Duty of Authorized Officer to take all Precautions before Putting Secured Asset to Sell: Supreme Court 


The Supreme Court ruled that it is the Duty of authorized officer to take all the precautions before putting secured asset to sell. 


Feeling aggrieved and dissatisfied with the judgment and order passed by the High Court of Kerala at Ernakulam by which the High Court has allowed the said appeal preferred by respondent Bank and has quashed and set aside the judgment and decree passed by the Trial Court directing the Bank to pay to the plaintiff a sum of Rs.58,10,000/­ with interest at the rate of 12% per annum from the date of suit till realization, the plaintiff has preferred the appeal. 

The defendant ­ Bank secured the property in Survey No.48/1 in Tirur Taluk, Tanur Village in exercise of powers under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (‘SARFAESI Act, 2002’).


Advocate M.T. George, appearing for the appellant, submitted that therefore the High Court has materially erred in observing and holding that the suit was barred by Section 34 of the SARFAESI Act. 

It is submitted that as the suit was for damages/compensation the same cannot be barred under Section 34 of the SARFAESI Act

Advocate Kunal Tandon, appearing for the Respondent – Bank, submitted that as the property in question was put to auction on “as is where is” and “as is what is” basis and the plaintiff – auction purchaser was from the very beginning aware that the area of the land is less than what was advertised and despite that the offer was made which was accepted, the High Court has rightly set aside the judgment and decree passed by the Trial Court.


The division bench of Justice M. R. Shah and Justice Krishna Murari noted that after the Bank received the possession of the secured property in exercise of powers under the SARFAESI Act, the property in question admeasuring 54 cents was put to auction, by Auction Notice.

The court said that the plaintiff was not challenging the sale/sale certificate. The plaintiff claimed the damages/compensation with respect to the less area. Therefore, the High Court has seriously erred in holding that the suit was barred by Section 34 of the SARFAESI Act.

It was observed that at the relevant time when the property was put to auction even the Bank was not aware of the actual measurement and had gone by the document and 54 cents was put to auction.

It was further observed by the court that considering the fact that the auction notice was for 54 cents; the plaintiff submitted the offer; the plaintiff paid the actual amount of sale consideration; the sale certificate was issued for 54 cents and even the sale certificate which was registered in the year 2012 was for 54 cents, thereafter it was not open for the Bank to contend that though the Bank had handed over the possession of 34.60 cents still the sale consideration recovered would be for 54 cents.

The court said that the Bank ought to have been fair and ought to have issued the sale certificate only for 34.60 cents. This shows the conduct on the part of the bank. 

The court held that the High Court had committed an error in allowing the appeal and quashing and setting aside the judgment and decree passed by the Trial Court.

The bench restored the judgment and decree passed by the Trial Court decreeing the suit.

Case title: Mrs. Leelamma Mathew v/s M/s Indian Overseas Bank & Ors.

Citation: Civil appeal no. 7128 of 2022 

Click here to read the Order/Judgment 

Date: November 17, 2022

Leave a Reply

Your email address will not be published. Required fields are marked *