Allowed

Shubchintak v. Idfc First Bank Ltd. and Others

DRT5 Aug 2026SA/201/2023

Case brief

AI extract

What is this about?

In a securitization application, the Tribunal quashed SARFAESI proceedings initiated by a bank because the statutory notices under Section 13 were not proved served on the applicant due to lack of track consignment records, and the secured asset was not registered with CERSAI.

What did the court decide?

Securitization Application was allowed; SARFAESI proceedings initiated by the respondents are quashed.

Shubchintak versus Idfc First Bank Ltd. and Others — Banking and Recovery | DRT (2026)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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PRESIDED OVER: SH. MRIDULESH KUMAR SINGH

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SECURITIZATION APPLICATION NO.201/2023

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Date of Institution: 19.09.2023 Date of Decision: 05.08.2026

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M/s Shubchintak, 503, Model Town, Krishna Mandir Road, Punjab, Ludhiana-141002 through its proprietor namely Awal Singh Chabra, R/o House No.34, Back Gate Garden Enclave, Carlton Woods, South City, Ludhiana, Punjab

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---Applicant

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Versus

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Authorised Officer, IDFC First Bank Ltd. (Erstwhile Capital First Ltd. & Amalgamated with IDFC Bank Ltd.), having its Branch at Feroze Gandhi Market, Ludhiana

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Authorised Officer, IDFC First Bank Ltd. (Erstwhile Capital First Ltd. & Amalgamated with IDFC Bank Ltd.), 8^th Floor, A-Wing, Asher IT Park, Waghle Estate, Thane-West Mumbai, Maharashtra-400604

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Authorised Officer, IDFC First Bank Ltd. (Erstwhile Capital First Ltd. & Amalgamated with IDFC Bank Ltd.), Upper Ground Floor No.62/20, New Rohtak Road, Karol Bagh, New Delhi-110005

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---Respondents

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Argued by: Sh. Akhilesh Vyas, Advocate for Applicant Ms. Gagandeep Kaur, Advocate proxy for Sh. Arjun Grover, Advocate for Respondents (through VC)

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FINAL ORDER

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(1) This Securitization Application was filed under Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for brevity) to set aside demand notice under Section 13(2) of the Act dated 15.04.2019 (Annexure A-2), possession notices dated 01.11.2019 & 09.03.2023 (Annexures A-3 & A-4) and sale notice dated 18.08.2023 (Annexure A-6), whereby auction of the secured asset was fixed for 21.09.2023 or quashing any

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SA/201/2023 SHUBCHINTAK VS. IDFC FIRST BANK LTD. AND OTHERS

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other proceedings arising under the Act related to the property in dispute.

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(2) It was stated in the application that present Securitization Application has been filed by proprietorship concern namely M/s Shubchintak through its proprietor Sh. Awal Singh Chabra; that applicant had availed a credit facility to the tune of Rs.3,60,00,000/vide sanction letter dated 29.05.2017; that to secure the above said credit facility applicant had mortgaged the property i.e., B-XXX137/34, Main G.T. Road & Sahnewal Airport Road, Near Zamindar Dhabha, Sahnewal, Ludhiana; that owing to some default in the loan account of the applicant, the account was classified as NPA on 08.02.2019; that thereafter, respondents had issued notice under Section 13(2) of the Act dated 15.04.2019; that the said notice was blatant abuse to the process of law because in the said notice the rate of interest was mentioned as 10.6%, which was exorbitantly high and also against the provisions of rate of interest implied by Reserve Bank of India; that intimation letter with regard to classification of loan account as NPA has also been issued on the same date i.e., on 15.04.2019 when the notice under Section 13(2) of the Act was issued; that thereafter, respondents had issued possession notice dated 01.11.2019 regarding the immovable property of the applicant; that thereafter again respondents had issued another possession notice dated 09.03.2023, which was never served upon applicant through registered post; that in the possession notice dated 09.03.2023, total outstanding amount was mentioned as Rs.3,69,38,334.11p; that before issuance of new possession notice dated 09.03.2023 the bank has not withdrawn its earlier notice dated 01.11.2013, which was also blatantly abuse to the process of law; that bank cannot issue two possession notices, when the earlier possession notice was not cancelled/withdrawn; that possession notice dated 09.03.2023 was not pasted on the conspicuous part of the property nor the same was published in leading newspapers; that thereafter, respondents had issued sale notice dated 18.08.2023, whereby the sale of the immovable property was fixed for 21.09.2023, which was also

