Citation: Lakshmi Mohan (Dead) Through LRs. & Anr. v. M/s. Airtech Projects Engineers Pvt. Ltd. & Anr., 2026 INSC 909 (Supreme Court of India, decided August 21, 2026).
Can a technical shortfall of just ₹35,000 undo a property auction worth over ₹2 crore? A company fought for years arguing exactly that — and the Supreme Court has finally settled it.
This judgment fits a clear pattern the Supreme Court has been building lately: protecting the finality of completed sales and auctions from being unwound years later over technical defects that never actually hurt anyone. But it also shows this principle cuts both ways — the bank won its case on the auction, but was still held accountable for its own carelessness with the borrower’s money. Nobody gets to hide behind “technicality wins” when the shoe is on the other foot.
A company called Airtech defaulted on a bank loan, and the bank moved to auction off its mortgaged property to recover the dues, using the fast-track process banks get under the SARFAESI Act. The auction notice required interested bidders to submit a security deposit of ₹21.5 lakh along with their offer — and warned that any bid without it would be rejected outright.
Two bidders came forward. Both, as it turned out, deposited slightly less than required — ₹21.15 lakh instead of ₹21.5 lakh, a shortfall of ₹35,000 each. The bank accepted both bids anyway, and the higher one — a winning offer of ₹2.17 crore — went to the auction-purchasers, Lakshmi Mohan and her son. They promptly paid the legally required 25% of the total price the very next day, and cleared the rest soon after.
Airtech wasn’t willing to let this go. It argued the entire auction was invalid because the deposit shortfall broke a clear condition of the sale notice. What followed was years of back-and-forth: the Debt Recovery Tribunal sided with the bank, the Appellate Tribunal flipped and sided with Airtech, and the High Court agreed with Airtech too — cancelling the sale entirely. The case finally reached the Supreme Court.
The Supreme Court Restored the Auction
The Court leaned on a long-standing principle from tender and bidding law: not every condition in an auction notice carries equal weight. Some are essential — non-negotiable rules that must be followed to the letter. Others are just procedural safeguards — meant to serve a purpose, but flexible if bending them doesn’t actually harm anyone.
The Court held that the deposit requirement here fell into the second category — it existed simply to weed out non-serious bidders, not as an unbreakable eligibility rule. And crucially, both bidders had the exact same shortfall, so nobody gained an unfair advantage. Once the winning bidder paid the full, legally mandated 25% deposit the very next day, the earlier shortfall stopped mattering. The auction was declared valid, and the sale stood.
The Twist: The Bank Didn’t Walk Away Clean Either
Here’s where the story gets satisfying. While Airtech lost its fight to cancel the auction, it didn’t leave empty-handed. After the sale, there was a large leftover amount — around ₹1.34 crore — left over once the loan was paid off. The bank was supposed to keep this surplus in an interest-earning account for Airtech, but simply didn’t. The Supreme Court ordered the bank to pay this surplus back to Airtech, plus 7% interest for the years it sat unused.
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