SARFAESI auction disclosure duties require notice of material encumbrances, allowing a purchaser to seek refund for non-disclosure.

In a SARFAESI auction, writ jurisdiction was treated as available where a third-party purchaser challenged alleged procedural defects in the sale process rather than measures under section 13(4), so the alternate remedy under section 17 did not bar the petition. The sale notice had to disclose all material encumbrances and liabilities known to the secured creditor under Rule 8(6); failure to mention a sales tax attachment was treated as a material non-disclosure, so the successful bidder was not bound to complete the sale and was entitled to refund of the advance.

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Issues: (i) Whether the writ petition was maintainable in view of the statutory remedy under the SARFAESI Act, 2002; (ii) whether non-disclosure of the attachment/encumbrance in the auction notice justified refund of the sale advance.

Issue (i): Whether the writ petition was maintainable in view of the statutory remedy under the SARFAESI Act, 2002.

Analysis: The relief sought was not a challenge to the measures taken under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, but arose from the conduct of the auction and the alleged procedural defect in the sale process. Section 17 was treated as providing a remedy against measures under section 13(4), not as an absolute bar to every dispute connected with an auction conducted under the Act. In the facts, the petitioner was a third-party auction purchaser complaining of procedural non-compliance, and the extraordinary jurisdiction under article 226 was held to be available despite the existence of an alternate remedy.

Conclusion: The writ petition was maintainable.

Issue (ii): Whether non-disclosure of the attachment/encumbrance in the auction notice justified refund of the sale advance.

Analysis: Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 requires the sale notice to disclose the encumbrances known to the secured creditor and any other material fact necessary for an intending purchaser to judge the nature and value of the property. The attachment by the sales tax authorities was a material circumstance likely to influence a bidder's decision, and mere availability of documents for inspection did not amount to strict compliance with the mandatory rule. Since the auction notice did not set out the attachment or other statutory liability, the purchaser could not be compelled to complete the sale and bear the burden of an undisclosed encumbrance.

Conclusion: The petitioner was entitled to refund of the sale advance.

Final Conclusion: The auction purchaser was relieved from proceeding with the sale, and the secured creditor was directed to refund the advance amount for non-disclosure of the encumbrance in the sale notice.

Ratio Decidendi: In a SARFAESI auction, the secured creditor must disclose in the sale notice all material encumbrances and liabilities known to it, and failure to do so entitles the successful bidder to decline the sale and recover the amount paid.

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