Confirmed Sale Can Only Be Set Aside for Fraud, Collusion, Inadequate Pricing, or Underbidding, Not Mere Irregularities : Supreme Court
In Celir LLP v. Ms. Sumati Prasad Bafna & Others, the Supreme Court clarified the circumstances under which a confirmed property sale under the SARFAESI Act can be set aside. A bench of Justices JB Pardiwala and Manoj Misra held that procedural irregularities or rule deviations are insufficient grounds to nullify a confirmed sale unless they involve fundamental errors such as fraud, collusion, underbidding, or inadequate pricing.
The Court emphasized that confirmed sales should not be lightly interfered with unless the irregularities strike at the core of the sale process. Challenges to confirmed sales should not be entertained if they could have been raised earlier or if the irregularities did not result in substantial injury.
Citing V.S. Palanivel v. P. Sriram, the Court reiterated that auctions should only be set aside for serious flaws, such as fraud or grave procedural lapses that undermine the process. In the present case, the Court found no evidence of substantial prejudice or fundamental illegality in the auction proceedings and rejected the challenge, noting that the only issue raised—failure to observe the 15-day statutory notice period—did not affect the borrower’s ability to exercise its rights.