Smt. Rama Chaurasia W/O Shri Prakash Chaurasia vs Debut Recovery Appellant Tribunal Thro. Its Registrar And 2 Or

A.F.R.
Neutral Citation No. -
2026:AHC-LKO:80567
Reserved on: 06.10.2026
Delivered on: 05.11.2026
HIGH COURT OF JUDICATURE AT ALLAHABAD
LUCKNOW
WRIT - C No. - 1004411 of 2011
Smt. Rama Chaurasia W/o Shri Prakash Chaurasia
…..Petitioner(s)
Versus
Debut Recovery Appellant Tribunal Thro. its Registrar and 2 or
…..Respondent(s)
Counsel for Petitioner(s) : Ravi Singh, Ravendra Pratap Singh
Counsel for Respondent(s) : C.S.C., Alok Saxena, Devi Prasad
Maurya, Jagdish Prasad Maurya,
Ram Raj, Rama Kant Srivastava,
Sandeep Kumar, Vinay Shankar
Srivastava
Court No. - 4
HON'BLE IRSHAD ALI, J.
1) Heard Sri Ravi Singh, learned counsel for the petitioner, Sri Shiv
Ganesh Singh, learned Additional Chief Standing Counsel for
respondent No.1 – State, Sri Alok Saxena, learned counsel for
respondent No.2 – Bank and Sri J.P. Maurya, learned counsel for
respondent No.3 – auction purchaser.
2) The present writ petition has been filed on following prayer(s):
“i) Issue a writ, order or direction in the nature of
certiorari quashing the order dated 18/07/2011 passed by
Debut Recovery Appellate Tribunal, Allahabad i.e.
opposite party no.1 contained as Annexure No.1 to the
present writ petition.
ii) issue a writ, order or direction in the nature of
mandamus commanding the opposite parties not to give
effect of the impugned order dated 18/07/2011 passed by
Debut Recovery Appellate Tribunal, Allahabad i.e.
opposite party no.1 contained as Annexure No.1 to the
present writ petition.
iii) issue a writ, order or direction in the nature of
mandamus commanding the opposite party no.2 accept the

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loan amount and handover the land in question alongwith
the paper book to the petitioner.
iv) issue such other order or direction, which this
Hon'ble Court deem fit and proper under the facts and
circumstances of the case may kindly also be passed in
favour of the petitioner.
v) Cost of the writ petition may also be awarded to the
petitioner.”
3) By means of the present writ petition, the petitioner has
challenged the appellate order dated 18.07.2011 passed by the opposite
party no.1, whereby the order dated 17.08.2010 passed by the Debts
Recovery Tribunal, Lucknow, in Securitisation Application No.SA-137
of 2007 was set aside and the appeal preferred by the respondent Bank
was allowed. The petitioner has assailed the appellate order on the
grounds, inter alia , that the Appellate Tribunal failed to consider the
agricultural nature of the land in question, the alleged non-service of
statutory notices under Sections 13(2) and 13(4) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (hereinafter referred to as the “SARFAESI Act”) and the
deposit of the entire auction amount by the petitioner before issuance of
the sale certificate. The petitioner has also alleged that the Bank
arbitrarily returned the bank drafts deposited by her despite her
willingness to discharge the outstanding liability.
4) According to the petitioner, she and Smt. Kiran Chaurasia are joint
owners of the land in dispute, which they purchased through a registered
sale deed dated 27.02.1987. The petitioner has asserted that the land was
purchased for agricultural purposes and that its agricultural character
continued to be reflected in the relevant revenue records.
5) The petitioner has stated that a partnership firm, namely, M/s
Chaurasia Traders, was being run and controlled by two partners,
namely, Shri Dhruv Prakash Chaurasia, stated to be the brother-in-law of
the petitioner’s husband in the relationship described in the petition and
Shri Ashok Kumar Chaurasia, also related to the petitioner’s husband.

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The said firm obtained a credit loan of approximately Rs.30 lakh from
the opposite party no.2 - Bank in the year 2003.
6) The petitioner has further stated that, at the time of sanctioning the
aforesaid loan, her land in question was mortgaged with the Bank as
security for the loan facility extended to M/s Chaurasia Traders.
According to her, she had mortgaged the property only to facilitate the
grant of the loan to the aforesaid partners and was not herself the
principal borrower.
7) The petitioner has stated that, at the time of the loan transaction,
she was residing at 279/75, Pan Dariba, Lucknow. In the year 2003, she
shifted to Faizabad to reside with her husband and claims to have
informed the respondent Bank in writing about the change of residence,
requesting that any future correspondence be sent to her address at
Faizabad. A photocopy of the letter dated 09.07.2003 has been annexed
to the writ petition as Annexure No.3.
8) The petitioner has alleged that, in October 2007, when she visited
the residence of her husband’s brother, she came to know that the Bank
had issued a notice under Section 13(2) of the SARFAESI Act in
connection with the loan account of M/s Chaurasia Traders. Upon
acquiring such knowledge, she contacted the Bank and allegedly
receiving no satisfactory response, sent a letter dated 12.10.2007 by
registered post seeking information regarding the loan transaction and
the proceedings initiated by the Bank. A photocopy of the said letter has
been annexed as Annexure No.4 to the writ petition.
9) The petitioner has stated that, upon subsequently contacting the
Bank, she was informed that the loan account of the borrower had been
classified as a non-performing asset (NPA). She has disputed the validity
of such classification by referring to the statement of account of M/s
Chaurasia Traders, according to which transactions in the account
continued up to 31.05.2006 and a further transaction was recorded on
30.06.2006. On this basis, the petitioner has alleged that the Bank had
initiated proceedings under Section 13(2) of the SARFAESI Act without

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validly classifying the account as an NPA in accordance with the
applicable guidelines of the Reserve Bank of India. A photocopy of the
statement of account dated 04.05.2007 has been annexed as Annexure
No.5 to the writ petition.
10) The petitioner has further alleged that, after issuance of the notice
under Section 13(2) of the SARFAESI Act, neither she nor the actual
borrowers received any notice under Section 13(4) of the said Act.
According to the petitioner, the principal borrowers, namely, Shri Dhruv
Prakash Chaurasia and Shri Ashok Kumar Chaurasia, also informed her
that they had not received the aforesaid notice. She has, therefore,
questioned the legality of the subsequent measures taken by the Bank for
enforcement of the secured asset.
11) The petitioner has stated that, although the notice under Section
13(2) of the SARFAESI Act was issued in her name, the possession
notice dated 18.11.2006 was issued in the name of Shri Dhruv Prakash
Chaurasia. A photocopy of the possession notice dated 18.11.2006 has
been annexed as Annexure No.6 to the writ petition.
12) The petitioner has further stated that, in February 2007, the Bank
published an advertisement for auction of the land in question. She has
alleged that the auction proceedings were undertaken without proper
consideration of the nature and valuation of the property and without
complying with the mandatory requirements of the SARFAESI Act. A
photocopy of the relevant newspaper advertisement has been annexed as
Annexure No.7 to the writ petition.
13) The petitioner has stated that, after the festival of Diwali, when
she visited the land in question, she came to know that the Bank had
proceeded with the auction and that the opposite party no.3 had emerged
as the auction purchaser. Upon approaching the Bank, she was allegedly
informed that the auction had already taken place and that the auction
purchaser had deposited 25% of the sale consideration. The petitioner
claims that she, thereafter, submitted a letter dated 27.11.2006 to the
Branch Manager through registered post, expressing her willingness to

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deposit the entire outstanding amount, together with interest and other
expenses and requesting the Bank to accept the payment. A photocopy of
the said letter has been annexed as Annexure No.8 to the writ petition.
14) The petitioner has further stated that, upon again approaching the
office of the opposite party no.2, she was informed that, if she was
willing to pay the amount, she could deposit it immediately through
bank drafts. Accordingly, on 22.12.2007, the petitioner claims to have
tendered bank drafts aggregating to approximately Rs.34 lakh, whereas
the auction sale consideration was Rs.33 lakh. She has asserted that, to
the best of her knowledge, the sale in favour of the opposite party no.3
had not been confirmed at the time when the drafts were tendered.
15) The petitioner has alleged that, despite her having tendered the
entire amount claimed by her to be payable, the Bank returned all the
bank drafts to her vide letter dated 07.01.2008, stating that the land had
already been sold through the bidding process. According to the
petitioner, the return of the drafts was arbitrary and contrary to Section
13(8) of the SARFAESI Act, as she had offered to discharge the entire
liability before completion of the transfer of the secured asset. The
petitioner has further asserted that the Bank’s action was intended to
confer an undue benefit upon the auction purchaser. The letter dated
07.01.2008 and copies of the bank drafts have been annexed as
Annexure No.2 to the writ petition.
16) The petitioner has placed reliance upon Section 13(8) of the
SARFAESI Act and has contended that, where the entire dues of the
secured creditor, together with the applicable costs, charges and
expenses are tendered before completion of the sale or transfer of the
secured asset in accordance with the statutory provision applicable at the
relevant time, the secured creditor cannot proceed with the sale or
transfer. On this basis, she has challenged the Bank’s refusal to accept
the bank drafts and its decision to proceed with the auction in favour of
the opposite party no.3.

