The Authorized Officer, Bank Of India, Circuit House Branch, Jamshedpur, Having Its Office At Gulnar Mahal-4, Inner Circle Road, Jamshedpur, Distt.-Singhbhum, Jharkhand. vs Minhaj Asghar Ansari, S/O Md. Ali Ansari, R/O Duplex No. D-7, Vatikaa's Green Valley, P.O. And P.S. Mango, Jamshedpur, Distt.-East Singhbhum, Jharkhand.

The present appeal ^has been preferred by ^the appellant

^of Financial Assets ^and Enforcement ^of Security Interest ^Act, 2002 (in ^short "The SARFAESI Act") against ^the order dated 07.03.2025, whereby the S.A. No. 84/2024 filed by ^the respondent-borrower ^{has been} allowed by ^the Tribunal

Brief facts of the matter ^are that ^one proprietorship firm namely M/s M.A. Enterprises ^was granted ^{various credit} facilities by the appellant-Bank through its proprietor respondent-borrower under ^the CGTMSE Scheme. The respondent-borrower ^{was also} granted ^a housing ^loan by the appellant-Bank for ^{a sum} of Rs.64.80 lacs for purchasing the house ⁱⁿ question. ^In order ^{to secure the same, an} equitable mortgage ^was created by the respondent-borrower ^over the property ⁱⁿ question by depositing original title deed ^{with the} bank. ^Since the respondent-borrower could ^not maintain the financial discipline ⁱⁿ respect ^{of the loan account of the} above mentioned firm, the ^{same was} classified ^as NPA including ^{the account of} housing ^{loan on} 15.05.2024. The appellant-Bank issued ^{a notice dated} 08.07.2024 ^to the respondent-borrower stating ^therein that the ^{accounts of the} respondent have ^been classified ^{as NPA.} Thereafter, ^a demand ^notice dated 24.05.2024 ^was issued by ^the Bank u/s 13(2) of the SARFAESI Act, which ^was replied by ^the respondent-borrower vide letter dated 25.07.2024 u/s 13(3-A) ^{of the said} Act. Thereafter, ^the symbolic possession of the property ⁱⁿ question ^{was taken} by ^the bank by issuing possession ^notice dated 30.07.2024 u/s 13(4) of the SARFAESI ^Act.

ⁱⁿ the meantime, M/s M.A. Enterprises through ^its proprietor had filed ^{a Writ} Petition (C) No. 1563/2022 ^before the Hon'ble High Court ^of Jharkhand ^at Ranchi for release of payment towards the construction work done ^{in the} department of the State Government, but the Hon'ble High ^Court vide ^order dated 24.11.2023 dismissed the ^same with liberty to the respondent-

The respondent-borrower challenged ^the demand ^notice dated 24.05.2024 and possession ^{notice dated} 30.07.2024 by filing the present S.A. before the Tribunal below. Thereafter, ^the appellant-Bank issued ^fresh auction ^{sale notice} scheduling the auction of ^the property ⁱⁿ question ^on 10.03.2025, ^{which was} challenged by the respondent-Bank ⁱⁿ the said pending S.A. The Tribunal below vide order impugned ^has allowed the S.A. ^{of the} respondent-^borrower holding that the housing ^loan admittedly ^{was not overdue} and it could not be treated ^{as NPA because} CGTSME ^loan itself could ^not be treated ^as NPA and ^as such declaration ^{of NPA} itself is ^erroneous, consequently, SARFAESI action ^is also illegal. Being aggrieved by ^{the said} order, ^{the present} appeal has ^{been filed by the} respondent-Bank.

