Allowed

Roman Steel Pvt. Ltd. and Another v. Canara Bank and Another

DRT18 Feb 2026SA/227/2025

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal quashed SARFAESI proceedings initiated by Canara Bank. It held that agricultural land cannot be sold under the Act, notices were not properly served as required by rules, and proceedings were illegal.

What did the court decide?

Securitization Application allowed; SARFAESI proceedings initiated by respondents quashed; Record consigned to record room after due compliance.

Roman Steel Pvt. Ltd. and Another versus Canara… — Contract and Commercial Disputes | 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.227/2025

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Date of Institution: 28.07.2025 Date of Decision: 18.02.2026

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M/s Roman Steels Pvt. Ltd. Jitwal Road, Kup Kalan, Tehsil & District Malerkotla Punjab 148023, through its Authorized Person Sh. Salahudin Chaudhary Director

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Sh. Salahudin Chaudhary S/o Sh. Nizamudin Chaudhary R/o 32, Model Town, Tehsil & Distt Malerkotla, Punjab-148023

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--Applicants

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Versus

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Authorised Officer, Canara Bank Branch Office Delhi Gate, Malerkotla, Punjab-148023

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Canara Bank, Branch Office Delhi Gate, Malerkotla, Punjab-148023

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--Respondents

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Argued by: Sh. N.C. Sahni, Advocate for Applicants Sh. Rakesh Gupta, Advocate for Respondents

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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) for setting aside and quashing sale dated 19.06.2025 and all actions taken by the respondents under the provisions of the Act.

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(2) It was stated in the application that applicant No.1 is MSME Unit duly registered with the Industries Department dated 22.09.2011; that respondents are claiming illegal and unlawful amount from the applicants and for claiming the same, respondents had already filed an OA No.786/2017, which is pending in this Tribunal; that in order to harass and pressurize the applicants the respondents have initiated a sale process of the property mentioned in the application illegally and unlawfully and has sold the property owned by applicant No.2 Sh. Salahudin Chaudhary illegally,

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2 SA/227/2025 M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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unlawfully, without notice and knowledge of the applicants on 19.06.2025; that applicants came to know about the sale about a week back when a cosharer came to the house of the applicant and informed that share of the applicants have been sold by the respondents; that on making enquiries date of sale was learnt as 19.06.2025 but the name of the purchaser could not be known; that the property in question was an Agricultural Land and according to Section 31 of the Act an agricultural land is not liable to be sold in the SARFAESI; that Valuation Report dated 23.09.2011 (Annexure A-13) obtained by the bank at the time of sanctioning of loan showing land to be agricultural land; that as per the orders of the learned DM on the application under Section 14 of Act moved by the Bank, Tehsildar went to the spot for the purpose of handing over possession to the bank and he reported that the land is agricultural land and there are co-sharers and land is not partitioned, so physical possession cannot be given; that in another report of Tehsildar who investigated the matter on 13.11.2018 (Annexure A- 16), on spot verification it was found that this land is an agricultural land except some part on which three factory sheds are constructed and also one incomplete constructed house is present in which some Muslim Gujjars are residing; that the property in question was never mortgaged by applicants to the respondents; that an application No. 313/2017 (Annexure A-18) for arbitration is pending between the parties in OA No.786/2017 and the matter in dispute about the recovery is to be decided by arbitration as per the settled law as there is an arbitration clause in the documents produced by the respondents in the OA; that the forged and fabricated documents have been filed by the respondents in OA No.786/2017; that an FIR No. 80 dated 14.07.2017 stands registered against the employees of the respondents, who have indulged in the forgery and fabrication of the documents; that the Title Deed of the land in question is in possession of the applicants and it was never handed over to the respondents for creating security; that the account of the applicants has been illegally classified as NPA

