, have published the auction notice. It is stated that the respondent had earlier issued notice under Rule 8(6) of the Security

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Interest (Enforcement) Rules, 2002 on 19.08.2023 and had put the

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mortgaged and hypothecated properties on e-auction on 26.09.2023. This is not first time that the secured assets are put to sale. It is false to state that the sale notice is not published in Marathi language and is published only in English daily. It is further false that description of factory premises is incorrect and misleading. It is however submitted by the respondent bank that the bids are not received to the land and building. The description of factory land and building is correct and as per requirement. It is further denied that the valuation of plant and machinery is kept at lower side. It is also denied that the list of Plant and Machinery is wrong. The same Plant and Machinery were kept for auction on 19.08.2023 as is clear from page No.132 of first S.A. The applicants have not raised all these objections in the first S.A. Further it is specifically denied that there were repeated requests to provide the valuation report. The applicants along with S.A. have not filed any said letter of applicants addressed to the respondent. It is false that the outstanding debt is not mentioned in the sale notice. At page

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Nos.89 to 91, the notices issued under Rules 6(2) and Rule 8(6) are

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filed. In each and every notice and in advertisement/e-auction sale

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notices, the outstanding as on 14.01.2025 of Rs.7,24,18,153/- plus future interest, costs, expenses, etc. have been mentioned. It is denied that the auction notices were not affixed. It is further stated that on 15.01.2025, the Rule 8(6) notice was issued, which is at page 90. The earlier Rule 8(6) notice dated 19.08.2023 is filed at page 130 of the first S.A. It was also subject matter of the first S.A. Therefore, the contentions of the applicants in respect of notice under Rule 8(6) are not sustainable and hence, denied.

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Further it is stated by the respondent bank that the entire procedure is followed by the bank. The present S.A. is limited to the extent of e-auction sale notice as is stated on oath by the applicants. Therefore, all the contentions other than e-auction sale notice are not tenable and maintainable, hence, those be rejected. The contents that with the passage of time, the valuation will increase, are incorrect. In fact, there is depreciation which is not

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considered by the applicants. If the applicants are contending that the valuation of factory land and building is more than Rs.1.91 Crore, then the applicants should have brought purchaser for the amount contended by them in the e-auction sale proceedings which were scheduled on 28.02.2025. The contention of the applicants that the respondent is trying to sell the factory land and building at lower side is denied. The earlier reserve price fixed and intimated by Rule 8(6) notice dated 19.08.2023 was Rs.1,25,66,000/- and after around more than 16 months, the reserve price fixed is Rs.1.15 Crores. It is a matter of record that for both the reserve price, bids are not received. It is stated that the valuation is done by competent and qualified valuer. The accounts are properly maintained and there is no error in it. It is further stated that the applicants were provided huge loan facilities as per business requirements as detailed in para No.2 of the application. The applicants enjoyed all those loan facilities and now in view of their default in repayment, when the respondent started legal action, only after non-compliance

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of demand notice dated 04.05.2022, the applicants are making false and baseless allegations against the bank and its officials. The applicants are not paying their dues, which as per notice under Rule 8(6) are Rs.7,24,18,153/- as on 14.01.2025 and future interest, costs, expenses, etc. The respondent bank is filing with the written statement CERSAI registration papers of all three properties. All other allegations of the applicants in the S.A. are denied by the respondent bank and prayed for dismissal of the Securitization Application with heavy costs.

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The applicants have produced on record following

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documents as per lists of documents (Exhibit-4).

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Sr. No.	Description of document	Annexure
1	Copy of vigilance report dated 18.04.2023	A-1
2	Copy of demand notice dated 04.05.2022	A-2
3	Copy of representation/objection dated 27.05.2022	A-3
4	Copy of possession notice dated 07.07.2022	A-4
5	Copy of application u/s 14 of the SARFAESI Act	A-5

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6	Copy of affidavit in support of application u/s14ofthe SARFAESI Act	A-6
7	Cop of order dated 14.03.2023 passed bythe District Magistrate,Ahmednagar	A-7
8	Copy of order dated 15.01.2024, passed inS.A. DiaryNo.984/2024	A-8
9	Copy of panchanama drawn by the Tahsildar, Shevgaondated23.08.2023	A-9
10	Copy of possession receipt dated 23.08.2023	A-10
11	Copy of counterfoil of Rs.61 lakh dated23.08.2023	A-11
12	Copy of sale notice dated 28.01.2025 published in Indian Express	A-12

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34. The respondent bank has produced following documents

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along with the written statement as per the list of documents dated

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22.03.2025:

