M/S Ace Fab Overseas A Partnership Firm Thru. Partner Ajay Singh And Another v. Debts Recovery Appellate Tribunal Allahabad Thru. Registrar And 4 Others

respondent no.4- Union Bank of India as well as Shri Tanmay Sagar, learned counsel appearing for the auction purchaser and perused the material available on record.

2. The present petition has been filed by the petitioners challenging an order dated 03.09.2025 passed by the opposite party no.1- Debts Recovery Appellate Tribunal, Allahabad and the order dated 21.04.2025 passed by the opposite party no.2- Debts Recovery Tribunal, Lucknow.

3. The facts that emerged from the pleadings are that, the petitioners had taken financial facilities from the respondent- Bank and security interest was also made over the properties which are subject matter of sale. It also appears from the record that, earlier than proceedings under the SARFAESI Act, respondent- Bank had proceeded against the petitioner by filing an O.A. for recovery before the D.R.T., Delhi being O.A. No. 558 of 2017, the said proceedings culminated in the judgment dated 2 WRIC No. 8970 of 2025

25.02.2021. The said order was challenged by the petitioner by preferring an Appeal No. 165 of 2022 in which, an interim order came to be passed on 29.05.2024 staying the taking of possession of the properties involved in the matter till the next date of hearing i.e. 21.08.2024. It also placed on record that apart from taking of proceedings under the D.R.T. Act, proceedings were also initiated under the SARFAESI Act. The said proceedings were challenged by the petitioner by filing Securitization Application No. 212 of 2018. During the pendency of the said proceedings, steps were taken by the parties for restructuring agreement and all the involved Credit Limits of the petitioners were restructured, however, it is alleged by the respondent- Bank that the petitioner defaulted in honouring the said restructuring. As, the respondents were proceeding to take possession of the property, I.A. No. 1139 of 2025 was preferred seeking an interim direction in the S.A. No. 212 of 2018 restraining the respondent- Bank from taking the physical possession of the property. The said application came to be disposed of on 21.04.2025. The said order is on record as Annexure No.3 in which, the D.R.T. Lucknow dismissed the application mainly on the ground that a proposal for restructuring the amount was not honoured by the petitioners. It was also observed that the sale notice has already been published and the right of redemption of the applicant, stood extinguished, on that ground alone, the interim application was rejected and the matter was directed to be posted for hearing on the main S.A. on 25.08.2025. Assailing the said order, the petitioners preferred an appeal before the D.R.A.T., Allahabad in which, initially, interim order was passed on

01.05.2025, subsequently, dates were fixed, however, ultimately the D.R.A.T., Allahabad passed an order on 03.09.2025, dismissing the appeal observing that on the previous occasion, the counsel for the respondent- Bank had submitted that no possession is being taken by the bank and if, possession is sought to be taken, 15 days' notice shall be given, the appellate tribunal also held that in case, any action is taken by the respondent- bank, it would be open to the petitioner to approach the D.R.T. once again. Challenging the said order, as well as the order dated

21.04.2025 passed by the D.R.T., Lucknow, petitioners have approached this Court. 3 WRIC No. 8970 of 2025

4. Learned counsel for the petitioners argues that the issues to be considered by the D.R.T. in the I.A. moved was whether the sale was justified or not, he further argues that the relief with regard to the restraining the bank from taking possession, ought to have been considered in the light of the order passed by the D.R.A.T., Delhi, which was subsisting on the date when the application was disposed of i.e.

21.04.2025.

5. It is further argued that none of the grounds, raised were considered by the D.R.T., Lucknow especially, the allegation with regard to, the property is being sold on the basis of the evaluation arrived at in the year 2018 and, the property being sold at evaluation even less than, the valuation as recorded by the respondent- bank itself.

6. He further argues that the D.R.T. has erred in rejecting the application by observing that arrived at redemption should close on the issuance of the sale notice. He next argues that, all the issues with regard to not following the mandatory provisions contained in Section 13(4) of the SARFAESI Act read with, the applicable rules, ought to have been considered while deciding the interim application which have not been done.

7. It is also argued that even the D.R.A.T, Allahabad has not considered any of contentions of the petitioners on its merits and has proceeded to decide the appeal in a casual manner. In the light of the said arguments, it is argued that both the orders cannot be sustained and are liable to be quashed.

