Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.5422 of 2025 (In the matter of an application under Articles 226 and 227of the Constitution of India, 1950). Mamina Mallick …. Petitioner(s) -versus- Authorised Officer, Canara Bank &Anr. …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner(s) For Opposite Party (s) : : Ms. Anita Nanda, Adv. Mr. Arupananda Das, Adv. CORAM: DR. JUSTICE SANJEEB K PANIGRAHI DATE OF HEARING:-14.08.2025 DATE OF JUDGMENT:-17.10.2025 Dr. Sanjeeb K Panigrahi, J. 1. The Petitioner, in this Writ Petition, has made a prayer to quash the impugned auction conducted by the Opposite Parties/ Bank on 17.01.2025 vide paper publication dated 08.01.2025. The Petitioner further seeks a direction from this Court to the Opposite Parties to return the auctioned gold/ or value thereof along with exemplary cost and compensation to her. I. FACTUAL MATRIX OF THE CASE: 2. The brief facts of the case are as follows: Page 1 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 (i) The Petitioner states that she had pledged fifteen (15) items of gold ornaments, having a gross weight of 23.91 grams and a net weight of 16.39 grams, with the Opposite Party Bank for availing financial assistance towards her agricultural requirements. The said loan was sanctioned under Loan Account No. 180261528755 for an amount of Rs. 74,000/- (Rupees Seventy-Four Thousand only), vide sanction order dated 12.01.2024, with the date of maturity fixed as 12.01.2025. (ii) It is further submitted that the mother-in-law of the Petitioner, namely Smt. Jyostnarani Das, had also availed a gold loan from the same Bank, pledging 73.72 grams of gold ornaments, under Loan Account No. 180256801579, for a sanctioned amount of Rs. 2,62,000/- (Rupees Two Lakh Sixty-Two Thousand only). The said loan was sanctioned on 30.12.2023, and the maturity date was fixed as 30.12.2024 (iii) As per the sanction letter annexed hereto as Annexure–1, the loan was sanctioned on 12.01.2024, with the date of maturity fixed as 12.01.2025, i.e., for a tenure of one year, carrying a floating rate of interest at 8.8% per annum. The terms and conditions incorporated in the said sanction letter stipulate that the loan is repayable within twelve (12) months from the date of sanction, either in monthly, quarterly, or half-yearly instalments, or through lump sum repayment at the option of the borrower. (iv) It is further provided therein that, in the event of default in repayment, the Bank shall be entitled to publish the name of the Page 2 of 24
Facts
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 borrower as a defaulter in any manner or medium deemed appropriate, after giving thirty (30) days’ prior notice to the borrower. The sanction letter also specifically mentions that a safe- keeping charge shall be levied after thirty (30) days from the date of expiry of the loan period, if the pledged jewels are not redeemed within thirty (30) days from the closure of the loan account. (v) It is submitted that prior to the date of maturity of the loan on 12.01.2025, the Opposite Parties–Bank issued a series of communications to the Petitioner. The first such communication, styled as a “First Reminder Letter” dated 22.11.2024, called upon the Petitioner to clear the principal amount along with the accrued interest and other charges within seven (7) days from the date of receipt thereof, in order to regularize the loan account. Subsequently, a “Second Reminder Letter” dated 04.12.2024 was issued, reiterating the said demand and directing the Petitioner to liquidate the outstanding dues along with interest within fifteen (15) days. Thereafter, the Opposite Parties–Bank issued a further communication dated 16.12.2024, described as an “Auction-cum- Final Reminder”, in respect of the Petitioner’s Loan Account, intimating initiation of auction proceedings in the event of non- payment. However, the said letter did not specify the date and time of the proposed auction, mentioning only the venue where such auction was purported to be conducted.