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SA/227/2025

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M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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without giving any opportunity of being heard by a Committee; that notice under Section 13(2) of the Act is illegal and unlawful; that since the account was classified as NPA illegally so no demand notice could have been issued and no procedure of the Act was followed in the service of notice under Section 13(2) of the Act by respondents; that since notice under Section 13(2) of the Act is illegal then the further proceedings under Section 13(4) of the Act is also illegal and no procedure of the Act was followed by respondents in the service of notice under Section 13(4) of the Act; that further the entire sale process conducted by respondents is absolutely illegal unlawful as neither any sale notice was served upon the applicants nor it was affixed on the conspicuous place of the property nor it was published in two leading newspapers as per Security Interest (Enforcement) Rules, 2002; that the property sold by the respondents has been undervalued as the present market value of the property is not less than Rs. 02 crores but the same has been sold for sum of Rs.38.86 lakh (reserve price fixed by the bank is Rs.38.76 lakh) even the valuation obtained by the bank at the time of sanction of loan was Rs.86.73 lakh (Annexure A-13); that vindictive action of the respondents to sell the property of the applicant No.2 is not in the ordinary course of business but to harass and pressurize the applicants to withdraw FIR; that despite various visits to the branch and to request the Officers of the Branch to disclose the name, address and other particulars of the purchaser but the same was intentionally denied and concealed. Therefore, it was prayed that the present SA may kindly be allowed. (3) Reply filed by respondents. (4) It is stated in the reply that the present SA is liable to be dismissed on the short ground that the applicants have mislead this Hon'ble Tribunal to get an interim order; that from the perusal of the order passed by this Tribunal dated 04.08.2025, it is apparent that the applicants have claimed that applicants are in possession of the original title deeds of the property, which was sold by the bank under the Act; that the said assertion is either factually incorrect or the applicant

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4 SA/227/2025 M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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has got the possession of the original title deeds in an illegal manner; that in the present case, a patently false complaint was given by the applicants and their family members leveling false allegations against the officials of the bank; that during the course of investigation, original title deeds were taken over by one Rupinder Singh, ASI on 08.04.2021; that once the original title deeds were handed over by the bank to the investigating agency, the same could never be in possession of the applicants; that respondents are already in the process of taking up the matter with the investigating agency as to how this original document could be in possession of the applicants; that applicants did not approached this Hon'ble Tribunal with clean hands; that the property in question is not an agricultural land; that copy of the sanction letter dated 11.01.2012 on the basis of which the financial facilities were granted to the applicants and which duly contains the recital regarding the security interest created by the applicants on different properties (Annexure R-2); that a perusal of the same shows that the property which is the subject matter of the present SA is a vacant plot; that at the time of renewal, fresh valuation of the property in question was taken from the approved valuer, in which the property is shown as a commercial plot; that copy of the valuation report dated 28.04.2015 is annexed as Annexure R-3; that before putting the property on sale, a fresh valuation was taken and even as per that valuation, the property is shown to be in the residential area and copy of the valuation report dated 22.04.2025 is annexed as Annexure R-4; that moreover, the applicants have placed reliance only on the revenue record to claim that the properties are agricultural in nature; that this assertion is not only factually incorrect but in any case, the revenue record is not the determining factor to ascertain as to whether the land is agricultural or not; that admittedly, no agricultural activity is going on at the spot which is apparent from the photographs which were taken by the Authorized Officer while fixing the sale notice at the site; that the SARFAESI proceedings up to the stage of 13(4) of the Act attained finality way

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5 SA/227/2025 M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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back in the year 2016 and the same was never assailed by the applicants and cause of action up to that stage is no longer available to the applicants; that the applicants at best assailed the sale which has now been conducted by the Authorized Officer; that as far as the sale is concerned, there is a complete compliance of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ‘Rules’ for brevity); that notice under Rule 8(6) of the Rules was duly served on the applicants on 30.05.2025; that copy of the postal receipts vide which it was sent to the applicants is annexed as Annexure R-6 and copy of the publication in two newspapers and the same are annexed as Annexure R-7 (Colly); that fresh valuation was taken on 22.04.2025 before fixing the reserve price and copy of the same is already on record as annexed as Annexure R-4; that the necessary registration under CERSAI was got done by the respondents and copy of the document showing the registration is annexed as Annexure R-8; that since the procedure which is required to be followed for selling the secured assets has been duly complied with by the respondents, the present SA is without any substance and deserves to be dismissed.

