SARFAESI sale notices must disclose known encumbrances and possession duties before forfeiture of an auction deposit can stand.

Under the SARFAESI framework, a secured creditor must disclose known encumbrances in the sale notice, deliver possession in accordance with the statutory scheme where applicable, and clearly state in the sale certificate whether the purchase is free from encumbrances. Forfeiture of the auction purchaser's deposit is justified only when the purchaser defaults in paying the balance consideration. Here, the sale notice merely described the property on an "as is where is" and "as is what is" basis without disclosing the decree and encumbrance, and the bank did not act consistently with the required possession process. The purchaser's refusal to complete the sale was therefore not a default attracting forfeiture, and refund with interest was warranted.

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Issues: Whether the secured creditor was bound to disclose known encumbrances and hand over possession in accordance with the SARFAESI framework, and whether forfeiture of the auction purchaser's 25% deposit was justified.

Analysis: Rule 8(6) requires the sale notice to set out the description of the immovable property and the details of encumbrances known to the secured creditor. Rule 9(9) obliges delivery of the property to the purchaser free from encumbrances known to the secured creditor where the sale involves discharge of such encumbrances, and Rule 9(10) requires the sale certificate to state whether the purchase is free from encumbrances. Rule 9(5) permits forfeiture only on default by the purchaser in paying the balance sale consideration. The auction notice here stated only that the property was sold on an "as is where is" and "as is what is" basis, without disclosing the existing decree and encumbrance. The Bank also did not take steps consistent with the statutory scheme for handing over possession to the purchaser. In these circumstances, the purchaser's refusal to complete the sale could not be treated as a default attracting forfeiture.

Conclusion: The forfeiture was unsustainable and the appellant was entitled to refund of the deposited amount with interest.

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