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SA/201/2023 SHUBCHINTAK VS. IDFC FIRST BANK LTD. AND OTHERS

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wrong and illegal; that the said notice was served to applicant through registered post on 25.08.2023, which was received by the applicant on 29.08.2023 after 11 days of the issuance of sale notice dated 18.08.2023; that the said sale notice was not served upon applicant providing 30 days time and neither the same was published nor it was affixed nor pasted on the conspicuous place of the property; that in the said sale notice, total outstanding amount pending against borrower/applicant was not mentioned, which is essential requirement of Rule 8 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ‘Rules’ for brevity); that there is no valuation conducted by respondents prior to putting the property to sale, which is also one of the essential requirement of law; that when the applicant came to know about the fact regarding sale notice after receiving on 29.08.2023, applicant tried to arrange money from his relatives and friends and approached the respondents for settlement with demand draft of Rs.25 Lacs and also assured the respondents that if one year time is provided to it, then it can settle its loan account with respondents but respondents were not adhered to the request of the applicant and threatened it to sell the immovable property; that applicant is ready and willing to pay the amount, if some relaxing time as well as relaxation under the OTS policy is given; that secured asset is not registered under the CERSAI, it is mandatory for the bank to register its charge under CERSAI, otherwise bank cannot initiate action under the Act; that all the proceedings initiated by respondents under the Act are in violation of the provisions of law. Therefore, it was prayed that present SA may kindly be allowed.

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(3) Reply filed by respondents.

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(4) It was stated in the reply that present SA filed by applicant is devoid of any merits and deserves to be dismissed at the threshold; that applicant has misused the process of law by wrongly invoking the jurisdiction of this Tribunal by way of the instant application, while inter-alia seeking a relief against the respondents; that applicant in the present case is seeking setting aside of the impugned sale notice dated 18.08.2023 (Annexure A-6) issued by respondents;

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4 SA/201/2023 SHUBCHINTAK VS. IDFC FIRST BANK LTD. AND OTHERS

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that the said auction was failed as no EMD was received by the bank and the said fact was also mentioned in the order sheet dated 04.10.2023 passed by this Tribunal; that before the sale notice dated 18.08.2023, two more sale notices prior to the same had been issued on 05.04.2023 and 19.05.2023, which the applicant did not mentioned in the said SA; that applicant along with co-borrowers availed a Loan Facility (LAP) from the respondents in the year 2017 as loan against property to the tune of Rs.3,60,00,000/-, which got sanctioned on 29.05.2017; that for the purpose of securing loan facility, applicant created mortgage in favour of respondents; that applicant along with co-borrowers, assured the respondents to pay regular EMIs towards the loan amount being sanctioned and availed by them on due dates; that upon the consequences of failure to pay timely EMIs, the bank will have the right to enforce the mortgaged property in its favour; that applicant was irregular towards repaying the outstanding dues and charges in spite of respondents repeated request and demands; that on account of default and noncooperation, the loan account of the applicant and other co-borrowers was classified as NPA on 08.02.2019 in accordance with law; that respondents had sent an intimation to the applicant to the effect that loan account has been classified as NPA and with the said intimation, notice under Section 13(2) of the Act recalling the entire outstanding of Rs.3,69,38,334.11p as on 15.04.2019 was also issued by the bank to the applicant and as such no dispute or any objections under Section 13(3-A) of the Act by the applicant has raised any dispute on the receipt thereof; that applicant did not come forward to pay its liability; that therefore, the possession notice dated 09.03.2023 under Section 13(4) of the Act was issued and the same was duly served upon applicant as per Rules; that applicant is liable to pay a sum of Rs.6,54,09,975.68p in the loan account; that respondents had duly followed the due process of law provided under the provisions of the Act in order to recover legitimate dues of the bank, which happens to be public money; that as per settled cannons of law, no one can be permitted to take benefit of its own wrongs, thus as such in the instant case,

