Allowed

Mr Sushil Kumar and Others v. Punjab National Bank

DRT27 Mar 2026SA/170/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application quashing SARFAESI action including the auction sale of mortgaged property by the bank. The Tribunal held that the bank failed to provide proof of service of notices and violated procedural mandates, rendering the sale illegal.

What did the court decide?

SARFAESI action and auction sale quashed; Bank to refund purchaser with 10% interest and hand over possession to applicants within one month.

Mr Sushil Kumar and Others versus Punjab National Bank — Banking and Recovery | DRT (2026)

SA 170 of 2023 IJI

DRT,PATN A

DEBTS RECOVERY TRIBUNALPATNA

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Presiding Officer :Shri Kaushalendra Yadav

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SA- 170 of 2023

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Sushil Kumar, S/o Sri Gupta Nand Mauar, R/a Paradise Public School, Club Road, Near HED Colony, P.O. & P.S. –Aurangabad, District – Aurangabad, Bihar – 824101.

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Smt. Bebi Kumari, W/o Sushil Kumar, R/o Paradise Public School, Club Road, Near HED Colony, P.O. & P.S. – Aurangabad, District – Aurangabad, Bihar – 824101

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.........Applicants

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Versus

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The Authorized Officer-cum-Chief Manager, Punjab National Bank, Recovery Center, Aurangabad, District – Aurangabad – 8241011.

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Branch Manager, Punjab National Bank, Old G.T. Road Branch, Opposite Town Thana, District – Aurangabad, Bihar – 824101.

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Mrs. Nilu Kumari, W/o Basant Kumar, R/o A-256, 13 Near BaI Bharti School, Laxman Bihar, Phase – 1, Gurgaon, Haryana – 122001. –respondents

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Present :

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For the Applicant Sh. Brajesh Kr. Jha, Advocate For the respondents Bank Dr.Binod Bihari Sinha, Advocate For the Respondent No. 3 to 8 Sh. Anjani Kr. Singh, Advocate

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Dated: 27.03.2026

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JUDGMENT

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Present application u/s 17 of SARFAESI Act has been filed with a prayer to quash the entire SARFAESI Action taken by the respondent bank against the property in question including Possession Notice dated 14.09.2021.

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The brief fact of the case is that applicants availed financial assistance

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to the tune of Rs.40 lacs as Cash Credit Limit from the respondent

V\QP

SA 170 of 2023 IJI

DRT.PATNA

bank. To secure the loan facility, the applicant created an equitable mortgage by deposit of Sale Deed. On default in repayment of the dues of the bank, the account of the applicants was declared as NPA on 31.03.2021. The bank initiated SARFAESI Action against the borrower and guarantor and issued demand notice u/s 13(2) dated 28.06.2021 calling upon borrower & guarantor to make the payment of Rs.33,55,938.72. Subsequently, Possession Notice dated 14.09.2021 was issued u/s 13(4) of the SARFAESI Act. Further, the property was put on auction sale by issuing sale notices dated 25.04.2023 fixing the date of auction sale as 24.05.2023. Aggrieved from the auction sale notice, the present SA has been filed by the applicant.

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It is submitted by the Id. Counsel of applicants that the respondent bank without serving Demand Notice as well as Possession Notice to all the applicants, proceeded for auction sale of the property in question. The Possession Notice dated 14.09.2021 was affixed on secured assets and also published in “Dainik Jagran" and “The Hindu" on 22.09.2021 but not within the seven days as required under Act. The detail of the property has also not been mentioned in the possession notice. The property has not been registered with Central Registry as required under section 26(D) of the Act. The respondent bank put the property on auction sale by issuing auction sale notice dated 25.04.2023 but the said sale notice was neither served to applicant no.2 nor affixed on secured asset. The composite sale notice was published in “Prabhat Khabar" and “Times of India” on 06.05.2023. nor published in two leading newspapers. Before putting the property on auction sale, the valuation of the property was not obtained by the bank and auction sold the property on 24.05.2023 on very low price i.e. Rs.3686400/while at the time of sanctioning the loan valuation of the property was considered as Rs.89,51,200/- The auction purchaser had deposited

SA 170 of 2023 IJI

DRT,PATNA

EMD amount on 21.04.2023 i.e. before the issuance of sale notice dated 25.04.2023 and the EMD was credited in the loan account on 30.05.2023 while the sale was conducted on 24.05.2023.

