Supreme Court of India

CELIR LLPversusBAFNA MOTORS (MUMBAI) PVT. LTD. & ORS.

Citation: 2023 INSC 838
Decided: 21 September 2023
Disposal: Appeal(s) allowed
Bench: D Y CHANDRACHUD

Holding

The amended Section 13(8) of the SARFAESI Act extinguishes the borrower’s right of redemption at the date of publication of the auction notice, and the bank’s confirmation of sale under Rule 9(2) creates a vested right in the auction purchaser to obtain a sale certificate, rendering the High Court’s writ intervention impermissible.

Summary

The borrowers defaulted on a loan secured by a mortgage over land in Navi Mumbai, prompting Union Bank of India to initiate SARFAESI proceedings and eventually conduct a public auction. The appellant, CELIR LLP, was the highest bidder, paid the full bid amount, and received a sale confirmation, but the bank withheld the sale certificate and later entertained the borrowers' request to redeem the mortgage. The borrowers filed a writ petition under Article 226 seeking redemption, which the Bombay High Court allowed, directing the bank to permit redemption and refund the appellant. The Supreme Court held that the High Court erred in exercising writ jurisdiction when an effective statutory remedy under Section 17 of the SARFAESI Act was available, that the bank’s confirmation of sale vested a right in the appellant to obtain a sale certificate, and that the amended Section 13(8) of the SARFAESI Act extinguishes the borrower’s right of redemption at the date of publication of the auction notice. Consequently, the appeals were allowed, the High Court order set aside, the bank ordered to refund the borrowers’ redemption payment, and the appellant directed to pay the balance amount and receive the sale certificate.

Issues considered

Whether the High Court was justified in exercising writ jurisdiction under Article 226 when the borrowers had already availed the alternative remedy under Section 17 of the SARFAESI Act.
Whether confirmation of sale by the bank under Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 confers a vested right on the successful auction purchaser.
Impact of the amended Section 13(8) of the SARFAESI Act on the borrower’s right of redemption and its interaction with Section 60 of the Transfer of Property Act, 1882.
Whether a bank, after confirming sale under Rule 9(2), can withhold the sale certificate under Rule 9(6) and enter into a private arrangement with the borrower.
Whether equitable considerations can be applied by a High Court under Article 226 to override the statutory auction process prescribed by the SARFAESI Act.
Whether the right of redemption of mortgage stands extinguished upon publication of the auction notice or persists until registration of the sale certificate.

Legislation cited

Banking Regulation Act, 1949s. 9
Recovery of Debts Due to Banks and Financial Institutions Act, 1993
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002s. 13(8), s. 17, s. 35, s. 37
Transfer of Property Act, 1882s. 60

Subjects

SARFAESI ActRedemption of mortgagePublic auctionArticle 226 writ jurisdictionVested right of auction purchaserSection 13(8) amendmentTransfer of Property ActSale certificateEquity vs. statutory lawSpecial law vs. general law

Judgment

[2023] 13 S.C.R. 53 : 2023 INSC 838

CASE DETAILS

CELIR LLP
v.
BAFNA MOTORS (MUMBAI) PVT. LTD. & ORS.
(Civil Appeal Nos. 5542 - 5543 of 2023)
SEPTEMBER 21, 2023
[DR. DHANANJAYA Y. CHANDRACHUD, CJI AND
J. B. PARDIWALA, J.]
HEADNOTES
Issues for consideration:
The present appeals by the appellant-auction purchaser were
against the judgment passed by the High Court by which it allowed
the writ petition filed by respondent no.1-borrowers and directed the
respondent no.3-Bank to permit the borrowers to redeem the mortgage
of the secured asset after the auction proceedings had attained finality.
The questions for consideration were:-
1. Whether the High Court was justified in exercising its writ
jurisdiction under Article 226 of the Constitution more particularly
when the alternative remedy available to the Borrowers had already
been availed of.
2. Whether the confirmation of sale by the Bank under Rule 9(2) of
the Security Interest (Enforcement) Rules, 2002 invests the successful
auction purchaser with a vested right.
3. What is the impact of the amended Section 13(8) of the
Securitization and Reconstruction of Financial Assets and Enforcement
of Securities Interest Act, 2002 (SARFAESI Act) on the Borrowers’
right of redemption in an auction conducted under the SARFAESI Act.
What is the effect of amendment to Section 13(8) of the SARFAESI
Act read with Section 60 of the Transfer of Property Act, 1882.
4. Whether a Bank after having confirmed the sale under Rule
9(2), can withhold the sale certificate under Rule 9(6) of the Rules of
2002 and enter into a private arrangement with a borrower.

53
54 SUPREME COURT REPORTS [2023] 13 S.C.R.

5. Whether the High Court under Article 226, could have applied
equitable considerations to override the outcome contemplated by the
statutory auction process prescribed by the SARFAESI Act.
6. Whether the right of redemption of mortgage stood extinguished
upon publication of notice of auction. Till what point of time the right
of redemption of mortgage can be exercised in respect of secured asset
under the SARFAESI Act.
Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002 (SARFAESI Act) –
s.17 – Constitution of India – Art. 226 - Exercise of writ jurisdiction
u/ Art.226 of the Constitution when alternative remedy u/s.17 of
SARFAESI Act already availed by the borrower – If justiﬁed.
Held: The Supreme Court has time and again, reminded the High
Courts that they should not entertain petition under Article 226 of the
Constitution if an eﬀective remedy is available to the aggrieved person
under the provisions of the SARFAESI Act – In the present case, the
High Court was not justiﬁed in exercising its writ jurisdiction under
Article 226 of the Constitution more particularly when the borrowers had
already availed the alternative remedy available to them under s.17 of the
SARFAESI Act. [Paras 92, 105]
Security Interest (Enforcement) Rules, 2002 – r.9(2) - Whether
the conﬁrmation of sale by the Bank under r.9(2) invests the successful
auction purchaser with a vested right.
Held: The conﬁrmation of sale by the Bank under Rule 9(2) of the
Rules of 2002 invests the successful auction purchaser with a vested right
to obtain a certiﬁcate of sale of the immovable property in form given
in appendix (V) to the Rules i.e., in accordance with Rule 9(6) of the
SARFAESI. [Para 105]
Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002 (SARFAESI Act) –
ss.13(8) and 35 – Transfer of Property Act, 1882 – s.60 – Impact
of amended s.13(8) of SARFAESI Act on the Borrowers’ right of
redemption in an auction conducted under the SARFAESI Act – Eﬀect
of amendment to s.13(8) of SARFAESI Act r/w s.60 of the Transfer
of Property Act, 1882.
Mortgage – Right of redemption of mortgage.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 55
LTD. & ORS.

Held: 1. In accordance with the unamended Section 13(8) of the
SARFAESI Act, the right of the borrower to redeem the secured asset was
available till the sale or transfer of such secured asset – The borrower’s
right of redemption did not stand terminated on the date of the auction
sale of the secured asset itself and remained alive till the transfer was
completed in favour of the auction purchaser, by registration of the sale
certiﬁcate and delivery of possession of the secured asset – However,
the amended provisions of Section 13(8) of the SARFAESI Act, make
it clear that 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 is 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
the completion of the sale or transfer of the secured asset in favour of the
auction purchaser. [Para 105]
2. The SARFAESI Act is a special law containing an overriding clause
in comparison to any other law in force – Section 60 of the Transfer of
Property Act, 1882, is a general law vis-a-vis the amended Section 13(8) of
the SARFAESI Act which is special law – The right of redemption is clearly
restricted till the date of publication of the sale notice under the SARFAESI
Act, whereas the said right continues under Section 60 of the Act 1882 till the
execution of conveyance of the mortgaged property – The SARFAESI Act
is a special law of recovery with a paradigm shift that permits expeditious
recovery for the banks and the ﬁnancial institutions without intervention
of Courts – Similarly, Section 13(8) of the SARFAESI Act is a departure
from the general right of redemption under the general law i.e. the Act
1882 – Further, the legislature has in the objects and reasons while passing
the amending Act speciﬁcally stated “to facilitate expeditious disposal of
recovery applications, it has been decided to amend the said Acts….” – Thus,
while interpreting Section 13(8) vis-à-vis Section 60 of the Act 1882, an
interpretation which furthers the said object and reasons should be preferred
and adopted – If the general law is allowed to govern in the manner as sought
to be argued by the borrowers, it will defeat the very object and purpose as
well as the clear language of the amended Section 13(8) – 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
56 SUPREME COURT REPORTS [2023] 13 S.C.R.

Act only till the publication of auction notice and not thereafter, in light of
the amended Section 13(8). [Paras 64 and 68]
Security Interest (Enforcement) Rules, 2002 – r.9(2) and r.9(6)
– Whether a Bank after having conﬁrmed the sale under r.9(2), can
withhold the sale certiﬁcate u/r.9(6) and enter into a private arrangement
with a borrower.
Held: The Bank after having conﬁrmed the sale under Rule 9(2) of the
Rules of 2002 could not have withhold the sale certiﬁcate under Rule 9(6)
of the Rules of 2002 and enter into a private arrangement with a borrower.
[Para 105]
Constitution of India – Art. 226 – Scope u/Art. 226, to apply equitable
considerations to override the outcome contemplated by the statutory
auction process prescribed by the SARFAESI Act – Securitization and
Reconstruction of Financial Assets and Enforcement of Securities Interest
Act, 2002 (SARFAESI Act).
Held: The High Court under Article 226 of the Constitution could not
have applied equitable considerations to overreach the outcome contemplated
by the statutory auction process prescribed under the SARFAESI Act. [Para
105]
The Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 – s.13(8) – Interpretation of.
Auction - Auction process under the SARFAESI Act.
Auction – Public Auction – Sanctity of – Courts ought to be loath
in interfering with auctions.
Held: 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 – 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 – 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
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 57
LTD. & ORS.

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. [Paras 86, 87 and 88]
Equity – Law and Equity – Relationship.
Held: Equity cannot supplant the law – Equity has to follow law, if
the law is clear and unambiguous. [Para 104]

LIST OF CITATIONS AND OTHER REFERENCES

Concern Readymix, rep. by its Proprietor, Smt. Y. Sunitha v. Authorised
Oﬃcer, Corporation Bank and Anr. 2018 SCC OnLine Hyd 783; M/s Pal
Alloys and Metal India Private Limited & Ors. v. Allahabad Bank & Ors.
2021 SCC OnLine P&H 2733; Amme Srisailam v. Union Bank of India,
Regional Oﬃce, Guntur, rep. by its Region Head & Deputy General
Manager, Andhra Pradesh & Ors., W.P. No. 11435 of 2021 (Decision of
Telangana High Court dated 17.08.2022) – held not correct law.
Sai Annadhatha Polymers & Anr. v. Canara Bank rep. by its Branch
Manager, Mandanapalle 2018 SCC OnLine Hyd 178; K.V.V. Prasad Rao
Gupta v. State Bank of India 2021 SCC OnLine TS 328 – held correct law.
Mathew Varghese v. M. Amritha Kumar and Ors., (2014) 5 SCC 610
: [2014] 2 SCR 736; Shakeena and Anr. v. Bank of India and Ors. (2021)
12 SCC 761 : [2019] 11 SCR 341; S. Karthik & Ors. v. N. Subhash Chand
Jain & Ors., (2022) 10 SCC 641 – explained.
Varimadugu OBI Reddy v. B. Sreenivasulu & Ors. (2023) 2 SCC
168; Authorised Oﬃcer State Bank of India v. C. Natarajan and Anr. 2023
SCC OnLine SC 510; Narandas Karsondas v. S.A. Kamtam and Another
(1977) 3 SCC 247 : [1977] 2 SCR 341; Embassy Hotels Private Ltd. v.
Gajraj and Company & Ors. (2015) 14 SCC 316 : [2014] 14 SCR 603;
Maharashtra University of Health Sciences v. Satchikitsa Prasarak Mandal
(2010) 3 SCC 786 : [2010] 3 SCR 91; National Spot Exchange Ltd. v.
Anil Kohli, Resolution Professional for Dunar Foods Ltd. (2022) 11 SCC
761; Mardia Chemicals Ltd. & Ors. v. Union of India & Ors. (2004) 4
SCC 311 : [2004] 3 SCR 982; Madras Petrochem Ltd. & Anr. v. Board for
Industrial and Financial Reconstruction & Ors. (2016) 4 SCC 1 : [2016]
11 SCR 419; L.K. Trust v. EDC Limited and Others (2011) 6 SCC 780 :
[2011] 7 SCR 569; Dwarika Prasad v. State of Uttar Pradesh (2018) 5
58 SUPREME COURT REPORTS [2023] 13 S.C.R.

SCC 491 : [2018] 3 SCR 29; Allokam Peddabbayya & Anr. v. Allahabad
Bank & Ors. (2017) 8 SCC 272 : [ 2017] 8 SCR 121; Arce Polymers Pvt.
Ltd. v. Alpine Pharmaceuticals Pvt. Ltd. & Ors. (2022) 2 SCC 221; M.D.
Frozen Foods Exports Private Limited & Ors. v. Hero Fincorp Limited
(2017) 16 SCC 741 : [2017] 13 SCR 800; Vishal N. Kalsaria v. Bank of
India & Ors. (2016) 3 SCC 762 : [2016] 1 SCR 419; Valji Khimji and
Company v. Oﬃcial Liquidator of Hindustan Nitro Product (Gujarat) Ltd.
and Ors. (2008) 9 SCC 299 : [2008] 12 SCR 1; K. Kumara Gupta v. Sri
Markendaya and Sri Omkareswara Swamy Temple & Ors. (2022) 5 SCC
710; Eva Agro Feeds Private Limited v. Punjab National Bank & Anr.
2023 SCC OnLine SC 1138; United Bank of India v. Satyawati Tondon
& Ors. (2010) 8 SCC 110 : [2010] 9 SCR 1; Commissioner of Income
Tax & Ors. v. Chhabil Dass Agarwal (2014) 1 SCC 603; Phoenix ARC
Private Limited v. Vishwa Bharati Vidya Mandir & Ors. (2022) 5 SCC
345; Sadashiv Prasad Singh v. Harendar Singh & Ors. (2015) 5 SCC 574
: [2014] 1 SCR 249 – referred to.

OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5542-5543
of 2023.

From the Judgment and Order dated 17.08.2023 of the High Court
of Judicature at Bombay in CWP No.9523 of 2023 and IA(ST) No.21706
of 2023.

Appearances:

Mukul Rohatgi, Neeraj Kishan Kaul, Sr. Advs., Mahesh Agarwal,
Rishi Agrawala, Ankur Saigal, Ms. Anwesha Padhi, Chirag Nayak, Robin
Fernandes, Ms. Diksha Rai, Kunal Mehta, Ms. Ira S. Mahajan, Ms. Roopali
Lakhotia, E.C. Agrawala, Advs. for the Appellant.

Shyam Divan, Nikhil Nayyar, Sr. Advs., Omkar Kanegaonkar,
Shreeyash Uday Lalit, Devashish Godbole, Anuj Joglekar, Ishaan George,
Abhinav Aggarwal, Krishnagopal Abhay, Ms. Runjhun Garg, Himanshu
Vats, Advs. for the Respondents.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 59
LTD. & ORS.

JUDGMENT / ORDER OF THE SUPREME COURT

JUDGMENT
J. B. PARDIWALA, J.
For the convenience of the exposition, this judgment is divided in the
following parts:
A. Factual Matrix........................................................................ 3-10*
B. Submissions on behalf of the Appellant .............................. .........10-13*
C. Submissions on behalf of the Borrowers.......................................13-23*
D. Questions of Law falling for the determination of
the Court ...........................................................................................23-24*
E. Legislative History and Scheme of the SARFAESI
Act......................................................................................................24-45*
F. Redemption of Mortgage under Section 60 of the Transfer of
Property Act, 1882............................................................................45-49*
G. Redemption of Mortgage under the SARFAESI
Act.....................................................................................................49-68*
H. Eﬀect of the Amendment to Section 13(8) of the SARFAESI
Act.....................................................................................................69-80*
I. Why the decision of the Telangana High Court in the case of
Amme Srisailam v. Union Bank of India, Regional Oﬃce, Guntur,
rep. by its Region Head & Deputy General Manager, Andhra
Pradesh & Ors., W.P. No. 11435 of 2021, is not a good
law?...................................................................................................80-93*
J. Sanctity of Public Auction................................................... ...........93-97*
K. Exercise of Extraordinary Jurisdiction by the High Court under
Article 226 of the Constitution in SARFAESI matters................97-103*

*Ed. Note: The pagination as per the original Judgment.
60 SUPREME COURT REPORTS [2023] 13 S.C.R.

L. Conduct of the Bank...........................................................103-108*
M. Summary of the Final Conclusion...................................108-111*
1. Since the issues raised in both the captioned appeals are same,
the parties are also the same and the challenge is also to the self-same
judgment and order passed by the High Court those were taken up for
hearing analogously and are being disposed of by this common judgment
and order.
2. For the sake of convenience, we clarify that the appellant herein is
an auction purchaser, the respondent No. 1 is the Borrower, the respondent
No. 2 is the Guarantor and the respondent No. 3 is the Bank (Secured
Creditor).
3. These appeals are at the instance of an auction purchaser left high
and dry by the respondents herein and is directed against the common
judgment and order passed by the High Court of Judicature at Bombay in
Writ Petition No. 9523 of 2023 with Interim Application (ST) No. 21706
of 2023 (for impleadment) by which the High Court allowed the writ
petition ﬁled by the borrowers and thereby directed the Bank to permit the
borrowers to redeem the mortgage of the secured asset more particularly
after the auction proceedings attained ﬁnality.
FACTUAL MATRIX
4. It appears from the materials on record that the borrowers had
availed credit facility from the Bank on 03.07.2017. Accordingly, the Bank
sanctioned Lease Rental Discounting (for short, ‘the LRD’) credit facility
to the tune of Rs. 100 crore in favour of the borrower with the respondent
No. 2 standing as a guarantor. Out of the total amount sanctioned, the
amount of Rs. 65 crore was adjusted against the then existing LRD facility
granted by the previous bank and for the balance amount of Rs. 35 crore a
security in the form of a simple mortgage was created over a parcel of land
admeasuring 16200 sq. metres having buildings and ancillary structures on
it at plot Nos. D-105, D-110 and D-111 respectively situated at the Trans
Thane Creek Industrial Area MIDC Village Shirwane, Thane, Belapur
Road, Nerul, Navi Mumbai, Thane, Maharashtra in lieu of the sanctioned
credit.
*Ed. Note: The pagination as per the original Judgment.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 61
LTD. & ORS. [J. B. PARDIWALA, J.]

5. The borrower defaulted in repayment of the loan amount and
accordingly the loan account was declared as a Non-Performing Asset (NPA).
6. The Bank issued a demand notice under Section 13(2) of the
Securitization and Reconstruction of Financial Assets and Enforcement of
Securities Interest Act, 2002 (for short, ‘the SARFAESI Act’) for repayment
of the principal amount along with interest, cost, charges, etc. As on 30.04.23,
an aggregate sum of Rs. 123.83 crore was due and payable by the borrower to
the Bank.
7. Owing to the failure of the borrower & the guarantor in repaying the
outstanding amount referred to above, the Bank proceeded to take measures
for possession of the secured asset under the provisions of the SARFAESI Act.
The Bank decided to put the secured asset to auction. It appears that between
April 2022 & June 2023, the Bank attempted eight auctions but all failed.
8. In the meantime, the borrowers preferred a Securitization Application
being SA No. 46 of 2022 before the Debt Recovery Tribunal-I, Mumbai
(for short, “DRT”) inter alia challenging the demand notice issued under
Section 13(2) of the SARFAESI Act and also for quashing of the sale notice
dated 25.03.22 in respect of the secured asset. It is not in dispute that the said
application as on date is still pending before the DRT.
9. It appears that the borrowers informed the Bank that they were trying to
sell the secured asset but were not getting good oﬀers. The borrowers informed
the Bank that the maximum they might be able to fetch from the sale of the
secured asset would be around Rs. 91-92 crore and they were willing to settle
the entire account by oﬀering such amount to the Bank.
10. The Bank decided to go for one more auction. On 14.06.23, the
Bank published the auction notice for the 9th time for sale of the secured asset
at a reserve price of Rs. 105 crore. On publication of the auction notice, the
appellant herein participated in the auction proceedings conducted on 27.06.23
and submitted its bid of Rs. 105.05 crore, along with a deposit of Rs. 10.5 crore
as earnest money.
11. In the 9th auction conducted by the Bank, the appellant herein was
declared as the highest bidder. The Bank on 30.06.2023 vide its email sent a
“Sale Conﬁrmation Letter” to the appellant, declaring him as the highest bidder
/ H1 in the auction of the secured asset and called upon the appellant to deposit
62 SUPREME COURT REPORTS [2023] 13 S.C.R.

25% of the bid amount by 01.07.23 and the balance amount on or before
15.07.23. The email is reproduced below: -
“admin@mstcauction.com
SALE CONFIRMATION LETTER (Property-UBINMUMSAM2888)
To: Mac, Cc: samvmumbai@unionbankofindia.bank, ibapiop@
mstcauction.com
CELIR LLP Date: 30-06-2023:
C-708 teerth technospace 7th ﬂoor Sr no 103 baner
Pune
411045
INDIA Date: 30.06.2023
Time: 06:36 PM
Dear Sir / Madam,
Your Bid of amount Rs.1050500000. for the property ID No.
UBINMUMSAM2888 during online auction held on e-BKRAY portal
on Date: 30-06-2023, is accepted as highest bid and accordingly you
have been declared H1 bidder for the said property.

In terms of Sale Notice issued under the provisions of SARFAESI Act,
you are required to deposit 25% of the Bid amount, which comes to
Rs.262625000. Including 10% of reserve price as EMO amount, which
has been deducted from your Global EMO Wallet, immediately, but
not later than 01-07-2023. In case 01.07.2023 is a holiday, payment
should be made within the next working day at concerned branch of
Bank in account No.087021980050000. Further, you are required to
deposit the balance amount of Rs.787875000, being 75% of entire
bid amount within 15 days i.e. on or before 15.07.2023 at Concerned
Branch of Bank in account No.087021980050000.
Please be informed that in case you fail to deposit due amount by
scheduled dates, sale shall be cancelled and any amount deposited
by you related to this bid, shall be forfeited.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 63
LTD. & ORS. [J. B. PARDIWALA, J.]