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17) The petitioner has further stated that the land in dispute, identified
as Khasra No.13333-5A, situated at Village Sarosa Bharosa, Alamnagar,
Lucknow, had been purchased for agricultural purposes and continued to
be recorded as agricultural land in the revenue records. In support of this
assertion, she has relied upon the relevant Khasra issued on 22.07.2011,
a copy of which has been annexed as Annexure No.9 to the writ petition.
18) The petitioner has contended that Section 31(i) of the SARFAESI
Act excludes agricultural land from the application of the Act in the
circumstances specified therein. According to her, the Bank had no
authority to enforce the mortgage by resorting to the provisions of the
SARFAESI Act against the land in question, as the property continued to
retain its agricultural character. She has further asserted that the land had
not been declared as abadi or converted to non-agricultural use under
Section 143 of the Uttar Pradesh Zamindari Abolition and Land Reforms
Act by the competent authority, namely, the Sub-Divisional Magistrate
concerned.
19) The petitioner has stated that, after the Bank returned the bank
drafts, she instituted Securitisation Application No.SA-137 of 2007
before the Debts Recovery Tribunal, Lucknow, under Section 17(1) of
the SARFAESI Act, challenging the measures taken by the Bank for
enforcement of the secured asset and the auction proceedings conducted
in respect of the land in question.
20) The petitioner has stated that the Debts Recovery Tribunal,
Lucknow, vide order dated 17.08.2010, allowed Securitisation
Application No.SA-137 of 2007 and set aside the action taken by the
opposite party no.2-Bank. A photocopy of the said order has been
annexed as Annexure No.10 to the writ petition.
21) According to the petitioner, while allowing the securitisation
application, the Debts Recovery Tribunal, Lucknow, examined the
relevant records, including the Khatauni and found that the secured
property continued to be recorded as agricultural land. The Tribunal
observed, as pleaded by the petitioner, that the Khasra and Khatauni

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were relevant revenue documents for identifying the property and
determining its nature. It further noted that conversion of agricultural
land to non-agricultural use required an order passed by the competent
authority under Section 143 of the Uttar Pradesh Zamindari Abolition
and Land Reforms Act and that the Bank had not produced any such
order on the record.
22) The petitioner has stated that, being aggrieved by the order dated
17.08.2010 passed by the Debts Recovery Tribunal, Lucknow, the
opposite party no.2 - Bank preferred an appeal under Section 18 of the
SARFAESI Act before the Debts Recovery Appellate Tribunal,
Allahabad, registered as Appeal No.R-1224 of 2010.
23) The petitioner has challenged the appellate order dated 18.07.2011
on the ground that the Appellate Tribunal set aside the order of the Debts
Recovery Tribunal, Lucknow, without properly examining the material
on record or adequately considering the findings recorded by the
Tribunal regarding the agricultural character of the property. According
to the petitioner, the Appellate Tribunal itself proceeded on the premise
that the land might be agricultural land but failed to return a clear finding
on this material issue.
24) The petitioner has further alleged that the Appellate Tribunal
observed that, since the petitioner held a 50 per cent share in the
property, the Debts Recovery Tribunal, Lucknow, ought not to have set
aside the entire auction and should instead have restricted the relief to
her 50 per cent share. The petitioner has contended that the Appellate
Tribunal, despite making the aforesaid observation, neither remanded the
matter for fresh consideration nor conclusively determined whether the
property was agricultural land and whether the Bank had lawfully
exercised its powers under the SARFAESI Act.
25) The petitioner has also questioned the valuation and fairness of the
auction proceedings. She has alleged that the Bank auctioned the
property in the year 2007 without properly assessing its market value
and has asserted that the value of the land at the relevant time was

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approximately Rs.1.5 crore, whereas the auction was conducted for
Rs.33 lakh. She has submitted that the alleged inadequacy of the sale
consideration could be examined by summoning the relevant records.
26) The petitioner has further contended that the loan facility had been
availed of by the principal borrowers, namely, Shri Dhruv Prakash
Chaurasia and Shri Ashok Kumar Chaurasia, whereas the property
subjected to auction belonged jointly to the petitioner and Smt. Kiran
Chaurasia. According to the petitioner, she had furnished her property as
security for the loan and was only a guarantor, while the actual
borrowers were the partners of M/s Chaurasia Traders.
27) The petitioner has alleged that the Bank proceeded against her
property without first taking appropriate steps to recover the outstanding
loan from the principal borrowers or their assets. She has relied upon the
statutory provisions and judicial pronouncements concerning the
enforcement of secured assets and the liability of guarantors, contending
that the Bank’s action against her property was unlawful in the facts and
circumstances of the case. She has also reiterated that the statutory
notices under Sections 13(2) and 13(4) of the SARFAESI Act were not
duly served upon her in accordance with law.
28) The petitioner has further stated that, after conducting the auction,
the Bank issued a sale certificate in favour of the opposite party no.3,
although the date of issuance of the certificate was not disclosed in the
relevant documents relied upon by the petitioner. She has pointed out
that, in paragraph 5.8 of the memorandum of appeal filed by the Bank
before the Appellate Tribunal, the Bank stated that the auction sale had
been confirmed and the sale certificate issued in favour of the auction
purchaser on 24.01.2008, upon deposit of the entire auction
consideration of Rs.33 lakh. The petitioner has alleged that the Bank did
not annex the said sale certificate to its memorandum of appeal.
29) The petitioner has contended that, even according to the Bank’s
own pleading, the sale certificate was issued on 24.01.2008, whereas she
had tendered bank drafts aggregating to approximately Rs.34 lakh on

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22.12.2007. She has, therefore, asserted that her tender preceded the
stated date of issuance of the sale certificate and that the Bank was not
justified in returning the drafts without properly considering the statutory
protection claimed by her under Section 13(8) of the SARFAESI Act. On
this basis, she has questioned the legality of the confirmation of the sale
and the subsequent issuance of the sale certificate in favour of the
opposite party no.3.
30) The petitioner has alleged that the Bank’s conduct throughout the
proceedings, including its refusal to accept the bank drafts, its failure to
resolve the dispute regarding the nature of the land and its decision to
proceed with the auction, was arbitrary and contrary to the provisions of
the SARFAESI Act. She has further alleged that the auction was
conducted without proper valuation of the property, without due service
of the requisite statutory notices and without first pursuing appropriate
recovery measures against the principal borrowers.
31) The petitioner has reiterated that she remains willing to deposit the
entire amount lawfully payable under the loan transaction, together with
applicable interest and other permissible expenses, in accordance with
the terms of the agreement executed between the borrowers and the
Bank. She has alleged that, despite repeatedly communicating her
willingness to settle the outstanding liability after acquiring knowledge
of the recovery proceedings, the Bank declined to accept the payment
and returned the bank drafts.
32) The petitioner has stated that, in view of the impugned appellate
order dated 18.07.2011, the alleged violation of the statutory provisions
governing enforcement of secured assets, the disputed agricultural
character of the land, the alleged non-service of the requisite notices and
the Bank’s refusal to accept the amount tendered before the stated date
of issuance of the sale certificate, she has been left with no other equally
efficacious alternative remedy. Accordingly, she has invoked the writ
jurisdiction of this Hon’ble Court under Article 226 of the Constitution

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of India, seeking judicial review of the impugned appellate order and the
consequential reliefs claimed in the writ petition.
33) Submission of learned counsel for the petitioner is that the
impugned appellate order dated 18.07.2011 passed by the Debts
Recovery Appellate Tribunal, Allahabad, is legally unsustainable, being
vitiated by failure to adjudicate the material questions of law arising
from the enforcement proceedings initiated by the respondent Bank
under “SARFAESI Act”. The Appellate Tribunal was required to
examine whether the statutory conditions precedent for invoking the
coercive measures under the Act stood satisfied and whether the secured
creditor had acted in conformity with the mandatory statutory procedure.
The failure to return clear and reasoned findings on the material issues
affecting the legality of the enforcement proceedings renders the
impugned order amenable to judicial review under Article 226 of the
Constitution of India.
34) He submitted that the first substantial question of law arising for
consideration is whether the secured creditor could lawfully invoke the
provisions of the SARFAESI Act in respect of the property in question
when the petitioner specifically asserted that the property was
agricultural land within the meaning of Section 31(i) of the Act. The
statutory exclusion contained in Section 31(i) is substantive and cannot
be rendered ineffective merely because the property has been mortgaged
to secure a loan transaction. If the property falls within the statutory
exclusion, the secured creditor cannot enforce its security interest against
such property by resorting to the measures contemplated under Section
13 of the SARFAESI Act. The nature of the property was, therefore, a
jurisdictionally material issue which required determination before the
legality of the enforcement measures could be sustained.
35) His next submission is that the petitioner relies upon the settled
principle of statutory interpretation that where the legislature expressly
excludes a class of property from the operation of a statute, the authority
exercising powers under that statute cannot disregard the exclusion or

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enlarge its jurisdiction beyond the limits prescribed by law. The
petitioner had relied upon the relevant Khasra and Khatauni entries to
establish that the land continued to be recorded as agricultural land. The
Debts Recovery Tribunal had considered the revenue record and
recorded findings in favour of the petitioner. The Appellate Tribunal,
while reversing the said decision, was required to examine the
evidentiary and legal significance of those entries and determine whether
the property attracted the exclusion under Section 31(i). A reversal
without a proper determination of this foundational issue cannot be
sustained merely on the basis of the existence of a mortgage or the
default in repayment of the loan.
36) He further submits that the question whether land is agricultural
land for the purposes of Section 31(i) of the SARFAESI Act must be
determined on the basis of the relevant statutory provision and the
evidence concerning the actual nature and use of the property. Revenue
entries are relevant evidence, though their evidentiary value must be
assessed with reference to the entire record. Equally, the absence of an
order under Section 143 of the Uttar Pradesh Zamindari Abolition and
Land Reforms Act may be a relevant circumstance but cannot, by itself,
be treated as an invariably conclusive test of the applicability of Section
31(i). The Appellate Tribunal was, therefore, required to determine the
question in accordance with the applicable law and the material on
record rather than leave the fundamental issue unresolved.
37) He submitted that the impugned appellate order is further
assailable on the ground that it does not adequately resolve the question
whether the statutory notices contemplated under Sections 13(2) and
13(4) of the SARFAESI Act were duly served upon the petitioner in
accordance with law. The petitioner specifically disputed service of the
notices and asserted that the possession notice dated 18.11.2006 was
issued in the name of one of the principal borrowers, although the
secured property jointly belonged to the petitioner and Smt. Kiran
Chaurasia. The legality of the subsequent enforcement measures
depended upon compliance with the statutory requirements applicable to

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the secured creditor. The Appellate Tribunal was required to examine the
relevant notices, the mode and proof of service, the identity of the
persons upon whom service was legally required and the legal
consequences of any established defect.
38) His next submission is that Sections 13(2) and 13(4) of the
SARFAESI Act contemplate distinct stages in the enforcement process,
and compliance with the requirements applicable at each stage must be
independently examined. The issuance of a demand notice under Section
13(2) cannot, by itself, establish compliance with the requirements
governing the subsequent measures under Section 13(4). The secured
creditor must establish that the statutory conditions governing the
measure actually adopted were fulfilled. Where service is specifically
disputed, the issue cannot be decided merely on presumptions
unsupported by the relevant record. The petitioner accordingly submits
that the Appellate Tribunal ought to have determined the legality of the
enforcement proceedings by reference to the statutory scheme and the
evidence of service available on record.
39) He submitted that the classification of the loan account as a non-
performing asset was also required to satisfy the applicable statutory and
regulatory requirements. The petitioner had relied upon the statement of
account reflecting transactions during 2006 and questioned the date and
legality of the classification. The mere existence of entries in a bank
account does not necessarily establish that the account could not
lawfully have been classified as a non-performing asset, since the
applicable norms require examination of the nature of the credit facility,
the repayment obligations, the period of overdue amounts and the
relevant prudential norms. Nevertheless, where the validity of the
classification is specifically challenged, the secured creditor must
demonstrate compliance with the applicable requirements. The legality
of the subsequent measures cannot be insulated from judicial scrutiny if
the statutory foundation for their initiation is shown to be defective.

