DRAT Kolkata (2025.07.18) in The Authorized Officer, Canara Bank and Anr. Vs. Sree Vijayasri Lakshmi Traders and Ors. [(2025) ibclaw.in 165 DRAT, Appeal No. 03 of 2025 (Arising out of S.A. No. 46 of 2019 in DRT Visakhapatnam)] held that;
Accordingly, it is incumbent upon the Authorised Officer, even in case of subsequent sale, to comply the provisions of Rule 8 (6) as well as proviso to Rule 9 (1). Law nowhere curtails the right to redemption available to the Borrower under Section 13 (8) of the Act in case of a subsequent sale. Accordingly, I am of the considered view that even in case of subsequent sale, Authorised Officer is required to issue 30 days notice under Rule 8 (6) and thereafter 15 days notice under Proviso attached to Rule 9 (1).
Excerpts of the Order;
Heard the Learned Counsel for the Appellant as well as Learned Counsel for Respondent No. 3 and perused the records. Despite service none appeared for the Respondent No. 1.
# 2. Instant Appeal has arisen against a judgment and order dated 6th August, 2024 passed by Learned DRT Visakhapatnam in S.A. No. 46 of 2019 whereby Learned DRT allowed the Securitisation Application.
# 3. As per pleadings of the parties, a Securitisation Application u/s 17 (1) of the SARFAESI Act, 2002 was filed by the borrower challenging the E-auction Sale Notice dated 13th December, 2018 and the sale conducted on 29th January, 2019 with consequential reliefs that all the steps taken by the secured creditor under Securitisation Act are against law. The Securitisation Applicant was a borrower of the Appellant Bank herein whose payments of the instalment became irregular and account was classified as NPA on 01.11.2017. Notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 16.11.2017. Notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the Rules) was received by the Applicant on 07.06.2018 for E-auction sale on 23.07.2018. Thereafter, a notice under Rule 9(1) of the Rules was issued by the Bank on 05.09.2018 fixing the e-auction Sale on 12.12.2018. E-auction sale failed as there was no bidder. Subsequent thereto, fresh e-auction Sale Notice was issued on 13.12.2018 fixing the e-auction Sale on 29.01.2019. It was published on 23.12.2018. No notice under Rule 8(6) of the Rules was issued or served or published on the borrower. The Sale was finalized in favour of Respondent Nos. 2 and 3 for an amount of Rs. 1.33,44,000/- on 29.01.2019. In the meantime, proceedings under Section 14 of the SARFAESI Act were also carried out.
# 4. Feeling aggrieved a challenge to the e auction sale was made by the Applicant by filing a securitization Application under Section 17(1) of the Act.
# 5. Respondent Bank filed the reply before the DRT stating that the Securitisation action was taken in accordance with law. 30 days notice was already given to the borrower on 05.09.2018. Thereafter, e-auction Sale Notice was issued fixing the auction Sale on 29.01.2019 and the auction was conducted in favour of the Respondent Nos. 2 and 3 herein. It is further stated the Notices were duly served, published in accordance with law. The bid amount was duly deposited by the Auction Purchaser. Learned DRT after hearing the Learned Counsel for the parties recorded a finding that there is violation of Rule 8(6) and 9(1) of the Rules, 2002.
# 6. Learned DRT also placed reliance upon the judgment of CELIR LLP -vs- Bafna Motors (Mumbai) Private Limited & Others [(2024) 2 SCC 1] and Sri. Sai Annadhatha Polymers & Anr. Vs. Canara Bank rep. by its Branch Manager, Mandanapalle [2018 SCC OnLine Hyd 178]
# 7. Learned Counsel for the Appellant would submit that Learned DRT erred in recording the findings as there was compliance of Rule 8(6) and 9(1) of the Rules, 2002. It is further submitted that no fresh Rule 8(6) Notice was required to be issued. Learned Counsel for the Auction purchaser adopted the submissions made by the Learned Counsel for the Bank/ Appellant.