Authorized oﬃcer
Name of Authorized Oﬃcer: Sidharath S. Mhade
Name of Bank: UNION BANK OF INDIA
Contact No. or AO: 898-518779
e-Mail to or AO: samvmumbai@unionbankoﬁnida.bank
(This mail is from Authorized Oﬃcer and being generated through
computer system, hence needs no signature)”
12. On 01.07.2023, the appellant deposited 25% of the total
bid amount (minus the earnest money deposit). In the wake of such
development, the borrowers ﬁled an Interim Application No. 2339 of 2023
on 04.07.2023, titled Redemption Application in S.A. No. 46 of 2022
before the DRT-I, Mumbai for redemption of the mortgage in respect of
the secured asset by payment of the total outstanding sum of Rs 123.83
crore (approx.) on or before 31.08.23.
13. On 27.07.23, the appellant herein deposited the balance sum of
the total bid amount which was duly received and accepted by the Bank.
On the very same day, the redemption application referred to above was
also heard by the DRT-I. The redemption application was opposed by
both the appellant herein as well as the Bank. The DRT after hearing the
parties at length, reserved orders to be pronounced on 02.08.23.
14. While the parties were awaiting for the DRT to pass appropriate
an on order on the redemption application, the borrowers went to the High
Court and ﬁled the Writ Petition No. 9523 of 2023, seeking directions
to the Bank to permit them to redeem the mortgage of the secured asset.
15. The writ petition was ﬁled on the premise that the borrowers had
strong apprehension that the DRT may reject their redemption application
and the entire matter would become infructuous more particularly, the
Bank having accepted the entire amount from the appellant herein of the
total bid.
16. Before the High Court, the borrowers expressed their willingness
to pay a total sum of Rs. 129 crore for redeeming the mortgage by 31.08.23.
The Bank which had earlier opposed the plea for redemption of mortgage
before the DRT for some good reason expressed its willingness before
64 SUPREME COURT REPORTS [2023] 13 S.C.R.

the High Court to accept the oﬀer of the borrowers. The Bank perhaps got
lured by the fact that the borrowers were paying almost Rs. 23.95 crore more
than what was paid by the appellant herein and Rs. 5 crore more than the
outstanding amount.
17. It also appears that the appellant herein having come to know about
such writ petition ﬁled in the High Court preferred Interim Application (ST)
No. 21706 of 2023 for being impleaded in the writ petition.
18. The writ petition along with interim application was heard by the
High Court and vide its impugned judgment and order dated 17.08.2023
allowed the writ petition and permitted the borrowers to redeem the mortgage
of the secured asset subject to payment of Rs. 25 crore on the same day and
the balance amount of Rs. 104 crore on or before 31.08.2023, failing which
the sale of secured asset in favour of the appellant herein would be conﬁrmed.
19. The operative part of the impugned order passed by the High Court
reads thus:
“(a) The Petitioner shall hand over a sum of Rs. 25 crores to the
Respondent Bank today. In compliance with this direction, Mr.
Khandeparkar has handed over three Demand Drafts in the sum of Rs.
10 crores, 10 crores and 5 crores respectively to the learned Advocate
appearing on behalf of the Respondent Bank which is duly acknowledged
by him. The Bank is entitled to encash these Demand Drafts and
appropriate the sum of Rs.25 crores towards the outstanding dues of
the Petitioners.
(b) The balance amount of Rs. 104 crores shall be paid by the Petitioners
to the Respondent Bank on or before 31st August 2023 in the designated
account below: -
Union Bank of India Stressed Asset Management
Branch, Mumbai
IFSC UBIN0908703
A/c. No. 087021980050000
(c) If the amount of Rs. 104 crores are paid in the said account on
or before 31st August 2023, the same shall be appropriated by the
Respondent-Bank towards the dues of the Petitioners. The Bank
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 65
LTD. & ORS. [J. B. PARDIWALA, J.]

shall then return the original title deeds of the secured asset to the
Petitioners, execute all such documents for cancellation of mortgage,
and issue a ‘No Dues Certiﬁcate’ to the Petitioners.
(d) Mr. Shinde, the learned Advocate appearing for the Respondent-
Bank, has brought to our attention that out of the entire amount of Rs.
105.05 crores deposited by the Auction Purchaser, the Respondent-
Bank has appropriated the sum of Rs. 63,50,45,000/- towards the loan
amount of the Petitioners. We therefore direct that the Respondent-Bank
shall reverse this entry and immediately keep the entire amount of
Rs. 105.05 crores [deposited by the auction purchaser] in a No Lien
interest bearing account. If the Petitioners pay the balance amount
of Rs.104 crores to the Respondent Bank by 31st August 2023, then
the Respondent-Bank shall refund the amount of Rs. 105.05 crores
deposited by the Auction Purchaser together with accrued interest on
or before 7th September 2023.
(e) In the event the balance amount of Rs. 104 crores are not paid
by the Petitioners to the Respondent-Bank on or before 31st August
2023, the Respondent Bank shall then be entitled to appropriate the
money from the No Lien interest bearing account towards the dues
payable by the Petitioners and the sale of the secured asset shall be
conﬁrmed in favour of the Auction Purchaser and a sale certiﬁcate
shall be issued in their favour. All formalities in relation to registration
of that certiﬁcate shall also be done by the Respondent-Bank and the
Auction Purchaser.
(f) In light of this order, Mr. Khandeparkar has stated that, nothing
would survive in Securitization Application No. 46 of 2022 and/or
the Interim Applications ﬁled therein and seeks leave to withdraw
the same within a period of one week from today. The said statement
is accepted as an undertaking given to the Court. It is needless to
clarify that even if the Petitioners do not withdraw the Securitization
Application, the same shall stand dismissed in light of this order and
the Petitioners will not be permitted to litigate any further with the
Respondent Bank in relation to the secured asset. In other words,
if the Petitioners default in making the balance payment of Rs.104
crores to the Respondent Bank by 31st August 2023, the Auction
66 SUPREME COURT REPORTS [2023] 13 S.C.R.

Purchaser shall get the secured asset free from litigation. As per
the statement made by Mr. Khandeparkar, and which is accepted
as an undertaking given to the Court, if the Petitioners default
in making the balance payment of Rs.104 crores by 31st August
2023, physical, vacant, quiet, and peaceful possession of the
secured asset shall be handed over to the Auction Purchaser on
or before 5th September 2023.”
20. It appears that during the pendency of the present appeals,
the borrowers transferred the balance amount of Rs. 104 crore on
26.08.2023 to the Bank in terms of the impugned order passed by the
High Court. With the transfer of the amount of Rs. 104 crore, the Bank
issued a “No Dues Certificate” on 28.08.23. On the very same day,
the borrowers entered into an Agreement of Assignment of Leasehold
Rights with a third-party viz. M/s Greenscape I.T. Park LLP for the
transfer of leasehold rights in the secured asset and the said agreement
was registered before the Joint Sub Registrar, Thane 8 vide Registration
No. 19286 of 2023.
21. Being aggrieved and dissatisfied with the aforesaid order
passed by the High Court, the appellant is here before this Court with
the present appeals.
SUBMISSIONS ON BEHALF OF THE APPELLANT
22. Mr. Mukul Rohatgi, the learned Senior Counsel and Mr. Neeraj
Kishan Kaul, the learned Senior Counsel appearing for the appellant
made the following submissions:
a. The writ petition filed by the borrowers before the High Court
was not maintainable in view of the alternative remedy available to them
under Section 17 of the SARFAESI Act and more particularly when
such alternative remedy had already been availed by the borrowers.
b. The High Court ought not to have entertained the writ petition
on the ground that although the auction proceedings had attained
finality and the appellant herein was declared as the successful highest
bidder yet the bank was getting more amount as offered by the appellant
compared to the sale bid.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 67
LTD. & ORS. [J. B. PARDIWALA, J.]

c. Mere apprehension on the part of the litigant that an adverse order
might be passed by a forum which was already looking into the issue cannot
be a ground to invoke the extraordinary jurisdiction under Article 226 of
the Constitution.
d. The High Court failed to consider that in view of the amended
provision of Section 13(8) of the SARFAESI Act, the right of redemption
of mortgage stood extinguished upon publication of the auction notice.
If the Borrower is permitted to redeem the mortgage at the very last
moment, more particularly even after payment of entire amount by
the auction purchaser, then no auction would ever attain ﬁnality and
indirectly, the borrower is given indeﬁ nite time to repay the outstanding
amount.
e. The High Court failed to appreciate an important fact that the Bank
had already conﬁrmed the sale of the secured asset to the appellant and as
such the appellant had a vested right to the secured asset. Once the sale
was conﬁrmed, the Bank in accordance with Rule 9(2) read with Rule 9(6)
of the Security Interest (Enforcement) Rules, 2002, (“Rules of 2002”) was
under a legal obligation to issue a sale certiﬁcate to the appellant. The Bank
could not have consented before the High Court to the borrowers’ plea of
redemption.
f. The High Court committed a serious error of law in considering the
equities in favour of the borrowers unmindful of the fact that equity follows
the law.
g. In the last, Mr. Rohatgi submitted that his client is ready and
willing to make good the entire amount of Rs. 129 crore by depositing Rs.
23.95 crore with the Bank, in addition to the amount of Rs. 105.05 already
deposited with the Bank.
h. With a view to fortify the aforesaid submissions reliance was placed
on the following decisions:
i) United Bank of India v. Satyawati Tondon & Ors., (2010) 8 SCC
110;
ii) Varimadugu OBI Reddy v. B. Sreenivasulu & Ors., (2023) 2 SCC
168;
68 SUPREME COURT REPORTS [2023] 13 S.C.R.

iii) Valji Khimji and Company v. Oﬃcial Liquidator of Hindustan
Nitro Product (Gujarat) Ltd. and Ors., (2008) 9 SCC 299;
iv) Authorised Oﬃcer State Bank of India v. C. Natarajan and Anr.,
2023 SCC OnLine SC 510; and
v) Sadashiv Prasad Singh v. Harendar Singh & Ors., (2015) 5 SCC
574.
SUBMISSIONS ON BEHALF OF THE BORROWERS
23. Mr. Shyam Divan, the learned Senior Counsel and Mr. Nikhil
Nayyer, the learned Senior counsel appearing for the borrowers made the
following submissions:
a. That after the impugned order was dictated in the open court on
17.8.2023 and subsequently uploaded on the website of Bombay High Court
on 26.8.2023, the following developments took place:
(i) The borrowers transferred an amount of Rs. 104 Crores
to t h e U ni on Ba n k o f I nd i a vi d e RT G S, h avi ng UT R No.
HDFCR52023082882894716.
(ii) This was followed by the Respondent No.3, i.e., Union Bank of
India issuing a No Dues Certiﬁcate dated 28.08.2023 thereby acknowledging
that the borrowers do not owe any further amount to the Bank and releasing
the personal guarantees as well.
(iii) Further, after the No Dues Certiﬁcate was issued by the Bank,
the borrowers executed a registered Deed of Release in favour of the Tata
Motors Financial Solutions Limited registered with the Joint Sub Registrar,
Thane 8 having registration No. 19283/2023, whereby the second charge
that the Tata Motors Finance Solutions Limited had on the second property
came to be released, pursuant to payment of Rs. 15 Crore (Rs. 10 Crore
on 18.08.2023 and Rs. 5 Crore on 22.08.2023 ), which came to be duly
acknowledged by the Tata Motors Finance Solutions Limited.
(iv) Following this, the borrowers have also entered into a registered
Agreement of Assignment of Leasehold Rights for the transfer of leasehold
rights in the secured asset with M/s Greenscape L.T. Park LLP on 28.8.2023,
which came to be registered before the Joint Sub Registrar, Thane 8 having
registration No. 19286/2023.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 69
LTD. & ORS. [J. B. PARDIWALA, J.]

b. Since there has been full compliance of the Impugned Order by the
borrowers herein as well as the Bank, the appeals have essentially become
infructuous.
c. The only issue which remains is the refund of the amount deposited
by the appellant herein. This is an issue between the appellant and the Bank
and the borrowers have no reason to come in the way of the refund of the
amount to the appellant herein.
d. There is a speciﬁc direction issued by the High Court that the
Respondent Bank shall immediately keep the entire amount of Rs. 105.05
crore (deposited by the Auction Purchaser/appellant herein) in a “No Lien
Interest Bearing Account” and if the borrowers pay the balance amount of
Rs. 104 crore to the Respondent Bank by 31.8.2023 (which it has), then the
Respondent Bank shall refund the amount of Rs. 105.05 Crores deposited
by the Auction Purchaser together with the accrued interest on or before
7.9.2023.
e. The High Court correctly interpreted Section 13(8) of the SARFAESI
Act. The right of redemption is nowhere mentioned in the SARFAESI Act
and in such circumstances, Section 60 of the Transfer of Property Act, 1882
(for short, ‘the Act 1882’) should be looked into. Section 60 of the Act 1882
has been interpreted to reserve the right of mortgagor to redeem the property
till the stage of the same being conveyed /transferred to a third party.
f. The aforesaid interpretation is discernible from the decision of this
Court in the case of Narandas Karsondas v. S.A. Kamtam and Another
reported in 1977 (3) SCC 247, wherein it has been held that:
“34. The right of redemption which is embodied in Section 60 of the
Transfer of Property Act is available to the mortgagor unless it has been
extinguished by the act of parties. The combined eﬀect of Section 54 of
the Transfer of Property Act and Section 17 of the Indian Registration
Act is that a contract for sale in respect of immovable property of the
value of more than one hundred rupees without registration cannot
extinguish the equity of redemption. In India it is only on execution of
the conveyance and registration of transfer of the mortgagor’s interest
by registered instrument that the mortgagor’s right of redemption will
be extinguished. The conferment of power to sell without intervention of
70 SUPREME COURT REPORTS [2023] 13 S.C.R.

the Court in a Mortgage Deed by itself will not deprive the mortgagor
of his right to redemption. The extinction of the right of redemption
has to be subsequent to the deed conferring such power. The right of
redemption is not extinguished at the expiry of the period. The equity
of redemption is not extinguished by mere contract for sale.
35. The mortgagor’s right to redeem will survive until there has been
completion of sale by the mortgagee by a registered deed. In England
a sale of property takes place by agreement but it is not so in our
country. The power to sell shall not be exercised unless and until notice
in writing requiring payment of the principal money has been served
on the mortgagor. Further Section 69(3) of the Transfer of Property
Act shows that when a sale has been made in professed exercise of
such a power, the title of the purchaser shall not be impeachable on
the ground that no case had arisen to authorise the sale. Therefore,
until the sale is complete by registration the mortgagor does not lose
right of redemption.”
(Emphasis supplied)
g. The aforesaid position has also been echoed in the case of Mathew
Varghese v. M. Amritha Kumar and Ors., (2014) 5 SCC 610, wherein this
Court held that upon a combined reading of Sections 60 and 54 respectively
of the Act 1882 with Section 17 of the Registration Act, 1908, it can be
concluded that the extension of the right of redemption comes much later
than the sale notice.
h. Although the decision in Mathew Varghese (supra) was prior to
the 2016 amendment to the SARFAESI Act, yet its applicability has been
held valid even after the amendment of the said Act. A Division Bench of
the High Court of Telangana in the case of Concern Readymix, rep. by its
Proprietor, Smt. Y. Sunitha v. Authorised Oﬃcer, Corporation Bank and
Anr., reported in 2018 SCC OnLine Hyd 783 has held after juxtaposing the
amended and unamended provisions of Section 13(8) of the SARFAESI
Act, with respect to the right of redemption available to the Mortgagor that
the amended Section 13(8) of the SARFAESI Act only puts a restriction on
the right of the mortgagee to deal with the property and does not speak in
express terms about the equity of redemption available to the mortgagor.
It was further held that the danger of interpreting Section 13(8) as though
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 71
LTD. & ORS. [J. B. PARDIWALA, J.]

it relates to the right of redemption is if the payments are not made in
accordance with Section 13(8), the right of redemption may get lost even
before the sale is complete in all respects and that holding that the right
of redemption would be extinguished at the stage of issue of notice under
Rule 9(1) would tantamount to annulling the relevant provision of the Act
1882 which do not stand expressly excluded insofar as the question of
redemption is concerned. The said judgment of the Telangana High Court
was challenged before this Court vide SLP(C) D. No. 28967 of 2019 and
the same came to be dismissed.
i. The view expressed in Concern Readymix (supra) was echoed by
a Division Bench of the High Court of Punjab and Haryana in the case of
M/s Pal Alloys and Metal India Private Limited & Ors. v. Allahabad Bank
& Ors., reported in 2021 SCC OnLine P&H 2733, wherein the High Court,
inter alia, considered the speciﬁc issue “(a) till what time and date can the
right of redemption of the Mortgage can be exercised by the Mortgagors /
Borrowers in the light of the amendment to Section 13(8) of the SARFAESI
Act”.
j. While answering the aforesaid question, the Court considered the
report of the Joint Committee on the Enforcement of Security Interest and
Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill,
2016 (the Report) as well as the law laid down by this Court in Mathew
Varghese (supra) and the judgment in Concern Readymix (supra), in order
to determine whether the said right of redemption was available up to the
date of transfer of the asset or only up to the date of publication of the sale
notice. On a consideration of Section 60 of the Act 1882 as well as the
judgment in Narandas Karsondas (supra), it was observed that:
“62. Thus even if the sale of secured assets is under a special statute
like State Financial Corporations Act, there is no deviation from the
general principle that the mortgagor’s right of redemption is not
extinguished till the execution of conveyance.”
k. It was ultimately held as below:-
“96. … that the amended Section 13(8) of the SARFAESI Act merely
prohibits a secured creditor from proceeding further with the transfer
of the secured asset by way of lease, assignment or sale; a restriction
72 SUPREME COURT REPORTS [2023] 13 S.C.R.

on the right of the mortgagee to deal with the property is not exactly
the same as the equity of redemption available to the mortgagor, the
payment of the amount mentioned in Section 13 (8) of the SARFAESI
Act ties the hands of the mortgagee (secured creditor) from exercising
any of the powers conferred under the Act; that redemption comes
later; extinction of the right of redemption comes much later than the
sale notice; and the right of redemption is not lost immediately upon
the highest bid made by a purchaser in an auction being accepted.
We also hold that such a right would continue till the execution of a
conveyance i.e. issuance of sale certiﬁcate in favour of the mortgagee.
A similar view has been taken by this Bench in Hoshiarpur Roller Flour
Mill Private Limited V/s Punjab National Bank (CWP No. 14440 of
2021, decided on 10.12.2021).
97. It would, therefore, certainly be available to the petitioners herein
before the issuance of sale certiﬁcate in favour of respondents No. 2
and 3. Point (a) is answered accordingly in favour of the petitioners
and against the respondents.”
l. The said judgment also considered and distinguished the judgment
of this Court in Shakeena and Anr. v. Bank of India and Ors., (2021)
12 SCC 761, holding that the said case did not consider the concept of
redemption under Section 60 of the Act 1882. The observations in para 30
of Shakeena are in the nature of obiter dicta as in the said case the auction
had concluded prior to the amendment of Section 13(8) and in any event the
sale certiﬁcate had already been issued. Thus, the question of interpretation
of Section 13(8) was not directly in issue.
m. A perusal of the Report (the report of Joint Committee on
the Enforcement of Security Interest and Recovery of Debt Laws and
Miscellaneous Provisions (Amendment) Bill, 2016), more particularly
para 24, indicates that the proposed amendment to Section 13(8) of the Act
was intended to deal with: - “Provisions to stop secured creditor to lease or
assignment or sale in the prescribed conditions”. The important thing to note
is also that the report does not indicate that the Committee had considered
the eﬀect of Section 60 of the Transfer of Property Act, 1882, which is a
general law regarding redemption of mortgage vis-a-vis the provisions of
SARFAESI.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 73
LTD. & ORS. [J. B. PARDIWALA, J.]

n. The focus of the Committee in the said report is on the obligations
of the Mortgagee to not create third party rights up to a certain time-period,
but it is silent on the rights of the Mortgagor to exercise its redemption for
which Section 60 of the Act 1882 is the relevant provision.
o. It is further necessary to note that the non obstante clause in Section
13 speciﬁcally excludes only Sections 69 and 69A respectively of the Act
1882. This section does not speciﬁcally include the words “Notwithstanding
anything contained in any other Act for the time being in force” which is the
standard term used in non obstante clauses. In view thereof, the legislative
intent should be interpreted to only exclude Sections 69 and 69A respectively
of the Act 1882 and the same does not aﬀect the applicability of Section 60
of the Act 1882.
p. Various High Courts have consistently held that the right of
redemption has to be exercised in terms of Section 60 of the Act 1882 and
not under Section 13(8) of the SARFAESI Act and the amendment to Section
13(8) does not aﬀect or take away this right in any manner.
24. The Telangana High Court in the case of Amme Srisailam v.
Union Bank of India, Regional Oﬃce, Guntur, rep. by its Region Head
& Deputy General Manager, Andhra Pradesh & Ors., W.P. No. 11435 of
2021 decided on 17.08.2022 has referred to and relied upon on Concern
Readymix (supra) and Pal Alloys (supra). The Telangana High Court in
Amme Srisailam (supra) in turn has relied upon the decision of this Court
in the case of S. Karthik & Ors. v. N. Subhash Chand Jain & Ors., (2022)
10 SCC 641. The Telangana High Court in Amme Srisailam (supra) held
as under:
“44. Before we revert back to the facts of the present case, we may
also refer to Sections 35 and 37 of the SARFAESI Act. While Section
35 says that the provisions of the SARFAESI Act shall have eﬀect
notwithstanding anything inconsistent therewith contained in any other
law for the time being in force, Section 37 clariﬁes that provisions of
the SARFAESI Act or the rules made thereunder shall be in addition
to and not in derogation of any other law for the time being in force.
45. This brings us to Section 60 of the Transfer of Property Act, 1882.
Section 60 says that at any time after the principal amount has become
74 SUPREME COURT REPORTS [2023] 13 S.C.R.

