Till what point of time the right of redemption of mortgage under Section 13(8) of the SARFAESI Act, 2002 can be exercised in respect of a Secured Asset? – Celir LLP Vs. Bafna Motors (Mumbai) Pvt. Ltd. & Ors. – Supreme Court
In this landmark judgment, Hon’ble Supreme Court, bench comprising of Dr. Justice D.Y. Chandrachud (CJI) and Mr. Justice J. B. Pardiwala held that:
(i) The amended provisions of Section 13(8) of the SARFAESI Act, make it clear that the right of the borrower to redeem the secured asset stands extinguished thereunder on the very date of publication of the notice for public auction under Rule 9(1) of the Rules of 2002. In effect, the right of redemption available to the borrower under the present statutory regime is drastically curtailed and would be available only till the date of publication of the notice under Rule 9(1) of the Rules of 2002 and not till the completion of the sale or transfer of the secured asset in favour of the auction purchaser.
(ii) The Bank after having confirmed the sale under Rule 9(2) of the Rules of 2002 could not have withhold the sale certificate under Rule 9(6) of the Rules of 2002 and enter into a private arrangement with a borrower.
(iii) 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.
(iv) The two decisions of the Telangana High Court in the case of Concern Readymix (2018) ibclaw.in 155 HC and Amme Srisailam (2022) ibclaw.in 502 HC do not lay down the correct position of law. In the same way, the decision of the Punjab and Haryana High Court in the case of Pal Alloys (2021) ibclaw.in 98 HC also does not lay down the correction position of law.
(v) The decision of the Andhra Pradesh High Court in Sri Sai Annadhatha Polymers (2018) ibclaw.in 49 HC and the decision of the Telangana High Court in the case of K.V.V. Prasad Rao Gupta (supra) lay down the correct position of law while interpreting the amended Section 13(8) of the SARFAESI Act.