Learned counsel for the appellant submitted that the Tribunal below has wrongly held that in ^case of ^CGTMSE

^Income Recognition, ^Asset Classification and Provisioning Pertaining to Advances. It ^was further contended that the

^purpose of providing guarantee in respect of credit ^facilities extended by lending ^{institutions to the} borrowers

^one M/s M.A. Enterprises through its proprietor, who ^is respondent ⁱⁿ the present ^case, had taken ^various credit facilities from the appellant-Bank ^and the proprietor of ^the

15.09.2018 and ⁱⁿ both the loan accounts, the PAN number of the respondent ^was attached. ^{It was} further irregular, hence it ^was declared ^as NPA ^on 15.05.2024 and pursuant ^to which, the housing ^loan account also ^{stood as NPA on the} said date. ^{It was} further ^{contended that the} proprietorship ^{firm is not a separate} legal entity ^{from the} individual ^owner, meaning thereby ^the business identity ^is essentially the ^{same as the owner's} personal identity.

counsel has ^{referred to} paragraph ^{no. 2.2.2 of} the IRAC ^norms dated 02.07.2012 and has stated that ^{in respect} of ^a borrower having ^{more than one} facility with ^a Bank, all the facilities granted by the Bank will have to be ^{treated as NPA} and ^not the particular facility ^or part thereof which ^has become irregular. ^{It was} further contended that the demand notice, possession ^notice and ^sale notice challenged by ^the borrowers ^{was with} regard ^to the housing loan facility and classification of ^{the CC account of the firm was never} challenged by ^the Bank, but the Tribunal below without considering these facts has held that the declaration of ^account pertaining ^{to the} housing ^{loan is erroneous. It was,} therefore, prayed ^that the order impugned ^{may be set} aside ^{and the} appeal may

for the respondent-borrower submitted ^{that the} respondent-borrower ^was regularly paying ^{his EMI since} very beginning of the loan, but ^on 08.07.2024 ^{he came to} know about the NPA of the account pertaining the housing loan, whereas the said ^{account was} regular. ^was further contended that the cash credit facility ^{was taken} by the respondent's ^company M/s M.A. Enterprises ^and the home loan ^{was taken} by ^the respondent ⁱⁿ his personal capacity, therefore, the ^cash credit facility

because in the said account payment ^{was never} irregular.

appellant-Bank ^{that since the PAN of the} respondent ^was attached ⁱⁿ both the loan accounts, therefore, when the ^{account of the firm was} classified ^{as NPA on} 15.05.2024, the home ^{loan account was} automatically classified ^as NPA ^on the said date, ^{is not} sustainable ^because both the ^loan

Learned counsel further submitted that ^{the various} credit facilities ^were taken by the company ^of the respondent namely M/s M.A. Enterprises under ^the CGTSME Scheme, which ^is established by ^the Central Government ⁱⁿ order to implement ^{a credit} guarantee scheme for MSMEs. ^{It was}

provide financial assistance to the small and medium industries without ^any third party guarantee ^or collateral

Learned counsel further submitted

^also preferred ^{an O.A. No.} 377/2024 before ^the Tribunal below against the company of the respondent namely M/s M.A. Enterprises ^with certain reliefs, which ^is still pending for adjudication. It ^was further contended that the appellant-Bank ^itself has admitted ^{that the} home ^{loan account} of the respondent-borrower ^was standard when it

contention ^of the appellant that ^{as per} the IRAC ^{norms, if}

borrower may also become NPA, is not sustainable because the ^{same is not} applicable ^{to the} individual loan account, ^as the housing loan ^was taken by the borrower in ^his personal capacity and the another loan ^was taken

^{It was also} contended ^that the credit facilities granted by the Bank ^to the respondent's company M/s M.A. Enterprises ^was secured by ^{way of} hypothecation of book debt, JCB 3DX-PBBKGDAAG, pledge of TDR/NSC/KVP/Assignment of Insurance Policy ^{and other} assets, but ^not by ^the property ⁱⁿ question, ^as the house ^loan facility availed by ^the respondent ^{in his} personal capacity ^was entirely separate loan facility and ^{the same} could ^not be clubbed with the said facility i.e. Cash Credit facility granted ^to the proprietorship firm. It ^was thus contended that the Tribunal below has rightly held that ^the account declared ^as NPA pertaining ^to the housing loan ^is erroneous. ^{It was,} therefore, prayed that ^the appeal filed by ^the appellant ^may be ^{dismissed with heavy costs.}

counsels for the parties ^and perused the record.

