Cheque deposit of 25% bid amount violates mandatory R.9(3) SARFAESI Rules requiring immediate cash; sale confirmation during interim order is nullity.

JUDGMENT : 19t* December, 2025

THE APPELLATE TRIBUNAL :

Instant Appeal No. 250 of 2018 has arisen against a judgment and order dated 30% October 2018 passed by Learned DRT-2 Hyderabad dismissing S.A. No. 1398 of 2017 (Smt. Gajjala Jayamma versus Canara Bank and others).

2. As per pleadings of the parties, facts of the case are that admittedly Appellant Smt. Gajjala Jayamma was a borrower who offered S.A. schedule property as a security for the loan availed by M/s Eversure Aqua Solutions Pvt. Ltd. Defaults were made in repayment of the amount by the borrower. Proceedings under SARFAESI Act, 2002 were initiated by the Bank. S.A. No. 499 of 2014 was filed challenging the Possession Notice dated 24.06.2014. Interim order was passed in favour of the Securitisation Applicant. Subsequent thereto, e-auction Sale Notice dated 15.10.2015 fixing the e-auction on 21.11.2015 was issued by the Bank. As an interim measure, Bank was allowed to go ahead with the auction but directed not to confirm the sale till further orders of the DRT. Ultimately, S.A. No. 499 of 2014 was dismissed on 11.04.2016.

3. A Writ Petition No. 7315 of 2017 was filed by the Respondent No. 2 i.e. auction purchaser wherein the Securitisation Applicant was arrayed as _ Respondent. Pending Writ Petition, several irregularities were noticed by the Securitisation Applicants which were not within his knowledge at the time of filing of S.A. No. 499 of 2014. Accordingly, S.A. was filed with a relief restraining the Bank for taking over physical possession of the schedule property as well as setting aside the Sale Certificate dated 12.01.2017 issued by the Bank and also to set aside the sale conducted on 21.11.2015 on the ground of violation of Rule 9(3) and 9(4) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the ‘Rules’)

4. Respondent Bank filed the response before the Learned DRT wherein it is stated that factum of loan is not in dispute. Demand Notice dated 25.01.2014 was duly issued and served in accordance with law. Possession Notice dated 24.06.2014 was also served on 02.07.2014 which was also published in two newspapers in ‘Andhra Jyothi’ and English Daily on 27.06.2014. Filing of S.A. No. 499 of 2014 on 14.07.2014 is also in dispute wherein interim order was passed on 23.07.2014 which was not complied with. Thereafter, challenge to the Sale Notice dated 15.10.2015 fixing the auction on 21.11.2015 was made wherein the DRT allowed the Bank to proceed with the auction but not to confirm the sale. S.A. No. 499 of 2014 was dismissed vide order 18.03.2016/ 11.04.2016.

5. Thereafter, Sale Certificate was issued on 12.01.2017. Compliance of Rule 9(3) and 9(4) of the Rules, 2002 was challenged in the present S.A which was duly complied with by the auction purchaser. Cheque was deposited by the auction purchaser. Auction was conducted as notified on 21.11.2015. Bank was entitled to receive E.M.D from bidder upto 5 p.m on 19.11.2015. Amount of 25% was received on 21.11.2015 in compliance of the provisions of the Rules. Accordingly, S.A. is liable to be dismissed.

6. Auction purchaser also preferred the separate written statement adopting the same contentions as raised by the Bank.

7. After hearing the Learned Co