The Chhattisgarh High Court on October 30, 2025, dismissed an auction purchaser’s challenge to orders of the Debts Recovery Tribunal (DRT), Jabalpur, and the Debts Recovery Appellate Tribunal (DRAT), Allahabad, that had set aside a bank auction under the SARFAESI framework. Judge Narendra Kumar Vyas found that the bank’s enforcement steps had not complied with mandatory procedural safeguards principally service and consideration of the borrower’s representation under Section 13(3A) and the notice-possession rules and that those failures caused real prejudice to the borrower.
The case arises from a cash-credit loan that became a non-performing asset in 2007. The secured property offered as security by the borrower’s guarantor was taken into symbolic possession and put to public auction in June 2008. The petitioner, who bought the property at auction, argued that the sale was valid because he had eventually paid the sale price, the bank had followed auction formalities, and any date discrepancies were typographical. The DRT disagreed and the DRAT affirmed the DRT’s order; the High Court has now declined to interfere with those findings.
Two procedural defects were decisive. First, the court agreed with the DRT/DRAT that the bank failed to properly consider a representation the borrower filed after receipt of the Section 13(2) notice. Section 13(3A) requires a secured creditor to consider and communicate reasons for rejecting a borrower’s representation within the statutory timeframe; the record shows the bank conceded those representations were not answered. The High Court held that omission prejudiced the borrower’s statutory opportunity to seek redress and so vitiated the sale.
Second, the court scrutinised compliance with the sale rules. Rule 8(1) requires proper delivery and prompt publication of a possession notice, and Rule 9(3) mandates immediate deposit of 25 percent of the sale price by the successful auction purchaser. The record showed the purchaser deposited only 15 percent at the relevant stage and the authorised officer treated a portion of the earlier earnest money as making up the shortfall a step the court found contrary to Rule 9 and to binding Supreme Court precedents applying the Rules. On those grounds the DRT and DRAT had validly set aside the auction sale.
The High Court also reviewed higher court precedents cited by the parties. It explained that while some Supreme Court decisions accept equitable considerations such as waiver where a borrower’s conduct makes challenge inequitable, those cases are fact-sensitive and were distinguishable here because the borrower had raised timely objections that went unanswered. The court therefore treated the statutory safeguards as controlling in this fact pattern.
The writ petition (WPC No. 156 of 2019) was dismissed and the interim order previously granted by the High Court was vacated.
Citation : 2025 Local Law (CG) 839
Case Details : WPC No. 156 of 2019, Ajay Upadhayay vs UCO Bank Through Authorized Officer, Nehru Nagar Branch, Bhilai, District – Durg Chhattisgarh and Others. For Petitioner : Mr. Prafull N. Bharat, Sr. Advocate with Mr. Anand Dadariya, Advocate For Res. No. 1 to 3/ Bank : Mr. Anshit Singh Hora, Advocate appears on behalf of Mr. Ravindra Sharma, Advocate. For Res. No. 4 : Respondent No. 4/ Mr. Manik Mehta in person.