Auction Sale Confers Title – Subsequent Creditor Cannot Reclaim Sold Asset
The original owner of the flat had taken credit facilities from SI and Saraswat Bank and provided security of same flat to both the banks.
On 25.9.2004, the mortgage was created in favour of SBI and it was registered with CARSAI on 21.3.2012.
In 2012, Saraswat Bank had sanctioned loan.
On 12.4.2013, Saraswat Bank had taken symbolic possession of the flat under Section 13(4) of the SARFAESI Act. Thereafter, till 2025, no action as taken.
On 17.12.2013, SBI Had taken symbolic possession of the said flat and took physical possession on 29.11.2014.
In 2024, Saraswat Bank approached the Magistrate for possession and on the basis of order dated 17.1.2025, it had physically dispossessed the petitioners from the flat.
In 2017, in the e-auction, the petitioners auction purchasers had purchased the said flat of SBI.
They were thrown out of the said flat on 20.8.2025.
We find that the respondent – Saraswat Bank has miserably failed to explain its deep slumber with regard to taking further logical action under the provisions of the Securitisation Act, having taken symbolic possession of the subject flat as far back as on 12.04.2013. The said respondent chose to rise from its slumber after about eleven years at its own peril, because during the interregnum and ten years prior to the said respondent rising from its slumber, respondent – SBI was already granted an order under Section 14 by the Competent Magistrate, which was executed in the year 2017 and further action of conducting auction sale was undertaken, leading to the petitioners obtaining registered sale certificate and physical possession in the subject flat.
As per sub-section (6) of Section 13 of the Securitisation Act quoted hereinabove, once the secured asset i.e. the subject flat in this case stood transferred, all rights therein stood transferred in favour of the petitioners, as if the transfer had been made by the original owner of the flat i.e. the borrower. This is significant as the petitioners are the transferees and the sale certificate issued in their favour has been registered.
Sub-section (7) of the Section 13 of the Securitisation Act quoted hereinabove stipulates that a secured creditor like the respondent – SBI herein holds the amount received in pursuance of an auction sale conducted under the provisions of the Securitisation Act, in trust, to be applied in the manner provided under the said provision. Thus, even if respondent – Saraswat Bank claims a superior charge or claim over the proceeds of auction sale, it is necessarily a dispute between it and respondent – SBI, which needs to be resolved under the provisions of the Securitisation Act. The petitioners cannot be made to suffer due to the dispute between the aforesaid two banks
The dispute between two Banks for priority over the secured assets has to be resolved in terms of Section 11 of the SARFAESI Act.
Judgment dated 30.6.2026 of the High Court of Bombay in Writ Petition No.11618 of 2015 of Mariyam Rangwala and another Vs. The State of Maharashtra, Thr. Registrar, CMM and others
