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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S).8097­8098 OF 2009

Shakeena & Anr.  ..…Appellant(s)  

Versus

Bank of India & Ors.  ….Respondent(s)

J U D G M E N T

A.M. Khanwilkar, J.

1. These  appeals take exception to the impugned judgment

and order of the Madras High Court, Madurai Bench dated 10th

August, 2007 in  Writ  Appeal (MD)  Nos.145  and  146  of  2007

respectively; whereby, the Division Bench of the High Court

dismissed the writ petitions filed by the appellants praying for

setting aside of notice issued by the respondent bank in exercise

of powers under the Securitisation and Reconstruction of

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Financial Assets and Enforcement of Security Interest Act, 2002

(for short, “2002 Act”) dated 14th  November, 2005 and the

consequent public notice dated 15th November, 2005 for sale of

the subject property, the public auction conducted in furtherance

thereof on 19th December, 2005, declaration of respondent No.3

as the  highest  bidder in the said public  auction and the  sale

certificate issued in his favour dated 6th January, 2006.         2. Briefly stated, in 2003, Shri P. Shahul Hameed and Smt.

Shakeena (appellants/borrowers) were sanctioned a term loan of

Rs.10 Lacs each under Star Mortgage Loan by the respondent

bank. The accounts became NPA (Non­Performing Assets)  from

30th  June, 2004. As there was default in re­payment, the

respondent bank issued legal notice dated 19th October, 2004 to

repay the dues within seven days. On 1st December, 2004, notice

was issued under Section 13(2) of the 2002 Act to the appellants,

calling  upon  them to  discharge the  loan within sixty  days. In

reply, the  appellants  by representations  dated  10th  December,

2004, requested the respondent bank to grant time for bringing

the account in order. In view of the default  in discharging the

loans by the appellants, the respondent bank, exercised its power

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under Section 13(4)  of the 2002 Act.  Accordingly,  constructive

possession of the  mortgaged property  was taken over by the

respondent bank on 8th February, 2005.  

3. The appellants then filed S.A. Nos.21 and 22 of 2005, by

invoking Section 17 of the 2002 Act, before the Debts Recovery

Tribunal II, Chennai, challenging the notices, issued by the

respondent bank. On 18th March, 2005, DRT­II, Chennai passed

an order in S.A. Nos.21 and 22 of 2005 staying all further

proceedings on condition that the appellants would pay Rs.1.50

Lac in each appeal. However, the appellants failed to comply with

the  said  order  and, therefore, the  order  being  a  self­operating

order, stood automatically vacated. Later on, S.A. Nos.21 & 22 of

2005 were eventually dismissed for non­prosecution/default on

28th September, 2005, for non­payment of court fee.  

4.  The respondent bank then brought the secured property for

sale by inviting sealed tenders vide sale notice dated 15th

November, 2005. Notice was also given to the appellants on 14th

November, 2005. The appellants herein neither objected to the

said sale notice nor challenged the same. Thus, the sale was held

on 19th  December, 2005, in which one Mr.

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Chidhamaramanickam, respondent No.3 herein was declared as

the  highest bidder  who  had  quoted  a sum of  Rs.42,51,000/­

(Rupees Forty­Two Lacs Fifty­One Thousand Only). He also

deposited 25% of the sale consideration immediately, as per the

rules. On 2nd  January, 2006, the appellants approached the

respondent bank and deposited three cheques for total sum of

Rs.25,21,446/­ (Rupees Twenty­Five Lacs Twenty­One Thousand

Four Hundred Forty­Six Only). These cheques were duly returned

by the respondent bank on 4th February, 2006 as it could not be

treated as a valid tender.  

5. The highest bidder (respondent No.3) in the meantime had

complied with all the terms and conditions of sale as a result of

which the sale was confirmed in his favour. In that, he paid the

entire sale consideration  of  Rs.42,51,000/­ (Rupees  Forty­Two

Lacs Fifty­One Thousand Only) by 4th  January, 2006. On

payment of sale consideration, the respondent bank credited a

sum of Rs.12,40,000/­ (Rupees Twelve Lacs Forty Thousand

Only) in the loan account of appellant No.2 herein and a sum of

Rs.12,52,350/­ (Rupees Twelve Lacs Fifty­Two Thousand Three

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Hundred Fifty Only) in the loan account of appellant No.1 herein

and closed both the loan accounts.  6. On 6th  January, 2006, the respondent bank issued a sale

certificate in favour of respondent No.3. According to the

respondent bank  upon issue of sale certificate, the sale had

become final.  

7. Be that as it  may, the appellants filed applications for

restoration of the  main proceedings  before  DRT.  However, the

said applications came to be dismissed on 10th  January, 2006.

