Case Background
The case was filed as Civil Writ Jurisdiction Case No. 727 of 2022 before the Patna High Court. The petitioner was a borrower from Darbhanga, Bihar, who had taken two loan facilities from Punjab National Bank: a housing term loan and an overdraft against property.
The loans were identified in the writ petition as loan account numbers 240700NC000014 03 (T/L Housing Loan) and 24070099 00000131 (ODIP). At some point, the accounts became irregular and the bank initiated recovery proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
The petitioner received a common notice under Section 13(2) of the SARFAESI Act. Later, on 27.12.2021, an authorized officer of Punjab National Bank issued and published a notice taking symbolic possession of the secured assets. This notice was annexed in the writ petition as Annexure-8.
The borrower approached the Patna High Court challenging these actions. He did so at a time when the Debt Recovery Tribunal (DRT), which normally hears challenges against SARFAESI measures, was not functional due to non-appointment of the Presiding Officer. The Court specifically noted this reason for entertaining the writ petition.
What the Court Examined and Decided
The petitioner sought multiple reliefs through the writ petition. First, he asked for a writ of certiorari to quash or set aside the common notice issued under Section 13(2) of the SARFAESI Act. This is the statutory notice through which a secured creditor demands repayment from a defaulting borrower before taking possession of the secured asset.
Secondly, he prayed for another writ of certiorari to quash the notice dated 27.12.2021 issued by the authorized officer of Punjab National Bank under the SARFAESI Act. According to the petitioner, through this notice, respondents, especially respondent numbers 9 to 12 (officers of the bank), had mechanically and arbitrarily taken symbolic possession of his assets.
The petitioner alleged that the respondent authorities did not follow the mandatory rules and regulations under the SARFAESI framework. He further claimed that their actions amounted to violation of his fundamental rights under Articles 14, 19 and 21 of the Constitution of India.
Thirdly, the petitioner sought a writ of mandamus directing respondent numbers 9 to 12 to regularize both the loan accounts upon his depositing the outstanding amount. Effectively, he wanted an opportunity to clear dues and have the loans treated as standard rather than non-performing assets.
Finally, he prayed for any other appropriate reliefs that the Court found fit in the circumstances of the case.
When the matter came up on 22.02.2022, the Division Bench comprising Hon’ble the Chief Justice and Hon’ble Mr. Justice S. Kumar heard the parties. The Court first dealt with the array of respondents. It directed that respondent numbers 17, 18 and 19 — all officers of Punjab National Bank at Darbhanga — be deleted from the list of parties. The Registry was instructed to make necessary corrections in both digital and physical records.
During the hearing, an important factual development was placed before the Court. Learned counsel for the petitioner stated that the petitioner had already deposited a sum of Rs. 5 lakhs with the respondent bank on 18.02.2022. This payment showed that the borrower had started clearing part of the dues.
To further demonstrate his bona fides, the petitioner, through his counsel, undertook before the Court to deposit another Rs. 5 lakhs within two weeks from the date of the order. This fresh commitment became central to the way the Court resolved the matter.
Rather than going into a detailed examination of the legality of the Section 13(2) notice or the symbolic possession notice, the Patna High Court opted to dispose of the writ petition on mutually acceptable terms between the borrower and the bank. The Court treated the case as one where an amicable settlement of dues was possible, subject to certain clear conditions.
First, in clause (a) of its operative directions, the Court required the petitioner to “positively deposit” the further sum of Rs. 5,00,000 (five lakhs) with the respondent bank within two weeks. This deposit was a time-bound obligation. The wording shows that the payment was not merely optional but a firm condition.
Secondly, in clause (b), the Court directed the petitioner to personally appear in the office of respondent number 14, the Chief Branch Manager of Punjab National Bank, Laheriyasarai Branch, Darbhanga. The date and time were fixed: 8th March 2022 at 10:30 A.M.
The Court also clarified what the petitioner must carry and discuss at this meeting. He had to come with a proposal, complete in all respects, for two things. One, re-determining the amount due and payable by him to the bank. Two, seeking waiver of interest on the principal amount due and payable, in line with the bank’s policy and the guidelines issued by the Reserve Bank of India.
This direction showed that the Court was not fixing the final payable amount itself. Instead, it was facilitating a structured discussion between the borrower and the bank, leaving the final decision to the bank’s commercial wisdom, within the legal and regulatory framework.