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On the contrary, Id. Counsel of the respondent bank submits that the borrower after availing the credit facilities from the respondent bank, failed to repay the same. Hence, the account of the borrower was declared as NPA on 31.03.2021. Thereafter, the respondent bank initiated SARFAESI Action against the borrower and issued demand notice dated 28.06.2021 and served to the applicants. Even after service of demand notice, the applicants failed to repay the outstanding dues of the bank, hence the respondent bank proceeded further and took possession of the property by issuing Possession Notice dated 14.09.2021 by delivering possession notice and affixing the same on the conspicuous part of the said property. The possession notice was duly published in “Dainik Jagran" and “The Hindu" on 22.09.2021. After service of possession notice, the applicant approached the bank and showed intention to repay the dues of the bank and request to halt the proceeding initiated under SARFAESI Act. Accordingly, a supplementary agreement dated 31.01.2022 was executed amongst the party wherein the applicant/borrower has expressly admitted the services of demand notice dated 28.06.2021 as well as possession notice dated 14.09.2021. Even after execution of the agreement, the applicants did not repay the dues of the bank. Hence, the respondent bank obtained the valuation of the property and put the property on auction sale by issuing auction sale notice dated 25.04.2023 fixing the date of auction sale on 24.05.2023. The sale notice was served to the applicants and affixed on secured assets. The sale notice was also published in “Prabhat Khabar" and “Times of India" on 06.05.2023. In pursuance of said sale notice, the property

SA 170 of 2023 IJI

DRT,PATN A

has been auctioned on 24.05.2023 to the successful bidder namely Mrs. Nilu Kumari, W/o Basant Kumar. On receipt of the entire auction amount, the sale certificate has been issued in favor of the auction purchaser. The possession of the property has also been transferred to the auction purchaser. Registered Sale deed has also been issued on 04.04.2024. As far as registration of the property with CERSAI is concerned, the loan was sanctioned prior to the notification of Act 44 of 2016 of Central Registry. Further, as registered mortgaged deed is a document in rem, the compliance of public notice as required under Central Registry stands satisfied.

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Ld. Counsel of the auction purchaser submitted that after getting knowledge of publication of sale notice dated 06.05.2023, the auction purchaser deposited required EMD and participated in the auction sale held on 24.05.2023 of the property in question. The auction purchaser was declared the highest bidder with an amount of Rs.36,86,400/- and accordingly, the auction purchaser deposited the entire auction amount. Thereafter, the respondent bank issued a Sale Certificate. Further, the respondent bank handed over the possession of the property in question to the auction purchaser. During the stay granted by this Tribunal, the applicants with some other people visited the property in question and started demolishing the gate and other structures. Hence, the auction purchaser submitted a written complaint before the S.H.O, Town Police Station, Aurangabad vide P.S. Case No. 920 of 2023.

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1 have heard Ld. Counsel for the parties and gone through the record.

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It is alleged that neither the Demand Notice nor the Possession Notice has been served upon the applicant. The Possession Notice was not published in the newspaper within the seven days as required under Act. The detail of the property has also not been mentioned in the bC,„*

SA 170 of 2023 IJI

DRT.PATNA

possession notice. The property has not been registered with Central Registry as required under section 26(D) of the Act. The sales notice dated 25.04.2023 was neither served to applicant no.2 nor affixed on secured asset. The composite sale notice was published in “Prabhat Khabar" and “Times of India” on 06.05.2023. Without obtaining the valuation of the property the respondent bank auction sold the property on very low price i.e. Rs.3686400/- while at the time of sanctioning the loan valuation of the property was considered as Rs.89,51,200/-. The auction purchaser had deposited EMD amount on 21.04.2023 i.e. before the issuance of sale notice dated 25.04.2023 and the EMD was credited in the loan account on 30.05.2023 while the sale was conducted on 24.05.2023

