Supreme Court of India
M.S. SANJAYversusINDIAN BANK & ORS.
- Citation
- 2025 INSC 177
- Decided
- 29 January 2025
- Disposal
- Appeal(s) allowed
Holding
The Supreme Court held that the High Court erred in invalidating the auction; the sale was lawful and should stand despite the alleged notice deficiency, as equity and the absence of injustice outweigh the technical defect.
Summary
The appellant purchased a mortgaged property at an auction conducted on 31 July 2007 and received a sale certificate on 30 November 2007, thereafter developing the property. The guarantor of the original borrower challenged the auction before the Debt Recovery Tribunal, which set aside the sale; the decision was later reversed by the Debt Recovery Appellate Tribunal. The guarantor then filed a writ petition in the Karnataka High Court, which held that the bank had failed to give the statutorily required 15 clear days' notice and declared the auction illegal. The Supreme Court examined whether the High Court should have considered the equitable circumstances and the finality of the sale, noting that mere procedural infractions that do not cause injustice should not merit interference under Article 226. It held that the High Court erred, that the sale was valid, and set aside the High Court’s order, allowing the appeal.
Issues considered
- Whether the High Court was justified in setting aside the auction sale on the ground of insufficient notice despite the passage of time and the appellant's possession and development of the property.
- Whether a procedural defect in notice period, without resulting injustice, warrants interference by a writ court exercising extraordinary jurisdiction under Article 226.
- Whether the amendment to Rule 9(1) prescribing a 15‑day notice period applies retrospectively to auctions conducted in 2007.
- Whether equity and substantial justice can outweigh a technical statutory violation in the context of SARFAESI‑Act‑driven auctions.
Legislation cited
Headnote
Issue for Consideration An auction was conducted on 31.07.2007 and sale certificate was issued on 30.11.2007. The respondent no.4-guarantor questioned the validity of auction proceedings. In 2019, the High Court declared the auction to be illegal. Whether the High Court failed in noticing jurisdiction. Headnotes† Constitution of India – Art. 226 – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002 – The respondent no.2 had availed of loan facility from the respondent no.1-Bank –
Subjects
Extraordinary JurisdictionArticle 226 of the ConstitutionAuction NoticeFrivolous litigationInterference by the Writ CourtMere infraction of statutory provisionLegal formulationsEquitable situation
Judgment
[2025] 1 S.C.R. 1588 : 2025 INSC 177
M.S. Sanjay
v.
Indian Bank & Ors.
(Civil Appeal No. 1188 of 2025)
29 January 2025
[J.B. Pardiwala and R. Mahadevan, JJ.]
Issue for Consideration
An auction was conducted on 31.07.2007 and sale certificate was
issued on 30.11.2007. The respondent no.4-guarantor questioned
the validity of auction proceedings. In 2019, the High Court declared
the auction to be illegal. Whether the High Court failed in noticing
equitable consideration in exercise of its extraordinary jurisdiction.
Headnotes†
Constitution of India – Art. 226 – Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act (SARFAESI), 2002 – The respondent no.2
had availed of loan facility from the respondent no.1-Bank –
Borrower defaulted – The Bank proceeded to auction the
property mortgaged – Auction was conducted – Appellant was
declared the successful bidder and he deposited total sum with
the bank – Sale Certificate was also issued on 30.11.2007 –
Appellant started developing the property – Respondent
no.4-guarantor went before DRT and questioned the legality
and validity of the auction proceeding – The DRT, allowed the
ASA 232/2008 instituted by the Guarantor and set at naught
the auction proceedings – However, the DRAT set aside the
order passed by the DRT – Again, the High Court declared
the auction to be illegal on the footing that 15 clear days
notice was not issued by the Bank for putting the property
in question to auction – Correctness:
Held: The Respondent No.4 (Guarantor) was wholly responsible for
dragging the appellant to a very frivolous litigation and that too on a
very technical point – When the High Court took up the writ petition
for hearing in 2019 it went strictly by the number of days necessary
for the issuance of auction notice – The High Court should have
taken a practical view of the matter considering that the auction had
[2025] 1 S.C.R. 1589
M.S. Sanjay v. Indian Bank & Ors.
