Dismissed

Sudarshan Yashwant Waghmare v. Osmanabad Janata Sahakari Bank Ltd.

DRT5 Feb 2026SA/216/2025

Case brief

AI extract

What is this about?

In a securitisation application, the Debt Recovery Tribunal examined the bank's decision to cancel an auction sale after the borrower cleared dues. The tribunal found a breach of mandatory notice rules but held the sale should be cancelled due to safer banking interests, ordering the bank to refund the buyer's deposit with interest instead of granting a sale certificate.

What did the court decide?

Securitisation application dismissed; Bank directed to refund Rs.67,00,000 with 9% interest from deposit date.

Sudarshan Yashwant Waghmare versus Osmanabad Janata Sahakari… — Banking and Recovery | DRT (2026)

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Presented on : 17.03.2025 Registered on : 27.03.2025 Decided on : 05.02.2026 Duration : Y M D

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00-10-18

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IN THE DEBTS RECOVERY TRIBUNAL AT AURANGABAD SECURITISATION APPLICATION NO.216 OF 2025 WITH I.A. DIARY NO.682 OF 2025

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Sudarshan Yashwant Waghmare, Age : 37 years, Occu. Business, R/o Bhavani Road, Tuljapur, Tal Tuljapur, Dist. Dharashiv

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(Osmanabad) .. Applicant

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Versus

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The Authorized Officer, Osmanabad Janta Sahakari Bank Ltd., Osmanabad, Branch at Tuljapur

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Vasudha Vishnu Matre, Age : 62 years, Occu. Business, R/o NH-52, Vitthal Petrol Pump, Sangvi Mardi, Tuljapur, District Osmanabad

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Dilip Bhimrao Gated, Age : 50 years, Occu. Business, R/o Malubra, Tal Tuljapur, District Osmanabad

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[N. Jahagirdar] [S.A.No.216/2025] Page 1 of 13

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Nitin Bhimrao Gate, Age : 52 years, Occu. Business, R/o Malubra, Tal Tuljapur, District Osmanabad

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Ramesh Bapurao waghmare, Age : 45 years, Occu. Business, R/o Near Mudgaleshwar Temple, Sindphal, Tal Tuljapur, District Osmanabad …. Respondents

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APPEARANCE :

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Applicant : Mr. S.A. Kulkarni, Advocate

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Respondent : Mr. Sushant B. Choudhari, Advocate No.1/Bank Respondent : None Nos.2 to 5

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CORAM: DR. J.R. CHAUHAN, PRESIDING OFFICER

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JUDGMENT

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(Pronounced on : 05.02.2026)

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The applicant has filed this Securitisation Application (S.A.)

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under Section 17 (1) of the Securitisation and Reconstruction of

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Financial Assets and Enforcement of Security Interest Act, 2002

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[N. Jahagirdar] [S.A.No.216/2025] Page 2 of 13

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(hereinafter referred to as “SARFAESI Act”) against the respondent

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No.1 bank, respondent No.2 – borrower and respondent Nos.3 to 5, who are guarantors of respondent No.2 – borrower with the averments that respondent No.1 bank has published the auction sale notice on 14.01.2025 and auction was scheduled on 06.02.2025.

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The applicant participated in the said auction and declared successful highest bidder of the said auction and he immediately deposited an amounts of Rs.16,50,000/- and Rs.25,000/- before respondent No.1 bank. The applicant deposited the remaining amount of Rs.50,25,000/- on 18.02.2025 to the respondent bank by taking loan and mortgaged the gold to other bank.