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5 SA/201/2023 SHUBCHINTAK VS. IDFC FIRST BANK LTD. AND OTHERS

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applicant cannot be allowed to take the benefit of their own mistake by challenging the impugned notices sent to them by respondents by way of present SA. Therefore, it was prayed that present SA may kindly be dismissed.

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(5) Replication by applicant to the reply filed by respondents was filed, wherein the contents of SA were reiterated and that of the reply to the SA were denied. (6) I have heard arguments advanced by Sh. Akhilesh Vyas, Advocate for Applicant and Ms. Gagandeep Kaur, Advocate proxy for Sh. Arjun Grover, Advocate for Respondents, who appeared through Video Conferencing and gone through the record carefully.

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(7) Sh. Akhilesh Vyas, Advocate argued that notice under Section 13(2) of the Act dated 15.04.2019 was not served upon applicant as per Rule 3 of the Rules.

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(8) Per contra , Ms. Gagandeep Kaur, Advocate argued that notice under Section 13(2) of the Act dated 15.04.2019 was duly served upon applicant and copy of the said notice along with receipts of registered posts were annexed as Annexure R-3 to the reply.

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(9) It reveals from record that only receipts of registered posts were filed in respect of notice under Section 13(2) of the Act but no track consignment record filed by respondents to show that the notice in question which was allegedly sent by respondents was ever received by the applicant. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondents notice in question was sent in year 2019. Gone are the days when sending of registered post itself used to be enough for drawing the presumption of service against the addressee. There is hardly any scope for the same in view of the availability of the track consignment record. Track consignment record should have been produced to bring home the fact that the notice was duly served upon the applicant and that not being the position, this Tribunal refuses to draw presumption of service.

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(10) In light of above factual position, it is established that notice under Section 13(2) of the Act

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6 SA/201/2023 SHUBCHINTAK VS. IDFC FIRST BANK LTD. AND OTHERS

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was issued but not proved served upon applicant in light of the Rules.

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(11) Sh. Akhilesh Vyas, Advocate further argued that notice under Section 13(4) of the Act dated 09.03.2023 was not served upon applicant as per Rule 8 of the Rules. It was further argued that the said notice was neither served through personal service nor through pasting nor through publication.

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(12) Per contra , Ms. Gagandeep Kaur, Advocate argued that possession notice was duly served upon applicant as per Rules. It was further argued that copy of said notice along with receipts of registered post as well as copy of publications in the newspapers and copy of affixation of the said notice were annexed as Annexure R-6 to the reply.

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(13) Possession notice was required to be served through personal service, through pasting and through publication in two leading newspapers. It is also required that possession notice be also served through electronic mode of service in addition to the modes prescribed under sub-rule (1) and sub-rule (2) of Rule 8 of the Rules.

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(14) Respondents had not disclosed regarding service of possession notice through electronic mode in the pleadings nor argued during the course of arguments.

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(15) Photographs of pasting annexed along with Annexure R-6 shows that a photocopy of one notice has been affixed on the wall and two persons are standing beside the said wall. Date and description of the notice is not clear as well as it is not clear that the said wall is conspicuous place of property in question.

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(16) It reveals from record that only receipts of registered posts were filed in respect of notice under Section 13(4) of the Act but no track consignment record filed by respondents to show that the notice in question which was allegedly sent by respondents was ever received by the applicant.

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(17) Copies of publication of the newspapers i.e., one in Punjabi and one in English (names of newspaper were not mentioned in the copies) are annexed along with Annexure R-6. No names of newspapers were shown, which can show that the said newspapers are

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7 SA/201/2023 SHUBCHINTAK VS. IDFC FIRST BANK LTD. AND OTHERS

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leading newspapers or not and when the said publication was done.

