/2022 INSC 0985/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(s).  8470   OF 2022
     (Arising out of Special Leave Petition (C) No(s).30038 of 2019)
VARIMADUGU OBI REDDY             ….APPELLANT(S)
VERSUS
B. SREENIVASULU & ORS.       ….RESPONDENT(S)
J U D G M E N T
Rastogi, J.
1. Leave granted. 
2. The   instant   appeal   has   been   preferred   at   the   instance   of   the
auction   purchaser   (appellant   herein)   assailing   the   impugned
judgment and order dated 20 th
 November, 2019 passed by the High
Court for the State of Telangana at Hyderabad setting aside the e­
auction sale held by the respondent Bank (secured creditor) under
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the provisions of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (hereinafter
being referred to as the “SARFAESI Act, 2002”).
3. The   relevant   facts   in   brief   to   appreciate   the   controversy   are
that   respondent   nos.1­3   have   availed   three   loan   facilities   vide
Mortgage Loan of Rs.10 lakhs, Cash Credit Loan of Rs.8 lakhs and
Car   Loan   of   Rs.8   lakhs   from   the   respondent   Bank   (secured
creditor)   after   executing   necessary   security   documents.
Respondent   No.4   herein   stood  as   guarantor  and   created   equitable
mortgage   over   her   immovable   property   as   security   for   due
repayment of the said loan amount. 
4. After   availing   the   above   loan   facilities,   the   respondent
borrowers have committed default in repaying the outstanding loan
amount and have also failed to pay the interest accrued to the loan
accounts   from   time   to   time.   Finally,   the   loan   accounts   have   been
classified   as   Non­Performing   Assets   (NPAs)   on   30 th
  September,
2012   and   in   furtherance,   the   respondent   Bank   initiated   recovery
proceedings   under   the   provisions   of   the   SARFAESI   Act,   2002   and
issued demand notice dated 15 th  
November, 2012 calling upon the
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respondent   borrowers/guarantor   to   repay   and   discharge   the
outstanding   loan   amount   with   interest   and   costs   within   60   days.
After following the procedure as contemplated under the provisions
of   the   SARFAESI   Act,   2002   and   Rules   made   thereunder,   on   14 th
February,   2013,   the   respondent   Bank   published   a   possession
notice   in   the   daily   newspapers   under   Section   13(4)   of   the
SARFAESI   Act,   2002   and   obtained   the   order   from   the   District
Collector   on   23 rd
  June,   2013   to   take   physical   possession   of   the
scheduled property from the respondent borrowers/ guarantor and
hand over to the respondent Bank (secured creditor).
5.   These   proceedings   came   to   be   challenged   by   the   respondent
borrowers   by   filing   a   Securitization   Application   (SA)   before   the
Debts Recovery Tribunal which finally came to be dismissed by the
Tribunal   by   order   dated   12 th
  December,   2014   and   it   is   on   record
that   no   appeal   was   preferred   against   the   order   dated   12 th
December,   2014   passed   by   the   Debts   Recovery   Tribunal   and   that
became final.
6. After   taking   possession   of   the   mortgaged   property,   on   29 th
November,   2014,   the   respondent   Bank   (secured   creditor)   issued   a
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notice   prior   to   e­auction   to   the   respondent   borrowers   after
obtaining   valuation   of   the   subject   property   from   an   approved
valuer   in   terms   of   Rules   8(5)   and   8(6)   of   the   Security   Interest
(Enforcement)   Rules,   2002   (hereinafter   being   referred   to   as   the
“Rules,   2002”)   calling   upon   the   borrowers/guarantor   to   repay   the
outstanding   loan   amount   as   demanded.   When   the   respondent
borrowers/guarantor   failed   to   respond,   the   respondent   bank
proceeded   further   and   issued   e­auction   sale   notice   dated
25 th
  February,   2015   fixing   the   date   of   auction   of   the   schedule
property   on   28 th
  March,   2015   and   the   said   notice   was   widely
published   in   Indian   Express   (English)   and   Eenadu   (Telugu)   daily
newspapers dated 26 th
 February, 2015.
7. That the aforesaid e­auction sale notice came to be challenged
by   the   respondent   borrowers   before   the   Debts   Recovery   Tribunal
and   by   an   interim   order   dated   26 th
  March,   2015,   the   Tribunal
directed the respondent Bank (secured creditor) to proceed with the
auction   sale   of   the   secured   asset   scheduled   on   28 th
  March,   2015
with a further direction not to issue the sale certificate provided the
respondent borrowers deposits Rs.6 lakhs within 15 days from the
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date   of   the   said   order.   It   was   made   clear   that   in   the   event   of
respondent   borrowers   fail   to   deposit   the   said   amount,   the
respondent   Bank   will   be   at   liberty   to   issue   the   sale   certificate   in
favour of the highest bidder. It is not disputed that in terms of the
interim   order   passed   by   the   Tribunal,   the   respondent   borrowers
had   to   deposit   Rs.6   lakhs   by   9 th
  April,   2015   but   failed   to   deposit
the  said amount and at  this  stage, the respondent borrowers filed
an   application   on   9 th
  April,   2015   seeking   extension   of   further   15
days’   time   from   10 th
  April,   2015   to   deposit   the   amount   of   Rs.6
lakhs and the Tribunal by an order dated 17 th
  April, 2015 granted
extension   of   15   days’   time   to   deposit   the   sum   of   Rs.6   lakhs   with
direction   to   the   respondent   Bank   (secured   creditor)   and   the
respondent borrowers to maintain status­quo.
8. The   fact   to   be   noticed   at   this   stage   is   that   since   the   dispute
was   on­going   before   the   Tribunal   and   the   respondent   borrowers
have  failed to comply  with the interim  order  of the Tribunal dated
26 th
  March,   2015   to   deposit   Rs.6   lakhs   within   15   days   from   the
date   of   passing   of   the   order   by   10 th
  April,   2015,   the   respondent
Bank   (secured   creditor)   proceeded   with   the   auction   sale   pursuant
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to  the  e­auction  sale notice dated  25 th
  February, 2015  in  terms of
liberty granted by the Tribunal. 
9. The   present   appellant   had   initially   deposited   the   earnest
money   of   Rs.5,54,000/­   on   26 th
  March,   2015   and   after   being
declared the highest bidder with an offer of Rs.64,23,000/, further
deposited a sum of Rs.10,51,750/­ which comes to Rs.16,05,750/
i.e. 25% of the  total auction price and  the  balance 75% of the  bid
amount i.e. Rs.48,17,250/­ was deposited by the appellant on 15 th
April,   2015   and   sale   certificate   was   issued   in   favour   of   the
appellant (auction purchaser).  It is to be noticed that the day when
the   order   came   to   be   passed   by   the   Tribunal   on   17 th
  April,   2015
granting   further   extension   of   15   days’   time   to   the   respondent
borrowers   to   deposit   a   sum   of   Rs.6   lakhs,   auction   sale   was
finalised   and   sale   certificate   dated   15 th
  April,   2015   was   issued   in
favour of the appellant (auction purchaser). 
10. Respondent   borrowers   raised   two   primary   objections   before
the   Tribunal   that   there   was   an   error   in   the   description   of
mortgaged   property   indicated   in   the   e­auction   sale   notice   dated
25 th
  February,   2015   and   to   be   more   specific,   the   scheduled
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property   bearing   Door   No.12­3­39,   3 rd  
Cross,   Sai   Nagar,
Ananthapuramu was mortgaged as a security for the aforesaid loan
while   in   the   e­auction   sale   notice,   the   property   was   described   as
Door   No.”12­3­393”   instead   of   “12­3­39”     and     this,   according   to
the respondent borrowers was the manifest error committed by the
respondent   Bank   and   because   of   the   wrong   description   of   the
property   put   to   auction,   that   property   could   not   have   fetched   the
value which it ought to have fetched in the course of business.
11. In   addition,   further   objection   raised   by   the   respondent
borrowers   was   that   in   terms   of   Rule   9(4)   of   the   Rules,   2002,   the
auction price was to be deposited by the auction purchaser within
15   days   which   expired   on   10 th  
April,   2015   but   it   was   admittedly
deposited by  the auction purchaser  (appellant) on 15 th
  April, 2015
which   is   in   clear   breach   of   Rule   9(4)   of   the   Rules   2002,   in
consequence   thereof,   the   e­auction   sale   notice   and   all   further
proceedings  initiated  pursuant   thereto  deserve to   be  declared  null
and void.
12. The   contentions   were   repelled   by   the   Tribunal   and   the
Tribunal   dismissed   the   applications   filed   by   the   respondent
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borrowers.     Although   it   was   an   appealable   order   before   the   Debts
Recovery   Appellate   Tribunal,   still   the   respondent   borrowers
approached   the   High   Court   under   Article   226   of   the   Constitution
and   the   Division   Bench   of   the   High   Court   reversed   the   findings
returned by the Tribunal on the premise that there was an error in
the   description   of   the   scheduled   property   in   e­auction   sale   notice
dated 25 th
 February, 2015 and that was considered to be a serious
infirmity   in  the process  and  cannot  be sanctified  and further  held
that   since   the   appellant   (auction   purchaser)   failed   to   deposit
balance   75%   of   the   bid   amount   within   the   stipulated   time   of   15
days which ought to have been deposited by him on or before 10 th
April, 2015, that admittedly  deposited by  him  on  15 th
  April, 2015,
is in clear breach of Rule 9(4) of the Rules, 2002 and accordingly,
set   aside   all   the   proceedings   initiated   from   the   stage   of   Section
13(2)   of   the   SARFAESI   Act,   2002   till   the   delivery   of   physical
possession   of   the   scheduled   property   to   the   auction   purchaser
(appellant)   by   the   respondent   Bank   by   an   order   dated   23 rd
November,   2018,   which   is   the   subject   matter   of   challenge   before
us.
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13. Learned   counsel   for   the   appellant   submits   that   so   far   as   the
description of the scheduled property put to auction is concerned,
from the stage when the initial notice was issued by the respondent
Bank   (secured  creditor)  under   Section   13(2)  of  the  SARFAESI   Act,
2002,   the   mortgaged   property   was   described   as   “Door   No.12­3­
393” instead of “Door No.12­3­39”, but it was never the case of the
respondent borrowers either before the Tribunal or before the High
Court   that   the   description   in   the   e­auction   sale   notice   indicating
the   boundaries,   measurement,   ward   number,   block   number,   TS
number and extent of land, etc. left any ambiguity or confusion in
the   minds  of  the  participants  in  the  e­auction   bid  and  it  was  also
not the case of the respondent borrowers that there is some other
property in the locality/vicinity with the number as indicated in the
e­auction   sale   notice   i.e.   “12­3­393”.   Thus,   in   the   given   facts   and
circumstances, merely because there appears to be a typographical
inadvertent human error in reference to door number of the subject
property   may   not   leave   ambiguity   with   regard   to   mortgaged
property   put   to   auction   and   this   typographical   error   is
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inconsequential and does not vitiate the e­auction sale proceedings
held on 28 th
 March, 2015. 
14. So far as the non­compliance of Rule 9(4) of the Rules, 2002 is
concerned,   learned   counsel   for   the   appellant   submits   that   during
pendency   of   e­auction   proceedings  initiated  pursuant   to   e­auction
sale   notice   dated   25 th
  February,   2015,   the   sale   of   the   scheduled
property   was   to   be   held   on   28 th  
March,   2015   and   the   said   notice
was   published   in   Indian   Express   (English)   and   Eenadu   (Telugu)
daily   newspapers  dated  26 th
  February,  2015   and   this  process   was
initiated after  giving  full opportunity  and  notice  to  the  respondent
borrowers   in   compliance   of   Rule   8(6)   of   Rules,   2002   and   the
appellant   was   held   to   be   the   highest   bidder   and   auction   bid   was
much higher than the reserve price indicated in the e­auction sale
notice which was Rs.64,23,000/­ and he has complied with all the
conditions of e­auction sale notice.
15. Learned   counsel   submits   that   the   appellant   was   ready   and
willing   to   deposit   the   balance   of   75%   of   auction   bid   before   11 th
April,   2015   but   because   of   the   intervention   made   by   the   Tribunal
that   created   confusion   in   the   mind   of   the   appellant   and   for   the
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aforesaid   reason,   delay   of   four   days   was   caused   in   depositing   the
balance 75% of the bid amount which was deposited on 15 th
  April,
2015   and   the   time   under   Rule   9(4)   of   Rules,   2002   is   not   that
sacrosanct.  This  fact  has  not  been  noticed  by  the   High  Court  and
in the given circumstances, the finding recorded by the High Court
in the impugned judgment, is not sustainable in law and deserves
to be set aside.
16. Learned   counsel   further   submits   that   the   conduct   of   the
respondent   borrowers   is   equally   to   be   looked   into   for   the   reason
that   when   the   e­auction   sale   notice   came   to   be   published   by   the
respondent   Bank,   simultaneously,   application   was   filed   by   the
respondent borrowers before the Tribunal on 23 rd
 March, 2015 and
interim   order   was   passed   by   the   Tribunal   on   26 th  
March,   2015   to
see  the   bonafides  of   the   respondent   borrowers,   they   were   directed
to   deposit   Rs.6   lakhs   within   15   days   from   the   date   of   order   but
admittedly,   the   respondent   borrowers   have   failed   to   deposit   with
the respondent Bank and sought further time to deposit, on which
order   came   to   be   passed   on   17 th
  April,   2015   and   they   are   only
interested   to   nullify   the   e­auction   proceedings   initiated   by   the
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respondent   Bank   either   by   taking   legal   recourse   or   by   any   other
mechanism,   which   is   possible   under   the   law   and   after   failed   to
deposit   the   amount   as   directed   by   the   Tribunal   at   least,   they   are
not entitled to seek any indulgence from the High Court in the writ
jurisdiction   filed   at   their   instance   under   Article   226   of   the
Constitution.
17. Per   contra,   learned   counsel   for   the   respondents,   while
supporting   the   finding   returned   by   the   High   Court   submits   that
once the appellant has failed to deposit the balance 75% of the bid
amount by 11 th
  April, 2015, which was the deadline in terms of e­
auction   sale   notice   published   by   the   respondent   Bank   and
admittedly  75% of the bid amount  was  deposited by  the appellant
on 15 th
 April, 2015 which is in violation of Rule 9(4) of Rules, 2002
and that itself is sufficient to nullify the e­auction sale initiated by
the   respondent   Bank   and   in   support   of   his   submission,   placed
reliance on the judgement of this Court in   General Manager, Sri
Siddeshwara Cooperative Bank Limited and Another vs. Ikbal
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and Others 1
.   Para 14 of the judgment is relevant for the purpose
and is extracted below:­
“14.   A reading of sub­rule (1) of Rule 9 makes it manifest that the
provision   is   mandatory.   The   plain   language   of   Rule   9(1)   suggests
this.   Similarly,   Rule   9(3)   which   provides   that   the   purchaser   shall
pay a deposit of 25% of the amount of the sale price on the sale of
immovable   property   also   indicates   that   the   said   provision   is
mandatory   in   nature.   As   regards   balance   amount   of   purchase
price,  sub­rule  (4)  provides  that   the  said  amount  shall  be  paid  by
the purchaser on or before the fifteenth day of confirmation of sale
of   immovable   property   or   such   extended   period   as   may   be   agreed
upon   in   writing   between   the   parties.   The   period   of   fifteen   days   in
Rule   9(4)   is   not   that   sacrosanct   and   it   is   extendable   if   there   is   a
written agreement between the parties for such extension. What is
the   meaning   of   the   expression   “written   agreement   between   the
parties”   in   Rule   9(4)?   The   2002   Rules   do   not   prescribe   any
particular   form   for   such   agreement   except   that   it   must   be   in
writing.   The   use  of   the   term   “written   agreement”  means   a   mutual
understanding or an arrangement about relative rights and duties
by   the   parties.   For   the   purposes   of   Rule   9(4),   the   expression
“written   agreement”   means   nothing   more   than   a   manifestation   of
mutual   assent   in   writing.   The   word   “parties”   for   the   purposes   of
Rule 9(4) we think must mean the secured creditor, borrower  and
auction­purchaser.”
18. Learned counsel for the respondent borrowers further submits
that   description   of   the   scheduled   property   has   also   created   a
confusion   in   the   minds   of   the   participants   in   the   e­auction   sale
notice and in support thereof, submits that when the property was
mortgaged   and   security   interest   was   created,   the   value   of   the
property   assessed   was   much   higher   in   value   than   what   being
indicated   as   the   reserve   price   by   the   respondent   bank   in   the
1 (2013) 10 SCC 83
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e­auction   sale   notice   pursuant   to   which   the   auction   proceedings
were initiated and because of the wrong description of the property
put to auction, certainly inference can be drawn that property could
not have fetched the value it ought to have fetched and that is the
reason the High Court has interfered with and set aside the notice
under   Section   13(2)   of   the   SARFAESI   Act,   2002   and   all   other
consequential   proceedings   initiated   by   the   respondent   Bank,   and
therefore, needs no further interference of this Court.
19. Learned   counsel   for   the   respondent   Bank   (secured   creditor)
has   raised   an   objection   that   order   of   the   Tribunal   was   appealable
order   before   the   Debts   Recovery   Appellate   Tribunal   under   Section
18   of   the   SARFAESI   Act,   2002   and   the   petition   filed   by   the
respondent   borrowers   directly   before   the   High   Court   against   the
order   of   the   Tribunal   was   not   maintainable   and   for   the   delay   in
depositing   the   balance   75%   of   the   bid   amount,   respondent   Bank
has   tendered   a   reasonable   justification   and   also   filed   a   counter
affidavit   before   this   Court   wherein,   it   has   specifically   stated   that
though the auction purchaser was ready to pay the balance of 75%
of the bid amount on time, it is the respondent Bank who requested
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the auction purchaser to wait for some time because the respondent
borrowers   were   negotiating   with   the   Bank   at   that   point   of   time   in
light   of   the   interim   order   dated   26 th
  March,   2015   passed   by   the
Tribunal  and  that  was  the  reason  for  which   the  delay  of  four  days
was caused in depositing the balance 75% of the bid amount, which
ought to have been paid by 11 th
  April, 2015 but actually deposited
by 15 th
 April, 2015.
20. Learned counsel for the respondent Bank further submits that
the   auction   proceedings   were   initiated   under   Section   13(2)   of   the
SARFAESI   Act,   2002   in   reference   to   the   scheduled   property   and
although there was a factual inadvertent error indicated in the door
number  in  the  notice  issued under   Sections  13(2)  and 13(4) of  the
SARFAESI Act, 2002 mentioned as “Plot No.65” with the schedule of
property   with   boundaries,   ward   number,   block   number,   T.S.
number,   etc.,   there   is   no   door   number   existing   in   the
locality/vicinity   as   “Door   No.12­3­393”,   but   no   prejudice   has   been
caused   to   the   respondent   borrowers   that   vitiate   the   auction
proceedings   and   further   submits   that   after   depositing   75%   of
auction bid amount on 15 th
  April, 2015, sale certificate was issued
15

