Sale at reserve price under SARFAESI Rules requires borrower consent; reserve price notice discrepancies vitiate auction process.

JUDGMENT : 25 March,2026

THE APPELLATE TRIBUNAL :

Instant appeal has arisen against a judgment and order dated 16.08.2024 passed by Learned DRT 2 Kolkata in S.A. No. 214 of 2023 (M/s K.D. Enterprise and others versus Indian Bank and others) whereby Learned DRT dismissed the S.A. along with the I.A. 1078 of 2023.

2. S.A. No. 214 of 2023 was filed by the Appellants for a relief to set aside the measures taken by the secured creditor under the SARFAESI Act with a further relief to restrain the Bank from taking action in pursuance of Demand Notice dated 05.01.2023, Possession Notice dated 20% March, 2023 published on 23" March, 2023 with a further relief to quash the same.

3. As per pleadings, Applicants are the borrowers and guarantors of the Bank who have availed the financial facilities from the Bank. Account became irregular and Bank proceeded under the provisions of SARFAESI Act after classifying the account as NPA on 08.09.2022. It is alleged that the notices issued by the Bank are against the provisions of law. Full particulars as required under section 13(3) of the SARFAESI Act, 2002 have not been mentioned in Notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the ‘Act). Details of outstanding amount etc. are also not provided. There is also violation of Rule 8 (1) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the ‘Rules’). Procedure as required under the Act was not followed by the Bank.

4. Written statement was filed by the Bank challenging the assertions made by the Applicants. Auction Purchaser has also put an appearance and filed the objections. In the objection filed by the Bank it is stated that Sale Notice was duly published in the “Financial Express” English daily “Aji Somoy” Bengali newspaper on 26.07.2023. Notices were also affixed on the conspicuous part of the secured assets. Valuation of the property was made by the Authorised Valuer who fixed realizable value of Rs.43,93,000.00. One S.A. No. 214 of 2023 was filed by the Applicant. But it was not informed to the Bank. No fresh ground is taken in the S.A. by the Applicant. Rather, an IA No. 1078 of 2023 is filed which is not in accordance with law.

5. In the affidavit of the auction purchaser it is stated that the auction purchaser is the successful auction purchaser in the E-auction conducted by the Bank who was declared as the highest bidder. 25% of the bid amount was deposited. Thereafter, remaining amount was also deposited on 31.08.2023. Despite the issuance of Sale Certificate, possession could not be delivered to the auction purchaser. S.A. is liable to be dismissed.

6. I have heard the Learned Counsel for the parties and perused the records.

7. Learned Counsel for the Appellant would submit that in the Notice under Section 13(2) of the SARFAESI Act, 2002 details as required under section 13(3) of the Act are not mentioned. Hence, the notice itself is bad in law. It is further submitted that this is a case of a single bidder in the auction process. There was no contest. Further, no consent of the borrower was obtained for sale to be conducted on the basis of reserve price only.

8. A challenge is also made on the Sale Notice on the ground that it was not published in the newspaper and was not affixed on the conspicuous part of the property as required under Rule 8(7) of the Rules.

9. Accordingly, it is submitted that the impugned judgement is erroneous.

10. Per contra, Learned Counsel of the Res