8. Counsel for the respondent- Bank, on the other hand, argues that the petitioners are guilty of giving a proposal for restruction, which was duly accepted by the bank and not honoured by the petitioners. It is further argued that the proceedings in which, the order has been passed by the DRAT, Delhi, emanate from proceedings initiated under the D.R.T. Act whereas, the present steps being taken against the petitioners, arrived out of their right to proceed against the security interest under the SARFAESI Act.

9. It is argued that both the Acts operate on different spheres, the first 4 WRIC No. 8970 of 2025 being the D.R.T. and, gives the right seek a decree against the borrower and to execute the same in accordance with the said provision, the second being, the right to enforce the security interest and the two provisions operates distinctly and separately. He, however, admits that the order passed by the D.R.A.T., Delhi, has not been vacated so far.

10. It is further argued that even the D.R.A.T. Allahabad had given a liberty to the petitioners to approach the D.R.T. Lucknow in the event, any steps are taken for taking possession and as such, the petition is liable to be dismissed.

11. Counsel for the auction purchaser, adopts the arguments of counsel for the respondent- bank and further, argues that once, the petitioner had defaulted in paying the structured amounts, it is were against him and, therefore, the petition is liable to be dismissed.

12. It is further argued that even before the D.R.A.T., Allahabad, no amounts were deposited despite, the petitioners filing an application for waiver of the deposit.

13. It is further stated by the counsel for the respondent as the auction purchaser that he do not want to file counter affidavit and the matter may be decided without counter affidavit.

14. In the light of the submission made by the counsels for the respective parties, as recorded above, it is settled that the order passed by the D.R.A.T., Delhi, specifically restrained the respondent- bank from taking possession. The said order, has not been vacated by the D.R.A.T., Delhi, in the light of the said provisions, although, the bank had a right to take steps for enforcing the security interest under the SARFAESI Act, however, the actual act of taking physical possession, cannot be done till the order of the D.R.A.T., Delhi is in operate. It is no doubt true that both the Acts operates in different spheres, however, the principle of comity of courts, demands that the proceedings should not be taken till the time, an order passed by the appellate forum is vacated. It is also noticed that the D.R.T., Lucknow, has erred in rejecting the application, solely on the ground that sale notice had been issued. Merely because, a sale notice is issued, the proceedings cannot be said to be not maintainable as, the 5 WRIC No. 8970 of 2025 securitization application under section 17 of the SARFAESI Act, is against the measures taken by the respondent-bank under Section 13(4) of the SARFAESI Act and is incumbent for the D.R.T. to take same into consideration while granting or rejecting the interim application, which has not been done in the order passed by the D.R.T., Lucknow in its order dated 21.04.2025. It was incumbent upon the D.R.A.T., Allahabad to have gone into the said questions prior to disposing of the appeal and merely by observing that it will open to the petitioner to approach the D.R.T., Lucknow once again in the event, any fresh action is taken for taking possession, would not be a substitute for the appellate court deciding the issues that were raised by the petitioner.

15. The fact remains that even if the permission granted by the D.R.A.T., Allahabad in its impugned order, is considered to be an option available to the petitioner, the same would not suffice the requirement of satisfying whether, the action of the respondent- bank taken against the petitioners are justified or not, as the D.R.T. had already taken a view in its order dated 21.04.2025, it was incumbent upon the D.R.A.T., Allahabad to have either set-aside the said order or affirmed the same which has not been done.

16. For all the reasons recorded above, the order dated 03.09.2025 and the order dated 21.04.2025 cannot be sustained and are quashed.

17. The matter is remanded to the D.R.T., Lucknow to pass fresh order on the application for interim relief.

18. It is specifically directed that while doing so, the D.R.T., Lucknow will consider, all the grounds raised by the petitioners with regard to, the errors in the process of sale as may be raised by the petitioners. It will also be incumbent upon the D.R.T., Lucknow to take into consideration the order passed by the D.R.A.T., Delhi and its affect on the action of the respondent- bank in trying to take possession despite the said order.

19. Till the fresh orders, as directed above, are passed, no action for taking physical possession shall be taken by the respondent- bank.

20. Needless to add that the D.R.T., Lucknow will not give any 6 WRIC No. 8970 of 2025 unnecessary adjournments to any of the parties and would endeavour to decide, the interim application within one month and the S.A. itself preferably within a period of three months.

