INDIAN OVERSEAS BANK vs ARJUN SETHI on 15 October 2026

D I,l IIT'S l{E COVEIIY APIrFl, LLA'I'E TIUB UNAL, DIl, I.,III Misc. Appeal No. 36tl/2026 In MA No. 109/2025 Arising out of SA No. 36512024 (DRT-I[, Chandigarh) Itcm No. 11 Indian Ovcrscas Ilank V Mr. Ariun Sethi 15.10.2026 Hon'ble Dr. Justice Sudhir Kumar Jain Prcscnt: Sh. Sanjccv Ilhandari, Scnior Advocate along with Ms. Pallavi Singh and Ms. Anjali Singh, Advocates for appcllant Ms. Decpshikha (iupta, Advocate for rcspondent 'l'l-rcsc mattcrs arc tal<cn up through Ilybricl hcaring. Cavaat t1412026

l. 'l'hc rcspondcnt has filcd thc instant caveal". Ms. I)ccpshikha Gupta has appcarccl lor thc rcsponclcnt. Accordingly, thc cavcat is dischargcd.

2. Itcspondcnt filcd tl"rc SA bcaring No. 365/2024 LiLled as Ariun Scthi V Indian Ovcrscas llank which was statcd to bc pcnding bcforc thc I)I{'I'-III, Chandigarh. I)R'l'-lll, Chandigarh vidc final ordcr datcd 27.05.2025 has allowod the SA ancl cluashcd thc SAI{IIAIiSI procccdings initiatcd by the appcllant on thc ground that l.hc loan accounts wcrc classificd as NPA wrongly and illcgally in contravcntion of guiclclincs issucd by thc Itcscrvc Ilank of India as wcll as thc ordcr passcd by thc Ilon'blc Suprcmc Courl of India. IIowcvcr, thc libcrly is givcn to thc appcllant tlrat thc appcllant may again initiatc thc SAI{ITAIISI procccdings in accorclancc with law. 'l'hc rclcvant portion of thc final ordcr datcd 27 .05.2025 is rcproduccd as undcr:

(32) SA is allowcd. SAIIFAFI,SI proceedings initiated by the rcspondent is quashcd since initiation as loan accounts werc classified as NPA wrongly and illcgally in contravcntion of guidelincs issucd by llcserve Ilank of India as well as order passed by [Ion'blc Suprcme Court of India. It is made clcar that rcspondcnt may again initiatc frcsh SAIUI'AI,I,SI proceedings according to law.

3. It is pcrtinent to mention that none of the parties in the SA has preferred to file thc appcal. Sh. Sanjecv Ilhandari, Senior Counsel for the appellant stated that the appcllant has accepted the final order dated 27 .05.2025 and decided to initiate the frcsh procccdings under the SAI{ITAI1SI Act against the respondent. I-Ie further statcd that thc datc of NI'}A was corrccted as 29.03.2021 from 31,03.2021 on the basis of thc statcmcnt of account and othcr rclcvant records thercalter fresh notice under Section l3(4) of the SAIUTAESI Act dated 24.06.2025 was issued.

4. 'lhc respondent afler disposal of the SA vide order dated 27.05.2025 filed the misc. Application bearing no. IOgl2O25 which is stated to be still pending before thc DI{I'-[I, Chandigarh. The DI{T-III Chandigarh vide order dated 04.08.2025 has restrained the appcllant to proceed fuither in pursuance of demand notice dated 24.06.2025 till ncxt date fixed under the SAIUTAI.ISI Act. The appellant has not ohallcngcd thc order dated 04.08.2025.

5. Sh. Sanjeev Bhandari, Senior Counsel stated that vide notification dated 15.09.2026 the appellant has invited the EOI (Expression of Interest) for "transfcr of NPA loan exposures to AltCs and permitted transfcrees" and thereafter that NPA aocount pcrtaining to the respondent has already been assigned to another AI{C namcly Cl"M Asset Iteconstruction Company on 24.09.2026. Sh. Sanjeev Ilhandari further stated that the DI{T-III, Chandigarh vide order dated 28.09.2026 has ordercd to kept in abeyance the notification dated 15.09.2026 inviting the EOIs for transfcr of NPA loan accounts including thc loan account of applicant till furthcr orders. I'he appellant being aggrieved filed the present appeal.