and   possession   was   later   transferred   to   the   auction   purchaser
(appellant   herein).   In   the   given   facts   and   circumstances,
interference made by the High court was not valid and deserves to
be interfered by this Court. 
21. To complete the facts, learned counsel for the respondent Bank
further submits that on 15 th
 April, 2015 after receiving the complete
bid amount of Rs.64,23,000/­ the value of property under e­auction
and   after   adjustments   of   the   outstanding   loan   accounts   and   other
ancillary   charges,   the   surplus   amount   remain   payable   to   the
borrowers   of   Rs.16,30,000/­   which   was   offered   to   the   respondent
borrowers   and   since   they   failed   to   accept   the   balance   amount,   it
was accordingly kept in FDR and at present, the aforesaid amount
is lying in FDR and with accumulation of interest, the said amount
has   come   to   approximately   Rs.18.80   lakhs,   which   is   due   and
payable   to   the   respondent   borrowers   and   it   can   be   transferred   to
the borrowers/guarantor in compliance of the order of this Court. 
22. We   have   heard   the   learned   counsel   for   the   parties   and   with
their assistance perused the material available on record.
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23. The   indisputed   facts   which   manifest   from   the   record   are   that
the   respondent   borrowers   availed   three   loan   facilities   from   the
respondent Bank (secured creditor) to the tune of Rs.26 lakhs after
executing necessary security documents.  Respondent no.4 stood as
guarantor   and   created   equitable   mortgage   over   her   immovable
property   as   security   for   due   payment   of   the   said   loan   amounts.
The property is a residential building of 266 sq. yards of land.   The
description   of   the   property   mortgaged   can   be   identified   from   the
notice issued in the first instance under Section 13(2) of the Act as
follows:­
Borrowers   Names   &
Addresses (1) Properties   under
Mortgage (2) Guarantors
Name   &
Addresses (3) Outstanding
amount due
1) Sri   Bandi   Srinivasulu ,
S/o Late B. Narasimhulu
2)   Smt.   Bandi   Swarna
Latha ,   W/o   B.   Srinivasulu,
D.No.12­3­393,   3 rd
  Cross,
Sai Nagar, Anantapur
A/C. Nos.31758622533;
32344540051;
31684374998 Property   situated   in
the   RD   and   SRD   of
Anantapur   and   within
the   Anantapur
Municipal   Limits.
Ward   No.4,   Block
No.18,   T.S.
No.2005,Paiki Ac. 0.05
Cents,   Plot   No.65.
Present   Door   No.12­3­
393,   Assessment
No.1001035935
Measurements :   East
West : 33 Ft and  North
South :66   Ft.;
Boundaries:  East:  Plot
of   Pushpavathamma;
West:   House   of
Yaganti;   North:   Road; Smt.   Bandi
Jaya
Lakshmamma ,
W/o   Late   B.
Narasimhulu,
D.No.12­3­393,
3 rd
  Cross,   Sai
Nagar,
Anantapur. 24,87,616.00   as
on   08.11.2012   +
future   interest   &
expenses.
17