Even that order has been allowed to become final by the

appellants.   8. As aforementioned, consequent to sale of the secured asset,

a sum of Rs.24,92,750/­ (Rupees Twenty­Four Lacs Ninety­Two

Thousand Seven Hundred Fifty Only) was adjusted towards the

loan accounts of the appellants and a sum of Rs.10,000/­

(Rupees Ten Thousand Only) towards legal expenses. Out of the

balance sum of  Rs.17,48,250/­  (Rupees Seventeen Lacs Forty­

Eight Thousand Two Hundred Fifty Only), the bank returned a

sum of Rs.17,25,000/­ (Rupees Seventeen Lacs Twenty­Five

Thousand Only) to the appellant (Petitioner in Writ Petition

No.634 of 2006) by way of a bankers cheque along with letter

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dated 18th  January, 2006. However, the said appellant did not

encash the bankers cheque and instead returned the same. The

bank had retained a sum of Rs.23,250/­ (Rupees Twenty­Three

Thousand Two Hundred Fifty Only) towards future legal expenses

with the undertaking that the balance amount will be returned

after adjusting the lawyer charges/legal expenses.  

9. The Appellants then forwarded demand drafts for

Rs.25,06,250/­ (Rupees Twenty­Five Lacs Six Thousand Two

Hundred Fifty Only), which was received by the respondent bank

on 17th  January, 2006. According to the respondent bank, the

appellants had ante dated the covering letter as if it was written

on 12th January, 2006, undertaking to pay the balance amount.

The respondent bank, however, did not accept or encash the said

demand drafts as a valid tender ­ as it were drawn in the name of

the Authorised Officer of the bank i.e. respondent No.2 herein;

and also because the sale certificate had already been issued on

6th January, 2006.

10. On 19th January, 2006 the appellants, feeling aggrieved by

the action of respondent bank for having taken constructive

possession of the secured assets and the notice of sale dated 14 th

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November, 2005,   filed subject Writ Petition (MD) Nos.634 and

635 of 2006 before the High Court of Madras at Madurai Bench

for quashing of the auction of the subject property and further to

direct the respondents to receive the  amount  offered by them

towards settlement of loan accounts.  Respondent no.3  herein

(auction purchaser) got himself impleaded as a party­respondent

in the said  writ  petitions, filed  by the  appellants  herein, and

opposed the same.  

11. The Learned Single Judge vide judgment dated 9th March,

2007, allowed the writ petitions filed by the appellants herein,

holding that the appellants had a subsisting right of redemption

until the sale certificate was duly registered entailing in transfer

of the subject property. It has been noted that such registration

was not done in the present case until the filing of writ petitions

and until disposal thereof.   

12. Against the judgment of the Learned Single Judge,

respondent No.3 herein (auction purchaser) filed  Writ Appeal

Nos.145 and 146 of 2007 before the Madurai Bench of Madras

High Court. By the impugned judgment dated 10th August, 2007,

the Division Bench allowed the appeals filed by respondent No.3

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herein and set aside the Order dated 9th March, 2007 passed by

the Learned Single Judge.  13. On 18th  September, 2007, the stated sale certificate in

respect of the suit property had been registered and soon

thereafter on 5th  October, 2007, respondent No.3 sold the

property to a third party.  

14. Feeling aggrieved by the decision of the Division Bench of

the High Court,  the appellants have approached this Court by

way  of  present  appeals.  This  Court, on  23rd  November,  2007,

ordered that status quo as on that date be  maintained  with

regard to the suit property. Later on, this Court granted leave to

appeal on 27th November, 2009 and the interim order continued

during the pendency of the appeals.  

15. Be it noted that on  1st  September, 2016 amendment to

Section 13(8) of the 2002 Act came into force as a result of which

the dues of the secured creditor together with all costs, charges

and expenses incurred by him are required to be tendered to the

secured creditor  at  any  time before the  date  of  publication of

notice  for  public auction or  inviting quotations or  tender  from

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public or private treaty for transfer by way of lease, assignment

or sale of the secured assets.     

16. Reverting to the impugned judgment of the Division Bench

of High Court, it essentially considered three points as noted in

paragraph 8 of the impugned judgment. The same reads thus:

(i) Whether the sale of the secured asset in public auction as per section 13(4) of SARFAESI Act, which ended in issuance of a sale certificate as per rule 9(7) of the Security Interest (Enforcement) Rules, 2003 (in short “the rules”) is a complete and absolute sale for the purpose of SARFAESI Act or whether the sale would become final only on the registration of the sale certificate?

