Punjab and Sind Bank vs Mohd. Haider & Anr

R. D. Khare, Chairperson

Learned counsel for the appellant submitted that the property in question has already been auctioned and sale certificate has been issued in favour of the auction purchaser, therefore, the right of redemption is not available to the borrower in view of Section 13(8) of the SARFAESI Act as well as the judgment passed by the Hon’ble Supreme Court in Celir Llp Vs. Bafna Motors (Mumbai) Pvt. Ltd. on 21.09.2023. It is, therefore, prayed that the order impugned may be set aside and the appeal may be allowed by remanding the matter back to the Tribunal below for deciding the S.A. filed by the respondent-borrower on merits.

Learned counsel for the respondent submitted that the order impugned is not with regard to the right of redemption and the appellant-Bank has neither filed any proof of service of demand notice, possession and auction sale notice before this Tribunal or before the Tribunal below, pursuant to which the property has been auctioned on 28.03.2024. It was further submitted that no reply has yet been filed by the Bank and the auction purchaser before the Tribunal. It was, therefore, contended that the Tribunal below has rightly granted the interim relief in favour of the respondent no. 1 vide order impugned, hence the same does not call for any interference by this Hon’ble Court. Hence, the appeal may be dismissed with costs.

Considered the rival contentions of the learned counsels for the parties and perused the record.

It appears that the present appeal has been field under Section 18 of the SARFAESI Act against an interlocutory order dated 12.09.2024 passed in S.A. No. 1070 of 2023 of the respondent no. 1, by which the status quo order has been granted directing the appellant-Bank to consider and dispose off the affidavit filed by the respondent no. 1-borrower.

The admitted fact is that the property in question has been auctioned by the Bank and the sale certificate has been issued in favour of the respondent no. 2-auction purchaser.

The controversy involved in the present case is, as to whether the borrower has right to redeem the property after publication of sale notice and auction of the property or not ?

The right of redemption has been given to the borrower by the SARFAESI Act under Section 13(8), which says as under:-

“Section 13(8) -Where the amount of dues of he 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”.

From the plain reading of the above section, it is clear that prior to amendment of Section 13(8) i.e. 01.09.2016, the right of redemption was available to the borrower till the transfer of the property or its registration and delivery of possession, but after amendment w.e.f. 01.09.2016, the right of redemption is available to the borrower before the date of publication of sale notice. In this regard, the Hon’ble Apex Court in Celir Llp Vs. Bafna Motors (Mumbai) Pvt. Ltd. (supra) has also held as under:-

“………… 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.”

In view of the above, undoubtedly, the right of redemption is available to the borrower only till the date of publication of notice under Rule 9(1) of the Rules, 2002.

With regard to the contention of the respondent no. 1-borrower that the order impugned is not pertaining to right of redemption, the para 6 of the affidavit dated 05.08.2024 of the respondent no. 1-borrower is relevant. The said paragraph says that “the deponent will deposit Rs. 50.00 lacs within a period of one week and after adjusting the said amount, the deponent will also deposit remaining outstanding of the Bank within a period of 15 days”. The Tribunal below vide order impugned has directed the Bank to consider and dispose off the affidavit containing the said averment and if the same is considered and decided favourably, definitely the same would be said to have given the right of redemption to the borrower, therefore, the Tribunal below ought not to have directed the Bank to consider the proposal of the borrower regarding payment of outstanding amount after completion of the sale of the property in question. Thus, the contention of the respondent-borrower that the order impugned is not with regard to the right of redemption is not tenable.

So far as the submissions that no proof of service of demand notice, possession notice and sale notice and non-filing of reply of S.A. are concerned, the same pertain to the merits of the case, which are yet to be decided by the Tribuanl below, therefore, it would not be appropriate for this Tribunal to express any opinion on the said issues.

In view of the discussions as held above, the Tribunal below has erred in directing the Bank to consider the affidavit of the respondent no. 1 and dispose off the same, by which the respondent no. 1-borrower has stated to deposit 50% of the outstanding amount within a week and remaining within 15 days. Hence, the order impugned is not sustainable and accordingly, the same is set aside. Consequently, the appeal is allowed and the Tribunal below is directed to consider and decide the S.A. No. 1070 of 2023 filed by the respondent no. 1, which is stated to be pending, in accordance with law most expeditiously preferably within three months from the date of production of certified copy of this order.