Andhra Pradesh High Court voids Canara Bank auction because SARFAESI does not cover agricultural land
· Reported by LiveLawBiz
The Andhra Pradesh High Court held that a security interest created in agricultural land falls outside the SARFAESI Act, and set aside the sale notice and the March 2025 auction of plots that the bank had treated as secured assets. The bank must refund the Rs 81.50 lakh auction money with 6.85 percent interest, and the parties go to the civil court.
What this changes for a title check
This is a diligence failure that shows up in the title check, not the loan file. The sale deeds described the plots as dry agricultural land, and the bank did not test that description against the revenue record or take a legal opinion on land classification before it enforced. Before a lender files under SARFAESI, the search should pull the land classification from the record of rights, meaning the adangal and 1-B extract and any conversion order, and compare it with the description in the deed. A registered conversion to non-agricultural use is the document that keeps the asset inside the Act. Where the land is agricultural or the classification is unclear, plan for a civil suit rather than a Section 13(4) notice. An auction purchaser carries the same risk, because this sale was undone about eighteen months after the auction.