Pal Alloys & Metal India Private Limited and others Vs Allahabad Bank and others (Punjab and Haryana High Court)
Summary: The Punjab and Haryana High Court held that the amended Section 13(8) of the SARFAESI Act, 2002, as considered in this case, did not extinguish the mortgagor’s equity of redemption merely upon publication of the auction notice or acceptance of the highest bid. The Court distinguished between the statutory restriction placed on a secured creditor under Section 13(8) and the mortgagor’s general right of redemption under Section 60 of the Transfer of Property Act, 1882. It held that the right of redemption continued until execution of the conveyance, namely issuance of the sale certificate.
In the present case, the petitioners had mortgaged their residential property to Allahabad Bank. After the loan account became NPA, proceedings under the SARFAESI Act followed and the property was auctioned for Rs. 3.12 crore. However, no sale certificate had been issued because the auction was expressly subject to the outcome of the writ proceedings and an interim order restrained confirmation of sale. The Court noted that the petitioners had already paid Rs. 80 lakh and had also demonstrated attempts to arrange further funds for settlement. Since the sale certificate had not been issued, the Court held that their redemption right remained subsisting.
