Whether once Secured Creditor has proceeded to change the mode of sale, from public auction to private treaty, minimum 30 days’ notice is required to be given in view of Rule 8(6) read with Rule 9(1) of Security Interest (Enforcement) Rules, 2002 and u/s 13(8) of SARFAESI Act, 2002, Bank is obliged to call upon Borrower to clear dues before proceeding for sale? – IDFC First Bank Ltd. Vs. Dharmendra Popatlal Patel – Gujarat High Court
December 7, 2023
The Division Bench of Hon’ble High Court of Gujarat held that:
(i) The bank or the Secured Creditor is not obliged to call upon the borrower to clear the dues before proceeding for the sale of the secured asset.
(ii) Even with the change of mode of sale from public auction to private treaty, it would have no bearing, insofar as the right to redeem conferred on the borrowers under Section 13(8) of the Act, 2002.
(iii) The period of thirty days between the date of service of said notice to the date of sale, as required in Rule 9(1) of the Rules, 2002, will have no bearing on the exercise of right of the borrower to redeem the mortgage under Section 13(8) of the Act.
(iv) The cut off date as per Section 13(8) is the date of publication of notice, whether for public auction or inviting quotations or tender from public or private treaty – for sale or transfer. Any subsequent date to the date of service of notice upon the borrower in case of sale by private treaty or the date of sale subsequent thereto will have no consequence at all.
(v) As the publication of the notice for public auction under Rule 9(1) of the Rules, 2002 has not been challenged, the subsequent sale notices cannot be permitted to be assailed. Any of the subsequent notices issued by the Secured Creditor informing the borrowers for any subsequent sale, there was no question of revival of the said right.
