The court affirmed that adherence to procedural norms in auction processes under SARFAESI Act is crucial, with technical violations insufficient for invalidation unless clear prejudice is demonstrated.

ORDER :

MANINDRA MOHAN SHRIVASTAVA, CJ.

(Order of the Court was made by the Hon'ble Chief Justice)

1. Heard.

2. This petition under Article 227 of the Constitution of India has been filed against the order dated 26.09.2025 passed by the Debt Recovery Appellate Tribunal, by which the Appellate Tribunal confirmed the order of dismissal of SA filed by the petitioners/borrowers.

3. Default on the part of the petitioners/borrowers to repay the loan resulted in initiation of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short 'SARFAESI Act') against the petitioners. Notice under Section 13(2) of the SARFAESI Act was issued followed by measures taken under Section 13(4), which led to the symbolic possession taken and also sale of the secured asset through auction by the bank.

3.1. These proceedings were challenged by the petitioners by filing a Securitisation Application before the Debts Recovery Tribunal. The application of the petitioners was rejected. Aggrieved, the petitioners filed appeal before the Debt Recovery Appellate Tribunal, though unsuccessfully, giving rise to the instant petition.

4. The submissions made by learned counsel for the petitioners are as below:

A) The sale notice dated 25.07.2022 was defective for the reasons that -

(i) it is in contravention of 15 clear days as provided in Rule 9 of the Security Interest (Enforcement) Rules, 2002;

(ii) the description of the property is not proper as the superstructure has not been clearly described in the sale notice; and

(iii) the valuation report, which was made basis to fix the minimum reserve price, was prepared more than one year before, which violated the guidelines under NPA Management Police 2022-23 – Version 1.0 issued by the respondent/bank.

B) The respondent also contravened the provision contained in Section 13(3A) of the SARFAESI Act in not deciding the petitioners' objection to notice under Section 13(2).

C) The petitioners' account was wrongly classified as NPA, as

(i) an amount of Rs.1,37,718/-, which was paid by the petitioners, was not taken into consideration while working out the amount in default and thereby, resulting in wrong classification of the petitioners' account as NPA; and

(ii) the petitioners were illegally deprived of the benefit of additional loan facility at the rate of 20% of the loan during moratorium period on account of Covid-19 as per the bank policy.

D) The petitioners have paid a huge amount of Rs.78 lakhs and are even willing to pay the balance amount as claimed by the bank in the OA filed before the Debts Recovery Tribunal.

5. Learned counsel for the respondent/bank replies to the contentions by submitting that the bank replied to the so-called objection under Section 13(3A) on 31.07.2021. His submission is that a close look of the contents of letter dated 23.06.2021 would show that it was not in the nature of any objection, but only a prayer to grant some relaxation and further extension of time was made. As there was no objection as such, there was no requirement of law to decide any objection.

5.1. He would next submit that the submissions with regard to the defect in the notice are liable to be ignored, for the reason that -

(a) the valuation report is dated 31.07.2021 whereas the sale notice was published in the newspaper on 26.07.2022. The occasion to describe the reserve price arose while issuing the sale notice and not on the date of sale.

(b) the bank got the valuation of the property made by an approved valuer duly registered under Section 34AB of the Wealth-Tax Act, 1957 , whereas the petitioners' case relies upon the v