Dismissed

Atul Kumar Bhushan v. Punjab National Bank

DRT29 Jan 2026SA/330/2022

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal dismissed an application seeking a sale certificate from the respondent bank. Although the applicant was the highest bidder and deposited full consideration, the court held that the application was not maintainable due to the non-joinder of necessary parties and noted the bank's refund of the deposit. The sale was ultimately adjourned from issuance.

What did the court decide?

Application dismissed; parties to bear own costs; applicant's sale consideration refunded by the bank.

Atul Kumar Bhushan versus Punjab National Bank — Banking and Recovery | DRT (2026)

SA 330 of 2022 (J)

DRT,PATNA

DEBTS RECOVERY TRIBUNAL PATN A

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Presiding Officer: Shri Kaushalendra Yadav

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SA- 330 of 2022

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Atul Kumar Bhushan S/O -Shri Himanshu Bhusan, R/O- At Po Dhanarua. Patna Road Near Mahadev Sthan, Oiyara, Oiara, Patna Bihar 80445 1.

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..................Applicant

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Versus

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The Authorized Officer, Punjab National Bank, Circle Sastra Patna North,2nd Floor Chanakya Tower-Block, Patna 800001.

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Circle Sastra Head, Sastra Department Circle Office Patna R-Block 2nd Floor Chanakya Place, Patna 800001.

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

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Presents;

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For the Applicant For the Respondent Bank

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: Sh.Binay Kumar Singh, Advocate

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: Sh.S.K. Tiwari , Advocate

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Dated: 29.01.2026

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JUDGMENT

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The present application has been filed seeking a direction upon the respondent bank to issue the Sale Certificate in favour of the applicant and to pay interest on the sale consideration amount for the period of delay until issuance of the Sale Certificate. The applicant has further prayed for invoking the provisions of Section 29 of the SARFAESI Act. 2002

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The brief facts of the case are as follows: The applicant is neither a guarantor, mortgagor. nor borrower; he is an auction purchaser who participated in an auction held by the respondent bank concerning the property in question. A partnership firm, M/s Om Shanti Enterprises , availed a loan from the respondent bank through its proprietor, and to secure the said loan amount, they mortgaged their property with the bank. Due to default in repayment of the loan amount, the respondent bank classified the loan account as a Non-Performing Asset (NPA) on 31.03.2021. Subsequently, a demand notice dated 24.05.202 1 under Section 13(2) of the SARFAESI Act was issued, followed by a possession notice dated

SA 330 of 2022 (J)

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22.09.2021 under Section 13(4) of the SARFAESI Act. Thereafter, an e-auction notice dated 05.09.2022 was issued, and the applicant participated in the said auction held on 27.09.2022, wherein he emerged as the highest bidder with an offer of ?94,92,000/-. The applicant deposited 25% of the bid amount within the stipulated time after receiving the sale intimation letter, and accordingly, the sale letter was issued on 01.10.2022. The remaining 75% of the sale consideration was deposited on 10.10.2022 within the stipulated period as the last date to deposit the remaining amount was 15.10.2022. The applicant also deposited 1% TDS on 13.10.2022. However, despite depositing the full amount, no sale certificate has been issued by the bank. Aggrieved by the same, the applicant has filed the present application.

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The learned counsel for the applicant submitted that the applicant participated in the e-auction held on 27.09.2022 pursuant to the sale notice dated 05.09.2022 for the mortgaged property, wherein he emerged as the highest bidder with an offer of ?94,92,000/-. After receiving the sale intimation letter dated 27.09.2022 on his email, the applicant deposited 25% of the bid amount within the stipulated time Thereafter, upon approval from the competent authority (CSCO), a sale letter was issued on 01.10.2022, directing the applicant to deposit the remaining 75% of the bid amount by 15.10.2022. The applicant deposited the balance amount by 10.10.2022 and also deposited 1% TDS on 13.10.2022. Subsequently. through an email dated 1 1.10.2022, the applicant informed the respondent bank about the full payment. However, despite submission of the entire sale consideration, the sale certificate was not issued. The applicant, vide letter dated 15.10.2022, again requested the respondent bank to issue the sale certificate, but no response was received.

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The respondent bank submitted that Ms Om Shanti Enterprises had availed a business loan of ?40,00,000/- as a credit facility. When the borrower defaulted in repayment, the bank classified the loan account as a Non-Performing Asset (NPA) on 31.03.2021 and thereafter issued a demand notice dated 24.05.2021, followed by a possession notice dated 22.09.2021, and finally a sale notice dated 05.09.2022. The applicant participated in the said auction and emerged as the highest bidder. The applicant deposited 25% of the bid amount within the stipulated period, and a confirmation of sale was issued in his favour. The remaining 75cY, of the sale consideration was also deposited within the stipulated period; however, in the meantime, the borrower cleared the outstanding dues, whereafter the loan account was upgraded and subsequently closed.

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Consequently, the bank did not issue the sale certificate. The respondent bank further submitted that the entire amount deposited by the applicant in response to the sale has been refunded to him. It is also contended that the bank reserves the right to cancel the sale before the issuance of the sale certificate.