# 8. Only one issue is to be decided is about the validity of Notice under Rule 8(6) and 9(1) of the Rules?
# 9. The only controversy in this matter is on the issue as to whether in the case of subsequent sale fresh 30 days notice under Rule 8 (6) is required or not?
Rules 8 (6) and 9 (1) of the Security Interest (Enforcement) Rules, 2002 are as under :
“8. Sale of immoveable secured assets
(6) The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5):”
“9. Time of sale, issue of sale certificate and delivery of possession, etc.
(1) No sale of immovable property under these rules, in first instance shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) of rule 8 or notice of sale has been served to the borrower:”
“Section 13 (8) SARFAESI Act reads as under:
“(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets –
(i) the secured assets shall not be transferred by way of lease, assignment or sale by the secured creditor; and
(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets]”
# 10. We are conscious of the fact that in a recent judgment in CELIR LLP -vs- Bafna Motors (Mumbai) Private Limited & Others [(2024 2 SCC 1] the Hon’ble Apex Court has dealt with all the issues relating to the auction sale as well as compliance of the provisions of the Act as well as the Rules. The Hon’ble Apex Court has dealt with the issue on the sanctity of public auction. Hon’ble the Apex Court has placed reliance upon a judgment in Valji Khimji And Company -vs- Official Liquidator of Hindustan Nitro Product (Gujarat) Limited & Others [(2008) 9 SCC 299] wherein it was held that once an auction is confirmed, the same can be interfered only on very limited grounds as otherwise no auction would ever be complete.
# 11. Hon’ble Apex Court in Bafna Motors (supra) has reiterated the case of K. Kumara Gupta -vs- Sri Markendaya and Sri Omkareswara Swamy Temple & Others [(2022) 5 SCC 710] wherein the Hon’ble Apex Court in paragraph 17 it has held that:
“17. The sale pursuant to the public auction can be set aside in eventuality where it is found on the basis of material on record That the property had been sold away at a throwaway price and/or on a wholly inadequate consideration because of the fraud and/or collusion and/or after any material irregularity and/or illegality is found in conducing/holding the public auction. After the public auction is held and the highest bid is received and the property is sold in a public auction in favour of a highest bidder, such a sale cannot be set aside on the basis of some offer made by third parties subsequently and that too when they did not participate in the auction proceedings and made any offer and/or the offer is made only for the sake of making it and without any serious intent. In the present case, as observed hereinabove, though Shri Jagat Kumar immediately after finalising the auction stated that he is ready and willing to pay a higher price, however, subsequently, he backed out. If the auction-sale pursuant to the public auction is set aside on the basis of such frivolous and irresponsible representations made by such persons then the sanctity of a public auction would be frustrated and the rights of a genuine bidder would be adversely affected.”
# 12. Further Hon’ble Apex Court has reiterated in Case Law and has held in Eva Agro Feeds Private Limited -vs-Punjab National Bank [(2023) SCC OnLine 1138] wherein it was held that there can be no absolute or unfettered discretion on the part of the Liquidator to cancel an auction which is otherwise valid. Hence it was held by the Hon’ble Apex Court that in the case of Bafna Motors (supra) that :
“86. Thus, what is discernible from above is that, it is the duty of the courts to zealously protect the sanctity of any auction conducted. The courts ought to be loath in interfering with auctions, otherwise it would frustrate the very object and purpose behind auctions and deter public confidence and participation in the same.
87. Any other interpretation of the amended Section 13 (8) will lead to a situation where multiple redemption offers would be encouraged by a mischievous borrower, the members of the public would be dissuaded and discouraged from in participating in the auction process and the overall sanctity of the auction process would be frustrated thereby defeating the very purpose of the SARFAESI Act. Thus, it is in the larger public interest to maintain the sanctity of the auction process under the SARFAESI Act.”
“96. More than a decade back, this Court had expressed serious concern despite its repeated pronouncements in regard to the High Courts ignoring the availability of statutory remedies under the RDBFI Act and the SARFAESI Act and exercise of jurisdiction under Article 226 of the Constitution. Even after, the decision of this Court in Satyawati Tondon (supra), it appears that the High Courts have continued to exercise its writ jurisdiction under Article 226 ignoring the statutory remedies under the RDBFI Act and the SARFAESI Act.
