SANIDHYA GARG AND MANAN GARG vs STATE BANK OF INDIA on 18 October 2025

**FINAL ORDER**

1. 1. This matter is taken up by this Tribunal through Hybrid mode.

2. 2. This appeal, filed under Section 30 of the Recovery of Debts and Bankruptcy Act, 1993 ("RDB Act"), has been preferred by the appellants, Sanidhya Garg and Manan Garg, challenging the order dated 08.08.2025 passed by the Recovery Officer-I, DRT-III, New Delhi, in TRC No. 64/2022.

3. 3. By the impugned order dated 08.08.2025, the Recovery Officer directed issuance of show-cause notices for attachment of the appellants' immovable properties and further required them to file detailed affidavits of their assets, income, and financial transactions. The appellants contend that these directions are arbitrary, illegal, and beyond the jurisdiction of the Recovery Officer, as they are not certificate debtors and have no connection with the recovery proceedings arising from O.A. No. 311/2015 titled *State Bank of India v. Apple Natural Commodities Pvt Ltd & Ors.* Their parents, Ashish Garg and Ruchi Garg, were defendants and guarantors in that case, against whom Recovery Certificate No. 160/2019 was issued by DRT-II, later transferred and renumbered as TRC/64/2022. The appellants assert that they are independent individuals, not liable for their parents' debts, and that the impugned order was passed without notice, hearing, or any legal authority.

4. 4. According to the appellants, the respondent bank arbitrarily filed an application under Section 25(a) and (aa) of the RDB Act read with Rule 4 of the Second Schedule of the Income Tax Act, seeking attachment of their personal properties without any legal justification. The bank's sole basis for such a request was that the appellants are the sons of the certificate debtors and allegedly possess assets disproportionate to their age and income. The application relied on affidavits of assets that the appellants had filed before the Hon'ble High Court of Delhi in *W.P.(C) No. 5438/2021 (Ashish Garg v. State Bank of India & Ors.)*, which related to their father's request for permission to travel abroad. By order dated 16.07.2025, the High Court directed Mr. Ashish Garg and his family members to file affidavits of assets solely for that limited purpose. The appellants, complying with that order, filed affidavits on 17.07.2025 disclosing ownership of three properties Property No. 35, Central Drive, DLF Farms, Chhatarpur, New Delhi; Flat No. 102, Onyx Building, Union Park, Chembur, Mumbai; and Flat No. 10, Pine Drive, DLF Farms, Chhatarpur, New Delhi. They maintain that these affidavits, filed in compliance with judicial direction in a separate matter, were misused by the respondent bank in the DRT proceedings to seek attachment of their independent assets.

1. 5. The appellants further point out that pursuant to an earlier order dated 21.05.2025, the Recovery Officer had already directed their parents Certificate Debtors Nos. 2 and 5 to disclose all monies transferred to their family members, including the appellants, during the preceding five years. Both certificate debtors complied by filing their audited balance sheets for the financial years 2020-2025, disclosing all transactions with the appellants. Despite this compliance and absence of any recorded finding of A small green rectangular stamp or mark with a blue line above it, located at the bottom right of the page.

evasion or concealment, the Recovery Officer, without any material evidence or established nexus between the appellants' assets and the debt under recovery, proceeded to issue coercive directions against them. The appellants allege that the order was passed mechanically, on oral submissions of the bank, without proper verification or adherence to natural justice.

1. 6. The respondent bank, in its reply, submits that the appeal is not maintainable since the order under challenge is only a show-cause notice issued under Rules 73 and 83 of the Second Schedule to the Income Tax Act, calling upon the appellants to explain the source of funds used for the acquisition of their properties. It contends that no final attachment has been made and, therefore, no cause of action arises for filing an appeal. The respondent further argues that the impugned order is merely a continuation of the earlier order dated 21.05.2025, wherein the Recovery Officer had recorded transfers exceeding Rs. 29 crores from the account of Certificate Debtor No. 5, Ruchi Garg, to the appellants. That order was never challenged by the appellants, and the separate appeals filed by their parents were dismissed by the Tribunal on 01.09.2025, thereby rendering the directions final.

2. 7. The bank maintains that substantial evidence indicates the appellants' assets were purchased using funds siphoned from the certificate debtors during the pendency of recovery proceedings. The timing of property acquisitions, the appellants' young age at the time one being a minor and the contemporaneous bank transactions demonstrate that these properties were acquired from diverted funds 

with intent to defeat recovery. Such transfers, according to the bank, amount to fraudulent and benami transactions under Section 53 of the Prohibition of Benami Property Transactions Act, 1988. The Recovery Officer, therefore, acted well within his authority under Sections 25 and 28 of the RDB Act, read with Rules 73 and 83 of the Second Schedule of the Income Tax Act and Order 21 Rule 41 of the CPC, to investigate these transactions and call for disclosure of financial details.