Legal Reasoning
Bank is ex facie illegal, arbitrary, and unsustainable in law, and is therefore liable to be quashed and set aside. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES/ BANK: 4. The Learned Counsel for the Opposite Parties/ Bank earnestly made the following submissions in support of his contentions: (i) The Petitioner had availed a gold loan from the Opposite Parties– Bank on 12.01.2024, with the date of maturity fixed as 12.01.2025. Similarly, the husband of the Petitioner, Shri Samarjit Das, and her mother-in-law, Smt. Jyotshna Rani Das, had also availed separate gold loans on 30.12.2023, each having the date of maturity as 30.12.2024. Pursuant to the sanction of the gold loans, the Petitioner executed the application-cum-letter of pledge for loan/overdraft against gold jewellery on 12.01.2024, thereby pledging certain gold ornaments as security for the said facility. (ii) It is further submitted that the Petitioner had also availed a housing loan from the same Bank, in addition to being issued three credit cards, all of which had been fully utilised at the relevant point of time. These distinct credit facilities were governed by separate contractual terms and sanction conditions, and there was no interlinkage or cross-security clause permitting the Bank to treat the accounts as one or to initiate joint recovery proceedings. (iii) It is contended that under Paragraph 8 of the Letter of Pledge executed by the Petitioner at the time of availing the gold loan, it was specifically stipulated and agreed that the Bank shall be Page 12 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 entitled to retain and appropriate the proceeds of the pledged security towards the satisfaction of any or all other liabilities of the Petitioner, whether present or future, and whether arising individually or jointly with any other person, in respect of any advance, financial assistance, or facility granted or to be granted by the Bank. The said clause further authorizes the Bank to hold and sell the pledged security for the discharge of any such outstanding dues, irrespective of the nature of the account or the capacity of the Petitioner, whether as principal debtor or surety. (iv) It is submitted that the Letter of Pledge executed by the Petitioner confers upon the Opposite Parties–Bank the authority to sell or dispose of the pledged jewellery and to appropriate the sale proceeds towards the liquidation of any dues or liabilities standing in the name of the Petitioner, or of any other person in respect of whom the Petitioner stands as a guarantor, surety, or co-applicant. The said document further provides that the Petitioner expressly waives her right to receive prior notice of such sale, authorizing the Bank to conduct the sale or auction— public or private—as it may deem appropriate, for realization of the outstanding dues. This power, however, is stated to be without prejudice to the Bank’s right to initiate other lawful proceedings for recovery of any remaining dues, in accordance with the provisions of law and the terms of the loan agreement. (v) It is further contended that the Petitioner, along with her husband, Shri Samarjit Das, and mother-in-law, Smt. Jyotshna Page 13 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 Rani Das, had jointly applied for a housing loan from the Opposite Parties–Bank for the purpose of construction of a residential building (G+2 structure). Pursuant to the said application, an amount of Rs. 54,00,000/- (Rupees Fifty-Four Lakhs only) was sanctioned on 25.02.2022 by the Bank. Out of the total sanctioned amount, a sum of Rs. 22,00,000/- (Rupees Twenty- Two Lakhs only) was disbursed as on 29.10.2022, which the Petitioner, her husband, and mother-in-law had duly availed. (vi) It is, however, submitted that as the disbursed amount of Rs. 22,00,000/- was not utilized for the intended purpose of construction of the residential building, the balance undisbursed amount of Rs. 32,00,000/- (Rupees Thirty-Two Lakhs only) was withheld and not released by the Opposite Parties–Bank, in accordance with the terms and conditions of the sanction and disbursement policy governing housing loans. (vii) Due to non-payment of the dues against the disbursement amount of Rs.22,00,000/-, the account became NPA on 21.11.2024. Learned counsel for the Opposite Parties/ Bank brought to the notice of this Court to the Master Circular issued by the Reserve Bank of India (RBI) dated 01.07.2014 to all the commercial banks. He specifically pointed out Para 4.2.7 of the Master Circular which is extracted as under:- “4.2.7 (i) It is difficult to envisage a situation when only one facility to a borrower/ one investment in any of the securities issued by the borrower becomes a problem credit/ investment and not others. Therefore, all the facilities Page 14 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 granted by a bank to a borrower and investment in all the securities issued by the borrower will have to be treated as NPA/ NPI and not the particular facility / investment or part thereof which has become irregular.”
