Dismissed

Ms Annu Rice Mills v. Bank of Baroda

DRT30 Jan 2026SA/62/2022

Case brief

AI extract

What is this about?

The DRT dismissed an application seeking to quash SARFAESI proceedings and a sale certificate. The court held that the application was not maintainable due to the non-joinder of a guarantor, which would result in multiplicity of proceedings.

What did the court decide?

The application was dismissed on the grounds of non-joinder of the guarantor.

Ms Annu Rice Mills versus Bank of Baroda — Securities and Capital Markets | DRT (2026)

SA 62 of 2022 (J)

DRT,PATNA

DEBTS RECOVERY TRIBUNAL PATNA

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Presiding Officer: Shri Kaushalendra Yadav

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SA- 62 of 2022

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M/s Annu Rice Mills, through Proprietor Akhilesh Rai, Badkanuaon, P.O – Buxar Jail, P.S – Buxar Mufassil, District – Buxar

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

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Versus

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The Chief Manager Cum Authorised Officer, Bank of Baroda, Branch R.O.S. A.R.B Patliputra, Patna.

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2 The Branch Manager, Bank ofBaroda, Buxar.

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Prakash Rai, Son of Sarangdhar Rai, Resident of Village – Koirpurva. Ward no. 29, District- Buxar, PIN – 802101.

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

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Presents:

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For the Applicants : Kamlesh Kumar, Advocate For the Respondent Bank : Arvind Kumar, Advocate For the Respondent 3 : Santosh Kumar Singh, Advocate

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Dated: 30.01.2026

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JUDGMENT

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The present application has been filed seeking to quash the entire SARFAESI proceedings including the sale certificate 16.11.2021 and sale deed no. 2668 dated 21.03.2023.

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During the pendency of the present case, the applicant has filed an interlocutory application, being IA No. 22/2023, seeking to maintain the status quo.

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The brief facts of the case are that the applicant. through its proprietor. availed a cash credit facijity of ?50 lakhs from the respondent bank. To secure the said loan amount. the proprietor of the applicant mortgaged his property in t'a'our of the respondent bank. Due to default in repayment of the loan, the respondent bank classified the loan account as a Non-Performing Asset (NPA) on 31.12.2015. Thereafter. the respondent bank issued a demand notice dated 23.02.2016 undel Section 13(2) of the SARFAESI Act, followed by a possession notice dated 03.11.2016 under Section 13(4) of the Act. Subsequently. the respondent bank issued a sale notice dated 04.09.2021 fixing the auction sale on 23.09.2021, pursuant to which the secured property was sold to Respondent No. 3. A sale certificate dated 16.11.2021 was thereafter issued in favour of the auction purchaser. i.e.. Respondent No. 3. Being aggrieved by the issuance of the sale certificate, the applicant has liled the present securitization application. N / V=t\ 'P?"

DRT,PATNA

SA 62 of 2022 (J)

The learned counsel for the applicant submitted that due to a sudden illness. the applicant suffered substantial financial loss and could not deposit the loan amount, whereupon the respondent bank classified the loan account as NPA: thereafter. the respondent bank issued a demand notice followed by a possession notice. which was not published in two newspapers within the stipulated period of seven days. It is further submitted that the respondent bank thereafter issued a sale notice dated 04.08.2018. which was challenged by the applicant by filing S.A. No. 140/2018 before this Hon’ble Tribunal; however, the said S.A. was dismissed for nonprosecution on 30.04.2019, and the subsequent M.A. No. 108/2019 filed for restoration was also dismissed. It is further submitted that the respondent bank thereafter issued another sale notice dated 04.09.2021, which was published in only one newspaper and was issued without obtaining a valuation report of the property in question. despite the reserve price being fixed at ?13,36,500/- whereas the approximate market value of the property is around ?3,03,00,000/-. It is further submitted that the applicant deposited a sum of ?93,00,000/- against the outstanding loan amount of ?86,38,151/- as per the directions of the respondent bank; however, despite the same, the respondent bank issued a sale certificate dated 16.11 .2021 in favour of Prakash Rai, i.e., respondent no. 3, and it is further submitted that. in order to challenge the said sale, the applicant filed CWJC No. 18879 of 2021 before the Hon’ble High Court, which was dismissed as withdrawn on 11.01.2022 with liberty to pursue the remedy before the appropriate forum, and that the respondent bank has also filed O.A. No. 177/2021 before this Hon’ble Tribunal. in which the applicant has appeared.

