2026 INSC 909 1

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 9228 –9231 OF 2013

Lakshmi Mohan (Dead)

Through LRs. & Anr. … Appellants

Versus

M/s. Airtech Projects Engineers

Pvt. Ltd. & Anr. … Respondents

WITH

CIVIL APPEAL NO(S). OF 2026

(@ SLP (C) NO(S). 1441-1446 OF 2014)

M/s. Airtech Projects Engineers

Pvt. Ltd. ... Appellant

Versus

Mrs. Lakshmi Mohan (Dead)

Through LRs. & Ors. … Respondents

AND

CIVIL APPEAL NO. OF 2026

(@ SLP (C) NO. OF 2026)

(@ Diary No. 31322 OF 2018)

The Chief Manager and

Authorized Officer ...Appellant

Versus

M/s Airtech Projects Engineers

Pvt. Ltd. & Ors. …Respondents

2

J U D G M E N T

ALOK ARADHE, J.

1. Delay condoned.

2. Leave granted in both the Special Leave Petitions.

3. These appeals impugn the common judgment dated

22.03.2013, rendered by the High Court

1

in a batch of

Writ Petitions

2. Mrs. Lakshmi Mohan , the auction-

purchaser no. 1, since deceased and now represented by

her legal representatives including her son Mr. M.

Premkumar, auction-purchaser no. 2, preferred Civil

Appeal Nos. 9228-9231 of 2013. M/s. Airtech Projects

Engineers Pvt. Ltd. (the borrower) has preferred Civil

Appeals @ Special Leave Petition (Civil) Nos. 1441-1446

of 2014, while the United Bank of India, which merged

with Punjab National Bank in 2020 (the Bank) has

approached this Court by way of Civil Appeal @ Special

Leave Petition @ Diary No. 31322 of 2018. As a common

question touching the validity of the bid submitted by

the auction purchasers arises for consideration in all

1

The High Court of Judicature at Madras

2

Writ Petition Nos. 24241-24244, 32610 and 32611 of 2012

3

these appeals, the same were heard together and are

being decided by this common judgment.

FACTUAL MATRIX

4. The facts giving rise to these appeals, stated in brief, are

as follows. The borrower availed of a cash-credit facility

from the Bank. The borrower failed to repay the loan, as

on 31.07.2008, the dues in the account were

Rs.88,52,741/- (Rupees Eighty-Eight Lakhs Fifty-Two

Thousand Seven Hundred Forty -One only) against the

sanctioned limit of Rs.85 lakhs. Its account was thus,

declared as a Non-Performing Asset (NPA) by the Bank.

On 01.08.2008, the Bank issued a demand notice under

Section 13(2) of the Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest

Act, 2002 (‘the Act’) calling upon the borrower to pay a

sum of Rs.88,52,741/- (Rupees Eighty-Eight Lakhs

Fifty-Two Thousand Seven Hundred Forty -One only)

within sixty days.

5. The secured asset, namely land measuring an

approximate of 4900 square feet with building thereon

consisting of ground floor and first floor bearing Door

4

Number 32, McNichols Road, Chetpet, Chennai , was

valued on 14.10.2008, for purposes of proceeding under

the Act. On 12.11.2008, the Bank issued a possession-

cum-sale notice, fixing 04.01.2009, a Sunday, as the

date of sale. Thereafter, a corrigendum subsequently

substituted 05.01.2009 as the revised date.

6. The borrower assailed the notice by way of a

securitization application (SA) under the Act before the

Debts Recovery Tribunal-II, Chennai (DRT). By an order

dated, 29.12.2008, the DRT allowed the SA and quashed

the possession-cum-sale notice on the ground that the

sale was fixed on a Sunday, while granting the Bank

liberty to issue a fresh notice. Aggrieved, the Bank filed

CRP No. 501 of 2009, contending that the order has been

passed without notice to it. The aforesaid order dated

29.12.2008 was set aside by the High Court on

21.04.2009 and the matter was remitted to the DRT.

