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IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
NARENDRA KUMAR VYAS, J.
Ajay Upadhayay S/o Shri Gajraj Prasad Upadhyay – Appellant
Versus
UCO Bank through Authorized Officer, Nehru Nagar Branch, Bhilai – Respondent
WPC No. 156 of 2019
Decided On : 30-10-2025
The chronological timeline of events, based on the provided legal document, is as follows:
In 2000, the borrower and his guarantor initiated a loan with UCO Bank, which was later increased in 2003. The borrower defaulted on repayment, leading the bank to classify the account as non-performing in July 2007 (!) .
On July 6, 2007, the bank issued a notice under Section 13(2) of the SARFAESI Act, demanding full repayment of the dues from the borrower and guarantor. Despite this, they failed to discharge their liabilities (!) .
The bank took symbolic possession of the mortgaged property on December 3, 2007, after the borrower and guarantor did not respond or make payments (!) (!) .
A notice of possession was published on December 5, 2007, informing the public of the possession of the property. The borrower and guarantor did not object or challenge this action (!) .
The auction of the secured assets was scheduled for June 24, 2008. Multiple bidders participated, with the petitioner being the highest bidder, and the bid amount was deposited accordingly (!) .
The petitioner received the sale certificate in March 2009, and the sale was confirmed. The property was registered in the petitioner’s name on March 29, 2009 (!) .
The borrower challenged the proceedings by filing an appeal under Section 17 of the SARFAESI Act, which was initially allowed and later set aside by the appellate tribunal due to procedural irregularities, including improper notices and failure to consider the borrower’s representations (!) (!) .
The higher courts reviewed the case, emphasizing the importance of strict adherence to statutory requirements, and found that procedural lapses, such as failure to serve proper notices and consider objections, prejudiced the borrower’s rights, rendering the auction invalid (!) (!) (!) .
Ultimately, the courts held that the procedural violations were substantial enough to invalidate the auction proceedings. The proceedings were set aside, and the claim of the petitioner was rejected (!) (!) (!) .
The final order was issued in favor of the respondent, affirming the invalidity of the auction due to non-compliance with statutory provisions, and the case was closed with the petitioner’s claim dismissed (!) .
This timeline summarizes the key dates and events from the initial loan, default, procedural notices, auction process, legal challenges, and the final judicial decision.
| Table of Content |
|---|
| 1. petition filed under article 226 regarding drat's order. (Para 1 , 3) |
| 2. petitioner's arguments against drat's findings. (Para 4 , 5 , 6) |
| 3. respondent arguments supporting drat’s decision. (Para 7 , 8 , 9) |
| 4. court's analysis of provisions under sarfaesi act. (Para 12 , 13 , 14 , 15 , 16) |
| 5. consideration of procedural lapses and prejudice caused. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23) |
| 6. final order dismissing the petition. (Para 24 , 25 , 26) |
ORDER :
1. This petition has been filed by the petitioner/auction purchaser under Article 226 of the Constitution of India assailing the order dated 20.07.2018 passed by Debts Recovery Appellate Tribunal, Allahabad (for short “the DRAT”) in Appeal No. R-75/2011 whereby the appeal filed by the petitioner has been dismissed against the order dated 29.03.2011 passed by the Debts Recovery Tribunal, Jabalpur (for short “the DRT”).
2. This Court has called upon the records of the DRAT, Allahabad as well as the respondent/Bank for perusal of this Court.
3. The brief facts, as reflected from writ petition are as under:-
(A) Respondent No. 4/borrower has set-up a Computer Equipment Sales and Service business in the rented premises/Shop in the year 2000 titled as M/s Future Vision and to start the same, he has taken loan from UCO Bank, Nehru Nagar Branch, Bhilai wherein his mother namely Shyama Mehta stood as guarantor who had given her immovable property as mortgaged with the Bank which is situated at 48/6, Nehru Nagar West Bhilai, District Durg. The Bank after completion of all requisite formalities and executing necessary documents, sanctioned the cash credit limit hypothecation facility/loan of Rs 3.50 lacs in the year 2000 which has been extended to Rs. 7.50 lacs in the year 2003.
(B) As per the credit norms fixed by the Reserve Bank of India, the Bank has insured the said cash credit limit under hypothecation of the stock of respondent No. 4 for which premium has been debited from respondent No. 4/borrower. Due to default in payment, the cash credit facilities given by the Bank to respondent No. 4/borrower, has been declared Non-Performing Assets (NPA) on 06.07.2007 as per the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SARFAESI Act, 2002 ”).
(C) On 06.07.2007, a notice under Section 13 (2) of the SARFAESI Act, 2002 was issued to respondent No. 4 as well as guarantor/Smt. Shyama Mehta who is mother of respondent No. 4 calling upon them to discharge in full his/her liabilities to the secured creditor/respondent bank and to repay the due amount of Rs. 7,57,089/- as on 31.03.2007 with future interest and incidental expenses cost within 60 days, failing which, the Bank will proceed under Section 13(4) of the SARFAESI Act, 2002. Despite service of notice, respondent No. 4 and guarantor failed to repay the due amount to the respondent Bank, as such the respondent Bank has taken symbolic possession of the mortgaged property on 03.12.2007.
(D) On 5.12.2007, the fact regarding taking symbolic possession of the mortgage property was published in the newspaper, despite the same, respondent No. 4 and guarantor did not discharge their liabilities by repaying the dues, therefore, the respondent Bank was constrained to put the secured assets for auction.
(E) Respondent No. 4 instead of discharging his liabilities and repaying the amount due to the respondent Bank, moved an application on 18.01.2008 before the DRT under Section 17 of the SARFAESI Act, 2002 which was registered as SA No. 16 of 2008. There was no interim order operating in favour of respondent No. 4, therefore, the respondent Bank continued with the auction proceedings of residential house/secured assets on 24.06.2008.
(F) On 24.06.2008, a public auction was held in which total seven persons including the petitioner had participated in the auction proceeding. The petitioner was the highest bidder, as such his bid was accepted and auction was duly
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