South:   Plot   of
Pushpavathamma.
Place: Anantapur
Date: 05­12­2012                                               Sd/­ Authorised Officer,
                                              State   Bank   of   India,   Gandhi   Bazar
Branch
24. On   account   of   default,   the   loan   amounts   of   the   respondent
borrowers were classified as Non­Performing Assets (NPAs) and the
bank   issued   a   demand   notice   dated   15 th
  November,   2012   under
Section 13(2) of the Act which later came to be published in Hindu
(English)   and  Eenadu   (Telugu)   daily   newspapers   on   5 th
  December,
2012  and   later   possession  notice   dated   14 th
  February,   2013   came
to   be   published   in   Hindu   (English)   and   Eenadu   (Telugu)   daily
newspapers on 20 th
 February, 2013 and after initiating proceedings
under Section 14 of the Act, the respondent Bank took possession
of the scheduled property under the orders of the District Collector
from the respondent borrowers on 23 rd
 June, 2013.  
25. At this stage, the proceedings initiated by the respondent bank
came to be assailed by the respondent borrowers before the Debts
Recovery Tribunal of Andhra Pradesh at Hyderabad under Section
17(1) of the Act.   It may be relevant to note that in the description
of   the   property   under   Sections   13(2)   and   13(4)   of   the   Act,   door
18

