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M.S. Sanjay v. Indian Bank & Ors.

Civil Appeal · 2025 INSC 177Decided 29 Jan 2025
Civil Appeal No. 1188/2025 (@ SLP (C) No. 26695/2019)
Justice J.B. Pardiwala · Justice R. Mahadevan

Background

A borrower defaulted on a loan from Indian Bank, which auctioned the mortgaged property under the SARFAESI Act in 2007. The appellant was the successful bidder, paid roughly Rs. 24 lakh, received a sale certificate, and went on to construct a building on the property (spending about Rs. 1.5 crore). Only in 2008 did the guarantor challenge the auction as procedurally defective, arguing the bank hadn't given the required clear-days' notice before the sale. A tribunal initially sided with the guarantor, an appellate tribunal reversed that in the bank's favour, but the High Court in 2019 sided again with the guarantor and cancelled the sale, over a decade after it occurred.

Decision Breakdown

The Supreme Court restored the auction sale and set aside the High Court's order. It found that the High Court had mechanically applied the strict notice-period rule without weighing the practical realities: the auction had gone unchallenged for months, had attained finality years earlier, and the innocent auction-purchaser had since built substantial construction on the property in good faith. Relying on precedent that a High Court's writ jurisdiction under Article 226 is discretionary and equitable, not a mechanical review, the Court held that even a genuine procedural violation does not have to result in an order being struck down if doing so would cause greater injustice than it cures. The Court noted it could have imposed costs on the guarantor for pursuing what it called frivolous, purely technical litigation, but chose not to.

Lesson Learnt

Courts exercising writ jurisdiction are not bound to cancel an official sale or action just because a technical procedural lapse occurred years earlier, especially where an innocent third party has relied on that action in good faith and reopening it now would cause real hardship disproportionate to the original defect.

Official source (sci.gov.in)View Judgment (PDF)

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