SARFAESI auction procedure upheld: notice requirements, agricultural-land objection, and reserve price challenge all failed.

In SARFAESI enforcement, the notice and auction framework under Rules 8(6) and 9(1) was read as not requiring duplicate sale notices for the first auction, and later notices after failed auctions were treated as curing any objection; the auction was therefore upheld. The secured asset was also held not to attract the agricultural-land exclusion under Section 31(i), because the borrower had earlier represented, in sworn and contemporaneous loan documents, that the land was being used for non-agricultural purposes and could be proceeded against under the Act. The challenge to reserve price and valuation failed because a fresh valuation was obtained and no illegality or perversity was shown.

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Issues: (i) Whether the sale notice and auction process were vitiated for want of a separate 30-day notice under Rule 9(1) in addition to notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002; (ii) Whether the secured asset was agricultural land so as to attract the exclusion under Section 31(i) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (iii) Whether the reserve price and valuation adopted for the auction were legally unsustainable.

Issue (i): Whether the sale notice and auction process were vitiated for want of a separate 30-day notice under Rule 9(1) in addition to notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002;

Analysis: The Rules were construed as not contemplating two independent sale notices for the first auction. Rule 8(6) governs service and publication of the notice of sale, while Rule 9(1) fixes the minimum period before the first sale and the proviso governs subsequent sales of shorter duration. The amended scheme of Section 13(8) of the Act was also read as dealing with restriction on further transfer steps, not with extinction of redemption rights. Even assuming a separate Rule 9(1) notice was required, the later notices issued after successive failed auctions cured any complaint, and the challenge to the very first notice could not survive after the 7th notice culminated in a successful sale.

Conclusion: The objection to the sale notice was rejected and the auction was held valid.

Issue (ii): Whether the secured asset was agricultural land so as to attract the exclusion under Section 31(i) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

Analysis: The character of the property was treated as a question of fact. The borrower's sworn affidavit obtained at the time of sanction, together with the contemporaneous legal opinion and the basis on which credit facilities were granted, showed a representation that the land was being used for non-agricultural purposes and that the bank could proceed under the Act. Having induced the sanction on that footing, the borrower was not permitted to resile from the representation at the enforcement stage.

Conclusion: The agricultural-land objection was rejected and Section 31(i) was held inapplicable on the facts.

Issue (iii): Whether the reserve price and valuation adopted for the auction were legally unsustainable.

Analysis: The bank had obtained a fresh valuation before the last auction, and the inability to secure a buyer in earlier auctions justified the eventual sale price. The Court held that while better price realisation is desirable, auction sales do not always yield ideal outcomes, and no illegality or perversity was shown in the valuation process adopted by the bank or accepted by the Tribunal.

Conclusion: The challenge to the reserve price and valuation was rejected.

Final Conclusion: The Tribunal's order dismissing the challenge to the auction sale was upheld, and the writ petition was dismissed in exercise of supervisory jurisdiction under Article 226.

Ratio Decidendi: In SARFAESI proceedings, a borrower cannot invalidate a completed auction merely by treating Rule 8(6) and Rule 9(1) as mandating duplicate notices for the first sale, nor can a borrower repudiate a contemporaneous representation about the non-agricultural character of the secured asset after obtaining loan facilities on that basis.

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