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2022 (8) TMI 1440 - HC - Indian LawsSale/e-auction - Recovery of outstanding dues - whether sub-section (8) of Section 13 of the SARFAESI Act can restrain the secured creditor from realising the outstanding dues from the borrower after notice for public auction is issued? HELD THAT:- A Division Bench of this Court in Concern Readymix [2018 (12) TMI 1982 - TELANGANA HIGH COURT] noted the changes that were made to the SARFAESI Act by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 including the substitution of sub-section (8) of Section 13 of the said Act. Thereafter the Division Bench compared and analysed sub-section (8) of Section 13 as it stood before the amendment and as it stands post amendment. This Court noted the distinction between the unamended and the amended sub-section (8) of Section 13 holding that The first distinction between the unamended and amended sub-section (8) of Section 13 is that before amendment, the facility of repayment of the entire dues along with the costs, charges and expenses, was available to the debtor at any time before the date fixed for the sale or transfer. But after the amendment, the facility is available upto the time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty. The second distinction is that the unamended sub-section (8) did not provide for the contingency when the dues are tendered by the borrower before the date of completion of the sale or lease but after the issue of notice. But the amended sub-section (8) takes care of the contingency where steps have already been taken by the secured creditor for the transfer of the secured asset, before the payment was made. Except these two distinctions, there is no other distinction. After referring to the amendments brought to the Security Interest (Enforcement) Rules, 2002, this Court took the view that amended Section 13(8) merely prohibits the secured creditor from proceeding further with the transfer of the secured assets by way of lease, assignment or sale if the dues are paid before issuance of notice for public auction. Thereafter it has been held that a restriction on the right of the mortgagee to deal with the property is not exactly the same as the equity of redemption available to the mortgagor. Payment of the amounts mentioned in Section 13(8) ties the hands of the mortgagee (secured creditor) from exercising any of the powers conferred under the SARFAESI Act. Redemption comes later - this Court emphasised that the right of redemption is not lost immediately upon the highest bid made by the purchaser in an auction is accepted. On a careful application of Sections 35 and 37 of the SARFAESI Act, it is evident that the situation contemplated under Section 13(8) of the SARFAESI Act does not exclude application of Section 60 of the Transfer of Property Act, 1882. As explained by this Court in Concern Readymix, a restriction on the right of the mortgagee to deal with the property post issuance of notice for public auction is not the same as the right of redemption available to the mortgagor. In so far the present case is concerned, admittedly the bid amount of the petitioner was Rs. 57.00 lakhs. Though the auction was conducted on 16.03.2021 and payment was made by the petitioner within the stipulated period, there is clear dispute between the parties as regards issuance of sale certificate by respondent Nos. 1 and 2 in favour of the petitioner. However, admittedly there is no registration of any sale certificate - In this case, we have already come to the conclusion that third respondent had not lost the right of redemption upon publication of notice for auction sale. If that be the position, then it should be left to the discretion of the secured creditor as to which course of action would be more beneficial to it. Evidently, the OTS with the third respondent is much more beneficial to the secured creditors i.e., respondent Nos. 1 and 2 and as has been explained such a course of action is not restricted or extinguished by Section 13(8) of the SARFAESI Act. Right to property is a valuable right. Though no longer a fundamental right, it is still a constitutional right. The interpretation which we have adopted subserves such a right. That apart, third respondent had not lost the right of redemption upon publication of notice for auction sale; his right of redemption would have been lost only upon the sale certificate getting registered which admittedly has not taken place. Therefore, the action of respondent Nos. 1 and 2 in accepting the higher OTS amount of the third respondent though after publication of notice for public auction and auction is justified and cannot be faulted. The writ petition fails and is accordingly dismissed.
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