(ii) Whether the action of the second respondent in not accepting the amounts paid by the borrowers and not cancelling the sale certificate before the registration of the sale is in derogation of section 60 of the Transfer of Property Act, in view of the Section 37 of SARFAESI Act? And  

(iii) Whether section 35 of the SARFAESI Act has the effect of overriding section 37 of the SARFAESI Act?”

While answering the first point, the Court observed thus:

“10.7 At the  outset, it is to be stated that  nothing survives in the notice dated 14.11.2005 to adjudicate, as, on the date of filing of the writ petitions, the entire proceedings under Section 13(4) of the Act have come to an end and become final, by issuance of sale certificate under sub­rule (7) of rule 9 of the rules on 06.01.2006. The writ petitions have been prepared and signed by the parties only on 19.01.2006. In such circumstances, the proper course for the  borrowers would be to prefer an appeal before the Appellate Tribunal against the order of the Tribunal dated 10.01.2006 under the provisions of the SARFAESI Act.

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The borrowers,  however,  have approached this court invoking Article 226 of the Constitution of India.”

And again, in paragraph No.10.9

“10.9 In our considered view, the  borrowers should have approached the secured creditor or the authorized officer before the date fixed for sale and not after the sale, as  provided  under sub­section (8) to section 13 of the SARFAESI Act. As discussed earlier, only if the borrowers approach the secured creditor or the authorized officer before the date fixed for sale or transfer and tender or pay all the dues to the secured creditor, the Section creates a bar on the secured creditor or authorized officer to proceed further with the proposed sale or transfer. In this case, admittedly, the date fixed for the sale was 19.12.2005. But, even according to the version of the borrowers, they approached the secured creditor only on 02.01.2006 in such circumstances, the contention of the learned counsel for the borrowers is without any basis contrary and to the provisions contained in sub section (8) of Section 13 of the Act.”

The  Court then relied  upon the  decision  of this  Court in  B.

Arvind Kumar Vs. Govt. of India and Others1 and applying the

principle underlying the said decision concluded that registration

of sale certificate was not essential. The Court observed thus:

“10.17 The ratio laid down by the Division Bench of this court in Arumugham, S. & 2 others v. C.K.Venugopal  Chetty  &  5  others  and  the  Supreme Court in B. Arvind Kumar vs. Government of India and others, referred supra, squarely applies to the case on hand and we, therefore,  have no  incertitude to hold that the sale  which took place on 19.12.2005 has become final  when it is confirmed in favour of the auction purchaser and the auction purchaser is vested with  rights  in  relation  to the  property  purchased  in auction on issuance of the sale certificate and he has

1 (2007) 5 SCC 745

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become the absolute owner of the property. Further, as held by the Division bench of this court in Arumugham, S. & 2 others v. C.K. Venugopal Chetty & 5 others and the Supreme Court in B. Arvind Kumar Vs. Government of India and others,  referred supra, the sale  certificate issued in  favour of the appellant does  not require  any registration in view  of section 17(2) (xii) of the Registration Act as the same has been granted pursuant to the sale held in public auction by the authorized officer under SARFAESI Act.   10.18 The finding of the learned Single Judge that the sale is not complete without registration of sale certificate, therefore, is not sustainable in law and the same is liable to be set aside.  

10.19 If the argument of the borrowers that even after the issuance of the sale certificate, prior to registration, they are entitled to redeem the property is accepted, it would make the provisions of the SARFAESI Act  redundant and the very object  of the SARFAESI Act enabling the Banks and financial Institutions to realize long term assets, manage problems of liquidity, asset liability mismatch and to improve recovery of debts by exercising powers to take possession of securities, sell them and thereby reduce non performing assets by adopting measures for recovery and reconstruction would fail and would open a pandora’s box for the litigations upsetting the sale confirmed in favour of the bonafide auction purchasers, who invested huge money.  

10.20 In view of our finding on this point, we hold that the sale of the secured asset in public auction as per section 13(4) of SARFAESI Act, which ended in issuance of  a  sale  certificate  as per  rule 9(7)  of the Rules is a complete and absolute sale for the purpose of SARFAESI  Act and same  need  not be registered under the provisions of the Registration Act.”  

While considering the second point, after noticing the Section 37

of the 2002 Act and Section 60 of the Transfer of Property Act,

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the Court rejected the argument of the appellants for the

following reasons:

“11.4 We have  more than one reasons to reject the said contention of the learned counsel for the borrowers.  

