SARFAESI Auction

To challenge an auction sale on grounds of undervaluation:

• Market value must be established by credible, independent evidence—valuation reports from government-approved valuers, recent sale transactions of similar properties, or reliable real estate indices.

• Circle rate (the government-notified minimum) is not definitive evidence of market value but provides a minimum benchmark. The market rate, determined by actual transactions and market demand, often exceeds the circle rate substantially.

• Courts place greater weight on verifiable, independent valuations over circle rates, especially if there is a significant difference as in your scenario (bank auction at ₹37.34 lakh, circle rate ~₹30 lakh, asserted actual market value ₹1 crore).

• Evidence of only a single bid or single participant may not by itself render the sale invalid unless linked to a suppressed or manipulated process.

Key points the DRT will scrutinize:

• Whether the reserve price was fixed according to a proper and recent valuation by a certified surveyor as per SARFAESI rules.

• Whether all notices and statutory timelines were properly followed, including opportunity for the borrower to object under Sec 13(3A).

• If the borrower deposited the entire principal plus interest after the auction but before the sale certificate was issued, courts may consider this for equitable relief, especially if procedural irregularities or gross undervaluation occurred.

Borrower's Grounds and Probable Chances

• If the borrower can prove the reserve price was arbitrarily or manipulatively fixed far below prevailing market values, especially with documented market evidence and comparable sales, relief is possible.

• The fact that the auction had a single bidder and the bid closely matched the reserve price may further strengthen the borrower’s case if tied to undervaluation or lack of adequate publicity.

• However, absent clear evidence of fraud, collusion, or significant statutory violations, courts generally uphold concluded sales unless the borrower’s objection is supported by substantial market value proof, not just circle rate comparisons.

Borrower's Grounds and Probable Chances

• If the borrower can prove the reserve price was arbitrarily or manipulatively fixed far below prevailing market values, especially with documented market evidence and comparable sales, relief is possible.

• The fact that the auction had a single bidder and the bid closely matched the reserve price may further strengthen the borrower’s case if tied to undervaluation or lack of adequate publicity.

• However, absent clear evidence of fraud, collusion, or significant statutory violations, courts generally uphold concluded sales unless the borrower’s objection is supported by substantial market value proof, not just circle rate comparisons.

Obtained one private valuation after auction from certified valuer who assessed the value of property 80 lacs.
One correction is there that as per cirlce rate for stamp purpose the value is 16-18 lacs.

Party can request the court to appoint a third-party valuer to assess the value of a disputed property. Indian courts have the discretionary power to order an independent valuation when the value of property is contested in civil or partition disputes, or where objectivity is needed for fair adjudication.

Under Order 26 Rule 9 of the CPC, courts may appoint a commissioner for local investigation to ascertain the market value of a property when it is relevant to the dispute, such as in partition suits or specific performance cases. The commissioner may take the assistance of an independent valuer or appraiser to determine fair value. The valuer’s report then becomes part of the evidence, subject to cross-examination and court scrutiny. This provision essentially allows for a third-party valuer when property valuation is contentious.​

Additionally, courts may also appoint a receiver under Order 40 Rule 1(d) to manage property during litigation, and that receiver may be authorized to engage valuers for accurate assessment in the course of property administration.

I agreed , any approved valuer appointed by court assess the market value on the basis of circle rate or actual market value or based on the past registration ??

They have specific standards as specified by approving authorities; but aligns market valuation.