1. 8. The respondent also highlights that the appellants have failed to furnish any explanation or supporting documents regarding the funds used for the purchase of their properties. The payments for these assets were made from accounts not belonging to them but connected to their parents. Moreover, the certificate debtors had suppressed multiple bank accounts in their asset affidavits filed in 2019, 2022, and 2023, demonstrating deliberate concealment of assets and transfer of funds to family members to obstruct recovery. The bank thus contends that the impugned order was passed with due application of mind, in continuation of prior lawful directions, and is an essential step to safeguard the bank's recovery rights.

2. 9. In totality, while the appellants claim the impugned order is an illegal extension of recovery proceedings to third parties, the respondent maintains that it is a valid inquiry into the diversion of funds and concealment of assets by related parties. The appellants seek setting aside of the order as arbitrary, void, and violative of their independent rights, whereas the respondent prays for dismissal of the appeal with exemplary costs, asserting that it is a premature and frivolous attempt to obstruct lawful recovery proceedings.

1. 10. On the other hand, the respondent bank has filed a detailed reply opposing the appeal preferred by the appellants, Sanidhya Garg and Manan Garg, against the impugned order dated 08.08.2025 passed by the Learned Recovery Officer-I, Debts Recovery Tribunal-III, New Delhi in TRC No. 64/2022. It is submitted that the present appeal is wholly misconceived, not maintainable, and liable to be dismissed at the threshold. The bank contends that the impugned order merely issues a show-cause notice under Rules 73 and 83 of the Second Schedule of the Income Tax Act, 1961, calling upon the appellants to explain the source of funds utilized for acquisition of their immovable assets. The said notice is purely preliminary in nature and does not constitute a final determination or attachment of property. As such, no appeal lies against a show-cause notice, and the appellants' remedy, if any, is to submit an explanation before the Recovery Officer. The respondent emphasizes that the appeal is premature and intended solely to delay the ongoing recovery process and to obstruct lawful proceedings initiated by the Recovery Officer in exercise of his statutory powers under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act).

2. 11. The respondent further submits that the impugned order dated 08.08.2025 is in continuation of an earlier order dated 21.05.2025, whereby the Recovery Officer recorded specific findings that Certificate Debtor No. 5, Mrs. Ruchi Garg, had transferred more than Rs. 29 crores from concealed bank accounts to the appellants. In light of those findings, the Recovery Officer directed the issuance of notices to the appellants under Rule 83 of the Second Schedule to furnish complete particulars of all funds received from Certificate Debtors Nos. 2 and 5, namely their parents, Mr. Ashish Garg and Mrs. Ruchi Garg, during the preceding five years, along with their bank statements. Despite service of notice, the appellants failed to comply with the said direction. The order dated 21.05.2025 was never challenged by the appellants, while the appeals preferred by their parents, being Appeal Nos. NDN/95/2025 and NDN/101/2025, were dismissed by this Tribunal on 01.09.2025. Therefore, the findings contained in the order dated 21.05.2025 have attained finality, and the impugned order merely continues the same inquiry. On this ground alone, the present appeal is not maintainable.

12. The respondent bank submits that prima facie material on record establishes that the properties ostensibly held by the appellants were acquired from funds siphoned off from the accounts of the certificate debtors during the pendency of the recovery proceedings. These transactions, it is asserted, were carried out with the intent to conceal assets and defeat the rights of the creditor bank. The properties in question the farmhouse at Pine Drive, DLF Farms, New Delhi; agricultural land measuring eight bighas at Chhatarpur; and Flat No. 102, Onyx Building, Union Park, Chembur, Mumbai were all acquired when Appellant No. 1 was only 20 years old and Appellant No. 2 was still a minor represented through his grandmother. The payment trail shows that the consideration for these acquisitions was made through accounts not belonging to the appellants but to their parents, the certificate debtors. The

transfers of more than Rs. 29 crores to the appellants were contemporaneous with the execution of the sale deeds for the said properties, clearly demonstrating a nexus between the diverted funds and the acquisitions. Such transactions, according to the bank, are fraudulent in nature and amount to benami transfers intended to frustrate recovery, attracting the provisions of Section 53 of the Prohibition of Benami Property Transactions Act, 1988. Under these circumstances, the Recovery Officer was well within his statutory jurisdiction under Sections 25(a), 25(aa), and 28 of the RDB Act, read with Rules 73 and 83 of the Second Schedule to the Income Tax Act and Order XXI Rule 41 of the Code of Civil Procedure, to issue notices, call for records, and examine the transactions to trace recoverable assets.

