Authority: Supreme Court of India, Civil Appellate Jurisdiction (Division Bench of Justices Dipankar Datta & Sheel Nagu)

Order Date: 26 October 2026

Case Overview

  • Parties: Appellant Sumita Gupta (guarantor) vs. State of Uttar Pradesh & others, including Punjab National Bank as respondent.
  • Background: Gupta guaranteed a loan advanced by Punjab National Bank to borrower Akanksha Agrawal. Bank initiated SARFAESI proceedings; Gupta filed an application under Section 17 of the SARFAESI Act before the Debt Recovery Tribunal (DRT), Lucknow, which on 15 July 2025 issued an interim order restraining the bank from taking physical possession of the secured asset.
  • The High Court of Judicature at Allahabad, Lucknow Bench, disposed a writ petition (Anuja Dixit vs. State of U.P.) on 19 December 2025 directing police to assist the bank in taking possession, without noting the pending DRT application.
  • On 12 March 2026 the same Division Bench modified its earlier order, acknowledging a pending DRT proceeding but still extending police assistance for four weeks.
  • The bank failed to disclose the operative stay order from the DRT, and subsequently took possession of the asset and issued an auction notice.

Final Outcome

  • The Supreme Court held the bank remiss for nondisclosure and modified the High Court orders, directing Punjab National Bank to restore possession of the secured asset to Sumita Gupta.
  • Gupta may retain possession without creating any encumbrance until the Section 17 application is finally disposed of by the DRT, preferably by the end of February 2027.
  • All auction notices issued by the bank are stayed pending disposal of the Section 17 application.
  • The DRT is urged to decide the application expeditiously and to consider Gupta’s grievance regarding forfeiture of earnest money together with the Section 17 application.
  • The civil appeals are disposed of; all pending applications, if any, stand disposed of, while the merits of the disputes remain open.

Topics: Banking Regulation, SARFAESI Act, Asset Recovery