Allowed

Ms Maihar Enterprises v. Hdfc Bank

DRT8 Apr 2026SA/170/2024

Case brief

AI extract

What is this about?

Debts Recovery Tribunal allowed an application to quash SARFAESI proceedings, setting aside measures including demand and possession notices, due to material discrepancies in notice dates and failure to prove agricultural land classification.

What did the court decide?

The application SA 107 of 2024 is allowed with cost, and the SARFAESI measures under challenge are set aside.

Ms Maihar Enterprises versus Hdfc Bank — Banking and Recovery | DRT (2026)

SA 107 of 2024 (J)

DRT,PATNA

DEBTS RECOVERY TRIBUNAL PATNA

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Presiding Officer: Shri Kaushalendra Yadav

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SA- 107 of 2024

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M/s Ganesh Ji Mini Rice Mill, a proprietorship concern. through its proprietor, Mr. Kapil Gupta, situated at Town/Village – Darwa, P.S. – Mohania, District – Kaimur (Bhabhua). Pin Code – 821110.

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9 Mr. Kapil Gupta @ Kapil Muni Prasad, aged about 53 years, Male, son of Sadan Prasad, resident of H. No. 23, Darwa. P.O. – Darwa, District – Kaimur (Bhabhua). Pin Code – 821110 (Proprietor/Guarantor).

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aj. Smt. Shashi Devi @ Sasi Devi, wife of Mr. Kapil Gupta @ Kapil Muni Prasad, resident of H. No. 23, Darwa, P.O. – Darwa, District – Kaimur (Bhabhua), Pin Code – 82 1110 (Guarantor/Mortgagor).

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...................Applicants

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Versus

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The Authorised Officer-cum-Chief Manager, HDFC Bank Limited, situated at Bimla Sadan. Holding No. 801/432, Ward No. 37, Exhibition Road. Patna, Pin Code – 800001 .

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The HDFC Bank Limited, Head Office – situated at HDFC Bank House, The Authorised Officer, Indian Bank (Erstwhile Allahabad Bank), Patna Main Branch. Budh Marg. Town & District – Patna.

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......................... Respondents

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Presents;

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For the Applicants :Sh. Alok Ranjan, Advocate For the Respondent Bank : Sh. Bhola Shankar, Advocate

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Dated: 08.04.2026

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JUDGMENT

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]. The present application has been filed seeking to quash the entire SARFAESI proceedings including the demand notice dated 02.03.2020 and the possession notice.

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a The brief facts of the case are as follows: The applicant, being a proprietorship firm through its proprietor, availed a cash credit facility of ?70 lakhs vide loan application dated 24.02.2014; to secure the said loan account, the applicant created an equitable mortgage by depositing the title deeds of the property in question; however, due to default in repayment. the loan account was classified as a Non-Performing Asset (NPA) by the respondent Bank on 27.08.2020; thereafter, the respondent Bank initiated proceedings under the SARFAESI Act by issuing a demand notice under Section 13(2) of the Act dated 02.03.2021, followed by issuance of a possession notice

SA 107 of 2024 (J)

DRT,PATNA

dated 09.02.2024 under Section 13(4) of the Act; being aggrieved by the said possession notice, the present securitization application has been filed by the applicant.

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J.a The learned counsel for the applicants submitted that the applicants were not served with the demand notice dated 02.03.2020. It is further submitted that there is a discrepancy in asmuch as the demand notice is dated 02.03.2020, whereas the loan account was classified as NPA on 27.08.2022, i.e.. subsequent thereto. It is further submitted that the possession notice dated 09.02.2024 is not in accordance with Appendix IV, was published only in one newspaper, namely, The Times of India, and does not properly mention the property address. It is further submitted that the property in question is agricultural land. It is further submitted that. in view of RBI directions during the COVID period prohibiting NPA classification between 01.06.2020 and 31.08.2020, the classification of the account as NPA on 27.08.2020 is improper. It is further submitted that it is not known whether the property is registered under CERS AI. It is also submitted that though the MCLR was 8.75% p.a., the Bank has charged interest at 18% p.a. with monthly rests w.e.f. 01.02.2021. It is further submitted that the Bank had filed O.A. No. 397/2021, which was allowed on 01.07.2023, and thereafter R.P. No. 399/2023 was initiated, wherein an order of attachment of the secured asset has been passed.

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The respondent Bank submitted that due to default in repayment of the loan amount, the loan account was classified as NPA on 27.08.2020. and thereafter a demand notice dated 02.03.2021 under Section 13(2) of the SARFAESI Act was issued, which was duly served upon the applicants; it is further submitted that the said demand notice was also published in two newspapers. namely. The Times of India (English) and Aq (Hindi) on 07.09.2021; it is further submitted that as the outstanding dues were not cleared. the respondent Bank issued a possession notice dated 09.02.2024 under Section 13(4) of the Act for taking symbolic possession, which was duly delivered to the applicants, affixed on the secured asset, and also published in two leading newspapers: it is further submitted that the respondent Bank thereafter issued a physical possession notice dated 26.09.2024. which was also published in two newspapers.

