The court affirmed that procedural infractions in auction proceedings under the SARFAESI Act do not invalidate the auction unless they result in injustice.

ORDER :

1. Leave granted.

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.

3. The facts giving rise to this Appeal may be summarized as under:

(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.

(ii) As the borrower defaulted in repaying the loan amount, the Bank decided to proceed under the provisions of the SARFAESI Act.

(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.

(iv) The Bank proceeded to put the property in question to auction after due compliance with the provisions of the SARFAESI Act.

(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.

(vi) It is not in dispute that thereafter on 30-11-2007, a Sale Certificate also came to be issued in favour of the appellant – herein.

(vii) The appellant thereafter started developing the property purchased by him in the auction.

(viii) The borrower did not deem fit to question the legality and validity of the auction proceedings. However, it is the Respondent No.4 - herein its capacity as the guarantor went be- fore the Debt Recovery Tribunal and questioned the legality and validity of the auction proceeding.

(ix) The DRT, Karnataka vide the order dated 23-1-2009 allowed the ASA 232/2008 instituted by the Guarantor and set at naught the auction proceedings.

(x) The DRT in its impugned order observed thus:-

“On verification of the pleadings put forth by the appellant as well as the respondent bank herein, along with its counter the respondent bank field publication copies of sale notice dated 14.7.2007 and another sale notice dated 8.6.2007 and possession notice dated 24.5.2007, along with the counter field by it on 6.6.2008. On 8.12.2008 along with a memo the respondent bank field publication copy of pos- session notice dated 24.5.2007 in 2 newspapers, sale notice dated 8.6.2007 published in 2 newspapers, sale notice dated 14.7.2007 published in 2 newspapers, and valuation report dated 25.5.2007. But, at the first instance along with its objections to the appeal nothing prevented the respondent bank to file the valuation report along with its counter objections for the reasons best known to it in spite of avail- ability of it with the respondent bank, which definitely leads to a suspicion whether it was obtained prior to filing its objections or subsequent to filing its objections. If really the respondent bank obtained valuation report as required under law, nothing prevented it to file the same along with its objections, as the appellant has taken the plea that the authorized officer has not followed all the formalities before bringing the property for sale. Further, as seen from the sale notices dated 8.6.2007 and 14.7.2007 the respondent bank issued 2 sale notices, whereas the 2nd sale notice dated 14.7.2007 was published on 16.7.2007 in Kannada Praba as well as Indian Express as required under law. But the tenders. were opened on 30.7.2007 and sale was held on 31.7.2007. But the 2nd publication was made by the respondent bank without giving 30 days time for selling the property. But, on 30.7.2007 itself it opened the tenders and sold the property to the highest bidder, i.e. on 31.7.2007 itself. But, as per law laid down under Secu