Strict SARFAESI compliance required; defective possession, sale notice and confirmation proceedings were held invalid.

Mandatory compliance with SARFAESI possession, sale notice, sale confirmation and payment timelines was treated as essential, and the secured creditor's failure to prove proper service, affixture, publication and timely confirmation rendered the possession proceedings and sale invalid. The Court also held that the writ was maintainable because the statutory appeal was not an efficacious remedy in the circumstances. The borrowers' challenge was not barred by limitation and no waiver arose, as the creditor had not disclosed the auction result before the challenge and the borrowers promptly objected to subsequent steps. Sale of the entire secured asset for dues far below the reserve value was additionally found not bona fide, and the enforcement measures were set aside.

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Issues: (i) Whether the writ petition was maintainable despite the statutory appeal remedy under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (ii) whether the securitisation application was barred by limitation and whether the borrowers had waived their right to challenge the measures; (iii) whether the secured creditor complied with the mandatory requirements of Rules 8(6) and 9 of the Security Interest (Enforcement) Rules, 2002 and the consequent sale and possession proceedings were valid; (iv) whether the sale of the entire secured asset for dues far below its reserve value was bona fide.

Issue (i): Whether the writ petition was maintainable despite the statutory appeal remedy under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Analysis: The availability of an appeal under section 18 did not provide an effective remedy because of the absence of a functioning appellate forum at the relevant place and the practical burden on the parties to pursue relief at different locations. In those circumstances, the writ court treated the alternative remedy as not efficacious.

Conclusion: The writ petition was maintainable and could be entertained.

Issue (ii): Whether the securitisation application was barred by limitation and whether the borrowers had waived their right to challenge the measures.

Analysis: The challenge was filed after the auction but the secured creditor had not informed the borrowers of the auction result before the application was filed. A party cannot take advantage of its own wrong to defeat limitation. The borrowers also promptly challenged the subsequent possession steps, which negatived any inference of waiver. Mere conduct short of express or implied relinquishment of statutory rights did not amount to waiver.

Conclusion: The challenge was not barred by limitation and there was no waiver by the borrowers.

Issue (iii): Whether the secured creditor complied with the mandatory requirements of Rules 8(6) and 9 of the Security Interest (Enforcement) Rules, 2002 and the consequent sale and possession proceedings were valid.

Analysis: No satisfactory material was produced to show proper service, affixture or publication of the possession notice and subsequent sale notice. The record also showed non-compliance with Rule 9 in relation to the timing of sale confirmation and payment of the auction consideration. The Court treated these requirements as mandatory and found the possession proceedings under section 14 and the sale confirmation process defective.

Conclusion: The possession proceedings, sale confirmation and sale were invalid and liable to be set aside.

Issue (iv): Whether the sale of the entire secured asset for dues far below its reserve value was bona fide.

Analysis: The liability stated in the auction notice was a fraction of the reserve price of the property, yet the entire secured asset was brought to sale. The Court found this approach not bona fide and inconsistent with the proper enforcement of security interest.

Conclusion: The sale was set aside on this additional ground.

Final Conclusion: The borrower succeeded in challenge to the securitisation measures, the auction sale and the possession proceedings were invalidated, and restoration of possession to the petitioners was directed with costs.

Ratio Decidendi: Mandatory statutory requirements governing possession, sale notice, sale confirmation and payment timelines under the SARFAESI regime must be strictly complied with, and a secured creditor cannot rely on limitation, waiver or alternative remedy to sustain action taken in breach of those requirements or after suppressing material facts relevant to the borrower's challenge.

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