SHAKEENA & ANR.versusBANK OF INDIA & ORS.

                          [2019] 11 S.C.R. 341                           341


                       SHAKEENA & ANR.                                   A
                                  v.
                    BANK OF INDIA & ORS.
               (Civil Appeal Nos. 8097-8098 of 2009)
                         AUGUST 20, 2019                                 B
      [A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]
       Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002: ss. 13(2), 13(4) – Right
of redemption – Loan taken by appellants from respondent Bank –
                                                                         C
In view of default in discharging the loan by appellants, respondent
Bank exercised its power under s.13(4) and took over constructive
possession of mortgaged property – Appellant filed applications
before DRT which, however, were dismissed for non-prosecution –
Thereafter, respondent bank brought secured property for sale –
Respondent no. 3 was the highest bidder and he deposited 25% of          D
sale consideration – On 2.1.2006, appellant deposited Rs.25 lacs
in the account of his father followed by deposit of three cheques of
Rs.25 lacs which were returned by respondent bank on the ground
that same was not a valid tender – Meanwhile, respondent no. 3
complied with all terms and conditions of sale, as a result of which
                                                                         E
sale was confirmed in his favour – Respondent bank credited a sum
in the loan accounts of appellants and closed both the loan accounts
– On 6.1.2006, respondent bank issued a sale certificate in favour
of respondent no.3 – Appellant filed applications for restoration of
the main proceedings before DRT which was dismissed – Appellants
thereafter forwarded demand drafts in the name of Authorised             F
Officer of the bank which was also not accepted – Appellant filed
writ petition before High Court for quashing of the auction of subject
property – Whether the appellants had a subsisting right of
redemption until the sale certificate was duly registered entailing in
transfer of subject property – Held: There was substance in the
                                                                         G
stand taken by respondent bank that no valid tender was made by
the appellants so as to discharge them from their obligation – The
amount allegedly deposited in the account of father of appellant
No.2 and not in their loan accounts was not be a valid tender –
Similarly, appellants attempted to pay in the form of cheques on
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                                 341
342            SUPREME COURT REPORTS                        [2019] 11 S.C.R.


A     2.1.2006 – However, as per the terms and conditions, payment by
      cheques was not permissible – Thus, the respondent bank was not
      obliged to accept the amount in the form of cheques – Even the
      third attempt made by appellants was to offer demand drafts drawn
      in favour of or in the name of the Authorised Officer of the
      respondent bank and not in the name of the bank or authorising
B
      the bank to appropriate it towards the subject loan accounts –
      Therefore, these demand drafts were rightly not accepted as a valid
      tender – Thus, appellants failed to exercise their right of redemption
      before the issue of sale certificate much less the registration thereof.
            Dismissing the appeals, the Court\
C
            HELD: 1. Indisputably, after the disposal of the writ appeals
      by the Division Bench of the High Court, the auction purchaser
      (respondent No.3) got the sale certificate registered on 18 th
      September, 2007 and then transferred the property by a
      registered sale deed on 5th October, 2007 to third party. It was
D     not the case of the appellants that some interim injunction
      prohibiting respondent No.3 from registering the sale certificate
      or transferring the suit property, was operating against him after
      the decision of the Division Bench of High Court. In fact, the
      impugned judgment was not even carried in appeal before this
E     Court by the appellants until then. The special leave petitions
      came to be filed only on 13th October, 2007 and order of status
      quo was passed by this Court on 23rd November, 2007. In other
      words, there has been a paradigm shift in the rights of the parties
      upon registration of the sale certificate on 18th September, 2007
      and also because of the registered sale deed in favour of third
F     party on 5th October, 2007. [Para 25] [359-A-D]
            2. The appellants had allowed the action taken by the
      respondent bank under Section 13(4) of the 2002 Act, to become
      final consequent to the order of the DRT rejecting challenge
      thereto due to non-compliance of the conditional order. Even the
G     subsequent application for restoration of the DRT proceedings
      came to be rejected. The appellants then filed the subject writ
      petition on 19th January, 2006, by which date the auction had
      already concluded including the sale certificate was issued in
      favour of the highest bidder on 6th January, 2006. Moreover, the
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       SHAKEENA & ANR. v. BANK OF INDIA & ORS.                         343


principal assertion of the appellants before the High Court was        A
that they were wanting to exercise their right of redemption of
mortgage, but due to fortuitous situation and the inappropriate
stand taken by the respondent bank were prevented from doing
so. No other plea was pursued by the appellants in support of the
reliefs claimed by them before the High Court. The appellants
                                                                       B
cannot be permitted to assail the auction process on any other
count. [Para 26] [359-D-G]
      3. Reverting to the stand taken by the appellants that they
had attempted to exercise their right of redemption by depositing
an aggregate sum of Rs. 25 Lacs on 30th December, 2005 and 4th
January, 2006, in the account of the father of appellant No.2          C
followed by issuing cheque(s) in the aggregate sum of
Rs.25,21,446/- on 2nd January, 2006; and once again offering the
amount by demand drafts in the sum of Rs.25,06,250/- on 18th
January, 2006. This stand though attractive at the first blush, will
have to be stated to be rejected. [Para 27] [359-G-H; 360-A-B]         D
      4. Notably, the appellants took no steps, whatsoever, to
pay the outstanding dues to the respondent bank by way of a
valid tender nor moved any formal application before the High
Court after filing of the writ petitions on 19 January, 2006, to
permit them to deposit the requisite amount either in the              E
concerned loan accounts or in the court. That was not done even
until the disposal of the writ petitions by the Single Judge or
during the pendency of the writ appeals before the Division Bench
and until the disposal thereof vide the impugned judgment. The
appellants, for reasons best known to them, have not chosen to
deposit the amount in the loan accounts or attempted to seek           F
permission of the Court to deposit the same in Court from 19th
January, 2006 immediately after filing of writ petitions or for that
matter until the registration of the sale certificate on 18 th
September, 2007. In this backdrop, it is not possible to
countenance the stand of the appellants that they had made a           G
valid tender to the respondent bank or that the respondent bank
had mischievously or malafide rejected their offer to defeat their
rights, to redeem the mortgage before registration of the sale
certificate on 18 th September, 2007. [Para 28] [360-F-H;
361-A-B]
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344            SUPREME COURT REPORTS                     [2019] 11 S.C.R.


