Allowed

M/s Goyal Motors v. Punjab National Bank

DRT29 Aug 2026SA/419/2024

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed an application by M/s Goyal Motors to set aside a property auction conducted by Punjab National Bank. The court held that the absence of a fifteen-day clear notice rendered the auction illegal, distinguishing prior precedents regarding technical defects, despite the auction purchaser's bona fide status.

What did the court decide?

The auction dated 13.09.2024 was set aside; sale consideration was directed to be refunded with interest; sale certificate cancelled; assets restored to the bank.

M/s Goyal Motors versus Punjab National Bank — Banking and Recovery | DRT (2026)

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SA No. 419 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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SA No. 419 of 2024

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M/s Goyal Motors and others

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Versus

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Punjab National Bank and another

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Dated: 29.08.2026

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Item No. (Supplementary-1)

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Argued by: Mr. Ashok Malik & Mr. Vishisht, Counsel for the Applicants. Mr.CS Pasricha & Mr.Kamal Sharma, Counsel for Respondent Bank.

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Mr.AS Kakkar, Counsel for Auction Purchaser.

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M/s Goyal Motors 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 Punjab National Bank and another (Respondents).

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The case of the Applicants as set up in the Securitization Application is that Applicant No.1 is a proprietorship firm and Applicant No. 2 is its proprietor. They are the authorized dealers of Tata Motors. Since 2015-16, they were enjoying the Cash Credit Working Limit of Rs. 900 lacs from PNB. Since, the payment was not made, the Bank initiated the SARFAESI action and declared the account NPA. Vide sale notice dated 28.08.2024, it was stated that a sum of Rs. 923.47 lacs was the outstanding amount. On 28.08.2024, they received two notices in respect of sale of commercial property at Ajnali Road, Gobindgarh. Both these notices had been dispatched on 29.08.2024 and were received by the Applicants on 30.08.2024. On 13.09.2024, the Bank sold the property in auction. The Bank did not give clear fifteen days notice. The notice is also defective. Accordingly, auction conducted by the Bank is illegal, null and void . The Bank did not disclose the encumbrances in the sale notice. The sale notice was not affixed on the conspicuous part of the secured asset. The authorized officer did not obtain valuation report from an approved valuer and also did not fix the reserve price

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SA No. 419 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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in consultation with the Bank. On these facts, Applicants filed the present SA and prayed that the auction conducted on 13.09.2024 be set aside.

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Bank, in reply to the SA, has denied the case of the Applicants. It is alleged that the Bank had issued demand notice in 2019. Bank has been able to sell the property after five years. The present SA has been filed intentionally after the completion of auction process and issuance of sale certificate. The SA has been filed at the eleventh hour. The Bank had issued the sale certificate on 03.10.2024. Applicants have filed the SA only to frustrate the recovery process. The property was put to auction on ten occasions vide sale notices dated 29.09.2020; 10.11.2020; 25.03.2021; 31.01.2022; 25.08.2022; 27.09.2022; 28.12.2022; 14.03.2023; 25.03.2023 and 18.07.2024. However, there were no bidders. The secured asset is in the physical possession of the Bank. The auction is hit by Section 13(8) of the SARFAESI Act. The Hon’ble Supreme Court in Celir LLP versus Bafna Motors (Mumbai) Private Limited and others, Civil Appeal No. 5542-5543/2023, decided on 21.09.2023 has held that the right to redeem the mortgage extinguishes once the Bank publishes the notice of the sale of secured asset. The Hon’ble Supreme Court in M/s L&T Housing Finance Limited versus M/s Trishul Developers and Another, Civil Appeal No. 3413 of 2020 has also held that the SARFAESI action cannot be nullified on the ground of technical defects and procedural lapse, unless significant damage has been caused to the defaulter. Though, Applicants were aware of the auction, yet, they did not file the SA immediately. Accordingly, it is stated that the SA be dismissed.

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I have heard Mr.Ashok Malik, counsel for the Applicants; Mr.CS Pasricha, counsel for the Respondent Bank and Mr. AS Kakkar, counsel for auction purchaser.