attained finality way back in the year 2007 – It is well settled that
interference by the Writ Court for mere infraction of any statutory
provision or norms, if such infraction has not resulted in injustice is
not a matter of course – The legal formulations cannot be enforced
divorced from the realities of the fact situation of the case – While
administering law it is to be tempered with equity and if the equitable
situation demands after setting right the legal formulations not to
take it to the logical end, the High Court would be failing in its duty if
it does not notice equitable consideration and mould the final order
in exercise of its extraordinary jurisdiction – Any other approach
would render the High Court a normal Court of Appeal, which it is
not – It is a settled principle of law that the remedy under Article
226 of the Constitution of India is discretionary in nature and in a
given case, even if some action or order challenged in the petition
is found to be illegal and invalid, the High Court while exercising
its extraordinary jurisdiction thereunder can refuse to upset it with
a view to doing substantial justice between the parties – Thus, the
impugned Judgment and order passed by the High Court is set aside.
[Paras 5, 8, 9,10,11]
Case Law Cited
Shiv Shanker Dal Mills v. State of Haryana [1980] 1 SCR 1170 :
(1980) 2 SCC 437; Kewal Krishna Puri v. State of Punjab [1979]
3 SCR 1217 : (1980) 1 SCC 416 – referred to.
List of Acts
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act (SARFAESI), 2002;
Constitution of India.
List of Keywords
Extraordinary Jurisdiction; Article 226 of the Constitution; Auction
Notice; Frivolous litigation; Interference by the Writ Court; Mere
infraction of any statutory provision or norms; Legal formulations;
Equitable situation.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1188 of 2025
From the Judgment and Order dated 15.06.2019 of the High Court
of Karnataka at Bengaluru in WP No. 47721 of 2017
1590 [2025] 1 S.C.R.
Supreme Court Reports
Appearances for Parties
S N Bhat, Sr. Adv., D P Chaturvedi, Tarun Kumar Thakur,
Mrs. Parvati Bhat, Abhay Choudhary M, Vivek Ram R, Ms. Anuradha
Mutatkar, Advs. for the Appellant.
Himanshu Munshi, Anitesh Choudhary, Siddhant Munshi, Dinesh
Kumar Garg, P.V. Yogeshwaran, Abhishek Garg, Dhananjay Garg,
Ms. Anu Kushwaha, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Order
1. Leave granted.
2. This appeal arises from the Judgment and Order passed by the High
Court of Karnataka at Bengaluru dated 15-6-2019 in Writ Petition
No.47721/2017 by which the High Court allowed the Writ Petition
filed by the Respondent No.4 – herein (guarantor) and thereby set
aside the order passed by the Debt Recovery Appellate Tribunal
(DRAT) dated 11-4-2017 in RA(SA) 151/2011.
3. The facts giving rise to this Appeal may be summarized as under:
(i) The appellant – herein before us is the auction purchaser.
The Respondent No.4 is the guarantor. The Respondent No.2
before us M/s. Arihant Sarees had availed of loan facility from
the Respondent No.1 – Bank.
(ii) As the borrower defaulted in repaying the loan amount, the Bank
decided to proceed under the provisions of the SARFAESI Act.
(iii) The property in question was mortgaged by the original borrower,
with the Respondent No.1 – Bank. Thus, a security interest was
granted in favour of the Bank.
(iv) The Bank proceeded to put the property in question to auction
after due compliance with the provisions of the SARFAESI Act.
(v) The Auction was conducted on 31-7-2007. The appellant -
herein was declared as the successful bidder in the said auction
proceedings. He deposited a total sum of Rs.24,00,000/-
(Approx.) with the Bank.
(vi) It is not in dispute that thereafter on 30-11-2007, a Sale Certificate
also came to be issued in favour of the appellant – herein.
[2025] 1 S.C.R. 1591
M.S. Sanjay v. Indian Bank & Ors.
(vii) The appellant thereafter started developing the property
purchased by him in the auction.
(viii) The borrower did not deem fit to question the legality and validity
of the auction proceedings. However, it is the Respondent
No.4 - herein its capacity as the guarantor went before the Debt
Recovery Tribunal and questioned the legality and validity of
the auction proceeding.