Conduct of the Bank
97. The genesis of the entire case lies in the illegitimate conduct of the Bank in placing different concerns above the clear provisions of the law. First, there was failure on the part of the Bank to issue sale certificate in favour of the auction purchaser despite the fact that the entire payment of auction bid was made. Secondly, although the right of redemption clearly stood lapsed under Section 13 (8) of the SARFAESI Act and auction having taken place wherein full bid amount was received, yet the Bank proceeded to accept the offer of full payment of the Borrower which is clearly impermissible in law. Once the auction notice is published in accordance with Section 13 (8) of the SARFAESI Act, then unless and until the auction is held to be bad and illegal in the facts of the case, the right of redemption of mortgage is not available to the borrower.”
# 13. In view of the law laid down by the Hon’ble Apex Court, now we have to scrutinize whether the procedure, described in Rules 8 (6) and 9 (1) of The Rules, is followed by the secured creditors or not?
# 14. Now it is to be seen as to what are the rights of the Borrower available to him under Section 13 (8) of the Act? At this stage it would be apposite to refer to the provisions of Section 13 (8) of the Act as was viewed in the old Act as well as in the amended Act of 2016 which are as under :
“Pre-amendment Section 13(8) of the SARFAESI Act
(8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset.
“Post-amendment Section 13(8) of the SARFAESI Act
(8) Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets –
(i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor, and
(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets.”
# 15. In the case of Mathew Varghese (supra) the Hon’ble Apex Court has considered the importance of right of redemption of the Borrower. Although the case of Mathew Varghese (supra) was under the provisions of the old Act but the difference in the old Act as well as in the amended Act, as would appear from the provisions itself, is to the effect that in the old Act the right of redemption was available to the Borrower till the deed is executed while under the amended provisions right is curtailed to an extent that the right of redemption is available only till the date of publication of Sale Notice. However, as far as right of redemption is concerned, the law laid down in the case of Mathew Varghese (supra) still holds good, as has been reiterated by the Hon’ble Apex Court in the case of Bafna Motors (supra). In Mathew Varghese (supra) the Hon’ble Apex Court held that by virtue of the stipulation contained in Section 13 (8) read with Rules 8 (6) and 9 (1), the owner/Borrower should have clear notice of 30 days before the date and time when the sale or transfer of the secured asset would be made as that alone would enable the owner/Borrower to take all efforts to retain his or her ownership by tendering the dues of the secured creditor before that date and time. It is further held in paragraph 33.3 that :
“33.3. Be that as it may, the paramount objective is to provide sufficient time and opportunity to the borrower to take all efforts to safeguard his right of ownership either by tendering the dues to the creditor before the date and time of the sale or transfer, or ensure that the secured asset derives the maximum price and no one is allowed to exploit the vulnerable situation in which the borrower is placed.”
# 16. It is further held in paragraph 34 that :
“x x x. The underlying purport of such a requirement is to ensure that under no circumstances, the rights of the owner till such right is transferred in the manner known to law is infringed. Merely because the provisions of the SARFAESI Act and the Rules enable the secured creditor to take possession of such an immovable property belonging to the owner and also empowers to deal with it by way of sale or transfer for the purpose of realising the secured debt of the borrower, it does not mean that such wide power can be exercised arbitrarily or whimsically to the utter disadvantage of the borrower.”
# 17. It is further held in paragraph 35 that :
“35. X x x x x. Therefore, a reading of Rules 8 and 9, in particular, sub-rules (1) to (4) and (6) of Rule 8 and sub-rule (1) of Rule 9 makes it clear that simply because a secured interest in a secured asset is created by the borrower in favour of the secured creditor, the said asset in the event of the same having become a non-performing asset cannot be dealt with in a light-hearted manner by way of sale or transfer or disposed of in a casual manner or by not adhering to the prescriptions contained under the SARFAESI Act and the abovesaid Rules mentioned by us.”