6. l'he DI{I'-III, Chandigarh in the order dated 28.09.2026 also observed that the appellant in contravention of the restrain ordcr passed by the DI{I has issued notification dated 15.09.2026 inviting the EOIs for transfer of NPA loan accounts whioh is not permissible undcr the law.

7. Sh. Sanjcev Ilhandari, Senior Counsel for the appellant further argued that the said direction in the impugned ordcr dated 28.09.2026 is in contravention of the Scction (5) of thc SAIUTAIiSI Act which authorised any financial institution to assign the outstanding dues of thc dcbt to any AI{C. It is furthcr argucd that the DI{'I'-III, Chandigarh in thc impugned order dated 28.09.2026 has wrongly obscrvcd that thc lctter notification datcd 15.09.2026 was in contravention of the rcstrain ordcr dated 04.08.2025. It is furthcr argued that aflcr transfer of the account thc new assignee has thc right to appear before the DI{I' and also to parlicipatc in the proceeding arisen due to M.A. bearing no. 10912025 and also cntitled to takc over the procecdings in accordance with law. In support of his argumcnt Sh. Sanjecv Ilhandari, Scnior Advooate for the appellant has cited the judgmcnt of the I-Iigh Court of Judicature at Madras passed on 30. ll.202l titled as M/s AMI{ Pharma India Private Limited & others v. Authorized Officcr Indian Ovcrscas llank.

8. In thcsc circumstances, Sh. Sanjeev Ilhandari, Senior Counscl for the appellant statcd that thc impugncd order dated 28.09.2026 is bad in law and liable to be set- asidc. Ilowcver, during the course of the arguments it is stated that the M.A. bcaring no. 10912025 is still pending and listcd on 19.10.2026 and such direction can bc issucd to the DI{I'-III, Chandigarh for disposal of the MA bearing no. 10912025 as early as possible without any unnecessary delay and lurther while dcciding the M.A. bearing no. 10912025, the DItl-[I, Chandigarh should not be influcnccd by any observation made in thc order dated 28.09.2026. It is also stated that all thc plcas and contcntions of thc contcsting parties shall be allowed to be taken which can be taking during the hearing of M.A. bearing no. togl2o26 including thc jurisdictional issues.

g. Ms. Dccpshikha Gupta, Counscl for thc rcspondcnt defended the impugned ordcr dated 28.09.2026 and stated that the notification dated 15.09.2026 was not issued in contravention of restrain ordcr dated 04.08.2025. During the course of argumcnts, Ms. Gupta invitc thc attcntion towards the notification dated 15.09.2026 and stated that it was pcrtaining to the 66transfer of NlrA loan cxposure to ARC and permitted transfcrring" and it docs not have any spcculation that it was issued undcr Scction (5) of the SAIUTAIISI Act. I-Iowever, shc argued that M.A. bearing no. 10912025 is listed on 19.10.2026 for final hearing ancl shc has no objcction if thc ncoossary dircction can bc issucd to thc DI{'I'-III, Chandigarh lor carly disposal oI'thc M.A. bcaring No. I 0()12025.

10. [n vicw of'thc submissions madc by thc rcspcctivc Counscls lorthc appcllant and thc rcspondcnt, thc prcscnt appcal is disposcd o1'with thc dircction to thc I)l{'l'- Ill, Chancligarh to dcoiclc thc M.A. bcaring no. 10912025 within a pcriod ol'onc Ilonth l}om tl-rc datc of rcccipt ol'this ordcr. It is also madc clcar that at thc tirnc ol final clisposal, thc t)li.'l'shall not bc inllucncccl with any obscrvation rnadc in thc ordcrs datocl 04.08.2025 and 28.09.2026. 'l'l.rc contcsting partics shall also bc at libcrty to raisc all thc issucs and contcntions in accordancc with law including thc .iurisdictional issuc. 'l'hc pcncling application also stands disposcd of accorclingly. ll.'l'hc copy o1'this or"dcr bc givcn to l)lt'l'-lll, Chancligarh frrr inl'ormation and compliancc. Qo -l- ----1--Z------ (Dr. Justicc Sudhir Kumar Jain) Chairperson -tr$