M.R. Vasumathi vs The Authorized Officer
- Court
- Supreme Court
NON-REPORTABLE
2026 INSC 633
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1606 OF 2026
M. R. VASUMATHI … APPELLANT
VERSUS
THE AUTHORIZED OFFICER & ORS. … RESPONDENTS
J U D G M E N T
DIPANKAR DATTA, J.
HE PPEAL
T A
1. This appeal is directed against the judgment and order dated
1 2
21.09.2020 passed by the High Court of Judicature at Madras in Writ
Petition No. 29641 of 2019. Vide the impugned judgment, the High Court
of Judicature at Madras dismissed the writ petitions filed by the appellant
3
(daughter) as well as the son of the deceased guarantor , thereby
declining to interfere with the measures adopted by the first respondent
4
being the authorised officer of the Indian Bank under the Securitisation
Signature Not Verified
1
impugned judgment
2
High Court
3
G. Ramanujam
4
secured creditor
Digitally signed by
rashmi dhyani pant
Date: 2026.06.10
14:20:24 IST
Reason:
1
and Reconstruction of Financial Assets and Enforcement of Security
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Interest Act, 2002 , culminating in the auction sale of the secured asset.
2. Appellant questions the legality of the said proceedings, particularly the
auction sale held on 11.03.2010, on the ground that the statutory
procedure governing such sale was not complied with.
3. The first respondent is the authorised officer of the secured creditor. The
second respondent is the auction purchaser, being the successful bidder
in the auction sale of the secured asset. The remaining respondents are
the other legal heirs/representatives who were parties to the
proceedings before the High Court and have been arrayed as formal
parties in the present proceedings.
ENESIS
G
4. Briefly, the facts triggering this appeal are these:
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a. One S. Murugesan , sole proprietor of M/s Shiv Shankar Agencies,
had availed financial assistance from the secured creditor in the
year 1984. To secure the said loan, G. Ramanujam stood as
guarantor and mortgaged his immovable property in favour of the
secured creditor.
b. On account of the default committed by the borrower, the secured
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creditor instituted a suit before the City Civil Court, Chennai
against the borrower and the guarantor, seeking recovery of the
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SARFAESI Act
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borrower
7
O.S. No. 4067 of 1996
2
outstanding dues. On 10.09.1997, the said court passed a
preliminary decree in favour of the secured creditor for a sum of
Rs. 1,87,004.23 [in effect, the total sum was Rs. 1,92,400.23p
(inclusive of Court Fee of Rs. 5396/-)] along with interest @ of
18% per annum.
c. G. Ramanujam expired on 26.09.2001 leaving behind his heirs
including the appellant. Several attempts were thereafter made by
and between the secured creditor and the heirs of G. Ramanujam
for an amicable settlement, but the same did not fructify.
d. On 08.09.2009, nearly (12) twelve years after the passing of the
preliminary decree, the secured creditor issued a demand notice
under Section 13(2) of the SARFAESI Act to the borrower and the
heirs of G. Ramanujam. Subsequently, the secured creditor issued
a possession notice dated 21.12.2009 and later a sale notice dated
03.02.2010 proposing to sell the secured asset by way of public
8
auction under the Security Interest (Enforcement Rules), 2002 .
e. The secured asset was ultimately put to auction on 11.03.2010, in
9
which the respondent 2 herein emerged as the successful bidder
with a bid amount of Rs. 2,11,00,500/-. Admittedly, 25% of the
bid amount was paid by the auction purchaser on
10.03.2010/11.03.2010, and the remaining 75% of the sale
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SARFAESI Rules
9
auction purchaser
3
consideration was paid on 31.03.2010. The sale certificate was
issued by the secured creditor on 10.04.2010.
f. The heirs of G. Ramanujam challenged the aforesaid demand
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notice before the Debts Recovery Tribunal, Chennai by applying
under Section 17 of the SARFAESI Act (S.A. No. 28 of 2010). On
28.09.2010, the heirs of G. Ramanujam, including the appellant,
further filed S.A. No. (Sr.No.6473 of 2010) seeking to set aside
the auction sale, which was held on 11.03.2010 and confirmed in
favour of the auction purchaser. During the pendency of the
proceedings in S.A. (Sr. No. 6473 of 2010), the legal heirs,
including the appellant herein, filed M.A.6504 of 2010 seeking
permission to redeem the property; M.A.6505 of 2010 to condone
the delay in filing the application No. 6473 of 2010 and M.A. 6506
of 2010 seeking interim stay.
