Allowed

Ankit Cotton Company through its Proprietor, Shri Pardeep Kumar Garg v. Hdfc Bank

DRT24 Mar 2026SA/366/2025

Case brief

AI extract

What is this about?

The Debt Recovery Tribunal set aside a 2025 bank auction for selling mortgaged land due to procedural defects, including inconsistent area measurements in notices, lack of CERSAI registration, and failure to value the correct land extent. The bank must refund purchasers with interest and pay damages.

What did the court decide?

The auction was set aside. The bank must refund purchase money with 12% interest and pay Rs. 25 lacs compensation to the auction purchasers.

Ankit Cotton Company through its Proprietor, Shri Pardeep… — Banking and Recovery | DRT (2026)

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SA No. 366 of 2025

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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SA No. 366 of 2025

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M/s Ankit Cotton Company and others

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Versus

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The Authorized Officer, HDFC Bank and others

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Dated: 24.03.2026

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Item No. 24

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Argued by: Mr.Vivek Verma and Mr.Sanjay Sagar, Counsel for the Applicants.

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Mr.Vijay Sharma, Counsel for Respondent No.1/HDFC Bank. Mr.Manish Jain, Senior Advocate, alongwith Mr.Tejinder Singh, Counsel for Respondent No.2 to 5/Auction Purchasers.

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M/s Ankit Cotton Company and others (Applicants) have filed this Securitization Application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), against the Authorized Officer, HDFC Bank and others (Respondents).

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In brief, the case of the Applicants, as set-up in the Securitization Application is, whereas, Applicant No. 1 is a proprietorship concern, owned by Applicant No. 2; Applicants No. 2 to 6 are the guarantors and Applicants No. 1, 3 to 5 are the mortgagors. Applicants state that in the year 2014, Applicant No. 1 had availed CC Limit of Rs. 11 crores; Term Loan of Rs. 6.18 crores and another Term Loan of Rs. 3.82 crores. To secure the debt, Applicants No. 1, 3 to 5 had mortgaged their properties, measuring 34 kanals 18 marlas, situated in the area of Rampura Phul, District Bathinda, in favour of the Bank. Out of these properties, Applicant No. 4 and 5 are the owners of 08 kanals each; Applicant No. 3 is the owner of 7 kanals and Applicant No. 1 is the owner of 11 kanals 18 marlas of land. It is stated that the account had turned NPA on 29.12.2015. On 15.01.2016, HDFC Bank issued the notice under Section 13(2) of the SARFAESI Act, demanding a sum of Rs. 11,41,48,601.93p, due as on 01.01.2016 (Annexure A/1). On 28.04.2016, Bank issued the possession notice to take the possession on 17.05.2016

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SA No. 366 of 2025

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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(Annexure A/2). The Bank took the possession of the mortgaged property. The Bank also filed OA No. 678 of 2017, for the recovery of Rs. 13,31,25,555.62p, which has been allowed vide order dated 04.08.2022 and the Recovery Certificate has also been issued in favour of the Bank. It is stated that Applicant No. 7 was not a party to the OA proceedings. Accordingly, the demand raised by the Bank against Applicant No. 7 is illegal. It is further stated that the Applicants were always ready to settle the account. In the year 2025, there were communications between the parties for the settlement of the account. Vide email dated 20.11.2025, Bank informed the Applicants in respect of the auction dated 21.11.2025. Applicants state that the Bank did not serve any auction notice to them. However, on getting the email dated 20.11.2025, they approached the Bank and requested for settlement. However, the Bank officers did not pay any heed to their request. After the auction, Bank officers informed them that the property has been sold. However, no details of auction purchasers were given to them. Accordingly, they contacted their counsel, who after making inquiries, came across the newspaper publication and came to know that the property had put up for auction on 21.11.2025 at the reserve price of Rs. 9.16 crores. Applicants have placed on the record a copy of auction notice, dated 22.10.2025 (Annexure A/5). Applicants have further alleged that as per the auction notice, the Bank has sold 34 kanals 18 marlas. It is stated that out of this land, Applicant No. 6/Monika Garg is the owner of 3 kanals 10 marlas of land. This property was not mortgaged by Monika Garg with the Bank. The value of the property owned by Applicant No.6/Monika Garg is around Rs. 2,13,50,000/-. Further, at the time of taking the possession, the Bank also took the possession of the property of Monika Garg, which is not a secured asset. It is stated that the Bank had taken the physical possession of the property in the year 2016. Bank conducted the auction on 21.11.2025. Further, no 30/15 days auction notice was served upon the Applicants. No valuation from the approved valuer was obtained before

