Supreme Court Clarifies Amended Section 13(8) SARFAESI Act; Right of Redemption Extinguished Upon Notice Publication.

Supreme Court Reaffirms Bafna Motors Ratio, Curtails Borrower's Right of Redemption Under Amended SARFAESI Act while it adjudicated two analogous civil appeals (Civil Appeal Nos. 12174 and 12175 of 2025) arising out of Madras High Court judgment dated April 24, 2023.

The dispute involved M. Rajendran & Ors. (Auction Purchasers/Appellants) and M/S KPK Oils and Protiens India Pvt. Ltd. & Ors. (Original Borrowers/Respondents). The borrowers had defaulted on cash credit facilities availed in 2016, leading the Bank (Respondent No. 5) to classify the account as a Non-Performing Asset (NPA) on December 31, 2019, and subsequently issue a Section 13(2) notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

After the said notice, bank secured the asset, and successfully auctioned it to the appellants on February 26, 2021, and a Sale Certificate was issued on March 22, 2021. Despite the sale's completion and the loan account eventually being closed by the borrowers' subsequent payments, the Bank refused to permit redemption of the sold asset.

The borrowers bypassed the statutory appeal remedy before the Debt Recovery Appellate Tribunal (DRAT) and challenged the Sale Certificate via a Writ Petition before the High Court. The High Court, relying on the pre-amendment interpretation in Mathew Varghese v. Amritha Kumar and Ors., and allowed the writ petition and permitted the borrowers to redeem the mortgage, directing the Auction Purchasers be refunded their purchase price plus 9% interest.

While setting aside the High Court’s judgment and quashing the direction permitting the borrowers to redeem the property the Supreme Court relied heavily on judgment in case of Celir LLP v. Bafna Motors (Mumbai) Private Ltd.. The bench held that the High Court committed an egregious error by entertaining the writ petition when an alternative statutory remedy was available.

The Apex Court held that the amended Section 13(8) of the SARFAESI Act drastically curtails the borrower's right of redemption, which now stands extinguished on the date of publication of the notice for public auction or inviting quotations, tenders, or private treaty. That the amended Section 13(8) constitutes a departure from the general right of redemption under Section 60 of the Transfer of Property Act; in this situation of inconsistency, the SARFAESI Act, being a special law, must override the general law.

on the "Retrospective Application" of the amendment, the Apex Court held that Section 13(8) applies retrospectively to all claims that were alive when the provision came into effect (September 1, 2016), furthering the SARFAESI Act’s remedial object of speedy recovery. The borrower's contention that the right must be construed based on the original loan date is "completely misconceived".

The Court confirmed that the decisions of the Andhra Pradesh and Telangana High Courts in Sri Sai Annadhatha Polymers and K.V.V. Prasad Rao Gupta lay down the correct position of law, while the views expressed in Amme Srisailam, Concern Readymix, and Pal Alloys are overruled.

Supreme Court held that the Rules 8(6), 8(7), and 9(1) of the SARFAESI Rules mandate only one single composite "notice of sale" which must be served, published, affixed, and uploaded. The distinction lies only in the manner of giving the notice, not in requiring separate notices.

Furthermore, The expression "before the date of publication" in Section 13(8) must be understood to mean the expiry of thirty days as required under Rule 9(1), reckoned from the date the secured creditor complies with all required steps of giving the notice of sale (service, publication, affixation, uploading), whichever is later.

On the Judicial Restraint, Supreme Court observed that the High Court was not justified in exercising its writ jurisdiction under Article 226 when the borrowers had already availed the alternative remedy under Section 17 of the SARFAESI Act (DRT), additionally the courts cannot apply equitable considerations to overreach the outcome mandated by the statutory auction process.

The Court expressed deep regret that the "glaring anomaly" and "ill-wording" of Section 13(8) and the SARFAESI Rules still persist, and urged the Ministry of Finance to bring about necessary legislative amendments.

In conclusion, the Supreme Court reaffirmed that the 2016 amendment to Section 13(8) of the SARFAESI Act drastically curtailed the borrower's right of redemption. This right now extinguishes on the date of publication of the notice for public auction, quotation, tender, or private treaty, not upon the subsequent registration of the sale certificate, as was the position prior to the amendment.

Coram: Justice J.B. Pardiwala and Justice R. Mahadevan.