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(18) In light of above factual position, it is established that notice under Section 13(4) of the Act was issued but not proved served upon applicant either through personal service or through pasting or through electronic mode or through publication in light of the Rules.

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(19) Sh. Akhilesh Vyas, Advocate further argued that sale notice dated 18.08.2023, whereby sale of the secured asset was fixed for 21.09.2023 was not served upon applicant providing 30 days time as per Rules. It was further argued that the said notice was not served upon applicant through personal service, through pasting or through publication in the newspapers in light of the Rules.

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(20) Per contra , Ms. Gagandeep Kaur, Advocate argued that sale notice dated 18.08.2023 challenged by the applicant in the present SA has been rendered infructuous for the reason that sale scheduled for 21.09.2023 in the term of the said notice was unsuccessful as no EMD has been received by respondents for the said sale. It was further argued that before issuance of the sale notice dated 18.08.2023, two sale notices dated 05.04.2023 and 19.05.2023 were also issued but the same were not disclosed by applicant in the present SA.

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(21) In light of above, there is no need to prove the service of above said sale notice challenged by the applicant in the present SA. Neither it required for any adjudication.

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(22) Sh. Akhilesh Vyas, Advocate further argued that secured creditor has not registered the mortgaged property with the Central Registry in compliance of mandatory provision under Section 26-D of the Act. It was further argued that no document in this regard was filed by respondents along with the SA. Therefore, the whole SARFAESI proceedings initiated by respondents against applicant are in violation of the provisions of the Act.

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(23) Per contra , Ms. Gagandeep Kaur, Advocate argued that respondents had duly created its charge against the property in question with CERSAI.

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8 SA/201/2023 SHUBCHINTAK VS. IDFC FIRST BANK LTD. AND OTHERS

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(24) It reveals from record that in whole of the reply to SA filed by respondents, nowhere it is mentioned that as to whether the secured asset was registered with the Central Registry as per Section 26-D of the Act, which is pre-requisite condition for initiation of the proceedings under the Act. In fact, no document or CERSAI Registration Certificate was filed by respondents along with the reply, which shows that respondents had not created its charge over the secured asset under the Central Registry.

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(25) As per Section 26-D of the Act , it is mandatory that no secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter-III unless the security interest created in its favour by the borrower has been registered with the Central Registry.

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(26) Non-registration of CERSAI is a crucial illegality in the SARFAESI proceedings. It is not proved that the secured asset was registered with the Central Registry.

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(27) In absence of CERSAI Certificate or any equivalent with complete details of CERSAI, it appears that secured asset was not registered under Section 26-D of the Act by respondents, which is pre-requisite for initiating of SARFAESI proceedings. Therefore, on this ground also SARFASEI proceedings are liable to be quashed.

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(28) No other point was argued/pressed.

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(29) From the above facts, it shows that the foundation of the SARFAESI proceedings i.e., notice under Section 13(2) of the Act was not proved as served upon applicant then building constructed on the said base (notice) cannot be said as legal. Secured asset was also not registered with the Central Registry, which is mandatory as per Section 26-D of the Act. Notice under Section 13(4) of the Act was also not proved served as discussed above.

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(30) After considering the above facts and circumstances as well as evidence on record, present SA is liable to be allowed.

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(31) SA is allowed. SARFAESI proceedings initiated by the respondents are hereby quashed. It is

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9 SA/201/2023 SHUBCHINTAK VS. IDFC FIRST BANK LTD. AND OTHERS

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made clear that respondents may again initiate fresh SARFAESI proceedings according to law. Record be consigned to record room after due compliance. Date: 05.08.2026. Pronounced by me in the open Tribunal.

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(MRIDULESH KUMAR SINGH) Presiding Officer, DRT-III, Chandigarh

Shubchintak v. Idfc First Bank Ltd. and Others

Case brief

What is this about?

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Shubchintak v. Idfc First Bank Ltd. and Others

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