Under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, an auction purchaser has certain rights and protections. The SARFAESI Act empowers banks and financial institutions to enforce their security interests in defaulted loans by selling the underlying assets, typically through public auction. Here are the rights of an auction purchaser under the SARFAESI Act:

  1. Clear Title: The auction purchaser is entitled to receive a clear and marketable title to the property, free from any encumbrances or claims, subject to certain exceptions provided under the law.
  2. Right to Possession: Upon successful completion of the auction process and payment of the purchase price, the auction purchaser has the right to take possession of the property. However, the bank or financial institution must hand over possession peacefully and without any hindrance.
  3. Right to Information: The auction purchaser has the right to access relevant information about the property, including its title deeds, encumbrances, and any legal issues. The bank or financial institution is obligated to provide accurate and complete information to the purchaser.
  4. Right to Challenge Irregularities: If the auction purchaser discovers any irregularities or deficiencies in the auction process, such as procedural violations or misrepresentation of facts, they have the right to challenge the sale and seek appropriate remedies through legal recourse.
  5. Protection from Third-Party Claims: The SARFAESI Act provides certain protections to auction purchasers against third-party claims on the property arising after the auction sale. However, the Act does not provide absolute immunity, and the purchaser may still be subject to certain risks, such as undisclosed claims or pending litigation.
  6. Right to Transfer and Alienation: After acquiring ownership of the property, the auction purchaser has the right to transfer, sell, or otherwise alienate the property as per their discretion, subject to applicable laws and regulations.
  7. Right to Seek Redressal: If the auction purchaser faces any disputes or challenges regarding their rights or ownership of the property, they have the right to seek redressal through appropriate legal channels, such as civil courts or debt recovery tribunals.

It’s important for auction purchasers to understand their rights and obligations under the SARFAESI Act and to conduct thorough due diligence before participating in auctions. Seeking legal advice can help ensure that the purchaser’s rights are adequately protected and that they can navigate any potential challenges effectively.

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