# CASE DETAILS CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT. LTD. & ORS

- **Citation:** 2023 INSC 838
- **Court:** Supreme Court of India
- **Decided:** 2023-09-21
- **Case number:** Civil Appeal Nos. 5542 - 5543 of 2023
- **Bench:** Dr. Dhananjaya Y. Chandrachud, J. B. Pardiwala
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/case-details-celir-llp-v-bafna-motors-mumbai-pvt-ltd-ors-36636
- **Pages:** 99

## Headnote

Issues for consideration:
The present appeals by the appellant-auction purchaser were
against the judgment passed by the High Court by which it allowed
the writ petition filed by respondent no.1-borrowers and directed the
respondent no.3-Bank to permit the borrowers to redeem the mortgage
of the secured asset after the auction proceedings had attained finality.
The questions for consideration were:-
1. Whether the High Court was justified in exercising its writ
jurisdiction under Article 226 of the Constitution more particularly
when the alternative remedy available to the Borrowers had already
been availed of.
2. Whether the confirmation of sale by the Bank under Rule 9(2) of
the Security Interest (Enforcement) Rules, 2002 invests the successful
auction purchaser with a vested right.
3. What is the impact of the amended Section 13(8) of the
Securitization and Reconstruction of Financial Assets and Enforcement
of Securities Interest Act, 2002 (SARFAESI Act) on the Borrowers'
right of redemption in an auction conducted under the SARFAESI Act.
What is the effect of amendment to Section 13(8) of the SARFAESI
Act read with Section 60 of the Transfer of Property Act, 1882.
4. Whether a Bank after having confirmed the sale under Rule
9(2), can withhold the sale certificate under Rule 9(6) of the Rules of
2002 and enter into a private arrangement with a borrower.
SUPREME COURT REPORTS
[2023] 13 S.C.R.
54
5. Whether the High Court under Article 226, could have applied
equitable considerations to override the outcome contemplated by the
statutory auction process prescribed by the SARFAESI Act.
6. Whether the right of redemption of mortgage stood extinguished
upon publication of notice of auction. Till what point of time the right
of redemption of mortgage can be exercised in respect of secured asset
under the SARFAESI Act.
Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002 (SARFAESI Act) -
s.17 - Constitution of India - Art. 226 - Exercise of writ jurisdiction
u/ Art.226 of the Constitution when alternative remedy u/s.17 of
SARFAESI Act already availed by the borrower - If justifi ed.
Held: The Supreme Court has time and again, reminded the High
Courts that they should not entertain petition under Article 226 of the
Constitution if an eff ective remedy is available to the aggrieved person
under the provisions of the SARFAESI Act - In the present case, the
High Court was not justifi ed in exercising its writ jurisdiction under
Article 226 of the Constitution more particularly when the borrowers had
already availed the alternative remedy available to them under s.17 of the
SARFAESI Act. [Paras 92, 105]
Security Interest (Enforcement) Rules, 2002 - r.9(2) - Whether
the confi rmation of sale by the Bank under r.9(2) invests the successful
auction purchaser with a vested right.
Held: The confi rmation of sale by the Bank under Rule 9(2) of the
Rules of 2002 invests the successful auction purchaser with a vested right
to obtain a certifi cate of sale of the immovable property in form given
in appendix (V) to the Rules i.e., in accordance with Rule 9(6) of the
SARFAESI. [Para 105]
Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002 (SARFAESI Act) -
ss.13(8) and 35 - Transfer of Property Act, 1882 - s.60 - Impact
of amended s.13(8) of SARFAESI Act on the Borrowers' right of
redemption in an auction conducted under the SARFAESI Act - Eff ect
of amendment to s.13(8) of SARFAESI Act r/w s.60 of the Transfer
of Property Act, 1882.
Mortgage - Right of redemption of mortgage.
55
Held: 1. In accordance with 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 - The borrower's
right of redemption did not stand terminated on the date of the auction
sale of the secured asset itself and remained alive till the transfer was
completed in favour

## Text

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[2023] 13 S.C.R. 53 : 2023 INSC 838
53
CASE DETAILS
CELIR LLP
v.
 BAFNA MOTORS (MUMBAI) PVT. LTD. & ORS.
(Civil Appeal Nos. 5542 - 5543 of 2023)
SEPTEMBER 21, 2023
[DR. DHANANJAYA Y. CHANDRACHUD, CJI AND
J. B. PARDIWALA, J.]
HEADNOTES
Issues for consideration:
The present appeals by the appellant-auction purchaser were
against the judgment passed by the High Court by which it allowed
the writ petition filed by respondent no.1-borrowers and directed the
respondent no.3-Bank to permit the borrowers to redeem the mortgage
of the secured asset after the auction proceedings had attained finality.
The questions for consideration were:-
1. Whether the High Court was justified in exercising its writ
jurisdiction under Article 226 of the Constitution more particularly
when the alternative remedy available to the Borrowers had already
been availed of.
2. Whether the confirmation of sale by the Bank under Rule 9(2) of
the Security Interest (Enforcement) Rules, 2002 invests the successful
auction purchaser with a vested right.
3. What is the impact of the amended Section 13(8) of the
Securitization and Reconstruction of Financial Assets and Enforcement
of Securities Interest Act, 2002 (SARFAESI Act) on the Borrowers'
right of redemption in an auction conducted under the SARFAESI Act.
