SARFAESI | Borrower's Right Of Redemption Available Only Till Notice For Sale Of Mortgaged Asset Is Published : Supreme Court

The Supreme Court has stated that the right of a borrower to redeem the secured asset can be exercised only till a notice for the sale of the mortgaged property is published in terms of Rule 9(1) of the Security Interest (Enforcement) Rules, 2002.

The Court observed that till the 2016 amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), the borrower had the right to redeem the mortgaged property till the sale or transfer of such secured asset. However, after the amendment to Section 13(8) of the SARFAESI Act, the right of redemption can be exercised only till the publication of sale notice.

A bench comprising Justice BV Nagarathna and Justice NK Singh made these observations while setting aside a Delhi High Court's judgment which cancelled the auction sale of a secured asset. The bench noted that the bank had granted ample opportunities to the borrower to redeem the mortgage by clearing the dues. The Court reminded that the right of redemption is not unfettered.

"The counsel for respondent No.2 vehemently argued that respondent No.2 has to have the right of redemption of the property on payment of the dues. However, this right is not unfettered and there is a statutory limitation prescribed to it. 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. Subsequent to the amendment in 2016, the right of redemption available to the borrower would be available only till the date of publication of the notice under Rule 9(1) of the Security Interest (Enforcement) Rules, 2002," the bench observed.

Also from the judgment- Until Sale Deed Is Registered, Ownership Of Immovable Property Isn't Transferred : Supreme Court

Sale By Way Of Public Auction Can't Be Set Aside Unless There's Material Irregularity Or Fraud/Collusion : Supreme Court

Case Title : Sanjay Sharma v. Kotak Mahindra Bank Ltd.

Related reports - SARFAESI Act | Borrower's Right To Redeem Mortgage Extinguishes Once Bank Publishes Auction Notice For Secured Asset: Supreme Court

SARFAESI Act | As per Unamended S.13(8), Borrower Has Right To Redeem Available Till Sale Certificate Is Registered & Possession Is Handed Over : Supreme Court