due, the mortgagor has a right, on payment or tender, of the mortgage
money, to require the mortgagee (a) to deliver to the mortgagor the
mortgage deed and all documents relating to the mortgaged property
which are in possession or power of the mortgagee, (b) where the
mortgagee is in possession of the mortgaged property, to deliver
possession thereof back to the mortgagor, and (c) at the cost of the
mortgagor either to re-transfer the mortgaged property to him or
to such third person as he may direct, or to execute and to have
registered an acknowledgement in writing that any right in derogation
of his interest transferred to the mortgagee has been extinguished.
As per the proviso, the right conferred under the aforesaid provision
shall not be extinguished by any act of the parties or by decree of
a Court.
46. Therefore, on a careful application of Sections 35 and 37 of the
SARFAESI Act, it is evident that the situation contemplated under
Section 13(8) of the SARFAESI Act does not exclude application of
Section 60 of the Transfer of Property Act, 1882. As explained by
this Court in Concern Readymix (supra), a restriction on the right of
the mortgagee to deal with the property post issuance of notice for
public auction is not the same as the right of redemption available
to the mortgagor.
47. In so far the present case is concerned, admittedly the bid
amount of the petitioner was Rs.57.00 lakhs. Though the auction was
conducted on 16.03.2021 and payment was made by the petitioner
within the stipulated period, there is clear dispute between the
parties as regards issuance of sale certiﬁcate by respondent Nos.1
and 2 in favour of the petitioner. However, admittedly there is no
registration of any sale certiﬁcate. On the other hand, the borrower
had approached respondent Nos.1 and 2 for settlement of the loan
account under OTS Scheme on 18.03.2021 which was recommended
by second respondent on 20.03.2021 and was accepted by ﬁrst
respondent on 31.03.2021 for an amount of Rs.5.10 crores, which
has been paid by the borrower i.e., third respondent. On the one hand
petitioner’s amount was Rs.57.00 lakhs which the petitioner had paid
but on the other hand third respondent has paid Rs.5.10 crores as
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 75
LTD. & ORS. [J. B. PARDIWALA, J.]

per the OTS. Lending of money, recovery of dues and entering into
OTS are all commercial decisions which are taken by the banks/
ﬁnancial institutions in their best interest, subject of course within
the statutory framework. In this case, we have already come to the
conclusion that third respondent had not lost the right of redemption
upon publication of notice for auction sale. If that be the position,
then it should be left to the discretion of the secured creditor as to
which course of action would be more beneﬁcial to it. Evidently, the
OTS with the third respondent is much more beneﬁcial to the secured
creditors i.e., respondent Nos.1 and 2 and as has been explained
above such a course of action is not restricted or extinguished by
Section 13(8) of the SARFAESI Act.
xxx xxx xxx
50. Right to property is a valuable right. Though no longer a
fundamental right, it is still a constitutional right. The interpretation
which we have adopted subserves such a right. That apart, third
respondent had not lost the right of redemption upon publication
of notice for auction sale; his right of redemption would have been
lost only upon the sale certiﬁcate getting registered which admittedly
has not taken place. Therefore, the action of respondent Nos.1 and 2
in accepting the higher OTS amount of the third respondent though
after publication of notice for public auction and auction is justiﬁed
and cannot be faulted.”
25. In such circumstances referred to above, the learned counsel
prayed that there being no merit in the present appeals, those may be
dismissed.
ANALYSIS
26. Having heard the learned counsel appearing for the parties and
having gone through the materials on record the following questions fall
for our consideration:
(a) Whether the High Court was justiﬁed in exercising its writ
jurisdiction under Article 226 of the constitution more particularly when
the alternative remedy available to the Borrowers had already been availed
of?
76 SUPREME COURT REPORTS [2023] 13 S.C.R.

(b) Whether the conﬁrmation of sale by the Bank under Rule 9(2) of
the Rules of 2002 invests the successful auction purchaser with a vested
right?
(c) What is the impact of the amended Section 13(8) of the SARFAESI
Act on the Borrowers’ right of redemption in an auction conducted under
the SARFAESI Act? Or in other words, what is the eﬀect of amendment to
Section 13(8) of the SARFAESI Act read with Section 60 of the Act 1882?
(d) Whether a Bank after having conﬁrmed the sale under Rule 9(2),
can withhold the sale certiﬁcate under Rule 9(6) of the Rules of 2002 and
enter into a private arrangement with a borrower?
(e) Whether the High Court under Article 226, could have applied
equitable considerations to override the outcome contemplated by the
statutory auction process prescribed by the SARFAESI Act?
(f) Whether the right of redemption of mortgage stood extinguished
upon publication of notice of auction? Or in other words till what point of
time the right of redemption of mortgage can be exercised in respect of
secured asset under the SARFAESI Act?
(g) Whether the decisions of Telangana High Court in the case of
Concern Readymix (supra) and Amme Srisailam (supra) lay down the
correct position of law?
LEGISLATIVE HISTORY AND SCHEME OF THE SARFAESI
ACT
27. Till early 1990s, the civil suits were being ﬁled for recovery of the
dues of banks and ﬁnancial institutions under the Act 1882 and the Code
of Civil Procedure, 1908 (CPC). Due to various diﬃculties the banks and
ﬁnancial institutions had to face in recovering loans and enforcement of
securities, the Parliament enacted the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (for short, “the Act 1993” or “the RDBFI
Act”).
28. On account of lack of infrastructure and manpower, the regular civil
courts were not in a position to cope up with the speed in the adjudication of
recovery cases. In the light of recommendations of the Tiwari Committee
the special tribunals came to be set up under the provisions of the Act 1993
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 77
LTD. & ORS. [J. B. PARDIWALA, J.]

referred to above for the recovery of huge accumulated NPA of the Bank
loans.
29. On the continuing rise in number of Non-Performing Assets
(NPA) at banks and other ﬁnancial institutions in India; a poor rate of
loan recovery and the failure of the existing legislation in redressing the
diﬃculties of recovery by banks; the Narasimham Committee I & II and
Andyarujina Committee were constituted by the Government for examining
and suggesting banking reforms in India. These Committees in their reports
observed that one out of every ﬁve borrower was a defaulter, and that due
to the long and tedious process of existing frame work of law and the
overburdening of existing forums including the specialised tribunals under
the 1993 Act, any attempt of recovery with the assistance of court/tribunal
often rendered the secured asset nearly worthless due to the long delays. In
this background the Committees thus, proposed new laws for securitisation
in order to permit banks and ﬁnancial institutions to hold securities and sell
them in a timely manner without the involvement of the courts.
30. On the recommendations of the Narasimham Committee and
Andyarujina Committee, the SARFAESI Act was enacted to empower the
banks and ﬁnancial institutions to take possession of the securities and to
sell them without intervention of the court.
31. The statement of objects and reasons for which the Act has been
enacted reads as under: -
“STATEMENT OF OBJECTS AND REASONS
The ﬁnancial sector has been one of the key drivers in India’s eﬀorts to
achieve success in rapidly developing its economy. While the banking
industry in India is progressively complying with the international
prudential norms and accounting practices there are certain areas in
which the banking and ﬁnancial sector do not have a level playing ﬁeld
as compared to other participants in the ﬁnancial markets in the world.
There is no legal provision for facilitating securitisation of ﬁnancial
assets of banks and ﬁnancial institutions. Further, unlike international
banks, the banks and ﬁnancial institutions in India do not have power
to take possession of securities and sell them. Our existing legal
framework relating to commercial transactions has not kept pace with
78 SUPREME COURT REPORTS [2023] 13 S.C.R.

the changing commercial practices and ﬁnancial sector reforms. This
has resulted in slow pace of recovery of defaulting loans and mounting
levels of non-performing assets of banks and ﬁnancial institutions.
Narasimham Committee I and II and Andhyarujina Committee
constituted by the Central Government for the purpose of examining
banking sector reforms have considered the need for changes in the
legal system in respect of these areas. These Committees, inter alia,
have suggested enactment of a new legislation for securitisation and
empowering banks and ﬁnancial institutions to take possession of
the securities and to sell them without the intervention of the court.
Acting on these suggestions, the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Ordinance,
2002 was promulgated on the 21st June, 2002 to regulate securitisation
and reconstruction of ﬁnancial assets and enforcement of security
interest and for matters connected therewith or incidental thereto.
The provisions of the Ordinance would enable banks and ﬁnancial
institutions to realise long-term assets, manage problem of liquidity,
asset liability mismatches and improve recovery by exercising powers
to take possession of securities, sell them and reduce nonperforming
assets by adopting measures for recovery or reconstruction.”
32. This Court in Mardia Chemicals Ltd. & Ors. v. Union of India
& Ors. reported in (2004) 4 SCC 311, examined the history and legislative
backdrop that ultimately led to the enactment of the SARFAESI Act as
under: -
“34. Some facts which need to be taken note of are that the banks and
the ﬁnancial institutions have heavily ﬁnanced the petitioners and
other industries. It is also a fact that a large sum of amount remains
unrecovered. Normal process of recovery of debts through courts
is lengthy and time taken is not suited for recovery of such dues.
For ﬁnancial assistance rendered to the industries by the ﬁnancial
institutions, ﬁnancial liquidity is essential failing which there is a
blockade of large sums of amounts creating circumstances which
retard the economic progress followed by a large number of other
consequential ill eﬀects. Considering all these circumstances, the
Recovery of Debts Due to Banks and Financial Institutions Act was
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 79
LTD. & ORS. [J. B. PARDIWALA, J.]

enacted in 1993 but as the ﬁgures show it also did not bring the desired
results. Though it is submitted on behalf of the petitioners that it so
happened due to inaction on the part of the Governments in creating
Debts Recovery Tribunals and appointing presiding oﬃcers, for a long
time. Even after leaving that margin, it is to be noted that things in the
spheres concerned are desired to move faster. In the present-day global
economy it may be diﬃcult to stick to old and conventional methods
of ﬁnancing and recovery of dues. Hence, in our view, it cannot be
said that a step taken towards securitisation of the debts and to evolve
means for faster recovery of NPAs was not called for or that it was
superimposition of undesired law since one legislation was already
operating in the ﬁeld, namely, the Recovery of Debts Due to Banks
and Financial Institutions Act. It is also to be noted that the idea has
not erupted abruptly to resort to such a legislation. It appears that a
thought was given to the problems and the Narasimham Committee
was constituted which recommended for such a legislation keeping
in view the changing times and economic situation whereafter yet
another Expert Committee was constituted, then alone the impugned
law was enacted. Liquidity of ﬁnances and ﬂow of money is essential
for any healthy and growth-oriented economy. But certainly, what
must be kept in mind is that the law should not be in derogation of
the rights which are guaranteed to the people under the Constitution.
The procedure should also be fair, reasonable and valid, though it
may vary looking to the diﬀerent situations needed to be tackled and
object sought to be achieved.
xxx xxx xxx
36. In its Second Report, the Narasimham Committee observed
that NPAs in 1992 were uncomfortably high for most of the public
sector banks. In Chapter VIII of the Second Report the Narasimham
Committee deals about legal and legislative framework and observed:
“8.1. A legal framework that clearly deﬁnes the rights and
liabilities of parties to contracts and provides for speedy
resolution of disputes is a sine qua non for eﬃcient trade and
commerce, especially for ﬁnancial intermediation. In our system,
the evolution of the legal framework has not kept pace with
80 SUPREME COURT REPORTS [2023] 13 S.C.R.

changing commercial practice and with the ﬁnancial sector
reforms. As a result, the economy has not been able to reap the
full beneﬁts of the reforms process. As an illustration, we could
look at the scheme of mortgage in the Transfer of Property Act,
which is critical to the work of ﬁnancial intermediaries….”
One of the measures recommended in the circumstances was to vest
the ﬁnancial institutions through special statutes, the power of sale
of the assets without intervention of the court and for reconstruction
of assets. It is thus to be seen that the question of non-recoverable
or delayed recovery of debts advanced by the banks or ﬁnancial
institutions has been attracting attention and the matter was considered
in depth by the Committees specially constituted consisting of the
experts in the ﬁeld. In the prevalent situation where the amounts of
dues are huge and hope of early recovery is less, it cannot be said
that a more eﬀective legislation for the purpose was uncalled for or
that it could not be resorted to. It is again to be noted that after the
Report of the Narasimham Committee, yet another Committee was
constituted headed by Mr Andhyarujina for bringing about the needed
steps within the legal framework. We are therefore, unable to ﬁnd much
substance in the submission made on behalf of the petitioners that
while the Recovery of Debts Due to Banks and Financial Institutions
Act was in operation it was uncalled for to have yet another legislation
for the recovery of the mounting dues. Considering the totality of
circumstances and the ﬁnancial climate world over, if it was thought
as a matter of policy to have yet speedier legal method to recover the
dues, such a policy decision cannot be faulted with nor is it a matter
to be gone into by the courts to test the legitimacy of such a measure
relating to ﬁnancial policy.”
33. In this regard, reference may be made to the following observations
of this Court in the case of Satyawati Tondon (supra). The relevant paras
are being reproduced hereunder:
“1. … With a view to give impetus to the industrial development of
the country, the Central and State Governments encouraged the banks
and other ﬁnancial institutions to formulate liberal policies for grant
of loans and other ﬁnancial facilities to those who wanted to set up
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 81
LTD. & ORS. [J. B. PARDIWALA, J.]

new industrial units or expand the existing units. Many hundred
thousand took advantage of easy ﬁnancing by the banks and other
ﬁnancial institutions but a large number of them did not repay the
amount of loan, etc. Not only this, they instituted frivolous cases and
succeeded in persuading the civil courts to pass orders of injunction
against the steps taken by banks and ﬁnancial institutions to recover
their dues. Due to lack of adequate infrastructure and non-availability
of manpower, the regular courts could not accomplish the task of
expeditiously adjudicating the cases instituted by banks and other
ﬁnancial institutions for recovery of their dues. As a result, several
hundred crores of public money got blocked in unproductive ventures.
2. In order to redeem the situation, the Government of India constituted
a committee under the Chairmanship of Shri T. Tiwari to examine the
legal and other diﬃculties faced by banks and ﬁnancial institutions
in the recovery of their dues and suggest remedial measures. The
Tiwari Committee noted that the existing procedure for recovery was
very cumbersome and suggested that special tribunals be set up for
recovery of the dues of banks and ﬁnancial institutions by following a
summary procedure. The Tiwari Committee also prepared a draft of the
proposed legislation which contained a provision for disposal of cases
in three months and conferment of power upon the Recovery Oﬃcer
for expeditious execution of orders made by adjudicating bodies.”
34. Section 13 of the SARFAESI Act contains the provisions relating
to the enforcement of the security interest and the manner in which the same
may be done by the secured creditor without the intervention of the Court
or Tribunal in accordance with its provisions, and reads as under: -
“13. Enforcement of security interest.–(1) Notwithstanding anything
contained in section 69 or section 69A of the Transfer of Property Act,
1882 (4 of 1882), any security interest created in favour of any secured
creditor may be enforced, without the intervention of the court or
tribunal, by such creditor in accordance with the provisions of this Act.
(2) Where any borrower, who is under a liability to a secured creditor
under a security agreement, makes any default in repayment of secured
debt or any instalment thereof, and his account in respect of such debt
is classiﬁed by the secured creditor as non-performing asset, then,
82 SUPREME COURT REPORTS [2023] 13 S.C.R.

the secured creditor may require the borrower by notice in writing
to discharge in full his liabilities to the secured creditor within sixty
days from the date of notice failing which the secured creditor shall
be entitled to exercise all or any of the rights under sub-section (4).
Provided that –
(i) the requirement of classiﬁcation of secured debt as non-performing
asset under this sub-section shall not apply to a borrower who has
raised funds through issue of debt securities; and
(ii) in the event of default, the debenture trustee shall be entitled to
enforce security interest in the same manner as provided under this
section with such modiﬁcations as may be necessary and in accordance
with the terms and conditions of security documents executed in favour
of the debenture trustee;
(3) The notice referred to in sub-section (2) shall give details of the
amount payable by the borrower and the secured assets intended to
be enforced by the secured creditor in the event of non-payment of
secured debts by the borrower.
(3A) If, on receipt of the notice under sub-section (2), the borrower
makes any representation or raises any objection, the secured creditor
shall consider such representation or objection and if the secured
creditor comes to the conclusion that such representation or objection
is not acceptable or tenable, he shall communicate within ﬁfteen days
of receipt of such representation or objection the reasons for non-
acceptance of the representation or objection to the borrower:
Provided that the reasons so communicated or the likely action of the
secured creditor at the stage of communication of reasons shall not
confer any right upon the borrower to prefer an application to the
Debts Recovery Tribunal under section 17 or the Court of District
Judge under section 17A.
(4) In case the borrower fails to discharge his liability in full within
the period speciﬁed in sub-section (2), the secured creditor may take
recourse to one or more of the following measures to recover his
secured debt, namely:—
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 83
LTD. & ORS. [J. B. PARDIWALA, J.]

(a) take possession of the secured assets of the borrower including
the right to transfer by way of lease, assignment or sale for realising
the secured asset;
(b) take over the management of the business of the borrower including
the right to transfer by way of lease, assignment or sale for realising
the secured asset:
Provided that the right to transfer by way of lease, assignment or sale
shall be exercised only where the substantial part of the business of
the borrower is held as security for the debt:
Provided further that where the management of whole of the business
or part of the business is severable, the secured creditor shall take over
the management of such business of the borrower which is relatable
to the security for the debt;
(c) appoint any person (hereafter referred to as the manager), to
manage the secured assets the possession of which has been taken
over by the secured creditor;
(d) require at any time by notice in writing, any person who has
acquired any of the secured assets from the borrower and from whom
any money is due or may become due to the borrower, to pay the secured
creditor, so much of the money as is suﬃcient to pay the secured debt.
(5) Any payment made by any person referred to in clause (d) of
sub-section (4) to the secured creditor shall give such person a valid
discharge as if he has made payment to the borrower.
(5A) Where the sale of an immovable property, for which a reserve
price has been speciﬁed, has been postponed for want of a bid of an
amount not less than such reserve price, it shall be lawful for any oﬃcer
of the secured creditor, if so authorised by the secured creditor in this
behalf, to bid for the immovable property on behalf of the secured
creditor at any subsequent sale.
(5B) Where the secured creditor, referred to in sub-section (5A),
is declared to be the purchaser of the immovable property at any
84 SUPREME COURT REPORTS [2023] 13 S.C.R.

subsequent sale, the amount of the purchase price shall be adjusted
towards the amount of the claim of the secured creditor for which the
auction of enforcement of security interest is taken by the secured
creditor, under sub-section (4) of section 13.
(5C) The provisions of section 9 of the Banking Regulation Act, 1949
(10 of 1949) shall, as far as may be, apply to the immovable property
acquired by secured creditor under sub-section (5A).
(6) Any transfer of secured asset after taking possession thereof
or take over of management under sub-section (4), by the secured
creditor or by the manager on behalf of the secured creditor shall
vest in the transferee all rights in, or in relation to, the secured asset
transferred as if the transfer had been made by the owner of such
secured asset.
(7) Where any action has been taken against a borrower under the
provisions of sub-section (4), all costs, charges and expenses which,
in the opinion of the secured creditor, have been properly incurred
by him or any expenses incidental thereto, shall be recoverable from
the borrower and the money which is received by the secured creditor
shall, in the absence of any contract to the contrary, be held by him
in trust, to be applied, ﬁrstly, in payment of such costs, charges
and expenses and secondly, in discharge of the dues of the secured
creditor and the residue of the money so received shall be paid to the
person entitled thereto in accordance with his rights and interests.
(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
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 85
LTD. & ORS. [J. B. PARDIWALA, J.]

shall be taken by such secured creditor for transfer by way of lease
or assignment or sale of such secured assets.
(9) Subject to the provisions of the Insolvency and Bankruptcy Code,
2016, in the case of ﬁnancing of a ﬁnancial asset by more than one
secured creditors or joint ﬁnancing of a ﬁnancial asset by secured
creditors, no secured creditor shall be entitled to exercise any or all
of the rights conferred on him under or pursuant to sub-section (4)
unless exercise of such right is agreed upon by the secured creditors
representing not less than sixty per cent. in value of the amount
outstanding as on a record date and such action shall be binding on
all the secured creditors:
Provided that in the case of a company in liquidation, the amount
realised from the sale of secured assets shall be distributed in
accordance with the provisions of section 529A of the Companies
Act, 1956 (1 of 1956):
Provided further that in the case of a company being wound up on
or after the commencement of this Act, the secured creditor of such
company, who opts to realise his security instead of relinquishing
his security and proving his debt under proviso to sub-section (1) of
section 529 of the Companies Act, 1956 (1 of 1956), may retain the
sale proceeds of his secured assets after depositing the workmen’s
dues with the liquidator in accordance with the provisions of section
529A of that Act:
Provided also that liquidator referred to in the second proviso shall
intimate the secured creditor the workmen’s dues in accordance
with the provisions of section 529A of the Companies Act, 1956 (1
of 1956) and in case such workmen’s dues cannot be ascertained,
the liquidator shall intimate the estimated amount of workmen’s
dues under that section to the secured creditor and in such case the
secured creditor may retain the sale proceeds of the secured assets
after depositing the amount of such estimate dues with the liquidator:
Provided also that in case the secured creditor deposits the estimated
amount of workmen’s dues, such creditor shall be liable to pay the
balance of the workmen’s dues or entitled to receive the excess
amount, if any, deposited by the secured creditor with the liquidator:
86 SUPREME COURT REPORTS [2023] 13 S.C.R.