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40) He submitted that the Appellate Tribunal was also required to
examine the legal effect of the tender of bank drafts aggregating to
approximately Rs.34 lakh on 22.12.2007, particularly in view of the
Bank's own assertion that the sale certificate was issued on 24.01.2008.
The petitioner had offered an amount exceeding the stated auction
consideration of Rs.33 lakh and asserted that the tender was made before
completion of the sale in accordance with the applicable statutory
provisions. The Bank's subsequent return of the drafts, by its letter dated
07.01.2008, raised a substantial question concerning the operation of
Section 13(8) of the SARFAESI Act as it stood at the relevant time.
41) His submission is that Section 13(8) must be applied in the form in
force on the date of the relevant enforcement proceedings. The petitioner
does not contend that the mere preparation or unilateral tender of bank
drafts, irrespective of the statutory conditions, automatically
extinguished the secured creditor's rights. His submission is that the legal
effect of the tender had to be determined by examining whether the
amount tendered represented the entire dues of the secured creditor,
together with the costs, charges and expenses lawfully payable, whether
the tender was made within the applicable statutory period and whether
the other requirements of the provision stood satisfied. The Appellate
Tribunal could not lawfully reject this contention solely on the ground
that the auction process had commenced or that the Bank had decided to
proceed with the sale.
42) He next submitted that the distinction between the date of auction,
the date of payment of the sale consideration, the date of confirmation of
sale and the date of issuance of the sale certificate is material to the
determination of the petitioner's claim under Section 13(8). These events
cannot be treated as interchangeable without reference to the statutory
framework and the applicable rules. The Bank's pleading that the sale
certificate was issued on 24.01.2008, read with the petitioner's assertion
that the bank drafts had been tendered on 22.12.2007, required the
Appellate Tribunal to determine the legal consequences of the respective
dates. The relevant question was whether the petitioner's tender satisfied

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the statutory requirements governing redemption at the material time,
not merely whether the auction had already been conducted.
43) He next submitted that the secured creditor's statutory powers are
subject to the restrictions and conditions imposed by the SARFAESI Act
and the Security Interest (Enforcement) Rules, 2002. The fact that an
auction purchaser has participated in the sale or that the Bank has
subsequently issued a sale certificate cannot, by itself, cure an
antecedent violation of a mandatory statutory requirement. The rights
asserted by the auction purchaser must be considered in accordance with
the applicable law, but such rights cannot validate enforcement measures
which are otherwise established to be unlawful. The Appellate Tribunal
was, therefore, required to consider the petitioner's challenge to the sale
by examining the legality of the entire process and the legal
consequences of any established non-compliance.
44) His submission is that the Appellate Tribunal's observation that the
petitioner's interest in the property was limited to 50 per cent did not, by
itself, furnish a legally sufficient ground for reversing the order of the
Debts Recovery Tribunal in its entirety. The extent of the petitioner's
proprietary interest and the legal effect of the mortgage over the property
were matters requiring consideration in accordance with the title
documents, the mortgage instruments and the applicable law. If only a
divisible share was lawfully available for enforcement, the consequences
of such limitation had to be determined on the basis of the legal rights of
all co-owners and the terms and extent of the security interest.
Conversely, if the security interest validly extended to the entire
property, the legal position would have to be determined accordingly.
The Appellate Tribunal could not substitute an observation regarding the
petitioner's share for a reasoned adjudication of the parties' substantive
rights.
45) He submitted that the Bank's right to proceed against the
mortgaged property must be distinguished from the question of the
petitioner's status as a principal borrower or a person who furnished

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security for the loan. The fact that the loan facility was availed of by M/s
Chaurasia Traders and that the petitioner was not the principal borrower
does not, by itself, discharge a validly constituted mortgage or exclude
the secured asset from lawful enforcement. Equally, the petitioner's
liability and the Bank's enforcement rights cannot be determined without
examining the mortgage documents, the terms of the security and the
statutory conditions governing enforcement. The relevant legal question
was whether the Bank had acted within the scope of its lawful security
interest and in compliance with the SARFAESI Act.
46) He submitted that the petitioner does not rest her challenge solely
on the proposition that the Bank was legally bound to exhaust its
remedies against the principal borrowers before proceeding against the
secured property. In the absence of a statutory or contractual restriction
applicable to the transaction, a secured creditor is not ordinarily required
to first exhaust its remedies against the principal borrower before
enforcing a valid security or proceeding against a guarantor. The
petitioner's sustainable legal contention is that the Bank's right to enforce
the mortgage remained subject to the validity of the security, the extent
of the interest created, the applicable statutory exclusions and
compliance with the mandatory enforcement procedure. The Appellate
Tribunal was required to examine these questions independently of the
mere fact that the petitioner was not the principal borrower.
47) He submitted that the legality of the auction could not be sustained
without due consideration of the statutory rules governing the sale of
secured assets, including the applicable requirements relating to
valuation, fixation of reserve price, notice of sale, publication and
conduct of the auction. The allegation that the property valued at
approximately Rs.1.5 crore was sold for Rs.33 lakh raises a question,
which must be examined with reference to the applicable valuation
material and the mandatory sale procedure. Mere inadequacy of price, in
the absence of proof of a legally material irregularity, may not by itself
be sufficient to invalidate an auction. However, where the petitioner
specifically alleges non-compliance with mandatory requirements or a

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sale conducted in a manner contrary to the governing rules, the
competent tribunal must examine the relevant record and determine
whether the sale is legally sustainable.
48) Learned counsel for the petitioner submits that the Appellate
Tribunal, while exercising appellate jurisdiction under Section 18 of the
SARFAESI Act, was required to consider the material findings of the
Debts Recovery Tribunal and the grounds on which those findings were
challenged by the Bank. Although the Appellate Tribunal was competent
to reverse the order of the Debts Recovery Tribunal, such reversal was
required to be supported by reasons demonstrating why the findings
under challenge were legally or factually unsustainable. The existence of
appellate jurisdiction does not dispense with the obligation to address
material issues that determine the legality of the enforcement action. A
failure to deal with substantial grounds and relevant evidence may
render the resulting decision vulnerable to judicial review.
49) His submission is that the requirement to record reasons is an
essential safeguard against arbitrary exercise of adjudicatory power.
Where an order of the subordinate tribunal has been reversed on issues
involving statutory jurisdiction, compliance with mandatory procedure
and the rights in immovable property, the appellate authority must
disclose the reasoning that supports its conclusions on the material
issues. The impugned order is liable to be interfered with if, on
examination of its actual reasoning, it is found that the Appellate
Tribunal failed to determine the agricultural character of the property, the
legality of the statutory notices or the legal effect of the tender under
Section 13(8), despite those issues being material to the outcome of the
appeal.
50) He submits that the statutory remedy under Section 17 of the
SARFAESI Act is intended to provide an effective adjudicatory
mechanism for examining whether the measures adopted by a secured
creditor conform to the Act and the rules made thereunder. The
jurisdiction of the Debts Recovery Tribunal is not confined to a formal

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WRIC No. - 1004411 of 2011
examination of the Bank's claim of default; it extends to determining
whether the impugned enforcement measures were taken in accordance
with law and to granting such relief, as is authorised by the statute. The
Appellate Tribunal was, therefore, required to determine the legality of
the measures challenged by the petitioner rather than treat the Bank's
entitlement to recover its dues as conclusive of the legality of the
particular enforcement process.
51) He further submits that the jurisdiction of this Court under Article
226 of the Constitution of India is not excluded merely because the
dispute arises under the SARFAESI Act. At the same time, the existence
of an alternative statutory remedy is a material consideration in the
exercise of writ jurisdiction and does not cease to be relevant merely
because a party alleges an error in the appellate decision. The petitioner's
case for interference rests upon the alleged failure to adjudicate material
statutory questions, the asserted disregard of mandatory legal
requirements and the contention that the impugned order suffers from an
error of law apparent from the record. The petitioner accordingly
submits that this Hon'ble Court may examine whether the impugned
order warrants interference within the recognised limits of judicial
review.
52) He lastly submitted that the impugned appellate order dated
18.07.2011 cannot be sustained, if the record establishes that the
Appellate Tribunal reversed the order of the Debts Recovery Tribunal
without determining the applicability of Section 31(i), without
examining compliance with the mandatory requirements governing the
notices and enforcement measures, or without adjudicating the legal
effect of the tender in the light of Section 13(8) as applicable at the
relevant time. These are not merely peripheral factual disputes; they
concern the statutory authority of the Bank to enforce the security and
the legality of the measures by which the petitioner's property was
brought to sale.

18
WRIC No. - 1004411 of 2011
53) On the other hand, learned counsel for respondent – Bank
submitted that the auction proceedings were undertaken in accordance
with the procedure followed by the Bank for realization of its secured
dues. The first sale notice in respect of the mortgaged property was
published on 03.02.2007 in two newspapers, namely, Dainik Jagran and
Indian Express, fixing the reserve price at 40,00,000/-. However, as the
₹
auction could not be finalized for want of bidders, the Bank issued a
second sale notice on 22.03.2007 in Swatantra Bharat and Indian
Express, reducing the reserve price to 32,00,000/-. The respondent
₹
Bank submits that the subsequent auction proceedings were undertaken
in furtherance of its lawful right to enforce the security interest and
recover the outstanding dues.
54) Learned counsel for the respondent Bank further submits that
pursuant to the second sale notice dated 22.03.2007, respondent no.3, Sri
Ajay Gupta, submitted his offer for 33,00,000/-, which was accepted by
₹
the Bank. It is contended that the acceptance of the offer was preceded
by sufficient opportunities being afforded to the borrowers to settle the
loan account and discharge their outstanding liability. In this regard,
reliance is placed upon the communications dated 07.02.2007 and
19.06.2007 issued by the Bank, as well as the borrower's letter dated
24.05.2007 brought on record with the counter affidavit. According to
the Bank, despite the opportunities so afforded, the borrowers failed to
liquidate the outstanding dues.
55) It is further submitted that after acceptance of the offer made by
respondent no.3, the Bank, vide communication dated 08.08.2007, called
upon the auction purchaser to deposit the balance 75% of the bid amount
within the stipulated period of one month. The auction purchaser,
thereafter, deposited the remaining amount, which, according to the
Bank's records, was kept in a suspense account. Learned counsel submits
that the subsequent deposit of the balance consideration was in
furtherance of the accepted bid and that the petitioner's subsequent offer
could not, merely by being higher than the accepted bid, confer upon
him an indefeasible right to have the sale proceedings reopened.

