Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 9 June 2026

Case Overview

  • Parties: Appellant – M. R. Vasumathi (daughter of the deceased guarantor G. Ramanujam). Respondents – (1) Authorized Officer of Indian Bank (secured creditor), (2) Auction purchaser (successful bidder in 2010 auction), and other legal heirs/representatives of G. Ramanujam.
  • Background: In 1984, S. Murugesan (sole proprietor of M/s Shiv Shankar Agencies) obtained a loan from Indian Bank, secured by a mortgage executed by guarantor G. Ramanujam. A preliminary decree for Rs 1,87,004.23 (total Rs 1,92,400.23 including court fee) with 18% interest was passed by the City Civil Court, Chennai on 10 Sept 1997. G. Ramanujam died on 26 Sept 2001. After failed settlement attempts, Indian Bank issued a SARFAESI notice under Sec. 13(2) on 8 Sept 2009, a possession notice on 21 Dec 2009, and a sale notice on 3 Feb 2010.
  • Auction: The secured asset was auctioned on 11 Mar 2010. Respondent 2 became the highest bidder with Rs 2,11,00,500. 25% of the bid (Rs 9,00,000) was deposited on 10‑11 Mar 2010; the remaining 75% (Rs 1,22,00,500) was paid on 31 Mar 2010, beyond the 15‑day period prescribed by Rule 9(4) of the SARFAESI Rules. Sale certificate issued on 10 Apr 2010.
  • Legal Proceedings: Heirs filed applications before the Debts Recovery Tribunal (DRT) under Sec. 17 SARFAESI, which were dismissed on 30 Dec 2010 on the ground that the sale was already effected and limitation under the Limitation Act did not apply. Subsequent appeals before the Debts Recovery Appellate Tribunal (DRAT) were also dismissed (16 Dec 2016). The heirs then filed writ petitions (W.P. 29641 of 2019 and W.P. 27770 of 2019) before the Madras High Court, which dismissed them, holding the secured creditor had validly exercised SARFAESI powers.
  • Appeal: The appellant filed Civil Appeal No. 1606 of 2026 before the Supreme Court, challenging the legality of the 2010 auction and alleging non‑compliance with SARFAESI Rules, especially Rule 9(3) and Rule 9(4), and improper valuation.

Final Outcome

  • The Supreme Court set aside the Madras High Court judgment, as well as the orders of the DRAT and DRT.
  • The 2010 auction sale is quashed and set aside.
  • Refund to Auction Purchaser: Respondent 2 is entitled to a full refund of the entire amount deposited (Rs 2,11,00,500) plus interest at 7% per annum from the dates of each deposit until payment. Refund to be made by the secured creditor within six weeks of the judgment.
  • Redemption Right for Appellant: The appellant may redeem the mortgaged property by paying the outstanding dues of Rs 95,42,372.52 together with 5% interest per annum calculated from the date of the Sec. 13(2) notice (issued 8 Sept 2009) until actual payment.
  • The appellant must approach the secured creditor within two weeks of the judgment with a copy of the judgment to ascertain the exact amount due. The secured creditor must then give a notice specifying a payment period not less than one month.
  • Fresh Auction Provision: If the appellant fails to pay the stipulated amount within the time granted, the secured asset may be re‑auctioned after eight weeks. The secured creditor is directed to obtain a fresh valuation from a government‑empanelled valuer before any such auction.
  • The Court clarified that the limitation issue (whether the SARFAESI proceedings were barred) is left open as it is superfluous given the decision on the second issue (validity of the auction).
  • Costs: Each party bears its own costs.
  • The judgment and order are to be sent to the appellant’s advocate‑on‑record immediately.

Topics: SARFAESI Act, Auction Sale, Debt Recovery