Provided also that the secured creditor shall furnish an undertaking
to the liquidator to pay the balance of the workmen’s dues, if any.
Explanation.— For the purposes of this sub-section,—
(a) “record date” means the date agreed upon by the secured creditors
representing not less than sixty per cent. in value of the amount
outstanding on such date;
(b) “amount outstanding” shall include principal, interest and any
other dues payable by the borrower to the secured creditor in respect
of secured asset as per the books of account of the secured creditor.
(10) Where dues of the secured creditor are not fully satisﬁed with the
sale proceeds of the secured assets, the secured creditor may ﬁle an
application in the form and manner as may be prescribed to the Debts
Recovery Tribunal having jurisdiction or a competent court, as the
case may be, for recovery of the balance amount from the borrower.
(11) Without prejudice to the rights conferred on the secured creditor
under or by this section, secured creditor shall be entitled to proceed
against the guarantors or sell the pledged assets without ﬁrst taking
any of the measured speciﬁes in clauses (a) to (d) of sub-section (4)
in relation to the secured assets under this Act.
(12) The rights of a secured creditor under this Act may be exercised
by one or more of his oﬃcers authorised in this behalf in such manner
as may be prescribed.
(13) No borrower shall, after receipt of notice referred to in sub-
section (2), transfer by way of sale, lease or otherwise (other than in
the ordinary course of his business) any of his secured assets referred
to in the notice, without prior written consent of the secured creditor.”
(Emphasis supplied)
35. We are concerned in the present litigation with sub-section 8 of
Section 13 of the SARFAESI Act referred to above. Section 13(8) is in two
parts; (i) it enables the borrower to exercise his right of redemption upto
a particular point of time and at the same time (ii) it enables the secured
creditor to exercise its power to deal or dispose oﬀ the secured asset. First,
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 87
LTD. & ORS. [J. B. PARDIWALA, J.]

by stipulating the time limit during which the borrower can tender all the
dues with interest, costs and charges to the secured creditor, and secondly,
by providing as to when the secured creditor can proceed to sell, auction,
assign or lease the secured asset.
36. Rules 8 and 9 respectively of the Rules of 2002 prescribe the
procedure and formalities to be followed for the sale of immovable secured
asset as per Section 13 of the SARFAESI Act and reads as under: -
“8. Sale of immovable secured assets. – (1) Where the secured asset
is an immovable property, the authorised oﬃcer shall take or cause
to be taken possession, by delivering a possession notice prepared
as nearly as possible in Appendix IV to these rules, to the borrower
and by aﬃxing the possession notice on the outer door or at such
conspicuous place of the property.
(2) The possession notice as referred to in sub-rule (1) shall also be
published, as soon as possible but in any case not later than seven
days from the date of taking possession, in two leading newspaper one
in vernacular language having suﬃcient circulation in that locality,
by the authorised oﬃcer.
(2A) All notices under these rules may also be served upon the
borrower through electronic mode of service, in addition to the modes
prescribed under sub-rule (1) and sub-rule (2) of rule 8.
(3) In the event of possession of immovable property is actually taken
by the authorised oﬃcer, such property shall be kept in his own custody
or in the custody of any person authorised or appointed by him, who
shall take as much care of the property in his custody as a owner of
ordinary prudence would, under the similar circumstances, take of
such property.
(4) The authorised oﬃcer shall take steps for preservation and
protection of secured assets and insure them, if necessary, till they are
sold or otherwise disposed of.
(5) Before eﬀecting sale of the immovable property referred to in
sub-rule (1) of rule 9, the authorised oﬃcer shall obtain valuation
88 SUPREME COURT REPORTS [2023] 13 S.C.R.

of the property from an approved valuer and in consultation with the
secured creditor, ﬁx the reserve price of the property and may sell
the whole or any part of such immovable secured asset by any of the
following methods:-
(a) by obtaining quotations from the persons dealing with similar
secured assets or otherwise interested in buying the such assets;
or
(b) by inviting tenders from the public;
(c) by holding public auction including through e-auction mode;
or
(d) by private treaty.
Provided that in case of sale of immovable property in the State of
Jammu and Kashmir, the provision of Jammu and Kashmir Transfer
of Property Act, 1977 shall apply to the person who acquires such
property in the State.
(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):
Provided that if the sale of such secured asset is being eﬀected by
either inviting tenders from the public or by holding public auction,
the secured creditor shall cause a public notice in the Form given in
Appendix IV-A to be published in two leading newspapers including
one in vernacular language having wide circulation in the locality.
(7) every notice of sale shall be aﬃxed on the conspicuous part of
the immovable property and the authorised oﬃcer shall upload the
detailed terms and conditions of the sale, on the web-site of the secured
creditor, which shall include;
(a) the description of the immovable property to be sold, including
the details of the encumbrances known to the secured creditor;
(b) the secured debt for recovery of which the property is to be
sold;
(c) reserve price of the immovable secured assets below which
the property may not be sold;
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 89
LTD. & ORS. [J. B. PARDIWALA, J.]

(d) time and place of public auction or the time after which sale
by any other mode shall be completed;
(e) deposit of earnest money as may be stipulated by the secured
creditor;
(f) any other terms and conditions, which the authorised oﬃcer
considers it necessary for a purchaser to know the nature and
value of the property.
(8) Sale by any methods other than public auction or public tender,
shall be on such terms as may be settled between the secured creditors
and the proposed purchaser in writing.
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:
Provided further that if sale of immovable property by any one of the
methods speciﬁed by sub-rule (5) of rule 8 fails and sale is required
to be conducted again, the authorised oﬃcer shall serve, aﬃx and
publish notice of sale of not less than ﬁfteen days to the borrower, for
any subsequent sale.
(2) The sale shall be conﬁrmed in favour of the purchaser who has
oﬀered the highest sale price in his bid or tender or quotation or oﬀer
to the authorised oﬃcer and shall be subject to conﬁrmation by the
secured creditor:
Provided that no sale under this rule shall be conﬁrmed, if the amount
oﬀered by sale price is less than the reserve price, speciﬁed under
sub-rule (5) of rule 8:
Provided further that if the authorised oﬃcer fails to obtain a price
higher than the reserve price, he may, with the consent of the borrower
and the secured creditor eﬀect the sale at such price.
90 SUPREME COURT REPORTS [2023] 13 S.C.R.

(3) On every sale of immovable property, the purchaser shall
immediately, i.e. on the same day or not later than next working day,
as the case may be, pay a deposit of twenty ﬁve per cent. of the amount
of the sale price, which is inclusive of earnest money deposited, if any,
to the authorised oﬃcer conducting the sale and in default of such
deposit, the property shall be sold again;
(4) The balance amount of purchase price payable shall be paid by
the purchaser to the authorised oﬃcer on or before the ﬁfteenth day
of conﬁrmation of sale of the immovable property or such extended
period as may be agreed upon in writing between the purchaser and
the secured creditor, in any case not exceeding three months.
(5) In default of payment within the period mentioned in sub-rule (4),
the deposit shall be forfeited to the secured creditor and the property
shall be resold and the defaulting purchaser shall forfeit all claim to the
property or to any part of the sum for which it may be subsequently sold.
(6) On conﬁrmation of sale by the secured creditor and if the terms of
payment have been complied with, the authorised oﬃcer exercising
the power of sale shall issue a certiﬁcate of sale of the immovable
property in favour of the purchaser in the Form given in Appendix V
to these rules.
(7) Where the immovable property sold is subject to any encumbrances,
the authorised oﬃcer may, if he thinks ﬁt, allow the purchaser to
deposit with him the money required to discharge the encumbrances
and any interest due thereon together with such additional amount that
may be suﬃcient to meet the contingencies or further cost, expenses
and interest as may be determined by him.
Provided that if after meeting the cost of removing encumbrances and
contingencies there is any surplus available out of money deposited
by the purchaser such surplus shall be paid to the purchaser within
ﬁfteen days, from date of ﬁnalisation of the sale.
(8) On such deposit of money for discharge of the encumbrances, the
authorised oﬃcer shall issue or cause the purchaser to issue notices
to the persons interested in or entitled to the money deposited with
him and take steps to make, the payment accordingly.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 91
LTD. & ORS. [J. B. PARDIWALA, J.]

(9) The authorised oﬃcer shall deliver the property to the purchaser
free from encumbrances known to the secured creditor on deposit of
money as speciﬁed in sub-rule (7) above.
(10) The certiﬁcate of sale issued under sub-rule (6) shall speciﬁcally
mention that whether the purchaser has purchased the immovable
secured asset free from any encumbrances known to the secured
creditor or not.”
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.
38. In Mardia Chemicals (supra), this Court examined the provision
of Section 13 of the SARFAESI Act and made the following relevant
observations reproduced below: -
“38. We may now consider the main enforcing provision which is
pivotal to the whole controversy, namely, Section 13 in Chapter III of
the Act. It provides that a secured creditor may enforce any security
interest without intervention of the court or tribunal irrespective of
Section 69 or Section 69-A of the Transfer of Property Act where
according to sub-section (2) of Section 13, the borrower is a defaulter
in repayment of the secured debt or any instalment of repayment and
further the debt standing against him has been classiﬁed as a non-
performing asset by the secured creditor. Sub-section (2) of Section
13 further provides that before taking any steps in the direction of
realising the dues, the secured creditor must serve a notice in writing to
the borrower requiring him to discharge the liabilities within a period
of 60 days failing which the secured creditor would be entitled to take
any of the measures as provided in sub-section (4) of Section 13. It
92 SUPREME COURT REPORTS [2023] 13 S.C.R.

may also be noted that as per sub-section (3) of Section 13 a notice
given to the borrower must contain the details of the amounts payable
and the secured assets against which the secured creditor proposes to
proceed in the event of non-compliance with the notice given under
sub-section (2) of Section 13.”
39. Section 35 of the SARFAESI Act contains the overriding clause
and provides that the Act shall override any other law which is inconsistent
with its provisions, and reads as under: -
“35. The provisions of this Act to override other laws.–The provisions
of this Act shall have eﬀect, notwithstanding anything inconsistent
therewith contained in any other law for the time being in force or any
instrument having eﬀect by virtue of any such law.”
40. Section 37 of the SARFAESI Act provides that the provisions of
the SARFAESI Act shall be in addition to the Acts mentioned in or and any
other law for the time being in force and that the other laws shall also be
applicable alongside the SARFAESI Act, and reads as under: -
“37. Application of other laws not barred.–The provisions of this
Act or the rules made thereunder shall be in addition to, and not in
derogation of, the Companies Act, 1956 (1 of 1956), the Securities
Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and
Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any
other law for the time being in force.”
41. This Court in Madras Petrochem Ltd. & Anr. v. Board for
Industrial and Financial Reconstruction & Ors. reported in (2016) 4 SCC
1, recapitulated the object behind the enactment of the SARFAESI Act and
in that context examined the purpose of Sections 13, 35 and 37 respectively
of the SARFAESI Act with the following observations given as under: -
“16. It is important at this stage to refer to the genesis of these three
legislations. Each of them deals with diﬀerent aspects of recovery
of debts due to banks and ﬁnancial institutions. Two of them refer to
creditors’ interests and how best to deal with recovery of outstanding
loans and advances made by them on the one hand, whereas the Sick
Industrial Companies (Special Provisions) Act, 1985, on the other
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 93
LTD. & ORS. [J. B. PARDIWALA, J.]

hand, deals with certain debtors which are sick industrial companies
[i.e. companies running industries named in the Schedule to the
Industries (Development and Regulation) Act, 1951] and whether
such “debtors” having become “sick”, are to be rehabilitated. The
question, therefore, is whether the public interest in recovering debts
due to banks and ﬁnancial institutions is to give way to the public
interest in rehabilitation of sick industrial companies, regard being
had to the present economic scenario in the country, as reﬂected in
parliamentary legislation.
xxx xxx xxx
19. While this Act had worked for a period of about 7 years, the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993
was brought into force, pursuant to various committee reports. The
Statement of Objects and Reasons for this Act reads as follows:
“Statement of Objects and Reasons of the Recovery of Debts Due
to Banks and Financial Institutions Act, 1993
1. Banks and financial institutions at present experience
considerable diﬃculties in recovering loans and enforcement of
securities charged with them. The existing procedure for recovery
of debts due to the banks and ﬁnancial institutions has blocked a
signiﬁcant portion of their funds in unproductive assets, the value
of which deteriorates with the passage of time. The Committee
on the Financial System headed by Shri M. Narasimham has
considered the setting up of the Special Tribunals with special
powers for adjudication of such matters and speedy recovery as
critical to the successful implementation of the ﬁnancial sector
reforms. An urgent need was, therefore, felt to work out a suitable
mechanism through which the dues to the banks and ﬁnancial
institutions could be realised without delay. In 1981, a Committee
under the Chairmanship of Shri T. Tiwari had examined the legal
and other diﬃculties faced by banks and ﬁnancial institutions and
suggested remedial measures including changes in law. The Tiwari
Committee had also suggested setting up of Special Tribunals for
recovery of dues of the banks and ﬁnancial institutions by following
a summary procedure. The setting up of Special Tribunals will not
94 SUPREME COURT REPORTS [2023] 13 S.C.R.

only fulﬁl a long-felt need, but also will be an important step in the
implementation of the Report of Narasimham Committee. Whereas
on 30-9-1990 more than ﬁfteen lakhs of cases ﬁled by the public
sector banks and about 304 cases ﬁled by the ﬁnancial institutions
were pending in various courts, recovery of debts involved more
than Rs 5622 crores in dues of public sector banks and about Rs 391
crores of dues of the ﬁnancial institutions. The locking up of such
huge amount of public money in litigation prevents proper utilisation
and recycling of the funds for the development of the country.
2. The Bill seeks to provide for the establishment of Tribunals and
Appellate Tribunals for expeditious adjudication and recovery of
debts due to banks and ﬁnancial institutions. Notes on clauses
explain in detail the provisions of the Bill.”
20. The Recovery of Debts Due to Banks and Financial Institutions Act,
1993 took away the jurisdiction of the courts and vested this jurisdiction
in tribunals established by the Act so as to ensure speedy recovery of
debts due to the banks and ﬁnancial institutions mentioned therein. This
Act also included one appeal to the Appellate Tribunal, and transfer of
all suits or other proceedings pending before any court to tribunals set
up under the Act. The Act contained a non obstante clause in Section
34 stating that its provisions will have eﬀect notwithstanding anything
inconsistent contained in any other law for the time being in force or
in any instrument having eﬀect by virtue of any other law. In the year
2000, this Act was amended so as to incorporate a new sub-section
(2) in Section 34 together with a saving provision in sub-section (1).
It is of some interest to note that this Act was to be in addition to
and not in derogation of various Financial Corporation Acts and the
Sick Industrial Companies (Special Provisions) Act, 1985. Clearly,
therefore, the object of the 2000 Amendment to the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993 was to make the Sick
Industrial Companies (Special Provisions) Act, 1985 prevail over it.
21. Regard being had to the poor working of the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993, the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 was brought into force in the year 2002. …”
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 95
LTD. & ORS. [J. B. PARDIWALA, J.]

22. This 2002 Act was brought into force as a result of two committee
reports which opined that recovery of debts due to banks and ﬁnancial
institutions was not moving as speedily as expected, and that, therefore,
certain other measures would have to be put in place in order that
these banks and ﬁnancial institutions would better be able to recover
debts owing to them.
xxx xxx xxx
24. The “pivotal” provision, namely, Section 13 of the said Act makes
it clear that banks and ﬁnancial institutions would now no longer have
to wait for a tribunal judgment under the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 to be able to recover debts
owing to them. They could, by following the procedure laid down in
Section 13, take direct action against the debtors by taking possession
of secured assets and selling them; they could also take over the
management of the business of the borrower. They could also appoint
any person to manage the secured assets possession of which has been
taken over by them, and could require, at any time by notice in writing
to any person who has acquired any of the secured assets from the
borrower and from whom any money is due or may become due from
the borrower, to pay the secured creditor so much of the money as is
suﬃcient to pay the secured debt.
25. In order to further the objects of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002, the Act contains a non obstante clause in Section 35
and also contains various Acts in Section 37 which are to be in addition
to and not in derogation of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002.
Three of these Acts, namely, the Companies Act, 1956, the Securities
Contracts (Regulation) Act, 1956 and the Securities and Exchange
Board of India Act, 1992, relate to securities generally, whereas the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993
relates to recovery of debts due to banks and ﬁnancial institutions.
Signiﬁcantly, under Section 41 of this Act, three Acts are, by the
Schedule to this Act, amended. We are concerned with the third of
such Acts, namely, the Sick Industrial Companies (Special Provisions)
96 SUPREME COURT REPORTS [2023] 13 S.C.R.

Act, 1985, in Section 15(1) of which two provisos have been added. It
is the correct interpretation of the second of these provisos on which
the fate of these appeals ultimately hangs.”
(Emphasis supplied)
REDEMPTION OF MORTGAGE UNDER SECTION 60 OF THE
TRANSFER OF PROPERTY ACT, 1882
42. Section 60 of the Act 1882 provides the general statutory right of
the mortgagor to redeem the mortgage and reads as below: -
“60. Right of mortgagor to redeem.–At any time after the principal
money has become due, the mortgagor has a right, on payment or
tender, at a proper time and place, of the mortgage-money, to require
the mortgagee (a) to deliver to the mortgagor the mortgage-deed and
all documents relating to the mortgaged property which are in the
possession or power of the mortgage, (b) where the mortgage is in
possession of the mortgaged property, to deliver possession thereof
to the mortgagor, and (c) at the cost of the mortgagor either to re-
transfer the mortgaged property to him or to such third person as he
may direct, or to execute and (where the mortgage has been eﬀected
by a registered instrument) to have registered an acknowledgment in
writing that any right in derogation of his interest transferred to the
mortgage has been extinguished:
Provided that the right conferred by this section has not been
extinguished by act of the parties or by decree of a Court.
The right conferred by this section is called a right to redeem and a
suit to enforce it is called a suit for redemption.
Nothing in this section shall be deemed to render invalid any provision
to the eﬀect that, if the time ﬁxed for payment of the principal money
has been allowed to pass or no such time has been ﬁxed, the mortgage
shall be entitled to reasonable notice before payment or tender of
such money.
Redemption of portion of mortgaged property.—Nothing in this
section shall entitle a person interested in a share only of the mortgaged
property to redeem his own share only, on payment of a proportionate
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 97
LTD. & ORS. [J. B. PARDIWALA, J.]

part of the amount remaining due on the mortgage, except only where
a mortgagee, or, if there are more mortgages than one, all such
mortgages, has or have acquired, in whole or in part, the share of a
mortgagor.”
43. This Court in Narandas Karsondas (supra), upon examination of
Section 60 of the Act 1882, held that the mortgagor’s right to redeem will be
extinguished only after completion of sale by a registered deed, and made
the following relevant observations reproduced below: -
“28. The Rights and Liabilities of Mortgagor are dealt with in
Section 60 of the Transfer of Property Act. It is that at any time after
the principal money has become due, the mortgagor has a right, on
payment or tender, at a proper time and place, of the mortgage-money,
to require the mortgagee (a) to deliver to the mortgagor the mortgage-
deed and all documents relating to the mortgaged property which are
in the possession or power of the mortgagee, (b) where the mortgagee
is in possession of the mortgaged property to deliver possession thereof
to the mortgagor, and (c) at the cost of the mortgagor either to re-
transfer the mortgaged property to him or to such third person as he
may direct, or to execute and to have registered an acknowledgment
in writing that any right in derogation of his interest transferred to
the mortgagee has been extinguished. There is a proviso that the right
conferred by this section has not been extinguished by the act of the
parties or by decree of a Court. The right conferred by Section 60 of
the Transfer of Property Act is called a right to redeem. Therefore, the
said Section 60 provides for a right of redemption provided that the
right has not been extinguished by the act of parties.
xxx xxx xxx
33. In India, the word “transfer” is deﬁned with reference to the word
“convey”. The word “transfer” in English law in its narrower and
more usual sense refers to the transfer of an estate in land. Section
205 of the Law of Property Act in England deﬁnes: “Conveyance”
includes a mortgage, charge, lease, assent, vesting declaration,
vesting instrument. The word “conveys” in Section 5 of the Transfer
of Property Act is used in the wider sense of conveying ownership.
98 SUPREME COURT REPORTS [2023] 13 S.C.R.

34. The right of redemption which is embodied in Section 60 of the
Transfer of Property Act is available to the mortgagor unless it has been
extinguished by the act of parties. The combined eﬀect of Section 54 of
the Transfer of Property Act and Section 17 of the Indian Registration
Act is that a contract for sale in respect of immovable property of the
value of more than one hundred rupees without registration cannot
extinguish the equity of redemption. In India it is only on execution of
the conveyance and registration of transfer of the mortgagor’s interest
by registered instrument that the mortgagor’s right of redemption will
be extinguished. The conferment of power to sell without intervention of
the Court in a Mortgage Deed by itself will not deprive the mortgagor
of his right to redemption. The extinction of the right of redemption
has to be subsequent to the deed conferring such power. The right of
redemption is not extinguished at the expiry of the period. The equity
of redemption is not extinguished by mere contract for sale.
35. The mortgagor’s right to redeem will survive until there has been
completion of sale by the mortgagee by a registered deed. In England
a sale of property takes place by agreement but it is not so in our
country. The power to sell shall not be exercised unless and until notice
in writing requiring payment of the principal money has been served
on the mortgagor. Further Section 69(3) of the Transfer of Property
Act shows that when a sale has been made in professed exercise of
such a power, the title of the purchaser shall not be impeachable on
the ground that no case had arisen to authorise the sale. Therefore,
until the sale is complete by registration the mortgagor does not lose
right of redemption.
xxx xxx xxx
37. In view of the fact that only on execution of conveyance, ownership
passes from one party to another it cannot be held that the mortgagor
lost the right of redemption just because the property was put to
auction. The mortgagor has a right to redeem unless the sale of
the property was complete by registration in accordance with the
provisions of the Registration Act.”
(Emphasis supplied)
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 99
LTD. & ORS. [J. B. PARDIWALA, J.]

