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Issues: (i) whether the e-auction sale notice and the consequent sale of the secured asset under the SARFAESI Act and the Security Interest (Enforcement) Rules were vitiated for non-compliance with the prescribed procedure; (ii) whether the borrower retained a right to redeem the mortgaged property by paying the auction price fetched for that secured asset together with incidental expenses before the sale certificate was registered.
Issue (i): Whether the e-auction sale notice and the consequent sale of the secured asset under the SARFAESI Act and the Security Interest (Enforcement) Rules were vitiated for non-compliance with the prescribed procedure.
Analysis: The borrower fell within the definition of borrower and the bank within the definition of secured creditor, and the account had become an NPA. The Court found that the bank was entitled to invoke measures under Section 13 of the SARFAESI Act. The sale notice dated 16.11.2015 was published on 18.11.2015 and the auction was held on 23.12.2015, maintaining the required time gap under Rule 8(6) read with Rule 9(1) of the Security Interest (Enforcement) Rules, 2002. On that basis, the procedure adopted for sale could not be faulted.
Conclusion: The challenge to the sale notice and the auction procedure was rejected.
Issue (ii): Whether the borrower retained a right to redeem the mortgaged property by paying the auction price fetched for that secured asset together with incidental expenses before the sale certificate was registered.
Analysis: The Court held that the mortgagor's right of redemption survives until the sale is completed in accordance with law and title is conveyed to the purchaser. Relying on Section 13(8) of the SARFAESI Act, the Court held that, where only one secured asset out of several mortgaged properties is sold, the borrower may redeem that particular asset by tendering the sale consideration fetched at auction together with the bank's securitisation expenses and reasonable compensatory costs to the auction purchaser, rather than the entire outstanding loan amount. The Court therefore restrained registration of the sale certificate for the time being and allowed redemption on payment within the stipulated date.
Conclusion: The borrower was held entitled to redeem the secured asset by paying the auction price and incidental expenses within the time granted by the Court.
Final Conclusion: The writ petition was substantially rejected on the challenge to the sale process, but relief was granted enabling the borrower to redeem the secured asset on payment of the auction amount and related expenses within the time fixed by the Court, failing which the sale in favour of the auction purchaser would stand confirmed.
Ratio Decidendi: The mortgagor's statutory and equitable right of redemption under Section 13(8) of the SARFAESI Act continues until the secured asset is validly transferred, and where only one secured asset is sold out of multiple securities, redemption may be effected by tendering the sale price of that asset together with lawful expenses before the sale certificate is registered.
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