A            5. 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 18th September, 2007. Therefore, it is
B
      not possible to countenance the plea of the appellants to reopen
      the entire auction process. This is moreso 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
C     redemption in any case stood obliterated on 18th September, 2007.
      Further, the amended Section 13(8) of the 2002 Act which has
      come into force w.e.f. 1st September, 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
D
      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. The
E     appellants have failed to make a valid and legal tender to the
      respondent bank before the issue of sale certificate on 6th January,
      2006, muchless registration thereof on 18 th September, 2007.
      [Paras 29, 30] [360-C-F; H; 362-A]
            B. Arvind Kumar v. Govt. of India and Others (2007) 5
F           SCC 745 ; Mardia Chemicals Ltd. and Others v. Union
            of India and Others (2004) 4 SCC 311 : [2004] 3 SCR
            982 ; Narandas Karsondas v. S.A. Kamtam and Another
            (1977) 3 SCC 247 : [1977] 2 SCR 341 ; Mathew
            Varghese v. M. Amritha Kumar and Others (2014) 5 SCC
            610 : [2014] 2 SCR 736 ; Dwarika Prasad v. State of
G           Uttar Pradesh and Others (2018) 5 SCC 491 : [2018]
            3 SCR 29 ; J. Rajiv Subramaniyan and Another v.
            Pandiyas and Others (2014) 5 SCC 651 : [2014] 3 SCR
            1140 ; T. Ravi and Another v. B. Chinna Narasimha

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        SHAKEENA & ANR. v. BANK OF INDIA & ORS.                              345


      and Others (2017) 7 SCC 342 : [2017] 3 SCR 1 ; Kirpal                  A
      Kaur v. Jitender Pal Singh and Others (2015) 9 SCC
      356 : [2015] 8 SCR 51 ; Kanaiyalal Lalchand Sachdev
      and Others v. State of Maharashtra and Others (2011)
      2 SCC 782 : [2011] 2 SCR 602 – referred to.
                        Case Law Reference                                   B
(2007) 5 SCC 745                  referred to              Para 16
[2004] 3 SCR 982                  referred to              Para 16
[1977] 2 SCR 341                  referred to              Para 17
[2014] 2 SCR 736                  referred to              Para 17           C
[2018] 3 SCR 29                   referred to              Para 17
[2014] 3 SCR 1140                 referred to              Para 18
[2017] 3 SCR 1                    referred to              Para 18
[2015] 8 SCR 51                   referred to              Para 18           D

[2011] 2 SCR 602                  referred to              Para 21
      CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 8097-
8098 of 2009.
      From the final Judgment dated 10.08.2007 of the High Court of          E
Judicature at Madras in W.A. (MD) Nos.145 and 146 of 2007.
     Dr. A. Francis Julian, Sr. Adv., Antony R. Julian, Danish Zabair
Khan, M/s Arputham Aruna and Co., Advs. for the Appellants.
     Pranab Kumar Mullick, Mrs. Soma Mullick, Sebat Kumar Devria,
                                                                             F
K.K. Mani, Ms. T. Archana, Advs. for the Respondents.
      The Judgment of the Court was delivered by
      A. M. KHANWILKAR, J.
       1. These appeals take exception to the impugned judgment and
order of the Madras High Court, Madurai Bench dated 10th August,             G
2007 in Writ Appeal (MD) Nos.145 and 146 of 2007 respectively;
whereby, the Division Bench of the High Court dismissed the writ petitions
filed by the appellants praying for setting aside of notice issued by the
respondent bank in exercise of powers under the Securitisation and
                                                                             H
346            SUPREME COURT REPORTS                          [2019] 11 S.C.R.


A     Reconstruction of Financial Assets and Enforcement of Security Interest
      Act, 2002 (for short, “2002 Act”) dated 14th November, 2005 and the
      consequent public notice dated 15th November, 2005 for sale of the subject
      property, the public auction conducted in furtherance thereof on 19 th
      December, 2005, declaration of respondent No.3 as the highest bidder in
      the said public auction and the sale certificate issued in his favour dated
B
      6th January, 2006.
             2. Briefly stated, in 2003, Shri P. Shahul Hameed and Smt.
      Shakeena (appellants/borrowers) were sanctioned a term loan of Rs.10
      Lacs each under Star Mortgage Loan by the respondent bank. The
      accounts became NPA (Non-Performing Assets) from 30th June, 2004.
C     As there was default in re-payment, the respondent bank issued legal
      notice dated 19th October, 2004 to repay the dues within seven days. On
      1st December, 2004, notice was issued under Section 13(2) of the 2002
      Act to the appellants, calling upon them to discharge the loan within
      sixty days. In reply, the appellants by representations dated 10 th
D     December, 2004, requested the respondent bank to grant time for bringing
      the account in order. In view of the default in discharging the loans by
      the appellants, the respondent bank, exercised its power under Section
      13(4) of the 2002 Act. Accordingly, constructive possession of the
      mortgaged property was taken over by the respondent bank on 8th
      February, 2005.
E
             3. The appellants then filed S.A. Nos.21 and 22 of 2005, by invoking
      Section 17 of the 2002 Act, before the Debts Recovery Tribunal II,
      Chennai, challenging the notices, issued by the respondent bank. On 18th
      March, 2005, DRT-II, Chennai passed an order in S.A. Nos.21 and 22
      of 2005 staying all further proceedings on condition that the appellants
F     would pay Rs.1.50 Lac in each appeal. However, the appellants failed
      to comply with the said order and, therefore, the order being a self-
      operating order, stood automatically vacated. Later on, S.A. Nos.21 &
      22 of 2005 were eventually dismissed for non-prosecution/default on
      28th September, 2005, for non-payment of court fee.
G           4. The respondent bank then brought the secured property for
      sale by inviting sealed tenders vide sale notice dated 15th November,
      2005. Notice was also given to the appellants on 14th November, 2005.
      The appellants herein neither objected to the said sale notice nor
      challenged the same. Thus, the sale was held on 19th December, 2005,
H     in which one Mr. Chidhamaramanickam, respondent No.3 herein was
        SHAKEENA & ANR. v. BANK OF INDIA & ORS.                                 347
               [A. M. KHANWILKAR, J.]

