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IN THE HIGH COURT OF JUDICATURE AT MADRAS
MANINDRA MOHAN SHRIVASTAVA, G.ARUL MURUGAN
Lucky Footwear Components Rep. by its Partner, Mr. V.Aslam Basha – Appellant
Versus
Authorized Officer, Indian Bank – Respondent
| Table of Content |
|---|
| 1. challenge to auction process based on notice defects. (Para 3 , 4 , 5) |
| 2. response by both parties considered. (Para 7 , 8) |
| 3. auction notice validity and property description upheld. (Para 9 , 10) |
| 4. classification of account as npa justified. (Para 12 , 13 , 14) |
| 5. importance of demonstrating prejudice in challenges. (Para 17) |
ORDER :
MANINDRA MOHAN SHRIVASTAVA, CJ.
(Order of the Court was made by the Hon'ble Chief Justice)
1. Heard.
2. This petition under Article 227 of the Constitution of India has been filed against the order dated 26.09.2025 passed by the Debt Recovery Appellate Tribunal, by which the Appellate Tribunal confirmed the order of dismissal of SA filed by the petitioners/borrowers.
3. Default on the part of the petitioners/borrowers to repay the loan resulted in initiation of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short 'SARFAESI Act') against the petitioners. Notice under Section 13(2) of the SARFAESI Act was issued followed by measures taken under Section 13(4), which led to the symbolic possession taken and also sale of the secured asset through auction by the bank.
The court affirmed that adherence to procedural norms in auction processes under SARFAESI Act is crucial, with technical violations insufficient for invalidation unless clear prejudice is demonstrate....
The auction sale of secured assets was invalid due to violations of statutory procedures, including failure to obtain separate valuations and selling below the reserve price.
Auction sale under SARFAESI Act upheld; simultaneous civil proceedings do not invalidate the completed transaction, and allegations of undervaluation found unsubstantiated.
Sale at reserve price under SARFAESI Rules requires borrower consent; reserve price notice discrepancies vitiate auction process.
The main legal point established in the judgment is the interpretation of Rule 9(4) and 9(5) of the Security Interest (Enforcement) Rules, 2002, highlighting the requirement for the purchaser to pay ....
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 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.
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