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The Supreme Court through judgment dated 09.06.2026 in the matter of M. R. Vasumathi v. The Authorized Officer & Ors.1 , held that non-compliance with the mandatory timelines prescribed under Rule 9 of the Security Interest (Enforcement) Rules, 2002 (“SARFAESI Rules”) goes to the root of the validity of sale under SARFAESI Act.
The dispute arose out of recovery proceedings initiated by Indian Bank as Secured Creditor, against a borrower who had availed financial assistance in 1984, for which G. Ramanujam (“Guarantor”) had mortgaged his immovable property. Following the borrower’s default, a mortgage decree was passed in favour of the Secured Creditor in 1997. After the death of the Guarantor in 2001 and unsuccessful settlement attempts with his legal heirs, the Secured Creditor initiated proceedings under the SARFAESI Act in 2009, issued a sale notice dated 03.02.2010, and auctioned the secured asset on 11.03.2010. The auction purchaser emerged as the successful bidder for a consideration and a sale certificate was subsequently issued on 10.04.2010. The Guarantor’s legal heirs challenged the auction sale, inter alia, on the ground that while 25% of the bid amount had been deposited at the time of sale, the balance 75% was paid only on 31.03.2010, beyond the period prescribed under Rule 9(4) of the SARFAESI Rules, and in the absence of any written agreement extending the time for payment the sale is not valid.
The Supreme Court held that Rule 9 of SARFAESI Rules is neither ornamental nor directory and are mandatory in nature. A conjoint reading of the relevant sub-rules of Rule 9 underscore the mandatory character of these provisions, particularly the requirement of balance deposit under sub-rule (4), which is integral to the sanctity and credibility of auction mechanism. Any deviation in absence of legally sustainable justification, would render the process vitiated.
Footnote
1. Civil Appeal No. 1606 of 2026.
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