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(5) Replication by applicants was filed to the reply filed by respondents, wherein the contents of SA were reiterated and that of the reply to the SA were denied.

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(6) I have heard arguments advanced by Sh. N.C. Sahni, Advocate for Applicants and Sh. Rakesh Gupta, Advocate for Respondents and gone through the record carefully.

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(7) Sh. N.C. Sahni, Advocate argued that applicant No.1 is an MSME Unit and respondents have wrongly classified the account of applicants as NPA in contraventions of the guidelines issued by Reserve Bank of India dated 17.03.2016 ( Annexure A-19 ). It was further argued that account was classified as NPA without referring the matter to the Designated Committee.

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(8) Per contra , Sh. Rakesh Gupta, Advocate argued that Unit of applicants is MSME but the account

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6 SA/227/2025 M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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of applicants was classified as NPA in strict compliance of Rules and there is no illegality in it.

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(9) As per Circular of Reserve Bank of India dated March 17, 2016 ( Annexure A-19 ) it was binding upon the respondents to refer the matter of applicants to the Designated Committee constituted under this Circular before classification of account as NPA. There is nothing mentioned in this Circular that if, the Bank/FI restructured the account earlier on one occasion then it will be exempted to comply with this Circular dated 17.03.2016. It was not argued that earlier restructure of account was done after referring the matter to Designated Committee. It is admitted fact that Circulars issued by Reserve Bank of India are binding upon the Banks/FIs.

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(10) In the considered opinion of this Tribunal, respondents have classified the account as NPA without referring the matter to Designated Committee. Therefore, the said action was illegal. (11) Sh. N.C. Sahni, Advocate further argued that notice under Section 13(2) of the Act dated 17.10.2016 and possession notice dated 30.05.2025 were not served upon applicants as per Rules.

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(12) Per contra , Sh. Rakesh Gupta, Advocate argued that all the notices issued by respondents under the Act were duly served upon applicants as per Rules. (13) Demand notice was required to be served through personal service and in failure through pasting and publication. Possession notice was required to be served through personal service, through pasting and through publication in two leading newspapers.

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(14) It reveals from record that neither any copies of the notices were filed by respondents nor any documentary proof was filed in support thereof, which shows that notice under Section 13(2) of the Act and possession notice were served upon applicants as per Rules. In absence of any documentary proof, there is no ground to disbelieve the contention of applicants and it appears that notices under Section 13(2) & 13(4) of the Act were not served upon applicants as per Rules.

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SA/227/2025

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M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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(15) Sh. N.C. Sahni, Advocate further argued that the property in question is an agricultural land, which was sold by respondents under the Act vide sale notice dated 30.05.2025 (Annexure A-4), whereby auction of the secured asset was fixed for 19.06.2025. It was further argued that in the notice issued by respondents under Section 13(2) of the Act dated 17.10.2016 (Annexure A-12), property in question was identified through Khasra Numbers and relevant Khasra Numbers of Zamabandi were mentioned in the said notice. It was further argued that in the valuation report dated 23.09.2011 (Annexure A-13) also property in question was shown as Agricultural land. It was further argued that as per the reports of Tehsildar concerned dated 05.09.2018 (Annexure A-15) and dated 13.11.2018 (Annexure A-16) also, the property in question was shown as Agricultural land. Therefore, respondents had illegally sold the property in question in contravention of the provisions of the Act.

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(16) Per contra , Sh. Rakesh Gupta, Advocate argued that property in question is not an agricultural property, it was an open vacant plot. It was further argued that the valuation report will not show the actual use of the land but in any case, even the socalled document relied upon by the applicants falsifies the averment of the applicants. It was further argued that in the year 2013, the valuation of the land was Rs. 3,000/- per sq. yards, which will amount to roughly Rs. 02 Crores per acre approximately. It was further argued that in the year 2013, no agricultural land in the entire State of Punjab was worth Rs. 02 Crores, even today the agricultural land is not that valuable. It was further argued that the report of Naib Tehsildar is factually incorrect as the land, which was sold by the bank is completely identifiable from the boundaries.