19
WRIC No. - 1004411 of 2011
56) Learned counsel for the respondent Bank specifically submits that
the petitioner's offer of 34,00,000/-, made on 24.12.2007, was not liable
₹
to be accepted merely on the ground that it exceeded the bid of
respondent no.3 by 1,00,000/-. It is contended that the petitioner's offer
₹
was made after the bid of respondent no.3 had been accepted and the
sale had been confirmed on 08.08.2007. The Bank further asserts that, as
on 24.12.2007, the total liability outstanding in the loan account stood at
40,22,861.08, apart from the expenses incurred by the Bank.
₹
Consequently, according to the respondent Bank, the amount offered by
the petitioner did not satisfy the entire liability required to be discharged
for claiming the benefit of Section 13(8) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002.
57) It is argued that the petitioner's reliance upon Section 13(8) of the
SARFAESI Act cannot be considered in isolation from the statutory
conditions governing redemption of the secured asset. The right of
redemption must be exercised in accordance with the applicable
statutory provision and within the legally prescribed period. Learned
counsel submits that a mere offer to pay an amount lower than the entire
outstanding liability, without satisfying the applicable statutory
requirements, would not by itself invalidate an otherwise lawful auction
sale. The respondent Bank, therefore, contends that the petitioner's offer
dated 24.12.2007 did not furnish a legally sustainable ground to compel
the Bank to abandon the sale in favour of respondent no.3.
58) Learned counsel for the respondent Bank further submits that the
sale was confirmed in favour of respondent no.3 on 08.08.2007 and the
sale certificate was subsequently issued on 24.01.2008. It is contended
that the petitioner's subsequent offer, made after confirmation of the sale,
could not automatically displace the rights accruing to the auction
purchaser under the concluded sale proceedings. The validity of the
auction proceedings, according to the Bank, must be examined with
reference to the applicable statutory provisions and the material available

20
WRIC No. - 1004411 of 2011
on record, and not merely by comparing the respective amounts offered
by the petitioner and the auction purchaser.
59) On the question of the petitioner's entitlement to challenge the
auction proceedings, learned counsel submits that the exercise of
jurisdiction under Article 226 of the Constitution of India must be guided
by the existence of a legally enforceable right and a demonstrated
violation of law. The petitioner cannot claim interference merely because
a subsequent offer was allegedly more advantageous to the Bank. Unless
a material illegality, breach of a mandatory statutory requirement, or
violation of the principles of natural justice is established, the auction
proceedings cannot be set aside solely on the basis of a later offer.
60) Learned counsel for the respondent Bank submits that the
supplementary affidavit has placed on record the material particulars
available in the Bank's records concerning publication of the sale
notices, acceptance of the bid, the subsequent demand for deposit of the
balance consideration, confirmation of sale and issuance of the sale
certificate. It is contended that these particulars, read with the counter
affidavit and its annexures, demonstrate that the Bank acted in exercise
of its statutory powers to recover the secured debt. Accordingly, the
respondent Bank prays that the challenge to the auction proceedings be
examined in the light of the governing provisions of the SARFAESI Act
and that no relief be granted to the petitioner in the absence of proof of a
legally sustainable ground for interference.
61) Learned counsel appearing on behalf of respondent No.3, the
auction purchaser, submits that the petitioner had mortgaged the property
in question with Canara Bank, Aminabad Branch, Lucknow, in the year
2003 as security for repayment of the loan availed by her. Upon the
petitioner's failure to discharge the outstanding liability, the Bank
initiated proceedings for realization of its secured dues and published a
sale notice in February 2007. Despite the opportunity available to her to
liquidate the outstanding liability, the petitioner failed to do so,

21
WRIC No. - 1004411 of 2011
whereupon the secured asset was put to auction in accordance with the
procedure adopted by the Bank.
63) It is further submitted that respondent No.3 participated in the
auction proceedings and purchased the property in question upon
acceptance of his bid. After completion of the requisite formalities, a sale
certificate was issued in his favour on 24.01.2008. Learned counsel
contends that the auction purchase and issuance of the sale certificate
created legally enforceable rights in favour of respondent No.3, subject,
of course, to compliance with the applicable statutory provisions
governing the auction sale. The petitioner cannot seek to defeat such
rights merely by expressing dissatisfaction with the outcome of the
auction proceedings or by subsequently asserting a claim over the
property.
64) Learned counsel for respondent No.3 submits that the petitioner
instituted the present writ petition on 27.07.2011, whereas the auction
proceedings had culminated in the issuance of the sale certificate on
24.01.2008. It is contended that the challenge to the auction proceedings
must be examined in the light of the statutory remedies available to the
petitioner and the settled principles governing interference with
completed auction sales. Unless the petitioner establishes a material
violation of a mandatory statutory provision, procedural illegality, or
other legally sustainable ground for setting aside the sale, the rights of
the auction purchaser cannot be displaced on mere allegations.
65) Learned counsel further submits that the petitioner's rights in the
mortgaged property were subject to the security interest created in
favour of the Bank. The petitioner could not, by executing subsequent
sale deeds, convey a better title than that which she lawfully possessed,
nor could any subsequent transaction, by itself, defeat the rights validly
acquired by the secured creditor or the auction purchaser. The legal
effect of any transfer made after creation of the mortgage must,
therefore, be determined with reference to the subsisting mortgage, the

22
WRIC No. - 1004411 of 2011
applicable provisions of law and the rights acquired pursuant to the
auction proceedings.
66) It is further contended that the petitioner executed several
registered sale deeds in favour of third parties in the years 2014 and
2015 in respect of portions of the property in question. These
transactions were effected after issuance of the sale certificate in favour
of respondent No.3 on 24.01.2008.
67) Learned counsel submits that the petitioner cannot rely upon
transactions subsequently entered into by her to establish an indefeasible
title against the auction purchaser. The validity and legal effect of those
transactions must be determined in accordance with the applicable law
and their mere registration cannot, by itself, establish that the petitioner
retained a transferable title free from the consequences of the earlier
mortgage and auction sale.
68) Learned counsel further submits that respondent No.3 has asserted
his rights as the auction purchaser and has stated that he remains in
possession of the property and has raised construction over a portion
thereof. It is contended that the rights and interests claimed by
respondent No.3 pursuant to the sale certificate cannot be ignored while
considering the relief sought by the petitioner.
69) Learned counsel for respondent No.3 also refers to the criminal
proceedings initiated on the basis of the complaint made by him,
pursuant to which an FIR was registered against the petitioner and other
persons under Sections 467, 468, 471, 419 and 420 of the Indian Penal
Code. It is submitted that the allegations underlying those proceedings
concern the subsequent transactions relating to the property and are
relevant insofar as they disclose the nature of the dispute between the
parties. However, the respondent acknowledges that the registration of
an FIR, by itself, does not establish the guilt of the accused or
conclusively determine the title to the property; the criminal allegations
must be adjudicated independently in accordance with law.

23
WRIC No. - 1004411 of 2011
70) Learned counsel for respondent No.3 submits that the petitioner
cannot claim relief in disregard of the rights asserted by the auction
purchaser under the sale certificate. The petitioner must establish an
enforceable legal right and demonstrate a corresponding illegality
warranting interference by this Hon'ble Court. In the absence of proof
that the auction proceedings were vitiated by a breach of the applicable
statutory requirements or other material illegality, the subsequent
transactions relied upon by the petitioner cannot furnish a sufficient basis
for invalidating the auction sale.
71) In view of the aforesaid submissions, learned counsel for
respondent No.3 prays that this Hon'ble Court may decline to interfere
with the auction proceedings and the sale certificate dated 24.01.2008,
unless the petitioner establishes a legally sustainable ground for such
interference. It is accordingly prayed that the writ petition be dismissed.
72) Learned Additional Chief Standing Counsel appearing for
respondent No.1 – State (DRAT) submitted that the auction proceedings
and the rights claimed by the auction purchaser are required to be
examined in accordance with the applicable provisions of the
SARFAESI Act, 2002 and the rules framed thereunder. He submits that
the petitioner, having mortgaged the property as security for the loan,
cannot seek to invalidate the auction merely on the ground that she
subsequently offered a higher amount than the accepted bid, unless she
establishes compliance with the statutory requirements governing
redemption of the secured asset or demonstrates a material illegality in
the auction proceedings.
73) He further submits that the issuance of the sale certificate dated
24.01.2008 and the subsequent transactions concerning the property
must be considered in the light of the rights lawfully acquired by the
parties and the applicable statutory provisions. The petitioner, having
invoked the extraordinary jurisdiction of this Hon’ble Court under
Article 226 of the Constitution of India, must establish a legally
sustainable ground for interference with the impugned appellate order. In

24
WRIC No. - 1004411 of 2011
the absence of any established violation of a mandatory statutory
provision or other material illegality warranting judicial interference, the
writ petition deserves to be dismissed.
74) I have considered the submissions advanced by learned counsel
for the parties and perused the material on record.
75) To resolve the controversy involved in the matter, relevant
provisions of the SARFAESI Act are being quoted below:
“ 13. Enforcement of security interest
(2) Where any borrower, who is under a liability to a
secured creditor under a security agreement, makes any
default in repayment of secured debt or any installment
thereof, and his account in respect of such debt is
classified by the secured creditor as non-performing asset,
then, the secured creditor may require the borrower by
notice in writing to discharge in full his liabilities to the
secured creditor within sixty days from the date of notice
failing which the secured creditor shall be entitled to
exercise all or any of the rights under sub-section (4).
[Provided that-
(i)the requirement of classification of secured debt as non-
performing asset under this sub-section shall not apply to
a borrower who has raised funds through issue of debt
securities; and
(ii)in the event of default, the debenture trustee shall be
entitled to enforce security interest in the same manner as
provided under this section with such modifications as may
be necessary and in accordance with the terms and
conditions of security documents executed in favour of the
debenture trustee;]
(4) In case the borrower fails to discharge his liability in
full within the period specified in sub-section (2), the
secured creditor may take recourse to one or more of the
following measures to recover his secured debt, namely:
(a) take possession of the secured assets of the borrower
including the right to transfer by way of lease, assignment
or sale for realising the secured asset;
(b) [ take over the management of the business of the
borrower including the right to transfer by way of lease,
assignment or sale for realising the secured asset:
[Substituted by the Enforcement of Security Interest and
Recovery of Debts Laws (Amendment) Act, 2004, Section 8
(30 of 2004), for Cl.(b) (w.e.f. 11.11.2004).]
Provided that the right to transfer by way of lease,
assignment or sale shall be exercised only where the
substantial part of the business of the borrower is held as
security for the debt:

