Auction sale upheld despite improper notice service when borrower had actual knowledge and participated

The SC upheld an auction sale despite improper service of notice. The borrower defaulted on loan repayment, and the lender conducted an auction sale following notice dated 30.11.2012. Although proper service of the auction notice was not proven, the borrower was fully aware of the auction process, filed a writ petition within 14 days, and was present during the auction. The auction purchaser constructed flats and sold them to third parties. The HC's order setting aside the sale was reversed, and the auction sale was confirmed as valid.

---

---

Issues involved: Loan default, SARFAESI Act proceedings, auction sale challenge, service of auction notice, possession of property, settlement offer, auction purchaser's actions, legal interpretation of rules.

Loan default and SARFAESI Act proceedings: In 1996, the respondent took a loan from the Cooperative Bank for a firearms business, which later turned into a Non-Performing Asset. Despite various attempts at settlement, the respondent failed to pay the outstanding amount, leading to possession of the property by the bank under SARFAESI Act provisions.

Challenge to auction sale: The respondent challenged the auction sale of the property, claiming lack of proper notice service. However, the court noted that the respondent was aware of the auction and had even participated in it, along with entering into an agreement with the eventual auction purchaser.

Possession and auction proceedings: The bank took possession of the property and conducted an auction where the highest bidder, Abdul Haleem Siddiqui, acquired the property. Subsequently, the respondent expressed willingness to pay a partial amount, which was rejected by the bank.

Legal interpretation and settlement: The respondent relied on a legal precedent regarding the mandatory nature of notice service rules. The court acknowledged the lapse in record-keeping by the bank but also noted the respondent's awareness of the auction process. In a final settlement, the court directed the bank to pay a specified amount to the respondent, considering all circumstances.

Conclusion: The court set aside previous orders, confirmed the sale to the auction purchaser, and directed the bank to make a payment to the respondent in settlement. The judgment highlighted the need for proper notice service while balancing the respondent's awareness of the auction proceedings.

---