What is the effect of amendment to Section 13(8) of the SARFAESI
Act read with Section 60 of the Transfer of Property Act, 1882.
4. Whether a Bank after having confirmed the sale under Rule
9(2), can withhold the sale certificate under Rule 9(6) of the Rules of
2002 and enter into a private arrangement with a borrower.
SUPREME COURT REPORTS
[2023] 13 S.C.R.
54
5. Whether the High Court under Article 226, could have applied
equitable considerations to override the outcome contemplated by the
statutory auction process prescribed by the SARFAESI Act.
6. Whether the right of redemption of mortgage stood extinguished
upon publication of notice of auction. Till what point of time the right
of redemption of mortgage can be exercised in respect of secured asset
under the SARFAESI Act.
Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002 (SARFAESI Act) -
s.17 - Constitution of India - Art. 226 - Exercise of writ jurisdiction
u/ Art.226 of the Constitution when alternative remedy u/s.17 of
SARFAESI Act already availed by the borrower - If justifi ed.
Held: The Supreme Court has time and again, reminded the High
Courts that they should not entertain petition under Article 226 of the
Constitution if an eff ective remedy is available to the aggrieved person
under the provisions of the SARFAESI Act - In the present case, the
High Court was not justifi ed in exercising its writ jurisdiction under
Article 226 of the Constitution more particularly when the borrowers had
already availed the alternative remedy available to them under s.17 of the
SARFAESI Act. [Paras 92, 105]
Security Interest (Enforcement) Rules, 2002 - r.9(2) - Whether
the confi rmation of sale by the Bank under r.9(2) invests the successful
auction purchaser with a vested right.
Held: The confi rmation of sale by the Bank under Rule 9(2) of the
Rules of 2002 invests the successful auction purchaser with a vested right
to obtain a certifi cate of sale of the immovable property in form given
in appendix (V) to the Rules i.e., in accordance with Rule 9(6) of the
SARFAESI. [Para 105]
Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002 (SARFAESI Act) -
ss.13(8) and 35 - Transfer of Property Act, 1882 - s.60 - Impact
of amended s.13(8) of SARFAESI Act on the Borrowers' right of
redemption in an auction conducted under the SARFAESI Act - Eff ect
of amendment to s.13(8) of SARFAESI Act r/w s.60 of the Transfer
of Property Act, 1882.
Mortgage - Right of redemption of mortgage.
55
Held: 1. In accordance with 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 - The borrower's
right of redemption did not stand terminated on the date of the auction
sale of the secured asset itself and remained alive till the transfer was
completed in favour of the auction purchaser, by registration of the sale
certifi cate and delivery of possession of the secured asset - However,
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 eff ect, 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. [Para 105]
2. The SARFAESI Act is a special law containing an overriding clause
in comparison to any other law in force - Section 60 of the Transfer of
Property Act, 1882, is a general law vis-a-vis the amended Section 13(8) of
the SARFAESI Act which is special law - The right of redemption is clearly
restricted till the date of publication of the sale notice under the SARFAESI
Act, whereas the said right continues under Section 60 of the Act 1882 till the
execution of conveyance of the mortgaged property - The SARFAESI Act
is a special law of recovery with a paradigm shift that permits expeditious
recovery for the banks and the fi nancial institutions without intervention
of Courts - Similarly, Section 13(8) of the SARFAESI Act is a departure
from the general right of redemption under the general law i.e. the Act
1882 - Further, the legislature has in the objects and reasons while passing
the amending Act specifi cally stated "to facilitate expeditious disposal of
recovery applications, it has been decided to amend the said Acts...." - Thus,
while interpreting Section 13(8) vis-à-vis Section 60 of the Act 1882, an
interpretation which furthers the said object and reasons should be preferred
and adopted - If the general law is allowed to govern in the manner as sought
to be argued by the borrowers, it will defeat the very object and purpose as
well as the clear language of the amended Section 13(8) - In the light of
clear inconsistency between Section 13(8) of the SARFAESI Act and Section
60 of the Act 1882 the former special enactment overrides the latter general
enactment in light of Section 35 of the SARFAESI Act - Thus, the right of
redemption of mortgage is available to the borrower under the SARFAESI
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT.
LTD. & ORS.
SUPREME COURT REPORTS
[2023] 13 S.C.R.
56
Act only till the publication of auction notice and not thereafter, in light of
the amended Section 13(8). [Paras 64 and 68]
Security Interest (Enforcement) Rules, 2002 - r.9(2) and r.9(6)
- Whether a Bank after having confi rmed the sale under r.9(2), can
withhold the sale certifi cate u/r.9(6) and enter into a private arrangement
with a borrower.
Held: The Bank after having confi rmed the sale under Rule 9(2) of the
Rules of 2002 could not have withhold the sale certifi cate under Rule 9(6)
of the Rules of 2002 and enter into a private arrangement with a borrower.
[Para 105]
Constitution of India - Art. 226 - Scope u/Art. 226, to apply equitable
considerations to override the outcome contemplated by the statutory
auction process prescribed by the SARFAESI Act - Securitization and
Reconstruction of Financial Assets and Enforcement of Securities Interest
Act, 2002 (SARFAESI Act).