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It is further averred that on 25.02.2025, respondent bank issued a letter in the name of the applicant that the borrower is ready to deposit entire amount and as per clause (5) of the Auction Notice, the bid was cancelled by the respondent bank. The applicant immediately filed reply and sought sale certificate from the bank. The applicant has challenged the letter dated 25.02.2025 for

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[N. Jahagirdar] [S.A.No.216/2025] Page 3 of 13

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cancellation of the sale on the ground that the successful bidder is entitled to obtain Certificate of Sale as per Rule 9 (2) of the Security Interest (Enforcement) Rules, 2002 (for short, “SI Rules”). The right of the borrower to redeem the secured asset was available till sale or transfer of such secured asset in accordance with the un-amended Section 13(8) of the SARFAESI Act. After the amended provision of Section 13(8) of the SARFAESI Act, the right of the borrower to redeem the secured asset stands extinguished on the date of publication of the sale notice. There was failure on the part of the bank to issue sale certificate in favour of the auction purchaser despite the fact that the entire payment has been made by the applicant. The action of cancelling the bid as per letter dated 25.02.2025 is illegal, against the Rules and thus, the applicant prayed for allowing the Securitisation Application and to quash and set aside the impugned letter dated 25.02.2025 issued by the respondent bank for cancellation of the auction and further

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prayed that the respondent bank may be directed to issue sale certificate in the name of the applicant.

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The respondent No.1 bank filed say (Exhibit-10) and contested the S.A. on the grounds that the applicant had participated in the auction proceeding by way of depositing an amount of rs.25,000/- and being the highest bidder, he has deposited an amount of Rs.16,50,000/-, which is a part of record. The applicant has also deposited remaining amount of Rs.50,25,000/- on or before 20.02.2025, which is also a matter of record. The borrower had cleared all the dues along with all the dues along with all costs, charges and expenses on 20.02.2025 and hence, respondent bank immediately communicated the same to the present applicant by issuing letter dated 25.02.2025, requesting the applicant to approach the bank so that the amount deposited by him will be refunded to him. The request of the applicant for issuing Sale Certificate was not acceptable as the respondent bank had already conveyed him vide its letter dated 25.02.2025 that the borrower has paid the entire

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dues and hence, the auction sale has been cancelled by the respondent bank. There was right of redemption prior to amendment to Section 13(8) of the SARFAESI Act, as stated above, but the right of redemption is still in existence till the last step of confirmation of sale and in the present matter, the Sale Certificate was not issued. Hence, the present applicant is having no statutory right to seek direction for issuance of Sale Certificate. The applicant was requested to accept an amount of Rs.67,00,000/by issuing letter dated 25.02.2025, but he has not approached the bank for receiving the said amount. The respondent bank has denied all other allegations of the S.A. and dismissal of the same was prayed for.

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The applicant has produced on record following documents as

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per list of documents (Exhibit-4).

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Sr. No.	Description of document	Annexure
1	True copy of Auction Sale Notice dated 14.01.2025	A-1
2	True copies of receipts of deposit of bid	A-2 (Colly)

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	amount
3	True copy of letter issued by the respondent no.1 bank	A-3
4	True copy of receipt of deposit amount on 18.02.2025	A-4
5	True copy of letter dated 25.02.2025 issued by the bank	A-5
6	True copy of letter issued by the applicant on 27.02.2025	A-6

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I have heard the learned counsel for the parties and gone through the material on record thoroughly and carefully. My findings along with reasons are as under.

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Before proceeding further, some facts are necessary to be recorded here that the auction sale notice (Annexure-A-1) was issued on 14.01.2025. The sale was conducted on 06.02.2025. The applicant was successful bidder and he paid 25% amount on 06.02.2025. The remaining sale amount was paid on 18.02.2025. As per auction sale notice (Annexure-A-1), the reserve price was Rs.66,99,680/-. The sale was held for Rs.67,00,000/-. There was only single bidder, who participated in the auction sale.

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The respondent No.2 borrower adjusted the entire loan amount by paying more than Rs.96,00,000/- on 20.02.2025 and closed the loan account. Thereafter, respondent No.1 bank issued letter dated 25.02.2025, whereby the sale dated 06.02.2025 was cancelled and the applicant/auction purchaser was directed to approach the bank for refund of the amount of Rs.67,00,000/-. Now, the present applicant/auction purchaser has challenged the cancellation of sale conducted by the bank vide letter dated 25.02.2025 (Annexure-A-5). It was submitted on behalf of the applicant/auction purchaser that the applicant/auction purchaser was the highest bidder and he paid the entire sale price of Rs.67,00,000/-. The bank did not issue Sale Certificate to the applicant, but cancelled the sale vide letter dated 25.02.2025. It was further submitted that the respondent No.1 bank was not legally competent to cancel the sale as the borrower’s right to redeem the secured asset was extinguished on the date of publication of sale

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notice and reliance was placed on the judgment of the Hon’ble

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Supreme Court of India delivered on 22.09.2025 in Civil Appeal No.12174/2025 in the matter of M. Rajendran & Ors. Vs. M/s KPK Oils and Priotiens India Pvt. Ltd. & Ors.

