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J. B. PARDIWALA, R. MAHADEVAN
M. S. Sanjay – Appellant
Versus
Indian Bank – Respondent
| Table of Content |
|---|
| 1. summary of auction proceedings (Para 2 , 3) |
| 2. appeal allowed (Para 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12) |
ORDER :
2. This appeal arises from the Judgment and Order passed by the High Court of Karnataka at Bengaluru dated 15-6-2019 in Writ Petition No.47721/2017 by which the High Court allowed the Writ Petition filed by the Respondent No.4 – herein (guarantor) and thereby set aside the order passed by the Debt Recovery Appellate Tribunal (DRAT) dated 11-4-2017 in RA(SA) 151/2011.
(i) The appellant – herein before us is the auction purchaser. The Respondent No.4 is the guarantor. The Respondent No.2 before us M/s. Arihant Sarees had availed of loan facility from the Respondent No.1 – Bank.
(iii) The property in question was mortgaged by the original borrower, with the Respondent No.1 – Bank. Thus, a security interest was granted in favour of the Bank.
(v) The Auction was conducted on 31-7-2007. The appellant - herein was declared as the successful bidder in the said auction proceedings. He deposited a total sum of Rs.24,00,000/- (Approx.) with the Bank.
(vii) The appellant thereafter started developing the property purchased by him in the auction.
(ix) The DRT, Karnataka v
The court affirmed that procedural infractions in auction proceedings under the SARFAESI Act do not invalidate the auction unless they result in injustice.
The court reinforced that compliance with statutory notice requirements and fair valuation is essential in property auctions under the SARFAESI Act to protect borrower rights.
Mandatory compliance with procedural requirements under the SARFAESI Act is essential; failure to adhere prejudices borrowers' rights and invalidates auction proceedings.
(1) Auction sale of secured asset – Unless and until a clear 30 days' notice is given to borrower, no sale or transfer can be resorted to by a secured creditor. Secured creditor cannot effect sale or....
The SARFAESI Act mandates exhausting statutory remedies before seeking extraordinary relief under Article 226; procedural compliance is essential, and the auction process cannot be set aside absent s....
Setting aside auction sale – Mere typographical error due to inadvertence which has not caused any prejudice to borrowers, that in itself could not be considered to be ground to annul process held by....
The bank cannot negotiate a sale with the second highest bidder without conducting a fresh auction if the highest bidder fails to comply with auction conditions.
Compliance with statutory notice requirements is imperative in mortgage auctions; failures may invalidate the sale, preserving the mortgagor's right of redemption until formal sale registration.
The sale certificate under the SARFAESI Act is sufficient for title transfer, negating the need for further registration, and the High Court should not intervene in SARFAESI proceedings when alternat....
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