1. 13. The bank further points out that the conduct of the certificate debtors, Mr. Ashish Garg and Mrs. Ruchi Garg, reveals a consistent pattern of concealment and misrepresentation. In their affidavits of assets filed before the Recovery Officer in 2019, 2022, and 2023, they failed to disclose several active bank accounts, including those with DCB Bank and Central Bank of India, which were operational since 2021. These material omissions establish that the certificate debtors intentionally withheld disclosure of funds that were later transferred to the appellants. The bank also notes that the appellants have never filed complete details of the funds received, bank statements, or any satisfactory explanation for the source of their property acquisitions, despite multiple opportunities granted by the Recovery Officer. The deliberate non-disclosure and evasion by both the 

certificate debtors and the appellants justify the Recovery Officer's decision to invoke his powers of inquiry and issue the impugned show-cause notice.

14. It is submitted that the appellants' argument that they are independent individuals with no connection to the liabilities of the certificate debtors is unsustainable. The financial trail, coupled with their relationship to the debtors and their ages at the time of acquisition, establishes that they were the direct beneficiaries of funds belonging to the certificate debtors. The Recovery Officer, in issuing the impugned order, has not adjudicated upon ownership or attachment but merely initiated a lawful inquiry to determine whether the appellants' properties are traceable to funds diverted from the judgment debtors. Therefore, the allegation that the Recovery Officer exceeded his jurisdiction or acted arbitrarily is without basis. The reliance on affidavits of assets filed before the Hon'ble High Court of Delhi is justified, as the appellants' own declarations therein reveal substantial assets disproportionate to their income and inconsistent with their declared financial status. These affidavits, therefore, form relevant material for examination in the recovery proceedings.

15. In conclusion, the respondent bank submits that the impugned order dated 08.08.2025 has been passed after due consideration of the material available on record and in lawful exercise of powers conferred upon the Recovery Officer under the RDB Act. The appeal, being premature and devoid of merit, is a clear attempt to delay and obstruct the recovery process and to shield assets that are prima facie derived from concealed funds of the certificate debtors. The respondent prays that the present appeal be dismissed with exemplary costs as an abuse of the process of law and that the appellants be directed to comply with the Recovery Officer's directions by filing their affidavits of assets and financial details to enable a proper inquiry into the source of funds and the ownership of the properties in question.

1. 16. The Tribunal has carefully examined the record, the rival submissions, and the scope of appellate jurisdiction under Section 30 of the RDB Act 1993.

2. 17. The impugned order dated 08.08.2025 is in the nature of a show-cause notice seeking an explanation from the appellants under Rules 73 and 83 of the Second Schedule to the Income Tax Act. These provisions, when read with Sections 25 and 28 of the RDB Act, empower the Recovery Officer to call for information, examine third-party transactions, and trace assets suspected to have been transferred by certificate debtors to evade recovery.

3. 18. It is settled principle that a show-cause notice does not constitute an appealable order unless it culminates in a final determination affecting rights or imposing liability. The Recovery Officer's power to inquire into the diversion of funds to family members is integral to the enforcement of the recovery certificate. The impugned direction merely initiates such inquiry; it neither adjudicates ownership nor orders attachment.

4. 19. The appellants' plea that they are independent and unconnected to the certificate debtors cannot be adjudicated at this preliminary stage. They have the opportunity to place their explanation and supporting documents before the Recovery Officer to demonstrate legitimate acquisition of their properties. Premature intervention by this Tribunal would obstruct the statutory process meant to uncover concealment and diversion of assets.

20. Further, the earlier order dated 21.05.2025 finding that Rs. 29 crores were transferred from Certificate Debtor No. 5 to the appellants remains unchallenged and has attained finality. The Recovery Officer's subsequent notice is, therefore, a lawful continuation of the enforcement process based on existing findings.

21. In these circumstances, the appeal fails both on maintainability and merit. The appellants have not shown that the Recovery Officer exceeded jurisdiction or violated any principle of natural justice. On the contrary, the inquiry serves the public interest by ensuring that funds diverted from certificate debtors are properly traced and recovered.

22. In view of the above analysis, this Tribunal finds no illegality, irregularity, or impropriety in the impugned order dated 08.08.2025. The appeal is premature, devoid of merit, and not maintainable under Section 30 of the RDB Act. Accordingly, the appeal is hereby **dismissed**.

23. File consigned into record room.

(SHIV KUMAR - I) PRESIDING OFFICER, DRT-III, DELHI

(Pronounced in open court) Dated: 18.10.2025

This image shows a blank page with a light beige or cream-colored background. There are faint, vertical lines running down the page, which appear to be artifacts from the scanning process or the texture of the paper. In the center of the page, there is a small, faint, and illegible mark that looks like a stamp or a small piece of text. The overall appearance is that of an old, slightly worn piece of paper.