Arguments
(vi) The Petitioner, along with her husband, Shri Samarjit Das, and mother-in-law, Smt. Jyostnarani Das, had jointly availed a housing Page 3 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 loan from the Opposite Parties–Bank, bearing Loan Account No. 160000605430, by mortgaging immovable property more fully described as follows: Plot No. 282/5442, measuring Ac. 0.020 dec., under Khata No. 859/2711, and Plot No. 283/5445, measuring Ac. 0.040 dec., under Khata No.859/2714, both situated in Mouza–Kapaleswar, under Choudwar Police Station, Tangi-Choudwar Tahasil, District Cuttack. The said housing loan was sanctioned on 25.02.2022 for an amount of Rs. 22,00,000/- (Rupees Twenty-Two Lakhs only). Subsequently, the said loan account was classified as a Non-Performing Asset (NPA) by the Bank on 22.11.2024. Following such classification, the Bank recalled the loan and issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) to the loanees, including the present Petitioner, on 25.11.2025, in respect of the said housing loan account, as well as another account pertaining to a credit card facility issued in the name of the Petitioner bearing Credit Card No. 4687 8708 2207 4000. (vii) In respect of the aforesaid housing loan account bearing No. 160000605430, which was declared as Non-Performing Asset (NPA) on account of default, the present gold loan account stands on a completely distinct and independent footing. The gold loan was availed by the Petitioner for agricultural purposes and has no Page 4 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 nexus whatsoever with the said housing loan. It is further submitted that in the notice issued under Section 13(2) of the SARFAESI Act, 2002, annexed as Annexure–3, there is no reference that the gold loan account has been treated as a linked account to the said housing loan account. The Bank, therefore, acted without justification in seeking to club or relate the two distinct loan accounts while initiating recovery proceedings under the SARFAESI Act. (viii) It is submitted that when the Petitioner approached the Branch Manager of the Opposite Party–Bank seeking to settle and regularize the gold loan account, the said authority refused to entertain her request or extend any assistance. On the contrary, the Petitioner was directed to clear all outstanding dues, including both the housing loan and the gold loan accounts, and was informed that only upon payment of the entire outstanding amount under both accounts would the same be considered for regularization. The action of the Bank, in linking two distinct and unrelated loan accounts, is arbitrary, unreasonable, and contrary to the terms of sanction and settled banking practice. (ix) Thereafter, the Petitioner came to learn that the Authorized Officer of the Opposite Party–Bank (Opposite Party No.1) had published an auction notice in respect of the gold ornaments pledged by the Petitioner, in the daily Odia newspaper “The Samaj” dated 08.01.2025. The said notice declared that in the event of non- payment of the outstanding gold loan dues by 14.01.2025, the Page 5 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 pledged gold ornaments would be put to auction on 17.01.2025 at the Bank premises. The name and loan account number of the Petitioner were reflected at Serial No.8 of the said publication. (x) In the auction notice (Annexure–4), it was specifically mentioned that persons desirous of participating in the auction were required to deposit Rs.5,000/- (Rupees Five Thousand only) as security money with the Bank, and would thereafter be permitted to inspect the pledged ornaments. The notice further provided that the bidding for each account would be conducted sequentially, i.e., only after closure of the previous account, along with other stipulated terms and conditions. (xi) In view of the arbitrary and premature initiation of auction proceedings, even prior to the date of maturity of the gold loan (12.01.2025), and in violation of the contractual terms as well as the principles of natural justice, the Petitioner has been constrained to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, seeking appropriate reliefs against the illegal and high-handed actions of the Opposite Parties–Bank. II. SUBMISSIONS ON BEHALF OF THE PETITIONER: 3. Learned counsel for the Petitioner earnestly made the following submissions in support of her contentions: (i) The housing loan Account No.160000605430 which was defaulted and declared NPA, is no way connected to the present Gold loan.. Moreover, the notice issued under Section 13(2) of the SARFAESI Act does not disclose regarding the present loan account as a Page 6 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 corollary account