declared as the highest bidder who had quoted a sum of Rs.42,51,000/-           A
(Rupees Forty-Two Lacs Fifty-One Thousand Only). He also deposited
25% of the sale consideration immediately, as per the rules. On 2nd
January, 2006, the appellants approached the respondent bank and
deposited three cheques for total sum of Rs.25,21,446/- (Rupees Twenty-
Five Lacs Twenty-One Thousand Four Hundred Forty-Six Only). These
                                                                                B
cheques were duly returned by the respondent bank on 4th February,
2006 as it could not be treated as a valid tender.
       5. The highest bidder (respondent No.3) in the meantime had
complied with all the terms and conditions of sale as a result of which
the sale was confirmed in his favour. In that, he paid the entire sale
consideration of Rs.42,51,000/- (Rupees Forty-Two Lacs Fifty-One                C
Thousand Only) by 4th January, 2006. On payment of sale consideration,
the respondent bank credited a sum of Rs.12,40,000/- (Rupees Twelve
Lacs Forty Thousand Only) in the loan account of appellant No.2 herein
and a sum of Rs.12,52,350/- (Rupees Twelve Lacs Fifty-Two Thousand
Three Hundred Fifty Only) in the loan account of appellant No.1 herein          D
and closed both the loan accounts.
       6. On 6th January, 2006, the respondent bank issued a sale
certificate in favour of respondent No.3. According to the respondent
bank upon issue of sale certificate, the sale had become final.
      7. Be that as it may, the appellants filed applications for restoration   E
of the main proceedings before DRT. However, the said applications
came to be dismissed on 10th January, 2006. Even that order has been
allowed to become final by the appellants.
       8. As aforementioned, consequent to sale of the secured asset, a
sum of Rs.24,92,750/- (Rupees Twenty-Four Lacs Ninety-Two Thousand              F
Seven Hundred Fifty Only) was adjusted towards the loan accounts of
the appellants and a sum of Rs.10,000/- (Rupees Ten Thousand Only)
towards legal expenses. Out of the balance sum of Rs.17,48,250/-
(Rupees Seventeen Lacs Forty-Eight Thousand Two Hundred Fifty
Only), the bank returned a sum of Rs.17,25,000/- (Rupees Seventeen              G
Lacs Twenty-Five Thousand Only) to the appellant (Petitioner in Writ
Petition No.634 of 2006) by way of a bankers cheque along with letter
dated 18th January, 2006. However, the said appellant did not encash the
bankers cheque and instead returned the same. The bank had retained a
sum of Rs.23,250/- (Rupees Twenty-Three Thousand Two Hundred Fifty
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348             SUPREME COURT REPORTS                           [2019] 11 S.C.R.


A     Only) towards future legal expenses with the undertaking that the balance
      amount will be returned after adjusting the lawyer charges/legal expenses.
             9. The Appellants then forwarded demand drafts for
      Rs. 25,06,250/- (Rupees Twenty-Five Lacs Six Thousand Two Hundred
      Fifty Only), which was received by the respondent bank on 17th January,
B     2006. According to the respondent bank, the appellants had ante dated
      the covering letter as if it was written on 12th January, 2006, undertaking
      to pay the balance amount. The respondent bank, however, did not accept
      or encash the said demand drafts as a valid tender - as it were drawn in
      the name of the Authorised Officer of the bank i.e. respondent No.2
      herein; and also because the sale certificate had already been issued on
C     6th January, 2006.
             10. On 19th January, 2006 the appellants, feeling aggrieved by the
      action of respondent bank for having taken constructive possession of
      the secured assets and the notice of sale dated 14th November, 2005,
      filed subject Writ Petition (MD) Nos.634 and 635 of 2006 before the
D     High Court of Madras at Madurai Bench for quashing of the auction of
      the subject property and further to direct the respondents to receive the
      amount offered by them towards settlement of loan accounts. Respondent
      no.3 herein (auction purchaser) got himself impleaded as a party-
      respondent in the said writ petitions, filed by the appellants herein, and
E     opposed the same.
              11. The Learned Single Judge vide judgment dated 9th March,
      2007, allowed the writ petitions filed by the appellants herein, holding
      that the appellants had a subsisting right of redemption until the sale
      certificate was duly registered entailing in transfer of the subject property.
F     It has been noted that such registration was not done in the present case
      until the filing of writ petitions and until disposal thereof.
             12. Against the judgment of the Learned Single Judge, respondent
      No.3 herein (auction purchaser) filed Writ Appeal Nos.145 and 146 of
      2007 before the Madurai Bench of Madras High Court. By the impugned
G     judgment dated 10th August, 2007, the Division Bench allowed the appeals
      filed by respondent No.3 herein and set aside the Order dated 9 th March,
      2007 passed by the Learned Single Judge.
             13. On 18th September, 2007, the stated sale certificate in respect
      of the suit property had been registered and soon thereafter on 5th October,
      2007, respondent No.3 sold the property to a third party.
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        SHAKEENA & ANR. v. BANK OF INDIA & ORS.                               349
               [A. M. KHANWILKAR, J.]