number   indicated   was   “12­3­393”   in   place   of   “12­3­39”   and   this
question   about   the   alleged   error   in   the   door   number   of   the
mortgaged   property   was   available   to   the   borrowers   in   the   first
round of litigation before the Tribunal, if at all, it has any material
bearing in reference to the proceedings initiated by the respondent
Bank   (secured   creditor),   but   the   proceedings   initiated   at   the
instance  of  the   respondent   borrowers  before  the  Tribunal  came  to
be   dismissed   by   a   judgment   dated   12 th
  December,   2014   and   no
further   appeal   was   preferred   and   accordingly   it   has   attained
finality.  
26. The   e­auction   notice   came   to   be   published   by   the   respondent
Bank   on   25 th
  February,   2015   fixing   the   date   of   auction   as
28 th
  March,   2015   with   a   reserve   price   of   Rs.55,33,000/­   and
e­auction   notice   was  widely   published  in   Indian  Express  (English)
and Eenadu (Telugu) daily newspapers dated 26 th
 February, 2015.  
27. That e­auction notice came to the challenged by the respondent
borrowers   in   the   fresh   proceedings   instituted   before   the   Tribunal
on 23 rd
  March, 2015.     Pursuant thereto, interim order came to be
passed   by   the   Tribunal   on   26 th
  March,   2015   with   a   direction   that
19