44. A similar view was taken by this Court in L.K. Trust v. EDC
Limited and Others reported in (2011) 6 SCC 780 wherein it was observed
as follows:
“53. On analysis of arguments advanced at the Bar, this Court
ﬁnds that the proposition that in India it is only on execution of
conveyance and the registration of transfer of the mortgagor’s interest
by registered instrument that the mortgagor’s right of redemption
stands extinguished is well settled. Further it is not the case of the
appellant that a registered Sale Deed had been executed between the
appellant-trust and the respondent No. 1 pursuant to the Resolution
passed by the respondent No. 1 and, therefore, in terms of Section 54
of the Transfer of Property Act 1882 no title relating to the disputed
property had passed to the appellant at all.
54. What is ruled in Narandas Karsandas (Supra) is that in India, there
is no equity or right in property created in favour of the purchaser by
the contract between the mortgagee and the proposed purchaser and in
view of the fact that only on execution of conveyance, ownership passes
from one party to another, it cannot be held that the mortgagor lost the
right of redemption just because the property was put to auction. In this
case, the respondent Housing Society, the mortgagor, had taken loan
from the co-respondent Finance Society and mortgaged the property
to it under an English mortgage. On default, the mortgagee exercised
its right under the mortgage to sell the property without intervention
of Court and after notice, put the property to sale by public auction.
The appellant auction purchaser paid the sums due. Before the sale
was completed by registration etc. the mortgagor sought to exercise
his right of redemption by tendering the amount due. The appellant
had based his case on the plea that in such a situation the mortgagee
acts as agent of the mortgagor and hence binds him.
55. Rejecting the appeal, this Court has held that the right of
redemption which is embodied in Section 60 of the Transfer of Property
Act is available to the mortgagor unless it has been extinguished by
the act of parties or by decree of a court. What is held by this Court is
that, in India it is only on execution of the conveyance and registration
of transfer of the mortgagor’s interest by registered instrument that the
100 SUPREME COURT REPORTS [2023] 13 S.C.R.

mortgagor’s right of redemption will be extinguished but the conferment
of power to sell the mortgaged property without intervention of the
Court, in a mortgage deed, in itself, will not deprive the mortgagor of
his right of redemption. This Court in the said case further explained
that the extinction of the right of redemption has to be subsequent to
the deed conferring such power and the right to redemption is not
extinguished at the expiry of the period. This Court emphasized in
the said decision that the equity of redemption is not extinguished by
mere contract for sale.”
(Emphasis supplied)
REDEMPTION OF MORTGAGE UNDER THE SARFAESI ACT
45. Sub-section (8) of Section 13 of the SARFAESI Act, as originally
enacted, stated as under: -
“13. Enforcement of security interest.–
(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.”
46. In Mathew Varghese (supra), this Court had the occasion to
consider the right of redemption of mortgage under the SARFAESI Act
vis-à-vis the Act 1882, wherein, this Court made the following relevant
observations, being reproduced below: -
“38. … a mere conferment of power to sell without intervention of the
court in the mortgage deed by itself will not deprive the mortgagor of
his right to redemption, that the extinction of the right of redemption
has to be subsequent to the deed conferring such power, that the right
of redemption is not extinguished at the expiry of the period, that the
equity of redemption is not extinguished by mere contract for sale
and that the mortgagor’s right to redeem will survive until there has
been completion of sale by the mortgagee by a registered deed. The
ratio is also to the eﬀect that the power to sell should not be exercised
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 101
LTD. & ORS. [J. B. PARDIWALA, J.]

unless and until notice in writing requiring payment of the principal
money has been served on the mortgagor. The above proposition of
law of course was laid down by this Court in Narandas Karsondas
[Narandas Karsondas v. S.A. Kamtam, (1977) 3 SCC 247] while
construing Section 60 of the TP Act. But as rightly contended by
Mr Shyam Divan, we fail to note any distinction to be drawn while
applying the abovesaid principles, even in respect of the sale of secured
assets created by way of a secured interest in favour of the secured
creditor under the provisions of the SARFAESI Act, read along with
the relevant Rules. We say so, inasmuch as, we ﬁnd that even while
setting out the principles in respect of the redemption of a mortgage
by applying Section 60 of the TP Act, this Court has envisaged the
situation where such mortgage deed providing for resorting to the sale
of the mortgage property without the intervention of the Court. Keeping
the said situation in mind, it was held that the right of redemption will
not get extinguished merely at the expiry of the period mentioned in
the mortgage deed. It was also stated that the equity of redemption is
not extinguished by mere contract for sale and the most important and
vital principle stated was that the mortgagor’s right to redeem will
survive until there has been completion of sale by the mortgagee by a
registered deed. The completion of sale, it is stated, can be held to be
so unless and until notice in writing requiring payment of the principal
money has been served on the mortgagor. Therefore, it was held 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.
39. When we apply the above principles stated with reference to Section
60 of the TP Act in respect of a secured interest in a secured asset in
favour of the secured creditor under the provisions of the SARFAESI
Act and the relevant Rules applicable, under Section 13(1), a free
hand is given to a secured creditor to resort to a sale without the
intervention of the court or tribunal. However, under Section 13(8),
it is clearly stipulated that the mortgagor i.e. the borrower, who
is otherwise called as a debtor, retains his full right to redeem the
property by tendering all the dues to the secured creditor at any time
102 SUPREME COURT REPORTS [2023] 13 S.C.R.

before the date ﬁxed for sale or transfer. Under sub-section (8) of
Section 13, as noted earlier, the secured asset should not be sold
or transferred by the secured creditor when such tender is made
by the borrower at the last moment before the sale or transfer. The
said sub-section also states that no further step should be taken by
the secured creditor for transfer or sale of that secured asset. We
ﬁnd no reason to state that the principles laid down with reference
to Section 60 of the TP Act, which is general in nature in respect
of all mortgages, can have no application in respect of a secured
interest in a secured asset created in favour of a secured creditor,
as all the abovestated principles apply on all fours in respect of a
transaction as between the debtor and secured creditor under the
provisions of the SARFAESI Act.
xxx xxx xxx
41. … even if there was some diﬀerence in the amount tendered by
the borrower while exercising his right of redemption under Section
13(8), the question of diﬀerence in the amount should be kept open
and can be decided subsequently, but on that score the right of
redemption of the mortgagor cannot be frustrated. Elaborating the
statement of law made therein, we wish to state that the endeavour
or the role of a secured creditor in such a situation while resorting
to any sale for the realisation of dues of a mortgaged asset, should
be that the mortgagor is entitled for some lenience, if not more to be
shown, to enable the borrower to tender the amounts due in order
to ensure that the constitutional right to property is preserved,
rather than it being deprived of.”
(Emphasis supplied)
47. In Dwarika Prasad v. State of Uttar Pradesh reported in (2018)
5 SCC 491, this Court speaking through one of us Dr. D.Y. Chandrachud,
CJI., considered the unamended Section 13(8) of the SARFAESI Act,
keeping in mind the decision in the case of Mathew Varghese (supra).
The Court took the view that the right of redemption of mortgage is not
lost until there is a transfer by a registered instrument. The following
observations as contained in para 8 of the judgment are reproduced below:
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 103
LTD. & ORS. [J. B. PARDIWALA, J.]

“8. … These provisions have fallen for interpretation before this
Court in Mathew Varghese. Dwelling on Section 60 of the Transfer
of the Property Act, 1882 this Court held that the right of redemption
is available to a mortgagor unless it stands extinguished by an act of
parties. The right of the mortgagor to redeem the property survives until
there has been a transfer of the mortgagor’s interest by a registered
instrument of sale. …”
48. In, yet one another decision of this Court in Allokam Peddabbayya
& Anr. v. Allahabad Bank & Ors. reported in (2017) 8 SCC 272, a similar
view was taken. The relevant observations made therein are as under:
“23. The aforesaid discussion leads to the conclusion that the plaintiﬀs
lost the right to sue for redemption of the mortgaged property by virtue
of the proviso to Section 60 of the Act, no sooner that the mortgaged
property was put to auction-sale in a suit for foreclosure and sale
certiﬁcate was issued in favour of Defendant 2. There remained no
property mortgaged to be redeemed. The right to redemption could
not be claimed in the abstract.”
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.
50. However, later on 1st September, 2016, the Enforcement of
Security Interest and Recovery of Debt Laws and Miscellaneous Provisions
(Amendment) Act, 2016 (“2016 Amendment”) was enacted which inter-alia
amended sub-section 8 of Section 13 of the SARFAESI Act, and substituted
the words “any time before the date ﬁxed for sale or transfer” of the original
provision with “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”. The
amended provision of Section 13 sub-section (8) of the SARFAESI Act,
now reads as under: -
104 SUPREME COURT REPORTS [2023] 13 S.C.R.

“13. Enforcement of security interest. –
(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.”
51. The true purport and scope of the amended Section 13(8) of the
SARFAESI Act was looked into by the Andhra Pradesh High Court in Sri.
Sai Annadhatha Polymers & Anr. v. Canara Bank rep. by its Branch
Manager, Mandanapalle reported in 2018 SCC OnLine Hyd 178. The court
took the view that in accordance with the unamended Section 13(8) of the
SARFAESI Act, the right of the borrower to redeem the secured asset was
available till the sale or transfer of such secured asset. The court went on
to say that the amended provisions of Section 13(8) of the SARFAESI Act
brought in a radical change inasmuch as the right of the borrower to redeem
the secured asset would stand extinguished thereunder on the very date of
publication of the notice for public auction under Rule 9(1) of the Rules of
2002. It is pertinent to note that the High Court has referred to and relied
upon the decision of this Court in Mathew Varghese (supra). The relevant
observations made by the High Court are reproduced hereinbelow:
“6. In terms of the amended provisions of Section 13(8) of the
SARFAESI Act, the right of redemption given to the borrower would
expire upon publication of such a notice. However, Rule 8(6) of
the Rules of 2002, as interpreted by the Supreme Court in Mathew
Varghese v. M. Amritha Kumar [(2014) 5 SCC 610], stipulates that
the thirty day notice period mentioned therein is for the purpose
of enabling the borrower to redeem his property. Signiﬁcantly, this
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 105
LTD. & ORS. [J. B. PARDIWALA, J.]

provision remains unaltered. Therefore, this statutory notice period
of thirty days is sacrosanct and deviation therefrom would curtail the
statutory right of redemption available to the borrower. However, in
terms of the amended Section 13(8) of the SARFAESI Act, once the
notice under Rule 9 of the Rules of 2002 is published, the said right
stands extinguished.
xxx xxx xxx
20. In the light of the aforestated changes in the statutory scheme,
certain crucial aspects may be noted. As per the unamended Section
13(8) of the SARFAESI Act, the right of the borrower to redeem the
secured asset was available till the sale or transfer of such secured
asset. Case law consistently held to the eﬀect that a sale or transfer
is not completed until all the formalities are completed and there is
an eﬀective transfer of the asset sold. In consequence, the borrower’s
right of redemption did not stand terminated on the date of the auction
sale of the secured asset itself and remained alive till the transfer was
completed in favour of the auction purchaser, by registration of the sale
certiﬁcate and delivery of possession of the secured asset. The recent
judgment of the Supreme Court in ITC LIMITED v. BLUE COAST
HOTELS LIMITED also aﬃrmed this legal position.
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. …
xxx xxx xxx
23. Therefore, even after the amendment of Section 13(8) of the
SARFAESI Act, a secured creditor is bound to aﬀord to the borrower a
clear thirty day notice period under Rule 8(6) to enable him to exercise
106 SUPREME COURT REPORTS [2023] 13 S.C.R.

his right of redemption. In consequence, a notice under Rule 9(1) of
the Rules of 2002 cannot be published prior to expiry of this thirty day
period in the new scenario, post-amendment of Section 13(8) of the
SARFAESI Act, as such right of redemption would stand terminated
immediately upon publication of the sale notice under Rule 9(1) of
the Rules of 2002. The judgment of the Supreme Court in CANARA
BANK v. M. AMARENDER REDDY, which was rendered in the context
of the unamended provisions, would therefore have no application to
the post-amendment scenario in the light of the change brought about
in Section 13(8). To sum up, the post-amendment scenario inevitably
requires a clear thirty day notice period being maintained between
issuance of the sale notice under Rule 8(6) of the Rules of 2002 and the
publication of the sale notice under Rule 9(1) thereof, as the right of
redemption available to the borrower in terms of Rule 8(6) of the Rules
of 2002, as pointed out in MATHEW VARGHESE, stands extinguished
upon publication of the sale notice under Rule 9(1).”
(Emphasis supplied)
52. The amended Section 13(8) of the SARFAESI Act was also looked
into by the High Court of Telangana in the case of K.V.V. Prasad Rao Gupta
v. State Bank of India reported in 2021 SCC OnLine TS 328 and relying
on the decision of the Andhra Pradesh High Court in the case of Sri. Sai
Annadhatha Polymers (supra), the court observed in para 21 as under:
“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 the borrower to redeem the property stands extinguished.”
(Emphasis supplied)
53. The Telangana High Court in Concern Readymix (supra),
examined the amended Section 13(8) of the SARFAESI Act, & held that the
same only restricts the right of the secured creditor and not the borrowers
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 107
LTD. & ORS. [J. B. PARDIWALA, J.]

right of redemption, which will continue to exist until the execution of the
conveyance. The following relevant observations are reproduced below: -
“10. The ﬁrst distinction between the unamended and amended
sub-section (8) of Section 13 is that before amendment, the facility
of repayment of the entire dues along with the costs, charges and
expenses, was available to the debtor at any time before the date
ﬁxed for the sale or transfer. But after the amendment, the facility is
available upto the time before the date of publication of notice for
public auction or inviting quotations or tender from public or private
treaty. The second distinction is that the unamended sub-section (8)
did not provide for the contingency when the dues are tendered by
the borrower before the date of completion of the sale or lease but
after the issue of notice. But the amended sub-section (8) takes care of
the contingency where steps have already been taken by the secured
creditor for the transfer of the secured asset, before the payment was
made. Except these two distinctions, there is no other distinction.
xxx xxx xxx
13. What is important to note both from the amended and unamended
provisions of Section 13(8) and Rule 9(1) is that both of them do not
speak in express terms, about the equity of redemption available to the
mortgagor. The amended Section 13(8) merely prohibits the secured
creditor from proceeding further with the transfer of the secured assets
by way of lease, assignment or sale. A restriction on the right of the
mortgagee to deal with the property is not exactly the same as the equity
of redemption available to the mortgagor. The payment of the amounts
mentioned in Section 13(8) ties the hands of the mortgagee (secured
creditor) from exercising any of the powers conferred under the
Securitisation Act, 2002. Redemption comes later. But unfortunately,
some Courts, on a wrong reading of the decision of the Supreme Court
in Mathew Varghese v. M. Amritha Kumar [(2014) 5 SCC 610], have
come to the conclusion as though Section 13(8) speaks about the right
of redemption. The danger of interpreting Section 13(8) as though it
relates to the right of redemption, is that if payments are not made as
per Section 13(8), the right of redemption may get lost even before
the sale is complete in all respects. But in law it is not. It may be seen
108 SUPREME COURT REPORTS [2023] 13 S.C.R.

from paragraphs-34 to 36 of the decision of the Supreme Court in
Mathew Varghese that the Supreme Court took note of Section 60 of
the Transfer of Property Act and the combined eﬀect of Section 54 of
the Transfer of Property Act and Section 17 of the Registration Act to
come to the conclusion that the extinction of the right of redemption
comes much later than the sale notice. Therefore, we should ﬁrst
understand that the right of redemption is not lost immediately upon
the highest bid made by a purchaser in an auction being accepted.
14. Perhaps the Courts were tempted to think that Section 13(8)
speaks about redemption, only on account of what is found in Rule
3(5) of the Security Interest (Enforcement) Rules, 2002. Rule 3(5)
inserted by way of amendment with eﬀect from 04-11-2016 states
that the demand notice issued under Section 13(2) should invite the
attention of the borrower to the provisions of Section 13(8), in respect
of the time available to the borrower to redeem the secured assets.
Today, it may be convenient for one borrower to contend that the
right of redemption will be lost immediately upon the issue of notice
under Rule 9(1). But if it is held so, the same would tantamount to
annulling the relevant provisions of the Transfer of Property Act,
which do not stand expressly excluded, insofar as the question of
redemption is concerned.”
(Emphasis supplied)
54.We are conscious of the fact, that the aforesaid decision of
Concern Readymix (supra) was carried upto and challenged before this
Court by way of Special Leave Petition (C) No. 20500 of 2019, which
came to be dismissed by this Court in limine, being as follows: -
“ORDER
Delay condoned.
The Special Leave Petition is dismissed”
55. In Shakeena (supra), while primarily dealing with the unamended
provision of Section 13(8) of the SARFAESI Act, this Court also made
certain pertinent observations in respect of the amended provision of
Section 13(8), which are being reproduced hereunder: -
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 109
LTD. & ORS. [J. B. PARDIWALA, J.]

“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.
xxx xxx xxx
30. A fortiorari, it must follow that the appellants have failed to
exercise their right of redemption in the manner known to law, much
less until the registration of the sale certiﬁcate on 18-9-2007. In
that view of the matter no relief can be granted to the appellants,
assuming that the appellants are right in contending that as per the
applicable provision at the relevant time [unamended Section 13(8)
of the 2002 Act], they could have exercised their right of redemption
until the registration of the sale certiﬁcate — which, indisputably,
has already happened on 18-9-2007. Therefore, it is not possible to
countenance the plea of the appellants to reopen the entire auction
process. This is more so because, the narrative of the appellants
that they had made a valid tender towards the subject loan accounts
before registration of the sale certiﬁcate, has been found to be
tenuous. Thus understood, their right of redemption in any case stood
obliterated on 18-9-2007. Further, the amended Section 13(8) of the
2002 Act which has come into force w.e.f. 1-9-2016, will now stare
at the face of the appellants. As per the amended provision, stringent
condition has been stipulated that the tender of dues to the secured
creditor together with all costs, charges and expenses incurred by
him shall be at any time before the “date of publication of notice”
for public auction or inviting quotations or tender from public or
private deed for transfer by way of lease assessment or sale of the
secured assets. …”
(Emphasis supplied)
56. The Punjab & Haryana High Court while rendering its decision in
Pal Alloys (supra), looked into the Report of the Joint Committee on the 2016
Amendment and the decision in Concern Readymix (supra), & concluded
110 SUPREME COURT REPORTS [2023] 13 S.C.R.

that under the amended Section 13(8) of the SARFAESI Act, the right of
redemption of mortgage would continue till the execution of conveyance or
issuance of sale certiﬁcate. It further observed that the decision in Shakeena
(supra) was not applicable inasmuch as it did not deal with the right of
redemption under the Act 1882. The observations made in it are given below:
“78. It is interesting to note that para 24 of the Report of the Joint
Committee referred to above deals with the proposed amendment
to Section 13(8) of the SARFAESI Act and gives a heading
“Provisions to stop secure creditor to lease or assignment or sale
in the prescribed conditions-Amendment to Section 13(8) of the
SARFAESI Act.”
79. Thus the amendment was proposed w.r.t. when to stop the
secured creditor from selling/transferring the secured asset. The
words ‘when to stop the exercise of right of redemption by the
borrower/mortgagor’ were not used.
80. In the said Report, at pg.12, Clause 11(ii) of the Bill which
proposed to amend Section 13(8) of the SARFAESI Act is noted.
After extracting the existing Section 13(8) of the Act which stands
as under: —
“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.”
81. The proposed modiﬁ cation to Section 13(8) is set out also at
pg.12 as under:—
“(8) Where the amount of 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 lease, assignment or sale of the secured assets,-
(i) the secured assets shall not be leased, assigned or sold by
the secured creditor; and
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 111
LTD. & ORS. [J. B. PARDIWALA, J.]

(ii) in case, any step has been taken by the secured creditor
for 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 lease or assignment or
sale of such secured assets.”
82. Strangely, on the next page at page 13, the following is stated:-
“The Committee after examining the proposed amendment and
the existing Rules in this regard decide to modify proposed Clause
11(ii) [section 13(8) of the principal Act] 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.”
83. Nothing is mentioned as to why the proposal indicated in Page-12
was changed on page-13 diﬀerently.
84. Admittedly, what is stated in page-13 was passed in the Lok Sabha
and the Rajya Sabha and then it became the Act 44 of 2016 and came
into eﬀect on 01.09.2016.
85. But the important thing to note is that this Report does not indicate
that the Committee had even considered Section 60 of the Transfer
of Property Act, 1882, which provides the general law of right to
redeem a mortgaged asset of a mortgager vis-a-vis the provisions of
the SARFAESI Act.
112 SUPREME COURT REPORTS [2023] 13 S.C.R.

86. It no where says that there was an intention to bring about a change
with regard to the time before which a mortgagor can exercise his right
to redeem the mortgage.
87. Even the heading of Para 24 of the Report which says “Provisions
to stop secure creditor to lease or assignment or sale in the prescribed
conditions - Amendment to Section 13(8) of the SARFAESI Act”
seems to suggest that the focus of the Committee was on the date
when the secured creditor’s right to lease or assignment or sale
would stop.
88. In our considered opinion, it is clear that the legislature did not
have any intention to deal with the right of mortgagor to redeem
the mortgage when they amended Sec.13(8) or to modify it in any
manner; and amendment cannot be said to have intended to modify
the existing law which continued even when the un-amended Section
13(8) of the SARFAESI Act was in force. The amended Sec.13(8)
was intended to only deal with the date when the secured creditor’s
right to transfer the secured asset should stop and nothing more.
xxx xxx xxx
93. The view taken by the High Court for the State of Telangana
and Andhra Pradesh in M/s. Concern Ready Mix [(2019) 3 ALD
384 : Law Finder Doc Id # 1380151] commends itself to us and
we accept and approve the same.
94. We shall now consider the judgment of Supreme Court in
Shakeena [(2019) 5 RCR (Civil) 689 (SC)]cited by the counsel
for 1st respondent. In that case, sale certiﬁcate had been issued
in favour of the auction purchasers on 06.01.2006 and a Writ
Petition was ﬁled on 19.01.2006 challenging the auction and it was
registered on 18.9.2007. The Court held that the appellants had
failed to make a valid tender of amounts due or exercise their right
of redemption in a manner known to law until the registration of
the sale certiﬁcate on 18.09.2007 and that the right of redemption
stood obliterated on 18.09.2007. The statement therein in para 29
that as per the amended provision stringent conditions have been
stipulated that the tender of dues to the secured creditor shall be at
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 113
LTD. & ORS. [J. B. PARDIWALA, J.]

any time before the date of publication of notice for public auction
does not, in our opinion, lead to an expression of opinion by the
Supreme Court that the law of redemption as per Section 60 of the
Transfer of Property Act would not apply in view of amendment
to Section 13(8). We do not ﬁ nd any discussion in the decision in
Shakeena [(2019) 5 RCR (Civil) 689 (SC)] about the decisions of
the apex court dealing with the right of redemption under Sec.60 of
the Transfer of Property Act, 1872. So reliance on the said decision
does not help the 1st respondent.
xxx xxx xxx
96. Keeping in mind (i) the Report of the Joint Committee on the
Enforcement of Security Interest and Recovery of Debts Laws and
Miscellaneous Provisions (Amendment) Bill, 2016 discussed above,
(ii) the law laid down by the Supreme Court in Mathew Varghese
[(2014) 5 SCC 610] and (iii) the decision in M/s. Concern Readymix
[(2019) 3 ALD 384 : Law Finder Doc Id # 1380151] of the Telangana
and Andhra Pradesh High Court, with which we respectfully agree,
we hold that the amended Section 13(8) of the SARFAESI Act merely
prohibits a secured creditor from proceeding further with the transfer
of the secured asset by way of lease, assignment or sale; a restriction
on the right of the mortgagee to deal with the property is not exactly
the same as the equity of redemption available to the mortgagor; the
payment of the amount mentioned in Section 13(8) of the SARFAESI Act
ties the hands of the mortgagee (secured creditor) from exercising any
of the powers conferred under the Act; that redemption comes later;
extinction of the right of redemption comes much later than the sale
notice; and the right of redemption is not lost immediately upon the
highest bid made by a purchaser in an auction being accepted. We also
hold that such a right would continue till the execution of a conveyance
i.e. issuance of sale certiﬁcate in favour of the mortgagee. …
97. It would, therefore, certainly be available to the petitioners herein
before the issuance of sale certiﬁcate in favour of respondents No. 2
and 3. Point (a) is answered accordingly in favor of the petitioners
and against the respondents.”
(Emphasis supplied)
114 SUPREME COURT REPORTS [2023] 13 S.C.R.

