SARFAESI sale notice lapse did not undo a completed auction sale where the borrower had actual awareness and third-party rights intervened.

Service of sale notice under the SARFAESI enforcement rules was mandatory, and the absence of proper proof of service was treated as a procedural lapse. However, because the borrower had actual awareness of the auction process and had participated in related proceedings, the lapse did not require setting aside the completed sale. The SC preserved the auction purchaser's title, noted that third-party rights had intervened after construction and transfers, set aside the High Court's orders, and substituted an equitable monetary settlement in full and final resolution of the borrower's challenge.

---

---

Issues: (i) Whether the auction sale could be invalidated for want of proved service of the sale notice under the SARFAESI framework; (ii) whether the sale in favour of the auction purchaser should nevertheless be sustained and an equitable monetary relief granted to the borrower.

Issue (i): Whether the auction sale could be invalidated for want of proved service of the sale notice under the SARFAESI framework.

Analysis: Service of notice under the enforcement rules is mandatory, and absence of proper record of service constitutes a lapse. At the same time, the surrounding facts showed that the borrower was aware of the proposed auction, had approached the High Court soon after the sale notice, had referred to the auction in his own proceedings, and had even been present at the auction. The Court therefore treated the procedural lapse as established, but not as warranting automatic displacement of the subsequent events.

Conclusion: The notice lapse was acknowledged, but the auction was not set aside on that ground.

Issue (ii): Whether the sale in favour of the auction purchaser should nevertheless be sustained and an equitable monetary relief granted to the borrower.

Analysis: The auction purchaser had already acted on the sale, constructed flats, and transferred them to third parties. In these circumstances, and to balance the competing equities arising from the bank's lapse and the borrower's awareness of the sale process, the Court invoked its powers to craft a final equitable resolution rather than disturb the completed sale. The earlier orders of the High Court were therefore set aside, while the sale itself was confirmed.

Conclusion: The sale in favour of the auction purchaser was upheld, and the borrower was directed to receive monetary compensation in full and final settlement.

Final Conclusion: The appeal was disposed of by preserving the completed auction sale, undoing the impugned High Court orders, and substituting an equitable monetary settlement in place of further interference with the secured asset.

Ratio Decidendi: Even where service of a sale notice under the SARFAESI enforcement rules is procedurally deficient, a completed auction sale may be sustained in exercise of equitable jurisdiction when the borrower had actual awareness of the process and third-party rights have intervened.

---