Secured Assets - The Legal Chamber

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 classif...

The Supreme Court, in Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd., ruled that Section 11 of the SARFAESI Act is mandatory, requiring inter-se disputes between banks and financial institutions concerning secured assets to be resolved through arbitration. No explicit arbitration agreement is needed; the provision legally mandates it, thereby divesting DRT of jurisdiction in such matters. Facts Of The Case: In the case of Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd. & Ors., the core dispute involved the priority of charge over secured assets (stocks of paddy and rice) belonging to a common borrower, M/s Sri Nangli Rice Mills Pvt. Ltd., between two public sector banks: Bank of India (appellant) and Punjab National Bank (respondent). Both banks had extended credit facil...

Tag: Secured Assets

No Redemption After Auction Notice: Supreme Court Major Ruling on Bank Loan Recovery

SARFAESI Act’s Section 11: Supreme Court Affirms Mandatory Arbitration for Financial Institutions