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On perusal of records it appears that the demand notice dated 28.06.2021 was issued against applicant no. 1 & 2 but the respondent bank failed to file any proof of service upon the applicants. The respondent bank issued possession notice on 14.09.2021 and the same was affixed on secured asset but the respondent bank failed to file any proof of service of possession notice also upon the applicants. However, the respondent bank filed a supplementary agreement executed among parties on 31.01.2022 with the written argument wherein applicants acknowledged the issuance of Demand Notice as well as Possession Notice. To prove the publication of possession notice, respondent bank filed a copy of newspapers as annexure B/B & B/C, page 14-15 with counter affidavit but the said annexure neither indicates the name of newspapers nor the date of its publication. Before putting the property on sale, the valuation of the property was obtained by the respondent bank from its approved valuer as appears from a copy of valuation report annexed with written arguments which shows the Distress Sale Value of the property has been assessed as

/g,@

SA 170 of 2023 IJI

DRT,PATNA

Rs.36, 14,000/-.

The property was put on auction sale vide sale notice dated 25.04.2023 fixing the date of auction sale on 24.05.2023 but the respondent bank failed to file proof of service of sale notice upon the applicants. The copy of the postal receipt which has been filed with sale notice with counter affidavit to prove the service is neither clearly visible nor readable to whom and when it was sent. Furthermore, the respondent bank also failed to file proof of affixation of sale notice on secured assets. To prove the publication of sale notice, respondent bank filed copy of newspapers as annexure C/A & C/B, page 17-18 with counter affidavit but the said annexure neither indicate the name of newspapers nor the date of its publication and indicates the publication as a composite sale notice published with some other borrowers.

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As far as the auction purchaser is concerned, the auction sale was conducted on 24.05.2023. The EMD amount was deducted from the Global EMD Wallet of the applicant as appears from page 13 of the counter affidavit filed by auction purchaser. The rest amount was deposited by the auction purchaser by 02.05.2023 which is evident from page 24 & 35 of counter affidavit of auction purchaser.

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11.The respondent bank filed the written argument with valuation report and alleged supplementary agreement executed among parties on 31.01.2022 to acknowledge the Demand Notice as well as Possession Notice. It is impressed upon that the fairness in judicial process requires documents to be filed with an affidavit giving an opportunity to rebut by other side. As such the evidence filed with written arguments can not be treated as valid evidence of the fact in issue.

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In view of the above discussion, the allegations made in the present S.A. are stand proved and unrebutted and render the measures illegal

/,,d''

SA 170 of 2023 IJI

DLT PATNA

and irregular. The sale in question is vitiated on account of fraud and undervaluation. The S. application accordingly deserves to be allowed.

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ORDER

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The application under Section 17 of the SARFAESI Act filed by Sushil Kumar & Another, is allowed with costs. The SARFAESI Action in question against applicants, including auction sale 24.05.2023 are hereby quashed. The respondent Bank shall refund the amount deposited by the auction purchaser with 10% simple interest, subject to the condition that if the auction purchaser is in possession, will hand over the vacant possession of the mortgaged property within one month from the date when the amount for refund is tendered by the respondent Bank. The respondent Bank will hand over the possession of the property to the applicant. No interest will be payable to the auction purchaser, if the possession is not handed over to the bank within one month from the date of tender of the refund. The respondent will also not charge

[KaushalendraYadav]

Presiding Officer

Debts Recovery Tribunal, Patna

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Judgment signed, sealed, dated and pronounced in the open court on this 27TH Day of March, 2026. n A//

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n A// {-&P* , .„/F_ -*'~'= V’,&

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[Kaushalendra Yadav]

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Presiding Officer

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Debts Recovery Tribunal, Patna

Mr Sushil Kumar and Others v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

Mr Sushil Kumar and Others v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

Parties & counsel

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Case details

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