SARFAESI sales of liquidation assets must align with company law, fair notice, and commercially prudent valuation safeguards.

Where a company is in liquidation, a secured creditor enforcing security under the SARFAESI Act must proceed in harmony with the Companies Act and respect the Official Liquidator's custody of the assets. The sale process must be fair and protective of the liquidation estate, including notice to the Official Liquidator, clear disclosure of liquidation status in the advertisement, commercially prudent efforts to secure a better price, and a reserve price supported by proper valuation. The document emphasises that sale confirmation cannot rest on a deficient auction process or on a reserve price inconsistent with the creditor's own financing assessment.

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Issues: Whether the secured creditor's e-auction sale of the company in liquidation could be confirmed despite the winding-up order and the Official Liquidator's objections, and whether the sale process and reserve price satisfied the statutory requirements under the SARFAESI Act and the Companies Act.

Analysis: The secured creditor had initiated measures under the SARFAESI Act before the winding-up order, but once the company was in liquidation the property came under the control and custody of the Official Liquidator for the purposes of the Companies Act. The provisions of the SARFAESI Act and the Companies Act were required to be read harmoniously, and the secured creditor could not claim an unfettered right to sell the assets without regard to the rights of the Official Liquidator and other stakeholders. The sale procedure was found wanting because no notice of sale was issued to the Official Liquidator, the advertisement did not clearly reflect that the company was in liquidation, the sale was confirmed on a sole bid without adequate effort to obtain a better price, and the bank itself later sanctioned finance on the same property in a manner inconsistent with the asserted reserve price. The Court held that commercial prudence and the protective scheme of company liquidation had not been properly observed.

Conclusion: The sale was not approved. The bank was directed to obtain a fresh valuation in consultation with the Official Liquidator, issue a fresh advertisement stating that the company was in liquidation, and fix a revised reserve price not below the figure indicated by the bank's own financing assessment.

Ratio Decidendi: Where a company is in liquidation, a secured creditor proceeding under the SARFAESI Act must act in harmony with the Companies Act and cannot seek sale confirmation unless the sale process is fair, properly noticed, commercially prudent, and protective of the interests of the liquidation estate and other stakeholders.

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