the   sale   certificate   shall   not   be   issued   in   favour   of   the   highest
bidder   provided   the   borrower   deposit   a   sum   of   Rs.6   lakhs.
Relevant extract of the order of the Tribunal is quoted below:­
  “The   Respondent   Bank   is   hereby   permitted   to   proceed   with   the
auction sale of the schedule property on 28.03.2015 in pursuance of
the Auction Notice dt. 25.02.2015 and however the Respondent Bank
is   hereby   directed   not   to   issue   the   sale   certificate   in   favour   of   the
highest   bidder   in   the   auction   subject   to   the   condition   that   the
Applicant   shall   deposit   a   sum   of   Rs.6.00   lakhs   directly   with   the
Respondent Bank within 15 days from today. It is made clear that in
the event the Applicant fails to deposit the amount, as stated supra,
the Respondent Bank shall be at liberty to issue the sale certificate in
favour   of   the   highest   bidder   in   the   auction   and   such   sale   shall   be
subject to the result of the above SA.”
28. In   terms   of   the   aforesaid   order,   respondent   borrowers   were   to
deposit   the   sum   of   Rs.6   lakhs   on   or   before   9 th
  April,   2015,   but
admittedly,   the   borrowers   failed   to   deposit   the   aforesaid   amount
and on the said date i.e. 9 th
 April, 2015 I.A. No.1687 of 2015 came
to   filed   before   the   Tribunal   seeking   extension   of   time   period   by
another 15 days to deposit the sum of Rs.6 lakhs and extension of
15   days’   time   was   granted   by   the   Tribunal   to   deposit   the   sum   of
Rs.6   lakhs   to   the   borrowers   by   an   order   dated   17 th
  April,   2015.
The   extract   of   the   order   dated   17 th
  April,   2015   is   reproduced
hereinbelow:
20

“The Applicant is hereby directed to deposit the said sum of Rs.6.00
lakhs into the ‘interest bearing no­lien account’ with the Respondent
Bank   within   15   days   from   10.04.2015,   as   sought   by   the   Applicant,
and   accordingly,   the   Respondent   Bank   and   the   Auction   Purchaser
are  hereby   directed to  maintain status­quo. Accordingly, the present
IA is disposed of.”
29.   It   may   be   relevant   to   note   that   in   the   interregnum   period,
since   the   respondent   Bank   (secured   creditor)   was   permitted   to
proceed with the auction proceedings, appellant deposited initially
the   earnest   money   of   Rs.5,54,000/­   for   participating   in   the
proposed  e­auction sale on 26 th
 March, 2015 and after the auction
purchaser   was   declared   as   the   highest   bidder   with   the   offer   of
Rs.64,23,000/­,   further   sum   of   Rs.10,51,750/­   totalling
Rs.16,05,750/­   was   deposited   (25%   of   Rs.64,23,000/­)   on
28 th
 March, 2015.
30. In terms of Rule 9(4) of the Rules, 2002, the balance 75% of the
bid   amount   being   Rs.48,17,250/­   was   to   be   deposited   by   the
appellant auction purchaser on or before 11 th
 April, 2015, but prior
thereto,   an   application   was   filed   by   the   respondent   borrowers   on
9 th
  April,   2015   seeking   extension   of   time   and   as   the   matter   was
sub­judice before the Tribunal, the balance 75% of the bid amount
could   not   have   been   deposited   on   11 th
  April,   2015,   but   it   was
21