25
WRIC No. - 1004411 of 2011
Provided further that where the management of whole of
the business or part of the business is severable, the
secured creditor shall take over the management of such
business of the borrower which is relatable to the security
for the debt.]
Prior to its substitution, Clause(b) read;
(b) take over the management of the secured assets of the
borrower including the right to transfer by way of lease,
assignment or sale and realise the secured asset;
(c) appoint any person (hereafter referred to as the
manager), to manage the secured assets the possession of
which has been taken over by the secured creditor;
(d) require at any time by notice in writing, any person
who has acquired any of the secured assets from the
borrower and from whom any money is due or may
become due to the borrower, to pay the secured creditor, so
much of the money as is sufficient to pay the secured debt.
(8) [ Where the amount of dues of the secured creditor
together with all costs, charges and expenses incurred by
him is tendered to the secured creditor at any time before
the date of publication of notice for public auction or
inviting quotations or tender from public or private treaty
for transfer by way of lease, assignment or sale of the
secured assets,-
(i) the secured assets shall not be transferred by way of
lease assignment or sale by the secured creditor; and
(ii) in case, any step has been taken by the secured creditor
for transfer by way of lease or assignment or sale of the
assets before tendering of such amount under this
subsection, no further step shall be taken by such secured
creditor for transfer by way of lease or assignment or sale
of such secured assets.]
31. Provisions of this Act not to apply in certain cases
The provisions of this Act shall not apply to
(a) a lien on any goods, money or security given by or
under the Indian Contract Act, 1872 (9 of 1872) or the
Sale of Goods Act, 1930 (3 of 1930) or any other law for
the time being in force;
(b) a pledge of movables within the meaning of section 172
of the Indian Contract Act, 1872 (9 of 1872);
(c) creation of any security in any aircraft as defined in
clause (1) of section 2 of the Aircraft Act, 1934
(24 of 1934);
(d) creation of security interest in any vessel as defined in
clause (55) of section 3 of the Merchant Shipping Act,
1958 (44 of 1958);
[ ] [Omitted '(e) any conditional sale, hire-purchase *
or lease or any other contract in which no security interest
has been created;' by Act No. 44 of 2016.]

26
WRIC No. - 1004411 of 2011
(f) any rights of unpaid seller under section 47 of the Sale
of Goods Act, 1930 (3 of 1930);
(g) [any properties not liable to attachment (excluding the
properties specifically charged with the debt recoverable
under this Act)] [Substituted by the Enforcement of
Security Interest and Recovery of Debts Laws
(Amendment) Act, 2004 (30 of 2004), Section 17, for "any
properties not liable to attachment" (w.e.f. 11.11.2004).] or
sale under the first proviso to sub-section (1)
of section 60 of the Code of Civil Procedure, 1908 (5 of
1908);
(h) any security interest for securing repayment of any
financial asset not exceeding one lakh rupees;
(i) any security interest created in agricultural land;
(j)any case in which the amount due is less than twenty per
cent. of the principal amount and interest thereon.”
17. [Application against measures to recover secured
debts]:
(1) Any person (including borrower), aggrieved by any of
the measures referred to in sub-section (4) of section 13
taken by the secured creditor or his authorised officer
under this Chapter, 2[may make an application along with
such fee, as may be prescribed,] to the Debts Recovery
Tribunal having jurisdiction in the matter within fortyfive
days from the date on which such measure had been taken:
3[Provided that different fees may be prescribed for
making the application by the borrower and the person
other than the borrower.]
4[Explanation.--For the removal of doubts, it is hereby
declared that the communication of the reasons to the
borrower by the secured creditor for not having accepted
his representation or objection or the likely action of the
secured creditor at the stage of communication of reasons
to the borrower shall not entitle the person (including
borrower) to make an application to the Debts Recovery
Tribunal under this sub-section.]
5[(1A) An application under sub-section (1) shall be filed
before the Debts Recovery Tribunal within the local limits
of whose jurisdiction--
(a) the cause of action, wholly or in part, arises;
(b) where the secured asset is located; or
(c) the branch or any other office of a bank or financial
institution is maintaining an account in which debt
claimed is outstanding for the time being.]
6[(2) The Debts Recovery Tribunal shall consider
whether any of the measures referred to in sub-section (4)
of section 13 taken by the secured creditor for enforcement
of security are in accordance with the provisions of this
Act and the rules made thereunder.

27
WRIC No. - 1004411 of 2011
7[(3) If, the Debts Recovery Tribunal, after examining the
facts and circumstances of the case and evidence produced
by the parties, comes to the conclusion that any of the
measures referred to in sub-section (4) of section 13, taken
by the secured creditor are not in accordance with the
provisions of this Act and the rules made thereunder, and
require restoration of the management or restoration of
possession, of the secured assets to the borrower or other
aggrieved person, it may, by order,--
(a) declare the recourse to any one or more measures
referred to in sub-section (4) of section 13 taken by the
secured creditor as invalid; and
(b) restore the possession of secured assets or
management of secured assets to the borrower or such
other aggrieved person, who has made an application
under sub-section (1), as the case may be; and
(c) pass such other direction as it may consider
appropriate and necessary in relation to any of the
recourse taken by the secured creditor under sub-section
(4) of section 13.]
(4) If, the Debts Recovery Tribunal declares the recourse
taken by a secured creditor under sub-section (4) of
section 13, is in accordance with the provisions of this Act
and the rules made thereunder, then, notwithstanding
anything contained in any other law for the time being in
force, the secured creditor shall be entitled to take
recourse to one or more of the measures specified under
sub-section (4) of section 13 to recover his secured debt.
8[(4A) Where--
(i) any person, in an application under sub-section (1),
claims any tenancy or leasehold rights upon the secured
asset, the Debt Recovery Tribunal, after examining the
facts of the case and evidence produced by the parties in
relation to such claims shall, for the purposes of
enforcement of security interest, have the jurisdiction to
examine whether lease or tenancy,--
(a) has expired or stood determined; or
(b) is contrary to section 65A of the Transfer of Property
Act, 1882 (4 of 1882); or
(c) is contrary to terms of mortgage; or
(d) is created after the issuance of notice of default and
demand by the Bank under subsection (2) of section 13 of
the Act; and
(ii) the Debt Recovery Tribunal is satisfied that tenancy
right or leasehold rights claimed in secured asset falls
under the sub-clause (a) or sub-clause (b) or sub-clause
(c) or sub-clause (d) of clause (i), then notwithstanding
anything to the contrary contained in any other law for the
time being in force, the Debt Recovery Tribunal may pass
such order as it deems fit in accordance with the
provisions of this Act.]

28
WRIC No. - 1004411 of 2011
(5) Any application made under sub-section (1) shall be
dealt with by the Debts Recovery Tribunal as expeditiously
as possible and disposed of within sixty days from the date
of such application:
Provided that the Debts Recovery Tribunal may, from
time to time, extend the said period for reasons to be
recorded in writing, so, however, that the total period of
pendency of the application with the Debts Recovery
Tribunal, shall not exceed four months from the date of
making of such application made under sub-section (1).
(6) If the application is not disposed of by the Debts
Recovery Tribunal within the period of four months as
specified in sub-section (5), any part to the application
may make an application, in such form as may be
prescribed, to the Appellate Tribunal for directing the
Debts Recovery Tribunal for expeditious disposal of the
application pending before the Debts Recovery Tribunal
and the Appellate Tribunal may, on such application, make
an order for expeditious disposal of the pending
application by the Debts Recovery Tribunal.
(7) Save as otherwise provided in this Act, the Debts
Recovery Tribunal shall, as far as may be, dispose of the
application in accordance with the provisions of the
Recovery of Debts Due to Banks and Financial Institutions
Act, 1993 (51 of 1993) and the rules made thereunder.]
Section 18 : Appeal to Appellate Tribunal
(1) Any person aggrieved, by any order made by the Debts
Recovery Tribunal 1[under section 17, may prefer an
appeal along with such fee, as may be prescribed]to the
Appellate Tribunal within thirty days from the date of
receipt of the order of Debts Recovery Tribunal.
2 [Provided that different fees may be prescribed for filing
an appeal by the borrower or by the person other than the
borrower:]
3 [Provided further that no appeal shall be entertained
unless the borrower has deposited with the Appellate
Tribunal fifty per cent. of the amount of debt due from him,
as claimed by the secured creditors or determined by the
Debts Recovery Tribunal, whichever is less:
Provided also that the Appellate Tribunal may, for the
reasons to be recorded in writing, reduce the amount to
not less than twenty-five per cent. of debt referred to in the
second proviso.]
(2) Save as otherwise provided in this Act, the Appellate
Tribunal shall, as far as may be, dispose of the appeal in
accordance with the provisions of the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993 (51 of
1993) and rules made thereunder.”
76) On perusal of affidavit dated 31.10.2017 filed by Smt. Kiran
Chaurasiya and upon consideration of the material brought on record and
the submissions advanced by learned counsel for the parties, it transpires

29
WRIC No. - 1004411 of 2011
that the petitioner and the deponent, Smt. Kiran Chaurasia, had jointly
purchased the property in question from Moti Jheel Cooperative Housing
Society on 27.02.1987 and subsequently mortgaged the same with
Canara Bank in the year 2003 as security for repayment of the loan.
Owing to non-payment of the loan, the Bank initiated proceedings for
enforcement of its security interest and the property was put to auction.
The auction purchaser, Dr. Ajay Gupta, was issued a sale certificate on
24.01.2008.
77) It further emerges from the affidavit of Smt. Kiran Chaurasia that,
according to her, neither she nor the petitioner has remained in
possession of the property since 2006, whereas the auction purchaser has
been in possession thereof since the issuance of the sale certificate. She
has also stated that the petitioner subsequently executed several sale
deeds in favour of third parties in 2014 and 2015 in respect of portions
of the property in question, without, according to the allegations made in
the affidavit, disclosing the earlier mortgage and the pending litigation.
These assertions lend support to the respondents' objection regarding the
petitioner's subsequent dealings with the property; nevertheless, their
precise legal effect would depend upon the relevant sale deeds, the
extent of the property covered thereby and the rights, if any, subsisting in
favour of the petitioner at the time of execution.
78) The Court further takes note of the fact that an FIR was registered
against the petitioner and other persons on the complaint of the auction
purchaser in relation to the subsequent transactions. However, the
registration of an FIR, by itself, cannot be treated as proof of the
allegations made therein or as a conclusive determination of title to the
property. The criminal proceedings are required to be considered
independently in accordance with law and cannot, merely by their
pendency, determine the legality of the auction proceedings impugned in
the present writ petition.
79) The principal issue, therefore, is whether the auction proceedings
culminating in the issuance of the sale certificate dated 24.01.2008 were