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SA No. 366 of 2025

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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conducting the auction. Further, the Bank has sold the property without following the procedure prescribed by law. Applicants have challenged the auction notice in this SA on the ground that no Rule 8(6) notice was served upon them; the Bank fixed up the reserve price on the lower side; the auction notice was not affixed on the property 30 days prior to the auction. Further, the property was not registered with the CERSAI. The auction purchasers did not deposit the EMD by 19.11.2025. Further, the auction purchasers did not deposit 25% of the sale consideration within time. Again, the remaining 75% was also not deposited as per law. The Bank has violated Rule 3(3), 3(4), 4(2) and 4(2-B) of the Rules. Again, the Bank did not upload the sale notice on the website of the Bank. The auction notice is again defective as all the details were not mentioned. Bank issued the notice to Applicant No. 7. Applicant No. 7 has no liability. In fact, Bank had not filed the OA against him. Again, the Bank did not provide the details of the auction to them.

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On these facts, Applicants filed the present SA and prayed that the whole of the SARFAESI action be set aside; the auction conducted on 21.11.2025 and the auction notice dated 22.10.2025 be set aside. Further, the sale certificate be also set aside and the auction purchasers be restrained from alienating or creating any third party interest etc.

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During the pendency of the present SA, Bank provided the particulars of the auction purchasers to counsel for the Applicants, who moved an application for impleading the auction purchasers as party. The application was allowed vide order dated 12.01.2026. Application for amendment of the SA was also allowed vide order dated 19.01.2026, subject to all just grounds that may be available to the parties. Notice of the SA was given to the auction purchasers.

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Bank, in reply to the SA, denied the case of the Applicants. Bank in the reply has admitted that the secured asset is owned by Smt. Neel Kamal Garg;

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SA No. 366 of 2025

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Smt. Shelly Garg; Smt. Jeevan Lata Garg and M/s Ankit Cotton Company. It is stated that Smt. Monika Garg/Applicant No. 6 is a guarantor. It is stated that the Applicants had deposited the following title-deeds, in favour of the Bank, to secure the debt.

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Sr. No.	Sale Deed No. and Date	Owner-Mortgagor	Land Area
1	3656, dated 01.12.2006	Ankit Cotton Co., Prop. Shri	11K - 18 M
		Pardeep Kumar
2	1842, dated 09.06.2005	Neel Kamal Garg wife of	08K - 00M
		Kuldip Garg
3	1843, dated 09.06.2005	Smt. Garg Shelly	08K - 00M
4	1844, dated 09.06.2005	Smt. Jeevan Lata Garg	08K - 00M
		Total Area	34K - 18M

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It is also alleged that Des Raj, father of Pardeep Kumar had filed SA No. 76 of 2017, wherein he had challenged the SARFAESI action, which was dismissed by this Tribunal, vide order dated 06.09.2022, with costs of Rs. 50,000/-. The mortgaged did not challenge the possession. The borrowers neither protested nor made any payment to the Bank. They also did not contest the OA. Rather, Des Raj, father of Pardeep Kumar, filed SA No. 76 of 2017, which was dismissed on 06.09.2022 with costs of Rs. 50,000/- (Annexure R/1). It is stated that that the Bank had taken the possession of the property on 19.09.2016 with the assistance of District Magistrate. Bank had put up the property on auction for the first time on 22.02.2017. It is stated that despite the fact that OA filed against the Applicants has been allowed, still no payment has been made. It is stated that the borrowers were insisting for One Time Settlement. Applicants had submitted the valuation report, showing the valuation at Rs. 9,16,65,101/-. Vide communication dated 21.08.2025, Bank advised the borrowers to redeem the property. However, without any result. The property was ultimately put up for auction at the reserve price of Rs. 9.16