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Mr.Malik, counsel for the Applicants has argued that the law is well settled that for the first auction Bank has to give thirty days notice and for

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SA No. 419 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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every subsequent auction, it is under obligation to give fifteen days clear notice. In the case in hand, the auction notice was issued on 28.08.2024, fixing the auction for 13.09.2024. The notice was dispatched on 29.08.2024 and the same was received by the Applicants on 30.08.2024. Accordingly, Bank did not given fifteen days clear notice to the Applicants. Mr.Malik further pointed out that the Bank did not publish the sale notice in two leading newspapers, having wide circulation in the locality and thus, there was violation of Rule 8(6) and 9(1) of the Security Interest (Enforcement) Rules, 2002. Accordingly, it is stated that the auction be set aside. Reliance has been placed by Mr. Malik upon the judgment passed by the Hon’ble Punjab and Haryana High Court in M/s Hoshiarpur Roller Flour Mills Private Limited and another versus Punjab National Bank, CWP No. 14440-2021, decided on 10.12.2021 .

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Per contra , Mr. Pasricha, counsel for the Respondent Bank relying upon the judgment passed in M/s L&T Housing Finance (supra) has argued that the mere circumstance that 15 days notice was not given to the Applicants cannot be a ground to set aside the auction. Mr. Pasricha submitted that the trivial technical defect in issuing the auction notice cannot be a ground to set aside the auction. The Bank had put the property on auction on ten occasions. Applicants never challenged the same. In the tenth auction the Bank was able to sell the property. After the auction was concluded and the auction purchaser deposited the money and the Bank issued the sale certificate, Applicants filed the present SA challenging the auction. Mr. Pasricha submitted that the Hon’ble Supreme Court in Bafna Motors (supra) has held that the concluded auction should not be set aside lightly. Counsel submitted that it is only when there is fraud or collusion that the auction should be set aside. Mr. Pasricha placed reliance upon the judgment passed in M/s Morion Chemicals Limited and others versus UCO Bank and others, CWP No. 16885 of 2013, decided on 05.10.2021 .

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SA No. 419 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Mr.Kakkar, counsel for the auction purchaser also supported the contentions of Mr.Pasricha and submitted that the auction purchaser is a bona fide purchaser. Auction Purchaser has paid the whole of the sale consideration to the Bank. Bank has also issued the sale certificate in his favour. Accordingly, it is stated that the SA be dismissed.

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I have considered the rival contentions.

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Admittedly, Bank had issued the auction notice on 28.08.2024. The auction was fixed up for 13.09.2024. The auction notice was dispatched on 29.08.2024, which was received by the Applicants on 30.08.2024. Bank had also published the auction notice in ‘Financial Express’ on 29.08.2024 and in ‘Jagbani’ on 28.08.2024. Thus, there was no 15 days clear notice either to the borrowers or to the general public. However, Mr.Pasricha, counsel for the Respondent Bank strongly argued that the Applicants never challenged the auction notice issued earlier. He submitted that it was the 10^th auction. Relying upon L & T judgment ( supra ), Mr. Pasricha submitted that a concluded auction cannot be set aside on trivial grounds. Applicants have failed to show any prejudice. Mr. Pasricha argued that even in the present case, the Applicants did not challenge the auction notice prior to the auction. They challenged the auction after the auction purchaser had deposited the whole of the sale consideration and the Bank had issued the sale certificate in his favour. He submitted that the Bank had issued the sale certificate on 03.10.2024 and Applicants filed the present SA on 08.10.2024.

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The Hon’ble Punjab and Haryana High Court has held in M/s Hoshiarpur Roller Mills ( supra ) that for every subsequent auction, 15 days clear notice be given to the Applicants. The judgment in Morion Chemical ( supra ) case cited by the Bank is on different facts. The issue involved in the present case was not involved in Morion Chemical ( supra ) as well as in Celir ( supra ) case. Accordingly, the auction dated 13.09.2024 is hereby set aside.

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SA No. 419 of 2024

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DEBTS RECOVERY TRIBUNAL-I, CHANDIGARH

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Bank is directed to refund the sale consideration to the auction purchaser with interest @ 6% per annum from the date of deposit, till the date of payment. The Bank would cancel the sale certificate. The auction purchaser would return all the documents of title given by the bank to him. The auction purchaser would also restore the possession to the Bank.

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Needless to mention, Bank would be free to put the property for auction again after obtaining fresh valuation report, giving proper notices to the borrowers as well as general public and publish the auction notice in leading newspapers. 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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Pronounced in open court Dated: 29.08.2026 Manoj

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(A S Narang) Presiding Officer DRT-I, Chandigarh

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M/s Goyal Motors v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

M/s Goyal Motors v. Punjab National Bank

Case brief

What is this about?

What did the court decide?

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