# 18. It was further held in paragraph 38 that “until the sale is complete by registration of sale, the mortgagor does not lose the right of redemption. It was also made clear that it was erroneous to suggest that the mortgagee would be acting as the agent of the mortgagor in selling the property.”
The law laid down in Ram Kishun -vs- State of U.P. [(2012) 11 SCC 511] was reiterated wherein paragraph 13, 14 and 28 it was held that :
“13. Undoubtedly, public money should be recovered and recovery should be made expeditiously. But it does not mean that the financial institutions which are concerned only with the recovery of their loans, may be permitted to behave like property dealers and be permitted further to dispose of the secured assets in any unreasonable or arbitrary manner in flagrant violation of the statutory provisions.
14. A right to hold property is a constitutional right as well as a human right. A person cannot be deprived of his property except in accordance with the provisions of a statute. (Vide Lachhman Dass v. Jagat Ram [(2007) 10 SCC 448] and State of M.P. v. Narmada Bachao Andolan [(2011) 7 SCC 639] Thus, the condition precedent for taking away someone’s property or disposing of the secured assets, is that the authority must ensure compliance with the statutory provisions.
28. In view of the above, the law can be summarised to the effect that the recovery of the public dues must be made strictly in accordance with the procedure prescribed by law. The liability of a surety is coextensive with that of the principal debtor. In case there are more than one surety the liability is to be divided equally among the sureties for unpaid amount of loan. Once the sale has been confirmed it cannot be set aside unless a fundamental procedural error has occurred or sale certificate had been obtained by misrepresentation or fraud. (emphasis added)”
# 19. It was further held in Mathew Varghese (supra) in paragraph 43 that :
“43. The above principles laid down by this Court also make it clear that though the recovery of public dues should be made expeditiously, it should be in accordance with the procedure prescribed by law and that it should not frustrate a constitutional right, as well as the human right of a person to hold a property and that in the event of a fundamental procedural error occurred in a sale, the same can be set aside.”
# 20. Ultimately in paragraph 53 of the judgment, Hon’ble Apex Court held that once the sale does not take place pursuant to notice issued under Rule 8 (6) and 9 (1) read along with Section 13 (8) for which the entire blame cannot be thrown on the Borrower. It is imperative that for effective sale, the procedure, prescribed above, will have to be followed afresh as the notice issued earlier would lapse.
# 21. Division Bench of the Hon’ble Andhra Pradesh High Court in Sri Sai Annadhatha Polymers (supra) has taken care of the amended provisions of Rule 13 (8). It was held that :
“21. However, the amended provisions of Section 13(8) of the SARFAESI Act bring in a radical change, inasmuch as 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 stands 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 completion of the sale or transfer of the secured asset in favour of the auction purchaser. However, It is significant to note that Rule 8(6) of the Rules of 2002 still continues to remain the same and thereunder, the authorized officer of the secured creditor must necessarily serve upon the borrower a notice of thirty days for sale of the immovable secured asset taking recourse to one of the options available under Rule 8(5) thereof.”
# 22. It was further held that “Therefore, even after the amendment of Section 13 (8) of the SARFAESI Act, 2002 (hereinafter referred to as the Act) such right of redemption would stand terminated immediately upon publication of the Sale Notice under Rule 9 (1) of the Rules. A secured creditor is bound to offer to the Borrower a clear 30 days notice period under Rule 8 (6) to enable him to exercise his right to redemption. In consequence, a notice under Rule 9 (1) of the Rules, 2002 cannot be published prior to expiry of this thirty days period. In the new scenario, post amendment of the Section 13 (8) of the SARFAESI Act, such right of redemption would stand terminated immediately upon publication of the Sale Notice under Rule 9 (1) of the Rules.”
