Non-compliance with mandatory timelines for deposit of auction sale price vitiates SARFAESI recovery proceedings.

The borrower (S. Murugesan) availed a loan from Indian Bank in 1984, with G. Ramanujam (guarantor/appellant’s father) mortgaging his property as security

Following a default, a preliminary decree was passed in 1997

After the guarantor's death in 2001 and failed settlement attempts, the bank initiated recovery under the SARFAESI Act in 2009—nearly 12 years after the decree

A public auction held on 11.03.2010 saw Respondent 2 emerge as the successful bidder for Rs. 2.11 crore

The appellant challenged the sale, alleging that the auction purchaser failed to deposit the mandatory 25% "immediately" and the remaining 75% within the statutory 15-day period (paid on 31.03.2010), and that no written agreement for extension existed

The DRT, DRAT, and High Court concurrently dismissed the appellant's challenges on grounds of delay and lack of bona fides

1. Whether the proceedings under the SARFAESI Act initiated nearly 12 years after the preliminary decree stand vitiated on the ground of limitation?

2. Whether the auction sale of the secured asset stands vitiated due to non-compliance with the mandatory timelines for payment under Rule 9 of the SARFAESI Rules?

Rule 9 of the Security Interest (Enforcement) Rules, 2002 (unamended), which mandates that the purchaser must "immediately" deposit 25% of the sale price

Under Rule 9(4), the balance 75% must be paid within 15 days of confirmation or such extended period "as may be agreed upon in writing between the parties"

The Court relied on Sri Siddeshwara Cooperative Bank Ltd. v. Ikbal, established that while these rules are mandatory, they are for the benefit of the parties and can be waived only by "manifestation of mutual assent in writing"

Failure to comply with these timelines, absent a written agreement, renders the sale a nullity

The Court observed that the auction took place on 11.03.2010, meaning the 15-day window for the 75% balance payment expired on 26.03.2010

However, the purchaser admittedly paid the balance only on 31.03.2010

The Court found no evidence of a written request for extension by the purchaser or any written agreement by the Bank before the deadline

The Court rejected the lower courts' reliance on "equities" or the "indolent conduct" of the borrower to validate the sale, holding that statutory non-compliance with Rule 9 is a material irregularity that goes to the root of the sale's validity

It emphasized that even if the appellant had not made a formal tender for redemption, her multiple applications before the DRT manifested a clear intent to protect her interest in the property

Since the mandatory procedure was bypassed, the sale could not be sanctified

Secured Creditor must refund the auction purchaser's deposit with 7% interest per annum within six weeks; Appellant is granted a one-time opportunity under Article 142 to redeem the mortgage by paying Rs. 95,42,372.52 with 5% interest per annum from the date of the Section 13(2) notice; if the appellant fails to pay within the stipulated time, the bank may conduct a fresh auction. The issue of limitation was left open.