SARFAESI sale procedure and interim status quo protection in challenge to mortgaged property auction

In a writ petition challenging sale of mortgaged property under the SARFAESI framework, the petitioner argued that the secured creditor proceeded with the sale after an earlier auction was deferred and without initiating a fresh sale process in accordance with the statutory procedure. The commentary notes that, where a sale does not materialise under the prescribed notice process and the borrower is not solely at fault, the earlier notice may not continue indefinitely. Pending further hearing and the secured creditor's response, interim protection was granted and status quo was directed to be maintained till the next date of hearing.

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Issues: Whether interim protection by way of status quo was warranted in a writ petition challenging the sale of mortgaged property under the SARFAESI framework.

Analysis: The challenge was founded on the plea that the secured creditor proceeded with the sale after the earlier auction process had been deferred and without commencing a fresh process in accordance with the statutory sale procedure. Reliance was placed on the requirement that, where a sale does not fructify under the prescribed notice process and the borrower is not solely at fault, the earlier notice cannot be treated as surviving indefinitely. In these circumstances, pending further hearing and response from the secured creditor, interim protection was considered appropriate.

Conclusion: Status quo in respect of the subject project was directed to be maintained till the next date of hearing.

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