Held: The High Court under Article 226 of the Constitution could not
have applied equitable considerations to overreach the outcome contemplated
by the statutory auction process prescribed under the SARFAESI Act. [Para
105]
The Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 - s.13(8) - Interpretation of.
Auction - Auction process under the SARFAESI Act.
Auction - Public Auction - Sanctity of - Courts ought to be loath
in interfering with auctions.
Held: As per the amended Section 13(8) of the SARFAESI Act, once
the borrower fails to tender the entire amount of dues with all cost & charges
to the secured creditor before the publication of auction notice, his right of
redemption of mortgage shall stand extinguished / waived on the date of
publication of the auction notice in the newspaper in accordance with Rule
8 of the Rules of 2002 - It is the duty of the courts to zealously protect the
sanctity of any auction conducted - The courts ought to be loath in interfering
with auctions, otherwise it would frustrate the very object and purpose behind
auctions and deter public confi dence and participation in the same - Any
other interpretation of the amended Section 13(8) will lead to a situation
where multiple redemption off ers would be encouraged by a mischievous
borrower, the members of the public would be dissuaded and discouraged
57
from in participating in the auction process and the overall sanctity of the
auction process would be frustrated thereby defeating the very purpose of
the SARFAESI Act - Thus, it is in the larger public interest to maintain the
sanctity of the auction process under the SARFAESI Act. [Paras 86, 87 and 88]
Equity - Law and Equity - Relationship.
Held: Equity cannot supplant the law - Equity has to follow law, if
the law is clear and unambiguous. [Para 104]
LIST OF CITATIONS AND OTHER REFERENCES
Concern Readymix, rep. by its Proprietor, Smt. Y. Sunitha v. Authorised
Offi cer, Corporation Bank and Anr. 2018 SCC OnLine Hyd 783; M/s Pal
Alloys and Metal India Private Limited & Ors. v. Allahabad Bank & Ors.
2021 SCC OnLine P&H 2733; Amme Srisailam v. Union Bank of India,
Regional Offi ce, Guntur, rep. by its Region Head & Deputy General
Manager, Andhra Pradesh & Ors., W.P. No. 11435 of 2021 (Decision of
Telangana High Court dated 17.08.2022) - held not correct law.
Sai Annadhatha Polymers & Anr. v. Canara Bank rep. by its Branch
Manager, Mandanapalle 2018 SCC OnLine Hyd 178; K.V.V. Prasad Rao
Gupta v. State Bank of India 2021 SCC OnLine TS 328 - held correct law.
Mathew Varghese v. M. Amritha Kumar and Ors., (2014) 5 SCC 610
: [2014] 2 SCR 736; Shakeena and Anr. v. Bank of India and Ors. (2021)
12 SCC 761 : [2019] 11 SCR 341; S. Karthik & Ors. v. N. Subhash Chand
Jain & Ors., (2022) 10 SCC 641 - explained.
Varimadugu OBI Reddy v. B. Sreenivasulu & Ors. (2023) 2 SCC
168; Authorised Offi cer State Bank of India v. C. Natarajan and Anr. 2023
SCC OnLine SC 510; Narandas Karsondas v. S.A. Kamtam and Another
(1977) 3 SCC 247 : [1977] 2 SCR 341; Embassy Hotels Private Ltd. v.
Gajraj and Company & Ors. (2015) 14 SCC 316 : [2014] 14 SCR 603;
Maharashtra University of Health Sciences v. Satchikitsa Prasarak Mandal
(2010) 3 SCC 786 : [2010] 3 SCR 91; National Spot Exchange Ltd. v.
Anil Kohli, Resolution Professional for Dunar Foods Ltd. (2022) 11 SCC
761; Mardia Chemicals Ltd. & Ors. v. Union of India & Ors. (2004) 4
SCC 311 : [2004] 3 SCR 982; Madras Petrochem Ltd. & Anr. v. Board for
Industrial and Financial Reconstruction & Ors. (2016) 4 SCC 1 : [2016]
11 SCR 419; L.K. Trust v. EDC Limited and Others (2011) 6 SCC 780 :
[2011] 7 SCR 569; Dwarika Prasad v. State of Uttar Pradesh (2018) 5
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT.
LTD. & ORS.
SUPREME COURT REPORTS
[2023] 13 S.C.R.
58
SCC 491 : [2018] 3 SCR 29; Allokam Peddabbayya & Anr. v. Allahabad
Bank & Ors. (2017) 8 SCC 272 : [ 2017] 8 SCR 121; Arce Polymers Pvt.
Ltd. v. Alpine Pharmaceuticals Pvt. Ltd. & Ors. (2022) 2 SCC 221; M.D.
Frozen Foods Exports Private Limited & Ors. v. Hero Fincorp Limited
(2017) 16 SCC 741 : [2017] 13 SCR 800; Vishal N. Kalsaria v. Bank of
India & Ors. (2016) 3 SCC 762 : [2016] 1 SCR 419; Valji Khimji and
Company v. Offi cial Liquidator of Hindustan Nitro Product (Gujarat) Ltd.
and Ors. (2008) 9 SCC 299 : [2008] 12 SCR 1; K. Kumara Gupta v. Sri
Markendaya and Sri Omkareswara Swamy Temple & Ors. (2022) 5 SCC
710; Eva Agro Feeds Private Limited v. Punjab National Bank & Anr.