21. Petition stands disposed of with the aforesaid observations. September 22, 2025 Praveen (Pankaj Bhatia,J.) PRAVEEN KUMAR High Court of Judicature at Allahabad, Lucknow Bench

respondent no.4- Union Bank of India as well as Shri Tanmay Sagar, learned counsel appearing for the auction purchaser and perused the material available on record.

2. The present petition has been filed by the petitioners challenging an order dated 03.09.2025 passed by the opposite party no.1- Debts Recovery Appellate Tribunal, Allahabad and the order dated 21.04.2025 passed by the opposite party no.2- Debts Recovery Tribunal, Lucknow.

3. The facts that emerged from the pleadings are that, the petitioners had taken financial facilities from the respondent- Bank and security interest was also made over the properties which are subject matter of sale. It also appears from the record that, earlier than proceedings under the SARFAESI Act, respondent- Bank had proceeded against the petitioner by filing an O.A. for recovery before the D.R.T., Delhi being O.A. No. 558 of 2017, the said proceedings culminated in the judgment dated 2 WRIC No. 8970 of 2025

25.02.2021. The said order was challenged by the petitioner by preferring an Appeal No. 165 of 2022 in which, an interim order came to be passed on 29.05.2024 staying the taking of possession of the properties involved in the matter till the next date of hearing i.e. 21.08.2024. It also placed on record that apart from taking of proceedings under the D.R.T. Act, proceedings were also initiated under the SARFAESI Act. The said proceedings were challenged by the petitioner by filing Securitization Application No. 212 of 2018. During the pendency of the said proceedings, steps were taken by the parties for restructuring agreement and all the involved Credit Limits of the petitioners were restructured, however, it is alleged by the respondent- Bank that the petitioner defaulted in honouring the said restructuring. As, the respondents were proceeding to take possession of the property, I.A. No. 1139 of 2025 was preferred seeking an interim direction in the S.A. No. 212 of 2018 restraining the respondent- Bank from taking the physical possession of the property. The said application came to be disposed of on 21.04.2025. The said order is on record as Annexure No.3 in which, the D.R.T. Lucknow dismissed the application mainly on the ground that a proposal for restructuring the amount was not honoured by the petitioners. It was also observed that the sale notice has already been published and the right of redemption of the applicant, stood extinguished, on that ground alone, the interim application was rejected and the matter was directed to be posted for hearing on the main S.A. on 25.08.2025. Assailing the said order, the petitioners preferred an appeal before the D.R.A.T., Allahabad in which, initially, interim order was passed on

01.05.2025, subsequently, dates were fixed, however, ultimately the D.R.A.T., Allahabad passed an order on 03.09.2025, dismissing the appeal observing that on the previous occasion, the counsel for the respondent- Bank had submitted that no possession is being taken by the bank and if, possession is sought to be taken, 15 days' notice shall be given, the appellate tribunal also held that in case, any action is taken by the respondent- bank, it would be open to the petitioner to approach the D.R.T. once again. Challenging the said order, as well as the order dated

21.04.2025 passed by the D.R.T., Lucknow, petitioners have approached this Court. 3 WRIC No. 8970 of 2025

4. Learned counsel for the petitioners argues that the issues to be considered by the D.R.T. in the I.A. moved was whether the sale was justified or not, he further argues that the relief with regard to the restraining the bank from taking possession, ought to have been considered in the light of the order passed by the D.R.A.T., Delhi, which was subsisting on the date when the application was disposed of i.e.

21.04.2025.

5. It is further argued that none of the grounds, raised were considered by the D.R.T., Lucknow especially, the allegation with regard to, the property is being sold on the basis of the evaluation arrived at in the year 2018 and, the property being sold at evaluation even less than, the valuation as recorded by the respondent- bank itself.

6. He further argues that the D.R.T. has erred in rejecting the application by observing that arrived at redemption should close on the issuance of the sale notice. He next argues that, all the issues with regard to not following the mandatory provisions contained in Section 13(4) of the SARFAESI Act read with, the applicable rules, ought to have been considered while deciding the interim application which have not been done.

7. It is also argued that even the D.R.A.T, Allahabad has not considered any of contentions of the petitioners on its merits and has proceeded to decide the appeal in a casual manner. In the light of the said arguments, it is argued that both the orders cannot be sustained and are liable to be quashed.

