Madras High court rules that E-auction by banks are legal

The Madras High Court has ruled that E-auction of properties by banks cannot be challenged in the modern era of social

networks.

"We should take note of the fact that we are in the age of Facebook, You Tube and Twitter. We are in an age where man has set his sights on planets which are many light years away," said Judge Jaichandren and K Kalyanasundaram.

This process of electronic auction is simply a minor step towards the growing modern technologies in implementing the procedures provided by law, added the Judges.

If a borrower shows failure in three consecutive installments, the banks will send a notice granting more 60 days to reply. However if the borrower does not give a prompt response the bank can put their property for auction. E-auction has gained interest over last few years. Even the Finance Minister wants to shift to the e-auction platform.

Few people did not like this approach towards the modernization of applying the procedures of law, the petitioners argued that under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFEISI) Act, which deals with bad loans, permits public auction but does not prescribe e-auction. So, e-auction is illegal and there was no transparency in the process. 

The petitioners added that in rural areas the illiterates will not get an opportunity to participate in this process. However the banks replied that e-auction was a public auction aided by technology.

The Madras High Court made an observation that it is time the various authorities and entities in India adopt the digital technology.

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