# 23. In Bafna Motors (supra) Hon’ble Apex Court considered the issue of redemption of mortgagee under Section 16 of the Transfer of Property Act, viz-a-viz, SARFAESI Act. It is held in paragraph 49 that:
“49. Thus, prior to the amendment of Section 13(8) of the SARFAESI Act, this Court consistently held, that the borrower shall continue to have a right of redemption of mortgage until the execution of the conveyance of the secured asset by way of a registered instrument. Furthermore, this Court in Mathew Varghese (supra) found no inconsistency between the unamended Section 13(8) of SARFAESI Act and the general right of redemption under Section 60 of the Act 1882.”
# 24. Thereafter, Hon’ble Apex Court with approval considered the judgment of the Hon’ble Telangana High Court in Sri Sai Annadhatha Polymers (supra. The Hon’ble Apex Court has also considered the judgment of the Hon’ble Telangana High Court in K.V.V. Prasad Rao Gupta -vs- State Bank of India (2021 SCC OnLine TS 328) wherein reliance is placed on Sri Sai Annadhatha Polymers (supra). It was held by the Hon’ble Telangana High Court in paragraph 21 that :
“21. Thus from the above judgments it is clear that under Rule 8(6) of the Rules of 2002, the petitioners are entitled for a thirty day notice period enabling them to clear the loan and to redeem the property as envisaged under Section 13(8) of the SARFAESI Act, and that if they fail to repay the amount within the stipulated period, after expiry of said period of 30 days, the secured creditor is entitled to issue publication of sale notice under Rule 9(1), and that on publication of such notice, the right of borrower to redeem the property stands extinguished.”
# 25. Hon’ble Apex Court also considered that approval of its own judgment in the case of Sakina & Another -vs- Bank of India & Others [(2021) 12 SCC 761] as regards the provisions of Section 13 (8) are concerned. In paragraph 15 of the Sakina (supra) it was held that :
“15. Be it noted that on 1-9-2016 amendment to Section 13(8) of the 2002 Act came into force as a result of which the dues of the secured creditor together with all costs, charges and expenses incurred by him are required to be tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets.”
# 26. It was held in paragraph 68 that :
“68. However, with the advent of the 2016 Amendment, Section 13(8) of the SARFAESI Act now uses the expression “before the date of publication notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets” which by no stretch of imagination could be said to be in consonance with the general rule under the Act 1882 that the right of redemption is extinguished only after conveyance by registered deed. Thus, in the light of clear inconsistency between Section 13(8) of the SARFAESI Act and Section 60 of the Act 1882 the former special enactment overrides the latter general enactment in light of Section 35 of the SARFAESI Act. Thus, the right of redemption of mortgage is available to the borrower under the SARFAESI Act only till the publication of auction notice and not thereafter, in light of the amended Section 13(8).”
# 27. Hon’ble Apex Court in paragraph 88 in Bafna Motors (supra) held that
“88. In view of the aforesaid discussion, we hold that as per the amended Section 13(8) of the SARFAESI Act, once the borrower fails to tender the entire amount of dues with all cost & charges to the secured creditor before the publication of auction notice, his right of redemption of mortgage shall stand extinguished/waived on the date of publication of the auction notice in the newspaper in accordance with Rule 8 of the Rules of 2002.”
# 28. Hence it is absolutely clear that the right of redemption has been granted in favour of the Borrower which is a sacrosanct right.
# 29. Hon’ble Apex Court, in the case of Bafna Motors (supra), has reiterated the laws laid down in National Spot Exchange Limited -vs- Anil Kohli, Resolution Professional for Dunar Foods Limited [(2022) 11 SCC 761] that :
“102. x x x x where the law is clear the consequence thereof must follow. The High Court has no option but implement the law. The relevant observations made in it are being reproduced below: –
“15.1. In Mishri Lal [BSNL -vs- Mishri Lal, (2011) 14 SCC 739: (2014) 1 SCC (L&S) 387], it is observed that the law prevails over equity if there is a conflict. It is observed further that equity can only supplement the law and not supplant it.
