A sale under the SARFAESI Act can be set aside if the secured asset is undervalued due to a discrepancy between the actual area mortgaged (and mentioned in the sale certificate) and the area assessed in the valuation report used for the auction.

JUDGMENT : 28st April, 2026 THE

APPELLATE TRIBUNAL :

1.Heard the Ld. Counsel for the parties.

2. Instant Appeal has arisen against the order and judgement dated 15.05.2024 passed by Learned Debts Recovery Tribunal - 1 Hyderabad in SA 13/2019 whereby sale conducted by the Appellant Bank was set aside and the bank was directed to refund the amount of sale consideration to the Respondents No. 2 to 5 who are auction purchasers of the schedule property.

3. As per pleadings of the parties, undisputedly, Respondent No.1 is borrower of the Appellant Bank and Respondents No.2 to 5 are the auction purchasers and Respondents No. 6 & 7 are the subsequent auction purchasers of the secured assets. It is not in dispute that the 1st Respondent borrower availed financial facilities from the Appellant Bank and the loan account became irregular and the same was classified as NPA as per the guidelines of RBI. Notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 21.07.2016, Possession Notice was issued on 29.09.2016 and different sale notices were issued by the bank but sale could not be fructified. Ultimately, sale notice dated 16.02.2019 was issued by the Bank and sale was conducted on 22.03.2019 in favour of Respondents No.2 to 5. In the meanwhile, SA.13/2019 was filed by the borrower. Auction purchasers i.e. Respondents No. 2 to 5 deposited sale consideration amount of Rs.1,06,25,000/- and sale certificate was issued and the same was also registered. After filing of SA, amendment application was moved by the borrower for amendment of SA which was partly allowed by the Ld. DRT. Writ Petition No.12501/2019 was filed by the borrower before the Hon’ble High Court of Telangana at Hyderabad which was allowed and amendment was carried out. After filing of reply by the bank, Ld. DRT disposed of the SA by passing the impugned order which is under challenge.

4. As far as the action of the bank under SARFAESI Act, 2002 is concerned, Ld. DRT categorically held that the action of the Bank by issuing notice under Section 13(2), 13(4) of the Act and sale notice was in accordance with law. Those findings are not challenged by the borrower and they attained finality. However, Ld. DRT allowed the SA on the ground of discrepancy in the area of secured asset which was sold by the bank in e-auction. The area of the secured asset is House bearing No.42-463/64/A in Plot No.64A in Sy.No.353/1/city or town, Gayatrinagar, Moula_ Ali admeasuring 266.66 Sq.yds and the total plinth area of first floor was 1739.02 sq.ft. and the second floor was also the same totaling 3478.04 sq.ft. The same area was mentioned in the Possession Notice dated 29.09.2016. But the approved valuer of the Bank submitted valuation report for an area of 220 Sq.yds. with a plinth area of 2300 sq.ft. Basing on the same, sale was conducted and was finalized. Accordingly Ld.DRT allowed the SA.

5. Ld. Counsel for the Appellant would submit that mortgage was created by the borrower in favour of the bank by deposit of sale deed. The area in the sale deed of the borrower was 266.66 Sq.yds. but in the valuation report prepared by the approved valuers, the area was found as 220 Sq.yds. with a plinth area of 2300 sq.ft. physical survey of the site was done in the presence of borrower. Accordingly, valuation report was prepared, sale was conducted and sale certificate was also issued. Per contra, Ld. Counsel for the Respondents would submit that the area of secured asset was admittedly 266.66 sq.yds o