(ix) The DRT, Karnataka vide the order dated 23-1-2009 allowed
the ASA 232/2008 instituted by the Guarantor and set at naught
the auction proceedings.
(x) The DRT in its impugned order observed thus:-
“On verification of the pleadings put forth by the
appellant as well as the respondent bank herein, along
with its counter the respondent bank field publication
copies of sale notice dated 14.7.2007 and another
sale notice dated 8.6.2007 and possession notice
dated 24.5.2007, along with the counter field by it
on 6.6.2008. On 8.12.2008 along with a memo the
respondent bank field publication copy of possession
notice dated 24.5.2007 in 2 newspapers, sale notice
dated 8.6.2007 published in 2 newspapers, sale
notice dated 14.7.2007 published in 2 newspapers,
and valuation report dated 25.5.2007. But, at the
first instance along with its objections to the appeal
nothing prevented the respondent bank to file the
valuation report along with its counter objections for
the reasons best known to it in spite of availability
of it with the respondent bank, which definitely leads
to a suspicion whether it was obtained prior to filing
its objections or subsequent to filing its objections. If
really the respondent bank obtained valuation report
as required under law, nothing prevented it to file the
same along with its objections, as the appellant has
taken the plea that the authorized officer has not
followed all the formalities before bringing the property
for sale. Further, as seen from the sale notices dated
8.6.2007 and 14.7.2007 the respondent bank issued
2 sale notices, whereas the 2nd sale notice dated
14.7.2007 was published on 16.7.2007 in Kannada
1592 [2025] 1 S.C.R.
Supreme Court Reports
Praba as well as Indian Express as required under
law. But the tenders. were opened on 30.7.2007 and
sale was held on 31.7.2007. But the 2nd publication
was made by the respondent bank without giving 30
days time for selling the property. But, on 30.7.2007
itself it opened the tenders and sold the property to
the highest bidder, i.e. on 31.7.2007 itself. But, as per
law laid down under Securitization Act, the respondent
bank ought to have sold the property by giving 30 days
time after publication of sale notice. No doubt in this
case the respondent bank published of sale notice
on 8.6.2007, but the sale was not held in pursuance
of the same. While in respect of the 2nd publication
of sale notice, the respondent bank not followed the
law laid down under Securitization Act i.e. 30 days
gap in selling the property. Further, the respondent
bank in spite of saying that it has issued demand
notice, no copy of the demand notice is filed by the
respondent bank to verify whether it was properly
issued or not. Under the above circumstances it
can be presumed that the respondent bank has not
proceeded in accordance with the law, but proceeded.
according to its wishes. Further, the filing of the
documents by the respondent bank on 8.12.2008
gives rise to a kind of suspicion regarding the valuation
report said to have been obtained by them dated
25.5.2007 itself. Under the above circumstances, the
proceedings initiated by the respondent bank under
Securitization Act are not in terms of the provisions
laid down under law. As such, they are not valid
proceedings. So, under the above circumstances the
appeal preferred by the appellant has to be allowed.
In the result, appeal is allowed.”
(xi) The Respondent No.1 - herein, i.e., the Bank being dissatisfied
with the order passed by the DRT went in appeal before the
Debt Recovery Appellate Tribunal. The DRAT by its order dated
11-4-2017 allowed the appeal filed by the Bank and thereby
set aside the order passed by the Debt Recovery Tribunal,
referred to above. Some of the relevant observations made by
the Appellate Tribunal read thus:-
[2025] 1 S.C.R. 1593
M.S. Sanjay v. Indian Bank & Ors.
“7. In such a situation, bank cannot be held guilty
for not maintaining 30 days gap between second
publication of sale notice, because initially there was
gap of more than 30 days. In so far as valuation
is concerned, documentary proofs are available
on record. Notices are sent to the respondents/
guarantors on the addresses available in the
bank records and all debts and proceedings were
known to the respondents/ guarantor/s but due to
their negligence and over confidence, they did not
approach the bank well in time for repayment of
the loan or for further communication. Malafide of
respondent/ borrower is evident from the fact that
on 31.7.2007 itself, i.e. date of sale, he sent letter to
the bank. But he did not take interest for repayment
of loan.