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The learned counsel for the respondent bank submitted that due to default in repayment of the loan amount by the applicant, the loan account was classified as a Non-Performing Asset (NPA) on 31.12.2015. Thereafter, the respondent bank issued a demand notice dated 23.02.2016 under Section 13(2) of the SARFAESI Act. which was duly served upon the applicants. As the applicants failed to discharge the outstanding dues, the respondent bank issued a possession notice dated 03.11.2016 under Section 13(4) of the SARFAESI Act, which was duly served upon the applicants, affixed on the secured asset, and published in two newspapers in accordance with law. It is further submitted that the amount deposited by the applicant was without the consent of the respondent bank. Accordingly, the said amount was returned to the applicant, and the same was duly intimated to the applicant vide letter dated 04. 12.202 1.

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6 The learned counsel for the auction purchaser submitted that the auction purchaser came to know about the auction through a newspaper publication., he participated in the bidding process by depositing an amount of Rs. 13,37,023.60 and emerged as the highest bidder. Upon successful completion of the bidding, he deposited a total sum

L),,

DRT,PATNA

SA 62 of 2022 (J)

of Rs. 33.87,070.08, inclusive of Rs. 13,37,023.60, through RTGS on 22.09.2021 and 24.09.2021. It is further submitted that the sale intimation letter and sale confirmation letter were issued to the auction purchaser on 23.09.2021. The remaining 75% of the sale consideration was required to be deposited on or before 08.10.2021; however, at the request of the auction purchaser, the said period was extended first up to 20.10.2021 and thereafter up to 04.11.2021, which was agreed to by the bank. The balance amount was deposited before the extended period i.e.,04.11.2021, and thereafter, the sale certificate dated 16.11.2021 was issued by the bank in favour of the auction purchaser.

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1 have heard the learned counsels of all the parties and gone through the records.

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The applicants alleged that the possession notice was not published in two newspapers within the stipulated period of seven days. It is further alleged that the respondent bank thereafter issued another sale notice dated 04.09.2021. which was published in only one newspaper and was issued without obtaining a valuation report of the property in question, despite the reserve price being fixed at ?13.36.500/-. whereas the approximate market value of the said property is around ?3,03,00.000/-. It is further alleged by the applicants that they deposited a sum of ?93,00,000/against the outstanding loan amount of ?86,38,151/- as per the directions of the respondent bank; however, despite the same, the respondent bank issued a sale certificate dated 16.11.2021.

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Upon perusal of the record, it is found that the possession notice dated 03.11.2016 was sent to the applicant on 05.11.2016 by post, as evident from the postal receipt at page 24 of the counter affidavit. The said possession notice was also affixed on the secured asset, as evident from the xerox copies of photographs at pages 25 and 26 of the counter affidavits. As regards the specific allegation of the applicant concerning newspaper publication, it is found that the said possession notice was published in one Hindi and one English newspaper, as evident from pages 22–23 of the counter affidavit. However, the name of the newspapers is not legible and the same has not been mentioned by the respondent bank in the counter affidavit. Further, the date of publication is also not legible on the newspapers, and the date “06.11.2016” appears to have been written by hand on the xerox copies of the newspapers.

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As far as the allegation regarding the publication of the sale notice is concerned. the respondent bank has not submitted any statement in its counter affidavit with respect to the service or publication of the sale notice, nor has it annexed any postal receipt, proof of publication, or proof ofaffixation of the said sale notice.

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11 . As far as the allegation regarding valuation of the secured property is concerned. the respondent bank, in paragraph 5(10) of its counter affidavit, has submitted that proper valuation of the secured property was carried out and that the valuation report has been annexed as Armexure-B to the written statement; however, no such

(h)a

SA 62 of 2022 (J)

DRT,PATNA

annexure pertaining to the valuation report is attached to the counter affidavit available on record.

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It is farther noted that regarding the applicant’s allegation of depositing a sum of ?93,00.000/- against the outstanding loan amount of ?86,38,151/-, the applicant has not produced any evidence specifying the date of such deposit. While the respondent bank, vide its letter dated 04.12.2021, has acknowledged the deposit and stated that the amount was returned to the applicant, the applicant has failed to provide any document demonstrating that the deposit was made with the consent of the bank or that the bank had assured the applicant that the sale certificate would not be issued thereafter. In this regard, the Hon’ble Supreme Court, in M Rajendr an & Ors. v. Ms KPK Oils and Proteins India Pvt . Ltd. & Ors. (2025 INSC 1144), has held that once the sale notice is published, the borrower ceases to have any subsisting right to redeem the secured asset, and the secured creditor cannot cancel or undo the sale process merely on the ground that the borrower has subsequently cleared the dues.

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At the same time, it is important to consider the effect of the non-joinder of the guarantor, namely Nitesh Kumar Rai S/o Vishwanath Rai, in the present application. The non-joinder of the necessary parties’ results in a multiplicity of judicial proceedings. The application filed by the borrower is not maintainable without impleading the guarantor, as the controversy involved cannot be effectively adjudicated in their absence, they being parties to the contract. Therefore, no relief can be granted to the Applicant.

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