Allowed

Global Educational Trust and Others v. Central Bank of India and Another

DRT5 Feb 2026SA/25/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal allowed an application to quash SARFAESI proceedings. The court held that notices under Sections 13(2), 13(4), and sale notices were not properly served due to lack of track consignment records, and the secured asset was not registered with the Central Registry under Section 26-D.

What did the court decide?

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

Global Educational Trust and Others versus Central Bank of… — 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.25/2022

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Date of Institution: 04.04.2022 Date of Decision: 05.02.2026

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Global Educational Trust, Kothi No.131, Village Rakhra, Near Rakhra Road, Patiala, Punjab -147001, through its Treasurer Sh. Tarlochan Singh

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Smt. Rupinder Kaur Tiwana W/o Late. Sh. Gurdeep Singh Tiwana, R/o Village Tarkheri Khurd, Tehsil Nabha, District Patiala, Punjab-147104

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Sh. Karamjit Singh S/o Sh. Joginder Singh, R/o Village Rakhra, Tehsil & District Patiala, Punjab147201

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Smt. Jasvir Kaur W/o Sh. Tarlochan Singh, R/o Village Rakhra, Tehsil & District Patiala, Punjab147201

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Sh. Tarlochan Singh S/o Sh. Major Singh, R/o VPO Rakhra, Tehsil & District Patiala, Punjab-147201

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Smt. Balvir Kaur W/o Late. Sh. Joginder Singh, R/o VPO Rakhra, Tehsil & District Patiala, Punjab-147201

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Sh. Kulwinder Singh S/o Sh. Karnail Singh, R/o Bhatiwal Kalan, Tehsil Bhawanigarh, District Sangrur, Punjab-148026

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--Applicants

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Versus

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Authorised Officer, Central Bank of India, Regional Office, K.P. Complex, Near Hotel Park Plaza, Ferozpur Road, Ludhiana-141001

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Central Bank of India, Branch Office at SCO 141-A, Mall Road, Choti Baradari, Near Hotel Narain Continental, Patiala, through its Branch Manager

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--Respondents

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Argued by: Sh. Rohit Sapra, Advocate for Applicants

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2 SA/25/2022

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GLOBAL EDUCATIONAL TRUST AND OTHERS VS. CENTRAL BANK OF INDIA AND ANOTHER

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Sh. Saurabh Bharadwaj, 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) to set aside the entire action under Section 13 of the Act culminating into issuance of sale notice dated 09.03.2022 as illegal, null and void ab-initio .

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(2) It was stated in the application that applicant No.1 was running educational institutions and has been granted loan(s) in the shape of Overdraft Limit of Rs.200 Lacs vide sanction letter dated 09.07.2015 and Term Loan of Rs.200 Lacs vide sanction letter dated 07.03.2016 from respondents against the security of land measuring 31 Bigha 0 Biswa along with building(s) constructed thereupon at Village Rakhra, Tehsil & District Patiala, which is owned by applicant No.1; that the private and unaided colleges, like that of applicant No.1, were asked by the Govt. of Punjab to provide free admission/not to charge any fees from SC and OBC students; that Govt of Punjab has also not cleared the dues of SC and OBC students of the applicant No.1’s college as per sanction orders of Govt of Punjab of SC and OBC scholarship funds and copies of the orders are annexed as Annexure A-3 & A-4; that respondents were fully aware of non-disbursement of sanctioned scholarship funds by Govt of Punjab; that despite above adverse situation, applicant No.1 has paid more than Rs.7.50 Lacs in the FITL loan account; that without any fault on the part of applicant No.1 the accounts of the applicants were classified as NPA on 29.06.2021; that applicants were never informed before declaring/classifying their account as NPA, as no opportunity of settlement of the controversy/doubts regarding classification of the asset was given to the applicants; that after the death of one borrower namely Sh. Joginder Singh, his son Sh. Karamjit Singh (applicant No.3) while going through the files/documents of his late father came across the demand notice publication dated 03.08.2021 calling