8. In view of the aforesaid facts and situations,
respondent/ guarantor does not deserve any benefit
on so called technical grounds. Rather, bank whose
public money is at stake, acted in legal manner
to ensure for recovery of the debt amount. Any
dispute between respondents can be resolved on
civil or criminal independently to ensure whether the
respondent/ guarantor was really cheated or not?
But bank has better rights to realize money from the
respondents/ guarantors also.
9. Accordingly, the impugned order is set aside. Sale
dated 31.7.2007 deserve to be and is hereby affirmed.
Appeal stands allowed.”
(xii) The respondent No.4 – herein being dissatisfied with the order
passed by the Appellate Tribunal challenged the same before
the High Court by filing Writ Petition No.47721/2017. The High
Court allowed his Writ Petition and thereby set aside the order
of the DRAT.
(xiii) The High Court in its impugned order has observed thus:-
“11. The contention of the 4th respondent that Rule
9(1) is amended by way of substitution in the year
2016 and as per the amended Rules 15 days clear
notice is sufficient if the property is brought to sale on
1594 [2025] 1 S.C.R.
Supreme Court Reports
the second occasion. In the instant case, as the sale
is on the second occasion, he contends that there
was 15 days clear notice and the 1st respondent
Indian Bank had rightly issued the sale certificate.
12. Even though the Rule is amended by way of
substitution in the year 2016, it would have no
application to the facts of the present case. The
sale has taken place in the year 2007 and the law
as stood on the date of sale is to be looked into.
The amendment made is to procedural law and not
substantive law. When the amendment is brought into
procedural law, it would always be prospective. In the
case on hand, as on the date of sale 30 days clear
notice was mandatory and as such the contention
of 4 th respondent is liable to be rejected. Even
assuming that as the amended Rule would apply 15
days notice is sufficient, but the sale has not taken
place in accordance with the amended Rules. The
amended Rules would specify that the sale on the
second occasion could take place if the sale notice
is of not less than 15 days. Section 9 of the General
Clauses Act, 1897 (for short ‘the 1857 Act’) provides
for computation of prescribed time. Section 9(1) of
the 1857 Act reads as follows:-
“9. Commencement and termination of time –
(1) In any 2[Central Act ] or Regulation made
after the commencement of this Act, it shall be
sufficient, for the purpose of excluding the first
in a series of days or any other period of time,
to use the word “from”, and, for the purpose of
including the last in a series of days or any other
period of time, to use the word “to”.”
From a reading of the above provision it is clear
that if a provision prescribes time which commences
with the word “from”, the first day of period of time
prescribed shall be excluded. For calculating 15 clear
days time the date of publication is to be excluded.
The sale publication was on 16.07.2007. If the date
of publication of sale notice is excluded, then there
would be no 15 days clear notice of sale. The last
[2025] 1 S.C.R. 1595
M.S. Sanjay v. Indian Bank & Ors.
date for submitting the tender was 30.07.2007 and as
stated, the sale has taken place on 31.07.2007, that
is to say, the sale has taken place on the 15th day.
Hence, there was no clear 15 days notice of sale.
On this ground also the sale is liable to be set aside.
13. For the aforesaid reasons, the writ petition is
allowed. The order of the DRAT dated 11.04.2017
in RA(SA) 151 OF 2011 is set aside and the order
passed by the DRT on 23.01.2009 in ASA No. 232
of 2008 is confirmed.”
(xiv) Thus, it appears on plain reading of the impugned order passed
by the High Court that the High Court proceeded on the footing
that 15 clear days notice was not issued by the Bank for putting
the property in question to auction & accordingly declared the
auction to be illegal.
4. In such circumstances, referred to above, the appellant is here before
this Court with the present appeal.
5. Having heard the learned counsel appearing for the parties and having
gone through the materials on record, we hold the Respondent No.4
(Guarantor) wholly responsible for dragging the appellant – herein
to a very frivolous litigation and that too on a very technical point. It
all started in 2007. The appellant paid the entire sale consideration
towards the sale of property which was put to auction, i.e., an amount
of Rs.24,00,000/- (Approx.) on 30-11-2007 and a sale certificate also
came to be issued. Till that point of time, neither the borrower nor
the guarantor said anything in this regard. It is sometime in March,
2008 that the guarantor conceived the idea of challenging the auction
proceedings before the DRAT.
