DRAT upholds Validity of Notice served u/r 9(1) of Security Interest (Enforcement ) Rules, Citing Evidence, Dismisses Appeal of Punjab National Bank [Read Order]
As none of the conditions of Order XLI Rule 27 of the CPC is satisfied, the contention of the appellant-Bank that the sale notice was served on 02.05.2022 is not tenable for want of any evidence/document in this regard.
![DRAT upholds Validity of Notice served u/r 9(1) of Security Interest (Enforcement ) Rules, Citing Evidence, Dismisses Appeal of Punjab National Bank [Read Order] DRAT upholds Validity of Notice served u/r 9(1) of Security Interest (Enforcement ) Rules, Citing Evidence, Dismisses Appeal of Punjab National Bank [Read Order]](https://images.taxscan.in/h-upload/2025/08/01/2071871-punjab-national-bank-taxscan.webp)
In a recent case, the Allahabad bench of the Debts Recovery Appellate Tribunal (DRAT) upheld the validity of notice served under rule 9(1) of Security Interest (Enforcement ) Rules relying on evidence and dismisses the Appeal of Punjab National Bank.
Punjab National Bank, the appellant, filed under Section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( "the SARFAESI Act") against the order dated 19.07.2022, whereby the S.A. filed by the respondents-borrowers was disposed of.
The respondents-borrowers were granted certain credit facilities by the appellant-Bank. In order to secure the said credit facilities, the borrowers had created an equitable mortgage over their property in question by depositing original title deed with the appellant-Bank. Since the borrowers did maintain the financial discipline, therefore, the account the borrowers were classified as NPA on 16.06.2019 an demand notice dated 19.06.2019 was issued und Section 13(2) of the SARFAESI Act for a sum of Rs.1,52 23.010.20 as on 31.05.2019
Want a deeper insight into the Income Tax Bill, 2025? Click here
In order to secure the said credit facilities, the borrowers had created an equitable mortgage over their property in question by depositing original title deed with the appellant-Bank. Since the borrowers did not maintain the financial discipline, therefore, the accounts of the borrowers were classified as NPA on 16.06.2019 and a demand notice dated 19.06.2019 was issued under Section 13(2) of the SARFAESI Act for a sum of Rs. 1,52,23,010.70 as on 31.05.2019.
Also Read:Delhi HC Grants Interim Relief to Borrower in Canara Bank Dispute, Directs No Coercive Action for Two Weeks [Read Order]
The borrowers did not pay any heed to the said demand, therefore, symbolic possession of the property in question was taken by issuing possession notice dated 24.11.2019 and the same was affixed at the conspicuous place of the property in question and published in two newspapers having wide circulation in the area, where the respondents-borrowers reside.
Thereafter, the auction sale notice dated 16.12.2021 was issued scheduling the auction on 18.01.2022, but the same could not be materialized for want of bidders. Subsequently, the another sale notice dated 30.04.2022 was issued and dispatched on the same day to the borrowers, copy of the said sale notice and postal receipts are placed at page no. 30 and 39 of the paper book. The said sale notice was published in the newspapers one in vernacular language scheduling the auction of the property in question on 18.05.2022. The copies of the said publications have been filed at page nos. 31 to 38 of the paper book.
How to Audit Public Charitable Trusts under the Income Tax Act Click Here
The respondents-borrowers challenged the entire proceedings of the appellant-Bank by filing the securitization application before the Tribunal below on 27.05.2022 without any application for condonation of delay. The Tribunal below vide order impugned has disposed of the said S.A., setting aside the auction salenotice dated 30.04.2022 and subsequent actions thereof and they challenged the demand notice and possession notice, which were dismissed being barred by limitation. Being aggrieved by the said order, the present appeal has been filed by the appellant-Bank.
Counsel for the appellant submitted that a short question involved in the present case is that there is non compliance of Rule 9(1) of the Security Interest (Enforcement) Rules, 2002, therefore, the sale has been set aside by the Tribunal below holding that 15 days' clear notice has not been given to the borrowers and all the proceedings of the Bank upto possession notice has been upheld. The learned counsel further submitted that the sale notice was issued on 28.04.2022 scheduling the auction of the property in question to be held on 18.05.2022.
The counsel also submitted that as per information received from the postal department, the sale notice was sent by registered post on 30.04.2022 and it was served upon the borrowers on 04.05.2022 and the Tribunal below by taking this as relevant date has stated that 15 days' clear notice has not been given. The matter is to be considered as to on what date the delivery of notice upon the borrowers was made by the Bank.
Clear all Your Doubts on RCM, TCS, GTA, OIDAR, SEZ, ISD Etc... Click Here
The counsel also submitted that after pronouncement of the order Impugned, the appellant approached the postal department under the RTI Act, against which an information vide letter dated 11.08.2022 (at page No. 119 of the paper book) has been received from the Senior Superintendant of the Post Office, Ghaziabad, wherein it is stated that delivery of notice was made on 02.05.2022 to the addressee.
It was next contended that the said information was received/obtained after pronouncement of judgment by the Tribunal below, but it cannot be said that the said information given by the postal department is not conclusive proof of service upon the parties. The next argument was that the borrowers have never intimated that on which date the notice was served upon them, therefore, it was contended that a clear 15 days' notice has been given to the borrowers, hence, it was prayed that the order impugned may be set aside and the appeal may be allowed.
It was also contended that after passing of the order impugned by the Tribunal below and even after filing of the present appeal before this Tribunal, vide interim order dated 14.07.2023, the respondent-borrower was directed to deposit the amount, which has been deposited and the possession is with the respondent-borrower. It was further contended that pursuant to the order dated 14.07.2023 of this Tribunal, the respondent-borrower approached the Bank along with Bank draft of Rs. 1,87,600/- with the OTS proposal dated 06.10.2023.
Know Practical Aspects of Tax Planning, Click Here
It was next contended that when the right of redemption was claimed by the borrower, the sale was already set aside, therefore, it cannot be said that the redemption sought by the borrower was after publication of the sale notice or confirmation of sale, whereas the entire amount has been deposited by the borrower pursuant to the order dated 14.07.2023 passed by this Tribunal. It was, therefore, prayed that the order impugned does not call for any interference by this Tribunal, hence the appeal may be dismissed with heavy costs.
The appellant-Bank has filed the aforesaid documents along with the memo of appeal only stating therein that the sale notice was served upon the borrowers on 02.05.2022 and nothing else. It is not the case of the appellant-Bank that the Tribunal below had refused to accept the said documents.
It is also not the case of the appellant-Bank that the said document was not within his knowledge or could, after the exercise of due diligence, be produced by him during the pendency of the Securitization Application before the Tribunal below, because para 8 of the order impugned clearly says that the sale notice was delivered to applicants on 04.05.2022 as per postal track record at page 32 & 33 of the reply, meaning thereby the tracking report dated 04.05.2022 was filed by the appellant-Bank itself.
How to Compute Income from Salary with Tax Planning, Click Here
The bench of Justice R. D. Khare, Chairperson held that If the appellant-Bank was under impression that the said notice was delivered on 02.05.2022, at that time the appellant ought to have obtained the said documents, but the same was obtained after passing of the order impugned, which means the appellant-Bank was watching the fate of the case. Thus it can be said that the said documents have been obtained by the appellant-Bank to make out its case.
As none of the conditions of Order XLI Rule 27 of the CPC is satisfied, the contention of the appellant-Bank that the sale notice was served on 02.05.2022 is not tenable for want of any evidence/document in this regard.
Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates