Glossary: Bank-Auction and SARFAESI Terms
Auction Dunia · Law and portal facts checked as of · 13 min read
The short answer
This glossary defines the words you will meet in a SARFAESI sale notice, the bank’s terms and the steps after the auction, grouped in the order a sale runs. Each entry gives the meaning in a sentence or two and the section or rule it comes from, so you can read the law itself. Where a term needs more than a definition, the related guides explain it in full.
Key points
- Symbolic possession is not physical possession. The bank holds the property on paper while the occupant may still be inside; physical possession usually needs a magistrate’s order under SARFAESI Act s.14.
- The 25% due on winning includes the EMD and is always the buyer’s own money (Rule 9(3)). The balance is due within 15 days of confirmation, and any extension must be agreed in writing, up to three months (Rule 9(4)).
- Confirmation of sale is the bank’s acceptance of the highest bid; the sale certificate comes only after the full price is paid (Rule 9(2), 9(6)). They are different documents on different days.
- The borrower’s right to redeem ends when a valid sale notice is published (SARFAESI Act s.13(8)), but a challenge at the DRT can still be filed after the auction (s.17).
- “Known encumbrances” are only those the bank knows of and discloses (Rule 8(7), 9(9)). “As is where is” means everything else is the buyer’s to find.
The law and the parties
| Term | What it means | Where it comes from |
|---|---|---|
| SARFAESI Act | The 2002 law that lets banks and other secured creditors take and sell mortgaged property without first going to court. Its full name is the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. | SARFAESI Act, 2002 |
| Security Interest (Enforcement) Rules, 2002 | The rules made under the Act that set the possession, valuation, sale notice, auction and payment steps. Rules 8 and 9 govern the sale of immovable property. | SIE Rules, 2002 |
| Secured creditor | The bank, financial institution, asset reconstruction company or other lender that holds the security interest being enforced. | SARFAESI Act s.2(1)(zd) |
| Security interest | A right, title or interest in property created in a lender’s favour, such as a mortgage or charge. The property it sits on is the “secured asset”. | SARFAESI Act s.2(1)(zf), s.2(1)(zc) |
| Borrower | The person who took the loan, and also anyone who stood as guarantor or mortgaged their property as security for it. The Act uses one word for all of them. | SARFAESI Act s.2(1)(f) |
| Mortgagor and guarantor | The mortgagor is the person whose property secures the loan; the guarantor is the person who promised to pay if the borrower does not. Either may be someone other than the person who borrowed. | Transfer of Property Act s.58; Indian Contract Act s.126 |
| NPA (non-performing asset) | A loan account the bank has classified as sub-standard, doubtful or loss under RBI’s asset-classification norms, typically once a payment has been overdue for more than 90 days. Classification as an NPA is what opens the SARFAESI route. | SARFAESI Act s.2(1)(o), s.13(2); RBI prudential norms on income recognition and asset classification |
| ARC (asset reconstruction company) | A company registered with the Reserve Bank that buys loans from banks and can enforce them under SARFAESI in the bank’s place. | SARFAESI Act s.2(1)(ba), s.3 |
| Authorised Officer (AO) | The officer the bank appoints to exercise its SARFAESI powers: taking possession, fixing the reserve with the bank, running the sale and signing the sale certificate. In a public sector bank, not below the rank of chief manager. | SIE Rules, Rule 2 |
Notices and possession, before any sale
| Term | What it means | Where it comes from |
|---|---|---|
| Demand notice (s.13(2)) | The bank’s written notice asking the borrower to repay in full within 60 days, failing which it may take the measures the Act allows. | SARFAESI Act s.13(2) |
| Bar on transfer (s.13(13)) | Once the demand notice is received, the borrower may not sell, lease or otherwise transfer the secured property, other than in the ordinary course of business, without the bank’s written consent. | SARFAESI Act s.13(13) |
| Possession notice | The notice, in the form of Appendix IV, by which the Authorised Officer takes possession. It is delivered to the borrower, affixed on the property and published in two newspapers, one in the local language. | SIE Rules, Rule 8(1)–(2) |
| Symbolic possession | Possession taken on paper by the possession notice, while the borrower or an occupant may still be physically in the property. The sale notice states which kind of possession the bank holds. | SARFAESI Act s.13(4); Rule 8; common usage |
| Physical possession | The bank actually holds the property and can hand it over. Where the occupant does not leave, it usually comes through a Section 14 order. | SARFAESI Act s.14 |
| Section 14 order | An order of the Chief Metropolitan Magistrate or District Magistrate, on the bank’s application, to take physical possession of the secured property. The bank may apply before or after the sale; the Act asks the magistrate to pass the order within 30 days, extendable to 60, a time limit for the order and not for the handover. | SARFAESI Act s.14 |
| CMM / DM | The Chief Metropolitan Magistrate (in a metropolitan area) or the District Magistrate (elsewhere), who hears the bank’s Section 14 application. | SARFAESI Act s.14 |
| Valuation report | An approved valuer’s report on the property’s value, which the Authorised Officer must obtain before the sale. | SIE Rules, Rule 8(5) |
| Reserve price | The minimum price, fixed by the Authorised Officer with the secured creditor after the valuation. A sale below it cannot be confirmed except with the consent of the borrower and the secured creditor. | SIE Rules, Rule 8(5), Rule 9(2) |
The sale notice and the auction
| Term | What it means | Where it comes from |
|---|---|---|
| Sale notice | The notice of sale served on the borrower and, for an auction or tender, published in the form of Appendix IV-A in two newspapers, one in the local language. It is also affixed on the property and its terms are put on the bank’s website. | SIE Rules, Rule 8(6) and proviso, Rule 8(7) |
| 30-day rule | No sale can take place until 30 days have passed after the sale notice; the Supreme Court has read this as 30 days from the latest of service, affixing and publication. A re-sale after a failed sale needs at least 15 days’ notice. | SIE Rules, Rule 8(6), Rule 9(1); Supreme Court, 2025 (2025 INSC 1144) |
| EMD (earnest money deposit) | The deposit a bidder pays to take part in the auction. The amount, due date and payment method are in the sale notice; 10% of the reserve price is common. It is the buyer’s own money and is refunded to bidders who do not win. | Sale notice terms; part of the Rule 9(3) deposit |
| e-auction | A public auction held online on the portal the bank names in its sale notice. Bids are placed in real time, often with a short automatic extension when a bid arrives near the close. | SIE Rules, Rule 8(5) (public auction as a mode of sale); sale notice terms |
| BAANKNET | The e-auction portal operated by PSB Alliance and used by most public sector banks; it is the renamed and relaunched eBKray portal. EMD there is paid from a wallet topped up in advance. | IBBI FAQ on the BAANKNET portal (as on 21 Jul 2025) |
| MSTC | A Government of India enterprise that runs e-auctions, including for banks. Its portal is one of several that banks name in their notices. | mstcecommerce.com |
| Bid increment | The minimum amount by which each bid must exceed the one before it. The notice sets it. | Sale notice terms |
| “As is where is, as is what is, whatever there is” | The bank sells the property in its present state and condition and warrants nothing beyond what it discloses. Physical condition, occupation and undisclosed dues are the buyer’s to check. | Sale notice terms; SIE Rules, Rule 8(7), Rule 9(9) |
