# Supreme Court: EMD shortfall doesn’t invalidate auction if 25% paid on sale day 2026-08-23T14:12:32+00:00 | Governance | Indian Opinion Desk Corroboration: 1 independent outlet The Supreme Court has ruled that an auction sale under the SARFAESI Act cannot be set aside merely because the earnest money deposit (EMD) was short, as long as the buyer paid 25% of the sale price on the auction day. A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe allowed an appeal by auction purchasers whose sale certificate was cancelled by the Madras High Court and the Debt Recovery Appellate Tribunal due to a Rs 35,000 shortfall in the EMD of Rs 21.15 lakh. The court observed that the buyers had deposited Rs 54.35 lakh (25% of the bid amount) the day after the auction, and the full balance later. It said the shortfall was not fatal because the statutory requirement of paying 25% on the sale day was substantially complied with. The judgment set aside the restoration of the property to the borrower and directed the bank to refund Rs 1.33 crore with 7% interest from March 2010 to the borrower. ## Indian Opinion Analysis This ruling settles a recurring dispute in SARFAESI auctions: whether a technical EMD shortfall can undo a completed sale. The court's emphasis on substantial compliance protects auction purchasers from post-sale litigation years later. The borrower in this case lost possession nearly 17 years after the auction. The key number to watch is the refund amount: Rs 1.33 crore plus interest, which the borrower will now receive instead of the property. ## Coverage - livelaw.in Straight report of the Supreme Court judgment with no editorial slant. This story was synthesised by AI from the source linked above. Tags: Alok Aradhe, Madras High Court, Pamidighantam Sri Narasimha, SARFAESI Act, Supreme Court of India Canonical: https://indianopinion.org/supreme-court-emd-shortfall-doesnt-invalidate-auction-if-25-paid-on-sale-day/ License: Summary and commentary (c) Indian Opinion, reusable with attribution. Facts belong to the linked sources. Cite: https://indianopinion.org/supreme-court-emd-shortfall-doesnt-invalidate-auction-if-25-paid-on-sale-day/#story-in-brief Review state: restored archive article, accurate at time of publication, not offered to search indexes. How this brief was made: an AI model read the report linked above and wrote this summary and analysis, which were published automatically. Published briefs are sampled every hour by an automated quality check; the editor verifies its findings and approves corrections, and corrected briefs carry a dated correction line. We do no original reporting. Methodology: https://indianopinion.org/ai-use-policy/