g. On 30.12.2010, the DRT dismissed S.A. No. 28 of 2010, primarily
on the ground that since the sale schedule property was already
sold, the said application challenging the notice of intended sale
became infructuous. It also held that the secured creditor had
adhered to the procedure under the SARFAESI Act. Followingly, on
the same day, the DRT dismissed SA (Sr. No. 6473/2010) along
with the MAs (Sr. Nos. 6504, 6505 & 6506/2010) on the ground
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that section 5 of the Limitation Act, 1963 would not be applicable
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DRT
11
Limitation Act
4
to the application under section 17 of the SARFAESI Act.
h. Appeals, being M.A. (S.A. No. 107 of 2011) and R.A. (S.A. No. 91
of 2014), were carried before the Debts Recovery Appellate
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Tribunal, Chennai challenging the dismissal of M.A. Sr. No. 6505
of 2010, filed in S.A. Sr. No. 6473 of 2010 by the appellant and
her brother.
i. The DRAT first dismissed the appeal, i.e., R.A. (S.A. No. 91 of
2014) filed by the brothers of the appellant, by an order dated
16.12.2016, affirming the reason assigned by the DRT.
Consequently, the DRAT also dismissed the appeal of the daughter
of G. Ramanujam and other heirs, being M.A. (S.A. No. 107 of
2011).
j. Aggrieved thereby, the appellant approached the High Court in
W.P. No. 29641 of 2019, and her brother (son of G. Ramanujam)
filed the connected W.P. No. 27770 of 2019. The High Court vide
the impugned judgment dismissed both the writ petitions holding
that the secured creditor had validly exercised its powers under
the SARFAESI Act and that no interference was warranted.
k. Still aggrieved, the present civil appeal has been preferred by the
daughter of G. Ramanujam.
S UMMARY OF THE I MPUGNED J UDGMENT
5. The High Court, by the common impugned judgment, dismissed W.P.
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DRAT
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No. 29641 of 2019 and W.P. No. 27770 of 2019. At the outset, the
High Court noted that the foundational facts were largely not in
question. The loan transaction dated back to 1984; a preliminary
decree had been passed in 1997 on the basis of a mortgage created
by G. Ramanujam; and the subsequent attempts at settlement
having become nugatory, recourse was eventually taken by the
secured creditor under the SARFAESI Act, culminating in the sale of
the secured asset in 2010. The challenge mounted by the heirs of G.
Ramanujam before the High Court was essentially directed against
the recovery proceedings and the consequent auction.
6. The High Court found the challenge to be entirely untenable in light
of the conduct of the appellant and her brother, being the writ
petitioners. It was observed that the writ petitioners had remained
indolent for an inordinate length of time, notably on the aspect of
failing to take steps to set aside the ex parte decree for approximately
over 4500 (forty five hundred) days. Such a prolonged inaction, in
the Court’s view, disentitled them from challenging the subsequent
recovery proceedings. The writ petitioners’ attempt to assail the
actions of the secured creditor, having remained in a state of inertia,
was characterised by the High Court as lacking in bona fides .
7. On the anvil of limitation, the High Court rejected the contention that
the proceedings under the SARFAESI Act were barred merely because
they were initiated several years after the decree. It went on to hold
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that the secured creditor continuously pursued recovery, subsuming
attempts at one-time settlement, and that the statutory framework
introduced concomitantly permitted recourse to the SARFAESI Act as
an efficacious remedy. The delay, therefore, was held not to be fatal
so as to invalidate the proceedings.
8. Furthermore, the High Court held that the writ petitioners had
fundamentally misconstrued the nature and object of the SARFAESI
Act. It was observed that the legislation was enacted to provide an
expeditious mechanism for recovery of secured debts, independent
of the conventional civil court process. The mere existence of a prior
decree or the availability of remedies under other enactments was
held not to preclude the secured creditor from invoking the provisions
of the SARFAESI Act.