57. In S. Karthik (supra) a three-Judge Bench of this Court, made
the following relevant observations given below: -
“53. It could thus be seen that this Court in Mathew Varghese
[Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 : (2014)
3 SCC (Civ) 254] observed that the equity of redemption is not
extinguished by mere contract for sale and that the mortgagor’s
right to redeem will survive until there has been completion of sale
by the mortgagee by a registered deed. This Court further observed
that applying the principles stated with reference to Section 60 of the
Transfer of Property Act in respect of a secured interest in a secured
asset in favour of the secured creditor under the provisions of the
SARFAESI Act and the relevant Rules applicable, a free hand is given
to a secured creditor to resort to a sale without the intervention of
the court or tribunal. It has, however, been held that under Section
13(8), it is clearly stipulated that the mortgagor i.e. the borrower,
who is otherwise called as a debtor, retains his full right to redeem
the property by tendering all the dues to the secured creditor at any
time before the date ﬁxed for sale or transfer.
54. This Court in Mathew Varghese [Mathew Varghese v. M. Amritha
Kumar, (2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254] further held that
if the tender is made by the borrower at the last moment before the
sale or transfer, the secured asset should not be sold or transferred
by the secured creditor. This Court held that there was no reason as
to why the general principle laid down by this Court in Narandas
Karsondas [Narandas Karsondas v. S.A. Kamtam, (1977) 3 SCC 247]
with reference to Section 60 of the Transfer of Property Act could
not have application in respect of a secured interest in a secured
asset created in favour of a secured creditor. It has been held that
the said principles will apply on all fours in respect of a transaction
as between the debtor and secured creditor under the provisions of
the SARFAESI Act.
xxx xxx xxx
115. Even if viewed from another angle, the claim of the appellants
is not sustainable. The two-Judge Bench of this Court in Mathew
Varghese [Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 115
LTD. & ORS. [J. B. PARDIWALA, J.]

: (2014) 3 SCC (Civ) 254], has heavily relied on the judgment of the
three-Judge Bench of this Court in Narandas Karsondas . It has been
held by this Court in Narandas Karsondas [Narandas Karsondas
v. S.A. Kamtam, (1977) 3 SCC 247], that the right of redemption,
which is embodied in Section 60 of the Transfer of Property Act,
is available to the mortgagor unless it has been extinguished by
the act of parties. It has been held, that only on execution of the
conveyance and registration of transfer of the mortgagor’s interest
by registered instrument, that the mortgagor’s right of redemption
will be extinguished.
xxx xxx xxx
118. It is further relevant to note that this Court in Dwarika Prasad
[Dwarika Prasad v. State of U.P., (2018) 5 SCC 491] and in Shakeena
[Shakeena v. Bank of India, (2021) 12 SCC 761] held that the right
to redemption stands extinguished on the sale certiﬁcate getting
registered.”
(Emphasis supplied)
58. Concern Readymix (supra) was referred to and relied upon later
in another decision by the Telangana High Court titled Amme Srisailam
(supra), wherein the following relevant observations were made:
“38. After referring to the amendments brought to the Security Interest
(Enforcement) Rules, 2002, this Court took the view that amended
Section 13(8) merely prohibits the secured creditor from proceeding
further with the transfer of the secured assets by way of lease,
assignment or sale if the dues are paid before issuance of notice for
public auction. Thereafter it has been held that a restriction on the
right of the mortgagee to deal with the property is not exactly the same
as the equity of redemption available to the mortgagor. Payment of the
amounts mentioned in Section 13(8) ties the hands of the mortgagee
(secured creditor) from exercising any of the powers conferred under
the SARFAESI Act. Redemption comes later. It has been held as follows:
The danger of interpreting Section 13(8) as though it relates to
the right of redemption, is that if payments are not made as per
Section 13(8), the right of redemption may get lost even before
the sale is complete in all respects. But in law it is not.
116 SUPREME COURT REPORTS [2023] 13 S.C.R.

39. Thus this Court emphasised that the right of redemption is not
lost immediately upon the highest bid made by the purchaser in an
auction is accepted.
40. A three-Judge Bench of the Supreme Court in S.Karthik (supra)
held that the right of redemption which is embodied in Section 60 of
the Transfer of Property Act, 1882 is available to the mortgagor unless
it has been extinguished by the act of the parties. Only on execution
of the conveyance and registration of transfer of mortgagor’s interest
by registered instrument that the mortgagor’s right of redemption will
be extinguished. Referring to the previous decisions of the Supreme
Court, it has been held that the right to redemption stands extinguished
only on the sale certiﬁcate getting registered.
41. This position has been explained by the Punjab & Haryana High
Court in Pal Alloys & Metal India Private Limited (supra), wherein
it has been clariﬁed that the amended Section 13(8) of the SARFAESI
Act merely prohibits the secured creditor from proceeding further with
the transfer of the secured asset by way of lease, assignment or sale
if the dues are paid before issuance of sale notice for public auction.
A restriction on the right of the mortgagee to deal with the property
is not exactly the same as the equity of redemption available to the
mortgagor.
42. Let us now examine the decision of the Supreme Court in Shakeena
(supra) relied upon by the petitioner. As opposed to S.Karthik (supra)
which was rendered by a three-Judge Bench, Shakeena (supra) was
delivered by a two-Judge Bench of the Supreme Court. That was a
case which dealt with Section 13(8) of the SARFAESI Act prior to
amendment. In this case, the appellants failed to exercise their right
of redemption until registration of the sale certiﬁcate; therefore, relief
was declined. While coming to the above conclusion, the Division
Bench of the Supreme Court adverted to the amended Section 13(8)
of the SARFAESI Act observing by way of obiter that tender of dues
to the secured creditor with all costs, charges and expenses incurred
by him shall be at any time before the date of publication of notice
for public auction etc.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 117
LTD. & ORS. [J. B. PARDIWALA, J.]

43. The decision in Shakeena (supra) was rendered by a two-Judge
Bench of the Supreme Court on 20.08.2019. On the other hand, the
decision in S.Karthik (supra) was rendered by a three-Judge Bench
of the Supreme Court much later i.e., on 23.09.2021. The decision
in S.Karthik (supra) being a later judgment and by a larger bench
therefore will be binding on us and this decision says that the right
of redemption stands extinguished only on the sale certiﬁcate getting
registered.
44. Before we revert back to the facts of the present case, we may
also refer to Sections 35 and 37 of the SARFAESI Act. While Section
35 says that the provisions of the SARFAESI Act shall have eﬀect
notwithstanding anything inconsistent therewith contained in any other
law for the time being in force, Section 37 clariﬁes that provisions of
the SARFAESI Act or the rules made thereunder shall be in addition
to and not in derogation of any other law for the time being in force.
45. This brings us to Section 60 of the Transfer of Property Act, 1882.
Section 60 says that at any time after the principal amount has become
due, the mortgagor has a right, on payment or tender, of the mortgage
money, to require the mortgagee (a) to deliver to the mortgagor the
mortgage deed and all documents relating to the mortgaged property
which are in possession or power of the mortgagee, (b) where the
mortgagee is in possession of the mortgaged property, to deliver
possession thereof back to the mortgagor, and (c) at the cost of the
mortgagor either to re-transfer the mortgaged property to him or to
such third person as he may direct, or to execute and to have registered
an acknowledgement in writing that any right in derogation of his
interest transferred to the mortgagee has been extinguished. As per
the proviso, the right conferred under the aforesaid provision shall
not be extinguished by any act of the parties or by decree of a Court.
46. Therefore, on a careful application of Sections 35 and 37 of the
SARFAESI Act, it is evident that the situation contemplated under
Section 13(8) of the SARFAESI Act does not exclude application of
Section 60 of the Transfer of Property Act, 1882. As explained by
this Court in Concern Readymix (supra), a restriction on the right of
the mortgagee to deal with the property post issuance of notice for
118 SUPREME COURT REPORTS [2023] 13 S.C.R.

public auction is not the same as the right of redemption available to
the mortgagor.”
(Emphasis supplied)
59. Thus, from the aforesaid, it is evident that the Telangana High
Court in the Amme Srisailam (supra) has not referred to or looked into
its earlier decision in the case of K.V.V. Prasad Rao Gupta (supra). The
decision of the Andhra Pradesh High Court in Sri Sai Annadhatha Polymers
(supra) was also not been looked into by the Telangana High Court in the
case of Amme Srisailam (supra). It appears that the Telangana High Court
in Concern Readymix (supra) and Amme Srisailam (supra) as well as the
Punjab and Haryana High Court in the case of Pal Alloys (supra) have taken
the view that the amended Section 13(8) of the SARFAESI Act does not
exclude the application of Section 60 of the Act 1882 in view of Sections
35 and 37 respectively of the SARFAESI Act.
EFFECT OF THE AMENDMENT TO SECTION 13(8) OF THE
SARFAESI ACT
60. Before proceeding with the analysis of the provision of Section
13(8) of the SARFAESI Act, it would be appropriate to refer to the said
provision as it stood prior to the amendment and as it stands after the
amendment, which is given below: -
Pre-amendment Section 13(8) Post-amendment Section 13(8)
(8) If the dues of the secured creditor (8) Where the amount of dues of the
together with all costs, charges secured creditor together with all
and expenses incurred by him are costs, charges and expenses incurred
tendered to the secured creditor at by him is tendered to the secured
any time before the date ﬁxed for creditor at any time before the date
sale or transfer, the secured asset of publication of notice for public
shall not be sold or transferred by the auction or inviting quotations
secured creditor, and no further step or tender from public or private
shall be taken by him for transfer or treaty for transfer by way of lease,
sale of that secured asset. assignment or sale of the secured
assets,—
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 119
LTD. & ORS. [J. B. PARDIWALA, J.]

(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.

61. At this juncture, it would be apposite to refer to the decision of this
Court in Embassy Hotels Private Ltd. v. Gajraj and Company & Ors. reported
in (2015) 14 SCC 316, wherein this Court had held that the expression “by
act of the parties” in the Proviso to Section 60 would include the failure of the
parties to settle the dispute and by their act allowing the mortgaged property to
be sold in auction. The relevant observations made in it are reproduced below: -
“16. Section 60 of the Transfer of Property Act protects the right of
redemption available to a mortgagor by providing that the mortgagor
can exercise such a right by paying the mortgaged money any time
after the principal money has become due. But the proviso clariﬁes
that the right conferred by that section is available only if it has not
been extinguished by act of the parties or by decree of the court. The
act parties would cover act of the mortgagor and mortgagee, if they
are unable to settle the dispute arising out of money claim covered by
the mortgage and by their action, allow the mortgaged property to be
sold through auction in favour of a third party. Hence, it is not possible
to accept the case of the plaintiﬀ-respondent that in spite of sale of suit
property becoming ﬁnal through court auction, for the purpose of grant
of speciﬁc relief to the plaintiﬀ in the present suit, the ﬁrst defendant
would be deemed to still retain the right to the mortgage and transfer the
suit property to the plaintiﬀ regardless of the right, title and possession
already legally vested in the auction- purchaser the appellant.”
(Emphasis supplied)
120 SUPREME COURT REPORTS [2023] 13 S.C.R.

62. It is equally well settled that the rights created for the beneﬁt of
the borrower under the SARFAESI Act, can be waived. Waiver can be
contractual or by express conduct in consideration of some compromise.
However, a statutory right may also be waived by implied conduct, like, by
wanting to take a chance of a favourable decision. The fact that the other
side has acted on it, is suﬃcient consideration, as observed by this Court
in Arce Polymers Pvt. Ltd. v. Alpine Pharmaceuticals Pvt. Ltd. & Ors.
reported in (2022) 2 SCC 221, referred as under: -
“16. Waiver is an intentional relinquishment of a known right. Waiver
applies when a party knows the material facts and is cognizant
of the legal rights in that matter, and yet for some consideration
consciously abandons the existing legal right, advantage, beneﬁt,
claim or privilege. Waiver can be contractual or by express conduct
in consideration of some compromise. However, a statutory right may
also be waived by implied conduct, like, by wanting to take a chance
of a favourable decision. The fact that the other side has acted on it,
is suﬃcient consideration.
17. It is correct that waiver being an intentional relinquishment is not
to be inferred by mere failure to take auction, but the present case is
of repeated positive acts post the notices under Sections 13(2) and
(4) of the SARFAESI Act. Not only did the borrower not question or
object to the auction of the Bank, but it by express and deliberate
conduct had asked the Bank to compromise its position and alter the
contractual terms. The borrower wrote repeated request letters for
restructuring of loans, which prayers were considered by the Bank by
giving indulgence, time and opportunities. The borrower, aware and
conscious of its rights, chose to abandon the statutory claim and took
its chance and even procured favourable decisions. Even if we are to
assume that the borrower did not waive the remedy, its conduct had
put the Bank in a position where they have lost time, and suﬀered on
account of delay and laches, which aspects are material. Auction on the
subject property was delayed by more than a year as at the behest of
the borrower, the Bank gave them a long rope to regularise the account.
To ignore the conduct of the borrower would not be reasonable to the
Bank once third-party rights have been created. In this background, the
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 121
LTD. & ORS. [J. B. PARDIWALA, J.]

principle of equitable estoppel as a rule of evidence bars the borrower
from complaining of violation.”
(Emphasis supplied)
63. We are of the view that the failure on the part of the borrower in
tendering the entire dues including the charges, interest, costs etc. before
the publication of the auction notice as required by Section 13(8) of the
SARFAESI Act, would also suﬃciently constitute extinguishment of right
of redemption of mortgage by the act of parties as per the proviso to Section
60 of the Act 1882. Furthermore, in the case on hand, there was no claim
for right of redemption by the borrower either before the publication of the
auction notice or even thereafter. The borrowers entered into the fray only
after coming to know of the conﬁrmation of auction. Be that as it may, once
the Section 13(8) stage was over and auction stood concluded, it could be said
that there was an intentional relinquishment of his right of redemption under
Section 13(8), whereby the Bank declared the appellant as the successful
auction purchaser having oﬀered the highest bid in accordance with the
terms of the auction notice.
64. The SARFAESI Act is a special law containing an overriding
clause in comparison to any other law in force. Section 60 of the Act 1882,
is a general law vis-a-vis the amended Section 13(8) of the SARFAESI Act
which is special law. The right of redemption is clearly restricted till the
date of publication of the sale notice under the SARFAESI Act, whereas
the said right continues under Section 60 of the Act 1882 till the execution
of conveyance of the mortgaged property. The legislative history has been
covered in the preceding paragraphs of this judgment and how the Parliament
desired to have express departure from the general provision of Section
60 of Act 1882. The SARFAESI Act is a special law of recovery with a
paradigm shift that permits expeditious recovery for the banks and the
ﬁnancial institutions without intervention of Courts. Similarly, Section 13(8)
of the SARFAESI Act is a departure from the general right of redemption
under the general law i.e. the Act 1882. Further, the legislature has in the
objects and reasons while passing the amending Act speciﬁcally stated “to
facilitate expeditious disposal of recovery applications, it has been decided
to amend the said Acts….”. Thus, while interpreting Section 13(8) vis-à-
vis Section 60 of the Act 1882, an interpretation which furthers the said
122 SUPREME COURT REPORTS [2023] 13 S.C.R.

object and reasons should be preferred and adopted. If the general law is
allowed to govern in the manner as sought to be argued by the borrowers,
it will defeat the very object and purpose as well as the clear language of
the amended Section 13(8).
65. In Mathew Varghese (supra) this Court had interpreted the
unamended section 13(8) of SARFAESI Act and Section 60 of Act 1882
respectively. However, thereafter the legislature amended Section 13(8) of
the SARFAESI Act. Thus, on this score, the decision in Mathew Varghese
(supra) could be said to have been partially legislatively overruled as the
substratum of the verdict stands altered / amended.
66. Even otherwise, we should not lose sight of the fact that in Mathew
Varghese (supra) the court held in regard to the right of redemption that
both the SARFAESI Act and Act 1882 are complimentary to each other
and equally applicable. It had held this because, the words “before the date
ﬁxed for transfer” in the unamended Section 13(8), amongst other things
also means and connotes the date of conveyance of the secured asset by a
registered instrument (which is the ordinary process of extinguishment of
right of redemption under Act 1882). Since, this Court observed that the
stipulation or expression “date ﬁxed for transfer” could also mean the date
of conveyance / transfer of such secured asset and being so, is not much
diﬀerent from the ordinary process of redemption under the Act 1882, it
could not be said that there was any material inconsistency between the
SARFAESI Act & Act 1882, and thus it found no reason or hesitation
to hold that the Act 1882 is inapplicable and thus made an endeavour of
harmonizing the two.
67. It appears that while considering the right of redemption of
mortgage under the unamended Section 13(8), this Court in Mathew
Varghese (supra) only went so far to say that in the absence of any material
inconsistency between the SARFAESI Act & Act 1882, there was no good
reason to hold that the Act 1882 would not be applicable and as such, held
that general right of redemption of mortgage contained in Section 60 Act
1882 would apply even in respect of the SARFAESI Act.
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
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 123
LTD. & ORS. [J. B. PARDIWALA, J.]

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).
69. This aspect of inapplicability of the Act 1882 vis-a-vis the
SARFAESI Act can be looked at from one another angle. In Madras
Petrochem (supra) this Court made a pertinent observation that the Sections
35 and 37 respectively of the SARFAESI Act form a unique scheme of
overriding provisions, however the scope and ambit of Section 37 is
restricted only to the securities law. The relevant portion is given as under: -
“39. This is what then brings us to the doctrine of harmonious
construction, which is one of the paramount doctrines that is applied in
interpreting all statutes. Since neither Section 35 nor Section 37 of the
Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 is subject to the other, we think it is necessary
to interpret the expression “or any other law for the time being in force” in
Section 37. If a literal meaning is given to the said expression, Section 35
will become completely otiose as all other laws will then be in addition to
and not in derogation of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002. Obviously this could
not have been the parliamentary intendment, after providing in Section
35 that the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 will prevail over all other laws
that are inconsistent therewith. A middle ground has, therefore, necessarily
to be taken. According to us, the two apparently conﬂicting sections can
best be harmonised by giving meaning to both. This can only be done by
limiting the scope of the expression “or any other law for the time being in
force” contained in Section 37. This expression will, therefore, have to be
held to mean other laws having relation to the securities market only, as the
124 SUPREME COURT REPORTS [2023] 13 S.C.R.

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is the
only other special law, apart from the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002, dealing
with recovery of debts due to banks and ﬁnancial institutions. On this
interpretation also, the Sick Industrial Companies (Special Provisions) Act,
1985 will not be included for the obvious reason that its primary objective is
to rehabilitate sick industrial companies and not to deal with the securities
market.”
(Emphasis supplied)
70. This Court in M.D. Frozen Foods Exports Private Limited & Ors.
v. Hero Fincorp Limited reported in (2017) 16 SCC 741, observed that since
as per Section 37 SARFAESI Act, the RDBFI Act which also contemplates
arbitration proceedings, is in addition to the SARFAESI Act, it held that
both Arbitration & Conciliation Act, 1996 and the SARFAESI Act would
go hand in hand. The relevant observations are reproduced below: -
“27. On the SARFAESI Act being brought into force seeking to
recover debts against security interest, a question was raised whether
parallel proceedings could go on under the RDDB Act and the
SARFAESI Act. This issue was clearly answered in favour of such
simultaneous proceedings in Transcore v. Union of India. A later
judgment in Mathew Varghese v. M. Amritha Kumar also discussed
this issue in the following terms: (Mathew Varghese case, SCC pp.
640-41, paras 45-46)
“45. A close reading of Section 37 shows that the provisions of the
SARFAESI Act or the Rules framed thereunder will be in addition to
the provisions of the RDDB Act. Section 35 of the SARFAESI Act states
that the provisions of the SARFAESI Act will have overriding eﬀect
notwithstanding anything inconsistent contained in any other law for
the time being in force. Therefore, reading Sections 35 and 37 together,
it will have to be held that in the event of any of the provisions of the
RDDB Act not being inconsistent with the provisions of the SARFAESI
Act, the application of both the Acts, namely, the SARFAESI Act and
the RDDB Act, would be complementary to each other. In this context
reliance can be placed upon the decision in Transcore v. Union of
India. In para 64 it is stated as under after referring to Section 37 of
the SARFAESI Act: (SCC p. 162)
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 125
LTD. & ORS. [J. B. PARDIWALA, J.]