pledged to the said loan. The gold loan was distinct and not cross-collateralised with the housing loan; (b) the Bank conducted auction within five days of maturity, ignoring the contractual 30-day redemption grace and principles of fair auction; (c) bidders were selectively accommodated, loanees were excluded, accounts were allegedly clubbed, and details of successful bidders/reserve price were withheld; (d) adjustment of surplus to unrelated liabilities was impermissible absent a lawful sale and transparent appropriation. (ii) By the letter of pledge (cl. 8), the Petitioner agreed that the pledged security could secure any liability of the Petitioner (including joint/guarantor liabilities) and that sale could be effected without further notice; (b) borrower-wise asset classification under RBI’s Master Circular (01.07.2014, para 4.2.7) warranted NPA tagging across all facilities; (c) adequate reminders (22.11.2024, 04.12.2024, 16.12.2024) and public notice (08.01.2025) preceded a fair packet-wise auction on 17.01.2025; (d) surplus was validly adjusted towards the housing loan per the general lien/contractual terms. (iii) Thereafter, when the present Petitioner approached the Branch Manager of the bank to settle the gold loan accounts, she was asked to clear all the outstanding dues including the Housing loan as well as the Gold loan and in such event only the loan accounts would be regularized by the Opposite Parties/Bank. (iv) When the paper publication of the bid dated 08.01.2025 came to the knowledge of the Petitioner, she approached the Branch Page 7 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 Manager of the bank vide letter dated 15.01.2025 requesting therein that for the time being she would pay interest charged in the gold loan accounts for regularization of the accounts. She further requested that she may be allowed 4 weeks’ time to clear the dues and settle the matter as she was under financial stringency. (v) As the loan account was subsisting till 12.01.2025 and the petitioner had a right of 30 days more to redeem her gold, representation filed by the Petitioner to that effect ought to have been considered. But, when the Petitioner approached to the bank on the date of the bid i.e. on 17.01.2025 and found that all arrangements were made for bid of the gold pledged. Hence, it was understood that the Branch Manager of the Bank/ Opposite Party No.2 with an illegal intention entrusted with the bid of the account of the Petitioner and other accounts of her relations from serial Nos.5 to 8 of the Annexure-4, did not chose to consider the representation of the Petitioner. It is also submitted that when the Petitioner and her relations appeared before the Bank for the purpose of auction got to know that 3 interested bidders were present in the Manager’s room along with one Gold Smith. Among the three proposed bidders one person was there whom the petitioner and her husband have seen him earlier in the Branch having some discussions of a land deal with the Manager of the OP Bank, who was showing the whereabouts of the proposed land about a land deal. The petitioner was not allowed Page 8 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 by the Manager of the Bank to be present during the auction proceeding in sheer violation of the principles of natural Justice. (vi) Further, it is submitted that the Loan accounts of the Petitioner, her husband and her mother-in-law were different from each other and according to the guidelines of the offline auction it is clearly stated that the “jewels relating to each loan should be auctioned separately. Whenever more than one item of jewellery is pledged, branch shall auction only as many items as necessary to clear the liability”. But, in the instant case, despite categorisation of the gold ornaments in different loan accounts the Opposite Parties/Bank auctioned all the gold ornaments jointly in violation terms and conditions of the auction and violation of principles of natural Justice. (vii) Thereafter, the Petitioner received a message from the Branch that on the same day i.e. on 17.01.2025 her loan account has been successfully closed. The Petitioner and her husband also came to know that the Branch Manager in connivance with the said bidder finalized the bid for all the four accounts/ the gold ornaments with a low price of Rs.12,15,000/- in favour of a particular person. (viii) In order to ascertain her legal rights and entitlements arising out of the auction of the pledged gold ornaments, the Petitioner approached the Opposite Parties–Bank, seeking disclosure of the details of the auction proceedings, including the identity of the successful bidder, the bid amount, and the procedure adopted in conducting the