2023 SCC OnLine SC 1138; United Bank of India v. Satyawati Tondon
& Ors. (2010) 8 SCC 110 : [2010] 9 SCR 1; Commissioner of Income
Tax & Ors. v. Chhabil Dass Agarwal (2014) 1 SCC 603; Phoenix ARC
Private Limited v. Vishwa Bharati Vidya Mandir & Ors. (2022) 5 SCC
345; Sadashiv Prasad Singh v. Harendar Singh & Ors. (2015) 5 SCC 574
: [2014] 1 SCR 249 - referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5542-5543
of 2023.
From the Judgment and Order dated 17.08.2023 of the High Court
of Judicature at Bombay in CWP No.9523 of 2023 and IA(ST) No.21706
of 2023.
Appearances:
Mukul Rohatgi, Neeraj Kishan Kaul, Sr. Advs., Mahesh Agarwal,
Rishi Agrawala, Ankur Saigal, Ms. Anwesha Padhi, Chirag Nayak, Robin
Fernandes, Ms. Diksha Rai, Kunal Mehta, Ms. Ira S. Mahajan, Ms. Roopali
Lakhotia, E.C. Agrawala, Advs. for the Appellant.
Shyam Divan, Nikhil Nayyar, Sr. Advs., Omkar Kanegaonkar,
Shreeyash Uday Lalit, Devashish Godbole, Anuj Joglekar, Ishaan George,
Abhinav Aggarwal, Krishnagopal Abhay, Ms. Runjhun Garg, Himanshu
Vats, Advs. for the Respondents.
59
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
J. B. PARDIWALA, J.
For the convenience of the exposition, this judgment is divided in the
following parts:
A. Factual Matrix........................................................................
3-10*
B. Submissions on behalf of the Appellant .............................. .........10-13*
C. Submissions on behalf of the Borrowers............................. ..........13-23*
D. Questions of Law falling for the determination of
 the Court ...........................................................................................23-24*
E. Legislative History and Scheme of the SARFAESI
 Act.................. ....................................................................................24-45*
F. Redemption of Mortgage under Section 60 of the Transfer of
 Property Act, 1882 ............................................................................45-49*
G. Redemption of Mortgage under the SARFAESI
 Act...................... ...............................................................................49-68*
H. Eff ect of the Amendment to Section 13(8) of the SARFAESI
 Act... ..................................................................................................69-80*
I. Why the decision of the Telangana High Court in the case of
Amme Srisailam v. Union Bank of India, Regional Offi ce, Guntur,
 rep. by its Region Head & Deputy General Manager, Andhra
 Pradesh & Ors., W.P. No. 11435 of 2021, is not a good
 law? ...................................................................................................80-93*
J. Sanctity of Public Auction................................................... ...........93-97*
K. Exercise of Extraordinary Jurisdiction by the High Court under
 Article 226 of the Constitution in SARFAESI matters....... .........97-103*
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT.
LTD. & ORS.
*Ed. Note: The pagination as per the original Judgment.
SUPREME COURT REPORTS
[2023] 13 S.C.R.
60
L. Conduct of the Bank...........................................................103-108*
M. Summary of the Final Conclusion................................... 108-111*
1. Since the issues raised in both the captioned appeals are same,
the parties are also the same and the challenge is also to the self-same
judgment and order passed by the High Court those were taken up for
hearing analogously and are being disposed of by this common judgment
and order.
2. For the sake of convenience, we clarify that the appellant herein is
an auction purchaser, the respondent No. 1 is the Borrower, the respondent
No. 2 is the Guarantor and the respondent No. 3 is the Bank (Secured
Creditor).
3. These appeals are at the instance of an auction purchaser left high
and dry by the respondents herein and is directed against the common
judgment and order passed by the High Court of Judicature at Bombay in
Writ Petition No. 9523 of 2023 with Interim Application (ST) No. 21706
of 2023 (for impleadment) by which the High Court allowed the writ
petition fi led by the borrowers and thereby directed the Bank to permit the
borrowers to redeem the mortgage of the secured asset more particularly
after the auction proceedings attained fi nality.
FACTUAL MATRIX
4. It appears from the materials on record that the borrowers had
availed credit facility from the Bank on 03.07.2017. Accordingly, the Bank
sanctioned Lease Rental Discounting (for short, 'the LRD') credit facility
to the tune of Rs. 100 crore in favour of the borrower with the respondent
No. 2 standing as a guarantor. Out of the total amount sanctioned, the
amount of Rs. 65 crore was adjusted against the then existing LRD facility
granted by the previous bank and for the balance amount of Rs. 35 crore a
security in the form of a simple mortgage was created over a parcel of land
admeasuring 16200 sq. metres having buildings and ancillary structures on
it at plot Nos. D-105, D-110 and D-111 respectively situated at the Trans
Thane Creek Industrial Area MIDC Village Shirwane, Thane, Belapur
Road, Nerul, Navi Mumbai, Thane, Maharashtra in lieu of the sanctioned
credit.
*Ed. Note: The pagination as per the original Judgment.
61
5. The borrower defaulted in repayment of the loan amount and
accordingly the loan account was declared as a Non-Performing Asset (NPA).