15.2. In Raghunath Rai Bareja [Raghunath Rai Bareja -vs- Punjab National Bank, (2007) 2 SCC 230], in paras 30 to 37, this Court observed and held as under: (SCC pp. 242-43)
“30. Thus, in Madamanchi Ramappa -vs- Muthaluru Bojjappa [AIR 1963 SC 1633] (vide para 12) this Court observed: (AIR p. 1637)
12…. [What is administered in Courts is justice according to law, and considerations of fair play and equity however important they may be, must yield to clear and express provisions of the law.”31. In Council for Indian School Certificate Examination v. Isha Mittal [(2000) 7 SCC 521] (vide para 4) this Court observed: (SCC p. 522)
‘4…. Considerations of equity cannot prevail and do not permit a High Court to pass an order contrary to the law.’
32. Similarly, in P.M. Latha v. State of Kerala [(2003) 3 SCC 541: 2003 SCC (L&S) 339] (vide para 13) this Court observed: (SCC p. 546)
’13. Equity and law are twin brothers and law should be applied and interpreted equitably but equity cannot override written or settled law.
33. In Laxminarayan R. Bhattad -vs- State of Maharashtra [(2003) 5 SCC 413] (vide para 73) this Court observed: (SCC p. 436)
‘73. It is now well settled that when there is a conflict between law and equity the former shall prevail.’
34. Similarly, in Nasiruddin -vs- Sita Ram Agarwal [(2003) 2 SCC 577] (vide para 35) this Court observed: (SCC p. 588)
’35. In a case where the statutory provision is plain and unambiguous, the court shall not interpret the same in a different manner, only because of harsh consequences arising therefrom.’
35. Similarly, in E. Palanisamy -vs- Palanisamy [(2003) 1 SCC 123] (vide para 5) this Court observed: (SCC p. 127)
‘5. Equitable considerations have no place where the statute contained express provisions.
36. In India House -vs- Kishan N. Lalwani [(2003) 9 SCC 393] (vide para 7) this Court held that: (SCC p. 398)
‘7. … The period of limitation statutorily prescribed has to be strictly adhered to and cannot be relaxed or departed from for equitable considerations.’ …”
# 30. Now it is to be seen as to whether in the case of subsequent sale, 30 days notice, under Rule 8 (6) of the Rules, is required or not? Whether 15 days notice, before issuing notice under 1st Proviso to Rule 9 (1) of the Rules, is required or not? It was held by Hon’ble Apex Court in Bafna Motors (supra) in paragraph 37 that :
“37. From the above provisions under Rule 8(6) it is clear that the authorised officer of the Bank shall serve on the borrower a notice of thirty days for sale of immovable property, and that if the sale of such secured assets is by way of public auction, the Bank/secured creditor, shall cause publication of such notice in two leading newspapers, one in vernacular, language having sufficient circulation in the locality by setting the out the terms of sale, mentioned in the said provision; and under sub-rule (1) of Rule 9, such sale of immovable of property under these Rules shall not take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6), or notice of sale has been served to the borrower.”
# 31. It has been held by the Hon’ble Apex Court in Mathew Varghese (supra) in paragraph 53 that :
“53. We, therefore, hold that unless and until a clear 30 days’ notice is given to the borrower, no sale or transfer can be resorted to by a secured creditor. In the event of any such sale properly notified after giving 30 days’ clear notice to the borrower did not take place as scheduled for reasons which cannot be solely attributable to the borrower, the secured creditor cannot effect the sale or transfer of the secured asset on any subsequent date by relying upon the notification issued earlier. In other words, once the sale does 9 not take place pursuant to a notice issued under Rules 8 and 9, read along with Section 13(8) for which the entire blame cannot be thrown on the borrower, it is imperative that for effecting the sale, the procedure prescribed above will have to be followed afresh, as the notice issued earlier would lapse. In that respect, the only other provision to be noted is sub-rule (8) of Rule 8 as per which sale by any method other than public auction or public tender can be on such terms as may be settled between the parties in writing. As far as sub-rule (8) is concerned, the parties referred to can only relate to the secured creditor and the borrower. It is, therefore, imperative that for the sale to be effected under Section 13(8), the procedure prescribed under Rule 8 read along with Rule 9(1) has to be necessarily followed, inasmuch as that is the prescription of the law for effecting the sale as has been explained in detail by us in the earlier paragraphs by referring to Sections 13(1), 13(8) and 37, read along with Section 29 and Rule 15. In our considered view any other construction will be doing violence to the provisions of the SARFAESI Act, in particular Sections 13(1) and (8) of the said Act.”