deposited   by   the   appellant   on   15 th
  April,   2015   and   the   sale
certificate was issued in favour of auction purchasers and as there
was factual error in the door number of the subject property, which
was indicated as “12­3­393” instead of “12­3­39”, rectification deed
dated 21 st
  April, 2015 was executed with the correct description of
the scheduled property.   
31. That since the respondent borrowers failed to deposit a sum of
Rs.6   lakhs   in   the   extended   period   granted   by   an   order   dated   17 th
April, 2015, the Tribunal by its order dated 1 st
  May, 2015 granted
further   time   to   the   respondent   borrowers   till   10 th
  May,   2015   to
deposit   the   amount   of   Rs.6   lakhs,   but   by   that   time   the   auction
proceedings were finalised and the sale certificate dated 15 th
  April,
2015 was duly registered and the physical possession of scheduled
property was handed over to the appellant on 23 rd
 November, 2018.
The   Tribunal,   after   taking   into   consideration   the   so­called   alleged
description  of mortgaged  property   in reference to  which there  was
great emphasis that Door No.“12­3­393” was mentioned instead of
“12­3­39”   and   so   also   the   breach   of   Rule   9(4)   of   the   Rules,   2002,
22

the Debts Recovery Tribunal dismissed the application by an order
dated 1 st
 August, 2019.   
32. The   order   of   the   Tribunal   dated   1 st
  August,   2019   was   an
appealable order under Section 18 of the SARFAESI Act, 2002 and
in the ordinary course of business, the borrowers/person aggrieved
was   supposed   to   avail   the   statutory   remedy   of   appeal   which   the
law   provides   under   Section   18   of   the   SARFAESI   Act,   2002   in   the
absence   of   efficacious   alternative   remedy   being   availed,   there   was
no   reasonable   justification   tendered   by   the   respondent   borrowers
in approaching the High Court and filing writ application assailing
order of the Tribunal dated 1 st
  August, 2019 under its jurisdiction
under   Article   226   of   the   Constitution   without   exhausting   the
statutory right of appeal available at its command.  
33. This   Court   in   the   judgment   in   United   Bank   of   India   vs.
Satyawati Tondon & Others 2
,   was concerned with the argument
of alternative remedy provided under the SARFAESI Act, 2002 and
dealing   with   the   argument   of   alternative   remedy,   this   Court   had
observed that where an effective remedy is available to an aggrieved
2 (2010) 8 SCC 110
23

person,   the   High   Court   ordinarily   must   insist   that   before   availing
the   remedy   under   Article   226   of   the   Constitution,   the   alternative
remedy   available   under   the   relevant   statute   must   be   exhausted.
Paras   43,   44   and   45   of   the   said   judgment   are   relevant   for   the
purpose and are extracted below: 
“43.   Unfortunately, the High Court overlooked the settled law that
the High Court will ordinarily not entertain a petition under Article
226   of   the   Constitution   if   an   effective   remedy   is   available   to   the
aggrieved   person   and   that   this   rule   applies   with   greater   rigour   in
matters involving recovery of taxes, cess, fees, other types of public
money   and   the   dues   of   banks   and   other   financial   institutions.   In
our view, while dealing with the petitions involving challenge to the
action   taken   for   recovery   of   the   public   dues,   etc.   the   High   Court
must keep in mind that the legislations enacted by Parliament and
State   Legislatures   for   recovery   of   such   dues   are   a   code   unto
themselves   inasmuch   as   they   not   only   contain   comprehensive
procedure for recovery of the dues but also envisage constitution of
quasi­judicial bodies for redressal of the grievance of any aggrieved
person.   Therefore,   in   all   such   cases,   the   High   Court   must   insist
that before availing remedy under Article 226 of the Constitution, a
person   must   exhaust   the   remedies   available   under   the   relevant
statute.
44.   While expressing the aforesaid view, we are conscious that the
powers   conferred   upon   the   High   Court   under   Article   226   of   the
Constitution   to   issue   to   any   person   or   authority,   including   in
appropriate   cases,   any   Government,   directions,   orders   or   writs
including   the   five   prerogative   writs   for   the   enforcement   of   any   of
the   rights   conferred   by   Part   III   or   for   any   other   purpose   are   very
wide   and   there   is   no   express   limitation   on   exercise   of   that   power
but,  at  the  same  time,  we  cannot  be  oblivious  of  the  rules  of  self­
imposed restraint evolved by this Court, which every High Court is
bound to keep in view while exercising power under Article 226 of
the Constitution.
45.   It is true that the rule of exhaustion of alternative remedy is a
rule   of   discretion   and   not   one   of   compulsion,   but   it   is   difficult   to
fathom any reason why the High Court should entertain a petition
filed  under   Article   226   of  the  Constitution  and   pass  interim   order
24

ignoring   the   fact   that   the   petitioner   can   avail   effective   alternative
remedy   by   filing   application,   appeal,   revision,   etc.   and   the
particular   legislation   contains   a   detailed   mechanism   for   redressal
of his grievance.”
34.       In   the   instant   case,   although   the   respondent   borrowers
initially   approached   the   Debts   Recovery   Tribunal   by   filing   an
application under  Section   17 of the   SARFAESI  Act, 2002, but  the
order   of   the   Tribunal   indeed   was   appealable   under   Section   18   of
the   Act   subject   to   the   compliance   of   condition   of   pre­deposit   and
without   exhausting   the   statutory   remedy   of   appeal,   the
respondent borrowers approached the High Court by filing the writ
application   under   Article   226   of   the   Constitution.   We   deprecate
such   practice   of   entertaining   the   writ   application   by   the   High
Court   in   exercise   of   jurisdiction   under   Article   226   of   the
Constitution   without   exhausting   the   alternative   statutory   remedy
available   under   the   law.     This   circuitous   route   appears   to   have
been   adopted   to   avoid   the   condition   of   pre­deposit   contemplated
under 2 nd
 proviso to Section 18 of the Act 2002. 
35. The High Court under the impugned judgment has non­suited
the   present   appellant   (auction   purchaser)   on   the   premise   that
there   is   an   error   in   the   description   of   the   door   number   of   the
25

