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2025 (9) TMI 1340
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.... Adv. JUDGMENT J.B. PARDIWALA, J.: For the convenience of the exposition, this judgment is divided into the following parts: - INDEX I. FACTUAL MATRIX 3 A. Proceedings before the DRT 8 II. IMPUGNED ORDER 10 III. SUBMISSIONS OF THE PARTIES 13 A. Submissions on behalf of the appellants. 14 B. Submissions on behalf of the borrowers. 14 IV. ISSUE FOR DETERMINATION 15 V. ANALYSIS 15 A. Legislative History and Scheme of the SARFAESI Act. 15 i. The impetus behind enactment of the SARFAESI Act. 16 ii. Relevant Statutory Provisions at Play. 22 B. Section 13(8) of the SARFAESI Act and the Decision of this Court in Bafna Motors 39 i. Factual Scenario in Bafna Motors 44 ii. Ratio of the Decision of Bafna Motors 47 a. Position of Law prevailing prior to the Amendment of Section 13(8) of the SARFAESI Act. 48 b. The 2016 Amendment to Section 13(8) of the SARFAESI Act and the Contradictory Views on the subject. 58 c. Effect of the 2016 Amendment on the Right of Redemption under Section 13(8) of the SARFAESI Act. 77 ....
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....bject Property" vide the Memorandum of Deposit of Title Deeds bearing Document No. 68 of 2016 dated 06.1.2016 with the Sub Registrar Office, Dharapuram for the purpose of securing the repayment of the credit facilities. 6. The description of the subject property is as under: - "Vacant dry land to an extent of 1.92 acres in Old S.F. NO. 540, 541 and New S.F. No.476/2, Dharapuram Alangiyam Road, Chitraravuthanpalayam, Dharapuram Taluk, Triuppur District. Boundaries: On the South by : East West in RS No. 535 On the West by: 0.89 acres of land belonging to Nachimuthu Gounder in RSNo. 476/2 On the North by : Land belonging to Kuppusamy Gounder in RS No. 476/1. On the East by: Land belonging to Palanisamy and Vallinayaki in RSNo. 475/3." 7. It may not be out of place to state at this stage that the respondent nos. 3 and 4 respectively herein are the son and daughter in law respectively of the respondent No. 2 who had executed guarantees to secure repayment of the credit facilities availed by KPK Oils Limited i.e., Original Borrowers. 8. On 31.12.2019, the borrower's auction was classified as a Non-Performing Asset (NPA) by the Bank du....
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....es under the loan. It is pertinent to note that at the relevant point of time an amount of INR 61,91,000 was still outstanding towards the loan amount. A. Proceedings before the DRT. 20. After the completion of sale and issuance of the Sale Certificate, the DRT passed an order of status quo dated 26.03.2021. Since the appellants herein were not made party to the proceedings before the DRT, the DRT vide order dated 26.03.2021 proceeded to pass an order of status quo despite the fact that the appellants herein were not made party in the said proceedings. Later an application for impleadment was filed by the appellants in the proceedings before the DRT. 21. On 07.05.2021, the borrowers paid an amount of INR 62,74,123.74 towards the outstanding dues for releasing the other properties. 22. On 07.05.2021, the Bank closed the loan account of the borrowers after appropriating a sum of INR 1,25,60,000 received by it out of the sale consideration on auction of the secured assets as aforesaid. 23. On 14.07.2021, the application for impleadment filed by the appellant came to be allowed. 24. On 07.12.2021, 14.03.2021, 01.06.2022, 24.06.2022 and 11.07.2022 respectively, adjourn....
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....g to the bank, as an exceptional case this writ petition is entertained by this Court and accordingly we over rule the said objection raised on behalf of the respondents. 11. It is the objection of the respondent bank that initially when the petitioners paid a sum of Rs. 2,88,00,000/- in the month of March 2021 and thereafter Rs. 62,74,123.74/- on 17.05.2021, by accepting the sale of the property and by closing the loan account is concerned, except for the bald averment in Para 5 of the counter affidavit, no material whatsoever is produced before this Court. If such is the case, there would have been written communications to that effect on either side. Besides, it could be seen that even in the interim order dated 26.03.2021 was passed by the DRT, the following has been stated; Learned counsel for the Respondent Bank submitted that the property is sold on the scheduled date of auction and the Sale Certificate is also issued. However, the Sale Certificate is not registered as of now. The Applicant also paid substantial amount of dues of about 50% of the amount claimed. The Applicant having paid a substantial amount of about 50% of the claim amount, this T....
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....e the same by writing to the petitioners within one week thereafter. (f) Upon receipt of the written communication from the first respondent bank, the entire interest amount shall be remitted to the first respondent bank within one week therefrom by the writ petitioners and the first respondent bank shall pay out the same to the respondents 3 to 11; (g) It is made clear that if the writ petitioners default in the payment of interest as aforesaid within the aforesaid time the writ petition shall stand dismissed automatically without any further reference to this Court." 32. In such circumstances referred to above, the auction purchasers are here before this Court with the present appeal. III. SUBMISSIONS OF THE PARTIES A. Submissions on behalf of the appellants. 33. Mr. K.S. Mahadevan, the learned counsel appearing for the Auction Purchasers vehemently submitted that the High Court committed an egregious error in entertaining the writ petition and passing the impugned judgment and order. He would submit that the issues involved in the present appeal are now covered by a decision of this Court in Celir LLP v. Bafna Motors (Mumbai) Private Ltd. reported i....
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....financial institutions in India; a poor rate of loan recovery and the failure of the existing legislation in redressing the difficulties of recovery by banks; the Narasimham Committee I & II and Andyarujina Committee were constituted by the Government for examining and suggesting banking reforms in India. These Committees in their reports observed that one out of every five borrower was a defaulter, and that due to the long and tedious process of existing frame work of law and the overburdening of existing forums including the specialised tribunals under the 1993 Act, any attempt of recovery with the assistance of court/tribunal often rendered the secured asset nearly worthless due to the long delays. In this background the Committees thus, proposed new laws for securitisation in order to permit banks and financial institutions to hold securities and sell them in a timely manner without the involvement of the courts. 41. On the recommendations of the Narasimham Committee and Andyarujina Committee, the SARFAESI Act was enacted to empower the banks and financial institutions to take possession of the securities and to sell them without intervention of the court. 42. The stateme....