auction. However, the Branch Manager of the Bank categorically refused to divulge any such information, notwithstanding the Petitioner’s legitimate and vested right to Page 9 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 such disclosure as the original pledger and borrower. Owing to the Bank’s deliberate non-disclosure, the Petitioner was precluded from impleading the auction purchaser as a necessary and proper party to the present Writ Petition, thereby suffering serious procedural disadvantage. (ix) It is, however, submitted that upon obtaining the statement of the gold loan account from the Bank, the Petitioner discovered that the entire outstanding amount of Rs. 87,314.66 pertaining to the said loan account had been fully adjusted, and the account stood closed. This fact, borne out from the Bank’s own records, unequivocally establishes that the loan liability was extinguished, and that the auction was conducted in a manner lacking transparency and procedural propriety, thereby causing grave prejudice to the Petitioner’s proprietary and constitutional rights in respect of the pledged gold ornaments (x) It is contended that the Opposite Parties–Bank, without assigning any valid or lawful reason, have arbitrarily merged the Petitioner’s distinct loan accounts, namely the gold loan account, housing loan account, and credit card account, and have jointly declared them as Non-Performing Assets (NPA). Such action, being contrary to the terms of individual loan agreements and in derogation of established banking norms, is wholly illegal, unreasonable, and unsustainable in law. (xi) It is further submitted that the Opposite Parties–Bank, vide letter dated 18.01.2025, intimated the Petitioner that the balance amount realized from the auction of the pledged gold ornaments had been Page 10 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 adjusted and retained in a “suspense account”. The said act of the Bank amounts to gross illegality and procedural impropriety, inasmuch as the proceeds from the auction of a secured asset are required to be appropriated strictly in accordance with the provisions of law and after due intimation to the borrower. The unauthorized retention of sale proceeds in a suspense account, without transparency or justification, constitutes a serious violation of fiduciary duty and banking discipline, thereby vitiating the entire process of recovery and adjustment undertaken by the Opposite Parties–Bank. (xii) It is further contended that the Opposite Parties–Bank have committed gross illegality and procedural impropriety in conducting the auction of the Petitioner’s pledged gold ornaments. The said auction was carried out in utter disregard of the terms and conditions expressly stipulated in the sanction letter governing the gold loan account, as well as the mandatory procedural safeguards governing such recovery actions. (xiii) It is specifically submitted that the Opposite Parties–Bank initiated the auction proceedings even prior to the expiry of the statutory thirty (30) days’ notice period required to be afforded to the borrower, and well before the completion of the stipulated loan tenure. Such premature initiation of auction proceedings, without adherence to due process, constitutes a flagrant violation of the Bank’s own contractual obligations and regulatory norms. Consequently, the auction conducted by the Opposite Parties– Page 11 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02
Decision
(viii) In view of the above said Master Circular issued by the RBI, the gold loan declared as NPA on 21.11. 2024.As the housing loan became NPA on the same date after the gold loan account was declared as NPA, the Opposite Parties/ Bank issued the first reminder on 22.11.2024 to the Petitioner to clear the outstanding dues against the gold loan amounting to Rs.80,151/-. Again, on04.12.2024, the Opposite Parties/ Bank issued the second reminder to the Petitioner to clear the dues within 15 days and also requested the Petitioner to come for a discussion with the Opposite Parties/ Bank, if she has any difficulties. (ix) It is submitted that despite issuance of the second reminder notice, the Petitioner failed to respond or regularize the loan account. Consequently, the Opposite Parties–Bank issued an Auction-cum-Final Reminder Letter dated 16.12.2024, wherein the Petitioner was called upon to clear the outstanding dues within fifteen (15) days from the date of the notice. It was further stated therein that in the event of non-payment within the stipulated period, the Bank would be constrained to initiate the sale of the pledged gold ornaments by conducting an auction in accordance with due procedure of law, and the sale proceeds would be appropriated towards