6. The Bank issued a demand notice under Section 13(2) of the
Securitization and Reconstruction of Financial Assets and Enforcement of
Securities Interest Act, 2002 (for short, 'the SARFAESI Act') for repayment
of the principal amount along with interest, cost, charges, etc. As on 30.04.23,
an aggregate sum of Rs. 123.83 crore was due and payable by the borrower to
the Bank.
7. Owing to the failure of the borrower & the guarantor in repaying the
outstanding amount referred to above, the Bank proceeded to take measures
for possession of the secured asset under the provisions of the SARFAESI Act.
The Bank decided to put the secured asset to auction. It appears that between
April 2022 & June 2023, the Bank attempted eight auctions but all failed.
8. In the meantime, the borrowers preferred a Securitization Application
being SA No. 46 of 2022 before the Debt Recovery Tribunal-I, Mumbai
(for short, "DRT") inter alia challenging the demand notice issued under
Section 13(2) of the SARFAESI Act and also for quashing of the sale notice
dated 25.03.22 in respect of the secured asset. It is not in dispute that the said
application as on date is still pending before the DRT.
9. It appears that the borrowers informed the Bank that they were trying to
sell the secured asset but were not getting good off ers. The borrowers informed
the Bank that the maximum they might be able to fetch from the sale of the
secured asset would be around Rs. 91-92 crore and they were willing to settle
the entire account by off ering such amount to the Bank.
10. The Bank decided to go for one more auction. On 14.06.23, the
Bank published the auction notice for the 9th time for sale of the secured asset
at a reserve price of Rs. 105 crore. On publication of the auction notice, the
appellant herein participated in the auction proceedings conducted on 27.06.23
and submitted its bid of Rs. 105.05 crore, along with a deposit of Rs. 10.5 crore
as earnest money.
11. In the 9th auction conducted by the Bank, the appellant herein was
declared as the highest bidder. The Bank on 30.06.2023 vide its email sent a
"Sale Confi rmation Letter" to the appellant, declaring him as the highest bidder
/ H1 in the auction of the secured asset and called upon the appellant to deposit
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT.
LTD. & ORS. [J. B. PARDIWALA, J.]
SUPREME COURT REPORTS
[2023] 13 S.C.R.
62
25% of the bid amount by 01.07.23 and the balance amount on or before
15.07.23. The email is reproduced below: -
"admin@mstcauction.com
SALE CONFIRMATION LETTER (Property-UBINMUMSAM2888)
To: Mac, Cc: samvmumbai@unionbankofindia.bank, ibapiop@
mstcauction.com
CELIR LLP Date: 30-06-2023:
C-708 teerth technospace 7th fl oor Sr no 103 baner
Pune
411045
INDIA
Date: 30.06.2023
Time: 06:36 PM
Dear Sir / Madam,
Your Bid of amount Rs.1050500000. for the property ID No.
UBINMUMSAM2888 during online auction held on e-BKRAY portal
on Date: 30-06-2023, is accepted as highest bid and accordingly you
have been declared H1 bidder for the said property.
In terms of Sale Notice issued under the provisions of SARFAESI Act,
you are required to deposit 25% of the Bid amount, which comes to
Rs.262625000. Including 10% of reserve price as EMO amount, which
has been deducted from your Global EMO Wallet, immediately, but
not later than 01-07-2023. In case 01.07.2023 is a holiday, payment
should be made within the next working day at concerned branch of
Bank in account No.087021980050000. Further, you are required to
deposit the balance amount of Rs.787875000, being 75% of entire
bid amount within 15 days i.e. on or before 15.07.2023 at Concerned
Branch of Bank in account No.087021980050000.
Please be informed that in case you fail to deposit due amount by
scheduled dates, sale shall be cancelled and any amount deposited
by you related to this bid, shall be forfeited.
63
Authorized offi cer
Name of Authorized Offi cer: Sidharath S. Mhade
Name of Bank: UNION BANK OF INDIA
Contact No. or AO: 898-518779
e-Mail to or AO: samvmumbai@unionbankofi nida.bank
(This mail is from Authorized Offi cer and being generated through
computer system, hence needs no signature)"
12. On 01.07.2023, the appellant deposited 25% of the total
bid amount (minus the earnest money deposit). In the wake of such
development, the borrowers fi led an Interim Application No. 2339 of 2023
on 04.07.2023, titled Redemption Application in S.A. No. 46 of 2022
before the DRT-I, Mumbai for redemption of the mortgage in respect of
the secured asset by payment of the total outstanding sum of Rs 123.83
crore (approx.) on or before 31.08.23.
13. On 27.07.23, the appellant herein deposited the balance sum of
the total bid amount which was duly received and accepted by the Bank.
On the very same day, the redemption application referred to above was
also heard by the DRT-I. The redemption application was opposed by
both the appellant herein as well as the Bank. The DRT after hearing the
parties at length, reserved orders to be pronounced on 02.08.23.
14. While the parties were awaiting for the DRT to pass appropriate
an on order on the redemption application, the borrowers went to the High
Court and fi led the Writ Petition No. 9523 of 2023, seeking directions
to the Bank to permit them to redeem the mortgage of the secured asset.
