SARFAESI auction compliance breached by confirming sale to a non-bidder, delayed payment, and misleading section 14 proceedings.

The SARFAESI auction process required confirmation only in favour of the highest bidder, immediate deposit of 25% of the sale price, and payment of the balance within the stipulated time, failing which the asset could be resold and the initial deposit forfeited. The sale notification did not permit extension of time, part payment, or transfer of the confirmed sale to a nominee. On the facts described, confirmation was made in favour of a non-bidder, the balance was accepted after a long delay, and the sale certificate was issued to a stranger. The section 14 application also suppressed prior proceedings and was filed against a deceased person, misleading the Magistrate; the text states that the auction sale and consequential possession order were therefore liable to be annulled, with restoration of possession.

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Issues: Whether the auction sale and the consequent proceedings under section 14 of the SARFAESI Act were liable to be set aside for violation of the statutory sale conditions, confirmation in favour of a person who was not a bidder, delayed payment beyond the stipulated period, issuance of the sale certificate to a stranger, and suppression of material facts before the Magistrate.

Analysis: The sale process under the SARFAESI Act and the Security Interest (Enforcement) Rules, 2002 required confirmation in favour of the highest bidder, immediate deposit of 25% of the sale price, and payment of the balance 75% within the stipulated time, failing which the secured asset could be resold and the initial deposit forfeited. The auction notification also did not permit extension of time, part payment, or transfer of the confirmed sale in favour of a nominee. Despite an interim restraint order, the Authorised Officer confirmed the sale in the name of a person who had not participated in the auction, accepted the balance amount after a long delay, and thereafter issued the sale certificate in favour of yet another stranger. The application under section 14 was filed without disclosing the earlier proceedings and against a deceased person, and the Magistrate was misled into passing the impugned order. Such conduct amounted to a clear breach of the statutory framework and of the court's restraint order, warranting annulment of the sale and the consequential possession order.

Conclusion: The auction sale was invalid and the order passed under section 14 was liable to be set aside; the petitioner was entitled to restoration of possession.

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