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....ive backdrop that ultimately led to the enactment of the SARFAESI Act as under: - "34. Some facts which need to be taken note of are that the banks and the financial institutions have heavily financed the petitioners and other industries. It is also a fact that a large sum of amount remains unrecovered. Normal process of recovery of debts through courts is lengthy and time taken is not suited for recovery of such dues. For financial assistance rendered to the industries by the financial institutions, financial liquidity is essential failing which there is a blockade of large sums of amounts creating circumstances which retard the economic progress followed by a large number of other consequential ill effects. Considering all these circumstances, the Recovery of Debts Due to Banks and Financial Institutions Act was enacted in 1993 but as the figures show it also did not bring the desired results. Though it is submitted on behalf of the petitioners that it so happened due to inaction on the part of the Governments in creating Debts Recovery Tribunals and appointing presiding officers, for a long time. Even after leaving that margin, it is to be noted that things in the spher....
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.... assets without intervention of the court and for reconstruction of assets. It is thus to be seen that the question of non-recoverable or delayed recovery of debts advanced by the banks or financial institutions has been attracting attention and the matter was considered in depth by the Committees specially constituted consisting of the experts in the field. In the prevalent situation where the amounts of dues are huge and hope of early recovery is less, it cannot be said that a more effective legislation for the purpose was uncalled for or that it could not be resorted to. It is again to be noted that after the Report of the Narasimham Committee, yet another Committee was constituted headed by Mr Andhyarujina for bringing about the needed steps within the legal framework. We are therefore, unable to find much substance in the submission made on behalf of the petitioners that while the Recovery of Debts Due to Banks and Financial Institutions Act was in operation it was uncalled for to have yet another legislation for the recovery of the mounting dues. Considering the totality of circumstances and the financial climate world over, if it was thought as a matter of policy to have yet....
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....ant Statutory Provisions at Play. 45. Section 13 of the SARFAESI Act contains the provisions relating to the enforcement of the security interest and the manner in which the same may be done by the secured creditor without the intervention of the court or tribunal in accordance with its provisions. The said provision reads as under: - "13. Enforcement of security interest.- (1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured ....
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....r is held as security for the debt: Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt; (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. (5) Any payment made by any person referred to in clause (d) of sub-section (4) to the secured creditor shall give such person a valid discharge as if he has made payment to the borrower. (5A) Where the sale of an immovable property, for which a reserve price has been specified, has been postponed for want of a bid of an amount not less than such reserve price, it shall be lawful for any officer of the secured creditor, if so authorised b....
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....further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets. (9) Subject to the provisions of the Insolvency and Bankruptcy Code, 2016, in the case of financing of a financial asset by more than one secured creditors or joint financing of a financial asset by secured creditors, no secured creditor shall be entitled to exercise any or all of the rights conferred on him under or pursuant to sub-section (4) unless exercise of such right is agreed upon by the secured creditors representing not less than sixty per cent. in value of the amount outstanding as on a record date and such action shall be binding on all the secured creditors: Provided that in the case of a company in liquidation, the amount realised from the sale of secured assets shall be distributed in Act, 1956 (1 of 1956): Provided further that in the case of a company being wound up on or after the commencement of this Act, the secured creditor of such company, who opts to realise his security instead of relinquishing his security and proving his debt under proviso to sub-section (1) of section 529 of the Companies Act, 1956 (1 o....
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....officers authorised in this behalf in such manner as may be prescribed. (13) No borrower shall, after receipt of notice referred to in sub section (2), transfer by way of sale, lease or otherwise (other than in the ordinary course of his business) any of his secured assets referred to in the notice, without prior written consent of the secured creditor." 46. Rules 8 and 9 respectively of the SARFAESI Rules prescribe the procedure and formalities to be followed for the sale of immovable secured asset as per Section 13 of the SARFAESI Act. 47. Rule 8 of the SARFAESI Rules stipulates the manner in which sale of an immovable secured asset may take place at the behest of the secured creditor, and reads as under: - "8. Sale of immovable secured assets.- (1) Where the secured asset is an immovable property, the authorised officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property. (2) The possession notice as referred to in sub-rule (1) shall al....
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.... (7) every notice of sale shall be affixed on the conspicuous part of the immovable property and the authorised officer shall upload the detailed terms and conditions of the sale, on the web-site of the secured creditor, which shall include; (a) the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor; (b) the secured debt for recovery of which the property is to be sold; (c) reserve price of the immovable secured assets below which the property may not be sold; (d) time and place of public auction or the time after which sale by any other mode shall be completed; (e) deposit of earnest money as may be stipulated by the secured creditor; (f) any other terms and conditions, which the authorised officer considers it necessary for a purchaser to know the nature and value of the property. (8) Sale by any methods other than public auction or public tender, shall be on such terms as may be settled between the secured creditors and the proposed purchaser in writing." 48. On the other hand, Rule 9 of the SARFAESI Rules provides when the immovable prop....
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....to the property or to any part of the sum for which it may be subsequently sold. (6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorised officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the Form given in Appendix V to these rules. (7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if he thinks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him. Provided that if after meeting the cost of removing encumbrances and contingencies there is any surplus available out of money deposited by the purchaser such surplus shall be paid to the purchaser within fifteen days, from date of finalisation of the sale. (8) On such deposit of money for discharge of the encumbrances, the authorised officer shall issue or cause the purchaser to issue notices to the....
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....y of outstanding loans and advances made by them on the one hand, whereas the Sick Industrial Companies (Special Provisions) Act, 1985, on the other hand, deals with certain debtors which are sick industrial companies [i.e. companies running industries named in the Schedule to the Industries (Development and Regulation) Act, 1951] and whether such "debtors" having become "sick", are to be rehabilitated. The question, therefore, is whether the public interest in recovering debts due to banks and financial institutions is to give way to the public interest in rehabilitation of sick industrial companies, regard being had to the present economic scenario in the country, as reflected in parliamentary legislation. xxx xxx xxx 19. While this Act had worked for a period of about 7 years, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was brought into force, pursuant to various committee reports. [. ] 20. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 took away the jurisdiction of the courts and vested this jurisdiction in tribunals established by the Act so as to ensure speedy recovery of debts due to the banks an....