7. On 18.03.2009, the Bank issued a fresh possession-

cum-sale notice, fixing 24.04.2009 as the date of

auction. Clause 7 thereof required intending bidders to

submit their offers on or before 23.04.2009 ,

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accompanied by a demand draft or pay order in favour

of the Bank towards earnest money deposit (EMD) of

Rs.21,50,000/- (Rupees Twenty-One Lakhs Fifty

Thousand only), and stipulated that an offer

unaccompanied by the EMD would be rejected. The

borrower challenged this notice as well, by way of a fresh

SA before the DRT. DRT, by order dated 21.04.2009

granted a conditional stay, however, permitted the Bank

to proceed with the auction with a direction not to

confirm the same till 21.05.2009.

8. The auction-purchasers submitted their bid on

23.04.2009 along with EMD of Rs.21,15,000/- (Rupees

Twenty-One Lakhs Fifteen Thousand only), a shortfall of

Rs.35,000/- (Rupees Thirty-Five Thousand only) from

the stipulated sum. At the auction held on 24.04.2009,

the auction purchasers’ offer of Rs.2,17,40,000/-

(Rupees Two Crores Seventeen Lakhs Forty Thousand

only) was the highest, and they were declared the

successful bidders.

9. On the same day, the auction-purchasers deposited a

further sum of Rs.33,20,000/- (Rupees Thirty Three

6

Lakhs Twenty Thousand only), bringing the total deposit

to Rs.54,35,000/- (Rupees Fifty Four Lakhs Thirty-Five

Thousand only), constituting twenty-five percent (25%)

of the bid amount. By order dated 01.10.2009, the DRT

dismissed the borrower’s S.A., holding that the notice

under Section 13(4) dated 12.11.2008 and possession-

cum-sale notice dated 18.03.2009 had been issued in

due compliance with the Act. The auction-purchasers

thereafter deposited the balance sale consideration on

05.10.2009. A sale certificate was issued in their favour

on 10.10.2009 and the same was registered on

15.10.2009.

10. The borrower carried the order dated 01.10.2009 in

appeal before the Debts Recovery Appellate Tribunal

(DRAT), which, by order dated 20.06.2011, held that the

auction had not been conducted in compliance with Rule

8 (5) of the Security Interest (Enforcement) Rules, 2002

(the Rules), and was vitiated by non-compliance with the

express terms of the auction notice. The appeal was

accordingly allowed, and the Bank was directed to

restore the possession of secured asset to the borrower.

7

11. Both the auction-purchasers and the Bank assailed this

order before the High Court in separate writ petitions.

By order dated 16.08.2011, the High Court, set aside the

order of the DRAT and remitted the matter, on the

ground that the memorandum of appeal before the

DRAT had not raised any ground touching non-

compliance with Rule 8(5) of the Rules or breach of the

terms of the auction notice, thereby depriving the

auction-purchasers of an opportunity to meet the case

on which the DRAT’s order rested. On remand, t he

DRAT, by order dated 31.08.2012, reaffirmed the

findings recorded in its earlier order dated 20.06.2011.

12. This order also was carried before the High Court in

further writ petitions, by the auction-purchasers and

the Bank, which came to be dismissed by the impugned

common judgment dated 22.03.2013. Hence, these

appeals.

SUBMISSIONS

13. Mr. Niranjan Reddy, learned senior counsel appearing

for the auction-purchasers submitted that deposit of

earnest money along with the bid is neither a statutorily

8

prescribed condition nor a mandatory one. He further

submitted that the auction-purchasers had, in

compliance with Rule 9(3) of the Rules, deposited 25%

of the amount of sale price, and that the borrower had

suffered no prejudice on this account. He pointed out

that the shortfall in the EMD had not even been urged

by the borrower before the DRT, that there were only two

bidders in the fray, and that the other bidder also had

committed an identical shortfall of Rs. 35,000/-. In

these circumstances, he submitted, the irregularity was

a minor technical one incapable of vitiating the auction.