30
WRIC No. - 1004411 of 2011
conducted in accordance with the applicable provisions of the
SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules,
2002, as they stood at the relevant time. The respondent Bank has relied
upon the publication of sale notices dated 03.02.2007 and 22.03.2007,
acceptance of the auction purchaser's bid of 33,00,000/-, confirmation
₹
of sale stated to have been made on 08.08.2007 and subsequent issuance
of the sale certificate. At the same time, the petitioner has questioned the
reduction in the reserve price, the absence of relevant contemporaneous
records and the sequence concerning payment of the balance sale
consideration and confirmation of sale. These issues require examination
with reference to the original record and the statutory requirements
applicable to the transaction.
80) The subsequent sale deeds relied upon by the respondents and the
assertions regarding possession cannot, by themselves, dispense with the
necessity of determining whether the original auction was legally valid.
Equally, the petitioner's subsequent offer of 34,00,000/- dated
₹
24.12.2007 cannot, merely because it exceeded the accepted bid by
1,00,000/-, establish a right to have the auction sale set aside. The
₹
petitioner's entitlement to redemption and the legal effect of the offer
must be assessed in the light of the applicable version of Section 13(8) of
the SARFAESI Act and the stage reached in the enforcement
proceedings.
81) Accordingly, while the affidavits filed on behalf of the auction
purchaser and Smt. Kiran Chaurasia raise substantial questions
concerning the petitioner's subsequent dealings with the property and the
rights claimed by the auction purchaser, the ultimate determination of the
writ petition must rest upon the legality of the auction proceedings, the
petitioner's legally enforceable rights and the material available on
record. The mere existence of subsequent transfers, an FIR or a claim of
possession cannot substitute for such determination. The challenge to the
auction sale must, therefore, be adjudicated on its own merits, in
accordance with law.

31
WRIC No. - 1004411 of 2011
82) Relevant portion of the impugned order dated 18.07.2011 speaks
as under:
“11. On the basis of the same it is clear that the
respondent No. 1 has failed to prove that in the said land
any agricultural operation is going on, and on the
contrary it is proved by the appellant and the respondent
No. 2 that the said land is not used for any agricultural
operation.
12. Apart from the aforesaid, this is also to be seen that
there had been two owners of the plot in question and the
auction was challenged by only one owner and another
owner has not come forward to challenge the proceedings,
yet, the Debts Recovery Tribunal has set aside the whole of
the auction. In this reference, this is to be seen that even
assuming that the said plot was an agricultural land, the
whole auction proceedings could not have been set aside
by the Debts Recovery Tribunal and the auction of the plot
in question to the extent of only 50% share belonging to
the respondent No. 1 should have been set aside by the
Debts Recovery Tribunal because it was the case of the
respondent No. 1 that on the aforesaid plot she is having
only an equal ownership.
13. In view of the aforesaid, I do find force in the present
appeal and accordingly, I set aside the order passed by the
Debts Recovery Tribunal on 17.08.2010 for the reasons
stated above and accordingly, the appeal stands allowed.
14. A copy of the judgment be supplied to the parties as
well as the Debts Recovery Tribunal concerned as per law.
Record, if summoned earlier, be also sent back to the
Debts Recovery Tribunal concerned within a week.”
83) I have considered the submissions advanced by learned counsel
for the petitioner, learned counsel appearing on behalf of the learned
Additional CSC appearing for respondent No.1- State (DRAT),
respondent No.2-Bank and learned counsel appearing on behalf of
respondent No.3, the auction purchaser and have carefully examined the
pleadings, affidavits and the relevant provisions of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (hereinafter referred to as the “SARFAESI Act”), as
reproduced in the material placed before this Court. The controversy
arises out of the order dated 18.07.2011 passed by the Debts Recovery
Appellate Tribunal, Allahabad, whereby the appeal preferred by the
respondent Bank was allowed and the order dated 17.08.2010 passed by
the Debts Recovery Tribunal, Lucknow, in Securitisation Application

32
WRIC No. - 1004411 of 2011
No. SA-137 of 2007 was set aside. The principal question for
consideration is whether the petitioner has established any illegality,
jurisdictional error or perversity in the impugned appellate order
warranting interference by this Court in exercise of its extraordinary
jurisdiction under Article 226 of the Constitution of India.
84) Before proceeding to examine the individual submissions, it is
necessary to bear in mind the statutory scheme governing enforcement
of security interests under the SARFAESI Act. Section 13(2) authorises a
secured creditor, upon default and classification of the relevant account
as a non-performing asset in accordance with the applicable norms, to
issue a demand notice calling upon the borrower to discharge the
liability within sixty days. In the event of failure to discharge the liability
within the prescribed period, Section 13(4) enables the secured creditor
to adopt one or more of the measures specified therein, including taking
possession of the secured asset and transferring it by way of sale for
realisation of the secured debt. These powers are, however, subject to the
statutory limitations, the applicable rules governing enforcement and
sale and the exclusions expressly provided under Section 31 of the Act.
The statutory scheme, thus, seeks to facilitate enforcement of a valid
security interest without dispensing with compliance with the mandatory
requirements of law.
85) Section 17 of the SARFAESI Act provides an adjudicatory remedy
to any person, including a borrower, aggrieved by a measure taken under
Section 13(4). Under sub-sections (2) and (3) thereof, the Debts
Recovery Tribunal is required to examine whether the measure adopted
by the secured creditor conforms to the Act and the rules made
thereunder and, where the measure is found unlawful, may declare it
invalid and grant appropriate consequential relief, including restoration
of possession where warranted. Section 18 provides an appellate remedy
against an order passed by the Debts Recovery Tribunal under Section
17. The order under challenge has been passed by the Appellate Tribunal
in exercise of the appellate jurisdiction conferred by the statute.
Consequently, the mere fact that the Appellate Tribunal reversed the

33
WRIC No. - 1004411 of 2011
decision of the Debts Recovery Tribunal does not, by itself, constitute a
ground for interference. The petitioner must demonstrate that the
reversal suffers from an error of law, a material failure to consider the
relevant record, perversity, or some other recognised infirmity
warranting judicial review.
86) The first and foremost submission advanced by learned counsel
for the petitioner is that the secured asset constitutes agricultural land
and is, therefore, excluded from the operation of the SARFAESI Act by
virtue of Section 31(i). It is contended that the petitioner and Smt. Kiran
Chaurasia jointly purchased the property through a registered sale deed
dated 27.02.1987; that the land continued to be recorded as agricultural
in the revenue records; and that the Debts Recovery Tribunal, after
examining the relevant Khasra and Khatauni, rightly concluded that the
Bank could not invoke the provisions of the Act in the absence of any
order converting the land to non-agricultural use under Section 143 of
the Uttar Pradesh Zamindari Abolition and Land Reforms Act. The
petitioner further submits that the Appellate Tribunal reversed the
decision of the Debts Recovery Tribunal without recording a legally
satisfactory finding on this foundational issue.
87) There can be no quarrel with the proposition that Section 31(i)
excludes a security interest created in agricultural land from the
operation of the SARFAESI Act. Where the statutory exclusion applies,
the secured creditor cannot overcome it merely by relying upon the
existence of a mortgage or the default committed by the borrower.
Equally, however, the applicability of the exclusion must be determined
on the basis of the nature of the property and the evidence relevant to its
agricultural character. The question is not answered conclusively by the
description of the property in a sale deed or by the existence of an entry
in the revenue record, considered in isolation. The revenue entries are
relevant and must receive due consideration, but their evidentiary
significance has to be assessed in the light of the other material bearing
upon the nature and actual use of the land.

34
WRIC No. - 1004411 of 2011
88) In the present case, the petitioner relies upon a Khasra said to have
been issued on 22.07.2011 and the earlier revenue entries, whereas the
impugned appellate order, in the extract reproduced before this Court,
records that the petitioner failed to establish that agricultural operations
were being carried on over the land and that the material produced by the
Bank and respondent no.3 indicated otherwise. The petitioner disputes
the adequacy of this conclusion and contends that the absence of an
order under Section 143 of the Uttar Pradesh Zamindari Abolition and
Land Reforms Act ought to have been given due significance.
Nevertheless, the absence of such an order cannot, without examination
of the applicable statutory framework and the complete evidence, be
elevated into an invariably conclusive test of the applicability of Section
31(i). Conversely, the absence of agricultural operations at a particular
point in time would not, by itself, necessarily establish that the property
had ceased to be agricultural land for the purposes of the exclusion. The
determination must rest upon the cumulative effect of the relevant
material and the applicable law.
89) The fact that the Debts Recovery Tribunal adopted one view on
the agricultural character of the property does not render that view
immune from appellate scrutiny. The Appellate Tribunal was competent
under Section 18 to examine the findings recorded by the Debts
Recovery Tribunal and to reverse them if the findings were inconsistent
with the material on record or the applicable law. The relevant extract of
the impugned order indicates that the Appellate Tribunal considered the
question of agricultural use and recorded its conclusion on the evidence
before it. The petitioner has not, in the material reproduced in the present
proceedings, demonstrated by reference to any identified finding or
documentary evidence that the conclusion of the Appellate Tribunal is
necessarily perverse or that it ignored an indisputable statutory fact. A
disagreement with the appreciation of evidence by the appellate forum
cannot, without more, furnish a sufficient ground for this Court to
substitute its own assessment in proceedings under Article 226.