property and instead of “12­3­39”, it was indicated as “12­3­393”,
although   there   was   no   error   in   the   description   of   the   property
rather   the   dimensions   with   measurement   and   boundaries   were
properly   indicated   of   the   mortgaged   property   and   on   the   premise
that Rule 9(4) of the Rules has not been followed by the appellants
by   depositing   75%   of   the   bid   amount   which   ought   to   have   been
deposited   by   11 th
  April,   2015,   instead   it   was   deposited   on   15 th
April, 2015.
36.     We  find  substance  in  the  submissions  made  by   the  learned
counsel for the appellant for the reason that so far as the error in
the description of door number of the property is concerned, which
admittedly   indicated   throughout   as   “12­3­393”   instead   of   “12­3­
39”, but the fact is that the description of the mortgaged property
from the commencement of the proceedings under Section 13(2) of
the SARFAESI Act, 2002, due to human error instead of “12­3­39”,
door number was indicated as “12­3­393”, but admittedly the fact
is   that   there   is   no   such   property   available   in   the   locality/vicinity
with  Door  no.”12­3­393”  and  as  full  description  of  the  mortgaged
property   was   mentioned/indicated,   although   there   was   a
26

typographical   error,   but   the   respondent   borrowers   failed   to
demonstrate   any   prejudice   being   caused   on   account   of   the
inadvertent   error   being   caused   in   description   of   the   mortgaged
property.   At   the   same   time,   the   borrower   failed   to   demonstrate
that because of a typographical inadvertent error in door number,
as indicated above, the property could not have fetched the value
as   it   ought   to   have   fetched   and   that   apart,   there   was   no
documentary evidence placed on record to substantiate the kind of
prejudice, if any, being caused.
37. It   is   true   that   the   secured   creditor   is   under   an   obligation   to
undertake   the   exercise   and   cross­check   the   description   of   the
mortgaged   property   at   the   stage   when   the   initial   proceedings
under   Section   13(2)   are   initiated   or   in   the   later   consequential
proceedings,   but   at   the   same   time,   mere   typographical   error   due
to   inadvertence   which   has   not   caused   any   prejudice   to   the
borrowers, that in itself could not be considered to be the ground
to   annul   the   process   held   by   the   secured   creditor   which,   in   our
view,  is in  due compliance with  the  requirement as  contemplated
under   the   provisions   of   Rules,   2002   and   this   was   extensively
27

considered by the Tribunal and that apart, it is not the case of the
respondents   that   participants   in   e­auction   sale   are   misguided
because  of  the  error  in   description  of  the  property  put  to   auction
and   when   there   is   no   ambiguity   with   regard   to   the   detailed
description   of   the   mortgaged   property   put   to   auction,   mere
mentioning of the door number “12­3­393” instead of “12­3­39” is
inconsequential and does not vitiate the auction proceedings held
on 28 th
 March, 2015.
38. So far as the second objection raised by the respondent, which
prevailed upon before the High Court regarding the breach of Rule
9(4) of Rules, 2002 is concerned, it will be apposite to note Rules
9(4)   and   9(5)   of   the   Rules   2002   (pre­amended)   which   reads   as
under:
“ 9.   Time   of   sale,   issues   of   sale   certificate   and   delivery   of
possession, etc.­
…….
(4)   The   balance   amount   of   purchase   price   payable   shall   be   paid   by
the purchaser to the authorised officer on or before the fifteenth day
of  confirmation  of  sale  of  the immovable  property  or   such  extended
period as may be agreed upon in writing between the parties.
(5)   In   default   of   payment   within   the   period   mentioned   in   sub­rule
(4),   the   deposit   shall   be   forfeited   and   the   property   shall   be   resold
and the defaulting purchaser shall forfeit all claim to the property or
to any part of the sum for which it may be subsequently sold.
……..”.
28

39.   It will be relevant to note that amendment was made in Rule
9(4) and Rule 9(5) of the Rules, 2002 of which reference has been
made by GSR No.1046(E) dated 3 rd
  November, 2016 effective from
4 th
 November, 2016 and it reads as under:
“ 9.   Time   of   sale,   issue   of   sale   certificate   and   delivery   of
possession, etc.­
…….
(4) The balance amount of purchase price payable shall be paid by
the   purchaser   to   the   authorised   officer   on   or   before   the   fifteenth
day   of   confirmation   of   sale   of   the   immovable   property   or   such
extended   period   [as   may   be   agreed   upon   in   writing   between   the
purchaser   and   the   secured   creditor,   in   any   case   not   exceeding
three months]. 
(5)   In   default   of   payment   within   the   period   mentioned   in   sub­rule
(4),   the   deposit   shall  be   forfeited   [to   the   secured   creditor]  and   the
property   shall  be   resold   and   the  defaulting   purchaser   shall   forfeit
all claim to the property or to any part of the sum for which it may
be subsequently sold.
……..”.
40. It   clearly   manifests   that   the   pre­amended   Rule   9(4)   refers   to
the   period   of   15   days   for   confirmation   of   sale   or   such   extended
period, but the outer limit has not been defined and that appears
to be not as sacrosanct and the period can be extended, as agreed
upon in writing between the parties. In sequel thereto, if the time
stands   extended,   the   auction   purchaser   would   not   be   considered
29

to be a defaulter as referred to under Rule 9(5) of the Rules and if
the amended provisions are being taken note of, of which reference
has   been   made,   effective   from   4 th
  November,   2016,   however,   may
not   be   relevant   as   the   auction   in   the   instant   case   was   held   in
March   2015,   but   the   fact   remains   that   by   an   amendment,   the
legislature with its consciousness has clarified that the agreement
has   to   be   between   the   purchaser   and   the   secured   creditor
exceeding   15   days  but  in   any   case   may  not   exceed   three   months
although who are the parties to the agreement are not clear in the
pre­amended Rule 9(4) of the Rules.   
41. This Court, while examining the pre­amended Scheme of Rule
9(4)   in   judgment   in   General   Manager,   Sri   Siddeshwara
Cooperative   Bank   Limited   (supra)   was   of   the   view   that   the
period which is referred to in Rule 9(4) is not that sacrosanct and
may   be   extended   if   there   is   a   written   agreement   between   the
parties and since parties to the written agreement is not defined in
Rule 9(4), this Court was of the view that it covers into its fold the
secured   creditor,   the   auction   purchaser   and   the   borrower,   but
later the legislature taking into consideration the judgment of this
30

