This Supreme Court judgment clarifies that the right of redemption of a mortgagor under Section 13(8) of the SARFAESI Act is extinguished upon the publication of the notice of sale, as per the 2016 amendment. The Court held that this amended provision is retrospective in operation and overrides the general right of redemption under the Transfer of Property Act, 1882. The ruling emphasizes that only a single composite notice of sale is required under the SARFAESI Rules, irrespective of the mode of transfer adopted by the secured creditor.
Facts Of The Case:
The borrowers, M/s KPK Oils and Proteins India Pvt. Ltd. and its guarantors, availed credit facilities from the respondent Bank in January 2016, creating an equitable mortgage over various properties. After the loan account was classified as a Non-Performing Asset (NPA) in December 2019, the Bank initiated proceedings under the SARFAESI Act, issuing a possession notice and subsequently an auction sale notice in January 2021. The appellants successfully bid for the secured property in the auction held on February 26, 2021, deposited the entire sale consideration, and were issued a sale certificate on March 22, 2021. Subsequently, the borrowers deposited a substantial amount with the Bank, claiming the right to redeem the mortgage. The Debt Recovery Tribunal (DRT) dismissed the borrowers’ applications challenging the sale. However, the High Court, in a writ petition, allowed the borrowers to redeem the property by repaying the outstanding dues, quashing the sale certificate, primarily relying on the pre-amended interpretation of the right of redemption. The auction purchasers appealed to the Supreme Court against this order.
Procedural History:
The procedural history of this case commenced before the Debt Recovery Tribunal (DRT), Coimbatore, where the borrowers filed applications under Section 17 of the SARFAESI Act challenging the possession and auction sale notices. The DRT ultimately dismissed these applications. The borrowers then bypassed the statutory appellate remedy before the Debt Recovery Appellate Tribunal (DRAT) and directly filed a Writ Petition before the High Court of Judicature at Madras. The High Court allowed the writ petition, quashed the sale certificate issued to the auction purchasers, and permitted the borrowers to redeem the mortgage by repaying the dues. Aggrieved by this decision, the auction purchasers filed the present appeals before the Supreme Court of India by way of special leave, which were allowed, setting aside the impugned judgment of the High Court.
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Court Observation:
The Supreme Court made pivotal observations, holding that the 2016 amendment to Section 13(8) of the SARFAESI Act drastically curtailed the borrower’s right of redemption, extinguishing it upon the publication of the sale notice, not upon the final registration of the sale certificate. It clarified that this amended provision has retrospective application to all live claims and proceedings. The Court further ruled that the SARFAESI Rules envisage only a single, composite notice of sale, and the concept of “publication” in Section 13(8) encompasses the service, affixation, and public notice of this sale notice as required by the rules. Consequently, the special provisions of the SARFAESI Act override the general right of redemption under the Transfer of Property Act, and writ jurisdiction should not be exercised to overreach a concluded statutory auction process.
Final Decision & Judgement:
The Supreme Court allowed the appeals filed by the auction purchasers and set aside the impugned judgment of the High Court. It held that the borrowers’ right of redemption stood extinguished upon the publication of the auction sale notice, as per the amended Section 13(8) of the SARFAESI Act. The Court concluded that the High Court erred in entertaining the writ petition and quashing the validly concluded auction sale, thereby restoring the sale certificate in favour of the appellants. Any third-party rights created over the secured asset subsequent to the auction were declared non-est.
Case Details:
Case Title: M. Rajendran & Ors. Versus M/S KPK Oils and Protiens India Pvt. Ltd. & Ors. Citation: 2025 INSC 1144 Appeal Number: Civil Appeal No. 12174 of 2025 Date of Judgement: 22nd September, 2025 Judges/Justice Name: Justice J.B. Pardiwala and Justice R. Mahadevan
Download The Judgement Here