Mandatory compliance with Rule 9(4) requires written agreement for extending balance payment beyond 15 days in e-auctions under SARFAESI Rules.

JUDGMENT : 14th January, 2026

THE APPELLATE TRIBUNAL :

Instant Appeal has arisen against an order dated 20th February 2024 passed by Learned DRT- II Hyderabad allowing the S.A. No. 416 of 2019 (M/s. Apsara Constructions and others versus Canara Bank and others).

2. As per pleadings of the parties, Respondent No. 1, 2 and 3 namely M/s Apsara Constructions represented by its partner Vemula Anand Kumar, V Anand Kumar and S. Venkatesh Goud preferred a Securitisation Application under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the ‘Act’) stating that a loan of Rs.1.75 crore was availed by them on 10.10.2013 from the Canara Bank. Security Agreement in respect of secured assets was entered upon between the parties. Securitisation Applicants also stood as guarantors. The loan account became irregular and was classified as NPA. Demand Notice under Section 13(2) of the SARFAESI Act, 2002 was issued which was responded on 13.07.2015. But the same was not accepted by the Bank. Notice under Section 13(4) of the Act was issued on 19.10.2015 which was neither published nor affixed on the secured assets as required under the law. Reserve price was fixed at a lower price in violation of Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the ‘Rules’). No proper Notice under Rule 8(6) and 9(1) of the Rules was issued. There is violation of Rule 8(7) and 9(3) and 9(4) of the Rules.

3. Respondent Bank filed reply before the Ld. DRT stating that conditional order passed by the Ld. DRT on 26.12.2019 in I.A. No. 6189 of 2019 was not complied with. Accordingly, S.A. becomes infructuous. Account was rightly classified as NPA. Recall Notice was issued on 04.05.2015 by the Bank. Notice under Section 13(2) of the Act was issued on 13.05.2015 which was replied by the borrowers on 13.07.2015. Bank issued detailed reply on 21.07.2015. Possession Notice was issued in accordance with law. E- auction Sale Notice dated 21.11.2019 was published on 24.11.2019 in ‘The New Indian Express’ and ‘Sakshi’ English and Telegu Newspapers. No valuation report is filed by the borrowers. Rather, the valuation report dated 01.11.2019 was obtained by the Bank as per the approved guidelines. E-auction sale was conducted on 27.12.2019. Auction purchaser deposited 25% bid amount on 30 December, 2019. Time was sought for 90 days for payment of balance sale consideration which was granted and the auction purchaser made payment on 21.03.2020. Sale certificate was issued on 21.03.2020 which was registered on 24.06.2020. Auction purchaser also adopted the statement made by the Bank.

4. Learned DRT framed following two issues for consideration:

(i) Whether the applicants have made out any valid ground to set aside the e-auction held on 27.12.2019 pursuant to e-auction sale notice dated 21.11.2019 and consequential sale certificate dated 21.03.2020 in respect of SA schedule property?

(ii) To what relief?

5. Learned DRT recorded a finding that there is no violation of Rule 8(5), 8(6) and 8(7) of the Rules, 2002. However, no proof of affixation of Possession Notice on the secured assets was placed on record. Hence, there is violation of Rule 8(1) of the Rules, 2002. It is further held that the auction was conducted on 27.12.2019 while 28.12.2019 and 29.12.2019 were the Bank holidays and 25% deposit was made on 30% December, 2019 which is in accordance with law. However, the auction purchaser only sought 30 days time for payment of 75% of the bid amount. 75% of the bid amount was deposited on 21.03.2020. There is nothing on record to show that any further extension was granted. Accordingly, there is violation of Rule 9(4) of the Rules. Consequently, S.A. was allowed setting aside the Possession Notice dated 06.08.2015. E- auction held on 27.12.2019 and the Sale Certificate dated 21.03.2020 were also set aside. Direction was issued to the Bank to refund the sa