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....ice in writing to any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due from the borrower, to pay the secured creditor so much of the money as is sufficient to pay the secured debt. 25. In order to further the objects of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Act contains a non obstante clause in Section 35 and also contains various Acts in Section 37 which are to be in addition to and not in derogation of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Three of these Acts, namely, the Companies Act, 1956, the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992, relate to securities generally, whereas the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 relates to recovery of debts due to banks and financial institutions. Significantly, under Section 41 of this Act, three Acts are, by the Schedule to this Act, amended. We are concerned with the third of such Acts, namely, the Sick Industrial Companies (Special Pro....
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....rimary objective is to rehabilitate sick industrial companies and not to deal with the securities market." (Emphasis supplied) 53. In interpreting the various provisions of the SARFAESI Act and the SARFAESI Rules framed thereunder, one must be mindful of the observations made by this Court in Mardia Chemical (supra), which are significant. This Court in Mardia Chemical (supra) observed that the provisions of the SARFAESI Act & SARFAESI Rules must be interpreted keeping in mind the economic object which is sought to be achieved by the legislature, the relevant observations read as under: - "34. Some facts which need to be taken note of are that the banks and the financial institutions have heavily financed the petitioners and other industries. It is also a fact that a large sum of amount remains unrecovered. Normal process of recovery of debts through courts is lengthy and time taken is not suited for recovery of such dues. For financial assistance rendered to the industries by the financial institutions, financial liquidity is essential failing which there is a blockade of large sums of amounts creating circumstances which retard the economic progress followed ....
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....y time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets,- (i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor; and (ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets. (Emphasis supplied) 55. A plaint reading of Section 13 sub-section (8) of the SARFAESI Act reveals that the said provision is in two parts, being as under: - (i) First, it enables the borrower to exercise his right of redemption upto a particular point of time by stipulating the time limit during which the borrower can tender all the dues with interest, costs and charges to the secured creditor; (ii) Secondly, it enables the secured creditor to exercise its power to deal or dispose of the secured asset, by providing as to w....
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....micals Ltd. vs. Union of India. In para 54, while dealing with the contention raised on behalf of the secured creditor that the right of redemption would be available to the mortgagor only if the amount due according to the secured creditor is deposited, this Court held as under: "54. ...Shri Sibal, however, submits that it is the amount due according to the secured creditor which shall have to be deposited to redeem the property. May be so, some difference regarding the amount due may be there but it cannot be said that right of redemption of property is completely lost. In cases where no such dispute is there, the right can be exercised and in other cases the question of difference in amount may be kept open and got decided before sale of property". 41. Here again we find that even if there was some difference in the amount tendered by the borrower while exercising his right of redemption under Section 13(8), the question of difference in the amount should be kept open and can be decided subsequently, but on that score the right of redemption of the mortgagor cannot be frustrated. Elaborating the statement of law made therein, we wish to state that the endeavour....
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....d credit facility to Bafna Motors (Mumbai) Private Limited in 2017 for INR 100 crore against which a security in the form of a simple mortgage was created over a parcel of land situated in Thane, Maharashtra. The Borrower defaulted in repayment and accordingly its loan account was declared as a Non-Performing Asset (NPA). The Bank issued a Demand Notice under Section 13(2) of the SARFAESI Act for repayment of the Loan amount, along with the interest, costs, etc, i.e. INR 123.83 crore. Due to failure to repay of the outstanding amount, the Bank proceeded to take possession of the Mortgaged Property. 65. The borrower challenged the Demand Notice before the DRT. The Bank attempted to auction the Mortgaged Property eight times during 2022-23. On June 14, 2023, the Bank auctioned the Mortgaged Property for a reserve price of INR 105 crore. Celir LLP participated in the auction and was declared as the successful bidder, and a sale confirmation letter was issued to the Purchaser by the Bank. The Purchaser also deposited 25% of the bid amount, which the Bank acknowledged. 66. The Borrower at this stage filed an interim application before the DRT for redemption of mortgage upon repaym....
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....-section (8) of the SARFAESI Act threadbare, in order to better understand, what has been conveyed in so many words by this Court in Bafna Motors (supra). a. Position of Law prevailing prior to the Amendment of Section 13(8) of the SARFAESI Act. 72. Prior to the amendment to Section 13(8) of SARFAESI Act, in the case of Mathew Varghese (supra) this Court had applied the principles pertaining to redemption of mortgage as enshrined in Section 60 of the Transfer of Property Act, 1882 (for short, the "TP Act") for construing the pre-amendment provision of Section 13(8) of the SARFEASI Act. 73. Section 60 of the TP Act provides the general statutory right of the mortgagor to redeem the mortgage and reads as below: - "60. Right of mortgagor to redeem.- At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee (a) to deliver to the mortgagor the mortgage deed and all documents relating to the mortgaged property which are in the possession or power of the mortgage, (b) where the mortgage is in possession of the mortgaged property, to deliver po....
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....ay direct, or to execute and to have registered an acknowledgment in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished. There is a proviso that the right conferred by this section has not been extinguished by the act of the parties or by decree of a Court. The right conferred by Section 60 of the Transfer of Property Act is called a right to redeem. Therefore, the said Section 60 provides for a right of redemption provided that the right has not been extinguished by the act of parties. xxx xxx xxx 33. In India, the word "transfer" is defined with reference to the word "convey". The word "transfer" in English law in its narrower and more usual sense refers to the transfer of an estate in land. Section 205 of the Law of Property Act in England defines: "Conveyance" includes a mortgage, charge, lease, assent, vesting declaration, vesting instrument. The word "conveys" in Section 5 of the Transfer of Property Act is used in the wider sense of conveying ownership. 34. The right of redemption which is embodied in Section 60 of the Transfer of Property Act is available to the mortgagor unless it has been exti....
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....ied in Section 60 of the TP Act will get extinguished. It further observed that the conferment of power to sell the mortgaged property without intervention of the Court, in a mortgage deed, in itself, will not deprive the mortgagor of his right of redemption under the said provision. The relevant observations read as under: - "53. On analysis of arguments advanced at the Bar, this Court finds that the proposition that in India it is only on execution of conveyance and the registration of transfer of the mortgagor's interest by registered instrument that the mortgagor's right of redemption stands extinguished is well settled. Further it is not the case of the appellant that a registered Sale Deed had been executed between the appellant-trust and the respondent No. 1 pursuant to the Resolution passed by the respondent No. 1 and, therefore, in terms of Section 54 of the Transfer of Property Act 1882 no title relating to the disputed property had passed to the appellant at all. 54. What is ruled in Narandas Karsandas (Supra) is that in India, there is no equity or right in property created in favour of the purchaser by the contract between the mortgagee and th....