Court   made   its   intention   clear   by   making   an   appropriate
amendment in Rule 9(4) of the Rules, 2002 which came into effect
by   a   notification   dated   3 rd
  November,   2016   effective   from   4 th
November, 2016.   
42. In the instant case, although there was no written consent by
all   the   three   partners,   namely,   secured   creditors,   borrowers   and
auction  purchaser,  as  being   referred  to   by  this  Court  in   General
Manager, Sri Siddeshwara Cooperative Bank Limited   (supra),
but   this   fact   cannot   be   ruled   out   that   in   the   instant   case,   the
peculiar   situation   has   come   forward   when   the   respondent
borrowers   in   the   first   instance   approached   the   Tribunal   assailing
the   e­auction   notice   issued   by   the   respondent   Bank   (secured
creditor)   and   were   able   to   secure   an   interim   order   from   the
Tribunal   dated   26 th
  March,   2015   permitting   the   auction
proceedings to continue, subject to the condition that the borrower
shall deposit Rs.6 lakhs directly with the respondent Bank within
15   days   from   the   date   of   order,   which   admittedly   expired   on   9 th
April,   2015   and   the   respondent   borrowers   failed   to   deposit   the
aforesaid amount.
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43.   On   the   last   date   when   the   period   was   to   expire   on   9 th
  April,
2015,   I.A.   No.1687   of   2015   was   filed   seeking   extension   of   time
period   by   15   days   for   depositing   the   sum   of   Rs.6   lakhs   and   as
there   was   no   stay   in   withholding   the   e­auction   proceedings,   the
appellant deposited not only the earnest money but 25% of the bid
amount in the first instance on 28 th
 March, 2015, the balance 75%
of   the   bid   amount   was   deposited   on   15 th
  April,   2015   and   the
interregnum period was in incomplete phase of flux as to what will
be   the   fate   of   the   auction   purchaser   pending   proceedings   before
the   Tribunal,   more   so   when   the   application   was   filed   by   the
respondent borrowers on 9 th
  April, 2015 seeking extension of time
and that being the situation, 75% of the bid amount was deposited
on   15 th
  April,   2015   and   sale   certificate   was   issued   and   still
thereafter when the Tribunal granted extension of 15 days’ of time
to the respondent borrowers by an order dated 17 th
  April, 2015 to
deposit the sum of Rs.6 lakhs, the respondent borrowers failed to
deposit the aforesaid amount and as it reveals from the record, a
further time was granted to the respondent borrowers to deposit a
sum   of   Rs.6   lakhs   by   an   order   dated   1 st
  May,   2015   and   much
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before   that,   the   auction   proceedings   were   finalised   and   even   the
rectification deed came to be executed on 21 st
 April, 2015.   
44. In   the   given   facts   and   circumstances,   the   four   days’   delay
which   was   caused   in   terms   of   the   original   auction   notice,   in   no
manner, would frustrate or annul the auction proceedings and the
Debts   Recovery   Tribunal   has   rightly   held   that   because   in   such
state   of   flux,   particularly   when   the   bank/secured   creditor
requested the auction purchaser to wait for some time because the
borrowers   are   negotiating   with   the   bank   in   the   light   of   interim
order  dated 26 th
  March, 2015 of  the  Tribunal, delay  in depositing
75% of the bid amount by four days in no manner would frustrate
the rights of the parties inter se, more so, when the conduct of the
borrowers   in   getting   extension   orders   on   two   different   occasions
and   still   not   depositing   Rs.6   lakhs   in   terms   of   the   order   of   the
Tribunal   would   clearly   reflect   that   the   intention   of   the   borrowers
was only to frustrate the auction sale by one reason or the other,
which they could not succeed.  
45. In   our   considered   view,   the   finding   returned   by   the   Tribunal
was well reasoned and duly supported with the material on record
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and the interference made by the High Court under the impugned
judgment   while   recording   a   finding   that   it   was   in   breach   of   Rule
9(4)   of   the   Rules,   2002   is   not   legally   sustainable   in   law   and
deserves to be set aside. 
46. Before we finally conclude, it is brought to our notice that after
sale of  property  under  e­auction,  the respondent  Bank received a
total sum of Rs.64,23,000/­ and after due adjustment of the three
NPA   accounts   of   the   respondent   borrowers   with   other   ancillary
charges,   a   balance   sum   of   Rs.16,30,000/­   is   lying   with   the
respondent bank and the said amount has been deposited by the
bank in FDRs and with accumulation of interest, the said amount
has   come   to   approx.   Rs.18,80,000/­.   We   make   it   clear   that   the
original sum of Rs.16,30,000/­ with interest yielded over the said
amount   upto   date   shall   be   transferred   to   the   account   of   the
borrower/guarantors,   as   the   case   may   be,   with   their   written
consent   as   to   in   whose   account   the   money   is   to   be   transferred.
The   bank   shall   transfer   the   money   in   the   account   of
borrower/guarantor within eight weeks.
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47. Consequently,   the   appeal   deserves   to   succeed   and   is
accordingly   allowed.   The   judgment   impugned   of   the   High   Court
dated  20 th
  November,   2019  is   hereby   quashed   and   set   aside   with
the aforesaid observations. 
48.  There shall be no order as to costs.
49. Pending application(s), if any, shall stand disposed of.
…………………………….J.
(AJAY RASTOGI)
…………………………….J.
(C.T. RAVIKUMAR)
NEW DELHI;
NOVEMBER 16, 2022.
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