       14. Feeling aggrieved by the decision of the Division Bench of the     A
High Court, the appellants have approached this Court by way of present
appeals. This Court, on 23rd November, 2007, ordered that status quo as
on that date be maintained with regard to the suit property. Later on, this
Court granted leave to appeal on 27th November, 2009 and the interim
order continued during the pendency of the appeals.
                                                                              B
       15. Be it noted that on 1st September, 2016 amendment to Section
3(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     C
lease, assignment or sale of the secured assets.
       16. Reverting to the impugned judgment of the Division Bench of
High Court, it essentially considered three points as noted in paragraph 8
of the impugned judgment. The same reads thus:
                                                                              D
      (i) Whether the sale of the secured asset in public auction as per
      section 13(4) of SARFAESI Act, which ended in issuance of a
      sale certificate as per rule 9(7) of the Security Interest
      (Enforcement) Rules, 2003 (in short “the rules”) is a complete
      and absolute sale for the purpose of SARFAESI Act or whether
      the sale would become final only on the registration of the sale        E
      certificate?
      (ii) Whether the action of the second respondent in not accepting
      the amounts paid by the borrowers and not cancelling the sale
      certificate before the registration of the sale is in derogation of
      section 60 of the Transfer of Property Act, in view of the Section      F
      37 of SARFAESI Act? And
      (iii) Whether section 35 of the SARFAESI Act has the effect of
      overriding section 37 of the SARFAESI Act?”
      While answering the first point, the Court observed thus:
                                                                              G
      “10.7 At the outset, it is to be stated that nothing survives in the
      notice dated 14.11.2005 to adjudicate, as, on the date of filing of
      the writ petitions, the entire proceedings under Section 13(4) of
      the Act have come to an end and become final, by issuance of
      sale certificate under sub-rule (7) of rule 9 of the rules on
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350               SUPREME COURT REPORTS                          [2019] 11 S.C.R.


A              06.01.2006. The writ petitions have been prepared and signed by
               the parties only on 19.01.2006. In such circumstances, the proper
               course for the borrowers would be to prefer an appeal before the
               Appellate Tribunal against the order of the Tribunal dated
               10.01.2006 under the provisions of the SARFAESI Act. The
               borrowers, however, have approached this court invoking Article
B
               226 of the Constitution of India.”
               And again, in paragraph No.10.9
               “10.9 In our considered view, the borrowers should have
               approached the secured creditor or the authorized officer before
C              the date fixed for sale and not after the sale, as provided under
               sub-section (8) to section 13 of the SARFAESI Act. As discussed
               earlier, only if the borrowers approach the secured creditor or the
               authorized officer before the date fixed for sale or transfer and
               tender or pay all the dues to the secured creditor, the Section
               creates a bar on the secured creditor or authorized officer to
D              proceed further with the proposed sale or transfer. In this case,
               admittedly, the date fixed for the sale was 19.12.2005. But, even
               according to the version of the borrowers, they approached the
               secured creditor only on 02.01.2006 in such circumstances, the
               contention of the learned counsel for the borrowers is without
E              any basis contrary and to the provisions contained in sub section
               (8) of Section 13 of the Act.”
            The Court then relied upon the decision of this Court in B. Arvind
      Kumar Vs. Govt. of India and Others1 and applying the principle
      underlying the said decision concluded that registration of sale certificate
F     was not essential. The Court observed thus:
               “10.17 The ratio laid down by the Division Bench of this court in
               Arumugham, S. & 2 others v. C.K.Venugopal Chetty & 5 others
               and the Supreme Court in B. Arvind Kumar vs. Government of
               India and others, referred supra, squarely applies to the case on
G              hand and we, therefore, have no incertitude to hold that the sale
               which took place on 19.12.2005 has become final when it is
               confirmed in favour of the auction purchaser and the auction
               purchaser is vested with rights in relation to the property purchased
               in auction on issuance of the sale certificate and he has become
      1
          (2007) 5 SCC 745
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        SHAKEENA & ANR. v. BANK OF INDIA & ORS.                                 351
               [A. M. KHANWILKAR, J.]

      the absolute owner of the property. Further, as held by the Division      A
      bench of this court in Arumugham, S. & 2 others v. C.K. Venugopal
      Chetty & 5 others and the Supreme Court in B. Arvind Kumar
      Vs. Government of India and others, referred supra, the sale
      certificate issued in favour of the appellant does not require any
      registration in view of section 17(2) (xii) of the Registration Act
                                                                                B
      as the same has been granted pursuant to the sale held in public
      auction by the authorized officer under SARFAESI Act.
       10.18 The finding of the learned Single Judge that the sale is not
      complete without registration of sale certificate, therefore, is not
      sustainable in law and the same is liable to be set aside.
                                                                                C
      10.19 If the argument of the borrowers that even after the issuance
      of the sale certificate, prior to registration, they are entitled to
      redeem the property is accepted, it would make the provisions of
      the SARFAESI Act redundant and the very object of the
      SARFAESI Act enabling the Banks and financial Institutions to
      realize long term assets, manage problems of liquidity, asset liability   D
      mismatch and to improve recovery of debts by exercising powers
      to take possession of securities, sell them and thereby reduce non
      performing assets by adopting measures for recovery and
      reconstruction would fail and would open a pandora’s box for the
      litigations upsetting the sale confirmed in favour of the bonafide        E
      auction purchasers, who invested huge money.
      10.20 In view of our finding on this point, we hold that the sale of
      the secured asset in public auction as per section 13(4) of
      SARFAESI Act, which ended in issuance of a sale certificate as
      per rule 9(7) of the Rules is a complete and absolute sale for the        F
      purpose of SARFAESI Act and same need not be registered under
      the provisions of the Registration Act.”
      While considering the second point, after noticing the Section 37
of the 2002 Act and Section 60 of the Transfer of Property Act, the
Court rejected the argument of the appellants for the following reasons:        G
      “11.4 We have more than one reasons to reject the said contention
      of the learned counsel for the borrowers.
      11.5.1 Firstly, as held by us, while answering point (i) the sale in
      this case has become absolute and complete on the date when
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352      SUPREME COURT REPORTS                           [2019] 11 S.C.R.