liquidation of the outstanding loan amount. (x) It is further submitted that the Opposite Parties–Bank, upon classification of the Petitioner’s housing loan account as a Non- Page 15 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 Performing Asset (NPA) on 21.11.2024, issued a demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) on 25.11.2024, calling upon the Petitioner to discharge the entire outstanding dues within the statutory period prescribed thereunder. (xi) It is submitted that upon the Petitioner’s failure to respond to the three reminder letters issued by the Opposite Parties–Bank under the Annexure–2 series, the Bank proceeded to issue a public notice of auction through a newspaper publication dated 08.01.2025, notifying that the auction of the pledged gold ornaments would be conducted on 17.01.2025. The said publication, annexed as Annexure–4, was carried in the daily Odia Newspaper “The Samaj.” It is further submitted that the Branch Manager of the concerned branch personally intimated the Petitioner of the said publication and proposed auction through a WhatsApp message, thereby informing her of the scheduled auction proceedings. (xii) It is submitted that following the publication of the auction notice in the newspaper, the Petitioner, by letter dated 15.01.2025, requested the Opposite Parties–Bank to grant four weeks’ time to enable her to clear the overdue amount and regularize her loan accounts, further praying for deferment of the proposed auction of the pledged gold ornaments. However, in accordance with the Master Circulars and guidelines issued by the Reserve Bank of India (RBI) governing asset classification and recovery Page 16 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 procedures, the Petitioner was informed that all her loan accounts had already been classified as Non-Performing Assets (NPA) due to continuous default in repayment of dues under the housing loan account. (xiii) Consequently, the Bank intimated that unless all outstanding liabilities under all linked accounts were cleared in entirety, it would unable to suspend or defer the recovery process or the scheduled auction. It is therefore submitted that the Opposite Parties–Bank have acted in strict compliance with the applicable RBI guidelines, and have adhered to all procedural and statutory mandates, thereby proceeding strictly in accordance with due process of law. (xiv) It is submitted that, upon the request of the Petitioner, the Opposite Parties–Bank permitted one representative to participate in the auction proceedings on her behalf. During the course of the auction, the said representative placed bids for the purpose of escalating the bid value, without personally inspecting the pledged gold ornaments, and remained in telephonic communication with the Petitioner. This conduct prompted objections from other participating bidders, who questioned the fairness of such participation. In order to ensure transparency and fairness in the auction process, the Opposite Parties–Bank directed the said representative to continue bidding only if he genuinely intended to purchase the ornaments. Subsequently, another bidder joined the proceedings, and the Bank conducted the auction on a packet-wise basis, pursuant to which four Page 17 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 packets of gold ornaments were sold to three successful bidders through competitive bidding, in accordance with the Bank’s auction procedures and regulatory norms. (xv) It is submitted that the auction proceedings were conducted by the Opposite Parties–Bank after segregating the pledged gold ornaments into four distinct packets, corresponding to the respective individual gold loan accounts. The gold packet pledged by the Petitioner was sold for a consideration of Rs. 1.45 lakhs, whereas the gold packet pledged by her mother-in-law, Smt. Jyotshna Rani Das, fetched a sale value of Rs. 4 lakhs. Likewise, the two gold packets pledged by the Petitioner’s husband, Shri Samarjit Das, were sold for Rs. 4.90 lakhs and Rs.1.80 lakhs, respectively. Each gold packet was auctioned separately, and the sale was concluded in favour of the highest bidder for each lot through a process of competitive bidding conducted under the supervision of the Bank authorities. (xvi) Upon completion of the auction, the Opposite Parties–Bank issued individual notices of auction proceedings to the Petitioner, setting out the respective auction amounts realized and the details of appropriation of the sale proceeds towards liquidation of the outstanding dues under each corresponding gold loan account. After such adjustment and appropriation, the respective gold loan accounts were treated as fully settled and closed upon realization