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SA No. 366 of 2025

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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crores and the property was sold for Rs. 9.17 crores, against the outstanding amount of Rs. 65,20,89,983.83p, due as on 21.11.2025. It is stated that the auction notice was duly served upon the Applicants at the addresses available with the Bank, through post on 17.10.2025. The pasting was done on the site on 21.10.2025. The sale notice was published in ‘Hindustan Times’ and ‘Punjabi Jagran’, dated 22.10.2025. The auction notice was also uploaded on the website of the Bank and at the Bank’s e-auctions site. Applicants were fully aware of the actions taken by the the Bank. It is stated that though Monika Garg is a guarantor, yet, she was not the mortgagor. In the OA proceedings, Monika Garg did not contest the case. It is stated that on 21.08.2025, redemption notice was duly served upon the Applicants. The redemption notice was also posted on 22.08.2025 and as per the track reports, it was noted that the addressee left without instructions. It is stated that there is proper CERSAI registration. Bank submitted that there is no merit in the present SA and the same be dismissed.

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The auction purchasers in their reply have denied the case of the Applicants. Mr.Amandeep Mittal/auction purchaser/Respondent No.5 filed the reply on behalf of Respondent No. 2 to 4 as well. He alleged that the auction was conducted on 21.11.2025. The auction purchasers had deposited 10% of the EMD on 19.11.2025. They were the highest bidders. They deposited 15% of the bid amount within 24 hours. They were required to pay the balance 75% by 06.12.2025. However, the auction purchasers deposited an additional 25% of the balance auction amount on 04.12.2025 and sought extension vide email dated 04.12.2025. The Bank granted them 15 days extension i.e. upto 21.12.2025 to make the payment of balance sale consideration. A copy of the email dated 12.12.2025 is Annexure R-2/8. They have also attached the Bank statement. They are the bona fide purchasers. Further, the Bank has issued the sale certificate in their favour. Accordingly, it is submitted that there is no merit in the present SA and the same be dismissed.

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SA No. 366 of 2025

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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I have heard Mr.Vivek Verma, counsel for the Applicants; Mr.Vijay Sharma, counsel for the Respondent Bank and Mr.Manish Jain, counsel for the auction purchasers.

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Assailing the auction, Mr.Verma, counsel for the Applicants has argued that the auction conducted on 21.11.2025 is illegal, null and void . Mr.Verma submitted that on 15.01.2016, Bank had issued the notice under Section 13(2) of the SARFAESI Act, stating that the secured asset measures 26 kanals 18 marlas. On 28.04.2016, Bank had issued the notice under Section 13(4) of the SARFAESI Act, stating that the secured asset measures 26 kanals 18 marlas. In August 2025, Bank issued the redemption notice to the Applicants and in that notice also Bank had stated that the secured asset measures 26 kanals 18 marlas. However, the Bank issued the auction notice for 34 kanals 18 marlas of land. Mr.Verma, submitted that as per law, the Bank can sell only that property in respect of which it had issued the notices under Section 13(2) and 13(4) of the SARFAESI Act. Further, the Bank had got the property valued in respect of 49 kanals of land. Mr.Verma submitted that the Bank has also sold 3 kanals 10 marlas, owned by Monika Garg (Applicant No.6), who had not created any security interest, in favour of the Bank. No personal notice was served upon the Applicants. Further, the CERSAI report is also not correct. The CERSAI report is in respect of 09 kanals only. However, the Bank sold 34 kanals 18 marlas of land. Mr. Verma submitted that Applicants were communicating with the Respondent Bank through email. However, the Bank did not send the auction notice to the Applicants by email. Further, the Bank did not upload the auction notice on its website. The auction notice does not make mention of movables. Winding up his arguments, Mr.Verma submitted that the auction is bad in law and the same be set aside.

