Allowed

Suresh Kumar Singh v. Canara Bank

DRT27 Mar 2026SA/265/2023

Case brief

AI extract

What is this about?

In an application under Section 17 of the SARFAESI Act, the Debts Recovery Tribunal held that the bank's measures, including auction sale, were illegal and irregular due to defective service of notices, lack of proof of service to all borrowers, improper valuation, and failure to provide required notice periods.

What did the court decide?

The SARFAESI action, including the auction sale, was quashed. The Bank is directed to refund the auction proceeds and expenses with 10% simple interest, conditional on returning vacant possession to t

Suresh Kumar Singh versus Canara Bank — Banking and Recovery | DRT (2026)

SA 265 of 2023 [JI

DRT,PATNA

DEBTS RECOVERY TRIBUNALPATN A

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Presiding Officer :Shri Kaushalendra Yadav

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SA- 265 of 2023

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Suresh Kumar Singh, Son of Late Yogendra Prasad Singh, Atardah, Kach Pakki, Atardah, District – Muzaffarpur 842002.

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Geeta Kumari, W/o – Suresh Kumar Singh, Atardah, Kach Pakki, Atardah, District – Muzaffarpur 842002.

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.........Applicants

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Versus

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Canara Bank, 2-d Main, Sampinge Road, Malleswaram, Bengalru – 560003 .

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Smt. Pinki Prasad (Purchaser), W/o Rakesh Prasad, Kedarnath Road, Brahman Toli, Mushari, Dist – Muzaffarpur (Bihar).

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–respondents

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Present :

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Forthe Applicant	: Ms. Gunja,Advocate
FortherespondentsBank	:Sh.ArvindKumar, Advocate
Forthe AuctionPurchaser	:Sh.Satish Nr. Sinha, Advocate

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Dated: 27.03.2026

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JUDGIVIENT

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Present application u/s 17 of SARFAESI Act has been filed with a prayer to quash Sale Notice dated 09.06.2023 and also to set aside the notice date 14.07.2023. Alongwith present SA, the applicant has also filed Limitation Petition by way of IA 509/2023 for condonation of delay.

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The brief fact of the case is that the applicants availed financial assistance to the tune of Rs.15.65 lakhs from the respondent bank. On default in repayment of the dues of the bank, the account of the applicants was declared as NPA on 09.06.2022. The bank initiated SARFAESI Action against the borrower and guarantors and issued

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DRT.PATNA

SA 265 of 2023 [JI

demand notice u/s 13(2) dated 27.07.2020 calling upon the applicant to make the payment of Rs.18,37,854.51. Subsequently, Possession Notice dated 22.11.2022 was issued u/s 13(4) of the SARFAESI Act. Further, the property was put on auction sale by issuing sale notices dated 09.06.2023 fixing the date of auction sale on was issued to auction sale of the secured assets fixing the date of auction on 15.07.2023. Aggrieved from the auction sale notice, the present SA has been filed by the applicants on 16.08.2023.

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On the point of limitation, it is submitted by the Id. Counsel of the applicants that sale notice dated 09.06.2023 has not been published in the newspapers. The applicant was making all endeavors to settle his loan account with the respondent bank and continuously deposited the amount in the loan account. There is no intentional or deliberate delay or latches on the part of the applicant. It is prayed that the delay of 66 days may be condoned.

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It is further submitted that the respondent bank without complying with the mandatory provision of SARFAESI Act issued Demand Notice and Possession Notice and also took symbolic possession of the property. Neither demand notice issued under section 13(2) nor the possession notice issued under section 13(4) has been served upon the applicant. The possession notice has also not been published in two leading newspapers within 07 days. After issuance of sale notice, the applicant has approached the bank for settlement but the bank did not consider the same. The bank has put the property on auction sale on very low valuation. The property has also been registered with CERSAI.

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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 09.06.2022. Thereafter, the respondent bank

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SA 265 of 2023 [JI

DRT,PATNA

initiated SARFAESI Action against the borrower and issued demand notice dated 27.07.2022. The said demand notice was duly served upon the applicant as also admitted in his application in the para no. 5(iii). Despite service of demand notice, the borrower neither repaid the dues of the bank nor raised any objection against demand notice. Hence, the respondent bank proceeded further and took possession of the property by issuing Possession Notice dated 22.11.2022. The said possession notice was duly served upon applicant through registered post and pasted on secured asset. The Possession Notice was also published in newspapers. Further, the property was put on auction sale and accordingly, sold to successful auction purchaser Smt. Pinki Prasad, W/o Rakesh Prasad.

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Although, the respondent no.3 i.e. auction purchaser appeared in the matter through counsel but failed to file counter affidavit.

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

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Before entering into controversy let us examine whether the present application was filed within the period of limitation or it is beyond the limitation that requires any kind of condonation of delay as raised by the respondent bank.

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Before entering into controversy let us examine whether the present application was filed within the period of limitation or it is beyond the limitation that requires any kind of condonation of delay.

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For the purpose of filing of the securitization application under section 17 of the SARFAESI Act (hereinafter referred as Act), the application has to be filed within the period of 45 days from the measures taken under section 13(4) of the Act. As such for the purpose of determining the date from which the limitation will start running, depends upon the fact that when the measures u/s 13(4) of

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SA 265 of 2023 [JI

DRT,PATNA

the Act were initiated and when such measures were brought into the knowledge of the applicant. It is also important to consider that the measures under the Act when are said to be initiated and when it comes to an end.