‘64. … According to American Jurisprudence, 2d, Vol. 25, p. 652,
if in truth there is only one remedy, then the doctrine of election
does not apply. In the present case, as stated above, the NPA Act
is an additional remedy to the DRT Act. Together they constitute
one remedy and, therefore, the doctrine of election does not apply.
Even according to Snell’s Principles of Equity (31st Edn., p. 119),
the doctrine of election of remedies is applicable only when there
are two or more co-existent remedies available to the litigants at
the time of election which are repugnant and inconsistent. In any
event, there is no repugnancy nor inconsistency between the two
remedies, therefore, the doctrine of election has no application.’
46. A reading of Section 37 discloses that the application of the
SARFAESI Act will be in addition to and not in derogation of the
provisions of the RDDB Act. In other words, it will not in any way
nullify or annul or impair the eﬀect of the provisions of the RDDB Act.
We are also fortiﬁed by our above statement of law as the heading of
the said section also makes the position clear that application of other
laws is not barred. The eﬀect of Section 37 would, therefore, be that
in addition to the provisions contained under the SARFAESI Act, in
respect of proceedings initiated under the said Act, it will be in order
for a party to fall back upon the provisions of the other Acts mentioned
in Section 37, namely, the Companies Act, 1956; the Securities
Contracts (Regulation) Act, 1956; the Securities and Exchange Board
of India Act, 1992; the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993, or any other law for the time being in force.”
xxx xxx xxx
29. The aforesaid two Acts are, thus, complementary to each other
and it is not a case of election of remedy.
30. The only twist in the present case is that, instead of the recovery
process under the RDDB Act, we are concerned with an arbitration
proceeding. It is trite to say that arbitration is an alternative to the
civil proceedings. In fact, when a question was raised as to whether
the matters which came within the scope and jurisdiction of the Debt
Recovery Tribunal under the RDDB Act, could still be referred to
arbitration when both parties have incorporated such a clause, the
126 SUPREME COURT REPORTS [2023] 13 S.C.R.

answer was given in the aﬃrmative. That being the position, the
appellants can hardly be permitted to contend that the initiation of
arbitration proceedings would, in any manner, prejudice their rights
to seek relief under the SARFAESI Act.
xxx xxx xxx
32. The aforesaid is not a case of election of remedies as was sought to
be canvassed by the learned Senior Counsel for the appellants, since
the alternatives are between a civil court, Arbitral Tribunal or a Debt
Recovery Tribunal constituted under the RDDB Act. Insofar as that
election is concerned, the mode of settlement of disputes to an Arbitral
Tribunal has been elected. The provisions of the SARFAESI Act are
thus, a remedy in addition to the provisions of the Arbitration Act. In
Transcore v. Union of India it was clearly observed that the SARFAESI
Act was enacted to regulate securitisation and reconstruction of
ﬁnancial assets and enforcement of security interest and for matters
connected therewith. Liquidation of secured interest through a
more expeditious procedure is what has been envisaged under the
Sarfaesi Act and the two Acts are cumulative remedies to the secured
creditors.”
(Emphasis supplied)
71. It would be also appropriate to refer to another decision of this Court
rendered in Vishal N. Kalsaria v. Bank of India & Ors. reported in (2016)
3 SCC 762 wherein this Court while construing the expression “any other
law” occurring in Section 35 of the SARFAESI Act, held the same would
mean any other law operating in the same ﬁeld. The relevant observations
made in it are given below: -
“37. It is a settled position of law that once tenancy is created, a tenant
can be evicted only after following the due process of law, as prescribed
under the provisions of the Rent Control Act. A tenant cannot be
arbitrarily evicted by using the provisions of the SARFAESI Act as that
would amount to stultifying the statutory rights of protection given to
the tenant. A non obstante clause (Section 35 of the SARFAESI Act)
cannot be used to bulldoze the statutory rights vested in the tenants
under the Rent Control Act. The expression “any other law for the
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 127
LTD. & ORS. [J. B. PARDIWALA, J.]

time being in force” as appearing in Section 35 of the SARFAESI Act
cannot mean to extend to each and every law enacted by the Central
and State Legislatures. It can only extend to the laws operating in the
same ﬁeld.” (Emphasis supplied)
72. Thus, it appears from a combined reading of the decisions
rendered by this Court in Madras Petrochem (supra) and M.D. Frozen
Foods Exports (supra) that this Court has consistently construed that only
those laws which have either been enumerated in Section 37 SARFAESI
Act or similar to it would be applicable in addition to the SARFAESI
Act i.e., laws which deal with securities or occupy the same ﬁeld as the
SARFAESI Act. Thus, even on this aspect, we are of the view that the Act
1882 would not be applicable in addition to the SARFAESI Act. Suﬃce to
say, that in view of the above discussion, the statutory right of redemption
under the Act 1882 will not be applicable to the SARFAESI Act at least
in view of the amended Section 13(8) and any right of redemption of a
borrower must be found within the SARFAESI Act in terms of the amended
Section 13(8).
WHY THE DECISION OF THE TELANGANA HIGH COURT IN THE
CASE OF AMME SRISAILAM (SUPRA) IS NOT A GOOD LAW?
73. The Telangana High Court’s judgment is in four parts. It takes the
view as under:
a. That amended Section 13(8) does not take away the right
of redemption under Section 60 of the Act 1882 and for this
proposition reliance was placed on the decisions in Concern
Readymix (supra) and S. Karthik (supra). (Paras 37-40)
b. Shakeena (supra) would not apply as it considered a litigation prior
to the amendment to Section 13(8) of the SARFAESI Act and as
such the observations made in it regarding the amended Section
13(8) were obiter dicta. Furthermore because S. Karthik (supra)
is a subsequent decision of a three-Judge Bench, thus, Shakeena
(supra) cannot be relied upon. (Paras 42-43)
c. It placed reliance on Section 37 of SARFAESI Act which clariﬁes
that the provisions of the SARFAESI Act or the Rules made
thereunder shall be in addition to and not in derogation of any other
128 SUPREME COURT REPORTS [2023] 13 S.C.R.

law for the time being in force. Thus, the amended Section 13(8)
does not exclude the application of Section 60 of the Act 1882.
(Paras 44 and 46)
d. Right to property is a constitutional right and such an interpretation
of the amended section 13(8) subserves the said constitutional right.
(Para 50)
74. We are of the view that each of the foundation of the judgment is
incorrect for the following reasons:
a. The reliance on S. Karthik (supra) is misplaced because:-
(i) Amme Srisailam’s case relies on S. Karthik (supra) to overcome
Shakeena’s case on the ground that the latter deals with the unamended
s. 13(8). Interestingly the same point also applies to S. Karthik (supra).
A careful reading of the facts in S. Karthik (supra) in Para 3-26 clearly
indicates that the sale auction notice and the auction in the said case
took place in the year 2012. Para 59 of S. Karthik (supra) clinches the
issue on the said score as this Court has limited its examination to the
validity of the ﬁrst sale notice dated 21.01.2012 i.e., the auction that
took place before amendment of Section 13(8):
“59. It can thus be seen that the properties at Items ‘B’ and ‘C’ in
the schedule of properties in ﬁrst sale notice dated 21-1-2012 have
been sold through a private treaty, and as such, the said sales are not
impugned in the present appeals. It is only the properties at Items ‘A’
and ‘D’ in the schedule of properties in ﬁrst sale notice dated 21-1-
2012, which have been sold consequent to second sale notice dated
9-7-2012 by public auction in favour of the auction-purchaser, are
impugned. We will therefore have to examine the correctness of the
submission that since the second sale notice dated 9-7-2012 provided
for a period of only 10 days, the auction-sale held on 20-7-2012 is
vitiated in view of the law laid down by this Court in Mathew Varghese
[Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 : (2014)
3 SCC (Civ) 254] . For that, it will be necessary to refer to various
orders passed by the tribunals as well as the High Court.”
(Emphasis supplied)
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 129
LTD. & ORS. [J. B. PARDIWALA, J.]

(ii) The amendment to Section 13(8) is subsequent in point of time
and came into eﬀect from 01.09.2016. Thus, there was no scope for any
discussion on the amendment of Section 13(8) in S. Karthik (supra).
Strikingly, Shakeena (supra) though arising from an auction prior to
amendment in Section 13(8) yet has taken notice of the amendment of
Section 13(8). The relevant para of Shakeena (supra) is as under:-
“30. A fortiorari, it must follow that the appellants have failed to exercise
their right of redemption in the manner known to law, much less until the
registration of the sale certiﬁcate on 18-9-2007. In that view of the matter
no relief can be granted to the appellants, assuming that the appellants
are right in contending that as per the applicable provision at the relevant
time [unamended Section 13(8) of the 2002 Act], they could have exercised
their right of redemption until the registration of the sale certiﬁcate —
which, indisputably, has already happened on 18-9-2007. Therefore, it is
not possible to countenance the plea of the appellants to reopen the entire
auction process. This is more so because, the narrative of the appellants
that they had made a valid tender towards the subject loan accounts before
registration of the sale certiﬁcate, has been found to be tenuous. Thus
understood, their right of redemption in any case stood obliterated on
18-9-2007. Further, the amended Section 13(8) of the 2002 Act which has
come into force w.e.f. 1-9-2016, will now stare at the face of the appellants.
As per the amended provision, stringent condition has been stipulated that
the tender of dues to the secured creditor together with all costs, charges
and expenses incurred by him shall be at any time before the “date of
publication of notice” for public auction or inviting quotations or tender
from public or private deed for transfer by way of lease assessment or sale of
the secured assets. That event happened before the institution of the subject
writ petitions by the appellants.”
(Emphasis supplied)
(iii) S. Karthik (supra) has followed Mathew Varghese’s case and hence
not elaborated on the provisions, more particularly Section 13(8). Further
Mathew Varghese’s case was decided prior to the amendment in Section
13(8). [See relevant para of S. Karthik (supra)]
“39. This Court in Mathew Varghese [Mathew Varghese v. M. Amritha
Kumar, (2014) 5 SCC 610 : (2014) 3 SCC (Civ) 254] has elaborately
130 SUPREME COURT REPORTS [2023] 13 S.C.R.

considered the provisions of Sections 13(1), 13(8), 35 and 37 of the
SARFAESI Act so also Rules 8 and 9 of the said Rules. We, therefore,
do not wish to burden the present judgment by reproducing all those
provisions since they have already been reproduced and considered
in Mathew Varghese [Mathew Varghese v. M. Amritha Kumar, (2014)
5 SCC 610 : (2014) 3 SCC (Civ) 254]. …”
(iv) This Court in S. Karthik (supra) further noted that Section 13(8)
supports the right of redemption at any time before the date ﬁxed for sale or
transfer. This is clearly in reference to the old Section 13(8) as interpreted
by Mathew Varghese (supra) and as rightly made applicable in the said
case as the facts therein arose prior to the amendment in Section 13(8).
The said Section 13(8) now stands amended and provides a cut-oﬀ for the
date of publication of the auction notice. Thus, now after the amendment
the support of right of redemption is limited till the date of publication of
the auction notice. The relevant Para is quoted for reference:
“53. It could thus be seen that this Court in Mathew Varghese [Mathew
Varghese v. M. Amritha Kumar, (2014) 5 SCC 610 : (2014) 3 SCC (Civ)
254] observed that the equity of redemption is not extinguished by mere
contract for sale and that the mortgagor’s right to redeem will survive
until there has been completion of sale by the mortgagee by a registered
deed. This Court further observed that applying the principles stated
with reference to Section 60 of the Transfer of Property Act in respect
of a secured interest in a secured asset in favour of the secured creditor
under the provisions of the SARFAESI Act and the relevant Rules
applicable, a free hand is given to a secured creditor to resort to a sale
without the intervention of the court or tribunal. It has, however, been
held that under Section 13(8), it is clearly stipulated that the mortgagor
i.e. the borrower, who is otherwise called as a debtor, retains his full
right to redeem the property by tendering all the dues to the secured
creditor at any time before the date ﬁxed for sale or transfer.”
(Emphasis supplied)
(v) S. Karthik (supra) also noted Shakeena’s case but it seems the
attention of the court was not drawn to the amendment in Section 13(8)
and the observation by this Court in Shakeena on the said amendment. The
para 118 of S. Karthik (supra) may be noted as below:-
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 131
LTD. & ORS. [J. B. PARDIWALA, J.]

“118. It is further relevant to note that this Court in Dwarika Prasad
[Dwarika Prasad v. State of U.P., (2018) 5 SCC 491] and in Shakeena
[Shakeena v. Bank of India, (2021) 12 SCC 761] held that the right to
redemption stands extinguished on the sale certiﬁcate getting registered.
(Emphasis supplied)
(vi) Thus, the verdict of this Court in S. Karthik (supra) is wrongly
interpreted & understood in Amme Srisailam (supra) by the High Court.
b. The reliance on Concern Readymix (supra) of the earlier Division
Bench judgement of the High Court is misplaced because:
(i) It has failed to consider that the Securitisation Act, 2002 is a
special enactment and the Act 1882 is a general enactment.
(ii) It has failed to take note of the overriding clause under Section
35 of the Securitisation Act, 2002.
(iii) Originally Section 13(8) retained the right akin to s. 60 of the
Transfer of Property Act, 1882. By amendment there was a
conscious departure by the legislature.
(iv) In Mathew Varghese (supra) this Court held that the original
Section 13(8) retained the borrowers right to redeem. Thus, it
is important to note that till the amendment took place under
Section 13(8), there was nothing inconsistent between 13(8)
of the SARFAESI Act and the Act 1882. It is only after the
amendment of Section 13(8) the inconsistency arose between
the two Acts on the said subject, which is clearly covered by
Section 35 of the SARFAESI Act whereby now the amended
Section 13(8) achieves supremacy over Section 60 of the Act
1882. Thus, leading to upholding of the SARFAESI Act as the
special law against the Act 1882 which is a general law. [See
Para 53 of S. Karthik (supra) also quoted above.]
(v) That the secured creditor, borrower as well as the auction
purchaser under the SARFAESI Act are equally bound by
the provisions of the enactment including Section 13(8).
The secured creditor cannot act de hors the Section 13(8).
An interpretation that declares secured creditor not bound by
132 SUPREME COURT REPORTS [2023] 13 S.C.R.

Section 13(8) makes it a bull in the china house and it leaves
the entire process at the whims and fancies of the secured
creditor. The auction purchaser is the most important actor of
the enactment and it is on him the success of the enactment
resides. Thus, any interpretation which discourages the
auction purchaser to participate has a direct bearing on the
implementation of the enactment and recovery of public dues
and the same has to be avoided. The only caveat being that after
the success of the auction bid the auction purchaser is required
to comply with all the rules.
c. The reliance on Section 37 of the SARFAESI Act is misplaced
because this Court in Madras Petrochem (supra) has restricted its application
to securities law only.
(i) The relevant portion is as under:-
“39. This is what then brings us to the doctrine of harmonious construction,
which is one of the paramount doctrines that is applied in interpreting all
statutes. Since neither Section 35 nor Section 37 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 is subject to the other, we think it is necessary to interpret the
expression “or any other law for the time being in force” in Section 37. If
a literal meaning is given to the said expression, Section 35 will become
completely otiose as all other laws will then be in addition to and not in
derogation of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002. Obviously this could not
have been the parliamentary intendment, after providing in Section 35 that
the Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 will prevail over all other laws that are
inconsistent therewith. A middle ground has, therefore, necessarily to be
taken. According to us, the two apparently conﬂicting sections can best be
harmonised by giving meaning to both. This can only be done by limiting
the scope of the expression “or any other law for the time being in force”
contained in Section 37. This expression will, therefore, have to be held
to mean other laws having relation to the securities market only, as the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is the
only other special law, apart from the Securitisation and Reconstruction of
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 133
LTD. & ORS. [J. B. PARDIWALA, J.]

Financial Assets and Enforcement of Security Interest Act, 2002, dealing
with recovery of debts due to banks and ﬁnancial institutions. On this
interpretation also, the Sick Industrial Companies (Special Provisions) Act,
1985 will not be included for the obvious reason that its primary objective is
to rehabilitate sick industrial companies and not to deal with the securities
market.”
(Emphasis supplied)
(ii) The court applied the Latin Expression “ejusdem generis” which
has been held to be a facet of “Noscitur a sociis”. The decision hereunder
is of relevance:
Maharashtra University of Health Sciences v. Satchikitsa Prasarak
Mandal, (2010) 3 SCC 786:
“27. The Latin expression “ejusdem generis” which means “of
the same kind or nature” is a principle of construction, meaning
thereby when general words in a statutory text are flanked by
restricted words, the meaning of the general words are taken to be
restricted by implication with the meaning of the restricted words.
This is a principle which arises “from the linguistic implication
by which words having literally a wide meaning (when taken in
isolation) are treated as reduced in scope by the verbal context”.
It may be regarded as an instance of ellipsis, or reliance on
implication. This principle is presumed to apply unless there is
some contrary indication [see Glanville Williams, The Origins
and Logical Implications of the Ejusdem Generis Rule, 7 Conv
(NS) 119].
28. This ejusdem generis principle is a facet of the principle of
noscitur a sociis. The Latin maxim noscitur a sociis contemplates
that a statutory term is recognised by its associated words. The
Latin word “sociis” means “society”. Therefore, when general
words are juxtaposed with specific words, general words cannot
be read in isolation. Their colour and their contents are to be
derived from their context. (See similar observations of Viscount
Simonds in Attorney General v. Prince Ernest Augustus of Hanover
[1957 AC 436 : (1957) 2 WLR 1 : (1957) 1 All ER 49 (HL)], AC
at p. 461.)”
134 SUPREME COURT REPORTS [2023] 13 S.C.R.

d. The argument of Right to property being a constitutional right and
the High Court’s interpretation subserving the same is irrelevant in
light of the following:-
(i) Because once it is established that Section 60 of the Transfer of
Property, 1882 has no application under the Securitisation Act, 2002,
nothing survives on the said count.
75. It also needs to be stated that, in Amme Srisailam (supra) the
High Court did not apply the observations made by this Court in Shakeena
(supra) as regards the amended Section 13(8) because it was of the view
that the same were only obiter dicta and moreover because a subsequent and
larger bench decision of this Court in S. Karthik (supra) had held that right
of redemption would be extinguished only upon issuance and registration
of the sale certiﬁcate.
76. We may however point out that, this Court in S. Karthik (supra)
had made no reference as to whether it was considering the unamended
or the amended Section 13(8), nor any reference was made to the 2016
Amendment. Thus, in our opinion, the decision in S. Karthik (supra)
cannot be said to have considered the amended provision of Section 13(8)
especially in view of the fact that, it had placed strong reliance on Mathew
Varghese (supra) which as discussed before had dealt with the unamended
provision of Section 13(8).
77. We also ﬁnd that, in Pal Alloys (supra) the reliance on the Joint
Committee Report speciﬁcally the heading “Provisions to stop secure
creditor to lease or assignment or sale in the prescribed conditions-
Amendment to Section 13(8) of the SARFAESI Act” occurring in it, to
construe that the said amendment was only to restrict the secured creditor
is misplaced. We say this, because, initially in the Report, the proposed
amendment to sub-section (8) of Section 13 stated as under:
“The proposed modiﬁed section 13(8) provides as under:-
“(8) Where the amount of 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 lease, assignment
or sale of the secured assets,-
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 135
LTD. & ORS. [J. B. PARDIWALA, J.]

(i) the secured assets shall not be leased, assigned or sold by the
secured creditor; and
(ii) in case, any step has been taken by the secured creditor for
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 lease or assignment or sale of such secured
assets.””
(Emphasis supplied)
78.The amendment as initially proposed speciﬁcally used the words
“at any time before the date ﬁxed for lease, assignment or sale of the secured
assets”. The heading it was placed under read as to only restricting the
rights of the secured creditor. However, remarkably, the Joint Committee
subsequently changed the proposal to as under: -
“The Committee after examining the proposed amendment and the
existing Rules in this regard decide to modify proposed Clause 11(ii)
[section 13(8) of the principal Act] 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.””
(Emphasis supplied)
79. Thus, without indicating any reason for the change, the proposal
now used the words “before the date of publication of notice for public
136 SUPREME COURT REPORTS [2023] 13 S.C.R.

auction or inviting quotations or tender from public or private treaty
for transfer by way of lease, assignment or sale of the secured assets”
and the same came to be incorporated by way of the 2016 Amendment.
We feel, in such circumstances, given the abrupt and signiﬁcant change
in the proposal by the Joint Committee, the initial heading had been
inadvertently left, and the same in no manner can be relied to construe
the said provision as one intended to inhibit only the secured creditor. In
any event, it is a well settled canon of law, that the sum and substance of
a provision is determined by what is given in the provision and not by its
heading or marginal note.
80. To read it otherwise in a strict manner as to only stipulating
a restriction upon the secured creditor and not on the borrower’s right
of redemption would lead to a very chilling eﬀect, where no auction
conducted under the SARFAESI Act would have any form of sanctity,
and in such a situation no person would be willing to come forward and
participate in any auction due to the fear and apprehension that despite
being declared a successful bidder, the borrower could still at any time
come and redeem the mortgage and thereby thwart the very auction process.
81. Such a scenario is all the more worrisome, because the general
public who participate in such auctions are often neither aware nor
informed by the secured creditors conducting the auctions, that as long
as the sale certiﬁcate is not issued, they will not have a right in the said
asset and that the borrower whose asset is being auctioned could sweep-
in and redeem the mortgage any time, and thereby thwart their rights and
the very auction process.
82. Thus, it is necessary to interpret the amended Section 13(8) of the
SARFAESI Act in such a manner where a legal sanctity is attached to an
auction process and a bright line is drawn where a mischievous borrower
is told ‘no more and no further’ and precluded from hastily exercising
its right of redemption from nowhere at the very end of the process and
thereby set the entire auction process at naught. If permitted to do so then
all auctions under the SARFAESI Act would be meaningless and simply
rendered otiose and the very object of Section 13 and the overall scheme
of the SARFAESI Act of enabling the banks from recovering its dues in a
timely manner without intervention of the courts would be simply defeated.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 137
LTD. & ORS. [J. B. PARDIWALA, J.]