11.5.1 Firstly, as held by us, while answering point (i) the sale in this case has become absolute and complete on the date when the sale was confirmed on the appellant/auction purchaser and he is vested with all the rights in relation to the property purchased by him in the public auction on issuance of sale certificate on  06.01.2006, i.e., prior to the date on which the borrowers have approached the second respondent for repayment, contrary to the provisions of Section 13(8) of the SARFAESI Act.  

11.5.2 Secondly, the sale certificate issued in this case does not require any registration as per section 17(2) (xii) of the Registration Act, 1908 and our said view is fortified with the decisions of the Division bench of this Court in Arumugham, S. & 2 others v. C.K. Venugopal Chetty & 5 others and the Supreme Court in B. Arvind Kumar vs. Government of India and others, referred supra.  

11.5.3.1 thirdly, it is true that the borrowers have the right of redemption as provided under Section 60 of the Transfer of Property Act, 1882, in view of Section 37 of SARFAESI Act and to substantiate the said stand, the learned counsel for the borrowers relies on the  decision  of the  Supreme  Court in  Narandas Karsondas vs. S.A. Kamtam and another, (1977) 3 SCC 247 wherein it is held that the mortgagor has a right to redemption unless the sale of the property was complete by registration in accordance with the provisions of the Registration Act.  

11.5.3.2 With great respect, we are of the view that the decision of the Supreme Court in Narandas Karsondas vs. S.A. Kamtam and another, referred supra, is not applicable to the facts of this case. Even, as held by the Supreme Court in Narandas Karsondas vs. S.A. Kamtam and another, referred supra, the right of the mortgagor to redemption continues only till such

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time the sale of the property was complete by registration. In this case, our finding, following the decision of the Division bench of this court in Arumugham, S. & 2 others vs. C.K. Venugopal Chetty & 5 others and the Supreme Court in B. Arvind Kumar vs. Government of India and others, referred supra, is that the sale in  this  case has become absolute and complete by the issuance of sale certificate on 6.1.2006. Further, section 17(2) (xii) of the Registration Act, 1908 does not require registration of a sale certificate granted to any purchaser of any property sold in public auction by a civil  or revenue officer and it is the finding of the Supreme Court in B. Arvind  Kumar vs.  Government of India and others, referred supra, that the sale certificate issued by a civil or revenue officer in respect of a property sold in public auction does not fall under the category of non­ testamentary documents which require registration under Sub­section (b) and (c)  of Section 17(1) of the Registration Act 1908.  

11.5.4 Fourthly, the right to redeem the mortgage, as provided in section 60 of the Transfer of Property Act, is, of course, a very valuable right possessed by the mortgagor. At the same time, such a right to redeem the mortgage can be exercised before it is foreclosed, or the estate  is sold. It  has been held that the  mortgagor can adopt the course provided under section 60 of the Transfer of Property Act only before the mortgage has filed a suit for enforcement of the  mortgage and not thereafter, vide Poulose and another vs. State Bank of Travancore, AIR 1989 Kerala 79. In this case,  as discussed earlier,  the borrowers approached the second respondent/Bank only after initiation of the proceedings under Section 13(4) of the SARFAESI  Act,  and that too  after the  property  was sold in public auction and the sale was confirmed in favour of the appellant.”

The Court then proceeded to examine the third point and

considering the interplay between Sections 35 and 37 of the 2002

Act, including the dictum in  Mardia Chemicals Ltd. and

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Others  Vs.  Union of India  and Others2  went  on to  observe

thus:

“12.4 As per the section 37 of the SARFAESI Act, the provisions of this act shall be “in addition to” and “not in derogation of” any other law for the time being in force. There is no ambiguity in the understanding the legislative intent behind the framing of this section.   12.5 On behalf of borrowers it is contended that a right of redemption available to them before the sale is completed by way of a registered deed under the Transfer of Property Act, a law for the time being in force, is  not taken  away  by the introduction  of the SARFAESI Act, by virtue of section 37 of the SARFAESI Act, as the provisions of the SARFAESI Act and the rules framed thereunder shall be in addition to  and not in  derogation of the right  of redemption conferred under the transfer of property act. But, we have already rendered a finding that the registration of sale certificate as per section 17(2)(xii) of the Registration Act is not mandatory for the completion of the sale pursuant to the public auction and issuance of the sale certificate under the scheme of the SARFAESI Act. Assuming, the right of redemption conferred under the Transfer of Property act is protected under Section 37 of the SARFAESI Act, and independently available without reference to the registration of the sale certificate under Section 17(2) (xii)  of the Registration Act, the sale already effected satisfying the conditions contemplated under Section 13(8) of the SARFAESI Act, shall by virtue of section 37 of the SARFAESI Act, prevail over such other rights, much less the right of redemption conferred  under transfer of property act, which is protected under section 37 of the SARFAESI Act, in view of  the non obstante clause provided under section 35 of the SARFAESI Act, because a non obstante clause provided under section 35 of the SARFAESI Act makes it clear that even though there are inconsistencies to such other rights conferred under any other  law for the time being in force that are protected under section 37 of  the SARFAESI Act,  the action initiated

