Woman’s ₹34 Lakh Offer Came After Sale Confirmation; Allahabad HC Leaves Auction Of Her Mortgaged Land Undisturbed

The petitioner and Smt. Kiran Chaurasia jointly owned land that was mortgaged to Canara Bank in 2003 as security for a loan to M/s Chaurasia Traders.

After default, the Bank initiated enforcement proceedings and sold the property at auction to respondent No. 3 for ₹33 lakh; a sale certificate was issued on 24.01.2008.

The petitioner challenged the enforcement measures before the DRT, which set them aside on 17.08.2010.

On the Bank’s appeal, the DRAT reversed that decision on 18.07.2011, finding that agricultural use had not been proved and observing that the DRT should not have set aside the entire auction when the petitioner claimed a 50% share.

The petitioner then sought judicial review, relying principally on the land’s asserted agricultural character, alleged defects in statutory notice and sale procedure, and her tender of bank drafts in December 2007.

Sections 13(2) and 13(4) of the SARFAESI Act permit enforcement after default and valid NPA classification, subject to compliance with the Act and applicable rules; Section 31(i) excludes security interests created in agricultural land, with that character determined on the relevant evidence rather than by a revenue entry alone; and, under the version of Section 13(8) applicable to these proceedings, the secured creditor’s dues together with costs, charges, and expenses had to be tendered before publication of the notice for sale to trigger the statutory bar on transfer.

Sections 17 and 18 provide for DRT review of enforcement measures and an appeal to the DRAT.

Sale of a secured asset must comply with the Security Interest (Enforcement) Rules, 2002; price inadequacy alone does not invalidate a sale without proof of a material legal or procedural irregularity.

Article 226 review is not a further appeal on facts and is warranted where a recognised defect—such as jurisdictional error, material misreading, perversity, denial of natural justice, or breach of a mandatory provision—is established.

The judgment cited no judicial precedents.

The Court held that the DRAT had considered agricultural use and that the petitioner had not demonstrated that its conclusion was perverse or contrary to an indisputable statutory fact; revenue entries and the absence of a Section 143 conversion order were not conclusive by themselves.

The alleged notice defects and NPA challenge were not supported by sufficient material to establish non-compliance.

The petitioner’s tender came after publication of the sale notices and, on the Bank’s account, after confirmation of sale; moreover, the tendered amount exceeded the auction bid but was below the Bank’s asserted outstanding dues and expenses.

It therefore did not establish satisfaction of Section 13(8).

The Court also found no adequate proof of a mandatory sale-procedure breach or of the asserted market value, and rejected the contention that the Bank had to exhaust remedies against the principal borrowers before enforcing a valid mortgage.

In the absence of a demonstrated reviewable defect, the Court declined to reweigh the evidence under Article 226.

It also declined to direct the Bank to accept the tender or restore the property.

No opinion was expressed on the petitioner’s guilt in the separate criminal proceedings, and there was no order as to costs.