Auction notice disclosure duties require full property particulars; defective asset description led to refund of earnest money with interest.

A secured creditor must disclose the complete and correct description of immovable secured assets, including all material particulars affecting nature and value, in the auction notice under Rule 8(7) of the Security Interest (Enforcement) Rules, 2002. A notice describing factory land, building and machinery was found defective because the flour mill did not exist, no Khasra numbers were given, part of the machinery stood on unmortgaged land, and mortgaged and unmortgaged parcels were not demarcated; an 'as is where is' clause did not cure the defect. The auction purchaser was denied delivery of the entire property but was entitled to refund of earnest money with interest and costs.

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Issues: (i) Whether the secured creditor complied with the obligation to disclose the correct description and material particulars of the secured asset in the auction notice under Rule 8(7) of the Security Interest (Enforcement) Rules, 2002; (ii) whether the auction purchaser was entitled to delivery of the entire property or, in the alternative, refund of the earnest money with interest.

Issue (i): Whether the secured creditor complied with the obligation to disclose the correct description and material particulars of the secured asset in the auction notice under Rule 8(7) of the Security Interest (Enforcement) Rules, 2002.

Analysis: The auction notice described the property as including factory land and building as well as plant and machinery of a rice sheller and flour mill. The material on record showed that the flour mill did not exist at the spot, no Khasra numbers of the mortgaged property were mentioned, and part of the rice sheller machinery was situated on land not mortgaged to the Bank. The property also comprised mortgaged and unmortgaged parcels within a common boundary wall without demarcation. The statutory duty under Rule 8(7) required disclosure of the description of the immovable property and all material particulars necessary for a purchaser to know the nature and value of the property. The mere use of the expression "as is where is" did not dilute that obligation.

Conclusion: The secured creditor failed to make full and correct disclosure, and the auction notice was held to be in violation of Rule 8(7) of the Security Interest (Enforcement) Rules, 2002.

Issue (ii): Whether the auction purchaser was entitled to delivery of the entire property or, in the alternative, refund of the earnest money with interest.

Analysis: Since the auction was founded on an incomplete and inaccurate description of the secured asset, the prayer for delivery of the entire property could not be granted. However, the petitioner had deposited 25% of the bid amount as earnest money, and the defective disclosure vitiated the basis on which the auction purchaser had bid. In those circumstances, refund of the earnest money with interest was the appropriate relief.

Conclusion: The claim for delivery of the entire property was rejected, but the petitioner was held entitled to refund of the earnest money with interest.

Final Conclusion: The petition succeeded only to the extent of monetary restitution, with directions for refund of the earnest money with interest and costs, while the prayer for delivery of the property was declined.

Ratio Decidendi: A secured creditor conducting a sale of immovable property must disclose the complete and correct description of the secured asset and all material particulars affecting its nature and value, and a sale notice is not saved by an "as is where is" clause if such disclosure is materially deficient.

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