Assets Reconstruction Co. India Limited vs Veer Guriar Aluminum Industries Private Limited on 4 November 2026

1. Present as under:

Mr. Charles De’souza i/b M/s T. N. Tripathi & Co., Counsel for Appellants. Mr. Harish Adwant, Counsel for Respondent.

2. This judgment shall dispose of two appeals. The First Appeal No. 75/2024 is filed by the Appellant/ ARC against the common order dated 13.06.2024 whereby the Original Application No. 172/2013 of the Appellant No. 1/ARC was partly disallowed.

The Second Appeal No. 74/2024 is also filed by the Appellant No. 1/ARC against the same impugned order whereby the Securitization Application No. 158/2021 of the Respondent was allowed against the Appellant No. 1/ARC.

3. The brief facts necessary for the disposal of these two appeals are that the Appellant No. 1/ARC filed Original Application No.

(Page No. 76, Exhibit-B) against the Respondents/Borrowers, inter alia, seeking the following reliefs:

(i) Issuance of a recovery certificate for a sum of Rs. 50,21,40,425/- in favour of the Appellant No. 1/ARC;

(ii) Issuance of a recovery certificate for a sum of Rs. 50,65,42,174/- in favour of the Appellant No. 2/JM Finance Asset Reconstruction Co. Pvt. Ltd.;

(iii) Issuance of a recovery certificate for a sum of Rs. 30,37,55,607/- in favour of the Appellant No. 3/Bank of India;

(iv) Issuance of appropriate directions for the sale of the hypothecated movable properties of Respondent No. 1, as well as the immovable properties mortgaged in favour of the Appellants and described in the schedule to the Original Application; and

(v) Issuance of appropriate directions for recovery of any deficiency in the debt remaining unsatisfied from the sale proceeds of the aforesaid properties have been appropriated.

4. By the same common order, the Ld. DRT-Aurangabad has allowed the Securitization Application No. 158/2021 of the Respondent. The main prayers in the Securitization Application No. 158/2021 were, inter alia, to declare the demand notice dated 27.08.2020 issued to the Respondents as illegal ; that, to declare the measures taken by the Appellants on 20.08.2021 in furtherance of that demand notice is null and void ; that, to declare the order dated 17.12.2021 passed by the District Magistrate, Aurangabad as illegal.

5. Heard.

6. The Learned Counsel for the Appellants/ARC would submit that the impugned order is legally unsustainable, as the Learned DRT has passed the same without assigning cogent reasons in support of its findings. Referring to paragraph 18.1 of the impugned order, the Learned Counsel would point out that, in the concluding sentence of the said paragraph, the Learned DRT observed that “adverse inference has to be drawn”. However, the Learned DRT failed to specify the reasons warranting such an adverse inference against either party.

The Learned Counsel would further submit that, while deciding I.A. No. 265/2017, the Learned DRT had specifically observed that the effect and evidentiary value of the documents in question would be considered at the final stage. However, while passing the impugned order, the Learned DRT failed to discuss the evidentiary impact of those documents and erroneously concluded that an adverse inference was required to be drawn. According to the Learned Counsel, such a finding cannot be sustained in law.

7. The Learned Counsel for the Appellants would further submit that the observations made by the Learned DRT in paragraph 18(2) of the impugned order are misplaced. He would contend that the pleadings in proceedings under the SARFAESI Act for obtaining an order from the Learned Magistrate under Section 14 of the said Act stand on an entirely different footing from the pleadings in an Original Application filed before the DRT. Therefore, any variance between the pleadings in the two proceedings could not have been relied upon to reject the claims of the Appellants and allow the Securitization Application filed by the Respondents.

To substantiate the submission, the Counsel for the Appellants would refer to the para no. 18(3) and would submit that the Ld. DRT has wrongly come to the conclusion that there is no consistency in the claims brought before the Tribunal with the averments made in Application No. 244/2021 filed before the District Magistrate under Section 14 of the SARFAESI Act, that too, without specifying that what are the points of inconsistencies in these two applications. The Counsel for the Appellants would further submit that even in the observations made in para nos. 18(4), 18(5),18(6) and 18(7) are also misplaced and without any base.

The Counsel for the Appellants would further submit that in para no. 18(4) the Ld. DRT observed that the memorandum of modification of mortgage deed does not bear the date ; that , however , in the last page of this deed there is a specific date stated i.e. 22.01.2011.

The Counsel for the Appellants would further submit that in the impugned order dated 20.01.2021 rejected the interim application no. 265/2017 of the Appellants to lead the secondary evidence of the original memorandum of equitable mortgage dated 11.06.2008 but in the very next line in para no. 4 of this order, the Ld. DRT observed that the impact of this document will be seen at the time of the final argument, however , in para no. 18(5) of the impugned order it again observed that the Appellants do not possess the original memorandum of the equitable mortgage dated 11.06.2008.