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Sr. No.	Description of document	Annexure
1	Copy of Marathi Daily Lokmat and English Daily Indian Express, both dated 14.08.2022 and photographs of affixing possession notice.	R-1
2	Copy of paper-book of first Securitization Application Diary No.984/2023 filed by present applicants before this Tribunal with respect to the same securitization action.	R-2

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3	Copy of Daily Loksatta dated 28.01.2025 in which auction notice is published in Marathi language	R-3
4	Copies of photographs of affixing e-auction sale notice on 23.01.2025 at the conspicuous part ofsubject property	R-4
5	Copy of CERSAI Registration papers of all three properties	R-6

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35.. I have heard the learned counsel for the applicants and learned counsel for the respondent bank and gone through the material on record. My findings along with reasons are as under.

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The applicants availed three loan facilities from the respondent bank being Cash Credit of Rs.410.00 Lakh, Term Loan of Rs.25.00 Lakh and GECL for Rs.35.00 Lakh. The loan account of the applicants was classified as Non-Performing Asset (NPA) on 30.04.2022. Thereafter, demand notice (Annexure-A-2) under Section 13 (2) of the SARFAESI Act for an amount of Rs.4,67,31,356/- was issued on 04.05.2022. The physical possession of the secured asset was taken on 23.08.2023 as per documents (Annexure-A-9 and A-10). The applicants had also

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deposited an amount of Rs.61 Lakh in the loan account on 23.08.2023 as per copy of counterfoil (Annexure-A-11) The respondent bank moved an application under Section 14 of the

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SARFAESI Act before the District Magistrate on 26.12.2022 and the learned District Magistrate passed an order dated 14.09.2023 and in view of this order, the physical possession of the mortgaged property was taken on 23.08.2023. Thereafter, the respondent bank issued sale notice dated 09.08.2023 with reserve price of Rs.1,25,66,000/- and e-auction was fixed for 26.09.2023. The present applicants moved Securitization Application Diary No.984/2023 in September, 2023 against the sale notice, which was dismissed on 15.01.2024.

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The respondent bank lastly issued sale notice dated 23.01.2025 with reserve price of Rs.1.15 Crores. This sale notice was published in newspaper on 28.01.2025 (Annexure-A-12 and Exh-R-3). The sale date was fixed for 28.02.2025. The applicants challenged the sale notice by filing the present S.A. No.154/2025

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filed on 24.02.2025 along with I.A. Diary No.505/2025 seeking protection and interim relief and this Tribunal, vide order dated 28.02.2025, disposed of the above referred I.A. by passing an order that the respondent bank may accept 25% amount if bid is received, but not to confirm the sale without permission of this Tribunal. The bid was received and the respondent bank has accepted 25% of bid amount. Thereafter, the respondent bank moved I.A. Diary No.986/2025 seeking permission of this Tribunal for confirmation of this sale. The applicants have also moved I.A. Diary No.506/2025 for appointment of the Court Commissioner and another I.A. Diary No.2844/2025 regarding disclosing the details of visits in the mortgaged premises. Since the main reply of the S.A. has been filed, now all these I.A.s. and present S.A. No.154/2025 are being disposed of on merits.

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The learned counsel for the respondent bank submitted that S.A. No.984/2024 was dismissed on 15.01.2024 and this order

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dated 15.01.2024 has got finality between the parties as it was not

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challenged by the applicants. He further submitted that the present S.A. is survived only for the purpose of challenging the sale notice dated 23.01.2025, whereby the sale was held on 28.02.2025 and no other reliefs can be granted in favour of the applicants.

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As per perusal of the order dated 15.01.2024 (Annexure-A-8), passed in S.A. Diary No.984/2024, no bid was received in view of sale notice dated 19.08.2023 and no action has taken place and the S.A. stands disposed of as infructuous. It is also ordered that the I.A. for condonation of delay was also dismissed. In the present S.A. as well as in earlier S.A., the applicants have taken a specific plea that account of the applicants was wrongly classified as NPA on 30.04.2022 as it was standard account as on 31.03.2022. In case it is established in this case that the loan account of the applicants was rightly classified as NPA by the respondent bank on 30.04.2022, in that case, the submission of the bank is acceptable that the applicants’ present S.A. is only to be considered challenging the sale notice dated 28.01.2025 whereby the sale was

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held on 28.02.2025. If it is proved by the applicants that the loan account was wrongly classified by the respondent bank as NPA on 30.04.2022, in that case, the proceedings conducted on the basis of the same would fall flat and all subsequent proceedings would be illegal, null and void.

