Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – s. 13 (8) – Right to redemption – Extinguishment of – Held: s. 13(8) mandates that it is only where the dues of the secured creditor are tendered together with costs, charges and expenses before the date fixed for sale or transfer that the secured asset is not to be sold or transferred – On facts, appellant guarantor to sanctioned loan, created an equitable mortgage in respect of immovable property and the said property was auctioned by the bank – Appellant was aware of the proceedings initiated by the bank for asserting its right to recover its dues by selling the property – While appellant deposited an amount of Rs 7,00,000/- with the bank, but failure to deposit the balance in accordance with the provisions of s.13(8) – Even after the writ proceedings before the High Court was withdrawn, appellant did not deposit the balance due together with the costs, charges and expenses – Sale was confirmed and registered sale deed was executed – Thus, the right to redemption stood extinguished on the execution of the registered sale deed – However, appellant to be refunded the deposit of Rs 7,00,000/- with interest at 9% p.a.
The issue arose for consideration whether the right of the appellant-mortgagor to redeem the property survives on the execution of the registered sale deed.
Disposing of the appeal, the Court
HELD : The appellant failed to comply with the provisions of Section 13(8) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The statute mandates that it is only where the dues of the secured creditor are tendered together with costs, charges and expenses before the date fixed for sale or transfer that the secured asset is not to be sold or transferred. The appellant was aware of the proceedings initiated by the bank for asserting its right to recover its dues by selling the property. The appellant moved the DRT in Securitization Application. During the pendency of those proceedings, orders were passed by the Tribunal on 1 February 2016 and 3 February 2016. The appellant moved the High Court which restrained the bank and the auction purchaser from executing the sale deed until 15 March 2016. The stay was extended till 28 March 2016 by which date the appellant was to deposit an amount of Rs 7,00,000/-. The balance was required to be deposited by 30 April 2016. While appellant deposited an amount of Rs 7,00,000/- with the bank, he failed to deposit the balance in accordance with the provisions of Section 13(8). Even after the writ proceedings before the High Court was withdrawn, the appellant did not deposit the balance due together with the costs, charges and expenses. The sale was confirmed, a sale certificate was issued and a registered sale deed was executed on 12 April 2016. The right to redemption stands extinguished on the execution of the registered sale deed. The appellant, is however, entitled to a refund of his deposit of Rs 7,00,000/- with interest at 9% per annum from the date of deposit till payment. [Para 6, 7] [35-B-G]
Mathew Varghese v M. Amritha Kumar [2014] 2 SCR
736 : (2014) 5 SCC 610 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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