How can I challenge an unfair SARFAESI auction of my property?

Question

My property was auctioned by the bank under SARFAESI at a price much lower than the market value. Can I challenge this sale? What I am unsure about is the procedure — where the application goes, what it costs, and how long sarfaesi auction challenge matters usually take. A plain explanation of the steps, in order, would help more than a general answer.

MyVakeel Legal Desk · Accepted Answer

The law that applies to sarfaesi auction challenge here is SARFAESI Act 2002, Section 13, Security Interest (Enforcement) Rules 2002, Rule 8 and Rule 9 and SARFAESI Act 2002, Section 17. The detail below matters, because SARFAESI Act 2002, Section 13 draws the line differently depending on what your documents show.

Rule 8 of the Enforcement Rules requires the bank to obtain a fair valuation of the secured asset and give 30 days' notice of sale specifying the reserve price.

Undervaluation, lack of wide publicity, or sale to a related party without following the prescribed tender or auction process are valid grounds to challenge the sale under Section 17.

Courts have repeatedly held that the reserve price must reflect a genuine assessment of market value, and gross undervaluation can vitiate the entire sale process.

The sale certificate is issued only after full payment by the auction purchaser, and until then a borrower with a strong case can seek to have the auction set aside.

Once the sale is confirmed and certificate issued, setting it aside becomes considerably harder, so speed in filing the DRT application is critical.

What to do next: 1) Obtain the sale notice, valuation report and auction sale certificate through an RTI or from the bank; 2) Get an independent valuation to compare against the auction price achieved; 3) File a Section 17 application before the DRT promptly, highlighting procedural lapses in valuation or publicity; 4) Seek urgent interim orders to prevent registration of the sale deed in favour of the auction purchaser.

If you are unsure whether your facts fall inside SARFAESI Act 2002, Section 13, that is worth checking with an advocate before you commit to a route, because switching later costs time. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in banking law.