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Now it has to be appreciated from the evidence on record as to whether the loan account of the applicants – borrowers was rightly classified as NPA on 30.04.2022 or not.

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The respondent bank has produced on record a document (Exhibit-R-2) i.e. copy of the paper-book of earlier S.A. Diary No.984/2023 filed by the present applicants. The present applicants submitted list of documents therein and particularly the Statement of Accounts contained at pages No.70 to 101 filed by the respondent along with the reply. As per perusal of the bank statement of account, an amount of Rs.15.00 lakh was credited in the Cash Credit loan account of the applicants by way of transfer on 31.03.2022, reducing the balance at Rs.4,04,64,909.45 against the

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limit of Rs.410.00 lakh (page 85 of the Statement of Account). On 04.04.2022, the bank debited an amount of Rs.15.00 lakh showing description as “cheque-WDL-cheque transfer to 178503” showing the balance of Rs.4,24,90,566.45 at page 70. The respondent bank is claiming that the credit of Rs.15.00 lakhs was given to the account of the applicants on 31.03.2022 is based on wrong entry and the entry accordingly was reversed on 04.04.2022 and the account was declared NPA on 30.04.2022. The facts and circumstances of both these entries reflect that the bank has concealed some material facts from this Tribunal as the respondent bank was asked through their counsel during course of arguments to produce the evidence as to under which circumstances credit of an amount of Rs.15.00 lakhs was given on 31.03.2022 and immediately after completion of financial year, the entry was reversed on 04.04.2022. The learned counsel has shown his inability before this Tribunal in this regard on the ground that the respondent bank is demanding a written communication from the

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[N. Jahagirdar] [S.A.No.154/2025] Page 57 of 65

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Tribunal to disclose details of credit and debit entries, in absence thereof, they are not in a position to explain the position. This is very strange submission on behalf of the bank as there is no procedure to make direct written communication with the banks pertaining to any query and the same are being asked during course of argument through the counsel or the authorized officer of the bank. Therefore, the respondent bank has not produced any document to the satisfaction of this Tribunal as to in which circumstances, the credit entry of Rs.15.00 lakhs was made on 31.03.2022 and why it was reversed immediately after completion of the financial year.

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If both the above referred entries are read in corroboration with the document (Annexure-A-1) submitted by the applicants along with list of documents (Exh-4) i.e. copy of the vigilance report dated 18.04.2023, then it would reveal that in this vigilance report, it has come on record that the account has been classified as

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NPA by the Statutory Auditors. It may be noted here that the

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[N. Jahagirdar] [S.A.No.154/2025] Page 58 of 65

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respondent bank has not produced the Statutory Auditor’s report on record in order to prove that only due to wrong entry, the account of the applicants was recommended to be notified as NPA. The Statutory Auditor may recommend the declaration of the account as NPA on several other grounds and hence, non-production of the Statutory Auditor’s report goes against the bank.

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As per the vigilance report (Annexure-A1), it was found during enquiry that the Cash Credit account of M/s Shravan Oil Industries (applicant) was on the verge of turning NPA on 31.03.2022. As per enquiry report, it appeared that Shri Pralhad Moundekar, the Branch Manager of MIDC, Ahmednagar credited an amount of Rs.15.00 lakh from another account maintained by M/s Ideal Steel and Iron Enterprises Pvt. Ltd to CC account of M/s Shravan Oil Industries on 31.03.2022. As a result, the account appeared standard on 31.03.222. This amount was then reversed back on 04.04.2022. It is worthwhile to mention that this vigilance

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enquiry was conducted on the basis of the complaint made by the

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[N. Jahagirdar] [S.A.No.154/2025] Page 59 of 65

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borrower M/s Shravan Oil Industries. It has also come in the vigilance report (Annexure-A-1) that an amount of Rs.15.00 lakh was credited to the Cash Credit account of the borrower by debiting with account of M/s Ideal Steel and Iron Enterprises Pvt. Ltd. Due to this credit, interest due from January to March, 2022 was realized and the account was saved from slippage. In this regard, the IO has also talked to the proprietor of the company on 19.10.2023, who narrated that this transaction as done by MIDC Ahmednagar Branch without their mandate and after the transaction, he was informed about it and was told to give his written confirmation on the debit slip, which he had given. The findings of the enquiry as well as vigilance report reflect that an amount of Rs.15.00 lakh was credited in the Cash Credit account of the present applicants/borrowers by debiting the Cash Credit account of M/s Ideal Steel and Iron Enterprises Pvt. Ltd without their consent and the Manager, MIDC, Ahmednagar Branch even obtained the debit confirmation from the company in order to legalize deposit of