8. Counsel for the respondent- Bank, on the other hand, argues that the petitioners are guilty of giving a proposal for restruction, which was duly accepted by the bank and not honoured by the petitioners. It is further argued that the proceedings in which, the order has been passed by the DRAT, Delhi, emanate from proceedings initiated under the D.R.T. Act whereas, the present steps being taken against the petitioners, arrived out of their right to proceed against the security interest under the SARFAESI Act.

9. It is argued that both the Acts operate on different spheres, the first 4 WRIC No. 8970 of 2025 being the D.R.T. and, gives the right seek a decree against the borrower and to execute the same in accordance with the said provision, the second being, the right to enforce the security interest and the two provisions operates distinctly and separately. He, however, admits that the order passed by the D.R.A.T., Delhi, has not been vacated so far.

10. It is further argued that even the D.R.A.T. Allahabad had given a liberty to the petitioners to approach the D.R.T. Lucknow in the event, any steps are taken for taking possession and as such, the petition is liable to be dismissed.

11. Counsel for the auction purchaser, adopts the arguments of counsel for the respondent- bank and further, argues that once, the petitioner had defaulted in paying the structured amounts, it is were against him and, therefore, the petition is liable to be dismissed.

12. It is further argued that even before the D.R.A.T., Allahabad, no amounts were deposited despite, the petitioners filing an application for waiver of the deposit.

13. It is further stated by the counsel for the respondent as the auction purchaser that he do not want to file counter affidavit and the matter may be decided without counter affidavit.

14. In the light of the submission made by the counsels for the respective parties, as recorded above, it is settled that the order passed by the D.R.A.T., Delhi, specifically restrained the respondent- bank from taking possession. The said order, has not been vacated by the D.R.A.T., Delhi, in the light of the said provisions, although, the bank had a right to take steps for enforcing the security interest under the SARFAESI Act, however, the actual act of taking physical possession, cannot be done till the order of the D.R.A.T., Delhi is in operate. It is no doubt true that both the Acts operates in different spheres, however, the principle of comity of courts, demands that the proceedings should not be taken till the time, an order passed by the appellate forum is vacated. It is also noticed that the D.R.T., Lucknow, has erred in rejecting the application, solely on the ground that sale notice had been issued. Merely because, a sale notice is issued, the proceedings cannot be said to be not maintainable as, the 5 WRIC No. 8970 of 2025 securitization application under section 17 of the SARFAESI Act, is against the measures taken by the respondent-bank under Section 13(4) of the SARFAESI Act and is incumbent for the D.R.T. to take same into consideration while granting or rejecting the interim application, which has not been done in the order passed by the D.R.T., Lucknow in its order dated 21.04.2025. It was incumbent upon the D.R.A.T., Allahabad to have gone into the said questions prior to disposing of the appeal and merely by observing that it will open to the petitioner to approach the D.R.T., Lucknow once again in the event, any fresh action is taken for taking possession, would not be a substitute for the appellate court deciding the issues that were raised by the petitioner.

15. The fact remains that even if the permission granted by the D.R.A.T., Allahabad in its impugned order, is considered to be an option available to the petitioner, the same would not suffice the requirement of satisfying whether, the action of the respondent- bank taken against the petitioners are justified or not, as the D.R.T. had already taken a view in its order dated 21.04.2025, it was incumbent upon the D.R.A.T., Allahabad to have either set-aside the said order or affirmed the same which has not been done.

16. For all the reasons recorded above, the order dated 03.09.2025 and the order dated 21.04.2025 cannot be sustained and are quashed.

17. The matter is remanded to the D.R.T., Lucknow to pass fresh order on the application for interim relief.

18. It is specifically directed that while doing so, the D.R.T., Lucknow will consider, all the grounds raised by the petitioners with regard to, the errors in the process of sale as may be raised by the petitioners. It will also be incumbent upon the D.R.T., Lucknow to take into consideration the order passed by the D.R.A.T., Delhi and its affect on the action of the respondent- bank in trying to take possession despite the said order.

19. Till the fresh orders, as directed above, are passed, no action for taking physical possession shall be taken by the respondent- bank.

20. Needless to add that the D.R.T., Lucknow will not give any 6 WRIC No. 8970 of 2025 unnecessary adjournments to any of the parties and would endeavour to decide, the interim application within one month and the S.A. itself preferably within a period of three months.

21. Petition stands disposed of with the aforesaid observations. September 22, 2025 Praveen (Pankaj Bhatia,J.) PRAVEEN KUMAR High Court of Judicature at Allahabad, Lucknow Bench