The court emphasized minimal interference in bank loan matters under SARFAESI Act, ruling against parallel high court and lower court proceedings.

Order

23/09/2025 By way of filing the present writ petition under Article 226 of the Constitution of India, the petitioners have prayed for the following reliefs:-

S.B. Civil Writ Petition No. 17148/2024:-

“It is, therefore, most respectfully prayed that the by an appropriate Writ, order or direction the Hon’ble Court be pleased to:-

A]. Quash and set aside the impugn auction notice dated 13.08.2024 (Annexure-9) issued by the Non-Petitioner no.2 being without jurisdiction; and B]. Quash and set aside the proceedings under Section

14 of the SARFAESI Act, 2002 pending before the Non- Petitioner no.1 in case No.35/2022 (Annexure-8) and

38/2022 (Annexure-6)

c]. The non-petitioner no. 2 be directed to adjust the outstanding Loan amount from the Insurance Policy taken out in the name of the father of the Petitioner, and D]. Any other appropriate order or direction as may deem just and proper be passed in favour of the Petitioner.

The humble Petitioner’s ever prays for.”

S.B. Civil Writ Petition No. 4407/2025:-

“It is, therefore, most respectfully and humble prayed that by an appropriate writ, order or direction:

I. The present writ petition may kindly be allowed. II. The possession of the secured/mortgaged asset in question which has been forcibly taken by respondent Nos.1 and 2 may be directed to be restored back to the petitioner- Bank by issue appropriate direction to respondents Nos.3 and 4.

III. Heavy cost may be ordered against the respondent Nos.1 and 2 in the facts and circumstances of the case and the said cost may be directed to be given to the petitioner-

Bank.

IV. Any other order of direction, which this Hon'ble Court deems fit and proper in the facts and circumstances of the present case may kindly be passed in favour of the humble petitioner.”

2. Shri Vijay Purohit, learned counsel appearing for AU Small Finance Bank (A.U. Bank) submitted that the borrower Shri Radhe Shyam Choudhary took loan of Rs.42,00,000/- on 11.03.2021 for his business in the name of M/s Swami Motors. In order to secure the business loan, the residential plot situated in Pratapgarh belonging to the borrower admeasuring 331.33 Sq. yards was mortgaged with the A.U. Bank. Amidst Covid-19, Shri Radhe Shyam Choudhary passed away on 14.05.2021. The wife and Smt. Sapna Choudhary insisted that the outstanding loan amount may be recovered from the life insurance policy claimed to be received by them upon death of Shri Radhe Shyam Choudhary from Future General Life Insurance as the premium against the policy was deposited by Late Shri Radhe Shyam Choudhary.

3. Learned counsel submitted that as a matter of fact, the life insurance policy remain inactive as the borrower Shri Radhe Shyam Choudhary never appeared for medical examination. Be that as it may, he submitted that Smt. Sheetal Choudhary has already filed a case against the insurance company before the Consumer Court which is pending adjudication.

4. Learned counsel submitted that when Smt. Sheetal Choudhary failed to repay the loan amount as per the terms and conditions of the loan agreement, the A.U. Bank issued a demand notice as per the provisions of SARFAESI Act calling upon her to clear the outstanding loan amount but of no avail. He submitted that in these circumstances, the A.U. Bank moved an application under Section 14 of the SARFAESI Act.

5. Learned counsel submitted that actions taken by the A.U. Bank for recovery of outstanding loan amount were challenged before Debts Recovery Tribunal, Jaipur by way of filing S.A./539/2024 titled as “Sheetal Choudhary vs. A.U. Small Finance Bank Ltd.”. Learned Debts Recovery Tribunal, Jaipur on 25.09.2024 after hearing the parties on stay