2 (2004) 4 SCC 311

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under the provisions of the SARFAESI Act shall have the overriding effect as per section 35 of the SARFAESI Act, because SARFAESI Act is a special act which aims to  accelerate the  growth of economy of  our  country empowering the lenders, namely Nationalized Banks, Private Sector banks and other Financial Institutions to realize their dues from the defaulted borrowers who are very lethargic in repayment of the loans borrowed by them, by exercising their right of expeditious attachment and foreclosure for the enforcement of security and therefore, sections 35 and 37 of the SARFAESI Act have to be read conjointly to achieve the object of the SARFAESI Act, but not to defeat the same and therefore, we do not see any conflict between them.”

On  the  above  analysis, the  Division Bench of the  High Court

allowed the appeals filed by respondent No.3 and dismissed the

writ petitions filed by the appellants.  

17. The  appellants  would  contend that  as  per  2002 Act  and

Rules framed thereunder, the right of the mortgagor to redeem

the mortgage gets extinguished only upon registration of the sale

certificate, resulting in transfer  of the  auctioned property.  For

that,  reliance has been placed on the exposition in  Narandas

Karsondas Vs. S.A. Kamtam and Another3 and in particular in

Mathew Varghese Vs. M. Amritha Kumar and Others4.

Reliance is also placed on a recent decision of this Court (three

Judge Bench) in Dwarika Prasad Vs. State of Uttar Pradesh

3 (1977) 3 SCC 247 4 (2014) 5 SCC 610

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and Others5. The appellants have assailed the conclusion

recorded in the impugned judgment that registration of sale

certificate was not essential  on the ground that the same was

based on a decision in B. Arvind Kumar (supra), which had no

application to the public auction conducted under the provisions

of the 2002 Act. On the other hand, registration of sale certificate

is the quintessence for transfer of the auctioned property in

favour of the auction purchaser. In that, the public auction

conducted under the 2002 Act by the secured creditor is not on

account of order of any court; and  neither is the  Authorised

Officer a Civil or Revenue Officer for the purposes of Section 17(2)

(xii) of the Registration Act. Reliance is placed on Rule 2(a) of the

Enforcement Rules, which defines Authorised Officer as an officer

not less than a Chief Manager of a Public Sector Bank or

equivalent,  as specified by  the  Board of  Directors or  Board of

Trustees of the secured creditor or any other person or authority

exercising power of superintendence, direction and control of the

business or affairs of the secured creditor, as the case may be, to

exercise the rights  of  a  secured  creditor  under the  2002  Act.

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Thus, the  Authorised Officer is  essentially  an employee of the

bank and not  a Civil  or  Revenue Officer as such. There  is  no

deeming provision in the 2002 Act or the Rules framed

thereunder, to construe the Authorised Officer of the bank as a

civil or revenue officer for the purpose of Section 17(2)(xii) of the

Registration Act.  

18. It is then submitted that public auction of the subject

property has been conducted without a valuation report by an

approved valuer as required under the Enforcement Rules, 2002.

Further, the reserve price fixed by the respondent bank as

Rs.40,00,000/­ (Rupees Forty Lacs Only) did not reflect the

actual market value of the property on the date of auction. The

value ought to have been no less than Rs.2 Crores. Reliance is

placed on J. Rajiv Subramaniyan and Another Vs. Pandiyas

and Others6 to contend that the secured creditor has a duty to

ensure that the borrower gets maximum yield from the sale of the

assets, failing which the auction sale would vitiate. As regards

the subsequent sale of  subject property by respondent No.3 to

third party, it is contended that the same is hit by the doctrine of

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lis pendens in terms of Section 52 of the Transfer of Property Act,

1882. Further, the subsequent purchaser is not a bonafide

purchaser for consideration without notice; and in any case

cannot be heard to resist the claim of the appellants which ought

to succeed against the respondent bank and the auction

purchaser (respondent No.3). Reliance is placed on T. Ravi and

Another Vs. B. Chinna Narasimha and Others7  and  Kirpal

Kaur Vs. Jitender Pal Singh and Others8 to buttress the above

submissions. It is lastly contended that this Court, in the

peculiar facts of the present case, must exercise powers under

Article 142 of the Constitution of India to declare the subsequent

sale of the mortgaged property as null and void and direct the

concerned persons to immediately handover the vacant and

peaceful possession thereof to the appellants.  

