Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-012174-012174 – 2025 |
| Diary Number | 20228/2023 |
| Judge Name | HON’BLE MR. JUSTICE J.B. PARDIWALA |
| Bench | HON’BLE MR. JUSTICE J.B. PARDIWALA & HON’BLE MR. JUSTICE K.V. VISWANATHAN |
| Precedent Value | Binding |
| Overrules / Affirms | Affirms Bafna Motors; overrules Concern Readymix and Pal Alloys |
| Type of Law | Statutory interpretation of the SARFAESI Act and Rules |
| Questions of Law |
|
| Ratio Decidendi |
The 2016 amendment to Section 13(8) of the SARFAESI Act extinguishes a borrower’s right of redemption upon publication of the sale notice, regardless of mode of transfer. The SARFAESI Rules (8(6), its proviso and 9(1)) envisage a single composite notice of sale—service, publication, affixation and upload may occur simultaneously, followed by a 30-day sale window. As a special law, the amended provision overrides the general right under Section 60 TP Act. The amendment applies to all notices published after 1 September 2016. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court |
Borrowers availed credit facilities in January 2016 and defaulted, leading to NPA classification (Dec 2019). The Bank issued Section 13(2)&(4) notices, took possession (Oct 2020) and published an auction notice (22 Jan 2021). Appellants bid successfully (Feb 2021), paid the price, and received a sale certificate (22 Mar 2021). Borrowers paid outstanding dues only after notice publication and sought redemption in the High Court, which quashed the sale—leading to this appeal. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All Debt Recovery Tribunals, Debt Recovery Appellate Tribunals, High Courts and subordinate courts |
| Persuasive For | Other High Courts and the Supreme Court on SARFAESI interpretation |
| Overrules |
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| Distinguishes |
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| Follows | Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd. (2024) 2 SCC 1 |
What’s New / What Lawyers Should Note
- The borrower’s redemption right under Section 13(8) is lost on publication of the sale notice, not on hammer-fall or sale completion.
- SARFAESI Rules (8(6), proviso, 8(7), 9(1)) require a single composite “notice of sale” that may be served, published, affixed and uploaded on the same day, followed by a 30-day auction/tender period.
- The amended Section 13(8) applies to all notices published on or after 1 September 2016, regardless of when the loan was sanctioned.
- As a special law, amended Section 13(8) overrides Section 60 TP Act; no artificial distinction by mode of sale.
- Overrules decisions imposing dual-notice or extended-period requirements; quashes third-party maneuvers post-notice.
Summary of Legal Reasoning
- Legislative Purpose: SARFAESI Act enacted to expedite recovery, empower non-court enforcement.
- Statutory Scheme: Sections 13(8), 35, 37; Rules 8 & 9 define sale mechanics and redemption cut-off.
- Unamended vs Amended: Pre-2016, redemption lasted until transfer. Post-2016, redemption window closes upon sale-notice publication.
- Special Law vs General Law: Amended Section 13(8) (special) overrides TP Act Section 60 (general).
- Notice Requirement: Only one composite “notice of sale” is mandated, regardless of mode—serve borrower & publish/affix/upload as per Rules; 30-day sale gap.
- Conflict Resolution: Affirms Bafna Motors; overrules High Court decisions requiring dual notices or longer redemption windows.
- Retrospectivity: Amendment applies to all sale-notices published on/after 1 Sept 2016, covering ongoing NPAs.
Arguments by the Parties
Petitioner (Auction Purchasers)
- High Court erred in quashing sale certificate and admitting redemption post-notice.
- Ratio in Bafna Motors covers similar facts post-amendment; right to redeem expires on notice publication.
Respondent Borrowers
- Bafna Motors not applicable; loan sanctioned before 2016 amendment, so unamended Section 13(8) prevails.
- Amendment not retrospective; redemption should await sale completion.
Factual Background
Borrowers took a cash-credit and term-loan facility in January 2016, defaulted and were declared NPA in December 2019. The Bank took possession (Oct 2020), published an auction notice under Rule 8(6)/9(1) on 22 Jan 2021, and auctioned the property on 26 Feb 2021. Appellants deposited the sale price and received a sale certificate on 22 Mar 2021. Borrowers tendered dues only after notice publication and succeeded in the High Court, prompting this appeal.
Statutory Analysis
- Section 13(8) SARFAESI Act (as amended 1 Sept 2016): borrower’s redemption cut-off is “before the date of publication of notice” for any mode of transfer.
- Rule 8(6) SARFAESI Rules: serve 30-day “notice of sale” to borrower; proviso mandates publication for auction/tender; Rule 8(7) & Rule 9(1) regulate affixation, upload & sale timing.
- Sections 35 & 37 SARFAESI Act: special-law non-obstante and non-derogation clauses override general laws including Transfer of Property Act.
Alert Indicators
- 🚨 Breaking Precedent – Conflicts with earlier High Court decisions overturned
- ✔ Precedent Followed – Bafna Motors reaffirmed
- 🔄 Conflicting Decisions – Resolves divergence over notice requirements and redemption cut-off