Secured creditor bidding rights at postponed sale upheld as valid under SARFAESI safeguards and borrower remedy provisions.

Section 13(5A) of the SARFAESI Act, which allows an authorised officer of the secured creditor to bid at a postponed sale when no bid is received at or above the reserve price, was upheld as constitutionally valid. The provision was read as filling a statutory gap in auction sales, while remaining constrained by valuation by an approved valuer, fixation of reserve price, public notice, and the safeguards in the Security Interest (Enforcement) Rules, 2002. The availability of a Section 17 remedy before the Debt Recovery Tribunal further protected the borrower, so the provision was not arbitrary and did not violate Articles 300A or 21.

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Issues: Whether Section 13(5A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which permits an authorised officer of the secured creditor to bid for the secured asset at a postponed sale when no bid is received at or above the reserve price, is arbitrary, irrational, or violative of Articles 300A and 21 of the Constitution of India.

Analysis: The provision was enacted to fill a statutory lacuna because the Act earlier did not enable the secured creditor to bid when an auction failed for want of bidders at the reserve price. The reserve price is fixed only after valuation by an approved valuer, public notice is required, and the sale process remains subject to the safeguards in the Security Interest (Enforcement) Rules, 2002. The secured creditor may bid only at the postponed sale and only at or above the reserve price. The aggrieved borrower also has a statutory remedy under Section 17 of the Act to challenge the sale before the Debt Recovery Tribunal. These safeguards were held to adequately protect the mortgagor and to negate any suggestion of arbitrary or irrational deprivation of property.

Conclusion: Section 13(5A) is constitutionally valid and does not violate Articles 300A or 21.

Ratio Decidendi: A statutory power enabling the secured creditor to bid at a postponed sale, subject to valuation, reserve price, public notice, and appellate remedy safeguards, is not arbitrary or unconstitutional.

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