Lucky Footwear Components Vs Authorized Officer (Madras High Court)
The Madras High Court dismissed the petition filed by Lucky Footwear Components challenging the auction of its mortgaged property conducted by the respondent bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The Court held that the auction was conducted in accordance with law and that the valuation report relied upon by the bank, prepared by an approved valuer registered under Section 34AB of the Wealth-Tax Act, 1957, was valid and acceptable.
Background
The petitioners, borrowers under a loan facility from the respondent bank, defaulted on repayment, leading to initiation of proceedings under the SARFAESI Act. The bank issued notice under Section 13(2), followed by taking symbolic possession and conducting a sale of the secured asset through auction under Section 13(4). The petitioners challenged these measures by filing a Securitisation Application (SA) before the Debts Recovery Tribunal (DRT), which was dismissed. Their appeal before the Debt Recovery Appellate Tribunal (DRAT) also failed, prompting the present petition under Article 227 of the Constitution of India against the DRAT’s order dated 26 September 2025.
Petitioners’ Contentions
The petitioners’ counsel argued that the sale notice dated 25 July 2022 was defective and invalid for multiple reasons. First, it allegedly violated Rule 9 of the Security Interest (Enforcement) Rules, 2002, by not providing 15 clear days’ notice between publication and auction. Second, the sale notice failed to properly describe the property, as the superstructure was not clearly mentioned. Third, the valuation report forming the basis of the reserve price was prepared more than a year earlier and contravened the respondent bank’s Non-Performing Asset (NPA) Management Policy 2022–23.