Thirdly, clause (c) placed a duty on the bank. It ordered the bank to take a decision on the petitioner’s proposal within eight weeks from the date of his appearance and submission. This ensured that the borrower would not be left in uncertainty for an indefinite period.
In clause (d), the Court laid down the standards the bank must follow while deciding the request. The decision had to be in accordance with law, the guidelines issued by the Reserve Bank of India, and the requirement of maintaining parity. “Maintaining parity” indicates that similarly placed borrowers should be treated alike under the bank’s policies, preventing arbitrary discrimination.
Finally, clause (e) clarified the consequences if the petitioner failed in his commitments. If he did not deposit Rs. 5 lakhs as undertaken, or if he later failed to repay the amount in terms of the schedule fixed by the bank on mutually agreeable terms, the bank would remain free to proceed under law. This specifically included the right to sell the mortgaged or hypothecated property.
Through these directions, the Patna High Court did not quash any SARFAESI notice. It also did not grant a blanket stay on the bank’s recovery steps. Instead, it created a temporary window for the borrower to regularize or settle the loan based on real payments and a formal proposal, while protecting the bank’s rights if the borrower defaulted again.
In the end, the Court recorded that the petition stood disposed of in the aforesaid terms. Any interlocutory applications also stood disposed of. The judgment was delivered on 22.02.2022 and uploaded on 25.02.2022.
Why This Judgment Matters
This judgment is important for borrowers and banks dealing with SARFAESI proceedings in Bihar, especially when regular forums like the Debt Recovery Tribunal are not functioning. The Patna High Court entertained the writ petition specifically because the DRT had no Presiding Officer.
For borrowers, the case shows that merely alleging violation of fundamental rights or technical defects in SARFAESI notices may not automatically lead to quashing of the notices. Courts may instead focus on whether the borrower is genuinely willing and able to repay.
Here, the Court gave weight to the actual deposit of Rs. 5 lakhs and the promise to deposit another Rs. 5 lakhs. On that basis, it opened a path for negotiation and possible waiver of interest, but kept the bank’s statutory rights intact.
For banks, the decision reinforces that even when the High Court intervenes due to non-availability of DRT, it will usually not interfere with recovery powers if the borrower is in default. Banks are, however, expected to decide settlement or restructuring proposals in line with law, RBI guidelines, and their own policies, and to treat similar borrowers similarly.
The judgment also gives practical guidance: borrowers seeking relief should come forward with concrete payments and a realistic proposal, rather than only challenging the legality of recovery measures.
Legal Issues and Answers
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Issue: Should the Patna High Court quash the SARFAESI Section 13(2) notice and the 27.12.2021 symbolic possession notice issued by Punjab National Bank against the borrower’s secured assets?
Answer: The Court did not quash the notices. Instead, it disposed of the writ petition by recording the borrower’s payments and directing the bank to consider a comprehensive proposal within a fixed time, while preserving the bank’s right to continue SARFAESI recovery, including sale of the mortgaged property, if the borrower defaults. -
Issue: Can the High Court entertain a writ petition in a SARFAESI matter when the Debt Recovery Tribunal is not functioning?
Answer: In this case, the Patna High Court expressly entertained the writ petition because, at that time, the Debt Recovery Tribunal was not functional due to non-appointment of a Presiding Officer.
Cases Cited by the Court
- No prior judgments are cited or relied upon in the text of this order.
Case Details
Case Number: Civil Writ Jurisdiction Case No. 727 of 2022
Case Title: Tripurari Jha v. The Union of India & Ors.
Citation: 2022(1) PLJR 701
Court: High Court of Judicature at Patna
Coram: Hon’ble the Chief Justice; Hon’ble Mr. Justice S. Kumar
Date of Judgment: 22.02.2022
Advocates for the Petitioner: Mr. Rohit Kumar, Advocate; Mr. Manish Kumar No. 13, Advocate
Advocates for the Respondents: Dr. Krishna Nandan Singh, ASG; Mr. Ajay Kumar Rastogi, AAG-10; Mr. Suryakant Kumar, Advocate (PNB); Mr. Radhika Raman, CGC; Mr. Rohit Kumar, Advocate; Mr. Amit Prakash, Advocate; Mr. Kumar Priya Ranjan, Advocate
Nature of the Case: Writ petition under Article 226 of the Constitution challenging SARFAESI notices and seeking regularization of bank loan accounts
Statute Involved: Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (including Section 13(2)); constitutional provisions under Articles 14, 19 and 21 (invoked by the petitioner)
Link to Judgment: Click here to access the official Patna High Court judgment
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