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SA/25/2022

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GLOBAL EDUCATIONAL TRUST AND OTHERS VS. CENTRAL BANK OF INDIA AND ANOTHER

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upon the borrowers to an outstanding amount of Rs.4,85,00,495/- due as on 23.07.2021; that no demand notice dated 23.07.2021 under Section 13(2) of the Act was served upon applicants as per Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as ‘Rules’ for brevity); that respondents straight away resorted to demand notice publication, without first exercising the other stipulated prescribed modes of service; that non-service of demand notice, at first instance by given prescribed modes has extinguished the legal right of the ‘borrowers’ as available to them under Section 13(3-A) of the Act; that respondents had neither affixed the possession notice under Section 13(4) of the Act on the immovable property of applicant No.1 nor served the said notice upon applicants as per Rule 8(1) of the Rules and the said notice was also not published in leading newspapers having sufficient circulation in the locality as per Rule 8 (2) of the Act; that thereafter, applicant No.1, the owner of the property was received a sale notice dated 09.03.2022 dispatched on 11.03.2022 and received on 15.03.2022 informing sale of the property on 11.04.2022; that the said sale was the first sale and the said sale notice was not providing 30 days time as per Rules; that the said sale notice was not affixed on the conspicuous place of the property as per Rule 8(7) of the Rules; that respondents had not obtained any valuation report of the property from an approved valuer as defined in Rule 2(d) of the Rules; that respondents had not registered the secured asset under the Central Registry as per Section 26-D of the Act; that respondents have initiated SARFAESI proceedings without following the provisions of law and Rules made thereunder. Therefore, it was prayed that the present SA may kindly be allowed.

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(3) Reply filed by respondents.

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(4) It is stated in the reply that the present SA is liable to be dismissed as the applicants have not come before this Tribunal with clean hands and concealed the material facts of the case; that respondents have complied with the procedure, which is required to be followed; that admittedly, applicants have taken financial facilities from respondents after executing

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SA/25/2022

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GLOBAL EDUCATIONAL TRUST AND OTHERS VS. CENTRAL BANK OF INDIA AND ANOTHER

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various security documents; that the original title deeds of the properties, which are the subject matter of the proceedings under the Act were handed over the Bank with intention of creating an equitable mortgage; that since there was a default by the applicants, their accounts were classified as NPA on 29.06.2021 since they failed to regularized their loan accounts for a continuous period of 90 days and there was a default in repayment of Term Loan facilities; that accounts were rightly classified as NPA; that thereafter demand notice under Section 13(2) of the Act was served upon applicants on 23.07.2021 through registered posts and thereafter through publication in two leading newspapers; that however, no reply/objections were received by the respondents to the said demand notice; that thereafter, possession notice under Section 13(4) of the Act dated 22.11.2021 was duly served upon the applicants by way of publication in two leading newspapers & pasting over the conspicuous part of the secured asset; that thereafter, Bank Officials visited to spot to take peaceful physical possession of the properties, however applicants/members present at the spot did not allow them to do the same; that only thereafter, respondents moved application under Section 14 of the Act to provide police help and the said application was allowed by the District Magistrate; that thereafter, sale notice dated 09.03.2022 was duly served through publication in two leading newspapers and also sent through registered post to applicants on 11.03.2022 by giving 30 days advance notice to General Public as well as the borrowers for sale of the immovable property; that as contemplated under the law before effecting sale of the secured asset, two valuation reports were obtained by the Authorized Officer & since the borrowers are not coming forward the reserve price was fixed considering both the valuation reports by putting the property on sale through Open Auction; that respondents had initiated SARFAESI proceedings strictly in accordance with the provisions of the Act and Rules. Therefore, it was prayed that the present SA may kindly be dismissed. (5) Replication by applicants was filed to the reply filed by respondents, wherein the contents of SA

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5 SA/25/2022 GLOBAL EDUCATIONAL TRUST AND OTHERS VS. CENTRAL BANK OF INDIA AND ANOTHER

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were reiterated and that of the reply to the SA were denied.

