Auction Under SARFAESI Act Valid When Property Valued By Valuer Is Registered U/S 34AB Of Wealth-Tax Act: Madras High Court

The Madras High Court held that an auction under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) Act, 1957, is valid when the property is valued by a valuer and registered under Section 34AB of the Wealth-Tax Act. Section 34AB of the Wealth-Tax Act, 1957, provides the process for individuals to become officially recognised valuers under the Act. Chief Justice Mohan Shrivastava and G. Arul Murugan opined that out of the two valuation reports placed before the Tribunal, if the Tribunal has accepted the valuation made by approved valuer, registered under the provision of Wealth-Tax Act, it cannot be said to be patently illegal or perverse so as to interfere in the exercise of supervisory jurisdiction under Article 227 of the Constitution of India. In this case, the petitioners/borrowers took a loan from the respondent/bank by mortgaging property as security. Default on the part of the borrowers to repay the loan resulted in the initiation of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short 'SARFAESI Act') against the petitioners. The mortgaged property was sold through auction by the bank. The petitioner challenged the proceedings on the ground that the valuation of the property for auction is not correct and that the sale price is lower than the market value. The bank argued that the bank got the valuation of the property made by an approved valuer duly registered under Section 34AB of the Wealth-Tax Act, 1957, whereas the petitioners' case relies upon the valuation made by a licensed building surveyor, who is not an approved valuer and therefore, only on this ground, it cannot be said that the building was under-valued. The petitioners' case is that, according to their own valuer, the property's value is much higher. The petitioners rely upon the report of the approved surveyor, who does not appear to be an approved valuer registered under Section 34AB of the Wealth-Tax Act. Regarding the correctness of the valuation of the property, the bench stated that the present is not a case where the bank got the property valued by one who was not authorised or was not having sufficient experience as required under the law to undertake the valuation of the property. It is not even a case that while valuing the property, the superstructure/building of the property has been ignored. Regarding the objection of the petitioners/borrowers to the proceedings drawn by the bank, including the measures taken under Section 13(4) of the SARFAESI Act, on the ground that their objection made to the notice under Section 13(2) was not decided, the bench opined that the contents of the letter are more in the nature of seeking some more indulgence rather than raising any substantial objection. The petitioners rely upon the report of the approved surveyor, who does not appear to be an approved valuer registered under Section 34AB of the Wealth-Tax Act, added the bench. In view of the above, the bench dismissed the petition. Case Title: M/s. Lucky Footwear Components v. The Authorized Officer, Indian BankCitation: 2025 LiveLaw (Mad) 409 Case Number: C.R.P.No.5237 of 2025 Counsel for Petitioner/Borrower: N. Muralikumaran Counsel for Respondent/Department: T. Sundar Rajan and S. Charuhasan & Mr. S. Vanithalakshmi Click Here To Read/Download The Order

Auction Under SARFAESI Act Valid When Property Valued By Valuer Is Registered U/S 34AB Of Wealth-Tax Act: Madras High Court

Mehak Dhiman

Tags