14. Mr. Dhruv Mehta, learned senior counsel for the Bank

submitted that the acceptance of a non-compliant bid

could, at the highest, be questioned by a rival bidder,

and since the only other bidder was similarly placed, no

such challenge could arise. He submitted further that

the auction-purchasers had deposited twenty-five

percent of the bid amount on the very date of the

auction, occasioning no prejudice to the borrower; that

the condition requiring deposit of earnest money had

been incorporated for the Bank’s benefit; and that the

9

excess sale proceed, though inadvertently retained in a

non-interest bearing account, were liable to be refunded,

and the Bank remained ready and willing to do so.

15. Mr. Jayanth Bhushan, learned senior counsel for the

borrower submitted that in the absence of the requisite

EMD, no valid bid could be said to exist at all, the

deposit being a mandatory and essential condition of

eligibility from which the Bank was not competent to

deviate. He submitted further that the balance sale

consideration, required to be paid within 15 days of the

sale, had in fact been paid after a delay of nearly five

months. In support of the aforesaid submissions,

reliance has been placed on the decisions of this Court

3

.

16. We have considered the rival submissions and have

perused the record.

ANALYSIS

17. It would be apposite, at the outset, to extract Clause 7

of the possession-cum-sale notice dated 18.03.2009: -

“7. The interested purchaser

bidders may send their offers for

the properties described herein

3

Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622; Ramana

Dayaram Shetty v. The International Airport Authority of India, (1979) 3 SCC 489 and E.

Muthurathinasabathy and Ors. v. Sri International and Ors., 2026 SCC OnLine SC 508.

10

above in a sealed cover on or before

23.04.2009 along with Demand

Draft / Pay order drawn in favour

of United Bank of India payable at

Chennai towards earnest money as

mentioned above (Rs.21,50,000/-)

to the Auhorised Officer & Chief

Manager, United Bank of India, T.

Nagar Branch between 9.00 am

and 4.00 pm for property described

above for which they may contact

the undersigned at the above

address. The offer without earnest

money deposit will be rejected.

There will be an Inter Se bidding

amongst the eligible bidders on the

aforesaid date of sale. The

undersigned, reserves the right to

accept or reject any or all the offers

or adjourn postpone the sale

without assigning any reason

thereof. If the offer of the highest

bidder is accepted the said highest

bidder purchaser has to deposit

immediately 25% of the sale price

adjusting the amount of EMD

already deposited and if he falls to

deposit the same, the amount

deposited towards the earnest

money shall be forfeited and the

property shall be sold again. The

balance amount of purchase price

shall be paid within 15 days of date

of the confirmation of sale or within

the extended period as allowed by

the undersigned in writing and in

default of payment within the

period, the deposit and earnest

money shall be forfeited and the

properties shall be resold. Any

other statutory dues/rates/taxes/

stamp duty/registration

11

fee/miscellaneous

expenses/Government dues of any

authority etc. shall have to be

borne by the successful highest

bidder purchaser(s) exclusively and

separately in the event of non

happening of sale on the date and

time mentioned above, the bank

reserves its right for effecting sale of

the above properties/ assets by

private treaty.”

18. Rule 8 of the Rules deals with sale of immovable secured

assets. Rule 8(7) which existed at the relevant time

provides that every notice of sale shall be affixed on

conspicuous part of the immovable property and may, if

the authorized officer deems it fit, put on the web-site of

the secured creditor on the Internet. Rule 8(6) as is

applicable to the facts of this case provides for service of

notice to the borrower for sale of immovable secured

assets. The proviso to this Rule provides that if the sale

of the secured asset is being effected by either inviting

tenders from the public or by holding public auction, the

secured creditor shall cause a public notice to be

published in two leading newspapers; which shall

include inter alia, the deposit of earnest money as may

be stipulated by the secured creditor. Rule 9 of the Rules

12

deals with time of sale, issue of sale certificate and

delivery of possession etc. Rule 9(3), 9(4) and 9(5) of the

Rules as applicable to the facts of the case in hand read

as under:

“9(3) On every sale of immovable

property, the purchaser shall

immediately pay a deposit of twenty-

five per cent of the amount of the sale

price, to the authorised officer

conducting the sale and in default of

such deposit, the property shall

forthwith be sold again.

