Sanjay Sharma Vs Kotak Mahindra Bank Ltd. & Ors. (Supreme Court of India)
In a landmark judgment, the Supreme Court of India upheld the validity of an auction sale conducted under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act). The case involved a property in Old Rajinder Nagar, New Delhi, originally owned by Champa Bhen Kundia, who had mortgaged it to Kotak Mahindra Bank in 2001. Due to non-repayment, the bank-initiated proceedings under the SARFAESI Act and auctioned the property in 2010. Sanjay Sharma emerged as the highest bidder and was issued a sale certificate. However, a third party challenged the auction, claiming ownership based on unregistered sale deeds allegedly executed before the mortgage. However, Respondent No. 2 challenged the auction, claiming ownership through unregistered sale deeds executed before the mortgage.
The Supreme Court, after carefully examining the evidence, ruled in favor of Sanjay Sharma. Recognizing the significance of registered documents, the Court held that the unregistered documents relied upon by the challenger could not confer valid ownership under Section 54 of the Transfer of Property Act. The Court further emphasized the importance of adhering to the procedural requirements of the SARFAESI Act and highlighted that the challenger had failed to exercise their redemption rights within the stipulated timeframe.