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It was submitted on behalf of respondent No.1 bank that the borrower had adjusted the entire loan amount on 20.02.2025, including all costs and expenses and further, there were legal defects in sale proceedings and keeping in view these facts, the bank had accepted the entire closure amount from the borrower and cancelled the sale and conveyed the same to the applicant vide letter dated 25.02.2025. It was submitted that even before issuing the Sale Certificate, the sale in favour of the applicant was withdrawn and cancelled, but the applicant did not turn up to seek refund of the money deposited by him, as conveyed to him vide letter dated 25.02.2025 and now, the applicant is entitled only for refund of the deposited sale money.

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If the sale proceedings are appreciated in totality, I find that the respondent No.1 bank has not conducted the sale on 06.02.2025

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as per the provisions of the SARFAESI Act and the Rules made thereunder. The sale notice (Annexure-A-1) was issued on 14.01.2025 and the sale was conducted on 06.02.2025. Admittedly it was first sale. As per Sub-Rule (1) of Rule 9 of the SI Rules, no sale of immovable property under these Rules, in first instance, shall take place before the expiry of 30 days from the date on which the notice of sale is published in the newspaper, as referred in Proviso to Sub-Rule (6) of Rule 8 or notice on sale had been served to the borrower. Sub-Rule (6) of Rule 8 says that the Authorised Officer shall serve to the borrower a notice of 30 days for sale of the immovable secured asset. Admittedly, the sale notice (Annexure-A-1) was issued on 14.01.2025 and the sale was conducted on 06.02.2025, meaning thereby that there was no effective notice of 30 days even from the date of publication of sale notice dated 14.01.2025 (Annexure-A-1), what to talk of the service to the borrower. Therefore, the sale dated 06.02.2025 conducted by the respondent bank is not sustainable in the eye of law.

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It may be noted here that as per the auction sale notice dated 14.01.2025, the loan liability was of Rs.96,41,000/- and the reserve price of the secured asset was Rs.66,99,680/-. The sale was conducted for Rs.67,00,000/-, almost at a reserve price and there was single bidder. Even the respondent bank could not sell out the secured asset below the reserve price. But in this case, there was a single bidder and if it would have been a competitive bid of more than one bidder, the secured asset could have fetched more auction price. Further, as per clause (5) of the auction sale notice dated 14.01.2025, the Authorised Officer reserved the right to postpone or cancel the auction and sale. Hence, keeping in view all these facts, the bank has rightly withdrawn and cancelled the auction sale and conveyed the same to the applicant vide their letter dated 25.02.2025 (Annexure-A-5) as there was fundamental breach of mandatory requirement of notice of 30 days. In the set of these circumstances, the law laid down in the judgment in the case of M.

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Rajendran & Ors. (supra), relied upon by the learned counsel for

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the applicant, has no bearing on the facts of the present case.

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Having regard to the aforesaid discussion, I hold that the applicant/auction purchaser is entitled to seek refund of the amount of Rs.67,00,000/- deposited by him along with interest @ 9% per annum from the date of deposit till realization and present Securitisation Application is liable to be dismissed.

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In the result, I pass the following order:

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ORDER

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(A) Securitisation Application No.216 of 2025, filed by the applicant is hereby dismissed with no order as to costs.

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(B) The respondent No.1 bank is directed to refund the amount of

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Rs.67,00,000/(Rupees Sixty Seven Lakhs) to the applicant/auction purchaser, along with interest @ 9% per annum from the date of deposit till payment, within fifteen days from the date of this order.

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