9(4) The balance amount of purchase

price payable shall be paid by the

purchaser to the authorised officer on

or before the fifteenth day of

confirmation of sale of the immovable

property or such extended period as

may be agreed upon in writing

between the parties.

9(5) In default of payment within the

period mentioned in sub-rule (4), the

deposit shall be forfeited and the

property shall be resold and the

defaulting purchaser shall forfeit all

claims to the property or to any part

of the sum for which it may be

subsequent sold.”

19. It is well-settled in law that requirements in a tender

notice can be classified into following two categories: (i)

those which lay down the essential condition of

eligibility; and (ii) the others which are merely ancillary

13

or subsidiary with the main object to be achieved by the

condition. In the first case, the authorities issuing the

tender may be required to enforce the condition rigidly

whereas in other cases, it may be open to the authority

to deviate from it and not to insist upon strict literal

compliance of the condition

4

. It is an equally established

legal proposition that any non-conformity with or

relaxation in the prescribed standard allowed in case of

any tenderer, if not resulting in substantial prejudice or

injustice to any of the parties or to public interest in

general would not be bad

5

. It is equally well-settled in

law that where upon due consideration of the tender

document submitted by all the tenderers on their own

merits, if it is ultimately found that successful bidders

had in fact substantially complied with the purport and

4

Poddar Steel Corporation v. Ganesh Engineering Works and Ors., (1991) 3 SCC 273; Om

Prakash Sharma v. Ramesh Chand Prashar & Ors., (2016) 12 SCC 632; Central Coalfields Ltd.

& Anr. v. SLL-SML (Joint Venture Consortium) & Ors., (2016) 8 SCC 622; Bakshi Security &

Personnel Services Pvt. Ltd. v. Devkishan Computed Pvt. Ltd. & Ors., (2016) 8 SCC 446 and

Vidarbha Irrigation Development Corporation & Ors. v. Anoj Kumar Agarwala & Ors., (2020) 17

SCC 577

5

G.J. Fernandez v. State of Karnataka & Ors., (1990) 2 SCC 488; Indian Railway Catering and

Tourism Corporation Ltd. & Anr. v. Doshion Veolia Water Solutions Pvt. Ltd. & Ors., (2010) 13

SCC 364 and National High Speed Rail Corporation Ltd. v. Monte Carlo Ltd. & Anr. (2022) 6 SCC

401

14

object for which the essential conditions were laid down,

the same may not ordinarily be interfered with

6

.

20. In the backdrop of aforesaid well-settled principles, we

may advert to the facts of the case in hand. Clause 7 of

possession-cum-sale notice dated 18.03.2009 which

requires the bidders to deposit EMD amount of

Rs.21,50,000/- is non-statutory and has been

incorporated in the possession-cum-sale notice with an

object to filter out non-serious bidders. In the instant

case, in response to the aforesaid notice two bidders had

submitted their bids and both of them had deposited a

sum of Rs.21,15,000/- (Rupees Twenty-One Lakhs

Fifteen Thousand only) instead of Rs.21,50,000/ -

(Rupees Twenty-One Lakhs Fifty Thousand only). The

Bank entertained and considered both the bids.

21. The bid of the auction-purchasers which was submitted

on 23.04.2009 for a sum of Rs.2,17,40,000/- (Rupees

Two Crores Seventeen Lakhs Forty Thousand only) was

found to be the highest. The auction-purchasers in

accordance with Rule 9(3) of the Rules deposited 25% of

6

B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. & Ors., (2006) 11 SCC 548 and National High

Speed Rail Corporation Ltd. v. Monte Carlo Ltd. & Anr. (2022) 6 SCC 401

15

the amount of bid price inclusive of EMD on the next day

i.e., 24.04.2009. The auction-purchasers were

statutorily obliged to comply with the 25% mark of the

sale price on the same day which was made good.

