Auction Sale Confirmation Does Not Bar Judicial Scrutiny Of Valuation Of Reserve Price : Supreme Court
The Supreme Court has held that even after confirmation of an auction sale, courts/DRTs can still examine whether the reserve price and valuation of the secured asset were adequate and properly fixed.
Confirmation of a court/DRT auction does not make the process completely immune from judicial scrutiny on the questions of valuation and reserve price.
If there are credible allegations that the property was undervalued or that the reserve price was not fixed on a proper assessment, the matter can be remitted for re‑valuation/reconsideration, despite a confirmed sale.
The Court reiterated that the rights of a bona fide auction purchaser and the principle of finality of confirmed court sales must be respected, so sales are not lightly interfered with.
However, this finality cannot be used as a shield where there is a serious question about adequacy of valuation or improper fixation of reserve price, because the SARFAESI/recovery process must be fair, transparent and based on a proper assessment of value so that the secured asset fetches the best possible price.
Case context and precedent
The impugned High Court order had remitted the matter to the DRT only on the valuation aspect; the auction purchaser contended that once the auction was confirmed, no such interference was permissible.
The Supreme Court (judgment authored by Justice Mahadevan) rejected this, relying inter alia on the principle earlier recognised in Rajiv Kumar Jindal v. BCI Staff Welfare Association (2023) that confirmed auction sales are not beyond scrutiny when there are credible issues on valuation or reserve price.
Practical implications for SARFAESI/DRT matters
Borrowers or guarantors can still challenge the adequacy of valuation/reserve price even after confirmation, if they can show substantive grounds (e.g. gross under‑valuation, flawed valuation process).
Auction purchasers’ interests remain protected in general, but they cannot insist that confirmation alone bars all further inquiry into valuation; courts may order re‑valuation or reconsideration where justified, rather than automatically setting aside the sale.
OM SAKTHI SEKAR VERSUS V. SUKUMAR & ORS.