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(6) I have heard arguments advanced by Sh. Rohit Sapra, Advocate for Applicants and Sh. Saurabh Bharadwaj, Advocate for Respondents and gone through the record carefully.

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(7) Sh. Rohit Sapra, Advocate argued that loan accounts of applicants were classified illegally as NPA on 29.06.2021. It was further argued that applicants were never informed before declaring/classifying their accounts as NPA, as no opportunity of settlement of the controversy/doubts regarding classification of the asset was given to the applicants.

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(8) Per contra , Sh. Saurabh Bharadwaj, Advocate argued that loan accounts were classified as NPA strictly in accordance with law. It was further argued that there is no requirement under any law to issue advance notice to borrowers and guarantors regarding the classification of account as NPA.

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(9) Sh. Rohit Sapra, Advocate has placed reliance upon the judgment passed by Hon’ble Jharkhand High Court in the matter M/s Stan Commodities Pvt. Ltd. Vs. Punjab and Sind Bank, 2009 AIR JHAR 14 in which Hon’ble High Court has observed as under:

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“ 28. In view of the provisions of the guidelines of the RBI, the petitioner was entitled to be informed and any doubt or dispute was to be settled between the creditor and the borrower through any specific internal channel within one month from the date on which the account would have been classified as NPA. Even if there was no internal channel to settle such dispute/doubt, the petitioner was entitled to be informed and to get an opportunity to explain or represent against the intended classification of his account as NPA.

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29. The provision of the guidelines providing for some specific internal channel for settling the doubt in asset classification is akin to the requirement of the principals of natural justice, which according to the Supreme Court in Smt. Menka Gandhi Vs. Union of India (AIR 1978 SC 597), must be read and followed even if, the provision is silent to that regard. The

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6 SA/25/2022 GLOBAL EDUCATIONAL TRUST AND OTHERS VS. CENTRAL BANK OF INDIA AND ANOTHER

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respondent been a Public Sector Bank are expected to follow the just, fair/prescribed procedure to meet the requirement of law and Article 14 of the Constitution of India.”

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(10) Admittedly, applicants were not informed before classifying their accounts as NPA and no opportunity of settlement of the controversy/doubts regarding classification of the assets were given. Therefore, the accounts of NPA classification cannot be said to be justified.

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(11) Sh. Rohit Sapra, Advocate further argued that notice under Section 13(2) of the Act dated 23.07.2021 was not served upon applicants as per Rules. Therefore, right to file objections under Section 13(3-A) of the Act was snatched by respondents from applicants.

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(12) Per Contra , Sh. Saurabh Bharadwaj, Advocate argued that respondents had duly posted the notice issued under section 13(2) of the Act through registered post as per Rules. It was further argued that the said notice was also published in two newspapers. Therefore, contention of the applicants that respondents had violated their right of raising objections under section 13(3-A) of the Act is wrong and incorrect.

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(13) 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 applicants and concerned. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondent No.1 notice in question was sent in year 2021. 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 applicants and concerned and that not being the position, this Tribunal refuses to draw presumption of service. There is no other type of

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7 SA/25/2022

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GLOBAL EDUCATIONAL TRUST AND OTHERS VS. CENTRAL BANK OF INDIA AND ANOTHER

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personal service of the said notice upon the applicants and other concerned, which was either pleaded or proved.

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(14) In light of above factual position, it is established that notice under Section 13(2) of the Act was issued but not proved served upon all concerned in light of the Rules.

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(15) Sh. Rohit Sapra, Advocate further argued that notice under Section 13(4) of the Act dated 22.11.2021 was not served upon applicants as per Rules. It was further argued that the said notice was neither served upon applicants through personal service nor it was published in leading newspapers nor it was affixed on the conspicuous part of the property as per Rules.

