Supreme Court holds redemption right under amended S.13(8) SARFAESI ends on publication of sale notice; High Court order set aside

A bench of Justice J.B. Pardiwala and Justice R. Mahadevan heard appeals against a Madras High Court order that quashed a bank’s sale certificate and permitted borrowers to redeem mortgaged land after an auction. The appeals arose from rival contentions over the scope of amended Section 13(8) of the SARFAESI Act (2016 Amendment), the meaning of “date of publication of notice” and the procedural interplay of Rules 8 and 9 of the SARFAESI Rules for sale of immovable secured assets.

The Court allowed the auction-purchasers’ appeals and set aside the High Court judgment. It held that the 2016 amendment materially curtailed a borrower’s right of redemption: once the secured creditor validly published the notice for sale (in the form required by the Rules for the chosen mode of transfer), the borrower’s statutory right to redeem under Section 13(8) stood extinguished. The Court explained the SARFAESI scheme, the Rule 8(5) modes of sale (quotations, tenders, public/e‑auction, private treaty) and that Rule 8(6) (service to borrower) together with the proviso (publication where auction/tender is used), Rule 8(7) (affixation/upload) and Rule 9(1) (minimum 30‑day period before sale) form a single composite notice regime which can be served and published simultaneously. The Court rejected the view that different modes attract different redemption cut‑off rules and declined to treat Rule 9(1) as imposing a separate second notice. The Court, in its reasoning, observed: Background The respondents (Original Borrowers) had obtained bank finance in January 2016 and created equitable mortgages over immovable properties, including a 1.92‑acre vacant land. The account became NPA in December 2019; the bank issued statutory notices under Section 13 and took constructive/physical possession. The bank issued an auction sale notice in January 2021; the appellants (auction purchasers) successfully bid in February 2021, deposited the sale price and the bank issued a sale certificate in March 2021. The borrowers challenged the possession/sale before DRT and then filed a writ petition in the Madras High Court without exhausting the statutory appeal, seeking to redeem the mortgage by tendering dues. The High Court accepted the borrowers’ plea, quashed the sale certificate of 22.03.2021 and directed refund to the auction purchasers (with interest), relying on precedent including Mathew Varghese that had applied the general right of redemption under Section 60, Transfer of Property Act. The bank and auction‑purchasers appealed to this Court.

The Supreme Court reviewed legislative history and conflicting High Court precedents after the 2016 Amendment. It reiterated the SARFAESI Act’s object to enable expeditious recovery: as the judgment noted, the Act sought to avoid delays that “resulted in slow pace of recovery of defaulting loans and mounting levels of non‑performing assets.” The Court held that Section 13(8) must be read with Rules 8 and 9 as a single notice regime: the “date of publication” in Section 13(8) meant the valid publication/serving/affixation/upload required by the Rules for the chosen mode, and the 30‑day period runs from whichever act (service, affixation or publication) is later. The Court further rejected arguments that the 2016 amendment was inapplicable to loans sanctioned before its commencement, holding the amended provision governs tendering after the amendment’s date where the notice/publication occurred post‑amendment. Applying these principles to the facts, the Court found the auction notice dated 22.01.2021 extinguished the borrowers’ right to redeem thereafter and therefore the High Court erred in quashing the sale certificate.

Result: both Civil Appeals were allowed, the Madras High Court order of 24.04.2023 was set aside, and the sale certificate and auction purchaser rights were restored. The Court directed the registry to circulate the judgment and urged administrative review of drafting anomalies in the SARFAESI provisions.

Case Details: Case No.: Civil Appeal Nos. 12174–12175 of 2025 (Arising out of SLP (C) Nos. 11068 of 2023 and 14696 of 2023) Case Title: M. Rajendran & Ors. v. M/s KPK Oils and Protiens India Pvt. Ltd. & Ors. Appearances: For the Petitioner(s): Ms. Praveena Gautam (counsel for auction purchasers) For the Respondent(s): Mr. Huzefa Ahmedi (counsel for borrowers)