35
WRIC No. - 1004411 of 2011
90) The petitioner has further relied upon the proposition that the
revenue record and the absence of a declaration under Section 143 ought
to have led to the conclusion that the land remained agricultural. The
proposition, however, cannot be applied mechanically. The legal
character of the property for the purpose of Section 31(i) must be
examined in the context of the exclusion contained in the SARFAESI
Act and the evidence of its nature and use. Neither a revenue entry nor
the absence of a particular order can be treated as a substitute for the
entire inquiry where the relevant facts are disputed. The Appellate
Tribunal's conclusion must be read in the context of its finding regarding
the absence of proof of agricultural operations and the material relied
upon by the Bank and the auction purchaser. In the absence of a
demonstrated legal error or perversity in that assessment, the petitioner's
contention does not justify setting aside the appellate order.
91) The next submission of learned counsel for the petitioner is that
the statutory notices contemplated under Sections 13(2) and 13(4) of the
SARFAESI Act were not duly served upon her. It is asserted that
although the demand notice under Section 13(2) was issued in her name,
the possession notice dated 18.11.2006 was issued in the name of Shri
Dhruv Prakash Chaurasia, one of the partners of M/s Chaurasia Traders,
and that neither the petitioner nor the principal borrowers received the
requisite notice. The petitioner has also relied upon her letter dated
09.07.2003, allegedly intimating the Bank of her change of residence
from Lucknow to Faizabad and the subsequent letter dated 12.10.2007
seeking information concerning the loan and the recovery proceedings.
92) The requirements of Sections 13(2) and 13(4) operate at distinct
stages of the enforcement process and cannot be treated as
interchangeable. Compliance with the requirement of issuing a demand
notice does not, by itself, establish compliance with every requirement
governing the subsequent measure of taking possession or bringing the
secured asset to sale. At the same time, an allegation of non-service must
be examined with reference to the notice concerned, the person legally
entitled to receive it, the address used, the mode of service and the

36
WRIC No. - 1004411 of 2011
material available in the record. The mere assertion that a notice was not
received cannot automatically invalidate the entire enforcement process;
equally, the Bank cannot be absolved of a mandatory obligation merely
because it claims to have initiated recovery proceedings.
93) In the present case, the petitioner has asserted that the Bank had
been informed of her changed address, but the material reproduced
before this Court does not disclose a complete examination of the
original notices, the proof of dispatch or service, or the terms of the
mortgage and other security documents. The fact that the possession
notice was issued in the name of one of the borrowers raises a question
requiring consideration of the precise nature of the security interest and
the applicable service requirements. It does not, without examination of
the relevant documents, conclusively establish either that the entire
enforcement process was void or that the Bank complied with every
statutory requirement. The petitioner was required to establish a legally
material defect in the impugned enforcement measure. The material
presently disclosed does not furnish a sufficient basis for holding that the
Appellate Tribunal's order is liable to be quashed solely on the ground of
the asserted non-service.
94) The petitioner's further submission regarding the classification of
the loan account as a non-performing asset also requires consideration.
She relies upon the statement of account dated 04.05.2007 and points out
that transactions were reflected up to 31.05.2006, with a further entry
dated 30.06.2006. On this basis, she contends that the Bank could not
have lawfully classified the account as an NPA and initiated proceedings
under Section 13(2) of the SARFAESI Act. The submission proceeds on
the assumption that the mere existence of a transaction in the account
necessarily precludes classification as a non-performing asset.
95) The aforesaid assumption cannot be accepted as a proposition of
law. Classification of an account as a non-performing asset depends
upon the nature of the credit facility, the contractual repayment
obligations, the period for which the relevant amount remained overdue

37
WRIC No. - 1004411 of 2011
and the prudential norms applicable to the account at the material time. A
transaction appearing in a statement of account does not, by itself,
establish that the borrower had regularised the account or that the
conditions governing classification as an NPA were not fulfilled.
Equally, the Bank's assertion of classification cannot be treated as
conclusive if the relevant statutory or regulatory requirements are shown
not to have been satisfied. In the present case, however, the material
supplied does not set out the complete repayment schedule, the relevant
overdue position, the applicable classification calculation or any specific
finding of the Appellate Tribunal demonstrating a legally material defect
in the classification. The mere reference to subsequent account entries is,
therefore, insufficient to establish that the initiation of proceedings under
Section 13(2) was unlawful.
96) Learned counsel for the petitioner has next placed considerable
emphasis upon the tender of bank drafts aggregating to approximately
34,00,000/- on 22.12.2007, contending that the said amount exceeded
₹
the auction consideration of 33,00,000/- and was tendered before
₹
issuance of the sale certificate dated 24.01.2008. It is argued that the
Bank's letter dated 07.01.2008 returning the drafts was contrary to
Section 13(8) of the SARFAESI Act and that the Appellate Tribunal
failed to distinguish between the date of auction, the date of
confirmation of sale, the date of payment of the sale consideration and
the date of issuance of the sale certificate.
97) The legal effect of the petitioner's tender must be determined by
applying Section 13(8) in the form applicable to the enforcement
proceedings at the relevant time. The provision reproduced in the
supplied material contemplates that the amount of dues of the secured
creditor, together with all costs, charges and expenses incurred by it,
must be tendered before the date of publication of the notice for public
auction or the corresponding notice for transfer of the secured asset.
Where those statutory conditions are satisfied, the consequences
prescribed by the provision follow. The provision does not, in the
version reproduced before this Court, make the date of issuance of the

38
WRIC No. - 1004411 of 2011
sale certificate the sole or decisive test for determining whether the
secured creditor was obliged to discontinue the transfer process. The
relevant statutory event is the tender within the period specified by the
applicable provision and not merely the date upon which the formal
certificate was subsequently issued.
98) The chronology disclosed by the respondents assumes significance
in this context. The Bank states that the first sale notice was published on
03.02.2007 with a reserve price of 40,00,000/- and that, after the
₹
auction could not be finalised for want of bidders, a second sale notice
was published on 22.03.2007 with a reserve price of 32,00,000/-.
₹
According to the Bank, respondent No.3's bid of 33,00,000/- was
₹
accepted and the sale was confirmed on 08.08.2007, whereas the sale
certificate was issued on 24.01.2008. The petitioner's offer was made
subsequently, in December 2007. If the statutory notice for public
auction had already been published before the tender, the condition
prescribed in the version of Section 13(8) reproduced before this Court
would not be satisfied merely because the sale certificate was issued
later. The petitioner has not established that the tender was made before
the relevant publication of the sale notice.
99) There is, moreover, a material distinction between the amount of
the auction consideration and the amount of the secured creditor's
outstanding dues. The petitioner's drafts were stated to aggregate
approximately 34,00,000/-, whereas the Bank asserts that the liability
₹
outstanding as on 24.12.2007 was 40,22,861.08, apart from expenses
₹
incurred in the recovery proceedings. The fact that the tendered amount
exceeded the auction bid by 1,00,000/- does not establish that the
₹
amount represented the entire dues of the secured creditor together with
all costs, charges and expenses. The petitioner's contention that the Bank
was bound to accept the drafts cannot be sustained merely by comparing
the two figures. In the absence of material establishing that the tender
satisfied the requirements of the applicable version of Section 13(8), the
return of the drafts does not furnish a sufficient ground for invalidating
the sale.

39
WRIC No. - 1004411 of 2011
100) The petitioner has rightly emphasised that the date of auction, the
date of acceptance of the bid, the date of confirmation of sale, the
payment of the balance consideration and the issuance of the sale
certificate are legally distinct events. Their respective consequences
must be determined in accordance with the applicable statutory provision
and the Security Interest (Enforcement) Rules, 2002. Nevertheless, the
distinction drawn by the petitioner does not advance her case unless the
relevant dates, read with the governing provision, establish that the
secured creditor was legally prohibited from proceeding with the sale.
On the chronology pleaded by the Bank, the sale notice preceded the
petitioner's offer by several months, the bid was accepted and the sale
was stated to have been confirmed on 08.08.2007 and the certificate was
issued on 24.01.2008. The later issuance of the certificate, standing
alone, does not revive a right of redemption which had not been
exercised in the manner and within the period prescribed by the
applicable statutory provision.
101) The petitioner's submission that the Bank was required to accept
the drafts because they exceeded the auction price is, therefore,
misconceived. A secured creditor's statutory rights and the corresponding
right of redemption are governed by the statute and cannot be
determined solely by comparing competing monetary offers. Nor does a
subsequent willingness to pay necessarily confer a right to reopen an
auction already undertaken in accordance with law. The petitioner has
not demonstrated that the Bank was statutorily obliged to abandon the
accepted bid on account of the tender made in December 2007.
Consequently, no illegality in the impugned appellate order is
established on this ground.
102) The petitioner has also contended that the Bank could not lawfully
proceed against her property because the loan had been availed of by
M/s Chaurasia Traders and she was merely a person who had furnished
the property as security, rather than the principal borrower. It is further
submitted that the Bank ought first to have proceeded against the
principal borrowers or their assets before enforcing the mortgage over

40
WRIC No. - 1004411 of 2011
the petitioner's property. The contention, insofar as it suggests that the
secured creditor was invariably required to exhaust its remedies against
the principal borrowers before enforcing a valid security interest, cannot
be accepted.
103) The distinction between the principal borrower and the person
who has created a mortgage or furnished security is relevant, but it does
not by itself extinguish the secured creditor's rights over the secured
asset. Where a valid and enforceable security interest has been created to
secure the loan, the secured creditor may ordinarily proceed against the
secured asset in accordance with the governing law, subject to the terms
of the security instrument and the statutory restrictions applicable to the
transaction. The petitioner herself asserts that her property was
mortgaged with the Bank in the year 2003 to secure the credit facility
extended to M/s Chaurasia Traders. Her status as a person who was not
the principal borrower does not, without more, render the mortgage
unenforceable. The decisive questions remain whether the security
interest was validly created, whether the property fell within a statutory
exclusion and whether the Bank complied with the applicable
enforcement procedure. The petitioner has not established that the Bank
was legally bound to exhaust its remedies against the principal
borrowers before taking recourse to the mortgaged property.
104) Learned counsel for the petitioner has further challenged the
valuation and fairness of the auction, contending that the property was
worth approximately 1.5 crore but was sold for 33,00,000/-. It is
₹ ₹
submitted that the reduction in the reserve price from 40,00,000/- to
₹
32,00,000/- and the alleged failure to assess the market value properly
₹
indicate that the auction was conducted arbitrarily. The respondent Bank,
on the other hand, submits that the first auction did not attract bidders
and that the reserve price was reduced for the subsequent sale, in which
respondent no.3 offered 33,00,000/-.
₹
105) The sale of a secured asset must conform to the applicable
provisions of the Security Interest (Enforcement) Rules, 2002, including

41
WRIC No. - 1004411 of 2011
the requirements governing valuation, fixation of reserve price, notice
and publication of sale and conduct of the auction. The fact that the Bank
has a statutory right to enforce the security does not authorise it to
disregard mandatory safeguards intended to ensure a lawful and fair sale.
Equally, an allegation that the market value of the property was
substantially higher than the auction consideration cannot, without
supporting valuation material and proof of a legally material irregularity,
automatically invalidate the sale. The relevant inquiry is whether the
applicable procedure was followed and whether any established breach
was material to the legality of the sale.
106) In the present case, the Bank has furnished the particulars of two
sale notices and explained that the first auction could not be finalised for
want of bidders. It has further stated that the second sale notice fixed a
reserve price of 32,00,000/- and that the bid of 33,00,000/- submitted
₹ ₹
by respondent No.3 was accepted. The petitioner's assertion of a market
value of approximately 1.5 crore is not, by itself, sufficient to establish
₹
that the reserve price was unlawfully fixed or that the auction was
vitiated by fraud, collusion or a breach of a mandatory rule. The material
supplied does not disclose a contemporaneous valuation report or other
reliable evidence establishing the alleged value or identifying a specific
mandatory requirement which was violated. In these circumstances, the
challenge founded solely upon the alleged inadequacy of the sale
consideration cannot be accepted.
107) The petitioner has also contended that the Appellate Tribunal
ought not to have reversed the order of the Debts Recovery Tribunal
without recording adequate reasons on each material issue. The
requirement to give reasons is an essential feature of fair adjudication,
particularly where the decision determines the legality of measures taken
against immovable property. An appellate authority must consider the
grounds urged before it and disclose the reasoning supporting its
conclusions on the issues material to the result. However, the adequacy
of reasons must be assessed from the order read as a whole and not by