15. The writ petition was fi led on the premise that the borrowers had
strong apprehension that the DRT may reject their redemption application
and the entire matter would become infructuous more particularly, the
Bank having accepted the entire amount from the appellant herein of the
total bid.
16. Before the High Court, the borrowers expressed their willingness
to pay a total sum of Rs. 129 crore for redeeming the mortgage by 31.08.23.
The Bank which had earlier opposed the plea for redemption of mortgage
before the DRT for some good reason expressed its willingness before
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT.
LTD. & ORS. [J. B. PARDIWALA, J.]
SUPREME COURT REPORTS
[2023] 13 S.C.R.
64
the High Court to accept the off er of the borrowers. The Bank perhaps got
lured by the fact that the borrowers were paying almost Rs. 23.95 crore more
than what was paid by the appellant herein and Rs. 5 crore more than the
outstanding amount.
17. It also appears that the appellant herein having come to know about
such writ petition fi led in the High Court preferred Interim Application (ST)
No. 21706 of 2023 for being impleaded in the writ petition.
18. The writ petition along with interim application was heard by the
High Court and vide its impugned judgment and order dated 17.08.2023
allowed the writ petition and permitted the borrowers to redeem the mortgage
of the secured asset subject to payment of Rs. 25 crore on the same day and
the balance amount of Rs. 104 crore on or before 31.08.2023, failing which
the sale of secured asset in favour of the appellant herein would be confi rmed.
19. The operative part of the impugned order passed by the High Court
reads thus:
"(a) The Petitioner shall hand over a sum of Rs. 25 crores to the
Respondent Bank today. In compliance with this direction, Mr.
Khandeparkar has handed over three Demand Drafts in the sum of Rs.
10 crores, 10 crores and 5 crores respectively to the learned Advocate
appearing on behalf of the Respondent Bank which is duly acknowledged
by him. The Bank is entitled to encash these Demand Drafts and
appropriate the sum of Rs.25 crores towards the outstanding dues of
the Petitioners.
(b) The balance amount of Rs. 104 crores shall be paid by the Petitioners
to the Respondent Bank on or before 31st August 2023 in the designated
account below: -
Union Bank of India
Stressed Asset Management
Branch, Mumbai
IFSC
UBIN0908703
A/c. No.
087021980050000
(c) If the amount of Rs. 104 crores are paid in the said account on
or before 31st August 2023, the same shall be appropriated by the
Respondent-Bank towards the dues of the Petitioners. The Bank
65
shall then return the original title deeds of the secured asset to the
Petitioners, execute all such documents for cancellation of mortgage,
and issue a 'No Dues Certifi cate' to the Petitioners.
(d) Mr. Shinde, the learned Advocate appearing for the RespondentBank, has brought to our attention that out of the entire amount of Rs.
105.05 crores deposited by the Auction Purchaser, the RespondentBank has appropriated the sum of Rs. 63,50,45,000/- towards the loan
amount of the Petitioners. We therefore direct that the Respondent-Bank
shall reverse this entry and immediately keep the entire amount of
Rs. 105.05 crores [deposited by the auction purchaser] in a No Lien
interest bearing account. If the Petitioners pay the balance amount
of Rs.104 crores to the Respondent Bank by 31st August 2023, then
the Respondent-Bank shall refund the amount of Rs. 105.05 crores
deposited by the Auction Purchaser together with accrued interest on
or before 7th September 2023.
(e) In the event the balance amount of Rs. 104 crores are not paid
by the Petitioners to the Respondent-Bank on or before 31st August
2023, the Respondent Bank shall then be entitled to appropriate the
money from the No Lien interest bearing account towards the dues
payable by the Petitioners and the sale of the secured asset shall be
confi rmed in favour of the Auction Purchaser and a sale certifi cate
shall be issued in their favour. All formalities in relation to registration
of that certifi cate shall also be done by the Respondent-Bank and the
Auction Purchaser.
(f) In light of this order, Mr. Khandeparkar has stated that, nothing
would survive in Securitization Application No. 46 of 2022 and/or
the Interim Applications fi led therein and seeks leave to withdraw
the same within a period of one week from today. The said statement
is accepted as an undertaking given to the Court. It is needless to
clarify that even if the Petitioners do not withdraw the Securitization
Application, the same shall stand dismissed in light of this order and
the Petitioners will not be permitted to litigate any further with the
Respondent Bank in relation to the secured asset. In other words,
if the Petitioners default in making the balance payment of Rs.104
crores to the Respondent Bank by 31st August 2023, the Auction
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT.
LTD. & ORS. [J. B. PARDIWALA, J.]
SUPREME COURT REPORTS
[2023] 13 S.C.R.
66
Purchaser shall get the secured asset free from litigation. As per
the statement made by Mr. Khandeparkar, and which is accepted
as an undertaking given to the Court, if the Petitioners default
in making the balance payment of Rs.104 crores by 31st August
2023, physical, vacant, quiet, and peaceful possession of the
secured asset shall be handed over to the Auction Purchaser on
or before 5th September 2023."