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

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6 The applicants have alleged that they were not served with the demand notice dated 02.03.2020. It is further alleged that there is a discrepancy as the demand notice is dated 02.03.2020, whereas the loan account was classified as NPA on 27.08.2022, i.e., subsequent thereto. It is further alleged that the possession notice dated 09.02.2024 is not in accordance with Appendix IV, was published only in one newspaper (The Times of India). and does not properly mention the property address. It is further alleged that the property in question is agricultural land. It is further alleged that, in view of RBI directions during the COVID period prohibiting NPA classification between

DRT.PATNA

SA 107 of 2024 (J)

01.06.2020 and 31.08.2020, the classification of the account as NPA on 27.08.2020 is improper. It is further alleged that it is not known whether the property is registered under CERS AI. It is alleged that though the MCLR was 8.75% p.a., the Bank has charged interest at 18% p.a. with monthly rests w.e.f. 01.02.202 1

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Upon perusal of the record, it is found that, to prove service of the demand notice, the respondent Bank has filed a postal receipt dated 02.03.2021 at page 19 of Annexure R/1; however, no tracking report has been annexed thereto to establish that delivery was effected upon the applicants. The respondent Bank has further annexed photocopies of newspaper publications to show publication of the demand notice in The Times of India and Aaj dated 07.09.2021 at pages 20 and 21 of Annexure R/2; however, in the said cuttings, the names of the newspapers are not visible. With regard to the allegation of discrepancy in the date of the demand notice, it is found that the demand notice actually bears the date 02.03.2020, as reflected in Annexure-2 at page 33 of the SA, and the same date is also mentioned in the possession notice (Annexure3 series of the S. A.); however, in the counter affidavit, the respondent Bank has mentioned the date of the demand notice as 02.03.2021, and the postal receipt also reflects dispatch on 02.03.2021. Although this may appear to be a typographical error. the repetition of such discrepancy across multiple documents, including the demand notice. possession notice, and their respective newspaper publications, raises doubt.

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As far as the allegation regarding the possession notice is concerned, it is found that the possession notice is in accordance with Appendix IV, as evident from Annexure R/3 of the counter affidavit; the said possession notice also contains the description of the property, however, the property boundaries, i.e., bounded by East, West, North and South, are not provided. The said possession notice was also published in two newspapers, namely The Times cf India and Hindustan, on 13.02.2024, as evident from Annexure R/5 at pages 29 and 30 of the counter affidavits.

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9, As far as the allegation regarding the property in question being agricultural land is concerned, it is found that the applicant has only annexed two photographs as Annexure-5 at page 42 of the S. A., which do not specifically establish that the land is agricultural in nature, whereas the respondent Bank has denied the said claim. In K. Sreedhar v. M/s RaIls Constructions Pvt . Ltd. & Ors. (2023), it has been held that the exemption under Section 31(i) of the SARFAESI Act is not automatic merely on the basis of classification of land as agricultural in revenue records, but the actual use of the land for agricultural purposes must be proved, and the burden to establish the same lies upon the borrower. In the present case, the applicant has failed to discharge the said burden of proof

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It is further alleged that, as per the guidelines issued by the Reserve Bank of India during the COVID-19 period, a moratorium was granted on term loan instalments from 01.03.2020 to 31.08.2020, and during this period, the asset classification of loan

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SA 107 of 2024 (J)

accounts was to be kept in abeyance. meaning that accounts which were standard as on 01.03.2020 were not to be classified as NPA solely on account of non-payment during the moratorium period; however, this benefit was applicable only where the borrower had availed the moratorium and the account was not already in default prior to 01.03.2020. In the present case, although the loan account has been classified as NPA on 27.08.2020, No statement of account has been filed to demonstrate that there was no default or NPA classification is in violation of the RBI guidelines.

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As regards the allegation concerning CERS Al, it is found that the respondent Bank has stated in paragraph 37 of the counter affidavit that the property was registered with CERSAI; however, no documentary proof has been annexed in support of the said assertIon

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It is also submitted that though the MCLR was 8.75% per annum, the Bank has charged interest at 18% per annum with monthly rests w.e.f. 01.02.2021; however, no loan agreement or sanction terms have been placed on record by the applicant to substantiate the applicable rate of interest or to demonstrate that the rate charged by the Bank is contrary to the agreed terms, and in absence of such material, the said contention cannot be conclusively adjudicated.

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In view of the above discussion as the service of demand notice could not be proved and the date of demand notice is 02.03.2020, and the same date is also mentioned in the possession notice. The counter affidavit discloses the date of demand notice 02.03.2021 . But repetition of such discrepancy across multiple documents, including the demand notice, possession notice, and their respective newspaper publications, makes the demand notice wrong. ambiguous and self contradictory as it has been issued prior to the date of NPA. As such the measures under challenge are vitiated. S. Application accordingly succeeds.

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ORDER

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The application SA 107 of 2024 filed by M/s Ganesh Ji Mini Rice Mill, through its proprietor, Mr. Kapil Gupta, is allowed with cost. The SAFAESI measures under challenge are hereby set aside.

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A/'’.f"[Kaushalendra Yadav]

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Presiding Officer

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Debts Recovery Tribunal, Patna

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Judgment signed. sealed. dated and pronounced in the open couN on this 08TH Day of ADril. 2026

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[Kaushalendra Yadav]