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(17) Copy of notice under Section 13(2) of the Act dated 17.10.2016 is annexed as Annexure A-12, copy of valuation report dated 23.09.2011 is annexed as Annexure A-13, copy of report of Tehsildar dated 05.09.2018 is annexed as Annexure A-15 and copy of another report of Tehsildar dated 13.11.2018 is annexed as Annexure A-16 and in all the said

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8 SA/227/2025

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M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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documents, property in question is shown as agricultural land. (18) Sh. Rakesh Gupta, Advocate has relied upon the fresh sanction letter (Annexure R-2) in which the property in question was identified as vacant plot. He has further relied upon one valuation report Annexure R-3 dated 28.04.2015 in which the land was identified as commercial plot and also relied upon other valuation report Annexure R-4 dated 22.04.2025 in which the land was identified as residential. No other document was filed by respondents to show that the property in question was not agricultural land.

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(19) Contrary to it, applicants filed copy of notice under Section 13(2) of the Act dated 17.10.2016 (Annexure A-12), copy of valuation report dated 23.09.2011 (Annexure A-13), copy of report of Tehsildar dated 05.09.2018 (Annexure A-15) and copy of another report of Tehsildar dated 13.11.2018 (Annexure A-16) and in all the above documents the property in question was shown as agricultural land. (20) Sh. Rakesh Gupta, Advocate has not shown any reason as to why the same land was identified as Agricultural Land in one valuation report obtained by respondents and the same land was identified as Commercial Plot in other valuation report obtained by respondents and the same land was identified as Residential in other valuation report obtained by respondents. It shows that on the instance of respondents, there valuer have submitted different reports at different time regarding the same land. (21) Sh. Rakesh Gupta, Advocate argued that Tehsildar concerned had submitted false and fabricated report regarding the status of the land, therefore no reliance can be placed on those reports.

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(22) Per contra, Sh. N.C. Sahni, Advocate submitted that there is nothing on record to show and prove the contention of respondents. (23) In the considered opinion of this Tribunal, Tehsildar is a public Officer and without any proof it cannot be said that report of Tehsildar was wrong. No allegation was made against the Tehsildar by

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9 SA/227/2025 M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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respondents that they have filed false and fabricated report in connivance with applicants. (24) In light of above, this Tribunal is of the opinion that above argument advanced by Sh. Rakesh Gupta, Advocate is of no avail. (25) Admittedly, original title deed of the property in question is with applicants. Though Sh. Rakesh Gupta, Advocate argued that the original title deed was obtained by applicants illegally but he was unable to explain the fact that if a document was in possession of the Bank then as to how, the same was found with the applicants. In light of the facts, prima facie it appears that the property in question was never mortgaged with the respondents.

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(26) It further appears that original title deed was placed before Tribunal by applicants during the course of arguments and it was found that the property mentioned in the said title deed was agricultural land. (27) Sh. N.C. Sahni, Advocate further argued that the property in question was never mortgaged by applicants with the respondents. It was further argued that the original title deeds of the property in question is in possession of the applicants. It was further argued that since the property in question was not mortgaged by applicants with respondents then respondents have not entitled to auction the said property.

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(28) Per contra , Sh. Rakesh Gupta, Advocate argued that the property in question was equitably mortgaged by the owner vide deposit of title deeds and also by executing the memorandum of mortgage. It was further argued that although, the original documents were taken by the Investigating Agency however, the photocopy of the same is still available with the record of the bank and photocopy of the same is annexed as Annexure R-9.

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(29) During the course of arguments, original Sale Deed was produced before Tribunal by learned counsel for applicants regarding the property in question mentioned in the SA. Sh. Rakesh Gupta, Advocate has not disputed the said Sale Deed and in the said sale deed the property in question was shown as agricultural land.

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10 SA/227/2025 M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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(30) In light of above facts and evidence on record it is proved that property in question is agricultural land and therefore, respondents cannot initiate the SARFAESI proceedings against the said property under Section 31(i) of the Act.