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

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It is alleged by the applicants that even after depositing the entire auction amount, the respondent bank has not issued the Sale Certificate in favour of the applicant.

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Upon perusal of the record, it is found that the applicant emerged as the successful bidder pursuant to the Sale Notice dated 05.09.2022, and the auction was held on 27.09.2022. The bank thereafter issued a Sale Confirmation Letter dated 01.10.2022 in favour of the applicant, requesting payment of the remaining 75% of the bid amount on or before 15.10.2022, as evident from Annexure 3 at page 18 of the S. A. The applicant deposited the remaining amount before 15.10.2022, as evident from the account statement (Annexure 4 at page 19-21 of the S. A.). Subsequently, the applicant also sent an e-mail dated 11.10.2022 to the CSCO informing that the balance amount had been paid, as evident from Annexure 5 at page 22 of the S. A. Thereafter, on 15.10.2022. the applicant sent a letter to the respondent bank requesting issuance of the Sale Certificate. and the said letter was duly delivered to the respondent, as proved by the copy of the letter, postal receipt, and tracking report (Annexure 6 series at pages 23-25 of the S. A.). However, despite receipt of the communication, the bank did not respond or issue the Sale Certificate.

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Upon perusal, it is found that the bank in its pleadings has stated that since the borrower had paid the dues, the loan account was upgraded and, therefore, the Sale Certificate was not issued to the applicant (para 12, page 3 of the Counter Affidavit). Later, at para 19, page 4 of the Counter Affidavit, the bank stated that the auction amount had been refunded to the applicant. However, the bank has not annexed any documentary proof showing that such refund was actually made. But at the same time the applicant has also not denied the fact of refUnd of sale consideration to the applicant The only document annexed is a page purportedly showing that the borrower’s loan account was closed (at page 11 of the Counter Affidavit), which reflects the closing date as 25.11.2022. This clearly indicates that the applicant had deposited the entire auction amount before the borrower’s loan account was closed.

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9 The bank has contended that it had the right to cancel the sale before issuance of the Sale Certificate; however, this contention cannot be sustained in view of the

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recent judgment of the Hon’ble Supreme Court in M. Rajendran & Ors. v. M/s KPK Oils and Proteins India Pvt. Ltd. & Ors. (2025 INSC 1144).

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In the said judgment, the Hon’ble Supreme Court has categorically held that after the amendment to Section 13(8) of the SARFAESI Act, which came into force with effect from 01.09.2016, the borrower’s right of redemption stands extinguished upon the publication of the sale notice. The Hon’ble CouN clarified that the amendment was specifically intended to remove uncertainty in auction proceedings and to protect the rights of bona fide auction purchasers. Once the sale notice is published, the borrower ceases to have any subsisting right to redeem the secured asset, and the secured creditor has no power to cancel or undo the sale process on the ground that the borrower has later cleared the dues. The Supreme Coun further held that the earlier view in Mathew Varghese v. Amritha Kumar (2014) i SCC 610, which permitted redemption till the date of sale, no longer applies to cases arising after the 2016 amendment. The Court affirmed that the decision in Celir LLP v. Bafna Motors (2024) 2 SCC 1 lays down the correct interpretation, namely that once the auction purchaser has deposited the entire sale consideration within the prescribed period and the sale stands confirmed, a vested right is created in favour of the purchaser, and the bank becomes functus officio in respect of that sale except for issuing the Sale Certificate.

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In the present case, since the loan account was classified as NPA on 31.03.2021, the demand notice was issued on 24.05.2021, the possession notice on 22.09.2021, and the e-auction notice on 05.09.2022, all of which were issued well after the 2016 amendment, the ratio laid down in Al Rajendran squarely governs this matter. Accordingly, once the applicant deposited the entire bid amount within the stipulated period and the sale was duly confirmed by the bank, the transaction stood completed in the eyes of law. The respondent bank had no authority thereafter to cancel the sale or to withhold issuance of the Sale Certificate, as doing so would defeat the sanctity of the auction process and violate the settled legal position declared by the Hon’ble Supreme Court. The bank’s subsequent plea of cancellation, therefore, is contrary to the amended Section 13(8) and the ratio of M Rajendr arl.

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At the same time, it is important to consider the effect of the non-joinder of the borrower/mortgagor/guarantors in the present application. The non-joinder of these necessary parties results in a multiplicity of proceedings and prevents the Tribunal from effectively adjudicating the controversy involved. Since the borrower, mortgagor, and guarantors are parties to the loan transaction and are

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SA 330 of 2022 (J)

directly affected by the outcome of the present proceedings, their presence is

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indispensable for a complete and just determination of the matter.

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In view of the above discussion. the applicant has not denied the refund of the sale consideration paid by him, the applicant is not entitled to get any relief.

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ORDER

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The application SA 330 of 2022 filed by Atul Kumar Bhushan, is Dismissed. Parties will bear their own costs

/HI

[KaushalendraYadav]

Presiding Officer

Debts Recovery Tribunal. Patna