PNB vs India Bulls Housing Finance Ltd on 30 September 2026

1. 1. Heard the respective Counsels for the parties. Vide this common order I shall dispose of both the appeals bearing Appeal No. 106/2020 titled as **Punjab National Bank v. India Bulls Housing Finance Limited** & Appeal No. 189/2022 titled as **Sarabjit Kaur v. Indiabulls Housing Finance Limited & others**.

2. 2. Indiabulls Housing Finance Limited (hereinafter referred as IBHFL) filed S.A. bearing No. 65/2016 titled as **Indiabulls Housing Finance Limited v. Punjab National Bank & others** which was stated to be pending before DRT-II, Delhi.

3. 3. DRT-II, Delhi vide impugned judgment dated 20.02.2020 has observed that the mortgaged of the subject property in favour of IBHFL, prevailed over the mortgage of Punjab National Bank as such the Punjab National bank was directed to pay Rs.32,89,083/- with interest @ 9% p.a. simple out of the sale proceeds from the date of filing of the SA till payment. It was further directed that the balance sale proceeds can be appropriated by the Punjab National Bank besides other directions.

4. IBHFL filed S.A. bearing No. 65/2016 for recovery of Rs. 32,89,083/- as on 12.12.2014 along with interest @ 25.25% against the respondents no 2 to 7. It is reflecting that the respondents no 2 to 7 approached the IBHFL for grant of loan against the equitable mortgaged in respect of the subject property and thereafter IBHFL has sanctioned the loan of Rs. 50 lacs in favour of respondents no 2 to 7 on execution of requisite documents. The equitable mortgage was also created in respect of the subject property by respondents no 2 to 7. The respondents no 2 to 7 could not stick to the financial discipline and, as such, the account was declared as NPA on 12.12.2014. IBHFL has also sent a demand notice dated 19.12.2014 of the SARFAESI Act and thereafter proceed under Section 13(4) was also initiated. Notice for symbolic possession was also given on 06.11.2015. IBHFL also approached District Magistrate, Mansa, Bhatinda for taking possession of the secured asset. However, IBHFL came to know that the Punjab National Bank has already taken possession of the mortgaged property and also auctioned the property in question. The IBHFL being aggrieved filed S.A. bearing No. 65/2016.

5. Punjab National Bank contended that the respondents no 2 & 6 of S.A. bearing No. 65/2016 along with Malkit Singh & Amandeep Singh were granted CC limit of Rs.80 lacs to M/s AVM Construction Company which was comprised of all the above said persons as partners on 22.10.2011 and thereafter Punjab National Bank enhanced the CC limit from Rs.80 lacs to Rs. 200 lacs on execution of requisite documents. M/s AVM Construction Company has failed to maintain the account and the account was declared as NPA on 23.01.2016. Thereafter, SARFAESI proceedings were initiated and the subject property was put to auction and the Punjab National Bank received a bid of Rs.85.10 lacs. Sarabjit Kaur was declared as successful bidder. Sarabjit Kaur is the appellant in Appeal bearing No. 189/2022. Sarabjit Kaur has deposited a sum of Rs. 42,55,000/- with the Punjab National Bank.

6. DRT-II, Delhi as mentioned herein above opined that the IBHFL was having the prior charge over the charge as claimed by the Punjab National Bank as the charge/mortgaged was created in favour of IBIHFL in the year 2007 while Punjab National Bank has claimed the mortgage since 13.04.2010. DRT-II, Delhi also observed that the subject property has sold for Rs.85.10 lacs but the IBHFL only claimed Rs.32,89,083/- and accordingly, decided the SA. The relevant portion of the impugned judgment dated 20.02.2020 is reproduced as under:

9. I have heard the Ld. Counsels for the Applicant and Respondent bank and perused the record.

9. Now the point for consideration is whether the applicant is entitled for restraining the Respondent No. 1 (PNB) from taking measures under Section 13(4), or any other provisions of the SARFAESI ACT including possession, seizure, auctioning/sale of the property mortgaged to the applicant, as prayed?