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....the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset." 77. This Court examined the right of redemption of mortgage under the TP Act vis-à-vis the SARFAESI Act for the first time in Mathew Varghese (supra). 78. As already discussed in the foregoing paragraphs of this judgment, this Court in Mathew Varghese (supra), placing reliance on Narandas Karsondas (supra) found no occasion for drawing any distinction between the principles enshrined in Section 60 of the TP Act in respect of the sale of secured assets created by way of a secured interest in favour of the secured creditor under the provisions of the SARFAESI Act, read along with the relevant Rules. It observed that since Section 13 of the SARFAESI Act is nothing but a conferment of power upon the secured creditor to sell the security interest without the intervention of the court, the principles underlying Section 60 of the TP Act would be attracted, since the provision of Section 60 applies with full rigour even in respect of sale of mortgage property without the intervention of court. The relevant observations read as under: - "38. [...] a mere conferm....
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....ng as the agent of the mortgagor in selling the property. 39. When we apply the above principles stated with reference to Section 60 of the TP Act in respect of a secured interest in a secured asset in favour of the secured creditor under the provisions of the SARFAESI Act and the relevant Rules applicable, under Section 13(1), a free hand is given to a secured creditor to resort to a sale without the intervention of the court or tribunal. However, under Section 13(8), it is clearly stipulated that the mortgagor i.e. the borrower, who is otherwise called as a debtor, retains his full right to redeem the property by tendering all the dues to the secured creditor at any time before the date fixed for sale or transfer. Under sub-section (8) of Section 13, as noted earlier, the secured asset should not be sold or transferred by the secured creditor when such tender is made by the borrower at the last moment before the sale or transfer. The said sub-section also states that no further step should be taken by the secured creditor for transfer or sale of that secured asset. We find no reason to state that the principles laid down with reference to Section 60 of the TP Act, which ....
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....e plaintiffs lost the right to sue for redemption of the mortgaged property by virtue of the proviso to Section 60 of the Act, no sooner that the mortgaged property was put to auction-sale in a suit for foreclosure and sale certificate was issued in favour of Defendant 2. There remained no property mortgaged to be redeemed. The right to redemption could not be claimed in the abstract." 81. Prior to the amendment to Section 13 sub-section (8) of the SARFAESI Act, the position of law that prevailed, as per the decision of Mathew Varghese (supra), was that the principle underlying Section 60 of the TP Act was extended and applied to Section 13(8) of the SARFAESI Act to hold that the borrower has absolute right to redeem the property by repaying the debt before the sale of such property. 82. Thus, prior to the amendment of Section 13(8) of the SARFAESI Act, this Court consistently held, that the borrower shall continue to have a right of redemption of mortgage until the execution of the conveyance of the secured asset by way of a registered instrument. 83. The reason which impelled this Court in Mathew Varghese (supra), in holding so, was because it found no inconsistency betw....
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....edeem the secured asset was available till the sale or transfer of such secured asset. The court went on to say that the amended provisions of Section 13(8) of the SARFAESI Act, however brought in a radical change inasmuch as the right of the borrower to redeem the secured asset would now stand extinguished thereunder on the very date of publication of the notice for public auction under Rule 9(1) of the SARFAESI Rules. The relevant observations made by the High Court are reproduced hereinbelow: - "6. In terms of the amended provisions of Section 13(8) of the SARFAESI Act, the right of redemption given to the borrower would expire upon publication of such a notice. However, Rule 8(6) of the Rules of 2002, as interpreted by the Supreme Court in Mathew Varghese v. M. Amritha Kumar [(2014) 5 SCC 610], stipulates that the thirty day notice period mentioned therein is for the purpose of enabling the borrower to redeem his property. Significantly, this provision remains unaltered. Therefore, this statutory notice period of thirty days is sacrosanct and deviation therefrom would curtail the statutory right of redemption available to the borrower. However, in terms of the amended ....
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....he context of the unamended provisions, would therefore have no application to the post-amendment scenario in the light of the change brought about in Section 13(8). To sum up, the post-amendment scenario inevitably requires a clear thirty day notice period being maintained between issuance of the sale notice under Rule 8(6) of the Rules of 2002 and the publication of the sale notice under Rule 9(1) thereof, as the right of redemption available to the borrower in terms of Rule 8(6) of the Rules of 2002, as pointed out in MATHEW VARGHESE, stands extinguished upon publication of the sale notice under Rule 9(1)." (Emphasis supplied) 87. The amended Section 13(8) of the SARFAESI Act was also looked into by the High Court of Telangana in the case of K.V.V. Prasad Rao Gupta v. State Bank of India reported in 2021 SCC OnLine TS 328 and relying on the aforesaid decision of the Andhra Pradesh High Court in the case of Sri. Sai Annadhatha Polymers (supra), the court held that the right of the borrower to redeem the property stands extinguished upon publication of sale notice after the expiry of thirty-days period of notice to the borrower. The relevant observations read as under:....
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....able to the mortgagor. The amended Section 13(8) merely prohibits the secured creditor from proceeding further with the transfer of the secured assets by way of lease, assignment or sale. A restriction on the right of the mortgagee to deal with the property is not exactly the same as the equity of redemption available to the mortgagor. The payment of the amounts mentioned in Section 13(8) ties the hands of the mortgagee (secured creditor) from exercising any of the powers conferred under the Securitisation Act, 2002. Redemption comes later. But unfortunately, some Courts, on a wrong reading of the decision of the Supreme Court in Mathew Varghese v. M. Amritha Kumar [(2014) 5 SCC 610], have come to the conclusion as though Section 13(8) speaks about the right of redemption. The danger of interpreting Section 13(8) as though it relates to the right of redemption, is that if payments are not made as per Section 13(8), the right of redemption may get lost even before the sale is complete in all respects. But in law it is not. It may be seen from paragraphs-34 to 36 of the decision of the Supreme Court in Mathew Varghese that the Supreme Court took note of Section 60 of the Transfer of ....