9. Apropos the alleged procedural infirmities in the auction process, the
High Court underscored that both the DRT and the DRAT had returned
concurrent findings affirming due compliance with the statutory
requirements and that no material irregularity or illegality was
evinced, which demanded interference in the exercise of writ
jurisdiction. On the contrary, the High Court noted that the auction
purchaser had acquired rights consequent upon the completed sale
and had been subjected to protracted litigation.
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10. The sequitur was the dismissal of the writ petitions by the High Court,
on the premise that the natural circulation of public money cannot be
thwarted by frivolous personal litigation.
S UBMISSIONS ON BEHALF OF V ASUMATHI (A PPELLANT )
11. Learned senior counsel, Mr. Ratnakar Dash, appearing on behalf of
the appellant contended before us that after 25 (twenty five) years
of the preliminary decree, the secured creditor issued notice under
Section 13(2) of the SARFAESI Act to the heirs of G. Ramanujam,
who passed away after the preliminary decree was passed by the Civil
Court, claiming Rs. 95,42,372.52p. The same was contended to be
unjustifiable. Besides this, it was also urged that the secured creditor
took the decision to sell the secured asset in haste sans adherence to
the provisions of law.
12. It was submitted by Mr. Dash that the secured creditor instead of
obtaining a valuation report from its officers, played fraud by
obtaining valuation report through the original borrower, namely S.
Murugesan, which was argued not to be in terms of Rule 8(5) of the
SARFAESI Rules mandating that the report has to be obtained by the
authorised officer of the secured creditor.
13. Mr. Dash contended that Rule 9(3) of the SARFAESI Rules provides
for the mandate of depositing the 25% of the sale price immediately
on the date of sale and that in default, the property will be resold. It
was asserted that the auction purchaser had failed to pay the 25%
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deposit "immediately" in the prescribed mode (DD/BPO) on the date
of sale, i.e., 11.03.2010. Furthermore, the balance 75% was allegedly
paid beyond the mandatory 15-day period on 31.03.2010 without a
written agreement for extension, rendering the sale a complete
nullity. It was argued that the secured creditor had waived the delay
in the payment, and that the waiver could not have been a unilateral
act.
14. Mr. Dash further urged the Court to believe that even if the market
price of the property in question was Rs. 2.11 crore, for the
satisfaction of the debt of Rs. 95 lakh+ as claimed, only a portion of
the property ought to have been sold and not the entire property.
15. Mr. Dash next assailed the reliance placed by the secured creditor on
the amended definition of “debt” under Section 2(ha) of the
SARFAESI Act, as introduced by Act 44 of 2016. According to him,
the proceedings in question must be governed by the unamended
definition, as it stood at the time of institution of the original
proceedings.
16. In sum and substance, it was urged by Mr. Dash that the proceedings
initiated under the SARFAESI Act were illegal and without jurisdiction
since the claim of the secured creditor once stood adjudicated by the
competent civil court vide the passing of the preliminary decree and,
therefore, the secured creditor ought to have proceeded for execution
of the decree. He referred to Section 36 of the SARFAESI Act, which
9
mandates the measures to be taken under section 13(4) thereof to
be within the limitation period stipulated under the Limitation Act and
prayed that the appeal be allowed.
S UBMISSIONS ON B EHALF OF THE S ECURED C REDITOR (R ESPONDENT 1)
17. Mr. Brijesh Kumar Tamber, learned counsel, appearing on behalf of
the secured creditor, maintained that the definition of “debt” under
the SARFAESI Act and the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993, expressly includes liabilities payable
under a decree and accrued interest and that the proceedings under
the SARFAESI Act were initiated only after the guarantor’s legal heirs
defaulted on settlement attempts between 2001 and 2003.
18. It was further contended that the auction was conducted
transparently, with the respondent no.2 (auction purchaser)
emerging as the highest bidder at Rs. 2.11 crore, well above the
reserve price of Rs. 1.58 crore. Mr. Tamber urged that the bid amount
was deposited within the stipulated timelines and that any minor
delay in payment was within the secured creditor’s power to waive or
extend under the SARFAESI Rules.
