Borrower’s Challenge to SARFAESI Auction

 Borrower’s Challenge to SARFAESI Auction

Can a Borrower Challenge a SARFAESI Auction?

Yes—but not merely because the secured asset has been sold.

A borrower can challenge a SARFAESI auction before the Debts Recovery Tribunal (DRT) if there is a violation of mandatory legal procedures, improper valuation, fraud, collusion, lack of proper notice, or any material irregularity causing prejudice.

Key grounds include:

✅ Non-compliance with Sections 13(2), 13(3A), and 13(4)

✅ Violation of Rules 8 & 9 of the Security Interest (Enforcement) Rules, 2002

✅ Undervaluation of the secured asset

✅ Fraud, collusion, or bid-rigging

✅ Sale despite a subsisting stay order

✅ Unlawful possession proceedings

✅ Sale despite settlement or payment of dues

However, mere dissatisfaction with the auction price or inability to arrange funds is generally not sufficient to set aside an auction. 

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(Courtesy - Pranali Parmar, Link LinkedIn Post)

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