M. R. Vasumathi vs Authorized Officer - 2026 INSC 633 SARFAESI - Security Interest Rules - Auction Sale

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 - Security Interest (Enforcement) Rules, 2002 - Rule 9 - Rule 9 that existed at the time of the impugned sale, it is clear that these provisions are neither ornamental nor directory; they are couched in mandatory terms and go to the root of the validity of the sale. A conjoint reading of the relevant sub-rules of Rule 9 underscore the mandatory character of these provisions, particularly accentuating the requirement of balance deposit under sub-rule (4), which is integral to the sanctity and credibility of the auction mechanism. Any deviation therefrom, absent legally sustainable justification, would render the process vitiated. (Para 28) [Context: The Supreme Court set aside the Madras High Court judgment and the concurrent orders of the DRT and DRAT, holding that the auction sale of the mortgaged property conducted under the SARFAESI framework was vitiated due to non-compliance with the mandatory requirements of Rule 9 ]

SARFAESI Act and Rules - Auction - The rights of an auction purchaser and the sanctity of a confirmed sale ordinarily merit due protection, such protection is by no means absolute. It must yield where the very process engendering the sale is demonstrated to be legally infirm or to be incongruous with the statutory framework. The object of proceedings under the SARFAESI Act is not the mere culmination of a sale in a mechanical manner, but the lawful realisation of the secured asset through a process that is fair, transparent and strictly compliant with the prescribed rules. The mere factum that the sale stood confirmed cannot, therefore, foreclose judicial scrutiny [Context: In the present case, SC found that the non-adherence to the timeline that the SARFAESI Rules contemplate constitutes a material irregularity going to the root of the matter. ]