42
WRIC No. - 1004411 of 2011
isolating a particular sentence or by assuming that every contention not
reproduced in detail has necessarily been ignored.
108) The relevant portion of the impugned order reproduced in the
present material indicates that the Appellate Tribunal considered the
question of agricultural use and the petitioner's claim of joint ownership.
It recorded its conclusion that agricultural operations had not been
proved and further observed that, even if the property were agricultural,
the Debts Recovery Tribunal ought not to have set aside the entire
auction when the petitioner claimed only a 50 per cent share and the
other co-owner had not challenged the proceedings. These findings
disclose the principal grounds upon which the Appellate Tribunal
reversed the decision of the Debts Recovery Tribunal. The petitioner has
not demonstrated by reference to its actual reasoning, that the decision is
devoid of reasons altogether or that the findings recorded therein are
unsupported by any material. The submission that the impugned order is
non-speaking or wholly unreasoned cannot, therefore, be accepted
merely on the basis of the extract reproduced in the writ petition.
109) It is true that the Appellate Tribunal's observation concerning the
petitioner's 50 per cent share cannot, by itself, determine the extent of
the security interest or conclusively resolve the rights of all co-owners.
Those matters ordinarily depend upon the title documents, the mortgage
instrument and the nature of the security actually created. However, the
petitioner has also to establish that the impugned order suffers from an
error warranting interference and that the entire auction was liable to be
set aside on a legally sustainable ground. The fact that the petitioner and
Smt. Kiran Chaurasia jointly purchased the property does not, without
examination of the mortgage documents, establish that the security
interest was confined to the petitioner's share or that the auction was
necessarily invalid in its entirety. Conversely, the absence of a challenge
by the other co-owner cannot cure an otherwise established statutory
violation. The Appellate Tribunal's observation regarding the extent of
ownership must be understood in the context of the dispute before it; it

43
WRIC No. - 1004411 of 2011
does not, on the material supplied, furnish an independent ground for
quashing the appellate order.
110) The petitioner has further contended that the Bank could not
proceed with the auction without first resolving the question of the
agricultural character of the land and that the rights of the auction
purchaser cannot prevail over an enforcement measure which is
otherwise unlawful. The legal principle that a completed auction cannot
cure an antecedent violation of a mandatory statutory requirement is not
in dispute. Equally, however, the mere assertion of an antecedent
illegality does not establish that such illegality occurred. The petitioner
must demonstrate that the property attracted the statutory exclusion, that
a mandatory notice or procedural requirement was violated, or that the
sale was otherwise vitiated under the applicable law. In the absence of
such proof, the rights acquired by the auction purchaser pursuant to the
sale cannot be displaced merely because the petitioner disputes the
Bank's assessment of the property or expresses a subsequent willingness
to pay the outstanding dues.
111) The submissions of learned counsel for respondent No.3
concerning the subsequent sale deeds executed by the petitioner in the
years 2014 and 2015, the claim of possession and the construction stated
to have been raised over a portion of the property have also been
considered. These events occurred after the sale certificate dated
24.01.2008 and cannot, by themselves, establish the legality of the
original auction. Equally, the subsequent registration of sale deeds by the
petitioner cannot, by itself, establish that she retained a title capable of
being transferred free from the consequences of the earlier mortgage and
auction. The legal effect of those transactions must be determined in
accordance with the title documents and the rights subsisting at the time
of their execution. The subsequent transactions are, therefore, not treated
as conclusive of the validity of the auction, but neither do they furnish a
ground for granting the relief sought in the present writ petition.

44
WRIC No. - 1004411 of 2011
112) The registration of an FIR on the complaint of respondent No.3
has also been brought to the notice of the Court. The existence of
criminal proceedings does not establish the guilt of the petitioner, nor
can the allegations contained therein be treated as a conclusive
determination of the civil rights in the property. The criminal
proceedings must be adjudicated independently in accordance with law.
The present writ petition is concerned with the legality of the appellate
order passed under the SARFAESI Act and the question whether the
auction proceedings were lawfully conducted must be determined on the
relevant statutory provisions and admissible material, without prejudging
the criminal allegations. Accordingly, no adverse finding regarding the
petitioner's guilt is warranted or recorded on the basis of the FIR.
113) Learned counsel for the petitioner has also submitted that the
statutory remedy under Section 17 of the SARFAESI Act is intended to
provide a complete adjudicatory mechanism and that the High Court's
jurisdiction under Article 226 is not excluded merely because the dispute
arises under the said Act. The proposition that the existence of an
alternative remedy does not, in every circumstance, extinguish the
constitutional jurisdiction of this Court is well settled. Nevertheless, the
existence of an efficacious statutory remedy is a material consideration
in determining whether discretionary writ jurisdiction ought to be
exercised. In the present case, the petitioner invoked Section 17 and
obtained an order from the Debts Recovery Tribunal; the Bank thereafter
pursued the statutory appellate remedy under Section 18 and the
Appellate Tribunal passed the order now under challenge. The writ
petition is, therefore, not a substitute for another round of appellate
adjudication on disputed questions of fact.
114) Judicial review under Article 226 is directed towards examining
the legality of the decision-making process and the existence of a
recognised ground for interference; it does not ordinarily authorise this
Court to reassess every item of evidence as though exercising a further
statutory appeal. Where a specialised tribunal has considered the dispute
within its jurisdiction, its findings cannot be displaced merely because

45
WRIC No. - 1004411 of 2011
another view of the evidence may be possible. Interference would be
justified where the decision is shown to be without jurisdiction, contrary
to a mandatory statutory provision, vitiated by denial of natural justice,
based on a material misreading of the record, or otherwise perverse in
the legal sense. The petitioner has not established such an infirmity on
the material reproduced before this Court. The allegation that certain
issues were not adequately addressed does not, in the absence of a
demonstrated material error in the actual order, warrant the exercise of
extraordinary jurisdiction.
115) The submission that the Bank's statutory powers must be exercised
in strict conformity with the SARFAESI Act is accepted as a correct
statement of law. Sections 13(2) and 13(4) cannot be applied without
regard to their respective conditions; Section 31(i) must be given effect
wherever its requirements are satisfied; and Section 13(8) must be
applied in the form governing the transaction at the material time. The
Security Interest (Enforcement) Rules, 2002 likewise impose obligations
upon the secured creditor in conducting a sale. Nevertheless, the
existence of these statutory safeguards does not, by itself, establish that
the Bank violated them in the present case. The petitioner's challenge
must succeed on proof of a legally material violation, not merely on a
recitation of the statutory provisions or the assertion that the Appellate
Tribunal ought to have reached a different conclusion.
116) Upon an overall consideration of the material disclosed, the
petitioner has not established that the impugned appellate order dated
18.07.2011 is liable to be quashed on account of the asserted agricultural
character of the land, the alleged non-service of statutory notices, the
challenge to the classification of the loan account as an NPA, the tender
of bank drafts in December 2007, the alleged inadequacy of the auction
consideration, or the petitioner's status as a person who furnished
security for a loan taken by another borrower. The Bank has placed on
record its version concerning publication of the sale notices, acceptance
of the bid of respondent No.3, confirmation of sale and issuance of the
sale certificate. The petitioner's subsequent offer, made after publication

46
WRIC No. - 1004411 of 2011
of the sale notices and after the sale was stated to have been confirmed,
does not establish compliance with the requirements of the applicable
version of Section 13(8). Nor has the petitioner established, on the
material supplied, a specific violation of the statutory sale procedure or a
jurisdictional defect which would render the appellate order
unsustainable.
117) It is also relevant that the auction purchaser was issued a sale
certificate on 24.01.2008, whereas the present writ petition was
instituted on 27.07.2011. The passage of time and the intervening rights
asserted by respondent No.3 are relevant circumstances in considering
the discretionary relief sought, although delay alone is not treated as
curing an established violation of a mandatory statutory provision. The
petitioner must, in the first instance, demonstrate a legally sustainable
ground for setting aside the appellate order and the consequential sale. In
the absence of such a showing, the Court would not be justified in
disturbing the rights claimed by the auction purchaser merely on the
basis of the petitioner's subsequent offer to pay an amount which,
according to the Bank, was lower than the outstanding dues and
expenses.
118) The relief sought in prayer clauses (i) and (ii) is for quashing the
appellate order dated 18.07.2011 and restraining the respondents from
giving effect thereto. For the reasons recorded above, no sufficient
ground has been established for granting either relief. Prayer clause (iii),
seeking a direction to the Bank to accept the loan amount and hand over
the property along with the relevant documents, is consequential upon
the petitioner's challenge to the auction proceedings. Once the petitioner
has failed to establish a legally enforceable right to have the sale set
aside or to compel acceptance of the tender made in December 2007, no
direction for restoration of the property or delivery of documents can be
issued in the present proceedings. The Court cannot direct the Bank to
accept an amount merely because it exceeds the auction consideration,
without proof that the statutory requirements governing redemption were
satisfied.

47
WRIC No. - 1004411 of 2011
119) For the reasons aforesaid, this Court finds no sufficient ground, on
the material placed before it, to interfere with the impugned order dated
18.07.2011 passed by the Debts Recovery Appellate Tribunal, Allahabad,
in exercise of the jurisdiction conferred by Article 226 of the
Constitution of India. The petitioner has failed to establish that the
impugned order suffers from a jurisdictional error, perversity or a
demonstrated violation of a mandatory statutory provision warranting its
quashing. The submissions advanced on behalf of the petitioner, though
carefully considered, do not merit acceptance.
120) Accordingly, the writ petition is liable to be dismissed and is
hereby dismissed . The order dated 18.07.2011 passed by the Debts
Recovery Appellate Tribunal, Allahabad, setting aside the order dated
17.08.2010 passed by the Debts Recovery Tribunal, Lucknow, in
Securitisation Application No. SA-137 of 2007, is affirmed.
121) No opinion expressed herein shall be construed as a determination
of the guilt of the petitioner in the criminal proceedings referred to by
the parties, which shall proceed independently in accordance with law.
122) There shall be no order as to costs.
(Irshad Ali,J.)
November 05, 2026
Adarsh K Singh
Digitally signed by :-
ADARSH KUMAR SINGH
High Court of Judicature at Allahabad,
Lucknow Bench