^11. Undisputedly, ^the present S.A. ^was filed by ^the

possession ^{notice and sale notice} issued by ^the appellant-^Bank pertaining ^{to the} housing ^loan account. ^{In the} said

the housing loan account ^was regular and could ^not be declared ^as NPA. The appellant-Bank itself ^has admitted

granted ^to the firm of the respondent-borrower had become NPA. From it, the question arises, ^as to whether both the ^loan accounts ^were having separate legal entity No doubt, the credit facilities of the company of the respondent-borrower namely M/s ^M.A. Enterprises were granted by the appellant-Bank under the CGTMSE Scheme. ^In addition ^to it, ^the said facility ^was also secured by the principal security ^{in the form of} hypothecation ^{of book} debt, ^JCB 3DX-PBBKGDAAG, pledge of TDR/NSC/KVP/Assignment ^{of Insurance} Policy ^{and other} assets, ^as there ^was also collateral security in the shape of pledge ^of TDR, Assignment ^of SUDLIFE Elite Policy ⁱⁿ the ^{name of} M/s ^{Farha Maheen.} The said facility ^was also guaranteed by ^{the Central} Government. ^{In this} regard, ^para 4.2.14.1 ^{of the Master Circular} itself ^says "the credit facilities backed by guarantee of the Central Government though overdue ^may be treated ^as NPA only when ^the Government repudiates its guarantee when invoked". ^In the present ^case, there is nothing ^{on record} which may show that the Bank has ^ever invoked the said guarantee and ^the Government ^has rejected ^{the same. If} the ^account of the firm had become NPA, ^{it was} the duty ^of the Bank ^to first ^{raise its} demand to ^the Government for payment, ^to which the guarantee ^was extended by ^{it and} thereafter, for the remaining dues, the Bank ought ^to have filed the ^recovery suit before ^the competent ^{court for} obtaining ^the decree against the borrower. However, the Bank has filed the O.A. before the Tribunal below for recovery of ^its total dues, which ^{is stated to be still} pending ^for adjudication. It ^is stated ^that if the loan of the Bank ^is secured either by the Central Government ^or by the State Government, then

^money from the Government being guarantor, the Bank firstly proceeds ^{to recover its} dues ^{from the borrower} by adopting ^various methods for the ^same, whereas in my opinion, the ^Bank should proceed first for ^{its recovery} from ^the guarantor, particularly ^where is ^the Central Government ^or the State Government, because the bank ^{can recover} its money easily ^{from the} Government instead of borrower. ^{In the} present ^{case, the} bank ought to have proceeded first for its recovery from the Central Government ^{to recover its} dues, but it did ^not do ^{so. For} the sake of argument, ^if it is assumed that the said loan ^{account was} not of special category of the ^{loan such as} CGTSME loan, ^even then housing loan of ^the borrower despite being standard could ^not be declared ^{as NPA on the ground of the NPA of} the ^cash credit ^facilities granted ^to the ^firm of the respondent-borrower because the said facility ^was granted under the special scheme launched by the Government of India i.e. CGTMSE. As ^per the Article No. 2.2.2 of the Master Circular of the RBI, ^no doubt, if

^same borrower ^would automatically become NPA, but ^{in the present case, the} security ^created by ^{the borrower in} both the loan ^{accounts are} different and ^not collateral and the ^customer ID of the ^{borrower in} both ^{the loan} accounts ^are also different, therefore, the said Article is ^not applicable to the ^{case in hand.} However, ^{the Bank} itself ^has also admitted that ^the housing ^{loan of the} respondent-borrower ^was standard. The contention of the appellant

accounts, the ^{same were} classified ^as NPA together ^on the ^same day, ^{is not} tenable ^{because it appears to be} technical issue of the system of the Bank, for which the borrower ^{or any} person cannot be made ^to suffer. Thus ^the Tribunal below has rightly held the declaration of the housing ^{loan account of} the borrower ^{as NPA} by the Bank despite being regular ^to be ^erroneous.

^{13. In view of the} discussions ^as held above, the ^order impugned does ^not call for ^any interference by this Tribunal. Consequently, ^the appeal ^filed by ^the appellant ^is

^{14. A copy of this} judgment ^be forwarded ^{to the} parties ^as