Borrower’s right to redeem the mortgaged property ends on the publication date of the auction notice

Borrower’s right to redeem the mortgaged property ends on the publication date of the auction notice

The borrower’s right to redeem the mortgaged property under Section 13(8) of the SARFAESI Act, as amended in 2016, ends on the date of publication of the auction notice for the secured asset.

M. Rajendran & Ors. v. KPK Oils and Proteins India Pvt. Ltd. & Ors. (2025 INSC 1137) is a landmark Supreme Court decision clarifying the borrower’s right of redemption under the SARFAESI Act after the 2016 amendment to Section 13(8).​

Case Background

• KPK Oils and Proteins India Pvt. Ltd. availed loans in 2016; after default, the account was declared an NPA and the secured asset was auctioned by the bank.​

• The auction purchasers (M. Rajendran and others) were issued a Sale Certificate, but the borrowers sought to redeem the mortgage post-auction, which the Madras High Court allowed.​

• The Supreme Court was asked to clarify the exact point at which the right of redemption is extinguished under Section 13(8) post-amendment.​

Supreme Court’s Findings

• The 2016 amendment to Section 13(8) of the SARFAESI Act extinguishes the borrower’s right of redemption at the date of publication of the auction notice, rather than the registration of the sale certificate.​

• The amended provision applies prospectively, not retrospectively, meaning rights created before the amendment are not affected.​

• The High Court erred by allowing redemption after the auction process; once the auction notice is published, the right of redemption is lost if dues are not paid before that date.​

Critical Observations

• The Supreme Court highlighted a “glaring anomaly” and ambiguity between the language of Section 13(8) and SARFAESI Rules, which continues to cause litigation and confusion.​

• The Court urged the Ministry of Finance and Ministry of Law & Justice to amend the law to resolve these ambiguities.​

Final Outcome

• The Supreme Court allowed the appeals, set aside the Madras High Court’s judgment, and upheld the validity of the Sale Certificate issued to auction purchasers.​

• Any third-party rights created over the property after the auction were declared void.​

• The borrowers’ subsequent tender of dues was invalid as it was after the extinction of their redemption right.​

Legal Significance

• This decision is now a defining precedent for the extinction of redemption rights and clarifies the scope of amendments to Section 13(8) of the SARFAESI Act.​

• Reinforces protections for auction purchasers and the sanctity of the auction process under the SARFAESI Act.​

This judgment directs banks, borrowers, and courts to adhere strictly to the statutory scheme and timelines set out under the SARFAESI Act, providing greater certainty and safeguarding creditor remedies.​

The borrower’s right of redemption under Section 13(8) of the SARFAESI Act, after the 2016 amendment, is extinguished at the date of publication of the auction notice—not at the time of the sale certificate’s registration or the conclusion of the sale process.​

Supreme Court Interpretation

• The Supreme Court ruled that after publication of the auction sale notice, the borrower can no longer redeem or reclaim the mortgaged property, even if the sale has not yet been confirmed or registered.​

• This strict timeline provides certainty to banks and auction purchasers, reinforcing the sanctity of the auction process under SARFAESI and ensuring greater protection for creditor interests.​

Legal Reasoning

• Section 13(8), as amended in 2016, clearly states that the right to redeem is available only “before the date of publication of notice for public auction.”

• Once this notice is published, the borrower’s statutory right is lost, and any payment tendered thereafter does not revive redemption rights, regardless of sale status.​

Effect on Practice

• This makes the process transparent and predictable for all parties involved, and means borrowers must settle dues well before the auction notice is published.

• Courts and banks must now adhere strictly to this cutoff date, rather than previous confusion extending the right up to registration of the sale or deed execution.​

The borrower’s redemption right under SARFAESI ends the moment the auction notice is published, marking a clear departure from earlier interpretations that allowed redemption up to sale certificate registration or conveyance execution.

Here is a direct comparison and analysis of the Supreme Court judgments in “M. Rajendran & Ors. v. KPK Oils and Proteins India Pvt. Ltd. & Ors.” and “Mathew Varghese v. M. Amritha Kumar And Others”, focusing especially on the legal position regarding the right of redemption under the SARFAESI Act.

Core Issue: Right of Redemption under SARFAESI Act

Both cases fundamentally deal with the borrower’s right of redemption (the right to reclaim property mortgaged for a debt upon repayment) in the context of auction/sale of secured assets by banks under the SARFAESI Act.

Mathew Varghese v. M. Amritha Kumar (2014)

• The Supreme Court, interpreting unamended Section 13(8) of the SARFAESI Act, held that the mortgagor’s right of redemption is not automatically extinguished upon publication of auction notice. The right continues until the actual sale is completed and title is transferred to the bona fide purchaser. The Act must harmonize with Section 60 of the Transfer of Property Act (TPA), meaning the borrower retains the right to redeem before sale completion—even after the auction notice.​

• The Court cautioned against arbitrary sales by banks and required strict compliance with statutory procedure before finalizing a sale.​

• Key precedent: Even publication of auction notice does not extinguish right of redemption under unamended Section 13(8)—it continues until sale is confirmed.​

M. Rajendran & Ors. v. KPK Oils and Proteins India Pvt. Ltd. & Ors. (2025)

• This decision directly considers the effect of the 2016 Amendment to Section 13(8) of the SARFAESI Act, which significantly changed the legal landscape.​

• The Supreme Court clarified that under the amended Section 13(8), the borrower’s right of redemption is extinguished at the point of publication of auction notice or invitation for tender/quotations, not at the fall of the auction hammer or actual sale completion. This marks a clear departure from the position in Mathew Varghese’s case.​

• The rationale: The SARFAESI Act, as a special law for quick recovery by banks, prevails over the general Transfer of Property Act per Section 35 of the SARFAESI Act.​

• The Court settled the previous ambiguity and instructed lower courts and tribunals to follow the new legislative position strictly—the right of redemption ends with auction notice publication under current law.​

Legal Position Before & After SARFAESI Amendment

Key Takeaways

• The Mathew Varghese interpretation allowed borrowers more time and opportunities to redeem their assets.​

• The M. Rajendran judgment strictly curtails this window and mandates that redemption rights end upon publication of sale-related notice, matching the amended SARFAESI Act, which is now binding.​

Impact

• DRTs and courts must now apply the new rule: once notice is published for auction/tender, the right of redemption is lost, regardless of whether the auction has been held or sale concluded.​

• The Supreme Court has instructed adherence to this standard, overriding contrary earlier judgments.​

This marks a significant shift in SARFAESI enforcement favoring swifter, more final asset recovery by banks—ending the previous “auction hammer” ambiguity. Borrowers and legal practitioners must now act within the stricter window defined by the 2016 amendment and latest Supreme Court interpretation.​