20. It appears that during the pendency of the present appeals,
the borrowers transferred the balance amount of Rs. 104 crore on
26.08.2023 to the Bank in terms of the impugned order passed by the
High Court. With the transfer of the amount of Rs. 104 crore, the Bank
issued a "No Dues Certificate" on 28.08.23. On the very same day,
the borrowers entered into an Agreement of Assignment of Leasehold
Rights with a third-party viz. M/s Greenscape I.T. Park LLP for the
transfer of leasehold rights in the secured asset and the said agreement
was registered before the Joint Sub Registrar, Thane 8 vide Registration
No. 19286 of 2023.
21. Being aggrieved and dissatisfied with the aforesaid order
passed by the High Court, the appellant is here before this Court with
the present appeals.
SUBMISSIONS ON BEHALF OF THE APPELLANT
22. Mr. Mukul Rohatgi, the learned Senior Counsel and Mr. Neeraj
Kishan Kaul, the learned Senior Counsel appearing for the appellant
made the following submissions:
a. The writ petition filed by the borrowers before the High Court
was not maintainable in view of the alternative remedy available to them
under Section 17 of the SARFAESI Act and more particularly when
such alternative remedy had already been availed by the borrowers.
b. The High Court ought not to have entertained the writ petition
on the ground that although the auction proceedings had attained
finality and the appellant herein was declared as the successful highest
bidder yet the bank was getting more amount as offered by the appellant
compared to the sale bid.
67
c. Mere apprehension on the part of the litigant that an adverse order
might be passed by a forum which was already looking into the issue cannot
be a ground to invoke the extraordinary jurisdiction under Article 226 of
the Constitution.
d. The High Court failed to consider that in view of the amended
provision of Section 13(8) of the SARFAESI Act, the right of redemption
of mortgage stood extinguished upon publication of the auction notice.
If the Borrower is permitted to redeem the mortgage at the very last
moment, more particularly even after payment of entire amount by
the auction purchaser, then no auction would ever attain fi nality and
indirectly, the borrower is given indefi nite time to repay the outstanding
amount.
e. The High Court failed to appreciate an important fact that the Bank
had already confi rmed the sale of the secured asset to the appellant and as
such the appellant had a vested right to the secured asset. Once the sale
was confi rmed, the Bank in accordance with Rule 9(2) read with Rule 9(6)
of the Security Interest (Enforcement) Rules, 2002, ("Rules of 2002") was
under a legal obligation to issue a sale certifi cate to the appellant. The Bank
could not have consented before the High Court to the borrowers' plea of
redemption.
f. The High Court committed a serious error of law in considering the
equities in favour of the borrowers unmindful of the fact that equity follows
the law.
g. In the last, Mr. Rohatgi submitted that his client is ready and
willing to make good the entire amount of Rs. 129 crore by depositing Rs.
23.95 crore with the Bank, in addition to the amount of Rs. 105.05 already
deposited with the Bank.
h. With a view to fortify the aforesaid submissions reliance was placed
on the following decisions:
i) United Bank of India v. Satyawati Tondon & Ors., (2010) 8 SCC
110;
ii) Varimadugu OBI Reddy v. B. Sreenivasulu & Ors., (2023) 2 SCC
168;
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT.
LTD. & ORS. [J. B. PARDIWALA, J.]
SUPREME COURT REPORTS
[2023] 13 S.C.R.
68
iii) Valji Khimji and Company v. Offi cial Liquidator of Hindustan
Nitro Product (Gujarat) Ltd. and Ors., (2008) 9 SCC 299;
iv) Authorised Offi cer State Bank of India v. C. Natarajan and Anr.,
2023 SCC OnLine SC 510; and
v) Sadashiv Prasad Singh v. Harendar Singh & Ors., (2015) 5 SCC
574.
SUBMISSIONS ON BEHALF OF THE BORROWERS
23. Mr. Shyam Divan, the learned Senior Counsel and Mr. Nikhil
Nayyer, the learned Senior counsel appearing for the borrowers made the
following submissions:
a. That after the impugned order was dictated in the open court on
17.8.2023 and subsequently uploaded on the website of Bombay High Court
on 26.8.2023, the following developments took place:
(i) The borrowers transferred an amount of Rs. 104 Crores
to the Union Bank of India vide RTGS, having UTR No.
HDFCR52023082882894716.
(ii) This was followed by the Respondent No.3, i.e., Union Bank of
India issuing a No Dues Certifi cate dated 28.08.2023 thereby acknowledging
that the borrowers do not owe any further amount to the Bank and releasing
the personal guarantees as well.
(iii) Further, after the No Dues Certifi cate was issued by the Bank,
the borrowers executed a registered Deed of Release in favour of the Tata
Motors Financial Solutions Limited registered with the Joint Sub Registrar,
Thane 8 having registration No. 19283/2023, whereby the second charge
that the Tata Motors Finance Solutions Limited had on the second property
came to be released, pursuant to payment of Rs. 15 Crore (Rs. 10 Crore
on 18.08.2023 and Rs. 5 Crore on 22.08.2023 ), which came to be duly
acknowledged by the Tata Motors Finance Solutions Limited.
(iv) Following this, the borrowers have also entered into a registered
Agreement of Assignment of Leasehold Rights for the transfer of leasehold
rights in the secured asset with M/s Greenscape L.T. Park LLP on 28.8.2023,
which came to be registered before the Joint Sub Registrar, Thane 8 having
registration No. 19286/2023.