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(31) Sh. N.C. Sahni, Advocate further argued that sale notice dated 30.05.2025 (Annexure A-4), whereby auction of the secured asset was fixed for 19.06.2025 was not served upon applicants as per Rules. It was further argued that the said sale notice was neither served through personal service nor it was affixed on the conspicuous place of the secured asset nor it was published in the leading newspapers as per Rules.

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(32) Per contra , Sh. Rakesh Gupta, Advocate argued that sale notice dated 30.05.2025 was duly served upon applicants as per Rules. It was further argued that the said sale notice was also pasted on the secured asset and photographs of the same has been annexed as Annexure R-5. It was further argued that copy of receipts of registered posts was annexed as Annexure R-6. It was further argued that copies of publications of the said sale notice in two leading newspapers were also annexed as Annexure R-7 (Colly).

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(33) As per Rule 8 of the Rules , it is mandatory to serve sale notice by all three modes and the sale notice has to be served upon all borrower, guarantor and mortgagor.

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(34) Photographs of pasting (Annexure R-5) shows that a photocopy of notice has been affixed on the stick and one person is standing beside the said stick. Date and description of the notice is not clear as well as it is not clear that the said stick is conspicuous place of property in question.

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(35) It reveals from record that only receipts of registered post were annexed but no tracking reports were annexed along with sale notice. Therefore, it cannot be ascertained that sale notice was served upon applicants or not. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondent notice in question was sent in year 2025. Gone are the days when sending of registered post

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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 applicants and that not being the position, this Tribunal refuses to draw presumption of service.

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(36) Copies of publications of newspapers are annexed as Annexure R-7(Colly) but no name of newspapers as well as date of publication is shown as to whether the said newspapers are leading newspapers or not and to show as to when the said sale notice was published. From the photocopies, it cannot be even said that they are photocopies of sale publication in the newspapers.

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(37) In light of above factual position, it is established that sale notice was issued but not proved served upon applicants either through personal service or through pasting or through publication as per Rules. (38) Sh. N.C. Sahni, Advocate further argued that respondents have not obtained fresh valuation report before putting the property on sale. It was further argued that respondents have highly undervalued the property in question as the present market value of the property is not less than Rs. 02 Crores but the same has been sold for sum of Rs. 38.86 Lacs.

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(39) Per contra, Sh. Rakesh Gupta, Advocate argued that valuation report dated 24.04.2025 (Annexure R-4) was obtained for sale of the property on 19.06.2025. It was further argued that the detailed valuation report was obtained before putting the property on sale.

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(40) In the considered opinion of this Tribunal, valuation report dated 24.04.2025 cannot be assumed as illegal as the same was obtained only two months before the date of actual sale.

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(41) No other point was argued/pressed.

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(42) This Tribunal has considered all facts and evidence available on record as well as arguments advanced by the learned counsel for parties. It is clear that sale notice dated 30.05.2025 was not served upon

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12 SA/227/2025 M/S ROMAN STEELS PVT. LTD. AND ANOTHER VS. CANARA BANK AND ANOTHER

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applicants by all three modes as required under the law. Therefore, the sale notice and auction process as well as sale is liable to be quashed.

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(43) From the above facts, it also shows that when the foundation of the SARFAESI proceedings i.e., notice under Section 13(2) of the Act was also not proved as served upon applicants then building constructed on the said base (notice) cannot be said as legal.

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(44) From the above facts, it also proved that the property in question is agricultural land and therefore, respondents have illegally initiated SARFAESI proceedings against the said property in contravention of Section 31(i) of the Act.

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(45) After considering the above facts and circumstances as well as evidence on record, present SA is liable to be allowed. (46) SA is allowed. SARFAESI proceedings initiated by the respondents is hereby quashed. Record be consigned to record room after due compliance. Date: 18.02.2026

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Pronounced by me in the open Tribunal.

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

Roman Steel Pvt. Ltd. and Another v. Canara Bank and Another

Case brief

What is this about?

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Roman Steel Pvt. Ltd. and Another v. Canara Bank and Another

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