| Known encumbrances | The charges and claims on the property known to the secured creditor, which the sale terms must state. The bank answers only for these, not for ones it does not know of. | SIE Rules, Rule 8(7), Rule 9(9)–(10) |
After the hammer: the money clocks and the certificate
| Term | What it means | Where it comes from |
|---|---|---|
| Confirmation of sale | The secured creditor’s acceptance of the highest bid. No sale can be confirmed below the reserve price, and the 15 days for the balance run from confirmation. | SIE Rules, Rule 9(2), Rule 9(4) |
| 25% deposit | The winning bidder must bring the deposit, including the EMD, to 25% of the sale price immediately, or not later than the next working day. It is always the buyer’s own money: no lender pays it. | SIE Rules, Rule 9(3) |
| Balance (75%) | The rest of the sale price, due on or before the fifteenth day after confirmation of sale, or within any longer period agreed in writing. Some notices run the 15 days from the auction date; plan to whichever is stricter. | SIE Rules, Rule 9(4) |
| Extension (Rule 9(4)) | A longer period for the balance, never more than three months, agreed in writing between the buyer and the secured creditor. It is the bank’s decision, so it should be asked for and recorded in writing before day 15; the Supreme Court has set aside sales where the balance came late without one. | SIE Rules, Rule 9(4); Supreme Court, 2026 (2026 INSC 633) |
| Forfeiture | If the balance is not paid in time, the deposit is forfeited to the secured creditor and the property is sold again; the defaulting buyer has no claim to the property or the money. The forfeiture can be the entire deposit, not only the bank’s loss. | SIE Rules, Rule 9(5); Supreme Court, 2024 (2024 INSC 80) |
| Sale certificate | The Authorised Officer’s certificate of sale in the form of Appendix V, issued once the full price is paid. It is the evidence of the buyer’s title to the property sold, not a separate deed of transfer. | SIE Rules, Rule 9(6) |
| Section 89(4) filing | The officer who grants the sale certificate sends a copy to the sub-registrar, who files it in Book 1. The Supreme Court has held this filing sufficient, so registering the certificate is not compulsory; stamp duty arises only if the buyer presents it for registration. | Registration Act s.17(2)(xii), s.89(4); Esjaypee Impex, Supreme Court, 2021 |
| Title the buyer receives (s.13(6)) | A transfer by the secured creditor vests in the buyer the rights in the property as if the owner had made it. The buyer takes the borrower’s title as it stands, and no better. | SARFAESI Act s.13(6) |
Two words that sound alike
Confirmation is the bank accepting your bid; the sale certificate is the document you receive after paying in full. Between the two run the fifteen days of Rule 9(4), and the sale is complete only on full payment and the certificate (Indian Overseas Bank v. RCM Infrastructure, Supreme Court, 2022).
Challenges, stays, priorities and limits
| Term | What it means | Where it comes from |
|---|---|---|
| Redemption (s.13(8)) | The borrower’s right to pay the full dues, with costs, and stop the sale. It ends on publication of a valid sale notice. Where a sale is later set aside for breach of the Rules, the Supreme Court has allowed redemption again. | SARFAESI Act s.13(8); Celir LLP v. Bafna Motors, Supreme Court, 2023; Supreme Court, 2026 (2026 INSC 633) |
| Securitisation application (S.A.) | An application to the Debts Recovery Tribunal by any person, including the borrower, aggrieved by a measure the bank has taken. It is filed within 45 days of that measure and can be brought after the auction. | SARFAESI Act s.17(1) |
| DRT | The Debts Recovery Tribunal, which hears securitisation applications and can set aside a SARFAESI measure, including a sale, found to break the Act or the Rules. It also decides tenancy claims raised against the bank’s possession. | Recovery of Debts and Bankruptcy Act, 1993; SARFAESI Act s.17, s.17(4A) |
| DRAT | The Debts Recovery Appellate Tribunal, which hears appeals from the DRT. A borrower appealing must first deposit 50% of the debt claimed by the bank or determined by the DRT, whichever is less; the tribunal may reduce this to not less than 25%. | SARFAESI Act s.18 |