A     the sale was confirmed on the appellant/auction purchaser and he
      is vested with all the rights in relation to the property purchased
      by him in the public auction on issuance of sale certificate on
      06.01.2006, i.e., prior to the date on which the borrowers have
      approached the second respondent for repayment, contrary to
      the provisions of Section 13(8) of the SARFAESI Act.
B
      11.5.2 Secondly, the sale certificate issued in this case does not
      require any registration as per section 17(2) (xii) of the Registration
      Act, 1908 and our said view is fortified with the decisions of the
      Division bench of this Court in Arumugham, S. & 2 others v. C.K.
      Venugopal Chetty & 5 others and the Supreme Court in B. Arvind
C     Kumar vs. Government of India and others, referred supra.
      11.5.3.1 thirdly, it is true that the borrowers have the right of
      redemption as provided under Section 60 of the Transfer of
      Property Act, 1882, in view of Section 37 of SARFAESI Act and
      to substantiate the said stand, the learned counsel for the borrowers
D     relies on the decision of the Supreme Court in Narandas Karsondas
      vs. S.A. Kamtam and another, (1977) 3 SCC 247 wherein it is
      held that the mortgagor has a right to redemption unless the sale
      of the property was complete by registration in accordance with
      the provisions of the Registration Act.
E     11.5.3.2 With great respect, we are of the view that the decision
      of the Supreme Court in Narandas Karsondas vs. S.A. Kamtam
      and another, referred supra, is not applicable to the facts of this
      case. Even, as held by the Supreme Court in Narandas Karsondas
      vs. S.A. Kamtam and another, referred supra, the right of the
F     mortgagor to redemption continues only till such time the sale of
      the property was complete by registration. In this case, our finding,
      following the decision of the Division bench of this court in
      Arumugham, S. & 2 others vs. C.K. Venugopal Chetty & 5 others
      and the Supreme Court in B. Arvind Kumar vs. Government of
      India and others, referred supra, is that the sale in this case has
G     become absolute and complete by the issuance of sale certificate
      on 6.1.2006. Further, section 17(2) (xii) of the Registration Act,
      1908 does not require registration of a sale certificate granted to
      any purchaser of any property sold in public auction by a civil or
      revenue officer and it is the finding of the Supreme Court in B.
H     Arvind Kumar vs. Government of India and others, referred supra,
           SHAKEENA & ANR. v. BANK OF INDIA & ORS.                                353
                  [A. M. KHANWILKAR, J.]

         that the sale certificate issued by a civil or revenue officer in        A
         respect of a property sold in public auction does not fall under the
         category of non-testamentary documents which require registration
         under Sub-section (b) and (c) of Section 17(1) of the Registration
         Act 1908.
         11.5.4 Fourthly, the right to redeem the mortgage, as provided in        B
         section 60 of the Transfer of Property Act, is, of course, a very
         valuable right possessed by the mortgagor. At the same time, such
         a right to redeem the mortgage can be exercised before it is
         foreclosed, or the estate is sold. It has been held that the mortgagor
         can adopt the course provided under section 60 of the Transfer of
         Property Act only before the mortgage has filed a suit for               C
         enforcement of the mortgage and not thereafter, vide Poulose
         and another vs. State Bank of Travancore, AIR 1989 Kerala 79.
         In this case, as discussed earlier, the borrowers approached the
         second respondent/Bank only after initiation of the proceedings
         under Section 13(4) of the SARFAESI Act, and that too after the          D
         property was sold in public auction and the sale was confirmed in
         favour of the appellant.”
      The Court then proceeded to examine the third point and
considering the interplay between Sections 35 and 37 of the 2002 Act,
including the dictum in Mardia Chemicals Ltd. and Others Vs. Union                E
of India and Others2 went on to observe thus:
         “12.4 As per the section 37 of the SARFAESI Act, the provisions
         of this act shall be “in addition to” and “not in derogation of” any
         other law for the time being in force. There is no ambiguity in the
         understanding the legislative intent behind the framing of this          F
         section.
          12.5 On behalf of borrowers it is contended that a right of
         redemption available to them before the sale is completed by way
         of a registered deed under the Transfer of Property Act, a law for
         the time being in force, is not taken away by the introduction of        G
         the SARFAESI Act, by virtue of section 37 of the SARFAESI
         Act, as the provisions of the SARFAESI Act and the rules framed
         thereunder shall be in addition to and not in derogation of the right
         of redemption conferred under the transfer of property act. But,
2
    (2004) 4 SCC 311
                                                                                  H
354            SUPREME COURT REPORTS                          [2019] 11 S.C.R.


A           we have already rendered a finding that the registration of sale
            certificate as per section 17(2)(xii) of the Registration Act is not
            mandatory for the completion of the sale pursuant to the public
            auction and issuance of the sale certificate under the scheme of
            the SARFAESI Act. Assuming, the right of redemption conferred
            under the Transfer of Property act is protected under Section 37
B
            of the SARFAESI Act, and independently available without
            reference to the registration of the sale certificate under Section
            17(2)(xii) of the Registration Act, the sale already effected
            satisfying the conditions contemplated under Section 13(8) of the
            SARFAESI Act, shall by virtue of section 37 of the SARFAESI
C           Act, prevail over such other rights, much less the right of
            redemption conferred under transfer of property act, which is
            protected under section 37 of the SARFAESI Act, in view of the
            non obstante clause provided under section 35 of the SARFAESI
            Act, because a non obstante clause provided under section 35 of
            the SARFAESI Act makes it clear that even though there are
D
            inconsistencies to such other rights conferred under any other
            law for the time being in force that are protected under section 37
            of the SARFAESI Act, the action initiated under the provisions of
            the SARFAESI Act shall have the overriding effect as per section
            35 of the SARFAESI Act, because SARFAESI Act is a special
E           act which aims to accelerate the growth of economy of our country
            empowering the lenders, namely Nationalized Banks, Private Sector
            banks and other Financial Institutions to realize their dues from
            the defaulted borrowers who are very lethargic in repayment of
            the loans borrowed by them, by exercising their right of expeditious
            attachment and foreclosure for the enforcement of security and
F
            therefore, sections 35 and 37 of the SARFAESI Act have to be
            read conjointly to achieve the object of the SARFAESI Act, but
            not to defeat the same and therefore, we do not see any conflict
            between them.”
             On the above analysis, the Division Bench of the High Court
G     allowed the appeals filed by respondent No.3 and dismissed the writ
      petitions filed by the appellants.
             17. The appellants would contend that as per 2002 Act and Rules
      framed thereunder, the right of the mortgagor to redeem the mortgage
      gets extinguished only upon registration of the sale certificate, resulting
H
        SHAKEENA & ANR. v. BANK OF INDIA & ORS.                                355
               [A. M. KHANWILKAR, J.]