19. The respondent No.1(bank) and respondent No.2

(Authorised Officer of the bank) would however, submit that the

appellants failed to deposit the dues payable to the respondent

bank in terms of Section 13(8) of the 2002 Act as applicable at

the relevant time  and  did  not  challenge the  notice  of  auction

7 (2017) 7 SCC 342 8 (2015) 9 SCC 356

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before the date of auction despite sufficient opportunity was

given to them in that behalf. Whereas, the auction was conducted

on 19th December, 2005 and respondent No.3 being the highest

bidder  was issued  sale certificate  on  6th  January,  2006  upon

payment of the consideration amount on 4th January, 2006. With

issuance of sale certificate, it is urged that the sale transaction in

favour  of respondent  No.3 had become  final.  According  to the

respondents Section 13(8) of the 2002 Act, mandates tender of

the dues by the debtor/borrower to the secured creditor at any

time before the date fixed for sale which in this case was 19th

December, 2005. Our attention was invited to the fact that sub­

section  (8) has undergone a change and has been made more

stringent, requiring tender of dues to the secured creditor

together with all costs, charges and expenses incurred by him 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,  assignment  or  sale  of the

secured assets.  

20. It  is then urged that the appellants had failed to make a

valid tender to pay the outstanding dues till the date of

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registration of the sale certificate on 18th  September, 2007.

Indeed, the appellants had deposited a sum of rupees twenty­five

lac by 4th January, 2006, but that amount was deposited in the

account  of the father  of  appellant  No.2.  Thus, the  respondent

bank did not  accept  the  same as a valid tender  made by  the

appellants towards the loan accounts. Similarly, the cheques

issued by the  appellants  on 2nd  January,  2006  in  the  sum of

Rs.25,21,446/­ (Rupees Twenty­Five Lacs Twenty­One Thousand

Four Hundred Forty­Six Only), were of no avail not being a valid

tender as per the agreed terms. The third attempt was allegedly

made by the appellants, to pay the dues in the form of demand

drafts for an aggregate amount of Rs.25,06,250/­ (Rupees

Twenty­Five Lacs Six Thousand Two Hundred Fifty Only), on 18th

January, 2006. That again is of no avail as the demand drafts

were drawn in the name of respondent No.2 i.e. Shri B.

Jagathkumar (Authorised Officer) instead of in the name of the

respondent bank. Hence, even this was not a valid tender.

Notably, the appellants made no attempt to deposit the amount

in their loan accounts until the impugned decision was passed by

the  Division Bench including the date of registration of sale

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certificate on 18th  September, 2007. The sale in favour of

respondent No.3 stood complete and final on that day.  

21. It is urged that the exposition in the decisions pressed into

service by the appellants in  Mathew Varghese  (supra)  and

Dwarika Prasad  (supra), in fact, would go  against the

appellants. Further, the High Court was right in concluding that

the sale certificate issued in favour of respondent No.3 did not

require registration and that the sale process was complete on

issuance of the sale certificate on 6th  January, 2006. For this,

reliance has been placed on the  dictum in  B. Arvind Kumar

(supra).  Additionally, reliance  is  placed upon the provisions of

Rule 65 of Schedule II of Income Tax Act, 1961 as applicable at

the relevant time. Lastly, it is contended that the appellants have

failed to  avail alternative  efficacious remedy  against the  order

dated 10th January, 2006 passed by the Debt Recovery Tribunal

dismissing the proceedings initiated by the appellants to

challenge the action taken by the respondent bank under Section

13(4) of the 2002 Act. It is urged that the appellants should be

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non ­ suited on the basis of the dictum in Kanaiyalal Lalchand

Sachdev and Others Vs. State of Maharashtra and Others9.  

22. The respondent No.3, besides supporting the view taken by

the High Court in  the impugned  judgment,  would additionally

urge that the said respondent has paid the entire consideration

amount, Rs.42,51,000/­ (Rupees Forty­Two Lacs Fifty One

Thousand Only), on 4th  January, 2006.  Whereafter, the sale

certificate was issued  in his  favour on 6th  January,  2006. The

appellants,  however, filed  writ  petitions  only  on  19th  January,

2006. The appellants did not avail the option of redemption by

tendering the dues to the respondent bank before the date fixed

for sale or public auction which in this case was 19th December,

2005.  Furthermore, the legal  notice issued  at the instance  of

appellants also does not clearly indicate their intention to redeem

the mortgage by closing loan accounts and readiness and

willingness to pay the entire dues. The tender  made by the

appellants was not a valid tender and no fault can be found with

the respondent bank for having returned the cheques/drafts and

not to encash the same. Further, after the High Court rendered

9 (2011) 2 SCC 782

23

the impugned decision on 10th August, 2007, the sale certificate

has been duly registered on 18th September, 2007 and even until

that date no valid offer or tender has been made by the

appellants for payment of the outstanding dues to the respondent

bank. The title of the subject property had already passed on to

respondent No.3. Therefore, respondent No.3 was within his

rights to sell the property to a third party by a registered sale

deed on 5th  October,  2007.  By not impleading  the subsequent

purchaser, the civil appeals cannot proceed any further and no

relief can be granted to the appellants.   