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[N. Jahagirdar] [S.A.No.154/2025] Page 60 of 65

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Rs.15.00 lakh in the account of the present applicants on 31.03.2022. When the entry of Rs.15.00 lakh was confirmed by the

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company by way of written debit slip, then the entry of Rs.15.00 lakh on 31.03.2022 is a legal credit in the account of the applicants/borrowers. Even the amount of Rs.15.00 lakh was reverted back to the account of the company on 04.04.2022. The account of the applicants/borrowers could not be declared NPA as on 30.04.2022 reason being that in Cash Credit loan account, if the borrowers fail to pay interest of the Cash Credit loan account continuously for three months, thereafter the account is liable to be declared as NPA. When the account of the applicants was standard on 31.03.2022 and for subsequent three months interest default, the account would have been declared NPA on 30.06.2022. Therefore, the account of the applicants was wrongly declared NPA on 30.04.2022. In this case, the bank’s negligence in reversing entry on 04.04.2022 can be appreciated in the manner that the total limit

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of Cash Credit account was Rs.410 Lakh and the credit of Rs.15.00

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[N. Jahagirdar] [S.A.No.154/2025] Page 61 of 65

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lakh dated 31.03.2022 was rectified by the company by giving written confirmation on the debit slip. The debit balance of the present applicant firm before reversal of the entry of Rs.15.00 lakh as on 04.04.2022 was Rs.4,09,90,566.45, meaning thereby that the applicants/borrowers were eligible for availing the remaining part of the limit being near-about Rs.10,000/-. In the given circumstances, the bank could have refused to honour the cheque or transfer entry dated 04.04.2022 keeping in view the fact that the applicants/borrowers cannot exceed the limit of Rs.410 lakh. Therefore, all these circumstances on record have proved that the act of giving credit and reversal of entries has been made by the bank itself. When the company has given written confirmation on debit slip to the respondent bank regarding credit of Rs.15.00 lakh on 31.03.2022, then the entry becomes legal and the company could have recovered this amount from the applicants/borrowers and the bank would have refused to consider the withdrawal/transfer of Rs.15.00 lakh on 04.04.2022 but by allowing made its own account

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[N. Jahagirdar] [S.A.No.154/2025] Page 62 of 65

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as default. Even if the entry was reversed on 04.04.2022, still it was necessary for the respondent bank to declare the account as NPA after three months if the applicants failed to pay the interest continuously for further three months. But in this case, on 18.04.2022, the applicants/borrowers have deposited an amount of Rs.4.00 lakh in this account. Hence, the account of the applicants was wrongly classified as NPA on 30.04.2022 in violation of the Circular/instructions of the Reserve Bank of India.

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When it is established on record that the respondent bank has wrongly declared the Cash Credit account of the applicants/ borrowers as NPA on 30.04.2022, all the subsequent proceedings conducted by the respondent bank would fall flat and all the proceedings regarding symbolic possession, physical possession and sale are illegal, null and void and the same are liable to be set aside. Even the sale held on 28.02.2025 is also not sustainable and the same is liable to be quashed and 25% of the bid amount received by the respondent bank from the auction purchaser is

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[N. Jahagirdar] [S.A.No.154/2025] Page 63 of 65

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liable to be refunded to the auction purchaser along interest at the

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rate of 7% per annum from the date of deposit of the same till

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payment and the present Securitization Application deserves to be allowed.

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In view of above analysis/discussion and my findings arrived

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at as above, I pass the following order.

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ORDER

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(A) The Securitisation Application No.154 of 2025 is hereby

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allowed with costs.

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(B) It is hereby held that all the proceedings conducted by the respondent bank are illegal, null and void and the same are hereby quashed and set aside.

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(D) The respondent bank is directed to refund 25% of the bid amount deposited by the auction purchaser to him along with interest @ 7% per annum thereon from the date of deposit of the same till payment.

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(E) The respondent bank is also directed to restore the possession

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of the secured assets to the applicants/borrowers immediately.

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(F) The interlocutory applications stand disposed of in terms of this order/judgment.

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(G) File be consigned to the Record Room.

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(H) Copy of this judgment and order be uploaded on the website.

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(Dr. J.R. Chauhan), PRESIDING OFFICER, DEBTS RECOVERY TRIBUNAL, AURANGABAD

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Aurangabad

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Date : 19.05.2026

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[N. Jahagirdar] [S.A.No.154/2025] Page 65 of 65

Ms Shravan Oil Industries v. State Bank of India

Case brief

What is this about?

What did the court decide?

Ms Shravan Oil Industries v. State Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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