Sale in Collusive Suit Where Bank Isn't Party Does not Bind Either Bank Or Auction Purchaser

The DRAT Chennai ruled that a sale arising from a collusive suit, where the bank was not a party, does not bind the bank or the auction purchaser under SARFAESI proceedings. 

The case involved a mortgaged property sold through an auction by a bank after the guarantor, Ms. D. Ratchaka, defaulted on a loan. 

Ms. B. Usha Rani obtained a fraudulent ex parte decree for the specific performance of a sale agreement and executed a sale deed. 

The Tribunal observed that such collusive sales are invalid against banks and auction purchasers, reinforcing the integrity of SARFAESI processes. Appeals were allowed.