in transfer of the auctioned property. For that, reliance has been placed      A
on the exposition in Narandas Karsondas Vs. S.A. Kamtam and
Another3 and in particular in Mathew Varghese Vs. M. Amritha Kumar
and Others4. Reliance is also placed on a recent decision of this Court
(three Judge Bench) in Dwarika Prasad Vs. State of Uttar Pradesh
and Others5. The appellants have assailed the conclusion recorded in
                                                                               B
the impugned judgment that registration of sale certificate was not
essential on the ground that the same was based on a decision in B.
Arvind Kumar (supra), which had no application to the public auction
conducted under the provisions of the 2002 Act. On the other hand,
registration of sale certificate is the quintessence for transfer of the
auctioned property in favour of the auction purchaser. In that, the public     C
auction conducted under the 2002 Act by the secured creditor is not on
account of order of any court; and neither is the Authorised Officer a
Civil or Revenue Officer for the purposes of Section 17(2)(xii) of the
Registration Act. Reliance is placed on Rule 2(a) of the Enforcement
Rules, which defines Authorised Officer as an officer not less than a
                                                                               D
Chief Manager of a Public Sector Bank or equivalent, as specified by
the Board of Directors or Board of Trustees of the secured creditor or
any other person or authority exercising power of superintendence,
direction and control of the business or affairs of the secured creditor, as
the case may be, to exercise the rights of a secured creditor under the
2002 Act. Thus, the Authorised Officer is essentially an employee of the       E
bank and not a Civil or Revenue Officer as such. There is no deeming
provision in the 2002 Act or the Rules framed thereunder, to construe
the Authorised Officer of the bank as a civil or revenue officer for the
purpose of Section 17(2)(xii) of the Registration Act.
      18. It is then submitted that public auction of the subject property     F
has been conducted without a valuation report by an approved valuer as
required under the Enforcement Rules, 2002. Further, the reserve price
fixed by the respondent bank as Rs.40,00,000/- (Rupees Forty Lacs
Only) did not reflect the actual market value of the property on the date
of auction. The value ought to have been no less than Rs.2 Crores.
Reliance is placed on J. Rajiv Subramaniyan and Another Vs.                    G
Pandiyas and Others6 to contend that the secured creditor has a duty
3
  (1977) 3 SCC 247
4
  (2014) 5 SCC 610
5
  (2018) 5 SCC 491
6
  (2014) 5 SCC 651                                                             H
356               SUPREME COURT REPORTS                        [2019] 11 S.C.R.


A     to ensure that the borrower gets maximum yield from the sale of the
      assets, failing which the auction sale would vitiate. As regards the
      subsequent sale of subject property by respondent No.3 to third party, it
      is contended that the same is hit by the doctrine of lis pendens in terms
      of Section 52 of the Transfer of Property Act, 1882. Further, the
      subsequent purchaser is not a bonafide purchaser for consideration
B
      without notice; and in any case cannot be heard to resist the claim of the
      appellants which ought to succeed against the respondent bank and the
      auction purchaser (respondent No.3). Reliance is placed on T. Ravi
      and Another Vs. B. Chinna Narasimha and Others7 and Kirpal Kaur
      Vs. Jitender Pal Singh and Others8 to buttress the above submissions.
C     It is lastly contended that this Court, in the peculiar facts of the present
      case, must exercise powers under Article 142 of the Constitution of
      India to declare the subsequent sale of the mortgaged property as null
      and void and direct the concerned persons to immediately handover the
      vacant and peaceful possession thereof to the appellants.
D            19. The respondent No.1(bank) and respondent No.2 (Authorised
      Officer of the bank) would however, submit that the appellants failed to
      deposit the dues payable to the respondent bank in terms of Section
      13(8) of the 2002 Act as applicable at the relevant time and did not
      challenge the notice of auction before the date of auction despite sufficient
      opportunity was given to them in that behalf. Whereas, the auction was
E     conducted on 19th December, 2005 and respondent No.3 being the highest
      bidder was issued sale certificate on 6th January, 2006 upon payment of
      the consideration amount on 4th January, 2006. With issuance of sale
      certificate, it is urged that the sale transaction in favour of respondent
      No.3 had become final. According to the respondents Section 13(8) of
F     the 2002 Act, mandates tender of the dues by the debtor/borrower to the
      secured creditor at any time before the date fixed for sale which in this
      case was 19th December, 2005. Our attention was invited to the fact
      that sub-section (8) has undergone a change and has been made more
      stringent, requiring tender of dues to the secured creditor together with
      all costs, charges and expenses incurred by him at any time before the
G     “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.

      7
          (2017) 7 SCC 342
      8
          (2015) 9 SCC 356
H
           SHAKEENA & ANR. v. BANK OF INDIA & ORS.                             357
                  [A. M. KHANWILKAR, J.]

