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Judgment
JASGURPREET SINGH PURI, J. (ORAL)
The present writ petition has been filed under Articles 226/227 of the Constitution of India seeking issuance of an appropriate writ in the nature of certiorari/mandamus or such other appropriate writ, order or direction which this Court may deem fit under the circumstances of the case to set aside Demand Notice dated 06.11.2025 (Annexure P-3), the Symbolic Possession Notices dated 04.04.2026 and 18.04.2026 (Annexure P-5 & P-6), physical possession order dated 14.07.2026 passed by learned District Magistrate, Ludhiana (Annexure P-14) & the E-Auction Notice dated 07.08.2026 (Annexure P-17), including the impugned order dated 22.07.2026 (Annexure P-16) passed by the DRT-III, Chandigarh in S.A. No.198 of 2026 as it is legal and contractually obligated on the Bank to first recover the outstanding loan amount from the insurance company before initiating coercive measures under the SARFAESI Act, 2002. Moreover, Bank has failed to decide/consider the objections dated 07.04.2026 (Annexure P-4) of the petitioners to settle the loan under OTS scheme. With a further prayer to direct the Respondent/Bank to first settle the claim from the insurance company for the recovery of the outstanding loan amount and to stay the operation of the E-Auction Notice dated 07.08.2026 (Annexure P-17) and subsequent auction proceedings and restrain the respondent/Bank from taking physical possession of the petitioners’ residential property.
It is the case of learned counsel for the petitioners that the SARFAESI proceedings have been initiated against the property which was mortgaged. In respect of the measures taken by respondent-Bank in the SARFAESI proceedings, the petitioners challenged the said proceedings by filing a securitisation application before the Debts Recovery Tribunal (DRT), which is stated to be pending. In the said proceedings, an Interlocutory Application (I.A.) seeking interim protection was filed, however, the same was dismissed by learned Debts Recovery Tribunal-III, Chandigarh vide order dated 22.07.2026 (Annexure P-16). Since the e-auction was fixed by respondent-Bank, the petitioners filed the present writ petition seeking protection from this Court on various grounds.
Learned counsel for the petitioners, while arguing the matter, further submitted that an insurance policy had been obtained by late Sh. Yudhvir Jain, father of petitioner No.1 at the time of sanction and disbursement of the loan and an amount of approximately 30,000/- had been paid as insurance premium. A specific averment has been made in Paragraph No.2(b) of the writ petition that an amount of 30,385/- was deducted towards the premium of a life insurance policy. Learned counsel argued that without claiming and adjusting the insurance amount, no SARFAESI proceedings could have been initiated against the petitioners, since the insurance claim ought to have been claimed and adjusted by the respondent/Bank itself.
It was because of the aforesaid reason that this Court considered how the respondents/Bank had initiated proceedings under the SARFAESI Act without taking into account the insurance claim when the purpose of an insurance claim is to meet such unforeseen contingencies. Therefore, on 26.08.2026, this Court specifically asked the petitioners as to whether any insurance policy existed or not. A similar query was also put to learned counsel for the respondents/Bank. The aforesaid order dated 26.08.2026 is reproduced as under:-
“When the matter was called today, Mr. R.V. Mehra, learned counsel for the respondents/Bank appeared and filed his Vakalatnama on behalf of the respondents/Bank, which is taken on record. He submitted that at the time of sanction and disbursement of the loan to the petitioner, no insurance premium was charged from the petitioner and there was no insurance policy at all.
However, learned counsel for the petitioners submitted that there was an insurance policy and the insurance premium was also deducted at the time of disbursement of the loan. In this regard, he referred to the Bank Statement Transaction History (Annexure P-1) wherein the loan disbursement dated 13.09.2018 was to � the tune of 19,69,615/- whereas the total sanctioned amount was approximately �20 lacs and in this way, an amount of approximately �31,000/- was paid towards insurance premium at the time of sanction of the loan.
A dichotomous situation has arisen on the basis of the specific statements made by the learned counsel for both the parties. This Court takes this matter very seriously as there ought not to be any dispute at least with regard to the factual position. We, therefore, direct the respondents/Bank to produce the original record before this Court tomorrow i.e. 27.08.2026 at 10:00 A.M. along with an affidavit of the Regional Manager specifically stating as to whether any amount towards insurance premium was deducted or not and whether any insurance policy was issued in respect of the loan or not.
We make it clear that these directions are being issued to test the bona fides of both the parties as both learned counsels have made their respective statements on specific instructions.
The matter is adjourned to 27.08.2026. To be taken up at 10:00 A.M.”
A categorical stand was taken by the petitioners that the insurance premium was deducted at the time of disbursement of the loan in addition to the specific averments made as aforesaid. On the other hand, learned counsel for the respondents/Bank took a specific stand that no such premium had been paid and no insurance policy existed.
In view of this dichotomous position on facts and on the basis of the specific statements made by learned counsels for the parties on their respective instructions, this Court directed the Regional Manager of the respondents/Bank to file an affidavit clarifying the aforesaid position. This Court also observed as aforesaid that these directions were being issued to test the bona fides of both parties, as both the learned counsels had made their respective statements on specific instructions.
Today, an affidavit has been filed by the Chief Regional Manager, Indian Overseas Bank, Regional Office, Fountain Chowk, Ludhiana in Court, which is taken on record. A copy thereof has been supplied to learned counsel for the petitioners.
As per the aforesaid affidavit, it has been specifically stated that neither any insurance premium was ever paid nor debited nor was any life insurance policy purchased in the name of late Sh. Yudhvir Jain, who was the father of petitioner No. 1 and the husband of petitioner No.2. With regard to the aforesaid amount of 30,385/-, which has been specifically averred by the petitioners in Paragraph No.2(b) of the present writ petition to have been paid towards the insurance premium, a bifurcation thereof has been provided in Paragraph No.1 of the affidavit. It has been stated that the said amount was charged under different heads, mainly towards Central GST, State GST, etc. and no amount was paid towards any insurance policy.
We are, therefore, of the considered view that the petitioners have deliberately misled this Court, which cannot be permitted under any circumstance. This was the reason why this Court observed on 26.08.2026 that the bona fides of both parties were required to be tested. The petitioners have failed the test of bona fides before this Court, not only by making specific submissions but also by making a false averment in the writ petition, which is supported by the affidavit of the petitioners.
Ordinarily, this Court would have initiated contempt proceedings against the petitioners but considering the fact that the petitioner No.1 is the son of late Sh. Yudhvir Jain, who had taken the loan and is now deceased, we take a lenient view and do not proceed to issue contempt notice against the petitioners. However, this Court cannot loose sight of the fact when a specific query was put to learned counsel for the petitioners on 26.08.2026, he, upon specific instructions, stated and reiterated after taking instructions, that the insurance premium had been paid. It was for this reason that the present case was posted for today. Therefore, this Court is of the considered view that beyond any doubt the petitioners have misled this Court. Hence, we deem it fit to impose exemplary costs upon the petitioners.
Consequently, the present writ petition is hereby dismissed with 1,00,000/- (Rupees One Lac only) as costs, which shall be deposited by the petitioners in the Punjab and Haryana High Court Bar Association Lawyers Family Welfare Fund within a period of three months from today. Thereafter, the petitioners shall furnish the receipt thereof before the Registry of this Court.
In case, the receipt is not furnished before the Registry, then the Registry shall put up this case for compliance purposes after three months so that further course of action shall be adopted for recovery of the aforesaid costs from the petitioners in accordance with law.