19. Much emphasis was laid by Mr. Tamber on concurrent upholding of
the validity of the sale by the DRT, the DRAT and the High Court,
finding no irregularity in the interest calculation or the auction
procedure. Dismissal of the appeal was, accordingly, prayed.
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S UBMISSIONS OF THE A UCTION P URCHASER (R ESPONDENT 2)
20. Mr. Soumya Chakraborty, learned senior counsel for the auction
purchaser sought protection of his rights as a bona fide purchaser,
who has been kept out of the property’s full enjoyment for over a
decade. It was argued that the appellant is attempting to re-agitate
settled factual issues, which is impermissible.
21. According to Mr. Chakraborty, the payment of Rs. 2.11 crore was
made in 2010 (25% on 10.03.2010/11.03.2010 and the balance on
31.03.2010). He asserted that the sale was confirmed by the Bank
and the certificate issued in April 2010, making the transaction final.
It was also urged that cancelling an auction sale conducted 16
(sixteen) years ago would be catastrophic, as the auction purchaser
has suffered immensely in the meantime – deprived of the
opportunity to develop the property, costs, and inflation as a result
of the prolonged litigation, initiated by the appellant. He, thus, prayed
for dismissal of the appeal.
I SSUES I NVOLVED
22. Two broad issues arise for consideration:
a. Whether the proceedings under the SARFAESI Act initiated in
the year 2009, nearly 12 (twelve) years after the passing of the
preliminary decree, stand vitiated on the ground of limitation?
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b. Whether the sale of the secured asset pursuant to the
impugned proceedings stands vitiated on account of alleged
non-compliance with statutory requirements and procedural
irregularities?
NALYSIS
A
23. The rival submissions of the parties and perusal of the material on
record bring to the fore the controversy at hand, which may be
profitably narrowed down to the legality of the auction sale conducted
under the framework of the SARFAESI Act and the SARFAESI Rules.
24. As a prefatory note, it is observed that the validity of an auction
conducted under the statutory regime is not to be tested on equitable
considerations but strictly on the ground whether the mandate of the
statute and the rules has been breached or not. The SARFAESI Rules
being subordinate legislation, bind the secured creditor as well as the
auction purchaser with equal rigour.
I. C OMPLIANCE WITH R ULE 9: A S TATUTORY S INE Q UA N ON
25. Rule 9 of the SARFAESI Rules squarely governs the confirmation of
sale and the manner of payment of the sale consideration. Sub-Rules
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3, 4 and 5 of the unamended SARFAESI Rules may profitably be
noticed thus:
(3) On every sale of immovable property, the purchaser shall
immediately pay a deposit of twenty-five % of the amount of the sale
13
unamended SARFAESI Rules, as it stood at the time of the impugned sale
12
price, to the authorised officer conducting the sale and in default of
such deposit, the property shall forthwith be sold again.
(4) The balance amount of purchase price payable shall be paid by
the purchaser to the authorised officer on or before the fifteenth day
of confirmation of sale of the immovable property or such extended
period as may be agreed upon in writing between the parties.
(5) In default of payment within the period mentioned in sub-rule
(4), the deposit shall be forfeited and the property shall be resold
and the defaulting purchaser shall forfeit all claim to the property or
to any part of the sum for which it may be subsequently sold.
(emphasis ours)
26. As a sequitur to the aforementioned legal provisions, the auction
purchaser is mandated to immediately deposit 25% of the sale price
(inclusive of earnest money) on the date of sale; and in default of such
deposit, the property shall forthwith be resold. Further, the balance of
purchase price is required to be paid within the fifteenth day of
confirmation of sale or within such written agreed extended time,
failing which the deposit shall stand forfeited. Also, in such a case, the
purchaser would forfeit all his claims either to the property or to any
part of the sum for which such property may subsequently be sold.
27. The aforesaid legal position finds lucid expression in Sri Siddeshwara
14
Cooperative Bank Ltd. v. Ikbal , as follows:
*
13.3. Sub-rule (3) lays down that on every sale of immovable
property, the purchaser shall immediately make the deposit of 25%
of the amount of the sale price. In default of such deposit, the
property shall forthwith be sold again.