9. The Learned Counsel would further submit that the observations made in paragraph 18(10) of the impugned order, to the effect that the Appellants had failed to comply with the statutory mandate and had adopted an improper approach in prosecuting the Original Application, are erroneous. He would also contend that the observations made in paragraph 18(11), to the effect that the Appellants had been casual in attending the proceedings and had failed to lead proper evidence to establish the mortgage in accordance with law, are misplaced and unsupported by reasons.

According to the Learned Counsel, the observations made in paragraph 18(9) of the impugned order, regarding non-compliance with Sections 3, 58 and 59 of the Transfer of Property Act, Sections 63, 65 and 60 of the Indian Evidence Act, and Sections 9, 10 and 23 of the Indian Contract Act, are also misplaced and baseless, as the Ld. DRT has not assigned cogent reasons for arriving at such conclusions. On these grounds, the Learned Counsel would submit that the impugned order is liable to be set aside.

10. The Counsel for the Appellants would further submit that the observations made in para no. 18(12) is also contrary to law as the proceedings before the Magistrate exercising jurisdiction under Section 14 of the SARFAESI Act, as submitted above, cannot be compared with the proceedings before the DRT under Section 17 or otherwise, as the act of Magistrate in exercising its power under Section 14 of SARFAESI Act is ministerial in nature.

11. To substantiate his argument, Counsel for the Appellants would rely upon the judgment of Bombay High Court in Phoniex ARC Pvt. Ltd. v/s State of Maharashtra 2020 SCC OnLine Bom 1710.

12. The Counsel for the Appellants would further argue that the Respondent Nos. 2 & 3 were guarantors by executing the same document however, the Respondent No. 3/Guarantor was discharged of his liability without assigning any reason notwithstanding the fact that Respondent No. 2 & 3 were the guarantors by way of execution of the same document.

13. The Learned Counsel for the Respondent would oppose the appeal and submit that the impugned order dated 13.06.2024 is well- reasoned and in consonance with law, and does not call for interference by the Appellate Tribunal.

The Learned Counsel for the Respondent would further submit that the Appellants issued demand notices under Section 13(2) of the SARFAESI Act on 15.11.2011, 28.12.2011 (published on 14.01.2012) and 27.08.2020, without withdrawing or superseding the earlier notices ; that , the SARFAESI Act makes no provision for a second demand notice while the first remains live ; that, the notices vary in the amount due, the rate of interest and the date of NPA ; that, the notice dated 27.08.2020 was issued by a person who was not an Authorized Officer; and that the fresh notice issued nearly nine years after the first is barred by limitation under Section 36 of the SARFAESI Act, as a thing required to be done in a particular manner must be done in that manner alone, as laid down in Taylor v. Taylor, (1875) 1 Ch D 426.

14. The Learned Counsel for the Respondent would further submit that the Appellants failed to prove a valid security interest, in that the mortgage deeds are unattested, contrary to Section 59 of the Transfer of Property Act ; that, the original memoranda dated 11.06.2008, 24.12.2008 and 03.12.2009 were not produced ; that, photocopies were relied upon without proving execution through attesting witnesses, as required by the Indian Evidence Act; and that the memorandum dated 22.01.2011 is merely a modification and cannot by itself create a security interest, so that the Learned DRT rightly drew an adverse inference.

As regards the Section 14 order, the Learned Counsel for Respondent would contend that it was obtained by suppressing material facts, namely the earlier demand notices, the symbolic possession allegedly taken in 2011 and not restored, and the assignment of the debt ; that, the supporting affidavit lacked the declarations required by the proviso to Section 14(1) ; that the findings of fact of the Learned DRT ought not to be disturbed unless perverse ; and, that the Appellants cannot approbate and reprobate by taking inconsistent stands in the Original Application and in the Section 14 proceedings.

15. The Learned Counsel for Respondent would further submit that the Appellants did not comply with Section 13(3A) of the SARFAESI Act ; that, the possession notice did not comply with Rules 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002 ; that, they filed no reply to the Amended Securitization Application dated 31.03.2023 ; that, their earlier appeals (Diary Nos. 721 and 722 of 2023) were declined registration on 08.01.2025 ; and that, the guarantee of Respondent No. 3 was not pleaded in the Original Application, so that no relief can be granted against her, as held in Bachhaj Nahar v. Nilima Mandal, AIR 2009 SC 1103. Relying also on Mardia Chemicals Ltd. v. Union of India, (2004) 4 SCC 311, and Standard Chartered Bank v. V. Noble Kumar, (2013) 9 SCC 620, the Learned Counsel for the Respondent would pray that the appeal be dismissed with costs.