       20. It is then urged that the appellants had failed to make a valid     A
tender to pay the outstanding dues till the date of registration of the sale
certificate on 18th September, 2007. Indeed, the appellants had deposited
a sum of rupees twenty-five lac by 4th January, 2006, but that amount
was deposited in the account of the father of appellant No.2. Thus, the
respondent bank did not accept the same as a valid tender made by the
                                                                               B
appellants towards the loan accounts. Similarly, the cheques issued by
the appellants on 2nd January, 2006 in the sum of Rs.25,21,446/- (Rupees
Twenty-Five Lacs Twenty-One Thousand Four Hundred Forty-Six Only),
were of no avail not being a valid tender as per the agreed terms. The
third attempt was allegedly made by the appellants, to pay the dues in
the form of demand drafts for an aggregate amount of Rs.25,06,250/-            C
(Rupees Twenty-Five Lacs Six Thousand Two Hundred Fifty Only), on
18th January, 2006. That again is of no avail as the demand drafts were
drawn in the name of respondent No.2 i.e. Shri B. Jagathkumar
(Authorised Officer) instead of in the name of the respondent bank.
Hence, even this was not a valid tender. Notably, the appellants made no
                                                                               D
attempt to deposit the amount in their loan accounts until the impugned
decision was passed by the Division Bench including the date of
registration of sale certificate on 18th September, 2007. The sale in favour
of respondent No.3 stood complete and final on that day.
        21. It is urged that the exposition in the decisions pressed into
service by the appellants in Mathew Varghese (supra) and Dwarika               E
Prasad (supra), in fact, would go against the appellants. Further, the
High Court was right in concluding that the sale certificate issued in
favour of respondent No.3 did not require registration and that the sale
process was complete on issuance of the sale certificate on 6th January,
2006. For this, reliance has been placed on the dictum in B. Arvind            F
Kumar (supra). Additionally, reliance is placed upon the provisions of
Rule 65 of Schedule II of Income Tax Act, 1961 as applicable at the
relevant time. Lastly, it is contended that the appellants have failed to
avail alternative efficacious remedy against the order dated 10 th January,
2006 passed by the Debt Recovery Tribunal dismissing the proceedings
initiated by the appellants to challenge the action taken by the respondent    G
bank under Section 13(4) of the 2002 Act. It is urged that the appellants
should be non - suited on the basis of the dictum in Kanaiyalal Lalchand
Sachdev and Others Vs. State of Maharashtra and Others9.

9
    (2011) 2 SCC 782                                                           H
358             SUPREME COURT REPORTS                          [2019] 11 S.C.R.


A            22. The respondent No.3, besides supporting the view taken by
      the High Court in the impugned judgment, would additionally urge that
      the said respondent has paid the entire consideration amount, Rs.42,51,000/
      - (Rupees Forty-Two Lacs Fifty One Thousand Only), on 4th January,
      2006. Whereafter, the sale certificate was issued in his favour on 6 th
      January, 2006. The appellants, however, filed writ petitions only on 19th
B
      January, 2006. The appellants did not avail the option of redemption by
      tendering the dues to the respondent bank before the date fixed for sale
      or public auction which in this case was 19 th December, 2005.
      Furthermore, the legal notice issued at the instance of appellants also
      does not clearly indicate their intention to redeem the mortgage by closing
C     loan accounts and readiness and willingness to pay the entire dues. The
      tender made by the appellants was not a valid tender and no fault can be
      found with the respondent bank for having returned the cheques/drafts
      and not to encash the same. Further, after the High Court rendered the
      impugned decision on 10th August, 2007, the sale certificate has been
      duly registered on 18th September, 2007 and even until that date no valid
D
      offer or tender has been made by the appellants for payment of the
      outstanding dues to the respondent bank. The title of the subject property
      had already passed on to respondent No.3. Therefore, respondent No.3
      was within his rights to sell the property to a third party by a registered
      sale deed on 5th October, 2007. By not impleading the subsequent
E     purchaser, the civil appeals cannot proceed any further and no relief can
      be granted to the appellants.
             23. We have heard Dr. A. Francis Julian, leaned Senior Counsel
      for the appellants, Mr. Pranab Kumar Mullick, Advocate for respondent
      Nos.1 & 2 and Mr. K.K. Mani, Advocate for respondent No.3.
F            24. After cogitating over the factual matrix and perusing the
      relevant records, it is seen that the ground of challenge considered by
      the High Court at the behest of the appellants in the impugned judgment,
      in our opinion, has become unavailable. In that, the matter proceeded
      before the High Court for setting aside the entire auction process on the
G     premise that the sale certificate was yet to be registered in favour of the
      highest bidder (respondent No.3); and the appellants had made
      (unsuccessful) attempts to exercise their right of redemption by offering
      the outstanding dues to the respondent bank. It was argued by the
      appellants that only upon registration of the sale certificate, the right of
      the borrower to redeem the mortgage would get extinguished and
H     obliterated.
        SHAKEENA & ANR. v. BANK OF INDIA & ORS.                                  359
               [A. M. KHANWILKAR, J.]

       25. Indisputably, after the disposal of the writ appeals by the           A
Division Bench of the High Court vide impugned judgment on 10th August,
2007, the auction purchaser (respondent No.3) got the sale certificate
registered on 18th September, 2007 and then transferred the property by
a registered sale deed on 5th October, 2007 to third party. It is not the
case of the appellants that some interim injunction prohibiting respondent
                                                                                 B
No.3 from registering the sale certificate or transferring the suit property,
was operating against him after the decision of the Division Bench of
High Court. In fact, the impugned judgment was not even carried in
appeal before this Court by the appellants until then. The special leave
petitions came to be filed only on 13th October, 2007 and order of status
quo was passed by this Court on 23rd November, 2007. In other words,             C
there has been a paradigm shift in the rights of the parties upon registration
of the sale certificate on 18th September, 2007 and also because of the
registered sale deed in favour of third party on 5th October, 2007. The
contention pursued before the High Court by the appellants, therefore,
has now become unavailable.
                                                                                 D
        26. Be it noted that the appellants had allowed the action taken by
the respondent bank under Section 13(4) of the 2002 Act, to become
final consequent to the order of the DRT rejecting challenge thereto due
to non-compliance of the conditional order. Even the subsequent
application for restoration of the DRT proceedings came to be rejected.
The appellants then filed the subject Writ Petition (C) Nos.634-635 of           E
2006 on 19th January, 2006, by which date the auction had already
concluded including the sale certificate was issued in favour of the highest
bidder on 6th January, 2006. Moreover, the principal assertion of the
appellants before the High Court was that they were wanting to exercise
their right of redemption of mortgage, but due to fortuitous situation and       F
the inappropriate stand taken by the respondent bank were prevented
from doing so. No other plea was pursued by the appellants in support of
the reliefs claimed by them before the High Court, as can be discerned
from the three points formulated in paragraph No.8 of the impugned
judgment (reproduced in paragraph No.16 hereinabove). The appellants
cannot be permitted to assail the auction process on any other count.            G