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....f notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets. xxx xxx xxx 30. A fortiorari, it must follow that the appellants have failed to exercise their right of redemption in the manner known to law, much less until the registration of the sale certificate on 18-9 2007. In that view of the matter no relief can be granted to the appellants, assuming that the appellants are right in contending that as per the applicable provision at the relevant time [unamended Section 13(8) of the 2002 Act], they could have exercised their right of redemption until the registration of the sale certificate - which, indisputably, has already happened on 18-9 2007. Therefore, it is not possible to countenance the plea of the appellants to reopen the entire auction process. This is more so because, the narrative of the appellants that they had made a valid tender towards the subject loan accounts before registration of the sale certificate, has been found to be tenuous. Thus understood, their right of redemption in any case stood obliterated on 18-9 2007. Further, the amended Secti....
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....d creditor. This Court held that there was no reason as to why the general principle laid down by this Court in Narandas Karsondas [Narandas Karsondas v. S.A. Kamtam, (1977) 3 SCC 247] with reference to Section 60 of the Transfer of Property Act could not have application in respect of a secured interest in a secured asset created in favour of a secured creditor. It has been held that the said principles will apply on all fours in respect of a transaction as between the debtor and secured creditor under the provisions of the SARFAESI Act. xxx xxx xxx 115. Even if viewed from another angle, the claim of the appellants is not sustainable. The two-Judge Bench of this Court in Mathew Varghese [Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254], has heavily relied on the judgment of the three-Judge Bench of this Court in Narandas Karsondas. It has been held by this Court in Narandas Karsondas [Narandas Karsondas v. S.A. Kamtam, (1977) 3 SCC 247], that the right of redemption, which is embodied in Section 60 of the Transfer of Property Act, is available to the mortgagor unless it has been extinguished by the act of parties. It has been held,....
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....m for transfer or sale of that secured asset." 81. The proposed modification to Section 13(8) is set out also at pg.12 as under:- "(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for lease, assignment or sale of the secured assets,- (i) the secured assets shall not be leased, assigned or sold by the secured creditor; and (ii) in case, any step has been taken by the secured creditor for lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for lease or assignment or sale of such secured assets." 82. Strangely, on the next page at page 13, the following is stated:- "The Committee after examining the proposed amendment and the existing Rules in this regard decide to modify proposed Clause 11(ii) [section 13(8) of the principal Act] as under: "(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured credito....
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.... for the State of Telangana and Andhra Pradesh in M/s. Concern Ready Mix [(2019) 3 ALD 384 : Law Finder Doc Id # 1380151] commends itself to us and we accept and approve the same. 94. We shall now consider the judgment of Supreme Court in Shakeena [(2019) 5 RCR (Civil) 689 (SC)] cited by the counsel for 1st respondent. In that case, sale certificate had been issued in favour of the auction purchasers on 06.01.2006 and a Writ Petition was filed on 19.01.2006 challenging the auction and it was registered on 18.9.2007. The Court held that the appellants had failed to make a valid tender of amounts due or exercise their right of redemption in a manner known to law until the registration of the sale certificate on 18.09.2007 and that the right of redemption stood obliterated on 18.09.2007. The statement therein in para 29 that as per the amended provision stringent conditions have been stipulated that the tender of dues to the secured creditor shall be at any time before the date of publication of notice for public auction does not, in our opinion, lead to an expression of opinion by the Supreme Court that the law of redemption as per Section 60 of the Transfer of Property Act ....
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....e the applicability of Section 60 of the TP Act. It further noted, that although this Court in Shakeena (supra) had taken a contrary view, more particularly that the borrower's right of redemption stands curtailed by the 2016 Amendment, yet in the subsequent larger bench decision of this Court in S. Karthik (supra) it was held that such right of redemption would extinguish only on the sale certificate getting registered and not upon publication of the notice of auction. Consequently, it held that the right of redemption available to the borrower under Section 60 of the TP would not stand restricted only by virtue of the amended Section 13(8) of the SARFAESI Act. The relevant observations read as under: - "38. After referring to the amendments brought to the Security Interest (Enforcement) Rules, 2002, this Court took the view that amended Section 13(8) merely prohibits the secured creditor from proceeding further with the transfer of the secured assets by way of lease, assignment or sale if the dues are paid before issuance of notice for public auction. Thereafter it has been held that a restriction on the right of the mortgagee to deal with the property is not exactly the....
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....ned. While coming to the above conclusion, the Division Bench of the Supreme Court adverted to the amended Section 13(8) of the SARFAESI Act observing by way of obiter that tender of dues to the secured creditor with all costs, charges and expenses incurred by him shall be at any time before the date of publication of notice for public auction etc. 43. The decision in Shakeena (supra) was rendered by a two-Judge Bench of the Supreme Court on 20.08.2019. On the other hand, the decision in S.Karthik (supra) was rendered by a three-Judge Bench of the Supreme Court much later i.e., on 23.09.2021. The decision in S.Karthik (supra) being a later judgment and by a larger bench therefore will be binding on us and this decision says that the right of redemption stands extinguished only on the sale certificate getting registered. 44. Before we revert back to the facts of the present case, we may also refer to Sections 35 and 37 of the SARFAESI Act. While Section 35 says that the provisions of the SARFAESI Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, Section 37 clarifies that provisions....
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....on only till the date of publication of notice, which is a departure from the general right of redemption under the general law and therefore is inconsistent with Section 60 of Transfer of Property Act. In such a situation of inconsistency, the SARFAESI Act being a special one, would override the general law. This Court also took note of Section 35 and Section 37 respectively of the SARFEASI Act and held that Section 35 of the SARFEASI Act will have an overriding effect, notwithstanding anything which is inconsistent with any other law. Further, this Court held that the laws that are mentioned in Section 37 of SARFEASI Act i.e., laws which deal with securities or occupy the same field as the SARFAESI Act, would be applicable in addition to it and not in derogation to any other law. 97. The objects and reasons for the Amendment of the SARFEASI Act was to facilitate expeditious disposal of recovery applications. Taking the same into consideration, the Court noted that an interpretation which furthers the said object and reasons should be preferred and adopted. If the general law is allowed to govern, it will defeat the very object and purpose of the amended Section 13(8). 98. T....