10. The case of the Applicant is that D-2 to 7 stood as guarantors and mortgage the property covered by the SA in the year 2007 by depositing the documents relating to 2005 title whereas the 1st Respondent Bank claimed the mortgage vide RTD No.254 dated 13.04.2010 in respect of the same property. I have seen from the documents filed by the Applicant FI, the mortgage of the property is prior to the mortgage created by R-1 in respect of the same property in favour of 1st Respondent. However, in the present case the 1st respondent bank took possession of the property earlier in point of time, though the Applicant FI also approached the Ld. DM, Bhatinda for taking physical possession of the same property. The evidence of R-1 further reveals that the property is sold by it after taking physical possession. The property is sold for about Rs. 85.10. lakhs, the claim of the Applicant FI is only Rs.32,89,083/- (Rupees Thirty Two Lakhs Eighty Nine Thousand Eighty Three Only) as on the date of filing of SA. As the property fetches the highest price, I am of the considered opinion that the mortgage in favour of the Applicant FI is prior in point of time, the provisions of Transfer of Property Act will apply and the provisions of Section 48 of the TPA is as follows:

"48. Priority of rights created by transfer - Where a person purports to create by transfer at different times rights in or over the same immovable property, and such rights cannot all exist or be exercise to their full extent together, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created."

11. Since the mortgage in favour of the Applicant FI prevail over the mortgage of 1st Respondent, the 1st Respondent shall pay out of the sale proceeds, to the Applicant FI a sum of Rs.32,89,083/- with interest @9% p.a. simple from the date of filing of SA till payment. The balance amount can be appropriated by the 1st Respondent besides the sale of the remaining two properties which he has already sold.

**12. Accordingly, the SA is disposed off in favour of the Security Applicant.**

7. Punjab National Bank and Sarabjit Kaur being aggrieved filed the present appeals bearing No. 106/2020 and 189/2022. Ms. Reena Jain Malhotra, Counsel for auction purchaser Sarabjit Kaur stated and argued that Sarabjit Kaur is ready to deposit balance amount towards the auction price of Rs.85.10 lacs after deducting Rs.42.55 lacs which Sarabjit Kaur being auction purchaser has already paid to Punjab National Bank. It is further stated that after depositing of the said amount, the sale certificate be issued in favour of Sarabjit Kaur being the auction purchaser.

8. Sh. Hashmat Nabi, Counsel for the Punjab National Bank argued that the as the present dispute involves the dispute between two FI as such in view of Section 11 of the RDB Act and in view of the Supreme Court judgment dated 23.05.2025 in Civil Appeal No. 7110/2025 titled as **Bank of India v. M/s Sri Nangli Rice Mills Private Limited & others**, the dispute be referred for Arbitration.

9. Ms. Tanveer Kaur, Counsel for IBHFL argued that the Punjab National Bank be directed to return Rs.32,89,083/- along with interest to the IBHFL as early as possible. In view of the above submission and observations the following directions are passed:- **9.1. Sarabjit Kaur being the auction purchaser is directed to deposit Rs.85.10 lacs being sale price after deducting Rs.42.55 lacs which has already been paid to Punjab National Bank within 15 days from today. Thereafter, Punjab National Bank is directed to issue sale certificate and also to complete other formalities in favour of Sarabjit Kaur being the auction purchaser within four weeks.**

**9.2 Punjab National Bank is directed to refund Rs.32,89,083/- along with simple interest @ 9% from the date of filing of S.A. bearing No. 63/2016 till the actual payment to IBHFL within four weeks from today.**

**9.3 Punjab National Bank is entitled to retain the remaining amount out of the sale proceed towards outstanding dues in respect of the loan amount in favour of M/s AVM Construction Company Limited.**

**9.4 Sarabjit Kaur being the auction purchaser is also directed to pay simple interest @ 6% to the Punjab National Bank on the balance amount.**

**10.** With these directions both the appeals bearing No. 106/2020 and 189/2022 stands disposed of.

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**(Dr. Justice Sudhir Kumar Jain)** **Chairperson**

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