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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
MOUSHUMI BHATTACHARYA, GADI PRAVEEN KUMAR, JJ.
M/s. Aditya Constructions, rep. by its Proprietor, Hyderabad – Petitioner
Versus
The Debts Recovery Appellate Tribunal, Kolkata and Others – Respondents
Writ Petition Nos.24552 and 24642 of 2025
Decided On : 28-01-2026
| Table of Content |
|---|
| 1. facts of the case including loans and auction history. (Para 1 , 2) |
| 2. arguments presented by parties regarding auction validity. (Para 3 , 4 , 5 , 6) |
| 3. court's analysis of auction process and legal compliance. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26) |
| 4. ratio decidendi supporting upholding of the auction. (Para 27 , 28 , 29 , 30 , 31) |
| 5. final conclusion to dismiss the writ petitions. (Para 32) |
ORDER:
Moushumi Bhattacharya, J.
1. The petitioner in both these Writ Petitions is a Borrower who availed credit facilities from the respondent No.3 – Union Bank of India (formerly Andhra Bank) of about Rs.10.50 crores by mortgaging an asset which was put to auction by the respondent No.3-Bank. The petitioner has filed these Writ Petitions challenging the Common Judgment passed by the Debts Recovery Appellate Tribunal at Kolkata (‘DRAT’) on 04.08.2025 reverting an order passed by the Debts Recovery Tribunal-II at Hyderabad (‘DRT’) on 30.01.2023. The impugned Common Judgment was passed in two Appeals (viz., Appeal Nos.76 of 2023 and 40 of 2023) filed by the respondent No.3-Bank and the respondent No.5-Auction Purchaser, respectively, from the order passed by the DRT on30.01.2023.
Timeline of Relevant Events
2. A detailed timeline of the relevant events is stated below for a better understanding of the facts leading to the impugned Common Judgment passed by the DRAT.
| 17.05.2017 | The loan account of the writ petitioner was classified as a Non-Performing Asset. |
| 20.06.2017 | The respondent No.3-Bank issued a Demand Notice under section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’), calling upon the writ petitioner to repay Rs.11,39,50,775/- along with interest. |
| 28.06.2017 | The writ petitioner addressed a Letter to the respondent No.3-Bank acknowledging the receipt of the Demand Notice and promising to regularise the account. |
| 20.09.2017 | The respondent No.3-Bank issued a Possession Notice under section 13(4) of the SARFAESI Act as the writ petitioner failed to regularise the account. |
| 08.05.2018 | The respondent No.3-Bank obtained a Valuation Report from an approved Valuer under Rule 8(5) of The Security Interest (Enforcement) Rules, 2002 (‘2002 Rules’). |
| 18.07.2018 | The respondent No.3-Bank issued a Sale Notice under Rule 8(6) of the 2002 Rules fixing the reserve price @ Rs.6,67,71,000/-. The auction failed for lack of bidders. |
| 12.12.2018 | The respondent No.3-Bank issued another Sale Notice under Rule 8(6) of the 2002 Rules fixing reserve price @ Rs.6,00,93,000/- i.e., 10% lower than the price fixed in the earlier auction notice dated 18.07.2018. The auction failed for lack of bidders. |
| 29.05.2019 | The respondent No.3-Bank issued another Sale Notice under Rule 8(6) of the 2002 Rules fixing reserve price @ Rs.5,50,93,000/- i.e., 10% lower than the price fixed in the earlier auction notice dated 12.12.2018. The auction failed for lack of bidders. The writ petitioner filed S.A.No.185 of 2019 before the DRT and was granted a conditional order requiring the writ petitioner to deposit Rs.3.50 crores for stay of auction. The writ petitioner, however, failed to comply with the aforesaid conditional order. |
| 07.10.2019 | The respondent No.3-Bank issued another Sale Notice under Rule 8(6) of the 2002 Rules fixing reserve price @ Rs.4,95,00,000/- i.e., 10% lower than the price fixed in the earlier auction notice dated 29.05.2019. The auction failed for lack of bidders. |
| 19.12.2019 | The respondent No.3-Bank issued another Sale Notice under Rule 8(6) of the 2002 Rules fixing reserve price @ Rs.4,95,00,000/- which was the same price as fixed in the earlier auction notice dated 07.10.2019. |
| 10.01.2020 | The auction was conducted in which the respondent No.5 emerged as the highest bidder by bidding an amount of Rs.5,35,00,000/-. |
| 31.10.2019 | In the Writ Petition (WP.No.23860 of 2019) filed by the writ petitioner, a Coordinate Bench of this Court gran |
The court upheld the auction process under the SARFAESI Act, affirming that auctions must follow statutory requirements and can only be challenged on limited grounds such as fraud or procedural irreg....
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.
Mandatory compliance with procedural requirements under the SARFAESI Act is essential; failure to adhere prejudices borrowers' rights and invalidates auction proceedings.
The auction sale is invalid if not compliant with SARFAESI Act rules on property valuation, requiring distinct treatment of movable and immovable assets without collusion.
Secured creditors must adhere to proper notice and valuation requirements per the SARFAESI Act, as failure to do so invalidates asset sales.
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.
The main legal point established in the judgment is the importance of fair valuation, compliance with statutory provisions, and the need to set aside auction-sales with fundamental procedural errors.
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