of the auction proceeds in accordance with the Bank’s internal procedures and regulatory norms. Page 18 of 24 (xvii) It is submitted that, upon adjustment of the outstanding dues Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 in the respective gold loan accounts, the surplus amount realized from the auction proceeds was appropriated towards the Petitioner’s housing loan account, strictly in accordance with the terms and conditions contained in the application-cum-letter of pledge dated 12.01.2024. The said adjustment was carried out in conformity with the contractual provisions authorizing the Bank to utilize the proceeds of pledged security towards any other liability of the borrower. Accordingly, it is submitted that there has been no illegality, procedural irregularity, or violation of the principles of natural justice, as alleged by the Petitioner. The actions of the Opposite Parties–Bank were undertaken strictly in accordance with law, the governing contract, and the regulatory framework. (xviii) It is further contended that, prior to the auction held on 17.01.2025, the Opposite Parties–Bank had duly issued three separate reminder and demand notices, dated 22.11.2024, 04.12.2024, and 16.12.2024, in addition to the notice under Section 13(2) of the SARFAESI Act, 2002. These communications were dispatched well before the scheduled auction date and were duly served upon the Petitioner. Hence, the allegation that no adequate notice or opportunity was provided to the Petitioner prior to the auction is baseless and untenable. The Petitioner was afforded sufficient opportunity to regularize the loan account or respond to the notices, yet she wilfully failed to do so. Her silence and Page 19 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 inaction clearly demonstrate negligence and deliberate disregard of her obligations. It is, therefore, submitted that the Petitioner has approached this Court with unclean hands, having suppressed material facts, and that her allegations of procedural impropriety or lack of notice are wholly devoid of merit. (xix) In such premises, he contended that the Writ Petition filed by the Petitioner may be dismissed. IV. COURT’S REASONING AND ANALYSIS: 5. Heard learned counsel for the parties and perused the materials placed on record. The points for consideration for the parties are as follows: a) Whether, on these facts and the governing documents, the Bank could auction the Petitioner’s pledged gold on 17.01.2025—five days after contractual maturity—without affording a 30-day redemption opportunity? b) Whether the auction process satisfied the requirements of transparency, fairness and notice. (ii) Whether the post-sale appropriation of surplus towards the housing-loan liability can be sustained? 6. As per Section 176, Indian Contract Act, 1872, a pledge confers on the pawnee a statutory right of sale upon default after giving reasonable notice to the pawnor Even where parties stipulate facilitative terms, courts have insisted on a real and effective opportunity to redeem before irreversible sale which is amply articulated by the Apex Court Page 20 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 17-Oct-2025 18:58:02 in Lallan Prasad v. Rahmat Ali1and discusses on the consequences of pledge and duties of Pawnee and in Syndicate Bank v. Vijay Kumar2 the Apex Court discusses the scope of banker’s general lien vis-(cid:224)-vis contractual terms. 7. The sanction letter here (as pleaded) stipulates (i) repayment within 12 months; and (ii) safe-keeping charges apply after 30 days from expiry if jewels are not redeemed, which necessarily contemplates a 30-day post-maturity redemption window. The Bank’s own terms, therefore, recognise that sale is not the immediate next step on the date of maturity; rather, redemption is expected for 30 days post-maturity, after which consequences ensue. 8. The gold account matured on 12.01.2025. The auction was held on 17.01.2025. Irrespective of earlier reminders, the Bank could not, consistent with its own terms and Section 176, extinguish the Petitioner’s right of redemption within the 30-day window. The Petitioner’s representation dated 15.01.2025 seeking four weeks and offering to pay interest only underscores that an active attempt to redeem was afoot. Proceeding to sale two days later was precipitous. 9. The Bank relied on borrower-wise NPA classification (as per RBI Master Circular, 01.07.2014, para 4.2.7). That norm governs asset classification and provisioning; it does not by itself authorise accelerated realisation of a distinct, fully secured, time-bound pledge contrary to a contractually assured redemption period. Regulatory prudence cannot override contractual and statutory minima of notice