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....t in favour of the auction-purchaser. 110.4. The Bank after having confirmed the sale under Rule 9(2) of the 2002 Rules could not have withheld the sale certificate under Rule 9(6) of the 2002 Rules, and entered into a private arrangement with a borrower. 110.5. The High Court under Article 226 of the Constitution could not have applied equitable considerations to overreach the outcome contemplated by the statutory auction process prescribed under the Sarfaesi Act. 110.6. The two decisions of the Telangana High Court in Concern Readymix [Concern Readymix v. Corporation Bank, 2018 SCC OnLine Hyd 783 : (2019) 3 ALD 384] and Amme Srisailam [Amme Srisailam v. Union Bank of India, 2022 SCC OnLine AP 3484] do not lay down the correct position of law. In the same way, the decision of the Punjab and Haryana High Court in Pal Alloys [Pal Alloys & Metal India (P) Ltd. v. Allahabad Bank, 2021 SCC OnLine P&H 2733] also does not lay down the correction position of law. 110.7. The decision of the Andhra Pradesh High Court in Sri Sai Annadhatha Polymers [Sri Sai Annadhatha Polymers v. Canara Bank, 2018 SCC OnLine Hyd 178] and the decision of the Telangana High ....
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....f lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets." 104. A plain reading of the aforesaid provision indicates that where the borrower tenders the amount of dues along with all costs, charges and expenses to the secured creditor "before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets", then as per clause (i) the secured asset shall not be transferred by the secured creditor, and as per clause (ii) where any steps towards such transfer, by lease, assignment or sale, as the case may be, was already taken by the secured creditor, then no further steps shall be taken in this regard. 105. To put it simply, as per sub-section (8) of Section 13 of the SARFAESI Act, a borrower can tender the amount of due to the secured creditor along with all costs, charges and expenses, at any time, before the date of publication of notice for public auction or inviting quotations or te....
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....movable secured asset may be transferred by the secured creditor. The said rule provides that the secured creditor may transfer the whole or any part of such secured asset by any of the following methods: - (a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or (b) by inviting tenders from the public (c) by holding public auction including through e-auction mode; or (d) by private treaty 110. As per Rule 8 sub-rule (6) of the SARFAESI Rules, before the transfer / sale of the immovable secured asset by the secured creditor, by any of the methods enumerated in Rule 8(5), the secured creditor is required to serve to the borrower a notice of thirty-days of the intended sale of such secured asset through any one of the methods specified in Rule 8(5). The Proviso appended to Rule 8(6) further stipulates that where the proposed sale of the secured asset is either by 'inviting tenders from the public' or by 'holding a public auction', then the secured creditor shall cause a public notice in two leading newspapers, in the manner and form specified therein. Rule 8 sub-rule (....
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....o Rule 9(1) further stipulates that if the sale of the immovable secured asset under Rule 8(5) fails, then for conducting any subsequent sale, the secured creditor would be required to serve, affix and publish the subsequent notice of sale for a period of fifteen-days only. In other words, for the sale of immovable secured asset in the first instance, a notice period of thirty-days is required to be observed by the secured creditor till the date of actual sale / transfer, and if the first sale fails, then for all subsequent sales, only a notice period fifteen-days is to be given, as opposed to thirty-days. The said rule reads as under: - "9. Time of sale, Issue of Sale Certificate and delivery of possession, etc.- xxx xxx xxx (1) No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) of Rule 8 or notice of sale has been served to the borrower: Provided further that if sale of immovable property by any one of the methods specified by sub-rule (5) of Rule 8 fails and ....
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.... the date of publication of notice" used in Section 13(8) of the SARFAESI Act, semantically appear to mean the publication of the notice of sale in the newspaper, as specified in Rule 8(6). This is particularly because Rule 9(1) while referring to the notice of sale of public auction / tender under the Proviso to Rule 8(6), specifically uses the word "published", thereby suggesting that term "publication" occurring in Section 13(8) is referring to nothing but the notice envisaged under the Proviso to Rule 8(6) or to put it simply, the notice of sale in the newspaper. 119. Thus, although it is entirely possible for an inference to be drawn from the word "published" in Rule 9(1) for construing the expression "before the date of publication of notice" used in Section 13(8), yet to our minds, this does not appear to be correct understanding of Section 13(8), for the reasons that we shall assign hereinafter. 120. We must not lose sight of the fact that Section 13(8) of the SARFAESI Act speaks of all four modes of sale / transfer, delineated under the SARFAESI Rules, more particularly, Rule 8(5). The provision also refers to each of the mode of sale uniformly and in the same manner....
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.... no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets." In the above illustration: - • signifies that no notice of sale is required to be published in newspaper. • signifies that notice of sale is required to be published in newspaper. 124. This inherent contradiction within the provision of Section 13(8) of the SARFAESI Act was taken notice of by the High Court of Telangana in M/s Venshiv Pharma Chem (P) Ltd. & Anr. v. State Bank of India & Ors. reported in 2018 SCC OnLine Hyd 39. In the said decision the High Court observed that the amended Section 13(8) attaches vital importance to the date of publication of the notice insofar as the right of redemption is concerned. As such, it held that where the sale of the secured asset is by public auction or inviting tender from public, the date of publication of such sale notice under Rule 9(1) would clinch the right of the borrower to redeem the mortgage. It further observed that where the sale is by inviting quotations or private treaty, there the situation would be covered by clauses (i) and (ii) of the amended Section 13(8) ins....
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....ded section 13(8) therefore would not arise where the sale is through public auction by publication of a sale notice under rule 9(1). 54. Further, under the new section 13(8), the right of redemption available to the borrower stands drastically curtailed. Now, such right is available to the borrower only up to the date of publication of the notice for public auction or inviting quotations or tender from public for transfer by way of lease, assignment or sale of the secured asset. Thus, when the secured creditor resorts to sale through public auction under rule 8(5) of the Rules of 2002, the date of publication of such sale notice under rule 9(1) of the Rules of 2002 would effectively clinch the right of the borrower to redeem the secured asset. However, rule 8(6) of the Rules of 2002 remained unchanged, despite the amendments in November, 2016. This rule continues to provide that the authorized officer should serve upon the borrower a notice of 30 days before sale of the immovable secured asset. Obviously, this notice is intimation to the borrower of the intention of the secured creditor to recover its dues by sale of such asset, thereby enabling him to exercise his right ....