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10. Per contra , Mr.Vijay Sharma, counsel for the Respondent Bank has submitted that the Bank has sold the property by following proper procedure. 6

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SA No. 366 of 2025

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Auction notice was duly served upon the Applicants. The Bank got the property valued before conducting the auction. Applicants were fully aware of the actions taken by the Bank. Mr.Sharma submitted that there is no merit in the present SA and the same be dismissed.

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Mr.Jain, counsel for the auction purchasers submitted that the auction purchasers are bona fide purchasers. They had given the highest bid on the basis of publication made by the Bank. They have paid whole of the sale consideration to the Bank. Despite that the Bank has not delivered them the possession. He further submitted that the sale certificate has been issued by the Bank in favour of the auction purchasers. Mr.Jain submitted that the Bank be directed to deliver them the possession of the secured asset.

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I have considered the rival contentions.

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It is admitted on the record that the Applicants had created security interest in respect of 34 kanals 18 marlas of land. However, in the notices issued under Section 13(2) and 13(4) of the SARFAESI Act and redemption notice, Bank has made mention of land measuring 26 kanals 18 marlas. In these circumstances, the Bank could not sell more than 26 kanals 18 marlas. Further, the Bank has produced on the record CERSAI registration only in respect of 09 kanals of land and not 34 kanals 18 marlas of land. Again, it is admitted that Monika Garg had not created security interest in respect of 03 kanals 18 marlas of land. However, the Bank also took the possession of 03 kanals 18 marlas of land. That apart, the Bank got valued 49 kanals of land, whereas, the secured asset was only 34 kanals 18 marlas. Again, there is no proof on the record that the Bank had uploaded the auction notice on its website. This deserves to be mentioned that whereas the notices under Section 13(2) and 13(4) were issued prior to 2020, yet, the auction notice was issued in 2025. Accordingly, the Bank should have got the property registered with the CERSAI portal before conducting the auction. Further, Bank should have got

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SA No. 366 of 2025

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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the property valued in respect of 34 kanals 18 marlas of land. This deserves to be mentioned that though the Bank recovered Rs. 9.17 crores from the auction purchaser in December 2025, yet, it has not delivered the possession of the secured asset to the auction purchasers, till date.

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For all above-mentioned reasons, I am of the considered view that the auction is liable to be set aside. I hereby set aside the auction. The auction purchasers would return the sale certificate alongwith all documents of title given by the Bank to them. The Bank would cancel the sale certificate. The Bank would be liable to pay the whole of the sale consideration deposited by the auction purchasers to them with interest @ 12% per annum from the date of deposit, till the date of payment. The Bank would pay the money to the auction purchasers within one month from today, failing which the Bank would be liable to pay interest @ 15% per annum. The Bank would also be liable to pay compensation of Rs. 25.00 lacs to the auction purchasers as the Bank did not follow proper procedure and unnecessarily inconvenienced the auction purchasers.

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I am of the considered view that in the present case Bank conducted the auction proceedings in a very irresponsible manner. To sell the property of a debtor by public auction is a very serious matter. The Bank should take proper precautions. The Bank should appreciate that on the publication of the Bank, the auction purchasers participate in the auctions. In case any auction is set aside on account of the fact that the Bank did not follow proper procedure, the faith of the auction purchasers in the auctions is greatly shaken. In the case in hand also the Bank did not conduct the auction properly which has compelled this Tribunal to award the compensation to the auction purchasers.

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Needless to mention, the Bank would be free to auction the property again after following proper procedure.

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SA No. 366 of 2025

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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In view of the above, the present SA is allowed . All the pending IAs, if any, are also disposed of, accordingly.

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Registrar is directed to send a copy of this order to all the parties, as per rule. Thereafter, file be consigned to record room after due compliance.

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(A S Narang) Presiding Officer Pronounced in open court DRT-I, Chandigarh Dated: 24.03.2026 Manoj

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Ankit Cotton Company through its Proprietor, Shri Pardeep Kumar Garg v. Hdfc Bank

Case brief

What is this about?

What did the court decide?

Ankit Cotton Company through its Proprietor, Shri Pardeep Kumar Garg v. Hdfc Bank

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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