13.4. Sub-rule (4) provides that the balance amount of purchase
price payable shall be paid by the purchaser on or before the fifteenth
day of confirmation of sale of the immovable property or such
extended period as may be agreed upon in writing between the
parties.
14
(2013) 10 SCC 83
13
13.5. Sub-rule (5) makes a provision that if the balance amount of
purchase price is not paid as required under sub-rule (4), then the
deposit shall be forfeited and the property shall be resold and the
defaulting purchaser shall forfeit all claim to the property or to any
part of the sum for which it may be subsequently sold.
13.6. According to sub-rule (6), on confirmation of sale by the
secured creditor and if the terms of payment have been complied
with, the authorised officer exercising power of sale shall issue a
certificate of sale of the immovable property in favour of the
purchaser in the form given in Appendix V to the 2002 Rules.
14. A reading of sub-rule (1) of Rule 9 makes it manifest that the
provision is mandatory. The plain language of Rule 9(1) suggests this.
Similarly, Rule 9(3) which provides that the purchaser shall pay a
deposit of 25% of the amount of the sale price on the sale of
immovable property also indicates that the said provision is
mandatory in nature. As regards balance amount of purchase price,
sub-rule (4) provides that the said amount shall be paid by the
purchaser on or before the fifteenth day of confirmation of sale of
immovable property or such extended period as may be agreed upon
in writing between the parties. The period of fifteen days in Rule 9(4)
is not that sacrosanct and it is extendable if there is a written
agreement between the parties for such extension. What is the
meaning of the expression “written agreement between the parties”
in Rule 9(4)? The 2002 Rules do not prescribe any particular form for
such agreement except that it must be in writing. The use of the term
“written agreement” means a mutual understanding or an
arrangement about relative rights and duties by the parties. For the
purposes of Rule 9(4), the expression “written agreement” means
nothing more than a manifestation of mutual assent in writing. The
word “parties” for the purposes of Rule 9(4) we think must mean the
secured creditor, borrower and auction-purchaser.
*
19. There is no doubt that Rule 9(1) is mandatory but this provision
is definitely for the benefit of the borrower. Similarly, Rule 9(3) and
Rule 9(4) are for the benefit of the secured creditor (or in any case
for the benefit of the borrower). It is settled position in law that even
if a provision is mandatory, it can always be waived by a party (or
parties) for whose benefit such provision has been made. The
provision in Rule 9(1) being for the benefit of the borrower and the
provisions contained in Rule 9(3) and Rule 9(4) being for the benefit
of the secured creditor (or for that matter for the benefit of the
borrower), the secured creditor and the borrower can lawfully waive
their right. These provisions neither expressly nor contextually
indicate otherwise. Obviously, the question whether there is waiver
or not depends on the facts of each case and no hard-and-fast rule
can be laid down in this regard.
(emphasis ours)
14
28. Even upon a cursory perusal of Rule 9 of the SARFAESI Rules that
existed at the time of the impugned sale, it is clear that these
provisions are neither ornamental nor directory; they are couched in
mandatory terms and go to the root of the validity of the sale. A
conjoint reading of the relevant sub-rules of Rule 9 underscore the
mandatory character of these provisions, particularly accentuating the
requirement of balance deposit under sub-rule (4), which is integral to
the sanctity and credibility of the auction mechanism. Any deviation
therefrom, absent legally sustainable justification, would render the
process vitiated.
29. The factual position, as is borne out from the extant record, is not in
serious dispute – i) auction sale was conducted on 11.03.2010; ii)
auction purchaser was declared successful on the said date; iii) 25%
of the bid amount was deposited on 10.03.2010/11.03.2010 vide a
demand draft of Rs. 9,00,000/-, prepared on 10.03.2010; and iv) two
further demand drafts of Rs. 6,80,000/- and Rs. 36,95,125/- were
furnished on 11.03.2010.