23. We have heard Dr. A. Francis Julian, leaned Senior Counsel

for the appellants, Mr. Pranab Kumar  Mullick, Advocate for

respondent Nos.1 & 2 and Mr. K.K. Mani, Advocate for

respondent No.3.   

24. After  cogitating  over the factual  matrix  and perusing the

relevant records, it is seen that the ground of challenge

considered by the High Court at the behest of the appellants in

the impugned judgment, in our opinion, has become unavailable.

In that, the matter proceeded before the High Court for setting

aside the  entire  auction process  on  the  premise that the  sale

24

certificate was yet to be registered in favour of the highest bidder

(respondent No.3); and the appellants had made (unsuccessful)

attempts to exercise their right of redemption  by offering the

outstanding dues to the respondent bank. It was argued by the

appellants that only upon registration of the sale certificate, the

right of the borrower to redeem the mortgage would get

extinguished and obliterated.  

25. Indisputably, after the disposal of the writ appeals by the

Division Bench of  the High Court vide  impugned  judgment on

10th August, 2007, the auction purchaser (respondent No.3) got

the sale certificate registered on 18th September, 2007 and then

transferred the property by a registered sale deed on 5 th October,

2007 to third party.  It is not the case of the appellants that some

interim injunction prohibiting respondent No.3 from registering

the sale certificate or transferring the suit property, was

operating against him after the decision of the Division Bench of

High Court. In fact, the impugned judgment was not even carried

in  appeal  before this  Court  by the  appellants  until then.  The

special leave petitions came to be filed only on 13th October, 2007

and order of status quo was passed by this Court on 23rd

25

November, 2007. In other words, there has been a paradigm shift

in the rights of the parties upon registration of the sale certificate

on 18th September, 2007 and also because of the registered sale

deed in favour of third party on 5th October, 2007. The contention

pursued before the High Court by the appellants, therefore, has

now become unavailable.  26. Be it noted that the appellants had allowed the action taken

by the respondent bank under Section 13(4) of the 2002 Act, to

become final consequent to the order of the DRT rejecting

challenge thereto due to non­compliance of the conditional order.

Even the subsequent application for restoration of the DRT

proceedings came to be rejected.  The appellants then filed the

subject Writ Petition (C) Nos.634­635 of 2006 on 19th  January,

2006, by which date the auction had already concluded including

the sale certificate was issued in favour of the highest bidder on

6th  January, 2006. Moreover, the principal assertion of the

appellants before the High Court was that they were wanting to

exercise their right of redemption of mortgage, but due to

fortuitous  situation  and the inappropriate  stand  taken by the

respondent bank were prevented  from doing so.  No other plea

26

was pursued by the appellants in support of the reliefs claimed

by them before the High Court,  as can be discerned  from the

three points formulated in paragraph No.8 of the impugned

judgment (reproduced in paragraph No.16 hereinabove). The

appellants cannot be permitted to assail the auction process on

any other count.    

27. Reverting to the stand taken by the appellants that they had

attempted to exercise their right of redemption by depositing an

aggregate sum of  Rupees Twenty Five Lacs on 30th  December,

2005  and  4th  January, 2006, in the  account of the father  of

appellant No.2 followed by issuing cheque(s) in the aggregate sum

of  Rs.25,21,446/­ (Rupees Twenty­Five Lacs Twenty­One

Thousand Four Hundred Forty­Six Only), on 2nd January, 2006;

and once again offering the amount by demand drafts in the sum

of  Rs.25,06,250/­ (Rupees Twenty­Five Lacs Six Thousand Two

Hundred Fifty Only),  on 18th  January, 2006. This stand though

attractive at the first blush, will have to be stated to be rejected.

