1. With the consent of the parties, writ petition is taken up for final disposal.

2. This writ petition challenges an order passed by the Debt Recovery Appellate Tribunal ('DRAT') upholding an order passed by the Debt Recovery Tribunal ('DRT'), allowing the sale of a mortgaged apartment at below the approved reserve price in an auction. For the reasons set out by us in this judgement, the orders of the DRT and the DRAT deserve to be quashed, with a direction to conduct the auction afresh in accordance with law, as declared in this judgement. The fundamental fallacy in them is that they have treated an unsecured creditor as a secured creditor and that too with priority over the secured creditors (beneficiaries of a mortgage over the secured asset).

Factual Matrix:

3. In a nutshell, the following core facts are relevant to adjudicate the petition:

a) The Petitioner, Asset Reconstruction Company (India) Ltd. ('ARCIL'), is the beneficiary of a mortgage over Flat No. 61, 6th Floor, Basant Apartment, Navrang Basant Cooperative Society, 101, Cuffe Parade, Backbay Reclamation, Colaba, Mumbai 400 005 ('Secured Asset');

b) The mortgage had been created on 15th May, 1998; by way of deposit of title deeds by Respondent Nos. 4 and 5; Mr. Kirit Karia and Ms. Nirupama Karia (collectively, the 'Karias');