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(16) Per contra , Sh. Saurabh Bharadwaj, Advocate argued that possession notice dated 22.11.2021 was duly pasted, posted and published as per Rules. It was further argued that copy of possession notice, copy of affixation as well as copies of publication in two leading newspapers are annexed as Annexure R-2.

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(17) Possession notice was required to be served through personal service, through pasting and through publication in two leading newspapers.

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(18) Copy of possession notice under Section 13(4) of the Act dated 22.11.2021 is annexed as Annexure R-2 to the reply. Photographs of pasting (Annexure R-2) shows that a photocopy of notice had been affixed on the wall and no one is standing beside the wall and date and description of the notice is not clear as well as it is not clear that the said wall is of property in question.

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(19) Neither any receipts of registered posts nor track consignment record were filed by respondent Nos.1 & 2 to show that the notice in question which was allegedly sent by respondents was ever received by the applicants and concerned. Track consignment record is available w.e.f. January, 2013 and as per reply filed by respondent No.1 notice in question was sent in year 2021. 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

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8 SA/25/2022

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GLOBAL EDUCATIONAL TRUST AND OTHERS VS. CENTRAL BANK OF INDIA AND ANOTHER

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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 concerned and that not being the position, this Tribunal refuses to draw presumption of service. There is no other type of personal service of the said notice upon the applicants and other concerned, which was either pleaded or proved.

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(20) 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 all applicants either through personal service or through pasting in light of the Rules.

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(21) Sh. Rohit Sapra, Advocate further argued that sale notice dated 09.03.2022, whereby auction of the secured asset was fixed for 11.04.2022 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. (22) Per contra , Sh. Saurabh Bharadwaj, Advocate argued that sale notice dated 09.03.2022 was duly served upon applicants as per Rules. It was further argued that copy of the said sale notice along with copy of the receipts of the registered post as well as copy of publication in the newspapers were annexed as Annexure R-4.

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(23) 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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(24) No copy of affixation of the said notice was filed by respondents. In absence of any documentary proof of affixation of the said notice, shows that the said notice was not affixed on the conspicuous place of the property as per Rules.

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(25) 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.

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9 SA/25/2022

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GLOBAL EDUCATIONAL TRUST AND OTHERS VS. CENTRAL BANK OF INDIA AND ANOTHER

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(26) 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 as per Rules.

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(27) Sh. Rohit Sapra, 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. (28) Per contra , Sh. Saurabh Bharadwaj, Advocate argued that respondents had duly created its charge against the property in question with CERSAI. (29) 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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(30) Perusal of record shows that no copy of CERSAI Certificate was on record filed by respondents, which shows that the secured asset was registered with the Central Registry as per Section 26-D of the Act.

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(31) 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.

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(32) No other point was argued/pressed. (33) This Tribunal has considered all facts, evidence available on record as well as arguments advanced by the learned counsel for parties. It is clear that sale notice dated 09.03.2022 was not served upon all concerned 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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(34) 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 not proved as served upon applicants then building constructed on the said base (notice) cannot be said as legal.

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(35) 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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10 SA/25/2022 GLOBAL EDUCATIONAL TRUST AND OTHERS VS. CENTRAL BANK OF INDIA AND ANOTHER (36) After considering the above facts and circumstances as well as evidence on record, present SA is liable to be allowed. (37) SA is allowed. SARFAESI proceedings initiated by the respondents is hereby quashed. It is made clear that respondents may again initiate fresh SARFAESI proceedings according to law. Any other IA pending stands disposed of accordingly. Record be consigned to record room after due compliance. Date: 05.02.2026 Pronounced by me in the open Tribunal. (MRIDULESH KUMAR SINGH) Presiding Officer, DRT-III, Chandigarh

Global Educational Trust and Others v. Central Bank of India and Another

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Global Educational Trust and Others v. Central Bank of India and Another

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