On the other hand, we find substance in the stand taken by the

respondent bank that none of the above was a valid tender so as

to extricate or discharge the appellants from their obligation ­ to

27

deposit the outstanding dues payable by them before the

specified date. In that, the amount was allegedly deposited by

them in the account of the father of appellant No.2 and not in

their loan accounts as such. Unless the amount was

transferred/deposited in the loan accounts of the appellants in

relation to which the mortgage operated, it would not be a valid

tender for paying the outstanding dues. Similarly, on the second

occasion the appellants attempted to pay in the form of cheque(s)

issued  on 2nd  January,  2006.  However,  as  per the terms and

conditions for grant of loan payment by cheque(s) was not

permissible. Thus, the respondent bank was not obliged to accept

the amount in the form of cheque(s). The respondent bank,

therefore, justly  declined to  accept the cheque(s),  not  being  a

valid tender. Even the third attempt made by the appellants was

to offer demand drafts drawn in favour of or in the name of the

Authorised Officer of the respondent bank and not in the name of

the bank or authorising the bank to appropriate it towards the

subject loan accounts. Hence, these demand drafts were rightly

not accepted as a valid tender.

28

28. Notably, the appellants took no steps, whatsoever, to pay

the outstanding dues to the respondent bank by way of a valid

tender nor moved any formal application before the High Court

after filing of the writ petitions on 19 January, 2006,  to permit

them to deposit the requisite amount either in the concerned loan

accounts or in the court. That  was not done even  until the

disposal of the writ petitions by the Single Judge or during the

pendency of the writ appeals before the Division Bench and until

the disposal thereof vide the impugned judgment. We must also

notice the  stand taken by  the  respondent  bank that  even  the

legal notice sent by the appellants to the respondent bank, in no

way  expresses  unambiguous  commitment  of the  appellants to

exercise their right of redemption. Suffice it to observe that the

appellants, for reasons best known to them, have not chosen to

deposit the amount  in the loan accounts or attempted to seek

permission of the Court to deposit the same in Court from 19th

January, 2006 immediately after filing of writ petitions or for that

matter until the registration of the sale certificate on 18th

September, 2007. In this backdrop, it is not possible to

countenance the stand of the appellants that they had made a

29

valid tender to the respondent bank or that the respondent bank

had mischievously or malafide rejected their offer to defeat their

rights, to redeem  the  mortgage  before registration  of the sale

certificate on 18th September, 2007.  

29. A fortiorari, it must follow that the appellants have failed to

exercise their right of redemption in the manner known to law,

muchless until the registration of the sale certificate on 18th

September,  2007. In that  view of the  matter  no relief can  be

granted to the appellants, assuming that the appellants are right

in contending that as per the applicable provision at the relevant

time (unamended Section 13(8) of the 2002 Act), they could have

exercised their right of redemption until  the registration of the

sale certificate – which, indisputably, has already happened on

18th  September, 2007. Therefore, it is not possible to

countenance the plea of the appellants to reopen the entire

auction process.  This is  moreso  because, the  narrative  of the

appellants that they had made a valid tender towards the subject

loan accounts before registration of the sale certificate, has been

found to be tenuous. Thus understood, their right of redemption

in any case stood obliterated on 18th September, 2007. Further,

30

the amended Section 13(8) of the 2002 Act which has come into

force w.e.f. 1st September, 2016, will now stare at the face of the

appellants.  As  per the  amended  provision, stringent condition

has been stipulated that the tender of dues to the secured

creditor together with all costs, charges and expenses incurred by

him shall be at any time before the “date of publication of notice”

for public auction or inviting quotations or tender from public or

private deed for transfer by way of lease assessment or sale of the

secured assets. That event happened before the institution of the

subject writ petitions by the appellants.    30. Having said thus, in the peculiar facts of the present case,

we do not deem it necessary to dilate further on the argument

that registration of the sale certificate in relation to the auction

conducted under the 2002 Act  is essential.  Similarly, it is not

necessary to examine other grounds urged by the appellants, in

light of our conclusion that the appellants have failed to make a

valid and legal tender to the respondent bank before the issue of

sale certificate on 6th  January, 2006, muchless registration

thereof on 18th September, 2007.

31

31. For the  view we  have taken, it is  not  possible for  us to

countenance the argument of the appellants that we should

exercise plenary powers under Article 142 of the Constitution of

India. The reported decisions pressed into service by both sides

also need not detain us as the appellants have, in law, lost their

option to exercise right of redemption, consequent to registration

of the sale certificate on 18th September, 2007 and their failure to

pay the dues to the secured creditors before that date.   

32. Accordingly, these appeals must fail and same are

dismissed with no order as to costs. Ordered accordingly.  

33. All applications are also disposed of in the above terms.

                       ……………………………..J       (A.M. Khanwilkar)

     ……………………………..J       (Ajay Rastogi)

New Delhi; August 20, 2019.