Sri International Vs Central Bank of India (Madras High Court)
Summary: Madras High Court allowed the borrowers’ writ petitions, set aside the DRAT order and declared the SARFAESI auction sale and consequential registered sale certificate invalid. The borrowers had challenged the auction proceedings from their inception and ultimately deposited the entire outstanding loan amount with interest. The Court held that the bank and auction purchasers had wrongly treated confirmation of sale as remaining stayed even after the High Court’s order dated 15.12.2020 permitted the bank to accept the balance sale consideration.
Consequently, waiting approximately fifteen months until 31.03.2022 to confirm the auction and receive the balance 75% violated Rule 9(4) of the Security Interest (Enforcement) Rules, 2002. Relying substantially on Mathew Varghese Vs. M. Amritha Kumar, (2014) 5 SCC 610, the Court emphasized strict compliance with statutory sale requirements and held that a mortgagor’s right of redemption survives until completion of sale in accordance with law.
The Court also agreed with Concern Readymix and Pal Alloys & Metal India Private Limited that amended Section 13(8) of the SARFAESI Act restricts the secured creditor’s power to deal with the property but does not by itself extinguish the mortgagor’s equity of redemption under the Transfer of Property Act.
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