SARFAESI | Confirmed Sale Can't Be Set Aside For Mere Irregularities Except Fraud, Collusion, Inadequate Pricing, Under-bidding Etc

The Supreme Court recently explained the circumstances under which a sale of property by auction or other means under the SARFAESI Act can be set-aside after its confirmation. The Court held that mere procedural irregularities or deviation from rules are not grounds to set aside a confirmed sale unless such errors are fundamental in nature, such as fraud, collusion, inadequate pricing or underbidding. A bench comprising Justice JB Pardiwala and Justice Manoj Misra explained : "Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set-aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding. The Supreme Court advised Courts to not entertain challenges to confirmed sale which could have been raised before the confirmation of the sale or where the irregularities do not result in substantial injury. Palanivel v. P. Sriram which held that unless there are some serious flaws in the conduct of the auction as for example perpetration of a fraud/collusion, grave irregularities that go to the root of such an auction, courts must ordinarily refrain from setting them aside keeping in mind the domino effect such an order would have.