Karnataka HC Directs Bank To Honour Commitment To Return Possession After Withdrawing SARFAESI Action Over Property Description Error

In brief

The question

Whether the challenge to the sale notice and proposed auction had become infructuous because the auction did not take place and the Bank withdrew the SARFAESI proceedings.

The court held

The Court disposed of the writ petition as infructuous, holding that no further order was required on the challenge to the sale notice.

It also directed

It left the petitioner at liberty to urge the grounds raised in the writ petition in the pending suit and directed the Bank to adhere to its commitment in the communication dated 28 September 2026.

01Facts

The petitioner challenged the Bank’s communication dated 1 February 2024 and proposed e-auction scheduled for 13 March 2024 concerning mortgaged property under the SARFAESI Act, 2002. He also sought restoration of possession.

p. 2 · ¶ 1

On 13 March 2024, the Court directed that no sale certificate or confirmation of sale be issued, subject to the petitioner depositing 40% of the outstanding amount within eight weeks.

p. 3 · ¶ 3

The petitioner had also filed a civil suit, later transferred to the Commercial Court, which remained pending.

pp. 3–4 · ¶ 4–5

In September 2026, the Bank informed the petitioner that it was withdrawing the SARFAESI proceedings because the property description in the notices was incomplete, and that it intended to return possession before initiating fresh proceedings.

pp. 4–5 · ¶ 6–7

The auction had not taken place, no fresh sale notice had been issued, and the petitioner had not complied with the interim deposit condition.

pp. 6–7 · ¶ 10–11

02Issues

i.Whether the challenge to the sale notice and proposed auction had become infructuous because the auction did not take place and the Bank withdrew the SARFAESI proceedings.

pp. 6–7 · ¶ 10–11

ii.Whether the petitioner could pursue the grounds raised in the writ petition in the pending civil suit.

p. 7 · ¶ 11

03Law Applied

The petition invoked Articles 226 and 227 of the Constitution and concerned proceedings under the SARFAESI Act, 2002, including the Bank’s action under that Act.

p. 2 · ¶ 1

The Court did not decide the legality of the Bank’s SARFAESI action or set out any substantive statutory rule or precedent. It applied the procedural principle that a challenge to a proposed sale may be disposed of as infructuous where the sale has not occurred and the impugned sale process has ceased, while leaving the petitioner free to pursue the grounds in a pending proceeding.

pp. 6–7 · ¶ 10–11

Provisions in the judgment · 1 · Linked ones open on LawLens

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Section 13

04Reasoning

The challenged notice concerned an auction scheduled for 13 March 2024, but the auction did not take place; no subsequent sale notice had been issued, and the Bank had withdrawn its SARFAESI proceedings because of an incomplete property description in the notices.

pp. 4–5 · ¶ 6–7 · p. 6 · ¶ 10

The Court therefore treated the specific challenge to the proposed auction as having spent itself. It did not determine the petitioner’s broader claims that the Bank’s actions were illegal, noting that those grounds could be raised in the pending suit.

pp. 6–7 · ¶ 9–11

05Holding

The Court disposed of the writ petition as infructuous, holding that no further order was required on the challenge to the sale notice.

p. 7 · ¶ 11–12

It left the petitioner at liberty to urge the grounds raised in the writ petition in the pending suit and directed the Bank to adhere to its commitment in the communication dated 28 September 2026.

p. 7 · ¶ 12

LawLens.Karnataka High Court

Original Court PDF