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....or transfer of the secured asset, in view of the clear mandate requiring the secured creditor to wait for thirty-days before it can publish the notice for auction or tender, as the case may be. Thus, there is no occasion for clauses (i) and (ii) of Section 13(8) to be attracted, and as such the right of redemption would have to be construed in accordance with the substantive part of the provision instead. (iii) Thirdly, where however, the sale of the secured asset is either through public auction or tender, there, the possibility of the secured creditor proceeding with such sale is palpable, in the absence of any requirement to maintain a clear 30-days gap. It is for such situations that clauses (i) and (ii) of the amended Section 13(8) would come into the play, and the right of redemption would then necessarily have to be construed to continue to exist till the date of actual transfer, as was the position under the unamended Section 13(8) as per Mathew Varghese (supra). 126. The line of reasoning adopted by Venshiv Pharma Chem (supra) to hold that the right of redemption under the amended Section 13(8) of the SARFAESI Act would extinguish differently for different mode....
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.... to understand the form and manner of notice or notice(s), as the case may be, that is required under the SARFAESI Rules for the transfer of secured asset, by lease, assignment or sale of the secured asset. ii. There is only a single Notice of Sale required under Rule 8(6) of the SARFAESI Rules for transfer of secured asset, by lease, assignment or sale. 131. The entire controversy on the interpretation of Section 13(8) of the SARFAESI Act, revolves around the interpretation of the expression "before the date of publication". The reason why the said expression has been construed by various High Courts to mean the notice of auction is due to the prevailing misconception, that two separate notices are required, where the mode of sale of the secured asset is either by way of public auction or tender. This misconception has largely been because of a misreading of the provision of Rule(s) 8 and 9 of the SARFAESI Rules. a. Contradictory Views of the High Court on the subject. 132. The Telangana High Court in Venshiv Pharma Chem (supra) and K.V.V. Prasad Rao Gupta (supra) have held that the secured creditor is required to give a total of two notices; a thirty-days' notice of s....
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....he SARFAESI Rules, more particularly, Rule(s) 8(6) and 9(1), contemplate the issuance of only one notice of sale by the secured creditor. It observed that Rule 9(1) does not stipulate the requirement of publishing a separate notice, rather it merely makes a reference to publish the self-same notice that has to be served to the borrower under Rule 8(6). According to it, if Rule(s) 8(6) and 9(1) are construed to mean that two separate notices are required, then it would result in the borrower having a period of 60-days, which is repugnant to the statutory stipulated period of thirty-days' or fifteen-days' time, as the case may be, under the SARFAESI Rules. Thus, it held that there has to be only one notice under Rule 8(6), and it would be sufficient for Rule 9(1), if the date of auction falls beyond 30 days from the date of issuance of such notice, and publication thereof. In this regard, reliance was placed by the Telangana High Court on the decision of this Court in Canara Bank v. M. Amarender Reddy reported in (2017) 4 SCC 735. 136. Thus, there appears to be a divergence of opinion as regards, first, whether Rule 8(6) read with Rule 9(1) of the SARFAESI Rules contemplate issuan....
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....espectively. 142. The foremost reason, why we say that for the transfer of an immovable secured asset by way of lease, assignment or sale, under the SARFAESI Rules by the secured creditor only a single composite notice is required, is in view of the language couched in the provisions of Rule(s) 8 and 9, respectively. 143. The marginal note appended to Rule 9 of the SARFAESI Rules reads "Time of sale, Issue of Sale Certificate an delivery of possession, etc.". Thus, it is clear that Rule 9 only provides when the sale of the immovable secured asset may take place along with the formalities by which such sale would be concluded. The "public notice" alluded to in Rule 9(1) does not speak of any separate or distinct notice. This is manifest from the expression "as referred to in the proviso to sub-rule (6) of Rule 8 or notice of sale has been served to the borrower" used in the said Rule. 144. Rule 8(6) is the first instance, in the entire scheme of the SARFAESI Rules where any reference is made to a notice, insofar as sale of immovable secured asset is concerned. It provides that the secured creditor shall serve to the borrower a "notice of [...] for sale" and cause a "public ....
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....from the one under Rule 8(6). Rather the mentioning of "notice of sale" in Rule 8(7) and 9(1) is nothing but a reference back to the self-same notice of sale under Rule 8(6). 149. We are conscious of the fact, that the Appendix IV-A to the SARFAESI Rules, specifically mentions that the said prescribed format is only for the notice envisaged under the Proviso to Rule 8(6). Since there is no form or format prescribed for the notice of sale that has to be served to the borrower in terms of the substantive part of Rule 8(6), it could be said that, the reason why the legislature thought fit to prescribe a standard format only for the notice contemplated under the Proviso to Rule 8(6) and not the other Rules, was because of the public nature of such notice. 150. To obviate the possibility of any ambiguity, mala-fide, deception, prejudice or unclarity in the sale process of the secured asset being caused to the public for whom such notices are intended, advertently or inadvertently by the secured creditor, the legislature thought fit to prescribe a standard format. In such circumstances, it could be said that mere omission of any prescribed form or format in the Appendix for the oth....
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...."Notice is hereby given to the public in general and in particular to the Borrower (s) and Guarantor (s)" (emphasis) in the prescribed format under the Appendix IV-A, makes it manifestly clear that the "public notice" contemplated under the Proviso to Rule 8(6), is to be addressed not just to the public in general but also to the borrower(s) and the guarantor(s) to the secured asset. As a natural corollary to the aforesaid, even though, the Proviso to Rule 8(6) only goes so far as to say that, in case of public auction or tender, the secured creditor shall cause a public notice, yet the Appendix IV-A would reveal that this notice to the public is also a notice to the borrower and the guarantors to the secured asset, i.e., effectively, a single composite notice under both Rule 8(6) and the Proviso thereto. 153. It is not difficult to comprehend why, the mentioning or use of the words "shall cause a public notice" or "every notice of sale" or "public notice" in Rule(s) 8(6) Proviso, 8(7) and 9(1), respectively, is only a reference to the notice of sale required under Rule 8(6) and not a stipulation for causing or publishing a separate, distinct notice under each of the aforesaid r....
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....oviso appended to it, Rule 8(7) and Rule 9(1) of the SARFAESI Rules all speak of only one single notice of sale. The distinction lies only in the manner in which it is to be given, inasmuch as under Rule(s) 8(6), Proviso thereto, 8(7) and 9(1), the same notice is required to be served to the borrower, published in the newspaper, affixed on the secured asset & uploaded on the website, and maintain a 30-day gap from the date of actual sale, respectively. Despite the variance in the manner in which the notice of sale is to be given or effectuated under the aforesaid rules, it nevertheless still continues to be one single composite notice only. 158. The reason which appears to have weighed with the High Courts in Venshiv Pharma Chem (supra) and K.V.V. Prasad Rao Gupta (supra) Sri. Sai Annadhatha Polymers (supra) for arriving at the finding that two separate notices are required under the SARFAESI Rules; one under Rule 8(6) and the other under Rule 9(1), was due to the use of the word "public notice" in Rule 9(1), which the High Courts understood to mean a separate and distinct notice that has to be published by the secured creditor, apart from the notice that has to be served to the....