69
b. Since there has been full compliance of the Impugned Order by the
borrowers herein as well as the Bank, the appeals have essentially become
infructuous.
c. The only issue which remains is the refund of the amount deposited
by the appellant herein. This is an issue between the appellant and the Bank
and the borrowers have no reason to come in the way of the refund of the
amount to the appellant herein.
d. There is a specifi c direction issued by the High Court that the
Respondent Bank shall immediately keep the entire amount of Rs. 105.05
crore (deposited by the Auction Purchaser/appellant herein) in a "No Lien
Interest Bearing Account" and if the borrowers pay the balance amount of
Rs. 104 crore to the Respondent Bank by 31.8.2023 (which it has), then the
Respondent Bank shall refund the amount of Rs. 105.05 Crores deposited
by the Auction Purchaser together with the accrued interest on or before
7.9.2023.
e. The High Court correctly interpreted Section 13(8) of the SARFAESI
Act. The right of redemption is nowhere mentioned in the SARFAESI Act
and in such circumstances, Section 60 of the Transfer of Property Act, 1882
(for short, 'the Act 1882') should be looked into. Section 60 of the Act 1882
has been interpreted to reserve the right of mortgagor to redeem the property
till the stage of the same being conveyed /transferred to a third party.
f. The aforesaid interpretation is discernible from the decision of this
Court in the case of Narandas Karsondas v. S.A. Kamtam and Another
reported in 1977 (3) SCC 247, wherein it has been held that:
"34. The right of redemption which is embodied in Section 60 of the
Transfer of Property Act is available to the mortgagor unless it has been
extinguished by the act of parties. The combined eff ect of Section 54 of
the Transfer of Property Act and Section 17 of the Indian Registration
Act is that a contract for sale in respect of immovable property of the
value of more than one hundred rupees without registration cannot
extinguish the equity of redemption. In India it is only on execution of
the conveyance and registration of transfer of the mortgagor's interest
by registered instrument that the mortgagor's right of redemption will
be extinguished. The conferment of power to sell without intervention of
CELIR LLP v. BAFNA MOTORS (MUMBAI) PVT.
LTD. & ORS. [J. B. PARDIWALA, J.]
SUPREME COURT REPORTS
[2023] 13 S.C.R.
70
the Court in a Mortgage Deed by itself will not deprive the mortgagor
of his right to redemption. The extinction of the right of redemption
has to be subsequent to the deed conferring such power. The right of
redemption is not extinguished at the expiry of the period. The equity
of redemption is not extinguished by mere contract for sale.
35. The mortgagor's right to redeem will survive until there has been
completion of sale by the mortgagee by a registered deed. In England
a sale of property takes place by agreement but it is not so in our
country. The power to sell shall not be exercised unless and until notice
in writing requiring payment of the principal money has been served
on the mortgagor. Further Section 69(3) of the Transfer of Property
Act shows that when a sale has been made in professed exercise of
such a power, the title of the purchaser shall not be impeachable on
the ground that no case had arisen to authorise the sale. Therefore,
until the sale is complete by registration the mortgagor does not lose
right of redemption."

 (Emphasis supplied)
g. The aforesaid position has also been echoed in the case of Mathew
Varghese v. M. Amritha Kumar and Ors., (2014) 5 SCC 610, wherein this
Court held that upon a combined reading of Sections 60 and 54 respectively
of the Act 1882 with Section 17 of the Registration Act, 1908, it can be
concluded that the extension of the right of redemption comes much later
than the sale notice.
h. Although the decision in Mathew Varghese (supra) was prior to
the 2016 amendment to the SARFAESI Act, yet its applicability has been
held valid even after the amendment of the said Act. A Division Bench of
the High Court of Telangana in the case of Concern Readymix, rep. by its
Proprietor, Smt. Y. Sunitha v. Authorised Offi cer, Corporation Bank and
Anr., reported in 2018 SCC OnLine Hyd 783 has held after juxtaposing the
amended and unamended provisions of Section 13(8) of the SARFAESI
Act, with respect to the right of redemption available to the Mortgagor that
the amended Section 13(8) of the SARFAESI Act only puts a restriction on
the right of the mortgagee to deal with the property and does not speak in
express terms about the equity of redemption available to the mortgagor.
It was further held that the danger of interpreting Section 13(8) as though
71
it relates to the right of redemption is if the payments are not made in
accordance with Section 13(8), the right of redemption may get lost even
before the sale is complete in all respects and that holding that the right
of redemption would be extinguished at the stage of issue of notice under
Rule 9(1) would tantamount to annulling the relevant provision of the Act
1882 which do not stand expressly excluded insofar as the question of
redemption is concerned. The said judgment of the Telangana High Court
was challenged before this Court vide SLP(C) D. No. 28967 of 2019 and
the same came to be dismissed.
i. The view expressed in Concern Readymix (supra) was echoed by
a Division Bench of the High Court of Punjab and Haryana in the case of
M/s Pal Alloys and Metal India Private Limited & Ors. v. Allahabad Bank
& Ors., reported in 2021 SCC OnLine P&H 2733, wherein the High Court,
inter alia, considered the specifi c issue "(a) till what time and date can the
right of redemption of the Mortgage can be exercised by the Mortgagors /
Borrowers in the light of the amendment to Section 13(8) of the SARFAESI
Act".
j.