30. However , the balance 75% of the bid amount was admittedly paid only
on 31.03.2010. The lingering lis is as to whether this subsequent
deposit satisfies Rule 9(4). The outer time limit of fifteen days expired
on 26.03.2010, as reflected in the communication issued by the
secured creditor dated 11.03.2010, which may be reproduced here for
the convenience of reference:
15
*
4. Please note that you have to pay the balance sale price within 15
days of Confirmation of Sale ie., today. In case of your failure to pay
as said above, the entire bid amount paid by you shall be forfeited
by the Authorised Officer without any notice and the sale will be
cancelled.
31. The payment of the remaining 75%, on 31.03.2010 is, therefore, ex
facie beyond the statutory period. In view of the above, the contention
of the auction purchaser that the sale stood confirmed only on
11.03.2010 is untenable.
32. The following passage from IDBI Bank Ltd. v. Ramswaroop
15
Daliya lends credence to the proposition:
13. Notwithstanding the above, the provisions of sub-Rules (4) and
(5) of Rule 9 of the Rules, if read together in conjunction, would
reveal that it is only for the default in payment of the balance auction
amount within the period mentioned that the property could be resold
and that the period of 15 days stipulated therein for the deposit of
the balance sale amount may be extended, as may be agreed upon
in writing. It means that first there has to be a default on part of the
auction purchaser to invite cancellation of the auction and second,
that the period of deposit stipulated therein is not absolute rather
extendable with the agreement of the parties.
(emphasis ours)
33. Furthermore, the contention advanced on behalf of the secured
creditor by its learned counsel that any deviation in the timeline of
payment stood regularised by a valid exercise of power of extension
or waiver is equally unbacked by any demonstrable material. Nothing
is borne out of the record to demonstrate that there was any prayer
for extension of time made by the auction purchaser at any time prior
15
2024 SCC OnLine SC 2878
16
to 31.03.2010 or that any written agreement extending the time was
entered into by and between the secured creditor and the auction
purchaser.
34. The aforesaid legal position leads us to the examination of the
consequence of non-compliance with the statutorily ordained timeline,
in the absence of any record of written agreement between the secured
creditor and the auction purchaser in the present factual matrix.
II. C ONSEQUENCE OF N ON -C OMPLIANCE
35. The DRT, the DRAT and the High Court appear to have proceeded on a
broader premise of consideration of delay, conduct of the borrower,
and the perceived equities in favour of the auction purchaser. Equally,
it is true that the record bears out that no concrete steps were
ultimately taken by the appellant, who is the daughter of the deceased
guarantor, to liquidate the outstanding dues and that earlier attempts
at settlement did not come to fruition. However, in our considered
opinion, the failure to repay without being informed of an extension
being granted to the auction purchaser, by itself, cannot validate
proceedings that are otherwise vitiated in law.
36. While it is trite that the rights of an auction purchaser and the sanctity
of a confirmed sale ordinarily merit due protection, such protection is
by no means absolute. It must yield where the very process
engendering the sale is demonstrated to be legally infirm or to be
incongruous with the statutory framework. The object of proceedings
17
under the SARFAESI Act is not the mere culmination of a sale in a
mechanical manner, but the lawful realisation of the secured asset
through a process that is fair, transparent and strictly compliant with
the prescribed rules. In the present case, the non-adherence to the
timeline that the SARFAESI Rules contemplate constitutes a material
irregularity going to the root of the matter. The mere factum that the
sale stood confirmed cannot, therefore, foreclose judicial scrutiny.
37. It is true that there is no express or formal articulation, in so many
words, by the appellant evincing her readiness and willingness to
tender the stipulated amount for redemption of the secured asset.
However, the matter cannot be posited in such a narrow compass. The
record unmistakably discloses that the appellant, along with the other
legal heirs, had instituted multiple miscellaneous applications before
the DRT, inter alia , seeking permission to redeem the property upon
the deposit of the required amount and to set aside the consequences
of the sale. Such steps, taken in the teeth of adverse proceedings,
cannot be disregarded as inconsequential or merely procedural. On the
contrary, they evince a clear manifestation of intent, although implicit,
that the appellant was desirous of redeeming the property upon being
accorded with an opportunity to do so. Viewed in this prism, the filing
of the said application must be construed as sufficient indication of the
appellant’s willingness to redeem.
