Borrower consent is unnecessary for auction confirmation at reserve price under the security interest rules.

Under Rule 9(2) of the Security Interest (Enforcement) Rules, 2002, confirmation of sale in favour of the highest bidder does not require the borrower's consent when the bid equals the reserve price. The scheme of Rules 8(5) and 8(6) treats the reserve price as the minimum sale price, and the first proviso to Rule 9(2) bars confirmation only where the bid falls below that price. The second proviso is therefore triggered only for sales below the reserve price, where borrower and secured creditor consent is needed. This construction preserves the reserve price mechanism and supports the recovery process under the Act.

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Issues: Whether, under Rule 9(2) of the Security Interest (Enforcement) Rules, 2002, the consent of the borrower is required for confirmation of sale where the highest bid equals the reserve price fixed for the secured asset.

Analysis: Rule 8(5) requires valuation of the secured asset and fixation of the reserve price, while Rule 8(6) requires disclosure of the reserve price in the sale notice as the minimum price below which the property may not be sold. Rule 9(2) confirms sale in favour of the highest bidder, and its first proviso bars confirmation only where the bid is below the reserve price. The second proviso, read purposively, is attracted only where the highest price obtained is lower than the reserve price, in which event sale may be effected with the consent of the borrower and the secured creditor. Reading borrower consent as necessary even when the bid is equal to the reserve price would render the first proviso and the concept of reserve price otiose. The construction that the second proviso applies to bids below the reserve price best harmonises the scheme of the Rules and furthers recovery under the Act.

Conclusion: Borrower consent is not required for confirmation of sale at the reserve price; it is required only when the sale is to be effected at a price below the reserve price. The challenge to the auction confirmation therefore fails.

Ratio Decidendi: The second proviso to Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 applies only where the highest bid is below the reserve price, and borrower consent is not a precondition for confirmation of a sale at the reserve price.

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