# 32. Right of redemption of the Borrower is a sacrosanct right as provided under the law. The amended provisions of Section 13 (8) of the Act bring in a radical change, inasmuch as 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. In effect, the right of redemption available to the borrower under the present statutory regime stands drastically curtailed and would be available only till the date of publication of the notice under Rule 9 (1) of the Rules and not till completion of the sale or transfer of the secured asset in favour of the Auction Purchaser. However, it is significant to note that Rule 8 (6) of the Rules still continues to remain the same and thereunder, the Authorized Officer of the secured creditor must necessarily serve upon the borrower a notice of 30 days for sale of the immovable secured asset taking recourse to one of the options available under Rule 8 (5) thereof. Therefore, even if the amendment of Section 13 (8) of the Act, Secured Creditor is bound to afford to the Borrower a clear 30 days notice period under Rule 8 (6) to enable him to exercise his right of redemption. In consequence, a notice under Rule 9 (1) cannot be published prior to expiry of 30 days period. In the new scenario post amendment of Section 13 (8) of the Act, such right of redemption would stand terminated immediately upon publication of the Sale Notice under Rule 9 (1) of the Rules. Proviso attached to Rule 9 (1) simply provides that if the sale of immoveable property by one of the methods specified by Sub-rule (5) of Rule 8 fails, sale is required to be conducted again. The Authorised Officer shall serve, affix and publish notice of sale on not less than 15 days to the Borrower for any subsequent sale. It means that in case of subsequent sale, the period of 30 days, as required under Rule 9 (1) is curtailed to 15 days. This proviso of Rule 9 (1) in no manner curtailed the period of notice provided under Rule 8 (6). Had it been the intention of the Legislature, that period provided under Rule 8 (6) would also have to be amended by the legislature. But intentionally Rule 8 (6) is not amended but the period in subsequent sale is curtailed to 15 days. It means that even in the case of subsequent sale, provisions of Rule 8 (6) have to be followed by the Authorised Officer. Accordingly, it is incumbent upon the Authorised Officer, even in case of subsequent sale, to comply the provisions of Rule 8 (6) as well as proviso to Rule 9 (1). Law nowhere curtails the right to redemption available to the Borrower under Section 13 (8) of the Act in case of a subsequent sale. Accordingly, I am of the considered view that even in case of subsequent sale, Authorised Officer is required to issue 30 days notice under Rule 8 (6) and thereafter 15 days notice under Proviso attached to Rule 9 (1).
# 33. On the basis of the discussion made above, I am of the considered opinion that in the present case, as has been noted earlier, it is a case of subsequent sale wherein Sale Notice was issued on 13.12.2018 which was published in newspaper on 23.12.2018 and the date of auction sale was fixed on 29.01.2019 which is clearly in violation of Rule 8 (6) and Proviso 1 of Rule 9 (1) of the Rules. Accordingly, I do not find any infirmity in the impugned order. Appeal lacks merit and is liable to be dismissed.
ORDER
Appeal is dismissed. However, Appellant Bank is directed to refund the amount to the Auction Purchaser with interest @9% per annum from the date of deposit till the date of actual payment. Payments should be made within 30 days.
Possession of the secured assets was delivered to the auction purchaser on 19.03.2019. Since sale itself is quashed by the Learned DRT which is in accordance with law and the Auction Purchaser is entitled for refund of the amount, Auction Purchaser should hand over the possession to the secured creditor on receipt of the amount.
No Order as to costs.
File be consigned to Record Room.
Copy of the Judgment/ Final Order be uploaded in the Tribunal’s Website.
Order signed and pronounced by me in the open Court on this the 18th day of July, 2025.
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