6. At this stage, it is also relevant to refer to the order passed by this
Court dated 8.11.2019 which reads thus:-
“We have heard Mr. S. N. Bhat, learned counsel appearing
for the petitioner, who has inter alia submitted that he
was successful in the auction conducted way back
on 31.07.2007 and the sale certificate was issued on
30.11.2007. Learned counsel has further own submitted
that the petitioner has been in possession of the property
in-question over the years and the petitioner had put up
construction in the said property. In this regard, learned
1596 [2025] 1 S.C.R.
Supreme Court Reports
counsel for the petitioner has drawn the attention of the
Court to approved plan (page 227 of the SLP papers) and
also the photograph depicting the building constructed
thereon (page 228 of the SLP papers). Learned counsel
also raised other contentions in support of his submissions.
Having regard to the submissions made at the Bar, issue
notice.
There shall be stay of the impugned order until further
orders from this Court.”
7. It appears from the materials on record that after the possession was
handed over to the appellant, he developed the property by putting
up further construction. For this purpose, building plans etc. were
sanctioned by the competent authority and he is said to have spent
about Rs.1.5 Crore in developing the property further.
8. When the High Court took up the Writ Petition for hearing in 2019
it went strictly by the number of days necessary for the issuance of
auction notice. The High Court should have taken a practical view
of the matter considering that the auction had attained finality way
back in the year 2007.
9. It is well settled that interference by the Writ Court for mere infraction
of any statutory provision or norms, if such infraction has not resulted
in injustice is not a matter of course. In the case of Shiv Shanker
Dal Mills v. State of Haryana reported in (1980) 2 SCC 437, the
dealers in that case had paid market fees at the increased rate of
3%, which was raised from the original 2 per cent under Haryana
Act 22 of 1977. The excess of 1 per cent over the original rate
was declared ultra vires by this Court in the case of Kewal Krishna
Puri v. State of Punjab reported in (1980) 1 SCC 416. The excess
of 1 per cent over the original rate having been declared ultra vires,
became refundable to the respective dealers from whom they were
recovered by the Market Committee concerned. The demand for
refund of the excess amounts illegally recovered from them not
having been complied with, the dealers filed Writ Petitions under
Article 32 and Article 226 of the Constitution for a direction to that
effect to the Market Committee concerned. The Market Committees
contended that although the refund of the excess collections might
be legally due to the dealers, many of them had in turn recovered
this excess percentage from the next purchasers. While disposing
of the petition and laying down guidelines, this Court held as under:
[2025] 1 S.C.R. 1597
M.S. Sanjay v. Indian Bank & Ors.
“Article 226 grants an extraordinary remedy, which is
essentially discretionary, although founded on legal injury.
It is perfectly open for the court, exercising this flexible
power, to pass such order as public interest dictates and
equity projects. Courts of equity may, and frequently do, go
much further both to give and withhold relief in furtherance
of the public interest than they are accustomed to go where
only private interests are involved. Accordingly, the granting
or withholding of relief may properly be dependent upon
considerations as of public interest.”
10. It has been rightly observed that legal formulations cannot be enforced
divorced from the realities of the fact situation of the case. While
administering law it is to be tempered with equity and if the equitable
situation demands after setting right the legal formulations not to take
it to the logical end, the High Court would be failing in its duty if it
does not notice equitable consideration and mould the final order in
exercise of its extraordinary jurisdiction. Any other approach would
render the High Court a normal Court of Appeal, which it is not. It
is a settled principle of law that the remedy under Article 226 of the
Constitution of India is discretionary in nature and in a given case,
even if some action or order challenged in the petition is found to be
illegal and invalid, the High Court while exercising its extraordinary
jurisdiction thereunder can refuse to upset it with a view to doing
substantial justice between the parties.
11. In such circumstances, referred to above, without saying anything
further in the matter, we allow this appeal and set aside the impugned
Judgment and Order passed by the High Court.
12. At one point of time, we were inclined to allow this appeal with
costs to be paid by the Respondent No.4 for instituting a frivolous
litigation, however, we have refrained ourselves from passing any
order of costs.
Result of the case: Appeal allowed.
†
Headnotes prepared by: Ankit Gyan
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