In Brief
A secured creditor (IFCI) financed a five-star hotel in Goa through a corporate loan. When the borrower (Blue Coast Hotels) defaulted, IFCI followed the SARFAESI Act's recovery procedures and eventually sold the property via auction to ITC Ltd. The High Court set aside the auction, finding breaches of the Act's Section 13(3A) (failure to respond to the debtor's representation with written reasons), inclusion of agricultural land without conversion, and lack of physical possession. The Supreme Court reversed this, holding that Section 13(3A), though mandatory, does not automatically void proceedings—especially where the debtor repeatedly defaulted despite multiple settlement opportunities. The Court clarified that land classified in revenue records as agricultural can be treated as non-agricultural based on actual use; that symbolic possession is lawful; and that the debtor is not entitled to equitable relief given its blameworthy conduct of seeking delays rather than repaying. The auction sale to ITC was upheld.
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