      27. Reverting to the stand taken by the appellants that they had
attempted to exercise their right of redemption by depositing an aggregate
sum of Rupees Twenty Five Lacs on 30th December, 2005 and 4th January,
2006, in the account of the father of appellant No.2 followed by issuing
                                                                                 H
360             SUPREME COURT REPORTS                          [2019] 11 S.C.R.


A     cheque(s) in the aggregate sum of Rs.25,21,446/- (Rupees Twenty-Five
      Lacs Twenty-One Thousand Four Hundred Forty-Six Only), on 2nd
      January, 2006; and once again offering the amount by demand drafts in
      the sum of Rs.25,06,250/- (Rupees Twenty-Five Lacs Six Thousand
      Two Hundred Fifty Only), on 18th January, 2006. This stand though
      attractive at the first blush, will have to be stated to be rejected. On the
B
      other hand, we find substance in the stand taken by the respondent bank
      that none of the above was a valid tender so as to extricate or discharge
      the appellants from their obligation - to deposit the outstanding dues
      payable by them before the specified date. In that, the amount was
      allegedly deposited by them in the account of the father of appellant
C     No.2 and not in their loan accounts as such. Unless the amount was
      transferred/deposited in the loan accounts of the appellants in relation to
      which the mortgage operated, it would not be a valid tender for paying
      the outstanding dues. Similarly, on the second occasion the appellants
      attempted to pay in the form of cheque(s) issued on 2nd January, 2006.
      However, as per the terms and conditions for grant of loan payment by
D
      cheque(s) was not permissible. Thus, the respondent bank was not obliged
      to accept the amount in the form of cheque(s). The respondent bank,
      therefore, justly declined to accept the cheque(s), not being a valid tender.
      Even the third attempt made by the appellants was to offer demand
      drafts drawn in favour of or in the name of the Authorised Officer of the
E     respondent bank and not in the name of the bank or authorising the bank
      to appropriate it towards the subject loan accounts. Hence, these demand
      drafts were rightly not accepted as a valid tender.
             28. Notably, the appellants took no steps, whatsoever, to pay the
      outstanding dues to the respondent bank by way of a valid tender nor
F     moved any formal application before the High Court after filing of the
      writ petitions on 19 January, 2006, to permit them to deposit the requisite
      amount either in the concerned loan accounts or in the court. That was
      not done even until the disposal of the writ petitions by the Single Judge
      or during the pendency of the writ appeals before the Division Bench
      and until the disposal thereof vide the impugned judgment. We must also
G     notice the stand taken by the respondent bank that even the legal notice
      sent by the appellants to the respondent bank, in no way expresses
      unambiguous commitment of the appellants to exercise their right of
      redemption. Suffice it to observe that the appellants, for reasons best
      known to them, have not chosen to deposit the amount in the loan accounts
H     or attempted to seek permission of the Court to deposit the same in
        SHAKEENA & ANR. v. BANK OF INDIA & ORS.                                  361
               [A. M. KHANWILKAR, J.]

Court from 19th January, 2006 immediately after filing of writ petitions         A
or for that matter until the registration of the sale certificate on 18th
September, 2007. In this backdrop, it is not possible to countenance the
stand of the appellants that they had made a valid tender to the respondent
bank or that the respondent bank had mischievously or malafide rejected
their offer to defeat their rights, to redeem the mortgage before registration
                                                                                 B
of the sale certificate on 18th September, 2007.
       29. A fortiorari, it must follow that the appellants have failed to
exercise their right of redemption in the manner known to law, muchless
until the registration of the sale certificate on 18th September, 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           C
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 18th September, 2007. Therefore, it is not possible to
countenance the plea of the appellants to reopen the entire auction              D
process. This is moreso 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
18th September, 2007. Further, the amended Section 13(8) of the 2002
Act which has come into force w.e.f. 1st September, 2016, will now               E
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        F
way of lease assessment or sale of the secured assets. That event
happened before the institution of the subject writ petitions by the
appellants.
       30. Having said thus, in the peculiar facts of the present case, we
do not deem it necessary to dilate further on the argument that registration     G
of the sale certificate in relation to the auction conducted under the 2002
Act is essential. Similarly, it is not necessary to examine other grounds
urged by the appellants, in light of our conclusion that the appellants
have failed to make a valid and legal tender to the respondent bank

                                                                                 H
362              SUPREME COURT REPORTS                       [2019] 11 S.C.R.


A     before the issue of sale certificate on 6th January, 2006, muchless
      registration thereof on 18th September, 2007.
             31. For the view we have taken, it is not possible for us to
      countenance the argument of the appellants that we should exercise
      plenary powers under Article 142 of the Constitution of India. The
B     reported decisions pressed into service by both sides also need not detain
      us as the appellants have, in law, lost their option to exercise right of
      redemption, consequent to registration of the sale certificate on 18th
      September, 2007 and their failure to pay the dues to the secured creditors
      before that date.
C           32. Accordingly, these appeals must fail and same are dismissed
      with no order as to costs. Ordered accordingly.
             All applications are also disposed of in the above terms.


D     Devika Gujral                                             Appeals dismissed.




E




F




G




H