| Stay | An order of a tribunal or court pausing a step in the sale: the auction, its confirmation, the certificate or possession. A stay can come after the auction has been held. | SARFAESI Act s.17; common usage |
| CERSAI | The Central Registry of Securitisation Asset Reconstruction and Security Interest of India, where lenders record mortgages and other security interests. It offers a public search by asset. | SARFAESI Act s.20 and Chapter IVA; cersai.org.in |
| Section 26D | A secured creditor cannot use the SARFAESI enforcement powers unless its security interest is registered with CERSAI. | SARFAESI Act s.26D |
| Section 26E priority | Since 24 January 2020, a registered secured creditor’s debt is paid ahead of other debts and government dues, subject to insolvency law. It does not displace a statutory first charge such as provident fund dues. | SARFAESI Act s.26E; Jalgaon District Central Co-operative Bank v. State of Maharashtra, Supreme Court, 2025 |
| Agricultural-land exclusion | SARFAESI does not apply to a security interest in agricultural land. Whether land is agricultural is judged by its actual nature and use, not only its record. | SARFAESI Act s.31(i); Supreme Court, 20 Jul 2018 |
| IBC moratorium | When the NCLT admits a company into insolvency, a moratorium bars enforcement of security interests against it, SARFAESI included. A SARFAESI sale not yet completed by full payment and certificate can be halted. | Insolvency and Bankruptcy Code, 2016 s.14; Indian Overseas Bank v. RCM Infrastructure, Supreme Court, 2022 |
| NCLT | The National Company Law Tribunal, the insolvency forum for companies. A case sits at the bench where the company’s registered office is. | Insolvency and Bankruptcy Code, 2016 s.60(1) |
| Tenant protection | A genuine tenancy created before the mortgage, or one made under the mortgagor’s leasing power, can survive the sale. Tenancy claims against the bank’s possession are decided by the DRT. | Transfer of Property Act s.65A; SARFAESI Act s.17(4A); Supreme Court, 11 Sep 2019 (Criminal Appeal 1371 of 2019) |
What the auction route cannot promise
- Definitions summarise; the text of the Act, the Rules and the judgments governs, and they change by amendment and new decisions.
- The sale notice and the bank’s terms can be stricter than the Rules on dates and payment method. Read the notice in front of you, not only the definition.
- No definition here tells you whether a particular sale followed the Rules, how long possession will take, or whether a stay will come.
Questions buyers ask
Sources
Statutes, rules and judgments first. Checked as of 19 October 2026; the law and portal practice change, so confirm against the source before relying on a detail.
- StatuteSARFAESI Act, 2002 — full text (ss.2, 3, 13, 14, 17, 18, 20, 26D, 26E, 31)
- RulesSecurity Interest (Enforcement) Rules, 2002 — Rules 2, 8 and 9
- StatuteRegistration Act, 1908 — s.17(2)(xii) and s.89(4)
- StatuteInsolvency and Bankruptcy Code, 2016 — consolidated text (ss.14, 60)
- JudgmentCelir LLP v. Bafna Motors (Mumbai) Pvt Ltd, Supreme Court, 21 Sep 2023 (2023 INSC 838)
- JudgmentSupreme Court, 22 Sep 2025 (2025 INSC 1144) — the 30-day sale notice
- JudgmentSupreme Court, 2 Feb 2024 (2024 INSC 80) — forfeiture under Rule 9(5)
- JudgmentIndian Overseas Bank v. RCM Infrastructure Ltd, Supreme Court, 18 May 2022
- JudgmentJalgaon District Central Co-operative Bank v. State of Maharashtra, Supreme Court, 20 Nov 2025 (2025 INSC 1335)
- JudgmentSupreme Court, June 2026 (2026 INSC 633), Civil Appeal 1606 of 2026 — late balance without a written extension — judgment text
- RegulatorIBBI — FAQ on the BAANKNET listing and auction portal (as on 21 Jul 2025)
- Official portalCERSAI — public search
This guide explains the law and the process in general terms. It is not advice on any specific property; that belongs in a due diligence report on the property itself.
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