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The SARFAESI Action can be challenged under Section 17 of the SARFAESI Act. which runs as under:-

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“17. [Application against measures to recover secured debts]. – {1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorized officer under this Chapter, [may make an application alongwith such fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken."

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It is clear that any person who is aggrieved by measures referred to in sub-section 4 of the section 13 taken by secured creditor, may file the application under this provision. The sub-section (4) of section 13 runs as under :

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13(4) in case the borrower fail to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-

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(a) take possession of the secured assets of the borrow including the right to transfer by way of lease, assignment or sale for realizing the secured right o transfer by way of lease, assignment or sale for realizing the secured asset; (b) ....

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It is clear that subsection (4) of section 13 authorizes the secured

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SA 265 of 2023 [JI

DRT,PATN A

creditor to take recourse to one or more of the measures for recovery of dues. Under these measures, the secured creditor may take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realization of dues.

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Ld counsel for the applicant has further submitted that the right to challenge the SARFAESI action from very inception, still subsists as the SARFAESI Action has not come to an end till the application is filed.

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It is pertinent to mention here that u/s.13(7) of SARFAESI Act provides that-

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(7) Where any action has been taken against a borrower under the provisions of sub-section (4), all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests.

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In view of the above provision, the SARFAESI action u/s 13(4) comes to an end only after the stage of u/s.13(7) of SARFAESI Act. The application U/s 17 of SARFAESI Act can be filed till the auction money is appropriated and residue is paid to the mortgagor after adjustment according to section 13(7). In the present matter neither such averment has been made.

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So far as the infirmity in SARFAESI action is concerned, it has been

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SA 265 of 2023 IJI

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alleged that neither demand notice issued under section 13(2) nor the possession notice issued under section 13(4) has been served upon applicant. The possession notice has also not been published in two leading newspapers within 07 days. The bank has put the property on auction sale on very low valuation. The property has also been registered with CERSAI

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On perusal of records it appears that the respondent bank issued demand notice dated 27.07.2022 against the applicants and the same was received by the applicant no.1 by appending his signature on the copy of said demand notice as appears from the annexure – A, page 13-15. The said demand notice was also sent to the applicant no.2 through post. The postal receipt has been filed with the counter affidavit as annexure – A, page 13-15 but respondent bank failed to file its tracking report to prove the delivery of demand notice upon applicant no.2. Further, the possession notice was issued by the applicant on 22.11.2022 which was also received by the applicant no.1 on the same day by appending his signature on the copy of possession notice as evident from the annexure – A, page 16 filed with counter affidavit by the bank but respondent bank failed to file any proof of service of possession notice upon applicant no.2. The respondent bank also failed to file proof of affixation as the copy which has been to prove the affixation with counter affidavit at page no.17, does not indicate any affixation nor visible in any manner. The proof of publication of possession notice also neither indicates the name of the newspaper nor the date of its publication. The applicant has alleged that the property has been put on auction sale at a very low price but the respondent bank failed to file its valuation report to rebut the contention of applicants. Furthermore, the respondent bank issued a sale notice dated 09.06.2023 fixing the date of auction sale on

SA 265 of 2023 jJI

DRT,PATN A

15.07.2023 which was sent to the applicants through post on 15.06.2023 as appears from the postal receipt filed at page 25 of counter affidavit. On perusal of said sale notice as well as postal receipt it appears that no 30 days time has been provided to the applicants which are against the rule. The proof of publication of sale notice filed with counter affidavit also indicates that the composite sale notice has been published with 47 other sale notices of different borrower & guarantors which reduces the probability of serious buyers at a reasonable market.

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19.It is also important to be mentioned here that the respondent bank stated in para 5(18) that the property has been auctioned and sold to the successful auction purchaser Smt. Pinki Prasad and in this regard merely a sale certificate dated 08.08.2023 has been filed by the respondent bank which indicates that the property was auction sold for Rs.28.98 lacs but neither the details of payment made by auction purchaser has been disclosed nor any documentary proof has been filed to ascertain whether payment was made within time or not?. The auction purchaser also failed to file details of payment made against auction sale.

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20.It has been alleged that the property has also been registered with CERSAI. The auction sale was made at very low valuation. Respondent has failed to rebut these allegations by filing any documentary evidence.

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In view of the above discussion, the measure suffers with illegality and irregularity vitiates the measure including sale due to fraud and undervaluation. As such, the application succeeds.

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ORDER

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The application under Section 17 of the SARFAESI Act filed by Suresh Kumar Singh & Anr., is allowed with costs. The SARFAESI

SA 265 of 2023 IJI

DRT,PATN A

Action in question against applicants, including auction sale is hereby quashed. The respondent Bank shall refund the amount deposited and registration expenses, if any by the auction purchaser with 10% simple interest, subject to the condition that if the possession has been handed over to the auction purchaser, he 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. Otherwise the purchaser will not be entitled for the interests. The respondent Bank will hand over the possession of the property if taken, to the mortgager. The respondent Bank will not be entitled to charge any amount for the questioned SARFAESI Action. >X

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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 court on this 27TH Day of March, 2026. 27TH Day of March, 2026. Day of March, 2026. of March, 2026. March, 2026. 2026. JPr A \CFY \ rb\Vb b/– d*>

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this 27TH Day of March, 2026. 27TH Day of March, 2026. Day of March, 2026. of March, 2026. March, 2026. 2026.

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[Kaushalendra Yadav]

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Presiding Officer

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Debts Recovery Tribunal, Patna

Suresh Kumar Singh v. Canara Bank

Case brief

What is this about?

What did the court decide?

Suresh Kumar Singh v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

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