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....from the date on which he served, affixed or published the notice of sale, whichever is later, would such "notice of sale" be considered valid in the eyes of law. 163. At this stage, we may clarify, with a view to obviate any confusion that, when this Court in Bafna Motors (supra) upheld and approved the decisions of the Sri Sai Annadhatha Polymers (supra) and K.V.V. Prasad Rao Gupta (supra), this Court never held that two separate noticed with a time-gap of thirty-days each was required under the SARFAESI Rules, more particularly, the Proviso to Rule 8(6) and Rule 9(1), respectively. What has been conveyed in so many words by this Court in Bafna Motors (supra) is that the decisions of the Sri Sai Annadhatha Polymers (supra) and K.V.V. Prasad Rao Gupta (supra) lay down the correct position of law insofar as the interpretation of the amended Section 13(8) of the SARFAESI Act is concerned, more particularly that by virtue of the amendment, the right of redemption of the borrower now stands significantly curtailed. The relevant observations made by this Court in Bafna Motors (supra) read as under: - "(vii) The decision of the Andhra Pradesh High Court in Sri Sai Annadhatha....
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....re no public notice is required, there the right of redemption would extinguish and consequently the sale can take place only on the expiry of thirty-days from the date of service of the notice of sale to the borrower. 167. Lastly, the reason behind the stipulation of time period of 30 days in Rules 8(6) and 9(1) of the SARFAESI Rules respectively is that in the former rule, once the notice of sale is served to borrower by the secured creditor indicating its intention to sell the secured asset, the borrower should have sufficient time to try and redeem the secured asset, it is for this purpose the period of 30 days has been stipulated. Whereas, the rationale behind the stipulation of 30 days gap between the date of notice of auction and/or notice of sale being served and the date of actual sale is so that whichever mode of sale is involved, a sufficient amount of time is given to the prospective purchasers, to ensure that the mode of sale fetches the maximum possible price in the least time. This is to avoid underbidding, undervaluation, collusion, fraud, inadequate pricing etc. However, there is no rationale whatsoever as to why the gap is necessary. 168. Both the objects th....
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....place before the expiry of thirty-days, would be reckoned from the date of issuance of the "notice of sale", which would include both the public notice of sale in the newspaper and the service thereof to the borrower, whichever is later. (v) Under Rule 8(6) read with Rule 9(1) both the notice of sale can be served as-well as published in the newspaper, simultaneously on the same date. All that is required under Rule 9(1) is that thirty-day gap is maintained between when the notice of sale is served, affixed and published, whichever is later, as the case may be, till the date of actual sale. iii. What is the import of the expression "before the date of publication" used in Section 13(8) of the SARFAESI Act. 170. We turn back to the provision of Section 13(8) of the SARFAESI Act. The amended provision of Section 13(8) attaches vital importance to date of publication of notice for, namely public auction, invitation of quotation or tender, or private treat, for the purpose of the right of redemption of the borrower. As per the plain language of the provision, the moment the notice for holding auction, obtaining quotation, inviting tender or conducting private treaty is "....
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.... the forms and manner that he is obligated to do, under the relevant SARFAESI Rules, depending upon the mode of sale elected by the secured creditor. 176. Similarly, despite the different mode or manner in which the notice of sale is to be given by the secured creditor in terms of Rule 8(6), the Proviso thereto read with Rule 9(1), and for that matter even Rule 8(7), if the aforesaid rules are construed to refer and mean parts of a single composite notice of sale, then irrespective of the variation in the manner in which each rule contemplates the giving of such notice of sale, the discord in the language of Section 13(8) of the SARFAESI Act, more particularly, the expression "before the date of publication" may be resolved, notwithstanding the absence of any actual publication of notice of sale in some modes of sale. 177. Thus, for the purpose of the amended Section 13(8) of the SARFAESI Act, the expression "before the date of publication" used therein, has to be construed to refer and mean the publication of a valid "notice of sale" for the secured asset, although such publication may vary depending upon the mode of sale chosen by the secured creditor. 178. The word "pub....
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.....01.23021 by which date the amended Section 13(8) of the SARFAESI Act had already come into force. 184. In the aforesaid context, we may refer to and rely upon a decision of this Court in the case of M.D. Frozen Foods (supra) wherein this Court observed that the SARFAESI Act was brought into force with the object of providing expeditious procedure for recovery of large debts in NPAs. It held that the Act applied to all the claims which were alive when SARFAESI Act was into force. Certain Non-Banking Financial Companies (NBFCs) were notified at various dates between 2002-2016 (when judgement came). The judgement says for the NBFC it would be similarly applicable. 185. Thus, logically from the above, if the claim is alive on 01.09.16 when the Section 13(8) is amended and the notice for auction is issued after 01.09.16, then the amended section should apply otherwise an absurd situation would be created, that the Act which applied retroactively to "alive claims" prior to the Act coming into force on 2002, but the amendment in it like in Section 13(8) would apply prospectively. That would create absurd situations. 186. The SARFAESI Act intends to provide a remedy in respect of....
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....emption is not a contractual right, and rather a statutory right. Such right of redemption is generally governed by the TP Act, and subject to material modification or alteration by any overriding special law in this regard. Even under the SARFAESI Act, the right of redemption has been statutorily recognized and given effect to in Section 13(8) of the SARFAESI Act, albeit subject to conditions stipulated thereunder insofar as its exercise is concerned. 192. Thus, the contention of the borrowers that their right of redemption has to necessarily be construed in accordance with the date of when the loan was obtained is completely misconceived. Any contractual terms of arrangement in respect of loan facility obtained will have no bearing or significance in respect of application of the statutory provision of the SARFAESI Act and the rules thereunder. Since the right of redemption under the SARFAESI Act, is nothing but a manifestation of the statutory provision. 193. In this regard, reference may be made to the decision of this Court in Authorized Office, Central Bank of India v. Shanmugavelu reported in 2024 INSC 80 wherein one of us, J.B. Pardiwala J., held that where the legisl....