16. Considered and perused the records.

17. It would be pertinent to note that the perusal of the impugned order reflects that numbering of the paragraphs is bizarre in the sense that the serial numbers of the paragraph are repeated, therefore, the paragraphs are being referred with internal page number of the impugned order.

18. The perusal of the impugned order shows that the impugned order has not given any reason for arriving at the conclusion to pass final order and no findings have been given.

The sub-para 1 of para no. 18 at internal page no. 26 of the impugned order contains the observation of the Learned DRT that adverse interference has to be drawn but why and against whom adverse interference has to be drawn that has not been specified by the Learned DRT.

19. Similarly, in sub-para 2 of para no. 18 at internal page no. 26 of the impugned order, the Learned DRT has observed that there is variance in the claims brought under the RDDB Act and under the SARFAESI Act. However, the Learned DRT did not specify that what variance was noted by it and if there was any variance then what conclusion was drawn by the Learned DRT. The above observation made by the Learned DRT is not supported by particulars and does not show the application of mind by the Learned DRT.

20. Similarly, in sub-para no. 3 of para no. 18 at internal page no. 27 of the impugned order says that the Memorandum to record modification of equitable mortgage created on 03.12.2009 filed by the Applicants does not bear any date. But the Learned DRT did not make observation that, if there was no date on it then, how it affects the case and what was the consequence of the same. Besides careful perusal of this documents shows that it bears date of 22.01.2011 on last page of it.

21. The observation made in sub-para 5 of para no. 18 at internal page no. 27 of the impugned order reads that the Applicants of the Original Application do not possess the original memorandum of equitable mortgage dated 11.06.2008, therefore, the Applicants have no right to rest their claims on the further mortgage dated 24.12.2008 and 03.12.2009. However, it would be pertinent to note that the Applicants had filed the application I.A. No. 265/2017 to prove the 1st mortgage deed dated 11.06.2008 by way of secondary evidence. While passing the order on this application on dated 20.01.2021, the Learned DRT observed in para no. 4 of that order that the impact of these documents will be seen at the time of final arguments. Although in the same order, the Learned DRT has made the observation that allowing the secondary evidence will delay the matter further. In view of this Appellate Tribunal, this observation of dismissing the application is not tenable in the eyes of law because if the process for dispensation of justice some evidence is necessary then the same cannot be rejected for the reason that it may cause delay in disposal of the case.

22. The perusal of sub-para 8 of para 18 at internal page no. 28 of the impugned order reads that when the affidavit filed before the District Magistrate and the resultant order passed by him is seen then the same do not coincide with the pleading of the Original Application. It is difficult to understand and what does the Learned

DRT meant by this. If at all there was such situation then how would it adversely affect the case of the Applicants. Moreover, the Learned DRT did not specify that what was the contradiction between those two.

23. The observation made in sub-para 9 of para no. 18 at internal page no. 28 of the impugned order are also extremely bizarre and the same is quoted hereunder: “9. I am also convinced with the fact that the provisions of Sections 3, 58 and 59 of the Transfer of Property Act, Sections 63, 65 and 68 of the Indian Evidence Act and Sections 9 10 and 23 of the Contract Act have not been complied with by the Applicants while proving the mortgages referred in the O.A.” The Learned Tribunal has not specified that what exactly was the particular incidents and requirement of Sections3, 58 and 59 of the Transfer of Property Act, Sections 63, 65and 68 of the Indian Evidence Act and Sections 9, 10 and 23 of the Contract Act which were not complied with. Such a general observation without being substantiated with the facts cannot be sustained.

24. Similarly, the observation made in all remaining para are also without any cogent reasons and general in nature and are made without referring to the documents filed by the respective parties.

25. In view of the above discussion on facts and law, this Appellate Tribunal is of considered view that the impugned order suffers from lack of reasons, discussion of the facts and reasons for arriving at the final conclusion in the operative part of the impugned order.

Consequently, the Impugned order is liable to be set aside and to be remanded back to the Learned DRT- Aurangabad to rehear and decide it.

26. Accordingly, the impugned common order dated 13.06.2024 passed in these two Regular Appeals is set aside and the case i.e. Securitisation Application (S.A.) No. 158/2021 “Veer Gurjar Aluminium Industries Pvt. Ltd. V/s JM Financial Asset Reconstruction Company” and Original Application (O.A.) No. 172/2013 “Assets Reconstruction Company India Ltd. & Ors V/s Veer Gurjar Aluminium Industries Pvt. Ltd. & Ors.” are remanded to the Learned DRT, Chhatrapati Shambhajinagar (Aurangabad) with direction to rehear the case and decide.

Meanwhile parties are directed to maintain status quo.

All pending I.As if any, stand dismissed.

Sd/- Chairperson 04.11.2026

MKS(PS)-01 & 02(SB)