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38. Even otherwise, as a logical sequitur, the contention that the guarantor
or his legal heirs did not evince adequate interest in repayment does
not advance the case of the secured creditor, for a process vitiated by
statutory non-compliance cannot otherwise be sanctified on such
considerations.
39. The property in question belonged to G. Ramanujam, the deceased
guarantor, and upon his demise, vested in his legal heirs. Such heirs
cannot be divested of their lawful interest except in accordance with a
procedure that is fair, just and in strict conformity with the governing
statute, i.e., the SARFAESI Act and the SARFAESI Rules.
C ONCLUSION
40. In view of the foregoing discussion, the appeal deserves to be allowed
in part and is, accordingly, allowed to the extent mentioned hereafter.
The impugned judgment and order passed by the High Court is set
aside, as are the orders passed by the DRAT and the DRT.
41. Consequently, the auction sale conducted in respect of the secured
asset stands quashed and set aside.
42. However, having regard to the fact that the auction purchaser had
participated in the process and deposited the bid amount pursuant
thereto, interests of equity demand suitable restitution of interests of
such purchaser. Although the sale is being set aside for reasons not
attributable to him, he has remained deprived of the use of the
monies deposited by him for a significant length of time. Accordingly,
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the auction purchaser shall be entitled to refund of the entire amount
deposited by him together with interest thereon @ 7% per annum
from the respective dates of deposit until payment. Such refund shall
be effected by the secured creditor within a period of 6 (six) weeks
from date.
43. At the same time, the appellant being the legal heir of G. Ramanujam
would now be entitled to an opportunity to redeem the mortgage and
seek restoration of the secured asset in her favour till such time a
notice for a fresh auction is issued on her failure to redeem. We grant
her such opportunity. Appellant shall be at liberty to approach the
secured creditor within two weeks from date with a copy of this
judgment to ascertain the amount due and payable. Upon payment
being made within the time to be stipulated by the secured creditor
(which will not be less than a month from the date intimation is given
to the appellant), legal consequences will follow.
44. In moulding the relief, we have borne in mind the peculiar fact
situation of the case. The demand notice issued under Section 13(2)
of the SARFAESI Act quantified the outstanding dues at
Rs.95,42,372.52p. At the same time, the appellant cannot be
permitted to secure restoration of the mortgaged property without
satisfying the liability which constituted the fulcrum of the measures
initiated by the secured creditor. Balancing the competing equities
and in order to do complete justice between the parties, we deem it
20
appropriate to direct that the appellant shall be entitled to redeem
the mortgage and obtain restoration of the secured asset upon
payment to the secured creditor of a sum of Rs.95,42,372.52p
together with 5% interest per annum thereon from the date the
notice under Section 13(2) of the SARFAESI Act was issued until the
date of such payment by the appellant. Upon payment being made
within the period stipulated by the secured creditor in terms of
paragraph 44 above, the secured asset shall stand restored to the
appellant free from all encumbrances arising out of the subject loan
transaction.
45. The secured asset may, however, be put up for auction once again 8
(eight) weeks hence should the appellant fail to pay the amount
determined by the secured creditor in terms of this order; and during
this period, the secured creditor will obtain a fresh valuation report
from a government-empanelled valuer.
46. The directions contained in paragraphs 43 to 46 hereinabove are
issued in exercise of the jurisdiction of this Court under Article 142 of
the Constitution and shall constitute a one-time measure intended to
balance the equities of the parties in the peculiar facts of the present
case. It is clarified that in the event of failure on the part of the
appellant to avail this one-time opportunity, she will forfeit all her
rights to the secured asset.
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47. In light of the conclusion arrived at by us on the second issue qua the
validity of the auction sale and the consequential reliefs flowing
therefrom, it is considered superfluous to render a conclusive
determination on the first issue relating to limitation. The same is,
accordingly, left open.
48. The appeal stands disposed of on the above terms. Connected
applications, if any, stand disposed of.
49. Parties shall bear their own costs.
50. Registry is directed to send this judgment and order to the email
address of the learned advocate-on-record for the appellant
immediately.
…………………......…………………J.
(DIPANKAR DATTA)
……………………….…………………J.
(AUGUSTINE GEORGE MASIH)
NEW DELHI;
JUNE 9, 2026.
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