Allahabad High Court Upholds SARFAESI Auction, Rejects Higher Post-Sale Payment Offer

Quick Facts

• Court: High Courts
• Proceeding: 2026:AHC-LKO:80567; Writ-C No. 1004411 of 2011; decided 5 November 2026
• Bench: Justice Irshad Ali, Lucknow Bench
• Coverage window: Catch-up: newly reported development, with the underlying order date separately identified

The decision and the dispute

Justice Irshad Ali dismissed the writ petition filed by Rama Chaurasia and affirmed the Debts Recovery Appellate Tribunal’s order dated 18 July 2011. That appellate decision had reversed relief granted by the Debts Recovery Tribunal in August 2010. The dispute concerned land mortgaged to secure a credit facility obtained by a partnership firm. The petitioner said that she was not the principal borrower, challenged the enforcement measures and asked that the bank be directed to accept money and restore the property with its documents.

Why a higher offer was insufficient

The petitioner relied on bank drafts for approximately ₹34 lakh, compared with the ₹33 lakh auction consideration. The Court held that the difference between those figures did not itself establish a right to reopen the sale. A payment offer had to satisfy the requirements governing redemption, including the applicable statutory stage and the dues and expenses payable. The judgment treated Section 13(8) in the version governing the historical transaction. It did not turn an offer exceeding the bid price into proof that all legally required amounts had been tendered at the appropriate time.

Agricultural land and actual use

The petitioner maintained that the property was agricultural and therefore excluded from the SARFAESI Act under Section 31(i). The Court explained that the exclusion could not be determined solely by revenue entries or the absence of a land-conversion order. The nature and actual use of the property had to be assessed from the evidence as a whole. The appellate tribunal had found that agricultural operations were not proved, and the petitioner did not demonstrate that this finding was perverse or otherwise legally unsustainable. The agricultural-land safeguard remains applicable where its factual requirements are established.

Notice, default and valuation objections

The Court also rejected the objections concerning alleged non-service of notices, classification of the account as a nonperforming asset and an asserted disparity between market value and auction price. A bare allegation of non-receipt was insufficient without proof of a material procedural defect. Later transactions in an account did not automatically disprove the existence of defaults justifying its classification. Similarly, an asserted market value of about ₹1.5 crore did not establish an unlawful reserve price without reliable valuation material or an identified breach of a mandatory auction safeguard.

Liability of the mortgaged property

The petitioner’s position that she had furnished security for another borrower did not, without more, make the mortgage unenforceable. The relevant questions included whether a valid security interest existed, whether a statutory exclusion applied and whether the required enforcement process had been followed. On the material before it, the Court found no established legal obligation requiring the bank to exhaust remedies against the principal borrowers before proceeding against the secured asset. This conclusion was tied to the dispute and did not excuse a secured creditor from complying with the governing statute and rules.

Limits of writ review and the result

The judgment distinguished judicial review from a further factual appeal. The petitioner had used the statutory tribunal mechanism, and the bank had pursued the statutory appeal. Interference in writ jurisdiction required a demonstrated error of the recognised kind, such as a jurisdictional defect, perversity or breach of a mandatory provision. The Court found no sufficient ground of that nature. It expressly declined to infer guilt from separate criminal allegations and did not treat later property transactions as conclusive proof about the original auction. The writ petition was dismissed, leaving the appellate order affirmed.