Therefore, any anterior shortfall in deposit of EMD pales

into insignificance, the moment the 25% of the sale price

was deposited. Thus, the non-conformity of the bid of

the auction-purchasers insofar as it pertains to deposit

of EMD has not resulted in any prejudice or injustice to

the other bidder much less to the borrower. Therefore,

the shortfall in deposit of EMD as required by Clause 7

of possession-cum-sale notice dated 18.03.2009 does

not affect the validity of the bid of the auction -

purchasers in any manner.

22. For the reason stated supra, the contention of the

borrower that the deposit of EMD is an essential

eligibility condition does not deserve acceptance. Insofar

as the submission of the borrower that the balance sale

consideration was paid after a period of 15 days, is

concerned, suffice it to say that the aforesaid plea was

neither taken before the DRT nor before the DRAT.

16

Clause 7 explicitly states that the balance amount shall

be paid within fifteen days or within the extended period

as allowed by the undersigned i.e., the Bank. It is also

noteworthy that the borrower himself raised pleas to

forbear the auction-purchasers from depositing the

balance sale consideration. One of the auction-

purchasers, namely, Mr. M. Premkumar, in his affidavit

dated 02.09.2012 in W.P. Nos.24241-24244 of 2012,

stated that when they approached the Bank to pay the

balance of seventy-five percent (75%), the Bank issued a

letter dated 04.06.2009 stating that in view of the

pendency of the court proceedings the date for the

balance payment will be intimated in time. Thus, it can

be safely inferred that the Bank agreed to extend the

time for deposit of the balance sale consideration. It is

pertinent to note that borrower’s appeals were dismissed

by the Tribunal on 01.10.2009 and immediately

thereafter the auction-purchasers paid the balance

amount on 05.10.2009 itself. The aforesaid contention,

therefore, does not deserve acceptance.

17

23. Admittedly, after appropriation of sale proceeds, the

Bank was left with an excess amount of

Rs.1,33,94,054/- (Rupees One Crore Thirty -Three

Lakhs Ninety-Four Thousand Fifty-Four only). The Bank

had offered the aforesaid amount to the borrower by way

of a demand draft which it declined to accept

presumably on account of pending litigation. The Bank

ought to have kept the aforesaid balance amount in an

interest-bearing account. However, the Bank has failed

to do so. For this omission on the part of the Bank, the

borrower cannot be penalized. The borrower is entitled

to refund of the balance sale consideration along with

interest.

CONCLUSION

24. For the aforementioned reasons , the impugned

judgment dated 22.03.2013 passed in Writ Petition Nos.

24241-24244 of 2012, Writ Petition No. 32610 of 2012

and Writ Petition No. 32611 of 2012 as well as the order

dated 20.06.2011 passed by the DRAT are quashed and

set aside. The Bank is directed to refund the amount of

Rs.1,33,94,054/- (Rupees One Crore Thirty -Three

18

Lakhs Ninety-Four Thousand Fifty-Four only) along with

interest at the rate of 7% per annum from 23.03.2010

i.e. the date when the surplus amount was kept in a

non-interest bearing account till the payment is made to

the borrower.

25. In the result, the Civil Appeal Nos. 9228-9231 of 2013

and Civil Appeal @ Special Leave Petition @ Diary

No. 31322 of 2018 are allowed whereas Civil Appeals @

Special Leave Petition (Civil) Nos. 1441-1446 of 2014 are

disposed of.

26. There shall be no order as to costs.

……………..……………………………….J.

[PAMIDIGHANTAM SRI NARASIMHA]

………………………………………………J.

[ALOK ARADHE]

NEW DELHI;

AUGUST 21, 2026.