SANCTITY OF PUBLIC AUCTION
83. This Court in Valji Khimji (supra) held that once an auction is
conﬁrmed the same can be interfered on very limited grounds as otherwise
no auction would ever be complete, with the following relevant observations,
being reproduced hereunder: -
“11. It may be noted that the auction-sale was done after adequate
publicity in well-known newspapers. Hence, if any one wanted to make
a bid in the auction he should have participated in the said auction and
made his bid. Moreover, even after the auction the sale was conﬁrmed
by the High Court only on 30-7-2003, and any objection to the sale
could have been ﬁled prior to that date. However, in our opinion,
entertaining objections after the sale is conﬁrmed should not ordinarily
be allowed, except on very limited grounds like fraud, otherwise no
auction-sale will ever be complete.
xxx xxx xxx
29. … It may be mentioned that auctions are of two types – (1) where
the auction is not subject to subsequent conﬁrmation, and (2) where
the auction is subject to subsequent conﬁrmation by some authority
after the auction is held.
30. In the ﬁrst case mentioned above, i.e. where the auction is not
subject to conﬁrmation by any authority, the auction is complete
on the fall of the hammer, and certain rights accrue in favour of
the auction-purchaser. However, where the auction is subject to
subsequent conﬁrmation by some authority (under a statute or terms
of the auction) the auction is not complete and no rights accrue until
the sale is conﬁrmed by the said authority. Once, however, the sale
is conﬁrmed by that authority, certain rights accrue in favour of the
auction-purchaser, and these rights cannot be extinguished except in
exceptional cases such as fraud.”
84. In another decision by this Court in K. Kumara Gupta v. Sri
Markendaya and Sri Omkareswara Swamy Temple & Ors. reported in
(2022) 5 SCC 710, it was held that repeated interferences with public auction
would frustrate the sanctity and purpose of holding auctions. The relevant
observations made in it are given below: -
138 SUPREME COURT REPORTS [2023] 13 S.C.R.

“14. Once the appellant was found to be the highest bidder in a
public auction in which 45 persons had participated and thereafter
when the sale was conﬁrmed in his favour and even the sale deed
was executed, unless and until it was found that there was any
material irregularity and/or illegality in holding the public auction
and/or auction-sale was vitiated by any fraud or collusion, it is not
open to set aside the auction or sale in favour of a highest bidder
on the basis of some representations made by third parties, who
did not even participate in the auction proceedings and did not
make any oﬀer.
xxx xxx xxx
16. It is also required to be noted that the sale was conﬁrmed in favour
of the appellant by the Commissioner, Endowments Department after
obtaining the report of the Assistant Commissioner. Therefore, we
are of the opinion that in the aforesaid facts and circumstances of
the case, the High Court ought not to have ordered re-auction of the
land in question after a period of 23 years of conﬁrmation of the sale
and execution of the sale deed in favour of the auction-purchaser by
observing that the value of the property might have been much more,
otherwise, the object and purpose of holding the public auction and
the sanctity of the public auction will be frustrated. Unless there is
concrete material and it is established that there was any fraud and/or
collusion or the land in question was sold at a throwaway price, the
sale pursuant to the public auction cannot be set aside at the instance
of strangers to the auction proceeding.
17. The sale pursuant to the public auction can be set aside in an
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
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 139
LTD. & ORS. [J. B. PARDIWALA, J.]

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.” (Emphasis supplied)
85. In a recent decision by this Court in Eva Agro Feeds Private
Limited v. Punjab National Bank & Anr. reported in 2023 SCC OnLine SC
1138, the following relevant observations were made, being reproduced
as under: -
“84. … mere expectation of the Liquidator that a still higher price
may be obtained can be no good ground to cancel an otherwise
valid auction and go for another round of auction. Such a cause
of action would not only lead to incurring of avoidable expenses
but also erode credibility of the auction process itself. That apart,
post auction it is not open to the Liquidator to act on third party
communication and cancel an auction, unless it is found that fraud
or collusion had vitiated the auction. The necessary corollary that
follows therefrom is that there can be no absolute or unfettered
discretion on the part of the Liquidator to cancel an auction
which is otherwise valid. As it is in an administrative framework
governed by the rule of law there can be no absolute or unfettered
discretion of the Liquidator. Further, upon a thorough analysis of
all the provisions concerning the Liquidator it is evident that the
Liquidator is vested with a host of duties, functions and powers
to oversee the liquidation process in which he is not to act in any
adversarial manner while ensuring that the auction process is
carried out in accordance with law and to the beneﬁt of all the
stakeholders. Merely because the Liquidator has the discretion of
carrying out multiple auction it does not necessarily imply that he
would abandon or cancel a valid auction fetching a reasonable
price and opt for another round of auction process with the
140 SUPREME COURT REPORTS [2023] 13 S.C.R.

expectation of a better price. Tribunal had rightly held that there
were no objective materials before the Liquidator to cancel the
auction process and to opt for another round of auction.”
(Emphasis supplied)
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.
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.
EXERCISE OF EXTRAORDINARY JURISDICTION BY THE
HIGH COURT UNDER ARTICLE 226 OF THE CONSTITUTION
IN SARFAESI MATTERS
89. We shall now consider whether in the factual score of the present
matter, any interference was warranted by the High Court in exercise of
its discretionary powers under Article 226.
90. The undisputed position that emerges is;
(a) the appellant was the successful auction purchaser with a bid
of Rs. 105.05 crore;
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 141
LTD. & ORS. [J. B. PARDIWALA, J.]

(b) On 30.06.2023, the Bank conﬁrmed the sale of the secured asset
in the appellant’s favour;
(c) On 27.07.2023, the appellant had paid the entirety of the bid
amount of Rs. 105.05 Crore to the Bank;
(d) Out of this, a sum of Rs. 63,50,45,000/- was appropriated by
the Bank against the Borrowers’ dues;
(e) The Bank did not issue the sale certiﬁcate in the appellant’s
favour which it ought to have on 27.07.2023;
(f) After having initially invoked the jurisdiction of the DRT-I,
Mumbai and invited an order on an application for redemption,
the Borrowers invoked the Writ Jurisdiction of the Bombay
High Court under Article 226 apprehending that the DRT may
disallow their application;
(g) By the Impugned Judgment dated 17.07.2023, the Bombay High
Court allowed the Writ Petition on the basis of a consent granted
by the Bank to give the Borrowers, time till 31.08.2023 to repay
the outstandings and this has been treated as a redemption.
91. The only justiﬁcation for entertaining the Writ Petition is contained
in paragraphs 11 and 14 respectively of the Impugned Judgment. Whilst the
High Court has accepted that normally, such a Writ Petition would not be
maintainable, it proceeded to entertain the same because of the “peculiar
facts and circumstances of the present case”, “it would be in the interest of
all concerned if the consensus reached between the Respondent Bank and
the Petitioners is taken cognizance of by us.” Thereafter, it went on to say
that the “arrangement referred to above is in the interest of all, including
the Auction Purchaser”. A perusal of paragraph 14 would indicate that since
the outcome which the High Court considered to be ideal could be achieved,
it did not hold the Writ Petition to be an abuse of process.
92. This Court has time and again, reminded the High Courts that
they should not entertain petition under Article 226 of the Constitution if an
eﬀective remedy is available to the aggrieved person under the provisions
of the SARFAESI Act. This Court in Satyawati Tondon (supra) made the
following observations:
142 SUPREME COURT REPORTS [2023] 13 S.C.R.

“43. Unfortunately, the High Court overlooked the settled law that
the High Court will ordinarily not entertain a petition under Article
226 of the Constitution if an eﬀective remedy is available to the
aggrieved person and that this rule applies with greater rigour in
matters involving recovery of taxes, cess, fees, other types of public
money and the dues of banks and other ﬁnancial institutions. In our
view, while dealing with the petitions involving challenge to the
action taken for recovery of the public dues, etc. the High Court must
keep in mind that the legislations enacted by Parliament and State
Legislatures for recovery of such dues are a code unto themselves
inasmuch as they not only contain comprehensive procedure for
recovery of the dues but also envisage constitution of quasi-judicial
bodies for redressal of the grievance of any aggrieved person.
Therefore, in all such cases, the High Court must insist that before
availing remedy under Article 226 of the Constitution, a person must
exhaust the remedies available under the relevant statute.
44. While expressing the aforesaid view, we are conscious that
the powers conferred upon the High Court under Article 226 of
the Constitution to issue to any person or authority, including in
appropriate cases, any Government, directions, orders or writs
including the ﬁve prerogative writs for the enforcement of any of the
rights conferred by Part III or for any other purpose are very wide
and there is no express limitation on exercise of that power but, at
the same time, we cannot be oblivious of the rules of self-imposed
restraint evolved by this Court, which every High Court is bound
to keep in view while exercising power under Article 226 of the
Constitution.
45. It is true that the rule of exhaustion of alternative remedy is a rule
of discretion and not one of compulsion, but it is diﬃcult to fathom
any reason why the High Court should entertain a petition ﬁled under
Article 226 of the Constitution and pass interim order ignoring the
fact that the petitioner can avail eﬀective alternative remedy by ﬁling
application, appeal, revision, etc. and the particular legislation
contains a detailed mechanism for redressal of his grievance.
xxx xxx xxx
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 143
LTD. & ORS. [J. B. PARDIWALA, J.]

55. It is a matter of serious concern that despite repeated pronouncement
of this Court, the High Courts continue to ignore the availability of
statutory remedies under the DRT Act and the SARFAESI Act and
exercise jurisdiction under Article 226 for passing orders which have
serious adverse impact on the right of banks and other ﬁnancial
institutions to recover their dues. We hope and trust that in future the
High Courts will exercise their discretion in such matters with greater
caution, care and circumspection.”
93. In Commissioner of Income Tax & Ors. v. Chhabil Dass Agarwal
reported in (2014) 1 SCC 603, this Court in para 15 made the following
observations:
“15. Thus, while it can be said that this Court has recognised some
exceptions to the rule of alternative remedy i.e. where the statutory
authority has not acted in accordance with the provisions of the
enactment in question, or in deﬁance of the fundamental principles
of judicial procedure, or has resorted to invoke the provisions which
are repealed, or when an order has been passed in total violation
of the principles of natural justice, the proposition laid down in
Thansingh Nathmal case [AIR 1964 SC 1419], Titaghur Paper Mills
case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC
433 : 1983 SCC (Tax) 131] and other similar judgments that the High
Court will not entertain a petition under Article 226 of the Constitution
if an eﬀective alternative remedy is available to the aggrieved person
or the statute under which the action complained of has been taken
itself contains a mechanism for redressal of grievance still holds the
ﬁeld. Therefore, when a statutory forum is created by law for redressal
of grievances, a writ petition should not be entertained ignoring the
statutory dispensation.”
94. In Phoenix ARC Private Limited v. Vishwa Bharati Vidya Mandir
& Ors. reported in (2022) 5 SCC 345, it was observed as under:
“18. Even otherwise, it is required to be noted that a writ petition
against the private ﬁnancial institution — ARC — the appellant herein
under Article 226 of the Constitution of India against the proposed
action/actions under Section 13(4) of the SARFAESI Act can be said
to be not maintainable. In the present case, the ARC proposed to
144 SUPREME COURT REPORTS [2023] 13 S.C.R.

take action/actions under the SARFAESI Act to recover the borrowed
amount as a secured creditor. The ARC as such cannot be said to
be performing public functions which are normally expected to be
performed by the State authorities. During the course of a commercial
transaction and under the contract, the bank/ARC lent the money to
the borrowers herein and therefore the said activity of the bank/ARC
cannot be said to be as performing a public function which is normally
expected to be performed by the State authorities. If proceedings are
initiated under the SARFAESI Act and/or any proposed action is to
be taken and the borrower is aggrieved by any of the actions of the
private bank/bank/ARC, borrower has to avail the remedy under the
SARFAESI Act and no writ petition would lie and/or is maintainable
and/or entertainable. Therefore, decisions of this Court in Praga Tools
Corpn. [Praga Tools Corpn. v. C.A. Imanual, (1969) 1 SCC 585] and
Ramesh Ahluwalia [Ramesh Ahluwalia v. State of Punjab, (2012) 12
SCC 331 : (2013) 3 SCC (L&S) 456 : 4 SCEC 715] relied upon by
the learned counsel appearing on behalf of the borrowers are not of
any assistance to the borrowers.
xxx xxx xxx
21. Applying the law laid down by this Court in Mathew K.C. [State
Bank of Travancore v. Mathew K.C., (2018) 3 SCC 85 : (2018) 2 SCC
(Civ) 41] to the facts on hand, we are of the opinion that ﬁling of the
writ petitions by the borrowers before the High Court under Article
226 of the Constitution of India is an abuse of process of the court.
The writ petitions have been ﬁled against the proposed action to be
taken under Section 13(4). As observed hereinabove, even assuming
that the communication dated 13-8-2015 was a notice under Section
13(4), in that case also, in view of the statutory, eﬃcacious remedy
available by way of appeal under Section 17 of the SARFAESI Act,
the High Court ought not to have entertained the writ petitions.
Even the impugned orders passed by the High Court directing to
maintain the status quo with respect to the possession of the secured
properties on payment of Rs 1 crore only (in all Rs 3 crores) is
absolutely unjustiﬁable. The dues are to the extent of approximately
Rs 117 crores. The ad interim relief has been continued since 2015
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 145
LTD. & ORS. [J. B. PARDIWALA, J.]

and the secured creditor is deprived of proceeding further with the
action under the SARFAESI Act. Filing of the writ petition by the
borrowers before the High Court is nothing but an abuse of process
of court. It appears that the High Court has initially granted an
ex parte ad interim order mechanically and without assigning any
reasons. The High Court ought to have appreciated that by passing
such an interim order, the rights of the secured creditor to recover the
amount due and payable have been seriously prejudiced. The secured
creditor and/or its assignor have a right to recover the amount due
and payable to it from the borrowers. The stay granted by the High
Court would have serious adverse impact on the ﬁnancial health of
the secured creditor/assignor. Therefore, the High Court should have
been extremely careful and circumspect in exercising its discretion
while granting stay in such matters. In these circumstances, the
proceedings before the High Court deserve to be dismissed.”
95. In Varimadugu OBI Reddy (supra), it was held as under:
“36. In the instant case, although the respondent borrowers initially
approached the Debts Recovery Tribunal by ﬁling an application
under Section 17 of the SARFAESI Act, 2002, but the order of the
Tribunal indeed was appealable under Section 18 of the Act subject
to the compliance of condition of pre-deposit and without exhausting
the statutory remedy of appeal, the respondent borrowers approached
the High Court by ﬁling the writ application under Article 226 of the
Constitution. We deprecate such practice of entertaining the writ
application by the High Court in exercise of jurisdiction under Article
226 of the Constitution without exhausting the alternative statutory
remedy available under the law. This circuitous route appears to have
been adopted to avoid the condition of pre-deposit contemplated under
2nd proviso to Section 18 of the 2002 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
146 SUPREME COURT REPORTS [2023] 13 S.C.R.

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.
98. It is an admitted fact that the entire bid amount was paid by the
auction purchaser as observed at Para 10 of the Impugned Order. Thus, the
Bank was legally bound to issue the sale certiﬁcate as per the language of
Rule 9(6) of the Rules of 2002. The said provision employs the phrase “shall”.
Thus, it is an instance of mandatory provision. There is nothing more in the
realm of law that the auction purchaser can do once he has made the entire
payment to the Bank. The fact that the Respondent Bank failed to issue
the sale certiﬁcate raises serious concerns, when there was no stay by any
competent forum. Even otherwise the general conduct of the Respondent
Bank has not been satisfactory. Once the entire bid price is paid and there is
no stay granted by any forum known to law, the Bank is duty bound to issue
a valid Sale Certiﬁcate and hand over the physical possession of the secured
asset to the auction purchaser.
99. It is also pertinent to note that the Bank and its oﬃcers took absolutely
inconsistent stand. Before the DRT, they opposed the oﬀer for redemption
of mortgage as recorded by the High Court at para 11, while before the High
Court they made a complete 360 degrees turn and accepted the oﬀer. The
lame and weak justiﬁcation assigned for the same was to bring quietus to the
matter. This again shows that the decisions of the Bank are not taken as per the
provisions of law but according to the whims and fancies of the Bank oﬃcers.
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 147
LTD. & ORS. [J. B. PARDIWALA, J.]

100. Bank is duty bound to follow the provisions of the law as any other
litigant. It is to be noted that the Bank i.e., the secured creditor acts under the
SARFAESI Act through the authorised oﬃcer who is appointed under Section
13(2). Thus, the authorised oﬃcer and the Bank cannot act in a manner so
as to keep the sword hanging on the neck of the auction purchaser. The law
treats everyone equally and that includes the Bank and its oﬃcers. The said
enactments were enacted for speedy recovery and for beneﬁtting the public
at large and does not give any license to the Bank oﬃcers to act de hors the
scheme of the law or the binding verdicts.
101. The Bank could be said to have acted contrary to two judgments
of this Court: (i) Satyawati Tondon (supra) and (ii) the judgment dated
16.11.2022 in Varimadugu OBI Reddy (supra).
102. This Court in National Spot Exchange Ltd. v. Anil Kohli,
Resolution Professional for Dunar Foods Ltd. reported in (2022) 11 SCC
761 after referring to a catena of its other judgements, had held that where
the law is clear the consequence thereof must follow. The High Court has
no option but to implement the law. The relevant observations made in it
are being reproduced below: -
“15.1. In Mishri Lal [BSNL v. 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 v. 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 v. Muthaluru Bojjappa [AIR
1963 SC 1633] (vide para 12) this Court observed: (AIR p. 1637)
‘12. … [W]hat 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)
148 SUPREME COURT REPORTS [2023] 13 S.C.R.

‘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 v. 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 v. 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 v. 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 v. 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.’…”
103. This Court in Sadashiv Prasad Singh (supra), made the following
observations relevant to the aforesaid discussion, reproduced below: -
“21. A perusal of the impugned order [Harendar Singh v. State of Bihar,
LPA No. 844 2010, order dated 17-5-2010 (Pat)] especially paras 8,
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 149
LTD. & ORS. [J. B. PARDIWALA, J.]

12 and 13 extracted hereinabove reveal that the impugned order came
to be passed in order to work out the equities between the parties. The
entire deliberation at the hands of the High Court were based on oﬀers
and counter-oﬀers, inter se between the Allahabad Bank, on the one
hand, and the objector, Harender Singh on the other, whereas the rights
of Sadashiv Prasad Sinha, the auction-purchaser, were not at all taken
into consideration. As a matter of fact, it is Sadashiv Prasad Sinha who
was to be deprived of the property which came to be vested in him as far
back as on 28-8-2008. It is nobody’s case, that at the time of the auction-
purchase, the value of the property purchased by Sadashiv Prasad Sinha
was in excess of his bid. In fact, the factual position depicted under para 8
of the impugned judgment [Harendar Singh v. State of Bihar, LPA No. 844
2010, order dated 17-5-2010 (Pat)] reveals that the escalation of prices
had taken place thereafter, and the value of the property purchased by
Sadashiv Prasad Sinha was presently much higher than the bid amount.
22. Since it was nobody’s case that Sadashiv Prasad Sinha, the highest
bidder at the auction conducted on 28-8-2008, had purchased the property
in question at a price lesser than the then prevailing market price, there
was no justiﬁcation whatsoever to set aside the auction-purchase made
by him on account of escalation of prices thereafter. The High Court in
ignoring the vested right of the appellant in the property in question,
after his auction bid was accepted and conﬁrmed, subjected him to
grave injustice by depriving him to property which he had genuinely
and legitimately purchased at a public auction. In our considered
view, not only did the Division Bench of the High Court in the matter
ignore the sound, legal and clear principles laid down by this Court
in respect of a third-party auction-purchaser, the High Court also
clearly overlooked the equitable rights vested in the auction-purchaser
during the pendency of a lis. The High Court also clearly overlooked
the equitable rights vested in the auction-purchaser while disposing
of the matter.”
(Emphasis supplied)
104. The proposition of law as discernible from the aforesaid decisions
is that equity cannot supplant the law. Equity has to follow law, if the law is
clear and unambiguous.
150 SUPREME COURT REPORTS [2023] 13 S.C.R.

105. We summarise our ﬁnal conclusion as under:
(i) The High Court was not justiﬁed in exercising its writ jurisdiction
under Article 226 of the Constitution more particularly when the borrowers
had already availed the alternative remedy available to them under Section
17 of the SARFAESI Act.
(ii) The conﬁrmation of sale by the Bank under Rule 9(2) of the Rules
of 2002 invests the successful auction purchaser with a vested right to obtain
a certiﬁcate of sale of the immovable property in form given in appendix
(V) to the Rules i.e., in accordance with Rule 9(6) of the SARFAESI.
(iii) In accordance with the unamended Section 13(8) of the SARFAESI
Act, the right of the borrower to redeem the secured asset was available till
the sale or transfer of such secured asset. In other words, the borrower’s
right of redemption did not stand terminated on the date of the auction sale
of the secured asset itself and remained alive till the transfer was completed
in favour of the auction purchaser, by registration of the sale certiﬁcate and
delivery of possession of the secured asset. However, the amended provisions
of Section 13(8) of the SARFAESI Act, make it clear that 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 is 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 the completion of the sale or transfer
of the secured asset in favour of the auction purchaser.
(iv) The Bank after having conﬁrmed the sale under Rule 9(2) of the
Rules of 2002 could not have withhold the sale certiﬁcate under Rule 9(6)
of the Rules of 2002 and enter into a private arrangement with a borrower.
(v) The High Court under Article 226 of the Constitution could not have
applied equitable considerations to overreach the outcome contemplated by
the statutory auction process prescribed under the SARFAESI Act.
(vi) The two decisions of the Telangana High Court in the case of
Concern Readymix (supra) and Amme Srisailam (supra) do not lay down
the correct position of law. In the same way, the decision of the Punjab
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. 151
LTD. & ORS. [J. B. PARDIWALA, J.]

and Haryana High Court in the case of Pal Alloys (supra) also does not
lay down the correction position of law.
(vii) The decision of the Andhra Pradesh High Court in Sri Sai
Annadhatha Polymers (supra) and the decision of the Telangana High Court
in the case of K.V.V. Prasad Rao Gupta (supra) lay down the correct position
of law while interpreting the amended Section 13(8) of the SARFAESI Act.
106. In the result, both the appeals succeed and are hereby allowed.
107. The impugned judgment and order passed by the High Court is
hereby set aside.
108. The respondent Bank shall refund the entire amount deposited
by the borrowers i.e., an amount of Rs.129 crore paid by them in lieu of the
redemption of mortgage of the secured asset at the earliest. The appellant
herein shall pay an additional amount of Rs. 23.95 crore to the Bank within
a period of one week from today and subject to such deposit, the Bank shall
issue the sale certiﬁcate in accordance with Rule 9(6) of the Rules of 2002.
109. The pending applications if any shall stand disposed of.

Headnotes prepared by: Appeals allowed.
Bibhuti Bhushan Bose
Assisted by: Shubhanshu Das, LCRA

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